Why would you object to government creating more demand for labor? Over time, wages will rise and higher wages will fund more
demand for labor produced goods.
How universities, banks and the government turned student debt into America's next financial black hole...
On a wind-swept, frigid night in February 2009, a 37-year-old schoolteacher named Scott Nailor parked his rusted '92 Toyota Tercel
in the parking lot of a Fireside Inn in Auburn, Maine. He picked this spot to have a final reckoning with himself. He was going to
end his life.
Beaten down after more than a decade of struggle with student debt, after years of taking false doors and slipping into various
puddles of bureaucratic quicksand, he was giving up the fight. "This is it, I'm done," he remembers thinking. "I sat there and just
sort of felt like I'm going to take my life. I'm going to find a way to park this car in the garage, with it running or whatever."
Nailor's problems began at 19 years old, when he borrowed for tuition so that he could pursue a bachelor's degree at the University
of Southern Maine. He graduated summa cum laude four years later and immediately got a job in his field, as an English teacher.
Bu t he graduated with $35,000 in debt, a big hill to climb on a part-time teacher's $18,000 salary. He struggled with payments,
and he and his wife then consolidated their student debt, which soon totaled more than $50,000. They declared bankruptcy and defaulted
on the loans. From there he found himself in a loan "rehabilitation" program that added to his overall balance. "That's when the
noose began to tighten," he says.
The collectors called day and night, at work and at home. "In the middle of class too, while I was teaching," he says. He ended
up in another rehabilitation program that put him on a road toward an essentially endless cycle of rising payments. Today, he pays
$471 a month toward "rehabilitation," and, like countless other borrowers, he pays nothing at all toward his real debt, which he
now calculates would cost more than $100,000 to extinguish. "Not one dollar of it goes to principal," says Nailor. "I will never
be able to pay it off. My only hope to escape from this crushing debt is to die."
After repeated phone calls with lending agencies about his ever-rising interest payments, Nailor now believes things will only
get worse with time. "At this rate, I may easily break $1 million in debt before I retire from teaching," he says.
Nailor had more than once reached the stage in his thoughts where he was thinking about how to physically pull off his suicide.
"I'd been there before, that just was the worst of it," he says. "It scared me, bad."
He had a young son and a younger daughter, but Nailor had been so broken by the experience of financial failure that he managed
to convince himself they would be better off without him. What saved him is that he called his wife to say goodbye. "I don't know
why I called my wife. I'm glad I did," he says. "I just wanted her or someone to tell me to pick it up, keep fighting, it's going
to be all right. And she did."
From that moment, Nailor managed to focus on his family. Still, the core problem – the spiraling debt that has taken over his
life, as it has for millions of other Americans – remains.
Horror stories about student debt are nothing new. But this school year marks a considerable worsening of a tale that ought to
have been a national emergency years ago. The government in charge of regulating this mess is now filled with predatory monsters
who have extensive ties to the exploitative for-profit education industry – from Donald Trump himself to Education Secretary Betsy
DeVos, who sets much of the federal loan policy, to Julian Schmoke, onetime dean of the infamous DeVry University, whom Trump appointed
to police fraud in education.
Americans don't understand the student-loan crisis because they've been trained to view the issue in terms of a series of separate,
unrelated problems.
They will read in one place that as of the summer of 2017, a record 8.5 million Americans are in default on their student debt,
with about $1.3 trillion in loans still outstanding.
In another place, voters will read that the cost of higher education is skyrocketing, soaring in a seemingly market-defying arc
that for nearly a decade now has run almost double the rate of inflation. Tuition for a halfway decent school now frequently surpasses
$50,000 a year. How, the average newsreader wonders, can any child not born in a yacht afford to go to school these days?
In a third place, that same reader will see some heartless monster, usually a Republican, threatening to cut federal student lending.
The current bogeyman is Trump, who is threatening to slash the Pell Grant program by $3.9 billion, which would seem to put higher
education even further out of reach for poor and middle-income families. This too seems appalling, and triggers a different kind
of response, encouraging progressive voters to lobby for increased availability for educational lending.
But the separateness of these stories clouds the unifying issue underneath: The education industry as a whole is a con. In fact,
since the mortgage business blew up in 2008, education and student debt is probably our reigning unexposed nation-wide scam.
It's a multiparty affair, what shakedown artists call a "big store scheme," like in the movie The Sting : a complex deception
requiring a big cast to string the mark along every step of the way. In higher education, every party you meet, from the moment you
first set foot on campus, is in on the game.
America as a country has evolved in recent decades into a confederacy of widescale industrial scams. The biggest slices of our
economic pie – sectors like health care, military production, banking, even commercial and residential real estate – have become
crude income-redistribution schemes, often untethered from the market by subsidies or bailouts, with the richest companies benefiting
from gamed or denuded regulatory systems that make profits almost as assured as taxes. Guaranteed-profit scams – that's the last
thing America makes with any level of consistent competence. In that light, Trump, among other things, the former head of a schlock
diploma mill called Trump University, is a perfect president for these times. He's the scammer-in-chief in the Great American Ripoff
Age, a time in which fleecing students is one of our signature achievements.
It starts with the sales pitch colleges make to kids. The thrust of it is usually that people who go to college make lots more
money than the unfortunate dunces who don't. "A bachelor's degree is worth $2.8 million on average over a lifetime" is how Georgetown
University put it. The Census Bureau tells us similarly that a master's degree is worth on average about $1.3 million more than a
high school diploma.
But these stats say more about the increasing uselessness of a high school degree than they do about the value of a college diploma.
Moreover, since virtually everyone at the very highest strata of society has a college degree, the stats are skewed by a handful
of financial titans. A college degree has become a minimal status marker as much as anything else. "I'm sure people who take polo
lessons or sailing lessons earn a lot more on average too," says Alan Collinge of Student Loan Justice, which advocates for debt
forgiveness and other reforms. "Does that mean you should send your kids to sailing school?"
But the pitch works on everyone these days, especially since good jobs for Trump's beloved "poorly educated" are scarce to nonexistent.
Going to college doesn't guarantee a good job, far from it, but the data show that not going dooms most young people to an increasingly
shallow pool of the very crappiest, lowest-paying jobs. There's a lot of stick, but not much carrot, in the education game.
It's a vicious cycle. Since everyone feels obligated to go to college, most everyone who can go, does, creating a glut of graduates.
And as that glut of degree recipients grows, the squeeze on the un-degreed grows tighter, increasing further that original negative
incentive: Don't go to college, and you'll be standing on soup lines by age 25.
With that inducement in place, colleges can charge almost any amount, and kids will pay – so long as they can get the money. And
here we run into problem number two: It's too easy to find that money.
Parents, not wanting their kids to fall behind, will pay every dollar they have. But if they don't have the cash, there is a virtually
unlimited amount of credit available to young people. Proposed cuts to Pell Grants aside, the landscape is filled with public and
private lending, and students gobble it up. Kids who walk into financial-aid offices are often not told what signing their names
on the various aid forms will mean down the line. A lot of kids don't even understand the concept of interest or amortization tables
– they think if they're borrowing $8,000, they're paying back $8,000.
Nailor certainly was unaware of what he was getting into when he was 19. "I had no idea [about interest]," he says. "I just remember
thinking, 'I don't have to worry about it right now. I want to go to school.' " He pauses in disgust. "It's unsettling to remember
how it was like, 'Here, just sign this and you're all set.' I wish I could take the time machine back and slap myself in the face."
The average amount of debt for a student leaving school is skyrocketing even faster than the rate of tuition increase.
In 2016, for instance, the average amount of debt for an exiting college graduate was a staggering $37,172. That's a rise of six
percent over just the previous year. With the average undergraduate interest rate at about 3.7 percent, the interest alone costs
around $115 per month, meaning anyone who can't afford to pay into the principal faces the prospect of $69,000 in payments over 50
years.
So here's the con so far.
You must go to college because you're screwed if you don't.
Costs are outrageously high, but you pay them because you have to, and because the system makes it easy to borrow massive amounts
of money
The third part of the con is the worst: You can't get out of the debt.
Since government lenders in particular have virtually unlimited power to collect on student debt – preying on everything from
salary to income-tax returns – even running is not an option. And since most young people find themselves unable to make their full
payments early on, they often find themselves perpetually paying down interest only, never touching the principal. Our billionaire
president can declare bankruptcy four times, but students are the one class of citizen that may not do it even once.
October 2017 was supposed to represent the first glimmer of light at the end of this tunnel. This month marks the 10th anniversary
of the Public Service Loan Forgiveness program, one of the few avenues for wiping out student debt. The idea, launched by George
W. Bush, was pretty simple: Students could pledge to work 10 years for the government or a nonprofit and have their debt forgiven.
In order to qualify, borrowers had to make payments for 10 years using a complex formula. This month, then, was to start the first
mass wipeouts of debt in the history of American student lending. But more than half of the 700,000 enrollees have already been expunged
from the program for, among other things, failing to certify their incomes on time, one of many bureaucratic tricks employed to limit
forgiveness eligibility. To date, fewer than 500 participants are scheduled to receive loan forgiveness in this first round.
Moreover, Trump has called for the program's elimination by 2018, meaning that any relief that begins this month is likely only
temporary. The only thing that is guaranteed to remain real for the immediate future are the massive profits being generated on the
backs of young people, who before long become old people who, all too often, remain ensnared until their last days in one of the
country's most brilliant and devious moneymaking schemes.
Everybody wins in this madness, except students. Even though many of the loans are originated by the state, most of them are serviced
by private or quasi-private companies like Navient – which until 2014 was the student-loan arm of Sallie Mae – or Nelnet, companies
that reported a combined profit of around $1 billion last year (the U.S. government made a profit of $1.6 billion in 2016!). Debt-collector
companies like Performant (which generated $141.4 million in revenues; the family of Betsy DeVos is a major investor), and most particularly
the colleges and universities, get to prey on the desperation and terror of parents and young people, and in the process rake in
vast sums virtually without fear of market consequence.
About that: Universities, especially public institutions, have successfully defended rising tuition in recent years by blaming
the hikes on reduced support from states. But this explanation was blown to bits in large part due to a bizarre slip-up in the middle
of a controversy over state support of the University of Wisconsin system a few years ago.
In that incident, UW raised tuition by 5.5 percent six years in a row after 2007. The school blamed stresses from the financial
crisis and decreased state aid. But when pressed during a state committee hearing in 2013 about the university's finances, UW system
president Kevin Reilly admitted they held $648 million in reserve, including $414 million in tuition payments. This was excess hidey-hole
cash the school was sitting on, separate and distinct from, say, an endowment fund.
After the university was showered with criticism for hoarding cash at a time when it was gouging students with huge price increases
every year, the school responded by saying, essentially, it only did what all the other kids were doing. UW released data showing
that other major state-school systems across the country were similarly stashing huge amounts of cash. While Wisconsin's surplus
was only 25 percent of its operating budget, for instance, Minnesota's was 29 percent, and Illinois maintained a whopping 34 percent
reserve.
When Collinge, of Student Loan Justice, looked into it, he found that the phenomenon wasn't confined to state schools. Private
schools, too, have been hoarding cash even as they plead poverty and jack up tuition fees. "They're all doing it," he says.
While universities sit on their stockpiles of cash and the loan industry generates record profits, the pain of living in debilitating
debt for many lasts into retirement. Take Veronica Martish. She's a 68-year-old veteran, having served in the armed forces in the
Vietnam era. She's also a grandmother who's never been in trouble and consid?ers herself a patriot. "The thing is, I tried to do
everything right in my life," she says. "But this ruined my life."
This is an $8,000 student loan she took out in 1989, through Sallie Mae. She borrowed the money so she could take courses at Quinebaug
Valley Community College in Connecticut. Five years later, after deaths in her family, she fell behind on her payments and entered
a loan-rehabilitation program. "That's when my nightmare began," she says.
In rehabilitation, Martish's $8,000 loan, with fees and interest, ballooned into a $27,000 debt, which she has been carrying ever
since. She says she's paid more than $63,000 to date and is nowhere near discharging the principal. "By the time I die," she says,
"I will probably pay more than $200,000 toward an $8,000 loan." She pauses. "It's a scam, you see. Nothing ever comes off the loan.
It's all interest and fees. And they chase you until you're old, like me. They never stop. Ever."
And that's the other thing about lending to students: It's the safest grift around.
There's probably no better symbol of the bankruptcy of the education industry than Trump University. The half-literate president's
effort at higher learning drew in suckers with pathetic promises of great real-estate insights (for instance, that Trump "hand-picked"
the instructors) and then charged them truckfuls of cash for get-rich-quick tutorials that students and faculty later described as
"almost completely worthless" and a "total lie." That Trump got to settle a lawsuit on this matter for $25 million and still managed
to be elected president is, ironically, a remarkable testament to the failure of our education system. About the only example that
might be worse is DeVry University, which told students that 90 percent of graduates seeking jobs found them in their fields within
six months of graduation. The FTC found those claims "false and unsubstantiated," and ordered $100 million in refunds and debt relief,
but that was in 2016 – before Trump put DeVry chief Schmoke, of all people, in charge of rooting out education fraud. Like a lot
of things connected to politics lately, it would be funny if it weren't somehow actually happening.?"Yeah, it's the fox guarding
the henhouse," says Collinge. "You could probably find a worse analogy."
But the real problem with the student-loan story is that it's so poorly understood by people not living the nightmare. There's
so much propaganda that blames the borrowers for taking on the debt in the first place that there's often little sympathy for people
in hopeless situations. To make matters worse, band-aid programs that supposedly offer help hypnotize the public into thinking there
are ways out, when the "help" is usually just another trick to add to the balance.
"That's part of the problem with the narrative," says Nailor, the schoolteacher. "People think that there's help, so what are
you complaining about? All you got to do is apply for help."
But the help, he says, coming from a for-profit predatory system, often just makes things worse. "It did for me," he says. "It
does for a lot of people."
The real flaw is associating "higher" education with value. Get a job. Earn an income. Find an interest for your free time.
Raise a family. Spare the four years of wasted time and money.
If you want to take the risk of going into debt to attend college, you better come out with skills that are in high demand.
Otherwise you are much better off going into the military, or going to trade school. BTW, thank the Clintons for making it
impossible to get out of student debt through bankruptcy.
If you want to give out loans to kids then you should accept the risk that they might default on that debt and leave you
with the tab. Let's stop the coddling the banker bullshit. They lobbied to make this loans extremely difficult to discharge
in bankruptcy. They wanted all the profit and none of the risk. Let them assume risk and they'll stop handing out loans to
unqualified borrowers.
Amen! If the money for an "education" is more difficult to obtain, that ought to be a clue as to the value of the information
/ training one is purchasing. The fact it's so easy to get is all one needs to know about the worth of what's being spewed
by those dispensing their so-called knowledge / truth.
Allow the lawful discharge through bankruptcy and punish every single financial institution, (and especially their individual
persons who oversaw the process), that has profited off of ballooning "principle" amounts that even come close to doubling
an original amount with ties to any government official that voted to place these kind of loans in such a category.
This is madness! "Woe to those who make unjust laws, to those who issue oppressive decrees,..." Isaiah 10:1
Finally at least one person gets it. The inability to discharge student loan debt through the taint of bankruptcy is one
of the greatest financial crimes of the last century. Entirely unAmerican. America used to be all about fresh starts. That
is one reason our business life is more vibrant than say many places in Europe with less benign laws. Same goes for individuals.
If you go through the pain of bankruptcy there is no reason you shouldnt get that debt discharged. Whomever voted for that
law, whether Clintons or others should be beaten to death.
Hobart's 38-week combo welder program costs $16,625. A trained kid willing to travel and work in the field would make more
than an engineering graduate who paid a quarter-million for his degree.
No mention made of the rats nest Social Justice program$ infesting college and university campuses across the country, at
untold cost, worthless sullshit.
Not that the student loan thing isn't another banker scam, but the lead story doesn't make sense.
Firstly, educators get
loan forgiveness after a decade or two of public service. And there are income contingent repayment plans. And lawyers have,
in fact, been able to get these things discharged. None of this changes the scam that is giving out high interest loans to
kids to pursue an education. But you might want to start with a sob story that makes more sense. How about a pediatrician with
400k in loans and making 100k a year living in a coastal city? Or how about the art history majors at private liberal arts
schools with 200k in debt making $10/hour as a barista? But teachers are one of the few groups that has an actual federal out.
Maybe. My wife is a teacher in a Title I, low income school, and had been for 13 years..... She also has about 13K remaining in student loans, originally federal direct and Perkins loans. With her over 10 years in title I schools, she should be able to get them forgiven, except that she consolidated these loans
before I met her, and now they are "serviced" by AES, a private lender, and they are no longer eligible for discharge. This I call the "Consolidation Scam."
Pay off debt before you have children. There is no law that you must have children, if the debt makes it impossible. I would
have liked a lot of tings but could not afford them.
Taibbi has some gall to blame Trump, DeVos and others for the student debt explosion, but not one word about Obama or the
government's takeover of the student loan market as part of Obamacare? The student loan market was folded into the ACA as part
of the fake accounting to make the ACA numbers "work". Every market the govenrment insinuates itself into - housing, health
care, college tuition, etc. - gets distorted and costs explode. Taibbi's yet another dishonest liberal.
Yikes- is this factual? If so fuck him. All name, no cattle.
Obama began his turn as destroyer in chief at the height of the Great Recession, everyone & their brother was running into
the safety of college & student loans to pay the bills. I recall watching the local parking lots swell. :) So there's that.
But numbers are off the charts every year because younger millennials expect the govt to forgive all those loans at some
point. That's how many thought 20 years ago & it's worse today.
"The nexus between the student loan program and ObamaCare is purely opportunistic. As the Affordable Care Act was passing
through Congress, its wheels greased by the wholly fraudulent assertion that it didn't need 60 votes to pass the Senate, the
administration decided to put in a provision eliminating the private student loan industry, fully federalizing the program.
What was not widely understood at the time was that it hoped to raid the funds paid by students to provide money for the bottomless
pit known as ObamaCare"
"... While the Tea Party was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-, it represented a more authoritarian, right [wing] version of neoliberalism. ..."
"... Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering. Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. ..."
"... Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders' energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood" path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy. ..."
"... In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many concerned about the rise of U.S. fascism. ..."
"... We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism. ..."
"... While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the chance of a better world. They have not yet been offered one."' ..."
In Chapter 1, we traced the rise of our neoliberal conjuncture back to the crisis of liberalism during the late nineteenth and
early twentieth centuries, culminating in the Great Depression. During this period, huge transformations in capitalism proved impossible
to manage with classical laissez-faire approaches. Out of this crisis, two movements emerged, both of which would eventually shape
the course of the twentieth century and beyond. The first, and the one that became dominant in the aftermath of the crisis, was the
conjuncture of embedded liberalism. The crisis indicated that capitalism wrecked too much damage on the lives of ordinary citizens.
People (white workers and families, especially) warranted social protection from the volatilities and brutalities of capitalism.
The state's public function was expanded to include the provision of a more substantive social safety net, a web of protections for
people and a web of constraints on markets. The second response was the invention of neoliberalism. Deeply skeptical of the common-good
principles that undergirded the emerging social welfare state, neoliberals began organizing on the ground to develop a "new" liberal
govemmentality, one rooted less in laissez-faire principles and more in the generalization of competition and enterprise. They worked
to envision a new society premised on a new social ontology, that is, on new truths about the state, the market, and human beings.
Crucially, neoliberals also began building infrastructures and institutions for disseminating their new' knowledges and theories
(i.e., the Neoliberal Thought Collective), as well as organizing politically to build mass support for new policies (i.e., working
to unite anti-communists, Christian conservatives, and free marketers in common cause against the welfare state). When cracks in
embedded liberalism began to surface -- which is bound to happen with any moving political equilibrium -- neoliberals were there
with new stories and solutions, ready to make the world anew.
We are currently living through the crisis of neoliberalism. As I write this book, Donald Trump has recently secured the U.S.
presidency, prevailing in the national election over his Democratic opponent Hillary Clinton. Throughout the election, I couldn't
help but think back to the crisis of liberalism and the two responses that emerged. Similarly, after the Great Recession of 2008,
we've saw two responses emerge to challenge our unworkable status quo, which dispossesses so many people of vital resources for individual
and collective life. On the one hand, we witnessed the rise of Occupy Wall Street. While many continue to critique the movement for
its lack of leadership and a coherent political vision, Occupy was connected to burgeoning movements across the globe, and our current
political horizons have been undoubtedly shaped by the movement's success at repositioning class and economic inequality within our
political horizon. On the other hand, we saw' the rise of the Tea Party, a right-wing response to the crisis. While the Tea Party
was critical of status-quo neoliberalism -- especially its cosmopolitanism and embrace of globalization and diversity, which was
perfectly embodied by Obama's election and presidency -- it was not exactly anti-neoliberal. Rather, it was anti-left neoliberalism-,
it represented a more authoritarian, right [wing] version of neoliberalism.
Within the context of the 2016 election, Clinton embodied the neoliberal center that could no longer hold. Inequality. Suffering.
Collapsing infrastructures. Perpetual war. Anger. Disaffected consent. There were just too many fissures and fault lines in
the glossy, cosmopolitan world of left neoliberalism and marketized equality. Indeed, while Clinton ran on status-quo stories of
good governance and neoliberal feminism, confident that demographics and diversity would be enough to win the election, Trump effectively
tapped into the unfolding conjunctural crisis by exacerbating the cracks in the system of marketized equality, channeling political
anger into his celebrity brand that had been built on saying "f*** you" to the culture of left neoliberalism (corporate diversity,
political correctness, etc.) In fact, much like Clinton's challenger in the Democratic primary, Benie Sanders, Trump was a crisis
candidate.
Both Sanders and Trump were embedded in the emerging left and right responses to neoliberalism's crisis. Specifically, Sanders'
energetic campaign -- which was undoubtedly enabled by the rise of the Occupy movement -- proposed a decidedly more "commongood"
path. Higher wages for working people. Taxes on the rich, specifically the captains of the creditocracy.
Universal health care. Free higher education. Fair trade. The repeal of Citizens United. Trump offered a different response to
the crisis. Like Sanders, he railed against global trade deals like NAFTA and the Trans-Pacific Partnership (TPP). However, Trump's
victory was fueled by right neoliberalism's culture of cruelty. While Sanders tapped into and mobilized desires for a more egalitarian
and democratic future, Trump's promise was nostalgic, making America "great again" -- putting the nation back on "top of the world,"
and implying a time when women were "in their place" as male property, and minorities and immigrants were controlled by the state.
Thus, what distinguished Trump's campaign from more traditional Republican campaigns was that it actively and explicitly pitted
one group's equality (white men) against everyone else's (immigrants, women, Muslims, minorities, etc.). As Catherine Rottenberg
suggests, Trump offered voters a choice between a multiracial society (where folks are increasingly disadvantaged and dispossessed)
and white supremacy (where white people would be back on top). However, "[w]hat he neglected to state," Rottenberg writes,
is that neoliberalism flourishes in societies where the playing field is already stacked against various segments of society,
and that it needs only a relatively small select group of capital-enhancing subjects, while everyone else is ultimately dispensable.
1
In other words, Trump supporters may not have explicitly voted for neoliberalism, but that's what they got. In fact, as Rottenberg
argues, they got a version of right neoliberalism "on steroids" -- a mix of blatant plutocracy and authoritarianism that has many
concerned about the rise of U.S. fascism.
We can't know what would have happened had Sanders run against Trump, but we can think seriously about Trump, right and left
neoliberalism, and the crisis of neoliberal hegemony. In other words, we can think about where and how we go from here. As I suggested
in the previous chapter, if we want to construct a new world, we are going to have to abandon the entangled politics of both right
and left neoliberalism; we have to reject the hegemonic frontiers of both disposability and marketized equality. After all, as political
philosopher Nancy Fraser argues, what was rejected in the election of 2016 was progressive, left neoliberalism.
While the rise of hyper-right neoliberalism is certainly nothing to celebrate, it does present an opportunity for breaking
with neoliberal hegemony. We have to proceed, as Gary Younge reminds us, with the realization that people "have not rejected the
chance of a better world. They have not yet been offered one."'
Mark Fisher, the author of Capitalist Realism, put it this way:
The long, dark night of the end of history has to be grasped as an enormous opportunity. The very oppressive pervasiveness
of capitalist realism means that even glimmers of alternative political and economic possibilities can have a disproportionately
great effect. The tiniest event can tear a hole in the grey curtain of reaction which has marked the horizons of possibility under
capitalist realism. From a situation in which nothing can happen, suddenly anything is possible again.4
I think that, for the first time in the history of U.S. capitalism, the vast majority of people might sense the lie of liberal,
capitalist democracy. They feel anxious, unfree, disaffected. Fantasies of the good life have been shattered beyond repair for most
people. Trump and this hopefully brief triumph of right neoliberalism will soon lay this bare for everyone to see. Now, with Trump,
it is absolutely clear: the rich rule the world; we are all disposable; this is no democracy. The question becomes: How will we show
up for history? Will there be new stories, ideas, visions, and fantasies to attach to? How can we productively and meaningful intervene
in the crisis of neoliberalism? How can we "tear a hole in the grey curtain" and open up better worlds? How can we put what we've
learned to use and begin to imagine and build a world beyond living in competition? I hope our critical journey through the neoliberal
conjuncture has enabled you to begin to answer these questions.
More specifically, in recent decades, especially since the end of the Cold War, our common-good sensibilities have been channeled
into neoliberal platforms for social change and privatized action, funneling our political energies into brand culture and marketized
struggles for equality (e.g., charter schools, NGOs and non-profits, neoliberal antiracism and feminism). As a result, despite our
collective anger and disaffected consent, we find ourselves stuck in capitalist realism with no real alternative. Like the neoliberal
care of the self, we are trapped in a privatized mode of politics that relies on cruel optimism; we are attached, it seems, to politics
that inspire and motivate us to action, while keeping us living in competition.
To disrupt the game, we need to construct common political horizons against neoliberal hegemony. We need to use our common stories
and common reason to build common movements against precarity -- for within neoliberalism, precarity is what ultimately has the potential
to thread all of our lives together. Put differently, the ultimate fault line in the neoliberal conjiuicture is the way it subjects
us all to precarity and the biopolitics of disposability, thereby creating conditions of possibility for new coalitions across race,
gender, citizenship, sexuality, and class. Recognizing this potential for coalition in the face of precarization is the most pressing
task facing those who are yearning for a new world. The question is: How do we get there? How do we realize these coalitional potentialities
and materialize common horizons?
Ultimately, mapping the neoliberal conjuncture through everyday life in enterprise culture has not only provided some direction
in terms of what we need; it has also cultivated concrete and practical intellectual resources for political interv ention and social
interconnection -- a critical toolbox for living in common. More specifically, this book has sought to provide resources for thinking
and acting against the four Ds: resources for engaging in counter-conduct, modes of living that refuse, on one hand, to conduct one's
life according to the norm of enterprise, and on the other, to relate to others through the norm of competition. Indeed, we need
new ways of relating, interacting, and living as friends, lovers, workers, vulnerable bodies, and democratic people if we are to
write new stories, invent new govemmentalities, and build coalitions for new worlds.
Against Disimagination: Educated Hope and Affirmative Speculation
We need to stop turning inward, retreating into ourselves, and taking personal responsibility for our lives (a task which is ultimately
impossible). Enough with the disimagination machine! Let's start looking outward, not inward -- to the broader structures that undergird
our lives. Of course, we need to take care of ourselves; we must survive. But I firmly believe that we can do this in ways both big
and small, that transform neoliberal culture and its status-quo stories.
Here's the thing I tell my students all the time. You cannot escape neoliberalism. It is the air we breathe, the water in which
we swim. No job, practice of social activism, program of self-care, or relationship will be totally free from neoliberal impingements
and logics. There is no pure "outside" to get to or work from -- that's just the nature of the neoliberalism's totalizing cultural
power. But let's not forget that neoliberalism's totalizing cultural power is also a source of weakness. Potential for resistance
is everywhere, scattered throughout our everyday lives in enterprise culture. Our critical toolbox can help us identify these potentialities
and navigate and engage our conjuncture in ways that tear open up those new worlds we desire.
In other words, our critical perspective can help us move through the world with what Henry Giroux calls educated hope. Educated
hope means holding in tension the material realities of power and the contingency of history. This orientation of educated hope knows
very well what we're up against. However, in the face of seemingly totalizing power, it also knows that neoliberalism can never become
total because the future is open. Educated hope is what allows us to see the fault lines, fissures, and potentialities of the present
and emboldens us to think and work from that sliver of social space where we do have political agency and freedom to construct a
new world. Educated hope is what undoes the power of capitalist realism. It enables affirmative speculation (such as discussed in
Chapter 5), which does not try to hold the future to neoliberal horizons (that's cruel optimism!), but instead to affirm our commonalities
and the potentialities for the new worlds they signal. Affirmative speculation demands a different sort of risk calculation and management.
It senses how little we have to lose and how much we have to gain from knocking the hustle of our lives.
Against De-democratization: Organizing and Collective Coverning
We can think of educated hope and affirmative speculation as practices of what Wendy Brown calls "bare democracy" -- the basic
idea that ordinary' people like you and me should govern our lives in common, that we should critique and try to change our world,
especially the exploitative and oppressive structures of power that maintain social hierarchies and diminish lives. Neoliberal culture
works to stomp out capacities for bare democracy by transforming democratic desires and feelings into meritocratic desires and feelings.
In neoliberal culture, utopian sensibilities are directed away from the promise of collective utopian sensibilities are directed
away from the promise of collective governing to competing for equality.
We have to get back that democractic feeling! As Jeremy Gilbert taught us, disaffected consent is a post-democratic orientation.
We don't like our world, but we don't think we can do anything about it. So, how do we get back that democratic feeling? How do we
transform our disaffected consent into something new? As I suggested in the last chapter, we organize. Organizing is simply about
people coming together around a common horizon and working collectively to materialize it. In this way, organizing is based on the
idea of radical democracy, not liberal democracy. While the latter is based on formal and abstract rights guaranteed by the state,
radical democracy insists that people should directly make the decisions that impact their lives, security, and well-being. Radical
democracy is a practice of collective governing: it is about us hashing out, together in communities, what matters, and working in
common to build a world based on these new sensibilities.
The work of organizing is messy, often unsatisfying, and sometimes even scary. Organizing based on affirmative speculation and
coalition-building, furthermore, will have to be experimental and uncertain. As Lauren Berlant suggests, it means "embracing the
discomfort of affective experience in a truly open social life that no
one has ever experienced." Organizing through and for the common "requires more adaptable infrastructures. Keep forcing the existing
infrastructures to do what they don't know how to do. Make new ways to be local together, where local doesn't require a physical
neighborhood." 5 What Berlant is saying is that the work of bare democracy requires unlearning, and detaching from, our
current stories and infrastructures in order to see and make things work differently. Organizing for a new world is not easy -- and
there are no guarantees -- but it is the only way out of capitalist realism.
Getting back democratic feeling will at once require and help us lo move beyond the biopolitics of disposability and entrenched
systems of inequality. On one hand, organizing will never be enough if it is not animated by bare democracy, a sensibility that each
of us is equally important when it comes to the project of determining our lives in common. Our bodies, our hurts, our dreams, and
our desires matter regardless of our race, gender, sexuality, or citizenship, and regardless of how r much capital (economic,
social, or cultural) we have. Simply put, in a radical democracy, no one is disposable. This bare-democratic sense of equality must
be foundational to organizing and coalition-building. Otherwise, we will always and inevitably fall back into a world of inequality.
On the other hand, organizing and collective governing will deepen and enhance our sensibilities and capacities for radical equality.
In this context, the kind of self-enclosed individualism that empowers and underwrites the biopolitics of disposability melts away,
as we realize the interconnectedness of our lives and just how amazing it feels to
fail, we affirm our capacities for freedom, political intervention, social interconnection, and collective social doing.
Against Dispossession: Shared Security and Common Wealth
Thinking and acting against the biopolitics of disposability goes hand-in-hand with thinking and acting against dispossession.
Ultimately, when we really understand and feel ourselves in relationships of interconnection with others, we want for them as we
want for ourselves. Our lives and sensibilities of what is good and just are rooted in radical equality, not possessive or self-appreciating
individualism. Because we desire social security and protection, we also know others desire and deserve the same.
However, to really think and act against dispossession means not only advocating for shared security and social protection, but
also for a new society that is built on the egalitarian production and distribution of social wealth that we all produce. In this
sense, we can take Marx's critique of capitalism -- that wealth is produced collectively but appropriated individually -- to heart.
Capitalism was built on the idea that one class -- the owners of the means of production -- could exploit and profit from the collective
labors of everyone else (those who do not own and thus have to work), albeit in very different ways depending on race, gender, or
citizenship. This meant that, for workers of all stripes, their lives existed not for themselves, but for others (the appropriating
class), and that regardless of what we own as consumers, we are not really free or equal in that bare-democratic sense of the word.
If we want to be really free, we need to construct new material and affective social infrastructures for our common wealth. In
these new infrastructures, wealth must not be reduced to economic value; it must be rooted in social value. Here, the production
of wealth does not exist as a separate sphere from the reproduction of our lives. In other words, new infrastructures, based on the
idea of common wealth, will not be set up to exploit our labor, dispossess our communities, or to divide our lives. Rather, they
will work to provide collective social resources and care so that we may all be free to pursue happiness, create beautiful and/or
useful things, and to realize our potential within a social world of living in common. Crucially, to create the conditions for these
new, democratic forms of freedom rooted in radical equality, we need to find ways to refuse and exit the financial networks of Empire
and the dispossessions of creditocracy, building new systems that invite everyone to participate in the ongoing production of new
worlds and the sharing of the wealth that we produce in common.
It's not up to me to tell you exactly where to look, but I assure you that potentialities for these new worlds are everywhere
around you.
"Controlling the narrative" is politically correct term for censorship.
Notable quotes:
"... I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or they feel personally wounded or threatened. ..."
"... "controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was). ..."
"... In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology is now completely discredited and can be sustained only by cult-style methods. ..."
Maybe this is the same kind of clinical detachment doctors have to cultivate, a way of distancing oneself from the subject,
protecting yourself against a crippling empathy. I won't say that writers or artists are more sensitive than other people, but
it may be that they're less able to handle their own emotions.
It may be that art, like drugs, is a way of dulling or controlling pain. Eloquently articulating a feeling is one way to avoid
actually experiencing it.
Words are only symbols, noises or marks on paper, and turning the messy, ugly stuff of life into language renders it inert
and manageable for the author, even as it intensifies it for the reader.
It's a nerdy, sensitive kid's way of turning suffering into something safely abstract, an object of contemplation.
I suspect most of the people who write all that furious invective on the Internet, professional polemicists and semiliterate
commenters alike, are lashing out because they've been hurt -- their sense of fairness or decency has been outraged, or
they feel personally wounded or threatened.
"controlling the narrative" by neoliberal MSM is the key of facilitating the neoliberal "groupthink". Much like was in the
USSR with "communist" groupthink. This is a step in the direction of the theocratic society (which the USSR definitely was).
In other words "controlling the narrative" is the major form of neoliberal MSM "war on reality" as the neoliberal ideology
is now completely discredited and can be sustained only by cult-style methods.
They want to invoke your emotions in the necessary direction and those emotions serve as a powerful filter, a firewall which
will prevents you from seeing any alternative facts which taken as whole form an "alternative narrative".
It also creates certain taboo, such as "don't publish anything from RT", or you automatically become "Putin's stooge." But
some incoherent blabbing of a crazy neocon in Boston Globe is OK.
This is an old and a very dirty game, a variation of method used for centuries by high demand cults:
"Why, of course, the people don't want war. Why would some poor slob on a farm want to risk his life in a war when the best
that he can get out of it is to come back to his farm in one piece.
Naturally, the common people don't want war; neither in Russia nor in England nor in America, nor for that matter in Germany.
That is understood.
But, after all, it is the leaders of the country who determine the policy and it is always a simple matter to drag the people
along, whether it is a democracy or a fascist dictatorship or a Parliament or a Communist dictatorship
Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell
them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works
the same way in any country."
– Hermann Goering (as told to Gustav Gilbert during the Nuremberg trials)
You need to be able to decipher this "suggested" set of emotions and detach it from the set of facts provided by neoliberal
MSM. It might help to view things "Sine ira et studio" (
https://en.wikipedia.org/wiki/Sine_ira_et_studio
)
That helps to destroy the official neoliberal narrative.
Here skepticism (whether natural or acquired) can be of great help in fighting groupthink pushed by neoliberal MSM.
We are all guilty of this one sidedness, but I think that we need to put some efforts to move in direction of higher level
of skepticism toward our own views and probably provide at least links to alternative views.
Nationalism really represent a growing threat to neoliberalism. It is clear the the rise of
nationalism was caused by the triumph of neoliberalism all over the globe. As neoliberal
ideology collapsed in 2008, thing became really interesting now. Looks like
1920th-1940th will be replayed on a new level with the USA neoliberal empire under stress from
new challengers instead of British empire.
Rumor about the death of neoliberalism are slightly exaggerated ;-). This social system still
has a lot of staying power. you need some external shock like the need of cheap oil (defined as
sustainable price of oil over $100 per barrel) to shake it again. Of some financial crisis similar
to the crisis of 2008. Currently there is still
no alternative social order that can replace it. Collapse of the USSR discredited both socialism even
of different flavors then was practiced in the USSR. National socialism would be a step back from
neoliberalism.
Notable quotes:
"... The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade. This NYT article notes that liberalism has essentially died in Japan, and that all political contests are now between what the west would consider conservatives: https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html ..."
"... What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to as "two wings of the same bird of prey." ..."
"... Nobody at the top cares about 'diversity.' They care about the easy profits that come from ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number of very powerful people who have decided that the long-term health of their nations and civilization is less important than short-term profits and power. ..."
"... Hillary and Obama are to the right of the President that Buchanan served in his White House. Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way. Heck would freeze over before Hillary would do something so against her Banker Backers. ..."
"... It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk eliminated using sophisticated financial instruments, monetary policy etc. ..."
"... If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008). ..."
"... And, other (self-serving) neoliberal stories are now seen as false. For example, that the US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans for higher skilled/higher wage employment" or that "the US would always gain from tariff free trade". ..."
"... The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism), as shown by the last US Presidential election. ..."
"... Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders. Although it claims to support World Government, in actual fact it supports corporatism. This is explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations, as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as has been the case in America since at least the Clinton Presidency. ..."
"... But I recall that Pat B also said neoconservatism was on its way out a few years after Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin in liberal interventionism. ..."
Asked to name the defining attributes of the America we wish to become, many liberals would answer
that we must realize our manifest destiny since 1776, by becoming more equal, more diverse and more
democratic -- and the model for mankind's future.
Equality, diversity, democracy -- this is the holy trinity of the post-Christian secular state
at whose altars Liberal Man worships.
But the congregation worshiping these gods is shrinking. And even Europe seems to be rejecting
what America has on offer.
In a retreat from diversity, Catalonia just voted to separate from Spain. The Basque and Galician
peoples of Spain are following the Catalan secession crisis with great interest.
The right-wing People's Party and far-right Freedom Party just swept 60 percent of Austria's vote,
delivering the nation to 31-year-old Sebastian Kurz, whose anti-immigrant platform was plagiarized
from the Freedom Party. Summarized it is: Austria for the Austrians!
Lombardy, whose capital is Milan, and Veneto will vote Sunday for greater autonomy from Rome.
South Tyrol (Alto Adige), severed from Austria and ceded to Italy at Versailles, written off by
Hitler to appease Mussolini after his Anschluss, is astir anew with secessionism. Even the Sicilians
are talking of separation.
By Sunday, the Czech Republic may have a new leader, billionaire Andrej Babis. Writes The Washington
Post, Babis "makes a sport of attacking the European Union and says NATO's mission is outdated."
Platform Promise: Keep the Muslim masses out of the motherland.
To ethnonationalists, their countrymen are not equal to all others, but superior in rights. Many
may nod at Thomas Jefferson's line that "All men are created equal," but they no more practice that
in their own nations than did Jefferson in his
... ... ...
European peoples and parties are today using democratic means to achieve "illiberal" ends. And
it is hard to see what halts the drift away from liberal democracy toward the restrictive right.
For in virtually every nation, there is a major party in opposition, or a party in power, that holds
deeply nationalist views.
European elites may denounce these new parties as "illiberal" or fascist, but it is becoming apparent
that it may be liberalism itself that belongs to yesterday. For more and more Europeans see the invasion
of the continent along the routes whence the invaders came centuries ago, not as a manageable problem
but an existential crisis.
To many Europeans, it portends an irreversible alteration in the character of the countries their
grandchildren will inherit, and possibly an end to their civilization. And they are not going to
be deterred from voting their fears by being called names that long ago lost their toxicity from
overuse.
And as Europeans decline to celebrate the racial, ethnic, creedal and cultural diversity extolled
by American elites, they also seem to reject the idea that foreigners should be treated equally in
nations created for their own kind.
Europeans seem to admire more, and model their nations more, along the lines of the less diverse
America of the Eisenhower era, than on the polyglot America of 2017.
And Europe seems to be moving toward immigration polices more like the McCarran-Walter Act of
1950 than the open borders bill that Sen. Edward Kennedy shepherded through the Senate in 1965.
Kennedy promised that the racial and ethnic composition of the America of the 1960s would not
be overturned, and he questioned the morality and motives of any who implied that it would.
Liberalism is the naivete of 18th century elites, no different than today. Modernity as you
know it is unsustainable, mostly because equality isn't real, identity has value for most humans,
pluralism is by definition fractious, and deep down most people wish to follow a wise strongman
leader who represents their interests first and not a vague set of universalist values.
Blind devotion to liberal democracy is another one of those times when white people take an
abstract concept to weird extremes. It is short-sighted and autistically narrow minded. Just because
you have an oppressive king doesn't mean everyone should be equals. Just because there was slavery/genocide
doesn't mean diversity is good.
The retreat of [neo]liberalism is very visible in Asia. All Southeast Asian states have turned their
backs on liberal democracy, especially Indonesia, the Philippines and Myanmar in the last decade.
This NYT article notes that liberalism has essentially died in Japan, and that all political contests
are now between what the west would consider conservatives:
https://www.nytimes.com/2017/10/15/opinion/liberalism-japan-election.html
Good riddance. The idea that egalitarianism is more advanced than hierarchy has always been
false, and flies against the long arc of history. Time for nationalists around the world to smash
liberal democracy and build a new modernity based on actual humanism, with respect to hierarchies
and the primacy of majorities instead of guilt and pathological compassion dressed up as political
ideology.
"Liberalism" is not dying. "Liberalism" is dead, and has been since at least 1970.
What is today called "Liberalism" and "Conservatism" both are simply corrupted labels applied
to the same top-down corporate-fascistic elite rule that I think Mr. Buchanan once referred to
as "two wings of the same bird of prey."
Nobody at the top cares about 'diversity.' They care about the easy profits that come from
ever cheaper labor. 'Diversity' is not suicide but rather murder: instigated by a small number
of very powerful people who have decided that the long-term health of their nations and civilization
is less important than short-term profits and power.
Its been dead for nearly 20 years now. Liberalism has long been the Monty Python parrot nailed
to its perch. At this point, the term is mainly kept alive in right-wing attacks by people who
lack the imagination to change their habitual targets for so long.
To my eye, the last 'liberal' politician died in a susupicious plane crash in 2000 as the Bush
Republicans were taking the White House by their famous 5-4 vote/coup and also needed to claim
control of the Senate. So, the last authentic 'liberal' Senator, Paul Wellstone of MN was killed
in a suspicious plane crash that was never properly explained.
Hillary and Obama are to the right of the President that Buchanan served in his White House.
Richard Nixon was to the Left of both Hillary and Obama. I can't even imagine Hillary accepting
and signing into law a 'Clean Water Act' or enacting Price Controls to fight inflation. No way.
Heck would freeze over before Hillary would do something so against her Banker Backers.
And, at the root, that is the key. The 'Liberals' that the right now rails against are strongly
backed and supported by the Wall Street Banks and other corporate leaders. The 'Liberals' have
pushed for a government Of the Bankers, By the Bankers and For the Bankers. The 'Liberals' now
are in favor of Endless Unconstitutional War around the world.
Which can only mean that the term 'Liberal' has been so completely morphed away from its original
meanings to be completely worthless.
The last true Liberal in American politics was Paul Wellstone. And even by the time he died
for his sins, he was calling himself a "progressive" because after the Clintons and the Gores
had so distorted the term Liberal it was meaningless. Or it had come to mean a society ruled by
bankers, a society at constant war and throwing money constantly at a gigantic war machine, a
society of censorship where the government needed to control all music lyrics, the same corrupt
government where money could by anything from a night in the Lincoln Bedroom to a Presidential
Pardon or any other government favor.
Thus, 'Liberals' were a dead movement even by 2000, when the people who actually believed in
the American People over the profits of bankers were calling themselves Progressives in disgust
at the misuse of the term Liberal. And now, Obama and Hillary have trashed and distorted even
the term Progressive into bombing the world 365 days a year and still constantly throwing money
at the military machine and the problems it invents.
So, Liberalism is so long dead that if you exumed the grave you'd only find dust. And Pat must
be getting senile and just throwing back out the same lines he once wrote as a speechwriter for
the last Great Lefty President Richard Nixon.
Another question is whether this is wishful thinking from Pat or some kind of reality.
I think that he's right, that Liberalism is a dying faith, and it's interesting to check the
decline.
It's sure that financial (neo)liberalism was in a growth phase prior to year 2000 (under
Greenspan, the "Maestro") with a general belief that the economy could be "fine tuned" with risk
eliminated using sophisticated financial instruments, monetary policy etc.
If [neo] Liberalism is a package, then two heavy financial blows that shook the whole foundation
were the collapse of the dot.com bubble (2000) and the mortgage bubble (2008).
And, other (self-serving) neoliberal stories are now seen as false. For example, that the
US is an "advanced post-industrial service economy", that out-sourcing would "free up Americans
for higher skilled/higher wage employment" or that "the US would always gain from tariff free
trade".
In fact, the borderless global "world is flat" dogma is now seen as enabling a rootless hyper-rich
global elite to draw on a sea of globalized serf labour with little or no identity, while their
media and SWJ activists operate a scorched earth defense against any sign of opposition.
The basic divide is surely Nationalism (America First) vs. Globalism (Neo-Liberalism),
as shown by the last US Presidential election.
A useful analogy might be Viktor Orbán. He started out as a leader of a liberal party, Fidesz,
but then over time started moving to the right. It is often speculated that he started it for
cynical reasons, like seeing how the right was divided and that there was essentially a vacuum
there for a strong conservative party, but there's little doubt he totally internalized it. There's
also little doubt (and at the time he and a lot of his fellow party leaders talked about it a
lot) that as he (they) started a family and having children, they started to realize how conservatism
kinda made more sense than liberalism.
With Kurz, there's the possibility for this path. However, he'd need to start a family soon
for that to happen. At that age Orbán was already married with children
Neoliberalism, of which the Clintons are acolytes, supports Free Trade and Open Borders.
Although it claims to support World Government, in actual fact it supports corporatism. This is
explicit in the TPPA Trump vetoed. Under the corporate state, the state controls the corporations,
as Don Benito did in Italy. Under corporatism, the corporations tell the state what to do, as
has been the case in America since at least the Clinton Presidency.
Richard Nixon was a capitalist, not a corporatist. He was a supporter of proper competition
laws, unlike any President since Clinton. Socially, he was interventionist, though this may have
been to lessen criticism of his Vietnam policies. Anyway, his bussing and desegregation policies
were a long-term failure.
Price Control was quickly dropped, as it was in other Western countries. Long term Price Control,
as in present day Venezuela, is economically disastrous.
Let's hope liberalism is a dying faith and that is passes from the Western world. If not it will
destroy the West, so if it doesn't die a natural death then we must euthanize it. For the evidence
is in and it has begat feminism, anti-white racism, demographic winter, mass third world immigration
and everything else that ails the West and has made it the sick and dying man of the world.
But I recall that Pat B also said neoconservatism was on its way out a few years after
Iraq war II and yet it's stronger than ever and its adherents are firmly ensconced in the joint
chiefs of staff, the pentagon, Congress and the White House. It's also spawned a close cousin
in liberal interventionism.
What Pat refers to as "liberalism" is now left wing totalitarianism and anti-white hatred and
it's fanatically trying to remain relevant by lashing out and blacklisting, deplatforming, demonetizing,
and physically assaulting all of its enemies on the right who are gaining strength much to their
chagrin. They resort to these methods because they can't win an honest debate and in a true free
marketplace of ideas they lose.
"... managers, janitors, lawyers, nurses, librarians, bartenders, and everyone else who had a job in 2016 ..."
"... Total US Income = $18,750,000,000,000 Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200 Income from Federal Social Benefits = $2,039,300,000,000 ..."
"... Total Income - (Wages & Salaries + Benefits) = $9,763,546,014,800 ..."
"... every commodity ..."
"... every last grain ..."
"... every waste bin ..."
"... every single cappuccino ..."
"... Property income ..."
"... unearned income ..."
"... interest ..."
"... interest, rent, and corporate profits ..."
"... with ..."
"... just as valuable ..."
"... honest work ..."
"... In solidarity, John Laurits ..."
"... If you enjoy these posts, consider buying the writer a cup of coffee ..."
"... or making a monthly donation ..."
"... -- it's like a voluntary subscription directly to an artist & journalist ..."
Working Class w/ No Living Wage: The
Absurd Math of US Income
As the stock market gleefully claws its way to
more record-breaking highs,
Forbes reports
a full 56% of US Americans now have
less than $1,000 to their names -- and 25% have
less than $100
. But the
economy, as they say, is
booming.
Even with 165 million on the
breadline and an hourly minimum wage of only $7.25 nationally, surging Amazon share prices have
added $13 billion to Jeff Bezos' net-worth
since
mid-September. For perspective, $13 billion is enough to pay the student-loan debts of 432,000 millennials.
It's also plenty to end world hunger for a year, according to
the International Institute
for Sustainable Development
. And Bezos -- now the world's richest man -- smashes a bottle of
organic champagne to celebrate his new wind-farm. The question is -- how do markets grow as the wealth of the
people shrinks and wages fall? What do the commentariat mean by "economic growth" when the nation's income can
hardly keep half of its people's heads above water?
The National Income:
How Much Value is Created by the US Economy?
There are a lot of ways to measure economies -- for
example,
gross domestic product
or
GDP
is the value of everything a country produces ( minus the cost to produce it ) and the
employment-rate
measures the number of paying jobs. The
gross national income
or GNI is what you get after adding up all of
the income earned by everyone. GNI includes every citizen ( even in other countries ) and every kind of income
from wages or salaries to social security and unemployment benefits, investment returns, or the sale of assets
like houses and cars.
GNI is basically the total value of all money
paid to everyone, minus the expenses of doing the business everyone is getting paid for. According to the
macroeconomic accounts on the Federal Reserve's website, the GNI was about
$18.7 trillion dollars
in 2016 for the US.
Gross National Wages:
Every Paycheck Combined
Now, how much of America's multi-trillion-dollar
paycheck ends up in the pockets of people who work in the US? Since the "gross national wage" is apparently not
as important to US media-outlets as Jeff Bezos' latest earnings or the many triumphs of the Dow Jones, this
number is a bit more camouflaged. Luckily, the
total number who are employed by all industries and their
average wages or salaries
can be found in the bowels of the Bureau of Labor Statistics' website.
Multiplying these two numbers -- the total employed by all industries and their mean-average yearly
wages -- gives the combined wages and salaries of everyone with a job in the US, from the clerks and mechanics
to the brain-surgeons and corporate executives.
$7 trillion dollars to split between all employed people in the United States.
Everyone who built
everything and provided every service --
managers, janitors, lawyers,
nurses, librarians, bartenders, and everyone else who had a job in 2016
-- collectively earned about $7
trillion of the $18.7 trillion national paycheck.
But who gets the remaining $11,781,946,014,800?
Federal Benefits & Social Welfare
The national income also includes money received
from government benefits, such as disability, retirement, and social security. The Bureau of Labor Statistics
lists the 2016 total federal benefits
received at
$2.0393 trillion.
Total US Income = $18,750,000,000,000
Combined Wages & Salaries of All Employed Folks = $6,968,053,985,200
Income from Federal Social Benefits = $2,039,300,000,000
Total Income - (Wages & Salaries + Benefits) =
$9,763,546,014,800
And about $9.8 trillion is still missing.
Literally All Working People Combined
Earn Less Than Half of American Income
According to the BLS data,
there are an estimated
146 million people who hold some sort of job in the US.
These
146 million workers create
every commodity
, serve
every meal
, harvest
every last
grain
, empty
every waste bin
, teach
every student
, build
every house
,
and pour milk into
every single cappuccino
in the nation. And together
they take
about 37.2%
of the American pie.
All of the so-called
"handouts" from the federal government -- social security, retirement, disability, and other benefits -- only
amount to another 10.8% of the GNI.
The combined income from all employment and federal
benefits still only adds up to 48% of America's paycheck. And that means that the other 52% must be paid to
someone -- or some
thing
-- without a job.
Unearned Income: Landlords, Industrial
Capitalists, & Wall Street Investors
Property
income
-- or, as the classical economists knew it,
unearned income
-- is
earned through ownership ( rather than
wages
, which are earned by time
spent working ). There are three basic types of unearned income.
Rent
is paid to owners of land or other natural resources,
profit
is paid
to owners of capital ( like factories, equipment, machines, etc. ), and
interest
is paid to owners of financial assets ( like stocks, securities, debt, etc. ). The $13 billion
Jeff Bezos made when Amazon share prices increased, for example, was "earned" by owning something rather than
creating something or providing some service.
This type of income is a bit harder to keep
track of -- especially considering that the wealthy seem to be in the habit of using offshore tax-havens and
shell companies ( like those revealed in the
Panama
and
Paradise Papers
) to stash their fortunes. With
that being said, the
US Department of Commerce's accounts
show
nearly $7 trillion
-- or about the same as 146 million
working people made combined -- paid out for
interest, rent, and corporate
profits
. Another trillion and a half or so was paid to "proprietors" or, more colloquially, the
owners.
And now we have a rough sketch of the great
American paycheck:
Are Workers Worthy of Their Wages?
Not in the United States of America!
There are two basic components to the whole
economic activity and wealth of human civilization --
capital
and
labor
.
On one hand there is capital -- all of the natural resources, materials, lands, machines, and everything that
everything is made
of
and made
with
-- and, on the other hand, there are the countless workers whose labor-power transforms that stuff
into the societies we live in.
Without the time, energy, creativity, and
sacrifices made by the 146 million human beings who make everything and offer every service, the wealth of
people like Jeff Bezos would not exist. Business magnates like Jeff Bezos, Warren Buffet, and Bill Gates
need
working classes -- working classes do not need
them
. And yet
Bezos, Buffet, and Gates now possess more wealth than the
bottom 50%
of the nation combined.
Through the prism of the American economy, people like Bezos, Buffet, and Gates are
just as valuable
as the poorest 160 million of the working classes who
collectively labor billions of hours each week.
And
that
is unfair --
that
doesn't add up. The "American Dream" -- the whole idea
about how anyone willing to work hard should be able to prosper or, at the very least, make ends meet -- is
objectively
untrue
. The truth is -- if you want to earn wealth in the
US or even if you only want to earn enough to pay the bills on time --
honest
work
is not a very good strategy.
In solidarity,
John Laurits
If you enjoy these posts, consider buying the writer a cup of coffee
using PayPal
or making a monthly donation
using Patreon
-- it's
like a voluntary subscription directly to an artist & journalist
John Laurits is not an
award-winning journalist. Follow to watch the comic futility of John's quest to defeat capitalism with art
https://www.johnlaurits.com
A central selling point of the tax bill is that it will encourage investment. But that assumes that high tax rates were the
primary reason why business wasn't investing. Instead, the data says business investment is weak because the U.S. has a ton of
spare capacity.
First, let's look total capacity utilization: It has peaked at lower levels in each of the last three expansions.
Let's break the data down into durable and non-durable CU:
Both categories of production have ample spare capacity, with non-durable production having greater capacity.
Finally, let's look at crude, intermediate and final stages of production: All three have plenty of spare capacity to bring
online if needed.
So, will we see a huge wave of investment as a result of the changed tax bill? The data says no.
adding capacity hasn't been about need for years companies have been adding plant and
equipment that they didn't need for years because of incentives included in the code, such as
the investment tax credit and accelerated depreciation, so it's really hard to say when that
will stop..
spencer , December 22, 2017 1:30 pm
Rather than using the Fed estimate of capacity maybe it would be better to use a trend
line for capacity utilization and compare that to reported capacity utilization. I think that
would give a more realistic measure of economic slack as the trend line shows a long run
trend of slower capacity growth.
Lyle , December 22, 2017 11:46 pm
The main investment might be made to automate things, replacing expensive human workers
with cheaper automatic workers who don't need benefits and an HR department.
"... They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would). ..."
"... Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange. ..."
"... The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange. ..."
"... The basis was and remains to remove any and all national gov'ts across he globe from any influences on values of currencies, thus pure laissez-faire in the extreme .. as you say libertarian chaos. ..."
"... There is a much more severe problem with bitcoin. As the number mined asymptotically approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are the ones who validate coins, what will happen to the reliability of bitcoin when it becomes uneconomical for anyone to participate in mining? ..."
I am going to make a fool
of myself by suggesting that a cryptocurrency might actually be useful. Bitcoin et al have
negative social utility. They are pure speculative assets which enable people to gamble. Also
bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has
made bitcoin famous and which bitcoin enthusiasts consider a strength -- the enormous increase
in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin
useless as a means of exchange. Most firms don't want to gamble.
So I (semi-seriously this time) propose botcoin which might have a more stable dollar
exchange rate. The idea is to link the blockchain verification program to an official
exchange.
Backing up, there are two very different sorts of web-servers related to bitcoin. One set,
the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy
of the ledger of all bitcoin transactions -- the blockchain, race to create new blocks, and
evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin
exchanges in which bitcoin is traded for regular currency. They are not part of the original
plan in which bitcoin would be traded for goods and services and function as a means of
exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable
Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation
would).
I propose linking the blockchain program to an exchange. So there would be an official
botcoin exchange (this means it isn't entirely free-entry shareware libertarian anarchism). If
anyone were interested in a new cryptocurrency designed so that speculators can't become rich
(and pigs fly) there would be other unofficial exchanges.
The bitcoin program regulates the frequency of creation of new blocks to roughly one every
six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which
must be solved to make a new valid block. The idea was to limit the total amount of bitcoin
which will ever be created (to 21 million for some reason). This was supposed to make bitcoin
valuable. So far it has succeeded all too well (I am confident that in the end bitcoin will
have price 0).
It is possible to make the supply of botcoin flexible so the dollar price doesn't shoot up.
I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem
which must be solved to add a block easier if the dollar price of botcoin exceeds the target,
and harder if it falls below the target. This should stabilize the price.
Now no one is really interested in cryptocurrency except as a way to gamble and take
money from fools. But if anyone were, linking the blockchain program to prices on an exchange
would make it more nearly possible to use the cryptocurrency as a means of exchange.
The system is vulnerable to a tacit agreement to trade only on unofficial exchanges. It
is necessary that the problem is also made easier if daily trading volume on the official
exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this
would not affect the price on the official exchange if there were no transactions on the
official exchange.
Lyle , December 25, 2017 11:22 pm
Of course Goldman Sachs and its competitors are doing just this building an options and
futures exchange. (it is not really that much different than any other futures and options
business)
Longtooth , December 26, 2017 5:01 am
But Robert,
then the entire foundation for Bitcoin's purpose disappears entirely, so what advantage
remains?
The basis was and remains to remove any and all national gov'ts across he globe from any
influences on values of currencies, thus pure laissez-faire in the extreme .. as you say
libertarian chaos.
By making crypto-currency values subject to national currency exchange rates they cease to
have any reason to exist at all.
We / globally in fact already use crypto exchange via electronic transactions .. adding
block chain to it would be a benefit but a separate cryptocurrency is a worthless redundancy
if it is subject to valuation by exchange rates of national currencies.
What am I missing?.
likbez , December 26, 2017 5:27 am
Great Article !!! I wish I can write about this topic on the same level. Thank you very much. P.S. Happy New Year for everybody !
rick shapiro , December 26, 2017 10:26 am
There is a much more severe problem with bitcoin. As the number mined asymptotically
approaches the pre-determined maximum, the cost of mining approaches infinity. As miners are
the ones who validate coins, what will happen to the reliability of bitcoin when it becomes
uneconomical for anyone to participate in mining?
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively
make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most
neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised
(immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly
for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and
lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between
Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would
be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread
and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind
of dirty tricks for US public entertainment.
While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic
form of "National security state". In the National Security State, the US people no longer have the any chances to change the
policies.
Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including
neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties
no longer represent the will of the people.
Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose
to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves,
their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the
$400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM,
neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military
brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national
interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure,
in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of
$40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably
double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or
with a very fuzzy past) - symbolizes all too well).
"... It tells me that the bottom line is that Christmas has become a harder season for White families. We are worse off because of BOTH social and economic liberalism which has only benefited an elite few. The bottom half of the White population is now in total disarray – drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant wages, declining household income and investments – and this dysfunction is creeping up the social ladder. The worst thing we can do is step on the accelerator. ..."
As we move into 2018, I am swinging away from the Republicans. I don't support the Paul Ryan
"Better Way" agenda. I don't support neoliberal economics. I think we have been going in the
wrong direction since the 1970s and don't want to continue going down this road.
Opioid Deaths: As we all know, the opioid epidemic has become a national crisis and the White working class
has been hit the hardest by it. It is a "sea of despair" out there.
White Mortality: As the family crumbles, religion recedes in his life, and his job prospects dwindle, the
middle aged White working class man is turning to drugs, alcohol and suicide: The White suicide
rate has soared since 2000:
Median Household Income: The average household in the United States is poorer in 2017 than it was in 1997:
Real GDP: Since the late 1990s, real GDP and real median household income have parted
ways:
Productivity and Real Wages: Since the 1970s, the minimum wage has parted ways with
productivity gains in the US economy:
Stock Market: Since 2000, the stock market has soared, but 10% of Americans own 80% of
stocks. The top 1% owns 38% of stocks. In 2007, 3/4th of middle class households were invested
in the stock market, but now only 50% are investors. Overall, 52% of Americans now own stocks,
which is down from 65%. The average American has less than $1,000 in their combined checking
and savings accounts.
Do you know what this tells me?
It tells me that the bottom line is that Christmas has become a harder season for White
families. We are worse off because of BOTH social and economic liberalism which has only
benefited an elite few. The bottom half of the White population is now in total disarray
– drug addiction, demoralization, divorce, suicide, abortion, atomization, stagnant
wages, declining household income and investments – and this dysfunction is creeping up
the social ladder. The worst thing we can do is step on the accelerator.
Paul Ryan and his fellow conservatives look at this and conclude we need MORE freedom. We
need lower taxes, more free trade, more deregulation, weaker unions, more immigration and less
social safety net spending. He wants to follow up tax reform with entitlement reform in 2018. I
can't but see how this is going to make an already bad situation for the White working class
even worse.
I'm not rightwing in the sense that these people are. I think their policies are harmful to
the nation. I don't think they feel any sense of duty and obligation to the working class like
we do. They believe in liberal abstractions and make an Ayn Rand fetish out of freedom whereas
we feel a sense of solidarity with them grounded in race, ethnicity and culture which tempers
class division. We recoil at the evisceration of the social fabric whereas conservatives
celebrate this blind march toward plutocracy.
Do the wealthy need to own a greater share of the stock market? Do they need to own a
greater share of our national wealth? Do we need to loosen up morals and the labor market? Do
we need more White children growing up in financially stressed, broken homes on Christmas? Is
the greatest problem facing the nation spending on anti-poverty programs? Paul Ryan and the
True Cons think so.
Yeah, I don't think so. I also think it is a good thing right now that we aren't associated
with the mainstream Right. In the long run, I bet this will pay off for us. I predict this
platform they have been standing on for decades now, which they call the conservative base, is
going to implode on them. Donald Trump was only the first sign that Atlas is about to
shrug.
(Republished from Occidental Dissent by permission of author or representative)
"Hillary Clinton, following a long tradition of mainstream Democrats, had a grab bag of proposals that, if enacted, would collectively
make a huge difference in the lives of working people. "
I think you are wrong here.
Hillary was/is a neoliberal, and as such is hostile to the interests of working people and middle class in general. Like most
neoliberals she is a Machiavellian elitist. Her election promises are pure demagogy, much like Trump or Obama election promised
(immortalized in the slogan "change we can believe in" which now became the synonym of election fraud)
Also she was/is hell-bent of preserving/expanding the US neoliberal empire and the wars for neoliberal dominance (in ME mainly
for the benefit of Israel and Saudis). War are pretty costly ventures and they are financed at the expense of working class and
lower middle class, never at the expense of "fat cats" from Wall Street.
All-in-all I think the role of POTUS is greatly "misunderestimated" in your line of thinking. As we can see differences between
Trump and Hillary in foreign policy are marginal. Why are you assuming that the differences in domestic economic policies would
be greater ?
In reality there are other powerful factors in play that diminish the importance of POTUS:
The US Presidential Elections are no longer an instrument for change. They are completely corrupted and are mostly of "bread
and circuses" type of events, where two gladiators preselected by financial elite fight for the coveted position, using all kind
of dirty tricks for US public entertainment.
While the appearance of democracy remains, in reality the current system represents that rule of "deep state". In the classic
form of "National security state". In the National Security State, the US people no longer have the any chances to change the
policies.
Political emasculation of US voters has led to frustration, depression and rage. It feeds radical right movement including
neo-fascists, which embrace more extreme remedies to the current problems because they correctly feel that the traditional parties
no longer represent the will of the people.
Insulated and partially degenerated US elite have grown more obtuse and is essentially a hostage for neocons. They chose
to ignore the seething anger that lies just below the surface of brainwashed Us electorate.
The "American Dream" is officially dead. People at a and below lower middle class level see little hope for themselves,
their children or the country. The chasm between top 1% (or let's say top 20%) and the rest continues to fuel populist anger.
While Trump proved to be "yet another turncoat" like Barak Obama (who just got his first silver coin in the form of the
$400K one hour speech) Trump's election signify a broad rejection of the country's neoliberal elite, including neoliberal MSM,
neocon foreign policy as well as neoliberal economic system (and first of all neoliberal globalization).
The country foreign policy remains hijacked by neocons (this time in the form of fiends of Paul Wolfowitz among the military
brass appointed by Trump to top positions in his administration) and that might spell major conflict or even WWIII.
8. We can now talk about the USA as "neocon occupied country" (NOC), because the neocons policies contradict the USA national
interests and put heavy burden of taxpayers, especially in lower income categories. Due to neglect in maintaining infrastructure,
in some areas the USA already looks like third word country. Still we finance Israel and several other countries to the tune of
$40 billion dollars in military aid alone (that that's in case of Israel just the tip of the iceberg; real figure is probably
double of that) https://fas.org/sgp/crs/mideast/RL33222.pdf
Since Bill Clinton POTUS is more or less a marionette of financial oligarchy (which Obama -- as a person without the past (or
with a very fuzzy past) - symbolizes all too well).
"... I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous in their support for the military industrial complex and its expanding wars. Note the 98-2 vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as they are in either party, in reality separate branches of an imperial War Party. ..."
"... Let me be the dink who reminds you: Peak Oil ..."
"... As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if) that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will most likely die, billions of dollars will be spent, and the US will create an entirely new generation of terrorists. This will not end well. ..."
"... EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone? ..."
"... "In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites ..."
"... That would be sane. But the elites have decided to export it at a cut rate, to undermine Russia as the supplier in Europe, in order to foment regime change by crashing the Russian economy. Why did you think we had such low fuel prices all of a sudden? ..."
"... No, the fuel extracted from American soil does not accrue to the benefit of the American people, but to the profits and plans of elites. ..."
"... Oil obtained by fracking is far more expensive to produce than oil obtained by simply drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high before high-volume production becomes cost-effective. ..."
"... Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is a disaster and we know Clinton was terrible. There is no point in arguing about whether she would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be engaged in stupid twitter fights with dictators. But she might be better at leading us into some stupid war in Syria. Trump will stumble into some war with no support. Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted to start. ..."
"... One of my biggest concerns about Trump's foreign policy–and a major difference from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he (and Tillerson) have been busy setting the State Department ablaze, and many, many, many seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom, some of their own accord, some not. Some Trump defenders claim this is part of "draining the swamp", and many critics claim this is a purge of anyone not loyal to Trump personally–and these two claims may be opposite sides of the same coin. ..."
Trump won't get dragged into war, although his conniving nature may try to make it look like
that if it serves some ulterior motive of his. Trump will race on his own volition (not get
dragged by others) to war because he's already been chomping at the bit for war as evident in
how he's been baiting Iran and N. Korea alike, just as Bush baited Saddam Huessein, then bait
and switched Osama Bin Laden for Saddam. So if not war with one (Iran), then with the other
(N. Korea), or with both.
Why? Because like all Republican politicians, Trump's a businessman and proud of it,
(Pride goeth before destruction and a haughty spirit before a fall.) And because war is good
for American business, a lesson that was learned from WWII from which was created the
military-industrial-complex and the Permanent War Economy under which we've lived ever
since.
That bit's key to understanding the whole unwavering GOP attack on social services and
desire to deregulate and privatize everything, not because of evil "socialism" as the
Republican constituency is hypnotized with propaganda into believing, but because there's no
money to be made in government expenditures otherwise. The whole GOP agenda has been and is
about public expense for private gain. All the blather about shrinking the government is
smokescreen. The real agenda is about directing all government spending towards private
contractors with none wasted on things like social services, medicare, or Social
Security.
Economic aspects of politics can't be ignored and separated from social aspects of
politics which is how conservatism in America has helped create the current political mess,
by turning a blind eye and dittohead to economic matters in order to push the chosen,
preferred social agenda.
As Coolidge said, "The business of America is business." So since the US is ruled by money
of markets, there can be no getting one's moral back up and all Jesus over social immorality,
only to ignore the immorality of the marketplace and thereby fail to push for a moral economy
along with a moral society. Such misidentification of the problem will only result in missing
the mark, in inappropriate rather than on the mark effective solutions to problems.
Trump is simply a braggart who likes to exaggerate by talking in superlatives, so it's
fitting that Trump ran on the GOP ticket, because he's but another child of the Father of
Lies, who superlatively lies about his wealth being billions instead of millions to swell his
pride in being a mammon worshipper, and going to war is and will be as it certainly has been
part and parcel of such hubris.
To be fair, the Saudi dictators have always been best friends with America's elites –
think Bandar Bush, the grounding of all air traffic in the United States after 9/11, except
the Saudi evacuation planes spiriting Saudi royals out of the country so they could not be
questioned. And there is the locus of the Likud Israeli party friendship with the Saudis, and
Trump is certainly nothing if not onside with his good friend, the Israeli PM.
I'd like to believe either the Repubs or Dems were the answer, except both are near unanimous
in their support for the military industrial complex and its expanding wars. Note the 98-2
vote to make Russia a permanent enemy. I believe the resistors were bipartisan, lonely as
they are in either party, in reality separate branches of an imperial War Party.
Make no mistake: if there is going to be an attack on Iran by Americans, it is not because
MbS wants it, it is because the Americans love war.
I am convinced that most (some 90%) Americans are open or closeted
Neo-cons/liberal-interventionists/war-hawks. Some are shamelessly and openly so (John
Bolton), but many are so without showing it or even being aware of it. The hawk in them is
restlessly waiting for an opening, an excuse, to come out and proclaim what they have ever
been
Bush 41 dragged us into a coalition war over Kuwait. Clinton dragged us into a coalition war
in the Balkans. Bush 43 dragged us into a war in Iraq. Obama dragged us into a secret war
when he destabilized Syria and Lybia, which unleashed ISIS. All for the right reasons, of
course (sarcasm).
You might be right, but I fail to see how that would be different than the last 30
years.
BTW, Politico has a story about how the Obama Administration shot down DEA drug trafficking
investigations of Hezbollah to support the Iran nuclear deal. I would like to read your
comments about it, particularly in light of the comments you made above about Trump.
Parents always tell kids to choose their friends carefully. With pals like Netanyahu and the
Saudi bogus "crown prince", Trump clearly didn't follow that advice.
That video looks like a Nazi's wet dream, I mean the undiluted fascistic element is
overwhelming, it's like getting a peek at an alternate dimension, not even a society, of pure
militaristic "hathos" festooned by a limitless cloud of lies.
The worst of humanity is engrafted in that video, by which, I mean the unalloyed lying
stupidity of war: imperialist expansionism, nationalist revanchism, and plutocratic
supremacism, haloed by the grey mist–the dehumanzing pixelated mist–of the most
dehumanizing endeavor man can undertake, for the most dehumanizing of modern causes:
fascistic capitalism, the kind that fueled WWII (In this latter case, under the guise of
religious supremacism or religious survivalism, but, in any case, only an obvious guise as
far as the grotesque House of Saud is characteristically concerned).
Echoing Noah above, this doesn't appear to be a production of the Saudi government, but
having a contingent of the Saudi population gung-ho for a Sunni/Shi'a Ragnarok is concerning
in itself. Both KSA and Iran will fight each other to the last Yemeni before any direct
conflict arises.
This is the scenario that should be keeping us all up at night:
Fran Macadam: To be fair, the Saudi dictators have always been best friends with America's
elites – think Bandar Bush, the grounding of all air traffic in the United States after
9/11, except the Saudi evacuation planes spiriting Saudi royals out of the country so they
could not be questioned.
It wasn't the royals -- it was the bin Laden family itself. The people who knew Osama
best. I never understood why we didn't insists that, with all airplanes grounded, they had to
have a US Air Force pilot -- who then would have flown them to Gitmo for a sit-down on their
newly famous relative. Instead the highest levels of government -- how high did you have to
go to get permission to fly? -- broke into their busy schedules to be briefed and let them
go.
The whole thing still stinks. We really need to have an investigation into the role of
Saudi Arabia in American foreign policy; especially the Iraq Wars.
In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela,
or anyplace crazy the better.
President Trump's new best friend, MBS, is going to get us dragged into a new war in the
region. Watch.
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
ROTFLMAO!!!
If the Saudis are foolish enough to try that they will get their ass so thoroughly kicked
that "who were the Al Saud?" will a trivial pursuit question on par with "Who were the
Romanov's?" 10 years from now, and if the US is foolish enough to let them do that, watch the
Global Economy collapse as the Strait of Hormuz gets closed for a few years.
Dr Talon,
The best military in the Middle East is Hezbollah (Trained & equipped by the Iranian,
blooded and forged by the Israelis) the only thing they don't have is an air force. Let them
have a half way decent air wing, and they would be on par or better than the USMC.
Duke Leto,
All that beautiful hardware has to be put to good use, after all if you don't use it you
can't replace it. Think of all that beautiful money to be made in hardware replacement
Noah,
Trump also declined to support Kurdish independence, which the Israeli right supports
and would have undermined Iran (which has a restive Kurdish minority) and Iran ally
Iraq.
Supporting the Kurds would have pissed off his best buddy Erdogan, in that Turkey has the
largest Kurdish minority population of all the Middle Eastern countries (about 20% of
population) and the largest military in the Middle East. Not a good idea, especially if you
don't want them to become buddy buddy with their eastern neighbor.
Oh, did I mention that Saudi Arabia has a substantial Shiite minority (10 to 15% of the
population) who isn't exactly thrilled to live under Wahhabi rule.
Watching the Saudis (a country that has to import plumbers from South Asia because it's
below the dignity of the locals to be plumbers) getting their asses handed to them, watching
the Dumpster's poll rating jump up to the 80% mark before cratering down to 15%, watching the
Trump recession that would follow would almost be worth it if I didn't have to suffer the
consequences of "Real American's(TM)" idiocy. It would be almost as much fun as watching
Brexit.
And President Ted Cruz or Clinton would be different how?
It's a pretty safe assumption that a President Clinton would work to uphold the treaty her
predecessor signed with Iran. Cruz, like the rest of the GOP hawks, would probably (like
Trump) be actively working to undermine it and provoke Iran. She'd want more money for social
and infrastrucure spending, less for military.
Pavlos has it right. The GOP (and a lot of Democrats) think war is good for business and
are happy to funnel obscene amounts of money to the military-industrial complex under the
guise of "national security."
It depends on what you imply when saying that it has lit up Arab social media, Rod. "Damn
those Saudis are strong!" type of reaction means that social media are lit up. "LOL, what
sorry comedian a-holes those Saudis are!" type of reaction also means that social media are
lit up.
I can't decide if this truly 'government' backed or some Saudia wackos let their freak loose.
At least the wackos are going after Iran and not the US. It is probably really nothing than
an expensive Youtube comment but it does indicate that Saudia Arabia population really
desires War somewhere and somehow.
Although this is probably forgotten in 1 month, the Middle East appears to be following
similar paths as Europe in the 1900 – 1914. We have lots of secret Allies and treaties
with enormous tensions that is hungry for a battle.
The foreign policy of a President Hillary Clinton would probably be too hawkish for my
tastes–and certainly she wouldn't enjoy strong relations with Russia (given evidence,
in this hypothetical, that Putin was actively interfering in the election to support her
opponent)–but it wouldn't be the amateur hour that we've gotten so far with Trump.
Clinton would still have a functioning diplomatic corps, instead of sacking half the State
Department. She wouldn't be trading insults with foreign heads of state on Twitter. She'd
likely be not trying to undermine the Iran deal. And she'd not be performing fellatio on the
likes of Netanyaho, Ergodan, and MbS, as Trump has been eagerly doing.
Really. At what point does the "as bad as Trump's foreign policy has been, Clinton wudda
been worse" refrain stop? Trump is already the worst foreign policy president since
LBJ–he only needs a Vietnam War to his name to blow past him. And he has none of
Johnson's domestic achievements.
The last time an Arab dictator tried to attack the Iranians he could only get a draw that
bankrupted him and lead, by a series of second-order consequences, to his downfall.
The Iranians had just, when they were attacked by Iraq, had thier revolution and had
liquidated thier officer corps. Think about that. Iranians as polity may, for the most part,
dislike the rule of the clerics, but they are intensely patriotic and will fight to the last
man/woman to defend the Persian homeland. Underestimate them at your peril.
When Iran's proxies in Yemen -- the Houthis -- are launching missiles at airports and the
Royal Palace, I don't think this type video is very surprising and as propaganda goes really
a big deal. It is pretty low level saber rattling if it is a Saudi Government produc, or what
you would see a million times over among Americans if it is the work of just a bunch of young
Saudi yahoos. Oh, and MSAGA -- Make Saudi Arabia Great Again!
Israel has never fought side-by-side with the US in any of the wars it has sent the us to
fight [and die for and pay for] at the instigation of the settlers/occupiers.
Since the U.S. has never fought any wars for Israel, that makes the score 0:0 then.
But her E-mails Good Thing the witch from Chappaqua isn't in the White House
What ignorant drivel. Clinton is plenty hawkish (she cheered on Trump's April missile
strike on Assad, and urged him to go much further). Moreover, as I wrote above, this video
seems to be youthful fan fiction, not carrying any Saudi government imprimatur (let alone
endorsement from Trump). Rod is speculating that the US will eventually join Saudi Arabia in
a war against Iran, but Rod is no seer, whatever his other attributes.
Supporting the Kurds would have pissed off his best buddy Erdogan
Poppycock. Trump is hardly Erdogan's poodle. Trump gave heavy armaments to the Syrian
Kurds (O had limited their support to small arms) and wants to move our embassy to Jerusalem,
both decisions angering Erdogan. Erdogan would also liked to have seen Assad deposed.
I'm not going to offer an opinion on the efficacy of Saudi Arabia's army, and neither should
you. Remember how everyone warned us about Iraq's Republican Guard?) Few of us know what
we're talking about.
On the larger point: are you all taking drugs? Some video "lights up" Arab social media
and therefore Trump is taking us to war against Iran?? What?!
(especially the Straits of Hormuz aspect. The Iranians just have to mine it so that one or
more cargo ships get holed and got to the bottom at strategic bends and nobody ain't shipping
no Saudi Oil nowhere. Have fun with $300/bbl oil economies, guys China will make out like a bandit, considering
it's now the world leader in solar power.
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most folks
think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart enough to
avoid unnecessary war. However, war may just become "necessary" when the heat of his Russia
investigation becomes unbearable, and Trump needs the ultimate distraction. When (not if)
that happens, either North Korea or Iran will be in trouble -- perhaps both. Millions will
most likely die, billions of dollars will be spent, and the US will create an entirely new
generation of terrorists. This will not end well.
EngineerScotty wrote: "The foreign policy of a President Hillary Clinton wouldn't be the amateur hour that
we've gotten so far with Trump" No, it would be the ruthlessly effective professionalism of the reset with Russia and the
ouster of Qaddafi. /sarc She wanted and wants Assad deposed. How well would that have gone?
She wouldn't be trading insults with foreign heads of state on Twitter
Clinton has insulted Putin any number of times on social media and in interviews. On the
Colbert program just last September, she claimed that he worked against her election because
of sexism, and claimed that he "manspread" during a meeting with her.
And she'd not be performing fellatio on the likes of Netanyaho, Ergodan, and
MbS
Netanyahu and Erdogan do not get along, so it's pretty hard to please both of them
simultaneously. Like muad'dib, Scotty has it in his head that Trump is a poodle of Erdogan,
but the latter would disagree. Heavy weapons to Syrian Kurds, Jerusalem -- Erdogan is not
fully pleased with Trump.
If Scotty thinks the Clintons are hostile to Saudi Arabia, he hasn't been paying attention
(does he ever?).
Trump is already the worst foreign policy president since LBJ -- he only needs a
Vietnam War to his name to blow past him
"In the meantime, Frack Baby Frack! The less oil we have to import from there, Venezuela, or
anyplace crazy the better." That would be sane. But the elites have decided to export it at a cut rate, to undermine
Russia as the supplier in Europe, in order to foment regime change by crashing the Russian
economy. Why did you think we had such low fuel prices all of a sudden?
No, the fuel extracted from American soil does not accrue to the benefit of the American
people, but to the profits and plans of elites.
As a clever newspaper writer said about Jesse Ventura: Jesse is a lot smarter than most
folks think he is, but not nearly as smart as he thinks he is. Like Jesse, Trump is smart
enough to avoid unnecessary war. However, war may just become "necessary" when the heat of
his Russia investigation becomes unbearable, and Trump needs the ultimate distraction. When
(not if) that happens, either North Korea or Iran will be in trouble -- perhaps both.
Millions will most likely die, billions of dollars will be spent, and the US will create an
entirely new generation of terrorists. This will not end well.
Except that "heat" of his investigation is almost extinguished already.
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right. Trump is
a disaster and we know Clinton was terrible. There is no point in arguing about whether she
would be worse. I happen to think In some ways she wouldn't be as bad. She wouldn't be
engaged in stupid twitter fights with dictators. But she might be better at leading us into
some stupid war in Syria. Trump will stumble into some war with no support. Clinton would
have had lots of support for whatever mindlessly stupid bloodbath she wanted to start.
That would be sane. But the elites have decided to export it at a cut rate, to undermine
Russia as the supplier in Europe, in order to foment regime change by crashing the Russian
economy. Why did you think we had such low fuel prices all of a sudden?
No, the fuel extracted from American soil does not accrue to the benefit of the
American people, but to the profits and plans of elites.
Unless the "elites" you are talking about are the Saudis–who are well-known for
flooding the market with cheap crude periodically to undercut the competition (they can still
produce oil for far less than anywhere else), and have many reasons to be suspicious of
Russia–this makes no sense.
Oil obtained by fracking is far more expensive to produce than oil obtained by simply
drilling a well in the Arabian Desert and quickly finding a gusher. The US can meet its
domestic needs, but isn't that great of a net exporter -- prices have to be sufficiently high
before high-volume production becomes cost-effective.
And if you don't think that either the Saudis or the American oil industry have the ear of
Trump, you're smokin' something.
The "elites" that oppose Trump have rather little political power at the present moment.
Don't confuse cultural elites (who don't like the Donald one bit) with the gazillionaires who
actual control the petroleum industry, and are more than happy to do business with whoever is
in charge in Washington.
Trump–ignorant and fatuous and unworldly as he may be–is an "elite" by virtue
of the office he holds. Do not forget that.
Noah and Engineer Scotty -- There is a reasonable compromise. Both of you are right.
Trump is a disaster and we know Clinton was terrible. There is no point in arguing about
whether she would be worse. I happen to think In some ways she wouldn't be as bad. She
wouldn't be engaged in stupid twitter fights with dictators. But she might be better at
leading us into some stupid war in Syria. Trump will stumble into some war with no support.
Clinton would have had lots of support for whatever mindlessly stupid bloodbath she wanted
to start.
Fair enough–though I think that Hillary's foreign policy would likely be similar to
that of her husband. Far from ideal, but not disastrous. Of course, Bill got to hold office
in a time when the Soviet Union (and its constituent parts) was in shambles, China was still
a third-world country, North Korea was no threat to anyone but South Korea, Islamic extremism
was far less of a problem, and even the Israelis and Palestinians were talking, and on
roughly equal terms. Now is a much more dangerous time.
One of my biggest concerns about Trump's foreign policy–and a major difference
from how Hillary would have governed–is his utter disdain for diplomacy. As noted, he
(and Tillerson) have been busy setting the State Department ablaze, and many, many, many
seasoned diplomats (career civil servants, not political appointees) have left Foggy Bottom,
some of their own accord, some not. Some Trump defenders claim this is part of "draining the
swamp", and many critics claim this is a purge of anyone not loyal to Trump
personally–and these two claims may be opposite sides of the same coin.
But there is something else. Trump seems to think that international diplomacy ought to be
conducted like real-estate deals: Two high-rollers (CEOs or heads of state) meet on the golf
course, hash out a deal, and the lawyers work out the details; and that having a large staff
of people trained in understanding a potentially-hostile foreign country is simply
unnecessary. In short, he acts as though he believes the entire system of international
diplomatic protocol, is a racket. Perhaps he has a point here; and perhaps he does
not–as the old saying goes, don't knock down a wall unless you know what loads it is
bearing.
But you'll notice that neither Russia, nor China, nor Israel, nor Iran, or Germany, nor
any other player on the world stage, have been engaging in similar purges of their diplomatic
services.
"... With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people. ..."
"... They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats. ..."
"... The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot. ..."
"... Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43). ..."
"... This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer. ..."
"... The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth ! ..."
"... Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades. ..."
"... "Wow – is there ever negative!" ..."
"... You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'. ..."
"... My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece ..."
"... "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor." ..."
"... Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\ ..."
"... It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's! ..."
"... E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop. ..."
"... The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.) ..."
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated
sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array
of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing
globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into
question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the
public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities
we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible
opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008,
despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is
no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis
and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting
freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire.
A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership
is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species
of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise
to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA.
They chatter
about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace
problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics
-- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth
on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of
an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish
a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting
down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called
cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of
not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry
anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads
and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming
human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual
despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the
kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about
ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting!
In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny
is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor
pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that
unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right
of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the
graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy,
where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of
one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down
to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this
scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally
"people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed"
and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is
to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the
social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual
boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and
administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear
puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair
over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring
about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today,
there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress
on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the
Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of
ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why
a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely
Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent
rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with
a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively
nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors
and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified
oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized
ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the
university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain
to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically,
this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births,
drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their
homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood
how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing
him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of
stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life
is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of
the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud
that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine
and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering
public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism
-- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just
a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some
years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the
post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings
and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations
don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves
in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of
worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore,
including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them
around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking,
Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at
Kunstler.com .
I think I need to go listen to an old-fashioned Christmas song now.
The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence
in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan
of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about
our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's
biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that
comes after, won't be the miniature sunrise of a nuclear conflagration.
An excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this
strange death spiral?
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We
are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies
and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.
"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another."
Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants
from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American,
influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made
by the working and middle classes in the previous 3 decades.
Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats
to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis
actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage
underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the
standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion
of real estate speculation with borrowed money. Speculation with borrowed money never ends well.
I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard
of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the
same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness
will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to
say that there aren't other issues, but until we return to God, there's not much hope for improvement.
Hmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia,
or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped
equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights.
Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry,
anyone?
You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated
now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial
divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt
"shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation,
not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued
while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and
contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take
a second look at familiar ideas. I won't be back.
I disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.
The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream
of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative
-- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are
two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that
he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either
of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is
why, logically, he published it here. National Review would never have accepted this piece. QED.
This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers
from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware
of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols
engenders this tension, this angst.
Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has
been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the
problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself
as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy
or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call
to arms.
"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor."
And to whom do we hand
the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately,
under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia
and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the
USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity,
which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further
greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake
wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial,
and even legal).
"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case
for progress on the steps of the Lincoln Memorial in 1963."
Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would
give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around
older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's,
much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much
better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute
ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard
telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant
-- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore
pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan
isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero
on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé
runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners
-- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to
get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one
moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality,
what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100
years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time
to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the
industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into
a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance
but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market.
In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you
run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because
it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place
at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government,
just a different piece of legislation.
Kunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that
demonstrate it didn't have to be this way.
E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany
has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution
of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to
maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was.
Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites.
(E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care
system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme
of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects
the actual wealth of the middle class is left over.
Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people
AND the government. The truth is that many parties were to blame.
One of the things I love about this rag is that almost all of the comments are included.
You may be sure that similar commenting privilege doesn't exist most anywhere else.
Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.
I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more
towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.
If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.
Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad
doesn't represent usual fare at TAC. So do come back.
Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous
serving of Weltschmerz is just what the season calls for.
America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton
hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.
Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances.
Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising
from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even
capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling
the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?
I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced
everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both
liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount
of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond
anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three
years to go.
Mr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying
so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.
The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives,
from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national
dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.
Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and
obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar
and roll of rhetoric that was thrilling to be immersed in. Good work!
aah, same old Kunstler, slightly retailored for the Trump years.
for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about
it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices
at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give
a tired horse a rest.
Kunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic,
at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one
of which could be the geyser that brings on catastrophic failure.
However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common
culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies
the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of
the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass
murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality
much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with
fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a
'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better
take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made
in China).
Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act
Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians
and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist).
To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is
the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied
to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the
game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards
until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and
shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches
around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied
about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption
binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into
the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers
who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who
handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue,
but you get the picture.
"The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from
their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster
fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."
Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
"... With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire. A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people. ..."
"... They chatter about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics -- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats. ..."
"... The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual despotism worthy of Stalin, Mao Zedong, and Pol Pot. ..."
"... Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43). ..."
"... This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear puzzling to the casual observer. ..."
"... The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth ! ..."
"... Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American, influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made by the working and middle classes in the previous 3 decades. ..."
"... "Wow – is there ever negative!" ..."
"... You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt "shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'. ..."
"... My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is why, logically, he published it here. National Review would never have accepted this piece ..."
"... "Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class -- which included a great many white Americans who used to be able to support a family with simple labor." ..."
"... Young black people are told by their elders how lucky they are to grow up today because things are much better than when grandpa was our age and we all know this history.\ ..."
"... It's clear that this part of the article was written from absolute ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's! ..."
"... E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to maraud around the planet wasting gobs of taxpayer money playing Global Cop. ..."
"... The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was. Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites. (E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.) ..."
On America's 'long emergency' of recession, globalization, and identity politics.
Can a people recover from an excursion into unreality? The USA's sojourn into an alternative universe of the mind accelerated
sharply after Wall Street nearly detonated the global financial system in 2008. That debacle was only one manifestation of an array
of accumulating threats to the postmodern order, which include the burdens of empire, onerous debt, population overshoot, fracturing
globalism, worries about energy, disruptive technologies, ecological havoc, and the specter of climate change.
A sense of gathering crisis, which I call the long emergency , persists. It is systemic and existential. It calls into
question our ability to carry on "normal" life much farther into this century, and all the anxiety that attends it is hard for the
public to process. It manifested itself first in finance because that was the most abstract and fragile of all the major activities
we depend on for daily life, and therefore the one most easily tampered with and shoved into criticality by a cadre of irresponsible
opportunists on Wall Street. Indeed, a lot of households were permanently wrecked after the so-called Great Financial Crisis of 2008,
despite official trumpet blasts heralding "recovery" and the dishonestly engineered pump-up of capital markets since then.
With the election of 2016, symptoms of the long emergency seeped into the political system. Disinformation rules. There is
no coherent consensus about what is happening and no coherent proposals to do anything about it. The two parties are mired in paralysis
and dysfunction and the public's trust in them is at epic lows. Donald Trump is viewed as a sort of pirate president, a freebooting
freak elected by accident, "a disrupter" of the status quo at best and at worst a dangerous incompetent playing with nuclear fire.
A state of war exists between the White House, the permanent D.C. bureaucracy, and the traditional news media. Authentic leadership
is otherwise AWOL. Institutions falter. The FBI and the CIA behave like enemies of the people.
Bad ideas flourish in this nutrient medium of unresolved crisis. Lately, they actually dominate the scene on every side. A species
of wishful thinking that resembles a primitive cargo cult grips the technocratic class, awaiting magical rescue remedies that promise
to extend the regime of Happy Motoring, consumerism, and suburbia that makes up the armature of "normal" life in the USA.
They chatter
about electric driverless car fleets, home delivery drone services, and as-yet-undeveloped modes of energy production to replace
problematic fossil fuels, while ignoring the self-evident resource and capital constraints now upon us and even the laws of physics
-- especially entropy , the second law of thermodynamics. Their main mental block is their belief in infinite industrial growth
on a finite planet, an idea so powerfully foolish that it obviates their standing as technocrats.
The non-technocratic cohort of the thinking class squanders its waking hours on a quixotic campaign to destroy the remnant of
an American common culture and, by extension, a reviled Western civilization they blame for the failure in our time to establish
a utopia on earth. By the logic of the day, "inclusion" and "diversity" are achieved by forbidding the transmission of ideas, shutting
down debate, and creating new racially segregated college dorms. Sexuality is declared to not be biologically determined, yet so-called
cis-gendered persons (whose gender identity corresponds with their sex as detected at birth) are vilified by dint of
not being "other-gendered" -- thereby thwarting the pursuit of happiness of persons self-identified as other-gendered. Casuistry
anyone?
The universities beget a class of what Nassim Taleb prankishly called "intellectuals-yet-idiots," hierophants trafficking in fads
and falsehoods, conveyed in esoteric jargon larded with psychobabble in support of a therapeutic crypto-gnostic crusade bent on transforming
human nature to fit the wished-for utopian template of a world where anything goes. In fact, they have only produced a new intellectual
despotism worthy of Stalin, Mao Zedong, and Pol Pot.
In case you haven't been paying attention to the hijinks on campus -- the attacks on reason, fairness, and common decency, the
kangaroo courts, diversity tribunals, assaults on public speech and speakers themselves -- here is the key take-away: it's not about
ideas or ideologies anymore; it's purely about the pleasures of coercion, of pushing other people around. Coercion is fun and exciting!
In fact, it's intoxicating, and rewarded with brownie points and career advancement. It's rather perverse that this passion for tyranny
is suddenly so popular on the liberal left.
Until fairly recently, the Democratic Party did not roll that way. It was right-wing Republicans who tried to ban books, censor
pop music, and stifle free expression. If anything, Democrats strenuously defended the First Amendment, including the principle that
unpopular and discomforting ideas had to be tolerated in order to protect all speech. Back in in 1977 the ACLU defended the right
of neo-Nazis to march for their cause (National Socialist Party of America v. Village of Skokie, 432 U.S. 43).
The new and false idea that something labeled "hate speech" -- labeled by whom? -- is equivalent to violence floated out of the
graduate schools on a toxic cloud of intellectual hysteria concocted in the laboratory of so-called "post-structuralist" philosophy,
where sundry body parts of Michel Foucault, Jacques Derrida, Judith Butler, and Gilles Deleuze were sewn onto a brain comprised of
one-third each Thomas Hobbes, Saul Alinsky, and Tupac Shakur to create a perfect Frankenstein monster of thought. It all boiled down
to the proposition that the will to power negated all other human drives and values, in particular the search for truth. Under this
scheme, all human relations were reduced to a dramatis personae of the oppressed and their oppressors, the former generally
"people of color" and women, all subjugated by whites, mostly males. Tactical moves in politics among these self-described "oppressed"
and "marginalized" are based on the credo that the ends justify the means (the Alinsky model).
This is the recipe for what we call identity politics, the main thrust of which these days, the quest for "social justice," is
to present a suit against white male privilege and, shall we say, the horse it rode in on: western civ. A peculiar feature of the
social justice agenda is the wish to erect strict boundaries around racial identities while erasing behavioral boundaries, sexual
boundaries, and ethical boundaries. Since so much of this thought-monster is actually promulgated by white college professors and
administrators, and white political activists, against people like themselves, the motives in this concerted campaign might appear
puzzling to the casual observer.
I would account for it as the psychological displacement among this political cohort of their shame, disappointment, and despair
over the outcome of the civil rights campaign that started in the 1960s and formed the core of progressive ideology. It did not bring
about the hoped-for utopia. The racial divide in America is starker now than ever, even after two terms of a black president. Today,
there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case for progress
on the steps of the Lincoln Memorial in 1963. The recent flash points of racial conflict -- Ferguson, the Dallas police ambush, the
Charleston church massacre, et cetera -- don't have to be rehearsed in detail here to make the point that there is a great deal of
ill feeling throughout the land, and quite a bit of acting out on both sides.
The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another. And that is exactly why
a black separatism movement arose as an alternative at the time, led initially by such charismatic figures as Malcolm X and Stokely
Carmichael. Some of that was arguably a product of the same youthful energy that drove the rest of the Sixties counterculture: adolescent
rebellion. But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with
a common culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively
nullifies the concept of a national common culture.
What follows from these dynamics is the deflection of all ideas that don't feed a narrative of power relations between oppressors
and victims, with the self-identified victims ever more eager to exercise their power to coerce, punish, and humiliate their self-identified
oppressors, the "privileged," who condescend to be abused to a shockingly masochistic degree. Nobody stands up to this organized
ceremonial nonsense. The punishments are too severe, including the loss of livelihood, status, and reputation, especially in the
university. Once branded a "racist," you're done. And venturing to join the oft-called-for "honest conversation about race" is certain
to invite that fate.
Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor. Hung out to dry economically,
this class of whites fell into many of the same behaviors as the poor blacks before them: absent fathers, out-of-wedlock births,
drug abuse. Then the Great Financial Crisis of 2008 wiped up the floor with the middle-middle class above them, foreclosing on their
homes and futures, and in their desperation many of these people became Trump voters -- though I doubt that Trump himself truly understood
how this all worked exactly. However, he did see that the white middle class had come to identify as yet another victim group, allowing
him to pose as their champion.
The evolving matrix of rackets that prompted the 2008 debacle has only grown more elaborate and craven as the old economy of
stuff dies and is replaced by a financialized economy of swindles and frauds . Almost nothing in America's financial life
is on the level anymore, from the mendacious "guidance" statements of the Federal Reserve, to the official economic statistics of
the federal agencies, to the manipulation of all markets, to the shenanigans on the fiscal side, to the pervasive accounting fraud
that underlies it all. Ironically, the systematic chiseling of the foundering middle class is most visible in the rackets that medicine
and education have become -- two activities that were formerly dedicated to doing no harm and seeking the truth !
Life in this milieu of immersive dishonesty drives citizens beyond cynicism to an even more desperate state of mind. The suffering
public ends up having no idea what is really going on, what is actually happening. The toolkit of the Enlightenment -- reason, empiricism
-- doesn't work very well in this socioeconomic hall of mirrors, so all that baggage is discarded for the idea that reality is just
a social construct, just whatever story you feel like telling about it. On the right, Karl Rove expressed this point of view some
years ago when he bragged, of the Bush II White House, that "we make our own reality." The left says nearly the same thing in the
post-structuralist malarkey of academia: "you make your own reality." In the end, both sides are left with a lot of bad feelings
and the belief that only raw power has meaning.
Erasing psychological boundaries is a dangerous thing. When the rackets finally come to grief -- as they must because their operations
don't add up -- and the reckoning with true price discovery commences at the macro scale, the American people will find themselves
in even more distress than they've endured so far. This will be the moment when either nobody has any money, or there is plenty of
worthless money for everyone. Either way, the functional bankruptcy of the nation will be complete, and nothing will work anymore,
including getting enough to eat. That is exactly the moment when Americans on all sides will beg someone to step up and push them
around to get their world working again. And even that may not avail.
James Howard Kunstler's many books include The Geography of Nowhere, The Long Emergency, Too Much Magic: Wishful Thinking,
Technology, and the Fate of the Nation , and the World Made by Hand novel series. He blogs on Mondays and Fridays at
Kunstler.com .
I think I need to go listen to an old-fashioned Christmas song now.
The ability to be financially, or at least resource, sustaining is the goal of many I know since we share a lack of confidence
in any of our institutions. We can only hope that God might look down with compassion on us, but He's not in the practical plan
of how to feed and sustain ourselves when things play out to their inevitable end. Having come from a better time, we joke about
our dystopian preparations, self-conscious about our "overreaction," but preparing all the same.
Look at it this way: Germany had to be leveled and its citizens reduced to abject penury, before Volkswagen could become the world's
biggest car company, and autobahns built throughout the world. It will be darkest before the dawn, and hopefully, that light that
comes after, won't be the miniature sunrise of a nuclear conflagration.
An excellent summary and bleak reminder of what our so-called civilization has become. How do we extricate ourselves from this
strange death spiral?
I have long suspected that we humans are creatures of our own personal/group/tribal/national/global fables and mythologies. We
are compelled by our genes, marrow, and blood to tell ourselves stories of our purpose and who we are. It is time for new mythologies
and stories of "who we are". This bizarre hyper-techno all-for-profit world needs a new story.
"The black underclass is larger, more dysfunctional, and more alienated than it was in the 1960s. My theory, for what it's worth,
is that the civil rights legislation of 1964 and '65, which removed legal barriers to full participation in national life, induced
considerable anxiety among black citizens over the new disposition of things, for one reason or another."
Um, forgotten by Kunstler is the fact that 1965 was also the year when the USA reopened its doors to low-skilled immigrants
from the Third World – who very quickly became competitors with black Americans. And then the Boom ended, and corporate American,
influenced by thinking such as that displayed in Lewis Powell's (in)famous 1971 memorandum, decided to claw back the gains made
by the working and middle classes in the previous 3 decades.
Hey Jim, I know you love to blame Wall Street and the Republicans for the GFC. I remember back in '08 you were urging Democrats
to blame it all on Republicans to help Obama win. But I have news for you. It wasn't Wall Street that caused the GFC. The crisis
actually had its roots in the Clinton Administration's use of the Community Reinvestment Act to pressure banks to relax mortgage
underwriting standards. This was done at the behest of left wing activists who claimed (without evidence, of course) that the
standards discriminated against minorities. The result was an effective repeal of all underwriting standards and an explosion
of real estate speculation with borrowed money. Speculation with borrowed money never ends well.
I have to laugh, too, when you say that it's perverse that the passion for tyranny is popular on the left. Have you ever heard
of the French Revolution? How about the USSR? Communist China? North Korea? Et cetera.
Leftism is leftism. Call it Marxism, Communism, socialism, liberalism, progressivism, or what have you. The ideology is the
same. Only the tactics and methods change. Destroy the evil institutions of marriage, family, and religion, and Man's innate goodness
will shine forth, and the glorious Godless utopia will naturally result.
Of course, the father of lies is ultimately behind it all. "He was a liar and a murderer from the beginning."
When man turns his back on God, nothing good happens. That's the most fundamental problem in Western society today. Not to
say that there aren't other issues, but until we return to God, there's not much hope for improvement.
Hmm. I just wandered over here by accident. Being a construction contractor, I don't know enough about globalization, academia,
or finance to evaluate your assertions about those realms. But being in a biracial family, and having lived, worked, and worshiped
equally in white and black communities, I can evaluate your statements about social justice, race, and civil rights.
Long story short, you pick out fringe liberal ideas, misrepresent them as mainstream among liberals, and shoot them down. Casuistry,
anyone?
You also misrepresent reality to your readers. No, the black underclass is not larger, more dysfunctional, and more alienated
now than in the 1960's, when cities across the country burned and machine guns were stationed on the Capitol steps. The "racial
divide" is not "starker now than ever"; that's just preposterous to anyone who was alive then. And nobody I've ever known felt
"shame" over the "outcome of the civil rights campaign". I know nobody who seeks to "punish and humiliate" the 'privileged'.
I get that this column is a quick toss-off before the holiday, and that your strength is supposed to be in your presentation,
not your ideas. For me, it's a helpful way to rehearse debunking common tropes that I'll encounter elsewhere.
But, really, your readers deserve better, and so do the people you misrepresent. We need bad liberal ideas to be critiqued
while they're still on the fringe. But by calling fringe ideas mainstream, you discredit yourself, misinform your readers, and
contribute to stereotypes both of liberals and of conservatives. I'm looking for serious conservative critiques that help me take
a second look at familiar ideas. I won't be back.
I disagree, NoahK, that the whole is incohesive, and I also disagree that these are right-wing talking points.
The theme of this piece is the long crisis in the US, its nature and causes. At no point does this essay, despite it stream
of consciousness style, veer away from that theme. Hence it is cohesive.
As for the right wing charge, though it is true, to be sure, that Kunstler's position is in many respects classically conservative
-- he believes for example that there should be a national consensus on certain fundamentals, such as whether or not there are
two sexes (for the most part), or, instead, an infinite variety of sexes chosen day by day at whim -- you must have noticed that
he condemned both the voluntarism of Karl Rove AND the voluntarism of the post-structuralist crowd.
My impression is that what Kunstler is doing here is diagnosing the long crisis of a decadent liberal post-modernity, and his stance is not that of either
of the warring sides within our divorced-from-reality political establishment, neither that of the 'right' or 'left.' Which is
why, logically, he published it here. National Review would never have accepted this piece. QED.
This malaise is rooted in human consciousness that when reflecting on itself celebrating its capacity for apperception suffers
from the tension that such an inquiry, such an inward glance produces. In a word, the capacity for the human being to be aware
of his or herself as an intelligent being capable of reflecting on aspects of reality through the artful manipulation of symbols
engenders this tension, this angst.
Some will attempt to extinguish this inner tension through intoxication while others through the thrill of war, and it has
been played out since the dawn of man and well documented when the written word emerged.
The malaise which Mr. Kunstler addresses as the problem of our times is rooted in our existence from time immemorial. But the
problem is not only existential but ontological. It is rooted in our being as self-aware creatures. Thus no solution avails itself
as humanity in and of itself is the problem. Each side (both right and left) seeks its own anodyne whether through profligacy
or intolerance, and each side mans the barricades to clash experiencing the adrenaline rush that arises from the perpetual call
to arms.
"Globalization has acted, meanwhile, as a great leveler. It destroyed what was left of the working class -- the lower-middle class
-- which included a great many white Americans who used to be able to support a family with simple labor."
And to whom do we hand
the tab for this? Globalization is a word. It is a concept, a talking point. Globalization is oligarchy by another name. Unfortunately,
under-educated, deplorable, Americans; regardless of party affiliation/ideology have embraced. And the most ironic part?
Russia
and China (the eventual surviving oligarchies) will eventually have to duke it out to decide which superpower gets to make the
USA it's b*tch (excuse prison reference, but that's where we're headed folks).
And one more irony. Only in American, could Christianity,
which was grew from concepts like compassion, generosity, humility, and benevolence; be re-branded and 'weaponized' to further
greed, bigotry, misogyny, intolerance, and violence/war. Americans fiddled (over same sex marriage, abortion, who has to bake
wedding cakes, and who gets to use which public restroom), while the oligarchs burned the last resources (natural, financial,
and even legal).
"Today, there is more grievance and resentment, and less hope for a better future, than when Martin Luther King made the case
for progress on the steps of the Lincoln Memorial in 1963."
Spoken like a white guy who has zero contact with black people. I mean, even a little bit of research and familiarity would
give lie to the idea that blacks are more pessimistic about life today than in the 1960's.
Black millenials are the most optimistic group of Americans about the future. Anyone who has spent any significant time around
older black people will notice that you don't hear the rose colored memories of the past. Black people don't miss the 1980's,
much less the 1950's. Young black people are told by their elders how lucky they are to grow up today because things are much
better than when grandpa was our age and we all know this history.\
It's clear that this part of the article was written from absolute
ignorance of the actual black experience with no interest in even looking up some facts. Hell, Obama even gave a speech at Howard
telling graduates how lucky they were to be young and black Today compared to even when he was their age in the 80's!
Here is the direct quote;
"In my inaugural address, I remarked that just 60 years earlier, my father might not have been served in a D.C. restaurant
-- at least not certain of them. There were no black CEOs of Fortune 500 companies. Very few black judges. Shoot, as Larry Wilmore
pointed out last week, a lot of folks didn't even think blacks had the tools to be a quarterback. Today, former Bull Michael Jordan
isn't just the greatest basketball player of all time -- he owns the team. (Laughter.) When I was graduating, the main black hero
on TV was Mr. T. (Laughter.) Rap and hip hop were counterculture, underground. Now, Shonda Rhimes owns Thursday night, and Beyoncé
runs the world. (Laughter.) We're no longer only entertainers, we're producers, studio executives. No longer small business owners
-- we're CEOs, we're mayors, representatives, Presidents of the United States. (Applause.)
I am not saying gaps do not persist. Obviously, they do. Racism persists. Inequality persists. Don't worry -- I'm going to
get to that. But I wanted to start, Class of 2016, by opening your eyes to the moment that you are in. If you had to choose one
moment in history in which you could be born, and you didn't know ahead of time who you were going to be -- what nationality,
what gender, what race, whether you'd be rich or poor, gay or straight, what faith you'd be born into -- you wouldn't choose 100
years ago. You wouldn't choose the fifties, or the sixties, or the seventies. You'd choose right now. If you had to choose a time
to be, in the words of Lorraine Hansberry, "young, gifted, and black" in America, you would choose right now. (Applause.)"
I love reading about how the Community Reinvestment Act was the catalyst of all that is wrong in the world. As someone in the
industry the issue was actually twofold. The Commodities Futures Modernization Act turned the mortgage securities market into
a casino with the underlying actual debt instruments multiplied through the use of additional debt instruments tied to the performance
but with no actual underlying value. These securities were then sold around the world essentially infecting the entire market.
In order that feed the beast, these NON GOVERNMENT loans had their underwriting standards lowered to rediculous levels. If you
run out of qualified customers, just lower the qualifications. Government loans such as FHA, VA, and USDA were avoided because
it was easier to qualify people with the new stuff. And get paid. The short version is all of the incentives that were in place
at the time, starting with the Futures Act, directly led to the actions that culminated in the Crash. So yes, it was the government,
just a different piece of legislation.
Kunstler itemizing the social and economic pathologies in the United States is not enough. Because there are other models that
demonstrate it didn't have to be this way.
E.g. Germany. Germany is anything but perfect and its recent government has screwed up with its immigration policies. But Germany
has a high standard of living, an educated work force (including unions and skilled crafts-people), a more rational distribution
of wealth and high quality universal health care that costs 47% less per capita than in the U.S. and with no intrinsic need to
maraud around the planet wasting gobs of taxpayer money playing Global Cop.
The larger subtext is that the U.S. house of cards was planned out and constructed as deliberately as the German model was.
Only the objective was not to maximize the health and happiness of the citizenry, but to line the pockets of the parasitic Elites.
(E.g., note that Mitch McConnell has been a government employee for 50 years but somehow acquired a net worth of over $10 Million.)
P.S. About the notionally high U.S. GDP. Factor out the TRILLIONS inexplicably hoovered up by the pathological health care
system, the metastasized and sanctified National Security State (with its Global Cop shenanigans) and the cronied-up Ponzi scheme
of electron-churn financialization ginned up by Goldman Sachs and the rest of the Banksters, and then see how much GDP that reflects
the actual wealth of the middle class is left over.
Right-Wing Dittoheads and Fox Watchers love to blame the Community Reinvestment Act. It allows them to blame both poor black people
AND the government. The truth is that many parties were to blame.
One of the things I love about this rag is that almost all of the comments are included.
You may be sure that similar commenting privilege doesn't exist most anywhere else.
Any disfavor regarding the supposed bleakness with the weak hearted souls aside, Mr K's broadside seems pretty spot on to me.
I think the author overlooks the fact that government over the past 30 to 40 years has been tilting the playing field ever more
towards the uppermost classes and against the middle class. The evisceration of the middle class is plain to see.
If the the common man had more money and security, lots of our current intrasocial conflicts would be far less intense.
Andrew Imlay: You provide a thoughtful corrective to one of Kunstler's more hyperbolic claims. And you should know that his jeremiad
doesn't represent usual fare at TAC. So do come back.
Whether or not every one of Kunstler's assertions can withstand a rigorous fact-check, he is a formidable rhetorician. A generous
serving of Weltschmerz is just what the season calls for.
America is stupefied from propaganda on steroids for, largely from the right wing, 25? years of Limbaugh, Fox, etc etc etc Clinton
hate x 10, "weapons of mass destruction", "they hate us because we are free", birtherism, death panels, Jade Helm, pedophile pizza, and more Clinton hate porn.
Americans have been taught to worship the wealthy regardless of how they got there. Americans have been taught they are "Exceptional" (better, smarter, more godly than every one else) in spite of outward appearances.
Americans are under educated and encouraged to make decisions based on emotion from constant barrage of extra loud advertising
from birth selling illusion.
Americans brain chemistry is most likely as messed up as the rest of their bodies from junk or molested food. Are they even
capable of normal thought?
Donald Trump has convinced at least a third of Americans that only he, Fox, Breitbart and one or two other sources are telling
the Truth, every one else is lying and that he is their friend.
Is it possible we are just plane doomed and there's no way out?
I loathe the cotton candy clown and his Quislings; however, I must admit, his presence as President of the United States has forced
everyone (left, right, religious, non-religious) to look behind the curtain. He has done more to dis-spell the idealism of both
liberal and conservative, Democrat and Republican, rich and poor, than any other elected official in history. The sheer amount
of mind-numbing absurdity resulting from a publicity stunt that got out of control ..I am 70 and I have seen a lot. This is beyond
anything I could ever imagine. America is not going to improve or even remain the same. It is in a 4 year march into worse, three
years to go.
Mr. Kuntzler has an honest and fairly accurate assessment of the situation. And as usual, the liberal audience that TAC is trying
so hard to reach, is tossing out their usual talking points whilst being in denial of the situation.
The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives,
from their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national
dumpster fire and start claiming some responsibility, America has no chance of solving problems or fixing anything.
Kunstler must have had a good time writing this, and I had a good time reading it. Skewed perspective, wild overstatement, and
obsessive cherry-picking of the rare checkable facts are mixed with a little eye of newt and toe of frog and smothered in a oar
and roll of rhetoric that was thrilling to be immersed in. Good work!
aah, same old Kunstler, slightly retailored for the Trump years.
for those of you familiar with him, remember his "peak oil" mania from the late 00s and early 2010s? every blog post was about
it. every new year was going to be IT: the long emergency would start, people would be Mad Maxing over oil supplies cos prices
at the pump would be $10 a gallon or somesuch.
in this new rant, i did a control-F for "peak oil" and hey, not a mention. I guess even cranks like Kunstler know when to give
a tired horse a rest.
Kunstler once again waxes eloquent on the American body politic. Every word rings true, except when it doesn't. At times poetic,
at other times paranoid, Kunstler does us a great service by pointing a finger at the deepest pain points in America, any one
of which could be the geyser that brings on catastrophic failure.
However, as has been pointed out, he definitely does not hang out with black people. For example, the statement:
But the residue of the "Black Power" movement is still present in the widespread ambivalence about making covenant with a common
culture, and it has only been exacerbated by a now long-running "multiculturalism and diversity" crusade that effectively nullifies
the concept of a national common culture.
The notion of a 'national common culture' is interesting but pretty much a fantasy that never existed, save colonial times.
Yet Kunstler's voice is one that must be heard, even if he is mostly tuning in to the widespread radicalism on both ends of
the spectrum, albeit in relatively small numbers. Let's face it, people are in the streets marching, yelling, and hating and mass
murders keep happening, with the regularity of Old Faithful. And he makes a good point about academia loosing touch with reality
much of the time. He's spot on about the false expectations of what technology can do for the economy, which is inflated with
fiat currency and God knows how many charlatans and hucksters. And yes, the white working class is feeling increasingly like a
'victim group.'
While Kunstler may be more a poet than a lawyer, more songwriter than historian, my gut feeling is that America had better
take notice of him, as The American ship of state is being swept by a ferocious tide and the helmsman is high on Fentanyl (made
in China).
Re: The crisis actually had its roots in the Clinton Administration's use of the Community Reinvestment Act
Here we go again with this rotting zombie which rises from its grave no matter how many times it has been debunked by statisticians
and reputable economists (and no, not just those on the left– the ranks include Bruce Bartlett for example, a solid Reaganist).
To reiterate again : the CRA played no role in the mortgage boom and bust. Among other facts in the way of that hypothesis is
the fact that riskiest loans were being made by non-bank lenders (Countrywide) who were not covered by the CRA which only applied
to actual banks– and the banks did not really get into the game full tilt, lowering their lending standards, until late in the
game, c. 2005, in response to their loss of business to the non-bank lenders. Ditto for the GSEs, which did not lower their standards
until 2005 and even then relied on wall Street to vet the subprime loans they were buying.
To be sure, blaming Wall Street for everything is also wrong-headed, though wall Street certainly did some stupid, greedy and
shady things (No, I am not letting them off the hook!) But the cast of miscreants is numbered in the millions and it stretches
around the planet. Everyone (for example) who got into the get-rich-quick Ponzi scheme of house flipping, especially if they lied
about their income to do so. And everyone who took out a HELOC (Home Equity Line of Credit) and foolishly charged it up on a consumption
binge. And shall we talk about the mortgage brokers who coached people into lying, the loan officers who steered customers into
the riskiest (and highest earning) loans they could, the sellers who asked palace-prices for crackerbox hovels, the appraisers
who rubber-stamped such prices, the regulators who turned a blind eye to all the fraud and malfeasance, the ratings agencies who
handed out AAA ratings to securities full of junk, the politicians who rejoiced over the apparent "Bush Boom" well, I could continue,
but you get the picture.
"The Holy Bible teaches us that repentance is the first crucial step on the path towards salvation. Until the progressives, from
their alleged "elite" down the rank and file at Kos, HuffPo, whatever, take a good, long, hard look at the current national dumpster
fire and start claiming some responsibility, America has no chance of solving problems or fixing anything."
Pretty sure that calling other people to repent of their sin of disagreeing with you is not quite what the Holy Bible intended.
David Stockman estimates that front-loaded tax cuts will produce a federal deficit of
about $1.3 trillion in fiscal year 2019. In effect, fiscal stimulus is being cranked from 3
to 6 percent of GDP.
Gunning the economy could help reduce R party losses in the 2018 midterm elections. But
it's very poor timing for the 2020 presidential election. By then, with rate hikes biting and
stimulus easing, the economy is likely to take a tumble at the worst possible time for
re-electing the incumbent.
But given the regal out-of-touchness of elitist Dems, coupled with their jaw-dropping
incompetence, they should still be able to seize defeat from the jaws of victory.
My biggest complaint with this argument is that it's far from clear the tax bill is
gunning the economy. It looks much more like looting, in terms of where the gains go.
Doubling the standard deduction might have a big effect on a number of cash-constrained
households. It won't do much for the 47%, and of course it expires. I don't know how much
effect it will have in aggregate though.
I agree with you on the looting. What I expect that the Republicans are counting on
is:
1) The base (the people most immediately screwed by this) will still vote with them
because of tribalism and a few symbolic bonuses from a grateful AT&T.
2) The middle-class will be carried through the mid-terms by the immediate cuts and some
measure of gullibility.
3) The stock owners will enjoy the sugar high as buybacks kick off speculation, and thus be
more predisposed to it.
4) The donor cash will cushion the blow of any real blowback and the Dems will fumble the
fight over extending the "temporary" cuts so that the Repubs can look like middle class
saviors.
5) Even if all that fails they get cushy jobs as consultants.
Disagree that it gins the economy because the distribution of the tax cuts looks more like
a QE program than what tax cuts were when they cut taxes for working people.
The tax cuts go to those who hoard money and take it out of circulation – the rich
and corporations. They aren't going to spend more, they will save more or do stock buy
backs.
Thus the velocity of money will decline further.
So where is the gin coming from because I'm not seeing it.
Tax cuts are one part of fiscal stimulus. But so is increased direct spending. Stockman
elaborates:
We expect FY 2019 outlays to rise by upwards of $200 billion from CBO's most recent
baseline projection. That would include $75 billion for defense, $65 billion for disaster
aid, $25 billion for increased of domestic appropriations above the sequester cap, $20
billion for the ObamaCare subsidies and another $15 billion for interest on higher spending
and lower revenues.
Those kinds of spending increases are now virtually certain, and will take total FY 2019
outlays to around $4.575 trillion -- nearly 20% more than the $3.85 trillion spent during
FY 2016 during the run-up to the presidential election.
If such radically ramped-up spending fails to gin the economy, then we will be obliged to
question (as some do) whether fiscal stimulus actually works at all.
I don't really know what to tell you boo boo
I mean I try (you know I try)
I was referring to the tax cut, but you are right about the spending side and wrong too
IMO.
Disagree that this "increase" in spending – which is party a decrease of a decrease
– is even light years close to "radical" as you say.
The Defense spending is the least stimulate type of fiscal spending, Obamacare goes mostly
to rich gigantic corporations, disaster relief is transitory, and the interest goes to
investors.
So spending increases of a small very non radical nature that go largely to rich gigantic
corporations.
Ok I'm seeing some gin. But I'm still not seeing much gin.
"... By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives ..."
"... A dilettante is a person who cultivates an area of interest, such as the arts, without real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante Doctrine is a sure-fire means of winning academic disputes. You demand that your critics endorse your views, or you dismiss them as dilettantes unworthy of respect. ..."
"... Readers may recall that the scientific method works in the opposite direction of the Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability. The DSGE models fail recurrently, on the most important macro events, and the failures are massive. The scientific method requires the theorist of the failed model to declare it falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously declared, engaged in "pseudoscience." ..."
"... BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work, which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is utterly spot-on and mathematically sophisticated. Part of the problem with economics is that it has been afflicted with 'math envy' since its earliest days, and the ADM results were proved with Banach Space methods, so they just *had* to be right. Google the phrase "spherical cow" for more on this mindset, not to mention one of the few really funny math jokes I know. ..."
By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate
professor of economics and law at the University of Missouri-Kansas City, and co-founder of
Bank Whistleblowers United. Originally published at New
Economic Perspectives
The truly exceptional thing about 'modern macroeconomics' devotees is not that they are so
consistently and horrifically wrong or that they persist in their errors – but their
exceptional combination of arrogance and disdain for those who have dramatically better records
and broader and more relevant expertise. Kartik Athreya, the Richmond Fed's Research Director,
led the modern macro parade on June 17, 2010 with his blog
(which he later withdrew in embarrassment) when he announced the Athreya Axiom of Absolute
Arrogance.
So far, I've claimed something a bit obnoxious-sounding: that writers who have not taken a
year of PhD coursework in a decent economics department (and passed their PhD qualifying
exams), cannot meaningfully advance the discussion on economic policy. Taken literally, I am
almost certainly wrong. Some of them have great ideas, for sure. But this is irrelevant. The
real issue is that there is extremely low likelihood that the speculations of the untrained,
on a topic almost pathologically riddled by dynamic considerations and feedback effects, will
offer anything new. Moreover, there is a substantial likelihood that it will instead offer
something incoherent or misleading.
Modern macro devotees suffered far worse substantive embarrassment than Athreya's personal
embarrassment. After Athreya (briefly) published his Axiom, a flurry of the world's top
economists issued devastating critiques of modern macro's foundational myths in their dynamic
stochastic general equilibrium (DSGE) models. The takedowns enraged and humiliated modern macro
devotees, and because they are incapable of staying embarrassed, they doubled-down on Athreya's
Axiom by announcing the Dilettante
Doctrine .
People who don't like dynamic stochastic general equilibrium (DSGE) models are
dilettantes. By this we mean they aren't serious about policy analysis.
Lawrence J. Christiano, Martin S. Eichenbaum, and Mathias Trabandt, authored "On DSGE Models
on November 9, 2017. Christiano and Eichenbaum are freshwater modern macro devotees trained
largely at the University of Minnesota, and now holding prominent positions at Northwestern.
Trabandt is a German modern macro devotee.
A dilettante is a person who cultivates an area of interest, such as the arts, without
real commitment or knowledge. The Dilettante Doctrine takes modern macro's arrogance to a new
pinnacle. Only their model is legitimate, and it is illegitimate to criticize their DSGE
models, even though they repeatedly fail. Instead, we must all "like" their models. We cannot
make any statements about macroeconomics unless we "like [DSGE] models." The Dilettante
Doctrine is a sure-fire means of winning academic disputes. You demand that your critics
endorse your views, or you dismiss them as dilettantes unworthy of respect.
Readers may recall that the scientific method works in the opposite direction of the
Dilettante Doctrine. Modern macro proposes a theory (DSGE) and tests its predictive ability.
The DSGE models fail recurrently, on the most important macro events, and the failures are
massive. The scientific method requires the theorist of the failed model to declare it
falsified. Economists who "like" repeatedly falsified DSGE models are, as Paul Romer famously
declared, engaged in "pseudoscience."
Athreya then inadvertently compounded modern macro's failures by putting in writing a bit
too many of modern macro's darker secrets in his 2013
book about macroeconomics. Athreya confirmed many of the most fundamental criticisms of
modern macro devotees, revealed additional failures that were even more devastating, and
illustrated perfectly the blindness of modern macro's devotees to their dogmas and logic.
Athreya did recognize clearly one dogma that made modern macro devotees unable to spot even the
world's largest bubble – but treated that failure as if it were a virtue. Modern macro
devotees train macroeconomists to be unable to identify warn against, or take action to end
even the most destructive bubbles. This is like training surgeons to believe that shock cannot
occur and they should ignore shock in treating patients.
I will return to these errors in subsequent columns, but in this initial column, I introduce
Athreya's most embarrassing and devastating admission. Athreya goes on for over 100 pages on
how wondrous his fellow modern macro devotees are. They are brilliant specialists who are the
world's top practitioners of ultra-rigorous logic and ultra-sophisticated mathematics skills
that make it impossible for them to be anything other than transparent and scrupulously honest.
In particular, Athreya tells the reader that the paramount problem in macro and microeconomics
is recognizing, understanding, and countering deceit, the defining element at law of fraud.
(Actually, he does that only in an exceptionally opaque manner.) On p.103, however, Athreya
admits that modern macro devotees know that their vaunted DSGE models rest on a fatal premise
that is so preposterous and embarrassing that they dare not state it. "A silent assumption of
the ADM model" is that "the ADM God" perfectly prevents all crimes, predation, and deceit
– at no cost. Note that this means that modern macro devotees (silently) designed their
DSGE models to be incapable of recognizing, understanding, measuring, or countering deceit,
which they admit is their paramount and fatal failure.
It is never good to be arrogant. It is always dangerous and limiting to be (proudly)
ignorant of fields that are likely to have superior understanding of issues such as deceit,
fraud, and predation. Athreya's book displays his pride in both of these faults.
The authors of the Dilettante Doctrine inadvertently revealed another embarrassing modern
macro failure of great importance. It is the combination of repeated, devastating failure and
unfailing arrogance that defines (and dooms) modern macro as pseudoscientists. In fairness to
the authors, they announced their Dilettante Doctrine in the context of an article admitting
catastrophic errors in modern macro. They also unintentionally admit the non-scientific nature
of their enterprise. Consider this passage:
For [IMF's leader] to take DSGE model-based recommendations seriously, the economic
intuition underlying those recommendations has to be made in compelling and intuitive
ways.
Yes, they actually wrote that for anyone to take DSGE models "seriously" their "economic
intuition" must "be made intuitive." Wow, who knew science could be so 'intuitive?' Not
satisfied with announcing their new "intuitive method" as a substitute for the scientific
method, the authors double-down on the concept that 'intuition' is the secret sauce of
economics declaring that the super-secret is to keep that 'intuition' "simple."
To be convincing, it is critical for a DSGE modeler to understand and convey the economic
intuition behind the model's implications in simple and intuitive terms.
Notice that the authors are not stating the conditions required to make the DSGE models
'correct.' They are only interested in what practices will make the models' results
"convincing" to the bosses.
The bosses decide "actual policymaking." The Dilettante Doctrine authors declare
policymaking to be even less scientific than relying on 'simple' 'intuition' to convey DSGE
model results. It turns out that DSGE models are the 'canvas' on which modern macro devotees
"see the combined effect of the different colors" of their "art."
Inevitably, actual policymaking will always be to some extent an art. But even an artist
needs a canvas to see the combined effect of the different colors. A DSGE model is that
canvas.
These passages are not simply embarrassing, they are revealing. DSGE is a substantive farce
that repeatedly fails because modern macro devotees shaped their models from the beginning to
embrace laissez faire dogmas. The 'simple' 'intuitions' underlying DSGE models are the
most destructive laissez faire dogmas.
Narayana Kocherlakota's sly use of the word "almost" reveals his agreement with this
point.
[A]lmost coincidentally -- in these [early DSGE] models, all government interventions
(including all forms of stabilization policy) are undesirable.
The authors of the Dilettante Doctrine agree with Kocherlakota's observation about the
original DSGE models.
The associated policy implications are clear: there was no need for any form of government
intervention. In fact, government policies aimed at stabilizing the business cycle are
welfare-reducing.
Modern macro is proud that its 'freshwater' and 'saltwater' factions have achieved a grand
fusion. The saltwater types agreed to use DSGE models and the freshwater types agreed that the
freshwater types could add 'frictions' to the DSGE models that would allow the models to at
least purport to address some of the actual macroeconomic problems. There is a misleading view
that because the 'saltwater' types often call themselves "New Keynesians" they must have views
sympathetic to Keynesian thought. The Dilettante Doctrine authors make the useful point that
"New Keynesian" dogma is actually Milton Friedman's core laissez faire dogmas.
Prototypical pre-crisis DSGE models built upon the chassis of the RBC model to allow for
nominal frictions, both in labor and goods markets. These models are often referred to as New
Keynesian (NK) DSGE models. But, it would be just as appropriate to refer to them as
Friedmanite DSGE models. The reason is that they embody the fundamental world view
articulated in Friedman's seminal Presidential Address .
The Dilettante Doctrine authors admit that DSGE models failed at the most fundamental level
– they could not even spot that the economy was becoming progressively more dangerous and
harmful.
Pre-crisis DSGE models didn't predict the increasing vulnerability of the US economy to a
financial crisis.
The authors go badly wrong in multiple ways when they attempt to explain the DSGE models
failures and their implications for economic theory and policy.
There is still an ongoing debate about the causes of the financial crisis. Our view,
shared by Bernanke (2009) and many others, is that the financial crisis was precipitated by a
rollover crisis in a very large and highly levered shadow-banking sector that relied on
short-term debt to fund long-term assets.19
The trigger for the rollover crisis was developments in the housing sector. U.S. housing
prices had risen rapidly in the 1990's with the S&P/Case-Shiller U.S. National Home Price
Index rising by a factor of roughly 2.5 between 1991 and 2006. The precise role played by
expectations, the subprime market, declining lending standards in mortgage markets, and
overly-loose monetary policy is not critical for our purposes. What is critical is that
housing prices began to decline in mid-2006, causing a fall in the value of the assets of
shadow banks that had heavily invested in mortgage-backed securities. The Fed's willingness
to provide a safety net for the shadow banking system was at best implicit, creating the
conditions under which a roll-over crisis was possible. In fact a rollover crisis did occur
and shadow banks had to sell their asset-backed securities at fire-sale prices, precipitating
the Great Recession.
In sum, the pre-crisis mainstream DSGE models failed to forecast the financial crisis
because they did not integrate the shadow banking system into their analysis.
I begin with the most fundamental failure – the failure to ask the right questions.
Two prominent examples are why didn't the DSGE models warn us decades ago that the economy was
systematically misallocating assets and creating the largest bubble in world history and what
should we do to change the perverse incentives harming the economy and economic stability?
Kocherlakota, in the same article from which I quoted above, emphasized that modern macro
failed to warn about the coming financial crisis and the Great Recession and failed to provide
effective policies to respond to them.
The dilettante article only uses the word 'bubble' once – to describe the tech bubble.
It never labels the vastly larger housing bubble a 'bubble.' The dilettante article's authors
claim it is not relevant for their purposes to know how the bubble arose, why it continued to
inflate for over a decade, why it burst, or why it triggered the global financial crisis and
the Great Recession. Only a dilettante could make or believe that claim.
Recall that Athreya emphasizes that deceit is the key factor that screws up economies
– and that DSGE models "silently" assume "the ADM God" makes deceit impossible. I have
explained in scores of columns why deceit, fraud, and predation were the central causes of the
housing bubble hyper-inflating, the financial crisis, and the creation of the Great Recession.
The dilettante authors refusal to call the housing bubble a bubble does not change the fact
that they claim that the dramatic fall in housing values after 2005 was the paramount "trigger"
of the financial crisis and the Great Recession.
The dilettante authors create a fiction about what "precipitat[ed] the Great Recession.
In fact a rollover crisis did occur and shadow banks had to sell their asset-backed
securities at fire-sale prices, precipitating the Great Recession.
The dilettante authors then make their twin ' mea culpa ' on behalf of modern
macro.
Against this background, we turn to the first of the two criticisms of DSGE models
mentioned above, namely their failure to signal the increasing vulnerability of the U.S.
economy to a financial crisis. This criticism is correct. The failure reflected a broader
failure of the economics community.
The failure was to allow a small shadow-banking system to metastasize into a massive,
poorly-regulated wild west-like sector that was not protected by deposit insurance or
lender-of-last-resort backstops.
We now turn to the second criticism of DSGE models, namely that they did not sufficiently
emphasize financial frictions. One reason why modelers did not emphasize financial frictions
in DSGE models is that until the recent crisis, post-war recessions in the U.S. and Western
Europe did not seem closely tied to disturbances in financial markets. The Savings and Loans
crisis in the US was a localized affair that did not grow into anything like the Great
Recession. Similarly, the stock market meltdown in the late 1980's and the bursting of the
tech-bubble in 2001 only had minor effects on aggregate economic activity.
At the same time, the financial frictions that were included in DSGE models did not seem
to have very big effects.
The dilettante authors have no idea how important their concessions are. Their premise is
that it was government regulation, deposit insurance, and the central bank's 'lender of last
resort' function that prevented prior epidemics of accounting control fraud from causing
anything worse than "minor effects on aggregate economic activity." The obvious problem is that
since its inception 30 years ago modern macro ideologues have claimed the opposite is true
– that governmental action is unnecessary and harmful. They constructed their DSGE models
to valorize their Friedmanite dogmas.
The less obvious problem is that freshwater modern macro has claimed that the lesson of the
financial crisis is the opposite. Athreya and the Richmond Fed have
preached for years that the federal safety net caused the housing problem, the financial
crisis, and the Great Recession. The Richmond Fed claims that the key policy response to future
financial crises is allowing the shadow sector to collapse in an orgy of "rollover
cris[e]s."
The broader problem is why the dilettante authors are so wedded to their failed models,
which at their core assume out of existence the institutions and events they say are most
critical to explaining the catastrophic failures of their models. Why, for example, start with
a general equilibrium model based on absurdly utopian assumptions (stated and unstated) that
invariably produces equilibrium when the things we most need to study involve the failure of
markets to function? It is nonsensical to make contradictory assumptions in different parts of
your model about human behavior. Modern macro models keep failing and their devotees' response
is to add (over time) dozens of fudges that posit that humans typically act in a manner that
contradicts to the explicit and unstated assumptions of the DSGE model about human behavior.
DSGE models increasingly resemble Borg constructs. The Borg also claim that there is no
alternative to assimilation into their collective.
Excellent points. Helps to explain how you get a supposedly serious site covering real
estate falling for ridiculous tripe about the root cause of the housing crisis (aka Great
Recession). Take a careful look at the bombshell "working paper" and the new "narrative"
cited, and you can see the groupstink of the Fed written all over it
https://betterdwelling.com/forget-subprime-canadian-real-estate-buyers-investors-crashed-the-us-market/
Modern mainstream macro is like a police detective whose model of the world states that
people are nice and the body heals itself, and that therefore we will all live happily ever
after. When confronted by a murder victim lying in a pool of their own blood, and that fact's
apparent incompatibility with their model of the world, they respond, "My model is correct
only, you see, it failed to account for sudden massive blood loss. How that loss of blood
happened is beyond the scope of my investigation, the important thing is that I've now
incorporated that knowledge in my new improved model, which proves that we will all live
happily ever after -- except in cases of a sudden, massive loss of blood ."
There has not been a big mea-culpa from neoliberal economists after the 2008 Financial
Crisis. I don't think there will be. Many are essentially the equal of religious
fundamentalists.
However, we should also remember that the very wealthy have backed the neoliberal
economists against the general public. Neolibe3ralism provides a pseudoscientific economic
excuse for what amounts to turning society into a plutocracy, which is precisely what the
rich want.
The GFC worked out very well for the neoliberal agenda. What you can't predict, you don't
need to prevent or protect against. If the result happens to be a massive transfer of funds
from states to speculators that eases the path to austerity and asset stripping, what's to
apologize for?
Lack of higher math skills precludes citizen involvement in economics.
Blame it on the math card in PCs that makes doing it by hand and thus learning and
understanding how numbers work.
Most economists lack higher math skills too, but that doesn't seem to be obstacle for
them. It's spherical chickens in a vacuum, models that are supposedly related to real world
but are simplified beyond recognition because most economists are ignorant of even
rudimentary statistics.
and you don't need math to discover that the holy Models rely on downright silly
assumptions about Human Beings.
"rational actors with perfect information".
lol.
Most of the economic actors I know do not even remotely resemble that.
and whomever said that modern econ is akin to fundamentalist religion is right on.
I can't read "Money" or watch CNBC without thinking about Pat Robertson or Billy Graham.
It's just a different god they worship.
With this in mind, I think it's hilarious that the current hyperventilation about
"cryptocurrency" could possibly be the bubble that, in popping, brings the whole mess
down.
"Masters of the Universe", indeed.
Personally I believe economic as practiced is an example of telling the boss (the King)
what they want to hear.
Economist appear descended form a long line of Court Magicians, telling the futures from
the entrails of an animal, consulting the spirits for guidance, or using a Chrystal ball.
Of more pointedly Bullshit, baffles brains.
Prof Black make the point that he DSGE models assume away fraud. They also assume people
are "rational actors, driven only by logic," that is: we are all Vulcans from Star Trek.
A simple view of women's fashions (high heels) with regard to comfort or safety would
demolish any theory of people as "rational actors." Or men's behavior over their "sports
teams."
To assume away human behavior and emotion, and thus chaos or catastrophe theory, would put
economists at odds with their masters, and cut their income, by the nearly always fatal, or
career limiting "telling truth to power."
It's interesting to speculate what would be the scope or size of common ground in a dialog
between anthropologists and economists. Null set perhaps?
Just a quick note for those who were initially confused by Bill Black's use of "modern
macroeconomic theory" and thought "modern monetary theory". (I know I did, and was initially
really confused by his take, and had to re-read the first three paragraphs a few times to
re-set my mental pointers). As far as I know (and I did a year of Ph.D economics at Stanford,
so I pass Arthreya's first test) I haven't heard of "modern" applied to DSGE macro but that
probably reflects my choice of reading material more than anything else. In short, "modern
macro" is bad, "modern monetary" is good.
BTW, one of the best takes of macroeconomics I've encountered is Steve Keen's work,
which I gratefully acknowledge I first read here on NC. Keen's critique of DSGE models is
utterly spot-on and mathematically sophisticated. Part of the problem with economics is that
it has been afflicted with 'math envy' since its earliest days, and the ADM results were
proved with Banach Space methods, so they just *had* to be right. Google the phrase
"spherical cow" for more on this mindset, not to mention one of the few really funny math
jokes I know.
Nice illustration of ideologically based ostrakism as practiced in Academia: "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
Notable quotes:
"... A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned. ..."
"... The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for ..."
"... Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR. With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities. ..."
"... To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell. ..."
"... Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys. ..."
"... "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders." ..."
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias
towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say
that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple
to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem
as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract
simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in
a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step
too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might
take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect
people and then just assume that is best for the real world just to let the chips fall where they may according to the faults
and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their
heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment
to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you
mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more
useful for the task at hand?
Essentially, they want models that are consistent with only certain things, and often because this
makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having
perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect
self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline,
and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading
if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman
puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted
return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all
perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all
that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of
his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better,
and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well,
inconsistent with optimal, rational behavior -- of the economist using them.
Richard H. Serlin -> Richard H. Serlin...
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.
dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength
of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all
know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to
the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge
with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics
there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions
about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have
today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls
all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic
methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete
probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence
and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to
be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined
circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions,
incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So
much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers
are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to
go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little
thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in
pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The
future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy
decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus
decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and
reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating
logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models
were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share
it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every
economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven
by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've
read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce
more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking
oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after
New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same
role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to
ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.
To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality
be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining
this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very
handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
Nice illustration of ideologically based ostrakism as practiced in Academia: "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
Notable quotes:
"... A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment to indulge themselves in their hard money and liquidity fetishes, consequences be damned. ..."
"... The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers are willing to risk and whose interests they are willing to risk policy decisions for ..."
"... Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same role which Marxism was installed in the USSR. With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities. ..."
"... To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality be damned. Money does not smell. ..."
"... Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys. ..."
"... "Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People - powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize other insiders." ..."
At the risk of oversimplifying might it not be as simple as stronger leanings towards IS-LM and kind are indicative of a bias
towards full employment and stronger leanings towards DSGE, microfoundations, and kind are indicative of a bias towards low inflation?
IN general I consider over-simplification a fault, if and only if, it is a rigidly adhered to final position. This is to say
that over-simplification is always a good starting point and never a good ending point. If in the end your problem was simple
to begin with, then the simplified answer would not be OVER-simplified anyway. It is just as bad to over-complicate a simple problem
as it is to over-simplify a complex problem. It is easier to build complexity on top of a simple foundation than it is to extract
simplicity from a complex foundation.
A lot of the Chicago School initiative into microfoundations and DSGE may have been motivated by a desire to bind Keynes in
a NAIRU straight-jacket. Even though economic policy making is largely done just one step at a time then that is still one step
too much if it might violate rentier interests.
Darryl FKA Ron -> Barry...
There are two possible (but unlikely) schools of (generously attributed to as) thought for which internal consistency might
take precedence over external consistency. One such school wants to consider what would be best in a perfect world full of perfect
people and then just assume that is best for the real world just to let the chips fall where they may according to the faults
and imperfections of the real world. The second such school is the one whose eyes just glaze over mesmerized by how over their
heads they are and remain affraid to ask any question lest they appear stupid.
A more probable school of thought is that this game was created as a con and a cover for the status quo capitalist establishment
to indulge themselves in their hard money and liquidity fetishes, consequences be damned.
Richard H. Serlin
Consistency sounds so good, Oh, of course we want consistency, who wouldn't?! But consistent in what way? What exactly do you
mean? Consistent with reality, or consistent with people all being superhumans? Which concept is usually more useful, or more
useful for the task at hand?
Essentially, they want models that are consistent with only certain things, and often because this
makes their preferred ideology look far better. They want models, typically, that are consistent with everyone in the world having
perfect expertise in every subject there is, from finance to medicine to engineering, perfect public information, and perfect
self-discipline, and usually on top, frictionless and perfectly complete markets, often perfectly competitive too.
But a big thing to note is that perfectly consistent people means a level of perfection in expertise, public information, self-discipline,
and "rationality", that's extremely at odds with how people actually are. And as a result, this can make the model extremely misleading
if it's interpreted very literally (as so often it is, especially by freshwater economists), or taken as The Truth, as Paul Krugman
puts it.
You get things like the equity premium "puzzle", which involves why people don't invest more in stocks when the risk-adjusted
return appears to usually be so abnormally good, and this "puzzle" can only be answered with "consistency", that people are all
perfectly expert in finance, with perfect information, so they must have some mysterious hidden good reason. It can't be at all
that it's because 65% of people answered incorrectly when asked how many reindeer would remain if Santa had to lay off 25% of
his eight reindeer ( http://richardhserlin.blogspot.com/2013/12/surveys-showing-massive-ignorance-and.html ).
Yes, these perfect optimizer consistency models can give useful insights, and help to see what is best, what we can do better,
and they can, in some cases, be good as approximations. But to say they should be used only, and interpreted literally, is, well,
inconsistent with optimal, rational behavior -- of the economist using them.
Richard H. Serlin -> Richard H. Serlin...
Of course, unless the economist using them is doing so to mislead people into supporting his libertarian/plutocratic ideology.
dilbert dogbert
As an old broken down mech engineer, I wonder why all the pissing and moaning about micro foundations vs aggregation. In strength
of materials equations that aggregate properties work quite well within the boundaries of the questions to be answered. We all
know that at the level of crystals, materials have much complexity. Even within crystals there is deeper complexities down to
the molecular levels. However, the addition of quantum mechanics adds no usable information about what materials to build a bridge
with.
But, when working at the scale of the most advanced computer chips quantum mechanics is required. WTF! I guess in economics
there is no quantum mechanics theories or even reliable aggregation theories.
Poor economists, doomed to argue, forever, over how many micro foundations can dance on the head of a pin.
RGC -> dilbert dogbert...
Endless discussions about how quantum effects aggregate to produce a material suitable for bridge building crowd out discussions
about where and when to build bridges. And if plutocrats fund the endless discussions, we get the prominent economists we have
today.
Darryl FKA Ron -> dilbert dogbert...
"...I guess in economics there is no quantum mechanics theories or even reliable aggregation theories..."
[I guess it depends upon what your acceptable confidence interval on reliability is. Most important difference that controls
all the domain differences between physical science and economics is that underlying physical sciences there is a deterministic
methodology for which probable error is merely a function of the inaccuracy in input metrics WHEREAS economics models are incomplete
probabilistic estimating models with no ability to provide a complete system model in a full range of circumstances.
YOu can design and build a bridge to your load and span requirements with alternative models for various designs with confidence
and highly effective accuracy repeatedly. No ecomomic theory, model, or combination of models and theories was ever intended to
be used as the blueprint for building an economy from the foundation up.
With all the formal trappings of economics the only effective usage is to decide what should be done in a given set of predetermined
circumstance to reach some modest desired effect. Even that modest goal is exposed to all kinds of risks inherent in assumptions,
incomplete information, externalities, and so on that can produce errors of uncertain potential bounds.
Nonetheless, well done economics can greatly reduce the risks encountered in the random walk of economics policy making. So
much so is this true, that the bigger questions in macro-economics policy making is what one is willing to risk and for whom.
The arguments over internal and external consistency of models is just a convenient misdirection from what policy makers
are willing to risk and whose interests they are willing to risk policy decisions for.]
Darryl FKA Ron -> Peter K....
unless you have a model which maps the real world fairly closely like quantum mechanics.
[You set a bar too high. Macro models at best will tell you what to do to move the economy in the direction that you seek to
go. They do not even ocme close to the notion of a theory of everything that you have in physics, even the theory of every little
thing that is provided by quantum mechanics. Physics is an empty metaphor for economics. Step one is to forgo physics envy in
pursuit of understanding suitable applications and domain constraints for economics models.
THe point is to reach a decision and to understand cause and effect directions. All precision is in the past and present. The
future is both imprecise and all that there is that is available to change.
For the most part an ounce of common sense and some simple narrative models are all that are essential for making those policy
decisions in and of themselves. HOWEVER, nation states are not ruled by economist philosopher kings and in the process of concensus
decision making by (little r)republican governments then human language is a very imprecise vehicle for communicating logic and
reason with respect to the management of complex systems. OTOH, mathematics has given us a universal language for communicating
logic and reason that is understood the same by everyone that really understands that language at all. Hence mathematical models
were born for the economists to write down their own thinking in clear precise terms and check their own work first and then share
it with others so equipped to understand the language of mathematics. Krugman has said as much many times and so has any and every
economist worth their salt.]
likbez -> Syaloch...
I agree with Pgl and PeterK. Certain commenters like Darryl seem convinced that the Chicago School (if not all of econ) is driven
by sinister, class-based motives to come up justifications for favoring the power elite over the masses. But based on what I've
read, it seems pretty obvious that the microfoundation guys just got caught up in their fancy math and their desire to produce
more elegant, internally consistent models and lost sight of the fact that their models didn't track reality.
That's completely wrong line of thinking, IMHO.
Mathematical masturbations are just a smoke screen used to conceal a simple fact that those "economists" are simply banking
oligarchy stooges. Hired for the specific purpose to provide a theoretical foundation for revanschism of financial oligarchy after
New Deal run into problems. Revanschism that occurred in a form of installing neoliberal ideology in the USA in exactly the same
role which Marxism was installed in the USSR.
With "iron hand in velvet gloves" type of repressive apparatus to enforce it on each and every university student and thus to
ensure the continues, recurrent brainwashing much like with Marxism on the USSR universities.
To ensure continuation of power of "nomenklatura" in the first case and banking oligarchy in the second. Connections with reality
be damned. Money does not smell.
Economic departments fifth column of neoliberal stooges is paid very good money for their service of promoting and sustaining
this edifice of neoliberal propaganda. Just look at Greg Mankiw and Rubin's boys.
But the key problem with neoliberalism is that the cure is worse then disease. And here mathematical masturbations are very
handy as a smoke screen to hide this simple fact.
likbez -> likbez...
Here is how Rubin's neoliberal boy Larry explained the situation to Elizabeth Warren:
"Larry [Summers] leaned back in his chair and offered me some advice. I had a choice. I could be an insider or I could
be an outsider. Outsiders can say whatever they want. But people on the inside don't listen to them. Insiders, however, get lots of access and a chance to push their ideas. People
- powerful people - listen to what they have to say. But insiders also understand one unbreakable rule: they don't criticize
other insiders."
The demise of the North Sea doesn't necessarily mean the end of Norway's petroleum era -- far from it.
Still, despite significant reserves in the Barents Sea, Norway is about to embark upon a long period of
structural decline as its benchmark fields inch closer to depletion and its reserves taper before our
very eyes.
... ... ...
There's ample evidence to conclude that all the sweet spots of Norway's continental shelf have been
found. The latest shelf licensing round (24) elicited a weak response, with only 11 companies applying
for production licenses. There was plenty to bid for -- 102 blocks were up for grabs (never before did the
Norwegian Petroleum Directorate offer so much, with an overwhelming majority of them in the Barents Sea),
but due to their remoteness from formations deemed to be the most hydrocarbon-rich, bidders were only
half as numerous as they were during the previous licensing round in 2015.
After 2001, Norwegian oil output recorded 12 consecutive years of falling production. The current phase might best be
described as a lull before the (presumably) last long-term production increase in its history, expected to happen in the early
2020s. Much will depend on the two "Johans" Norway will bring online in the early 2020s: Johan Sverdrup (recoverable reserves
worth 2-3 BBbl) and Johan Castberg (0.5 BBbl).
Much has been done to render Johan Castberg profitable at current price levels -- from an initial level of 80 USD/bbl, Statoil
and the other shareholders have brought it to an
alleged 35 USD/bbl
. Against the background of falling oil services costs, this has entailed several cost-cutting measures,
most notably scrapping any sort of semi-submersible vessel variant coupled with pipeline construction from the oilfield to the
mainland (an option preferred by the government, as this would allow to provide smaller fields in the Barents Sea with a sure
transport route) in favor of a FPSO.
A half of all small businesses fail in the first 5 years.
Notable quotes:
"... I also suspect that with all the rhetorical celebration of "small businesses", a lot of people don't really want to have "jobs" but would prefer to be small business owners, with all of the attached narratives of autonomy ("be your own boss") etc. ..."
"... Many take jobs for lack of such opportunity, or because deep down they know they are not leadership material or don't have the stomach to deal with business management issues every day, which is closer to reality than living the dream. But maybe one day, they will open their own shop. ..."
"... Visions about workers, jobs, etc. may not appeal to them as much as imagined, aside from decades of hearing promises of jobs etc. that never materialized for a lot of people. ..."
"... I used to think when "small businesses" is mentioned in e.g. election ads or messaging to convince people to vote yes or no on a proposition, it means "right wing". I'm no longer sure that's universally the case. ..."
"... When I think of "small business" I usually think of marginally competent management (one step ahead of bankruptcy) and brutal exploitation of low paid labor. ..."
"... about 90% of small businesses have 20 employees or less and revenues under $2 million. Even Forbes thinks the SBA's definition that you cite is BS. ..."
"... half of all small businesses fail in the first 5 years. ..."
I also suspect that with all the rhetorical celebration of "small businesses", a lot of people don't really want to have "jobs"
but would prefer to be small business owners, with all of the attached narratives of autonomy ("be your own boss") etc.
Many take jobs for lack of such opportunity, or because deep down they know they are not leadership material or don't have
the stomach to deal with business management issues every day, which is closer to reality than living the dream. But maybe one
day, they will open their own shop. This is basically the same argument as the "temporarily embarrassed millionaire", though
it is not (primarily) about financial riches but personal fulfillment.
Visions about workers, jobs, etc. may not appeal to them as much as imagined, aside from decades of hearing promises of
jobs etc. that never materialized for a lot of people.
I used to think when "small businesses" is mentioned in e.g. election ads or messaging to convince people to vote yes or
no on a proposition, it means "right wing". I'm no longer sure that's universally the case.
When I think of "small business" I usually think of marginally competent management (one step ahead of bankruptcy) and brutal
exploitation of low paid labor.
Never mind, I looked it up myself and about 90% of small businesses have 20 employees or less and revenues under $2 million.
Even Forbes thinks the SBA's definition that you cite is BS.
Here's something about the GOP House and the GOP Senate: they each passed tax bills (supposed to come out in a "conference"
agreement sometime today) that diss the United States' working class taxpayers. White or black, Christian or Jew or other,
citizen by birth or naturalized citizen–workers are treated as an inferior "taker" class and owners are treated as a superior "maker"
class–the same old GOP class warfare that has been evidenced in Republican-driven tax legislation for decades. That shows in
the provisions that have been discussed quite a bit already, even though there is no official distributional analysis and even though
the Treasury Department put out a one-pager claiming to provide an analysis showing huge economic growth would eliminate any deficits
(based on both the tax "reform" legislation and promised cost-cutting "reforms" to Medicare and Social Security):
the significant reduction in impact of the estate tax,
the huge reduction in the statutory corporate tax rate of most benefit to officers/shareholders (it was 35%, it will be 21%
under the conference agreement, apparently, even though the "effective" corporate tax rate ranged from negative to around 24-25%–essentially
more favorable than many of our fellow advanced economies' corporate tax rates);
the territoriality of the corporate tax (generally, zero tax on foreign earnings of U.S. companies);
immediate expensing of company investments (a five year provision that allows companies huge tax benefits for those five years);
the elimination of the corporate alternative minimum tax (AMT), at a cost of about $250 billion in revenues.
the reduction in the top rate for wealthy individuals (from 39.6% to 37%),
the substantial reduction in the State and Local Tax Deduction for workers (thus changing entirely the economics of
paying for a house already purchased, while allowing sole proprietors, partnerships and other "owners" of equity in businesses
the ability to deduct such State and Local Taxes in full);
a larger standard deduction but the elimination of personal exemptions;
a larger child tax credit that only becomes refundable over time (limiting how much it helps the poor) but is available to
wealthy households (starting to phase out at half-a-million of income!);
the only slight reduction in the ability of wealthy individuals to take advantage of the mortgage interest deduction (reducing
the debt limit to $750,000 instead of $1,100,000)
the elimination of the corporate AMT (which cuts taxes for wealthy shareholders/owners/managers) but the retention of the
individual AMT (which primarily affects the upper middle class and not the wealthiest taxpayers under the current rate bracket
system);
the elimination of the
Affordable Care Act mandate and penalty (which reduces the amount of Medicaid and insurance subsidy funds for poor and middle-income
taxpayers, as well as guaranteeing the deconstruction of the health care system for 13 million or more Americans by 2027 and
increasing insurance premiums for upper-middle-class taxpayers); and
the opening of the Arctic National Wildlife Refuge to rape by fossil fuel oligarchies (a piddling amount of revenue, but sufficient
to buy off the principle-less Sen. Lisa Murkowski from Alaska );
making the corporate tax changes permanent (and effective without any transition period) while making the individual tax cuts
other than benefits for the wealthy like the estate tax changes temporary.
(just to name a few).
When the health care mandate removal is combined with the other provisions, "On net, the poor would actually lose out in all years
once this effect is taken into account." Dylan Matthews,
The Republican tax bill that could actually become law, explained , Vox.com (Dec. 14, 2017). The following
Tax Policy Center graph from the Vox article (using
the Urban-Brookings Microsimulation Model) shows that by 2027 the top 0.1% end up doing much better (average tax cut for the top
0.1 percent is $221,550 a year). The bottom 20% do worse while the middle–the second and third quintiles–have a very insignificant
plus (average tax cut of the third quintile is $490). Within the third or middle quintile, more than 62% of taxpayers that earn between
$54,700 and $93,200 would see their taxes go up, "[b]ut only about 0.1% of the very richest one-thousandth of Americans would see
a tax hike." Id.
Early gains–though small, intended perhaps to benefit the GOP in earlier votes -- don't last because the individual
cuts aren't permanent. A change to chained CPI for indexing brackets amounts to a tax increase on individuals, while the permanent
corporate tax cuts mean rich and very rich do well while middle and upper-middle lose out.
Lyle, December 17, 2017 6:10 pm
Note that ending the mandate just means more folks will wager on their health. All that wished to sign up could have. (and
still can where medicaid was expanded).
And the rest of us will pay their emergency room bills, as well.
Since it is now voluntary
to count the lower amount of subsidies as a cut seems a strange way of counting, but of course figures don't lie but liars do figure.
"... Canada is as neoliberal as almost anywhere else in the Anglo developed world. You can think of us as being just like the USA or UK, but about a decade behind in the adoption of dumb and cruel ideas. In the Anglo neoliberal family, Canada is the slightly retarded little sibling. ..."
"... Ireland allows you to claim citizenship if you have an Irish grandparent (with some caveats). Many US and Canadians use this to work/settle in the EU. A Chicago friend who was working in London and HK got her Irish passport without ever bothering to visit Ireland. ..."
"... Yves, Sweden might take you, if you can take the winters the requirements for self-employed residence permits aren't too harsh. So far they've managed to not overdo it on neoliberalism, although there are forces that sure try to make it happen. ..."
"... I also live near San Miguel de Allende in a small, agricultural Mexican community perched on the side of an extinct volcano. I pretty much avoid the expat scene, shop in the mercados, hang with Mexican friends and am thoroughly enjoying soaking in this wonderful way of life. I made this move at age 70. ..."
"... When I'm in Mexico the feeling is of constantly hitting my head against a glass ceiling and biting my tongue. ..."
"... But for the love of God, stay on the beaten tourist path (SMA-Oaxaca City-Cholula etc.). Don't go into Guerrero except maybe Taxco. I was just in Chilpancingo for a professional event, taking every precaution, and the stories you hear first hand are horrifying. The security situation in Mexico is deteriorating badly. ..."
"... Even states like Puebla that used to be safe are seeing kidnappings and other extreme crime. If you speak Spanish, the issue of security it is utterly unavoidable, it creeps into many conversations and dominates the local news. ..."
"... 'According to Pew Charitable Trusts, only 13 percent of Baby Boomers still have [defined benefit pensions].' ..."
"... This 13 percent remnant overwhelmingly consists of government employees, whose defined benefit pensions are uniformly underfunded (and even understated as to HOW underfunded they are). ..."
"... I had a work colleague from Sweden. She had been a school teacher there and came to the U.S. to sell financial products, make a lot of money and avoid Swedish taxes. I asked her if she were going to become a U.S. citizen. She looked at me like I was crazy, laughed and said, "Hell no, I would never wish to be old in America." ..."
"... From my perch, if any Americans want to make the move, I would say over the next decade before that door closes. The regulations are already tightening up such as making sure that you owe no taxes or the like before you leave. More Americans are now renouncing their citizenship as America still want to tax them even when they have moved away. After this decade, I regret to say, that America will be no country for old people. ..."
"... And speaking of inequality, most countries have far worse inequality than the US and it is savage and painful to watch when your security guard finishes a 12 hour shift and then starts another 12 hour shift across the street. ..."
"... By the way don't get me started on the cost of healthcare. It's cheap until you run into a major complication. I had surgery in Peru for something minor and the total bill was over $5000 USD. Imagine if it were heart surgery. My expat insurance paid it but you can't get that if you're over a certain age. ..."
Canada is as neoliberal as almost anywhere else in the Anglo developed world. You can think of us as being just like the
USA or UK, but about a decade behind in the adoption of dumb and cruel ideas. In the Anglo neoliberal family, Canada is the slightly
retarded little sibling.
The cost of living is high in Canadian cities. In Vancouver and Toronto, the cost of living has soared out of any sort of proportion
to employment incomes. Affordable rental housing is often infested with bedbugs or other vermin (Vancouver alleyways are strewn
with stained mattresses and other abandoned furniture). Beggars are seen everywhere, while the Teslas and Lexuses roll past. Not
a day goes by that I don't see elderly persons climbing in and out of dumpsters. Permanent shantytowns have arisen on the outskirts.
We got almost the same opiates problem as the USA.
The province of Quebec used to be more social-democratic in orientation than other parts of Canada. But even the Quebecois
seem to have caught the mental and spiritual diseases of the globalist bourgeoisie. I recently spent a month in Montreal, and
was aghast to see the staircases of downtown Metro stations rendered almost impassable by the large numbers of homeless men and
women trying to sleep there.
My younger relatives look at me very sceptically, when I tell them that as late as 1990, a beggar was an unusual sight in Vancouver.
Of course, people born since that time would think that what you see today is normal .
We were at a commercial hot springs somewhere in France about 15 years ago, and it cost around $5 to go in, and before entering,
there was a doctor and nurse that checked your blood pressure, etc., for no extra charge. It was so over the top in terms of anything
compared to here, in a delightful way.
In France, doctors make a lot less than in the US, particularly general practitioners. The GP doctors make on the order of
what a senior manager or engineer makes.
There are good reasons for that (among them free education for doctors and a totally different societal attitude towards healthcare,
based on SOLIDARITY – whose outcome is a more reasonable cost and coverage. Yes, they also do use that word a lot in general public
discourse, in many European countries. Have you heard the word SOLIDARITY in the US in public discourse, ever?).
A good summary of that and meaningful comparisons with other nations' healthcare systems is provided in the book 'The Healing
of America: A Global Quest for Better, Cheaper, and Fairer Health Care' by T. R. Reid.
Don't worry, Marcon and Merkel are accelerating the crapification of France and the wider EU. The next generation will get
to experience the joys of economic and health insecurity in abundance.
the main project now is to gut the public pensions. the PIIGS countries have already had to slash theirs, so the plan now is
to bring the rest of Europe to Canadian levels (retirement age at 67 or higher with a minimal state component).
By the way, it is not widely known for example that the retirement age in Russia is 60. And, judging by the tens of thousands
of healthy and active Russian retirees (these are teachers and professional workers, "middle class" people, not oligarchs – those
go to Monaco and Switzerland of course) living on the Black Sea coast of Bulgaria (mild winters, culturally and geographically
close, inexpensive by developed world standards, gateway to the EU), their pensions cannot be that bad.
And no, they don't look like they are about to die at 65.
So, take that, dear future US retirees (myself in that number).
Wikipedia says the retirement age in Russia is 60 for men, and 55 for women !!! My personal family practice physician is a
Russian immigrant and pre-GFC she claimed, "Most Russian men die before 60. (Wikipedia now says 70.91) Next time I see her I may
ask her about Russian retirement, and life expectancy etc. Another topic is the prevailing attitude of Russian immigrants when
they came to America. They really expected to clean up! I'd be interested in what other NC readers think about this.
Certainly
I can imagine the distress of Russian immigrants who through a lot to move to the US only to find by age 60–55 for women–they
might have been better off being back in Russia.
Indeed, the Black Sea coast is overran by Russkies, younger ones as well. The countryside is where the Brits move to to feel
like country squires on the cheap. And Americans are concentrated in Sofia, doing the heavy lifting of pretending to be civilising
the natives while securing staging areas for the future war against Russia. It's all one big happy international family :) Can't
wait to move back there permanently in 30 months.
They should allow Medicare to be used outside the US, especially for low cost countries in the Third World. They are cheaper
and just as good as the US for many medical services – maybe not for transplants but for heart bypasses, dialysis, etc., they
are ok.
correct: medicare cannot be used outside the u.s.
we are retirees living abroad much of the year. our secondary insurance (which we are lucky enough to have from former teaching
job) becomes our primary insurance. we submit bills to them and they pay (reimburse) fairly well.
we use local doctors and clinics at much lower rates than in the u.s.
emergency medical care in europe is nearly always free or all but free.
We've been to Ecuador twice in the last 4 years exploring retirement there – and decided against it. For a combination of reasons.
1. In spite of what gets touted in the retirement media, for the most part Ecuador is a third world country with everything
that entails.
2. The much ballyhood Cuenca is in an Andes plateau at 8,000 ft. elevation. Not a fan, and it's isolated, if you want to get
out of Cuenca there's a lot of nowhere to go. Cuenca has been haggling with airlines to get some service providers since TAME
cancelled its routes, that's been a constant and ongoing problem.
3. I liked Quito, It's at 9,000 ft. I really couldn't take it.
4. The coast is a very narrow strip of land at the bottom of the mountains, and outside of a couple of areas it's a backwater.
Little infrastructure, few services, dirt poor. The north coast of Ecuador (we call it the mosquito zone) shook down in a 7.8
earthquake in 2016 that wrecked everything from Manta to the Colombian border.
5. Ecuador completely overhauled its visa laws in February of this year making it much more difficult to get any kind of permanent
residency permit, and requiring all visa applicants to provide proof of personal health insurance to qualify for a visa.
6. Ecuador isn't cheap. They levy enormous taxes on almost everything that's imported, which is just about everything but food.
Impossible to get packages and mail in or out.
'Studies' have shown that the majority of pensioners who retire there, leave and go back home or somewhere else within 5 years.
American individualism is a recent myth. I remember how my grandmother who grew up in rural Montana a century ago could rattle
off the names of various second cousins, to say nothing of all the family stories. Life then was rugged but it was not individualistic.
Perhaps one can acquire new pals at the age of 70, as as not to be a lonely old man/woman.
Or are you just a Yankee with money?
And hopefully the new country is so subdued by the super power that there is no need to liberate it. For example, Libya, a
few years ago, would not have been a good choice, in this respect.
If you choose traditional medicare instead of a medicare advantage plan , I don't understand how it would narrow your network.
Traditional medicare is universal in the US and accepted by most providers. I've been on traditional medicare for16 years and
haven't had a provider that doesn't accept traditional medicare.
I wonder if that is regional. Where I live(south), I never see a problem with that.
My PCP when I asked him as I approached 65, replied, that of course he accepted medicare, that there was little difference
between it and other insurance, and that folks who did not accept medicare were immoral in his view.
I think out here in flyover it is less common for doctors to not take Medicare patients. My elderly father moved out here 1.5
years ago and has made considerable use of the excellent resources of the UW health system. His secondary private insurance covers
very little since he is out-of-network but Medicare has covered virtually everything and no expert has refused to see him (urology,
throat/swallowing, dementia, macular degeneration, etc.) due to being Medicare insured. I am pretty sure the entire Mayo Clinic
operation takes Medicare patients also.
It may be that independent docs are refusing Medicare patients but there are fewer and fewer of those out here.
A lot of doctors do not accept Medicare. My current MD does not. I think that is even more true of specialists.
And I am not in a network. I have an old-fashioned indemnity plan. I can see any doctor, anywhere in the world. I submitted
claims for 2 years from Australia, and have also submitted claims from the UK and Thailand.
it happens around this southern city . scary stuff, my first world problems may turn into third world problems. trying to imagine
being 70, living in a van, queing up for a chance at a valuable temp gig in an amazon warehouse.
I would have thought so, too. Certainly the media I have read has lead me to believe that many doctors don't accept Medicare.
I wondered what the percentages were so I did a search. Surprising to me. More nuance than one might think in the results -- seems
you can "accept" at finer-grained levels than one might assume in a Federal program. Here's what seems to be a reasonably objective
and recent appraisal: http://www.factcheck.org/2017/03/medicaids-doctor-participation-rates/
Anecdotal reply from the few doctors I have seen: They state they accept Medicare because it pays them quickly and there is
less paperwork than with most insurance companies, which results in less office overhead. Even with the lower payments from Medicare
for many procedures, the doctors do OK when the big picture is examined.
One of my docs accepts no insurance. But he will file the Medicare claim. I pay him and Medicare sends me a check. It's a little
unwieldy but he's a good doc (in my completely unprofessional opinion) so I put up with it. Others don't and go to other docs.
Physicians in private practice often do not accept Medicare or Medicaid do to billing issues. These are usually older doctors
with established practices. Younger physicians often end up working as employees of large chain hospitals to stay solvent, and
they will accept any form of payment.
I now live in Portugal. The quality of life is high, and cost of living quite low (though Lisbon has become pricey in terms
of property).
A few months ago I sustained a cut that wasn't healing well, and decided to visit a private walk-in clinic. It was clean, modern,
and there was virtually no wait. The nurse took care of me, as no doctor was required. She spent about twenty minutes cleaning
and dressing the wound, and gave me some extra waterproof bandages to take home.
The cost? Six Euros. You read that correctly: Six Euros.
To the issue of cost of living, I was in Portugal last week and had a myocardial infarction upon seeing petrol prices at 1.55€/litre.
Good thing is not only are there excellent public hospitals for such MIs, but the extremely relaxed recreational pharmaceuticals
policy makes for good prevention as well.
Where I live a liter is about .48 euro if I have my conversion right. So retirees here do catch some breaks. Also there's no
VAT although we do of course have sales tax. And finally many US retirees fully own their homes whereas in, say, Germany almost
everybody rents. Indeed I'd say that so far the US elderly have it easy compared to the millenials who are the ones really getting
screwed. Just reading an article the other day about the record number of millenials living with their parents or, undoubtedly,
their grandparents.
And finally I've read Nomadland and should be said that many of those older people wandering around the country do so by choice.
RVs are not cheap. A new one can cost as much as a house. Amazon prefers to hire these people for their work ethic and because
they bring their own housing with them which is handy for a temporary workforce. Amazon even tries to sugarcoat the exploitation
by making a kind of club out of it called CamperForce.
Home ownership in Germany is 52% and it is below 45% in Switzerland. It is 65-75% in almost all other rich countries including
the US. It is actually around 85% in Russia and 90% in Cuba although the amenities are not quite the same.
As a Swiss I can say that it does not pay to own your house outright. The way our taxes are structured you are cash ahead to
carry your mortgage in perpetuity. It is a nice gift for our banks.
Many 'Mericans say they own their home, but actually the bank (mortgage) owns the home. They're simply trying to improve their
equity (and freedom to paint it whatever color they please) in the home.
I've owned (completely mortgage free) several homes, and between crazy neighbors, time involved in upkeep, and property tax
the best hope is to sell them to a greater fool. (Price appreciation.) Spending over half of one's income on a home mortgage and
hoping the next generation will buy it when it's time to move on is more risky than many other "investments".
I was in Italy this year, in a remote part where you really needed a car to get around. The diesel prices were shocking, but
the small car efficiency actually balanced out the price. I don't think I spent any more per mile than I did in the US. For reference,
I drive a 4 cylinder Toyota which is not exactly a gas guzzler here.
My mom gave me her checkbook register from mid 1961-62 a few years ago, and for a family of 6, there was a total of $88 paid
to Dr. Evers, our family physician. My coming out party was $190.
The checks were mostly $6 and $7, with one $14 whopper.
I asked my mom if we had health insurance, and she told me that aside from a few that had Kaiser, nobody had health insurance
back in those days.
Health insurance was not as critical in those days. The low prices you quote for day to day purchases could also be found in
the healthcare of the day. Not the inflated prices we have now. Same with education. I recall seeing old tuition receipts from
my university that maxed out at a few hundred dollars per semester in the 1950's.
My dad's brother was a physician, an old-fashioned family doctor whose office was in his home and who made house calls. This
was in the 1940's and 50's. Many of his patients paid 'in kind;' although he lived in the city, people still had large gardens
or lived on outlying small farms, and in August and September especially, my aunt would routinely find boxes of fresh fruits and
veggies on their porch. She joked that she was kept busy canning and preserving for at least three months of the year.
Actually, there are some avenues available for some, depending on ancestry, but work is required.
My father was born in Europe, and, after three years and the help of an inexpensive lawyer, I was able to gain a second citizenship.
That, in turn, allowed me to live in Europe.
I believe that Ireland has fairly liberal rules along these lines, but it is worth checking into it no matter what foreign
country one's parents were born.
Won't even remotely work for me. I'm from old and undistinguished stock. All my grandparents were born in the US and three
of my four grandparents have gene pools that go back to before the Revolution (two English, one bizarrely Hungarian).
If you could speak Hungarian (which would be a feat ), you could apply for Hungarian passport by ancestry (assuming you can
track your Hungarian roots with sufficient documentation). That would open all of EU, and I think you might like Berlin
No, my Hungarian ancestors have supposedly been here over 200 years, plus my mother was terrified of both her parents, in particular
her Hungarian father, who was estranged from the rest of his family, and so she knows nothing about his ancestors. The claim was
they came to help fight in the Revolutionary War and stayed. That's likely family urban legend, but my mother is pretty sure his
parents were born here too.
Ireland allows you to claim citizenship
if you have an Irish grandparent (with some caveats). Many US and Canadians use this to work/settle in the EU. A Chicago friend
who was working in London and HK got her Irish passport without ever bothering to visit Ireland.
Easy enough within the EU of course – there are huge numbers of northern European retirees living on the Med and in Portugal.
But plenty of Britons are finding out to their horror they are very vulnerable to both Brexit and a weakening sterling.
I've not looked into the visa side of things, but some Asian countries target retirees as a source of investment in rural areas.
I don't know if it still does, but Taiwan used to market itself to Japanese retirees as a cheap place to move with your yen pensions.
There are a lot of retirement developments in Thailand and elsewhere, marketed on cheap property and good quality health systems.
They seem to aim mostly at Europeans and Japanese.
Mexico. I have friends (gay, married; a retired nurse and retired librarian), who moved there full-time 3 years ago after 30+
years in NYC, and nearly 15 years of periodic vacations all over Mexico, to consider possible locations. They moved to a medium-sized
city about 3 hours by bus from Mexico City, somewhat off the beaten path of the usual expat communities. Very affordable, and
permanent residency is not a problem. Mexico City is very affordable, very good subway system, and has lots of things to do if
you're retired and need to fill up a day. Over their years of visits, they built up a network of friends and connections, and
have found good local doctors and dentists. One is fluent in Spanish, the other not so much.
To me, another thing that makes the US horrible and expensive for older people (among other groups) is the virtual requirement
for a car. Outside of a few major metro areas you're basically screwed without one. Part of why I encourage my mother to move
back to Germany after my father passed away (even though she drives now and has a car) she can get basically anywhere in Europe
without needing to get behind the wheel.
Yves, Sweden might take you, if you can take the winters the requirements for self-employed residence permits aren't too harsh.
So far they've managed to not overdo it on neoliberalism, although there are forces that sure try to make it happen.
Thanks for the link. These bits from "Requirements for obtaining a residence permit as a self-employed" do seem a bit daunting,
though: "show that you have established customer contacts and/or a network in Sweden", and "show that the business' services or
goods are sold and/or produced in Sweden". This would be tough for us, since our main business now is fiber arts (weaving, etc.)
and farming, all very local things. I do some part-time programming but that's also quite local.
Fifteen years ago, I qualified for NZ immigration, just barely. Now I'm too old (their points system penalizes you on age).
Sad, really, since I spent a year in NZ as a child, went to school there, went on camping trips and adored the landscape, etc.
I still consider it my first home.
When Bush got appointed the second time in 2005 we made the move to Australia and boy are we glad we did.
The concerns about family and friends cited here are real but we have adjusted and Aussies are very easy and welcoming as new
friends.
We recently dropped our "private health coverage" which is essentially an American-style system that sits atop the existing
public system. So when my son recently had a non-serious health problem we were really astonished when, at 2 hours' notice, a
doctor showed up at our house to treat him. Bill? Zero. All of the health care we've received here has been top-notch.
Not mentioned in the article is that many countries, especially in Asia, are not ageist . Employers actually value and
respect the experience and wisdom older workers bring.
But my view is that the only hope is to hijack the politics of everything in the U.S., the richest country on Earth
has more than enough money to solve its woes. So pick a single issue, a simple one that everybody can understand, one that is
so destructive and hateful and wasteful that everybody can get behind it, and organize. Can I suggest Permanent War ? Maybe
mention the $21 trillion that went missing at the Pentagon in the last decade? Maybe help people understand that the
enemy (Osama, ISIS) is dead ? Show them a quick chart and ask them to pick which one they want to buy , an electronic
gun that can shoot Middle Eastern goat herders from space, or 25 new hospitals.
Stop the War. It's what worked in the 60's, and it can work again. A New Peace Dividend that can be spent on the things people
are crying out for like retirement and health care. Leave out all of the other divisive stuff like gender and race and abortions
and green energy and net neutrality. The party platform has one item on it: Stop The War. Peace, Bread, and Land.
Yes, the trick is getting to Canada and Quebec at my advanced age. I know the provinces have job categories where they are
seeking workers, otherwise my impression is it's by points, and I fail on that. The only way in might be if I got some sort of
teaching post at one of the unis for something where my background would add something they couldn't get locally.
I speak French. The spousal unit is learning. The cats picked it up quickly ;^) They are quite happy being "minous", rather
than kitties.
Actually in Montreal you can get by fine with English only in the West Island. I have anglophone colleagues who only speak English.
this is so true. 2 or more cars per household, and the ridiculous quantities of meat in their diet, are probably the two main
reasons why americans consume more than twice as much as the EU average.
I lived in Sweden for 6 months (as an EU citizen). There is indeed a lot going for it but there are a lot of issues too that
don't get media attention. As a Professor in Uppsala I was warned by a friendly local that "even if you were a Stockholm-based
immigrant to here you'd find it difficult to integrate". This was not due to any latent racism or anything like that – merely
that Swedes have quite an ingrained way of "putting down roots" (compared to, say, Denmark). So I was warned that socialising
means many many weeks of doing the coffee and cakes thing, then, if things go well, you may get invited out for a drink in a bar,
then again, if weeks of that work you may get an invite for a home visit.
It's tough – and I was someone who (unlike many anglos) was keen to learn the language so as to fit in better – though (of
course) Swedes typically have brilliant English you can't expect them all to speak it exclusively in a social context just to
accommodate you. So I witnessed Europeans (central, southern and western) tended not to integrate well and instead formed their
own groups. Furthermore Swedish healthcare, although overall cheap and good, does not do well on the "integrated care" front –
IIRC (don't have reference to hand) some "official" comparisons of industrialised countries bear this out and its ranking dropped
several places due to this issue.
It was incredibly difficult (even with employer sponsorship) to get Aussie permanent residency .but the "final hurdle" of citizenship
was a cinch (given that most of the "benefit" is accrued through PR, not citizenship) .I don't think any non-North American industrialised
country is unequivocally "better" – you decide what you want most and what you'll compromise on and take your choice. I'm probably
going to get citizenship of a 3rd country (Ireland – not cheap but I'm entitled to it via Irish mother and Irish paternal grandfather)
to hedge my bets if my company stays afloat but I have enough relatives there to know it has its own set of issues.
Agree on the integration part, but if you know this going in I think it's a bit more manageable (you learn not to take it personally,
that's just the way Swedes are, and it's definitely not universal). It also helps to join activity groups – they're into that
in a major way.
There are also large ex-pat communities in towns and cities of virtually any size. My circle of friends and acquaintances is
a Sesame Street-like cast of people from all over Europe, the Americas, Africa, and Asia who have all moved here to study and
work. Many of us speak Swedish with full professional fluency, hold dual-citizenship and regularly consume Swedish media but have
found other transplants to be among the most welcoming and have gravitated towards each other for that reason.
Oh, this is an entrepreneurial visa. That's; how I got into Oz but they shut that down. They typically require that you show sufficient net worth to fund a business and you need to generate a certain level of domestic
revenues and/or employment to stay.
The way "in Sweden" is tacked on at the end regarding where you make money makes it a little vague as to which part of the
and/or it applies to. I think they also do a reasonable job of looking at the whole case and would understand someone making a
living online or remotely. They just want you to pay tax here. If you haven't done the conversion already, 200,000 SEK is around
25,000 USD at today's rate, which I think is pretty modest from my vague knowledge of this type of visa in other parts of the
world.
But like I said, in my experience Migrationverket is quite polite, professional and even welcoming when you deal with them,
so it de worth contacting them if you're interested.
Aaw, that's really kind! And I am 1/4 Swedish if that at all helps, although my grandmother was born here (her father came
over and then had kids here after he got established).
I emailed one of our corporate attorneys today, he's been with the company since the early 1990s, and Outlook told me he resigned
on 12/8. I asked someone about it, and they said, yeah, he's moving to Sweden. I'm dying to find out why, and what he's going
to do.
It's the tax and treasury account compliance that stops many and causes more to renounce US citizenship combined with many
European banks refusing to do business with Americans that make expatriating very difficult. It's a feature and not a bug as Lambert
would say
FATCA has been a source of unending critical trouble for expatriates from the USA but also bureaucratic hassle for non-US citizens
who have strictly nothing to do with the USA.
I live 2 miles outside of San Miguel de Allende in the state of Guanajuato, Mexico. It's been voted the best tourist city in
the world by several magazines a little Paris. Settling here was tough, and ultimately I had to become functional in Spanish to
get the 13 year lease at $500/mo for a 4 bedroom 3 1/2 bath, needs work house, on 2 acres, since my landlord doesn't speak English.
But I live far and away better than I could in the US, on 1/3d to 1/2 of the cost. I am living in the only sustainable place of
my life pretty friendly, pretty clean, awfully nice a veritable garden of fireflies, butterflies, bird life, decent animal husbandry,
up against the mountains, much in nature reserve. There is excellent medical care at reasonable prices. I am 8 hours from the
US border if I have serious Medicare needs. Town offers wonderful food, luxuries, entertainment if I want to go in. Down here
we say, thank god people in the US are afraid and ignorant of Mexico. It keeps them away.
There is a lot of hand wringing in the Mexican press about how American and Canadian retirees have gentrified and de-Mexicanized
San Miguel de Allende. If the shit ever hits the fan, at the very least I would want my immigration papers in order, but really
I just would rather not be there.
Plus, quality major healthcare (the kind that a 65+ person may need suddenly at any time) is not cheap in Mexico and the Mexican
government has made it much harder for new arrivals to get onto the Institute of Medicine and Social Security.
When you add in the very high levels of xenophobia in Mexico (just look at how the Central Americans and even Mexican Americans
are treated) and deteriorating security situation in more and more states it is a risky proposition. I would not want my mom to
move there.
We take their low wage huddled masses and they get our gentry who benefited from paying low wages. It's win win! Or a stupid
circle jerk. Not sure which.
Unfortunately given escalating healthcare costs in Mexico, plus the same xenophobia as ever, they're much less keen on taking
our huddled masses. Plus they have a big problem now with American retirees who are trying to live on less than $1000 a month
in US social security, well under the approx $2500 month required to get a retiree visa, who can no longer return to the US for
healthcare or family visits because they can't even afford the bus ticket and might not be let back into Mexico because of their
massive immigration violations.
I think that's part of the problem. America is more and more reluctant to take in the huddled Mexican masses which means that
these huddled Mexican masses may begrudge more and more the privileged gringos who make the trip down south.
I also live near San Miguel de Allende in a small, agricultural Mexican community perched on the side of an extinct volcano.
I pretty much avoid the expat scene, shop in the mercados, hang with Mexican friends and am thoroughly enjoying soaking in this
wonderful way of life. I made this move at age 70.
Certainly, this required a major adjustment. It's not like moving from Boston to Tucson. It's more like moving to a different
universe. But if a person is open, hangs loose and finds someone to help work through the ins and outs of the immigration process,
it's not all that difficult.
My health insurance is free because of my age and health care here puts the emphasis on *care*. An acquaintance had a knee
replacement and the total out-of-pocket cost to her was 3300 pesos – about 170 usd. The entire surgical team came into her room
and introduced themselves before the procedure. The surgeon was top notch and she is fully functional with no pain for the first
time in years.
I've taken road trips from Chihuahua to Oaxaca alone with my dogs and have never felt unsafe. There are certain roads in Guerrero,
certain parts of Mexico City, etc that I avoid because it's just common sense. I did the same in parts of NYC and Albuquerque.
It was clear to me that I would outlast my savings if I'd stayed in the US. Here, I can afford to live here modestly but comfortably.
I have a Spanish tutor and I can get by. I am obviously a gringa but when Mexicans speak English to me and I answer in Spanish,
they smile and everything changes. People here are kind, polite and, if you don't behave like the proverbial "ugly American" (some
expats do, unfortunately), you may find yourself treated like family. And the way of life, the quality of the food, so many things
have had a hugely positive effect on my health. My borderline hypertension has given way to BP numbers I haven't seen since I
was in my 20s – and I take no pharmaceuticals.
I lived all over the US before moving here. I have no intention of going back. I'm eligible to become a Mexican citizen soon
and I will do so. Whether I renounce my US citizenship remains to be seen. I haven't been back to the US since moving here so
.
I speak Spanish at a near-native level (started learning as a child and lived years in Latin America).
My sincere advice is don't learn much more, if you're happy now, just keep being happy. If you're able to understand better
the world around you, the glow will rub off and you'll likely find that you are not in fact being treated as family but as a guest.
I once spent a year in South East Asia and made a conscious decision not to get too involved, and loved it. I pretty much had
the same experience you're having in Mexico. When I'm in Mexico the feeling is of constantly hitting my head against a glass ceiling
and biting my tongue.
The wonderful thing about not speaking the language is it's an automatic filter. Only people who like foreigners talk with
you and you are constantly in the position of wonderful people helping you out, because you need help.
But for the love of God, stay on the beaten tourist path (SMA-Oaxaca City-Cholula etc.). Don't go into Guerrero except maybe
Taxco. I was just in Chilpancingo for a professional event, taking every precaution, and the stories you hear first hand are horrifying.
The security situation in Mexico is deteriorating badly.
Even states like Puebla that used to be safe are seeing kidnappings and other extreme crime. If you speak Spanish, the issue
of security it is utterly unavoidable, it creeps into many conversations and dominates the local news.
because there isn't a lot of evidence most labor gets a very good return for crossing borders (like maybe all the low paid
mexican immigrant laborers with no rights for example?). Well yes and maybe it's better for them than staying put, but it isn't
any kind of good life. Most labor, even most skilled labor, is a lot closer to that "dime a dozen" bucket than any kind of name
your own price bucket. As individuals labor just doesn't have much power, now maybe labor movements need to cross borders have
all the workers at whole companies emigrate even.
Yes, I agree that in many cases labor doesn't necessarily win by moving in the real world. My comment was more on philosophical
level – and somewhat a spin on the NC concept of "because markets" – in an ideal world countries would compete on attracting labor
by what they offer in concrete material benefits.
'According to Pew Charitable Trusts, only 13 percent of Baby Boomers still have [defined benefit pensions].'
This 13 percent remnant overwhelmingly consists of government employees, whose defined benefit pensions are uniformly underfunded
(and even understated as to HOW underfunded they are).
On the back side of Bubble III, as pension sponsors' equity-heavy assets shrink like an ice cream cone in the Sacramento sun,
a hue and cry will arise for massive tax increases on the hapless public to bail out public employees' rich pensions. (Not that
they aren't already happening -- two towns near me just hiked their sales tax by 1 percent to bail out police and firefighter
pensions.)
'Pension envy' will be the defining cultural war of the 2020s. Got ammo?
"Pension envy" has been around for a long time, Jim. I'm in my late 50s and grew up in one of the reddest states in the country
(North Dakota). For forty years I've heard many snarky remarks about public pensioners, not to mention those gawdawful Unions
(AFL-CIO, et al.). It never occurred to these people to demand the same treatment from THEIR private employers instead of complaining
about collectively bargained for benefits. Much easier to beggar thy neighbor, apparently. Sigh.
yes just unionize and get a pension from your private employer – not all of which are big employers btw which might be the
only plausible shot at a private sector pension -however most people work for small to mid-size companies. And then people wonder
why people think public sector employees are clueless about reality when it's all "let them eat cake" all the time.
I say let's NOT pay much higher taxes to fund the public pensions but INSTEAD pay much higher taxes to fund expanded and improved
SOCIAL SECURITY for all. It's only equitable, it's only just, there shouldn't be favored types of retirees, whoever we work for,
we all get old if we live long enough. Btw those same private sector unions have often sold out younger employees and accepted
tiered wages etc.. I'm not anti-union, I'm skeptical of non-radical unions being sufficient.
For me, it's about merging all plans into one universal pension – Social Security, and defend it as hard as, or harder, as
pension plans are defended now.
government employees, whose defined benefit pensions are uniformly underfunded
They are not uniformly underfunded. The Wisconsin state and local employee pension system is fully funded. Even Scott Walker
hasn't been able to undo that.
The only way I could figure out how to retire in the US was to find a house in a semi rural community that is a 45 minute drive
past gentrification.
Start by buying a lot (bare land) then put a cheap RV on it, later a manufactured home if possible. Or find a lot with an older
decrepit -- but still livable single wide trailer. Buy it for a roof and grandfathered utilities.
Medicare, plus low price house, plus low-status address. We also looked for a county with a high percentage of over-65 residents
and rudimentary senior services.
Still not optimal but workable. northern California is where we landed because of family. Look for cheap towns with collapsed
logging, farming or fishing industries.
Investigate by taking vacations in community.
Downsides include car-dependent culture, dependence on Medicare system, poor public transit, 2 hour drive to land of decent
coffee shops.
Canada was a serious thought experiment until I realized they dont want old people unless they bring large bags of money along.
That's similar to what we've done, and we're an hour away from 'civilization'. Our difference being that we're still years
away-Medicare wise.
Our plan mostly revolves around the idea of not getting sick, a common way to avoid costly medical bills, combined with ACA
(for the time being) and costly deductibles that will put the hurt on us financially, but not devastate us, should push>meet<shove.
Too busy with yoga and writing to set up hostel. We do host traveling yoga teachers who come through periodically to teach
at county yoga studios.
The second part of the scheme outlined above is to bring a low cost avocation that gives your life meaning and connects you
with others. For me it was photography, writing, travel, and yoga. As years go by travel and photography are diminishing, yoga
and writing expanding.
I traveled like the dickens when I was younger, and am content now to hang out and do stuff that costs a pittance, most of
which doesn't involve a computer in any capacity, aside from this here ball & chain.
Yves, have you checked to see if you qualify for Canadian permanent residency? I did and don't qualify. I'm retired with a
good income from pension, social security, and interest from retirement savings. If I sold my house I'd nearly be a millionaire,
which around here isn't that big a deal. It's also not enough for the Canadians, which makes sense, given that I've never paid
into their health system and my medical expenses are likely to increase as I age. My understanding is that, given I am not going
to proved the Canadian economy with a scarce skill, I would have to invest $2 million in a business in Canada that created jobs
for Canadians.
I had a work colleague from Sweden. She had been a school teacher there and came to the U.S. to sell financial products, make
a lot of money and avoid Swedish taxes. I asked her if she were going to become a U.S. citizen. She looked at me like I was crazy,
laughed and said, "Hell no, I would never wish to be old in America."
I'm laying this one down at the door of social Darwinism at work. If you're poor then you deserve nothing and if you are rich
then obviously you deserve everything. That is why someone like Peter Thiel can waltz into New Zealand and buy himself citizenship
in less that a fortnight there. Not everybody can get themselves into the Best Exotic Marigold Hotel in India. And that mention
of Ayn Rand and her influence on American life through people like Paul Ryan?
Well, if so may Congressmen want to investigate Russian influence in American politics then I present you with Ayn Rand as proof
positive. In spite of all her malignant opinions, it should be noted that it did not stop her from claiming Medicare and Social
Security when she got old. She did not want to be bankrupted by illness in old age so registered under her married name.
From my perch, if any Americans want to make the move, I would say over the next decade before that door closes. The regulations
are already tightening up such as making sure that you owe no taxes or the like before you leave. More Americans are now renouncing
their citizenship as America still want to tax them even when they have moved away. After this decade, I regret to say, that America
will be no country for old people.
In the most excellent book "I Will Bear Witness" diarist Victor Klemperer is often writing about German-Jewish friends that
are leaving the 3rd Reich for other shores, subject to a "25% Reich Flight Tax", and in reality it was more like a 50-75% tax. What's our going rate?
I had another friend, a real gem of a man. From privilege, a Harvard graduate, progressive activist, who worked for low pay
in the non-profit sector. He described his future retirement plan as "homeless in Honduras."
Sorry, I was triggered by the introduction. I am an American in my late 30s and I've lived a large chunk of my adult life outside
the US, Latin America mostly and East Asia. Already now I'm hoping not to live long-term outside the country again.
I just made a short trip to Mexico and thought dear God I'm too old for this.
If you speak the local language and are hooked into local issues, you quickly realize that there is an unbelievable (for urban
Americans who are used to a mosaic international society) amount of xenophobia in almost every other country. Being an outsider
everywhere I go, with all the constant microagressions (and ocasional more major aggressions) wears on me the way Lambert says
that inequality wears on the body.
And if you don't speak the local language and try to isolate yourself among other retirees -- why even be alive at that point?
I don't imagine commenters on this site of all people sitting at a bar all day arguing US and UK politics in English with some
other retirees far away from the action.
And speaking of inequality, most countries have far worse inequality than the US and it is savage and painful to watch when
your security guard finishes a 12 hour shift and then starts another 12 hour shift across the street.
By the way don't get me started on the cost of healthcare. It's cheap until you run into a major complication. I had surgery
in Peru for something minor and the total bill was over $5000 USD. Imagine if it were heart surgery. My expat insurance paid it
but you can't get that if you're over a certain age.
And speaking of inequality, most countries have far worse inequality than the US and it is savage and painful to watch when
your security guard finishes a 12 hour shift and then starts another 12 hour shift across the street.
The obvious in your face OMFG inequality is often worse, but the absolute inequality in America is among the greatest in the
world. Most countries, outside Latin America, and Sub-Saharan Africa specifically, have better income equality. We are
one step up from El Salvador . I've been to El Salvador, and no offense to them, we really should be doing much, much
better than that small, oppressed, corrupt, dirt poor country. Granted, we are overwhelmingly wealthier, so being poor here is
often not as bad as there, but still.
With that rant done, the GINI coefficient, which is a quick dirty way of measuring inequality, and therefore the economic/social/political
well being of a country with 1.0 meaning one person owns everything and 0.0 complete income equality. The figures change some
depending on whose doing the figuring, but the GINI for income in the American paradise is around .47 compared to Mexico's 0.48
with the Swedish hellhole at 0.24. If you are counting wealth instead of income, the United States is 0.8. Also, our lowest, therefore
our most equal GINI was 0.36 in 1968. A study was done showing Rome's GINI (income) was 0.44.
I really should check again, but I recall reading nobody, anywhere who did not have revolution, uprising, something bad once
0.59 was reached.
Come to Bangkok. The medical care here is superb.. very reasonably priced and absolutely state of the art. Yes, we pay out
of pocket, but only for what we need. There's competition between health care providers and one can get a quote from multiple
sources for any surgical procedure. The US, with its ever increasing costs which now are something like 17% of GDP, is on an unsustainable
path. Combined with the pending pension crisis I am concerned about the future for my US colleagues.
After my first annual physical here my Dr. said, bluntly, no pills but lose 25 lbs and exercise daily and come back in 6 months.
An honest answer to our metabolic issues.
The lifestyle is fantastic, food is superb, cheap direct flights to anywhere in the world, world class beaches and vineyards,which
make a halfway decent red wine, with wonderful restaurants, are just two hours away. The occasional coup keeps everything interesting.
I can honestly say my lifestyle has improved in my retirement by leaving the US.
" The U.S. Is No Country for Older Men and Women "?
Indeed, it isn't. But increasingly, it's no place for younger people either. The stagnant wages, rising housing costs, and
rising medical costs impact younger people just like they do older people. And yes, I know that younger people's medical expenses
tend to be lower that they are for older people, but today's youth are being socked with educational expenses that seem to know
no bound:
https://www.nakedcapitalism.com/2017/12/student-loan-defaults-approach-5-million-using-permissive-definition-default.html
Is the solution really to "strengthen" programs like Social Security, Medicare and Medicaid, or would it be better to tackle
the monopolies and rent-seeking behavior that results in the need for ever more dollars to be supplied? Bob Hertz had some excellent
ideas regarding medical costs in
https://www.nakedcapitalism.com/2017/11/medical-cost-reduction-act-2017.html
. I think this would be a better solution than to simply promise more money for the money-hungry beasts out there to consume on
the behalf of seniors. Tackling rising costs at the source would benefit everybody .
But strengthening social services can be done and will help many people. Fixing root causes looks politically impossible (today) and will be strongly opposed by powerful interests. I doubt anyone
here would object but we are not in charge
Yes, makes some sense. Fixing root causes would include things like fixing ever rising rents etc. (although sometimes seniors
can get it cheaper). However, the reality is living on social security is hard at this point even for those who own a home, just
because the old age benefits are so much less than almost any other industrialized country on earth. So just increasing those
would help a lot.
the loss of the family network is an important thing to consider for many. Someone from our family always goes with my aunt to her hours-long chemo sessions and doctor appointments. In the waiting rooms, I see all these other solo cancer patients. They often look sodden. Maybe they're always going to chemo
alone? The last thing you want when battling illness is also battling a sense of isolation.
Seriously, all the centrists act like the US should welcome people from all over the world, while Canada hardly lets ANYONE
in. Also, I just got the aforementioned "Nomadland" book from my library, which I'll start on as soon as I finish "The Big Rig"
which is (so far) a fantastic book about the way the trucking industry screws its workers.
My friend Max, the neurosurgeon left the US several years ago for Switzerland. His son Peter had a serious brain tumor and
went to Switzerland for treatment. Max bankrolled the treatment with a $2 million gift. Max's son is now cancer free and is now
working at CERN and is also in the process of immigrating. Max and his son at beneficiaries of a very substantial trust fund that
is sited in Nevada. Max renounced his US passport and it cost 30% of his assets. Max's son is facing a similar cost. It was easy
for Max and his son, both are extremely wealthy and Max's parents were Swiss. Lesson: portable skills that enjoy strong demand
and loads of income.
I've often thought of moving abroad but see myself more as living in a different country for only part of the year. I'd love
to hear more from those who are ex-pats.
Home ownership in Germany is 52% and it is below 45% in Switzerland. It is 65-75% in almost all other rich countries including
the US. It is actually around 85% in Russia and 90% in Cuba although the amenities are not quite the same.
I think that it has become increasingly apparent that the rich have no sense of noblesse oblige. They are in it for themselves
and nobody else.
I'd be very interested to see if they believe their own propaganda on things like Ayn Rand and Social Darwinism. I know that
many libertarian types can be, but the more extreme Ayn Rand types? Or is this just a coping mechanism?
It may be like oil executives who for years publicly denied global warming, but knew the truth. I think that deep inside, many
wealthy people know exactly how worthless they are to society and insecure. They will never admit the truth though in public.
But the only bargain "world city" I know of is Montreal.
Canadian here. Montreal has it's pros and cons. I have talked with a few people who are fed up with that city and left.
Pros:
+ Cheap rent (especially compared to any other large city)
+ Very cultured city, for lack of a better term (night life, arts, exotic places to eat that you can actually afford, that sort
of thing)
+ For a while it was Canada's job creation capital due to our weak dollar
+ Cheap tuition for students compared to rest of Canada
+ Cheap hydro! Car insurance is also much cheaper.
+ Considered the best city in North America for cycling (
https://www.mtlblog.com/lifestyle/montreal-ranked-1-bicycle-friendly-city-in-north-america
). There's also lots of parks and green spaces.
+ Apart from NYC and if you live in the middle of the city, Montreal is one of the few North American cities where you probably
don't need a car
Cons:
– Becoming increasingly unillingual (French), which is one of the reasons why one of my colleagues left Montreal
– Buddy of mine says healthcare is not very good by Canadian standards and being an English speaker will be a big disadvantage
(the government is actively trying to get people to be French) and I believe there is mandatory French schooling for parents of
English origin
– Quality of roads is pretty awful in Quebec I find and drivers can be aggressive. Infrastructure as a whole is aging.
– Winter isn't that cold (By Canadian standards mind you), but Montreal does get quite a bit of snow.
– Outside of the boom periods, it can be hard to find a good job or frankly, a job
– Wages in many jobs isn't as good (although often the lower cost of living makes up for it, so net you may not be that much worse
off, and in some cases, even better off)
– Some of the worst traffic congestion in Canada
– Quebec separatism politics
– There are cultural issues you should be aware of:
http://www.cbc.ca/news/canada/montreal/quebec-low-birthrate-immigration-1.3573966
– A lot of consumer goods aren't as available in Canada, although you can rent a US mailbox or use Kinek at the border (Expensive
because our dollar is weaker and you have to pay for import taxes, US taxes, along with the mailbox fees). On the other hand,
there are some items in Canada and especially Quebec that are not as available in the US.
On the fence:
– If you own a home, I have been told that many parts of Montreal are a "Buyers market" now so if you ever want to move out
– There are government services like affordable childcare, but they do have long waitlists. That said, child care is cheaper than
in the rest of Canada as this still does drive the costs of the private sector down.
– The US is making it harder for Americans to renounce their US citizenship for those moving from the US (
https://www.theglobeandmail.com/news/politics/delays-costs-mount-for-canadians-renouncing-us-citizenship/article28688026/
)
– Taxes are higher, but the majority of payers (especially those not in the six figures and with children) will find themselves
better off I'd say in Quebec due to the better services.
– A lot of folks in Quebec say that Montreal is expensive compared to the rest of the province, although for a city its size,
it is fairly affordable
The big challenge though is that Canada's immigration system is pretty restrictive, and yes older immigrants are at a drawback
(the purpose is to attract immigrants that are likely to pay more in the system over their life than take out).
The other big issue with Canada is that neoliberalism, although not as bad as the US, has very strong backers and I fear could
get worse. We seem to be following the dark path the US has undergone. I just hope that a genuine left can come out, not this
neoliberal identity politics stuff that really serves the rich.
It's really not that hard to move to a third world country. It's practically a lateral move.
1. Bad public transport. Check.
2. Corrupt government. Check.
3. High wealth inequality. Check.
4. Increasingly bad infrastructure. Check.
I am sure there are plenty of areas where the US is ahead, but plenty where it's behind like affordable healthcare. But really
at the end of the day, moving is not easy because of : language, and for active people scratching that itch to be productive.
Yves, the US is also no place for young people. My wife and I have been visiting South America checking out possible retirement
locations. In Ecuador, we found a young Swiss man (late 20s) with his Ecuadorian girlfriend who were running the Hacienda we stayed
in near Cotacachi. The 80-year old owner had been in a car crash and had to have someone take over operations right away. The
owner's daughter was friends with the young Swiss man and recommended him to her father. In the United States you would never
see someone his age given this much responsibility. He had trained in the hospitality field and came to Ecuador a couple of years
earlier because he would actually have the opportunity to own and operate his own business, which he considered an impossibility
in Western Europe. He told us his Swiss parents were also seriously considering re-locating to Ecuador for a better quality of
life in retirement (and presumably – my guess – to be near the eventual grandchildren). They were not wealthy but had sufficient
funds to provide relatively small seed capital for their son's business in Ecuador.
In Montevideo, we met a young woman in her early thirties from Montana and her French husband, a chef, who had just opened
the café we had stopped in for postres and tea some 8 months earlier. They left the U.S. about 6 or 8 years ago (can't recall
exactly) because they concluded they had no opportunities there, and came to Montevideo after a friend recommended it. They now
have two daughters in school there.
I spoke with a prominent immigration attorney in Montevideo who told me that it's not just Americans, many Western Europeans
were also emigrating to Uruguay "because of social issues." I didn't press for an explanation.
It's a mistake – and implicitly demeaning to the country – to think of these places as retirement havens. A North American
or European young adult might actually be able to build a life for themselves in these places because the capital investment hurdles
are low, and there are opportunities.
Every time I talk to my Boomer father he wonders how I could be so irresponsible as to not, like him, have "saved for retirement."
He's got an Air Force pension, a local government pension, a pension from a private employer, and social security. There's a 0%
chance I'll ever be able to pay off my student loans. I have less take-home money after 20 ostensibly successful years in my profession
than I did when I was 15 years old and working in a deli.
For most people in my generation, our retirement plans are to hope to win the lottery, and if not, suicide.
They often did have to pay out of their salaries into those pensions as well, so he has a tiny bit of a point, it wasn't all
free money. But they were of course much better deals than the 401ks on offer now, that we are lucky to even be able to have purely
for the tax benefits, which most employers aren't even contributing to.
I remember my friend's mother, an RNA (Cdn equiv of an LPN) who religiously contributed to her voluntary pension plan. It was
hard for her, single mother in the 50's and 60's, but she considered it the responsible thing to do. When she came to retire in
the mid 70's she was disappointed (understatement) to find that the pension she had sacrificed to contribute to for all those
years paid her a whopping $17 per month.
When I was planning for my retirement, in the 70's and 80's, I was looking at interest rates of 7 to 10 % -- truly! It is no
accident that interest rates are now less than the rate of inflation, unless you are paying out, of course. We are being robbed
in every possible way.
I'm pre-baby boomer, with no pension because of the industry I worked in. But I do own my own home in rural Pennsylvania for
how long, I'm not sure. 20% of my modest income goes to school and property taxes. I recently let a handicapped friend live in
my other building; he gets $700 a month and $85 in food stamps. Currently both of us are struggling to deal with paying to heat
our homes, so the last time he was bitching to me I said: "Why else do you think old people are living in trailers in the Arizona
desert?"
I considered not only Arizona but Cuba. I know enough Spanish to get by. But I decided that I would stay in the U.S. I think
everyone needs to downsize and simplify because, unless the American people wake up and revolt, things aren't going to get any
better.
P.S. I tried to research bankruptcy and mortgage foreclosure rates in Pennsylvania. Nothing current, but I found that the rates
continually increased every year, and this was well before the 2008 implosion. So I assume that the situation is probably dire
by now.
What's a second world country? And Montreal is inexpensive?
Anyway thinking from a young person's perspective it's even worse. Employment prospects are crap everywhere especially Europe
where there is some inkling of a social safety net.
As I said, it's an inexpensive world city. You missed that. It's even been rated that way. Rent is cheap. My costs would be
40% or so lower than in NYC.
Yeah, but that's not a very high hurdle: almost *anything* is cheaper than NYC in particular, and NYS in general. Not to mention
less stressful. I tend to recommend Buffalo and outlying suburbs/rural areas, but then again I'm biased, being a native of the
area. Real estate differences can be dramatic even within NYS: I routinely compare prices and taxes in Erie county vs Wyoming
county. Its a real eye-opener, especially compared to anything near Albany or NYC.
This entire thread is simply heartbreaking, Americans have had their money, their freedom, their privacy, their health, and
sometimes their very lives taken away from them by the State. But the heartbreaking part is that they feel they are powerless
to do anything at all about it so are just trying to leave.
But
"People should not fear the government; the government should fear the people"
As your quote appears to imply, it's not a problem that can be solved by voting which, let's not forget, is nothing more than
expressing an opinion. I am not sticking around just to find out if economically-crushed, opiod-, entertainment-, social media-addled
Americans are actually capable of rolling out tumbrils for trips to the guillotines in the city squares. I strongly suspect not.
This is the country where, after the banks crushed the economy in 2008, caused tens of thousands to lose their jobs, and then
got huge bailouts, the people couldn't even be bothered to take their money out of the big banks and put it elsewhere. Because,
you know, convenience! Expressing an opinion, or mobilizing others to express an opinion, or educating or proselytizing others
about what opinion to have, is about the limit of what they are willing, or know how to do.
100M US citizens in 1945; 200M in 1976; 320M in 2016. Population up and resources down. The politicians would give you anything
to get a vote, the reason they don't is that the money is not there. Everything goes up in price and wages stagnant because that's
how economies adjust to less resources to share. Canada and Australia and Europe are going the same way as the US, not because
of nefarious politicians or greedy rich people, although they certainly exist, but because the sums don't add up any more. MMT
is just one example of grasping at straws. I wonder what part of 'you are doomed' old people don't understand? Apart from the
last 80 years or so, people got old and died; now they get old, get sick long term, go bankrupt and then die.
I have a very rare good, very old insurance policy.
I sure hope you can hold onto it Yves. I also had a really good private BCBS NC policy. This year they killed it and threw
me onto ACA which is horribly expensive and crappy if you are single and make > $48200. 5 years to Medicare .if it's still there.
I have also lived internationally in my late 30's. It takes huge effort to liquidate here and to move. I believe it's risky
to be an alien in a country if there is unrest -- and unrest is coming imo.
I'm scouting Panama this Feb but I also just read the central america will be ground zero for climate change and they are already
having droughts.
Canada or NZ are likely the best choices for immigration if that were even possible.
I live in Alaska. Can in no way think of living somewhere else. At sixty years of being. My body is a bit worn hard and put
away wet. I have no property, no retirement, no substantial savings. What i do have is knowledge.
Now driving a cab for cash in a small city on the coast. I make furniture as my backup income. Was a cabinetmaker at a time.
In fact i count on making furniture till i cannot.
Expecting to have SS is not something i count on. I know all the wild plants to forage, wild game to be had-small game. Fish
of course, living on the coast.
But when i cannot pay rent i will have to rely on the generosity of friends to let me put up a shack on their property to get
by, or squat on land. The woman who lets me live with her for the last twenty-two years will be able for retirement next year.
We will set her up with something simple in town. I shall head for the woods. Am building a foot powered wood lathe. You may find
me one day on the side of the road turning simple items for pittance + beer.
Getting a little tired of this leave the country stuff. Heard it from my dad in the 60's (Australia). Heard it from my husband
this morning (Canada). I am 66 years old and intend to fight it out on this line, like Grant, until they carry me out of here
in the funeral home van. This is my country, major f–ked as it presently stands.
Petras did not mention that it was Carter who started neoliberalization of the USA. The subsequent election of Reagan signified
the victory of neoliberalism in this country or "quite coup". The death of New Deal from this point was just a matter
of time. Labor relations drastically changes and war on union and atomization of workforce are a norm.
Welfare state still exists but only for corporation and MIC. Otherwise the New Deal society is almost completely dismanted.
It is true that "The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class
and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition
while the capitalists retained their executive prerogatives." But the key factor in this compromise was the existence of the USSR as
a threat to the power of capitalists in the USA. when the USSR disappeared cannibalistic instincts of the US elite prevailed over caution.
Notable quotes:
"... The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East. ..."
"... In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health. ..."
"... modern welfare state' ..."
"... Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility. ..."
"... Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions. ..."
"... World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war. ..."
"... So-called ' right to work' ..."
"... Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay ..."
"... Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined ..."
"... With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation. ..."
"... Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations. ..."
"... The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income. ..."
"... The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy ..."
"... Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home. ..."
"... President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff. ..."
"... Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities. ..."
"... President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven. ..."
"... Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' . ..."
"... Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe. ..."
"... Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump ..."
"... Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block. ..."
"... The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave. ..."
"... Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump. ..."
"... Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century. ..."
"... The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history ..."
"... "The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class." ..."
"... Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up ..."
"... Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers. ..."
"... The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy. ..."
"... Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it. ..."
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the
capitalist class has been steadily dismantling the entire welfare state.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for
affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an
astronomical degree.
What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare
legislation and institutions.
The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a
series of endless imperial wars, especially in the Middle East.
In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program
– a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized
by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity
and poor health.
New Deals and Big Wars
The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern
welfare state' .
Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections,
collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and
benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class
and provided for 2 generations of upward mobility.
Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through
federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace
shop steward councils organized 'on the spot' job action to protect safe working conditions.
World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective
bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number
were also killed or wounded in the war.
The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via
the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively
outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.
Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized
low interest mortgages encourage home-ownership, especially for veterans.
The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still
retained control over capital, the workplace and plant location of production.
Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses.
Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing
hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses
– sometimes through violence.
Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the
will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist
class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially
in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.
While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of
a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led
to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.
Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of
them addressed structural racism and poverty.
The Last Wave of Social Welfarism
The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal
governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists
and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and
young workers, threatened by military conscription, challenged the military and social order.
Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition
among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at
the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama
unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent:
African American, Hispanic, draft resisters, etc.
Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented.
A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats
and the AFL-CIO. Overall, social and economic inequalities diminished during this period.
The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare
as we knew it – as the bill for militarism placed even greater demands on the public treasury.
With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were
accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.
Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based
on politically fragile foundations.
The Debacle of Welfarism
Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk
to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated
to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.
Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations.
On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.
The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention
firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush
and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was
astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization,
capital flight and massive tax evasion reduced labor's share of national income.
The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression,
at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its
control of the commanding heights of the economy.
The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor
unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists
retained their executive prerogatives.
The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike
production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some
leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special
brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political
organizations. The quality of labor organization declined even as the quantity of trade union membership increased.
Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official
collaboration was extended overseas with strategic consequences.
The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese
colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It
pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.
US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked
to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant
militants.
' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home.
The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers.
Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas
and turned their backs on labor at home.
Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration
increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants,
activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare
state.
Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the
rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was
over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans,
community-based working poor and militant youth organizers.
The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War
(and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.
Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale,
non-unionized production at home.
The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology
would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes
displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the
so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.
Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated
collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers.
Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial
capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax
havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline
of wages, living standards and social benefits for millions of American workers.
The New Abolitionists: Trillionaires
The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.
Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness.
Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.
As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the
Democratic Party. They elected militarists and demagogues as their new presidents.
President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the
prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.
Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next
generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families
ravaged the urban communities.
Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened
the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.
The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national
treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks
on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were '
just
too small to matter' .
The Age of Demagogues
President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion
to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.
Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade
pacts – pushed by the eloquent African American President.
Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while
swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama
completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued
to moralize to black families about ' values' .
Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa.
The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of
Africans flooding Europe.
'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate
health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits
with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin
of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal
mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust
belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast
to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.
Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump
Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security.
The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.
The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare
state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing
at Trump's allies for shoving the corpse of welfare state into its grave.
Conclusion
Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed
to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush,
' Wall Street savior' Obama and ' Trickle-down' Trump.
Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions
into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in
the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from
the 'Great Financial Meltdown' of the 21 st century.
The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and
among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off
state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class
polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable
standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually
all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment
while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury
and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.
Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy.
To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to
elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich.
Deception and demagogy of the labor-
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be
magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.
I think that's one of the only situations where preppers would actually live out what they've been prepping for (except for
a natural disaster).
I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between
our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today.
I wonder how long it can last.
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism),
I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going
to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened
during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs;
while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation
did as well.
From then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world.
Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to
develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that
probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts
to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.
The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need
it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended
targets and not moochers.
Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead
of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals
tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive
up demand.
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period,
the capitalist class has been steadily dismantling the entire welfare state.
Wrong wrong wrong.
Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for
them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were
the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based
entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit
even with all the special, government granted favors showered upon it.
Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune
the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a
money conduit and ultimate profit center for the big money grubbers.
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate
goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly
ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.
In the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the
middle of the 80 ties we were equal to the US in standards of living.
Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way
behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the
same period has almost quadrupled. And so has our societies.
The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long
as you are wealthy.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies
for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits
to an astronomical degree.
What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems
facing destitute Americans? "Qu'ils mangent de la bagels!", source:
https://en.wikipedia.org/wiki/Let_them_eat_cake
Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions
in a sense, you're either in their club Or you're in the service industry that surrounds it.
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably
blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're
only talking about a bunch of meat cutters at Safeway.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy,
you're either in the club or not.
The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role
of the media in the American transformation? The success is mind blowing.
America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for
the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed
on, with a side of opiates.
There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering,
disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a
system that issues violence while portending (with the best media money can buy) that they claim the higher ground.
""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public
treasury." We are definitely in this situation today."
Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury."
Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder.
Anyone recognize the author?
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending
than ever before and Obamacare represents another huge entitlement.
Intellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has
been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism
results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and
secrecy, you're either in the club or not.
They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called
unions. Access is via credentialing and licensing. Good Day
Bernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and
of NATO."
Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals
and schools in self defense"
Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."
It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that
gets them to bare their teeth and speak of poo.
What came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication
of what people know or their general intelligence – although that myth has flourished. Good afternoon.
For an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of
novels by SM Stirling.
It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even
high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly
the cities did not have food, water, power, etc.
Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.
It has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish
ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden
Petras did not mention that it was Carter who started neoliberalization of the USA. The subsequent election of Reagan signified
the victory of neoliberalism in this country or "quite coup". The death of New Deal from this point was just a matter
of time. Labor relations drastically changes and war on union and atomization of workforce are a norm.
Welfare state still exists but only for corporation and MIC. Otherwise the New Deal society is almost completely dismanted.
It is true that "The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class
and the labor unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition
while the capitalists retained their executive prerogatives." But the key factor in this compromise was the existence of the USSR as
a threat to the power of capitalists in the USA. when the USSR disappeared cannibalistic instincts of the US elite prevailed over caution.
Notable quotes:
"... The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a series of endless imperial wars, especially in the Middle East. ..."
"... In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program – a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity and poor health. ..."
"... modern welfare state' ..."
"... Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections, collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class and provided for 2 generations of upward mobility. ..."
"... Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace shop steward councils organized 'on the spot' job action to protect safe working conditions. ..."
"... World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number were also killed or wounded in the war. ..."
"... So-called ' right to work' ..."
"... Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses. Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing hours (" thirty hours work for forty hours pay ..."
"... Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined ..."
"... With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation. ..."
"... Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based on politically fragile foundations. ..."
"... The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization, capital flight and massive tax evasion reduced labor's share of national income. ..."
"... The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression, at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its control of the commanding heights of the economy ..."
"... Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home. The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers. Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas and turned their backs on labor at home. ..."
"... President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff. ..."
"... Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families ravaged the urban communities. ..."
"... President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven. ..."
"... Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued to moralize to black families about ' values' . ..."
"... Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa. The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of Africans flooding Europe. ..."
"... Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump ..."
"... Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security. The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block. ..."
"... The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing at Trump's allies for shoving the corpse of welfare state into its grave. ..."
"... Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush, ' Wall Street savior' Obama and ' Trickle-down' Trump. ..."
"... Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from the 'Great Financial Meltdown' of the 21 st century. ..."
"... The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class polarized social system in history ..."
"... "The collaboration of liberals and unions in promoting endless wars opened the door to Trump's mirage of a stateless, tax-less, ruling class." ..."
"... Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up ..."
"... Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a money conduit and ultimate profit center for the big money grubbers. ..."
"... The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long as you are wealthy. ..."
"... Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions in a sense, you're either in their club Or you're in the service industry that surrounds it. ..."
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period, the
capitalist class has been steadily dismantling the entire welfare state.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies for
affordable housing have been gutted. ' Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits to an
astronomical degree.
What started as incremental reversals during the 1990's under Clinton has snowballed over the last two decades decimating welfare
legislation and institutions.
The earlier welfare 'reforms' and the current anti-welfare legislation and austerity practices have been accompanied by a
series of endless imperial wars, especially in the Middle East.
In the 1940's through the 1960's, world and regional wars (Korea and Indo-China) were combined with significant welfare program
– a form of ' social imperialism' , which 'buy off' the working class while expanding the empire. However, recent decades are characterized
by multiple regional wars and the reduction or elimination of welfare programs – and a massive growth in poverty, domestic insecurity
and poor health.
New Deals and Big Wars
The 1930's witnessed the advent of social legislation and action, which laid the foundations of what is called the ' modern
welfare state' .
Labor unions were organized as working class strikes and progressive legislation facilitated trade union organization, elections,
collective bargaining rights and a steady increase in union membership. Improved work conditions, rising wages, pension plans and
benefits, employer or union-provided health care and protective legislation improved the standard of living for the working class
and provided for 2 generations of upward mobility.
Social Security legislation was approved along with workers' compensation and the forty-hour workweek. Jobs were created through
federal programs (WPA, CCC, etc.). Protectionist legislation facilitated the growth of domestic markets for US manufacturers. Workplace
shop steward councils organized 'on the spot' job action to protect safe working conditions.
World War II led to full employment and increases in union membership, as well as legislation restricting workers' collective
bargaining rights and enforcing wage freezes. Hundreds of thousands of Americans found jobs in the war economy but a huge number
were also killed or wounded in the war.
The post-war period witnessed a contradictory process: wages and salaries increased while legislation curtailed union rights via
the Taft Hartley Act and the McCarthyist purge of leftwing trade union activists. So-called ' right to work' laws effectively
outlawed unionization mostly in southern states, which drove industries to relocate to the anti-union states.
Welfare reforms, in the form of the GI bill, provided educational opportunities for working class and rural veterans, while federal-subsidized
low interest mortgages encourage home-ownership, especially for veterans.
The New Deal created concrete improvements but did not consolidate labor influence at any level. Capitalists and management still
retained control over capital, the workplace and plant location of production.
Trade union officials signed pacts with capital: higher pay for the workers and greater control of the workplace for the bosses.
Trade union officials joined management in repressing rank and file movements seeking to control technological changes by reducing
hours (" thirty hours work for forty hours pay "). Dissident local unions were seized and gutted by the trade union bosses
– sometimes through violence.
Trade union activists, community organizers for rent control and other grassroots movements lost both the capacity and the
will to advance toward large-scale structural changes of US capitalism. Living standards improved for a few decades but the capitalist
class consolidated strategic control over labor relations. While unionized workers' incomes, increased, inequalities, especially
in the non-union sectors began to grow. With the end of the GI bill, veterans' access to high-quality subsidized education declined.
While a new wave of social welfare legislation and programs began in the 1960's and early 1970's it was no longer a result of
a mass trade union or workers' "class struggle". Moreover, trade union collaboration with the capitalist regional war policies led
to the killing and maiming of hundreds of thousands of workers in two wars – the Korean and Vietnamese wars.
Much of social legislation resulted from the civil and welfare rights movements. While specific programs were helpful, none of
them addressed structural racism and poverty.
The Last Wave of Social Welfarism
The 1960'a witnessed the greatest racial war in modern US history: Mass movements in the South and North rocked state and federal
governments, while advancing the cause of civil, social and political rights. Millions of black citizens, joined by white activists
and, in many cases, led by African American Viet Nam War veterans, confronted the state. At the same time, millions of students and
young workers, threatened by military conscription, challenged the military and social order.
Energized by mass movements, a new wave of social welfare legislation was launched by the federal government to pacify mass opposition
among blacks, students, community organizers and middle class Americans. Despite this mass popular movement, the union bosses at
the AFL-CIO openly supported the war, police repression and the military, or at best, were passive impotent spectators of the drama
unfolding in the nation's streets. Dissident union members and activists were the exception, as many had multiple identities to represent:
African American, Hispanic, draft resisters, etc.
Under Presidents Lyndon Johnson and Richard Nixon, Medicare, Medicaid, OSHA, the EPA and multiple poverty programs were implemented.
A national health program, expanding Medicare for all Americans, was introduced by President Nixon and sabotaged by the Kennedy Democrats
and the AFL-CIO. Overall, social and economic inequalities diminished during this period.
The Vietnam War ended in defeat for the American militarist empire. This coincided with the beginning of the end of social welfare
as we knew it – as the bill for militarism placed even greater demands on the public treasury.
With the election of President Carter, social welfare in the US began its long decline. The next series of regional wars were
accompanied by even greater attacks on welfare via the " Volker Plan " – freezing workers' wages as a means to combat inflation.
Guns without butter' became the legislative policy of the Carter and Reagan Administrations. The welfare programs were based
on politically fragile foundations.
The Debacle of Welfarism
Private sector trade union membership declined from a post-world war peak of 30% falling to 12% in the 1990's. Today it has sunk
to 7%. Capitalists embarked on a massive program of closing thousands of factories in the unionized North which were then relocated
to the non-unionized low wage southern states and then overseas to Mexico and Asia. Millions of stable jobs disappeared.
Following the election of 'Jimmy Carter', neither Democratic nor Republican Presidents felt any need to support labor organizations.
On the contrary, they facilitated contracts dictated by management, which reduced wages, job security, benefits and social welfare.
The anti-labor offensive from the ' Oval Office' intensified under President Reagan with his direct intervention
firing tens of thousands of striking air controllers and arresting union leaders. Under Presidents Carter, Reagan, George H.W. Bush
and William Clinton cost of living adjustments failed to keep up with prices of vital goods and services. Health care inflation was
astronomical. Financial deregulation led to the subordination of American industry to finance and the Wall Street banks. De-industrialization,
capital flight and massive tax evasion reduced labor's share of national income.
The capitalist class followed a trajectory of decline, recovery and ascendance. Moreover, during the earlier world depression,
at the height of labor mobilization and organization, the capitalist class never faced any significant political threat over its
control of the commanding heights of the economy.
The ' New Deal' was, at best, a de facto ' historical compromise' between the capitalist class and the labor
unions, mediated by the Democratic Party elite. It was a temporary pact in which the unions secured legal recognition while the capitalists
retained their executive prerogatives.
The Second World War secured the economic recovery for capital and subordinated labor through a federally mandated no strike
production agreement. There were a few notable exceptions: The coal miners' union organized strikes in strategic sectors and some
leftist leaders and organizers encouraged slow-downs, work to rule and other in-plant actions when employers ran roughshod with special
brutality over the workers. The recovery of capital was the prelude to a post-war offensive against independent labor-based political
organizations. The quality of labor organization declined even as the quantity of trade union membership increased.
Labor union officials consolidated internal control in collaboration with the capitalist elite. Capitalist class-labor official
collaboration was extended overseas with strategic consequences.
The post-war corporate alliance between the state and capital led to a global offensive – the replacement of European-Japanese
colonial control and exploitation by US business and bankers. Imperialism was later 're-branded' as ' globalization' . It
pried open markets, secured cheap docile labor and pillaged resources for US manufacturers and importers.
US labor unions played a major role by sabotaging militant unions abroad in cooperation with the US security apparatus: They worked
to coopt and bribe nationalist and leftist labor leaders and supported police-state regime repression and assassination of recalcitrant
militants.
' Hand in bloody glove' with the US Empire, the American trade unions planted the seeds of their own destruction at home.
The local capitalists in newly emerging independent nations established industries and supply chains in cooperation with US manufacturers.
Attracted to these sources of low-wage, violently repressed workers, US capitalists subsequently relocated their factories overseas
and turned their backs on labor at home.
Labor union officials had laid the groundwork for the demise of stable jobs and social benefits for American workers. Their collaboration
increased the rate of capitalist profit and overall power in the political system. Their complicity in the brutal purges of militants,
activists and leftist union members and leaders at home and abroad put an end to labor's capacity to sustain and expand the welfare
state.
Trade unions in the US did not use their collaboration with empire in its bloody regional wars to win social benefits for the
rank and file workers. The time of social-imperialism, where workers within the empire benefited from imperialism's pillage, was
over. Gains in social welfare henceforth could result only from mass struggles led by the urban poor, especially Afro-Americans,
community-based working poor and militant youth organizers.
The last significant social welfare reforms were implemented in the early 1970's – coinciding with the end of the Vietnam War
(and victory for the Vietnamese people) and ended with the absorption of the urban and anti-war movements into the Democratic Party.
Henceforward the US corporate state advanced through the overseas expansion of the multi-national corporations and via large-scale,
non-unionized production at home.
The technological changes of this period did not benefit labor. The belief, common in the 1950's, that science and technology
would increase leisure, decrease work and improve living standards for the working class, was shattered. Instead technological changes
displaced well-paid industrial labor while increasing the number of mind-numbing, poorly paid, and politically impotent jobs in the
so-called 'service sector' – a rapidly growing section of unorganized and vulnerable workers – especially including women and minorities.
Labor union membership declined precipitously. The demise of the USSR and China's turn to capitalism had a dual effect: It eliminated
collectivist (socialist) pressure for social welfare and opened their labor markets with cheap, disciplined workers for foreign manufacturers.
Labor as a political force disappeared on every count. The US Federal Reserve and President 'Bill' Clinton deregulated financial
capital leading to a frenzy of speculation. Congress wrote laws, which permitted overseas tax evasion – especially in Caribbean tax
havens. Regional free-trade agreements, like NAFTA, spurred the relocation of jobs abroad. De-industrialization accompanied the decline
of wages, living standards and social benefits for millions of American workers.
The New Abolitionists: Trillionaires
The New Deal, the Great Society, trade unions, and the anti-war and urban movements were in retreat and primed for abolition.
Wars without welfare (or guns without butter) replaced earlier 'social imperialism' with a huge growth of poverty and homelessness.
Domestic labor was now exploited to finance overseas wars not vice versa. The fruits of imperial plunder were not shared.
As the working and middle classes drifted downward, they were used up, abandoned and deceived on all sides – especially by the
Democratic Party. They elected militarists and demagogues as their new presidents.
President 'Bill' Clinton ravaged Russia, Yugoslavia, Iraq and Somalia and liberated Wall Street. His regime gave birth to the
prototype billionaire swindlers: Michael Milken and Bernard 'Bernie' Madoff.
Clinton converted welfare into cheap labor 'workfare', exploiting the poorest and most vulnerable and condemning the next
generations to grinding poverty. Under Clinton the prison population of mostly African Americans expanded and the breakup of families
ravaged the urban communities.
Provoked by an act of terrorism (9/11) President G.W. Bush Jr. launched the 'endless' wars in Afghanistan and Iraq and deepened
the police state (Patriot Act). Wages for American workers and profits for American capitalist moved in opposite directions.
The Great Financial Crash of 2008-2011 shook the paper economy to its roots and led to the greatest shakedown of any national
treasury in history directed by the First Black American President. Trillions of public wealth were funneled into the criminal banks
on Wall Street – which were ' just too big to fail .' Millions of American workers and homeowners, however, were '
just
too small to matter' .
The Age of Demagogues
President Obama transferred 2 trillion dollars to the ten biggest bankers and swindlers on Wall Street, and another trillion
to the Pentagon to pursue the Democrats version of foreign policy: from Bush's two overseas wars to Obama's seven.
Obama's electoral 'donor-owners' stashed away two trillion dollars in overseas tax havens and looked forward to global free trade
pacts – pushed by the eloquent African American President.
Obama was elected to two terms. His liberal Democratic Party supporters swooned over his peace and justice rhetoric while
swallowing his militarist escalation into seven overseas wars as well as the foreclosure of two million American householders. Obama
completely failed to honor his campaign promise to reduce wage inequality between black and white wage earners while he continued
to moralize to black families about ' values' .
Obama's war against Libya led to the killing and displacement of millions of black Libyans and workers from Sub-Saharan Africa.
The smiling Nobel Peace Prize President created more desperate refugees than any previous US head of state – including millions of
Africans flooding Europe.
'Obamacare' , his imitation of an earlier Republican governor's health plan, was formulated by the private corporate
health industry (private insurance, Big Pharma and the for-profit hospitals), to mandate enrollment and ensure triple digit profits
with double digit increases in premiums. By the 2016 Presidential elections, ' Obama-care' was opposed by a 45%-43% margin
of the American people. Obama's propagandists could not show any improvement of life expectancy or decrease in infant and maternal
mortality as a result of his 'health care reform'. Indeed the opposite occurred among the marginalized working class in the old 'rust
belt' and in the rural areas. This failure to show any significant health improvement for the masses of Americans is in stark contrast
to LBJ's Medicare program of the 1960's, which continues to receive massive popular support.
Forty-years of anti welfare legislation and pro-business regimes paved the golden road for the election of Donald Trump
Trump and the Republicans are focusing on the tattered remnants of the social welfare system: Medicare, Medicaid, Social Security.
The remains of FDR's New Deal and LBJ's Great Society -- are on the chopping block.
The moribund (but well-paid) labor leadership has been notable by its absence in the ensuing collapse of the social welfare
state. The liberal left Democrats embraced the platitudinous Obama/Clinton team as the 'Great Society's' gravediggers, while wailing
at Trump's allies for shoving the corpse of welfare state into its grave.
Conclusion
Over the past forty years the working class and the rump of what was once referred to as the ' labor movement' has contributed
to the dismantling of the social welfare state, voting for ' strike-breaker' Reagan, ' workfare' Clinton, ' Wall Street crash' Bush,
' Wall Street savior' Obama and ' Trickle-down' Trump.
Gone are the days when social welfare and profitable wars raised US living standards and transformed American trade unions
into an appendage of the Democratic Party and a handmaiden of Empire. The Democratic Party rescued capitalism from its collapse in
the Great Depression, incorporated labor into the war economy and the post- colonial global empire, and resurrected Wall Street from
the 'Great Financial Meltdown' of the 21 st century.
The war economy no longer fuels social welfare. The military-industrial complex has found new partners on Wall Street and
among the globalized multi-national corporations. Profits rise while wages fall. Low paying compulsive labor (workfare) lopped off
state transfers to the poor. Technology – IT, robotics, artificial intelligence and electronic gadgets – has created the most class
polarized social system in history. The first trillionaire and multi-billionaire tax evaders rose on the backs of a miserable
standing army of tens of millions of low-wage workers, stripped of rights and representation. State subsidies eliminate virtually
all risk to capital. The end of social welfare coerced labor (including young mother with children) to seek insecure low-income employment
while slashing education and health – cementing the feet of generations into poverty. Regional wars abroad have depleted the Treasury
and robbed the country of productive investment. Economic imperialism exports profits, reversing the historic relation of the past.
Labor is left without compass or direction; it flails in all directions and falls deeper in the web of deception and demagogy.
To escape from Reagan and the strike breakers, labor embraced the cheap-labor predator Clinton; black and white workers united to
elect Obama who expelled millions of immigrant workers, pursued 7 wars, abandoned black workers and enriched the already filthy rich.
Deception and demagogy of the labor-
If the welfare state in America was abolished, major American cities would burn to the ground. Anarchy would ensue, it would be
magnitudes bigger than anything that happened in Ferguson or Baltimore. It would likely be simultaneous.
I think that's one of the only situations where preppers would actually live out what they've been prepping for (except for
a natural disaster).
I've been thinking about this a little over the past few years after seeing the race riots. What exactly is the line between
our society being civilized and breaking out into chaos. It's probably a lot thinner than most people think.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury." We are definitely in this situation today.
I wonder how long it can last.
While I agree with Petras's intent (notwithstanding several exaggerations and unnecessary conflations with, for example, racism),
I don't agree so much with the method he proposes. I don't mind welfare and unions to a certain extent, but they are not going
to save us unless there is full employment and large corporations that can afford to pay an all-union workforce. That happened
during WW2, as only wartime demand and those pesky wage freezes solved the Depression, regardless of all the public works programs;
while the postwar era benefited from the US becoming the world's creditor, meaning that capital could expand while labor participation
did as well.
From then on, it is quite hard to achieve the same success after outsourcing and mechanization have happened all over the world.
Both of these phenomena not only create displaced workers, but also displaced industries, meaning that it makes more sense to
develop individual workfare (and even then, do it well, not the shoddy way it is done now) rather than giving away checks that
probably will not be cashed for entrepreneurial purposes, and rather than giving away money to corrupt unions who depend on trusts
to be able to pay for their benefits, while raising the cost of hiring that only encourages more outsourcing.
The amount of welfare given is not necessarily the main problem, the problem is doing it right for the people who truly need
it, and efficiently – that is, with the least amount of waste lost between the chain of distribution, which should reach intended
targets and not moochers.
Which inevitably means a sound tax system that targets unearned wealth and (to a lesser degree) foreign competition instead
of national production, coupled with strict, yet devolved and simple government processes that benefit both business and individuals
tired of bureaucracy, while keeping budgets balanced. Best of both worlds, and no military-industrial complex needed to drive
up demand.
The American welfare state was created in 1935 and continued to develop through 1973. Since then, over a prolonged period,
the capitalist class has been steadily dismantling the entire welfare state.
Wrong wrong wrong.
Corporations [now] are welfare recipients and the bigger they are, the more handouts they suck up, and welfare for
them started before 1935. In fact, it started in America before there was a USA. I do not have time to elaborate, but what were
the various companies such as the British East India Company and the Dutch West India Companies but state pampered, welfare based
entities? ~200 years ago, Herbert Spencer, if memory serves, pointed out that the British East India Company couldn't make a profit
even with all the special, government granted favors showered upon it.
Corporations not only continuously seek monopolies (with the aid and sanction of the state) but they steadily fine tune
the welfare state for their benefit. In fact, in reality, welfare for prols and peasants wouldn't exist if it didn't act as a
money conduit and ultimate profit center for the big money grubbers.
Well, the author kind of nails it. I remember from my childhood in the 50-60 ties in Scandinavia that the US was the ultimate
goal in welfare. The country where you could make a good living with your two hands, get you kids to UNI, have a house, a telly
ECT. It was not consumerism, it was the American dream, a chicken in every pot; we chewed imported American gum and dreamed.
In the 70-80 ties Scandinavia had a tremendous social and economic growth, EQUALLY distributed, an immense leap forward. In the
middle of the 80 ties we were equal to the US in standards of living.
Since we have not looked at the US, unless in pity, as we have seen the decline of the general income, social wealth fall way
behind our own.
The average US workers income has not increased since 90 figures adjusted for inflation. The Scandinavian workers income in the
same period has almost quadrupled. And so has our societies.
The article is dismal reading, and evidence of the failings of the "unregulated" society, where the anything goes as long
as you are wealthy.
Between the mid 1970's to the present (2017) labor laws, welfare rights and benefits and the construction of and subsidies
for affordable housing have been gutted. 'Workfare' (under President 'Bill' Clinton) ended welfare for the poor and displaced
workers. Meanwhile the shift to regressive taxation and the steadily declining real wages have increased corporate profits
to an astronomical degree.
What does Hollywood "elite" JAP and wannabe hack-stand-up-comic Sarah Silverman think about the class struggle and problems
facing destitute Americans? "Qu'ils mangent de la bagels!", source:
https://en.wikipedia.org/wiki/Let_them_eat_cake
Like the Pentagon. Americans still don't readily call this welfare, but they will eventually. Defense profiteers are unions
in a sense, you're either in their club Or you're in the service industry that surrounds it.
As other commenters have pointed out, it's Petras curious choice of words that sometimes don't make too much sense. We can probably
blame the maleable English language for that, but here it's too obvious. If you don't define a union, people might assume you're
only talking about a bunch of meat cutters at Safeway.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and secrecy,
you're either in the club or not.
The war on unions was successful first by co-option but mostly by the media. But what kind of analysis leaves out the role
of the media in the American transformation? The success is mind blowing.
America has barely literate (white) middle aged males trained to spout incoherent Calvinistic weirdness: unabased hatred for
the poor (or whoever they're told to hate) and a glorification of hedge fund managers as they get laid off, fired and foreclosed
on, with a side of opiates.
There is hardly anything more tragic then seeing a web filled with progressives (management consultants) dedicated to disempowering,
disabling and deligitimizing victims by claiming they are victims of biology, disease or a lack of an education rather than a
system that issues violence while portending (with the best media money can buy) that they claim the higher ground.
""Democracy can only work until the people figure out they can vote for themselves generous benefits from the public
treasury." We are definitely in this situation today."
Quite right: the 0.01% have worked it out & US democracy is a Theatre for the masses.
I don't know who said it but someone long ago said something along the lines of, "Democracy can only work until the people
figure out they can vote for themselves generous benefits from the public treasury."
Some French aristocrat put it as, once the gates to the treasury have been breached, they can only be closed again with gunpowder.
Anyone recognize the author?
The author doesn't get it. What we have now IS the welfare state in an intensely diverse society. We have more transfer spending
than ever before and Obamacare represents another huge entitlement.
Intellectuals continue to fantasize about the US becoming a Big Sweden, but Sweden has only been successful insofar as it has
been a modest nation-state populated by ethnic Swedes. Intense diversity in a huge country with only the remnants of federalism
results in massive non-consensual decision-making, fragmentation, increased inequality, and corruption.
The welfare state is alive and well for corporate America. Unions are still here – but they are defined by access and
secrecy, you're either in the club or not.
They are largely defined as Doctors, Lawyers, and University Professors who teach the first two. Of course they are not called
unions. Access is via credentialing and licensing. Good Day
Bernie Sanders, speaking on behalf of the MIC's welfare bird: "It is the airplane of the United States Air Force, Navy, and
of NATO."
Elizabeth Warren, referring to Mossad's Estes Rockets: "The Israeli military has the right to attack Palestinian hospitals
and schools in self defense"
Barack Obama, yukking it up with pop stars: "Two words for you: predator drones. You will never see it coming."
It's not the agitprop that confuses the sheep, it's whose blowhole it's coming out of (labled D or R for convenience) that
gets them to bare their teeth and speak of poo.
What came first, the credentialing or the idea that it is a necessary part of education? It certainly isn't an accurate indication
of what people know or their general intelligence – although that myth has flourished. Good afternoon.
For an interesting projection of what might happen in total civilizational collapse, I recommend the Dies the Fire series of
novels by SM Stirling.
It has a science-fictiony setup in that all high-energy system (gunpowder, electricity, explosives, internal combustion, even
high-energy steam engines) suddenly stop working. But I think it does a good job of extrapolating what would happen if suddenly
the cities did not have food, water, power, etc.
Spoiler alert: It ain't pretty. Those who dream of a world without guns have not really thought it through.
It has been pointed out repeatedly that Sweden does very well relative to the USA. It has also been noted that people of Swedish
ancestry in the USA do pretty well also. In fact considerably better than Swedes in Sweden
Neoliberalism as "Die-now economics." "Embodiment into lower class" or "the representation as a member the lower
class" if often fatal and upper mobility mobility is artificially limited (despite all MSM hype it is lower then in Europe). So just
being a member of lower class noticeably and negatively affects your life expectancy and other social metrics. Job insecurity
is the hazard reserved for lower and lower middle classes destructivly effect both physical and mental health. Too much stress
is not good for humans. Neoliberalism with its manta of competition uber alles and atomization of the workforce is a real killer.
also the fact that such article was published and the comments below is a clear sign that the days of neoliberalism are numbered.
It should go.
Notable quotes:
"... In our new book , we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies. Focusing on the social determinants of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives, while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity, stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. ..."
"... Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment, inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in biologically measurable ways . ..."
"... Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction." In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children, families, household work ). So, even if class in our political economy is the driver, it's not everything. ..."
"... "Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers, whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It maintains that "the market" delivers benefits that could never be achieved by planning. ..."
"... Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive and morally corrosive. The market ensures that everyone gets what they deserve." ..."
"... As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we" are not possible because we have all become "I". ..."
"... Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is at once belittling (it's all about f-e-e-e-lings ..."
"... "we have measurable health outcomes from political choices" So True!!! ..."
In our new book
, we draw on an extensive body of scientific literature to assess the health effects of three decades of neoliberal policies.
Focusing on the social determinants
of health -- the conditions of life and work that make it relatively easy for some people to lead long and healthy lives,
while it is all but impossible for others -- we show that there are four interconnected neoliberal epidemics: austerity, obesity,
stress, and inequality. They are neoliberal because they are associated with or worsened by neoliberal policies. They are
epidemics because they are observable on such an international scale and have been transmitted so quickly across time and space
that if they were biological contagions they would be seen as of epidemic proportions.
(The Case-Deaton study provides an obvious fifth: Deaths of despair. There are doubtless others.)
Case in point for
one of the unluckier members of the 90%:
On the morning of 25 August 2014 a young New Jersey woman, Maria Fernandes, died from inhaling gasoline fumes as she slept
in her 13-year-old car. She often slept in the car while shuttling between her three, low-wage jobs in food service; she kept
a can of gasoline in the car because she often slept with the engine running, and was worried about running out of gasoline. Apparently,
the can accidentally tipped over and the vapours from spilled gasoline cost her life. Ms Fernandes was one of the more obvious
casualties of the zero-hours culture of stress and insecurity that pervades the contemporary labour market under neoliberalism.
And Schrecker and Bambra conclude:
Neoliberalism operates through labor markets to undermine health not only by way of the financial consequences of unemployment,
inadequate employment, or low wages, as important as these are, but also through chronic exposure to stress that 'gets under your
skin' by way of multiple mechanisms. Quite simply, the effects of chronic insecurity wear people out over the life course in
biologically measurable ways .
... ... ...
Oh, and "beyond class" because for social beings embodiment involves "social production; social consumption; and social reproduction."
In the most reductive definition of class -- the one I used in my crude 1% + 10% + 90% formulation -- class is determined by wage
work (or not), hence is a part of production (of capital), not social consumption (eating, etc.) or social reproduction (children,
families, household work ). So, even if class in our political economy is the driver, it's not everything.
L.S. reminiscent of Ernst Becker's, "The Structure of Evil" – "Escape from Evil"? (..not to indicate good vs. evil dichotomy)
A great amount of perspective must be agreed upon to achieve "change" intoned. Divide and conquer are complicit, as noted .otherwise
(and as indicated by U.S. economic history) change arrives only when all have lost all and can therefore agree begin again.
There is however, Naomi Klein perspective, "Shock Doctrine", whereby influence contributes to destabilization, plan in hand
leading to agenda driven ("neoliberal"=market fundamentalism) outcome, not at all spontaneous in nature:
"Neoliberalism sees competition as the defining characteristic of human relations. It redefines citizens as consumers,
whose democratic choices are best exercised by buying and selling, a process that rewards merit and punishes inefficiency. It
maintains that "the market" delivers benefits that could never be achieved by planning.
Attempts to limit competition are treated as inimical to liberty. Tax and regulation should be minimised, public services
should be privatised. The organisation of labour and collective bargaining by trade unions are portrayed as market distortions
that impede the formation of a natural hierarchy of winners and losers. Inequality is recast as virtuous: a reward for utility
and a generator of wealth, which trickles down to enrich everyone. Efforts to create a more equal society are both counterproductive
and morally corrosive. The market ensures that everyone gets what they deserve."
On Case-Deason: Sounds like home. I keep the scanner on(local news) ems and fire only since 2006(sheriff got a homeland security
grant). The incidence of suicide, overdose and "intoxication psychosis" are markedly increased in the last 10+ years out here
in the wilderness(5K folks in whole county, last I looked). Our local economy went into near depression after the late 90's farm
bill killed the peanut program then 911 meant no hunting season that year(and it's been noticeably less busy ever since) then
drought and the real estate crash(we had 30 some realtors at peak..old family land being sold off, mostly). So the local Bourgeoisie
have had less money to spend, which "trickles down" onto the rest of us.:less construction, less eating out even at the cheap
places, less buying of gas, and on and on means fewer employees are needed, thus fewer jobs. To boot, there is a habit among many
employers out here of not paying attention to labor laws(it is Texas ) the last minwage rise took 2 years to filter out here,
and one must scrutinize one's pay stub to ensure that the boss isn't getting squirrelly with overtime and witholding.
Geography plays into all this, too 100 miles to any largish city.
I'm not well versed in Foucault or Lacan but I've read some of both and in reading between the lines of their writing (the
phantom philosophy?) I saw a very different message than that often delivered by post-modern theorists.
As opposed to being champions of "self-actualization/identity" and "absolute relativism", I always got the impression that
they were both offering stark warnings about diving too deeply into the self, vis-a-vis, identity. As if, they both understood
the terrifying world that it could/would create, devoid of common cause, community, and ultimately empathy. A world where "we"
are not possible because we have all become "I".
Considering what both their philosophies claimed, if identity is a lie, and the subject is always generated relative to the
other, then how the hell can there be any security or well being in self-actualization? It is like trying to hit a target that
does not exist.
All potentially oppressive cultural categorizations are examples of this (black, latino, gay, trans, etc.). If the identity
is a moving target, both to the oppressor and the oppressed, then how can it ever be a singular source of political action? You
can't hit what isn't there. This is not to say that these groups (in whatever determined category) are not oppressed, just that
formulating political action based strictly on the identity (often as an essential category) is impossible because it does not
actually exist materially. It is an amalgamation of subjects who's subjectivity is always relative to some other whether ally
or oppressor. Only the manifestations of oppression on bodies (as brought up in Lambert's post) can be utilized as metrics for
political action.
I thought of a couple of other advantages of the "embodiment" paradigm:
Better Framing. Wonks like Yglesias love to mock working class concerns as "economic anxiety," which is
at once belittling (it's all about f-e-e-e-lings *) and disempowering (solutions are individual, like therapy or drugs).
Embodiment by contrast insists that neoliberalism (the neoliberal labor market (class warfare)) has real, material, physiological
effects that can be measured and tracked, as with any epidemic.
I acknowledge what you are saying. However, I have learned that when one is in the midst of a pessimistic scenario, one tends
to develop tunnel vision and assume that the future will be like the present, only worse. Though I despise psychology as a science,
this is a very psychological phenomenon. Granting what you say about Trump and the false optimism he generated, I voted for him
not because I hated Trump less, but that I hated Hillary more.
Nevertheless, notwithstanding, in spite of all this, I do have a certain optimism about the American people, as a rayon de
lumière in a gloomy prospect.
keep the blinders on, even better yet wear the virtual reality goggles of MAGA while the country is living off a never ending
fraud.
Every part of the us government is a fraud, the money is a fraud, wall street is a fraud, 99% of the food you eat is kosher
fraud and you pension is fraud as the money is not there to allow you to collect your pension yet most people are paying dearly
for their pension and the money goes to either israel or the profiteers of the war machine.
They are toast. The leaks are not going to stop. Once the baby boom generation dies off completely the next generations will
clean up their mess. The baby boom can't see past their own prosperity. But everyone else is ready for reform.
(trying to throw a little optimism into the mix)
Think about it.. when you look at the electoral map by county HRC was thoroughly crushed. Is DJT a SomaSalesMan aka Mega Psyop..
who the fuck knows. The awakening is happen Chinese water torture style.
This is a lot like being a Gold perma Bull. We want to come into the forums every day and write about how hopeless the situation
is (a lot like what I do here everyday).
Just remember this.. Even Mao's wife had to stand trial for crimes against the populace. In 20 years the babyboomers will be
out of the way and we can get onto bigger and better things.
the biggest problems come from the millennial who grew up with bullshit, baby boomers lived threw a lot of american bullshit
and they are the ones like PCR are warning the youngs that america's days are numbered . even Deagel.com predict that the us population
in 2025 will dwindle from 325 million to only 55 millions, where do you think the 275 million will go? nuclear war will take care
of them.
the corruption is so great that every single new weapon does not work and all these weapons are built at a great cost. The
bulk of the left activists are millennials , the same with the super left, yet on the right the millennials are busy filing their
nails, surfing and buying bitcoin for a quick profit.
I am Canadian, I am an outsider and see clearly as I am not part of the system, I see a country where the leaders convinced
the population that they are exceptional but the people took it as a compliment, it was meant to fool them into a sense of being
above the rest of the world, yet most americans do not know the capital of florida, california, mississippi, alabama yet they
are in their own country.
This exceptionalism is preventing them from understanding the danger they are in.
For the first time I see a consensus on zerohedge that PCR is 100% right and the posters are worried what will become of america
if israel is left with a huge hold on all us presidents and on the political infrastructure of the us and they agree with PCR
on the list of propaganda the us have been telling the citizens to keep them distracted from knowing that their days are numbered
when the Russians might attack thinking america wants to annihilate them.
We are in the late stages of Pax Judaica. They, through their money magic,usury,fiat printing,and the bought/paid for/bribed/blackmailed
sycophants,rule almost the whole world.The West entirely.
They have push so much,on all aspects of the society,that the recoil is going to be devastating.We started seeing this with
the Jerusalem f*ck up.
US can not be saved at this point. It is at the Event Horizon already. I don't know what will be left of it: a few 4th world
small countries ,where warlords kill each other? Americans love violence.
I absolutely sure IS...RA...EL is NOT going to survive. Neither Saudi Barbaria. Especially after this last blunder.
Will they go into the dustbin of history gracefully,without destroying the whole world in the process?
I don't think so,they are psychopaths.They do not like to lose or to be exposed for what they really are.
PCR makes a valid point. The Russians are patient ,balanced, intelligent people,but if they sense they are dealing with irrational
ones ,they will not take a chance. The Russians have already said that US is not agreement capable, a great insult in their view.
In America everybody has their labels (businessman, Libertarian, Democrat, Republican) so they can all fight with each other
better. The country is so Balkanized that cannot function as a whole any more. I guess that was the plan all along.
Peace and truth are not welcome at the Whitehouse which should be painted BLOOD RED. Politicians are a greedy bloodthirsty
criminals, That includes Trump. If you want to save the world from WW3 which we are watching incubate. ALL current crop of politicians
have to be thrown out of government. YOU NEED A BLOODY REVOLUTION and throw these criminals into maximum security with the killers
and molestors to do as they wish with them.
Without public revolt we'll just keep seeing, hearing and swallowing fake news after fake news brain wash and send our children
to kill the innocent in WAR after WAR.
Don't forget the biggest lie. Even bigger than 9/11. That in the mid 2000s millions of deadbeats all decided to buy houses
that they could not afford. What a joke of a country. Land of the fee. Home of the Slave.
"What Mueller is doing is so corrupt that he really should be arrested and renditioned to Egypt." Best line of the whole piece.
Love it. We are not, however, "Walking Into Armageddon" Rather, we are "Slouching into the Apocolypse"
Trump handing Jerusalem to israel is just the first step in setting up the rise of Israel and the fall of America. It is a
symbolic transfer of power. All is left is world war 3 and the financial system collapse.
PCR is way off this time. Flynn is acting as bait, and the swamp critters went for it. Trump and Bannon are playing the ol'
rope-a-dope rather well. After the Dems and Deep Staters wear themselves out throwing all of these ineffective punches they will
take them out.
You might be on to something...as the Dems and Deep State reveal themselves for what they really are, it makes it easier for
Trump to go in for the kill....! They are getting more and more careless and their corruption and stupidity revealed more and
more each day. I hope Trump be able to pave the way to cleaning up America and getting it back on its feet....we will see...!
"THE" controllers of the puppet politicans, bankers and world leaders "WANT YOU TO LIVE IN FEAR." All the reasons stated by
PCR are valid but not one of them is a reason to go out and get drunk tomorrow. Either you believe in your own fate and the actions
which control the fate which you harvest "OR YOU DON'T."
Why would I worry about things I have zero control over, especially when I "KNOW" "THEY" live off of that fear? I will live
every moment of my life in the joy and happiness which is this blessing to be alive "AND" will live in fear of no one. If you
live your life this way they lose and you get to appreciate a gift which is greater then any material object on the planet.
The worse which they can do when you decide to refuse to live in fear of "THEM" is to take your life which they have no power
to do either.. Put up your middle finger to all of them, smile and move on and enjoy what time you have here to make it the best
you can do.
Choose not to live in fear of them..
We all fear death and question our place in the universe. The artist's job is not to succumb to despair, but to find an antidote
for the emptiness of existence. ... Ernest Hemingway
Two interesting pieces of news out of moonofalabama.org
First b says the real buyer of the fake $450M fake DaVinci is MbS, the KSA crown prince. Second, MbS just fired his Zino-friendly,
Jared-friendly foreign minister.
The rumors early on were that Flynn knew who all the pedophiles were in Washington, wanted to go after them "AND" would not
back down. Trump's VP was included on that list and played a part in the decision to move him out of the public eye and into the
position he currently occupies behind the scenes.
Interestingly enough it was supposedly this stupid explanation of him not telling Pence about his meeting with the Russian
Ambassador which was the excuse as to why he had to be removed. On face value, think about how ridiculous this is. A decorated
General who answers to the President withheld information on a meeting which is fairly typical military procedure.
"IT'S CALLED THE NEED TO KNOW." HELLO....
Trump could have simply stated that Flynn was not under orders from Pence and was acting under a protocol common to members
within the Military but not common to politicians. If Pence wanted to know anything about what people within my Administration
are doing he is always welcome to discuss it with me. PERIOD...
THE ENTIRE EXCUSE IS TOTAL BS AND THE WEAKNESS OF THAT EXCUSE GIVES ME SUSPICION TO BELIEVE THAT THE ORIGIONAL RUMORS WERE
ACCURATE.
The Fascist Tom Cotton with his hair on fire leading the charge. Metaphorically leading the charge to our own destruction.
He would never get himself involved in any genuine battle charge. Russia is not my enemy or adversary.
Has Iraq, Libya, Syria, Iran, Russia, China, North Korea ever done any physical harm to the USA ? No ... How about the reverse
? Mmm, it appears the only ones that have attacked the USA are Saudi Arabia and Israel. But America does not attack them, instead
it only attacks the countries that have never attacked the USA.
Is that wierd or what ?, it's almost as if there is another agenda at play.
You mean the Islam that allows grandads to marry and abuse 10 year olds. Husbands to beat up their wives, hang gay teenage
boys off cranes in public squares. Whip 12 year old girls in public for wearing western tight jeans ( underneath their hijab may
I add). Satan would approve of this sadistic protocol.
it's amazing to see so much naivety here. People seems to believe that America/Russia are bad/good. But people it's not just
imperialism anymore it's globalism. Therefore it's not about interests of countries but rather the ones of oligarchs. And oligarchs
interests are international, so why would they be interested in Armageddon? Earth belong to them, why would they want to damage
their wealth so much? i think we'll see busyness as usual - small wars, removing obstacles for transnationals, concentration of
wealth and power and social engineering on global scale.
Naive, ha ha! Take a look at Libya, the War Crimes & Genocide, overseen by the US & Vassals and talk about Good/Bad, NO SON,
we're talking Class A EVIL here, and in the other Regime Change Neocon Playbook. How many Foreign Bases/Entanglements are Russia
involved in, outside of Russia? In their Only ME base/port in Syria the US tried to fuck them over. Now Russia has half a dozen
strategic Bases ( including a meeting of minds with Egypt, Qatar, Libya, Turkey, Sudan ) to eliminate DAESH/al-CIAd'uh (US Constructs).
Lastly, Only through Threat and Intimidation can the US keep these Vassals on board. Have you not noticed how the Geopolitical
Landmark is changing with Sovereigns flocking far and wide to Moscow, for an ALTERNATIVE to the Vassal Prisoner Status offered
up by Vichy DC.
Naive Son? Z/Hedgers will call out Russia if they deviate from the Path of Righteousness.
No Russia didn't displace, maim, murder, tens of millions of citizens in the ME, VICHY DC did.
I read somewhere that the Ukrainian Army has changed its rule book to allow soldiers to wear beards. The inference from this
is that those ISIS members rescued by the Americans are being shipped to Ukraine to fight with the Nazis against those in the
East who object to Kiev's desire to genocide ethnic Russians. It would appear that, not content with arming Nazis and putting
them in Ukraine's Government, the US is now putting an armed ISIS into Eastern Europe. Does anybody have more detail?
Airlifting them from Der el Zor ( and inevitable destruction at the hands of Syrian/Hezbollah Bravehearts ) onto the demarcation
line in the Donbass? Good luck with that Chestnut! What are the Jihadi's wearing, 3 SETS OF THERMALS? Let's put it this way, no
matter how many Jihadi proxy scum/Advisers they airlift into Donbass there will be 10 times more FOREIGN FREEDOM-FIGHTERS (ok
mainly Russian, but from Everywhere ) ready to join that gig, me included.
How convenient that Trump gets to play the Good Guy, supposedly fingers tied at every turn by Deep State, preventing him from
reaching out.
There's not a shred of evidence that he's intervened to mend relations with Russia and if there is can someone shed light on
this?
First up he has a filthy Neocon POS in Nikki Haley in the UN, the Only one on the Security Council who's a War Hawk (including
the Palestinian fiasco ).
Did he intervene in the ILLEGAL eviction of Russian Diplomatic Quarters? Has he worked diligently with China & Russia to resolve
DPRK or contributed to the Neocon war-drum beat with more bluster? Has he increased or defused tension in the ME by withdrawing
US Troops or has he added to Obama's clandestine proxy jihadi recruitment programme by sending moar ADVISERS?
They say Tillerson's on his way out, to be replaced by a Neocon war-hawk in Mike Pompeo who's current charge of al-CIAd'uh
covert operations is a continuation of the Obama failings.
Unlike Obama ( one of his few credits in 8 years ) Trump's Encouraging Netanyahu's Deviancy?
I've read over at the Saker/Other that behind the scenes Vichy DC could step up the supply of WMD's/Advisers to Kiev.
The US Coalition Forces in Syria (minus the US, lol), like their Iraqi counterparts (the Kurds in the main ) are at least talking
with Russia/Government to thwart, long-term US Military Bases on Syrian soil. Obviously the US is unhappy about this with their
Partition ambitions.
Pope John Paul II, Gorbachev, and Reagan, together, ended the Cold War. HW Bush is the architect on how the USA kept its military
industrial complex intact. The USA no longer had an existential threat, and no longer a reason to maintain a multiple tens of
billions annual defense budget. So HW Bush picked an enemy and started a global war, that continues to this day. The British military
map makers, redrew much of the middle east, after WWI.
The state of Israel was already in the works, long before the story of the holocaust, some 20 years later. Anyway, Sadaam Hussein,
leader of Iraq, and US ally, spoke to the Bush administration about Kuwait; and taking back for Iraq, what Sadaam believed the
British map makers took away in 1917. Saddam was fooled, and the Bush administration had a reason to keep the military industrial
complex intact. The globalism/new world order, that US and EU government officials speak of, is simply another way of saying that
no one has any civil liberties and everyone is being monitored.
This dangerous game was effective and working for quite a while. A great deal of wealth and power transferred to a select few.
The strategy went sideways when Mr Putin said enough is enough, in roughly 2011.
Now, freedom fighters have joined Mr Putin, such as Edward Snowden, Julian Assange, Barrett Brown, Manning, Glenn Greenwald,
Sarah Carter,and many other, to restore freedom and honor back to the people of the world by shining light on all of the corruption.
It will take Trump and Sessions some time to restore trust and to root out the corruption.
The bottom line is that there are good people out there, who will never let this criminal behavior and corruption to be hidden
from the unwashed masses.
America is just looking for an excuse to send their young kids to war to get shot to pieces and get mentally fucked up so the
drug industry can profit, the war industry can profit, the banks can profit...
"... The initiative described in this article reminds me of how the World Bank pushed hard for emerging economies to develop capital markets, for the greater good of America's investment bankers. ..."
"... By Burcu Kilic, an expert on legal, economic and political issues. Originally published at openDemocracy ..."
"... Today, the big tech race is for data extractivism from those yet to be 'connected' in the world – tech companies will use all their power to achieve a global regime in which small nations cannot regulate either data extraction or localisation. ..."
"... One suspects big money will be thrown at this by the leading tech giants. ..."
"... Out of idle curiosity, how could you accurately deduce my country of origin from my name? ..."
December 14, 2017 by Yves Smith Yves here. Notice that Costa
Rica is served up as an example in this article. Way back in 1997, American Express had
designated Costa Rica as one of the countries it identified as sufficiently high income so as
to be a target for a local currency card offered via a franchise agreement with a domestic
institution (often but not always a bank). 20 years later, the Switzerland of Central America
still has limited Internet connectivity, yet is precisely the sort of place that tech titans
like Google would like to dominate.
The initiative described in this article reminds me of how the World Bank pushed hard
for emerging economies to develop capital markets, for the greater good of America's investment
bankers.
By Burcu Kilic, an expert on legal, economic and political issues. Originally published
at
openDemocracy
Today, the big tech race is for data extractivism from those yet to be 'connected' in
the world – tech companies will use all their power to achieve a global regime in which
small nations cannot regulate either data extraction or localisation.
To avoid a 'failure ministerial," some countries see the solution as pushing governments to
open a mandate to start conversations that might lead to a negotiation on binding rules for
e-commerce and a declaration of the gathering as the "digital ministerial". Argentina's MC11
chair, Susana Malcorra, is actively pushing for member states to embrace e-commerce at the WTO,
claiming that it is necessary to " bridge the gap between the
haves and have-nots ".
It is not very clear what kind of gaps Malcorra is trying to bridge. It surely isn't the
"connectivity gap" or "digital divide" that is growing between developed and developing
countries, seriously impeding digital learning and knowledge in developing countries. In fact,
half of humanity is not even connected to the internet, let alone positioned to develop
competitive markets or bargain at a multilateral level. Negotiating binding e-commerce rules at
the WTO would only widen that gap.
Dangerously, the "South Vision" of digital trade in the global trade arena is being shaped
by a recent alliance of governments and well-known tech-sector lobbyists, in a group called
'Friends of E-Commerce for Development' (FED), including Argentina, Chile, Colombia, Costa
Rica, Kenya, Mexico, Nigeria, Pakistan, Sri Lanka, Uruguay, and, most recently, China. FED
claims that e-commerce is a tool to drive growth, narrow the digital divide, and generate
digital solutions for developing and least developed countries.
However, none of the countries in the group (apart from China) is leading or even remotely
ready to be in a position to negotiate and push for binding rules on digital trade that will be
favorable to them, as their economies are still far away from the technology revolution. For
instance, it is perplexing that one of the most fervent defenders of FED's position is Costa
Rica. The country's economy is based on the export of bananas, coffee, tropical
fruits, and low-tech medical instruments, and almost half of its population
is offline . Most of the countries in FED are far from being powerful enough to shift
negotiations in favor of small players.
U.S.-based tech giants and Chinese Alibaba – so-called GAFA-A – dominate, by
far, the future of the digital playing field, including issues such as identification and
digital payments, connectivity, and the next generation of logistics solutions. In fact, there
is a no-holds-barred ongoing race among these tech giants to consolidate their market share in
developing economies, from the race to grow the advertising market to the race to increase
online payments.
An e-commerce agenda that claims unprecedented development for the Global South is a Trojan
horse move. Beginning negotiations on such topics at this stage – before governments are
prepared to understand what is at stake – could lead to devastating results, accelerating
liberalization and the consolidation of the power of tech giants to the detriment of local
industries, consumers, and citizens. Aware of the increased disparities between North and
South, and the data dominance of a tiny group of GAFA-A companies, a group of African nations
issued a statement opposing the digital ambitions of the host for MC11. But the political
landscape is more complex, with China, the EU, and Russia now supporting the idea of a
"digital" mandate .
Repeating the Same Mistakes?
The relationships of most countries with tech companies are as imbalanced as their
relationships with Big Pharma, and there are many parallels to note. Not so long ago, the
countries of the Global South faced Big Pharma power in pharmaceutical markets in a similar
way. Some developing countries had the same enthusiasm when they negotiated intellectual
property rules for the protection of innovation and research and development costs. In reality,
those countries were nothing more than users and consumers of that innovation, not the owners
or creators. The lessons of negotiating trade issues that lie at the core of public interest
issues – in that case, access to medicines – were costly. Human lives and
fundamental rights of those who use online services should not be forgotten when addressing the
increasingly worrying and unequal relationships with tech power.
The threat before our eyes is similarly complex and equally harmful to the way our societies
will be shaped in the coming years. In the past, the Big Pharma race was for patent
exclusivity, to eliminate local generic production and keep drug prices high. Today, the Big
Tech race is for data extractivism from those who have yet to be connected in the world, and
tech companies will use all the power they hold to achieve a global regime in which small
nations cannot regulate either data extraction or data localization.
Big Tech is one of the most concentrated and resourceful industries of all time. The
bargaining power of developing countries is minimal. Developing countries will basically be
granting the right to cultivate small parcels of a land controlled by data lords -- under their
rules, their mandate, and their will -- with practically no public oversight. The stakes are
high. At the core of it is the race to conquer the markets of digital payments and the battle
to become the platform where data flows, splitting the territory as old empires did in the
past. As
the Economist claimed on May 6, 2017: "Conflicts over control of oil have scarred
the world for decades. No one yet worries that wars will be fought over data. But the data
economy has the same potential for confrontation."
If countries from the Global South want to prepare for data wars, they should start thinking
about how to reduce the control of Big Tech over -- how we communicate, shop, and learn the
news -- , again, over our societies. The solution lies not in making rules for data
liberalization, but in devising ways to use the law to reduce Big Tech's power and protect
consumers and citizens. Finding the balance would take some time and we are going to take that
time to find the right balance, we are not ready to lock the future yet.
One suspects big money will be thrown at this by the leading tech giants. To paraphrase
from a comment I made recently regarding a similar topic : "with markets in the developed
world pretty much sewn up by the tripartite tech overlords (google, fb and amazon), the next
3 billion users for their products/services are going to come from developing world". With
this dynamic in mind, and the "constant growth" mantra humming incessantly in the background,
it's easy to see how high stakes a game this is for the tech giants and how no resources will
be spared to stymie any efforts at establishing a regulatory oversight framework that will
protect the digital rights of citizens in the global south.
Multilateral fora like the WTO are de facto enablers for the marauding frontal attacks of
transnational corporations, and it's disheartening to see that some developing nations have
already nailed the digital futures of their citizens to the mast of the tech giants by
joining this alliance. What's more, this signing away of their liberty will be sold to the
citizenry as the best way to usher them into the brightest of all digital futures.
One suspects big money will be thrown at this by the leading tech giants.
Vast sums of money are already being thrown at bringing Africa online, for better
or worse. Thus, the R&D aimed at providing wireless Internet via giant
drones/balloons/satellites by Google, Facebook, etc.
You're African. Possibly South African by your user name, which may explain why you're a
little behind the curve, because the action is already happening, but more to the north --
and particularly in East Africa.
The big corporations -- and the tech giants are competing with the banking/credit card
giants -- have noted how mobile technology leapt over the dearth of last century's telephony
tech, land lines, and in turn enabled the highest adoption rates of cellphone banking in the
world. (Particularly in East Africa, as I say.) The payoffs for big corporations are massive
-- de facto cashless societies where the corporations control the payment systems
–and the politicians are mostly cheap.
In Nigeria, the government has launched a Mastercard-branded national ID card that's also
a payment card, in one swoop handing Mastercard more than 170 million potential customers,
and their personal and biometric data.
In Kenya, the sums transferred by mobile money operator M-Pesa are more than 25 percent of
that country's GDP.
You can see that bringing Africa online is technically a big, decade-long project. But
also that the potential payoffs are vast. Though I also suspect China may come out ahead --
they're investing far more in Africa and in some areas their technology -- drones, for
instance -- is already superior to what the Europeans and the American companies have.
Hoisted from a comment I made here recently: "Here in South Africa and through its Free
Basics programme, facebook is jumping into bed with unsuspecting ISPs (I say unsuspecting
because fb will soon be muscling in on their territory and becoming an ISP itself by
provisioning bandwidth directly from its floating satellites) and circumventing net
neutrality "
I'm also keenly aware of the developments in Kenya re: safaricom and Mpesa and how that
has led to traditional banking via bank accounts being largely leapfrogged for those moving
from being unbanked to active economic citizens requiring money transfer facilities. Given
the huge succes of Mpesa, I wouldn't be surprised if a multinational tech behemoth (chinese
or american) were to make a play for acquiring safaricom and positioning it as a triple-play
ISP, money transfer/banking services and digital content provider (harvesting data about
users habits on an unprecedented scale across multiple areas of their lives), first in Kenya
then expanded throughout east, central and west africa. I must add that your statement about
Nigeria puts Mark Zuckerberg's visit there a few months back into context somewhat, perhaps a
reconnaissance mission of sorts.
Out of idle curiosity, how could you accurately deduce my country of origin from my
name?
As you also write: "with markets in the developed world pretty much sewn up by the
tripartite tech overlords (google, fb and amazon), the next 3 billion users for their
products/services are going to come from developing world."
Absolutely true. This cannot be stressed enough. The tech giants know this and the race is
on.
That's what Trump's "bastard neoliberalism" is about. He is not a New Dealer.
Notable quotes:
"... He forgot them on health care. Jettisoning his campaign pledge to "take care of everybody" regardless of income, he proposed cutting federal health subsidies for the hard-pressed blue-collar voters who put him into office. ..."
"... He forgot them on financial regulation. Abandoning talk of cracking down on Wall Street executives who "rigged" the economy to hobble the working class, he seeks to undercut the Consumer Financial Protection Bureau. ..."
"... And he forgot them on taxes. Discarding his vow to reshape taxation for average families at the expense of rich people like himself, he's working with Republican leaders to hand the biggest benefits to corporations and the wealthy ..."
"... The president hasn't forgotten everything. In lieu of big financial benefits, Trump has steadily given "the forgotten people" at least one visceral commodity [: ] affirmation of shared racial grievances. ..."
"... But on economic issues he has behaved exactly like a standard issue country club republican. The requirement that the GOP enact a "replacement" for Obamacare? Gone. Preventing the offshoring of manufacturing jobs? Gone. Enacting at least something like a tariff at the borders? Gone. Actually *doing* something about the opioid crisis, which is strongly correlated with areas of economic distress (as opposed to lip service)? Nothing. ..."
He forgot them on health care. Jettisoning his campaign pledge to "take care of everybody" regardless of income, he proposed
cutting federal health subsidies for the hard-pressed blue-collar voters who put him into office.
He forgot them on financial regulation. Abandoning talk of cracking down on Wall Street executives who "rigged" the economy
to hobble the working class, he seeks to undercut the Consumer Financial Protection Bureau.
And he forgot them on taxes. Discarding his vow to reshape taxation for average families at the expense of rich people like
himself, he's working with Republican leaders to hand the biggest benefits to corporations and the wealthy.
To the contrary, his budget includes big cuts to Social Security disability program. Meanwhile his much-vaunted infrastructure
plan has 'failed to materialize."
But, Harwood points out:
The president hasn't forgotten everything. In lieu of big financial benefits, Trump has steadily given "the forgotten people"
at least one visceral commodity [: ] affirmation of shared racial grievances.
I think this is a good summary of Trump's domestic policies as revealed by the past year. On social issues, he has governed exactly
as he promised during his campaign, issuing a de facto ban on Muslim immigration, unleashing ICE against Latinos, and fulminating
against protesting black NFL players.
But on economic issues he has behaved exactly like a standard issue country club republican. The requirement that the GOP enact
a "replacement" for Obamacare? Gone. Preventing the offshoring of manufacturing jobs? Gone. Enacting at least something like a tariff
at the borders? Gone. Actually *doing* something about the opioid crisis, which is strongly correlated with areas of economic distress
(as opposed to lip service)? Nothing.
Joel , December 7, 2017 9:03 am
Forgotten? LOL! No, Trump didn't forget. He was lying.
little john , December 7, 2017 4:01 pm
I hate doing this because I am not a fan of the President but a "de facto ban on Muslim immigration"? I cannot remember but
I don't think Indonesia, Pakistan, India or Turkey was on the list. Those a pretty big Muslim nations. Maybe you should look it
up. "Unleashing ICE against Latinos"? I have three Latino neighbors on my street, my next door neighbor doesn't even speak English,
but I haven't seen any ICE agents around. Maybe I should just wait they're on their way? "Fulminating against NFL players"? You're
right about that.
As an aside I have recently had to laugh when I see your pseudonym. Here in Dallas we've taken down the statue of Robert E.
Lee from Robert E. Lee Park. (Now named Oak Lawn Park.) At the opening of the park in 1936 there is a great picture of the statue
with FDR, Robert E Lee IV and D.W. Griffith. I am wondering if NewDealDemocrat is a microaggression?
run75441 , December 8, 2017 9:35 am
NDD:
Before you bemoan the loss of the CSR (covered by Section 1402 of the ACA) for those making between 138 and 250% FPL, you do
understand premium subsidies will pick up the difference. If the states apply the premium increase properly to the Silver plans,
the impact is felt across all other levels between 138% and 400% FPL. Indeed, in many cases Bronze plans are free, Gold plans
become less costly, and premiums decrease. A person can go to a lower deductible/copay for the same or less cost than the original
silver plan.
I think as some will tell you here, this does nothing for those greater than 400% FPL who now find themselves being hit with
the full impact of a premium increase due to Trump's action. While a much smaller percentage of the insured, it still numbers
around 9 million.
spencer , December 8, 2017 1:45 pm
Isn't that 8 million being hit out of the under 20 million that had signed up for Obamacare.
So on a percent basis doesn't you quote imply about half of the relevant population is being hit?
"... Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%. This was an effective $500 million wealth transfer from drivers to Uber's investors. ..."
"... Uber's P&L gains were wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in any improvement in Uber profit margins. ..."
"... In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing drivers an additional $3 billion. [6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a week. ..."
"... An independent study of the net earnings of Uber drivers (after accounting for the costs of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range. [7] Multiple recent news reports have documented how Uber drivers are increasing unable to support themselves from their reduced share of passenger payments. [8] ..."
"... Since mass driver defections would cause passenger volume growth to collapse completely, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in 2016 will probably only grow by about 15% in 2017. ..."
"... Socialize the losses, privatize the gains, VC-ize the subsidies. ..."
"... The cold hard truth is that Uber is backed into a corner with severely limited abilities to tweak the numbers on either the supply or the demand side: cut driver compensation and they trigger driver churn (as has already been demonstrated), increase fare prices for riders and riders defect to cheaper alternatives. ..."
"... "Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype brilliance" was to con the market with "revenue growth" and signs ..."
Uber lost $2.5 billion in 2015, probably lost $4 billion in 2016, and is on track to lose $5
billion in 2017.
The top line on the table below shows is total passenger payments, which must be split
between Uber corporate and its drivers. Driver gross earnings are substantially higher than
actual take home pay, as gross earning must cover all the expenses drivers bear, including
fuel, vehicle ownership, insurance and maintenance.
Most of the "profit" data released by Uber over time and discussed in the press is not true
GAAP (generally accepted accounting principles) profit comparable to the net income numbers
public companies publish but is EBIDTAR contribution. Companies have significant leeway as to
how they calculate EBIDTAR (although it would exclude interest, taxes, depreciation,
amortization) and the percentage of total costs excluded from EBIDTAR can vary significantly
from quarter to quarter, given the impact of one-time expenses such as legal settlements and
stock compensation. We only have true GAAP net profit results for 2014, 2015 and the 2nd/3rd
quarters of 2017, but have EBIDTAR contribution numbers for all other periods.
[5]
Uber had GAAP net income of negative $2.6 billion in 2015, and a negative profit margin of
132%. This is consistent with the negative $2.0 billion loss and (143%) margin for the year
ending September 2015 presented in part one of the NC Uber series over a year ago.
No GAAP profit results for 2016 have been disclosed, but actual losses likely exceed $4
billion given the EBIDTAR contribution of negative $3.2 billion. Uber's GAAP losses for the 2nd
and 3rd quarters of 2017 were over $2.5 billion, suggesting annual losses of roughly $5
billion.
While many Silicon Valley funded startups suffered large initial losses, none of them lost
anything remotely close to $2.6 billion in their sixth year of operation and then doubled their
losses to $5 billion in year eight. Reversing losses of this magnitude would require the
greatest corporate financial turnaround in history.
No evidence of significant efficiency/scale gains; 2015 and 2016 margin improvements
entirely explained by unilateral cuts in driver compensation, but losses soared when Uber had
to reverse these cuts in 2017.
Total 2015 gross passenger payments were 200% higher than 2014, but Uber corporate
revenue improved 300% because Uber cut the driver share of passenger revenue from 83% to 77%.
This was an effective $500 million wealth transfer from drivers to Uber's investors. These
driver compensation cuts improved Uber's EBIDTAR margin, but Uber's P&L gains were
wiped out by higher non-EBIDTAR expense. Thus the 300% Uber revenue growth did not result in
any improvement in Uber profit margins.
In 2016, Uber unilaterally imposed much larger cuts in driver compensation, costing
drivers an additional $3 billion.
[6] Prior to Uber's market entry, the take home pay of big-city cab drivers in the US was
in the $12-17/hour range, and these earnings were possible only if drivers worked 65-75 hours a
week.
An independent study of the net earnings of Uber drivers (after accounting for the costs
of the vehicles they had to provide) in Denver, Houston and Detroit in late 2015 (prior to
Uber's big 2016 cuts) found that driver earnings had fallen to the $10-13/hour range.
[7] Multiple recent news reports have documented how Uber drivers are increasing unable to
support themselves from their reduced share of passenger payments.
[8]
A business model where profit improvement is hugely dependent on wage cuts is unsustainable,
especially when take home wages fall to (or below) minimum wage levels. Uber's primary focus
has always been the rate of growth in gross passenger revenue, as this has been a major
justification for its $68 billion valuation. This growth rate came under enormous pressure in
2017 given Uber efforts to raise fares, major increases in driver turnover as wages fell,
[9] and the avalanche of adverse publicity it was facing.
Since mass driver defections would cause passenger volume growth to collapse completely,
Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to 80%.
This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over 200% in
2016 will probably only grow by about 15% in 2017.
"Uber's business model can never produce sustainable profits"
Two words not in my vocabulary are "Never" and "Always", that is a pretty absolute
statement in an non-absolute environment. The same environment that has produced the "Silicon
Valley Growth Model", with 15x earnings companies like NVIDA, FB and Tesla (Average
earnings/stock price ratio in dot com bubble was 10x) will people pay ridiculous amounts of
money for a company with no underlying fundamentals you damn right they will! Please stop
with the I know all no body knows anything, especially the psychology and irrationality of
markets which are made up of irrational people/investors/traders.
My thoughts exactly. Seems the only possible recovery for the investors is a perfectly
engineered legendary pump and dump IPO scheme. Risky, but there's a lot of fools out there
and many who would also like to get on board early in the ride in fear of missing out on all
the money to be hoovered up from the greater fools. Count me out.
The author clearly distinguishes between GAAP profitability and valuations, which is after
all rather the point of the series. And he makes a more nuanced point than the half sentence
you have quoted without context or with an indication that you omitted a portion. Did you
miss the part about how Uber would have a strong incentive to share the evidence of a network
effect or other financial story that pointed the way to eventual profit? Otherwise (my words)
it is the classic sell at a loss, make it up with volume path to liquidation.
apples and oranges comparison, nvidia has lots and lots of patented tech that produces
revenue, facebook has a kajillion admittedly irrational users, but those users drive massive
ad sales (as just one example of how that company capitalizes itself) and tesla makes an
actual car, using technology that inspires it's buyers (the put your money where your mouth
is crowd and it can't be denied that tesla, whatever it's faults are, battery tech is not one
of them and that intellectual property is worth a lot, and tesla's investors are in on that
real business, profitable or otherwise)
Uber is an iphone app. They lose money and have no
path to profitability (unless it's the theory you espouse that people are unintelligent so
even unintelligent ideas work to fleece them). This article touches on one of the great
things about the time we now inhabit, uber drivers could bail en masse, there are two sides
to the low attachment employees who you can get rid of easily. The drivers can delete the
uber app as soon as another iphone app comes along that gets them a better return
For many air travelers, getting to and from the airport has long been part of the whole
miserable experience. Do they drive and park in some distant lot? Take mass transit or a
taxi? Deal with a rental car?
Ride-hailing services like Uber and Lyft are quickly changing those calculations. That
has meant a bit less angst for travelers.
But that's not the case for airports. Travelers' changing habits, in fact, have begun to
shake the airports' financial underpinnings. The money they currently collect from
ride-hailing services do not compensate for the lower revenues from the other sources.
At the same time, some airports have had to add staff to oversee the operations of the
ride-hailing companies, the report said. And with more ride-hailing vehicles on the roads
outside terminals,
there's more congestion.
Socialize the losses, privatize the gains, VC-ize the subsidies.
The cold hard truth is that Uber is backed into a corner with severely limited abilities
to tweak the numbers on either the supply or the demand side: cut driver compensation and
they trigger driver churn (as has already been demonstrated), increase fare prices for riders
and riders defect to cheaper alternatives. The only question is how long can they keep the
show going before the lights go out, slick marketing and propaganda can only take you so far,
and one assumes the dumb money has a finite supply of patience and will at some point begin
asking the tough questions.
The irony is that Uber would have been a perfectly fine, very profitable mid-sized company
if Uber stuck with its initial model -- sticking to dense cities with limited parking,
limiting driver supply, and charging a premium price for door-to-door delivery, whether by
livery or a regular sedan. And then perhaps branching into robo-cars.
But somehow Uber/board/Travis got suckered into the siren call of self-driving cars,
triple-digit user growth, and being in the top 100 US cities and on every continent.
I've shared a similar sentiment in one of the previous posts about Uber. But operating
profitably in decent sized niche doesn't fit well with ambitions of global domination. For
Uber to be "right-sized", an admission of folly would have to be made, its managers and
investors would have to transcend the sunk cost fallacy in their strategic decision making,
and said investors would have to accept massive hits on their invested capital. The cold,
hard reality of being blindsided and kicked to the curb in the smartphone business forced
RIM/Blackberry to right-size, and they may yet have a profitable future as an enterprise
facing software and services company. Uber would benefit from that form of sober mindedness,
but I wouldn't hold my breath.
I know nothing about Softbank or its management, but I do know that the Japanese were the
dumb money rubes in the late '80's, overpaying for trophy real estate they lost billions
on.
Until informed otherwise, that's my default assumption
Softbank possibly looking to buy more Uber shares at a 30% discount is very odd. Uber had
a Series G funding round in June 2016 where a $3.5
billion investment from Saudi Arabia's Public Investment Fund resulted in its current $68
billion valuation. Now apparently Softbank wants to lead a new $6 billion funding round to
buy the shares of Uber employees and early investors at a 30% discount from this last
"valuation". It's odd because Saudi Arabia's Public Investment Fund has pledged
$45 billion to SoftBank's Vision Fund , an amount which was supposed to come from the
proceeds of its pending Aramco IPO. If the Uber bid is linked to SoftBank's Vision Fund, or
KSA money, then its not clear why this investor might be looking to literally 'double down'
from $3.5 billion o $6 billion on a declining investment.
"Growth and Efficiency" are the sine qua non of Neoliberalism. Kalanick's "hype
brilliance" was to con the market with "revenue growth" and signs of efficiency, and
hopes of greater efficiency, and make most people just overlook the essential fact
that Uber is the most unprofitable company of all time!
What comprises "Uber Expenses"? 2014 – $1.06 billion; 2015 $3.33 billion; 2016 $9.65
billion; forecast 2017 $11.418 billion!!!!!! To me this is the big question – what are
they spending $10 billion per year on?
ALso – why did driver share go from 68% in 2016 to 80% in 2017? If you use 68% as in
2016, 2017 Uber revenue is $11.808 billion, which means a bit better than break-even EBITDA,
assuming Uber expenses are as stated $11.428 billion.
Perhaps not so bleak as the article presents, although I would not invest in this
thing.
I have the same question: What comprises over 11 billion dollars in expenses in 2017?
Could it be they are paying out dividends to the early investors? Which would mean they are
cannibalizing their own company for the sake of the VC! How long can this go on before
they'll need a new infusion of cash?
Oh article does answer your 2nd question. Read this paragraph:-
Since mass driver defections would cause passenger volume growth to collapse completely
, Uber was forced to reverse these cuts in 2017 and increased the driver share from 68% to
80%. This meant that Uber's corporate revenue, which had grown over 300% in 2015 and over
200% in 2016 will probably only grow by about 15% in 2017.
As for the 1st, read this line in the article:-
There are undoubtedly a number of things Uber could do to reduce losses at the margin,
but it is difficult to imagine it could suddenly find the $4-5 billion in profit
improvement needed merely to reach breakeven.
in addition to all the points listed in the article/comments, the absolute biggest flaw
with Uber is that Uber HQ conditioned its customers on (a) cheap fares and (b) that a car is
available within minutes (1-5 if in a big city).
Those two are not mutually compatible in the long-term.
Thus (a) "We cost less" and (b) "We're more convenient" -- aren't those also the
advantages that Walmart claims and feeds as a steady diet to its ever hungry consumers? Often
if not always, disruption may repose upon delusion.
When this Uber madness blows up, I wonder if people will finally begin to discuss the
brutal reality of Silicon Valley's so called "disruption".
It is heavily built in around the idea of economic exploitation. Uber drivers are often,
especially when the true costs to operate an Uber including the vehicle depreciation are
factored in, making not very much per hour driven, especially if they don't get the surge
money.
Instacart is another example. They are paying the deliver operators very little.
At a fundamental level, I think that the Silicon Valley "disruption" model only works for
markets (like software) where the marginal cost for production is de minimus and the
products can be protected by IP laws. Volume and market power really work in those cases. But
out here in meat-space, where actual material and labor are big inputs to each item sold, you
can never just sit back on your laurels and rake in the money. Somebody else will always be
able to come and and make an equivalent product. If they can do it more cheaply, you are in
trouble.
There aren't that many areas in goods and services where the marginal costs are very
low.
Software is actually quite unique in that regard, costing merely the bandwidth and
permanent storage space to store.
Let's see:
1. From the article, they cannot go public and have limited ways to raise more money. An
IPO with its more stringent disclosure requirements would expose them.
2. They tried lowering driver compensation and found that model unsustainable.
3. There are no benefits to expanding in terms of economies of scale.
From where I am standing, it looks like a lot of industries gave similar barriers. Silicon
Valley is not going to be able to disrupt those.
Tesla, another Silicon Valley company seems to be struggling to mass produce its Model 3
and deliver an electric car that breaks even, is reliable, while disrupting the industry in
the ways that Elon Musk attempted to hype up.
So that basically leaves services and manufacturing out for Silicon Valley disruption.
UBER has become a "too big to fail" startup because of all the different tentacles of
capital from various Tier 1 VCs and investment bankers.
VCs have admitted openly that UBER is a subsidized business, meaning it's product is sold
below market value, and the losses reflect that subsidization. The whole "2 sided platform"
argument is just marketecture to hustle more investors. It's a form of service "dumping" that
puts legacy businesses into bankruptcy. Back during the dotcom bubble one popular investment
banker (Paul Deninger) characterized this model as "Terrorist Competition", i.e. coffers full
of invested cash to commoditize the market and drive out competition.
UBER is an absolute disaster that has forked the startup model in Silicon Valley in order
to drive total dependence on venture capital by founders. And its current diversification
into "autonomous vehicles", food delivery, et al are simply more evidence that the company
will never be profitable due to its whacky "blitzscaling" approach of layering on new
"businesses" prior to achieving "fit" in its current one.
It's economic model has also metastasized into a form of startup cancer that is killing
Silicon Valley as a "technology" innovator. Now it's all cargo cult marketing BS tied to
"strategic capital".
UBER is the victory of venture capital and user subsidized startups over creativity by
real entrepreneurs.
It's shadow is long and that's why this company should be ..wait for it UNBUNDLED (the new
silicon valley word attached to that other BS religion called "disruption"). Call it a great
unbundling and you can break up this monster corp any way you want.
2. The elevator pitch for Uber: subsidize rides to attract customers, put the competition
out of business, and then enjoy an unregulated monopoly, all while exploiting economically
ignorant drivers–ahem–"partners."
3. But more than one can play that game, and
4. Cab and livery companies are finding ways to survive!
If subsidizing rides is counted as an expense, (not being an accountant, I would guess it
so), then whether the subsidy goes to the driver or the passenger, that would account for the
ballooning expenses, to answer my own question. Otherwise, the overhead for operating what
Uber describes as a tech company should be minimal: A billion should fund a decent
headquarters with staff, plus field offices in, say, 100 U.S. cities. However, their global
pretensions are probably burning cash like crazy. On top of that, I wonder what the exec
compensation is like?
After reading HH's initial series, I made a crude, back-of-the-envelope calculation that
Uber would run out of money sometime in the third fiscal quarter of 2018, but that was based
on assuming losses were stabilizing in the range of 3 billion a year. Not so, according to
the article. I think crunch time is rapidly approaching. If so, then SoftBank's tender offer
may look quite appetizing to VC firms and to any Uber employee able to cash in their options.
I think there is a way to make a re-envisioned Uber profitable, and with a more independent
board, they may be able to restructure the company to show a pathway to profitability before
the IPO. But time is running out.
A not insignificant question is the recruitment and retention of the front line
"partners." It would seem to me that at some point, Uber will run out of economically
ignorant drivers with good manners and nice cars. I would be very interested to know how many
drivers give up Uber and other ride-sharing gigs once the 1099's start flying at the
beginning of the year. One of the harsh realities of owning a business or being an contractor
is the humble fact that you get paid LAST!
We became instant Uber riders while spending holidays with relatives in San Diego. While
their model is indeed unique from a rider perspective, it was the driver pool that fascinates
me. These are not professional livery drivers, but rather freebooters of all stripes driving
for various reasons. The remuneration they receive cannot possibly generate much income after
expenses, never mind the problems associated with IRS filing as independent contractors.
One guy was just cruising listening to music; cooler to get paid for it than just sitting
home! A young lady was babbling and gesticulating non stop about nothing coherent and
appeared to be on some sort of stimulant. A foreign gentleman, very professional, drove for
extra money when not at his regular job. He was the only one who had actually bought a new
Prius for this gig, hoping to pay it off in two years.
This is indeed a brave new world. There was a period in Nicaragua just after the Contra
war ended when citizens emerged from their homes and hit the streets in large numbers,
desperately looking for income. Every car was a taxi and there was a bipedal mini Walmart at
every city intersection as individuals sold everything and anything in a sort of euphoric
optimism towards the future. Reality just hadn't caught up with them yet .
U6 underemployment rate rose +0.1% from 7.9% to 8.0%
Here are the headlines on wages and the chronic heightened underemployment: Wages and
participation rates
Not in Labor Force, but Want a Job Now: rose +53,000 from 5.175 million to 5.238
million
Part time for economic reasons: rose +48,000 from 4.753 million to 4.801 million
Employment/population ratio ages 25-54: rose +0.2% from 78.8% to 79.0%
Average Weekly Earnings for Production and Nonsupervisory Personnel: rose +$.0.5 from a
downwardly revised $22.19 to $22.24, up +2.4% YoY. (Note: you may be reading different
information about wages elsewhere. They are citing average wages for all private workers. I
use wages for nonsupervisory personnel, to come closer to the situation for ordinary
workers.)
Holding Trump accountable on manufacturing and mining jobs
Trump specifically campaigned on bringing back manufacturing and mining jobs. Is he keeping
this promise?
Manufacturing jobs rose by +31,000 for an average of +15,000 a month vs. the last seven
years of Obama's presidency in which an average of 10,300 manufacturing jobs were added
each month.
Coal mining jobs fell -400 for an average of -15 a month vs. the last seven years of
Obama's presidency in which an average of -300 jobs were lost each month
September was revised upward by +20,000. October was revised downward by -17,000, for a
net change of +3,000.
likbez December 9, 2017 7:52 pm
There are now large categories of jobs, both part-time and full time, that can't provide
for living and are paying below or close to minimum wage (plantation economy jobs). it
looks like under neoliberalism this is the fastest growing category of jobs.
Examples are Uber and Lift jobs (which are as close to predatory scam as one can get) .
Many jobs in service industry, especially retail. See for example
Don't panic. Sit back, take a deep breath , and wait out the new developments.
Even though they have only a caretaker government now in Berlin, they have commissioned
experts to assess if and where the beautiful Trump tax reforms will violate the German/US
friendship treaty from the 1950s. Not a lot is known at the moment but the reduction in
corporate tax could be seen as a hostile act, providing an unfair advantage for American
companies. And then there is the end of tax deductability for parts bought in Europe. One
would have to look at the text of that friendship treaty but it looks all very probable.
What will happen then? Europe will have to say that they must sell their parts, to China
or Russia. Sanctions? You cannot blanket us with hostile acts, someone will say. Maybe you
should take a hike from Ramstein, if this is how you value our friendship. Sounds all very
drastic but has been a longtime coming.
Financialization of the economy and the lust for war goes hand in hand. That means that
"casino capitalism" is an aggressive capitalism.
" In the transition, politicians, who had no connection to domestic industry, found a
powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and
disseminating domestic spats, intrigues and conspiracies to the voters." -- this is an astute
observation.
Notable quotes:
"... Simultaneously, finance reversed its relation to industry: Industrial capital was now harnessed to finance, speculation, real estate, insurance sectors and electronic gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle chatter. ..."
"... Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers' children overdosed on 'Oxy'. ..."
"... In the transition, politicians, who had no connection to domestic industry, found a powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and disseminating domestic spats, intrigues and conspiracies to the voters. ..."
"... In this historic transformation, American political culture put on a new face: perpetual wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos versus the crotch-grabbing real-estate conman. ..."
"... Trump's presidential election campaign went about the country pleasuring the business and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set the parameters of the United States' political economy: The chase was on! ..."
The chaotic free-for-all in the US political economy is manipulated by scandalmongers,
conspirators and flight capitalists. Instead of preparing an economic plan to ' make America
great again' , they have embraced the political blackmailers and intriguers of Saudi Arabia
in a sui-generis global political alliance. Both countries feature purges, resignations and
pugnacious politicos who have never been weaned from the destructive bosom of war.
As a point of history, the United States didn't start out as a bloated, speculative state of
crony capitalists and parasitical allies: The US was once a powerful industrial country,
harnessing finance and overseas investments to securing raw materials for domestic industries
and directing profits back into industry for higher productivity.
Fake, or semi-fake, political rivalries and electoral competition counted little as
incumbents retained their positions most of the time, and bi-partisan agreements ensured
stability through sharing the spoils of office.
Things have changed. Overseas neo-colonies started to offer more than just raw materials:
They introduced low-tax manufacturing sites promising free access to cheap, healthy and
educated workers. US manufacturers abandoned Old Glory, invested overseas, hoarded profits in
tax havens and happily evaded paying taxes to fund a new economy for displaced US workers.
Simultaneously, finance reversed its relation to industry: Industrial capital was now
harnessed to finance, speculation, real estate, insurance sectors and electronic
gadgets/play-by-yourself ' i-phones' promoting isolated ' selfies' and idle
chatter.
Wall Street, Silicon Valley and Hollywood replaced Detroit, Pittsburgh, Cleveland and
Chicago. Stockbrokers proliferated, while master tool-and-die makers disappeared and workers'
children overdosed on 'Oxy'.
In the transition, politicians, who had no connection to domestic industry, found a
powerful niche promoting overseas wars for allies , like Saudi Arabia and Israel, and
disseminating domestic spats, intrigues and conspiracies to the voters. Vietnam and
Watergate, Afghanistan and Volker, Iran-Contra and Reaganomics , Yugoslavia and Iraq,
daily drone strikes and bombings and Bill Clinton's White House sex scandals giving salacious
birth to SpecialProsecutors . . .
In this historic transformation, American political culture put on a new face: perpetual
wars, Wall Street swindles and Washington scandals. It culminated in the farcical Hillary
Clinton – Donald Trump presidential election campaign: the war goddess-cuckquean of chaos
versus the crotch-grabbing real-estate conman.
The public heard Secretary of State Clinton's maniacal laugh upon her viewing the
'snuff-film' torture and slaughter of the wounded Libya's President Gadhafi: She crowed: '
We came, we saw and he died' with a sword up his backside. This defined the Clinton
doctrine in foreign affairs, while slaughter of the welfare state and the bloated prison
industry would define her domestic agenda.
Trump's presidential election campaign went about the country pleasuring the business
and finance elite (promises of tax cuts, deregulations, re-contamination and jacking up the
earth's temperature with a handful of jobs), and successfully pushed aside the outrage over his
crude rump grabbing boasts. Wars, Wall Street, Silicon Valley and Hollywood all gathered to set
the parameters of the United States' political economy: The chase was on!
This great article is an elaborate intellectual expansion on what Mr. Gerald Celente of
Trendsresearch.com has been proclaiming for years that" while the business of China is
business, the business of America is war". Professor Petras is pointing to the moral decline
that is behind the social and economic decline of the nation of America that was once a
beacon of light to the world.
This analysis leaves the reader with little doubt as to the direction in which the momentum
of historic leadership is moving; it is to the East away from the West in a reversal of the
dawn of the Renaissance era of Europe. The last hope for the west to stay at the helm of
civilisation is to have a leader who can ignite a moral renaissance in the West short of
which the 21st century will definitely be China's century. The impetus for such a revival is
a shake up of the world of finance that will chase the money changers out of the altar of the
Western economy and put he lying scribes of the Western media in labour camp where they will
be re educated about the virtues of truth and reality.
Official truth has become a stinking mound of offal.
Has become?
A good thing about it is that we should know to laugh at it whenever we hear it, and
accept the fact that "authority" is lying until proven otherwise.
Were I to indulge my own theory, I should wish [the states] to practise neither commerce
nor navigation, but to stand with respect to Europe precisely on the footing of China.
We should thus avoid wars
-Thomas Jefferson, letter To G. K. van Hogendorp , Paris, Oct. 13, 1785
Isn't Western "civilization" just peachy? Civilization?
One has to have had a "naissance" of morals to experience a "re" of them, but yes, chasing
the money changers out of the temple and money worship out of our souls would have
helped.
Would have.
Our great mass of workers have labored for the money changers too long.
You're right about many things you presented, but you still don't understand the
multi-layered gradually administered releases of mis-information, dis-information, and
information, designed to awaken and transform our nation, planet, and human consciousness.
Given that half the population has below average intelligence, new positive leadership does
not merely announce that generations of psychopaths have manipulated them. As a personal
example, half the people I communicate with are sub-average intelligence, and I've learned to
very gradually wake them up, or they will, in their unreasonable thinking, try to make
trouble for me. There's the saying, "Don't throw pearls before swine." I know this too
harshly stated, and I should have gradually and gently presented it for half the reader's.
Sorry.
P.S. . Unz.com and it's reader's are likely far above average.
The tax-reform bill that US Republicans are attempting to implement is economically
indefensible and blatantly unfair. But the US has a much deeper problem: the Anglo-Saxon model
of representative government is in serious trouble, and nobody seems to know how to fix it.
BERKELEY – The tax bill that US Republicans have doggedly pushed through Congress is
not as big a deal as many are portraying it to be. It is medium-size news. The big news –
the much more weighty and ominous news – lies elsewhere.
Of course, medium-size is not nothing. If the tax bill does clear its final hurdle – a
conference committee must reconcile the Senate-approved bill with that of the House of
Representatives – and become law, it will complicate the tax system considerably, as it
opens many loopholes. It won't have any impact on economic growth – positive or negative
– but it would have an impact on the government's finances, causing revenues to decline
by the equivalent of about 1% of national income.
The missing resources would most likely be transferred to the top 1% of earners, raising
their share of total income from 22% to 23%. The top 0.01% would probably gain the most, with
their share of income rising from 5.1% to 5.5%. In this sense, the tax plan would be another
brick – not a huge brick, but a medium-size brick – in the increasingly impregnable
fortress of American plutocracy.
But the bill may well not become law at all. Consider the Republicans' efforts earlier this
year to repeal and replace the Affordable Care Act ("Obamacare") – an effort that, it now
seems clear, was pure Dingbat Kabuki.
The Republicans didn't actually want to take responsibility for changing the health-care
financing system, much less strip their own constituents of health care. But the party's
propaganda arm had worked so hard to convince its base that Obamacare represented a clear and
present danger to the country that its leaders had to act as if they were making a serious
effort to fulfill their promise to repeal and replace it.
So a majority of Republicans in the House of Representatives voted for the bill, expecting,
with reasonable confidence, that it would be blocked in the 100-member Senate, where fewer than
40 of the 52 Republicans actually wanted it to pass. Had any of the three Republican senators
who voted against the bill – John McCain of Arizona, Susan Collins of Maine, or Lisa
Murkowski of Alaska – made a different choice, there were probably about five more who
would have stepped in to nix it.
The same thing may be happening with the tax reform. It depends on whether at least three of
the ten Republican senators who have raised objections are serious, or are playing a different
game of Dingbat Kabuki: seeking to trick their constituents into thinking that they went the
extra mile to try to help them, and are not puppets of Senate Majority Leader Mitch
McConnell.
But, regardless of whether the tax bill survives the reconciliation process and becomes law,
the big news won't change: the Anglo-Saxon model of representative government is in serious
trouble. And there is no solution in sight.
For some 400 years, the Anglo-Saxon governance model – exemplified by the republican
semi-principality of the Netherlands, the constitutional monarchy of the United Kingdom, and
the constitutional republic of the United States of America – was widely regarded as
having hit the sweet spot of liberty, security, and prosperity. The greater the divergence from
that model, historical experience seemed to confirm, the higher the likelihood of repression,
insecurity, and poverty. So countries were frequently and strongly advised to emulate those
institutions.
Nobody would dare offer that same advice today. The UK, having been thrown into devastating
austerity by Conservative and Liberal leaders after the global economic crisis, is now being
led by the Conservatives toward a messy and damaging Brexit. And, in the US, the election of
President Donald Trump heralded the age of "alternative facts" and "governance by tweet,"
overseen by an erratic and ignorant leader who is clearly in over his head.
When Trump was first elected, some argued that it did not have to be a disaster. After all,
the optimists pointed out, President Ronald Reagan had been more a "chief of state" than a
"chief executive," as had George W. Bush.
As divisive as Chief of State Trump would be, according to this view, he wouldn't derail
policy, because electing a Republican president is more like electing the Republican Party
establishment. And that bench was very deep and very competent, despite its weakening in recent
years.
The optimists were wrong. After nearly a year in control of both houses of Congress and the
White House, the Republicans haven't achieved any of their four policy goals: repeal and
replacement of Obamacare, infrastructure development, trade-policy reform, or even tax reform.
This points to a broken system of politics and governance, one that Americans seem to have no
idea how to fix.
The US remains the world's preeminent superpower. But doubts are intensifying over whether
it's still up to the job. In this context, the Republicans' tax reform, however economically
indefensible and blatantly unfair it is, is far from America's biggest concern.
"... The Demopublican War Party: United to shovel more money into the maw of the oligarch class while stealing dollars, services, and servitude from the working class. Reverse Robin Hood/Reverse Socialism in full effect. ..."
"... Currently, we have $20T debt but the U.S. govt is borrowing at short term rates in order to get this amazingly low debt service. ..."
"... Does anyone else believe that this is the game the U.S. govt is playing? If it is then I wonder what the consequences are in keeping short term interest rates at artificially low levels in perpetuity. ..."
"... I'll start taking the "deficit hawks" seriously when they start talking Defense procurement reform. Until then, its just "balance the budget on the backs of widows and orphans". ..."
"... For those who are fortunate enough not to live in these Benighted States: have pity upon us, especially those of us who done our best to fight against this horror show. Democraps are either just as bad or worse bc of their duplicity. The GOP is, at least, totally loud and proud of who they are, and no more dog whistles for them. ..."
"... poll end of October 2017 shows widespread fed up with government policies and war https://www.charleskochinstitute.org/news/cki-real-clear-politics-foreign-policy-poll/ ..."
"... It is impressive how the Democrats do nothing, but nothing at all against the catastrophic tax 'reform', instead - me too! ..."
"... I am still waiting on my Reagan trickle down. Reagan and fellow thieves stole social security funds to make their deficit look lower. Those funds have not been paid back....approximately $3,000,000,000,000. Now the dead beats are planning on slipping out of town. ..."
"... We should go back to the 1960 tax structure , the one in place after eight years of Eisenhower, so it should get plenty of Republican support, yes? ..."
"... You are already seeing the consequences of artificially low short term rates. Negative yielding sovereign European debt - meaning you pay to lend to some European governments. ..."
"... People don't understand what money is our how it is and can be created. They imagine it is like gold and limited in supply so that government can spend only from a finite supply which they must obtain by taxes or loans that require interest to be paid. This fable is about as true as Santa Clause and the Tooth Fairy. Money has no value but as an instrument of exchange. It can be created by government to pay for benefit of a nation. Instead we allow private bankers to create money via loans (no printing press needed its just a line item on a spread sheet on their computers which shows up in the borrowers account) The privately owned central bank system limits or increases the supply by various means in a cyclical manner which leads to boom and bust cycles in the economy. The rich get richer after each bust cycle since they have cash to acquire assets available at depressed prices ..."
"... There's no reason why with the current state of technology so much money is needed to campaign for office. Almost as if the MSM is conditioning us to believe it necessary. There's no reason some one can't run a campaign using social media, YouTube and video conferencing instead of advertising (on same MSM) travelling long distances to campaign rallies and broadcast advertising. Microdonations and volunteering assistance can take care of the rest. If there is a will, there's a way to run an outsider as a candidate. The recent death of Anderson reminded me of his difficulties running, but he ran at a time when none of these technologies existed. ..."
"... Churning out extra dosh works when it is part of a larger plan to increase productivity by encouraging people outta pointless 'shit industry' service jobs into either outright production like manufacturing or primary industry, or infrastructure investment like railways, roads, bridges & renewable energy projects. Just pumping fresh new bills into health n education will be great for those who work in these sectors, but is unlikely to create much flow on to the rest of the population. ..."
House Speaker Paul Ryan (R-Wis.) on Thursday said the tax cuts included in the tax reform
package Republican lawmakers crafted in conjunction with the Trump Administration have to be
deficit neutral so as to conform with budget reconciliation rules.
The U.S. Republican tax cut plan that President Donald Trump wants passed by the end of the
year is unlikely to trigger a big deficit expansion because it will spur more investment and
job growth, House of Representatives Speaker Paul Ryan told Reuters in an interview on
Wednesday.
"Paul Ryan deficit hawk is also a growth advocate. Paul Ryan deficit hawk also knows that you
have to have a faster growing economy, more jobs, bigger take-home pay, that means higher tax
revenues ," Ryan told Chris Wallace on "Fox News Sunday."
The tax overhaul legislation that Ryan shepherded through the House -- the Senate takes up
its version this week -- would add at least $1 trillion to budget deficits over the next
decade, even when accounting for economic growth, according to independent tax analysts.
House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending
on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit .
"We're going to have to get back next year at entitlement reform, which is how you tackle
the debt and the deficit ," Ryan said during an interview on Ross Kaminsky's talk radio
show.
And no. The Democrats aren't any better. Look at the trillions Obama handed to Wall Street.
That wasn't even a tax cut, it was a give-away. Obamacare is a sham, willfully constructed in
way that makes sure it can't survive. The Democrats only pretend to care for the people. As
soon as they again have a majority and fake intent for pro-social reforms the Repubs will again
whine about the deficit and the Democrats will be happy to fold.
The Demopublican War Party: United to shovel more money into the maw of the oligarch class
while stealing dollars, services, and servitude from the working class. Reverse Robin
Hood/Reverse Socialism in full effect.
Indeed. Two faces, same coin. The msm desperately wants to keep the relevant the age-old
rope-a-dope of the Demotards vs. Rethuglicans 2K17! Jesus, ever-loving-Christ, though, you
fuck with social security and Medicare and you bring on the wrath of AARP's membership.
Release the BLUE-HAIRS!
Can't wait, but that is another struggle for another day. In the mean time, I notice that
even the mention of Paul Ryan elicits a shudder. Such a slime.
It [was] a remarkably low $240B as of 2016. Does this mean that the Fed can just keep short term
rates low or even reduce them, vis-a-vis the Japanese model, and allow U.S. govt debt to grow
to arbitrarily high levels?
Currently, we have $20T debt but the U.S. govt is borrowing at short term rates in order
to get this amazingly low debt service. Now let's suppose over the next 50yrs our national
debt grows to a ridiculous $100T, if the fed puts short term rates at 0.1% then our annual
debt service will still be at the same levels or less.
Does anyone else believe that this is the game the U.S. govt is playing?
If it is then I wonder what the consequences are in keeping short term interest rates at
artificially low levels in perpetuity.
Here's to the evolving True Political
Awakening .
Move beyond the two-faced monkeys; the 2-faced division-makers; the 2 lying parties. Move
beyond them into yourself, your own mind and thoughts, owned by no-one; a critical and
independent thinker who seeks the truth.
I'll start taking the "deficit hawks" seriously when they start talking Defense procurement
reform. Until then, its just "balance the budget on the backs of widows and orphans".
There was a large mound formed recently over the grave of former Republican senator from WI
Bob Lafollette Sr., this protrusion was caused by his rapidly spinning corpse.
For those who are fortunate enough not to live in these Benighted States: have pity upon us,
especially those of us who done our best to fight against this horror show.
Democraps are either just as bad or worse bc of their duplicity. The GOP is, at least,
totally loud and proud of who they are, and no more dog whistles for them.
The Democrats, all while the GOP Tax SCAM was being shoved down our gobs, wasted all of
their time and "emotions" on a witch hunt to toss Al Franken outta the Senate. Franken is not
my favorite Senator by a long shot, but this is yet another chapter of the Democraps ACORNing
their own purportedly in the name of "taking the moral high ground." My Aunt Fanny.
Complicit, greedy, conniving, venal, deplorable bastards the whole d*mn lot with the
possible exception of Bernie Sanders (no great shakes but the pick of the litter).
Ugh. Don't get me started on all of those dual Israeli/USA citizens in riddling our
Congress. They are ALL in favor of this Jerusalem travesty with Schmuck Schumer leading the
charge. That's not about Trump... or not much about Trump. I place blame on worthless scum
like Schumer.
This is why people voted for Trump: they could see the worthlessness of both parties. Of
course, voting for Trump was a complete Mug's game, as for sure, the way things have turned
out was a foregone conclusion.
I am still waiting on my Reagan trickle down. Reagan and fellow thieves stole social security
funds to make their deficit look lower. Those funds have not been paid back....approximately
$3,000,000,000,000. Now the dead beats are planning on slipping out of town.
We should go back to the 1960 tax structure , the one in
place after eight years of Eisenhower, so it should get plenty of Republican support, yes?
top rate on regular income: 91%
top rate on capital gains: 25%
top rate on corporate tax: 52%
The top income tax tier back then was $400,000 - adjusted for inflation to 2017 dollars,
that's about $10 million. So anyone with an income of $10 million would still get a take-home
pay of $1 million a year. Seems like the right thing to do, doesn't it?
Good one b, the demodogs will stoop their feet point figures so they can raise lots of
$$$$$$$$$$$$$ to pay their friends the consultants and lose more seats. It's what they do
best.
I've almost given up. It's not just amerika; lookit Australia this week where the citizens
are being distracted by a same sex marriage beatup which should have been settled in 5
minutes years ago - meanwhile the last vestiges of Australia's ability to survive as a
sovereign state are being flogged off to anyone with a fat wedge in their kick.
Aotearoa isn't much better the 'new' government which was elected primarily because the
citizens were appalled to discover that for about the first time in 150 years, compatriots -
compatriots with jobs in 'the gig economy' were homeless in huge numbers, has just announced
that the previous government's housing policy was a total mess, and that fixing the problem
will be difficult -really Jacinda we never woulda guessed, I guess what yer really trying to
say is nothing is gonna change.
The englanders are in even worse trouble with their brexit mess, the political elite is
choosing to ignore a recent Northern Ireland poll which revealed that most people in the
north would rather hook up with Ireland than stay with an non EU UK, so the pols there are
arguing over semantics about the difference between "regulatory alignment" and "regulatory
equivalence" as it applies to Ulster while the pound is sinking so fast it is about to
establish equivalence with the euro by xmas.
No one is paying attention to what is really happening as in between giving us the lowdown on
which 2nd rate mummer was rude to a 3rd rate thespian and advertorials about the best
chronometer (who even wears a watch in 2017?) for that man in your life, the media simply
doesn't have the time much less the will to tell the citizens how quickly their lives are
about to go down the gurgler.
The only salient issue is - will the shit hit the fan before the laws are in place to
silence, lock up and butcher dissenters, or will there be a brief period where we hit the
barricades and have a moment of glory before humanity gets to enjoy serfdom Mk2?
b, have you really taken a look at federal government spending? What is the ratio of spending
by the German government between social programs and discretionary spending for defense,
agriculture subsidies, infrastructure, etc?
The majority of federal government spending is non-discretionary social entitlement
spending with the biggest being health care spending. Just Medicare & Medicaid is a third
of all federal government spending. Then you have to add health care spending for federal
government employees and members of Congress, Tricare and VA. With health care costs growing
at 9% each and every year as it has for the past 30 years, medical related expenditures as a
share of total federal government spending will continue to rise.
Deficits will continue to grow as these entitlement programs grow automatically as
eligibility grows. Even if all defense expenditures were zeroed out, the federal government
would still run a deficit.
You are already seeing the consequences of artificially low short term rates. Negative
yielding sovereign European debt - meaning you pay to lend to some European governments.
European junk bonds with 10 year duration yielding less than 10 yr US Treasury bond. Loss
making, junk rated European companies raising even more intermediate term debt at 0.001%.
Corporations borrowing to buy back stock. The Swiss National Bank creating money out of thin
air and owning $85 billion of US equity in major US companies like Apple & Google. The
Bank of Japan owning a third of all Japanese government bonds outstanding and the Top 10
holder of the companies in the Nikkei 100 index. Financial speculation off the charts across
the globe.
People don't understand what money is our how it is and can be created. They imagine it is
like gold and limited in supply so that government can spend only from a finite supply which
they must obtain by taxes or loans that require interest to be paid. This fable is about as true as Santa Clause and the Tooth Fairy. Money has no value but as an instrument of exchange. It can be created by government to
pay for benefit of a nation. Instead we allow private bankers to create money via loans (no
printing press needed its just a line item on a spread sheet on their computers which shows
up in the borrowers account) The privately owned central bank system limits or increases the
supply by various means in a cyclical manner which leads to boom and bust cycles in the
economy. The rich get richer after each bust cycle since they have cash to acquire assets
available at depressed prices
As for the debt owed by the US the privately owned Fed will ensure the government can
borrow whatever is needed for interest payments since they can create an infinite supply of
money by acquiring junk and calling them assets. Out pal OPEC (Saudis) keeps Petro dollar
(USD ) in demand and exchange rates are set within agreed upon limits by the worlds central
banks under the BIS, with input from various shadowy groups like Bilderbergers, trilaterals
and CFR. And if all else fails, an attack on the USD will result in the military option being
used
To remain in power corrupt governments rely on a citizen base that is uneducated or
misinformed, busy surviving to pay taxes and daily expenses, is dependent on government and
in debt and is well entertained. They must also be divided by religion, race, social, gender,
age and party (secular religion) and given a common external enemy to fear.
The system is working to perfection. Neoliberal economics is the icing on the cake and is
the gift that keeps on giving to the chosen ones.
Check out the pdf on money creation by the Bank of England
There's no reason why with the current state of technology so much money is needed to
campaign for office. Almost as if the MSM is conditioning us to believe it necessary. There's no reason some one can't run a campaign using social media, YouTube and video
conferencing instead of advertising (on same MSM) travelling long distances to campaign
rallies and broadcast advertising. Microdonations and volunteering assistance can take care
of the rest. If there is a will, there's a way to run an outsider as a candidate. The recent death of
Anderson reminded me of his difficulties running, but he ran at a time when none of these
technologies existed.
I think people are just too lazy to make the effort. Most elections people are just too
lazy to even vote.
While I agree that money can just be created there is a limit to that particularly when
low constraints on consumable supplies run parallel to established shortfalls on finite goods
such as houses, land, food etc. Inflation runs rampant and we weak humans distract ourselves
with cheap baubles instead of creating useful shit and putting a roof over the heads of our
children - "waddaya want for xmas kid, a freehold shithole or a new VR headset?" "I'll take
the vive Dad".
Churning out extra dosh works when it is part of a larger plan to increase productivity by
encouraging people outta pointless 'shit industry' service jobs into either outright
production like manufacturing or primary industry, or infrastructure investment like
railways, roads, bridges & renewable energy projects. Just pumping fresh new bills into
health n education will be great for those who work in these sectors, but is unlikely to
create much flow on to the rest of the population.
"... Ryan deficit BS there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it simply explains the history of the Gordian Knot we face as a species ..."
"... "Banking came into existence as a fraud. The fraud was legalized and we've been living with the consequences, both good and bad, ever since. Even so it is also a great invention-right up there with fire, the wheel, and the steam engine." ..."
@ Daniel ending with "This "Clash of Civilizations" type narrative is not encouraging." That
is exactly what they want you to focus on as a narrative rather than the simple truth about
the demise of private banking. On the previous thread about the Republican: Ryan deficit BS
there was a commenter ex-SA with a John H. Hotson link that I want to see go viral because it
simply explains the history of the Gordian Knot we face as a species
"Banking came into existence as a fraud. The fraud was legalized and we've been living
with the consequences, both good and bad, ever since. Even so it is also a great
invention-right up there with fire, the wheel, and the steam engine."
Clash of Civilizations is as vapid a meme as the common understanding of the Capitalism
myth as that article so clearly states. Spread his word far and wide to wake up the zombies.
It is time!
"During my whole career at Goldman Sachs - 1967 to 1991 - I never owned a foreign stock or emerging market bonds. Now I have
hundreds of millions of dollars in Russia, Brazil, Argentina and Chile, and I worry constantly about the dollar-yen rate. Every
night before I go to bed I call in for the dollar-yen quote, and to find out what the Nikkei is doing and what the Hang Seng Index
is doing. We have bets in all these markets. Right now Paul [one of my traders] is long [on] the Canadian dollar. We have bets all
over the place. I would not have worried about any of these twenty years ago. Now I have to worry about all of them."
Economic globalization is probably the most fundamental transformation of the world's political and economic arrangements since
the Industrial Revolution. Decisions made in one part of the world more and more affect people and communities elsewhere in the
world. Sometimes the consequences of globalization are positive, liberating inventive and entrepreneurial talents and accelerating
the pace of sustainable development. But at other times they are negative, as when many people, especially in less-developed countries,
are left behind without a social safety net. Globalization undermines the ability of the nation to tax and to regulate its own economy.
This weakens the power of sovereign nations relative to that of large transnational corporations and distorts how social and economic
priorities are chosen.
Economic globalization is most often associated with rapid growth in the flow of goods and services across international borders.
Indeed, the economic "openness" of a nation is often measured by the value of its exports, imports, or their sum when compared to
the size of its economy. Economic globalization also involves large investments from outside each nation, often by transnational
corporations. These corporations often combine technology and know-how with their investments that enhance the productive capacity
of a nation. Previous position papers of the Mobilization, contained in Speaking of Religion & Politics: The Progressive Church
Tackles Hot Topics2, have dealt with globalization primarily in these terms.
But international trade and investment are only part of the openness that has come to be called globalization. Another part,
and arguably the most important, is the quickening flow of financial assets internationally. While a small portion of this flow
is directly associated with the "real" economy of production and exchange, its vast majority is composed of trades in the "paper"
economy of short-term financial markets. This paper economy is enormous: The value of global financial securities greatly exceeds
the value of annual world output of goods and services. Moreover, the paper economy often contributes to crises in the real economy.
Thus it is important to the well being of humanity and the planet as a whole, yet it is little understood by most people. This essay
undertakes to provide a basic understanding of this paper economy, especially as its more speculative features have multiplied during
the last two or three decades, so that Christians and others concerned about what is happening in our world can join in an intelligent
discussion of how the harmful consequences of financial markets can be controlled.
Financial markets 101
To better understand this paper economy, one first needs to know something about foreign exchange markets, international money
markets, and "external" financial markets.
In an open economy, domestic residents often engage in international transactions. American car dealers, for example, buy Japanese
Toyotas and Datsuns, while German computer companies sell electronic notebooks to Mexican businessmen. Similarly, Australian mutual
funds invest in the shares of companies all over the world, while the treasurer of a Canadian transnational corporation parks idle
cash in 90-day Bank of England notes. Most of these transactions require one or more participants to acquire a foreign currency.
If an American buys a Toyota and pays the Japanese Toyota dealer in dollars, for example, the latter will have to exchange the dollars
for yens in order to have the local currency with which to pay his workers and local suppliers.
The foreign exchange market is the market in which national currencies are traded. As in any market, a price must exist at which
trade can occur. An exchange rate is the price of a unit of domestic currency in terms of a foreign currency. Thus, if the exchange
rate of the dollar in terms of the Japanese yen increases, we say the dollar has depreciated and the yen has appreciated. Similarly,
a decrease in the dollar/yen exchange rate would imply an appreciation of the dollar and a depreciation of the yen.
Foreign exchange markets can be classified as spot markets and forward markets. In spot markets currencies are bought and sold
for immediate delivery and payment. In forward markets, currencies are bought or sold for future delivery and payment. A U.S. music
company, say, enters into a contract to buy British records for delivery in 30 days. To guard against the possibility of the dollar/pound
exchange rate increasing in the meantime, the company buys pounds forward, for delivery in 30 days, at the corresponding forward
exchange rate quoted today. This is called hedging.
Of course, there has to be a counterpart to the music company's forward purchase of pounds. Who is the seller of those pounds?
The immediate seller would be a commercial bank, as in the spot market. But the bank only acts as an intermediary. The ultimate
seller of forward pounds may be another hedger, like the music company, but with a position just its opposite. Suppose, for example,
that an American firm or individual has invested in 30-day British securities that it wants to convert back into dollars after the
end of 30 days. The investor may decide to sell the pound proceeds forward in order to assure itself of the rate at which the pounds
are to be converted back into dollars after 30 days.
Another type of investor may be providing the forward contract bought by the music company. This is the speculator, who attempts
to profit from changes in exchange rates. Depending on their expectations, speculators may enter the forward market either as sellers
or as buyers of forward exchange. In this particular case, the speculator may have reason to believe that the dollar/pound exchange
rate will decrease in the next 30 days, permitting him to obtain the promised pounds at a lower price in the spot market 30 days
hence.
The main instruments of foreign exchange transactions include electronic bank deposit transfers and bank drafts, bills of exchange,
and a whole array of other short-term instruments expressed in terms of foreign currency. Thus, foreign exchange transactions do
not generally involve a physical exchange of currencies across borders. They generally involve only changes in debits and credits
at different banks in different countries. Very large banks in the main financial centers such as New York, London, Brussels and
Zurich, account for most foreign exchange transactions. Local banks can provide foreign exchange by purchasing it in turn from major
banks.
Although the foreign exchange market is dispersed in many cities and countries, it is unified by keen competition among the highly
sophisticated market participants. A powerful force keeping exchange rate quotations in different places in line with each other
is the search on the part of market participants for foreign exchange arbitrage opportunities. Arbitrage is the simultaneous purchase
and sale of a commodity or financial asset in different markets with the purpose of obtaining a profit from the differential between
the buying and selling price.
When foreign exchange is acquired in order to engage in international transactions involving the purchase or sale of goods and
services, it is said that international trade has taken place in the real economy. When international transactions involve the purchase
or sale of financial assets, they are referred to as international financial transactions. They constitute the paper economy.
Financial markets are commonly classified as capital markets or money markets. Capital markets deal in financial claims that
reach more than one year into the future. Such claims include shares of stock, bonds, and long-term loans, among others. Money markets,
on the other hand, deal in short-term claims, with maturities of less than one year. These include marketable government securities
(like Treasury bills), large-denomination certificates of deposit issued by banks, commercial paper (representing short-term corporate
debt), money market funds, and many other kinds of short-term, highly liquid (easily transferable) financial instruments. It is
these short-term money market securities that account for most of the instability in the global paper economy.
Buying or selling a money market security internationally involves the same kind of foreign exchange risk that plagues buyers
or sellers of merchandise internationally. If one wishes to guard against the possibility of an increase or decrease in the foreign
exchange rate, one can insure against such fluctuations by "covering" in the forward market. By the same token, the decision about
whether to own domestic or foreign money market securities is not simply a comparison of the rates of interest paid on otherwise
comparable securities, because one must also take into account the gain (or loss) from purchasing foreign currency spot and selling
it forward. Thus, choosing the security with the highest return does not necessarily imply the one with the highest interest rate.
People who trade in international money markets, moreover, need to take into account many other variables, including the costs
of gathering and processing information, transaction costs, the possibility of government intervention and regulation, other forms
of political risk, and the inability to make direct comparisons of alternative assets. Speculating in international money markets
is a risky proposition.
International money markets involve assets denominated in different currencies. External financial markets involve assets denominated
in the same currency but issued in different political jurisdictions. Eurodollars, for example, are dollar deposits held outside
the United States (offshore), such as dollar deposits in London, Zurich, or even Singapore banks. The deposits may be in banks owned
locally or in the offshore banking subsidiaries of U.S. banks. Deutsche mark deposits in London banks or pound sterling deposits
in Amsterdam banks also are examples of external deposits. They are referred to as eurocurrency deposits. (The advent of a new common
currency in the European Community - the Euro - will require the development of new nomenclature for external financial markets)
External banking activities are a segment of the wholesale international money market. The vast majority of eurocurrency transactions
fall in the above $1 million value range, frequently reaching the hundreds of millions (or even billion) dollar value. Accordingly,
the customers of eurobanks are almost exclusively large organizations, including multinational corporations, government entities,
hedge funds, and international organizations, as well as eurobanks themselves. Like domestic banks, eurobanks that have excess reserves
may make loans denominated in eurocurrencies, expanding the supply of eurocurrency deposits. The eurocurrency market funnels funds
from lending countries to borrowing countries. Thus, it performs an important function as global financial intermediator.
Early history
The origins of what Karl Polanyi3 called haute finance can be traced to Renaissance Italy,
where as early as 1422 there were seventy-two bankers or bill-brokers in or near the Mecato Vecchio of Florence.4
Many combined trade with purely financial business. By the middle of the fifteenth century, the Medici of Florence had opened branches
in Bruges, London and Avignon, both as a means of financing international trade and as a way of marketing new kinds of financial
assets. Many banking terms and practices still in use today originated in the burgeoning financial centers of Renaissance Europe.
By the early seventeenth century, the Dutch and East India Companies began issuing shares to the public in order to fund imperial
enterprises closely linked to Holland and Britain. Their shares were made freely transferable, permitting development of a secondary
financial market for claims to future income. Amsterdam opened a stock exchange in 1611, and shortly thereafter, the British government
began issuing lottery tickets, an early form of government bonds, to finance colonial expansion, wars and other major areas of state
expenditure. A lively secondary market in these financial instruments also emerged.5
Throughout these early years, financial markets were anything but riskless and stable. Consider the famous Dutch tulip mania
of 1630, for example. This speculative bubble saw prices of tulip bulbs reach what seemed like absurd levels, yet "the rage among
the Dutch to possess them [tulips] was so great that the ordinary industry of the country was neglected." Some investors in Britain
and France shared this "irrational exuberance," though it was centered mostly in Holland. Then, not unlike speculative bubbles of
more recent vintage, prices crashed6, pushing the economy into a depression and leaving many
investors angry and confused.
Paris developed into an early financial center in the eighteenth century, but the Revolution of 1789 dissipated its power. The
New York Stock Exchange was formally organized in 1792 and the official London Stock Exchange opened in 1802. The expansion westward
of the railroads in the U.S. offered the financial community opportunity to sell railway shares and bonds that quickly became dominant
in the financial markets. Indeed, the bond markets of London, Paris, Berlin, and Amsterdam were vehicles for collecting massive
amounts of European savings and transferring it at higher returns to the emerging markets of the U.S., Canada, Australia, Latin
America and Russia in the century preceding World War I.
Forward markets soon developed, especially in the U.S., in order to counter the impact of long distances and unpredictable weather.
As capital and money markets expanded, other new financial instruments came into use. Joint stock companies were formed, enabled
by legislation that clarified the distinction between the owners and managers of corporations. This, in turn, helped stimulate the
growth of the American stock market in the late nineteenth century. To be sure, financial markets did not grow continuously in the
nineteenth century. Lending to the emerging markets was interrupted by defaults in the 1820s, 1850s, 1870s and 1890s, but each wave
of default was confined to a relatively small number of countries, permitting growth of financial flows to resume.7
In the four decades leading up to World War I, a truly worldwide economy was forged for the first time, extending from the core
of Western Europe and the U.S. to latecomers in Eastern Europe and Latin America and even to the countries supplying raw materials
on the periphery. Central to this expansion of trade and investment was an expanding system of finance that girded the globe. The
amount was enormous: between 1870 and 1914 something like $30 billion,8 the equivalent in
2002 dollars of $550 billion, was transferred to recipient countries, in a world economy perhaps one-twelfth as large as today's.
During this "Gilded Age" of haute finance, the risks of participating in international trade and investment were generously shared
with governments and the banking system. The reason is that foreign exchange rates were kept reasonably stable by the commitment
of most governments to the "high" gold standard. In this way, businesses and individuals engaging in international transactions
were reasonably certain that the value of their contracts was not going to change before they matured. Their exchange risk was shared
with government by its willingness to buy or sell gold in order to keep the exchange rate constant. Because of this assurance, financial
flows were reasonably free of regulation.
They were not immune from crises, however. When the sources of financial capital temporarily dried up, capital-importing countries
occasionally found they could not expand export earnings sufficiently to avoid suspending interest payments on their debts or abandoning
gold parity. On two occasions, the United States faced this possibility. The first was in 1893, when it switched in a sharp economic
downturn to bimetallism (which caused William Jennings Bryan to denounce the "cross of gold"), and the second was in 1907, which
led to the creation of the Federal Reserve System, handing to the government the function of lender of last resort previously carried
out by Wall Street banks under the tutelage of J. Pierpont Morgan.
In his magisterial book The Great Transformation, Karl Polanyi reflected on the pervasive influence of haute finance on the policies
of nations even in this "Gilded Age." The globalising financial markets and the gold standard, according to Polanyi, left very little
room for states, especially smaller ones, to adopt monetary and fiscal policies independent of the new international order. "Loans,
and the renewal of loans, hinged upon credit, and credit upon good behavior. Since, under constitutional government ..., behavior
is reflected in the budget and the external value of the currency cannot be detached from the appreciation of the budget, debtor
governments were well advised to watch their exchanges carefully and to avoid policies which might reflect upon the soundness of
budget positions." Thus, even one hundred years ago the then-dominant world power, Great Britain, speaking as it did so often through
the voice of the City of London, "prevailed by the timely pull of a thread in the international monetary network.9
Following World War I, the United States emerged not merely as a creditor country but as the primary source of new international
financial flows. At first, the principal borrowers were the national governments of the stronger countries, but as the boom in security
underwriting developed in the U.S, numerous obscure provinces, departments and municipalities found it possible to sell their bonds
to American investors.10 Just as domestic construction, land, and equity markets went through
speculative rises in the 1920s, so too did the U.S. experience a speculative surge in foreign investment. In the aftermath of successive
defaults by foreign debtors in 1932, the Senate Committee on Banking and Currency concluded:
The record of the activities of investment bankers in the flotation of foreign securities is one of the most scandalous chapters
in the history of American investment banking. The sale of these foreign issues was characterized by practices and abuses that violated
the most elementary principles of business ethics.11
Speculation in the stock markets leading up to 1929 offers still another window on the instability of short-term financial flows.
A speculative market can be defined as one in which prices move in response to the balance of opinion regarding the future movement
of prices rather than responding normally to changes in the demand for and supply of whatever is priced. Helped by the willingness
of Wall Street to allow people to buy stocks on margin, people were only too ready to bet prices would rise as long as others thought
so too. Day after day and month after month the price of stocks went up in 1927. The gains by later standards were not large, but
they had an aspect of great reliability. Then in 1928, the nature of the boom changed. "The mass escape into make-believe, so much
a part of the true speculative orgy, started in earnest.12
Following World War I, the gold standard itself took on new form. Nations were allowed to hold their international reserves in
either gold or foreign exchange. This worked for a while in the 1920s, but as speculation mounted and balances of payments disequilibria
grew, fears of devaluation led central banks to try to replace their foreign-exchange holdings with specie in a "scramble for gold."
The worldwide result of these shifts in central bank portfolios was an overall contraction of the supply of money and credit that
sapped aggregate demand and forced prices to fall and output levels to shrink. Thus, it can be argued - persuasively in our view
- that the Great Depression of the 1930s was as much, if not more, the result of mismanagement of money and credit as it was the
result of protectionist policies. Protectionist policies were more likely the result of slowed growth and stalled trade. Countries
that broke with the gold-exchange standard early, such as Britain in 1931, and pursued more expansionary monetary policies fared
somewhat better.
The Bretton Woods system
During the darkest days of World War II, a radically new economic architecture was designed for the postwar world at a New Hampshire
ski resort called Bretton Woods. With the competitive devaluation and protectionist policies of the 1930s still fresh in their minds,
the mostly British and American delegates to the conference wanted most of all to design a system with fixed exchange rates that
did not rely on national gold hoards to keep exchange rates stable. They decided to depend instead on strict controls of international
financial movements. In this way, they hoped to allow countries to pursue full-employment policies through appropriate monetary
(money and credit) and fiscal (tax and spending) policies without some of the anxieties associated with open financial markets.
The role of monetary and financial stabilizer was given to the International Monetary Fund (IMF), which was provided with modest
funds to assist nations to adjust imbalances in their external payments obligations. The International Bank for Reconstruction and
Development (IBRD, later the World Bank) assumed the task of helping to finance post-war reconstruction.13
The IMF as it emerged from Bretton Woods had inadequate reserves to advance money for the long periods that many countries require
for "soft-landings" from big current-account deficits. It would make only short-term loans. To make sure that borrowing nations
were constrained, "conditionality" attached to IMF loans became standard practice, even in the early years of the Fund's operation.
Policy limitations and "performance targets" tied to credit lines advanced under "standby agreements" began in the middle 1950s
and were universal by the 1960s, long before the notions of "stabilization" and "structural adjustment" came into common parlance.
The Bretton Woods agreement also imposed a foreign exchange standard by which exchange rates between major currencies were fixed
in terms of the dollar, and the value of the dollar was tied to gold at a U.S. guaranteed price of thirty-five dollars per ounce.
By devising a system that controlled financial movements and assisted with the adjustment of countries' balances of payments, the
new system succeeded in keeping exchange rates remarkably stable. They were changed only very occasionally, e.g., as when the value
of sterling relative to the dollar was reduced in 1949 and again in 1966. This meant that companies doing business abroad did not
need to worry constantly about the risk of exchanging one currency for another.
Among the reasons for this remarkable stability was the willingness of the central banks of other countries to hold an increasing
proportion of their official reserves in the form of U.S. dollars. It was an essential part of the system that the dollars held
by other countries would be seen as IOUs backed by the U.S. offer to exchange them for gold at a fixed pre-war price. But as the
balance-of-payments of the U.S. moved more deeply into deficits in the 1960s, there were more and more U.S. dollars held by other
countries, and this so-called "dollar overhang" became disturbingly large.15 General de
Gaulle called it "the exorbitant privilege," meaning that the Americans were paying their bills - for defense spending to fight
the Vietnam War among other things - with IOUs instead of real resources in the form of exports of goods and services.
Strict control over financial movements began to weaken as early as the 1950s, when the first eurodollar (later eurocurrency)
deposits were made in London. At first a trickle, limited originally to Europe, these offshore banking operations soon expanded
worldwide. The American "Interest Equalization Tax" (IET) instituted in 1963 raised the costs to banks of lending offshore from
their domestic branches.16 The higher external rates led dollar depositors such as foreign
corporations to switch their funds from onshore U.S. institutions to eurobanks. Thus, the real effect of the IET was to encourage
the dollar to follow the foreigners abroad, rather than the other way around. Eurobanks paid higher interest rates on deposits and
loaned eurocurrencies at lower rates than U.S. banks could at home. Still another large inflow of eurodeposits occurred in 1973-74
as the Organization of Petroleum Exporting Countries (OPEC) began "recycling" their surplus dollar earnings through eurobanks. Because
of their existence, a country such as Brazil could arrange within a reasonably regulation-free environment to obtain multimillion-dollar
loans from a consortium of offshore American, German and Japanese banks and thereby finance its oil imports. Net eurocurrency deposit
liabilities that amounted to around $10 billion in the mid-1960s, grew to $500 billion by 1980.
These eurocurrency transactions taught the players in financial markets how to shift their deposits, loans, and investments from
one currency to another whenever exchange rates or interest rates were thought to be ready to change. Even the ability of central
banks to regulate the supply of money and credit was undermined by the readiness of commercial banks to borrow and lend offshore.
Hence, the effectiveness of regulatory mechanisms that had been put in place to implement the Bretton Woods agreement - interest
rate ceilings, lending limits, portfolio restrictions, reserve and liquidity requirements - gradually eroded as offshore transactions
started to balloon.
The world economy developed at unprecedented rates during the roughly twenty-five years immediately following World War II. Growth
and employment rates during these years were at historic highs in most countries. Productivity also advanced rapidly in most developing
countries as well as in the technological leaders. These facts suggest that the system devised at Bretton Woods worked reasonably
well, despite occasional adjustments. To be sure, it helped to sow the seeds of its own destruction by failing to retain operational
control of international financial flows. But the twenty-five years of its survival leading up to August 15, 1971, when President
Nixon closed the gold window, have nonetheless come to be called by some economic historians the "Golden Years."
Controlling private risk
Fixed exchange rates did not last long after the U.S. stopped exchanging gold for claims on the dollar held by foreign central
banks. The pound sterling was allowed to float against the dollar in July, 1972. Japan set the yen free to float in February, 1973,
and most European currencies followed suit shortly thereafter. The Bretton Woods gold-dollar system was doomed.
The fact that exchange rates no longer were fixed meant that companies doing business in different countries had to cope with
the day-to-day shifts in the dollar's rate of exchange with other currencies. The risks of unexpected changes in the value of international
contracts suddenly had shifted from the public to the private sector. Corporate finance officers now had to hedge against possible
exchange losses by buying a currency forward and investing the equivalent in the short-term money market, or by investing in the
eurocurrency market. The corporations' banks, in turn, tried to match each foreign currency transaction with another contrary transaction
in order not to leave each of the banks exposed to foreign exchange risk overnight. Since no single bank was likely to balance its
foreign exchange positions exactly, the need arose to swap deposits in different currencies in order to match corporate hedging
transactions and to square the bank's books.
The price of this forward cover on inter-bank transactions - that is to say, the premium or discount on a currency's spot value
- has tended to accord with the differences between interest-rates offered for eurocurrency deposits in different currencies. This
is the connection between the foreign exchange market and the short-term credit markets, between exchange rates and interest rates.
Whenever exchange rates move up or down, therefore, their influence is immediately transmitted through the eurocurrency markets
to the credit markets.
It is this scramble to avoid private risk that accounted for the dramatic rise in international financial movements following
the demise of the Bretton Woods system. By 1973, daily foreign exchange trading around the world varied between $10 and $20 billion
per day. This amount was approximately twice the value of world trade at the time. Bank of International Settlements data suggests
that the daily average of foreign exchange trading had climbed by 1980 to about $80 billion, and that the ratio between foreign
exchange trading and international trade was more nearly ten to one. The data for 1992 was $880 billion and fifty to one, respectively;
for 1995, $l,260 billion and seventy to one; and for 2000, almost $1,800 and ninety to one.
There is very little doubt, therefore, that the lion's share of international financial flows is relatively short-run. Indeed,
about eighty percent of foreign exchange transactions are reversed in less than seven business days. Only a very small proportion
is used to finance international trade and direct foreign investment. The vast majority must be used with the expectation of gain
or to avoid losses that may result from changes in the value of financial assets. In general terms, they are speculative, made in
hope of capital gain or to hedge against potential capital loss, or to seek the gains of arbitrage based on slight differences in
rates of return in different financial centers.
Foreign exchange markets and markets for money and credit seem remote and abstract to most people. This section introduces the
real institutions that operate these markets and assesses the nature of their power.
Commercial banks They take deposits, lend money, and create credit to the extent their capitalization allows. In
Europe, they tend to combine commercial and investment banking services, but in the U.S. and Japan they are still kept at least
partially separate by regulation. The foreign exchange trading facilities of the largest commercial banks, e.g. Citibank and
J.P.Morgan/Chase in the U.S., tend to dominate the market. The banking industry as a whole represents the largest pool of world
financial capital.
Investment banks They facilitate international payments, manage new issues of stocks and bonds, advise on mergers
and acquisitions in all industries, and engage in securities and foreign exchange trading as allowed by law. Investment banks
(previously called merchant banks in the U.K.) have specialized in particular kinds of derivative products. Derivatives are
financial contracts whose value is based upon the value of other underlying financial assets such as stocks, bonds, mortgages
or foreign exchange.
Brokerage houses They handle the bulk of stock exchange transactions and a major part of foreign exchange transactions.
Investment banks recently have acquired several of the main brokerage houses in the U.S. The development of investor-friendly
methods of buying and selling securities, e.g., over-the-counter markets and electronic brokerage, also have diminished the
role of independent brokerage houses.
Mutual funds They are pools of funds provided by clients that are run by professional investment managers. These
collective investments are held in portfolios with various mixes of money-market instruments, bonds and equities. Mutual funds
account for the second largest pool of global financial capital.
Hedge funds They resemble mutual funds, but they are much less restricted in investment activities and techniques.
Their customers are high net-worth individuals and large institutional investors. They specialize in complex financial instruments
and tend to take significant speculative positions, especially on expected future changes in macroeconomic conditions. They
exploit arbitrage opportunities embedded in the relative prices of related securities. They frequent offshore centers and tax
havens.
Tax havens Offshore centers and tax havens shelter perhaps $10 trillion of wealth from capital and income taxation.
The British Virgin Islands, the Bahamas, Bermuda, the Cayman Islands, Dublin and Luxembourg are among the most important. Many
hedge funds are registered there.
Wealthy individuals They are an important source of funds, as many of them invest their liquid funds in financial
markets. They account for about eighty percent of hedge fund investors.
Private pension funds They function like annuities, receiving funds today in return for a promise to pay future benefits.
With large pools of funds to invest, they tend to depend on investment banks, mutual funds or hedge funds to supervise placement
of their assets in global financial markets.
Insurance companies They pool risks by selling protection against the loss of property, income, or life. Since the
risks they insure have various durations, they call for varied investment strategies. A portion of their funds is invested in
short-term financial instruments, often through mutual and hedge funds.
Transnational corporations They produce and sell goods and services in a number of countries. Their finance departments
seek the best ways to raise and transfer funds across borders, and administer the transfer prices18
of international trade conducted within the corporation. Some even have in-house corporate banks.
According to recent work by political scientists, the power of these financial actors is based in part on a complicated "process
of multiplication" of loans, assets and transactions. Many investors in financial markets buy financial instruments on very thin
margins, based on loans obtained by pledging the assets as collateral. This is called "leverage" in the jargon of financial markets.
In turn, the borrowed funds are invested in other financial assets, multiplying the demand for credit and financial assets. As demand
rises, more sophisticated financial assets are invented, including many forms of financial derivatives. A major portion of the accumulated
debt remains serviceable only as long as the prices of most assets will rise or at least remain relatively stable. If prices turn
down, they easily can lead to a chain-reaction. If investors respond instinctively like a herd, they will bring a far-reaching collapse
that constitutes a crisis.
As the flow of financial assets climbs, some bankers, brokers, and managers of financial institutions become prominent players
in the competition for investor dollars. Some become known for picking profitable places to invest and for promoting their selections
successfully. This can influence markets if people have confidence in their advice. A notorious example of the influence of prominent
players was the attack on British sterling in 1992 by George Soros' Quantum Fund. Believing that sterling was overvalued, the Fund
quietly established credit lines that allowed it to borrow $15 billion worth of sterling and sell it for dollars at the then "overvalued"
price. Its purpose, of course, was to pay back the loan with cheaper pounds after they had depreciated. Having gone long on dollars
and short on sterling, Soros decided to speak up noisily. He publicized his short-selling and made statements in newspapers that
the pound would soon be devalued. It wasn't long before sterling was devalued; he made $1 billion in profit.
The point can be made more generally: financial markets are subject to manipulation because they have become socially structured.
Market leaders and financial gurus are admired and followed (at least until very recently). The heavyweights thus dominate the business.
An obvious consequence of this is that there is a strong tendency in financial markets for further concentration of resources.
Another source of the power of financial actors is their obvious affinity for the rampant free-market philosophy of neo-liberalism.
The freedom with which they move financial capital around depends, of course, on the market-friendly policies of the so-called Washington
Consensus.19 As long as they are seen as part of the governing coalition, they derive special
powers to regulate themselves rather than be controlled by an independent government agency or civil society. Their power also is
reinforced by the activities of several collective associations of financial actors,20
which lobby on their behalf.
One more source of power for the financial actors is their knowledge that if they are big enough and sufficiently interlaced
with other financial actors, then the "system" will keep them from failing. Consider the case of Long-term Capital Management, a
hedge fund partnership started in 1994. It was able to borrow from various banks the equivalent of forty times its capitalization
in order to make bets on changes in the relative prices of bonds in the U.S. and abroad. When the Russian government announced a
devaluation and debt moratorium in August, 1998, it produced losses that the fund could not sustain. Nor could some of the banks
that had loaned large amounts to the fund. Accordingly, the Federal Reserve Bank of New York, fearful that the risk to the entire
system was too high, orchestrated a private rescue operation by fourteen banks and other financial institutions, which re-capitalized
the company for $3.5 billion.
Financial actors also have the power indirectly to influence non-financial actors such as firms or states. By providing economic
incentives to gamble and speculate on financial instruments, global financial markets divert funds from long-term productive investments.
In all probability, they also encourage banks and financial institutions to maintain a regime of higher real interest rates that
reduce the ability of productive enterprises to obtain credit. The volatility of global financial markets, moreover, brings uncertainty
and volatility in interest rates and exchange rates that are harmful to various sectors of the real economy, particularly international
trade.
The above stories about George Soros and Long-term Capital Management are good illustrations of the consequences for non-financial
actors of actions by financial actors. Both episodes are examples of games that are basically zero-sum, at least in the short-run.
Nothing new was produced; no new values were created. In the 1992 case about speculating against sterling, the Quantum Fund's profits
were at the expense of the British government, especially the Bank of England, and British taxpayers. In 1998, the losses suffered
by Long-term Capital Management came out of the pockets of the stockholders of the banks that bailed it out, as the stock-market
value of their shares depreciated. Hence, the financial system tends to feed itself by drawing more resources from other sectors
of the economy, undermining the vitality of the real economy.
Consequences of global financial flows
The dominant economic ideology of the last twenty-five years has been embodied in the so-called Washington Consensus. It is a
"market-friendly" ideology that traces its roots to longstanding policies of the IMF that encourage macroeconomic "stabilization;"
to adoption by the World Bank of ideas in vogue in Washington early in the Reagan period concerning deregulation and supply-side
economics; to the zeal of the Thatcher government in England for privatizing public enterprises; and perhaps most of all to the
neo-liberal tendencies of the business community and the economics profession in the U.S. The implementation of these policies of
economic "reform," by first "stabilizing" the macro-economy and then "adjusting" the market so that it can perform more efficiently,
are supposed to pay off in the form of faster output growth and rising real incomes
Among these policy prescriptions is financial liberalization in both the developed and the developing countries. Domestically
it is achieved by weakening or removing controls on interest and credit and by diluting the differences between banks, insurance
and finance companies. International financial liberation, on the other hand, demands removal of controls and regulations on both
the inflows and outflows of financial instruments that move through foreign exchange markets. It is the implementation of these
reforms that is perhaps the single most important cause of the surge in global financial flows. To be sure, the influence of technological
advances has broken the natural barriers of space and time for financial markets as twenty-four hour electronic trading has grown.
The fact that throughout most of the 1980s and 1990s the developed countries suffered from over-capacity and overproduction in manufacturing
may also have led the owners of financial capital to look for alternative profit opportunities.
It now is time to ask whether the implementation of all these reforms, on balance, has produced good or bad results. The focus
of this section will be mostly on the consequences of large and expanding international financial flows. After all, they are the
main concern of this essay. But first, we should ask whether or not the policies of growth and rising real incomes promoted by the
Washington Consensus have borne fruit.
Growth and income
There is little doubt that the introduction of the Washington Consensus' policy mix expanded the volume of international trade.
As a result, trade in goods and services has grown at more than twice the rate of global gross domestic product (GDP), and developing
countries' share of trade has risen from 23 to 29 percent. Increasing numbers of firms from developing countries, like their industrial-country
counterparts, engage in transnational production and adopt a global perspective in structuring their operations. The flow of foreign
direct investments and foreign portfolio investments has multiplied even more rapidly than trade, despite the financial instability
experienced in Asia, Brazil, Russia, and elsewhere in recent years.
The effects of liberalization have not been uniformly favorable, however. After at least ten full years of experience with the
Washington Consensus, several recent studies have begun to assess the consequences for developing countries of this experiment in
more open markets.21 Except for the years of crisis in a number of the countries studied,
most developing countries achieved moderate growth rates of gross domestic product in the 1990s - considerably higher than in the
l980s in Africa and Latin America during the debt crisis, but remarkably unchanged in most other regions. Moreover, average annual
growth in the 1990s was slightly lower than in the twenty-five years preceding the debt crisis when a strategy of substituting domestic
production for imports was in fullest use. When population growth rates are taken into consideration, the growth rate of per capita
income in the developing countries studied during the 1990s also was somewhat lower than in the 1960s and 1970s. Toward the end
of the 1990s, growth tapered off in many countries due to emerging domestic financial crises or external events. There is little
evidence in these figures, therefore, to suggest the strategy of liberalization boosted growth rates appreciably.
Nor did the distribution of income improve in most developing countries in the 1990s. On the contrary, virtually without exception
the wage differentials between skilled and unskilled workers rose with liberalization. The reasons for this varied widely among
countries, but one of the most important reasons was the fact that the number of relatively well-paid jobs in sectors of the economy
involved with international trade, though growing, was insufficient to absorb available workers, forcing many workers into more
precarious and poorly paid employment in the non-traded, informal trade, and service sectors or where traditional agriculture served
as a sponge for the labor market. Between the mid-1960s and the late-1990s, the poorest 20 percent of the world population saw its
share of income fall from 2.3 to 1.4 percent. Meanwhile, the share of the wealthiest quintile increased from 70 to 85 percent.22
Risk and reward
While all markets are imperfect and subject to failure, financial markets are more prone than others to fail because they are
plagued with three particular shortcomings: asymmetric information, herd behavior and self-fulfilling panics. Asymmetric information
is a problem whenever one party to an economic transaction has insufficient information to make rational and consistent decisions.
In most financial markets where borrowing and lending take place, borrowers usually have better information about the potential
returns and risks associated with the investments to be financed by the loans than do the lenders. This becomes especially true
as financial transactions disperse across the globe, often between borrowers and lenders of widely different cultures.
Asymmetric information leads to adverse selection and moral hazard. Adverse selection occurs when, say, lenders have too little
information to choose from among potential borrowers those who are most likely to use the loans wisely. The lenders' gullibility,
therefore, attracts more unworthy borrowers. Moral hazard occurs when borrowers engage in excessively risky activities that were
unanticipated by lenders and lead to significant losses for the lender. Yet another form of moral hazard occurs when lenders indulge
in lending indiscriminately because they assume that the government or an international institution will bail them out if the loans
go awry.
A good illustration of asymmetric information is the story of bank lending following OPEC's large increase in oil prices following
1973. Awash in cash, the oil exporters deposited large amounts in commercial banks that then perfected the Euro-currency loan for
developing countries. Eager to put excess reserves to use, the banks spent little time discriminating among potential borrowers,
in part because they believed host governments or international agencies would guarantee the loans. At the same time, developing
countries found they could readily borrow not only to import oil, but also to increase other kinds of expenditures. This meant they
could use borrowed funds to maintain domestic spending rather than be forced to adjust to the new realities of higher prices for
necessary imports. There is considerable evidence that moral hazard also was present in the Mexican crises in 1982 and 1994, and
in the Southeast Asian crises in 1997-8.
Yet another illustration of asymmetric information is the tendency of financial firms, especially on Wall Street and in the City
of London, to invent ever more complex derivatives to shift risk around the financial system. The market for these products is growing
rapidly, both on futures and options exchanges (two of the several places where derivatives are traded). A financial engineer, for
example, can take the risk in, say, a bond and break it down into a series of smaller risks, such as that inflation will reduce
its real value or that the borrower will default. These smaller risks can then be priced and sold, using derivatives, so that the
bondholder keeps only those risks he wishes to bear. But this is not a simple task, particularly when it involves assets with risk
exposures far into the future and which are traded so rarely that there is no good market benchmark for setting the price. Enron,
for instance, sold a lot of these sorts of derivatives, booking profits on them immediately even though there was a serious doubt
about their long-term profitability. Stories of huge losses incurred in derivative trading are legion. The real challenge before
central banks and regulatory bodies is to curb speculative behavior and bring discipline in derivative markets.
A second source of risk in financial markets is the tendency of borrowers and lenders alike to engage in herd behavior. John
Maynard Keynes, writing in the 1930s, suggested that financial markets are like "beauty contests." His analogy was to a game in
the British Sunday newspapers that asked readers to rank pictures of women according to their guess about the average choice by
other respondents. The winner, therefore, does not express his own preferences, but rather anticipates "what average opinion expects
average opinion to be." Accordingly, Keynes thought that anyone who obtained information or signals that pointed to swings in average
opinion and to how it would react to changing events had the basis for substantial gain. Objective information about economic data
was not enough. Rather, simple slogans "like public expenditure is bad," "lower unemployment leads to inflation," "larger deficits
lead to higher interest rates," were then the more likely sources of changes in public opinion. What mattered was that average opinion
believed them to be true, and that advance knowledge of, say, more public spending, lower unemployment, or larger deficits, respectively,
offered the speculator a special advantage.
A financial market that operates as a beauty contest is likely to be highly unstable and prone to severe changes. One reason
for this is that people trading in financial assets, even today, know very little about them. People who hold stock know little
about the companies that issued them. Investors in mutual funds know little about the stocks their funds are invested in. Bondholders
know little about the companies or governments that issued the bonds. Even knowledgeable professionals are often more concerned
with judging how swings in conventional opinion might change market values rather than with the long-term returns on investments.
Indeed, since careful analysis of risks and rewards is costly and time consuming, it often makes sense for fund managers and traders
to follow the herd. If they decide rationally not to follow the herd, their competence may be seriously questioned. On the other
hand, if fund managers follow the herd and the herd suffers losses, few will question their competence because others too suffered
losses. When financial markets are operated like a beauty contest, everyone wants to sell at the same time and nobody wants to buy.
The financial markets behaved as predicted shortly after several industrial countries, including the U.S. and Germany, abolished
all restrictions on international capital movements in 1973. The new system proved to be highly volatile, with exchange rates, interest
rates, and financial asset-prices subject to large short-term fluctuations. The markets also were susceptible to contagion when
financial tremors spread from their epicenter to other countries and markets that seemingly had little connection with the initial
problem. In less than five years, it already was clear that both the surpluses and the deficits on the major countries' balance
of payments were getting larger, not smaller, despite significant changes in the exchange rates.
In some cases, a financial crisis can be self-fulfilling. A rumor can trigger a self-fulfilling speculative attack, e.g. on a
currency, that may be baseless and far removed from the economic fundamentals (unlike the Soros story above). This can cause a sudden
shift in the herd's intentions and lead to unanticipated market movements that create severe financial crises. Consider, for example,
the succession of major financial crises that have pock-marked the recent history of international financial markets, including
Latin America's Southern Cone crisis of 1979-81, the developing-country debt crisis of 1982, the Mexican crisis of 1994-95, the
Asian crisis of 1997-98, the Russian crisis of 1998, the Brazilian crisis of 1999, and the Argentine crisis of 2001-02.
Perhaps the Asian crisis of 1997-98 is the most interesting in this regard, for there were relatively few signals beforehand
of impending crisis. All the main East Asian economies displayed in 1994-96 low inflation, fiscal surpluses or balanced budgets,
limited public debt, high savings and investment rates, substantial foreign exchange reserves and no signs of deterioration before
the crisis. This background has led many analysts to suppose that the crisis was a mere product of the global financial system.
But what could have triggered the herd to stampede out of Asian currencies? No doubt several factors were at work. Before the crisis
that started in the summer of 1997, there was a rise in short-term lending to Asians by Western and Japanese banks with little or
no premiums, a fact that the Bank for International Settlement raised questions about. Alert investors, especially hedge funds,
also noticed that substantial portions of East and Southeast Asian borrowings were going into non-productive assets and real estate
that often were linked to political connections. In fact, some of the funds pouring into non-productive assets were coming out of
the productive sector, mortgaging the longer-term viability of some real economies. Information about the structure and policies
of financial sectors was opaque. Thus, opinions began to change among key lenders about the regulation of financial sectors in several
Asian countries and their destabilizing lack of transparency. Suddenly, several important hedge funds reduced their exposure by
shorting currency futures, followed quickly by Western mutual funds. The calling of loans led quickly to deep depression in several
Asian countries. It has been estimated that the Asian crisis and its global repercussions cut global output by $2 trillion in 1998-2000.
Loss of government autonomy
Both economic theory and the experience of managing the external financial affairs of nations tell us that it is virtually impossible
to maintain (1) full financial mobility, (2) a fixed exchange rate, and (3) freedom to seek macro-economic balance (full employment
with little inflation) with appropriate monetary and fiscal policies. Only two of these policy objectives can be consistently maintained.
If the authorities try to pursue all three, they will sooner or later be punished by destabilizing financial flows, as in the run
up to the Great Depression around 1930 and in the months before sterling's collapse 1992. If a government tries to stimulate its
economy with lax monetary policy, for example, and players with significant market power like George Soros sense that at a fixed
exchange rate, foreigners will be unwilling to lend enough to finance the country's current account deficit, they will begin to
flee the home currency in order to avoid the capital losses they will suffer if and when there is a devaluation. If reserve losses
accelerate and more players follow suit, crisis ensues. The authorities are forced to devalue, interest rates soar, and the successful
attackers sit back to count their profits.
For nations wishing to retain reasonably independent monetary and fiscal authority in order to cater to domestic needs, the solution
is to allow the exchange rate to move up or down as conditions in the foreign exchange markets dictate, or to establish some sort
of control over the movement of financial instruments in and out of the country, or to devise some combination of these two adjustment
mechanisms. The debate over whether fixed or flexible exchange rates is the wiser policy continues to rage in academic quarters
and in finance ministries all over the world. For the most part, the international business community prefers reasonably fixed exchange
rates in order to minimize their costs of hedging foreign currency positions. Thus instituting some form of control over speculative
financial movements may be an appropriate solution to the "trilemma."
The capacity of a nation to levy enough taxes to finance needed public expenditures is another important reason to retain independent
authority. A central function of government has been to insulate domestic groups from excessive market risks, particularly those
originating in international transactions. This is the way governments have maintained domestic political support for liberalizing
trade and finance throughout the postwar period. Yet many governments are less able today to help citizens that are injured by freer
markets with unemployment compensation, severance payments, and adjustment assistance because the slightest hint of raising taxes
to pay for these vital public services leads to capital flight in a world of heightened financial mobility.
This is a dilemma. Increased integration into the world economy has raised the need of governments to redistribute tax revenues
or implement generous social programs in order to protect the vast majority of the population that remains internationally immobile.
At the same time, governments find themselves less able to maintain the safety nets needed to preserve social stability. It seems
reasonable to suppose, therefore, that doing things that will bolster the ability of governments to levy sufficient taxes - curbing
tax avoidance by transnational corporations, controlling offshore tax havens, regulating capital flight - would help make globalization
slightly more democratic.
Winners and losers
The people who benefit from speculative financial movements are, for the most part, better educated and wealthier than the vast
majority of fellow citizens. They are the elites, whatever the country. As noted above, they have fewer connections to the real
economy of production and exchange than most people. And their purpose in trading financial assets, again for the most part, is
to make a profit quickly rather than wait for an investment project to mature.
People who do not participate directly in the buying and selling of short-term financial instruments are nonetheless influenced
indirectly by the macroeconomic instability and contagion that often accompany interruptions in financial market flows. This is
true for people both in developed and developing countries. In developed countries, the voracious appetite of financial markets
for more and more resources saps the vitality of the real economy - the economy that most people depend upon for their livelihood.
It has been shown that real interest rates rise as a result of the expansion of speculative financial markets. This rise in real
interest rates, in turn, dampens real investment and economic growth while serving to concentrate wealth and political power within
a growing worldwide rentier class (people who depend for their income on interest, dividends, and rents).23
Rather, the long-term health of the economy depends upon directing investable funds into productive investments rather than into
speculation.
In developing countries, attracting global investors' attention is a mixed blessing. Capital market inflows provide important
support for building infrastructure and harnessing natural and human resources. At the same time, surges in money market inflows
may distort relative prices, exacerbate weakness in a nation's financial sector, and feed bubbles. As the 1997 Asian crisis attests,
financial capital may just as easily flow out of as into a country. Unstable financial flows often lead to one of three kinds of
crises:
Fiscal crises. The government abruptly loses the ability to roll over foreign debts and attract new foreign loans, possibly
forcing the government into rescheduling or default of its obligations.
Exchange crises. Market participants abruptly shift their demands from domestic currency assets to foreign currency assets,
depleting the foreign exchange reserves of the central bank in the context of a pegged exchange rate system.
Banking crises. Commercial banks abruptly lose the ability to roll over market instruments (i.e., certificates-of-deposit)
or meet a sudden withdrawal of funds from sight deposits, thereby making the banks illiquid and possibly insolvent.
Although these three types of crises sometimes appear singly, they more often arrive in combination because external shocks or
changed market expectations are likely to occur simultaneously in the market for government bonds, the foreign exchange market,
and the markets for bank assets. Approximately sixty developing countries have experienced extreme financial crises in the past
decade.24
The vast majority of people in the developing world suffer from these convulsive changes. They are tired of adjusting to changes
over which they exercise absolutely no control. Most people in these countries view Western capitalism as a private club, a discriminatory
system that benefits only the West and the elites who live inside "the bell jars" of poor countries. Even as they consume the consumer
goods of the West, they are quite aware that they still linger at the periphery of the capitalist game. They have no stake in it,
and they believe that they suffer its consequences. As Hernando deSoto puts it, "Globalization should not be just about interconnecting
the bell jars of the privileged few."25
Social solidarity
Karl Polanyi in The Great Transformation sought to explain how the "liberal creed" contributed to the catastrophes of war and
depression associated with the first half of the twentieth century. Polanyi's central argument, which in fact can be traced back
to Adam Smith, is that markets do indeed promote efficiency and change, but that they achieve this through undermining social coherence
and solidarity. Markets must therefore be embedded within social institutions that mitigate their negative consequences.
The evidence of more recent times suggests that the global spread of free-market policies has been accompanied by the decline
of countervailing institutions of social solidarity. Indeed, a main feature of the introduction of market-friendly policies has
been to weaken local institutions of social solidarity. Consider, for example, the top-down policy prescriptions of the IMF and
World Bank during the developing world's debt crisis in the 1980s. These policies evolved into an intricate web of expected behaviors
by developing countries. In order for developing countries to expect private businesses and financial interests to invest funds
within their borders and to boost the growth potential of domestic economies, they needed to drop the "outdated and inefficient"
policies that dominated development strategies for most of the postwar period and adopt in their place policies that are designed
to encourage foreign trade and freer financial markets. Without significant adjustments in the ways economies were managed, it was
suggested, nations soon would be left behind.
The list of Washington Consensus requirements was long and daunting:
Make the private sector the primary engine of economic growth
Maintain a low rate of inflation and price stability
Shrink the size of the state bureaucracy
Maintain as close to a balanced budget as possible, if not a surplus
Eliminate or lower tariffs on imported goods
Remove restrictions on foreign investment
Get rid of quotas and domestic monopolies
Increase exports
Privatize state-owned industries and utilities
Deregulate capital markets
Make currency convertible
Open industries, stock, and bond markets to direct foreign ownership
Deregulate the economy to promote domestic competition
Eliminate government corruption, subsidies and kickbacks
Open the banking and telecommunications systems to private ownership and competition
Allow citizens to choose from an array of competing pension options and foreign-run pension and mutual funds.
In a provocative article, Ute Pieper and Lance Taylor point out that market outcomes often conflict with other valuable social
institutions. In addition, they emphasize that markets function effectively only when they are "embedded" in society. The authors
then look carefully at the experience of a number of developing countries as they struggled to comply with the policy prescriptions
of the IMF and the Fund. In almost every case, they demonstrate conclusively that the impact of these efforts was to make society
an "adjunct to the market."26
An appropriate balance is not being struck between the economic and non-economic aspirations of human beings and their communities.
Indeed, the evidence is mounting that globalization's trajectory can easily lead to social disintegration - to the splitting apart
of nations along lines of economic status, mobility, region, or social norms. Globalization not only highlights and exacerbates
tensions among groups; it also reduces the willingness of internationally mobile groups to cooperate with others in resolving disagreements
and conflicts.
Policy options
History confirms that free-markets are inherently volatile institutions, prone to speculative booms and busts. Overshooting,
especially in financial markets, is their normal condition. To work well, free markets need not only regulation, but active management.
During the first half of the post-war era, world markets were kept reasonably stable by national governments and by a regime of
international cooperation. Only lately has a much earlier idea been revived and made an orthodoxy - the idea adopted by the Washington
Consensus that, provided there are clear and well-enforced rules-of-the-game, free markets can be self-regulating because they embody
the rational expectations that participants form about the future.
On the contrary, since markets are themselves shaped by human expectations, their behavior cannot be rationally predicted. The
forces that drive markets are not mechanical processes of cause and effect, as assumed in most of economic theory. They are what
George Soros has termed "reflexive interactions."27 Because markets are governed by highly
combustible interactions among beliefs, they cannot be self-regulating.
The question before us then, is what could be done to better regulate financial markets and to bring active management back into
the task of "embedding" markets in society, rather than the other way around? Monetary authorities such as the Federal Reserve System
in the U.S. and the central banks of other countries were formed long ago in order to dampen the inherent instabilities of financial
market in their home countries. But the evolution of an international regulatory framework has not kept pace with the globalization
of financial markets. The International Monetary Fund was not designed to cope with the volume and instability of recent financial
trends.
Capital controls
Given the problems outlined above about short-term speculative financial transactions, one might wonder why national policy-makers
have not insulated their financial markets by imposing some sort of control over financial capital. The answer, of course, is that
some have continued trying to do so despite discouragement from the IMF. For example, some have put limitations on the quantity,
conditions, or destinations of financial flows. Others have tried to impose a tax on short-term borrowing by national firms from
foreign banks. This is said to be "market-based" because it operates by altering the cost of foreign funds. If such transactions
were absolutely prohibited, they would be called "non-market" interventions.
A more extreme form of financial capital controls, one that controls movement of foreign exchange across international borders,
also has been tried in a number of countries. This form of control requires that some if not all foreign currency inflows be surrendered
to the central bank or a government agency, often at a fixed price that differs from that which would be set in free market. The
receiving agency then determines the uses of foreign exchange. The absence of exchange controls means that currencies are "convertible."
The neo-liberal argument opposing financial capital controls asserts that their removal will enhance economic efficiency and
reduce corruption. It is based on two basic propositions in economic theory that depend for their proof on perfectly competitive
markets in the real economy and perfectly efficient gatherers and transmitters of information in financial markets. Neither assumption
is realistic in today's world. Indeed, a number of empirical studies have reported the effectiveness of capital controls in controlling
capital flight, curbing volatile capital flows and protecting the domestic economy from negative external developments.
Developing countries have only recently abandoned, or still maintain, a variety of control regimes. Latin American countries
traditionally have used market-based controls, putting taxes and surcharges on selected financial capital movements or tying them
up in escrow accounts. Non-market based restrictions were more common in Asia until the early 1990s. Many commentators believe that
their sudden removal in the early 1990s was a contributing cause to the Asian financial crises in 1997-8. The experience of two
countries, Malaysia and Chile, with capital controls is especially instructive.
Malaysia, unlike its Asian neighbors, was reluctant to remove its restrictions on external borrowing by national firms unless
they could show how they could earn enough foreign exchange to service their debts. Then when the Asian crises hit, its government
imposed exchange controls, in effect making its local currency that was held outside the country inconvertible into foreign exchange.
After the ringget was devalued, exporters were required to surrender foreign currency earnings to the central bank in exchange for
local currency at the new pegged rate. The government also limited the amount of cash nationals could take abroad, and it prohibited
the repatriation of earnings on foreign investments that had been held for less than one year. Thus, Malaysia's capital controls
were focused mostly on controlling the outflow of short-term financial transactions. Happily, the authorities were able to stabilize
the currency and reduce interest rates, leading to a degree of domestic recovery.28
Chile, on the other hand, tried to limit the inflow of short-term financial transactions. It did so by imposing a costly reserve
requirement on foreign-owned capital held in the country for less than one year. Despite attempts to stimulate foreign direct investment
of the funds, most of the reserve deposits were absorbed in the form of increased reserves at the central bank. In turn, this created
a potential for expanding the money supply, which the government feared would lead to inflation. Rather than allow this to happen,
the government "sterilized" the inflows by selling government bonds from its portfolio. But this pushed down the prices of bonds
and pushed up the interest rates on them, discouraging business investment. Finally, when prices of copper (Chile's primary export)
fell sharply in 1998, the control regime was scrapped.29
The tobin tax
A global tax on international currency movements was first proposed by James Tobin, a Yale University economist, in 1972.30
He suggested that a tax of one-quarter to one percent be levied on the value of all currency transactions that cross national borders.
He reasoned that such a tax on all spot transactions would fall most heavily on transactions that involve very short round-trips
across borders. In other words, it would be speculators with very short time-horizons that the tax would deter, rather than longer-term
investors who can amortize the costs of the tax over many years. For example, the yearly cost of a 0.2 percent round trip tax would
amount to 48 percent of the value of the traded amount if the round trip were daily, 10 percent if weekly and 2.4 percent if monthly.
Since at least eighty percent of spot transactions in the foreign exchange markets are reversed in seven business days or less,
the tax could have a profound effect on the costs of short-term speculators.
Of course, for those who believe in the efficiency of markets and the rationality of expectations, a transactions tax would only
hinder market efficiency. They argue that speculative sales and purchases of foreign exchange are mostly the result of "wrong" national
monetary and fiscal policies. While we readily admit that national policies sometimes do not accord with desired objectives, they
nonetheless have little relevance for speculators focused on the next few seconds, minutes or hours.
Tobin did not intend for his proposal to involve a supranational taxation authority. Rather, governments would levy the tax nationally.
In order to make the tax rate uniform across countries, however, an international agreement would have to be entered into by at
least the principal financial centers. The revenue obtained from the tax could be designated for each country's foreign exchange
reserve for use during periods of instability, or it could be directed into a common global fund for uses like aid to the poorest
nations. In the latter case, the feasibility of the tax also would depend on an international political agreement. The revenue potential
is sizeable, and could run as high as $500 billion annually.
There are two other advantages often cited by proponents of the Tobin tax. Tobin's original rationale for a foreign exchange
transactions tax was to enhance policy autonomy in a world of high financial capital mobility. He argued that currency fluctuations
often have very significant economic and political costs, especially for producers and consumers of traded goods. A Tobin tax, by
breaking the condition that domestic interest rates may differ from foreign interest rates only to the extent that the exchange
rate is expected to change (see p. 10), would allow authorities to pursue different policies than those prevailing abroad without
exposing them to large exchange rate movements. More recent research suggests that this is only a very modest advantage.31
An additional advantage of the tax is that it could facilitate the monitoring of international financial flows. The world needs
a centralized data-base on all kinds of financial flows. Neither the Bank for International Settlements nor the IMF has succeeded
in providing enough information to monitor them all. This information should be regularly shared among countries and international
institutions in order to collectively respond to emerging issues.
The feasibility issues raised by the Tobin tax are more political than technical. One of the issues is about the likelihood of
evasion. All taxes suffer some evasion, but that has rarely been a reason for avoiding them. Ideally all jurisdictions should be
a party to any agreement about a common transactions tax, since the temptation to trade through non-participating jurisdictions
would be high. Failing that, one could levy a penalty on transactions with "Tobin tax havens" of, say, double the normal tax rate.
Moreover, one could limit the problem of substituting untaxed assets for taxed assets by applying the tax to forwards, swaps and
possibly other contracts.
Tobin and many others have assumed that the task of managing the tax should be assigned to the IMF. Others argue that the design
of the tax is incompatible with the structure of the IMF and that the tax should be managed by a new supranational body. Which view
will prevail depends upon the resolution of other outstanding issues. The Tobin tax is an idea that deserves careful consideration.
It should not be dismissed as too idealistic or too impractical. It addresses with precision the problems of excessive instability
in the foreign exchange markets, and it yields the additional advantage of providing a means to assist those in greater need.
Reforming the IMF
The IMF was established in 1944 to provide temporary financing for member governments to help them maintain pegged exchange rates
during a period of internal adjustment. With the collapse of the pegged exchange rate regime in 1971, that responsibility has been
eclipsed by its role as central arbiter of financial crises in developing countries. As noted above (p. 20), these crises may be
of three different kinds: fiscal crises, foreign exchange crises, and banking crises.
Under current institutional arrangements, a nation suffering a serious fiscal crisis that could easily lead to default must seek
temporary relief from its debts from three different (but interrelated) institutions: the IMF, which is sometimes willing to renegotiate
loans in return for promises to adopt more stringent policies (see above); the so-called Paris Club that sometimes grants relief
on bilateral (country to country) credits; and the London Club that sometimes gives relief on bank credits. This is an extremely
cumbersome process that fails to provide debtor countries with standstill protection from creditors, with adequate working capital
while debts are being renegotiated, or with ways to ensure an expeditious overall settlement. The existing process often takes several
years to complete.
There is a growing consensus that this problem is best resolved with creation of a new international legal framework that provides
for de facto sovereign bankruptcy. This could take the form of an International Bankruptcy Code with an international bankruptcy
court, or it could involve a less formal functional equivalent to its mechanisms: automatic standstills, priority lending, and comprehensive
reorganization plans supported by rules that do not require unanimous consent. Jeffrey Sachs recommends, for example, that the IMF
issue a clear statement of operating principles covering all stages of a debtor's progression through "bankruptcy" to solvency.
A new system of emergency priority lending from private capital markets could be developed, he suggests, under IMF supervision.
He also feels that the IMF and member governments should develop model covenants for inclusion in future sovereign lending instruments
that allow for priority lending and speedy renegotiation of debt claims.32
At the Joint Meeting of the IMF and the World Bank in September, 2002, the policy committee directed the IMF staff to develop
by April, 2003, a "concrete proposal" for establishing an internationally recognized legal process for restructuring the debts of
governments in default. It also endorsed efforts to include "collective action" clauses in future government bond issues to prevent
one or two holdout creditors from blocking a debt-restructuring plan approved by a majority of creditors. The objective of both
proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions, as happened in Southeast
Asia in 1997-98.
Member countries rarely receive support from the IMF any longer to maintain a particular nominal exchange rate. Because financial
capital is so mobile now, pegged exchange rates probably are unsupportable. But there are special times when the IMF still might
give such support during a foreign exchange crisis. International lending to support a given exchange rate is legitimate if the
government is trying to establish confidence in a new national currency, or if its currency is recovering from a severe bout of
hyperinflation. Ordinarily the foreign exchange should be provided from an international stabilization fund supervised by the IMF.
National central banks usually supervise and regulate the domestic banking sector. Thus, banking crises normally are handled
by domestic institutions. This may not be possible, however, if the nation's banks hold large short-term liabilities denominated
in foreign currencies. If the nation's central bank has insufficient reserves of foreign currencies to fund a large outflow of foreign
currencies, there may be circumstances when the IMF or other lenders may wish to act as lenders-of-last-resort to a central bank
under siege. Nations like Argentina that have engaged in "dollarization" are learning about the downside risks of holding large
liabilities denominated in foreign currencies. The best way to avoid this problem is for governments and central banks to restrict
the use of foreign currency deposits or other kinds of short-term foreign liabilities at domestic banks.
Overall, what is most needed is the availability of more capital in developing countries and much quicker responses, amply funded,
to emerging financial crises.. George Soros has argued powerfully that the IMF needs to establish a better balance between crisis
prevention and intervention.33 The IMF has made some progress in prevention by introducing
Contingency Credit Lines (CCLs). The CCL rewards countries that follow sound policies by giving them access to IMF credit lines
before rather than after a crisis erupts. But CCL terms were set too high and there have been no takers. Soros also has recommended
the issuance of Special Drawing Rights (SDRs) that developed-countries would donate for the purpose of providing international assistance.
Its proceeds would be used to finance "the provision of public goods on a global scale as well as to foster economic, social, and
political progress in individual countries."34
A growing number of civil society institutions, however, oppose giving more money to the IMF unless it is basically reformed.
They point out that it is a committed part of the Washington Consensus, the application of whose policies have made societies adjuncts
of the market. They see the IMF as an instrument of the U.S. government and its corporate allies. The conditions it attaches to
loans for troubled countries often do more to protect the interests of first world investors than to promote the long-term health
of the developing countries. The needed chastening of speculative investors does not occur under these circumstances. There is evidence
that in several major crises, IMF requirements for assisting nations have in fact worsened the situation and protracted the crises.
The IMF opposed the policies that enabled Malaysia to weather the crisis in Southeast Asia, for example, while it urged the failed
policies of other Southeast Asian nations. The vast literature cited by Pieper and Taylor (p. 22) is a convincing chronicle of earlier
missteps. For such reasons as these, some civil society institutions argue that, unless IMF policies are changed, giving the institution
more money will do more harm than good.
Fortunately, the IMF's policies are beginning to change, partly as a result of criticisms by civil society institutions, but
more through recognition of the seriousness of the problems with the present system. In the wake of recent financial crises, leaders
in the IMF as well as the World Bank are looking for ways to reform the international financial architecture. Arguably, their emphasis
is shifting away from slavish devotion to the prescriptions of the Washington Consensus and toward more state intervention in financial
markets. Joseph Stiglitz, the Nobel Laureate who has been particularly critical of the IMF, nonetheless acknowledges that its policy
stances are improving.35
The IMF has begun to recognize the importance of at least functional public interventions in markets and the need to provide
more supporting revenues. It has realized that controls on external financial movements and prudent regulation can help contain
financial crises. It has abandoned the doctrine, long the backbone of structural adjustment policies, that raising the local interest
rate will stimulate saving and thereby growth. Both the IMF and the World Bank have rolled over or forgiven the bulk of official
debt owed by the poorest economies.
Whether these and other promising changes in IMF thinking and policy formation are sufficient to assure that its future responses
to crises will be benign still is not clear. While celebrating what they view as belated improvements, many critics of the IMF among
civil society institutions are not convinced that they are sufficiently basic. Even if the IMF avoids repeating some of its more
egregious mistakes, some believe that it is likely to continue to function chiefly for the benefit of the international financial
community rather than the masses of people. Rather, they believe that, at least in the long term, it would be much better for control
over international finance to reside in new institutions under a restructured United Nations. They favor the U.N. because it has
a broader mandate, is more open and democratic, and, in its practice, has given much greater weight to human, social, and environmental
priorities.
Many civil society institutions want the primary focus of reform to be on taming speculation, restoring the control of their
economies to nations, and embedding economies in the wider society. They believe that if these policies are adopted there will be
less need for large funding to deal with financial crises. There remains, however, the fact that such crises are occurring and will
continue to occur for some time. The IMF is the only institution positioned to respond to these crises. Hence, even for those who
sympathize with the goals of the civil society institutions, there is a strong argument for more financing for the IMF.
A world financial authority
A variety of public and private citizens and institutions have recently proposed the establishment of a World Financial Authority
(WFA) to perform in the domain of world financial markets what national regulators do in domestic markets. Some believe it should
be built upon the foundation of global financial surveillance and regulation that have already been laid by the Bank for International
Settlements in Basel, Switzerland. Others regard it as a natural extension of the activities of the IMF. Still others are less interested
in the precise institutional form it would take than in the clear delineation of the tasks that need to be done by someone.
Its first task probably should be to provide sufficient and timely financial assistance during crises to avert contagion and
defaults. This requires a lender-of-last-resort with sufficient resources and authority to disperse rescue money quickly. Perhaps
the best example to date is the bailout loan to Mexico by the U.S. Treasury and the IMF at the end of 1994. It supplied sufficient
liquidity for Mexico to make the transition back to stability and to pay back the loans ahead of time. The management of the Asian
crises in 1997-8, on the other hand, was badly handled. The bailout packages offered by the IMF were not only significantly smaller
than in the Mexico case; they also were constrained with so many conditions that a year later only twenty percent of the funds had
been disbursed. This slow response to the crisis probably worsened the contagion. Surprisingly, the error was repeated in the Russian
crisis in 1998 and the Brazilian crisis in 1999.
A World Financial Authority also should provide the necessary regulatory framework within which the IMF or a successor institution
can develop as a lender-of-last-resort. As long as domestic regulatory procedures function properly, there will be no need for a
world authority to be involved, any more than to certify that domestic regulatory procedures are effective. In countries where domestic
financial regulation is unsatisfactory, the WFA would assist with regulatory reform. In this way, the WFA could aid financial reconstruction,
reduce the likelihood of moral hazard, and give confidence to backers of the operation.
There is little appetite today, especially in Washington, to create a new international bureaucracy. This fact gives support
to the idea of building the WFA from the existing infrastructure of the Bank for International Settlements (BIS). The BIS is a meeting
place for national central bankers who have constructed an increasingly complicated set of norms, rules and decision-making procedures
for handling and preventing future crises. Its committees and cooperative cross-border regulatory framework enjoy the confidence
of governments and of the financial community. It may well be the best place to govern an international regulatory authority at
the present time.
Theological and ethical considerations
While Christian theology cannot provide us with detailed recommendations on how to correct the adverse consequences of speculative
financial movements, it can provide us with an empowering perspective or worldview. Our theological expressions of the faith describe
the source of our spiritual energy and hope. They betray our ultimate values and the source of our ethical norms. They shape how
we perceive and judge the "signs of the times."
God's world and human responsibilities
Nothing in creation is independent of God. "The earth is the Lord's and all that is in it, the world, and all those who live
in it." (Ps. 24:1 NRSV) Thus, no part of the creation - whether human beings, other species, the elements of soil and water, even
human-made things - is our property to use as we wish. All is to be treated in accord with the values and ground rules of a loving
God, their ultimate owner, who is concerned for the good of the whole creation. All of God's creation therefore deserves to be treated
with appropriate care and concern, no matter how remote from one's daily consciousness or existence.
The doctrine of creation reminds us that our ultimate allegiance is not to the nationalistic and human-centered values of our
culture, but rather to the values of the loving Maker of heaven and earth. When we seek plenty obsessively, consume goods excessively,
compete against others compulsively, or commit ourselves to Economic Fate, we are worshiping false gods. Modern idolatries are often
encountered in economic forms, just as in the New Testament's warnings about the spiritual perils of prosperity in the parables
of the rich, hoarding fool (Luke 12:15-21) and the rich youth (Matt. 19:16-24 and Luke 18:18-25).
The fact that so much of financial speculation is divorced from the real economy of production and exchange suggests that its
paper transactions are more like bets in a casino than an essential component of God's real economy, which seeks the good of all
creation. It is wrong to subject people to the effects of wholesale gambling. The fact that the practice of financial speculation
is secretive, compulsively competitive, and frequented by lone rangers, moreover, hints at a cult of false idols. Its practitioners,
including especially day-traders, seem interested only in exceedingly short-term personal financial advantage, unconcerned about
the long-term consequences of their actions or their impact on others. This also indicates a degree of idolatry that contradicts
the doctrine of creation.
Image of God
The conviction that human beings have a God-given dignity and worth (Gen. 1:26-28) unites humanity in a universal covenant of
rights and responsibilities - the family of God. All humans are entitled to the essential conditions for expressing their human
dignity and for participation in defining and shaping the common good. These rights include satisfaction of basic biophysical needs,
environmental safety, full participation in political and economic life, and the assurance of fair treatment and equal protection
of the laws. These rights define our responsibilities in justice to one another, locally, nationally and - because they are human
rights - internationally.
Financial speculation often leads to unmanageable floods of funds into and out of host societies, creating unwanted bubbles and
panics. Financial speculators normally ignore the human consequences of their activities on the rights of people in host societies,
where economic adjustments are shared widely and painfully. Their primary interest is short-term personal financial gain. The absence
of a sense of covenantal unity with their brothers and sisters of the developing world is a sad commentary on the governing ethic
of speculators in the capital markets. Their arrogance calls for some form of control over foreign exchange and financial capital
markets.
Justice in covenant
The rights and responsibilities associated with the image of God are inextricably tied to the stress on justice in Scripture
and tradition. We render to others their due because of our loving respect for their God-given dignity and value. The God portrayed
in Scripture is the "lover of justice" (Ps. 99:4, 33:5, 37:28, 11:7; Isa. 30:18, 61:8; Jer. 9:24). Justice is at the ethical core
of the biblical message. Faithfulness to covenant relationships, moreover, demands a justice that recognizes special obligations,
"a preferential option" to widows, orphans, the poor, and aliens, which is to say the economically vulnerable and politically oppressed.
Hence, the idea of the Jubilee Year (Lev. 25) was meant to prevent unjust concentrations of power and poverty. Jesus' ministry embodies
concern for the rights and needs of the poor; He befriended and defended the dispossessed and the outcasts.
The fact that the liberalization of trade and finance has failed to improve the distribution of incomes, indeed, that it has
widened the gap between rich and poor in virtually every country, is not a sign of distributive justice but of its opposite. The
standard of living for the least skilled, least mobile, and poorest citizens of many developing countries has declined absolutely.
This, too, is an unjust result of a broken system. The fact that governments that wish to assist the vulnerable and weak of their
societies are less able to do so, in part because they no longer can levy sufficient taxes on foreign interests, is a violation
of justice in community.
Sin and judgment
Sin is a declaration of autonomy from God, a rebellion against the sovereign source of our being. It makes the self and its values
the center of one's existence, in defiance of God's care for all. Sin tempts us to value things over people, measuring our worth
by the size of our wealth and the quantity of goods we consume, rather than by the quality of our relationships with God and with
others. Sin involves injustice because its self-centeredness defies God's covenant of justice, grasping more than one's due and
depriving others of their due.
Sin is manifested not only in individuals, but also in social institutions and cultural patterns. These structural injustices
are culturally acceptable ways of giving some individuals and groups of people advantage over others. Because they are pervasive
and generally invisible, they compel our participation. They benefit some and harm many others. Whether or not we deserve blame
as individuals and churches for these social sins depends in part on whether we defend or resist them, tolerate or reject them.
The fact that the freeing of financial markets has permitted financial speculators to engage in high-risk gambles without regard
to the consequences for others is abundant evidence of both individual and institutional sin. The policies of the Washington Consensus
frequently lead to adverse consequences for the poor and the environment, even as its proponents gain advantages from the implementation
of such policies. They are another serious expression of social sin in our time. These policies inevitably increase the concentration
of economic power in fewer hands. The fact that the global spread of free-market policies has led to the decline of countervailing
institutions of
social solidarity means that it is easier for the centers of economic power to corrupt governments, control markets, alienate
neighbors, manipulate public opinion, and contribute to a sense of political impotency in the public.
The Church's mission and hope
The church is called to be an effective expression of the Reign of God, which Jesus embodied and proclaimed. This ultimate hope
is a judgment on our deficiencies
and a challenge to faithful service. God's goal of a just and reconciled world is not simply our final destiny but an agenda
for our earthly responsibilities. We are called to be a sign of the Reign of God, on earth as it is in heaven, to reflect the coming
consummation of God's new covenant of shalom to the fullest extent possible.
A new financial architecture
In her path-breaking book, Casino Capitalism,36 Susan Strange likens the Western financial
system to a vast casino. As in a casino,
"the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing
to be done - the foreign-exchange market and all its variations; or in bonds, government securities or shares. In all these markets
you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial
inventions. Some of the players - banks especially - play with very large stakes. There are also many quite small operators. There
are tipsters, too, selling advice, and peddlers of systems to the gullible. And the croupiers in this global finance casino are
the big bankers and brokers. They play, as it were, "for the house.' It is they, in the long run, who make the best living."
She goes on to observe that the big difference between ordinary kinds of gambling and speculation in financial markets is that
one can choose not to gamble at roulette or poker, whereas everyone is affected by "casino capitalism." What goes on in the back
offices of banks and hedge funds "is apt to have sudden, unpredictable and unavoidable consequences for individual lives."
It is this volatility, this instability in financial markets that has given rise to recurring financial crises. They must be
tamed. In the wake of recent financial crises, people are beginning to look for ways to reform the international financial architecture.
Although it is difficult to move from general theological convictions to specific proposals, we offer the following suggestions
for consideration by Christians and other persons of good will.
Capital controls should be an integral part of national strategies to tame the financial system. They can be made an effective
and meaningful tool to protect and insulate the domestic economy from volatile capital flows and other negative external developments.
Regulatory and supervisory measures should supplement capital controls when appropriate. They should include regulation
of financial derivatives and hedge funds. Regulation is a necessary complement to domestic capital controls. Nations influenced
by hedge funds and their complex financial instruments should seek international cooperation, including the governments of host
countries, to regulate their practices.
A new international legal framework should be created, which provides for de facto sovereign bankruptcy. The existing international
system for dealing with insolvent governments is woefully inadequate. Provision must be made for automatic standstills, priority
lending, and planned reorganizations.
An international transactions tax (like the Tobin tax) should be designed and implemented to discourage short-term speculative
capital movements. It is neither "too idealistic" nor "too impractical." It would reduce short-term trading and strengthen the
defensibility of the exchange rate regime.
International cooperation should be sought to curb dubious activities of offshore financial centers. Strict international
regulation and supervision of offshore centers is essential to curb tax and regulatory evasions. They also are a primary conduit
for money laundering and various criminal activities.
The IMF's responsibilities as a lender-of-last-resort should be enhanced, expanding its authority and resources to make
possible quick action to avert financial crises. The IMF must have effective and swift mechanisms to increase the Fund's access
to official monies in times of crisis, including authority to borrow directly from financial markets under those circumstances.
A World Financial Authority based on the cross-border regulatory framework of the Bank for International Settlements should
be developed. It should provide the necessary regulatory framework within which the IMF or a successor organization can develop
as a lender-of-last-resort.
Of these recommendations, perhaps the most controversial is that more funds be given to the IMF. We noted above that much of
the criticism of the IMF is justified. We also acknowledged that the IMF is improving its policies. We hope that these improvements
will continue. Meanwhile, there is no other viable candidate to serve as lender-of-last-resort - an absolutely essential feature
of any new financial architecture.
The major reason some civil society institutions resist funding the IMF further is its history of misguided structural adjustment
policies, policies that are now widely recognized to have caused widespread suffering. We hope that recent changes will improve
this situation as well and enable the IMF to perform the important role we recommend for it.
Along with the World Bank, it is beginning to contextualize its performance criteria and conditionalities, taking much more seriously
the unique circumstances of particular economies. It is listening more and nitpicking less. To be sure, the IMF is not likely to
abandon its policy of making its loans conditional on the adoption by borrowing countries of mutually agreed economic policies.
Even so, there is considerable evidence that when it has had more resources on hand, conditionality has been correspondingly wiser
and less draconian.
The IMF now recognizes that it can leave more decisions to developing countries partly because these have better informed and
more sophisticated employees than was once the case. Certainly in Latin America and Asia and increasingly in Africa, country economic
teams are better qualified technically than the lower rung Ph.D.s from American and European universities to whom the IMF and World
Bank entrust their missions. Local economists can do financial programming and standard macroeconomic modeling as well as or better
than the people from Washington can; they also know how to do investment project analysis. To be sure, decisions about financial
and project plans must include input from many other elements of a society.
We can encourage the IMF (and World Bank) to reverse the typical procedure in setting conditions for multilateral loans. Instead
of waiting for it to specify the policies that must be followed to justify additional financing, country economic teams, in consultation
with other agencies of their government, should be allowed to propose economic programs to the IMF. Disagreements between Washington
staff assessments and the local teams could be resolved directly or by third-party arbitration. The scope of economic conditionality
could also be restricted, for example, just to a balance-of-payments target, while the country could pursue its own agenda regarding
inflation, income distribution, and growth.
What Christians can do
A primary part of the "principalities and powers" referred to in the Bible is composed of the political-economic institutions
and processes that govern how people relate economically to each other and to God's whole creation. The church has a stake in their
design. Yet many church members feel powerless to change basic political-economic reality. They think either that the economic conditions
of society result "naturally" from the forces of markets that are only marginally within the power of human control, or that economic
conditions result from powerful interests that are beyond the reach of ordinary citizens. Thus, there's nothing that can be done
about it, or there's nothing we can do about it.
On the contrary, Mobilization for the Human Family believes that the political economy is shaped by deliberate social policy
decisions; that conditions at any given time are the result of those decisions; that conditions can be changed by human decisions;
and that the will of a nation's and the world's citizens about what the commitments and purposes of the nation and the world should
be can be expressed in the political economy through the framework of democratic process provided in our national and transnational
polity. Accordingly, we offer below some suggestions for action that may be taken by individual Christians and by our churches and
their denominations to correct some correctable flaws of financial globalization.
Actions by individual Christian
Pray for persons working in governments, international organizations, institutions, and non-governmental organizations who
are trying to work toward a better world, including especially a world financial architecture that better assures fairness in
capital markets.
In the management of personal and family investments, seek fuller understanding of the uses to which the banks, companies,
mutual funds, and investment counselors are putting your money. Avoid speculative investments that are likely to be made without
regard to their consequences for others.
Reflect upon decisions about work and career choices that are consistent with a Christ-like commitment to economic justice
for all.
Organize Bible study in your local congregation, where possible together with people of other backgrounds and life-styles,
to learn and identify with God's continuing struggle to seek economic justice in the world.
Commit oneself to some voluntary organization that is trying to promote greater economic justice in the local and/or global
economy.
Become involved politically in your area or nation, seeking political and economic change in the direction of economic justice.
Actions by churches and denominations
Concern for economic justice must be fully reflected in the prayer life, worship, and educational programs and mission outreach
of all congregations.
Seek assistance from members who work for banks, brokerage houses, and mutual funds to help mould an educational program
that will assist members of the congregation to become more socially responsible investors.
Seek collaborative programs among clusters of congregations, perhaps with the aid of local Councils of Churches, to provide
educational opportunities where Christians and other faith groups can come to understand some of the complex economic issues
amidst which they live and work. Since virtually nothing is now available to explain the problems of financial speculation,
this paper could be used to assist study of this phenomenon.
Over and beyond educational programs, local churches - again perhaps best working together in the same neighborhood or town
- can enter into a deliberate dialogue or partnership with one or more voluntary bodies in the civic society, so as to put their
energies into the health of the wider society. Engagement with the International Forum on Globalization (l009 General Kennedy
Avenue #2, San Francisco, CA 94129) is a good way to explore the means of influencing the debate on the globalization of trade
and finance.
At the denominational level, churches should review their investment criteria to reassure themselves that social responsibility
is a primary goal of their financial management.
Also at the denominational level, agencies responsible for the formation of social witness policies need to monitor global
economic indicators on a continuing basis in order to assist its programmatic agencies to form effective and timely social witness
regarding the local and national consequences of the globalization of trade and finance.
Want to know more?
Globalization is a vast topic. For a general introduction, see Sarah Anderson and John Cavanagh, Field Guide to the Global Economy
(New York: New Press, 2000) and Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar Straus
Giroux, 1999). A classic introduction to the financial side of globalization is Susan Strange, Casino Capitalism, (New York: Mnchester
University Press, 1986). See also Kavaljit Singh, The Globalisation of Finance: A Citizen's Guide (London: Zed Books, 1999) and
John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation (New York: The New Press, 2000). The
best introduction to the Tobin Tax is Mahbub ul Haq et al (eds), The Tobin Tax: Coping with Financial Volatility (New York: Oxford
University Press, 1996). For how church people might react, see Pamela Brubaker, Globalization at What Price? (Cleveland: Pilgrim
Press, 2001).
Questions For Discussion
How have the linkages and interconnections of international finance impacted your life? On balance, do you regard them as
advantages or disadvantages for a healthy Christian life?
The frequency and severity of recent financial crises have fueled calls for a radical redesign of the rules of global finance.
If you were the advisor to an international commission asked to design "A New International Financial Architecture," what would
you recommend?
Do you favor allowing sovereign nations to declare bankruptcy? What Christian traditions might be invoked to support or
deny such an action?
A growing number of civil society institutions oppose giving more money to the IMF. They point out that it is part of the
Washington Consensus, the application of whose policies have made societies adjuncts of the market. Yet this paper suggests
that the IMF needs more money. As a committed Christian, which view do you favor?
Is it too late to expect justice in a globalizing world? Since much of the direction the global economy has taken is irreversible,
how can a balance between market and society be negotiated? How might Christians play a role in those negotiations?
"During my whole career at Goldman Sachs - 1967 to 1991 - I never owned a foreign stock or emerging market bonds. Now I have
hundreds of millions of dollars in Russia, Brazil, Argentina and Chile, and I worry constantly about the dollar-yen rate. Every
night before I go to bed I call in for the dollar-yen quote, and to find out what the Nikkei is doing and what the Hang Seng Index
is doing. We have bets in all these markets. Right now Paul [one of my traders] is long [on] the Canadian dollar. We have bets all
over the place. I would not have worried about any of these twenty years ago. Now I have to worry about all of them."
Economic globalization is probably the most fundamental transformation of the world's political and economic arrangements since
the Industrial Revolution. Decisions made in one part of the world more and more affect people and communities elsewhere in the
world. Sometimes the consequences of globalization are positive, liberating inventive and entrepreneurial talents and accelerating
the pace of sustainable development. But at other times they are negative, as when many people, especially in less-developed countries,
are left behind without a social safety net. Globalization undermines the ability of the nation to tax and to regulate its own economy.
This weakens the power of sovereign nations relative to that of large transnational corporations and distorts how social and economic
priorities are chosen.
Economic globalization is most often associated with rapid growth in the flow of goods and services across international borders.
Indeed, the economic "openness" of a nation is often measured by the value of its exports, imports, or their sum when compared to
the size of its economy. Economic globalization also involves large investments from outside each nation, often by transnational
corporations. These corporations often combine technology and know-how with their investments that enhance the productive capacity
of a nation. Previous position papers of the Mobilization, contained in Speaking of Religion & Politics: The Progressive Church
Tackles Hot Topics2, have dealt with globalization primarily in these terms.
But international trade and investment are only part of the openness that has come to be called globalization. Another part,
and arguably the most important, is the quickening flow of financial assets internationally. While a small portion of this flow
is directly associated with the "real" economy of production and exchange, its vast majority is composed of trades in the "paper"
economy of short-term financial markets. This paper economy is enormous: The value of global financial securities greatly exceeds
the value of annual world output of goods and services. Moreover, the paper economy often contributes to crises in the real economy.
Thus it is important to the well being of humanity and the planet as a whole, yet it is little understood by most people. This essay
undertakes to provide a basic understanding of this paper economy, especially as its more speculative features have multiplied during
the last two or three decades, so that Christians and others concerned about what is happening in our world can join in an intelligent
discussion of how the harmful consequences of financial markets can be controlled.
Financial markets 101
To better understand this paper economy, one first needs to know something about foreign exchange markets, international money
markets, and "external" financial markets.
In an open economy, domestic residents often engage in international transactions. American car dealers, for example, buy Japanese
Toyotas and Datsuns, while German computer companies sell electronic notebooks to Mexican businessmen. Similarly, Australian mutual
funds invest in the shares of companies all over the world, while the treasurer of a Canadian transnational corporation parks idle
cash in 90-day Bank of England notes. Most of these transactions require one or more participants to acquire a foreign currency.
If an American buys a Toyota and pays the Japanese Toyota dealer in dollars, for example, the latter will have to exchange the dollars
for yens in order to have the local currency with which to pay his workers and local suppliers.
The foreign exchange market is the market in which national currencies are traded. As in any market, a price must exist at which
trade can occur. An exchange rate is the price of a unit of domestic currency in terms of a foreign currency. Thus, if the exchange
rate of the dollar in terms of the Japanese yen increases, we say the dollar has depreciated and the yen has appreciated. Similarly,
a decrease in the dollar/yen exchange rate would imply an appreciation of the dollar and a depreciation of the yen.
Foreign exchange markets can be classified as spot markets and forward markets. In spot markets currencies are bought and sold
for immediate delivery and payment. In forward markets, currencies are bought or sold for future delivery and payment. A U.S. music
company, say, enters into a contract to buy British records for delivery in 30 days. To guard against the possibility of the dollar/pound
exchange rate increasing in the meantime, the company buys pounds forward, for delivery in 30 days, at the corresponding forward
exchange rate quoted today. This is called hedging.
Of course, there has to be a counterpart to the music company's forward purchase of pounds. Who is the seller of those pounds?
The immediate seller would be a commercial bank, as in the spot market. But the bank only acts as an intermediary. The ultimate
seller of forward pounds may be another hedger, like the music company, but with a position just its opposite. Suppose, for example,
that an American firm or individual has invested in 30-day British securities that it wants to convert back into dollars after the
end of 30 days. The investor may decide to sell the pound proceeds forward in order to assure itself of the rate at which the pounds
are to be converted back into dollars after 30 days.
Another type of investor may be providing the forward contract bought by the music company. This is the speculator, who attempts
to profit from changes in exchange rates. Depending on their expectations, speculators may enter the forward market either as sellers
or as buyers of forward exchange. In this particular case, the speculator may have reason to believe that the dollar/pound exchange
rate will decrease in the next 30 days, permitting him to obtain the promised pounds at a lower price in the spot market 30 days
hence.
The main instruments of foreign exchange transactions include electronic bank deposit transfers and bank drafts, bills of exchange,
and a whole array of other short-term instruments expressed in terms of foreign currency. Thus, foreign exchange transactions do
not generally involve a physical exchange of currencies across borders. They generally involve only changes in debits and credits
at different banks in different countries. Very large banks in the main financial centers such as New York, London, Brussels and
Zurich, account for most foreign exchange transactions. Local banks can provide foreign exchange by purchasing it in turn from major
banks.
Although the foreign exchange market is dispersed in many cities and countries, it is unified by keen competition among the highly
sophisticated market participants. A powerful force keeping exchange rate quotations in different places in line with each other
is the search on the part of market participants for foreign exchange arbitrage opportunities. Arbitrage is the simultaneous purchase
and sale of a commodity or financial asset in different markets with the purpose of obtaining a profit from the differential between
the buying and selling price.
When foreign exchange is acquired in order to engage in international transactions involving the purchase or sale of goods and
services, it is said that international trade has taken place in the real economy. When international transactions involve the purchase
or sale of financial assets, they are referred to as international financial transactions. They constitute the paper economy.
Financial markets are commonly classified as capital markets or money markets. Capital markets deal in financial claims that
reach more than one year into the future. Such claims include shares of stock, bonds, and long-term loans, among others. Money markets,
on the other hand, deal in short-term claims, with maturities of less than one year. These include marketable government securities
(like Treasury bills), large-denomination certificates of deposit issued by banks, commercial paper (representing short-term corporate
debt), money market funds, and many other kinds of short-term, highly liquid (easily transferable) financial instruments. It is
these short-term money market securities that account for most of the instability in the global paper economy.
Buying or selling a money market security internationally involves the same kind of foreign exchange risk that plagues buyers
or sellers of merchandise internationally. If one wishes to guard against the possibility of an increase or decrease in the foreign
exchange rate, one can insure against such fluctuations by "covering" in the forward market. By the same token, the decision about
whether to own domestic or foreign money market securities is not simply a comparison of the rates of interest paid on otherwise
comparable securities, because one must also take into account the gain (or loss) from purchasing foreign currency spot and selling
it forward. Thus, choosing the security with the highest return does not necessarily imply the one with the highest interest rate.
People who trade in international money markets, moreover, need to take into account many other variables, including the costs
of gathering and processing information, transaction costs, the possibility of government intervention and regulation, other forms
of political risk, and the inability to make direct comparisons of alternative assets. Speculating in international money markets
is a risky proposition.
International money markets involve assets denominated in different currencies. External financial markets involve assets denominated
in the same currency but issued in different political jurisdictions. Eurodollars, for example, are dollar deposits held outside
the United States (offshore), such as dollar deposits in London, Zurich, or even Singapore banks. The deposits may be in banks owned
locally or in the offshore banking subsidiaries of U.S. banks. Deutsche mark deposits in London banks or pound sterling deposits
in Amsterdam banks also are examples of external deposits. They are referred to as eurocurrency deposits. (The advent of a new common
currency in the European Community - the Euro - will require the development of new nomenclature for external financial markets)
External banking activities are a segment of the wholesale international money market. The vast majority of eurocurrency transactions
fall in the above $1 million value range, frequently reaching the hundreds of millions (or even billion) dollar value. Accordingly,
the customers of eurobanks are almost exclusively large organizations, including multinational corporations, government entities,
hedge funds, and international organizations, as well as eurobanks themselves. Like domestic banks, eurobanks that have excess reserves
may make loans denominated in eurocurrencies, expanding the supply of eurocurrency deposits. The eurocurrency market funnels funds
from lending countries to borrowing countries. Thus, it performs an important function as global financial intermediator.
Early history
The origins of what Karl Polanyi3 called haute finance can be traced to Renaissance Italy,
where as early as 1422 there were seventy-two bankers or bill-brokers in or near the Mecato Vecchio of Florence.4
Many combined trade with purely financial business. By the middle of the fifteenth century, the Medici of Florence had opened branches
in Bruges, London and Avignon, both as a means of financing international trade and as a way of marketing new kinds of financial
assets. Many banking terms and practices still in use today originated in the burgeoning financial centers of Renaissance Europe.
By the early seventeenth century, the Dutch and East India Companies began issuing shares to the public in order to fund imperial
enterprises closely linked to Holland and Britain. Their shares were made freely transferable, permitting development of a secondary
financial market for claims to future income. Amsterdam opened a stock exchange in 1611, and shortly thereafter, the British government
began issuing lottery tickets, an early form of government bonds, to finance colonial expansion, wars and other major areas of state
expenditure. A lively secondary market in these financial instruments also emerged.5
Throughout these early years, financial markets were anything but riskless and stable. Consider the famous Dutch tulip mania
of 1630, for example. This speculative bubble saw prices of tulip bulbs reach what seemed like absurd levels, yet "the rage among
the Dutch to possess them [tulips] was so great that the ordinary industry of the country was neglected." Some investors in Britain
and France shared this "irrational exuberance," though it was centered mostly in Holland. Then, not unlike speculative bubbles of
more recent vintage, prices crashed6, pushing the economy into a depression and leaving many
investors angry and confused.
Paris developed into an early financial center in the eighteenth century, but the Revolution of 1789 dissipated its power. The
New York Stock Exchange was formally organized in 1792 and the official London Stock Exchange opened in 1802. The expansion westward
of the railroads in the U.S. offered the financial community opportunity to sell railway shares and bonds that quickly became dominant
in the financial markets. Indeed, the bond markets of London, Paris, Berlin, and Amsterdam were vehicles for collecting massive
amounts of European savings and transferring it at higher returns to the emerging markets of the U.S., Canada, Australia, Latin
America and Russia in the century preceding World War I.
Forward markets soon developed, especially in the U.S., in order to counter the impact of long distances and unpredictable weather.
As capital and money markets expanded, other new financial instruments came into use. Joint stock companies were formed, enabled
by legislation that clarified the distinction between the owners and managers of corporations. This, in turn, helped stimulate the
growth of the American stock market in the late nineteenth century. To be sure, financial markets did not grow continuously in the
nineteenth century. Lending to the emerging markets was interrupted by defaults in the 1820s, 1850s, 1870s and 1890s, but each wave
of default was confined to a relatively small number of countries, permitting growth of financial flows to resume.7
In the four decades leading up to World War I, a truly worldwide economy was forged for the first time, extending from the core
of Western Europe and the U.S. to latecomers in Eastern Europe and Latin America and even to the countries supplying raw materials
on the periphery. Central to this expansion of trade and investment was an expanding system of finance that girded the globe. The
amount was enormous: between 1870 and 1914 something like $30 billion,8 the equivalent in
2002 dollars of $550 billion, was transferred to recipient countries, in a world economy perhaps one-twelfth as large as today's.
During this "Gilded Age" of haute finance, the risks of participating in international trade and investment were generously shared
with governments and the banking system. The reason is that foreign exchange rates were kept reasonably stable by the commitment
of most governments to the "high" gold standard. In this way, businesses and individuals engaging in international transactions
were reasonably certain that the value of their contracts was not going to change before they matured. Their exchange risk was shared
with government by its willingness to buy or sell gold in order to keep the exchange rate constant. Because of this assurance, financial
flows were reasonably free of regulation.
They were not immune from crises, however. When the sources of financial capital temporarily dried up, capital-importing countries
occasionally found they could not expand export earnings sufficiently to avoid suspending interest payments on their debts or abandoning
gold parity. On two occasions, the United States faced this possibility. The first was in 1893, when it switched in a sharp economic
downturn to bimetallism (which caused William Jennings Bryan to denounce the "cross of gold"), and the second was in 1907, which
led to the creation of the Federal Reserve System, handing to the government the function of lender of last resort previously carried
out by Wall Street banks under the tutelage of J. Pierpont Morgan.
In his magisterial book The Great Transformation, Karl Polanyi reflected on the pervasive influence of haute finance on the policies
of nations even in this "Gilded Age." The globalising financial markets and the gold standard, according to Polanyi, left very little
room for states, especially smaller ones, to adopt monetary and fiscal policies independent of the new international order. "Loans,
and the renewal of loans, hinged upon credit, and credit upon good behavior. Since, under constitutional government ..., behavior
is reflected in the budget and the external value of the currency cannot be detached from the appreciation of the budget, debtor
governments were well advised to watch their exchanges carefully and to avoid policies which might reflect upon the soundness of
budget positions." Thus, even one hundred years ago the then-dominant world power, Great Britain, speaking as it did so often through
the voice of the City of London, "prevailed by the timely pull of a thread in the international monetary network.9
Following World War I, the United States emerged not merely as a creditor country but as the primary source of new international
financial flows. At first, the principal borrowers were the national governments of the stronger countries, but as the boom in security
underwriting developed in the U.S, numerous obscure provinces, departments and municipalities found it possible to sell their bonds
to American investors.10 Just as domestic construction, land, and equity markets went through
speculative rises in the 1920s, so too did the U.S. experience a speculative surge in foreign investment. In the aftermath of successive
defaults by foreign debtors in 1932, the Senate Committee on Banking and Currency concluded:
The record of the activities of investment bankers in the flotation of foreign securities is one of the most scandalous chapters
in the history of American investment banking. The sale of these foreign issues was characterized by practices and abuses that violated
the most elementary principles of business ethics.11
Speculation in the stock markets leading up to 1929 offers still another window on the instability of short-term financial flows.
A speculative market can be defined as one in which prices move in response to the balance of opinion regarding the future movement
of prices rather than responding normally to changes in the demand for and supply of whatever is priced. Helped by the willingness
of Wall Street to allow people to buy stocks on margin, people were only too ready to bet prices would rise as long as others thought
so too. Day after day and month after month the price of stocks went up in 1927. The gains by later standards were not large, but
they had an aspect of great reliability. Then in 1928, the nature of the boom changed. "The mass escape into make-believe, so much
a part of the true speculative orgy, started in earnest.12
Following World War I, the gold standard itself took on new form. Nations were allowed to hold their international reserves in
either gold or foreign exchange. This worked for a while in the 1920s, but as speculation mounted and balances of payments disequilibria
grew, fears of devaluation led central banks to try to replace their foreign-exchange holdings with specie in a "scramble for gold."
The worldwide result of these shifts in central bank portfolios was an overall contraction of the supply of money and credit that
sapped aggregate demand and forced prices to fall and output levels to shrink. Thus, it can be argued - persuasively in our view
- that the Great Depression of the 1930s was as much, if not more, the result of mismanagement of money and credit as it was the
result of protectionist policies. Protectionist policies were more likely the result of slowed growth and stalled trade. Countries
that broke with the gold-exchange standard early, such as Britain in 1931, and pursued more expansionary monetary policies fared
somewhat better.
The Bretton Woods system
During the darkest days of World War II, a radically new economic architecture was designed for the postwar world at a New Hampshire
ski resort called Bretton Woods. With the competitive devaluation and protectionist policies of the 1930s still fresh in their minds,
the mostly British and American delegates to the conference wanted most of all to design a system with fixed exchange rates that
did not rely on national gold hoards to keep exchange rates stable. They decided to depend instead on strict controls of international
financial movements. In this way, they hoped to allow countries to pursue full-employment policies through appropriate monetary
(money and credit) and fiscal (tax and spending) policies without some of the anxieties associated with open financial markets.
The role of monetary and financial stabilizer was given to the International Monetary Fund (IMF), which was provided with modest
funds to assist nations to adjust imbalances in their external payments obligations. The International Bank for Reconstruction and
Development (IBRD, later the World Bank) assumed the task of helping to finance post-war reconstruction.13
The IMF as it emerged from Bretton Woods had inadequate reserves to advance money for the long periods that many countries require
for "soft-landings" from big current-account deficits. It would make only short-term loans. To make sure that borrowing nations
were constrained, "conditionality" attached to IMF loans became standard practice, even in the early years of the Fund's operation.
Policy limitations and "performance targets" tied to credit lines advanced under "standby agreements" began in the middle 1950s
and were universal by the 1960s, long before the notions of "stabilization" and "structural adjustment" came into common parlance.
The Bretton Woods agreement also imposed a foreign exchange standard by which exchange rates between major currencies were fixed
in terms of the dollar, and the value of the dollar was tied to gold at a U.S. guaranteed price of thirty-five dollars per ounce.
By devising a system that controlled financial movements and assisted with the adjustment of countries' balances of payments, the
new system succeeded in keeping exchange rates remarkably stable. They were changed only very occasionally, e.g., as when the value
of sterling relative to the dollar was reduced in 1949 and again in 1966. This meant that companies doing business abroad did not
need to worry constantly about the risk of exchanging one currency for another.
Among the reasons for this remarkable stability was the willingness of the central banks of other countries to hold an increasing
proportion of their official reserves in the form of U.S. dollars. It was an essential part of the system that the dollars held
by other countries would be seen as IOUs backed by the U.S. offer to exchange them for gold at a fixed pre-war price. But as the
balance-of-payments of the U.S. moved more deeply into deficits in the 1960s, there were more and more U.S. dollars held by other
countries, and this so-called "dollar overhang" became disturbingly large.15 General de
Gaulle called it "the exorbitant privilege," meaning that the Americans were paying their bills - for defense spending to fight
the Vietnam War among other things - with IOUs instead of real resources in the form of exports of goods and services.
Strict control over financial movements began to weaken as early as the 1950s, when the first eurodollar (later eurocurrency)
deposits were made in London. At first a trickle, limited originally to Europe, these offshore banking operations soon expanded
worldwide. The American "Interest Equalization Tax" (IET) instituted in 1963 raised the costs to banks of lending offshore from
their domestic branches.16 The higher external rates led dollar depositors such as foreign
corporations to switch their funds from onshore U.S. institutions to eurobanks. Thus, the real effect of the IET was to encourage
the dollar to follow the foreigners abroad, rather than the other way around. Eurobanks paid higher interest rates on deposits and
loaned eurocurrencies at lower rates than U.S. banks could at home. Still another large inflow of eurodeposits occurred in 1973-74
as the Organization of Petroleum Exporting Countries (OPEC) began "recycling" their surplus dollar earnings through eurobanks. Because
of their existence, a country such as Brazil could arrange within a reasonably regulation-free environment to obtain multimillion-dollar
loans from a consortium of offshore American, German and Japanese banks and thereby finance its oil imports. Net eurocurrency deposit
liabilities that amounted to around $10 billion in the mid-1960s, grew to $500 billion by 1980.
These eurocurrency transactions taught the players in financial markets how to shift their deposits, loans, and investments from
one currency to another whenever exchange rates or interest rates were thought to be ready to change. Even the ability of central
banks to regulate the supply of money and credit was undermined by the readiness of commercial banks to borrow and lend offshore.
Hence, the effectiveness of regulatory mechanisms that had been put in place to implement the Bretton Woods agreement - interest
rate ceilings, lending limits, portfolio restrictions, reserve and liquidity requirements - gradually eroded as offshore transactions
started to balloon.
The world economy developed at unprecedented rates during the roughly twenty-five years immediately following World War II. Growth
and employment rates during these years were at historic highs in most countries. Productivity also advanced rapidly in most developing
countries as well as in the technological leaders. These facts suggest that the system devised at Bretton Woods worked reasonably
well, despite occasional adjustments. To be sure, it helped to sow the seeds of its own destruction by failing to retain operational
control of international financial flows. But the twenty-five years of its survival leading up to August 15, 1971, when President
Nixon closed the gold window, have nonetheless come to be called by some economic historians the "Golden Years."
Controlling private risk
Fixed exchange rates did not last long after the U.S. stopped exchanging gold for claims on the dollar held by foreign central
banks. The pound sterling was allowed to float against the dollar in July, 1972. Japan set the yen free to float in February, 1973,
and most European currencies followed suit shortly thereafter. The Bretton Woods gold-dollar system was doomed.
The fact that exchange rates no longer were fixed meant that companies doing business in different countries had to cope with
the day-to-day shifts in the dollar's rate of exchange with other currencies. The risks of unexpected changes in the value of international
contracts suddenly had shifted from the public to the private sector. Corporate finance officers now had to hedge against possible
exchange losses by buying a currency forward and investing the equivalent in the short-term money market, or by investing in the
eurocurrency market. The corporations' banks, in turn, tried to match each foreign currency transaction with another contrary transaction
in order not to leave each of the banks exposed to foreign exchange risk overnight. Since no single bank was likely to balance its
foreign exchange positions exactly, the need arose to swap deposits in different currencies in order to match corporate hedging
transactions and to square the bank's books.
The price of this forward cover on inter-bank transactions - that is to say, the premium or discount on a currency's spot value
- has tended to accord with the differences between interest-rates offered for eurocurrency deposits in different currencies. This
is the connection between the foreign exchange market and the short-term credit markets, between exchange rates and interest rates.
Whenever exchange rates move up or down, therefore, their influence is immediately transmitted through the eurocurrency markets
to the credit markets.
It is this scramble to avoid private risk that accounted for the dramatic rise in international financial movements following
the demise of the Bretton Woods system. By 1973, daily foreign exchange trading around the world varied between $10 and $20 billion
per day. This amount was approximately twice the value of world trade at the time. Bank of International Settlements data suggests
that the daily average of foreign exchange trading had climbed by 1980 to about $80 billion, and that the ratio between foreign
exchange trading and international trade was more nearly ten to one. The data for 1992 was $880 billion and fifty to one, respectively;
for 1995, $l,260 billion and seventy to one; and for 2000, almost $1,800 and ninety to one.
There is very little doubt, therefore, that the lion's share of international financial flows is relatively short-run. Indeed,
about eighty percent of foreign exchange transactions are reversed in less than seven business days. Only a very small proportion
is used to finance international trade and direct foreign investment. The vast majority must be used with the expectation of gain
or to avoid losses that may result from changes in the value of financial assets. In general terms, they are speculative, made in
hope of capital gain or to hedge against potential capital loss, or to seek the gains of arbitrage based on slight differences in
rates of return in different financial centers.
Foreign exchange markets and markets for money and credit seem remote and abstract to most people. This section introduces the
real institutions that operate these markets and assesses the nature of their power.
Commercial banks They take deposits, lend money, and create credit to the extent their capitalization allows. In
Europe, they tend to combine commercial and investment banking services, but in the U.S. and Japan they are still kept at least
partially separate by regulation. The foreign exchange trading facilities of the largest commercial banks, e.g. Citibank and
J.P.Morgan/Chase in the U.S., tend to dominate the market. The banking industry as a whole represents the largest pool of world
financial capital.
Investment banks They facilitate international payments, manage new issues of stocks and bonds, advise on mergers
and acquisitions in all industries, and engage in securities and foreign exchange trading as allowed by law. Investment banks
(previously called merchant banks in the U.K.) have specialized in particular kinds of derivative products. Derivatives are
financial contracts whose value is based upon the value of other underlying financial assets such as stocks, bonds, mortgages
or foreign exchange.
Brokerage houses They handle the bulk of stock exchange transactions and a major part of foreign exchange transactions.
Investment banks recently have acquired several of the main brokerage houses in the U.S. The development of investor-friendly
methods of buying and selling securities, e.g., over-the-counter markets and electronic brokerage, also have diminished the
role of independent brokerage houses.
Mutual funds They are pools of funds provided by clients that are run by professional investment managers. These
collective investments are held in portfolios with various mixes of money-market instruments, bonds and equities. Mutual funds
account for the second largest pool of global financial capital.
Hedge funds They resemble mutual funds, but they are much less restricted in investment activities and techniques.
Their customers are high net-worth individuals and large institutional investors. They specialize in complex financial instruments
and tend to take significant speculative positions, especially on expected future changes in macroeconomic conditions. They
exploit arbitrage opportunities embedded in the relative prices of related securities. They frequent offshore centers and tax
havens.
Tax havens Offshore centers and tax havens shelter perhaps $10 trillion of wealth from capital and income taxation.
The British Virgin Islands, the Bahamas, Bermuda, the Cayman Islands, Dublin and Luxembourg are among the most important. Many
hedge funds are registered there.
Wealthy individuals They are an important source of funds, as many of them invest their liquid funds in financial
markets. They account for about eighty percent of hedge fund investors.
Private pension funds They function like annuities, receiving funds today in return for a promise to pay future benefits.
With large pools of funds to invest, they tend to depend on investment banks, mutual funds or hedge funds to supervise placement
of their assets in global financial markets.
Insurance companies They pool risks by selling protection against the loss of property, income, or life. Since the
risks they insure have various durations, they call for varied investment strategies. A portion of their funds is invested in
short-term financial instruments, often through mutual and hedge funds.
Transnational corporations They produce and sell goods and services in a number of countries. Their finance departments
seek the best ways to raise and transfer funds across borders, and administer the transfer prices18
of international trade conducted within the corporation. Some even have in-house corporate banks.
According to recent work by political scientists, the power of these financial actors is based in part on a complicated "process
of multiplication" of loans, assets and transactions. Many investors in financial markets buy financial instruments on very thin
margins, based on loans obtained by pledging the assets as collateral. This is called "leverage" in the jargon of financial markets.
In turn, the borrowed funds are invested in other financial assets, multiplying the demand for credit and financial assets. As demand
rises, more sophisticated financial assets are invented, including many forms of financial derivatives. A major portion of the accumulated
debt remains serviceable only as long as the prices of most assets will rise or at least remain relatively stable. If prices turn
down, they easily can lead to a chain-reaction. If investors respond instinctively like a herd, they will bring a far-reaching collapse
that constitutes a crisis.
As the flow of financial assets climbs, some bankers, brokers, and managers of financial institutions become prominent players
in the competition for investor dollars. Some become known for picking profitable places to invest and for promoting their selections
successfully. This can influence markets if people have confidence in their advice. A notorious example of the influence of prominent
players was the attack on British sterling in 1992 by George Soros' Quantum Fund. Believing that sterling was overvalued, the Fund
quietly established credit lines that allowed it to borrow $15 billion worth of sterling and sell it for dollars at the then "overvalued"
price. Its purpose, of course, was to pay back the loan with cheaper pounds after they had depreciated. Having gone long on dollars
and short on sterling, Soros decided to speak up noisily. He publicized his short-selling and made statements in newspapers that
the pound would soon be devalued. It wasn't long before sterling was devalued; he made $1 billion in profit.
The point can be made more generally: financial markets are subject to manipulation because they have become socially structured.
Market leaders and financial gurus are admired and followed (at least until very recently). The heavyweights thus dominate the business.
An obvious consequence of this is that there is a strong tendency in financial markets for further concentration of resources.
Another source of the power of financial actors is their obvious affinity for the rampant free-market philosophy of neo-liberalism.
The freedom with which they move financial capital around depends, of course, on the market-friendly policies of the so-called Washington
Consensus.19 As long as they are seen as part of the governing coalition, they derive special
powers to regulate themselves rather than be controlled by an independent government agency or civil society. Their power also is
reinforced by the activities of several collective associations of financial actors,20
which lobby on their behalf.
One more source of power for the financial actors is their knowledge that if they are big enough and sufficiently interlaced
with other financial actors, then the "system" will keep them from failing. Consider the case of Long-term Capital Management, a
hedge fund partnership started in 1994. It was able to borrow from various banks the equivalent of forty times its capitalization
in order to make bets on changes in the relative prices of bonds in the U.S. and abroad. When the Russian government announced a
devaluation and debt moratorium in August, 1998, it produced losses that the fund could not sustain. Nor could some of the banks
that had loaned large amounts to the fund. Accordingly, the Federal Reserve Bank of New York, fearful that the risk to the entire
system was too high, orchestrated a private rescue operation by fourteen banks and other financial institutions, which re-capitalized
the company for $3.5 billion.
Financial actors also have the power indirectly to influence non-financial actors such as firms or states. By providing economic
incentives to gamble and speculate on financial instruments, global financial markets divert funds from long-term productive investments.
In all probability, they also encourage banks and financial institutions to maintain a regime of higher real interest rates that
reduce the ability of productive enterprises to obtain credit. The volatility of global financial markets, moreover, brings uncertainty
and volatility in interest rates and exchange rates that are harmful to various sectors of the real economy, particularly international
trade.
The above stories about George Soros and Long-term Capital Management are good illustrations of the consequences for non-financial
actors of actions by financial actors. Both episodes are examples of games that are basically zero-sum, at least in the short-run.
Nothing new was produced; no new values were created. In the 1992 case about speculating against sterling, the Quantum Fund's profits
were at the expense of the British government, especially the Bank of England, and British taxpayers. In 1998, the losses suffered
by Long-term Capital Management came out of the pockets of the stockholders of the banks that bailed it out, as the stock-market
value of their shares depreciated. Hence, the financial system tends to feed itself by drawing more resources from other sectors
of the economy, undermining the vitality of the real economy.
Consequences of global financial flows
The dominant economic ideology of the last twenty-five years has been embodied in the so-called Washington Consensus. It is a
"market-friendly" ideology that traces its roots to longstanding policies of the IMF that encourage macroeconomic "stabilization;"
to adoption by the World Bank of ideas in vogue in Washington early in the Reagan period concerning deregulation and supply-side
economics; to the zeal of the Thatcher government in England for privatizing public enterprises; and perhaps most of all to the
neo-liberal tendencies of the business community and the economics profession in the U.S. The implementation of these policies of
economic "reform," by first "stabilizing" the macro-economy and then "adjusting" the market so that it can perform more efficiently,
are supposed to pay off in the form of faster output growth and rising real incomes
Among these policy prescriptions is financial liberalization in both the developed and the developing countries. Domestically
it is achieved by weakening or removing controls on interest and credit and by diluting the differences between banks, insurance
and finance companies. International financial liberation, on the other hand, demands removal of controls and regulations on both
the inflows and outflows of financial instruments that move through foreign exchange markets. It is the implementation of these
reforms that is perhaps the single most important cause of the surge in global financial flows. To be sure, the influence of technological
advances has broken the natural barriers of space and time for financial markets as twenty-four hour electronic trading has grown.
The fact that throughout most of the 1980s and 1990s the developed countries suffered from over-capacity and overproduction in manufacturing
may also have led the owners of financial capital to look for alternative profit opportunities.
It now is time to ask whether the implementation of all these reforms, on balance, has produced good or bad results. The focus
of this section will be mostly on the consequences of large and expanding international financial flows. After all, they are the
main concern of this essay. But first, we should ask whether or not the policies of growth and rising real incomes promoted by the
Washington Consensus have borne fruit.
Growth and income
There is little doubt that the introduction of the Washington Consensus' policy mix expanded the volume of international trade.
As a result, trade in goods and services has grown at more than twice the rate of global gross domestic product (GDP), and developing
countries' share of trade has risen from 23 to 29 percent. Increasing numbers of firms from developing countries, like their industrial-country
counterparts, engage in transnational production and adopt a global perspective in structuring their operations. The flow of foreign
direct investments and foreign portfolio investments has multiplied even more rapidly than trade, despite the financial instability
experienced in Asia, Brazil, Russia, and elsewhere in recent years.
The effects of liberalization have not been uniformly favorable, however. After at least ten full years of experience with the
Washington Consensus, several recent studies have begun to assess the consequences for developing countries of this experiment in
more open markets.21 Except for the years of crisis in a number of the countries studied,
most developing countries achieved moderate growth rates of gross domestic product in the 1990s - considerably higher than in the
l980s in Africa and Latin America during the debt crisis, but remarkably unchanged in most other regions. Moreover, average annual
growth in the 1990s was slightly lower than in the twenty-five years preceding the debt crisis when a strategy of substituting domestic
production for imports was in fullest use. When population growth rates are taken into consideration, the growth rate of per capita
income in the developing countries studied during the 1990s also was somewhat lower than in the 1960s and 1970s. Toward the end
of the 1990s, growth tapered off in many countries due to emerging domestic financial crises or external events. There is little
evidence in these figures, therefore, to suggest the strategy of liberalization boosted growth rates appreciably.
Nor did the distribution of income improve in most developing countries in the 1990s. On the contrary, virtually without exception
the wage differentials between skilled and unskilled workers rose with liberalization. The reasons for this varied widely among
countries, but one of the most important reasons was the fact that the number of relatively well-paid jobs in sectors of the economy
involved with international trade, though growing, was insufficient to absorb available workers, forcing many workers into more
precarious and poorly paid employment in the non-traded, informal trade, and service sectors or where traditional agriculture served
as a sponge for the labor market. Between the mid-1960s and the late-1990s, the poorest 20 percent of the world population saw its
share of income fall from 2.3 to 1.4 percent. Meanwhile, the share of the wealthiest quintile increased from 70 to 85 percent.22
Risk and reward
While all markets are imperfect and subject to failure, financial markets are more prone than others to fail because they are
plagued with three particular shortcomings: asymmetric information, herd behavior and self-fulfilling panics. Asymmetric information
is a problem whenever one party to an economic transaction has insufficient information to make rational and consistent decisions.
In most financial markets where borrowing and lending take place, borrowers usually have better information about the potential
returns and risks associated with the investments to be financed by the loans than do the lenders. This becomes especially true
as financial transactions disperse across the globe, often between borrowers and lenders of widely different cultures.
Asymmetric information leads to adverse selection and moral hazard. Adverse selection occurs when, say, lenders have too little
information to choose from among potential borrowers those who are most likely to use the loans wisely. The lenders' gullibility,
therefore, attracts more unworthy borrowers. Moral hazard occurs when borrowers engage in excessively risky activities that were
unanticipated by lenders and lead to significant losses for the lender. Yet another form of moral hazard occurs when lenders indulge
in lending indiscriminately because they assume that the government or an international institution will bail them out if the loans
go awry.
A good illustration of asymmetric information is the story of bank lending following OPEC's large increase in oil prices following
1973. Awash in cash, the oil exporters deposited large amounts in commercial banks that then perfected the Euro-currency loan for
developing countries. Eager to put excess reserves to use, the banks spent little time discriminating among potential borrowers,
in part because they believed host governments or international agencies would guarantee the loans. At the same time, developing
countries found they could readily borrow not only to import oil, but also to increase other kinds of expenditures. This meant they
could use borrowed funds to maintain domestic spending rather than be forced to adjust to the new realities of higher prices for
necessary imports. There is considerable evidence that moral hazard also was present in the Mexican crises in 1982 and 1994, and
in the Southeast Asian crises in 1997-8.
Yet another illustration of asymmetric information is the tendency of financial firms, especially on Wall Street and in the City
of London, to invent ever more complex derivatives to shift risk around the financial system. The market for these products is growing
rapidly, both on futures and options exchanges (two of the several places where derivatives are traded). A financial engineer, for
example, can take the risk in, say, a bond and break it down into a series of smaller risks, such as that inflation will reduce
its real value or that the borrower will default. These smaller risks can then be priced and sold, using derivatives, so that the
bondholder keeps only those risks he wishes to bear. But this is not a simple task, particularly when it involves assets with risk
exposures far into the future and which are traded so rarely that there is no good market benchmark for setting the price. Enron,
for instance, sold a lot of these sorts of derivatives, booking profits on them immediately even though there was a serious doubt
about their long-term profitability. Stories of huge losses incurred in derivative trading are legion. The real challenge before
central banks and regulatory bodies is to curb speculative behavior and bring discipline in derivative markets.
A second source of risk in financial markets is the tendency of borrowers and lenders alike to engage in herd behavior. John
Maynard Keynes, writing in the 1930s, suggested that financial markets are like "beauty contests." His analogy was to a game in
the British Sunday newspapers that asked readers to rank pictures of women according to their guess about the average choice by
other respondents. The winner, therefore, does not express his own preferences, but rather anticipates "what average opinion expects
average opinion to be." Accordingly, Keynes thought that anyone who obtained information or signals that pointed to swings in average
opinion and to how it would react to changing events had the basis for substantial gain. Objective information about economic data
was not enough. Rather, simple slogans "like public expenditure is bad," "lower unemployment leads to inflation," "larger deficits
lead to higher interest rates," were then the more likely sources of changes in public opinion. What mattered was that average opinion
believed them to be true, and that advance knowledge of, say, more public spending, lower unemployment, or larger deficits, respectively,
offered the speculator a special advantage.
A financial market that operates as a beauty contest is likely to be highly unstable and prone to severe changes. One reason
for this is that people trading in financial assets, even today, know very little about them. People who hold stock know little
about the companies that issued them. Investors in mutual funds know little about the stocks their funds are invested in. Bondholders
know little about the companies or governments that issued the bonds. Even knowledgeable professionals are often more concerned
with judging how swings in conventional opinion might change market values rather than with the long-term returns on investments.
Indeed, since careful analysis of risks and rewards is costly and time consuming, it often makes sense for fund managers and traders
to follow the herd. If they decide rationally not to follow the herd, their competence may be seriously questioned. On the other
hand, if fund managers follow the herd and the herd suffers losses, few will question their competence because others too suffered
losses. When financial markets are operated like a beauty contest, everyone wants to sell at the same time and nobody wants to buy.
The financial markets behaved as predicted shortly after several industrial countries, including the U.S. and Germany, abolished
all restrictions on international capital movements in 1973. The new system proved to be highly volatile, with exchange rates, interest
rates, and financial asset-prices subject to large short-term fluctuations. The markets also were susceptible to contagion when
financial tremors spread from their epicenter to other countries and markets that seemingly had little connection with the initial
problem. In less than five years, it already was clear that both the surpluses and the deficits on the major countries' balance
of payments were getting larger, not smaller, despite significant changes in the exchange rates.
In some cases, a financial crisis can be self-fulfilling. A rumor can trigger a self-fulfilling speculative attack, e.g. on a
currency, that may be baseless and far removed from the economic fundamentals (unlike the Soros story above). This can cause a sudden
shift in the herd's intentions and lead to unanticipated market movements that create severe financial crises. Consider, for example,
the succession of major financial crises that have pock-marked the recent history of international financial markets, including
Latin America's Southern Cone crisis of 1979-81, the developing-country debt crisis of 1982, the Mexican crisis of 1994-95, the
Asian crisis of 1997-98, the Russian crisis of 1998, the Brazilian crisis of 1999, and the Argentine crisis of 2001-02.
Perhaps the Asian crisis of 1997-98 is the most interesting in this regard, for there were relatively few signals beforehand
of impending crisis. All the main East Asian economies displayed in 1994-96 low inflation, fiscal surpluses or balanced budgets,
limited public debt, high savings and investment rates, substantial foreign exchange reserves and no signs of deterioration before
the crisis. This background has led many analysts to suppose that the crisis was a mere product of the global financial system.
But what could have triggered the herd to stampede out of Asian currencies? No doubt several factors were at work. Before the crisis
that started in the summer of 1997, there was a rise in short-term lending to Asians by Western and Japanese banks with little or
no premiums, a fact that the Bank for International Settlement raised questions about. Alert investors, especially hedge funds,
also noticed that substantial portions of East and Southeast Asian borrowings were going into non-productive assets and real estate
that often were linked to political connections. In fact, some of the funds pouring into non-productive assets were coming out of
the productive sector, mortgaging the longer-term viability of some real economies. Information about the structure and policies
of financial sectors was opaque. Thus, opinions began to change among key lenders about the regulation of financial sectors in several
Asian countries and their destabilizing lack of transparency. Suddenly, several important hedge funds reduced their exposure by
shorting currency futures, followed quickly by Western mutual funds. The calling of loans led quickly to deep depression in several
Asian countries. It has been estimated that the Asian crisis and its global repercussions cut global output by $2 trillion in 1998-2000.
Loss of government autonomy
Both economic theory and the experience of managing the external financial affairs of nations tell us that it is virtually impossible
to maintain (1) full financial mobility, (2) a fixed exchange rate, and (3) freedom to seek macro-economic balance (full employment
with little inflation) with appropriate monetary and fiscal policies. Only two of these policy objectives can be consistently maintained.
If the authorities try to pursue all three, they will sooner or later be punished by destabilizing financial flows, as in the run
up to the Great Depression around 1930 and in the months before sterling's collapse 1992. If a government tries to stimulate its
economy with lax monetary policy, for example, and players with significant market power like George Soros sense that at a fixed
exchange rate, foreigners will be unwilling to lend enough to finance the country's current account deficit, they will begin to
flee the home currency in order to avoid the capital losses they will suffer if and when there is a devaluation. If reserve losses
accelerate and more players follow suit, crisis ensues. The authorities are forced to devalue, interest rates soar, and the successful
attackers sit back to count their profits.
For nations wishing to retain reasonably independent monetary and fiscal authority in order to cater to domestic needs, the solution
is to allow the exchange rate to move up or down as conditions in the foreign exchange markets dictate, or to establish some sort
of control over the movement of financial instruments in and out of the country, or to devise some combination of these two adjustment
mechanisms. The debate over whether fixed or flexible exchange rates is the wiser policy continues to rage in academic quarters
and in finance ministries all over the world. For the most part, the international business community prefers reasonably fixed exchange
rates in order to minimize their costs of hedging foreign currency positions. Thus instituting some form of control over speculative
financial movements may be an appropriate solution to the "trilemma."
The capacity of a nation to levy enough taxes to finance needed public expenditures is another important reason to retain independent
authority. A central function of government has been to insulate domestic groups from excessive market risks, particularly those
originating in international transactions. This is the way governments have maintained domestic political support for liberalizing
trade and finance throughout the postwar period. Yet many governments are less able today to help citizens that are injured by freer
markets with unemployment compensation, severance payments, and adjustment assistance because the slightest hint of raising taxes
to pay for these vital public services leads to capital flight in a world of heightened financial mobility.
This is a dilemma. Increased integration into the world economy has raised the need of governments to redistribute tax revenues
or implement generous social programs in order to protect the vast majority of the population that remains internationally immobile.
At the same time, governments find themselves less able to maintain the safety nets needed to preserve social stability. It seems
reasonable to suppose, therefore, that doing things that will bolster the ability of governments to levy sufficient taxes - curbing
tax avoidance by transnational corporations, controlling offshore tax havens, regulating capital flight - would help make globalization
slightly more democratic.
Winners and losers
The people who benefit from speculative financial movements are, for the most part, better educated and wealthier than the vast
majority of fellow citizens. They are the elites, whatever the country. As noted above, they have fewer connections to the real
economy of production and exchange than most people. And their purpose in trading financial assets, again for the most part, is
to make a profit quickly rather than wait for an investment project to mature.
People who do not participate directly in the buying and selling of short-term financial instruments are nonetheless influenced
indirectly by the macroeconomic instability and contagion that often accompany interruptions in financial market flows. This is
true for people both in developed and developing countries. In developed countries, the voracious appetite of financial markets
for more and more resources saps the vitality of the real economy - the economy that most people depend upon for their livelihood.
It has been shown that real interest rates rise as a result of the expansion of speculative financial markets. This rise in real
interest rates, in turn, dampens real investment and economic growth while serving to concentrate wealth and political power within
a growing worldwide rentier class (people who depend for their income on interest, dividends, and rents).23
Rather, the long-term health of the economy depends upon directing investable funds into productive investments rather than into
speculation.
In developing countries, attracting global investors' attention is a mixed blessing. Capital market inflows provide important
support for building infrastructure and harnessing natural and human resources. At the same time, surges in money market inflows
may distort relative prices, exacerbate weakness in a nation's financial sector, and feed bubbles. As the 1997 Asian crisis attests,
financial capital may just as easily flow out of as into a country. Unstable financial flows often lead to one of three kinds of
crises:
Fiscal crises. The government abruptly loses the ability to roll over foreign debts and attract new foreign loans, possibly
forcing the government into rescheduling or default of its obligations.
Exchange crises. Market participants abruptly shift their demands from domestic currency assets to foreign currency assets,
depleting the foreign exchange reserves of the central bank in the context of a pegged exchange rate system.
Banking crises. Commercial banks abruptly lose the ability to roll over market instruments (i.e., certificates-of-deposit)
or meet a sudden withdrawal of funds from sight deposits, thereby making the banks illiquid and possibly insolvent.
Although these three types of crises sometimes appear singly, they more often arrive in combination because external shocks or
changed market expectations are likely to occur simultaneously in the market for government bonds, the foreign exchange market,
and the markets for bank assets. Approximately sixty developing countries have experienced extreme financial crises in the past
decade.24
The vast majority of people in the developing world suffer from these convulsive changes. They are tired of adjusting to changes
over which they exercise absolutely no control. Most people in these countries view Western capitalism as a private club, a discriminatory
system that benefits only the West and the elites who live inside "the bell jars" of poor countries. Even as they consume the consumer
goods of the West, they are quite aware that they still linger at the periphery of the capitalist game. They have no stake in it,
and they believe that they suffer its consequences. As Hernando deSoto puts it, "Globalization should not be just about interconnecting
the bell jars of the privileged few."25
Social solidarity
Karl Polanyi in The Great Transformation sought to explain how the "liberal creed" contributed to the catastrophes of war and
depression associated with the first half of the twentieth century. Polanyi's central argument, which in fact can be traced back
to Adam Smith, is that markets do indeed promote efficiency and change, but that they achieve this through undermining social coherence
and solidarity. Markets must therefore be embedded within social institutions that mitigate their negative consequences.
The evidence of more recent times suggests that the global spread of free-market policies has been accompanied by the decline
of countervailing institutions of social solidarity. Indeed, a main feature of the introduction of market-friendly policies has
been to weaken local institutions of social solidarity. Consider, for example, the top-down policy prescriptions of the IMF and
World Bank during the developing world's debt crisis in the 1980s. These policies evolved into an intricate web of expected behaviors
by developing countries. In order for developing countries to expect private businesses and financial interests to invest funds
within their borders and to boost the growth potential of domestic economies, they needed to drop the "outdated and inefficient"
policies that dominated development strategies for most of the postwar period and adopt in their place policies that are designed
to encourage foreign trade and freer financial markets. Without significant adjustments in the ways economies were managed, it was
suggested, nations soon would be left behind.
The list of Washington Consensus requirements was long and daunting:
Make the private sector the primary engine of economic growth
Maintain a low rate of inflation and price stability
Shrink the size of the state bureaucracy
Maintain as close to a balanced budget as possible, if not a surplus
Eliminate or lower tariffs on imported goods
Remove restrictions on foreign investment
Get rid of quotas and domestic monopolies
Increase exports
Privatize state-owned industries and utilities
Deregulate capital markets
Make currency convertible
Open industries, stock, and bond markets to direct foreign ownership
Deregulate the economy to promote domestic competition
Eliminate government corruption, subsidies and kickbacks
Open the banking and telecommunications systems to private ownership and competition
Allow citizens to choose from an array of competing pension options and foreign-run pension and mutual funds.
In a provocative article, Ute Pieper and Lance Taylor point out that market outcomes often conflict with other valuable social
institutions. In addition, they emphasize that markets function effectively only when they are "embedded" in society. The authors
then look carefully at the experience of a number of developing countries as they struggled to comply with the policy prescriptions
of the IMF and the Fund. In almost every case, they demonstrate conclusively that the impact of these efforts was to make society
an "adjunct to the market."26
An appropriate balance is not being struck between the economic and non-economic aspirations of human beings and their communities.
Indeed, the evidence is mounting that globalization's trajectory can easily lead to social disintegration - to the splitting apart
of nations along lines of economic status, mobility, region, or social norms. Globalization not only highlights and exacerbates
tensions among groups; it also reduces the willingness of internationally mobile groups to cooperate with others in resolving disagreements
and conflicts.
Policy options
History confirms that free-markets are inherently volatile institutions, prone to speculative booms and busts. Overshooting,
especially in financial markets, is their normal condition. To work well, free markets need not only regulation, but active management.
During the first half of the post-war era, world markets were kept reasonably stable by national governments and by a regime of
international cooperation. Only lately has a much earlier idea been revived and made an orthodoxy - the idea adopted by the Washington
Consensus that, provided there are clear and well-enforced rules-of-the-game, free markets can be self-regulating because they embody
the rational expectations that participants form about the future.
On the contrary, since markets are themselves shaped by human expectations, their behavior cannot be rationally predicted. The
forces that drive markets are not mechanical processes of cause and effect, as assumed in most of economic theory. They are what
George Soros has termed "reflexive interactions."27 Because markets are governed by highly
combustible interactions among beliefs, they cannot be self-regulating.
The question before us then, is what could be done to better regulate financial markets and to bring active management back into
the task of "embedding" markets in society, rather than the other way around? Monetary authorities such as the Federal Reserve System
in the U.S. and the central banks of other countries were formed long ago in order to dampen the inherent instabilities of financial
market in their home countries. But the evolution of an international regulatory framework has not kept pace with the globalization
of financial markets. The International Monetary Fund was not designed to cope with the volume and instability of recent financial
trends.
Capital controls
Given the problems outlined above about short-term speculative financial transactions, one might wonder why national policy-makers
have not insulated their financial markets by imposing some sort of control over financial capital. The answer, of course, is that
some have continued trying to do so despite discouragement from the IMF. For example, some have put limitations on the quantity,
conditions, or destinations of financial flows. Others have tried to impose a tax on short-term borrowing by national firms from
foreign banks. This is said to be "market-based" because it operates by altering the cost of foreign funds. If such transactions
were absolutely prohibited, they would be called "non-market" interventions.
A more extreme form of financial capital controls, one that controls movement of foreign exchange across international borders,
also has been tried in a number of countries. This form of control requires that some if not all foreign currency inflows be surrendered
to the central bank or a government agency, often at a fixed price that differs from that which would be set in free market. The
receiving agency then determines the uses of foreign exchange. The absence of exchange controls means that currencies are "convertible."
The neo-liberal argument opposing financial capital controls asserts that their removal will enhance economic efficiency and
reduce corruption. It is based on two basic propositions in economic theory that depend for their proof on perfectly competitive
markets in the real economy and perfectly efficient gatherers and transmitters of information in financial markets. Neither assumption
is realistic in today's world. Indeed, a number of empirical studies have reported the effectiveness of capital controls in controlling
capital flight, curbing volatile capital flows and protecting the domestic economy from negative external developments.
Developing countries have only recently abandoned, or still maintain, a variety of control regimes. Latin American countries
traditionally have used market-based controls, putting taxes and surcharges on selected financial capital movements or tying them
up in escrow accounts. Non-market based restrictions were more common in Asia until the early 1990s. Many commentators believe that
their sudden removal in the early 1990s was a contributing cause to the Asian financial crises in 1997-8. The experience of two
countries, Malaysia and Chile, with capital controls is especially instructive.
Malaysia, unlike its Asian neighbors, was reluctant to remove its restrictions on external borrowing by national firms unless
they could show how they could earn enough foreign exchange to service their debts. Then when the Asian crises hit, its government
imposed exchange controls, in effect making its local currency that was held outside the country inconvertible into foreign exchange.
After the ringget was devalued, exporters were required to surrender foreign currency earnings to the central bank in exchange for
local currency at the new pegged rate. The government also limited the amount of cash nationals could take abroad, and it prohibited
the repatriation of earnings on foreign investments that had been held for less than one year. Thus, Malaysia's capital controls
were focused mostly on controlling the outflow of short-term financial transactions. Happily, the authorities were able to stabilize
the currency and reduce interest rates, leading to a degree of domestic recovery.28
Chile, on the other hand, tried to limit the inflow of short-term financial transactions. It did so by imposing a costly reserve
requirement on foreign-owned capital held in the country for less than one year. Despite attempts to stimulate foreign direct investment
of the funds, most of the reserve deposits were absorbed in the form of increased reserves at the central bank. In turn, this created
a potential for expanding the money supply, which the government feared would lead to inflation. Rather than allow this to happen,
the government "sterilized" the inflows by selling government bonds from its portfolio. But this pushed down the prices of bonds
and pushed up the interest rates on them, discouraging business investment. Finally, when prices of copper (Chile's primary export)
fell sharply in 1998, the control regime was scrapped.29
The tobin tax
A global tax on international currency movements was first proposed by James Tobin, a Yale University economist, in 1972.30
He suggested that a tax of one-quarter to one percent be levied on the value of all currency transactions that cross national borders.
He reasoned that such a tax on all spot transactions would fall most heavily on transactions that involve very short round-trips
across borders. In other words, it would be speculators with very short time-horizons that the tax would deter, rather than longer-term
investors who can amortize the costs of the tax over many years. For example, the yearly cost of a 0.2 percent round trip tax would
amount to 48 percent of the value of the traded amount if the round trip were daily, 10 percent if weekly and 2.4 percent if monthly.
Since at least eighty percent of spot transactions in the foreign exchange markets are reversed in seven business days or less,
the tax could have a profound effect on the costs of short-term speculators.
Of course, for those who believe in the efficiency of markets and the rationality of expectations, a transactions tax would only
hinder market efficiency. They argue that speculative sales and purchases of foreign exchange are mostly the result of "wrong" national
monetary and fiscal policies. While we readily admit that national policies sometimes do not accord with desired objectives, they
nonetheless have little relevance for speculators focused on the next few seconds, minutes or hours.
Tobin did not intend for his proposal to involve a supranational taxation authority. Rather, governments would levy the tax nationally.
In order to make the tax rate uniform across countries, however, an international agreement would have to be entered into by at
least the principal financial centers. The revenue obtained from the tax could be designated for each country's foreign exchange
reserve for use during periods of instability, or it could be directed into a common global fund for uses like aid to the poorest
nations. In the latter case, the feasibility of the tax also would depend on an international political agreement. The revenue potential
is sizeable, and could run as high as $500 billion annually.
There are two other advantages often cited by proponents of the Tobin tax. Tobin's original rationale for a foreign exchange
transactions tax was to enhance policy autonomy in a world of high financial capital mobility. He argued that currency fluctuations
often have very significant economic and political costs, especially for producers and consumers of traded goods. A Tobin tax, by
breaking the condition that domestic interest rates may differ from foreign interest rates only to the extent that the exchange
rate is expected to change (see p. 10), would allow authorities to pursue different policies than those prevailing abroad without
exposing them to large exchange rate movements. More recent research suggests that this is only a very modest advantage.31
An additional advantage of the tax is that it could facilitate the monitoring of international financial flows. The world needs
a centralized data-base on all kinds of financial flows. Neither the Bank for International Settlements nor the IMF has succeeded
in providing enough information to monitor them all. This information should be regularly shared among countries and international
institutions in order to collectively respond to emerging issues.
The feasibility issues raised by the Tobin tax are more political than technical. One of the issues is about the likelihood of
evasion. All taxes suffer some evasion, but that has rarely been a reason for avoiding them. Ideally all jurisdictions should be
a party to any agreement about a common transactions tax, since the temptation to trade through non-participating jurisdictions
would be high. Failing that, one could levy a penalty on transactions with "Tobin tax havens" of, say, double the normal tax rate.
Moreover, one could limit the problem of substituting untaxed assets for taxed assets by applying the tax to forwards, swaps and
possibly other contracts.
Tobin and many others have assumed that the task of managing the tax should be assigned to the IMF. Others argue that the design
of the tax is incompatible with the structure of the IMF and that the tax should be managed by a new supranational body. Which view
will prevail depends upon the resolution of other outstanding issues. The Tobin tax is an idea that deserves careful consideration.
It should not be dismissed as too idealistic or too impractical. It addresses with precision the problems of excessive instability
in the foreign exchange markets, and it yields the additional advantage of providing a means to assist those in greater need.
Reforming the IMF
The IMF was established in 1944 to provide temporary financing for member governments to help them maintain pegged exchange rates
during a period of internal adjustment. With the collapse of the pegged exchange rate regime in 1971, that responsibility has been
eclipsed by its role as central arbiter of financial crises in developing countries. As noted above (p. 20), these crises may be
of three different kinds: fiscal crises, foreign exchange crises, and banking crises.
Under current institutional arrangements, a nation suffering a serious fiscal crisis that could easily lead to default must seek
temporary relief from its debts from three different (but interrelated) institutions: the IMF, which is sometimes willing to renegotiate
loans in return for promises to adopt more stringent policies (see above); the so-called Paris Club that sometimes grants relief
on bilateral (country to country) credits; and the London Club that sometimes gives relief on bank credits. This is an extremely
cumbersome process that fails to provide debtor countries with standstill protection from creditors, with adequate working capital
while debts are being renegotiated, or with ways to ensure an expeditious overall settlement. The existing process often takes several
years to complete.
There is a growing consensus that this problem is best resolved with creation of a new international legal framework that provides
for de facto sovereign bankruptcy. This could take the form of an International Bankruptcy Code with an international bankruptcy
court, or it could involve a less formal functional equivalent to its mechanisms: automatic standstills, priority lending, and comprehensive
reorganization plans supported by rules that do not require unanimous consent. Jeffrey Sachs recommends, for example, that the IMF
issue a clear statement of operating principles covering all stages of a debtor's progression through "bankruptcy" to solvency.
A new system of emergency priority lending from private capital markets could be developed, he suggests, under IMF supervision.
He also feels that the IMF and member governments should develop model covenants for inclusion in future sovereign lending instruments
that allow for priority lending and speedy renegotiation of debt claims.32
At the Joint Meeting of the IMF and the World Bank in September, 2002, the policy committee directed the IMF staff to develop
by April, 2003, a "concrete proposal" for establishing an internationally recognized legal process for restructuring the debts of
governments in default. It also endorsed efforts to include "collective action" clauses in future government bond issues to prevent
one or two holdout creditors from blocking a debt-restructuring plan approved by a majority of creditors. The objective of both
proposals is to resolve future debt crises quickly and before they threaten to destabilize large regions, as happened in Southeast
Asia in 1997-98.
Member countries rarely receive support from the IMF any longer to maintain a particular nominal exchange rate. Because financial
capital is so mobile now, pegged exchange rates probably are unsupportable. But there are special times when the IMF still might
give such support during a foreign exchange crisis. International lending to support a given exchange rate is legitimate if the
government is trying to establish confidence in a new national currency, or if its currency is recovering from a severe bout of
hyperinflation. Ordinarily the foreign exchange should be provided from an international stabilization fund supervised by the IMF.
National central banks usually supervise and regulate the domestic banking sector. Thus, banking crises normally are handled
by domestic institutions. This may not be possible, however, if the nation's banks hold large short-term liabilities denominated
in foreign currencies. If the nation's central bank has insufficient reserves of foreign currencies to fund a large outflow of foreign
currencies, there may be circumstances when the IMF or other lenders may wish to act as lenders-of-last-resort to a central bank
under siege. Nations like Argentina that have engaged in "dollarization" are learning about the downside risks of holding large
liabilities denominated in foreign currencies. The best way to avoid this problem is for governments and central banks to restrict
the use of foreign currency deposits or other kinds of short-term foreign liabilities at domestic banks.
Overall, what is most needed is the availability of more capital in developing countries and much quicker responses, amply funded,
to emerging financial crises.. George Soros has argued powerfully that the IMF needs to establish a better balance between crisis
prevention and intervention.33 The IMF has made some progress in prevention by introducing
Contingency Credit Lines (CCLs). The CCL rewards countries that follow sound policies by giving them access to IMF credit lines
before rather than after a crisis erupts. But CCL terms were set too high and there have been no takers. Soros also has recommended
the issuance of Special Drawing Rights (SDRs) that developed-countries would donate for the purpose of providing international assistance.
Its proceeds would be used to finance "the provision of public goods on a global scale as well as to foster economic, social, and
political progress in individual countries."34
A growing number of civil society institutions, however, oppose giving more money to the IMF unless it is basically reformed.
They point out that it is a committed part of the Washington Consensus, the application of whose policies have made societies adjuncts
of the market. They see the IMF as an instrument of the U.S. government and its corporate allies. The conditions it attaches to
loans for troubled countries often do more to protect the interests of first world investors than to promote the long-term health
of the developing countries. The needed chastening of speculative investors does not occur under these circumstances. There is evidence
that in several major crises, IMF requirements for assisting nations have in fact worsened the situation and protracted the crises.
The IMF opposed the policies that enabled Malaysia to weather the crisis in Southeast Asia, for example, while it urged the failed
policies of other Southeast Asian nations. The vast literature cited by Pieper and Taylor (p. 22) is a convincing chronicle of earlier
missteps. For such reasons as these, some civil society institutions argue that, unless IMF policies are changed, giving the institution
more money will do more harm than good.
Fortunately, the IMF's policies are beginning to change, partly as a result of criticisms by civil society institutions, but
more through recognition of the seriousness of the problems with the present system. In the wake of recent financial crises, leaders
in the IMF as well as the World Bank are looking for ways to reform the international financial architecture. Arguably, their emphasis
is shifting away from slavish devotion to the prescriptions of the Washington Consensus and toward more state intervention in financial
markets. Joseph Stiglitz, the Nobel Laureate who has been particularly critical of the IMF, nonetheless acknowledges that its policy
stances are improving.35
The IMF has begun to recognize the importance of at least functional public interventions in markets and the need to provide
more supporting revenues. It has realized that controls on external financial movements and prudent regulation can help contain
financial crises. It has abandoned the doctrine, long the backbone of structural adjustment policies, that raising the local interest
rate will stimulate saving and thereby growth. Both the IMF and the World Bank have rolled over or forgiven the bulk of official
debt owed by the poorest economies.
Whether these and other promising changes in IMF thinking and policy formation are sufficient to assure that its future responses
to crises will be benign still is not clear. While celebrating what they view as belated improvements, many critics of the IMF among
civil society institutions are not convinced that they are sufficiently basic. Even if the IMF avoids repeating some of its more
egregious mistakes, some believe that it is likely to continue to function chiefly for the benefit of the international financial
community rather than the masses of people. Rather, they believe that, at least in the long term, it would be much better for control
over international finance to reside in new institutions under a restructured United Nations. They favor the U.N. because it has
a broader mandate, is more open and democratic, and, in its practice, has given much greater weight to human, social, and environmental
priorities.
Many civil society institutions want the primary focus of reform to be on taming speculation, restoring the control of their
economies to nations, and embedding economies in the wider society. They believe that if these policies are adopted there will be
less need for large funding to deal with financial crises. There remains, however, the fact that such crises are occurring and will
continue to occur for some time. The IMF is the only institution positioned to respond to these crises. Hence, even for those who
sympathize with the goals of the civil society institutions, there is a strong argument for more financing for the IMF.
A world financial authority
A variety of public and private citizens and institutions have recently proposed the establishment of a World Financial Authority
(WFA) to perform in the domain of world financial markets what national regulators do in domestic markets. Some believe it should
be built upon the foundation of global financial surveillance and regulation that have already been laid by the Bank for International
Settlements in Basel, Switzerland. Others regard it as a natural extension of the activities of the IMF. Still others are less interested
in the precise institutional form it would take than in the clear delineation of the tasks that need to be done by someone.
Its first task probably should be to provide sufficient and timely financial assistance during crises to avert contagion and
defaults. This requires a lender-of-last-resort with sufficient resources and authority to disperse rescue money quickly. Perhaps
the best example to date is the bailout loan to Mexico by the U.S. Treasury and the IMF at the end of 1994. It supplied sufficient
liquidity for Mexico to make the transition back to stability and to pay back the loans ahead of time. The management of the Asian
crises in 1997-8, on the other hand, was badly handled. The bailout packages offered by the IMF were not only significantly smaller
than in the Mexico case; they also were constrained with so many conditions that a year later only twenty percent of the funds had
been disbursed. This slow response to the crisis probably worsened the contagion. Surprisingly, the error was repeated in the Russian
crisis in 1998 and the Brazilian crisis in 1999.
A World Financial Authority also should provide the necessary regulatory framework within which the IMF or a successor institution
can develop as a lender-of-last-resort. As long as domestic regulatory procedures function properly, there will be no need for a
world authority to be involved, any more than to certify that domestic regulatory procedures are effective. In countries where domestic
financial regulation is unsatisfactory, the WFA would assist with regulatory reform. In this way, the WFA could aid financial reconstruction,
reduce the likelihood of moral hazard, and give confidence to backers of the operation.
There is little appetite today, especially in Washington, to create a new international bureaucracy. This fact gives support
to the idea of building the WFA from the existing infrastructure of the Bank for International Settlements (BIS). The BIS is a meeting
place for national central bankers who have constructed an increasingly complicated set of norms, rules and decision-making procedures
for handling and preventing future crises. Its committees and cooperative cross-border regulatory framework enjoy the confidence
of governments and of the financial community. It may well be the best place to govern an international regulatory authority at
the present time.
Theological and ethical considerations
While Christian theology cannot provide us with detailed recommendations on how to correct the adverse consequences of speculative
financial movements, it can provide us with an empowering perspective or worldview. Our theological expressions of the faith describe
the source of our spiritual energy and hope. They betray our ultimate values and the source of our ethical norms. They shape how
we perceive and judge the "signs of the times."
God's world and human responsibilities
Nothing in creation is independent of God. "The earth is the Lord's and all that is in it, the world, and all those who live
in it." (Ps. 24:1 NRSV) Thus, no part of the creation - whether human beings, other species, the elements of soil and water, even
human-made things - is our property to use as we wish. All is to be treated in accord with the values and ground rules of a loving
God, their ultimate owner, who is concerned for the good of the whole creation. All of God's creation therefore deserves to be treated
with appropriate care and concern, no matter how remote from one's daily consciousness or existence.
The doctrine of creation reminds us that our ultimate allegiance is not to the nationalistic and human-centered values of our
culture, but rather to the values of the loving Maker of heaven and earth. When we seek plenty obsessively, consume goods excessively,
compete against others compulsively, or commit ourselves to Economic Fate, we are worshiping false gods. Modern idolatries are often
encountered in economic forms, just as in the New Testament's warnings about the spiritual perils of prosperity in the parables
of the rich, hoarding fool (Luke 12:15-21) and the rich youth (Matt. 19:16-24 and Luke 18:18-25).
The fact that so much of financial speculation is divorced from the real economy of production and exchange suggests that its
paper transactions are more like bets in a casino than an essential component of God's real economy, which seeks the good of all
creation. It is wrong to subject people to the effects of wholesale gambling. The fact that the practice of financial speculation
is secretive, compulsively competitive, and frequented by lone rangers, moreover, hints at a cult of false idols. Its practitioners,
including especially day-traders, seem interested only in exceedingly short-term personal financial advantage, unconcerned about
the long-term consequences of their actions or their impact on others. This also indicates a degree of idolatry that contradicts
the doctrine of creation.
Image of God
The conviction that human beings have a God-given dignity and worth (Gen. 1:26-28) unites humanity in a universal covenant of
rights and responsibilities - the family of God. All humans are entitled to the essential conditions for expressing their human
dignity and for participation in defining and shaping the common good. These rights include satisfaction of basic biophysical needs,
environmental safety, full participation in political and economic life, and the assurance of fair treatment and equal protection
of the laws. These rights define our responsibilities in justice to one another, locally, nationally and - because they are human
rights - internationally.
Financial speculation often leads to unmanageable floods of funds into and out of host societies, creating unwanted bubbles and
panics. Financial speculators normally ignore the human consequences of their activities on the rights of people in host societies,
where economic adjustments are shared widely and painfully. Their primary interest is short-term personal financial gain. The absence
of a sense of covenantal unity with their brothers and sisters of the developing world is a sad commentary on the governing ethic
of speculators in the capital markets. Their arrogance calls for some form of control over foreign exchange and financial capital
markets.
Justice in covenant
The rights and responsibilities associated with the image of God are inextricably tied to the stress on justice in Scripture
and tradition. We render to others their due because of our loving respect for their God-given dignity and value. The God portrayed
in Scripture is the "lover of justice" (Ps. 99:4, 33:5, 37:28, 11:7; Isa. 30:18, 61:8; Jer. 9:24). Justice is at the ethical core
of the biblical message. Faithfulness to covenant relationships, moreover, demands a justice that recognizes special obligations,
"a preferential option" to widows, orphans, the poor, and aliens, which is to say the economically vulnerable and politically oppressed.
Hence, the idea of the Jubilee Year (Lev. 25) was meant to prevent unjust concentrations of power and poverty. Jesus' ministry embodies
concern for the rights and needs of the poor; He befriended and defended the dispossessed and the outcasts.
The fact that the liberalization of trade and finance has failed to improve the distribution of incomes, indeed, that it has
widened the gap between rich and poor in virtually every country, is not a sign of distributive justice but of its opposite. The
standard of living for the least skilled, least mobile, and poorest citizens of many developing countries has declined absolutely.
This, too, is an unjust result of a broken system. The fact that governments that wish to assist the vulnerable and weak of their
societies are less able to do so, in part because they no longer can levy sufficient taxes on foreign interests, is a violation
of justice in community.
Sin and judgment
Sin is a declaration of autonomy from God, a rebellion against the sovereign source of our being. It makes the self and its values
the center of one's existence, in defiance of God's care for all. Sin tempts us to value things over people, measuring our worth
by the size of our wealth and the quantity of goods we consume, rather than by the quality of our relationships with God and with
others. Sin involves injustice because its self-centeredness defies God's covenant of justice, grasping more than one's due and
depriving others of their due.
Sin is manifested not only in individuals, but also in social institutions and cultural patterns. These structural injustices
are culturally acceptable ways of giving some individuals and groups of people advantage over others. Because they are pervasive
and generally invisible, they compel our participation. They benefit some and harm many others. Whether or not we deserve blame
as individuals and churches for these social sins depends in part on whether we defend or resist them, tolerate or reject them.
The fact that the freeing of financial markets has permitted financial speculators to engage in high-risk gambles without regard
to the consequences for others is abundant evidence of both individual and institutional sin. The policies of the Washington Consensus
frequently lead to adverse consequences for the poor and the environment, even as its proponents gain advantages from the implementation
of such policies. They are another serious expression of social sin in our time. These policies inevitably increase the concentration
of economic power in fewer hands. The fact that the global spread of free-market policies has led to the decline of countervailing
institutions of
social solidarity means that it is easier for the centers of economic power to corrupt governments, control markets, alienate
neighbors, manipulate public opinion, and contribute to a sense of political impotency in the public.
The Church's mission and hope
The church is called to be an effective expression of the Reign of God, which Jesus embodied and proclaimed. This ultimate hope
is a judgment on our deficiencies
and a challenge to faithful service. God's goal of a just and reconciled world is not simply our final destiny but an agenda
for our earthly responsibilities. We are called to be a sign of the Reign of God, on earth as it is in heaven, to reflect the coming
consummation of God's new covenant of shalom to the fullest extent possible.
A new financial architecture
In her path-breaking book, Casino Capitalism,36 Susan Strange likens the Western financial
system to a vast casino. As in a casino,
"the world of high finance today offers the players a choice of games. Instead of roulette, blackjack, or poker, there is dealing
to be done - the foreign-exchange market and all its variations; or in bonds, government securities or shares. In all these markets
you may place bets on the future by dealing forward and by buying or selling options and all sorts of other recondite financial
inventions. Some of the players - banks especially - play with very large stakes. There are also many quite small operators. There
are tipsters, too, selling advice, and peddlers of systems to the gullible. And the croupiers in this global finance casino are
the big bankers and brokers. They play, as it were, "for the house.' It is they, in the long run, who make the best living."
She goes on to observe that the big difference between ordinary kinds of gambling and speculation in financial markets is that
one can choose not to gamble at roulette or poker, whereas everyone is affected by "casino capitalism." What goes on in the back
offices of banks and hedge funds "is apt to have sudden, unpredictable and unavoidable consequences for individual lives."
It is this volatility, this instability in financial markets that has given rise to recurring financial crises. They must be
tamed. In the wake of recent financial crises, people are beginning to look for ways to reform the international financial architecture.
Although it is difficult to move from general theological convictions to specific proposals, we offer the following suggestions
for consideration by Christians and other persons of good will.
Capital controls should be an integral part of national strategies to tame the financial system. They can be made an effective
and meaningful tool to protect and insulate the domestic economy from volatile capital flows and other negative external developments.
Regulatory and supervisory measures should supplement capital controls when appropriate. They should include regulation
of financial derivatives and hedge funds. Regulation is a necessary complement to domestic capital controls. Nations influenced
by hedge funds and their complex financial instruments should seek international cooperation, including the governments of host
countries, to regulate their practices.
A new international legal framework should be created, which provides for de facto sovereign bankruptcy. The existing international
system for dealing with insolvent governments is woefully inadequate. Provision must be made for automatic standstills, priority
lending, and planned reorganizations.
An international transactions tax (like the Tobin tax) should be designed and implemented to discourage short-term speculative
capital movements. It is neither "too idealistic" nor "too impractical." It would reduce short-term trading and strengthen the
defensibility of the exchange rate regime.
International cooperation should be sought to curb dubious activities of offshore financial centers. Strict international
regulation and supervision of offshore centers is essential to curb tax and regulatory evasions. They also are a primary conduit
for money laundering and various criminal activities.
The IMF's responsibilities as a lender-of-last-resort should be enhanced, expanding its authority and resources to make
possible quick action to avert financial crises. The IMF must have effective and swift mechanisms to increase the Fund's access
to official monies in times of crisis, including authority to borrow directly from financial markets under those circumstances.
A World Financial Authority based on the cross-border regulatory framework of the Bank for International Settlements should
be developed. It should provide the necessary regulatory framework within which the IMF or a successor organization can develop
as a lender-of-last-resort.
Of these recommendations, perhaps the most controversial is that more funds be given to the IMF. We noted above that much of
the criticism of the IMF is justified. We also acknowledged that the IMF is improving its policies. We hope that these improvements
will continue. Meanwhile, there is no other viable candidate to serve as lender-of-last-resort - an absolutely essential feature
of any new financial architecture.
The major reason some civil society institutions resist funding the IMF further is its history of misguided structural adjustment
policies, policies that are now widely recognized to have caused widespread suffering. We hope that recent changes will improve
this situation as well and enable the IMF to perform the important role we recommend for it.
Along with the World Bank, it is beginning to contextualize its performance criteria and conditionalities, taking much more seriously
the unique circumstances of particular economies. It is listening more and nitpicking less. To be sure, the IMF is not likely to
abandon its policy of making its loans conditional on the adoption by borrowing countries of mutually agreed economic policies.
Even so, there is considerable evidence that when it has had more resources on hand, conditionality has been correspondingly wiser
and less draconian.
The IMF now recognizes that it can leave more decisions to developing countries partly because these have better informed and
more sophisticated employees than was once the case. Certainly in Latin America and Asia and increasingly in Africa, country economic
teams are better qualified technically than the lower rung Ph.D.s from American and European universities to whom the IMF and World
Bank entrust their missions. Local economists can do financial programming and standard macroeconomic modeling as well as or better
than the people from Washington can; they also know how to do investment project analysis. To be sure, decisions about financial
and project plans must include input from many other elements of a society.
We can encourage the IMF (and World Bank) to reverse the typical procedure in setting conditions for multilateral loans. Instead
of waiting for it to specify the policies that must be followed to justify additional financing, country economic teams, in consultation
with other agencies of their government, should be allowed to propose economic programs to the IMF. Disagreements between Washington
staff assessments and the local teams could be resolved directly or by third-party arbitration. The scope of economic conditionality
could also be restricted, for example, just to a balance-of-payments target, while the country could pursue its own agenda regarding
inflation, income distribution, and growth.
What Christians can do
A primary part of the "principalities and powers" referred to in the Bible is composed of the political-economic institutions
and processes that govern how people relate economically to each other and to God's whole creation. The church has a stake in their
design. Yet many church members feel powerless to change basic political-economic reality. They think either that the economic conditions
of society result "naturally" from the forces of markets that are only marginally within the power of human control, or that economic
conditions result from powerful interests that are beyond the reach of ordinary citizens. Thus, there's nothing that can be done
about it, or there's nothing we can do about it.
On the contrary, Mobilization for the Human Family believes that the political economy is shaped by deliberate social policy
decisions; that conditions at any given time are the result of those decisions; that conditions can be changed by human decisions;
and that the will of a nation's and the world's citizens about what the commitments and purposes of the nation and the world should
be can be expressed in the political economy through the framework of democratic process provided in our national and transnational
polity. Accordingly, we offer below some suggestions for action that may be taken by individual Christians and by our churches and
their denominations to correct some correctable flaws of financial globalization.
Actions by individual Christian
Pray for persons working in governments, international organizations, institutions, and non-governmental organizations who
are trying to work toward a better world, including especially a world financial architecture that better assures fairness in
capital markets.
In the management of personal and family investments, seek fuller understanding of the uses to which the banks, companies,
mutual funds, and investment counselors are putting your money. Avoid speculative investments that are likely to be made without
regard to their consequences for others.
Reflect upon decisions about work and career choices that are consistent with a Christ-like commitment to economic justice
for all.
Organize Bible study in your local congregation, where possible together with people of other backgrounds and life-styles,
to learn and identify with God's continuing struggle to seek economic justice in the world.
Commit oneself to some voluntary organization that is trying to promote greater economic justice in the local and/or global
economy.
Become involved politically in your area or nation, seeking political and economic change in the direction of economic justice.
Actions by churches and denominations
Concern for economic justice must be fully reflected in the prayer life, worship, and educational programs and mission outreach
of all congregations.
Seek assistance from members who work for banks, brokerage houses, and mutual funds to help mould an educational program
that will assist members of the congregation to become more socially responsible investors.
Seek collaborative programs among clusters of congregations, perhaps with the aid of local Councils of Churches, to provide
educational opportunities where Christians and other faith groups can come to understand some of the complex economic issues
amidst which they live and work. Since virtually nothing is now available to explain the problems of financial speculation,
this paper could be used to assist study of this phenomenon.
Over and beyond educational programs, local churches - again perhaps best working together in the same neighborhood or town
- can enter into a deliberate dialogue or partnership with one or more voluntary bodies in the civic society, so as to put their
energies into the health of the wider society. Engagement with the International Forum on Globalization (l009 General Kennedy
Avenue #2, San Francisco, CA 94129) is a good way to explore the means of influencing the debate on the globalization of trade
and finance.
At the denominational level, churches should review their investment criteria to reassure themselves that social responsibility
is a primary goal of their financial management.
Also at the denominational level, agencies responsible for the formation of social witness policies need to monitor global
economic indicators on a continuing basis in order to assist its programmatic agencies to form effective and timely social witness
regarding the local and national consequences of the globalization of trade and finance.
Want to know more?
Globalization is a vast topic. For a general introduction, see Sarah Anderson and John Cavanagh, Field Guide to the Global Economy
(New York: New Press, 2000) and Thomas Friedman, The Lexus and the Olive Tree: Understanding Globalization (New York: Farrar Straus
Giroux, 1999). A classic introduction to the financial side of globalization is Susan Strange, Casino Capitalism, (New York: Mnchester
University Press, 1986). See also Kavaljit Singh, The Globalisation of Finance: A Citizen's Guide (London: Zed Books, 1999) and
John Eatwell and Lance Taylor, Global Finance at Risk: The Case for International Regulation (New York: The New Press, 2000). The
best introduction to the Tobin Tax is Mahbub ul Haq et al (eds), The Tobin Tax: Coping with Financial Volatility (New York: Oxford
University Press, 1996). For how church people might react, see Pamela Brubaker, Globalization at What Price? (Cleveland: Pilgrim
Press, 2001).
Questions For Discussion
How have the linkages and interconnections of international finance impacted your life? On balance, do you regard them as
advantages or disadvantages for a healthy Christian life?
The frequency and severity of recent financial crises have fueled calls for a radical redesign of the rules of global finance.
If you were the advisor to an international commission asked to design "A New International Financial Architecture," what would
you recommend?
Do you favor allowing sovereign nations to declare bankruptcy? What Christian traditions might be invoked to support or
deny such an action?
A growing number of civil society institutions oppose giving more money to the IMF. They point out that it is part of the
Washington Consensus, the application of whose policies have made societies adjuncts of the market. Yet this paper suggests
that the IMF needs more money. As a committed Christian, which view do you favor?
Is it too late to expect justice in a globalizing world? Since much of the direction the global economy has taken is irreversible,
how can a balance between market and society be negotiated? How might Christians play a role in those negotiations?
Up early today and lit the shop woodstove; just waiting for light to get on with my day which
always starts (after chores) with my dog and I going for a walk.
Ron, I do not disagree with your post or comments, with the exception of when population
will peak and the aspect/timing of social disruption?
On this morning wait for daylight I have been reading various blog sites with CNN ticking
over in the background. Maybe it is the speed of the news cycle and my being used to the
insanity of what is being reported, but today, after seeing the Trump tweets on Muslim
Violence (film clips), the so-called tax plan, sexual misconducts, the recent reports on KSA,
Yemen, Syria, and what is ramping up concerning North Korea, I think we are at a crux right
now. I think there will be a Market collapse and war; perhaps global in scale. Further to
that I don't see any desire or mechanism for defusing tensions or a way to recall the
situation.
I am 62 and was a kid during a recent/last big social reset. I had older sibs and parents
who moved us north to Canada in '68 because they had had enough. My WW2 veteran parents
proclaimed they had seen enough to be afraid, and sold out to start over and build new lives.
While I was thinking about it, and your post, I realized that in today's situation there are
no simple answers and not really any places to run to. It seems different because of the
population numbers and armaments, plus the willingness of people to pretend it's just
'tribal/crooked politics as usual'. Then, I thought about photographs and how a few
catapulted us into rapid change last century. Certainly, the haunted faces of the Dust Bowl
sparked a move towards reform. Images from the south and the stories of the KKK perhaps Rosa
Parks herself helped galvanize the Civil Rights Movement. For me, the image of the young lady
holding the dead student at Kent State, (her anguish), the burning Monk and young girl coated
with napalm coupled with the lie about the Gulf of Tonkin incident pushed me into cynicism;
so much that I was not surprised about the non-existent WMD of Iraq.
Perhaps it won't be an image, or story that we look back to as a turning point. Maybe it
will be a tweet. Maybe it will be the Market collapse or a premptive attack on North Korea
that sets everything in motion. I just think we are loaded and tamped down like a pipe bomb
ready to blow.
I do not think we will continue to grow in population until 2050. I think it could start
to unravel pretty fast and any day. I don't see any step back from war(s) in either the ME,
or Korea.
From Wiki: (just one event that pales alongside today's triggers)
Kent State
"Just five days after the shootings, 100,000 people demonstrated in Washington, D.C.,
against the war and the killing of unarmed student protesters. Ray Price, Nixon's chief
speechwriter from 1969 to 1974, recalled the Washington demonstrations saying, "The city was
an armed camp. The mobs were smashing windows, slashing tires, dragging parked cars into
intersections, even throwing bedsprings off overpasses into the traffic down below. This was
the quote, student protest. That's not student protest, that's civil war."[10] Not only was
Nixon taken to Camp David for two days for his own protection, but Charles Colson (Counsel to
President Nixon from 1969 to 1973) stated that the military was called up to protect the
administration from the angry students; he recalled that "The 82nd Airborne was in the
basement of the executive office building, so I went down just to talk to some of the guys
and walk among them, and they're lying on the floor leaning on their packs and their helmets
and their cartridge belts and their rifles cocked and you're thinking, 'This can't be the
United States of America. This is not the greatest free democracy in the world. This is a
nation at war with itself.'"
I apologize if this seems North American centric; and in blinders. I wish to reiterate
that our population numbers, plus increasing divide and disparity, proliferation of weapons
and intolerance, coupled with environmental degradation and Climate Change, makes this much
much worse. It's a gun waiting for a trigger, imho.
Yes, things are pretty bad. But things were bad during the Kent State/Nixon era. Yet we
survived.
It has been my experience, following this biosphere destruction for many years now, that
people who see and understand the destruction, almost always expect things to fall apart real
soon. They never do.
I once spent several months as a stockbroker. One thing I learned during that period was a
truth about insider traders. That is traders who trade the stock of the company they work for.
They see things happening inside their company and expect it to cause great trouble or great
profit. They are almost always right and almost always way too early with their predictions.
Things just never seem to happen as fast as they expected.
We, you and I and a few others, are insiders to this problem that I have described in my
above post. We know something terrible is going to happen. But most of us expect it to happen
way before it actually will happen.
An example is "The Population Bomb" by Paul Ehrlich. I think he was spot on, but things just
did not happen as fast as he expected. I hope to avoid his mistake.
Yep, Ron, and we need to be careful about saying "this time is different". Perhaps we need a
list of things that really are different this time.
One that should be obvious to anyone paying attention is that, in the late 60s, US debt to
GDP was in the mid 30% range. It is now over 100% according to a number of sources. As Gail T.
is wont to say, unserviceable debt will likely be the trigger that results in a cascading
failure of financial systems, and everything else is likely to follow. In short, our financial
house of cards has grown three-fold in 50 years, as the global reserve currency is tagged to
nothing.
I think the debt problem is a little overblown. Now people use debt differently sometimes
implying "total debt" and sometimes "public debt" and sometimes "central government debt".
Which one are you talking about? I don't read Tverberg's stuff. Looking at your numbers and the
link below
They have been over 100% debt to GDP since 1999 and have been around 200% since 2014.
If Japan has collapsed, I missed it. Note that I agree with the idea that when the US
economy is doing well (which at present is the case), that paying down debt is a better idea
than reducing taxes. I would raise taxes if anything ( a carbon tax would be ideal) and reduce
the deficit to less than zero and pay down the debt.
Or just balance the budget and let economic growth reduce the debt to GDP ratio.
As for Japan, most of what they owe is to themselves while they own a lot of that US debt,
above. Japan also uses the carry trade to stay afloat.
I only posted this as being one of the things that is different about our situation ~50
years ago. People can make of it what they will. I personally think it is significant since the
world runs on credit. No credit, no growth.
Hard to imagine no credit. Also in the 1960s there was less borrowing by the government (so
less credit) and higher growth rates (at least in the US) than today. In the old days there was
concern the government would "crowd out" private debt, as if there was some fixed amount of
debt the system could sustain and the system always remained at this maximum debt level.
Instead it seems the system had room for higher levels of debt as government debt as
increased, but there is little evidence of "crowding out". There may be some maximum debt level
that an economy can sustain and Japan may be there. Also note that 50 years ago debt was at
fairly low levels, but in 1946 Debt to GDP was 118% of GDP, rapid economic growth from 1946 to
1974 reduced this debt to GDP to 31%, by 1992 it was at 61%, and in 2016 it was 105%.
Strange that the Republicans want to raise the debt higher by cutting taxes, this made sense
when the economy was doing poorly during the Obama years and the aftermath of the GFC.
I agree debt could become a problem and would be worried if central government debt to GDP
was 200% (as in Japan).
I also don't buy into the unfunded liabilities argument, laws change and governments don't
always fulfill their promises, that is just a fact of life.
Personally I believe Tverberg is a person who has discovered a niche she can exploit and is
making a living out of it. I had the pleasure of seeing her make her canned presentation at a
conference once, where all the presentations were repeated several times over for three days so
the entire attending crowd could see them all.
If you ask her a real question, she seizes up like a deer in headlights. She knows some
elementary level stuff that is worth some thought, in the case of people who know little or
nothing about the overall economy and environment.
Her answer in the case of a real question is the same answer you get from a politician who
doesn't WANT to answer. She just pretends you asked a DIFFERENT question, and provides a stock
answer to THAT question.
She doesn't have anything to say worth listening to , in terms of the level of understanding
of the contributing members of this forum.
UK government debt to GDP was well over 400% for decades running; it was never a problem. Don't
worry about it. Government debt is not really debt, it's actually money.
Good point on the rate. I remember my grade 11 Social Studies teacher talking to me after class
in 1972. One of our class texts was The Population Bomb. He expected to see, in his lifetime, a
collapse of sorts. When I asked him to expand further he described small scale gardens/farms of
no more the 2 acres. The primary machinery used would be walk-behind tractors.
I smiled at the memory when I bought my BCS walk-behind ten years ago. I smile every spring
when I till the gardens. I still think he was right, just off on the timing (just like I was
when I got out of stocks several years ago and put my money in term deposits.)
The older I get, the less I understand. I take comfort in knowing my Dad wouldn't get it,
either.
I thought Ehrlich's book "The Dominant Animal" was fairly well measured, and generally in line
with the post above (I haven't read the population bomb).
"... By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in
Asia and is currently working on a book about textile artisans. ..."
"... The Unbanking of America: How the New Middle Class Survives ..."
Posted on
December 4, 2017 by Jerri-Lynn ScofieldBy Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia
and is currently working on a book about textile artisans.
Three Democrats and three Republicans have co-sponsored a resolution, under the Congressional Review Act (CRA), to scuttle the
Consumer Financial Protection Bureau's payday lending rule.
CRA's procedures to overturn regulations had been invoked, successfully, only once before Trump became president. Congressional
Republicans and Trump have used CRA procedures multiple times to kill regulations (as I've previously discussed (see
here ,
here ,
here and here ). Not
only does CRA provide expedited procedures to overturn regulations, but once it's used to kill a regulation, the agency that promulgated
the rule is prevented from revisiting the issue unless and until Congress provides new statutory authority to do so.
Payday Lending
As I wrote in an extended October post,
CFPB Issues Payday Lending Rule: Will it Hold, as the Empire Will Strike Back, payday lending is an especially sleazy part of
the finance sewer, in which private equity swamp creatures, among others, operate. The industry is huge, according to this
New York Times report I quoted
in my October post, and it preys on the poorest, most financially-stressed Americans:
The payday-lending industry is vast. There are now more payday loan stores in the United States than there are McDonald's restaurants.
The operators of those stores make around $46 billion a year in loans, collecting $7 billion in fees. Some 12 million people,
many of whom lack other access to credit, take out the short-term loans each year, researchers estimate.
The CFPB's payday lending rule attempted to shut down this area of lucrative lending– where effective interest rates can spike
to hundreds of points per annum, including fees (I refer interested readers to my October post, cited above, which discusses at greater
length how sleazy this industry is, and also links to the rule; see also this
CFPB fact sheet
and press
release .)
Tactically, as with the ban on mandatory arbitration clauses in consumer financial contracts– an issue I discussed further in
RIP, Mandatory Arbitration
Ban , (and in previous posts referenced therein), the CFPB under director Richard Cordray made a major tactical mistake in not
completing rule-making sufficiently before the change of power to a new administration- 60 "session days" of Congress, thus making
these two rules subject to the CRA.
The House Financial Services Committee
press release lauding
introduction of CRA resolution to overturn the payday lending rule is a classic of its type, so permit me to quote from it at length:
These short-term, small-dollar loans are already regulated by all 50 states, the District of Columbia and Native American tribes.
The CFPB's rule would mark the first time the federal government has gotten involved in the regulation of these loans.
.
House Financial Services Committee Chairman Jeb Hensarling (R-TX), a supporter of the bipartisan effort, said the CFPB's rule
is an example of how "unelected, unaccountable government bureaucracy hurts working people."
"Once again we see powerful Washington elites using the guise of 'consumer protection' to actually harm consumers and make
life harder for lower and moderate income Americans who may need a short-term loan to keep their utilities from being cut off
or to keep their car on the road so they can get to work," he said. "Americans should be able to choose the checking account they
want, the mortgage they want and the short-term loan they want and no unelected Washington bureaucrat should be able to take that
away from them."
[Rep Dennis Ross, a Florida Republican House co-sponsor]. said, "More than 1.2 million Floridians per year rely on Florida's
carefully regulated small-dollar lending industry to make ends meet. The CFPB's small dollar lending rule isn't reasonable regulation
-- it's a de facto ban on what these Floridians need. I and my colleagues in Congress cannot stand by while an unaccountable federal
agency deprives our constituents of a lifeline in times of need, all while usurping state authority. Today, we are taking bipartisan
action to stop this harmful bureaucratic overreach dead in its tracks."
"The rule would leave millions of Americans in a real bind at exactly the time need a fast loan to cover an urgent expense,"
said Daniel Press, a policy analyst with the Competitive Enterprise Institute, in a statement after the bill's introduction.
Consumer advocates think otherwise (also from CNBC):
"Payday lenders put cash-strapped Americans in a crippling cycle of 300 percent-interest loan debt," Yana Miles, senior legislative
counsel at the Center for Responsible Lending, said in a statement.
Prospects Under CRA
When I wrote about this topic in October, much commentary assumed that prospects for CRA overturn were weak. I emphasized instead
the tactical error of failing to insulate the rule from CRA, which could have been done if the CFPB had pushed the rule through well
before Trump took office:
If the payday rule had been promulgated in a timely manner during the previous administration it would not have been as vulnerable
to a CRA challenge as it is now. Even if Republicans had then passed a CRA resolution of disapproval, a presidential veto would
have stymied that. Trump is an enthusiastic proponent of deregulation, who has happily embraced the CRA– a procedure only used
once before he became president to roll back a rule.
Now, the Equifax hack may have changed the political dynamics here and made it more difficult for Congressional Republicans–
and finance-friendly Democratic fellow travellers– to use CRA procedures to overturn the payday lending rule.
The New York Times certainly seems to think prospects for a CRA challenge remote:
The odds of reversal are "very low," said Isaac Boltansky, the director of policy research at Compass Point Research & Trading.
"There is already C.R.A. fatigue on the Hill," Mr. Boltansky said, using an acronymn for the act, "and moderate Republicans
are hesitant to be painted as anti-consumer.
I'm not so sure I would take either side of that bet. [Jerri-Lynn here: my subsequent emphasis.]
A more telling element than CRA-fatigue in my assessment of the rule's survival prospects was my judgment that Democrats wouldn't
muster to defend the payday lending industry– although that assumption has not fully held, as this recent
American Banker account makes clear:
After the
payday rule was finalized in October , it was widely expected that Republicans would attempt to overturn it. It's notable,
though, that the effort has attracted bipartisan support in the House.
.
Passage in the Senate, however, may be a much heavier lift. The chamber's
vote to overturn the arbitration rule in late October came down to the wire, forcing Republicans to call in Vice President
Mike Pence to cast the tie-breaking vote.
Bottom Line
I continue to think that this rule will survive– as the payday lending industry cannot count on a full court press lobbying effort
by financial services interests. Yet as I wrote in October, I still hesitate to take either side of the bet on this issue.
I think this whole article is totally disingenuous. There is a serious need for many Americans to have access to small amount,
short term loans. While, these lenders may appear predatory, they do serve a large sector of society.
Maybe you need to read: The Unbanking of America: How the New Middle Class Survives by
Lisa Servon . It might be worth the read.
Where's the Post Office Bank when you need it. This overturning of the rule is just an effort to stop the Post Office Bank
from gaining traction as the alternative non-predatory source of small loans to the people. Most pay day lender companies are
owned by large financial players.
I agree that's a far better approach and indeed, I discussed the Post Office bank in my October post– which is linked to in
today's post. Permit me to quote from my earlier post:
The payday lending industry preys on the poorest financial consumers. One factor that has allowed it to flourish is current
banking system's inability to provide access to basic financial services to a shocking number of Americans. Approximately 38
million households are un or underbanked– roughly 28% of the population.
Now, a sane and humane political system would long ago have responded with direct measures to address that core problem,
such as a Post Office Bank (which Yves previously discussed in this post,
Mirabile Dictu! Post Office Bank Concept Gets Big Boost and which have long existed in other countries.)
Regular readers are well aware of who benefits from the current US system, and why the lack of institutions that cater to
the basic needs of financial consumers rather than focusing on extracting their pound(s) of flesh is not a bug, but a feature.
So, instead, the United States has a wide-ranging payday lending system. Which charges borrowers up to 400% interest rates
for short-term loans, many of which are rolled over so that the borrower becomes a prisoner of the debt incurred.
With phrasing like "unbanked" or "underbanked", I worry that you've bought into the banking-industry framing of this issue,
which I'm sure is not your intent.
Ordinary people should not need any bank (not even a government or post office bank) for everyday life, with the possible exception
of mortgages. De-financialization of the medium of exchange, and basic payments, is something the public should be fighting for.
I would consider myself an ordinary person and I pay in cash when purchasing day to day items the vast majority of the time
and yet I'd still prefer to deposit my money in a bank rather than hiding it in my mattress for any number of good reasons.
Banks aren't the problem – their predatory executives are.
But there are, or at least ought to be, safe and secure ways to store money other than by lending it to banks or stuffing it
into mattresses. Or carrying wads of cash.
For instance, a debit card (or possibly cell phone) with a secure identity / password can already act as a cashless wallet.
The digital cash could be stored directly on the device, and accounted for through something similar to TreasuryDirect, without
any intermediaries. But this would require the Federal Government to get serious about having a modern Digital Dollar of some
kind (not bitcoin, shudder)
Even better would be State Banks. Every state should have one. I believe the State Bank of North Dakota made money in 2008.
While the TBTF Banks came hat in hand to our Reps. Of course OUR Reps handed them a blank check and told them to "Make it go Away".
However Post Office Banks would be GREAT!!
This is the boilerplate argument that always gets brought up by payday loan defenders, and there is a good bit of truth to
it. However, what you are not mentioning is that there are already far superior options available to pretty much any person who
needs a small, short term loan. That solution is your friendly neighborhood Credit Union, most of which offer very low interest
lines of overdraft coverage. I don't mind saying that it has saved my heiny on more than one occasion. Pay check a little late
in arriving? No problem, transfer $200 from your overdraft account into your checking account on-line and you're good to go. Pay
it back at your convenience, also on-line, at 7% APR.
Payday lenders are legal loansharks. The problems with their predatory lending model and the damage it does to low-income people
are well documented. Simply pointing out that there is a reason that people end up at payday lenders is not a valid justification
for the business practices of those lenders, especially when there are much better alternatives readily available.
Very true! There are several web sites that point out how the fees associated with payday loans raise the effective annual
percentage rate into the stratosphere, ranging from 300% to over 600%. Here's one:
One frustration that I have with legislation in general, and finance legislation in particular, is that it does not tell the
truth, the whole truth and nothing but the truth.
In my Panglossian world, I envision a financial services bill that lays out the following:
Define the problem
Unserviced people: X percent( for discussion, say 10% to make the math easy) of people are un-serviced (or under-, or rapaciously-serviced)
by conventional financial companies, whether banks, credit unions or other, whatever other is conventionally.
Unserviced and don't want: Y percent of that X percent (say, 50% of 10%, so 5%) doesn't want services.
Unserviced and want: 1-Y percent of that X percent (say, 50% of 10%, so 5%) wants services but can not get them. That could be
due to various factors, ranging from bad credit (how defined?, say FICO < 600?) to geographic remoteness (no branches within miles,
no internet, precious little slow mail service, whatever).
Within that deemed unserved 5% of the population, what are the costs to serve and what are the alternatives?
What would an honest service provider need to provide service, accounting for credit risks and the like, and still make a profit
sufficient to induce investment?
If I knew how to make and add a nice graphic, I'd include a waterfall chart here to show the costs and components of the interest
and fees paid in regular and default mode. Sorry, please bear with me as I make up numbers.
Default mode costs:
Interest at 275%
Plus: Fees at 25%
Less: cost of funds 20%
Less: personnel, overhead, etc 5%
Less: added default cost not in personnel etc line, say 25%
Pre-tax profit: 250%
In that little example, who couldn't make money at those rates?
Extending the notion of APR and Truth-In-Lending to include payday lenders and anyone else without a brick-and-mortar branch
who wants to do business in the US, how about mandating some type of honest waterfall chart as dreamt of above?
Then cross-reference and publicize the voting on finance legislation with the campaign contributions from payday people and
their ilk, and layer in the borrower costs and credit scores and other metrics in those Congressional districts and zip+4 codes
and census tracts and whatever other level of granularity will help provide any amount of disinfecting sunlight to help see the
scattering cockroaches.
The problem I suspect is that your "friendly neighborhood credit union" is actually rarely anywhere near the neighborhoods
where people who need these kind of loans live.
They don't have cars and mass transit is non-existent or so slow they couldn't get to the Credit Union during business hours,
and back again, anyway. That's the problem with expecting Private Enterprise to be a solution for people at the bottom. They don't
set up shop where those people live, or the ones that do are not exactly do-gooders.
I just checked and a lot of credit unions let you apply for a loan online, (earlier you can set up membership online). So the
issue of transport and time is lessened assuming folks have some form of net access.
One might ask why there are millions of people reduced to having to get ripped off by payday and auto-title lenders, to somehow
survive from week to week. Maybe because people can't make a living wage? Can't save any money, however prudent and abstemious
they may be? Because inter-citizen cruelty and Calvinism are so very strong a force in this rump of an Empire?
Some of the comments here seem to build on the baseline assumption that's part of the liberal-neoliberal mantra, "You get what's
coming to you (or the pittance we can't quite squeeze out of you yet)".
diptherio, I am guessing you may mean that there are models of better alternatives readily available, like paying
a living wage, a social safety net for the worst off, a postal bank, national health care, stuff like that. I don't see that there
are any alternatives actually available to most real people "on the ground."
You are, of course, correct in that the underlying problem is that so many people are forced to live on so little that they
need payday loans in the first place. Thanks for pointing that out.
My point is simply that in the short-term, as a matter of practicality for those of us who don't always make it until payday
before running out of money, a CU overdraft account is a very good option.
This is a far superior option and thank you for bringing it up. The only problem is most banks and credit unions will not tell
you it exists because they make a lot more money if you just keep bouncing checks.
I only learned about it when I worked for WAMU. We were tasked by management with promoting various new products to customers
as a condition of being paid a monthly bonus which was the only thing that made the job pay enough to live on. Funny, they never
asked us to promote the overdraft line of credit (aka an ODLOC), ever. I do remember one of my managers tell me that circa 2000
or so, WAMUs operating costs for the entire company for the entire year were offset just by the fees they collected off of bounced
checks etc.
The fees or interest you pay for using an ODLOC are a small fraction of what you'd pay for bouncing just one check. IIRC, if
I overdrew by $200 or so and paid it back on my next payday, the interest was generally less than $1. My local credit union has
since added a $5 fee for accessing the ODLOC on top of the interest, but it's still much less than a bounced check fee or interest
on a payday loan. I believe that depending on your credit history, you can get an ODLOC of up to $2500 or so which pretty much
negates the need for any payday loans.
A friend of mine was evicted from her apartment because of a payday loan. She failed to pay it off in full quick enough and
it spiraled out of control tripling in a very short time. I really fail to see how usury is beneficial to society.
Frank Pistone is part of the dying breed known as the American Loan Shark. Not so long ago, the loan shark flourished, offering
short-term, high-interest loans to desperate people with nowhere else to turn. Today, however, Pistone and countless others
like him are being squeezed out by the major credit-card companies, which can offer money to the down-and-out at lower rates
of interest and without the threat of bodily harm
I read Servon's book. It is not a brief on behalf of the payday loan industry. She worked at a couple of payday lenders and
explains how they serve the communities they're in, but a few things need to be noted:
The business she was most sympathetic with was a small, local one with only a couple of storefronts, in an east coast inner
city. The owner and his help knew the customer base, often by name. Much of her sympathy came from her respect for the women who
were dishing out the loans at the windows, not the owners and not the business model. This local joint operated like the most
benign of old time pawnbroker/loansharking operation from the early part of the last century.
Most "Cash America" storefront shops (on shabby, midcentury shopping strips in inner ring scuburbs across the US) aren't this
decent. They aren't "part of a community" in any sense. And the rates are usurious any way, for all of them.
Thank you to Ms. Scofield for continuing to cover this and related businesses. The upper, cleaner part of our finance industry
derives more filthy lucre from these kinds of loan shops than they ever want you to know (sub-prime lending shops, title loans
shops . there are a lot of modalities for fleecing the poor and the near-poor nowadays).
The NC staff must be pleased that it seems like so many subtle apologists for the looters, predators, "intelligence community,"
and so forth, appear to be turning up here early in the opening of new site posts. I'm guessing the Elite are not exactly quaking
in fear that NC's reporting will catalyze some change that might sweep the political economy in the direction of what the mopery
would categorize as "fairness," but still
Raised the dollar definition of middle class and declared a 'new middle class' or could it be 'new middle class' is actually
referring to the 'new middle poor'. The former middle class is desperately trying to avoid a plunge into the pits of the 'poor
poor'. Payday Loan predators are greasing the handrails.
"Where will the money-changers change money if not in the Holy Temple? Aren't we starving the priests of much-needed revenue?
This Jesus guy is totally disingenuous."
In good neo liberal fashion that Jesus dude got exactly what he deserved. The effrontry of that guy to chase those hard working
money lenders out of the temple square. Got exactly what was coming to him.
H.J.Res.122 – Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted
by the Bureau of Consumer Financial Protection relating to "Payday, Vehicle Title, and Certain High-Cost Installment Loans".
December 1, 2017
Sponsor Rep. Ross, Dennis A. [R-FL-15] (Introduced 12/01/2017)
Rep. Hastings, Alcee L. [D-FL-20]
Rep. Graves, Tom [R-GA-14]
Rep. Cuellar, Henry [D-TX-28]
Rep. Stivers, Steve [R-OH-15]
Rep. Peterson, Collin C. [D-MN-7]
Ahhh ..look at this list. TWO Florida lawbreakers introducing this banker bill. And one from Minnesota. Y'all know that Jacksonville,
FL and St. Paul, MN are the two places where the forgeries continue to be provided to the financial crooks? So, it goes to figure
that the lawbreakers are attempting to protect the financial crooks committing forgery in their prospective states! How appro.
If any of these House critters are "representing" you, time for lots of calls to them.
And thanks, SD, for listing them. I always wonder why our vaunted free press so seldom lists the sponsors of legislation when
it's reported on . Hhmm .
m .
I have mixed feelings about this specific issue.
The larger issue of a grossly skewed economic system is what needs to be fixed.
There will always be people that lack common sense and brains regarding money. There will always be people that will take advantage
of that.
I don't know how or why you would try and legislate that away.
We need to move in the direction of solving the biggest problems and not get wrapped up in the little problems.
The numbers above sound horrendous, but 7 billion in profit on 46 billion loaned is 14% return. Credit card companies are worse.
7 billion in profit off of 12 million people is $600 per person. Alot for poor folks I recognize, but not necessarily life shattering
for all.
The "system" loves to wrangle around with issues like this (trivial in my mind) so the handful of big ones go unattended.
some have apparently not felt it necessary to bail out family members for aggressive, egregious and immediate interest rates
and escalations charged by these scammers
but there certainly appears concerted effort by (likely) shills to perpetuate scams (and to discredit Consumer Financial Protection
Agency and Liz Warren )
I think there's an error in the original article, where it says:
CRA's procedures to overturn legislation had been invoked, successfully, only once before Trump became president. Congressional
Republicans and Trump have used CRA procedures multiple times to kill regulations (emphasis added)
My understanding is that CRA gives Congress the power to overturn executive branch regulations , not legislation
(which Congress already can overturn anyway). Is that incorrect?
P.S. It's sad that it might not even matter. Nowadays the public can't tell the difference between regulations (written by
unaccountable, unelected officials who take the revolving door back to working at the firms they regulated) and legislation (written
by unaccountable, only notionally elected politicians who get paid off in various ways by lobbyists for the same firms)
You're correct– fixed it! Slip of the fingers there that I didn't catch when I proofread the post. As the rest of the paragraph
makes clear, CRA procedures are used to overturn regulations.
Thanks for reading my work so carefully and drawing the error to my attention.
Finally bipartisan!
Trump loves it
Obomber woulda loved it
She who cannot be named woulda loved it, too.
Time for them all to get over that little spat she did it before trump should appoint her to something useful I bet she'd love
secdef
Where is the lovely Debbie Wasserman schultz in all of this? She has not surprisingly been a leading cheerleader for these
pay day lender sharks. but hey, what the hey, the lobby money is good!
This was written a decade ago. neoliberalism is a stable social system but nothing changed, although fault lines of the system
became more evident.
Notable quotes:
"... "The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers." ..."
"... Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated, record executive salaries are legion. ..."
"... he was appalled by the increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons - and they should be aware of what eventually happened to the Bourbons." ..."
"... "All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism". Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important to place in the hands of the new capitalists." ..."
"... Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing up into geysers of political and social disturbance in times of economic stress." ..."
"The prototype of the successful man in modern society is not the scientist, the inventor, the scholar. It is the financier, the
gambler and those with social pull. The others share [in the winnings] sometimes, it is true, but their share is modest compared
with the oligarchs and tycoons; and they don't usually keep their share for long. They are no match for the commercial prowlers."
A snap-shot of London's Mayfair district, home to the burgeoning hedge-fund phenomenon, in November 2006? Actually, no. The above
words were written in 1952 by the Labour politician Aneurin Bevan in his book In Place of Fear. Bevan had a gift - his most
passionate supporters would say a genius - for exposing the truth of a situation in language that could be both scintillating and
pungent.
Fifty years ago, he criticised the prime minister of the day, Sir Anthony Eden, for his reckless actions during the Suez crisis.
"[He] has been pretending that he is now invading Egypt in order to strengthen the United Nations," Bevan said in a famous speech
in Trafalgar Square. "Every burglar of course could say the same thing: he could argue that he was entering the house in order to
train the police. So, if Sir Anthony Eden is sincere in what he is saying, and he may be . . . then he is too stupid to be a prime
minister!" Here was political rhetoric with a touch of prophesy about it.
It was the enduring appeal of speeches such as these that helped draw a good crowd to the fifth annual Bevan memorial lecture
in London last week. The lecture was to be given by John Monks, formerly general secretary of the British Trades Union Congress,
now the Brussels-based leader of the European trade union confederation.
No one in the audience would have been expecting Bevanite rhetorical fireworks from Mr Monks. That has never been his style. Between
1993 and 2003, he led the British trade union movement with modesty and distinction. He was the moderate's moderate: avoiding confrontation
wherever possible and advocating partnership at work between management and employees. Business leaders were happy to do business
with him.
They would not have found this lecture so easy to deal with. Confronted by today's turbo-charged capitalism, Mr Monks cast off
his former moderation. He even seemed to be on the verge of recanting his commitment to the partnership model. "Partnership with
who?" he asked. There has been, he said, a "disintegration of the social nexus between worker and employer - a culture containing
broad social rights and obligations. The new capitalism wants none of it."
Mr Monks contrasted businesses' healthy profitability with the ruthless way some have treated their staff recently, whether through
large-scale redundancies or the constant threat that jobs may be sent off-shore or outsourced. While median wages have stagnated,
record executive salaries are legion.
He admitted that he had possibly been a bit naive in the past. "I did not fully appreciate what was happening on the other side
of the table," Mr Monks said. While he sympathised with business leaders for the relentless pressure they find themselves under -
"It cannot be easy running a firm . . . when you are up for sale every day and every night of every year" - he was appalled by the
increasingly "shameless", short-termist behaviour of overpaid corporate executives. "More and more they resemble the Bourbons
- and they should be aware of what eventually happened to the Bourbons."
For someone like me, who has sat through 10 years of reasonableness from John Monks, this speech was remarkable, devastating stuff.
Maybe there is something in the Brussels water. Perhaps the ghost of Nye Bevan was speaking through him. Or was it just anxiety over
the career choice of his daughter's boyfriend? He is now working for - you guessed it - a hedge fund. Whatever its cause, a challenge
was being thrown down.
"All this is too important to be left to the practitioners who have a vested interest in obscuring what they do from the rest
of us," he said. And, with bonus season fast approaching, he took one final, sweeping aim at the high rollers of "casino capitalism".
Their actions are "dangerous to economic stability, traditional industry and jobs", he said. "I would like to see the City pages
of the press more challenging and less respectful on these matters . . . Our future - the world's future - is too important
to place in the hands of the new capitalists."
Will corporate leaders - those that have read this far anyway - simply shrug their shoulders and get back to their slashing and
burning ways? Is Mr Monks merely offering a wholly predictable, knee-jerk, lefty rant? I do not think so. This general secretary
just does not do lefty rants. So business people should take note. When the John Monkses of this world say enough is enough, that
the capitalist system itself is sick, you can be sure that elsewhere in the world there is deep-seated, lingering resentment and
unhappiness.
Half a century ago, Nye Bevan expressed a similar concern. In In Place of Fear he wrote: "There is a sense of injustice
in modern society, and this induces a feeling of instability even in normal circumstances. The rewards are not in keeping
with social worth, and the consciousness of this, both among the successful and the unsuccessful, will simmer and bubble, blowing
up into geysers of political and social disturbance in times of economic stress."
Reading these words, you can see why so many people were prepared to come out on a dark Tuesday night...
Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates
of the view that the global casino is out of control.
Notable quotes:
"... Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates of the view that the global casino is out of control. Although she is not a household name, she played an important role in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William Greider in the US and Will Hutton in Britain. ..."
"... Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an international credit insurance corporation as a complement to the IMF. ..."
The dominant image of the financial markets is that of a giant casino. Brash young men in red braces, driven by insatiable greed,
gamble with huge sums every day. When the bets go wrong the innocent suffer. Reckless financial markets pose an immediate threat
to the future prosperity of humanity.
Susan Strange, who died just after the publication of her latest book, was one of the most compelling academic advocates
of the view that the global casino is out of control. Although she is not a household name, she played an important role
in developing the intellectual framework to support the casino thesis. Her Casino Capitalism (1986) is a Keynesian account of the
damage inflicted on the world as a result of financial deregulation which was taken up by many better known writers such as William
Greider in the US and Will Hutton in Britain.
With the onset of the Asian financial crisis Strange's account of financial markets has become almost mainstream. Her ideas inform
many of the discussions about a "new international financial architecture." Economists who would once have scorned her views
now agree with her that deregulation has gone too far and that new forms of regulation are needed.
The British government has floated the idea of a world financial authority to regulate global finance.
The IMF, once a bastion of
free market economics, has conceded that capital controls may be necessary under some circumstances.
Mad Money, the sequel to Casino Capitalism, takes into account the impact of information technology and the rise of financial
crime. It also places new emphasis on the role of international institutions. For example, she backs George Soros's plan for an
international credit insurance corporation as a complement to the IMF.
"... Barbarians at the Gate: The Fall of RJR Nabisco ..."
"... The Wall Street Journal ..."
"... The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is barely touched upon, and the laissez-faire ..."
"... Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation with debt will not exact a similarly heavy toll. ..."
"... the high levels of debt associated with buyouts and other forms of corporate restructuring create fragility in business structures and vulnerability to economic cycles ..."
"... Germany and Japan incur higher levels of debt for expansion and investment, whereas equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan bailout is a painfully obvious harbinger of such a development. ..."
"... The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times, that the best book about the deal of deals fails to educate as well as it entertains. ..."
Inside Casino Capitalism Barbarians at the Gate: The Fall of RJR Nabisco
By Bryan Burrough and John Helyar
Harper & Row. 528 pp. $22.95
In 1898, Adolphus Green, chairman of the National Biscuit Company, found himself faced with the task of choosing a trademark for
his newly formed baking concern. Green was a progressive businessman. He refused to employ child labor, even though it was then
a common practice, and he offered his bakery employees the option to buy stock at a discount. Green therefore thought that his trademark
should symbolize Nabisco's fundamental business values, "not merely to make dividends for the stockholders of his company, but to
enhance the general prosperity and the moral sentiment of the United States." Eventually he decided that a cross with two bars and
an oval – a medieval symbol representing the triumph of the moral and spiritual over the base and material – should grace the package
of every Nabisco product.
If they had wracked their brains for months, Bryan Burrough and John Helyar could not have come up with
a more ironic metaphor for their book. The fall of Nabisco, and its corporate partner R.J. Reynolds, is nothing less than the exact
opposite of Green's business credo, a compelling tale of corporate and Wall Street greed featuring RJR Nabisco officers who first
steal shareholders blind and then justify their epic displays of avarice by claiming to maximize shareholder value.
The event which made the RJR Nabisco story worth telling was the 1988 leveraged buyout (LBO) of the mammoth tobacco and food
conglomerate, then the 19th-largest industrial corporation in America. Battles for corporate control were common during the loosely
regulated 1980s, and the LBO was just one method for capturing the equity of a corporation. (In a typical LBO, a small group of
top management and investment bankers put 10 percent down and finance the rest of their purchase through high-interest loans or
bonds. If the leveraged, privately-owned corporation survives, the investors, which they can re-sell public shares, reach the so-called
"pot of gold"; but if the corporation cannot service its debt, everything is at risk, because the collateral is the corporation
itself.
The sheer size of RJR Nabisco and the furious bidding war that erupted guaranteed unusual public scrutiny of this particular
piece of financial engineering. F. Ross Johnson, the conglomerate's flamboyant, free-spending CEO (RJR had its own corporate airline),
put his own company into play with a $75-a-share bid in October. Experienced buyout artists on Wall Street, however, immediately
realized that Johnson was trying to play two incompatible games. LBOs typically put corporations such as RJR Nabisco through a ringer
in order to pay the mammoth debt incurred after a buyout. But Johnson, desiring to keep corporate perquisites intact, "low-balled"
his offer. Other buyout investors stepped forward with competing bids, and after a six-week-long auction the buyout boutique of
Kohlberg, Kravis, Roberts & Company (KKR) emerged on top with a $109-a-share bid. The $25-billion buyout took its place as one of
the defining business events of the 1980s
Burrough and Helyar, who covered the story for The Wall Street Journal, supply a breezy, colorful, blow-by-blow account
of the "deal from hell" (as one businessman characterized a leveraged buyout). The language of Wall Street, full of incongruous
"Rambo" jargon from the Vietnam War, is itself arresting. Buyout artists, who presumably never came within 10,000 miles of wartime
Saigon, talk about "napalming" corporate perquisites or liken their strategy to "charging through the rice paddies, not stopping
for anything and taking no prisoners."
At the time, F. Ross Johnson was widely pilloried in the press as the embodiment of excess; his conflict of interest was obvious.
Yet Burrough and Helyar show that Johnson, for all his free-spending ways, was way over his head in the major leagues of greed,
otherwise known as Wall Street in the 1980s. What, after all, is more rapacious: the roughly $100 million Johnson stood to gain
if his deal worked out over five years, or the $45 million in expenses KKR demanded for waiting 60 minutes while Ross Johnson prepared
a final competing bid?
Barbarians is, in the parlance of the publishing world, a good read. At the same time, unfortunately, a disclaimer
issued by the authors proves only too true. Anyone looking for a definitive judgment of LBOs will be disappointed. Burrough and
Helyar do at least ask the pertinent question: What does all this activity have to do with building and sustaining a business? But
authors should not only pose questions; they should answer them, or at least try.
Admittedly, the single most important answer to the RJR puzzle could not be provided by Burrough and Helyar because it
is not yet known. The major test of any financial engineering is its effect on the long-term vitality of the leveraged corporation,
as measured by such key indicators as market share (and not just whether the corporation survives its debt, as the authors imply).
However, a highly-leveraged RJR Nabisco is already selling off numerous profitable parts of its business because they are no longer
a "strategic fit": Wall Street code signifying a need for cash in order to service debts and avoid bankruptcy.
If the authors were unable to predict the ultimate outcome, they still had a rare opportunity to explain how
and why an LBO is engineered. Unfortunately, their fixation on re-creating events and dialogue – which admittedly produces a fast-moving
book – forced them to accept the issues as defined by the participants themselves. There is no other way to explain the book's uncritical
stance. When, for example, the RJR Nabisco board of directors tried to decide which bid to accept, Burrough and Helyar report that
several directors sided with KKR's offer because the LBO boutique "knew the value of keeping [employees] happy." It is impossible
to tell from the book whether the directors knew this to be true or took KKR's word. Even a cursory investigation would have revealed
that KKR is notorious for showing no concern for employees below senior management after a leveraged buyout.
The triumph of gossip over substance is manifest in many other ways. Wall Street's deft manipulation of the business press is
barely touched upon, and the laissez-faire environment procured by buyout artists via their political contributions is
scarcely mentioned, crucial though it is. Nowhere are the authors' priorities more obvious than in the number of words devoted to
Henry Kravis's conspicuous consumption compared to those devoted to the details of the RJR deal. In testimony before Congress last
year, no less an authority than Treasury Secretary Nicholas Brady – himself an old Wall Street hand – noted that the substitution
of tax-deductible debt for taxable income is "the mill in which the grist of takeover premiums is ground."
In the case of RJR Nabisco, 81 percent of the $9.9 billion premium paid to shareholders was derived from tax breaks achievable
after the buyout. This singularly important fact cannot be found in the book, however; nor will a reader learn that after the buyout
the U.S. Treasury was obligated to refund RJR as much as $1 billion because of its post-buyout debt burden. In Barbarians,
more time is spent describing Kravis's ostentatious gifts to his fashion-designer wife than to the tax considerations that make
or break these deals.
Fulminations about the socially corrosive effects of greed aside, the buyout phenomenon may represent one of the biggest changes
in the way American business is conducted since the rise of the public corporation, nothing less than a transformation of managerial
into financial capitalism. The ferocious market for corporate control that emerged during the 1980s has few parallels in business
history, but there are two: the trusts that formed early in this century and the conglomerate mania that swept corporate America
during the 1960s. Both waves resulted in large social and economic costs, and there is little assurance that the corporate infatuation
with debt will not exact a similarly heavy toll.
As the economist Henry Kaufman has written, the high levels of debt associated with buyouts and other forms of corporate restructuring
create fragility in business structures and vulnerability to economic cycles. Inexorably, the shift away from equity invites the
close, even intrusive involvement of institutional investors (banks, pension funds, and insurance companies) that provide the financing.
Superficially, this moves America closer to the system that prevails in Germany and Japan, where historically the relationship between
the suppliers and users of capital is close. But Germany and Japan incur higher levels of debt for expansion and investment, whereas
equivalent American indebtedness is linked to the recent market for corporate control. That creates a brittle structure, one that
threatens to turn the U.S. government into something of an ultimate guarantor if and when things do fall about. It is too easy to
construct a scenario in which corporate indebtedness forces the federal government into the business of business. The savings-and-loan
bailout is a painfully obvious harbinger of such a development.
The many ramifications of the buyout mania deserve thoughtful treatment. Basic issues of corporate governance and accountability
ought to be openly debated and resolved if the American economy is to deliver the maximum benefit to society and not just unconscionable
rewards to a handful of bankers, all out of proportion to their social productivity. It is disappointing, but a sign of the times,
that the best book about the deal of deals fails to educate as well as it entertains.
The Phillips Curve is back. In saying so, I do not mean to imply that being "back" refers to
a sudden reappearance of a stable empirical relationship between unemployment (or the output
gap) and inflation. The Phillips Curve is back in the same way that conspiracy theories about
the assassination of JFK are back after the recent release of government documents. In other
words, the Phillips Curve is something that people desperately want to believe in, despite the
lack of evidence.
The Phillips Curve is all the rage among central bankers. Since the Federal Reserve embarked
on quantitative easing, they have been ensuring the public that QE would not be inflationary
because of the slack in the economy. Until labor market conditions tighten, there would be
little threat of inflation. Then, as the labor market tightened, the Federal Reserve warned
that they might have to start raising interest rates to prevent these tightening conditions
from creating inflation.
What is remarkable about this period is that the Federal Reserve has undershot its target
rate of inflation throughout this entire period -- and continues to do so today. So what does
this tell us about the Phillips Curve and what can we learn about monetary policy?
If one looks at the data on unemployment and inflation (or even the output gap and
inflation), you could
more easily draw Orion the Hunter as you could a stable Phillips Curve. Fear not,
sophisticated advocates of the Phillips Curve will say. This is simply the Lucas Critique at
play here. If a Phillips Curve exists, and if the central bank tries to exploit it, then it
will not be evident in the data. In fact, if you take a really basic 3-equation-version of the
New Keynesian model, there is a New Keynesian Phillips Curve in the model. However, when you
solve for the equilibrium conditions, you find that inflation is a function of demand shocks,
technology shocks, and unexpected changes in interest rates. The output gap doesn't appear in
the solution. But fear not, this simply means that monetary policy is working properly. The
Phillips Curve is apparently like the observer effect in quantum mechanics in that when we try
to observe the Phillips Curve, we change the actual result (this is a joke, please do not leave
comments about why I've misunderstood the observer effect).
... ... ...
What all of this means is that even given the fact that the New Keynesian model features an
equation that resembles the Phillips curve, this does not imply that there is some predictive
power that comes from thinking about this equation in isolation. In addition, it certainly does
not imply that changes in the output gap cause changes in the rate of inflation. There
is no direction of causation implied by this one equilibrium condition.
"... This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output. ..."
"... This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties. ..."
Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery
and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television
and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked
staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy,
the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses
that depend upon it. Elements of the firm's structure and conduct pose anticompetitive concerns -- yet it has escaped antitrust
scrutiny.
This Note argues that the current framework in antitrust-specifically its pegging competition to "consumer welfare," defined
as short-term price effects-is unequipped to capture the architecture of market power in the modern economy. We cannot cognize
the potential harms to competition posed by Amazon's dominance if we measure competition primarily through price and output.
Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business
lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons. First, the
economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded.
Under these conditions, predatory pricing becomes highly rational-even as existing doctrine treats it as irrational and therefore
implausible. Second, because online platforms serve as critical intermediaries, integrating across business lines positions these
platforms to control the essential infrastructure on which their rivals depend. This dual role also enables a platform to exploit
information collected on companies using its services to undermine them as competitors.
This Note maps out facets of Amazon's dominance. Doing so enables us to make sense of its business strategy, illuminates anticompetitive
aspects of Amazon's structure and conduct, and underscores deficiencies in current doctrine. The Note closes by considering two
potential regimes for addressing Amazon's power: restoring traditional antitrust and competition policy principles or applying
common carrier obligations and duties.
"... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
"... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
"... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
"... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams,
server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything
worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these
people could save a business in times of disaster.
Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT
groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does
work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and
know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free
ticket for people to turn a blind eye.
Specialization
You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with
a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in
learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is
run by people who specialize in those elements. Everything is taken care of.
Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows
administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to
do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about
new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.
If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get.
Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they
indicate specialization or compensation for lack of experience.
Resource Competition
Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no."
As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups.
Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team
is.
The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's
worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may
get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management
or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate
the efforts of another group and just implement something themselves. On and on, the arguments continue.
Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what
happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting
in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT
groups.
With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most
groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers
to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to
various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their
own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction.
Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing
groups, a viable option.
Blamestorming
The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality.
Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time,
so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone
else to blame when things get delayed makes it all too easy to simply stop working for a while.
More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system
outage.
Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and
they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which
means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran
through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose
the problem. The server team doesn't even know how the application runs.
See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate
themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care
of all the other pieces.
I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge
and also get to know other people, which should lessen the propensity to view them as outsiders
And I feel like the Democrats get so distracted. They have been talking about sexual
harassment and stuff instead of the TAX BILL. It is so damn easy to get them to take their
eyes off the ball! and get played again and again. . . and TRAGIC given the consequences . .
.
It's the perfect "distraction". Allows them to engage in virtue-signaling and "fighting
for average Americans". It's all phony, they always "lose" in the end getting exactly what
they wanted in the first place, while not actually having to cast a vote for it.
It's all related, less safety net and more inequality means more desperation to take a
job, *ANY* job, means more women putting up with sexual harassment (and workplace bullying
and horrible and illegal workplace conditions etc.) as the price of a paycheck.
Horrible Toomey's re-election was a parallel to the Clinton/Trump fiasco. The Democrats
put up a corporate shill, Katie McGinty that no-one trusted.
"Former lobbyist Katie McGinty has spent three decades in politics getting rich off the
companies she regulated and subsidized. Now this master of the revolving-door wants
Pennsylvania voters to give her another perch in government: U.S. Senator." Washington
Examiner.
She was a Clintonite through and through, that everyone, much like $Hillary, could see
through.
To paraphrase the Beatles, you say you want a revolution but you don't really mean it. You
want more of the same because it makes you feel good to keep voting for your Senator or your
Congressman. The others are corrupt and evil, but your guys are good. If only the others were
like your guys. News flash: they are all your guys.
America is doomed. And so much the better. Despite all America has done for the world, it
has also been a brutal despot. America created consumerism, super-sizing and the Kardashians.
These are all unforgivable sins. America is probably the most persistently violent country in
the world both domestically and internationally. No other country has invaded or occupied so
much of the world, unless you count the known world in which case Macedonia wins.
This tax plan is what Americans want because they are pretty ignorant and stupid. They are
incapable of understanding basic math so they can't work out the details. They believe that
any tax cut is inherently good and all government is bad so that is also all that matters.
They honestly think they or their kids will one day be rich so they don't want to hurt rich
people. They also believe that millionaires got their money honestly and through hard work
because that is what they learned from their parents.
Just send a blank check to Goldman Sachs. Keep a bit to buy a gun which you can use to
either shoot up a McDonalds or blow your own brains out.
And some people still ask me why I left and don't want to come back. LOL
Macedonia of today is not the same are that conquered the world. They stole the name from
Greeks.
That being said, the US is ripe for a change. Every policy the current rulers enact seems
to make things better. However, I suspect a revolution would kill majority of the population
since it would disrupt the all important supply chains, so it does not seem viable.
However, a military takeover could be viable. If they are willing to wipe out the most
predatory portions of the ruling class, they could fix the healthcare system, install a
high-employment policy and take out the banks and even the military contractors. Which could
make them very popular.
Yeah, right. Have you seen our generals? They're just more of the same leeches we
have everywhere else in the 0.01%. Have you seen any of the other military dictatorships
around the world, like actually existing ones? They're all brilliantly corrupt and total
failures when it comes to running any sort of economy. Not to mention the total loss of civil
rights. Americans have this idiotic love of their military thanks to decades of effective
propaganda and think the rule of pampered generals would somehow be better than the right to
vote. Bleh.
This is a military dictatorship. The fourth and sixth amendments have been de facto
repealed. Trump cared about one thing and one thing only, namely to repeal the estate tax. He
is the ultimate con man and this was his biggest con. It is truly amazing how he accomplished
this. He has saved his family a billion $$$. He will now turn over governing to the generals
and Goldman Sachs. He may even retire. Truly amazing. One has to admire the sheer perversity
of it all. When will the American electorate get tired of being conned? The fact is they have
nothing but admiration for Trump. We live in a criminal culture, winner take all. America
loves its winners.
There is an old 2003 David Brooks column in which he mentions that
"The Democrats couldn't even persuade people to oppose the repeal of the estate tax, which
is explicitly for the mega-upper class. Al Gore, who ran a populist campaign, couldn't even
win the votes of white males who didn't go to college, whose incomes have stagnated over the
past decades and who were the explicit targets of his campaign. Why don't more Americans want
to distribute more wealth down to people like themselves?"
Then Brooks goes on to explain
"The most telling polling result from the 2000 election was from a Time magazine survey
that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans
say they are in the richest 1 percent and a further 20 percent expect to be someday. So right
away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that
favored the top 1 percent, he was taking a direct shot at them."
The Republicans have conditioned people to believe government services (except for
defense/military) are run poorly and need to be "run like a business" for a profit.
The problem is that not all government services CAN be profitable (homeless care, mental
health care for the poor, EPA enforcement, OSHA enforcement). And when attempts are made to
privatize some government operations such as incarceration, the result is that the private
company tries to maximize profits by pushing for laws to incarcerate ever more people.
The history of the USA as viewed by outsiders, maybe 50 years hence, will be that of a
resource consuming nation that spent a vast fortune on military hardware and military
adventures when it had little to fear due to geography, a nation that touted an independent
press that was anything but, a nation that created a large media/entertainment industry which
helped to keep citizens in line, a nation that fostered an overly large (by 2 or 3 times per
Paul Whooley) parasitical financial industry that did not perform its prime capital
allocation task competently as it veered from bubble to bubble and a nation that managed to
spend great sums on medical care without covering all citizens.
But the USA does have a lot of guns and a lot of frustrated people.
Maybe Kevlar vests will be the fashion of the future?
The provision to do away with the estate tax, if not immediately, in the current versions
(House and Senate) is great news for the 1%, and bad for the rest of us.
And if more people are not against that (thanks for quoting the NYTImes article), it's the
failure of the rest of the media for not focusing more on it, but wasting time and energy on
fashion, sports, entertainment, etc.
he provision to do away with the estate tax . . . is great news for the 1%
I think it's even a little more extreme than that. The data is a few years old, but it is
only the top 0.6% who are affected by estate taxes in the United States. See the data at
these web sites:
The military adventures were largely in support of what Smedley Butler so accurately
called the Great "Racket" of Monroe Doctrine colonialism and rapacious extractive
"capitalism" aka "looting."
It took longer and costed the rich a bit more to buy up all the bits of government, but
the way they've done will likely be more compendious and lasting. Barring some "intervening
event(s)".
While Republicans show their true colors, im out there seeing a resurgence of civil
society. And im starting to reach Hard core Tea Party types. Jobs, Manufacturing, Actual
Policy.
"... What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams, server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything worked, and I mean everything. ..."
"... Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free ticket for people to turn a blind eye. ..."
"... Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no." As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups. Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team is. ..."
"... The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate the efforts of another group and just implement something themselves. On and on, the arguments continue. ..."
What happened to the old "sysadmin" of just a few years ago? We've split what used to be the sysadmin into application teams,
server teams, storage teams, and network teams. There were often at least a few people, the holders of knowledge, who knew how everything
worked, and I mean everything. Every application, every piece of network gear, and how every server was configured -- these
people could save a business in times of disaster.
Now look at what we've done. Knowledge is so decentralized we must invent new roles to act as liaisons between all the IT
groups. Architects now hold much of the high-level "how it works" knowledge, but without knowing how any one piece actually does
work. In organizations with more than a few hundred IT staff and developers, it becomes nearly impossible for one person to do and
know everything. This movement toward specializing in individual areas seems almost natural. That, however, does not provide a free
ticket for people to turn a blind eye.
Specialization
You know the story: Company installs new application, nobody understands it yet, so an expert is hired. Often, the person with
a certification in using the new application only really knows how to run that application. Perhaps they aren't interested in
learning anything else, because their skill is in high demand right now. And besides, everything else in the infrastructure is
run by people who specialize in those elements. Everything is taken care of.
Except, how do these teams communicate when changes need to take place? Are the storage administrators teaching the Windows
administrators about storage multipathing; or worse logging in and setting it up because it's faster for the storage gurus to
do it themselves? A fundamental level of knowledge is often lacking, which makes it very difficult for teams to brainstorm about
new ways evolve IT services. The business environment has made it OK for IT staffers to specialize and only learn one thing.
If you hire someone certified in the application, operating system, or network vendor you use, that is precisely what you get.
Certifications may be a nice filter to quickly identify who has direct knowledge in the area you're hiring for, but often they
indicate specialization or compensation for lack of experience.
Resource Competition
Does your IT department function as a unit? Even 20-person IT shops have turf wars, so the answer is very likely, "no."
As teams are split into more and more distinct operating units, grouping occurs. One IT budget gets split between all these groups.
Often each group will have a manager who pitches his needs to upper management in hopes they will realize how important the team
is.
The "us vs. them" mentality manifests itself at all levels, and it's reinforced by management having to define each team's
worth in the form of a budget. One strategy is to illustrate a doomsday scenario. If you paint a bleak enough picture, you may
get more funding. Only if you are careful enough to illustrate the failings are due to lack of capital resources, not management
or people. A manager of another group may explain that they are not receiving the correct level of service, so they need to duplicate
the efforts of another group and just implement something themselves. On and on, the arguments continue.
Most often, I've seen competition between server groups result in horribly inefficient uses of hardware. For example, what
happens in your organization when one team needs more server hardware? Assume that another team has five unused servers sitting
in a blade chassis. Does the answer change? No, it does not. Even in test environments, sharing doesn't often happen between IT
groups.
With virtualization, some aspects of resource competition get better and some remain the same. When first implemented, most
groups will be running their own type of virtualization for their platform. The next step, I've most often seen, is for test servers
to get virtualized. If a new group is formed to manage the virtualization infrastructure, virtual machines can be allocated to
various application and server teams from a central pool and everyone is now sharing. Or, they begin sharing and then demand their
own physical hardware to be isolated from others' resource hungry utilization. This is nonetheless a step in the right direction.
Auto migration and guaranteed resource policies can go a long way toward making shared infrastructure, even between competing
groups, a viable option.
Blamestorming
The most damaging side effect of splitting into too many distinct IT groups is the reinforcement of an "us versus them" mentality.
Aside from the notion that specialization creates a lack of knowledge, blamestorming is what this article is really about. When a project is delayed, it is all too easy to blame another group. The SAN people didn't allocate storage on time,
so another team was delayed. That is the timeline of the project, so all work halted until that hiccup was restored. Having someone
else to blame when things get delayed makes it all too easy to simply stop working for a while.
More related to the initial points at the beginning of this article, perhaps, is the blamestorm that happens after a system
outage.
Say an ERP system becomes unresponsive a few times throughout the day. The application team says it's just slowing down, and
they don't know why. The network team says everything is fine. The server team says the application is "blocking on IO," which
means it's a SAN issue. The SAN team say there is nothing wrong, and other applications on the same devices are fine. You've ran
through nearly every team, but without an answer still. The SAN people don't have access to the application servers to help diagnose
the problem. The server team doesn't even know how the application runs.
See the problem? Specialized teams are distinct and by nature adversarial. Specialized staffers often relegate
themselves into a niche knowing that as long as they continue working at large enough companies, "someone else" will take care
of all the other pieces.
I unfortunately don't have an answer to this problem. Maybe rotating employees between departments will help. They gain knowledge
and also get to know other people, which should lessen the propensity to view them as outsiders
And I feel like the Democrats get so distracted. They have been talking about sexual
harassment and stuff instead of the TAX BILL. It is so damn easy to get them to take their
eyes off the ball! and get played again and again. . . and TRAGIC given the consequences . .
.
It's the perfect "distraction". Allows them to engage in virtue-signaling and "fighting
for average Americans". It's all phony, they always "lose" in the end getting exactly what
they wanted in the first place, while not actually having to cast a vote for it.
It's all related, less safety net and more inequality means more desperation to take a
job, *ANY* job, means more women putting up with sexual harassment (and workplace bullying
and horrible and illegal workplace conditions etc.) as the price of a paycheck.
Horrible Toomey's re-election was a parallel to the Clinton/Trump fiasco. The Democrats
put up a corporate shill, Katie McGinty that no-one trusted.
"Former lobbyist Katie McGinty has spent three decades in politics getting rich off the
companies she regulated and subsidized. Now this master of the revolving-door wants
Pennsylvania voters to give her another perch in government: U.S. Senator." Washington
Examiner.
She was a Clintonite through and through, that everyone, much like $Hillary, could see
through.
To paraphrase the Beatles, you say you want a revolution but you don't really mean it. You
want more of the same because it makes you feel good to keep voting for your Senator or your
Congressman. The others are corrupt and evil, but your guys are good. If only the others were
like your guys. News flash: they are all your guys.
America is doomed. And so much the better. Despite all America has done for the world, it
has also been a brutal despot. America created consumerism, super-sizing and the Kardashians.
These are all unforgivable sins. America is probably the most persistently violent country in
the world both domestically and internationally. No other country has invaded or occupied so
much of the world, unless you count the known world in which case Macedonia wins.
This tax plan is what Americans want because they are pretty ignorant and stupid. They are
incapable of understanding basic math so they can't work out the details. They believe that
any tax cut is inherently good and all government is bad so that is also all that matters.
They honestly think they or their kids will one day be rich so they don't want to hurt rich
people. They also believe that millionaires got their money honestly and through hard work
because that is what they learned from their parents.
Just send a blank check to Goldman Sachs. Keep a bit to buy a gun which you can use to
either shoot up a McDonalds or blow your own brains out.
And some people still ask me why I left and don't want to come back. LOL
Macedonia of today is not the same are that conquered the world. They stole the name from
Greeks.
That being said, the US is ripe for a change. Every policy the current rulers enact seems
to make things better. However, I suspect a revolution would kill majority of the population
since it would disrupt the all important supply chains, so it does not seem viable.
However, a military takeover could be viable. If they are willing to wipe out the most
predatory portions of the ruling class, they could fix the healthcare system, install a
high-employment policy and take out the banks and even the military contractors. Which could
make them very popular.
Yeah, right. Have you seen our generals? They're just more of the same leeches we
have everywhere else in the 0.01%. Have you seen any of the other military dictatorships
around the world, like actually existing ones? They're all brilliantly corrupt and total
failures when it comes to running any sort of economy. Not to mention the total loss of civil
rights. Americans have this idiotic love of their military thanks to decades of effective
propaganda and think the rule of pampered generals would somehow be better than the right to
vote. Bleh.
This is a military dictatorship. The fourth and sixth amendments have been de facto
repealed. Trump cared about one thing and one thing only, namely to repeal the estate tax. He
is the ultimate con man and this was his biggest con. It is truly amazing how he accomplished
this. He has saved his family a billion $$$. He will now turn over governing to the generals
and Goldman Sachs. He may even retire. Truly amazing. One has to admire the sheer perversity
of it all. When will the American electorate get tired of being conned? The fact is they have
nothing but admiration for Trump. We live in a criminal culture, winner take all. America
loves its winners.
There is an old 2003 David Brooks column in which he mentions that
"The Democrats couldn't even persuade people to oppose the repeal of the estate tax, which
is explicitly for the mega-upper class. Al Gore, who ran a populist campaign, couldn't even
win the votes of white males who didn't go to college, whose incomes have stagnated over the
past decades and who were the explicit targets of his campaign. Why don't more Americans want
to distribute more wealth down to people like themselves?"
Then Brooks goes on to explain
"The most telling polling result from the 2000 election was from a Time magazine survey
that asked people if they are in the top 1 percent of earners. Nineteen percent of Americans
say they are in the richest 1 percent and a further 20 percent expect to be someday. So right
away you have 39 percent of Americans who thought that when Mr. Gore savaged a plan that
favored the top 1 percent, he was taking a direct shot at them."
The Republicans have conditioned people to believe government services (except for
defense/military) are run poorly and need to be "run like a business" for a profit.
The problem is that not all government services CAN be profitable (homeless care, mental
health care for the poor, EPA enforcement, OSHA enforcement). And when attempts are made to
privatize some government operations such as incarceration, the result is that the private
company tries to maximize profits by pushing for laws to incarcerate ever more people.
The history of the USA as viewed by outsiders, maybe 50 years hence, will be that of a
resource consuming nation that spent a vast fortune on military hardware and military
adventures when it had little to fear due to geography, a nation that touted an independent
press that was anything but, a nation that created a large media/entertainment industry which
helped to keep citizens in line, a nation that fostered an overly large (by 2 or 3 times per
Paul Whooley) parasitical financial industry that did not perform its prime capital
allocation task competently as it veered from bubble to bubble and a nation that managed to
spend great sums on medical care without covering all citizens.
But the USA does have a lot of guns and a lot of frustrated people.
Maybe Kevlar vests will be the fashion of the future?
The provision to do away with the estate tax, if not immediately, in the current versions
(House and Senate) is great news for the 1%, and bad for the rest of us.
And if more people are not against that (thanks for quoting the NYTImes article), it's the
failure of the rest of the media for not focusing more on it, but wasting time and energy on
fashion, sports, entertainment, etc.
he provision to do away with the estate tax . . . is great news for the 1%
I think it's even a little more extreme than that. The data is a few years old, but it is
only the top 0.6% who are affected by estate taxes in the United States. See the data at
these web sites:
The military adventures were largely in support of what Smedley Butler so accurately
called the Great "Racket" of Monroe Doctrine colonialism and rapacious extractive
"capitalism" aka "looting."
It took longer and costed the rich a bit more to buy up all the bits of government, but
the way they've done will likely be more compendious and lasting. Barring some "intervening
event(s)".
While Republicans show their true colors, im out there seeing a resurgence of civil
society. And im starting to reach Hard core Tea Party types. Jobs, Manufacturing, Actual
Policy.
"... Carrying Capacity : Carrying capacity is a well-known ecological term that has an obvious and fairly intuitive meaning: "the maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water and other necessities available in the environment". Unfortunately, that definition becomes more nebulous the closer you look at it – especially when we start talking about the planetary carrying capacity for humans. Ecologists claim that our numbers have already surpassed the carrying capacity of the planet, while others (notably economists and politicians ) claim we are nowhere near it yet! ..."
"... Overshoot : When a population surpasses its carrying capacity it enters a condition known as overshoot. Because carrying capacity is defined as the maximum population that an environment can maintain indefinitely, overshoot must by definition be temporary. Populations ..."
"... to (or below) the carrying capacity. How long they stay in overshoot depends on how many stored resources there are to support their inflated numbers. Resources may be food, but they may also be any resource that helps maintain their numbers. For ..."
"... one of the primary resources is energy, whether it is tapped as flows (sunlight, wind, biomass) or stocks (coal, oil, gas, uranium etc.). A species usually enters overshoot when it taps a particularly rich but exhaustible stock of a resource. Like oil, for instance ..."
"... The zoomass of wild vertebrates is now vanishingly small compared to the biomass of domestic animals. In 1900 there were some 1.6 billion large domesticated animals, including about 450 million head of cattle and water buffalo (HYDE 2011); a century later the count of large domestic animals had surpassed 4.3 billion, including 1.65 billion head of cattle and water buffalo and 900 million pigs (FAO 2011). Calculations using these head counts and average body weights (they have increased everywhere since 1900, but the differences between larger body masses in North America and Europe and lower weights elsewhere persist) yield estimates of at least 35 Mt C of domesticated zoomass in 1900 (more than three times the total of all wild land mammals) and at least 120 Mt C in the year 2000, a 3.5-fold increase in 100 years (and 25 times the total of wild mammalian zoomass). And cattle zoomass alone is now at least 250 times greater than the zoomass of all surviving African elephants, which in turn is less than 2 percent of the zoomass of Africa's nearly 300 million bovines (Table 2). ..."
"... Carrying Capacity, Overshoot and Species Extinction ..."
11/29/2017 Notice: Please limit your comments below to the subject matter of this post only. There is a petroleum post above this
one for all petroleum and natural gas posts and a non-petroleum post below this one for comments on all other matters.
First, let us define carrying capacity and overshoot. And none has done that better than
Paul Chefurka .
Carrying Capacity : Carrying capacity is a well-known ecological term that has an obvious and fairly intuitive meaning: "the
maximum population size of a species that the environment can sustain indefinitely, given the food, habitat, water and other necessities
available in the environment". Unfortunately, that definition becomes more nebulous the closer you look at it – especially when we
start talking about the planetary carrying capacity for humans. Ecologists claim that our numbers have already surpassed the carrying
capacity of the planet, while others (notably economists and politicians ) claim we are nowhere near it yet!
Overshoot : When a population surpasses its carrying capacity it enters a condition known as overshoot. Because carrying capacity
is defined as the maximum population that an environment can maintain indefinitely, overshoot must by definition be temporary. Populations
always decline to (or below) the carrying capacity. How long they stay in overshoot depends on how many stored resources
there are to support their inflated numbers. Resources may be food, but they may also be any resource that helps maintain their numbers.
For humans one of the primary resources is energy, whether it is tapped as flows (sunlight, wind, biomass) or stocks (coal,
oil, gas, uranium etc.). A species usually enters overshoot when it taps a particularly rich but exhaustible stock of a resource.
Like oil, for instance
When we talk about carrying capacity we need to define exactly who or what we are carrying. Are we talking about humans, all animals
or what? Well, let's just talk about terrestrial vertebrate biomass.
Okay, Vaclav Smil and Paul Chefurka (and the estimates of most earth biologists) are correct, the long-term carrying capacity
of terrestrial vertebrate biomass is a little over 200,000,000 tons. But how do we know that amount is correct? Easily, because that
is what it was for millions of years before the advent of agriculture and other things brought about by modern day Homo sapiens.
Plant and animal species all struggle to survive. In doing so they have evolved to fill every available niche on earth. If a plant
can grow in an area, any area, it will do so. If an animal can find a habitat in any area on earth, it will do so. At least since
the mid-Triassic, about 225 million years ago, plants and animals have occupied every available niche on earth. If any animal overshot
its habitat, dieoff would soon correct that situation. So for many millions of years, the terrestrial vertebrate biomass remained
at about two hundred million tons, give or take. I say that because climate change, sea levels rising and falling, continental drift
would cause the long-term carrying capacity to wax or wane. Also, the estimate is just that, an estimate. It could be slightly higher
or lower. But the long-term carrying capacity of the earth always remained at one hundred percent of what it was possible to carry.
Then about 10,000 years ago man invented agriculture. At first, this only enabled a slight increase in population. Soon only plants
that produced the most grain, fruit or tuber per plant, or per area of ground, was selected for replanting. Genetic engineering goes
back thousands of years.
Then they discovered fertilizer. Animal and human waste could greatly increase plant production. Animals were domesticated and
the plow was invented. More food per area of ground could be produced. Then chemical fertilizers were invented and the population
floodgates were opened. At first phosphates from bird guano dramatically increased agricultural production but around the middle
of the last century nitrate fertilizers from the Haber Bosch process enabled the green revolution and enabled the population to expand
three fold.
It's mostly cows, then humans, then pigs then chickens then Interesting that the biomass of chickens is ovwe three times that
of all the wild animals combined. If this chart does not shock you then you are totally unable to be shocked by anything concerning
the earth's biosphere.
The world population is still expanding at an alarming rate. By 1989 the population was expanding by about 88 million people per
year. Then by the year 2000 population growth had slowed to about 77 million per year. Then the slowdown stopped and started to increase
again. it stands at about 79 million per year according to the US Census Bureau.
Now they are saying it will start to slow. But that slowdown has not yet started. True, the fertility rate has been dropping but
that has been offset by the increase in population. The fertility rate is dropping but on more and more people.
Notice the U.S. Census Bureau starts the slowdown at almost the exact date this chart was drawn, August 2017. If they had drawn
this chart in 1995, then no doubt they would have started their prediction of constant decline in 1995.
But I have no doubt that the population will start to decline. It must, it must because we are destroying the ability of the planet
to feed all its people.
Paul Chefurka created the above graph in May 2011. I think he was a little off. He has the world population hitting almost 8 billion
then starting to drop around 2030.
I am more inclined to agree with the U.S. Census Bureau who thinks the world population will hit 9.4 billion around 2050. Then
I believe the population will start to fall. The rate of population decline and how far it will fall is hard to predict. That will
depend on many things but primarily on if and when globalization collapses. The collapse of globalization will bring about civil
strife, border wars, and famine around the world.
I want to call your attention to the green, wild animal, portion of the second graph at the top of this post. Notice the wild
animal portion of the terrestrial vertebrate biomass, by 1900, had dropped to about 20% of its historical value. Then by 2000, it
had dropped to half that amount. Then by 2050, we expect that 2000 value to be cut in half again.
By 2100, it will very likely all be gone. Well, almost all gone. There will still be plenty of rats and mice and perhaps a few
other small vertebrates will still survive, but all the large megafauna, except humans, will be gone. Gone forever or at least for
the next million years or so. It will take that long for new megafauna to evolve after the human population has been greatly reduced
to a billion or even a few million people.
But the far distant future is of little concern to us now. The sad fact of the matter is your descendants will live in a world
completely free of wild megafauna. There is no way to avoid that fact now, it is already too late to stop the destruction.
WHY?
Yes, why? Why are we destroying the earth's ecosystem? Why are we driving most all wild animals into extinction? Why have we dramatically
overpopulated the planet with human beings? Why did all this happen? However, when you ask why, you are implying that all this had
a cause, that someone or some group of people are to blame for this damn mess we have gotten ourselves into.
Was it the early farmers who invented agriculture. Or was it the early industrialists like James Watt or Thomas Edison? Or was
it Fritz Haber and Carl Bosch, are they the villains that got us into such a damn mess? No, it was none of these people. It was no
one person or no group of people. It was not even any revolution like the industrial revolution, the medical revolution or the green
revolution. There is no one to blame and there is nothing to blame.
Agriculture enabled the very small early population to expand. The industrial revolution and later the green revolution enabled
more people to be fed. The medical revolution enabled more babies to survive and people to live much longer. Our population has exploded
simply because it could. We have always lived to the limit of our existence and we always will. It was just human nature pure and
simple.
Now many will say that we are now controlling our population, that we have learned how to limit our fertility rate. Well, yes
and no. Reference the below chart and table that were produced by the
Population Reference Bureau in 2012.
In the developed world, where most of the world's energy is consumed, we almost have zero population growth. But in the less developed
world, the population is still growing.
Here is the perfect example of what is happening, what is still happening , in much of the world. Notice the difference in the
infant mortality rate and the annual infant deaths. Most of the world's people are still living at the very limit of their existence.
<sarc>But not to worry. The death rate is rising, babies are dying, the population will soon start to fall in the undeveloped
world. </sarc>
Note: The Paul Chefurka graphs in this post were created, primarily, with data from the research of Vaclav Smil and is published
in this 24 page PDF file: Harvesting
the Biosphere: The Human Impact . The file includes over 2 pages of notes and 4 pages of references where Smil sources and documents
every stat he quotes. Below are a table and some text from the paper.
The zoomass of wild vertebrates is now vanishingly small compared to the biomass of domestic animals. In 1900 there were some
1.6 billion large domesticated animals, including about 450 million head of cattle and water buffalo (HYDE 2011); a century later
the count of large domestic animals had surpassed 4.3 billion, including 1.65 billion head of cattle and water buffalo and 900 million
pigs (FAO 2011). Calculations using these head counts and average body weights (they have increased everywhere since 1900, but the
differences between larger body masses in North America and Europe and lower weights elsewhere persist) yield estimates of at least
35 Mt C of domesticated zoomass in 1900 (more than three times the total of all wild land mammals) and at least 120 Mt C in the year
2000, a 3.5-fold increase in 100 years (and 25 times the total of wild mammalian zoomass). And cattle zoomass alone is now at least
250 times greater than the zoomass of all surviving African elephants, which in turn is less than 2 percent of the zoomass of Africa's
nearly 300 million bovines (Table 2).
Please comment below but only on the subject matter of this post.
Great summary. Mainly so I don't have to think about all the depressing aspects: do you not think if humans disappeared but even
a few of our larger domesticated animals survived that evolution could go bonkers and we'd have new familes and species springing
up all over in far less than a million years. After all homo sapiens are only a few hundred thousand years, and dogs (admittedly
still technically wolves) only a few thousand. It would depend a bit whether we left much of the planet that was actually habitable
of course – i.e. there'd need to be plenty of evolution pressure, but not too much. I guess your point would be we'd get new species
but not the mega fauna, but I think there's evidence that isolated small islands can lead to either pygmy species or giants depending
on the exact environment.
George, I would have to start by saying that humans are not going to disappear. Other than extinction via natural disaster, like
a giant meteorite hitting the earth, species are driven into extinction. That is they are outcompeted for territory and
resources. Humans are the drivers of extinction, no species will drive us into extinction. We occupy every habitable niche on
earth and will likely continue to do so even after our numbers have been dramatically reduced.
If we have a collapse of globalization, and I believe that is inevitable and will happen within the next one hundred years,
then the human population will be devastated by civil strife, border wars, and famine. Seven to nine billion hungry people will
be a disaster for all other animal life, domestic as well as wild. So I do not believe there will be enough domestic animal life
to kick-start evolution of new wild species of megafauna. As I have said before, we will eat the songbirds out of the trees. So
there sure as hell will not be any cows left.
Okay, so perhaps it will not take a million years for other large megafauna to evolve. Perhaps it will only be in the hundreds
of thousands of years.
So, after we eat the songbirds from the trees, what the hell will we eat then?
Is it not possible that the human species will drive itself to extinction because we are so successful at destroying the natural
environment which we depend upon for our survival?
After industrial civilization collapses, the great human die-off will rapidly reduce human numbers by more than 90%. Life for
the remaining humans will be extraordinarily hard. If the overall stress level is high enough, it will be very difficult for humans
to raise enough offspring to reproductive age to maintain the species over time. Biologists call this pre-extinction phase die
out. Once a species numbers fall below replacement level, they go extinct.
And what the hell do you mean: "If we have a collapse of globalization, and I believe that is inevitable and will happen within
the next one hundred years "? Within the next 100 years? You are dreaming! We are in the early stages of apocalypse right now!
Rapid die-off will begin within the next few years. 100 years from now, there will be no one alive who will remember it.
Cunning said; "After industrial civilization collapses, the great human die-off will rapidly reduce human numbers by more than
90%." ..
..while what is left of nature will rapidly move into the niches vacated by species humans have wiped out. If (big if, maybe)
there are remaining reproductively viable human populations, they will exploit those recovering niches at rates which will be
far below the astounding rates of exploitation during the industrial age. Where humans have abandoned their schemes of destroying
the natural world for their own purposes, nature, in some form, recovers quite quickly.
On the other hand, if global warming goes off the scale (ala Guy McPherson, et al), all bets are off. Everything larger than
a shrew will be toast.
Once a species numbers fall below replacement level, they go extinct.
The replacement level for animals in the wild and the replacement level for domestic animals are two different things entirely.
For animals in the wild, the replacement level may be several hundred to several thousand. Animals in the wild have to find each
other in order to reproduce. For domestic animals, the replacement level is two.
In this regard, we Homo sapiens are far more like domestic animals than wild animals. An example would be the Polynesians who
migrated to distant islands in sailing outrigger canoes. Their numbers, in those canoes, likely numbered only a dozen or so. Yet
huge numbers eventually sprang from tiny numbers.
Yes, stress during periods of great strife and famine will be great. Stress will likely take a great toll. But there will always
be survivors. Everyone is not equally affected by stress. Some can overcome, some cannot. It is a little like a plague or disease.
There are always some who are immune or otherwise escape the problem.
As for rapid die-off coming within a few years, yes that may happen but I doubt it. Humans societies are far more resilient
than you might expect. For instance, look at Somalia, or Venezuela. Somalia, a failed state, has been in turmoil for decades yet
no massive die-off has occurred. Venezuela is in a state of almost total anarchy, yet no massive die-off as of yet.
I believe the die-off will start within the next hundred years. Next week is within the next hundred years. But I doubt
it will happen by then, or even within the next few years or so. In my opinion, it will take several decades for things to really
fall apart.
You said:
"But I doubt it will happen by then, or even within the next few years or so. In my opinion, it will take several decades for
things to really fall apart."
What about Limits to Growth? That study forecast that real problems would begin in the first or second decade of the 21st century,
in other words, now. Why is Limits to Growth wrong? How do we avoid sudden, catastrophic collapse once world economic growth comes
to an end?
What about the fragile, debt ridden financial/credit/monetary system? Have you read the Korowicz paper? How will industrial
civilization gradually unwind over many decades when the world economy freezes very suddenly and food stops arriving at the grocery
stores? That should lead to a very rapid die-off as every city suddenly becomes uninhabitable.
What about Limits to Growth? That study forecast that real problems would begin in the first or second decade of the 21st century,
in other words, now. Why is Limits to Growth wrong?
Hey, I have a copy of Limits to Growth right here in my hand. On what page do they predict catastrophic collapse before 2050.
Help me out here but I just can't seem to find it.
As to real problems, hell yes, we are having real problems right now. We have been having real problems in Venezuela and a
lot of other places. But there is a tremendous difference between real problems and catastrophic collapse.
And what about all the other terrible things you are say are happening right now. Hell yes, they are happening and they are
terrible. But they have not yet led to catastrophic collapse. But it is very likely they will lead to collapse in three
or four decades from now.
It's actually from a Guardian article, taken from Bardi's "The Limits to Growth Revisited". I don't know what page the original
graph was on, but I have a copy of the original 1972 graph which shows the same curves, without the more recent data curves.
Guardian article "Limits to Growth was right. New research shows we're nearing collapse" :
It depends on what you call collapse. The UK and USA are both following the curve such that life expectancy is starting to decline.
I think industrial productivity might be going the same way in UK, and definitely our health and old age care systems (which is
one of the measures he uses for "services") are in decline (though the government always finds a way to massage the numbers so
far). One of the authors of LtG has said that once one of the main curves is definitely through an extrema then the models probably
don't work any more – which I took to mean possible accelerating chaos, but might mean something else.
This a unique, one-time only collapse because we never relied on fossil fuels in the past, and we certainly won't in the future.
If you look at energyskeptic/3) Fast Crash, you'll see the many reasons I think collapse will unfold quickly. Turchin, who has
looked at the patterns of collapse in civilizations going back to Mesopotamia, says it takes about 20 years on average. That is
in line with Hook's estimate of a 6% exponential decline, which is the rate at which the 500 giant oil fields decline on average
after peaking (something like 270 of them last I checked), all others (offshore, shale, smaller, and so on) decline much faster,
hence Hooks estimate of an exponential increase of .0015 a year as non-giants increasingly contribute to what's left of production
(giants are now 60% of world oil production). If Hook (2009) is right, that means we'll be down to 10% of what we produce after
global peak production in 16 years. At that point, even if governments are rationing oil wisely to grow and distribute food, you're
reaching the breaking point. Oil makes all other resources possible, so although many resources reaching their limits, the decline
of oil will be the true beginning of the end. No more pumping water from the Ogallala 1,000 feet down, going 10,000 miles on factory
farm fishing boats, and so on. Oil is masking how incredibly far we are over overshoot. Above all, 99% of the supply chain transport
– trucks, rail, ships – depends on oil. 80% of communities in the U.S. depend entirely on oil, by far the least efficient mode
of transportation of the three. Well, it is too big a topic to cover in a comment. I have a lot more to say in my book "When Trucks
Stop Running".
Oh, and when I heard Dennis Meadows speak at the 2006 Pisa Italy ASPO conference, he said that if anything Limits to growth
was head of schedule, with collapse starting as early as 2020. We'll see, too many factors. Also in the past, nations avoided
collapse way past their carrying capacity by trading or conquering other nations, like the Roman Empire, which had to import food
from Carthage and Egypt, no way to grow enough food in Italy.
I'm hoping to see more comments from you in the future, and not just in this one thread, lol.
It's very common for experts in any given field to presume there are none in other fields that are capable of solving the problems
they see as civilization killers.
There are no guarantees of success, but success is possible when it comes to finding and implementing solutions to problems
such as the eventual depletion of oil.
Once the shit starts hitting the fan pretty hard and fast in terms of declining oil supplies, both good and bad things will
happen on a scale that will take the breath away.
The bad will unquestionably include economic collapse across large swathes of some and maybe most societies.
The good will come in the form of action on the part of awakened LEVIATHAN, the nation state. Those of us who cannot see that
once LEVIATHAN stirs and focuses on such problems as we FORCED to deal with soon have little understanding of history , human
nature, and technology.
Now WHETHER , or NOT, Leviathan, Uncle Sam, John BULL, the Russian BEAR, et al, can do enough to keep the wheels on and turning,
instead of falling off, is an open question.
I believe they can, depending on how far gone things are once they begin to come to grips with the various troubles that will
threaten their existence.
People CAN AND DO come together, and work together, sometimes. Consider the case of the USA. We were mostly all isolationists
the day before Pearl Harbor, but within a couple of days after, we were all ready to to go flat out to murder our enemies on the
grand scale, and DID.
Neither I nor anybody else can prove either way whether we WILL work together well enough to prevent outright collapse meaning
we die hard deaths by the tens of millions even here in a country such as the USA.
There's no question that we CAN work together, once we realize we must. Whether we get started soon enough is probably going
to determine just how bad things will get in economic terms.
But between what scientists and engineers can do for us, by way of providing us with better tools, and what we can collectively
do for ourselves by way of collective action, there's a real possibility that some countries will pull thru ok, no longer sleek
and lazy and fat and wasteful, but at least still functional, and with most of their populations still alive and leading a reasonably
dignified life style.
I will have more to say about what Leviathan awakened, scared and enraged can do later on, way down thread someplace within
the next few days, by relating some historical examples.
I too feel that one day the trucks will stop running. It will be a very interesting transition to observe. I imagine it will have
a progression that goes something like this:
-trucks running will increase in cost as will the things that they are running about with inside them.
– trucks will run to less and less places.
-trucks will run to less and less places less frequently.
-trucks will run only very rarely and only for high priority reasons.
-trucks will stop running altogether.
As this process takes place I imagine there will be measures taken to fill some of the void, where and when it is possible
to do so.
Ron – do you think humans will still be around in a million years or even a hundred thousand? If they are I think it will only
be because they have made themselves irrelevant to the environment (i.e. small in numbers and having found a way to live sustainably)
and other species will be evolving without too much human involvement.
Yes, George, I think humans will be around in a million years. Not nearly as many as are around today however. If I had to guess,
and I do have to guess, then I would guess around 10 to 15 million humans would be around a million years from now. That would
be one person alive then for every 500 alive today.
Of course, all fossil fuel would be gone and everyone would live off the land.
But if you doubt human survival, then just what do you think will wipe everyone out? What will bring the human population to
zero?
That sounds as good a guess as any. Part of my point was that they could only survive if they were not intrusive, and therefore
would not be an impediment to evolution of other mega fauna. I think average species life time is estimated at around 1 to 2 million
years, homo is a family rather than a species so the sapiens could go and something else come along, like we took out the Neanderthals.
On the other hand if the bottlenecks get small enough in different locations we could just be whittled away by different causes.
I think average species life time is estimated at around 1 to 2 million years,
The point is George, Homo sapiens is not an average species. If we were an average species we would still be competing with
other species for food and territory, losing some of those battles and winning others. But our numbers would be kept in check
by our success and failure of that struggle, just like every other average species.
Our dominance has overwhelmed all other species. Like a plague, we are killing them all off. There is nothing average about
us as a species.
Ok, but our numbers were kept in check and we were competing like that for almost all of our history, until the Holocene interglacial
came along and we decided agriculture was a good idea, or maybe we had a go before and it never took in a less stable climate.
But before that there is evidence of some pretty tight bottlenecks when we were almost gone either locally (e.g. in India) or
globally. And things like the Roman empire collapse suggest we can forget any kind of technological advantages in a couple of
generations.
But since our brains to a degree where we could create stone tools and use fire, our population has been on a slow increase,
bottlenecks notwithstanding.
What has made us not average is our brains, our mental ability. That is the one thing that has given us a huge advantage
over all other species.
We are smart enough to wrestle all the world from every other species that stood in our way. If another species had something
that we wanted, including even their flesh, we got it. We are smart enough to dominate the world, but not smart enough to see
that we are destroying it.
My point is that unless we find a niche in which we can exist sustainably despite our intelligence and ability to get whatever
we want and dominate the world, then we won't survive very long, and may not even then.
I think some (you for example) are smart enough to see that we are destroying our World.
It may not be a majority view, though I think the numbers are increasing.
I would agree that we so far have not demonstrated that we are smart enough to change what we are doing (reduce the rate that
we destroy the planet as rapidly as possible to zero (or negative, by which I mean restore the planet closer to a natural or sustainable
state).
This may never be accomplished, but we cam move in that direction while reducing our numbers and our impact.
What it is about our brains that makes us not average is our capacity to deny reality. The mind over reality transition (Varki
&Brower) is arguably what gave "sapiens" the advantage, successful but apparently impossible risk taking, to do away with neanderthalensis.
In small scale hunter bands surrounded by magafaunal predators, denial of reality is a decided advantage, but in mass societies
with the capacity to produce mass belief in non-realityy, it is the disadvantage that could do us in. Although not experimentally
demonstrable, the idea that this mind over reality transition was an evolutionary event in the hominid genus 100-200 thousand
years ago is a plausible explanation for sapiens' dramatic cortical development and the development or consolidation of female
sexual selection, not present in our forebears or current great apes.
In a future world scratching a living as we did for most of our history as hunter-gatherer bands, but from a depleted world
absent of any predators, we might evolve the ability to believe reality, without sacrificing cortical development. The first inhabitants
of my country (Australia) managed to get by fot 60,000 years by killing off the megafauna. They were helped by climate change
which dessicated the continent, but hung in there making it an extremely attractive aquisition by my ancestors when they came
along.
In broad terms, I agree with what you are saying here.
"Our dominance has overwhelmed all other species. Like a plague, we are killing them all off. There is nothing average about
us as a species."
But we aren't doing any better than rats or fire ants, lol.
You're dead on about humanity not being an average species. We will be around at least until some other species capable of
wiping us out evolves, and it's unlikely that we will ALLOW such a species to exist, unless it's a microbe and we can't wipe it
out.
If chimps were to evolve just a little further along the lines of using tools and being able to communicate and work together,
and started attacking humans, numerous humans armed only with primitive weapons such as fire and bows and arrows would kill every
last chimp, and they wouldn't lose any time in doing so.
This brings up an interesting question. We know chimps use stone tools as hammers to break nuts, etc, , and that they fight
ORGANIZED fights to the death sometimes.
Is there any evidence they are using stones as weapons . YET?
I once heard an interesting story about chimps. Might have been in one of Pinker's books, I can't recall.
If you hang a bunch of bananas from the ceiling that a chimp cannot reach and you leave an A-frame ladder laying on the ground
the chimp will set the ladder upright and get the bananas.
If you do the same thing with 2 chimps and a ladder so heavy that one chimp alone cannot set it upright, but 2 chimps working
together could set it upright, they'll never get on the same page, so to speak, and cooperate in setting up the ladder. They will
both try individually and fail. The bananas will never be reached.
The charts in your post suggest about 1 billion might work, I would say 500 million would be my guess, not sure where you come
up with 10 to 15 million.
Note that 500 million is roughly the World population in 1550 CE.
Just a different guess as I think a sustainable society could be reached by 2300 at these lower population levels, though perhaps
fertility levels will remain below replacement over the long term so population will continually decline eventually some optimum
will be determined and fewer than two children will not be encouraged.
Humans, that is Homo Sapiens per se, maybe not. Don't forget Cro-Magnons probably caused the extinction of Homo Neandertalis in
about 40,000 years or so ago. Some other future species of the Genus Homo, very likely will be around for another million or so
years. This is what I think they might look like. Maybe they will be called Homo technoligicus implantabilis, feel free to call
them whatever you want. In any case resistance will be futile and you will be assimilated.
Cheers!
.
First of all, Ron, a species which destroys its own food supply or its own habitat *does* go extinct. They're currently referred
to as "superpredators" -- it's happened repeatedly throughout history.
Second, regarding population growth, my primary charity for 20 years has promoted sex ed, access to contraceptions, and education
of women worldwide. We know how to halt and reverse population growth in the "underdeveloped world". It's not difficult except
for the religious groups which oppose contraception and oppose women's liberation.
Often the same religious groups who promote burning of fossil fuels. And deforestation.
Basically, whether humans survive depends on whether we defeat those groups, IMO.
Countries like Cuba which are very underdeveloped but essentially *lack* those religious groups (thank you Godless Communism!)
they're doing OK on population stabilization.
There are countries that are religious such as Iran that have seen rapid demographic transition (15 years for TFR to go from
over 5 to under 2). Also non-communist nations such as South Korea saw rapid transitions.
I agree education and gender equality as well as access to modern contraception are helpful.
Religion has it's points, as Twain used to put it, both good and bad. Preachers and priests have a way of figuring out what
is in their own best interests, short term, medium term, and long term.
There are some religions or cultures, which are not necessarily one and the same thing , that do encourage or more or less
actually force women to bear lots of children.
I come from a culture that is very often ridiculed here in this forum, which doesn't bother me at all personally. It's ridiculed
on such a broad scale that it's hard to find a public forum peopled with technically well educated people where ridicule isn't
the NORM.
As religion goes, my own personal extended family is about as religious as they come in the USA. My nieces and nephews and
third cousins, the children of my FIRST cousins, are having kids at less than the necessary 2.1 rate needed to maintain our blood
lines, lol. My informal seat of the pants estimate is that the extended family birth rate is down to somewhere around one point
five.
It's well known that the birth rate in some countries that are supposedly Catholic has fallen like a rock over the last couple
of decades.
And while I can't prove it, it's my firm opinion that once the priesthood in any country comes to understand that it's own
long term interests are best served by encouraging small families, small families WILL BE ENCOURAGED. That may not happen for
another generation or so, and it may not happen at all in some countries, if there is no top down control of the culture and religion.
Priests and preachers don't exist to serve GOD, or any combinations of gods, etc. They exist because they have found a way
to provide a secure and relatively easy way of living largely off the work of their followers.
This is not to say their followers don't get back as much or more as they contribute. Every society has to have leaders, and
priests and preachers can be and have often been very effective leaders. Some of them are effective leaders today.
First of all, Ron, a species which destroys its own food supply or its own habitat *does* go extinct. They're currently referred
to as "superpredators" -- it's happened repeatedly throughout history.
Really, I have never heard of that. The only superpredator I ever heard of are human beings. But if you can give an example
of a species destroying its own food supply and habitat, please enlighten me.
Humans on Easter island is the only thing that comes to my mind when thinking of such an example. I'm no expert on Easter island,
however I understand people there did not go extinct, and that there was a small group living there when the island was found
by Europeans. Again, not terribly well informed about that particular bit of history.
When things begin to collapse the grid infrastructure will collapse. Coal factories in China and elsewhere will shut down and
dimming will end. James Hansen estimated that warming may be held back by 50% by dimming, so we can expect warming to shoot up.
http://www.columbia.edu/~jeh1/mailings/2013/20130329_FaustianBargain.pdf
With collapses of civilization their will be no remediation of forest fires. Chemical and Nuclear Dumps will burn as well as
the nuclear power plants that have gone Fukushima.
A very underappreciated study is that of decaying leaves around Chernobyl While horses and other wildlife might now roam around
Chernobyl the implications of leaves not decaying is enormous. "However, there are even more fundamental issues going on in the
environment. According to a new study published in Oecologia, decomposers -- organisms such as microbes, fungi and some types
of insects that drive the process of decay -- have also suffered from the contamination. These creatures are responsible for an
essential component of any ecosystem: recycling organic matter back into the soil. Issues with such a basic-level process, the
authors of the study think, could have compounding effects for the entire ecosystem."
Read more:
http://www.smithsonianmag.com/science-nature/forests-around-chernobyl-arent-decaying-properly-180950075/
To just state that humans wouldn't disappear is nothing more than an assertion, as is stating that they would certainly disappear.
However what faces humans is much more daunting than just the chaos of civilization collapse. Those who survive everything else
will have a hard time reproducing with all that radiation around
https://chernobylguide.com/chernobyl_mutations/
Of course long before civilization collapses the countries of the world may well play out the scenario that Richard Heinberg
describes – Last Man Standing. Sound like politics today?
I posted this as a reply to a comment by GF a few threads back.
I highly recommend the following three ASU Origins Project debates and panel discussions to get a good feel for the big picture.
It might take up a good four hours or so of your time. This isn't something suitable for sound bites. It involves a lot of in
depth cross disciplinary knowledge.
"Why did all this happen? However, when you ask why, you are implying that all this had a cause, that someone or some group of
people are to blame for this damn mess we have gotten ourselves into".
I would like to suggest, respectfully, that this wording is the wrong way around. The essence of the problem is that no one
has been in charge, no one has taken responsibility – and that is hardly changing at all.
The world is teeming with governments, corporations, NGOs, and "leaders" of all kinds. But what are all those leaders, and
their estimable organizations, really trying to do? Some are aiming to earn as much money as possible. Others are trying amass
as much power as possible. Most of their programmes have a lot to do with gaining more money and power – which become interchangeable
at a certain point (as can be seen from a study of the US Congress, for example).
An intelligent alien visitor to our planet would reasonably conclude that, although individual humans are intelligent to various
degrees, the human species as a whole is profoundly unintelligent. It has ample means of diagnosing what has happened, is happening,
and will happen. Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing
about the obvious threats it faces.
Tom, I think my wording was correct, you just did not quote all of my explanation. You wrote:
The essence of the problem is that no one has been in charge, no one has taken responsibility
No one can take responsibility because no one is in charge of the human race. And as far as being "profoundly unintelligent",
I think that is an unfair charge. Having a blind spot in our DNA does not imply that we are unintelligent. The human race has
never been faced with such a dilemma before. Our brains evolved to its present state during our hunter-gatherer days. We are molded
by evolution to do everything possible to survive and reproduce. There is nothing in our DNA that tells us to protect the biosphere
because the lives of our grandchildren depend upon it. So we don't.
What is happening is just human nature. That's all.
Evolution has resulted in all species, including humans, having a biotic potential that is greater than the carrying capacity
of the niches in which they live. Populations are limited by resource limits and predation, not by self restraint or mutual agreement.
It would have been very unusual, perhaps unique in evolutionary history, for humans to have deliberately limited our population,
even though it might have been theoretically possible due to our 'intelligent' ability to foresee our probable future. Despite
Malthus, Limits to Growth and many other warnings, no realistic attempt has been made to remain below carrying capacity.
As you note, a massive die-off is inevitable, the only real question is when. Like The Cunning Linguist, I personally think
it will be whenever people lose confidence in the global monetary system, as in Korowicz's "Trade Off: Financial system supply-chain
cross contagion – a study in global systemic collapse". Once money stops flowing so does the food supply.
What would cause this rejection of the monetary system? I don't follow the argument. Everyone decides at once that money is
no longer a reasonable medium of exchange. Didn't happen during any financial crisis so far, people couldn't access their money
at Banks after the 1929 crash, but this was less of a problem in OECD nations during the GFC.
The ETP nonsense is just that, anyone who knows their thermodynamics knows that theory is full of holes.
No, but we did come close in 2008. All sorts of debt instruments including commercial paper, CDOs (the root of the problem),
many derivatives and letters of credit all froze up. Without prompt dramatic action by the central banks and the US Treasury,
the financial system could have collapsed. Nobody knew who was solvent or insolvent, so the central banks had to backstop every
financial institution. All this over some mortgage securities based on the US housing market.
Now imagine that growth has turned to continuous worldwide economic recession, the inevitable fate of the global market economy
in the face of energy and resource depletion ( it will happen despite the stupidity of the Hill's Group). Unemployment increases
year after year and tax revenues continuously fall. Every kind of debt instrument, from sovereign debt to mortgages, to municipal
and corporate bonds is more and more likely never to be repaid. Defaults are increasing with greater and greater frequency. The
equities of every company become suspect as more and more companies go under.
Sooner or later, a critical mass of people are going to realize that most debts can never be repaid and are therefore worthless
as assets. Since almost all money is created from debt, almost all money becomes worthless.
The only thing that makes money work is confidence in its value. When confidence in money (debt repayment) fails, the monetary
system fails and without a monetary system, the global market fails.
Billions of lives are dependent on that market functioning smoothly every day. When it fails to function, people will die.
I fully expect to lose every financial asset I own at some point, that's why I am preparing to live without money. Unfortunately,
most people in the developed world can't do that, though they should be trying to do so with utmost urgency.
I admit that if there were a concerted international effort to declare a debt jubilee and start all over with a new world currency,
some form of monetary system might continue after the present one collapses, but I really doubt that creditor countries and debtor
countries are going to cooperate with the rapidity and solidarity needed to manage such a transition.
And even though all the productive assets in the world would still continue to exist after a financial collapse, without a
market to mediate their interconnected function, everything would grind to a halt. I don't see an international command economy
taking over either. That would be harder than creating a whole new monetary system.
The global market economy is very complicated and very fragile. I certainly wouldn't trust my family's life to something that
could collapse virtually overnight and neither should you.
I cannot imagine a continuous world wide economic recession, this is a fundamental flaw in your argument.
Well, I can't imagine how the global market economy and industrial civilization are going to have a steady state economy forever
at present levels of production and affluence. Overshoot means eventual retrenchment and die-off.
Up-thread you estimated the carrying capacity of the earth at around 500 million people. You obviously expect to gracefully
reach that level (in 2300!) through birth control while still maintaining current standards of living.
I expect that we will reach that population, or fewer, due to complications from resource-depletion-caused economic failure
(famine, war, pandemic). There simply isn't enough energy available to make the transition you desire without also destroying
the climate, even if there were the political will to do so, which there isn't.
I suggest looking at the history of the last 100 years to decide which future is more probable. Humanity has had the ability
to create a high technology, steady-state civilization with sustainable population levels for over a century, but has failed to
do so. There is still no evidence that we are serious about making the attempt now. I wonder why you can believe that such a thing
will happen at a time when the resources to make it happen will be declining rapidly. Continuous world-wide recession is a certainty
and unless you are very old, you will live to see it.
And as far as your suggestions for prepping go, my family has already got it's lifeboat ready in a rural tropical community.
I've got the productive land, the community and the guns. I don't expect to rely on gold at all. To my mind, the best durable
trade items are ammo, fishing equipment and livestock.
If raising my own food and living without money is necessary, I can do it. If your eco-modernist utopia magically appears,
I won't be disappointed, or regret one iota of the 'unnecessary' preparations I will have made, but I prefer to err on the side
of prudence.
I don't expect to live forever and as I said don't plan ahead for scenarios I believe have a very low probability of occurring.
As fossil fuel resources become scarce they will become more expensive and we will use them more carefully (or efficiently). There
has been no need to do so for the past 100 years as they have been relatively cheap and abundant. There will be enough energy
from Wind, solar, hydro, and perhaps nuclear to make the transition, as fossil fuel becomes expensive these will be produced as
they will become cheaper alternatives. Much of freight traffic can be moved to rail, which can be electrified, moving goods from
rail to factory or store can be done on overhead wires on main roads with EV used for the last few miles.
Also keep in mind that fossil fuels by nature are quite inefficient in producing electricity with about 60% of the energy wasted,
for heating systems compared to heat pumps there is also higher energy use. The transition to non-fossil fuels will result in
about one third the energy use for the same exergy (or work and useful heat) provided.
I make no assumptions about living standards being maintained, perhaps the transition will be very difficult and living standards
in the OECD will decrease while living standards in less developed nations increase. Note that declining population will reduce
resource pressure and realization of resource limits (as will be clear from fossil fuel scarcity) by the majority of citizens
may lead to changes in social behavior.
Also note that we have only been aware of the climate problem for about 38 years (using Charney report in 1979 as the starting
point).
If fossil fuels are very limited (say 1200 Pg C emissions from 1800-2100) then climate change might be less of a problem, but
this will still be adequate for a transition to non-fossil fuels. Even 1000 Pg of total carbon emissions from all anthropogenic
sources (including fossil fuel, cement and land use change) may be adequate for an energy transition, though it will need to begin
in earnest in the next 5 to 10 years, the sooner we begin the easier it will be to accomplish.
"What is happening is just human nature. That's all."
EXACTLY.
I posted a long rant down thread trying to get this across to people who somehow think we are DEFECTIVE because we don't collectively
behave more rationally, hoping to get it across in terms that are intelligible to those of us who have HEARD of evolution, but
never actually studied it for more than an hour or two at the most.
Nonsense, this is just Libertarian propaganda, which is actually a fake religion invented by real estate investors in the fifties
in a political catfight to avoid rent control legislation. It has now widen to some kind of pseudo-Darwinistic hocus pocus, but
it ignores the obvious fact that we became the world's dominant species be collaboration and long term thinking.
We're doomed if we don't get along with each other, and lots of propaganda is pushing you to believe we never have or could,
and never can or will. But that doesn't make it true.
I'd like to question the assertion that no one is in charge of the human race. In "Against the Grain: A Deep History of the Earliest
States" (Yale, 2017), James C. Scott demonstrates fairly convincingly that humans actively avoided adopting grain-based agriculture
because the labor:reward tradeoff was far less satisfactory than what could be obtained through hunting and gathering. The accumulation
of surplus, and presumably the insurance a surplus would provide against yearly fluctuations in food supply, in other words, was
an insufficient motivation for humans to give up hunting and gathering. As Scott documents quite clearly, this refusal to adopt
agriculture as the basis of the human economy persisted for more than 5,000 years in Mesopotamia, and much longer elsewhere.
So what caused the shift? Alas, Scott fails to explore this in any detail. (Just one of the many weaknesses of the book, which
nevertheless manages to make its central argument very well.)
I will speculate that what caused the change was the coming-together of a sufficiently large number (five? a dozen? who knows?)
of individuals who lacked the ability to feel remorse, shame, or compassion, and who were motivated purely by a desire to enrich
and empower themselves. Modern psychology calls these types psychopaths. I suggest that it was these individuals who, likely with
help from others with the related disorder of sadism (see recent research on "the dark tetrad"), were first able to subjugate
(Scott uses the very apposite term "domesticate") human communities and force them to labor on the land to produce a surplus,
which of course then could be appropriated by the psychopaths and their henchmen.
I am not aware of anyone else who has advanced the notion that civilization was founded by psychopaths and sadists. But recent
psychological research (popularized in books such as Babiak and Hare, "Snakes in Suits: When Psychopaths Go to Work") suggest
that psychopaths are four times more commonly represented in upper management than in the population as a whole, so it seems plausible
to me, at least, that the project of civilization and its attendant destruction of the ecosphere has been, from its inception,
forced upon humanity by a small minority.
Phil, thanks for a great post. I have no doubt that psychopaths have had a great influence on civilization. Many great leaders
were no doubt psychopaths. Hitler and Stalin come to mind. However, not all of them were psychopaths. Rosevelt, Washington, Jefferson,
and many other U.S. presidents were not psychopaths. Neither was Churchill or Gandhi.
However, your original sentence was: I'd like to question the assertion that no one is in charge of the human race.
So I kept reading, waiting for you to tell us just who was in charge of the human race. Of course you did not do that.
My short answer to your question would be to ask "Cui bono?" Doubtless not everyone who reaps the most benefit from the biocidal
trajectory of late capitalism is dominated by one or more of the traits of the Dark Tetrad, of course. Some of us might even be
able to argue plausibly that we were unaware of the consequences of our actions. But even though late capitalist society is sufficiently
robust that it continues to work out its internal logic without a lot of direct guidance by the dark few, I doubt it would last
long without their presence among the wealthy and powerful classes. If their interventions on behalf of the killing machine could
be eliminated, my guess is that dismantling the machine would be a much easier project.
Ultimately, it's the ones in positions of power who manifest the traits of the Dark Tetrad whose interventions are critical
to maintaining the status quo. If anyone can be said to rule the earth, it's them.
An intelligent alien visitor to our planet would reasonably conclude that, although individual humans are intelligent to various
degrees, the human species as a whole is profoundly unintelligent. It has ample means of diagnosing what has happened, is happening,
and will happen. Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing
about the obvious threats it faces.
That is my view as well! Though some like E.O. Wilson argue that we have evolved into an eusocial species and can at least
in theory function as a hive or termite mound. Where the collective intelligence emerges and even though the individual ants or
bees are stupid the anthill is an entity unto itself is smart and knows how to defend itself. See also Douglas Hofstader and Daniel
Dennett's book, 'The Mind's I', Chapter 11 titled Prelude Ant Fugue. http://themindi.blogspot.com/2007/02/chapter-11-prelude-ant-fugue.html
Also check out Curtis Marean's talk at the end of Inconvenient Truths – From Love to Extinctions from the link I provided above
from the ASU origins debates. He specifically makes that analogy about aliens, in his talk.
Marean is a professor in the School of Human Evolution and Social Change and the associate director of the Institute of
Human Origins at Arizona State University. He is interested in the relation between climate and environmental change and human
evolution, both for its significance as a force driving past human evolution, and as a challenge to be faced in the near future.
Curtis has focused his career on developing field and laboratory teams and methods that tap the synergy between the disciplines
to bring new insights to old scientific problems. He has spent over 20 years doing fieldwork in Africa, and conducting laboratory
work on the field-collected materials, with the goal of illuminating the final stages of human evolution – how modern humans became
modern.
" Yet, because it has never developed any organ comparable to the individual's conscious brain, it does nothing about the obvious
threats it faces."
Such an organ would be very costly, in terms of depriving humanity of the energy and resources devoted to it, depriving us
of the use of these resources for other purposes.
Evolution doesn't create organs that will be useful in dealing with new circumstances, by plan, ahead of time, except by accident.
It's just a "lucky accident" FOR US TODAY that our own ancestors evolved hands capable of grasping things such as branches ..
which set the stage for us to be able later on to grasp a stone and use it as a hammer or weapon.
No planning is involved. NONE. Various deists who accept the reality of evolution but still believe in higher powers disagree
of course.
I can't prove they are wrong. I don't believe anybody else can. All we can do is demonstrate that they have no evidence that
such higher powers exist.
An absence of evidence is not evidence of absence, lol.
I doubt if "intelligent" aliens are any different than we are – and therefore probably have a very short life expectancy should
they ever get to an industrial age – evolution can only work from one generation to the next and is therefore incompatible with
longer term planning for species longevity.
"It has often been said that, if the human species fails to make a go of it here on the Earth, some other species will take over
the running. In the sense of developing intelligence this is not correct. We have or soon will have, exhausted the necessary physical
prerequisites so far as this planet is concerned. With coal gone, oil gone, high-grade metallic ores gone, no species however
competent can make the long climb from primitive conditions to high-level technology. This is a one-shot affair. If we fail, this
planetary system fails so far as intelligence is concerned. The same will be true of other planetary systems. On each of them
there will be one chance, and one chance only." – Sir Fred Hoyle
Thanks for posting this Hoyle quote Steve. I have read it before, many times. And the truth of it is so obvious. All the things
that have enabled this wonderful abundant life will soon be gone. Then what?
We recycle what we can, we use less of scarce resources as prices rise and we try to find substitutes for resources as they
become scarce. Also population will fall as TFR falls (with a time lag due to population momentum) putting less pressure on resources.
None of this will be easy, and perhaps not possible, hard to predict the future.
Dennis, Hoyle here, is talking about long-term. Recycle or not, we will run out of all fossil fuels and eventually all metals.
However, recyclig will help, in the short term anyway.
No, we cannot really predict the future. All we can do is look at what is happening right now and say: "If this continues ."
And Dennis, it will continue. Human nature may be changed by evolution. But that will take many generations and tremendous
evolutionary pressure. So right now, human nature being what it is, we can predict that collapse is just down the road. Just how
far down the road is what we are trying to figure out right now.
Ron, if we look at the apparent numbers, say of many species, collapse appears already here, just that the shockwave hasn't hit
yet. Remember, if you see an explosion in the distance, it takes awhile to hit.
Yes some things will continue and others will not.
For example fossil fuel output has grown pretty steadily in absolute terms (about 163 million tonnes of oil equivalent per
year from 1981 to 2016) and I expect that will change (it will not continue).
The total fertility ratio has decreased at about 1.38% per year from 1965 to 2015, but I expect this will continue until the
World TFR approaches the high income nation average of about 1.75 (which would be reached in 2040 if the 1965-2015 rate of decrease
continues).
There may be more fossil fuels available than either of us think, but if my medium scenarios are correct there may be enough
fossil fuel to enable a transition to non-fossil fuel, then we just need to deal with other depleting resources.
Note that the fact that fossil fuels have peaked and declined (which should be apparent by 2035 at the latest), may enable
people to realize that this will be true for every scarce resource and perhaps we will plan ahead and recycle, and use resources
more efficiently.
Much of this is a matter of education.
Perhaps the meaning of soon we use differently.
When you say "will soon be gone." Can you define soon in years.
The sun will eventually destroy all life on Earth, but not "soon", as I define it.
Well, perhaps I should not have said "gone". There will always be trace amounts of everything left. And nothing will suddenly
disappear. There will be a decline curve for everything. But let's deal with the one with the least future abundance, oil. I believe
we are at peak oil right, or very near it anyway. The bumpy plateau may last from 5 to 10 years. Then the decline curve will
be much steeper than the ascent.
Dennis, you must be familiar with the phrase "You cannot get blood from a turnip". High prices will not create more oil in the
ground. We will most definitely have higher prices but they will be high because we have reached the peak. So, $100 oil will not
create a higher peak.
Just my guess but I believe the plateau will average less than 82 million bpd.
Is it a trailing 12 month average of between 80 and 82 Mb/d?
I imagine we will break above 82 Mb/d in 2018 if oil prices are over $65/b (Brent in 2016$) for the annual average in 2016.
For the most recent 12 months (EIA data) ending August 2017 we are at 80.93 Mb/d.
In the low price environment since 2015 the trend in World output is an annual increase of 280 kb/d. This rate of increase
is likely to double (at minimum) with oil prices over $80/b, which would bring us to 82 Mb/d by 2019 or 2020, perhaps this will
be as high a output rises, but my guess is that there is a 50% probability that output will continue to rise above this and perhaps
a 25% probability it may reach 85 Mb/d around 2025.
I thought I did that Dennis. I the bumpy plateau will average about 82 million barrels per day or less. There could be spikes
and dips and it will last from 2 to as much as 10 years. But when it heads down, it will do so with a vengeance.
Ehrlich underestimated the Green Revolution and Haber/Bosch factor that was really upping food production at the time.
Ultimately, he will be proven right.
I met Ehrlich personally when he visited Va Tech sometime around 1972. Visiting scholars often have smaller seminar meetings after
making their presentation to the larger U community, which he did. Not many people attended the particular seminar I participated
in , probably less than a couple of dozen. I was taking some ag courses there at the time, and enjoyed a long conversation with
him.
You're dead on. He badly underestimated what we farmers could do, and are still doing, given the necessary industrial support
system that keeps industrial level agriculture humming.
Sooner or later . We are going to have to deal with the Population Bomb. The resources we are devoting to industrial ag aren't
going to last forever. Neither are nature's one time gifts of soil and water so long as we are in overshoot.
I was head over heels in love with a milk and corn fed girl from Ohio and we were about ready to join the Peace Corp or something
along that line, and go someplace and save the people in some backwards community by teaching them how to farm the American way
all day and enjoy each other all night of course.
But one of my crusty and profane old professors took me aside and asked me if I really wanted to go to XXXXX and teach starving
people how to produce twice as much food so that twice as many of them would starve a generation down the road.
HE was right about the increase in production just resulting in more mouths to feed . back then. Since then, things have changed
dramatically . in SOME countries.
There are good reasons to believe that birth rates may fall dramatically within the next decade or two in at least some of
the countries that still have exploding populations. Maybe a few of them will manage to avoid starvation on the grand scale long
enough for their populations to stabilize and decline.
It's too late for falling birth rates to prevent famine on the grand scale in a hell of a lot of places.
First off, do I think it's technically possible that we can feed a population that peaks around nine billion a few decades
down the road?
This answer depends on how well energy supplies and the overall world economy holds up, with some wild cards thrown in relating
to climate, depletion of certain critical resources such as fresh water and minerals such as easily mined phosphate rock, etc.
New technology and the reactions of the people to it will also play a big role.The role played by governments local to national
to international will be critical, and huge, because only governments will have power enough to FORCE some changes that may and
probably will be necessary.
Here are a few examples.
It may be necessary to force well to do people aka the middle classes, to give up eating red meat for the most part, so that
grain ordinarily fed to cattle and hogs can be diverted to human consumption.
(I expect rich people will still be able to get a ribeye or pork chop any time by buying up ration tickets, or buying on the
black market, or paying an exorbitant consumption tax, or any combination of these strategies.)
Fuels, especially motor fuels, may be tightly rationed, so that enough will be available to run farms and food processing and
distribution industries.
Large numbers of people may be paid or coerced into going to work on farms or in community gardens or greenhouses.
A substantial fraction of the resources currently devoted to other needs or wants may have to be diverted to building sewage
treatment infrastructure designed to capture and recycle the nutrients in human sewage.
I could go on all day.
Bottom line, I think that barring bad luck, it is technically possible that we can feed that many people that long, and for
a while afterwards, as the population hopefully starts trending down.
As a practical matter, I don't think there WILL BE food enough for nine billion.
It's more likely in my opinion that some countries are going to come up desperately short of food, and be unable to beg, buy
or steal it from other countries. Some people, and some countries, are likely to resort to taking food, and other resources of
course by force from weaker neighbors .. maybe even "neighbors" on the far side of oceans.
I may be too pessimistic, but I'm one of the regulars here who think that climate change for the worse, much worse, is in the
cards, and I spend a few hours every week reading history. Humans have always been ready to go to war, even without good reasons.
A lot of people in desperate situations are going to see war as their best option, in my opinion, over the next half century.
Maybe my fellow Yankees will be willing to give up their burgers for beans so that kids in some far off country can eat. I'm
not so sure we are compassionate enough to do so on the grand scale.
If total fertility ratios continue to fall (for the World they fell from 5 in 1965 to 2.5 in 2015) about a 1.38% per year,
there may be no catastrophic collapse.
If that average rate should continue for 16 years then World TFR would be at 2 (below replacement level) by 2031. If the rate
of decrease in TFR experienced from 1965 to 2015 continues for 35 years (to 2050), the TFR for the World would be 1.54 in 2050.
Based on UN data from 2015, 65% of the World's population had a weighted average TFR (weighted by population) of 2.05, but
a more sophisticated calculation using estimates of the population of Women of child bearing age I have not done, I simply used
total population to weight the TFR from each nation which implicitly assumes the age structure of each nation is identical which
is clearly false.
Exactly! That's been my point from the very beginning. It is already way too late to fix things.
We have a predicament that must be dealt with, not a problem that can be solved.
Yeah, they shot white people. Can't have that. Nowadays the cops shoot three people on average every day in America. Nobody cares,
life is cheap in America. Gun deaths are the price of freedom. Native Americans run about three times the risk of white folks,
and black folks run about twice the risk.
It is obvious that humans are the major drivers of extinction on the planet. We are in the Sixth Extinction event and we cause
it directly and indirectly through our actions. the why is quite obvious, all species live to propagate and expand to their limits,
our limits are global at this point and so are our effects. I don't see energy as much of a problem as there is plenty of it in
various forms and we can obtain it if we want it. That however means continuing the high tech industrial form of civilization
which we have embarked upon. Can that be made sustainable and much less harmful, even helpful? Of course it can, it's all about
wise choices and thinking before we act instead of just going for profit.
The loss of vertebrates is just horrible but the loss of invertebrates will be the undoing of our farming and food production
and much of the other life that depends upon them. The loss of insect life due to global human generated poisoning of the environment,
especially food production areas, will unwind much of the food production.
As collapse starts, the chaos of riots and crime will rise sharply. All those mentally ill and drug addicted people will no longer
have their chemicals, causing a trigger point of violence and chaotic actions.
However the major fast cause of loss of human life will be disease. People forget how it was just a few generations ago before
antibiotics. Diseases will spread rapidly among the weak and starving, public sanitation will fail causing more disease to spread.
Clean water supplies will become absent, compromised or even purposely wrecked. Hospitals will fail because of both being overrun
and the power will fail plus supplies will fail. Disease will grow and spread among both people and their animals. It could take
less than a generation to drastically reduce the population of the species, with the resulting loss of knowledge, technical ability
and industrial ability the cascade will go further.
In the bad case scenarios much of the infrastructure will burn putting up a cloud of aerosols and GHG's as well as causing a large
toxic pulse to the environment.
But on the other side humans are very inventive and determined to continue the system that supports a huge population. So we
may expand this time forward for quite a while, but only through smart choices and changing how we do things such as agriculture,
industry and technology. Smart choices, not choices just for profit.
Humans need not worry about the Falling EROI, the Falling Carrying Capacity or the degradation of the environment. Those no
longer matter now that BITCOIN is now trading over $11,000.
Technology will solve all our problems and Bitcoin will make us all wealthy once again.
Ron -- The full text of this paper in SCIENCE will cost you 15 bucks but in my opinion, is well worth it; below is the Abstract.
Commenters are welcome to talk about educating women, etc. but its too late for Africa for the balance of this century. I have
personally observed the situation in Central Africa where you can see a school each containing about 1,000 kids located at roughly
one-kilometer intervals along all significant roads -- a lot of kids. Virtually all schools in Africa are run by churches (of
all types), and you can guess what these guys are teaching about birth control: I've asked, and the answer is NOTHING. AFRICANS
LOVE KIDS. And, health care has improved greatly over the past few decades meaning general health has been upgraded and infant
mortality has been reduced greatly. In fact, I would say the bulk of the UN's efforts in Africa are directed towards improving
general health at which they have been successful.
Sorry for the inarticulate ramble but this is a rather personal interest of mine partly because our family is supporting a
young girl in Uganda who will soon become a medical doctor. I had promised to stop commenting on the Blog but the African over
population crisis issue is one dear to my heart.
WORLD POPULATION STABILIZATION UNLIKELY THIS CENTURY
"The United Nations recently released population projections based on data until 2012 and a Bayesian probabilistic methodology.
Analysis of these data reveals that, contrary to previous literature, the world population is unlikely to stop growing this century.
There is an 80% probability that world population, now 7.2 billion people, will increase to between 9.6 billion and 12.3 billion
in 2100. This uncertainty is much smaller than the range from the traditional UN high and low variants. Much of the increase is
expected to happen in Africa, in part due to higher fertility rates and a recent slowdown in the pace of fertility decline. Also,
the ratio of working-age people to older people is likely to decline substantially in all countries, even those that currently
have young populations."
There is an 80% probability that world population, now 7.2 billion people, will increase to between 9.6 billion and 12.3 billion
in 2100.
I think you are about 237,500,000 too low with your estimate of world population. Well, that was as of a few minutes ago. It
was 7,437,500,000 last time I checked. World Population Clock
However, I think the UN is way off on their population projection. I believe that world population will reach 9 billion by
2050, just about a billion and a half above where it is now. However, I doubt it will ever go much above that. The UN, of course,
is predicting no catastrophes. After all, that's not their job.
The UN systematically underestimates the fall in birth rate associated with better education for women and their access to health
care and contraceptives.
My work suggests that the world runs out of more land that can be put under grain by 2035. This is mainly Brazil and Russia. Just
about every country in Africa is importing grain now. Therefore most of their population growth has to be fed on imported grain.
Most of the costs in producing grain are in energy so a rising oil price will have a leveraged effect on food prices.
Glad you decided to comment. Yes Africa is indeed a problem as far as population growth. With education and improved access to health care and internet
access on smart phones, African women may become empowered and decide to control their fertility using modern birth control. The
transition to lower fertility can happen in a generation.
As an anecdotal example, my family and my wife's averaged a Total fertility ratio (TFR) of 5.5 for the two families (close
to the average sub-Saharan TFR), the next generation of 11 children in total had a total of 6 children for a TFR of about 1.1.
Unscientific and likely too optimistic, but not that different from what occurred in the upper middle income nations of the
World (population about 2.4 billion in 2015) where TFR decreased from 4.93 in 1975 to 1.93 in 2000 a period of 25 years.
It is the low income nations that have lagged in reducing TFR, economic development is a key ingredient to getting population
under control. Easier to say than to accomplish.
Dennis – I guess this site is rightfully energy-centric but what's your view on the other limits that are showing up like potable
water, top soil, phosphorus?
I think recycling human waste might help with top soil and phosphorus, though a Farmer would know more than me. I think recycling
water from sewers can also be done and eventually the expansion of solar power may allow desalination of sea water.
In short, I think there are solutions to these issues, especially as we move to more sustainability (less beef production would
help) and a peak in population as education levels improve would also help.
Some nations such as Iran have made amazing progress on their TFR, from 1990 to 2005 (15 years) the TFR fell from 5.62 to 1.97
and by 2015 it had fallen to 1.75.
African nations should find out what happened in Iran over that period and import some of the lessons learned.
Note that there are many examples of a rapid demographic transition, another is South Korea where total fertility ratio (TFR)
decreased from 5.63 to 1.60 from 1965 to 1990 and in 2015 had fallen to 1.26.
Using South Korea as an example of increased sustainability (the point here?) is not helping your case much Dennis. As their TFR
decreased, their consumption grew exponentially. Just since 1991:
Seems their per-capita energy use has skyrocketed in the last 60 years or so, and they now import most of their energy sources.
They became 9th in CO2 emissions as of 2005. Looks like increased standards-of-living and declining birth rates are not much of
a solution for reducing planetary impacts.
I agree. The point was that population growth can be reduced.
We need two things to happen, reduced use of fossil fuels (which peak fossil fuels will take care of by 2030) and reduced population
(which peak population in 2050 to 2070 will take care of).
Figure below is from page 1153 of the article linked above.
Note that in 2015 the TFR for South Korea was 1.26, if average life expectancy does not rise above 90 years and World TFR falls
to 1.25 by 2100, then World Population falls from 8 billion to 2 billion in about 100 years. This reduces the use of resources
and the pressure on other species.
Transition to wind and solar with pumped hydro, wind gas, and thermal storage backup can reduce carbon emissions and reforestation
as population falls will help to absorb some of the carbon in the atmosphere. Carbon capture and storage of burned biofuels and
cement that absorbs CO2 would be other options for reducing atmospheric CO2.
As fossil fuel peaks prices will rise and the transition to non-fossil fuel will speed up.
The process will be messy, but we are likely to muddle through as there is not much alternative (or not a better one as I see
it.)
I think a common factor in all countries seeing large falls in birth rates is that they are preceded by large falls in death rates.
This typically takes a couple of generations, which is one of the biggest causes of population overshoot. In Iran it was maybe
a bit faster but not much – from above 20 per 1000 in the 50s and 12 in the eighties to around 4 now.
Regarding fertilizers, when you realize that there was a "human bones" market in the 19th century, and that for instance England
"emptied" the catacombs in Sicily for that, or took back the soldiers bones from Waterloo, you get a sense of the urgency for
fertilizer without phosphorus or natural gas based ones.
See for instance below :
"England is robbing all other countries of their fertility. Already in her eagerness for bones, she has turned up the battlefields
of Leipsic, and Waterloo, and of Crimea; already from the catacombs of Sicily she has carried away skeletons of many successive
generations. Annually she removes from the shores of other countries to her own the manorial equivalent of three million and a
half of men Like a vampire she hangs from the neck of Europe." https://livinghistoryfarm.org/farminginthe40s/crops_04.html
Or below : https://medium.com/study-of-history/the-bones-of-waterloo-a3beb35254a3
I had a better link regarding the bones from Sicily catacombs (many due to the plague epidemia I think), but cannot find it
back.
And this page above (from "Justus Von Liebig : the chemical gatekeeper" p 178) is also interesting on other aspects, suggesting
Liebig would today address energy ..
The churches which promote childbearing must be destroyed. They are basically the enemies of humanity. Since they're losing in
North America, Europe, South America, and most of Asia, they are targeting Africa.
(And *targeting* is the correct word -- they are deliberately sending missionaries to spread their sick, twisted doctrines
and spending lots of money to do so.)
If you read my story below, Food for the Poor is a religious group. In Jamaica I believe it is affiliated with
Missionaries for the Poor , an international Catholic organisation.
So while they are doing yeoman service in providing shelter for poor folks, they are doing diddly squat to encourage poor folks
to stop creating more mouths to feed and bodies to clothe and shelter. Isn't that just dandy?
Incidentally here's a recent newspaper article from my neck of the woods:
Youth unemployment in the Caribbean is said to be the highest in the world, and crime, partly fuelled by this high rate
of joblessness, is a major obstacle to economic growth in the region, according to Christine Lagarde, managing director of the
International Monetary Fund (IMF).
The IMF boss, who addressed the sixth High Level Caribbean Forum, held yesterday at The Jamaica Pegasus hotel in Kingston,
said that crime imposed several economic costs such as public spending on security and the criminal justice system, as well as
private spending on security. She also highlighted social costs arising from the loss of income owing to victimisation and incarceration.
Can anybody spot my comment? Hint: I used a pseudonym that should be familiar with everybody here.
Can we be so unpolitical correct to call for "A Pope onA Rope?"
Someone must draw a line in the sand- or should we all be under a religious spell?
Or do we want to break that spell?
This was discussed just this morning on NYC NPR, concerning homelessness and the housing provided for low income people. The gist
of it was that although there were programs to help the people with food and housing, very little was really being done to solve
the problems.
"This uncertainty is much smaller than the range from the traditional UN high and low variants. Much of the increase is expected
to happen in Africa, in part due to higher fertility rates and a recent slowdown in the pace of fertility decline. Also, the ratio
of working-age people to older people is likely to decline substantially in all countries, even those that currently have young
populations."
I have the impression that many of us myself included have an outdated and still colonialist view of African societies. I think
changes happening in many parts of Africa will surprise us and technologically leapfrog over much of the built infrastructure
of the OECD countries. I have seen it happen first hand in previously underprivileged parts of Brazil.
How we're using drones to deliver blood and save lives
Keller Rinaudo wants everyone on earth to have access to basic health care, no matter how hard it is to reach them. With
his start-up Zipline, he has created the world's first drone delivery system to operate at national scale, transporting blood
and plasma to remote clinics in East Africa with a fleet of electric autonomous aircraft. Find out how Rinaudo and his team are
working to transform health care logistics throughout the world -- and inspiring the next generation of engineers along the way.
BTW, I have a serious question! Does this kind of technology make the population crisis in Africa better or worse? Would like
to hear some thoughts on the matter.
It is uncanny how this lead post has come about just when I have been thinking about this subject recently. I am currently very
depressed, to the point I suspect it may be clouding my better judgment with respect to various matters. This depression is partly
caused by my views of the future of my little island in particular and the world in general. Let me try and illustrate how my
thoughts have been brought into focus recently.
I travel around the city I live in, passing through all the different types of communities from time to time. We have pockets
of extreme wealth as evidenced by palatial homes with swimming pools, tennis courts and all the creature comforts you would expect
in the home of a wealthy first world resident. Leaving these pockets of extreme wealth, one doesn't have to drive for more than
five minutes to reach pockets of extreme poverty, people who are so poor, they cannot pay rent and cannot envision ever buying
a plot of land or a house, so they build structures on any piece of land that they can get away with. This type of activity extends
across the island and there is no area that does not experience informal settlement (aka squatting). There is a political aspect
to this, in that in an effort to garner the votes of the large voting block that poor people make up succesive governments have
not discouraged squatting, to the point of encouraging it. See
yesterday's cartoon in one of the local rags
for a satirical perspective of the situation but, I digress.
I try to avoid too much contact with people outside my socioeconomic and educational class because it inevitably leads me to
being depressed but, sometimes I end up in that exact situation. This past Monday night was one such case and it was my observations
from Monday night that got me thinking about Peak Oil and carrying capacity and overshoot. I was invited to visit a gathering
and told to bring drinks and that they were going to cook so, I decided not to eat a meal before leaving the city. It was a forty
five minute drive, including a drive through late evening heavy traffic heading westward out of the city, past a big highway construction
project being carried out by a Chinese (honest to God, from China) construction firm that has been active in the island for a
number of years. On arriving at my destination I was told by my host that the gathering was at another house less than half a
mile away.
This particular house was one of
39 houses made
possible by the efforts of a couple from Grand Junction, Colorado (with pics) along with
the local branch of
Food For The Poor . I estimate that, these "houses" measure about
13ft. by 15 ft. inside and are supposed to include a kitchen, a bathroom and two bedrooms. The sister of my host was the recipient
of this house, being qualified for the charity as a result of being unemployed with four children, one of whom was either newborn
or yet to be born at the time the house was handed over to her. She was not yet thirty years old when her last child was born.
Does anybody see where I am going with this yet?
Back to the gathering. On arriving at the house my host informed that no food had been cooked. By this time I was hungry and
asked where was the nearest cook-shop where I could purchase a meal. I traveled with my host to Old Harbour, the nearest town
apart from Spanish Town. I can only describe Spanish Town as an overpopulated, crime infested, thug controlled mess, that becomes
a ghost town by midnight even though it is surprisingly busy by day. I asked my host if I should buy a meal for them also and
they declined but, by the time we got back to the house, they declared that they were hungry and needed to get something to cook
to go with the rice they had. So off we went to try and find a local shop that had what they wanted and was still open. First
one was a 24 hour joint, built using an old cargo truck body but it didn't have all they wanted so it was off to another one that
we managed to catch just as they were closing. We came away with a small packet of "veggie chunks" and some cooking oil. The little
propane stove had been fired up and the rice was almost done so in less than fifteen minutes a meal of rice and veggie chunks
was being served to four or five adults, one of whom had an infant, less than a year old, sharing the meal with her.
So let me weave together how all of this ties in with the subject of the lead post. First the "house" was only possible through
the generosity of citizens of a first world, developed country. The materials that made the house (lumber corrugated, galvanized
steel) are the products of extractive industries that rely heavily of FF, petroleum in particular. The soft drinks and alcohol
that I brought to the gathering were manufactured, distributed and retailed in a system, heavily dependent on external energy.
My vehicle runs of diesel. The rice for the meal I ate and the one at the house was imported from outside the island, again produced
and delivered with lots of help from petroleum. The chicken I ate was locally produced with imported grain, a product of industrial
scale agriculture, probably in the USA. Thankfully many of the chicken farmers are involved in a project that started with
15 kW systems at about 40 chicken
farms and seems to be expanding. The veggie chunks are a meat substitute protein made from soy meal, again a product of industrial
scale agriculture.
The cooking oil was probably one of soy, palm, canola, corn or coconut oil, produced at an industrial scale and imported to
the island. Jamaica was once an exporter of coconut oil before the industry was decimated by a disease called lethal yellowing
back in the early 70s. Virtually the entire population of coconut palms on the island was wiped out by this disease and even though
efforts have been made to resuscitate the industry using disease resistant varieties, more than forty years on, the manufacture
of coconut oil in Jamaica is a tiny cottage industry.
So here we have five or adults, two males and three females, one of which had four children with the other two having one each.
There were other people at the gathering but as far as I am aware only two had jobs, the brother of my host who left before the
meal and the woman with the infant who has a part time job selling lotto tickets. All of these people are living on the edge,
heavily dependent on a system that is in danger of collapse for their very survival and they are far from alone. there are thousands
of them if not hundreds of thousands on this island alone.
If for whatever reason industrial scale agriculture fails, the songbirds are going to be eaten out of the trees. I used to
dissect rats in my sixth form (12 and 13th grade) biology classes and there ain't much meat on them but, if we get hungry enough
maybe we'll turn on the rats. Without affordable propane, every tree and shrub will end up as firewood. This is the reason why
I have an almost obsessive focus on renewable energy, solar in particular. It is my hope that the deployment of renewable energy
can stay ahead of FF depletion long enough for global civilization to transition away from FF. It is my hope that our civilization,
seeing itself on a real time, renewable energy budget, will begin to recognize the fragility of our situation. I have to ask Ron
and others to forgive me as I continue to bring attention to the hopeful stories. It is the only way I can keep myself from sliding
into depression and despair. It is the only way I can cope.
The Green Revolution in the 60s was supposed to solve all our problems, and it solved a lot of them, especially in Europe and
Asia. It works well when you have a lot of water and farm intensively, but is destructive in semi-arid conditions and when used
in extensive agriculture, like the American Midwest.
After the Green Revolution, Asia boomed and Africa fell behind, prompting racist theories. Geography and climate are more likely
explanations. In India, for example, the more arid north did less well than the wetter south. The Chinese were the first to realize
the problem, and started a new generation of re-greening projects to boost agricultural production.
Meanwhile bad farming practices continues to rapidly degrade wide stretches of North America and South America. I was reading
recently about a county in SD that lost 19 inches (not feet!) of topsoil between 1960 and 2014. Many places in America simply
abandoned farming, like New England and Appalachia. People blame red dirt and the crick risin' in Appalachia and glacial rocks
in New England, but that wasn't a problem before soil degradation set in.
The Green Revolution focused on genetics and chemistry, which makes sense if applied correctly. Development economists were
puzzled that Kenyan farmers were uninterested in high yield seeds, but the explanation as simple: They need a regular water supply,
not better seeds. A lot of places in the world get 3-4 weeks of rain a years, and good seeds don't solve this problem. Pumping
the water out of the aquifier isn't the solution either, just ask anyone in Antelope Valley CA, a former grassland turned desert
by the alfalfa farmers.
My mother warned my to watch out for flash floods when camping in the desert. It took me decades to understand why flash floods
are a particular problem in the desert: More or less by definition, deserts are places where there are flash floods. The flash
floods are both cause and symptom of soil degradation. Deserts aren't places where there isn't enough water -- they are places
where rainwater runs off the surface instead of seeping into the soil. Degraded soil can't absorb water fast enough, surface runoff
degrades soil.
The problem with industrial agriculture is that it treats the great outdoors like a hydroponic farm -- it ignores soil ecology
and just assumes the hydrology will work itself out.
A more modern approach starts with water and soil. It's spreading rapidly in Africa, for example with the sand dams in Kenya,
the terracing in Ethiopia and Kenya, and the various planting pit (like zai and demi-lunes) in the Sahel and agroforestry (planting
trees in fields, or crops in orchards) in a lot of arid places.
It's true that mankind is pushing the limits of what the current ecosystem can carry, but it's also true that the ecosystem
could be much bigger than it currently is.
Meanwhile bad farming practices continues to rapidly degrade wide stretches of North America and South America. I was reading
recently about a county in SD that lost 19 feet of topsoil between 1960 and 2014.
There is a serious problem with that statement. No place on earth has 19 feet of topsoil, not even 19 inches over an entire
county.
Topsoil Wikipedia Topsoil is the upper, outermost layer of soil, usually the top 2 inches (5.1 cm) to 8 inches (20 cm). It has
the highest concentration of organic matter and microorganisms and is where most of the Earth's biological soil activity occurs.
EDIT: Here's a shot from Kalkriese, Germany where they are digging out a Roman-German battlefield. The artifacts are all found
at or just below the border between the black topsoil and the red dirt underneath it -- that was 7 BC
In the Kalkriese area, the farmers used sod planting ("Plaggendüngung"), i.e. they removed the top soil on large areas to improve
the soil on their fields.
Therefore, Kalkriese is an example how NOT to do it.
I think the thickness of the topsoil in the area speaks for itself.
My point is that as Ron points out, there is a limited carrying capacity for the planet, but I don't really think we are there
yet, because there are relatively simple methods available to make huge areas of the Earth's surface. Of course, even if it's
possible, it isn't clear it will happen.
there are relatively simple methods available to make huge areas of the Earth's surface.
That seems to be an incomplete sentence. Make huge areas of the Earth's surface what ? Desert? We sure can do that.
We are doing more of that every year. Scrubland? We are doing that also by cutting down the forest and trying to make farmland
out of it. After a few years the land will row nothing of value. That's happening in the Amazon right now.
There is nothing we can do to increase human habitual area without reducing the wild habitual area. That is what my post is
all about. We are destroying every wild thing by destroying their habitat, by taking their habitat for ourselves.
Your last paragraph is not correct. Much of the world is desert, and that desert could be much more productive than it is,
given the right agriculture methods.
Whether that will actually happen is another question of course.
That very same first world country that donated the materials has plenty of homeless and large amounts of poor. It also has large
amounts of empty buildings and huge amounts of food waste, yet they do not take care of their own. That is even a sadder situation
as people freeze to death, starve, and die of simple preventable health problems in one of the richest countries in the world.
Basic needs are not met and the governing bodies are constantly fighting to reduce the paltry benefits that are given. It's a
country full of hate for their own people and hate back at the haters.
There's no inherent evolutionary advantage to caring for people you have no relation to. That's the real reason why all of these
'safety net' programs you describe are hated in the general sense and under attack as time marches on.
Now Tony, we all know the public programs are under attack because of the greed and selfishness of people who already have too
much money and stuff.
We all know it is the greed and the overconsumption that is causing the destruction of our environment and possibly the whole
human race. That is a huge evolutionary disadvantage.
Helping, sharing and cooperating is the advantage. The selfish and greedy are like ticks sucking the world dry for their own personal
benefit.
I study the evolution of human ultra-sociality and the role of culture in enabling it. I am especially interested in how
humans evolved the capacity to cooperate with millions of genetically unrelated individuals, and how this links to the origins
of moral sentiments, prosocial behavior, norms, and large-scale warfare. To address these issues, I combine formal modeling of
the evolution of cooperation with fieldwork among the Turkana. The Turkana are an egalitarian pastoral society in East Africa
who cooperate, including in costly inter-ethnic raids, with hundreds of other Turkana who are not kin nor close friends. Through
systematic empirical studies in this unique ethnographic context, my research project here aims to provide a detailed understanding
of the mechanisms underpinning cooperation and moral origins.
I haven't read your good article just yet (although it is doubtful any of it will surprise me or add to what is already more
or less understood), but just to mention that I recently listened to a
podcast from Chris Martenson's site, Peak Prosperity, featuring William Rees from the University of BC
Two things about the podcast that stood out was that William was in fine form (articulate, clear, concise, passionate, 'deathly'
serious, etc.); and the second was his mention of possibly fundamentally changing the natural system of Atlantic cod (fisheries),
so that they may never recover. Not everything can simply reverse, and quickly enough, if they can, such as, say, with the depletion
of the ozone layer, and when it involves all kinds of living systems– much, and the intricacies/complex interconnections, of which
we are blissfully unaware of, despite some of our arrogant pretensions to the contrary (such as with regard to the avocation of
most if not all forms of geoengineering)– it is very serious.
What concerns me also is how some people, such as on this site, can ostensibly claim a required greenwashed BAU from out of
one side of their mouths, while on the other side, express grave concerns for the ecosystem. We cannot have it both ways.
To me, much greenwashed BAU is just swapping out different forms of rampant resource extraction, pollution and inequability
for other forms.
The system, along with its 'power-politics', is still intact.
IOW, there is no real change.
Loren, assuming that's you, I am certain that radical decline, if not outright collapse, is already well underway, despite
the obstinate mindlessness of some people. Just because some don't see something or want to see something doesn't mean it is not
there.
My simple recommendation, especially for certain people WRT this deathwish-for-a-culture is to let go/
get out (and in the process, learn things like permaculture and
local community resilience, and how our ancestors did some of it). Your comforts are much of an illusion (and predicated, for
example, on natural draw-down).
I knew you'd show up sooner or later and since you've always been critical of my support for renewables and EVs, let's bite.
"To me, much greenwashed BAU is just swapping out different forms of rampant resource extraction, pollution and inequability
for other forms.
The system, along with its 'power-politics', is still intact.
IOW, there is no real change."
Are you saying that "there is no real change" going from corporate owned, centrally located, large scale, FF fired generators
to small scale, individually or community owned, distributed renewable generators? If so, that's not what the FF and corporate
generator class in Australia thinks. They have captured the Australian federal government and are fighting renewables as hard
as they can.
Are you saying "there is no real change" going from ICE powered vehicles to EVs that, are perfectly happy to suck electrons
from any source including renewable sources individually owned or owned by a co-op of which the vehicle owner is invested? That's
not an opinion shared by the Koch brothers who are spending millions of dollars to try and paint EVs in a bad light in the eyes
of the public.
Surely you realize that an individual with solar on their roof and an EV is giving a big middle finger to the status quo, including
FF corporations and utilities who will no longer be able to feed at that individual's trough. In case you don't realize it, that
is a very big disruption of "system, along with its 'power-politics'" and no, in case you haven't been listening, "The system,
along with its 'power-politics'", will not be "still intact."
Now if you read my fairly long narrative further up, I hope the point I am trying to make does not escape you. That point is
that there are millions, no lets make that billions of poor poorly educated folks who depend on things like industrial agriculture
and the current status quo for the basic necessities of life, food, clothing and shelter. If the status quo collapses they are
dead, let me say that again, dead! I'm all for dismantling the status quo and replacing it with something that is much kinder
to all life on this pale blue dot we call home but, I shudder at the thought of millions or billions of human beings starving
to death, just as I shudder at what we are doing to the biosphere. Can you see why I'm depressed right now?
There is no real change if we are still relying on the monstrosity that is the crony-capitalist plutarchy/government-big-biz
symbiosis, such as for solar panels, etc. and/or what some misleadingly refer to as 'renewable'.
If you are in the biz– and I think you wrote hereon that you indeed are– then some might suggest, maybe even me, that you are,
say, 'soft-shilling' and/or rationalizing for your product using POB as your platform, and maybe problematically skewing the narrative
a little more towards a dystopic system that we should be getting the hell out of, while making preparations to do so, like learning
how to do the basics in a local, resilient context so that we do not need industrial agro. The longer we rely on industrial anything–
and as if it's somehow morally/ethically neutral– the harder/faster we will likely fall, maybe along something of a seneca curve.
We cannot eat solar panels and electricity is not a necessity, except to for the brainwashed and the brainwashers.
Attempting to play on people's heartstrings, such as about poor people in so-called undeveloped locales to sell a product they
don't need and that would risk locking them– and others– into a certain ('Western') lifestyle, in some contexts, approaches contemptible,
by the way.
You should already know how sociogeopoliticultural ideologies like Westernisation is foisted upon the global masses through
physical, cultural, mental and intellectual colonialism, with the result often being wars and deaths to people and traditional
ways of life. Just consider the Middle East right now. In the name of what? Oil and oligarchy?
You've said it yourself hereon that you have some kind of slavery in your family, yes? Well, many people are still slaves anyway,
if with coats of white paint. Libya was in the news recently about that– slavery– incidentally.
If we want to do solar panels etc. the right, ethical ways, we need sea changes, such as that avoid slavery and privilege-by-gun,
but I highly doubt we will manage them in time, and suspect that we are already long past that time.
I am not yet in the business of doing anything with solar PV so, as of right now I have no product that I am shilling for, soft
or hard. I am in a business connected to entertainment if you must know. The entertainment business can by no means be classified
as non-discretionary and recent technology has allowed far more people to compete with me so it will be necessary to get out of
that at some point. How about viewing this as something I see as as worthwhile pursuit for the future of mankind, given my skill
set and thus my advocating it as a worthwhile area for me to pursue a vocation in? I am not only advocating for solar PV because
it's a field I can participate in but, because I think it can contribute a great deal to reductions in carbon emissions among
other noble aspirations.
Are you going to start suggesting that I want to get into the business of manufacturing and selling EVs just because I am suggesting
that large scale EV adoption would be a good thing? I ain't no Elon Musk if that's what your thinking. Now, if the shit hits the
fan and motor fuels became really unobtainium, I might take a stab at an EV conversion business, a la Jack Rickard but, right
now even Jack seems disillusioned with that pursuit, having posted only one new video since the middle of August and only two
new blog posts since the last week of July. At any rate the necessary preconditions for such a business to be successful in an
age of factory made EVs, do not exist.
I am with OFM on the point that some of your ideas for agriculture cannot adequately serve the needs of a rapidly growing population
of 7.5 billion people. My dad who was a descendant of rebel runaway slaves, known in Jamaica as
Maroons , was into agriculture and left me and my
surviving sister a six acre homestead when he died. I can tell you agriculture ain't a walk in the park. It's damned hard work
and carries all sorts of risks not faced by other pursuits (droughts, thieves, diseases pests etc.) . You seem to have some romantic
view of agriculture that I do not share.
As for locking people in to a western lifestyle, that doesn't apply to Jamaica. The western lifestyle came with colonization
and slavery. Do you think that people outside of the developed word should forgo electricity, computers, cell phones, the internet
and other modern conveniences?
Despite all of that, the Caribbean has been bucking western culture for centuries. Trinidad and Tobago has their carnival and
it's music and Jamaica has had as big an impact on western culture with our music (reggae and ska) as western culture has had
on us. Even this past weekend, a dark skinned Jamaican woman sporting a huge afro, placed third in the Miss Universe pageant.
The girl that won was from South Africa and could pass for Caucasian whether she is or not and I didn't see any other black women
in the contest sporting an afro hairstyle (not that I watched it).
When it comes to some things, that train has already left the station. No point in romanticizing about what could have been.
I'd rather focus on what small steps we can take to improve things in the here and now, while moving us to a more sustainable
future. I will probably remain depressed until the new year. Probably more to with not having any immediate family around for
"the festive season" than anything else. Maybe the new year will bring some good news on the renewable/sustainability front! That
would cheer me up!
Islandboy–
After being in Central America for quite a while, and that heavy Catholic noose around everyones neck, it was so liberating to
get out to the islands.
Lets Party Mon!
Now you're talking! We in the Caribbean know how to party! I wouldn't be surprised if we woke up the morning after the collapse
and said, "Collapse? What collapse? We were too busy partying to notice"
Having said that, Trinidad is heavily influenced by catholicism, their carnival being associated with the catholic observance
of Lent. I don't see any evidence of the Trinis (as they are known in the islands) taking the admonitions of their various religious
leaders too seriously. Hell! I've never been to Trinidad carnival but, I hear it's one wild party!
On the other hand, Trinidad should have some long term concerns about what they are going to do after Oil and Gas production
fall below consumption and they have to start importing hydrocarbons. What if either prices are too high or supplies are limited?
What if prices collapse due to lack of demand as Seba suggests will happen after EVS and solar begin to dominate transport and
electricity generation?
Way too early to say. The article dated October 4, 2017 says this:
"The feasibility study will evaluate the viability of installing the wind farm, which would represent one of the first offshore
wind installations in Jamaica and the greater Caribbean region."
I expect the feasibility study is going to take months and I would expect them to do some detailed analysis of the offshore
wind resource in the process. It is good that this study is being done so soon after two devastating hurricanes have hit the region.
Should keep hurricanes very much in the picture.
Looking at some Caribbean buoy data it looks like wind would be a good source of power for the islands.
Beside the wind, the island has about 54 billion kwh/day of sunlight falling on it. That is more than ten times the total energy
production per year for the island. Energy is not a problem, how the energy is generated is the problem.
Cover less than 0.1 percent of the island with solar panels and make up the difference with wind power.
I have done some numbers in terms of what it would take to power the island entirely with renewables, mostly solar. Not impossible
but the technocrats, one of whom is a college classmate of mine, cannot wrap their head around 100% renewable electricity!
Incidentally, I came across a video presentation on Youtube (with a really annoying backing track) that at about
3 minutes in contains the following text:
"Seba's forecasts are predicated on the assumption that the cost of generating and storing electricity will continue to fall
– to the point where just about all generation will be solar by 2030. But electricity production would only have to increase by
18 percent in the US to cope with a complete switch to EVs, he said"
That 18% figure squares quite nicely with some back of the envelope calculations I have done.
I've made good friends with a couple of guys from Jamaica who have friends and family here that have managed to get their permanent
paperwork taken care of.
Unfortunately it doesn't look as if they will ever be able to get permanent resident status. They're older guys, and about
as mellow and fun people to be around as I have ever met. They come up for an extended family visit every fall, which just HAPPENS
to be the time of year local farmers need a lot of extra help, lol.
As soon as I'm finished with family duties, I'm going down to spend a month with them.
Will be spending some money on food and utilities and a few new nice things for them of course, because while they're friends,
they're not well off.
We cannot eat solar panels and electricity is not a necessity, except to for the brainwashed and the brainwashers.
Than do the world a favor and unplug yourself from all sources of electricity! At least we here won't have to read your fantasies!
BTW there are plenty of people who understand that the current capitalist system is not the answer, read Kate Raeworth's, Donut
Economics for starters.
Modern humans could no more live without electricity in the 21st century than they could live without food and water. Try living
without refrigeration in any city in the world. You would cause massive starvation in a few days. Try providing medical care to
an urban population without electricity.
You have to be completely delusional to suggest that electricity is not a necessity!
That's all irrelevant to my point which still stands– especially when the system is destroying our planet. We have lived with
electricity for a relative split second of our existence as a species on this planet.
Besides, if we're not treating the planet properly, do we even deserve electricity and its conveniences? I think not.
And then there are assorted uses for electricity, some being more questionable as priorities than others.
Electric car versus fridge?
FWIW, I have personally lived without refrigeration for months in a major city, at least at home after shopping at the grocery
store LOL, but also in the country– more hard-core.
If your local community especially is growing and processing its own food, then it's easy.
There's pickling, drying, fermenting, spicing/salting, alcohol, etc., and natural cool-storage, such as root cellars and simple
cooling-by-evaporation systems.
There's also 'eating as you go'. Other animals do that, and I've never heard of an animal that needs a fridge or electricity,
have you? Maybe your cat at home, but even Meow Mix can last outside the fridge, yes?
But some of us have to actually help make the changes, such as to the narrative, and limit the cling to some kinds of BAU narratives
and fantasies.
Do it for Mother Earth, Fred. Or me. Or Harvey Weinstein or whoever/whatever motivates you. Coral.
Obviously, we can't just turn off the lights and fridges overnight, but there are plenty of ways to manage, maintain and consume
food that don't require a fridge. So if we can't just turn off the lights and fridges overnight, maybe we should start talking
more about how to live without them and/or with greater resilience.
But even if the juice stays on forevermore, some juiceless skills and knowledge are great to learn, have and apply.
BTW, I just watched this documentary on rare earths– the apparently
highly-polluting stuff that's supposed to help power, until they run out, all these new and relatively-useless electrical gadgets
now and in the future to get off of those other pollutants.
but just to mention that I recently listened to a podcast from Chris Martenson's site, Peak Prosperity, featuring William Rees
from the University of BC
Highly recommended.
And I'm not a fan of some of Martenson's guests.
I came across the podcast indirectly via another site, but do sometimes run into Chris' material. He seems good at interviewing
and is easy to follow in videos.
This post is going to be a gold mine for me, because it relates directly to so much of what I'm working on for publication in
book form if I ever manage to finish it to my satisfaction. Here's hoping it attracts over a thousand comments, lol! I'm especially
interested in comments that dispute my own, because those are the ones enable me to understand my own blind spots.
Now so far, nobody has said anything about what I will refer to as the SECOND key fact that one must understand to understand
evolution. Hoyle missed the first one altogether, making a total fool of himself, although he was a brilliant scientist, one of
the top men in HIS field, his mistake being that he failed to understand that evolution BUILDS on it's PAST " accomplishments".
The second key fact I am hereby pointing out is that while evolution creates new life forms that reproduce to fill any and
all available niches, there's no GUIDANCE involved, no overall PLAN, no GOD in charge, if you wish to put it that way.
Evolution is characterized in large part by parsimony, by being conservative in the use of resources. Animals that don't have
use for claws don't have claws like tigers, lol, and animals that don't eat grass out in the fields don't have digestive systems
like COWS. Evolution creates organisms that are "good at" taking advantage of whatever resources are available, WITHOUT REGARD
ANY FUTURE CONSEQUENCES because there is NO LONG TERM PLAN. Behavioral BRAKES that aren't needed don't evolve, lol, and countless
things that would be extremely useful, like eyes in the back of our heads, which would keep us from being attacked from the rear,
don't often evolve either, because .. well because of more factors than I have any inclination to cover at this minute. Half of
the SHORT answer is that eyes in the back of our heads would cost us more in terms of sacrificing something else than they would
gain for us. The other half of the SHORT answer is that since pure chance plays such a big role . the odds are astronomically
high against it happening anyway.
This a comment/ rant, not a BOOK. The BOOK is in the works, and will be available free to member of this forum who may want
to read it and point out shortcomings in it before I publish it, most likely for free on the net. I'm not so arrogant as to think
anybody will PAY for it, lol.
Dead ends, blind alleys, and death, at the individual level, and or at the species level, means absolutely NOTHING to "Mother
Nature" because she is not sentient, she's not moral, she's not even ALIVE in the usual sense. She's just an artifact, a tool,
that we naked apes have invented in our efforts to understand reality.
What I'm getting at, since She IS parsimonious, is that She does not provide brakes where none are needed.
Sometimes things do evolve that prove to be useful under new circumstances, but when this happens, it's just a lucky accident
for the creature involved. If for instance a creature evolves a forelimb capable of grasping a branch, so that it can climb better,
lol, later on the ability to GRASP something MAY come in very handy, because it sets the stage for that creature being able to
grasp a stone which can be used as a tool or weapon. This does NOT mean the creature WILL eventually discover the use of tools
and weapons. It DOES mean the probability of such evolution is vastly enhanced. There's NO PLANNING INVOLVED . except in the minds
of deists who accept the reality of evolution while also retaining the concept of a God or gods or some guiding force of some
sort.
IF the need arises for BRAKES, well then, die off, or even extinction, takes care of the problem. If a given species eats only
a given plant, and that plant goes extinct, Mother Nature does not grieve for either the plant, nor the species that feeds exclusively
upon it,which very likely also goes extinct. She doesn't even consciously keep score, as indifferently as a hired bookkeeper keeps
books for a client he has never met and will never meet. She does however inadvertently create a RECORD of historical "scores"
, which we can read. It's the fossil record.
It's rather amusing that professional biologists go around talking about human stupidity as if there is something inherently
WRONG with people, as if we are collectively DEFECTIVE. We are what we are because we are final product ( up until today ) of
our own evolutionary history. We're as " good " or "well designed "as we are evolved to be, like all other living creatures.
Engineers build in safety margins, and add features that may be useful, under certain circumstances, when they design things,
because they DO work with and from PRECONCEIVED PLANS. Mother Nature doesn't make plans, she just deals and redeals the cards,
over and over, and will continue to do so until all life on this planet perishes which won't be until the sun expands sufficiently
to destroy the last vestiges of life on it.
We are NOT something different from the rest of biological creation, we do NOT operate under different rules, we aren't on
some sort of fucking pedestal, separate from the rest of the biosphere. THAT whole crock of shit sort of thinking is one of the
cornerstones of kinds of the thinking that some of the regulars here like to make fun of, such as religion, nationalism, racism,
etc.
A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like consciousness has his head up
his ass. NO. NO. No.
We have succeeded,basically for no other reason that accident in the last analysis, to the point we compete mostly with each
other, rather than other species.
The evolved PROGRAMS hard wired into our brains that drive our behavior DO NOT include much in the way of built in brakes,
because BRAKES HAVE COSTS. If we over populate, if we use up critical resources on which we depend for our survival, and perish,
there's NOBODY who gives a shit.. other than some of us who are aware of the fact that we ARE in overshoot. Mother Nature is INCAPABLE
of giving a shit.
The whole fucking idea that we are SOMETHING SPECIAL was probably originated by the first priests and their allies. It's an
idea that has little to do with any discussion based on real SCIENCE within the context of understanding our own overshoot .
Now none of this rant should be interpreted as indicating I don't know and understand that humans are tribal creatures, that
we are social creatures, and that we survive and thrive because we DO live and work cooperatively. The thing is , we survive and
thrive as COMPETING communities, tribes, and nations, rather than as a SINGLE global community. Wolf packs compete. Prides of
lions compete. Bands of chimps compete. We humans compete with each other. Talking as if we are DEFECTIVE because we behave this
way is a waste of time.
When the shit hits the fan hard enough and fast enough, we do sometimes cooperate with our former enemies, at least temporarily.Old
enemies can be new allies.
It's at least THEORETICALLY POSSIBLE that we can cooperate as a SPECIES, at the global level, in order to solve some or maybe
even most of the problems associated with our own overshoot. We have cooperated before at levels up to and including the global
level. In WWII, most of the developed countries of the world were involved as partisans on one or the other side. We cooperate
to some extent at the global level now, in economic terms, and in terms of our physical security, as for instance in arms control
agreements.
But just because it's theoretically possible that we can cooperate at the species level globally doesn't mean it's going to
happen. I don't think there's any real likelihood of it happening, although alliances consisting of the various major economic
and military powers do exist and will continue to exist and some of these alliances will prove to be critically important in determining
the course of future history.
"A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like consciousness has his head up his
ass. NO. NO. No." Do you mean E. O. Wilson has his head up his ass?
In his newly published The Social Conquest of the Earth -- the 27th book from this two-time winner of the Pulitzer Prize
-- Wilson argues the nest is central to understanding the ecological dominance not only of ants, but of human beings, too. Ants
rule the microhabitats they occupy, consigning other insects and small animals to life at the margins; humans own the macroworld,
Wilson says, which we have transformed so radically and rapidly that we now qualify as a kind of geological force. How did we
and the ants gain our superpowers? By being super-cooperators, groupies of the group, willing to set aside our small, selfish
desires and I-minded drive to join forces and seize opportunity as a self-sacrificing, hive-minded tribe. There are plenty of
social animals in the world, animals that benefit by living in groups of greater or lesser cohesiveness. Very few species, however,
have made the leap from merely social to eusocial, "eu-" meaning true. To qualify as eusocial, in Wilson's definition, animals
must live in multigenerational communities, practice division of labor and behave altruistically, ready to sacrifice "at least
some of their personal interests to that of the group." It's tough to be a eusocialist. Wouldn't you rather just grab, gulp and
go? Yet the payoffs of sustained cooperation can be huge. Eusociality, Wilson writes, "was one of the major innovations in the
history of life," comparable to the conquest of land by aquatic animals, or the invention of wings or flowers. Eusociality, he
argues, "created superorganisms, the next level of biological complexity above that of organisms." The spur to that exalted state,
he says, was always a patch of prized real estate, a focal point luring group members back each day and pulling them closer together
until finally they called it home. "All animal species that have achieved eusociality, without exception, at first built nests
that they defended from enemies," Wilson writes. An anthill. A beehive. A crackling campfire around which the cave kids could
play, the cave elders stay and the buffalo strips blacken all day. Trespassers, of course, would be stoned on sight.
As is evident by some of the comments on this thread, while the hive may be able to display collective intelligence, the individual
ants can still be pretty dumb! Do check out the link I posted to 'The Mind's I' chapter 11 Prelude to Ant Fugue.
The idea is still sound! If humans have not yet evolved to the point that they are able to include the whole globe as a part of
their hive Well, that's a separate issue and may indeed mean that we are collectively fucked! Because not enough of us have reached
that particular point in our evolution.
As George Carlin once said: "The Planet is fine, it's the people that are fucked"
An idea is sound only if it can be implemented, otherwise it is just a bunch of sugars turned to heat and in this case trees turned
to wastepaper.
My point was not that E.O. Wilson is wrong, but that he would not have presented such a point if he did not think it possible
or even probable. It was OFM that was the one saying it was not possible, which is a rather narrow view of humanity. Humanity
cooperates on large scale right now.
Looking at the update of Limits to Growth I get the feeling that the flattening out of some of the parameters (energy, industrial
output) may be misinterpreted. The same thing would happen if an energy and industrial transistion were occurring.
The key question is what does a transistion look like initially?
A field to a forest transistion looks a lot like field, then some bushes with a few small trees, then eventually almost all
trees. Originally the trees are hardly there at all and don't seem to be having much effect as their leaves smoother a lot of
plant life around them and they take up more and more of the solar energy that used to reach the ground. It starts small then
spreads to complete takeover.
An energy and industrial transistion goes hand in hand with a social/governmental transistion. It looks small and scattered
at first but steadily fills in even despite the resistance of the legacy systems. Key to the fast takeover is the weakening of
the previous growth and it's demise leaving easy space for the takeover.
For example, I have a kitchen ceiling light fixture. It has three bulb positions. I had replaced the three 60 watt incandescent
bulbs years ago with a 100 watt CFL (running actual 25 watts).
Last night the CFL started flickering so I pulled it and it had burn marks on the base of the bulb. The CFL bulb has now been
replaced by two 60 watt equivalent LED bulbs which together use only 16 watts and provide more light than the CFL.
Also the LED bulbs may never have to be replaced in my lifetime. 180 watts to 16 watts and no more replacement, that is high ground
transistion! Now $4 replaces over $500 on the user end and eliminates large amounts of pollution.
The power cost and economics have overshadowed the legacy instrument in an inexorable way. The death of an individual instrument
allowed the replacement by a superior one.
I think that effect has been happening all across the world in many areas of energy use and industrial process for decades. This
effect may have been interpreted as a reduction in energy and industrial output while it is really mostly a transistion in process.
So how do we get a fast takeover? Strand and remove the old legacy assets and systems plus do not replace dead systems with
the same system. The action is harsh, but that is how it is done.
I will know we are on the right course when I see those large glass buildings being stripped of their components, their glass
re-used, their steel reused and recycled, their wiring removed as they are removed. Why and how do we put up R2 buildings that
soak up huge amounts of energy for heating and cooling? They need to go now. Passenger vehicles that get less than 150 pMPG need
to go now and no passenger vehicle that gets below 400 pMPG should be built ever again. There are many inefficient, harmful and
problematical systems that could be removed and changed.
Trash the old ways now and insert better ways, ones that work longer with less harm. Make new systems that heal soil and nature
in general. The collapse is occurring now, take advantage of it by putting in superior systems that allow E.O. Wilson's Half-Earth
idea to flourish, not finish.
Personally, until a lot of the old stupid harmful systems are put aside we can't see clearly if a fast collapse is at hand
or not. Maybe if we just stop following bad and stupid we can ease off our consumption of the planet and reverse some of the major
problems we face. There may be no real need to go through a grand scale collapse and huge loss of species.
""It was OFM that was the one saying it was not possible, which is a rather narrow view of humanity. "
BULLSHIT.
Here's what I actually said in a comment upthread. It was posted a day previous to your comment, lol.
"It's at least THEORETICALLY POSSIBLE that we can cooperate as a SPECIES, at the global level, in order to solve some or maybe
even most of the problems associated with our own overshoot. We have cooperated before at levels up to and including the global
level. In WWII, most of the developed countries of the world were involved as partisans on one or the other side. We cooperate
to some extent at the global level now, in economic terms, and in terms of our physical security, as for instance in arms control
agreements. "
Perhaps I ought to lecture you a little on the meaning of the word EXPECT within the context I used it, which I think is obvious
enough to anybody who WANTS to understand. In this context, expect means (or not ) that cooperation will happen spontaneously,
or with only moderate incentives.
I don't think global level cooperation will happen, IF it happens, until the incentives to cooperate are OBVIOUS and overwhelming,
when it comes to really changing the way we do things. I don't think any competent biologist will argue with this position, speaking
in the broadest terms, painting with the so called broad brush.
We do after all have a few thousand years of known history that indicates that we are as apt to fight as cooperate, lol.
When the shit hits the fan hard enough, id it also hits slowly enough for us wake up , I EXPECT ( PREDICT ) that WE WILL COOPERATE
on the grand scale, at least up to the nation state level, in most nations, and frequently at the international level, and MAYBE
even at the global level.
I must admit I'm a little behind in reading E O Wilson, who is as capable a scientist as any in his field, and head and shoulders
above almost all the rest, in my opinion. He's also one of the best writers ever in his field, probably THE best writer in biology
in my personal opinion.
But so far as a I know, and I have read all of his older books, unless I'm mistaken, he would basically agree with me, because
I am, as I interpret his work, AGREEING WITH HIM.
There's a HELL OF DIFFERENCE between EXPECTING people to cooperate on the grand scale, and believing they are capable of doing
so.I believe we are capable of cooperating on the grand scale, given sufficient motivation to do so, and have said so already
in this thread. I don't EXPECT us to cooperate with people we see as outsiders and enemies, but given new circumstances, new conditions,
new problems, new fears, we can and sometimes do find new common ground, and make friends with former enemies.
I'm ready to bet the farm that I'm WITH E O WILSON, rather than AGAINST HIM.
Nuance matters.
To me at least, lol.
A couple of days back in another thread, you lectured me, telling me to THINK GLOBALLY, as if to imply I 'm unaware that most
of the people in the world are still desperately poor. I have never said that most of humanity is well off. I have never IMPLIED
that most of humanity is well off.
What I DID say, is that FOR WHAT IT'S WORTH, quoting myself, that there is a sound case to be made for the trickle down effect,
and that a substantial number of even very poor people humanity HAVE ALREADY benefited greatly from economic and technological
progress.
Hundreds of millions of desperately poor people are benefiting today from progress made in fields ranging from public health
to industrial agriculture to renewable energy , etc. Hundreds of millions of very poor people are making relatively fast economic
progress by some measures, for instance in the rate at which they are able to make use of at least some electricity, even if it's
only a single light powered by a battery recharged by a small solar panel.
The less you have, the greater the marginal value of anything new you are able to get.
Just one rechargeable light is worth a LOT to a person who has no other option than perhaps a candle or kerosene lamp or a
home made torch.
Incidentally I can remember being told by my grand parents that back when they were kids, it wasn't at all usual to literally
light a ( corn ) shuck to provide some light so as to make a quick run to the outdoor privy or take care of some other after dark
chore. They had kerosene, but it was considered wasteful to use it unnecessarily.
Things can and do get better sometimes, even on the global scale, lol.
E.O. Wilson would not have written the book Half Earth if he did not think that people could and would cooperate on a grand scale.
I don't think he was just blowing wind. Your statement was a direct affront to him and many others.
I have not read his latest book yet " The Social Conquest of Earth" which relates to this subject.
" Your statement was a direct affront to him and many others."
Bullshit again. You're deliberately twisting my words into something I didn't say.
You brought up his name, and you have put words in his mouth, as well as mine, in a manner of speaking.
I will say it again. There's a DIFFERENCE between EXPECTING or PREDICTING cooperation between large and diverse groups of people
EXCEPT when circumstances leave the various groups little or no choice, and they have COME TO UNDERSTAND that the only real option
they have IS to cooperate.
ONCE various competing groups or societies come to understand that they have little or nothing in the way of viable choice
other than cooperation, well then I PREDICT OR EXPECT them to cooperate.
I believe my position is entirely consistent with E O Wilson's thinking and beliefs, speaking in general terms.
If you want to play word games,I'm ready, because it's TRAINING as well as entertainment for me. I need all the practice I
can get when it comes to making my arguments clear before I go out on my own with my own book and web site .. EVENTUALLY.
The audience here is sophisticated enough to understand nuance, lol.
You ask for opposing opinions then you get nasty and personal and show no sign of wanting to learn or discuss anything, just shove
your ideas. Since you apparently are not capable of dealing with opinions or thoughts other than your own, I will cease interacting
with you. Plus you are always yelling in your comments, very rude.
Here is what you actually said ""A biologist who talks about humanity as if humanity SHOULD BE EXPECTED to display a hive like
consciousness has his head up his ass. NO. NO. No."
I want opposing opinions , and I'm always on the lookout for new facts. I do NOT want my words twisted into pretzels so that they
appear to mean something diametrically opposite to what I actually said, by taking them out of context.
I think you are more interested in finding personal fault with me than you are in actually discussing facts, possibilities,
and ideas.
I use a lot of caps, but seldom more than five or six words at a time, because caps are a lot quicker for me than taking time
to use italics or bold.
I'm not presenting a paper for publication here, lol. I'm just participating in a conversation. If you want to take offense,
feel free, it's still somewhat of a free country.
" Your statement was a direct affront to him and many others."
Bullshit again. You're deliberately twisting my words into something I didn't say.
You brought up Wilson , and you have put words in his mouth, as well as mine, in a manner of speaking.
I will say it again.
There's a DIFFERENCE between EXPECTING or PREDICTING cooperation between large and diverse groups of people under ordinary
circumstances versus under new and compelling circumstances.
IF AND WHEN circumstances leave various groups little or no choice other than cooperation, , and they have COME TO UNDERSTAND
that the only real option they have IS cooperation , well then .
I expect or predict that such groups WILL cooperate, sometimes, maybe even almost every time.
I believe my position is entirely consistent with E O Wilson's thinking and beliefs, speaking in general terms.
The audience here is sophisticated enough to understand nuance, lol.
Well, MOST of the audience here , anyway.
Understanding is tough for those who prefer NOT to understand.
This is pretty much nonsense. People are very different than other animals because they get ideas in their head and follow them.
That's the secret to our success -- we change our game plan all the time instead of being stuck in a single niche like most species.
It's always hard to guess which ideas are going to work out, but societies choose -- so to speak -- whether to destroy themselves
or not.
America has been choosing self destruction for several decades, and the eschatology our wacky creed planted in our minds seems
very attractive, especially to old farts -- the alternative is to try something different.
Many societies have shown themselves to be resilient an sustainable. America has a colonial mentality that doesn't support
that, even when it's obvious. My grandmother was born in Kansas and when she talked about the Dust Bowl she would shake her head
and say, "I always told them not to cut down those cottonwoods -- they were the only thing keeping the farm from being blown away".
Now they're depleting the aquifier in Kansas by planting maize for diesel. So the desert will continue to spread.
But the Japanese aren't like that at all. They've been planting trees for centuries. They don't have much choice, because the
hills aren't very stable there. They'll get through.
And the Sahel Zone, the world's worst and poorest place, is changing as well. They've started replanting. A lot of them will
survive.
Crazy hippies like this may do better than you think. Civilizations come and go, the species won't die for a while.
Root hog or die, as my father used to say. You can't imagine a world without Walmart, but it isn't the end of the world.
Another thought -- The Tasmanians. They were probably the wolrd's most primitive culture. They were cut off from the very old
Australian mainland after the Ice Ages, and seems to have even forgotten fishhooks one of mankind's oldest technologies. But they
had their ways, and they survived.
thank you Ron for this posting. I am in complete agreement with you on this.
nothing more important. it is a bizarre and tragic spectacle to behold, and to participate in.
what a poor use of such an incredible biosphere.
Many people from the looks of it here try to deal with the crises we face as a species and civilization the same way as myself.
I spend much time here in front of modern electronic gadgetry. It's useful in distracting the mind from a diseased dying world
along with a way to pass the time while waiting on my Lord and Savior to return to cleanse all the wickedness Satan has saturated
humans with. Yes this is truly a sick sad world we live in now. Matthew 13:38-40.
It's useful in distracting the mind from a diseased dying world along with a way to pass the time while waiting on my Lord
and Savior to return to cleanse all the wickedness Satan has saturated humans with.
You are likely to be waiting a very long time. Religious stupidity makes the problem worse, never better.
1. Any quotes of someone's book on collapse and how collapse happens based on history . . . all worthless. There is no history.
2) There is no history because there has never been 7 billion before. There has never been collapse with nuclear weapons involved
before. There has never been collapse with the maggot and fly total in the atmosphere from 6.5 billion corpses before.
3) Chinese oil consumption lags US per capita and they are striving mightily to correct that, as they should. When per capita
consumption growth becomes difficult, they HAVE to take oil from someone else. That someone else's population starts to starve
for lack of food production or transport. They object to the theft of "their" oil. War. They must. War or starve.
4) Consider Japan. Consider the relations between China and Japan. Japan cries out . . . you're taking this oil to improve
your country's standard of living and you are starving our country to death to do this. How can you find morality in this? China
will have no trouble whatsoever contriving morality in this.
5) Simply that. When there isn't enough to go around, no one will quietly accept inadequate amounts. Nor should they. All other
stuff about global warming and debt and sacrificing lifestyle for someone else is just so much bizarre delusion. You got too little
to live, you kill whoever took it.
'Black Earth: The Holocaust as History and Warning' by Timothy Snyder is quite good. If you're not into the minutia of east European
history circa WW2 then just cut to the conclusion. 'Bloodlands: Europe Between Hitler and Stalin' is good too.
Almost anyone, I suppose, can call himself or herself an anarchist, if he or she believed that the society could be managed
without the state. And by the state -- I don't mean the absence of any institutions, the absence of any form of social organisation
-- the state really refers to a professional apparatus of people who are set aside to manage society, to preëmpt the control of
society from the people. So that would include the military, judges, politicians, representatives who are paid for the express
purpose of legislating, and then an executive body that is also set aside from society. So anarchists generally believe that,
whether as groups or individuals, people should directly run society.
-Murray Bookchin
Anarchism is founded on the observation that since few men are wise enough to rule themselves, even fewer are wise enough
to rule others.
-Edward Abbey
Let's assume for a moment a World without any governments at all.
Let's also assume there at 7.4 billion people in the World.
I just don't see how that works. The World is not a perfect place, but it is far from clear that a World without any government(s)
would be an improvement.
When some one comes up with a plan that is appealing to the majority of citizens in some nation, perhaps such a form of non-government
will be instituted.
Collapse Dynamics: Initial Conditions, Media Manipulation and The Short-Circuiting of Consensuality
Hi Dennis,
I see anarchy, if it is understood correctly, as potentially having government if it is optional/consensual/legitimate.
For example, if I want you to represent me until which time as I say otherwise , then you can if you wish
.
I also see anarchy as potentially 'hierarchical', or at least pseudohierarchical, if it is chosen freely.
So, for example, if I want you to tie me to a bed and have your way with me as your 'slave' if you wish ,
until which time as I or you opt out , then that is still ok. (fans face with hand)
It is about consensuality and a large part of the whole idea behind media manipulation of the masses is to 'short-circuit'
consensuality– IOW, to make the masses consent to what they might not have normally consented to.
At the moment, I do not consent, for example, to what we call 'government' to take my money, or 'skim my labor', such as in
the form of taxation. It is an 'initial condition' (think the butterfly effect) that can cascade, and seems to have cascaded,
over time into dangerous, 'hurricane', territory. I mention this angle also to hopefully appeal to your apparent understanding
and appreciation of physics and physical dynamics over time.
Right now, there is software available, ostensibly to support government governing consensually, called
Loomio . There are likely others as well.
Your assertion does not necessarily stand to reason and is just an assertion without support. I could flip/modify it this way:
If taxes were consensual, then people would likely feel a greater sense of belonging to their locales and how they are shaped
and so give them freely and as they see fit.
Consensual tax collection could be viewed as part of the modus operandi of actual government, rather than as a kind of
large-scale centralized armed coercive mob, such that it appears.
See also here . I'll paraphrase
some of it for you (again)
" if economics is to become an instrument of freedom and prosperity instead of an instrument of statism, then there are
certain fundamental fallacies that must be continually challenged and discredited. Chief among these is the persistent non
sequitur from externality to coercion -- that is, the bogus conclusion that coercion is a proper means to solve problems involving
economic externalities.
One of the most blatant examples of this non sequitur occurs in discussions of the 'free rider problem' and the alleged
solution of government provision of so-called 'public goods'. This is a particularly insidious economic theory that bears a
great deal of the responsibility of derailing economics into the ditch of statism." ~
Ben O'Neill
A system that works for many more people, rather than a handful of elites, would appear to be a system that truly echoes what
the people actually want, rather than what they are forced to.
On the matter of carrying capacity, I have a minor quibble with some of the ideas presented here. Let me start by outlining my
understanding of what is being said about carrying capacity.
"So for many millions of years, the terrestrial vertebrate biomass remained at about two hundred million tons, give or take"
So that lays a base line for carrying capacity but, unnatural selection, the selection of higher output varieties of crops
or genetic engineering of crops would have raised the carrying capacity and I suggest, that increased carrying capacity would
be sustainable indefinitely. The use of fertilizer, primarily organic types, if done in a sustainable way and by that I mean,
returning animal and human waste streams to the soil, would also result in a more or less permanent increase in carrying capacity.
So far, I've outlined two methods that humans could have used to positively influence carrying capacity more or less permanently.
The big change in carrying capacity comes with the FF age and the industrial revolution, first with the advent of mechanization
and then with the Haber-Bosch process. A quick Internet search to refresh my memory of what the Haber-Bosch process entails, reveals
that it is the chemical synthesis of ammonia (NH3) from nitrogen and hydrogen. Herein lies the basis for the connection between
the petroleum industry and fertilizer industries and by extension carrying capacity. However, if we have enough excess energy
we can easily get nitrogen from the atmosphere and hydrogen from water though I'm not sure how well that would work at a industrial
scale at a global level.
So between the manufacture of fertilizers and the use of diesel powered machinery in farming, we have seen a huge increase
in the ability to produce food. Ostensibly this ability can only last as long as the NG used to obtain hydrogen at an industrial
scale and the petroleum to fuel the farm machines. However, the University of Minnesota has a Wind to Nitrogen
Fertilizer project that aims to use excess wind power to manufacture ammonia so, it may well be that, if sufficient amounts
of renewable energy can be harnessed, the manufacture of nitrogen fertilizers could be extended way beyond the end of the petroleum
age.
That is the basis for my minor quibble. Obviously, fossil hydrocarbons have allowed us to increase the carrying capacity of
the planet in a way that can only last as long as the finite hydrocarbon reserves do. Might it not be the case that, a transition
to renewable energy on a massive scale would allow a more or less sustainable increase in the carrying capacity of the planet
above and beyond the 200 million tons of terrestrial vertebrate biomass that existed 10,000 years ago? I would argue that, from
the standpoint of energy, renewable energy has the potential to yield a far more sustainable increase in carrying capacity than
fossil energy has. What the level of that carrying capacity is would require a fair amount of academic research.
I fully concede that there are all sorts of other resource limits that will negatively affect carrying capacity. Maybe I'm
just bargaining.
Islandboy, there is no doubt that the carrying capacity of human beings can be increased somewhat by the use of organic
fertilizers. But it is chemical fertilizers that have very dramatically and very temporally increased our carrying capacity.
Of course when the carrying capacity of humans is increased the carrying capacity of wild species, especially megafauna is
decreased.
That is one thing that just drives me up the wall. Everyone is concerned about the welfare of human beings. No one seems to
give a rats ass about the welfare of all other species.
Hi Ron, I hope your doing well. Thank you for a great post. It sure explains why Costco was so F'n busy last weekend.
"No one seems to give a rats ass about the welfare of all other species"
That's just not all true. I'm pretty sure GoneFishing cares about his dog a lot more than myself.
"the selection of higher output varieties of crops or genetic engineering of crops would have raised the carrying capacity
and I suggest, that increased carrying capacity would be sustainable indefinitely"
I think you could include the knowledge of harvesting water and controlled irrigation also increasing sustainable capacity
Humans evolved to become the equivalent of RNA in cells. We use tools and information, primarily in technological cells and use
them with ATP equivalent fossil fuels to do work. Like organisms or cells in the ecosystem, human organizations seek to grow,
profit and take market share – to further their existence.
The human brain is primarily a reward seeking organ as is most neural tissue in the ecosystem. Since humans are dissipative
structures, not seeking rewards is the greatest threat they face. Most other threats, short of being chased by a pack of wild
dogs, can be watered down and ignored since the brain must concentrate on getting resources and energy. Even though a human can
think about things, it does not substitute for being greedy and gathering as much wealth as possible and reproducing prolifically.
We're selected for doing that.
The natural greed which evolved because of natural scarcity in the ecosystem, did not wane as we evolved into a technological
setting. There is no limit on our desires to be "rich" because we perceive associated advantages in survival and reproduction.
Civilization is an explosive cancer that emerged from the ecosystem to consume and destroy the ecological body. Humans are the
RNA that can't stop reproducing and stimulate the growth of new cells and distribution systems until the entire consumable earth
is covered and the ecosystem dies or at least becomes much less complex.
In many wealthy nations total fertility has fallen below the replacement level, in fact for about half the World's population
TFR is below replacement (dividing things up by nation state). Generally it is higher income nations where this is the case and
correlation between education level and total fertility is very strong.
These facts and the trend in Global education levels for women don't square very well with your theory.
As Ron has suggested, homo sapiens sapiens is not your average species.
Even the education occurs in schools, the cellular equivalent of the nucleolus. Instead of pursuing the rewards of children, women
are pursuing "wealth" created by the technological system. I'm not sure which one is most damaging.
The natural greed which evolved because of natural scarcity in the ecosystem, did not wane as we evolved into a technological
setting. There is no limit on our desires to be "rich" because we perceive associated advantages in survival and reproduction.
And out of which orifice did you pull all that BS out of?! Let me guess, you are of the Neo-Liberal Economist school of though,
right? Try cracking a few tomes on human evolution and anthropology instead of failed 20th century memes about the nature of man
and rationality of markets.
You don't see any greed? None in the ecosystem? Why is everyone trying to accumulate more wealth? Why do all organisms struggle
to eat and reproduce to the maximum? Look in the cell, it's all happened before, but mostly with sunshine at the base.
Why do we worship the likes of Warren Buffett?
Cooperation exists, but only to enhance competition against a similarly cooperating group.
Blowing Up the Territory Trump's biggest break came from the Democratic party. Booking Hillary Clinton as the good guy in this match was a colossal
error, especially when the most improbable thing in all of politics was waiting in the wings: a legit babyface.
Bernie Sanders came off like Paddington Bear next to Hillary Clinton. Bernie was a nice old Jewish man from Vermont who legitimately
meant well, and he got a real pop from his fans. He drew like crazy. Hell, even I sent him money, the first time I have ever contributed
to a political campaign -- every time he got on TV and started shooting about marijuana smokers going to jail while Wall Street
hoodlums were walking, I Paypaled him five bucks. I had waited my whole life to hear a politician cut a promo like that -- I think
he eventually ended up with a Jackson from me, straight from my personal pot budget.
As a face, Clinton just had too much baggage, a lot of it achingly familiar: A partner known for predatory sexual behavior,
wicked family ties to big business, an entitled daughter, a family charity fund loaded with foreign money, lies, flip flops. .
. . What was good for the goose might have been tolerable for the gander, but all she really got was a cheap pop, and if she had
any moral high ground at all, she lost it when former Democratic operative Donna Brazile, while working for CNN, leaked potential
questions to the Clinton campaign before a debate with Sanders. That was cheating, behavior clearly unbecoming to a babyface.
But more important was that she failed to deliver on the only thing that matters: she didn't draw. For a while it looked like
there might be a "Dusty finish," a gimmick ending (named for Dusty Rhodes, the legendary wrestler and booker who invented it)
in which one wrestler is declared the winner, only to have the decision reversed on a technicality -- for instance, interference
from Russian hackers. This was a finish guaranteed to drive crowds insane, but Hillary couldn't put it over.
So who's the best worker? If we are using the Hulk Hogan index, it is indisputably Donald Trump. He won the election. He's
the president.
But when it all comes tumbling down, be ready for a fresh wave of Trump-brand kayfabe -- transparently flawed in both conception
and execution, except that he actually believes it. He'll ride off in his helicopter claiming that Washington was too dirty to
clean up, that he tried but he couldn't drain the swamp, that they wouldn't accept the One Honest Man. He'll blame obstructionist
Democrats for staging a witch hunt, and the Republicans for not having the guts to back him. In wrestling parlance this is called
"blowing up the territory."
Pundits will argue: How much of it was real, how much reality show? How much was a put-on, how much of it was a guy legit
skating at the edges of madness and dementia? Was it a work, a shoot, or a worked shoot? The only thing we can be sure of is that
the secular writers will get it wrong. And, existentially, at least, Trump will still wear spandex when he mows the lawn. He can't
help himself, that's just the kind of jerk he is.
Organisms evolved a bias to maximize fitness by maximizing power. With greater power, there is greater opportunity to allocate
energy to reproduction and survival, and therefore, an organism that captures and utilizes more energy than another organism in
a population will have a fitness advantage.
Individual organisms cooperate to form social groups and generate more power. Differential power generation and accumulation result
in a hierarchical group structure.
"Politics" is power used by social organisms to control others. Not only are human groups never alone, they cannot control their
neighbors' behavior. Each group must confront the real possibility that its neighbors will grow its numbers and attempt to take
resources from them. Therefore, the best political tactic for groups to survive in such a milieu is not to live in ecological
balance with slow growth, but to grow rapidly and be able to fend off and take resources from others[5].
The inevitable "overshoot" eventually leads to decreasing power attainable for the group with lower-ranking members suffering
first. Low-rank members will form subgroups and coalitions to demand a greater share of power from higher-ranking individuals
who will resist by forming their own coalitions to maintain it. Meanwhile, social conflict will intensify as available power continues
to fall.
Eventually, members of the weakest group (high or low rank) are forced to "disperse."[6] Those members of the weak group who do
not disperse are killed,[7] enslaved, or in modern times imprisoned. By most estimates, 10 to 20 percent of all the people who
lived in Stone-Age societies died at the hands of other humans.[8] The process of overshoot, followed by forced dispersal, may
be seen as a sort of repetitive pumping action -- a collective behavioral loop -- that drove humans into every inhabitable niche
of our planet.
Here is a synopsis of the behavioral loop described above:
Step 1. Individuals and groups evolved a bias to maximize fitness by maximizing power, which requires over-reproduction and/or
over-consumption of natural resources (overshoot), whenever systemic constraints allow it. Differential power generation and accumulation
result in a hierarchical group structure.
Step 2. Energy is always limited, and overshoot eventually leads to decreasing power available to some members of the group, with
lower-ranking members suffering first.
Step 3. Diminishing power availability creates divisive subgroups within the original group. Low-rank members will form subgroups
and coalitions to demand a greater share of power from higher-ranking individuals, who will resist by forming their own coalitions
to maintain power.
Step 4. Violent social strife eventually occurs among subgroups who demand a greater share of the remaining power.
Step 5. The weakest subgroups (high or low rank) are either forced to disperse to a new territory, are killed, enslaved, or imprisoned.
Step 6. Go back to step 1.
The above loop was repeated countless thousands of times during the millions of years that we were evolving[9]. This behavior
is inherent in the architecture of our minds -- is entrained in our biological material -- and will be repeated until we go extinct.
Carrying capacity will decline[10] with each future iteration of the overshoot loop, and this will cause human numbers to decline
until they reach levels not seen since the Pleistocene. http://www.dieoff.org
"There's no indication that we're going to do anything philosophically different," said Jim Blackburn, an environmental law
professor at Rice University. "With a few modifications, it's business as usual."
As Houston rebuilds from the most expensive hurricane in U.S. history, local officials plan to dredge waterways, build new
reservoirs and a coastal barrier to protect against storms that experts say are growing in intensity due to a warming climate.
They have asked Washington for $61 billion to pay for it all.
Apart from our own actions there may be random events that can take us out. There's a report in the Times today of research into
super-eruptions. The Toba explosion, 75,000 years ago, almost took out Homo sapiens. The latest research indicates such events
(maybe not quite as bad) happen on average every 17,000 years instead of every few hundred thousand as previously thought, and
we are currently in an unusually long hiatus from these.
The biggest explosion since "civilization" started was probably Krakatoa in the 6th century, which has been proposed as the
beggining of the dark ages in Europe and the end of a couple of other civilizations, though there's a bit of controversy about
that theory, but it was much milder than an explosion from one of the major calderas would be.
Continuing from above (this mirrors my own experience in Central Africa where families currently seem to be averaging about four
kids each):
POPULATION GROWTH IN AFRICA: GRASPING THE SCALE OF THE CHALLENGE
"In the past year (2016) the population of the African continent grew by 30 million. By the year 2050, annual increases will
exceed 42 million people per year and total population will have doubled to 2.4 billion, according to the UN. This comes to 3.5
million more people per month, or 80 additional people per minute since the early 1990s, family planning programmes in Africa
have not had the same attention (as Asia and Latin America), RESULTING IN SLOW, SOMETIMES NEGLIGIBLE, FERTILITY DECLINES. IN A
HANDFUL OF COUNTRIES, PREVIOUS DECLINES HAVE STALLED ALTOGETHER AND ARE REVERSING."
WHY HAVE FOUR CHILDREN WHEN YOU COULD HAVE SEVEN? FAMILY PLANNING IN NIGER
" but Hamani is unusual in that three babies are enough for her. Despite having the highest fertility rate in the world, women
and men alike in Niger say they want more children than they actually have – women want an average of nine, while men say they
want 11."
Sounds like an explosion that will lead to implosion and migration. Families used to be fairly large in the European and American
regions not long ago. Some still are. There are 27.7 million people in Uganda. But by 2025 the population will almost double to 56 million, close to that of Britain,
which has a similar land mass. In 44 years its population will have grown by nearly as much as China's.
"You look at these numbers and think 'that's impossible'," said Carl Haub, senior demographer at the US-based Population Reference
Bureau, whose latest global projections show Uganda as the fastest-growing country in the world. Midway through the 21st century,
if current birthrates persist, Uganda will be the world's 12th most populous country with 130 million people – more than Russia
or Japan.
That sounds about right and from personal observation almost all 27.7 million of them are school kids who (currently) are quite
well nourished and with decent health care. A big problem, as I see it, is that virtually all schools in Uganda are run by "Western"
churches who seen determined to increase the size of their flock by NOT teaching their students about contraception and the benefits
thereof: sound familiar?
Doug – like you I have some sponsorship in Africa – a general women's group rather than an individual. From their letters what
they want is education (both formal for the children and also just tips on farming and running a business), enough money (very
little) to start a business so they can feed their children, a way to manage HIV if they are infected (many still are) and peace
and quiet. What they don't want is more children, forced marriage through kidnap, the return of their husbands to beat them up,
interference from the elders (all men) in their business. Often they only realise these options are even possible after they have
had contact with the groups set up by the charity.
George – My African experiences are mainly restricted to Uganda (the pearl of Africa) where my family visit annually and have
done so for almost 20 years; we love the country, the people, the wildlife. Its been a joy watching the girl we assisted progress
from kindergarten to medical school; to meet and relate to her extended family who've become our close friends. The country (Uganda)
and the people are currently doing well, very well indeed (unless you happen to be gay). Wildlife parks flourish and are well
managed. My concerns relate to the future. There are too many kids. In my opinion, without reigning in population growth the country
will face immense over-population problems in the future. I hope I'm wrong. Having said that, I agree with your comments -- all
of them. And its true, woman's business groups are in many respects the future of Africa.
For anyone seeking a plausible scientific explanation for why:
– one species has a uniquely powerful brain
– why the brain of that species is capable of visiting the moon but incapable of understanding or acting on it's own overshoot
– why one small group of hominids exploded about 100,000 to take over the planet
– why religion emerged simultaneous with the behaviorally modern mind about 100,000 years ago
– and more big questions: https://un-denial.com/2017/06/25/why-my-interest-in-denial/
I find this theory by Ajit Varki and Danny Brower very satisfying.
That's a smart site you have there. I read that book some time ago, it's interesting but I thought a bit of a just-so story, but
that's maybe becasue the ideas woud be so hard to prove one way or the other. It's a pity Brower died before his ideas got out
to more discussion.
Your initial reaction to the theory is perfectly reasonable and common.
If you dig deeper and start connecting dots I think you may find it is the best available explanation for many big unanswered
questions. The theory may not be correct but there are no known facts that slay it, nor any other equally elegant theories that
fit the data better.
Varki acknowledges the difficulty of testing the theory, but does point to some promising avenues of research. Unfortunately
Varki's speciality and day job is in a different domain so his theory is likely to sit on the shelf until some young scientist
with a defective denial gene picks up the baton.
I did find it neat and convincing as you say, but that's the point of just-so stories, plus it's difficult to know where to go
if it is correct, but I'm going to be visiting your site without question.
WILL OVERPOPULATION LEAD TO PUBLIC HEALTH CATASTROPHE?
"Our new projections are probabilistic, and we find that there will probably be between 9.6 and 12.3 billion people in 2100,"
Prof. Raftery told Medical News Today. "This projection is based on a statistical model that uses all available past data on fertility
and mortality from all countries in a systematic way, unlike previous projections that were based on expert assumptions."
"A key finding of the study is that the fertility rate in Africa is declining much more slowly than has been previously estimated,
which Prof. Raftery tells us "has major long-term implications for population."
No discussion about human evolution or even biological evolution across all species can be considered complete without at least
a basic understanding of the biochemical and molecular biological basis of CRIPR-Cas9 gene editing technology and gene drives.
Sam Harris' latest podcast has a discussion of this technology with Jennifer Doudna.
In this episode of the Waking Up podcast, Sam Harris speaks with Jennifer Doudna about the gene-editing technology CRISPR/Cas9.
They talk about the biology of gene editing, how specific tissues in the body can be targeted, the ethical implications of changing
the human genome, the importance of curiosity-driven science, and other topics.
E.O. Wilson
I have always been a great admirer of E.O Wilson. I have followed his work for years. I especially liked "Sociobiology" and "Consilience".
I have followed his feud with Stephen J. Gould, Steven Rose, R.C. Lewontin, and Leon Kamin, (as reported by Steven Pinker and
Richard Dawkins). (I always came down on the side of Wilson et al.) And I am very proud to say he is a fellow Alabamian.
That being said, there are areas where I must disagree with him. For instance:
From Kirkus Reviews of "Half Earth": In this final volume of his trilogy, Wilson (The Meaning of Human Existence, 2014, etc.) opens with a compelling proposal on
how to slow current species extinction rates: set aside half of the planet (noncontiguously) as wilderness preserves free from
human encroachment, a measure that the author claims would stabilize more than 80 percent of species.
Fred Magyar, above, quotes from Edward O. Wilson's New Take on Human Nature: Wilson argues the nest is central to understanding the ecological dominance not only of ants, but of human beings, too ..
By being super-cooperators, groupies of the group, willing to set aside our small, selfish desires and I-minded drive to join
forces and seize opportunity as a self-sacrificing, hive-minded tribe ..
To qualify as eusocial, in Wilson's definition, animals must live in multigenerational communities, practice division of
labor and behave altruistically, ready to sacrifice "at least some of their personal interests to that of the group." It's tough
to be a eusocialist.
First, the idea that we would or could set aside half the earth for wildlife is preposterous. Which parts of the U.S. would
we set aside, parts that make half the land area? Could we convince every African nation to do the same? Or Russia? Or China,
South Korea or Japan?
Second, as much as I admire Wilson, I think he is just flat wrong on his new take on human nature. And I think Pinker and Dawkins
would agree with that opinion. If you had read Pinker's "
The Blank Slate: The Modern Denial of Human Nature ," and I have, you would know exactly what I mean. Our minds are not blank
slates to be molded by society, to be made to behave like ants in a colony, like a self-sacrificing, hive-minded tribe. All those
traits that Wilson says we must give up are in our genes, human nature.
I will not deny that humans can be ruled. An Iron Fist could compel us to behave in such a matter. But all such Iron Fists
carry within itself the seeds of its own destruction. Absolute power corrupts absolutely. It's just human nature.
After reading your eight fifty six am, I'm telling ya straight .. Between your ears, where you live intellectually, you are
a TRUE conservative.
The people who we refer to today as conservatives, meaning those who inhabit the right wing politically, are not REAL conservatives,
not according to my definition.
Don't forget that I am a follower of the Humpty Dumpty School of Linguistics. Words mean exactly what I intend them to mean,
when I use them, rotfl.
To my way of thinking, the first and single most important qualification of a TRUE conservative is that he must have a sound
grasp of human nature. You have it. You understand that we cooperate with friends, family, known community, and compete with outsiders
.. and that when circumstances compel us to do so, we make friends or at least ally ourselves with former enemies or strangers,
and work together .. but mostly only when we have little or no choice but to do so.
I'm just teasing you a little, not making fun of you.
Decent people, left or right wing, want the same things, when you get down to the basics. Peace, dignified life, freedom from
unnecessary worries, etc.
I haven't yet read Wilson's latest books. Hoping to get around to it, this winter.
We need to keep it in mind that just because somebody presents a grand plan in a book, and writes as if it might be possible
to implement it, he does not necessarily believe there's a snowball's chance on a red hot stove that his plan will ever actually
be implemented.
Such books are sometimes intended as sources of inspiration for a new generation of people following along in his footsteps
.. and such a plan MIGHT be implemented . a few centuries down the road, lol. Stranger things have happened, historically.
Such a book can be the result of an old man's dreams being put in libraries so as to achieve a sort of immortality . Wilson
had that already of course.
I reckon you're even older than I am, and here's wishing you the best at the personal level.
To my way of thinking, the first and single most important qualification of a TRUE conservative is that he must have a sound
grasp of human nature. You have it. You understand that we cooperate with friends, family, known community, and compete with outsiders
.. and that when circumstances compel us to do so, we make friends or at least ally ourselves with former enemies or strangers,
and work together .. but mostly only when we have little or no choice but to do so.
Sorry Mac, but I just don't get the connection. The definition you pen here could just as well be the definition of a True
Liberal.
I am a conservative when it comes to conserving the environment, saving animal habitat and saving species from extinction.
But those are qualities held by most liberals and not held by so-called conservatives. Right-wing Republicans call themselves
conservatives.
So I just have to accept the lexicon as it exist today. I am a liberal, not a conservative.
"Sorry Mac, but I just don't get the connection. The definition you pen here could just as well be the definition of a True Liberal."
You DO GET IT, Ron, except you haven't yet quite got around to thinking of labels as jokes or weapons . Labels are for partisans.
Labels are clubs we use to pound each other into submission.
People with real working brains generally come to the same basic conclusions, regardless of the way they're labeled by themselves
or others. There's usually more than one route by which we can travel and arrive at the truth.
You're a man willing to tell it like it is, as for instance when you have pointed out the realities of the way things work
in some countries where you worked yourself. A partisan D just won't repeat that sort of stuff, true or not.
When you say you're a liberal, you're just labeling yourself. What you ARE is something else. You're a man with a working brain,
a man who understands reality, a man who tells it like it is, as you perceive it to be.
It is however true that the so called liberals are more often right by a substantial margin than the so called conservatives
in terms of having objective facts on their side when considering issues such as the environment, public health, and many others.
But they're not always right. Sometimes the liberal camp seems to have it's head as far up its backside as the conservative
camp.
The leaders of both camps seem to be more interested in having plenty of foot soldiers to serve as cannon fodder than they
are in the actual welfare of the country.
I can provide as good arguments for any sort of truly sound public policy from a conservative pov as you can from a liberal
pov.
To me this proves we both have working brains, and are capable of looking the truth in the eye, and publicly agreeing on what
IS true, and what is not.
If we could free ourselves of goddamned infernal partisan politics and identity politics , based on our community cultures,
we could make things happen politically.
If for instance we could put the question of subsidizing wind and solar power to a referendum, I could easily convince most
of the so called conservatives I know that voting in favor of subsidies would be a GREAT BARGAIN for them, long term. Well, the
ones with brains enough that they know a little about the business world anyway. That's at least half of them, and more than enough.
They won't ordinarily support subsidizing renewable energy as part of a package deal because they perceive the PACKAGE to be
weighted in favor of their political and cultural enemies. Supporting renewable energy subsidies would mean voting for D's and
they don't like the overall D agenda.
I'm not sure WHERE this comment will appear, but hopefully it will be below my two forty pm.
Allow me to approach this liberal/ conservative label thing from a different direction.
Suppose you meet a new person, and get to talking about oh let us say water pollution, and fishing, and having to spend your
local tax money on a sophisticated water treatment plant, because there's too much of this or that and the other as well in the
river that passes your town to drink the water, without spending a lot of money. .
If you NEVER MENTION anything that LABELS you as a liberal or conservative, you can talk meaningfully to just about anybody
about this issue.
Identify yourself as a liberal, or a conservative, you more or less automatically blow your opportunity to say anything to
your new POTENTIAL friend who thinks of himself as your opposite and enemy, politically, other than something he already knows
and believes, even if what that something is factually incorrect.
Label yourself as a liberal, and the typical serious Christian voter in the state of Alabama automatically thinks of you as
a murderer of yet to be born children. Forget labeling yourself, avoid it to the extent you can, and you have an EXCELLENT shot
at talking to that voter about supporting only candidates who have a decent record of being respectful to women, immigrants, minorities,
etc.
If I label myself as a conservative, I've automatically blown my chance to have a serious conversation with a liberal about
the possibility of having some real choice in education . meaning breaking the teacher's unions and government's de facto monopoly
control of our educational system.
You may not like this idea, but think about this how much better are your options NOW, given that we have email, fax, UPS,
Fed Ex , etc, when it comes to getting a letter or package where it needs to go FOR SURE and RIGHT AWAY?
I have heard lots of liberals say that allowing any real choice in the schools would mean the end of any real opportunity for
poor kids, inner city kids, etc, to get a decent education. Sometimes, in the same breath almost, I hear those same liberals admit
that the public schools in lots of communities large and small are literal disaster areas, where hardly any of the kids learn
anything. I used to know quite a few of this sort , back in my younger days, when I was living in the Fan and hanging out with
the older ( grad students mostly ) kids at VCU having a good time, taking a course or two per semester to keep my grad student
ID up to date. I spent about ten years there off and on.
Ya know WHAT? EVERY LAST COUPLE I knew among them moved out of town when their OWN kids got old enough to go to school.
Quite a few of them spent their careers as teachers, lol. And my guess is that not more than one out of ten of those couples
ever moved to a place where the schools were the sort of hell holes we read about so often these days .. and that tenth couple
of course had NO KIDS, lol.
Yet they almost universally believe in the de facto teacher / government educational monopoly as it exists today, as it totally
ruins the prospects of millions of kids denying them, or more accurately, their parents, any real choice in the schools their
kids attend. If liberal versus conservative comes into the conversation, it's OVER. The liberals aren't going to listen, any more
than conservatives listen.
How many members of this forum think Roy Moore ought to be tarred and feathered ? How many have ever had the intellectual integrity
to say the same thing about Bill Clinton?
Liberals are liberals, and conservatives are conservatives, and the gulf between can be as vast as the gulf between East and
West. Communication is tough to impossible.
But if we avoid the labels . communication can happen.
Incidentally this rant does NOT mean I am a supporter of the Trump administration in general, or the Trump education department
in particular. Nothing I know of concerning the Trump administration seems to be about the good of the COUNTRY or of the majority
of the people of this country.
First, the idea that we would or could set aside half the earth for wildlife is preposterous.
Even stopping the rape and scrape accelerating is highly unlikely.
This is total fantasy.
At best, the survivors (if any) on the other side of the wall we are about to crash into, will have enough wisdom and intelligence
to embrace the condition they are in.
First, the idea that we would or could set aside half the earth for wildlife is preposterous.
That isn't what he proposes even though it is the title of his book. May I suggest you read it! What he is really arguing for
is more along the lines of a network of ecological corridors that might connect already existing nature preserves, parks and private
property and therefore allow isolated pockets of natural ecosystems to be connected with others.
To be very clear, E.O. Wilson is not in any way naive about our predicament and says so.
That's not to say he has thrown in the towel, especially given that he is now in the later portion of his 80's. He apparently
doesn't want to go down without a fight.
I have read his book twice already and have the Kindle version on my laptop. To be honest I'm not what anyone might call overly
optimistic about the prospects of his proposals coming to pass. Having said that, I do admire his deep knowledge base about the
natural world and have the greatest admiration for the man! More power to him for trying!
Fred, I read Half Earth and have to agree with E.O. Wilson. I think my personal bias is toward nature, but that aside, humans
can do what is needed. All the gadgetry in the world cannot replace a functioning ecosystem. Those functions are mandatory for
the preservation of life on earth. We need to preserve, expand and enhance (if we get smart enough) natural ecosystems around
the world.
Why not build armies? Armies called the United Conservation and Environmental Protection Corp, whose job is to protect and expand
natural areas around the world. It would increase employment and be funded by monies that otherwise go to military purposes. This
and other organizations could be doing things that make the people proud to be human, rather than just wheels and cogs in basically
destructive system.
This is not naïve, this is just choices. Humans make choices, that is one of our inherent abilities. Our current state and
appearance is due to a set of previous choices that have not quite worked out. We get stuck in old choices, time to make new ones.
I think my personal bias is toward nature, but that aside, humans can do what is needed.
Really now? If humans can do what is needed then why the hell are they not doing it. Species are going extinct at a rate as
fast as the last great extinction 65 million years ago. And the extinction rate is accelerating. If humans can do what is needed
it is goddamn time they got started.
Our current state and appearance is due to a set of previous choices that have not quite worked out. We get stuck in old
choices, time to make new ones.
Those choices were made, and are being made, by 7 billion people. And yes, it is time those 7 billion people changed the way
they are behaving, it is time they made different choices. But don't hold your breath.
I am sorry Fishing, but I just don't share your optimism.
Yup, reminds me of China, driving to a restaurant half way across Beijing with a car full of Chinese because they knew about a
hot spot where some endangered species or other was on the menu: get it before you're too late. Life in the real world!
"Although extinction is a natural phenomenon, it occurs at a natural "background" rate of about one to five species per year.
Scientists estimate we're now losing species at 1,000 to 10,000 times the background rate, with literally dozens going extinct
every day. It could be a scary future indeed, with as many as 30 to 50 percent of all species possibly heading toward extinction
by mid-century."
"If humans can do what is needed then why the hell are they not doing it. "
"I am sorry Fishing, but I just don't share your optimism."
By destroying the environment we destroy ourselves. I think that will soon become quite apparent and then those who are already
on track can leverage that.
Really now? If humans can do what is needed then why the hell are they not doing it. Species are going extinct at a rate as
fast as the last great extinction 65 million years ago. And the extinction rate is accelerating. If humans can do what is needed
it is goddamn time they got started.
Ok, let's assume for a moment using round numbers that there are currently 7.5 billion humans living on this tiny planet as
I type these words. How many of those humans do you suppose are actually aware of the fact that we are probably in the midst of
the sixth mass extinction? I'm going to go way out on a limb here and guess about a couple hundred thousand.
Now most of those couple hundred thousand are in shock and denial of reality. So there are maybe 100,000 humans who are aware
and are actually starting to do something.
While that may sound like a minuscule amount I can cite data and research that shows that may be enough to really start to
change the current paradigm in a big way.
Yea, the feud between Gould/Lewontin/Rose VS Wilson/Dawkins/Dennett has been interesting.
Being somewhat Marxist in my orientation, I was kinda presupposed to the Gould camp, but the Wilson/Dawkins have proven to ring
much truer. The Blank Slate puts the nails in the coffin for Marxist view of human nature, as Marx viewed it as totally a function
of environment. Pinker buried that view.
Orr was always Gould and Lewontin's go to guy with media, as he had power in the NYT's and Boston Globe, and could often control
reviews and and coverage.
It has been interesting.
I'm sure most here are familiar with what Carl Sagan said about our Pale Blue Dot
This excerpt from Sagan's book Pale Blue Dot was inspired by an image taken, at Sagan's suggestion, by Voyager 1 on February
14, 1990. As the spacecraft left our planetary neighborhood for the fringes of the solar system, engineers turned it around for
one last look at its home planet. Voyager 1 was about 6.4 billion kilometers (4 billion miles) away, and approximately 32 degrees
above the ecliptic plane, when it captured this portrait of our world. Caught in the center of scattered light rays (a result
of taking the picture so close to the Sun), Earth appears as a tiny point of light, a crescent only 0.12 pixel in size.
At present, the Voyager 1 spacecraft is 21 billion kilometers from Earth, or about 141 times the distance between the Earth
and Sun. It has, in fact, moved beyond our Solar System into interstellar space. However, we can still communicate with Voyager
across that distance.
This week, the scientists and engineers on the Voyager team did something very special. They commanded the spacecraft to fire
a set of four trajectory thrusters for the first time in 37 years to determine their ability to orient the spacecraft using 10-millisecond
pulses.
FURTHER READING
The Voyagers have reached an anniversary worth celebrating
After sending the commands on Tuesday, it took 19 hours and 35 minutes for the signal to reach Voyager. Then, the Earth-bound
spacecraft team had to wait another 19 hours and 35 minutes to see if the spacecraft responded. It did. After nearly four decades
of dormancy, the Aerojet Rocketdyne manufactured thrusters fired perfectly.
"The Voyager team got more excited each time with each milestone in the thruster test. The mood was one of relief, joy,
and incredulity after witnessing these well-rested thrusters pick up the baton as if no time had passed at all," said Todd Barber,
a propulsion engineer at the Jet Propulsion Laboratory in California.
So was I. Well, sort of. My dad was a Deacon in the Primitive Baptist Church but he was not a crusading evangelical.
I have told this story before but I will do it again here.
I was about 17 or so when I sidled up to my dad who was sitting in his easy chair. I asked: "Dad, how did them kangaroos get
from Australia to over there where Noah's Ark was? And how did they get back?" Dad jumped up from his chair, stuck his finger
right in my face and yelled: "Son, that is the word of God and that is not for you to question."
When countries begin to hit the wall economically ( as happened in Germany in the 1930's for example), the populace will often
out of desperation (and ignorance of course) enable a dictator to come to power. This is with the false hope that grandiose promises
of prosperity will be fulfilled.
This explains why Trump was elected, even though the American has yet to be tested by disruption, much.
As the world hits the wall of growth limits, the risk is for more and more leadership failures, the rise of warlords, the failure
of functioning democracies.
Violent choices and dysfunctional government will serve to be a mechanism of population decline, ugly population decline. Current
events can be seen through this lens as time unfolds.
Hard to watch.
May be better to have no TV.
The de-evolution will be televised, will be televised, will be televised
The general population in Germany did not really enable Hitler to come to power. He was appointed as a compomise by the two leading
parties in an election who had split the main vote. They both thought he would make such a mess of it that they would sweep the
board at the next election. As soon as he was appointed he started killing or imprisoning these smart opposition leaders, and
there wasn't another clean election. It was more like an extended coupe, admittedly with a large number of supporters, often ex
WW-I soldier thugs, in the general population.
George is in the bullseye about how Hitler came to power, considering he was painting fast with a broad brush in such a short
comment. I have devoted many a long evening to reading the history of war in the twentieth century, so as to better understand
the history of my time.
Wars are usually the result of politicians either wanting them, or being boxed into situations where they either can't avoid
them or consider them the best of an assortment of bad options.
Point taken George. Despite that the general notion that as crunch time develops, there will be a trend towards extremist and
totalitarian regimes throughout the world. Along with pockets of failed states, anarchy and warlords. 'Have nots' will take big
risks.
No devolution involved. Just human nature.
The loose knit groups with similar hates, anger and dislikes were temporarily brought together. It was an inverse election that
utilized the negative and more volatile side of human nature. it only hangs together with constant stirring and occasional negative
results (pound the enemy). Finger pointing and passing the buck is not enough, the groups start fracturing.
A question for Dennis Coyne, or any other cornucopian who believes renewable energy will save the world from economic collapse,
at least for the next 200 years or so.
Dennis, I understand your very optimistic outlook for the welfare of future human populations. I don't agree with it but I
understand your argument. But as I understand it, and please correct me if I am wrong, your entire argument deals with the
human population of the earth. I don't remember reading your predicted outlook for the rest of the animal kingdom? Perhaps
you did make one and I just missed it.
That being said, you have read my outlook many times. And it was all repeated in my post above. Do you agree or disagree? Just
where do you see the large wild animal population in the year 2100? Please elaborate.
Edit: Dennis, I know you do not consider yourself a cornucopian, however, I was just comparing your outlook for the
future of civilization to mine. And using that comparison?
Nice! I was just thinking about a response to a comment following
one of mine
further up and this pops up, which dovetails nicely into what I've been thinking. In my comment I mention using wind power
to make ammonia as a foundation for chemical nitrogen fertilizer and you (Ron) in you reply stated that, " But it is chemical
fertilizers that have very dramatically and very temporally increased our carrying capacity." I don't know if you realized
this but, that sort of was my point in that, the manufacture of ammonia and the resulting chemical fertilizer using excess wind
(and/or solar) power might well result in a much extended (permanent) increase in carrying capacity by allowing us to continue
the manufacture of chemical nitrogen fertilizer (ammonium nitrate if memory serves me right) in the absence of oil and NG.
This can be viewed as a downside to the ongoing exponential increasing capacity of renewable electricity generation. If renewables
grow big enough fast enough, there will be incentives to use any excess to do things like manufacture fertilizer allowing mankind's
expansion into wild habitats to continue. I think it is important that the existing population of the planet continues to have
more or less adequate food supplies in order to avoid the sort of situation that exist in Haiti but, the real problem as I see
it, is to get poor people in less developed countries to believe that they would be better off not having as many children. Based
on utterances I have heard in my neck of the woods, as recently as last night, many of these people do not see any problem with
having lots of kids. There seems to be an attitude abroad that there is a great big world out there, just ready for the taking.
No limits. I wonder whatever gives people that idea?
I wanted to post some pictures of garbage, sitting in open storm water channels, just waiting for the next big shower of rain
to be washed out of existence. At least that must be what the people who dump this stuff into the drains think. I have to wonder
if they ever bother to think about where it's going to end up but, it seems to be a simple case of out of sight, out of mind.
I guess some readers will have figured out that if you visit any area of the Jamaican coastline that does not have a regular,
structured clean up crew, you will see where the trash ends up. I have seen it and it is depressing.
I don't know if you realized this but, that sort of was my point in that, the manufacture of ammonia and the resulting chemical
fertilizer using excess wind (and/or solar) power might well result in a much extended (permanent) increase in carrying capacity
by allowing us to continue the manufacture of chemical nitrogen fertilizer (ammonium nitrate if memory serves me right) in
the absence of oil and NG.
Errr . I don't know if you realize it but you cannot make nitrogen fertilizer without natural gas . or some other source of
hydrogen. Of course, you might get the hydrogen from water via electrolysis but that would be super expensive.
Fertilizer Made with Natural
Gas Is Lifting Our World Referred to by some as the most important technological advance of the 20th century .Between 3 and 5 percent of the world's
annual natural gas production – roughly 1 to 2 percent of the world's annual energy supply – is converted using the process to
produce more than 500 million tons of nitrogen fertilizer, which is believed to sustain about 40 percent of the world's 7 billion
people. Approximately half of the protein in today's humans originated with nitrogen fixed through the Haber-Bosch process.
"Of course, you might get the hydrogen from water via electrolysis but that would be super expensive."
Not if you are experiencing negative electricity prices as has happened when there's lots of wind and no demand or transmission
capacity for the electricity being generated. I think OFM has alluded to this a few times in his ramblings, suggesting that hydrogen
production via electrolysis or desalination might be useful ways of avoiding otherwise wasted electricity when the resource is
available but, there is limited demand or transmission capacity.
We are pursuing a Grand Challenge – the challenge to feed the world while sustaining the environment. In the spirit of this
grand challenge, a team of researchers across the University are pursuing an elegant concept in which wind energy, water, and
air are used to produce nitrogen fertilizer.
WCROC energy from the windEnergy generated from the wind is used to separate hydrogen from water. Nitrogen is pulled from air.
The hydrogen and nitrogen are then combined to form nitrogen fertilizer that nourishes the plants surrounding the farmer.
Next to water, nitrogen fertilizer is the most limiting nutrient for food production. Minnesota farmers import over $400
million of nitrogen fertilizer each year and are subjected to volatile price swings. Furthermore, nitrogen fertilizer is currently
produced using fossil energy which contributes significantly to the carbon footprint of agricultural commodities.
Siemens is participating in an all electric ammonia synthesis and energy storage system demonstration programme at Rutherford
Appleton Laboratory, near Oxford. The demonstrator, which will run until December 2017, is supported by Innovate UK. Collaborators
include the University of Oxford, Cardiff University and the Science & Technology Facilities Council.
I do not know much about the subject so I should probably not offer an opinion, but because you asked
I agree that humans are the problem and believe that fewer humans (as in reduced population) will improve the situation. Will
humans choose to protect some of the mega fauna, until population falls to a more sustainable level? I have no idea.
Is it possible? I would say yes.
High probability? My guess would be no (less than a 66% probability).
So I do not have a prediction for the Earth's megafauna in 2100, except to say I doubt your prediction that we will be reduced
to rats and mice, etc. is correct. This is no doubt because I believe there will be a gradual transition to a more sustainable
society. I believe some of the mega fauna might be preserved until human population falls to 1 billion or so (by 2150 to 2200).
Most likely in North America, Scandanavia, and Siberia, and perhaps in the Himalaya and parts of South America. The rapid expansion
of population in Africa makes it less likely the megafauna will survive there.
I am using the 40 kg cutoff for megafauna, though there are many definitions.
Note that some would consider cornucopian an insult.
Certainly I do not think fossil fuels are as abundant as those who believe scenarios such as the RCP8.5 scenario (with about
5000 Pg of carbon emissions) are plausible.
I also do not believe resources are unlimited or infinitely substitutable, which tends to be the cornucopian viewpoint. There
is great need to utilize resources more efficiently and to recycle as much as possible (cradle to grave manufacturing should be
required by law).
Now if you define cornucopian as someone who is less pessimistic than you, then I am by that definition a cornucopian.
I am certainly more optimistic than you, but if we all agreed there would be little to discuss.
Clearly the future is unclear.
The outlook for the wild megafauna is tragic and we should do what we can to preserve species diversity. Getting human population
to peak and decline would improve the situation of other species, but I share your pessimism that this will be enough, I am just
less pessimistic than you.
I believe some of the mega fauna might be preserved until human population falls to 1 billion or so (by 2150 to 2200).
Okay, let's do the math. It looks like the world will reach 9 billion people by 2050. Then if it were to fall to 1 billion
by 2150, that would be a decline of 80,000,000 per year or 219,178 per day. That is deaths above births. That would be a catastrophic
collapse by any stretch of the imagination. And of course, most of those deaths would be by starvation. And for sure, as I said
before, we would eat the songbirds out of the trees.
Hell, if that scenario takes place, there will likely be no rats left. No, no, no, Dennis, please forgive me. You are definitely
not a cornucopian. Oh God, how could I have been so wrong?
The most rapid population decreases have been from disease. A few bouts of virulent diseases in a world with little medical help
and control could dramatically reduce population.
Population Collapse in Mexico (Down to about 5% in a century)
See chart below. If total fertility ratio (TFR) falls to 1.5 by 2050 then population can fall from 9 billion to 4.5 billion
by 2125 and to 2.25 billion by 2200 and to 1 billion by 2300, a fall in TFR to 1.25 (South Korea is about 1.26) would result in
more rapid population decline. It is not clear how low TFR can go for the World, it was cut in half in 40 years, whether that
can continue so that 1.27 is reached in 2055 is unknown. This scenario assumes life expectancy rises to no higher than 90 for
the World.
Deaths would be natural rather than from starvation, this is just a matter of people choosing to have fewer children as is
the case today in many East Asian countries such as South Korea and Japan and in many European nations as well.
Education for women and access to birth control and electrification (watch tv, instead of other forms of entertainment leading
to increased family size), and empowerment of women in general will reduce population growth. Higher income also helps.
Keeping things in perspective, why not go with the experts until they're proven wrong?
WORLD POPULATION LIKELY TO SURPASS 11 BILLION IN 2100
"American Statistical Association. "World population likely to surpass 11 billion in 2100: US population projected to grow
by 40 percent over next 85 years."
THERE'S A STRONG CHANCE THAT ONE-THIRD OF ALL PEOPLE WILL BE AFRICAN BY 2100
The combination of declining mortality and relatively high fertility is the driver of rapid population growth in Africa. Even
if fertility would continue to decline, as assumed by the UN medium scenario, it will not bring down the growth rate in the near
future, let alone halt population growth. This is because of "demographic inertia". And this is because Africa has a high proportion
of young adults of reproductive age. Even if each one had very few children, the number of births would remain high.
We are all African– it's just some of us have been gone for a while.
(well if you are east of the Wallace Line, you are part Denisovan, and west, part Neanderthal and a species we haven't discovered
yet)
Dennis, you are assuming that the population will alter their fertility rates to a lower value. Yes, that has already happened
in developed countries. The fertility rates in undeveloped countries are still controlled by what their economy and environment
will bear.
The vast majority of the human population lives in undeveloped countries. They will continue to push, push, push against the
very limits of their existence. And that will still be the case 50 years from now, and 100 years from now, and 150 years from
now.
There are reasons the fertility rate is dropping in developed countries. Female empowerment, contraception, and so on. There
are entirely different reasons the fertility rate is dropping in undeveloped countries. Poor nutrition, almost no prenatal care
and so on. Also, much higher infant death rate helps keep the population in check. Please check my chart above from the Population
Reference Bureau.
I think that if you could just live just one year in Bangladesh, or the Congo, or Zimbabwe, or . you would have an entirely
different outlook. You would be forced to take off those rose-colored glasses.
Again, check the Population Reference Bureau chart above.
" if you could just live just one year in Bangladesh, or the Congo, or Zimbabwe, or . you would have an entirely different outlook.
You would be forced to take off those rose-colored glasses."
Wouldn't take a year, one week would do it: even keeping the rose-colored glasses on.
I spent a bit of time on leave in "Liberated Burma"/Karen State shortly after the fall of Manerplaw. A week would do it, however
I was there for about 3 months. I haven't had a bad day since.
I linked up with some folks in Mae Sot on the Thai side. It was well planned before hand. There's was a lot of back and forth
across the border in those days. Did some long range mobile medical patrols in Karen and Karenni State. Got chased around by Tatmadaw/SLORC
a bit. When I was 25 that was my idea of a good time. Yeah, kinda fucked I know.
Yea --
I was the only Farang around in Masi, and everyone else was going back and forth.
Very interesting place.
That was a long time ago, in a land far, far away.
It would be impossible in the homogeneous police state we are currently inhabiting.
I spent about 5 months hitchhiking through North and West Africa in 1981-2. Tunisia, Algeria, Niger, Nigeria, Gabon, Republic
of Congo, and Zaire (as it was known in 1982).
The TFR of half the World's population as of 2015 is less than 2. The World TFR decreased from 5.02 in 1965 to 2.51 in 2015.
The problem I see with fertility rates is the same problem I see with planting trees. Even though I support a foundation to plant
trees I realize that future changes could allow people to wipe out those and other trees very quickly, thus rendering the effort
useless. I also realize the preserved areas of nature and wilderness could quickly disappear or be irreparably harmed by government
decree, war and material/food pressures.
The same goes with lower fertility rates. Since they are only based on decisions and not biological, the lower rates could reverse
quite quickly. Just stress the population and see how fast it will change.
Once people realize that technological progress is an empty dead system that moves us to an empty dead world, birth rates will
climb quickly.
Rather than adding to our knowledge, Tompkins argues computers and smartphones represent "deskilling devices; they make
us dumber. We're immersed in a system that now requires the use of a cell phone just to get around, just to function and so the
logic of that cell phone has been imposed on us.
"The computer is a mechanism for acceleration, it accelerates economic activity and this is eating up the world. It's eating
up resources, it's processing, it's manufacturing, it's distributing, it's consuming. That's what the computer's real work does
and it does that 24/7, 365 days a year, non-stop just to satisfy our own narrow needs."
Tompkins foresees a dark future dominated as he puts it by more ugliness, damaged landscapes, extinct species, extreme poverty,
and lack of equity and says humanity faces a stark choice; either to transition now to a different system or face a painful collapse.
"The extinction crisis is the mother of all crises. There will be no society, there will be no economy, there will be no
art and culture on a dead planet basically. We've stopped evolution."
Rather than adding to our knowledge, Tompkins argues computers and smartphones represent "deskilling devices; they make us
dumber. We're immersed in a system that now requires the use of a cell phone just to get around, just to function and so the logic
of that cell phone has been imposed on us.
So put the damn cell phones to better use. They can also make us smarter They can be used to track illegal logging in endangered
rain forests. The fact that I have a device in my pocket that gives me access to all of human knowledge and access to GPS does
not make me dumber.
Really? You have cell service in the rain forests? I barely have cell service where I live and it disappears totally between the
mountains near me. I don't need electronic mapping and GPS to get around so no problem for me.
Let the rest feel nervous as they get out of touch. For many it's a disaster if they lose their phones, fully dependent.
I don't need electronic mapping and GPS to get around so no problem for me.
I actually learned how to use a sextant and a compass but GPS is available so I admit that I do use it upon occasion.
In any case my point was that it is possible to use technology for purposes other than tweeting or posting selfies of oneself
to Facebook every ten minutes.
Fred, they are highly capable machines but just machines. How they are used is determined by the machine and the operator interface.
I could go on for hours how they have had very bad effects on personal time and personal interactions. For many people life is
a series of texts and phone calls with real time life being the background now. Interruptions are the norm now. Sacrilege is when
they have to turn them off.
@Fred
I come close to nailing a textwalker or walkytalky nearly every time I am out on my bike. SOP, watch out for the buggers. It amazes
me that people are unable to move about (foot, moto, car, bus, truck) without a phone in their hand.
A question for Dennis Coyne, or any other cornucopian who believes renewable energy will save the world from economic collapse,
at least for the next 200 years or so.
Ok, I'll take a nibble!
First of all, why do we have to accept the current definition of what the economy has to be? All of nature has existed on renewable
energy since the beginning of life on this planet 3.8 billion years ago, so obviously the problem isn't renewable energy. If it
were, life wouldn't even exist. The extractive, linear growth based neo liberal idea of the economy that we have come to accept
as normal, is a relatively recent construct that was created by a small group of people at the beginning of the 20th century and
it certainly is an aberration! Personally I don't think it is worth saving.
That economy will certainly collapse and no energy source can ever make it sustainable. Therefore it will by definition collapse.
However there is nothing that says we need to continue on that path. There are indeed choices that people and societies can make.
Even to the point of something that is considered radical and taboo like limiting population growth. (that is a separate dissertation
from my point here)
With regards alternative economic thinking maybe start with Kate Raeworth. Not everyone in the world who has ideas that are
out of the box are automatically naive cornucopians.
How to Think Like a 21st Century Economist. 45:00 minutes.
What is the goal of economics? Does GDP really tell us all we need to know about a country's wealth and well-being? Our
guest in this show argues that our economic system should be designed to meet everyone's needs, while living within the means
of the planet.
Kate Raworth is the author of the acclaimed book 'Doughnut Economics', and she will join us in the studio for an exploration
of a new 21st century economic model and why she believes so many economists have got it wrong for so long.
The implications of her Doughnut Economics are profound and and can be read and embraced as a roadmap for change not just
by experts or economists, but by everyone! This is a chance to challenge her with your questions and critiques.
If you want to think a bit more about how ideas like E.O. Wilson's Half Earth might look here's a TED talk that touches on
it.
Nature is everywhere -- we just need to learn to see it 16:00 minutes
How do you define "nature?" If we define it as that which is untouched by humans, then we won't have any left, says environmental
writer Emma Marris. She urges us to consider a new definition of nature -- one that includes not only pristine wilderness but
also the untended patches of plants growing in urban spaces -- and encourages us to bring our children out to touch and tinker
with it, so that one day they might love and protect it.
Emma Marris is a writer focusing on environmental science, policy and culture, with an approach that she paints as being
"more interested in finding and describing solutions than delineating problems, and more interested in joy than despair."
I agree with Gone Fishing, we do have choices! There are people all over the world who are making them.
Regarding the first paragraph of your reply. Conflating the functioning of ecosystems
using the renewable energy from the sun with the 'Renewable Energy' required by industrial civilisation is a common mistake. The
energy from the sun is renewable.
The infrastructure required to collect and store that energy requires the mining of the
requisite minerals,transportation,smelting,manufacturing,installation. The energy
required for all of that is supplied by fossil fuels. All of that infrastructure,and all of the
rest of the human-constructed industrial world,has to be rebuilt. Solar panels last
about 25-30 years. Wind Turbines about 50 years. Our industrial constructed world
has an immense amount of embedded fossil fuel energy. The mineral density of many ores are declining now,which means that the
energy required to extract a given amount of mineral is increasing. I haven't done much reading on this site. No doubt someone
has posted this link before. It gives a good idea of the scale of the construction required.
Natural ecosystems are quite different. The energy collection occurs using biodegradable
and recyclable materials,without the energy input of fossil fuels. https://en.wikipedia.org/wiki/Cubic_mile_of_oil
Have a read of the numbers in the link. All recycling requires energy. I don't know if anyone has done an analysis of the amount
of energy
required,but it would be very large. It is also worth remembering that some of the minerals in that infrastructure are difficult
to separate and
recycle.
Plenty of people have investigated recycling and are doing it. You obviously haven't. Even the Giga-Factory is building a recycling
facility.
On the personal level, I have just replaced my washing machine and stove as the old ones were falling apart – literally. The
stove is ready to go to the local recycler where it will be separated and then sent to be melted back to new steel. The washer
will be checked over by a refurbisher who will decide if he can use it or it's parts and what is left will go to the recycler.
Simple. All my waste metal goes to the recycler but, unfortunately, we have no glass recycling so that just has to go to land
fill.
Elton John blares so loudly on Donald Trump's campaign plane that staffers can't hear themselves think. Press secretary
Hope Hicks uses a steamer to press Trump's pants -- while he is still wearing them. Trump screams at his top aides, who are subjected
to expletive-filled tirades in which they get their "face ripped off."
And Trump's appetite seems to know no bounds when it comes to McDonald's, with a dinner order consisting of "two Big Macs,
two Fillet-O-Fish, and a chocolate malted."
[ ]
In another episode, Lewandowski describes how staffer Sam Nunberg was purposely left behind at a McDonald's because Nunberg's
special-order burger was taking too long. "Leave him," Trump said. "Let's go." And they did.
Trump's fast-food diet is a theme. "On Trump Force One there were four major food groups: McDonald's, Kentucky Fried Chicken,
pizza and Diet Coke," the authors write.
The plane's cupboards were stacked with Vienna Fingers, potato chips, pretzels and many packages of Oreos because Trump, a
renowned germaphobe, would not eat from a previously opened package.
The book notes that "the orchestrating and timing of Mr. Trump's meals was as important as any other aspect of his march
to the presidency," and describes the elaborate efforts that Lewandowski and other top aides went through to carefully time their
delivery of hot fast food to Trump's plane as he was departing his rallies.
One of the biggest problems we face as population and industry grows is obtaining enough fresh water. Sure there is a lot of water
on the planet, but it is mostly salty.
Marcia Barbosa talks about the many anomalies of water and how exploiting them with nano-tubes could help address the problem
of freshwater shortages.
Marcia Barbosa has a PhD in physics from Brazil's Universidade Federal do Rio Grande do Sul, where she is now the director
of its Physics Institute. She studies the complex structure of the water molecule, and has developed a series of models of its
properties which may contribute to our understanding of how earthquakes occur, how proteins fold, and could play an important
role in generating cleaner energy and treating diseases. She is actively involved in promoting Women in Physics and was named
the 2013 L'Oreal-UNESCO for Women in Science Awards Laureate for Latin America.
Tks, GF!
LOL! I'm head over heels in love with her!
I kept imagining her giving her talk to this sound track
https://www.youtube.com/watch?v=Wunq6YlcSX0
Can you see all the dancers dressed as raindrops on a Samba Float in a Carnival Parade?
Fred – As you know my bag is astrophysics, with climate change denial being merely irritating BUT when I see science news headlines
like the following then I really get pissed off, or feel sick. Who gives a shit if Earth can "carry" 7 or 9 or 11 billion people
when dolphins & elephants are relegated to "bush meat" and when species are disappearing at increasingly alarming rates. You're
probably the only one here qualified to assess this issue so please give us your thoughts.
CURRENT EXTINCTION RATE 10 TIMES WORSE THAN PREVIOUSLY THOUGHT
"Life on earth is remarkably diverse. Globally, it is estimated that there are 8.7 million species living on our planet, excluding
bacteria. Unfortunately, human activities are wiping out many species and it's been known for some time that we are increasing
the rate of species extinction. But just how dire is the situation? According to a new study, it's 10 times worse than scientists
previously thought with current extinction rates 1,000 times higher than natural background rates."
Doug, if you get a chance, watch the ASU Origins project debates to which I have posted links recently addressing the topic of
extinction. This is a very serious cross disciplinary discussion and can't really be done justice in a quick response here. It
probably necessitates a full post of similar length to Ron's.
I look on space habitats as being trapped inside a giant iron lung. Exploration is one thing, but actually thinking of Mars as
a possible home for humans is just sad.
Couldn't agree more! And that's from someone who lived and worked in a hyperbaric chamber as a saturation diver on oil rigs. I'd
say that is pretty close to living in an iron lung as well
The part about going to Mars that has always bothered me is the radiation exposure.
"The power and influence of the financial sector threatens a continuation of the regulatory capture that contributed to the financial
crisis. Financial firms, too often, have significant say in the appointment of high regulatory officials.
The tendency of some former government officials to obtain highly lucrative positions in the financial sector after leaving
government may well act as an inducement to those remaining in government to serve the interest of the financial sector rather
than those of the public."
The Western Banks are all over these markets, from commodities to equities. They are creating huge amounts of money debt, and providing
it to the financial industry as top down stimulus. What results is little aggregate or 'organic' growth and a series of paper asset
bubbles. They should be ashamed but they are too busy plundering to feel any twinge of conscience. They are like a herd of swine,
racing for the abyss.
I had to chuckle when the pampered princesses and giggling jackals were talking about the jobs report tomorrow,
and said that the ideal situation would be 'a strong jobs number with no wage growth,' a true 'goldilocks' scenario.
I have given up any expectation of reform from within. There will have to be some eye-opening incidents to shake the complacency
of the fortunate few.
"... On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the massive bill is just a monumental zero-sum pot stirring operation ..."
"... Whereas if the US spent the same 1 to 2 percent on defense (meaning its own territory) that normal countries do, individual tax cuts could be cut back to the Reagan-era maximum of 28 percent, permanently. Alternately, individual taxation could remain the same and everyone could have health care and maybe free college too. ..."
"... These choices are unavailable because the unauditable Defense Dept and spook agencies have made themselves politically untouchable. This is the real scandal of the tax bill. ..."
On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate
Committee bill over the next decade is attributable to the $1.369 trillion cost of cutting
the corporate rate from 35% to 20% (and repeal of the related AMT). All the rest of the
massive bill is just a monumental zero-sum pot stirring operation
The zero-sum game details:
1. eliminating state and local deductions
2. higher personal deductions
3. doubling child tax credit
4. tax credit for private education
5. new income brackets and rates
And the huge 35%-to-20% (or whatever) corporate tax reduction.
According to MMT, this perversion of that theory (and pervert MMT will always be
practiced) should put money into the system. The 'government can spend as much as it wants, deficits don't matter,' is 1) not
sufficient to ensure a desirable outcome and 2) can be abused to lead to many undesirable
results. As for the zero-sum game, it's zero-sum, so some of us 99% will benefit and the rest will
suffer. Some may enjoy higher personal deductions, child tax credit or a lower rate in a new tax
bracket.
Whereas if the US spent the same 1 to 2 percent on defense (meaning its own territory)
that normal countries do, individual tax cuts could be cut back to the Reagan-era maximum of
28 percent, permanently. Alternately, individual taxation could remain the same and everyone could have health care
and maybe free college too.
These choices are unavailable because the unauditable Defense Dept and spook agencies have
made themselves politically untouchable. This is the real scandal of the tax bill.
A Republican party unable to deliver individual tax cuts after harping relentlessly on the
theme for a decade is revealed as a fraud, a laughingstock and a failure on its own
terms.
"... If the goal is to prevent excessive compensation of top layers of executives, it is probably non-constructive to treat tax issues in isolation from the general problem of neoliberalism with its powerful mechanisms of redistribution of the wealth up. ..."
I will ease the pain from this early morning (when GOP senate slashed corporate taxes) by escaping into fantasy, I mean theory,
but I repeat myself.
A key theoretical argument about taxing profits (due to Diamond and Mirrlees I think) is that the tax can be very very high if
firms maximize profits, because maximizing 0.5X is just the same problem as maximizing X. This is a tax on pure profits (profits
minus capital times the cost of capital) .
The practical implication is that we should figure out what corporations maximize and apply a high flat tax rate on it, because
maximizing 0.1X is the same problem as maximizing X.
Theory then goes crazy and assume that firms maximize shareholder value equal to the present discounted stream of dividends. If
so, we should tax dividends. This is roughly similar to the new law in which investment is treated as an expense, so profits minus
investment is taxed.
There are lots of problems (aside from the fact that only in shareholders' dreams do manager maximize shareholder value). We would
have to tax stock buybacks too (just another way to get money to shareholders). Taxing dividends but not interest paid encourages
high leverage (for example through leveraged buyouts). Here again a tax on buying and retiring shares would be useful (not politically
possible but useful). A really heavy tax on dividends would make initial public offerings unattractive -- I think a subsidy for new
share issue would be nice (reallly politically impossible).
But the idea is just tax money going to shareholders and it is based on the assumption that getting money to shareholders is the
whole point and maximizing 0.01X is the same problem as maximizing X.
The assumption is crazy.
I think top management of corporations maximizes compensation of top management subject to a limit that, if they go too far, it
will be very profitable to take over the coporation and fire them. This means that, if the aim is to generate compensation for top
management, we should tax compensation of top management. Highly. I am quite sure that if the tax were 99% it would raise a lot of
money (provided all compensation could be detected). They *will* pay themselves no matter how much it costs the shareholders.
Now this strikes me as a pretty good idea. I think top management has to be defined as those with the top total compensation not
any title (otherwise the CEO will call himself his secretaries secretary). Now this does encourage taking corporations private. But
really, CEO compensation is obscene and is just begging to be taxed.
likbez , December 3, 2017 1:03 am
If the goal is to prevent excessive compensation of top layers of executives, it is probably non-constructive to treat tax
issues in isolation from the general problem of neoliberalism with its powerful mechanisms of redistribution of the wealth up.
My impression is that due to the complexity of the USA laws and the army of well paid corporate lawyers (including tax lawyers)
it is just a matter of time when any new tax system will be perverted.
For example, when there is a high tax on executive compensation, nothing prevents a corporation to donate money to charity,
and then this charity can hire corporate officers (or their relatives) to the board. Various form of "trusts" or "loans" also
can be played with.
You need some general mechanism of suppression of the power of the financial oligarchy. An institutional framework, like the
New Deal capitalism, has been. Tax laws are an important part of such a framework, but by themselves, they are not enough.
Renegade ( ex-? ) Republican David Stockman NAILS IT TO THE WALL:
To be sure, some element of political calculus always lies behind legislation. For instance, the Dems didn't pass the Wagner
Act in 1935, the Voting Rights Act of 1965 or the Affordable Care Act of 2010 as exercises in pure civic virtue -- these measures
targeted huge constituencies with tens of millions of votes at stake.
Still, threadbare theories and untoward effects are just that; they can't be redeemed by the risible claim that this legislative
Rube Goldberg contraption being jammed through sight unseen ( in ACA redux fashion ) is for the benefit of the rank
and file Republican voters, and most especially not for the dispossessed independents and Dems of Flyover America who voted
for Trump out of protest against the failing status quo.
To the contrary. The GOP tax bill is of the lobbies, by the PACs and for the money. Period.
There is no higher purpose or even nugget of conservative economic principle to it. The battle cry of "pro-growth tax cuts"
is just a warmed over 35-year-old mantra from the Reagan era that does not remotely reflect the actual content of the bill
or disguise what it really is: namely, a cowardly infliction of more than $2 trillion of debt on future American taxpayers
in order to fund tax relief today for the GOP's K Street and Wall Street paymasters.
On a net basis, in fact, fully 97% of the $1.412 trillion revenue loss in the Senate Committee bill over the next decade
is attributable to the $1.369 trillion cost of cutting the corporate rate from 35% to 20% (and repeal of the related AMT).
All the rest of the massive bill is just a monumental zero-sum pot stirring operation.
Stockman, who knows federal budgeting better than most of us know the contents of our own homes, goes on to shred the tax bill
item by item, leaving a smoking, scorched-earth moonscape in his deadly rhetorical wake. And he's not done yet.
But Lordy, how he scourges the last hurrah of the know-nothing R party, just before it gets pounded senseless at the polls
next year. Bubble III is the last hope of the retrograde Republican Congressional rabble. But it's a 50/50 proposition at best
that our beloved bubble lasts through next November. :-(
thanks Jim, yes, this looks like it will knock the legs out of the "main st" economy, but over at versailles on the potomac
they'll be listening to/playing the fiddle and watching the country burn while guzzling 300 dollar scotch and and admiring their
campfire.
Right next to "Versailles on the Potomac" is the site of the former Bonus Army camp, Anacostia Flats. The burning of the Bonus
Army camp at Anacostia Flats could be seen, as a red glow, from the White House. Historians charitable to Herbert Hoover suggest
that Gen. Douglass MacArthur 'conned' Hoover into letting the Army 'disperse' the Bonus Army. The resulting spectacle can be said
to be one of the prime reasons why the American public rejected Hoover when he ran for re-election against Franklin Roosevelt.
I don't know if Hoover played the fiddle, but MacArthur was known to be able to play politicians like one.
The lesson here, if there is one, is that the present occupant of the White House had better be very circumspect about taking
advice from Generals.
"anacostia flats" bonus army raided by Wall Street General MacArthur which is reason in previous iteration of Wall Street power
grab by "American Liberty League", ("The Plot To Seize the White House"-Jules Archer) Marine General Smedley Butler felt forced
play whistle-blower, providing FDR leverage he needed to prosecute banksters.
Big River Bandido December 2, 2017 at 3:26 pm
The gist of the commenter's statement was true - Democrats are totally complicit in the end result of Republican economic and
foreign policy. Until now, Republicans could only deliver on their promises when Democrats helped them out. The Democrats' enabling
strategy eventually alienated their own core supporters. With this tax cut, the Republicans have shown, for the first time, the
ability to enact and sign their own legislation.
The Democrats basically accommodated the Republicans long enough to ensure their own irrelevance. They will not rise again
until their "mixed stances" and those who encourage them are purged.
The most important part of power elite in neoliberal society might not be financial oligarchy, but intelligence agencies elite.
If you look at the role
of Brennan in "Purple color revolution" against Trump that became clear that heads of the agencies are powerful political players
with resources at hand, that are not available to other politicians.
Notable quotes:
"... Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals but of the smoldering threat of vast populations and of potential uprisings of the masses. ..."
"... This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign powers." ..."
"... This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty, a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs. ..."
"... This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare, economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of war equipment. ..."
"... Since WWII, there has been an epidemic of murders at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen, and religious leaders. ..."
"... The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it is one that has become increasingly utilized in pressure spots around the world. ..."
"... Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service with police powers. It is designed primarily to provide personal security to those who control the authority of the state against all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage, and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union. ..."
"... The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created to be; however, it does not exist. ..."
"... Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act. As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3 ..."
True existence of these multimegaton hydrogen bombs has so drastically changed the Grand Strategy of world powers that, today
and for the future, that strategy is being carried out by the invisible forces of the CIA, what remains of the KGB, and their lesser
counterparts around the world.
Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the
horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they
are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to
do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals
but of the smoldering threat of vast populations and of potential uprisings of the masses.
This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power
elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their
ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the
name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign
powers."
The power elite is not a group from one nation or even of one alliance of nations. It operates throughout the world and no doubt
has done so for many, many centuries.
... ... ...
From this point ot view, warfare, and the preparation tor war, is an absolute necessity for the welfare of the state and for control
of population masses, as has been so ably documented in that remarkable novel by Leonard Lewin Report From Iron Mountain on
the Possibility and Desirability of Peace and attributed by Lewin to "the Special Study Group in 1966," an organization whose
existence was so highly classified that there is no record, to this day, of who the men in the group were or with what sectors of
the government or private life they were connected.
This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty,
a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger
and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs.
Not long after that great war, the world leaders were faced suddenly with the reality of a great dilemma. At the root of this
dilemma was the new fission-fusion-fission H-bomb. Is it some uncontrollable Manichean device, or is it truly a weapon of war?
... ... ...
Such knowledge is sufficient. The dilemma is now fact. There can no longer be a classic or traditional war, at least not the all-out,
go-for-broke-type warfare there has been down through the ages, a war that leads to a meaningful victory for one side and abject
defeat for the other.
Witness what has been called warfare in Korea, and Vietnam, and the later, more limited experiment with new weaponry called the
Gulf War in Iraq.
... ... ...
This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism
and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare,
economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically
designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous
loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of
war equipment.
One objective of this book is to discuss these new forces. It will present an insider's view of the CIA story and provide
comparisons with the intelligence organizations -- those invisible forces -- of other countries. To be more realistic with the priorities
of these agencies themselves, more will be said about operational matters than about actual intelligence gathering as a profession.
This subject cannot be explored fully without a discussion of assassination. Since WWII, there has been an epidemic of murders
at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John
F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen,
and religious leaders.
The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions
of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it
is one that has become increasingly utilized in pressure spots around the world.
It is essential to note that there are two principal categories of intelligence organizations and that their functions are determined
generally by the characteristics of the type of government they serve -- not by the citizens of the government, but by its leaders.
Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service
with police powers. It is designed primarily to provide personal security to those who control the authority of the state against
all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive
and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage,
and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union.
The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence
and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created
to be; however, it does not exist.
Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend
to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act.
As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that
National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3
"... Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history. ..."
"... An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin soon outmaneuvered and exiled his oligarch patron Boris Berezovsky. ..."
"... One means of minimizing such risk is to select puppets who are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise. ..."
"... The gist is that elite need a kill switch on their front men (and women). ..."
"... McCain's father connected with the infamous Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights. ..."
"... Another stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic audio file of POW McCain's broadcasts from captivity. Dynamite stuff. ..."
"... Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the Cover-Up. ..."
An interesting article on John McCain. I disagree with the contention that McCain hid knowledge that many American POWs were left
behind (undoubtedly some voluntarily choose to remain behind but not hundreds ). However, the article touched on some ideas that
rang true:
Today when we consider the major countries of the world we see that in many cases the official leaders are also the leaders
in actuality: Vladimir Putin calls the shots in Russia, Xi Jinping and his top Politburo colleagues do the same in China, and
so forth. However, in America and in some other Western countries, this seems to be less and less the case, with top national
figures merely being attractive front-men selected for their popular appeal and their political malleability, a development that
may eventually have dire consequences for the nations they lead. As an extreme example, a drunken Boris Yeltsin freely allowed
the looting of Russia's entire national wealth by the handful of oligarchs who pulled his strings, and the result was the total
impoverishment of the Russian people and a demographic collapse almost unprecedented in modern peacetime history.
An obvious problem with installing puppet rulers is the risk that they will attempt to cut their strings, much like Putin
soon outmaneuvered and exiled his oligarch patron Boris Berezovsky.
One means of minimizing such risk is to select puppets who
are so deeply compromised that they can never break free, knowing that the political self-destruct charges buried deep within
their pasts could easily be triggered if they sought independence. I have sometimes joked with my friends that perhaps the best
career move for an ambitious young politician would be to secretly commit some monstrous crime and then make sure that the hard
evidence of his guilt ended up in the hands of certain powerful people, thereby assuring his rapid political rise.
The gist is that elite need a kill switch on their front men (and women).
Seems to be a series of pieces dealing with Vietnam POWs: the following linked item was interesting and provided a plausible explanation:
that the US failed to pay up agreed on reparations
Remarkable and shocking. Wheels within wheels – this is the first time I have ever seen McCain's father connected with the infamous
Board of Inquiry which cleared Israel in that state's attack on USS LIBERTY during Israel's seizure of the Golan Heights.
Another stunning article in which the author makes reference to his recent acquisition of what he considers to be a reliably authentic
audio file of POW McCain's broadcasts from captivity. Dynamite stuff. The conclusion regarding aspiring untenured historians is
quite downbeat:
Also remarkable; fantastic. It's hard to believe, and a testament to the boldness of Washington dog-and-pony shows, because this
must have been well-known in insider circles in Washington – anything so damning which was not ruthlessly and professionally suppressed
and simply never allowed to become part of a national discussion would surely have been stumbled upon before now. Land of the
Cover-Up.
The most important part of power elite in neoliberal society might not be financial oligarchy, but intelligence agencies elite.
If you look at the role
of Brennan in "Purple color revolution" against Trump that became clear that heads of the agencies are powerful political players
with resources at hand, that are not available to other politicians.
Notable quotes:
"... Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals but of the smoldering threat of vast populations and of potential uprisings of the masses. ..."
"... This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign powers." ..."
"... This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty, a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs. ..."
"... This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare, economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of war equipment. ..."
"... Since WWII, there has been an epidemic of murders at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen, and religious leaders. ..."
"... The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it is one that has become increasingly utilized in pressure spots around the world. ..."
"... Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service with police powers. It is designed primarily to provide personal security to those who control the authority of the state against all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage, and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union. ..."
"... The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created to be; however, it does not exist. ..."
"... Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act. As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3 ..."
True existence of these multimegaton hydrogen bombs has so drastically changed the Grand Strategy of world powers that, today
and for the future, that strategy is being carried out by the invisible forces of the CIA, what remains of the KGB, and their lesser
counterparts around the world.
Men in positions of great power have been forced to realize that their aspirations and responsibilities have exceeded the
horizons of their own experience, knowledge, and capability. Yet, because they are in chargeof this high-technology society, they
are compelled to do something. This overpowering necessity to do something -- although our leaders do not know precisely what to
do or how to do it -- creates in the power elite an overbearing fear of the people. It is the fear not of you and me as individuals
but of the smoldering threat of vast populations and of potential uprisings of the masses.
This power elite is not easy to define; but the fact that it exists makes itself known from time to time. Concerning the power
elite, R. Buckminster Fuller wrote of the "vastly ambitious individuals who [have] become so effectively powerful because of their
ability to remain invisible while operating behind the national scenery." Fuller noted also, "Always their victories [are] in the
name of some powerful sovereign-ruled country. The real power structures [are] always the invisible ones behind the visible sovereign
powers."
The power elite is not a group from one nation or even of one alliance of nations. It operates throughout the world and no doubt
has done so for many, many centuries.
... ... ...
From this point ot view, warfare, and the preparation tor war, is an absolute necessity for the welfare of the state and for control
of population masses, as has been so ably documented in that remarkable novel by Leonard Lewin Report From Iron Mountain on
the Possibility and Desirability of Peace and attributed by Lewin to "the Special Study Group in 1966," an organization whose
existence was so highly classified that there is no record, to this day, of who the men in the group were or with what sectors of
the government or private life they were connected.
This report, as presented in the novel, avers that war is necessary to sustain society, the nation, and national sovereignty,
a view that has existed for millennia. Through the ages, totally uncontrolled warfare -- the only kind of "real" war -- got bigger
and "better" as time and technology churned on, finally culminating in World War II with the introduction of atomic bombs.
Not long after that great war, the world leaders were faced suddenly with the reality of a great dilemma. At the root of this
dilemma was the new fission-fusion-fission H-bomb. Is it some uncontrollable Manichean device, or is it truly a weapon of war?
... ... ...
Such knowledge is sufficient. The dilemma is now fact. There can no longer be a classic or traditional war, at least not the all-out,
go-for-broke-type warfare there has been down through the ages, a war that leads to a meaningful victory for one side and abject
defeat for the other.
Witness what has been called warfare in Korea, and Vietnam, and the later, more limited experiment with new weaponry called the
Gulf War in Iraq.
... ... ...
This is why, even before the end of World War II, the newly structured bipolar confrontation between the world of Communism
and the West resulted in the employment of enormous intelligence agencies that had the power, invisibly, to wage underground warfare,
economic and well as military, anywhere -- including methods of warfare never before imagined. These conflicts had to be tactically
designed to remain short of the utilization of the H-bomb by either side. There can never be victories in such wars, but tremendous
loss of life could occur, and there is the much-desired consumption and attrition of trillions of dollars', and rubles', worth of
war equipment.
One objective of this book is to discuss these new forces. It will present an insider's view of the CIA story and provide
comparisons with the intelligence organizations -- those invisible forces -- of other countries. To be more realistic with the priorities
of these agencies themselves, more will be said about operational matters than about actual intelligence gathering as a profession.
This subject cannot be explored fully without a discussion of assassination. Since WWII, there has been an epidemic of murders
at the highest level in many countries. Without question the most dynamic of these assassinations was the murder of President John
F. Kennedy, but JFK was just one of many in a long list that includes bankers, corporate leaders, newsmen, rising political spokesmen,
and religious leaders.
The ever-present threat of assassination seriously limits the number of men who would normally attempt to strive for positions
of leadership, if for no other reason than that they could be singled out for murder at any time. This is not a new tactic, but it
is one that has become increasingly utilized in pressure spots around the world.
It is essential to note that there are two principal categories of intelligence organizations and that their functions are determined
generally by the characteristics of the type of government they serve -- not by the citizens of the government, but by its leaders.
Under totalitarian or highly centralized nondemocratic regimes, the intelligence organization is a political, secret service
with police powers. It is designed primarily to provide personal security to those who control the authority of the state against
all political opponents, foreign and domestic. These leaders are forced to depend upon these secret elite forces to remain alive
and in power. Such an organization operates in deep secrecy and has the responsibility for carrying out espionage, counterespionage,
and pseudoterrorism. This methodology is as true of Israel, Chile, or Jordan as it has been of the Soviet Union.
The second category of intelligence organization is one whose agents are limited to the gathering and reporting of intelligence
and who have no police functions or the power to arrest at home or abroad. This type of organization is what the CIA was created
to be; however, it does not exist.
Over the decades since the CIA was created, it has acquired more sinister functions. All intelligence agencies, in time, tend
to develop along similar lines. The CIA today is a far cry hum the agency that was created in 1947 by the National Security Act.
As President Harry S. Truman confided to close friends, the greatest mistake of his administration took place when he signed that
National Security Act of 1947 into law. It was that act which, among other things it did, created the Central Intelligence Agency.3
Well, that was a gigantic lie. The truth is that every major policy employed by Central
Banks since 2008 have been about one thing
Maintaining the bond bubble.
Governments around the world have used the bubble in bonds to finance their bloated budgets.
If interest rates were anywhere NEAR normal levels, most countries would lurch towards default
in a matter of weeks.
If you think this is conspiracy theory, consider that the European Central Bank openly
admitted this in its semi-annual Financial Stability Review this week:
Even so, [the ECB] said that "higher interest rates may trigger concerns about sovereigns'
debt-servicing capacity," and noted that "distrust in mainstream political parties continues to
rise, leading to fragmentation of the political landscape away from the established
consensus."
Source: Bloomberg.
In plain speak, the ECB is admitting here that if rates were to rise, the financial world
would quickly realize that most countries couldn't finance their debt payments. Indeed, the
five largest economies in the world are all near or above Debt to GDP levels of 100%
As I explained in my bestseller, The Everything Bubble: the Endgame For Central Bank
Policy , the bubble in bonds is what finances this entire mess. It's what lets the
political class continue to spend money the government doesn't have. And it's why the entire
financial system is now in a bubble.
Remember, sovereign bonds are the bedrock for the current fiat-based financial system, so
when they go into a bubble, EVERYTHING goes into a bubble, as all risk assets adjust to
ridiculously cheap interest rates.
This is why I coined the term The Everything Bubble in 2014 It's also why I wrote a book on
this issue as well as what's coming down the pike: because when this bubble bursts (as all
bubbles do) the policies Central Banks employ will make those from 2008-2015 look like a
cakewalk.
We are putting together an Executive Summary outlining all of these issues as well as what's
to come when The Everything Bubble bursts.
It will be available exclusively to our clients. If you'd like to have a copy delivered to
your inbox when it's completed, you can join the wait-list here:
Well, that was a gigantic lie. The truth is that every major policy employed by Central
Banks since 2008 have been about one thing
Maintaining the bond bubble.
Governments around the world have used the bubble in bonds to finance their bloated budgets.
If interest rates were anywhere NEAR normal levels, most countries would lurch towards default
in a matter of weeks.
If you think this is conspiracy theory, consider that the European Central Bank openly
admitted this in its semi-annual Financial Stability Review this week:
Even so, [the ECB] said that "higher interest rates may trigger concerns about sovereigns'
debt-servicing capacity," and noted that "distrust in mainstream political parties continues to
rise, leading to fragmentation of the political landscape away from the established
consensus."
Source: Bloomberg.
In plain speak, the ECB is admitting here that if rates were to rise, the financial world
would quickly realize that most countries couldn't finance their debt payments. Indeed, the
five largest economies in the world are all near or above Debt to GDP levels of 100%
As I explained in my bestseller, The Everything Bubble: the Endgame For Central Bank
Policy , the bubble in bonds is what finances this entire mess. It's what lets the
political class continue to spend money the government doesn't have. And it's why the entire
financial system is now in a bubble.
Remember, sovereign bonds are the bedrock for the current fiat-based financial system, so
when they go into a bubble, EVERYTHING goes into a bubble, as all risk assets adjust to
ridiculously cheap interest rates.
This is why I coined the term The Everything Bubble in 2014 It's also why I wrote a book on
this issue as well as what's coming down the pike: because when this bubble bursts (as all
bubbles do) the policies Central Banks employ will make those from 2008-2015 look like a
cakewalk.
We are putting together an Executive Summary outlining all of these issues as well as what's
to come when The Everything Bubble bursts.
It will be available exclusively to our clients. If you'd like to have a copy delivered to
your inbox when it's completed, you can join the wait-list here:
"... Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment Bank (AIIB) and other non-U.S. consortia. ..."
"... The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals. These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over legislation seen as undermining a company's 'expected future profits.' ..."
"... At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity. ..."
"... The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954 coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe to absorb the refugees. ..."
"... The trans-Atlantic financial bubble has left a legacy of austerity since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain. ..."
"... The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization? ..."
"... Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies apart, monetary imperialism by creditor nations is inevitable. ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21 st century. ..."
"... wiki/Anglo-Persian Oil Company "In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia. D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future profits." Note the 16% = ~1/6, the rest going off-shore. ..."
"... The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note that 83% = ~5/6, which goes off-shore. Coincidence? ..."
"... Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out the principles, running Aus into debt and austerity. ..."
"... US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice our blood and treasure in WW1 and 2, as is alluded to here.: ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21st century. ..."
"... It's important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception, and the anti-federalists knew it. ..."
"... "After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler. ..."
"... But they didn't invent anything. They learned from their WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs. ..."
"... The Berlin Baghdad railway was an important cause for WWI. ..."
"... Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the Suez Canal nor any chance to let the oil fields slip from their control either. ..."
"... This is not how the Enlightenment was supposed to evolve ..."
"... In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists. ..."
"... The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on, as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out. ..."
"... " Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not essential to capitalist production and of which it can rid itself." ..."
In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade
and "foreign aid" (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping
their assets and imposing austerity. The reality since World War I is that the United States has taken the lead in shaping the international
financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources –
and most of all, to collect on debts owed to it.
Each time this global system has broken down over the past century, the major destabilizing force has been American over-reach
and the drive by its bankers and bondholders for short-term gains. The dollar-centered financial system is leaving more industrial
as well as Third World countries debt-strapped. Its three institutional pillars – the International Monetary Fund (IMF), World Bank
and World Trade Organization – have imposed monetary, fiscal and financial dependency, most recently by the post-Soviet Baltics,
Greece and the rest of southern Europe. The resulting strains are now reaching the point where they are breaking apart the arrangements
put in place after World War II.
The most destructive fiction of international finance is that all debts can be paid, and indeed should be paid, even when
this tears economies apart by forcing them into austerity – to save bondholders, not labor and industry. Yet European countries,
and especially Germany, have shied from pressing for a more balanced global economy that would foster growth for all countries and
avoid the current economic slowdown and debt deflation.
Imposing austerity on Germany after World War I
After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs
among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great
War in 1917. The Allies turned to Germany for reparations to pay these debts. Headed by John Maynard Keynes, British diplomats sought
to clean their hands of responsibility for the consequences by promising that all the money they received from Germany would simply
be forwarded to the U.S. Treasury.
The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the
Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much
like that of Third World debtors a generation ago, and today's southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).
In a pretense that the reparations and Inter-Ally debt tangle could be made solvent, a triangular flow of payments was facilitated
by a convoluted U.S. easy-money policy. American investors sought high returns by buying German local bonds; German municipalities
turned over the dollars they received to the Reichsbank for domestic currency; and the Reichsbank used this foreign exchange to pay
reparations to Britain and other Allies, enabling these countries to pay the United States what it demanded.
But solutions based on attempts to keep debts of such magnitude in place by lending debtors the money to pay can only be temporary.
The U.S. Federal Reserve sustained this triangular flow by holding down U.S. interest rates. This made it attractive for American
investors to buy German municipal bonds and other high-yielding debts. It also deterred Wall Street from drawing funds away from
Britain, which would have driven its economy deeper into austerity after the General Strike of 1926. But domestically, low U.S. interest
rates and easy credit spurred a real estate bubble, followed by a stock market bubble that burst in 1929. The triangular flow of
payments broke down in 1931, leaving a legacy of debt deflation burdening the U.S. and European economies. The Great Depression lasted
until outbreak of World War II in 1939.
Planning for the postwar period took shape as the war neared its end. U.S. diplomats had learned an important lesson. This time
there would be no arms debts or reparations. The global financial system would be stabilized – on the basis of gold, and on creditor-oriented
rules. By the end of the 1940s the United States held some 75 percent of the world's monetary gold stock. That established the U.S.
dollar as the world's reserve currency, freely convertible into gold at the 1933 parity of $35 an ounce.
It also implied that once again, as in the 1920s, European balance-of-payments deficits would have to be financed mainly by the
United States. Recycling of official government credit was to be filtered via the IMF and World Bank, in which U.S. diplomats alone
had veto power to reject policies they found not to be in their national interest. International financial "stability" thus became
a global control mechanism – to maintain creditor-oriented rules centered in the United States.
To obtain gold or dollars as backing for their own domestic monetary systems, other countries had to follow the trade and investment
rules laid down by the United States. These rules called for relinquishing control over capital movements or restrictions on foreign
takeovers of natural resources and the public domain as well as local industry and banking systems.
By 1950 the dollar-based global economic system had become increasingly untenable. Gold continued flowing to the United States,
strengthening the dollar – until the Korean War reversed matters. From 1951 through 1971 the United States ran a deepening balance-of-payments
deficit, which stemmed entirely from overseas military spending. (Private-sector trade and investment was steadily in balance.)
U.S. Treasury debt replaces the gold exchange standard
The foreign military spending that helped return American gold to Europe became a flood as the Vietnam War spread across Asia
after 1962. The Treasury kept the dollar's exchange rate stable by selling gold via the London Gold Pool at $35 an ounce. Finally,
in August 1971, President Nixon stopped the drain by closing the Gold Pool and halting gold convertibility of the dollar.
There was no plan for what would happen next. Most observers viewed cutting the dollar's link to gold as a defeat for the United
States. It certainly ended the postwar financial order as designed in 1944. But what happened next was just the reverse of a defeat.
No longer able to buy gold after 1971 (without inciting strong U.S. disapproval), central banks found only one asset in which to
hold their balance-of-payments surpluses: U.S. Treasury debt. These securities no longer were "as good as gold." The United States
issued them at will to finance soaring domestic budget deficits.
By shifting from gold to the dollars thrown off by the U.S. balance-of-payments deficit, the foundation of global monetary reserves
came to be dominated by the U.S. military spending that continued to flood foreign central banks with surplus dollars. America's
balance-of-payments deficit thus supplied the dollars that financed its domestic budget deficits and bank credit creation – via foreign
central banks recycling U.S. foreign spending back to the U.S. Treasury.
In effect, foreign countries have been taxed without representation over how their loans to the U.S. Government are employed.
European central banks were not yet prepared to create their own sovereign wealth funds to invest their dollar inflows in foreign
stocks or direct ownership of businesses. They simply used their trade and payments surpluses to finance the U.S. budget deficit.
This enabled the Treasury to cut domestic tax rates, above all on the highest income brackets.
U.S. monetary imperialism confronted European and Asian central banks with a dilemma that remains today: If they do not turn around
and buy dollar assets, their currencies will rise against the dollar. Buying U.S. Treasury securities is the only practical way to
stabilize their exchange rates – and in so doing, to prevent their exports from rising in dollar terms and being priced out of dollar-area
markets.
The system may have developed without foresight, but quickly became deliberate. My book Super Imperialism sold best in
the Washington DC area, and I was given a large contract through the Hudson Institute to explain to the Defense Department exactly
how this extractive financial system worked. I was brought to the White House to explain it, and U.S. geostrategists used my book
as a how-to-do-it manual (not my original intention).
Attention soon focused on the oil-exporting countries. After the U.S. quadrupled its grain export prices shortly after the 1971
gold suspension, the oil-exporting countries quadrupled their oil prices. I was informed at a White House meeting that U.S. diplomats
had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United
States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.
This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first
attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization
(SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India,
Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking to break free from America's financial free
ride.
The IMF changes its rules to isolate Russia and China
Aiming to isolate Russia and China, the Obama Administration's confrontational diplomacy has drawn the Bretton Woods institutions
more tightly under US/NATO control. In so doing, it is disrupting the linkages put in place after World War II.
The U.S. plan was to hurt Russia's economy so much that it would be ripe for regime change ("color revolution"). But the effect
was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia. Pressing Europe
to shift its oil and gas purchases to U.S. allies, U.S. sanctions have disrupted German and other European trade and investment with
Russia and China. It also has meant lost opportunities for European farmers, other exporters and investors – and a flood of refugees
from failed post-Soviet states drawn into the NATO orbit, most recently Ukraine.
To U.S. strategists, what made changing IMF rules urgent was Ukraine's $3 billion debt falling due to Russia's National Wealth
Fund in December 2015. The IMF had long withheld credit to countries refusing to pay other governments. This policy aimed primarily
at protecting the financial claims of the U.S. Government, which usually played a lead role in consortia with other governments and
U.S. banks. But under American pressure the IMF changed its rules in January 2015. Henceforth, it announced, it would indeed be willing
to provide credit to countries in arrears other governments – implicitly headed by China (which U.S. geostrategists consider to be
their main long-term adversary), Russia and others that U.S. financial warriors might want to isolate in order to force neoliberal
privatization policies. [1] I provide the full
background in "The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked
Capitalism , Counterpunch and Johnson's Russia List .
Article I of the IMF's 1944-45 founding charter
prohibits it from lending to a member engaged in civil war or at war with another member state, or for military purposes generally.
An obvious reason for this rule is that such a country is unlikely to earn the foreign exchange to pay its debt. Bombing Ukraine's
own Donbass region in the East after its February 2014 coup d'état destroyed its export industry, mainly to Russia.
Withholding IMF credit could have been a lever to force adherence to the Minsk peace agreements, but U.S. diplomacy rejected that
opportunity. When IMF head Christine Lagarde made a new loan to Ukraine in spring 2015, she merely expressed a verbal hope for peace.
Ukrainian President Porochenko announced the next day that he would step up his civil war against the Russian-speaking population
in eastern Ukraine. One and a half-billion dollars of the IMF loan were given to banker Ihor Kolomoiski and disappeared offshore,
while the oligarch used his domestic money to finance an anti-Donbass army. A million refugees were driven east into Russia; others
fled west via Poland as the economy and Ukraine's currency plunged.
The IMF broke four of its rules by lending to Ukraine: (1) Not to lend to a country that has no visible means to pay back the
loan (the "No More Argentinas" rule, adopted after the IMF's disastrous 2001 loan to that country). (2) Not to lend to a country
that repudiates its debt to official creditors (the rule originally intended to enforce payment to U.S.-based institutions). (3)
Not to lend to a country at war – and indeed, destroying its export capacity and hence its balance-of-payments ability to pay back
the loan. Finally (4), not to lend to a country unlikely to impose the IMF's austerity "conditionalities." Ukraine did agree to override
democratic opposition and cut back pensions, but its junta proved too unstable to impose the austerity terms on which the IMF insisted.
U.S. neoliberalism promotes privatization carve-ups of debtor countries
Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer
trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all
others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment
Bank (AIIB) and other non-U.S. consortia.
At stake is much more than just which nations will get the contracting and banking business. At issue is whether the philosophy
of development will follow the classical path based on public infrastructure investment, or whether public sectors will be privatized
and planning turned over to rent-seeking corporations.
What made the United States and Germany the leading industrial nations of the 20 th century – and more recently, China
– has been public investment in economic infrastructure. The aim was to lower the price of living and doing business by providing
basic services on a subsidized basis or freely. By contrast, U.S. privatizers have brought debt leverage to bear on Third World countries,
post-Soviet economies and most recently on southern Europe to force selloffs. Current plans to cap neoliberal policy with the Trans-Pacific
Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Transatlantic Free Trade Agreement (TAFTA) go so far
as to disable government planning power to the financial and corporate sector.
American strategists evidently hoped that the threat of isolating Russia, China and other countries would bring them to heel if
they tried to denominate trade and investment in their own national currencies. Their choice would be either to suffer sanctions
like those imposed on Cuba and Iran, or to avoid exclusion by acquiescing in the dollarized financial and trade system and its drives
to financialize their economies under U.S. control.
The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds
of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve
out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments
pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might
reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and
other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals.
These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over
legislation seen as undermining a company's 'expected future profits.' "
This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment
and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests
has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency
rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt.
At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow
the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier
to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term
gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.
The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has
dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954
coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was
highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President
Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible
nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe
to absorb the refugees.
Germany's choice
This is not how the Enlightenment was supposed to evolve. The industrial takeoff of Germany and other European nations involved
a long fight to free markets from the land rents and financial charges siphoned off by their landed aristocracies and bankers. That
was the essence of classical 19 th -century political economy and 20 th -century social democracy. Most economists
a century ago expected industrial capitalism to produce an economy of abundance, and democratic reforms to endorse public infrastructure
investment and regulation to hold down the cost of living and doing business. But U.S. economic diplomacy now threatens to radically
reverse this economic ideology by aiming to dismantle public regulatory power and impose a radical privatization agenda under the
TTIP and TAFTA.
Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by becoming
more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North American industrial
economies. Instead, the world is polarizing, not converging. The trans-Atlantic financial bubble has left a legacy of austerity
since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain.
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to
force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public
sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization?
Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced
was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private
debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity
of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies
apart, monetary imperialism by creditor nations is inevitable.
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic
destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic
leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy
and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for
the remainder of the 21 st century.
Endnotes
[1] I provide the full background in
"The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked Capitalism
, Counterpunch and Johnson's Russia List .
"Austerity" is such a misused word these days. What the Allies did to Germany after Versailles was austerity, and everyone paid
dearly for it.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
The Austerity everyone complains about in the developed world these days is a joke, hardly austerity, for it has never meant
more than doing a little less deficit-spending than in prior periods, e.g. UK Labour whining about "Austerity" is a joke, as the
UK debt has done nothing but grow, which in terms understandable to simple folk like me means they are spending more than they
can afford to carry.
" The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "
In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country
that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.
Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with
a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
Four days for the trip.
The Berlin Baghdad railway was an important cause for WWI.
Let us hope that history does not repeat itself in the nuclear era.
Edward Mead Earle, Ph.D., 'Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism', 1923, 1924, New York
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking t o break free from America's
financial free ride .
Nah, the NY banksters wouldn't dream of doing such a thing; would they?
This is not how the Enlightenment was supposed to evolve
What I said, and beautifully put, the whole article.
World War I may well have been an important way-point, but the miserable mercantile modus operandi was well established
long before.
An interesting A/B case:
a) wiki/Anglo-Persian Oil Company
"In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of
Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia.
D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange
the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future
profits." Note the 16% = ~1/6, the rest going off-shore.
b) The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note
that 83% = ~5/6, which goes off-shore. Coincidence?
Then see what happened when the erstwhile APOC was nationalized; the US/UK perpetrated a coup against the democratically elected
Mossadegh, eventual blow-back resulting in the 1979 revolution, basically taking Iran out of 'the West.'
Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they
actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those
traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out
the principles, running Aus into debt and austerity.
We the people are powerless passengers, and to add insult to injury, the taxpayer-funded AusBC lies to us continually. Ho,
hum; just like the mainly US/Z MSM and the BBC do – all corrupt and venal. Bah!
Now, cue the trolls: "But Russia/China are worse!"
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions.
US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice
our blood and treasure in WW1 and 2, as is alluded to here.:
Today's global financial crisis can be traced back to World War I and its aftermath.
Excellent.:
The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival
on the altar of inter-government and private debt demands Without a global alternative to letting debt dynamics polarize societies
and tear economies apart, monetary imperialism by creditor nations is inevitable.
This is a gem of a summary.:
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's
democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following
U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy,
between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation,
and probably for the remainder of the 21st century.
Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. It's
important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception,
and the anti-federalists knew it.
Here is a revolution as radical as that which separated us from Great Britain.
You will find all the strength of this country in the hands of your enemies [ ed comment: the money grubbers ]
Patrick Henry June 5 and 7, 1788―1788-1789 Petersburg, Virginia edition of the Debates and other Proceedings . . . Of the
Virginia Convention of 1788
The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d'état.
It had been drafted, in the first place, by men representing special economic interests. Four-fifths of them were
public creditors, one-third were land speculators, and one-fifth represented interests in shipping, manufacturing, and merchandising.
Most of them were lawyers. Not one of them represented the interest of production -- Vilescit origine tali.
- Albert Jay Nock [Excerpted from chapter 5 of Albert Jay Nock's Jefferson, published in 1926]
"After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support
costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered
the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street
super rich, set off a process of greed that led to Hitler.
But they didn't invent anything. They learned from their
WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money
and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs
assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs.
To Michael Hudson,
Great article. Evidence based, factually argued, enjoyably readable.
Replacements for the dollar dominated financial system are well into development. Digital dollars, credit cards, paypal, stock
and currency exchange online platforms, and perhaps most intriguing The exponential rise of Bitcoin and similar crypto-currencies.
The internet is also exponentially exposing the screwing we peasants have been getting by the psychopath, narcissistic, hedonistic,
predatory lenders and controllers. Next comes the widespread, easily usable, and inexpensive cell phone apps, social media exposures,
alternative websites (like Unz.com), and other technologies that will quickly identify every lying, evil, jerk so they can be
neutrilized / avoided
"Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by
becoming more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North
American industrial economies."
I must be old; the economic textbooks I had did explain the benefits of freer trade among nations using Ricardo and Trade Indifference
Curves, but didn't prescribe any one political system being fostered by or even necessary for the benefits of international trade
to be reaped.
to be honest, this way of running things only need to last for 10-20 more years before automation will replace 800 million jobs.
then we will have a few trillionaire overlords unless true AI comes online. by that point nothing matters as we will become zoo
animals.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
That's true and the criminals do similar asset stripping to their own as well, through various means.
It's always the big criminals against the rest of us.
The Berlin Baghdad railway was an important cause for WWI.
Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor
were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the
Suez Canal nor any chance to let the oil fields slip from their control either.
The wars were also instigated to prevent either Germany or Russia having control of, and free access to warm water ports
and the wars also were an excuse to steal vast amounts of wealth from both Germany and Russia through various means.
All pious and pompous pretexts aside, economics was the motive for (the) war (s), and the issues are not settled to this day.
I.e., it's the same class of monstrously insatiable criminals who want everything for themselves who're causing the major troubles
of the day.
Unfortunately, as long as we have SoB's who're eager to sacrifice our blood and treasure for their
benfit, things will never change.
The golden rule is one thing. The paper rule is something else.
May you live in interesting times.
The golden rule is for dreamers, unfortunately. Those who control paper money rule, and your wish has been granted; we live
in times that are both interesting and fascinating, but are nevertheless the same old thing. Only the particular particulars
have changed.
Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin
line as the anti-EU faction in the US have sought to use Putin as a "useful idiot" to destroy the EU. Since nobody in Europe reads
these articles, Ii doesn't really matter and I certainly don't see any EU leader following the advice of someone who has never
concealed his hostility to the EU's very existence: note the use of the racist slur "PIIGS" to refer to certain EU Member States.
Thus, Professor Hudson is simply pushing the "let Putin win in Ukraine" line dressed up in fine-sounding economic jargon.
Since nobody in Europe reads these articles, Ii doesn't really matter
None of it rally matters anyway, no matter how valid. To paraphrase Thucydides, the money grubbers do what they want and the
rest of us are forced to suck it up and limp along.
and I certainly don't see any EU leader following the advice
I doubt that that's Hudson's intent in writing the article. I see it as his attempt to explain the situation to those of us
who care about them even though our concern is pretty much useless.
I do thank him for taking the time to pen this stuff which I consider worthwhile and high quality.
That sounds good but social media is the weapon of choice in the EU too. Lot's of kids know and love Hudson. Any half capable
writer who empathetically explains why you're getting fucked is going to have some followers. Watering, nutrition, weeding. Before
too long you'll be on the Eurail to your destination.
said: "The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler." If true, so what?
That's a classic example of 'garbage in, garbage out'. http://www.codoh.com
This is not how the Enlightenment was supposed to evolve
In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies,
which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.
The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on,
as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible
sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived
to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system
to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out.
The proper
use by the US of its controlled system thus should be a defensive one -- mainly to act so fairly to all players that it, not someone
else, remains in control of the dominant worldwide exchange system. This sensible course of conduct, unfortunately, is not being
pursued by the US.
there is fuzzy, and then there is very fuzzy, and then there is the fuzziness compounded many-fold. The latter is this article.
Here from wiki: "
" Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation
of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories
of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form
of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not
essential to capitalist production and of which it can rid itself."
Wiki goes on to identify "rentier" as used by Marx, to be the same thing as "capitalists." What the above quotation says
is that capitalism CAN rid itself of genuine rent capital. First, the feudal rents that were extracted by landowners were NOT
part of a free market system. Serfdom was only one part of unfree conditions. A general condition of anarchy in rules and laws
by petty principalities characteristic of feudalism, both contained commerce and human beings. There was no freedom, political
or economic.
The conflation (collapsing) of rents and interest is a Marxist error which expands into complete nonsense when a competitive
economy has replaced feudal conditions. ON top of that, profits from a business, firm, or industrial enterprise are NOT rents.
Any marxist is a fool to pretend otherwise, and is just another ideological (False consciousness ) fanatic.
Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase
roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.
The role to be played by the USA in the "new world order" is that of being the farmer to the world. The meticulous Asians will
make stuff.
The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated
than it was in the 1820′s and a nation must do everything in its power to protect and nurture its manufacturing and scientific
excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer's
expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that
put Americans out of work. We fall further and further behind.
"... Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment Bank (AIIB) and other non-U.S. consortia. ..."
"... The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals. These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over legislation seen as undermining a company's 'expected future profits.' ..."
"... At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity. ..."
"... The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954 coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe to absorb the refugees. ..."
"... The trans-Atlantic financial bubble has left a legacy of austerity since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain. ..."
"... The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization? ..."
"... Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies apart, monetary imperialism by creditor nations is inevitable. ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21 st century. ..."
"... wiki/Anglo-Persian Oil Company "In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia. D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future profits." Note the 16% = ~1/6, the rest going off-shore. ..."
"... The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note that 83% = ~5/6, which goes off-shore. Coincidence? ..."
"... Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out the principles, running Aus into debt and austerity. ..."
"... US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice our blood and treasure in WW1 and 2, as is alluded to here.: ..."
"... The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for the remainder of the 21st century. ..."
"... It's important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception, and the anti-federalists knew it. ..."
"... "After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler. ..."
"... But they didn't invent anything. They learned from their WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs. ..."
"... The Berlin Baghdad railway was an important cause for WWI. ..."
"... Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the Suez Canal nor any chance to let the oil fields slip from their control either. ..."
"... This is not how the Enlightenment was supposed to evolve ..."
"... In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies, which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists. ..."
"... The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on, as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out. ..."
"... " Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not essential to capitalist production and of which it can rid itself." ..."
In theory, the global financial system is supposed to help every country gain. Mainstream teaching of international finance, trade
and "foreign aid" (defined simply as any government credit) depicts an almost utopian system uplifting all countries, not stripping
their assets and imposing austerity. The reality since World War I is that the United States has taken the lead in shaping the international
financial system to promote gains for its own bankers, farm exporters, its oil and gas sector, and buyers of foreign resources –
and most of all, to collect on debts owed to it.
Each time this global system has broken down over the past century, the major destabilizing force has been American over-reach
and the drive by its bankers and bondholders for short-term gains. The dollar-centered financial system is leaving more industrial
as well as Third World countries debt-strapped. Its three institutional pillars – the International Monetary Fund (IMF), World Bank
and World Trade Organization – have imposed monetary, fiscal and financial dependency, most recently by the post-Soviet Baltics,
Greece and the rest of southern Europe. The resulting strains are now reaching the point where they are breaking apart the arrangements
put in place after World War II.
The most destructive fiction of international finance is that all debts can be paid, and indeed should be paid, even when
this tears economies apart by forcing them into austerity – to save bondholders, not labor and industry. Yet European countries,
and especially Germany, have shied from pressing for a more balanced global economy that would foster growth for all countries and
avoid the current economic slowdown and debt deflation.
Imposing austerity on Germany after World War I
After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support costs
among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered the Great
War in 1917. The Allies turned to Germany for reparations to pay these debts. Headed by John Maynard Keynes, British diplomats sought
to clean their hands of responsibility for the consequences by promising that all the money they received from Germany would simply
be forwarded to the U.S. Treasury.
The sums were so unpayably high that Germany was driven into austerity and collapse. The nation suffered hyperinflation as the
Reichsbank printed marks to throw onto the foreign exchange also were pushed into financial collapse. The debt deflation was much
like that of Third World debtors a generation ago, and today's southern European PIIGS (Portugal, Ireland, Italy, Greece and Spain).
In a pretense that the reparations and Inter-Ally debt tangle could be made solvent, a triangular flow of payments was facilitated
by a convoluted U.S. easy-money policy. American investors sought high returns by buying German local bonds; German municipalities
turned over the dollars they received to the Reichsbank for domestic currency; and the Reichsbank used this foreign exchange to pay
reparations to Britain and other Allies, enabling these countries to pay the United States what it demanded.
But solutions based on attempts to keep debts of such magnitude in place by lending debtors the money to pay can only be temporary.
The U.S. Federal Reserve sustained this triangular flow by holding down U.S. interest rates. This made it attractive for American
investors to buy German municipal bonds and other high-yielding debts. It also deterred Wall Street from drawing funds away from
Britain, which would have driven its economy deeper into austerity after the General Strike of 1926. But domestically, low U.S. interest
rates and easy credit spurred a real estate bubble, followed by a stock market bubble that burst in 1929. The triangular flow of
payments broke down in 1931, leaving a legacy of debt deflation burdening the U.S. and European economies. The Great Depression lasted
until outbreak of World War II in 1939.
Planning for the postwar period took shape as the war neared its end. U.S. diplomats had learned an important lesson. This time
there would be no arms debts or reparations. The global financial system would be stabilized – on the basis of gold, and on creditor-oriented
rules. By the end of the 1940s the United States held some 75 percent of the world's monetary gold stock. That established the U.S.
dollar as the world's reserve currency, freely convertible into gold at the 1933 parity of $35 an ounce.
It also implied that once again, as in the 1920s, European balance-of-payments deficits would have to be financed mainly by the
United States. Recycling of official government credit was to be filtered via the IMF and World Bank, in which U.S. diplomats alone
had veto power to reject policies they found not to be in their national interest. International financial "stability" thus became
a global control mechanism – to maintain creditor-oriented rules centered in the United States.
To obtain gold or dollars as backing for their own domestic monetary systems, other countries had to follow the trade and investment
rules laid down by the United States. These rules called for relinquishing control over capital movements or restrictions on foreign
takeovers of natural resources and the public domain as well as local industry and banking systems.
By 1950 the dollar-based global economic system had become increasingly untenable. Gold continued flowing to the United States,
strengthening the dollar – until the Korean War reversed matters. From 1951 through 1971 the United States ran a deepening balance-of-payments
deficit, which stemmed entirely from overseas military spending. (Private-sector trade and investment was steadily in balance.)
U.S. Treasury debt replaces the gold exchange standard
The foreign military spending that helped return American gold to Europe became a flood as the Vietnam War spread across Asia
after 1962. The Treasury kept the dollar's exchange rate stable by selling gold via the London Gold Pool at $35 an ounce. Finally,
in August 1971, President Nixon stopped the drain by closing the Gold Pool and halting gold convertibility of the dollar.
There was no plan for what would happen next. Most observers viewed cutting the dollar's link to gold as a defeat for the United
States. It certainly ended the postwar financial order as designed in 1944. But what happened next was just the reverse of a defeat.
No longer able to buy gold after 1971 (without inciting strong U.S. disapproval), central banks found only one asset in which to
hold their balance-of-payments surpluses: U.S. Treasury debt. These securities no longer were "as good as gold." The United States
issued them at will to finance soaring domestic budget deficits.
By shifting from gold to the dollars thrown off by the U.S. balance-of-payments deficit, the foundation of global monetary reserves
came to be dominated by the U.S. military spending that continued to flood foreign central banks with surplus dollars. America's
balance-of-payments deficit thus supplied the dollars that financed its domestic budget deficits and bank credit creation – via foreign
central banks recycling U.S. foreign spending back to the U.S. Treasury.
In effect, foreign countries have been taxed without representation over how their loans to the U.S. Government are employed.
European central banks were not yet prepared to create their own sovereign wealth funds to invest their dollar inflows in foreign
stocks or direct ownership of businesses. They simply used their trade and payments surpluses to finance the U.S. budget deficit.
This enabled the Treasury to cut domestic tax rates, above all on the highest income brackets.
U.S. monetary imperialism confronted European and Asian central banks with a dilemma that remains today: If they do not turn around
and buy dollar assets, their currencies will rise against the dollar. Buying U.S. Treasury securities is the only practical way to
stabilize their exchange rates – and in so doing, to prevent their exports from rising in dollar terms and being priced out of dollar-area
markets.
The system may have developed without foresight, but quickly became deliberate. My book Super Imperialism sold best in
the Washington DC area, and I was given a large contract through the Hudson Institute to explain to the Defense Department exactly
how this extractive financial system worked. I was brought to the White House to explain it, and U.S. geostrategists used my book
as a how-to-do-it manual (not my original intention).
Attention soon focused on the oil-exporting countries. After the U.S. quadrupled its grain export prices shortly after the 1971
gold suspension, the oil-exporting countries quadrupled their oil prices. I was informed at a White House meeting that U.S. diplomats
had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United
States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.
This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first
attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization
(SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India,
Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking to break free from America's financial free
ride.
The IMF changes its rules to isolate Russia and China
Aiming to isolate Russia and China, the Obama Administration's confrontational diplomacy has drawn the Bretton Woods institutions
more tightly under US/NATO control. In so doing, it is disrupting the linkages put in place after World War II.
The U.S. plan was to hurt Russia's economy so much that it would be ripe for regime change ("color revolution"). But the effect
was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia. Pressing Europe
to shift its oil and gas purchases to U.S. allies, U.S. sanctions have disrupted German and other European trade and investment with
Russia and China. It also has meant lost opportunities for European farmers, other exporters and investors – and a flood of refugees
from failed post-Soviet states drawn into the NATO orbit, most recently Ukraine.
To U.S. strategists, what made changing IMF rules urgent was Ukraine's $3 billion debt falling due to Russia's National Wealth
Fund in December 2015. The IMF had long withheld credit to countries refusing to pay other governments. This policy aimed primarily
at protecting the financial claims of the U.S. Government, which usually played a lead role in consortia with other governments and
U.S. banks. But under American pressure the IMF changed its rules in January 2015. Henceforth, it announced, it would indeed be willing
to provide credit to countries in arrears other governments – implicitly headed by China (which U.S. geostrategists consider to be
their main long-term adversary), Russia and others that U.S. financial warriors might want to isolate in order to force neoliberal
privatization policies. [1] I provide the full
background in "The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked
Capitalism , Counterpunch and Johnson's Russia List .
Article I of the IMF's 1944-45 founding charter
prohibits it from lending to a member engaged in civil war or at war with another member state, or for military purposes generally.
An obvious reason for this rule is that such a country is unlikely to earn the foreign exchange to pay its debt. Bombing Ukraine's
own Donbass region in the East after its February 2014 coup d'état destroyed its export industry, mainly to Russia.
Withholding IMF credit could have been a lever to force adherence to the Minsk peace agreements, but U.S. diplomacy rejected that
opportunity. When IMF head Christine Lagarde made a new loan to Ukraine in spring 2015, she merely expressed a verbal hope for peace.
Ukrainian President Porochenko announced the next day that he would step up his civil war against the Russian-speaking population
in eastern Ukraine. One and a half-billion dollars of the IMF loan were given to banker Ihor Kolomoiski and disappeared offshore,
while the oligarch used his domestic money to finance an anti-Donbass army. A million refugees were driven east into Russia; others
fled west via Poland as the economy and Ukraine's currency plunged.
The IMF broke four of its rules by lending to Ukraine: (1) Not to lend to a country that has no visible means to pay back the
loan (the "No More Argentinas" rule, adopted after the IMF's disastrous 2001 loan to that country). (2) Not to lend to a country
that repudiates its debt to official creditors (the rule originally intended to enforce payment to U.S.-based institutions). (3)
Not to lend to a country at war – and indeed, destroying its export capacity and hence its balance-of-payments ability to pay back
the loan. Finally (4), not to lend to a country unlikely to impose the IMF's austerity "conditionalities." Ukraine did agree to override
democratic opposition and cut back pensions, but its junta proved too unstable to impose the austerity terms on which the IMF insisted.
U.S. neoliberalism promotes privatization carve-ups of debtor countries
Since World War II the United States has used the Dollar Standard and its dominant role in the IMF and World Bank to steer
trade and investment along lines benefiting its own economy. But now that the growth of China's mixed economy has outstripped all
others while Russia finally is beginning to recover, countries have the option of borrowing from the Asian Infrastructure Investment
Bank (AIIB) and other non-U.S. consortia.
At stake is much more than just which nations will get the contracting and banking business. At issue is whether the philosophy
of development will follow the classical path based on public infrastructure investment, or whether public sectors will be privatized
and planning turned over to rent-seeking corporations.
What made the United States and Germany the leading industrial nations of the 20 th century – and more recently, China
– has been public investment in economic infrastructure. The aim was to lower the price of living and doing business by providing
basic services on a subsidized basis or freely. By contrast, U.S. privatizers have brought debt leverage to bear on Third World countries,
post-Soviet economies and most recently on southern Europe to force selloffs. Current plans to cap neoliberal policy with the Trans-Pacific
Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Transatlantic Free Trade Agreement (TAFTA) go so far
as to disable government planning power to the financial and corporate sector.
American strategists evidently hoped that the threat of isolating Russia, China and other countries would bring them to heel if
they tried to denominate trade and investment in their own national currencies. Their choice would be either to suffer sanctions
like those imposed on Cuba and Iran, or to avoid exclusion by acquiescing in the dollarized financial and trade system and its drives
to financialize their economies under U.S. control.
The problem with surrendering is that this Washington Consensus is extractive and lives in the short run, laying the seeds
of financial dependency, debt-leveraged bubbles and subsequent debt deflation and austerity. The financial business plan is to carve
out opportunities for price gouging and corporate profits. Today's U.S.-sponsored trade and investment treaties would make governments
pay fines equal to the amount that environmental and price regulations, laws protecting consumers and other social policies might
reduce corporate profits. "Companies would be able to demand compensation from countries whose health, financial, environmental and
other public interest policies they thought to be undermining their interests, and take governments before extrajudicial tribunals.
These tribunals, organised under World Bank and UN rules, would have the power to order taxpayers to pay extensive compensation over
legislation seen as undermining a company's 'expected future profits.' "
This policy threat is splitting the world into pro-U.S. satellites and economies maintaining public infrastructure investment
and what used to be viewed as progressive capitalism. U.S.-sponsored neoliberalism supporting its own financial and corporate interests
has driven Russia, China and other members of the Shanghai Cooperation Organization into an alliance to protect their economic self-sufficiency
rather than becoming dependent on dollarized credit enmeshing them in foreign-currency debt.
At the center of today's global split are the last few centuries of Western social and democratic reform. Seeking to follow
the classical Western development path by retaining a mixed public/private economy, China, Russia and other nations find it easier
to create new institutions such as the AIIB than to reform the dollar standard IMF and World Bank. Their choice is between short-term
gains by dependency leading to austerity, or long-term development with independence and ultimate prosperity.
The price of resistance involves risking military or covert overthrow. Long before the Ukraine crisis, the United States has
dropped the pretense of backing democracies. The die was cast in 1953 with the coup against Iran's secular government, and the 1954
coup in Guatemala to oppose land reform. Support for client oligarchies and dictatorships in Latin America in the 1960 and '70s was
highlighted by the overthrow of Allende in Chile and Operation Condor's assassination program throughout the continent. Under President
Barack Obama and Secretary of State Hillary Clinton, the United States has claimed that America's status as the world's "indispensible
nation" entitled it back the recent coups in Honduras and Ukraine, and to sponsor the NATO attack on Libya and Syria, leaving Europe
to absorb the refugees.
Germany's choice
This is not how the Enlightenment was supposed to evolve. The industrial takeoff of Germany and other European nations involved
a long fight to free markets from the land rents and financial charges siphoned off by their landed aristocracies and bankers. That
was the essence of classical 19 th -century political economy and 20 th -century social democracy. Most economists
a century ago expected industrial capitalism to produce an economy of abundance, and democratic reforms to endorse public infrastructure
investment and regulation to hold down the cost of living and doing business. But U.S. economic diplomacy now threatens to radically
reverse this economic ideology by aiming to dismantle public regulatory power and impose a radical privatization agenda under the
TTIP and TAFTA.
Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by becoming
more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North American industrial
economies. Instead, the world is polarizing, not converging. The trans-Atlantic financial bubble has left a legacy of austerity
since 2008. Debt-ridden economies are being told to cope with their downturns by privatizing their public domain.
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions. American intransigence threatens to
force an either/or choice in what looms as a seismic geopolitical shift over the proper role of governments: Should their public
sectors provide basic services and protect populations from predatory monopolies, rent extraction and financial polarization?
Today's global financial crisis can be traced back to World War I and its aftermath. The principle that needed to be voiced
was the right of sovereign nations not to be forced to sacrifice their economic survival on the altar of inter-government and private
debt demands. The concept of nationhood embodied in the 1648 Treaty of Westphalia based international law on the principle of parity
of sovereign states and non-interference. Without a global alternative to letting debt dynamics polarize societies and tear economies
apart, monetary imperialism by creditor nations is inevitable.
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's democratic
destiny to empower governments to override financial and other rentier interests. Instead, the West is following U.S. diplomatic
leadership back into the age when these interests ruled governments. This conflict between creditors and democracy, between oligarchy
and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation, and probably for
the remainder of the 21 st century.
Endnotes
[1] I provide the full background in
"The IMF Changes its Rules to Isolate China and Russia," December 9, 2015, available on michael-hudson.com, Naked Capitalism
, Counterpunch and Johnson's Russia List .
"Austerity" is such a misused word these days. What the Allies did to Germany after Versailles was austerity, and everyone paid
dearly for it.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
The Austerity everyone complains about in the developed world these days is a joke, hardly austerity, for it has never meant
more than doing a little less deficit-spending than in prior periods, e.g. UK Labour whining about "Austerity" is a joke, as the
UK debt has done nothing but grow, which in terms understandable to simple folk like me means they are spending more than they
can afford to carry.
" The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions "
In the whole article not a word about the euro, also an instrument of imperialism, that mainly benefits Germany, the country
that has to maintain a high level of exports, in order to feed the Germans, and import raw materials for Germany's industries.
Isolating China and Russia, with the other BRICS countries, S Africa, Brazil, India, dangerous game.
This effort forced China and Russia to close cooperation, the economic expression of this is the Peking Petersburg railway, with
a hub in Khazakstan, where the containers are lifted from the Chinese to the Russian system, the width differs.
Four days for the trip.
The Berlin Baghdad railway was an important cause for WWI.
Let us hope that history does not repeat itself in the nuclear era.
Edward Mead Earle, Ph.D., 'Turkey, The Great Powers and The Bagdad Railway, A study in Imperialism', 1923, 1924, New York
The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance
to benefit the United States and its satellites – and to deter countries from seeking t o break free from America's
financial free ride .
Nah, the NY banksters wouldn't dream of doing such a thing; would they?
This is not how the Enlightenment was supposed to evolve
What I said, and beautifully put, the whole article.
World War I may well have been an important way-point, but the miserable mercantile modus operandi was well established
long before.
An interesting A/B case:
a) wiki/Anglo-Persian Oil Company
"In 1901 William Knox D'Arcy, a millionaire London socialite, negotiated an oil concession with Mozaffar al-Din Shah Qajar of
Persia. He financed this with capital he had made from his shares in the highly profitable Mount Morgan mine in Queensland, Australia.
D'Arcy assumed exclusive rights to prospect for oil for 60 years in a vast tract of territory including most of Iran. In exchange
the Shah received £20,000 (£2.0 million today),[1] an equal amount in shares of D'Arcy's company, and a promise of 16% of future
profits." Note the 16% = ~1/6, the rest going off-shore.
b) The Greens in Aus researched the resources sector in Aus, to find that it is 83% 'owned' by off-shore entities. Note
that 83% = ~5/6, which goes off-shore. Coincidence?
Then see what happened when the erstwhile APOC was nationalized; the US/UK perpetrated a coup against the democratically elected
Mossadegh, eventual blow-back resulting in the 1979 revolution, basically taking Iran out of 'the West.'
Note that in Aus, the democratically elected so-called 'leaders' not only allow exactly this sort of economic rape, they
actively assist it by, say, crippling the central bank and pleading for FDI = selling our, we the people's interests, out. Those
traitor-leaders are reversing 'Enlightenment' provisions, privatising whatever they can and, as Michael Hudson well points out
the principles, running Aus into debt and austerity.
We the people are powerless passengers, and to add insult to injury, the taxpayer-funded AusBC lies to us continually. Ho,
hum; just like the mainly US/Z MSM and the BBC do – all corrupt and venal. Bah!
Now, cue the trolls: "But Russia/China are worse!"
The immediate question facing Germany and the rest of Western Europe is how long they will sacrifice their trade and investment
opportunities with Russia, Iran and other economies by adhering to U.S.-sponsored sanctions.
US banking oligarchs will expend the last drop of our blood to prevent a such a linking, just as they were willing to sacrifice
our blood and treasure in WW1 and 2, as is alluded to here.:
Today's global financial crisis can be traced back to World War I and its aftermath.
Excellent.:
The principle that needed to be voiced was the right of sovereign nations not to be forced to sacrifice their economic survival
on the altar of inter-government and private debt demands Without a global alternative to letting debt dynamics polarize societies
and tear economies apart, monetary imperialism by creditor nations is inevitable.
This is a gem of a summary.:
The past century's global fracture between creditor and debtor economies has interrupted what seemed to be Europe's
democratic destiny to empower governments to override financial and other rentier interests. Instead, the West is following
U.S. diplomatic leadership back into the age when these interests ruled governments. This conflict between creditors and democracy,
between oligarchy and economic growth (and indeed, survival) will remain the defining issue of our epoch over the next generation,
and probably for the remainder of the 21st century.
Instead, the West is following U.S. diplomatic leadership back into the age when these interests ruled governments. It's
important to note that such interests have ruled (owned, actually) imperial Britain for centuries and the US since its inception,
and the anti-federalists knew it.
Here is a revolution as radical as that which separated us from Great Britain.
You will find all the strength of this country in the hands of your enemies [ ed comment: the money grubbers ]
Patrick Henry June 5 and 7, 1788―1788-1789 Petersburg, Virginia edition of the Debates and other Proceedings . . . Of the
Virginia Convention of 1788
The Constitution had been laid down under unacceptable auspices; its history had been that of a coup d'état.
It had been drafted, in the first place, by men representing special economic interests. Four-fifths of them were
public creditors, one-third were land speculators, and one-fifth represented interests in shipping, manufacturing, and merchandising.
Most of them were lawyers. Not one of them represented the interest of production -- Vilescit origine tali.
- Albert Jay Nock [Excerpted from chapter 5 of Albert Jay Nock's Jefferson, published in 1926]
"After World War I the U.S. Government deviated from what had been traditional European policy – forgiving military support
costs among the victors. U.S. officials demanded payment for the arms shipped to its Allies in the years before America entered
the Great War in 1917. The Allies turned to Germany for reparations to pay these debts." The Yank banker, the Yankee Wall Street
super rich, set off a process of greed that led to Hitler.
But they didn't invent anything. They learned from their
WASP forebears in the British Empire, whose banking back to Oliver Cromwell had become inextricably entangled with Jewish money
and Jewish interests to the point that Jews per capita dominated it even at the height of the British Empire, when simpleton WASPs
assume that WASPs truly ran everything, and that WASP power was for the good of even the poorest WASPs.
To Michael Hudson,
Great article. Evidence based, factually argued, enjoyably readable.
Replacements for the dollar dominated financial system are well into development. Digital dollars, credit cards, paypal, stock
and currency exchange online platforms, and perhaps most intriguing The exponential rise of Bitcoin and similar crypto-currencies.
The internet is also exponentially exposing the screwing we peasants have been getting by the psychopath, narcissistic, hedonistic,
predatory lenders and controllers. Next comes the widespread, easily usable, and inexpensive cell phone apps, social media exposures,
alternative websites (like Unz.com), and other technologies that will quickly identify every lying, evil, jerk so they can be
neutrilized / avoided
"Textbook trade theory depicts trade and investment as helping poorer countries catch up, compelling them to survive by
becoming more democratic to overcome their vested interests and oligarchies along the lines pioneered by European and North
American industrial economies."
I must be old; the economic textbooks I had did explain the benefits of freer trade among nations using Ricardo and Trade Indifference
Curves, but didn't prescribe any one political system being fostered by or even necessary for the benefits of international trade
to be reaped.
to be honest, this way of running things only need to last for 10-20 more years before automation will replace 800 million jobs.
then we will have a few trillionaire overlords unless true AI comes online. by that point nothing matters as we will become zoo
animals.
What the IMF and the Western Banking Cartel do to third world countries is akin to a pusher hopping up addicts on debt and
then taking it away while stripping them of their assets, pretty much hurting only the people of the third world country; certainly
not the WBC, and almost certainly not the criminal elite who took the deal.
That's true and the criminals do similar asset stripping to their own as well, through various means.
It's always the big criminals against the rest of us.
The Berlin Baghdad railway was an important cause for WWI.
Bingo. Stopping it was a huge factor. There was no way the banksters of the world were going to let that go forward, nor
were they going to let Germany and Russia link up in any other ways. They certainly were not about to allow any threats to the
Suez Canal nor any chance to let the oil fields slip from their control either.
The wars were also instigated to prevent either Germany or Russia having control of, and free access to warm water ports
and the wars also were an excuse to steal vast amounts of wealth from both Germany and Russia through various means.
All pious and pompous pretexts aside, economics was the motive for (the) war (s), and the issues are not settled to this day.
I.e., it's the same class of monstrously insatiable criminals who want everything for themselves who're causing the major troubles
of the day.
Unfortunately, as long as we have SoB's who're eager to sacrifice our blood and treasure for their
benfit, things will never change.
The golden rule is one thing. The paper rule is something else.
May you live in interesting times.
The golden rule is for dreamers, unfortunately. Those who control paper money rule, and your wish has been granted; we live
in times that are both interesting and fascinating, but are nevertheless the same old thing. Only the particular particulars
have changed.
Essentially, the anti-EU and anti-euro line that Professor Hudson has being pushing for years, which has now morphed into a pro-Putin
line as the anti-EU faction in the US have sought to use Putin as a "useful idiot" to destroy the EU. Since nobody in Europe reads
these articles, Ii doesn't really matter and I certainly don't see any EU leader following the advice of someone who has never
concealed his hostility to the EU's very existence: note the use of the racist slur "PIIGS" to refer to certain EU Member States.
Thus, Professor Hudson is simply pushing the "let Putin win in Ukraine" line dressed up in fine-sounding economic jargon.
Since nobody in Europe reads these articles, Ii doesn't really matter
None of it rally matters anyway, no matter how valid. To paraphrase Thucydides, the money grubbers do what they want and the
rest of us are forced to suck it up and limp along.
and I certainly don't see any EU leader following the advice
I doubt that that's Hudson's intent in writing the article. I see it as his attempt to explain the situation to those of us
who care about them even though our concern is pretty much useless.
I do thank him for taking the time to pen this stuff which I consider worthwhile and high quality.
That sounds good but social media is the weapon of choice in the EU too. Lot's of kids know and love Hudson. Any half capable
writer who empathetically explains why you're getting fucked is going to have some followers. Watering, nutrition, weeding. Before
too long you'll be on the Eurail to your destination.
said: "The Yank banker, the Yankee Wall Street super rich, set off a process of greed that led to Hitler." If true, so what?
That's a classic example of 'garbage in, garbage out'. http://www.codoh.com
This is not how the Enlightenment was supposed to evolve
In fact, this is exactly how it was supposed to work. The wave of liberal democracies was precisely to overturn the monarchies,
which were the last bulwark protecting the people from the full tyranny of the financiers, who were, by nature, one-world internationalists.
The real problem with this is that any form of monetary arrangement involves an implied trusteeship, with obligations on,
as well as benefits for, the trustee. The US is so abusing its trusteeship through the continual use of an irresponsible
sanctions regime that it risks a good portion of the world economy abandoning its system for someone else's, which may be perceived
to be run more responsibility. The disaster scenario would be the US having therefore in the future to access that other system
to purchase oil or minerals, and having that system do to us what we previously did to them -- sanction us out.
The proper
use by the US of its controlled system thus should be a defensive one -- mainly to act so fairly to all players that it, not someone
else, remains in control of the dominant worldwide exchange system. This sensible course of conduct, unfortunately, is not being
pursued by the US.
there is fuzzy, and then there is very fuzzy, and then there is the fuzziness compounded many-fold. The latter is this article.
Here from wiki: "
" Marx believed that capitalism was inherently built upon practices of usury and thus inevitably leading to the separation
of society into two classes: one composed of those who produce value and the other, which feeds upon the first one. In "Theories
of Surplus Value" (written 1862-1863), he states " that interest (in contrast to industrial profit) and rent (that is the form
of landed property created by capitalist production itself) are superfetations (i.e., excessive accumulations) which are not
essential to capitalist production and of which it can rid itself."
Wiki goes on to identify "rentier" as used by Marx, to be the same thing as "capitalists." What the above quotation says
is that capitalism CAN rid itself of genuine rent capital. First, the feudal rents that were extracted by landowners were NOT
part of a free market system. Serfdom was only one part of unfree conditions. A general condition of anarchy in rules and laws
by petty principalities characteristic of feudalism, both contained commerce and human beings. There was no freedom, political
or economic.
The conflation (collapsing) of rents and interest is a Marxist error which expands into complete nonsense when a competitive
economy has replaced feudal conditions. ON top of that, profits from a business, firm, or industrial enterprise are NOT rents.
Any marxist is a fool to pretend otherwise, and is just another ideological (False consciousness ) fanatic.
Germany loans money back to the poorer nations who buy her exports just as China loans money to the United States (they purchase
roughly a third of our Treasury bonds) so that Americans can continue to buy Chinese manufactured goods.
The role to be played by the USA in the "new world order" is that of being the farmer to the world. The meticulous Asians will
make stuff.
The problem with this is that it is based on 19th century notions of manufacturing. Technique today is vastly more complicated
than it was in the 1820′s and a nation must do everything in its power to protect and nurture its manufacturing and scientific
excellence. In the United States we have been giving this away to our competitors. We educate their children at our taxpayer's
expense and they take the knowledge gained back to their native countries where, with state subsidies, they build factories that
put Americans out of work. We fall further and further behind.
Less regulation is one campaign promise made by the president that is coming true...
Reducing government regulation is tough. It's resisted by all those who benefit, including
government employees who administer the many programs. Every president since Jimmy Carter has
attempted to lower the cost of regulation. At best, any cuts have been tiny and mostly centered
on trimming paperwork. But less regulation is one campaign promise made by Donald Trump that is
coming true. With tax and health-care reform problematic and given the president's
protectionist leanings, deregulation is probably a major driver of the stock market rally.
the only credit trumpanyahoo deserves is for giving the last vestiges of what was left of
this country to the money printers, allowing them to print/steal/lie/cheat/war at will...
"... The only problem with One Belt One Road is US Intel stoking color revolutions in every critical spot along the belts and roads ..."
"... LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day Walmart version of Stalingrad. ..."
"... Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the Americans took down the British Sterling by force and replace the Pound with the US Dollar Reserve Currency. Since then the USA has exported its inflation. ..."
"... Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a weapon against you. A Reserve Currency should not be political. Both Russia and China need to modernize their Banking systems. It shouldn't be too much of a stretch to move the center of commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve trade one commodity at a time. China is presently the largest buyer of oil so when that pops YUAN, the Dollar will collapse. ..."
"... This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been factored in. What is going to happen is this thing will be foie grassed through and it will be a monumental letdown. ..."
"... Unlike western democracies or republics or oligarchies if you prefer, China has a plan and their plan is long range and not based on next week's, or next month's or next year's elections. That is an unbelievable economic andf political advantage it enjoys ..."
LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain
their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day
Walmart version of Stalingrad.
Not even a mention of the biggest event in China... The Yuan was approved Oct 2016 for use
as a global reserve currency. Australian Iron ore is already trading in Yuan and saving 14%
on the transaction over the US Dollar. This breaks the stranglehold of the US Dollar Reserve.
Russia is already setting up a Yuan Bond trading platform. This will lead to oil futures. I
agree with the author. Buy the Yuan. Nothing can stop China with the Yuan as a reserve
currency.
Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was
overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the
Americans took down the British Sterling by force and replace the Pound with the US Dollar
Reserve Currency. Since then the USA has exported its inflation.
Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are
moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the
rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a
weapon against you. A Reserve Currency should not be political. Both Russia and China need to
modernize their Banking systems. It shouldn't be too much of a stretch to move the center of
commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real
interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore
in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve
trade one commodity at a time. China is presently the largest buyer of oil so when that pops
YUAN, the Dollar will collapse.
Imagine the scale of US dollar inflation if suddenly dollars were not being held in
reserve across the globe. It is mind-numbing.
I could be wrong of course but if this maps the way it appears with dumb Trump at the
helm, the USA could be in for a depression that makes wheelbarrow money for a cup of coffee
look like deflation. When the rats start selling bonds to get out first, the house of cards
comes down hard.
This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been
factored in. What is going to happen is this thing will be foie grassed through and it will
be a monumental letdown. That will be the Trigger for the first big leg of the unraveling.
Inexperience Fed Chair who is not an economist, no FED ammo left, Bond Market pitches. Stocks
drop 50% and the euphoria is over. China, Russia, and India are going to take down the mighty
dollar. If you think you can just sit on the sidelines in Cash... what will those dollars be
worth? 10 Cents on the dollar? All asset classes will collapse homes, cars, dollar bills.
Mountains of debt backed up by the frothy bond market as the rats desert the sinking
ship!
Unlike western democracies or republics or oligarchies if you prefer, China has a plan and
their plan is long range and not based on next week's, or next month's or next year's
elections. That is an unbelievable economic andf political advantage it enjoys.
Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted
another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to
dissent to the Fed's rate hike decision earlier this year) received numerous questions. Among
them was the following one from Zero Hedge:
#AskNeel You have
admitted the Fed has a "third mandate" and are worried about financial instability. What do you
look at to gauge "instability" and what is the biggest S&P drop the Fed will accept before
intervening
Our job is not to protect investors. Tech bubble bursting didn't cause crisis - only mild
recession. We don't see leverage building across the economy the way it did in housing run-up.
If stocks correct - fine. Need to worry about what would trigger a real crisis. #AskNeelhttps://t.co/Wl7Pv1BX18
The answer echoed a similar
response from back in March , when he claimed that he doesn't "care about stock market fall
itself. Care abt potential financial instability. Stock market drop unlikely to trigger
crisis."
Needless to say, Kashkari's answer was token, superficial and condescending: while he is
right that the tech bubble bursting didn't cause a crisis, the Fed's dramatic easing in
response to the bursting of the tech bubble bursting lay the foundations for the housing and
credit bubble; in other words, the Fed responded to one bubble by creating an even bigger
bubble, and the bursting of that bubble in 2007/2008 did cause a crisis: the biggest financial
crisis since the Great Depression to be precise. And, in turn, the bursting of the current
global financial bubble - in which the Fed has been joined by all other central banks to inject
$20 trillion in global liquidity, or a third of global GDP - and is the biggest in history,
will have a far more disastrous outcome than the last one.
Kashkari also said that "we don't see leverage building across the economy the way it did in
housing run-up", which of course is a surprisingly naive way of looking at leverage, especially
following last night's explanation from
Fasakanara that when one takes into account ehe world's vol-sellers, it's all just one
giant, $22 trillion position shorting volatility with record gama and all-time high leverage,
both explicit and synthetic. Which also makes his next statement that the Fed needs "to worry
about what would trigger a real crisis" especially bizarre: we now live in a world in which the
market itself, thanks to QE and NIRP, has become systemic risk (see
""It's All One Single, Giant $22 Trillion Position": How Market Risk Became Systemic Risk
").
The fact that, as Kashkari confirms, the Fed is completely oblivious to its footprint and
impact in the market should be terrifying to anyone. Well, anyone but not traders because
despite what Kashkari also claimed, namely that " If stocks correct - fine ", one thing we can
be certain of is that the moment stocks have a 5-10% swoon, the Fed will be right back assuring
traders that it will ease back on its tightening, if not launch QE4 (right, James Bullard?)
Neel..I have respect for u but I know what I saw in August 2015..market dropped 7-8% and fed
speak became "the case for tightening is less compelling"...
But wait, it gets better, because in the very next question, immediately after stating that
the Fed's job is not to protect investors, in response to a question whether the Fed creates
moral hazard by keeping rates extra low, Kashkari answers that " If we raised interest rates to
drive down the stock market, how does that help workers/wages/employment? " Or investors, for
that matter. But the point is that the Fed quite clearly is intent on keeping stocks high.
The punchline: his very next statement: "If Greenspan had acted on his irrational exuberance
call the economic costs may have been high."
We pay close attention to leverage across asset classes and economy. If we raised interest
rates to drive down the stock market, how does that help workers/wages/employment? If Greenspan
had acted on his irrational exuberance call the economic costs may have been high. #AskNeelhttps://t.co/hfDycYCXkg
Here's a thought: if Greenspan had acted on his "irrational exuberance" call, there would
have been pain, yes, but there would never be a tech bubble, and there would never be a global
financial crisis, Lehman, AIG or trillions and trillions in central bank liquidity keeping the
global financial system propped up now. In fact, Kashkari's statement once again demonstrates
just how utterly clueless the "macroprudential regulators" at the Fed truly are.
* * *
There were some other tangential, but notable insights from the Minneapolis Fed president.
One was his accurate observation that the
Fed's constantly wrong dot plots have destroyed the Fed's credibility:
I'm not a fan of the dot plot. Forward guidance is a wonderful tool. Forward misguidance may
do harm and undermine our credibility . I would rather only give guidance when we are pretty
sure about the path forward
In response to whether the Fed's ZIRP was responsible for "zombie companies" in the shale
patch and the record glut of oil inventory, the former
Goldmanite was non-commital :
I think low interest rates brought down costs for people and businesses to invest - across
sectors. That is what they were designed to do. But commodity markets always have cycles of
under and overinvestment.
When asked how US investors are supposed to compete with foreign buyers of US stocks,
including such buyers as the Swiss National Bank which is price-indescriminate as it creates
money out of thin air, Kashkari's response :
It is a global market for investors. I don't think US economic growth would be stronger if
we forbade foreign investment. If we can get job and wage growth up, that will help regular
Americans make ends meet and save for their futures.
That Kashkari explicitly ignored the stated implication, namely that foreign central banks
buying US stocks has led to a giant asset bubble, was one more warning either how clueless or
how devious and premeditated this entire asset reflation experiment truly is.
Kashkari was also asked if the Fed would "ever consider forgiving the Treasury debt on its
books?" to
which the answer - sadly for the Magic Money Treers who have no grasp of elementary finance
- was "No. That would violate our independence and likely cause high inflation as people lost
confidence in the Fed's independence. "
Among the other interesting exchanges was a question if the Fed plans on using blockchain in
the future, where the response was that "researches
around the Fed System are looking at it (and other fintech developments). Too soon to know how
and if it will be used by the Fed."
Kashkari also touched on inflation price targeting: when asked "What level of inflation
would be a reason to 'tap the brakes'?" He responded that, as price targeting would suggest,
"2% core PCE on a 12-month basis would be a good place to start. We've been 1.3% for 5+ years
so we should be comfortable at 2.7% for 5+ years. That's what we are saying when we call it a
target and not a ceiling." In other words, Kashkari supports doubling the rate of core
inflation for the next 5 years.
Finally when asked "at what point does the flattening of the Treasury curve become a concern
for the Fed?" Kashkari responded that "it's
a concern now. We r raising rates, driving the front end up, meanwhile inflation expectations r
low keeping the long end anchored. The more we commit to driving rates higher (regardless of
data), the more we risk pressuring inflation expectations to the downside." He has good reason
to be concerned: the flatter - and eventually inverted - the curve gets, the more the market is
telling the Fed what should be obvious to everyone, if not Kashkari: that the Fed has lost
control, as
Citi warned last week .
LOL.. yes.. the USA Stocks the ponds from any of their 800 military bases used to sustain
their Dollar Reserve virtue. And if you object, they give you sanctions akin to a modern-day
Walmart version of Stalingrad.
Not even a mention of the biggest event in China... The Yuan was approved Oct 2016 for use
as a global reserve currency. Australian Iron ore is already trading in Yuan and saving 14%
on the transaction over the US Dollar. This breaks the stranglehold of the US Dollar Reserve.
Russia is already setting up a Yuan Bond trading platform. This will lead to oil futures. I
agree with the author. Buy the Yuan. Nothing can stop China with the Yuan as a reserve
currency.
Remember Maynard Keynes attempted to set up the BANCOR, a composite currency but was
overruled by the US in the dreadful Anglo American loan fiasco in 1944. That is when the
Americans took down the British Sterling by force and replace the Pound with the US Dollar
Reserve Currency. Since then the USA has exported its inflation.
Watch the Treasuries too. Saudi wants to sell off $750 Billion in US Treasuries. They are
moving closer to Russia and China. Trump in my eyes is the last Bully or last straw for the
rest of the world. If you don't agree with the USA, they use the US Dollar reserve as a
weapon against you. A Reserve Currency should not be political. Both Russia and China need to
modernize their Banking systems. It shouldn't be too much of a stretch to move the center of
commodities to Hong Kong. With China as the biggest buyer of commodities, they have a real
interest in underwriting commodities. There is absolutely zero reason to be trading Iron ore
in Us dollars. The US doesn't buy iron ore or make much of it. The YUAN will lever reserve
trade one commodity at a time. China is presently the largest buyer of oil so when that pops
YUAN, the Dollar will collapse.
Imagine the scale of US dollar inflation if suddenly dollars were not being held in
reserve across the globe. It is mind-numbing.
I could be wrong of course but if this maps the way it appears with dumb Trump at the
helm, the USA could be in for a depression that makes wheelbarrow money for a cup of coffee
look like deflation. When the rats start selling bonds to get out first, the house of cards
comes down hard.
This phony RINOTAX euphoria that the markets will rise 17% is wrong. This has already been
factored in. What is going to happen is this thing will be foie grassed through and it will
be a monumental letdown. That will be the Trigger for the first big leg of the unraveling.
Inexperience Fed Chair who is not an economist, no FED ammo left, Bond Market pitches. Stocks
drop 50% and the euphoria is over. China, Russia, and India are going to take down the mighty
dollar. If you think you can just sit on the sidelines in Cash... what will those dollars be
worth? 10 Cents on the dollar? All asset classes will collapse homes, cars, dollar bills.
Mountains of debt backed up by the frothy bond market as the rats desert the sinking
ship!
Unlike western democracies or republics or oligarchies if you prefer, China has a plan and
their plan is long range and not based on next week's, or next month's or next year's
elections. That is an unbelievable economic andf political advantage it enjoys.
Former Goldmanite and current Minneapolis Fed president, Neel Kashkari, conducted
another #AskNeel session on Twitter where the dovish FOMC voter (he was the only one to
dissent to the Fed's rate hike decision earlier this year) received numerous questions. Among
them was the following one from Zero Hedge:
#AskNeel You have
admitted the Fed has a "third mandate" and are worried about financial instability. What do you
look at to gauge "instability" and what is the biggest S&P drop the Fed will accept before
intervening
Our job is not to protect investors. Tech bubble bursting didn't cause crisis - only mild
recession. We don't see leverage building across the economy the way it did in housing run-up.
If stocks correct - fine. Need to worry about what would trigger a real crisis. #AskNeelhttps://t.co/Wl7Pv1BX18
The answer echoed a similar
response from back in March , when he claimed that he doesn't "care about stock market fall
itself. Care abt potential financial instability. Stock market drop unlikely to trigger
crisis."
Needless to say, Kashkari's answer was token, superficial and condescending: while he is
right that the tech bubble bursting didn't cause a crisis, the Fed's dramatic easing in
response to the bursting of the tech bubble bursting lay the foundations for the housing and
credit bubble; in other words, the Fed responded to one bubble by creating an even bigger
bubble, and the bursting of that bubble in 2007/2008 did cause a crisis: the biggest financial
crisis since the Great Depression to be precise. And, in turn, the bursting of the current
global financial bubble - in which the Fed has been joined by all other central banks to inject
$20 trillion in global liquidity, or a third of global GDP - and is the biggest in history,
will have a far more disastrous outcome than the last one.
Kashkari also said that "we don't see leverage building across the economy the way it did in
housing run-up", which of course is a surprisingly naive way of looking at leverage, especially
following last night's explanation from
Fasakanara that when one takes into account ehe world's vol-sellers, it's all just one
giant, $22 trillion position shorting volatility with record gama and all-time high leverage,
both explicit and synthetic. Which also makes his next statement that the Fed needs "to worry
about what would trigger a real crisis" especially bizarre: we now live in a world in which the
market itself, thanks to QE and NIRP, has become systemic risk (see
""It's All One Single, Giant $22 Trillion Position": How Market Risk Became Systemic Risk
").
The fact that, as Kashkari confirms, the Fed is completely oblivious to its footprint and
impact in the market should be terrifying to anyone. Well, anyone but not traders because
despite what Kashkari also claimed, namely that " If stocks correct - fine ", one thing we can
be certain of is that the moment stocks have a 5-10% swoon, the Fed will be right back assuring
traders that it will ease back on its tightening, if not launch QE4 (right, James Bullard?)
Neel..I have respect for u but I know what I saw in August 2015..market dropped 7-8% and fed
speak became "the case for tightening is less compelling"...
But wait, it gets better, because in the very next question, immediately after stating that
the Fed's job is not to protect investors, in response to a question whether the Fed creates
moral hazard by keeping rates extra low, Kashkari answers that " If we raised interest rates to
drive down the stock market, how does that help workers/wages/employment? " Or investors, for
that matter. But the point is that the Fed quite clearly is intent on keeping stocks high.
The punchline: his very next statement: "If Greenspan had acted on his irrational exuberance
call the economic costs may have been high."
We pay close attention to leverage across asset classes and economy. If we raised interest
rates to drive down the stock market, how does that help workers/wages/employment? If Greenspan
had acted on his irrational exuberance call the economic costs may have been high. #AskNeelhttps://t.co/hfDycYCXkg
Here's a thought: if Greenspan had acted on his "irrational exuberance" call, there would
have been pain, yes, but there would never be a tech bubble, and there would never be a global
financial crisis, Lehman, AIG or trillions and trillions in central bank liquidity keeping the
global financial system propped up now. In fact, Kashkari's statement once again demonstrates
just how utterly clueless the "macroprudential regulators" at the Fed truly are.
* * *
There were some other tangential, but notable insights from the Minneapolis Fed president.
One was his accurate observation that the
Fed's constantly wrong dot plots have destroyed the Fed's credibility:
I'm not a fan of the dot plot. Forward guidance is a wonderful tool. Forward misguidance may
do harm and undermine our credibility . I would rather only give guidance when we are pretty
sure about the path forward
In response to whether the Fed's ZIRP was responsible for "zombie companies" in the shale
patch and the record glut of oil inventory, the former
Goldmanite was non-commital :
I think low interest rates brought down costs for people and businesses to invest - across
sectors. That is what they were designed to do. But commodity markets always have cycles of
under and overinvestment.
When asked how US investors are supposed to compete with foreign buyers of US stocks,
including such buyers as the Swiss National Bank which is price-indescriminate as it creates
money out of thin air, Kashkari's response :
It is a global market for investors. I don't think US economic growth would be stronger if
we forbade foreign investment. If we can get job and wage growth up, that will help regular
Americans make ends meet and save for their futures.
That Kashkari explicitly ignored the stated implication, namely that foreign central banks
buying US stocks has led to a giant asset bubble, was one more warning either how clueless or
how devious and premeditated this entire asset reflation experiment truly is.
Kashkari was also asked if the Fed would "ever consider forgiving the Treasury debt on its
books?" to
which the answer - sadly for the Magic Money Treers who have no grasp of elementary finance
- was "No. That would violate our independence and likely cause high inflation as people lost
confidence in the Fed's independence. "
Among the other interesting exchanges was a question if the Fed plans on using blockchain in
the future, where the response was that "researches
around the Fed System are looking at it (and other fintech developments). Too soon to know how
and if it will be used by the Fed."
Kashkari also touched on inflation price targeting: when asked "What level of inflation
would be a reason to 'tap the brakes'?" He responded that, as price targeting would suggest,
"2% core PCE on a 12-month basis would be a good place to start. We've been 1.3% for 5+ years
so we should be comfortable at 2.7% for 5+ years. That's what we are saying when we call it a
target and not a ceiling." In other words, Kashkari supports doubling the rate of core
inflation for the next 5 years.
Finally when asked "at what point does the flattening of the Treasury curve become a concern
for the Fed?" Kashkari responded that "it's
a concern now. We r raising rates, driving the front end up, meanwhile inflation expectations r
low keeping the long end anchored. The more we commit to driving rates higher (regardless of
data), the more we risk pressuring inflation expectations to the downside." He has good reason
to be concerned: the flatter - and eventually inverted - the curve gets, the more the market is
telling the Fed what should be obvious to everyone, if not Kashkari: that the Fed has lost
control, as
Citi warned last week .
Less regulation is one campaign promise made by the president that is coming true...
Reducing government regulation is tough. It's resisted by all those who benefit, including
government employees who administer the many programs. Every president since Jimmy Carter has
attempted to lower the cost of regulation. At best, any cuts have been tiny and mostly centered
on trimming paperwork. But less regulation is one campaign promise made by Donald Trump that is
coming true. With tax and health-care reform problematic and given the president's
protectionist leanings, deregulation is probably a major driver of the stock market rally.
the only credit trumpanyahoo deserves is for giving the last vestiges of what was left of
this country to the money printers, allowing them to print/steal/lie/cheat/war at will...
"... With the Federal Reserve facing a Herculean conundrum in unwinding its crisis-era monetary policy - and a likely leadership
transition on the horizon - Goldman Sachs (GS) suggested on Saturday the central bank could move early to reduce the vast sums of government
and mortgage-backed securities (MBS) it holds on its books. ..."
"... "This could be important for balance sheet policy because many Republican-leaning economists have criticized quantitative easing
(QE) and have expressed a preference for rapid balance sheet rundown, perhaps even through asset sales," wrote Daan Struyven, a Goldman
economist. ..."
"... A potential fire sale of Treasurys and mortgage-backed securities by the Fed "could have significantly more adverse effects
on financial conditions than gradual runoff, and the mere risk of such an outcome might set up another 'taper tantrum,' " Struyven added.
..."
"... Some market observers have long argued that the Fed has distorted financial conditions with QE, and the central bank faces
a huge task trying to pare down its bloated balance sheet. ..."
Yellen's exit may prompt the Fed to pare its balance sheet sooner rather than later, Goldman says
Yuri Gripas | Reuters
It's often said that good things come to those who wait - but a bloated $4.5 trillion balance sheet might be a notable exception
to that rule.
With the Federal Reserve facing a Herculean conundrum in unwinding its crisis-era monetary policy - and a likely leadership
transition on the horizon - Goldman Sachs (GS) suggested on Saturday the central bank could move early to reduce the vast sums of
government and mortgage-backed securities (MBS) it holds on its books.
In a research note to clients, the bank pointed to the likelihood that President Donald Trump may "reshape the leadership" of
the Federal Open Market Committee (FOMC), the Fed's powerful policy-making body, as the terms of Fed Chair Janet Yellen and Vice
Chair Stanley Fischer expire in early 2018.
"This could be important for balance sheet policy because many Republican-leaning economists have criticized quantitative
easing (QE) and have expressed a preference for rapid balance sheet rundown, perhaps even through asset sales," wrote Daan Struyven,
a Goldman economist.
If the new appointments-especially the new chair-are thought to favor aggressive balance sheet normalization, perhaps even including
asset sales, and if all decisions are left up to the incoming team, financial markets might experience heightened uncertainty during
the transition."
Goldman suggested there was a "strong 'risk management' case for an announcement of very gradual balance sheet runoff later this
year," because of the political risk associated with new leadership at the Fed.
"Our forecast is that the discussion around reinvestment continues for most of this year and the plan is formally announced in
December 2017," Struyven said. "At that meeting, we expect the committee to hold the funds rate steady after hiking in both June
and September. We expect the quarterly hikes to resume in March 2018."
The economist harked back to 2013's "taper tantrum," in which markets reacted the Fed's suggestions of tighter monetary policy
by sending bond yields surging and stocks reeling - albeit temporarily.
A potential fire sale of Treasurys and mortgage-backed securities by the Fed "could have significantly more adverse effects
on financial conditions than gradual runoff, and the mere risk of such an outcome might set up another 'taper tantrum,' " Struyven
added.
'The uncertainty is substantial'
As the central bank begins a campaign to tighten benchmark interest rates - making a quarter-point hike just last week - it's
renewed a debate over how to unwind the Fed's massive bond buying program.
Some market observers have long argued that the Fed has distorted financial conditions with QE, and the central bank faces
a huge task trying to pare down its bloated balance sheet.
"The bigger the Fed's credit footprint, the more it interferes with the efficient employment and pricing of credit," wrote George
Selgin, a senior fellow and director of the Center for Monetary and Financial Alternatives at the libertarian-leaning Cato Institute,
in a blog post last month.
"By directing a large share of savings to purchases of longer-term MBS and Treasury securities, for example, the Fed has artificially
raised both the prices of those securities, and the importance of the housing market and the federal government relative to the rest
of the U.S. economy," Selgin wrote. "It has also dramatically increased its portfolio's duration gap and, by so doing, the risk that
it will suffer losses should it sell assets before they mature."
On Friday, Minneapolis Federal Reserve Bank President Neel Kashkari, the lone dissenter against the U.S. central bank's decision
last week to raise interest rates, the U.S. economy is still falling short on employment and inflation.
Kashkari, an alumnus of both Goldman Sachs and the U.S. Treasury who oversaw the government's Temporary Asset Relief Program (TARP)
during the financial crisis, believes the Fed should wait on raising interest rates until it publishes a detailed plan for how and
when it will reduce its $4.5 trillion balance sheet.
Goldman set forth two scenarios under which the Fed could begin trimming its balance sheet. Under an "early start, passive runoff"
scenario, the bank said the Fed "gradually tapers reinvestment in December 2017 over 10 months but does not sell assets."
Conversely, under a "late start, active sales" scenario, Goldman said the Fed could cease reinvesting in bonds in July 2018 "without
tapering and actively sells $40bn of assets per month."
Under the latter, the Fed could shrink its balance sheet by about $250 billion per quarter starting in the second half of next
year, "with similar contributions from maturing assets and active sales," the bank added.
However, neither scenario is without its risks, Goldman's economist wrote: "While our baseline estimate suggests relatively little
tightening from balance sheet rundown, the uncertainty is substantial. The 2013 'taper tantrum' also provides a reminder that the
impact of balance sheet policy on financial conditions is uncertain and could be larger than our baseline estimate."
Every time the Fed deals with the financial asset trading marketplaces the private parties wish to make a profit, no wonder
Goldman is shilling to get the more valuable Fed holdings 'sold' to these parties.
No article on reserves or Fed asset holdings is legitimate unless it also discusses the use of administrative offset with Treasury
(whether the bonds are mature and as a result, redeemable at that time, or not, they could all be offset with Treasury now).
The Fed has a lot it can do with the assets they bought with newly created money, but subsidizing the money center banks once
again ought to be low on the list (moral hazard rewarded again?). The asset-handling plans should be pursued only after Treasury
coordination talks are settled and according to well discussed, publicly known plans.
It is not clear to me who the public should trust here, so open public programming should be expected and press involvement
sought after by the Fed. Look at the magnitudes here, no one should be looking the other way on this.
RGC what is your point except to note that private interests sweep monies out of private positions in order to create the cash
to buy the bond being offered by the Fed should they sell some. It is a way to sweep excess monies out of the economic system,
though that is not a completed end-game unless the Fed destroys the money or it is remitted to Treasury where it covers other
claims for payment (reducing the need to borrow anew) turnstiling the monies back into the economy.
It is simpler with regard to Treasury to have both sides agree to osset their position.
But offsets means that Treasury offers none or fewer bonds for sale to outsude interests, including China and other govts or
within the banks or elsewhere.
Is the Fed ready to do all of these approaches, and is it coordinated with the oublic's govt via Treasury agreement?
The Fed has instruments with 8 percent coupons, I just don't like the idea of them selling these to the banking segment, at
a price that allows them to profit, with little risk, especially when you consider that they were the ones who caused the financial
crisis in the first place.
It will be interesting to see what the Feds do, what they do with the cash they get, and what Treasury and the Trump Administration
does as more cash remittances come in (and why was this not done to help the Obama Admin look good fiscally before?).
This aritcle is two years old and not much happned during those two years. But still there is a chance that highly authomated factories
can make manufacturing in the USA again profitable. the problme is that they will be even more profible in East Asia;-)
The rise of technologies such as 3-D printing and advanced robotics means that the next few decades for Asia's economies will
not be as easy or promising as the previous five.
OWEN HARRIES, the first editor, together with Robert Tucker, of The National Interest, once reminded me that experts-economists,
strategists, business leaders and academics alike-tend to be relentless followers of intellectual fashion, and the learned, as Harold
Rosenberg famously put it, a "herd of independent minds." Nowhere is this observation more apparent than in the prediction that we
are already into the second decade of what will inevitably be an "Asian Century"-a widely held but rarely examined view that Asia's
continued economic rise will decisively shift global power from the Atlantic to the western Pacific Ocean.
No doubt the numbers appear quite compelling. In 1960, East Asia accounted for a mere 14 percent of global GDP; today that figure
is about 27 percent. If linear trends continue, the region could account for about 36 percent of global GDP by 2030 and over half
of all output by the middle of the century. As if symbolic of a handover of economic preeminence, China, which only accounted for
about 5 percent of global GDP in 1960, will likely surpass the United States as the largest economy in the world over the next decade.
If past record is an indicator of future performance, then the "Asian Century" prediction is close to a sure thing.
Stagnation that is gripping several of the world's largest economies should be viewed as a secular, long term phenomenon, not
something transient. It is connected with the neoliberalism entering a new phase of its development, when New Deal was already
devoured, 90% or so of population standard of living slides and thus there are no direct mechanisms to increase consumer demand.
Notable quotes:
"... Stagnation is gripping several of the world's largest economies and many view this as secular, not transient. ..."
"... Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics. ..."
"... For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. ..."
"... In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare. ..."
"... Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed. ..."
"... How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? ..."
"... It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income. ..."
"... It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession. ..."
"... I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand. ..."
"... The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. ..."
"... In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine. ..."
This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore
potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and
this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure
investment.
Selected Skeptical Comments
Sandwichman -> anne:
Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing
-- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you
can get out of me.
This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt
yourselves!"
Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place.
Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.
Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers
collectively have. This is the spectre that haunts all economics.
Dan Kervick:
Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:
1. Ineffective economic organization, both inside corporate firms and outside of them.
a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles
of short-term value extraction for their absurdly over-incentivized key stakeholders.
b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global
level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains".
There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future
looks like, risk trumps confidence everywhere and nobody knows what to invest in.
2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and
demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything,
the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no
reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.
3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities.For many
of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them
stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this
can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened
self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind
back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.
4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who
despite their constant kvetching at one another all share in common the view that progress is self-organizing.
On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and
prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that
their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.
On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire
not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.
In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself
if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of
the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything
will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high
fructose cotton candy or the collected works of Shakespeare.
5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of
social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This
will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization
that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded
21st century planet.
George H. Blackford:
Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress
their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment
was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.
There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the
concentration of income has created stagnation for lack of investment opportunities.
How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed
system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort
of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going
to be left holding the bag when this system collapses again?
It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the
absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources
in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few
in the absence of the ability of those at the bottom to expand their debt relative to income.
We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with
a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great
Depression.
And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic
system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five
years after 1940.
It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power
out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the
concentration of income that led to the bubble economy we have today that has led us into the Great Recession.
What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe
comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern
age, namely, the trade deficit and the concentration of income.
I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing
of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth
reflecting persistently weak private demand.
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level
is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.
The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology
and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the
USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most
cults adherents became more fanatical believers after the prophecy did not materialized.
The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But
while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature
of the US economy, not a transitory state.
"Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially
drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client
state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the
USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign
that gambit is abandoned.
In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that
they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to
solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last
move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état
in Ukraine.
Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession
from the USSR by threatening to unleash the nuclear war.
"... During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of most ordinary people. ..."
"... They pursued them as a matter of faith in the market and its processes, despite the apparent warning signs of their imminent failure. ..."
"... as within many custom or belief systems, what economics enshrines is a social order. One where a dominant minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status. ..."
"... idea of economics as an exploitative mechanism is echoed in the cover picture of the book, Bosch's The Conjurer ..."
"... Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological crisis which the pursuit of economic growth has spawned. ..."
Brian Davey's new book, Credo: Economic Beliefs in a World in Crisis, is an analysis of economic theory as if it were a system
of religious belief.
It's a timely book. The simplistic, perhaps 'supernatural' assumptions which underpin key parts of economic theory demand far
more attention. It's a debate we've failed to have as a society.
... ... ...
During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that
the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of
most ordinary people.
And without understanding those terms, irrespective of our gut feeling that there was something wrong, how could we challenge
the political lobby those theories had put into power? In the end it took the
financial crash of 2007/8 to demonstrate
that those in charge of this system didn't understand the complexity and risk of those practices either.
They pursued them as a matter of faith in the market and its processes, despite the
apparent
warning signs of their imminent failure. Those outside 'orthodox' economics could already see where the economy
was heading in the longer-term.
Question is, did economists learn anything from that failure? Or,
through austerity, have they once again committed us to their dogmatic belief system, unchanged by that experience?
... ... ...
However, through simple hubris or optimism bias, the political
class has been convinced that 'fracking' is a solution to our economic woes
- even though there is a paucity of verifiable evidence to demonstrate those claims, and
it has already lost billions of investors money.
Economics is a reflection of power
Ultimately though, as within many custom or belief systems, what economics enshrines is a social order. One where a dominant
minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status.
This idea of economics as an exploitative mechanism
is echoed in the cover picture of the book, Bosch's
The Conjurer - where a magician distracts
the public with a sleight of hand trick so that they can be more easily robbed by his associate.
Again, in a world where we're hitting the limits to human material growth, political models of well-being based upon wealth and
consumption are damaging to human society in the long-term. The evidence that we're heading for a longer-term failure is there, as
was the case with the warning signs before the 2007 crash. The problem is that those in positions of power
do not wish to see it.
... ... ...
Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory
is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological
crisis which the pursuit of economic growth has spawned.
Contrary to the economic hubris of many world leaders, set alongside the reality of ecological limits humanity is not 'too big
to fail'.
"... An interview by Gordon T. Long of the Financial Repression Authority. Originally published at his website ..."
"... One of the most important distinctions that investors have to understand is the difference between secular and cyclical trends Let us begin with definitions from the Encarta® World English Dictionary: ..."
"... Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period of time ..."
"... Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions of an event or phenomenon that occurs regularly ..."
"... Secular stagnation is when the predators of finance have eaten too many sheeple. ..."
"... Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to have happened yet consistently. ..."
"... Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal, which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt with Nike gear. ..."
"... . . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit . It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system and raise the cost of living and doing business . ..."
GORDON LONG: Thank you for joining us. I'm Gordon Long with the Financial Repression Authority. It's my pleasure to have with
me today Dr. Michael Hudson Professor Hudson's very well known in terms of the FIRE economy to-I think, to a lot of our listeners,
or at least he's recognized by many as fostering that concept. A well known author, he has published many, many books. Welcome, Professor
Hudson.
MICHAEL HUDSON: Yes.
LONG: Let's just jump into the subject. I mentioned the FIRE economy cause I know that I have always heard it coming from yourself-or,
indirectly, not directly, from yourself. Could you explain to our listeners what's meant by that terminology?
HUDSON: Well it's more than just people getting fired. FIRE is an acronym for Finance, Insurance and Real Estate. Basically that
sector is about assets, not production and consumption. And most people think of the economy as being producers making goods and
services and paying labor to produce them – and then, labour is going to buy these goods and services. But this production and consumption
economy is surrounded by the asset economy: the web of Finance, Insurance, and Real Estate of who owns assets, and who owes the debts,
and to whom.
LONG: How would you differentiate it (or would you) with what's often referred to as financialization, or the financialization
of our economy? Are they one and the same?
HUDSON: Pretty much. The Finance, Insurance, and Real Estate sector is dominated by finance. 70 to 80% of bank loans in North
America and Europe are mortgage loans against real estate. So instead of a landowner class owning property clean and clear, as they
did in the 19 th century, now you have a democratization of real estate. 2/3 or more of the population owns their own
home. But the only way to buy a home, or commercial real estate, is on credit. So the loan-to-value ratio goes up steadily. Banks
lend more and more money to the real estate sector. A home or piece of real estate, or a stock or bond, is worth whatever banks are
willing to lend against it
As banks loosen their credit terms, as they lower their interest rates, take lower down payments, and lower amortization rates
– by making interest-only loans – they are going to lend more and more against property. So real estate is bid up on credit. All
this rise in price is debt leverage. So a financialized economy is a debt-leveraged economy, whether it's real estate or insurance,
or buying an education, or just living. And debt leveraging means that a larger proportion of assets are represented by debt. So
debt equity ratios rise. But financialization also means that more and more of people's income and corporate and government tax revenue
is paid to creditors. There's a flow of revenue from the production-and-consumption economy to the financial sector.
LONG: I don't know if you know Richard Duncan. He was with the IMF, etc, and lives in Thailand. He argues right now that capitalism
is no longer functioning, and really what he refers to what we have now is "creditism." Because in capitalism we have savings that
are reinvested into productive assets that create productivity, which leads to a higher level of living. We're not doing that. We
have no savings and investments. Credit is high in the financial sector, but it's not being applied to productive assets. Is he valid
in that thinking?
HUDSON: Not as in your statement. It's confused.
LONG: Okay.
HUDSON: There's an enormous amount of savings. Gross savings. The savings we have that are mounting up are just about as large
as they've ever been – about, 18-19% of the US economy. They're counterpart is debt. Most savings are lent out to borrowers se debt.
Basically, you have savers at the top of the pyramid, the 1% lending out their savings to the 99%. The overall net savings may be
zero, and that's what your stupid person from the IMF meant. But gross savings are much higher. Now, the person, Mr. Duncan, obviously-I
don't know what to say when I hear this nonsense. Every economy is a credit economy.
Let's start in Ancient Mesopotamia. The group that I organized out of Harvard has done a 20-study of the origins of economic structuring
in the Bronze Age, even the Neolithic, and the Bronze Age economy – 3200 BC going back to about 1200 BC. Suppose you're a Babylonian
in the time of Hammurabi, about 1750 BC, and you're a cultivator. How do you buy things during the year? Well, if you go to the bar,
to an ale woman, what she'd do is write down the debt that you owe. It was to be paid on the threshing floor. The debts were basically
paid basically once a year when the income was there, on the threshing floor when the harvest was in. If the palace or the temples
would advance animals or inputs or other public services, this would be as a debt. It was all paid in grain, which was monetized
for paying debts to the palace, temples and other creditors.
The IMF has this Austrian theory that pretends that money began as barter and that capitalism basically operates on barter. This
always is a disinformation campaign. Nobody believed this in times past, and it is a very modern theory that basically is used to
say, "Oh, debt is bad." What they really mean is that public debt is bad. The government shouldn't create money, the government shouldn't
run budget deficits but should leave the economy to rely on the banks. So the banks should run and indebt the economy.
You're dealing with a public relations mythology that's used as a means of deception for most people. You can usually ignore just
about everything the IMF says. If you understand money you're not going to be hired by the IMF. The precondition for being hired
by the IMF is not to understand finance. If you do understand finance, you're fired and blacklisted. That's why they impose
austerity programs that they call "stabilization programs" that actually are destabilization programs almost wherever they're imposed.
LONG: Is this a lack of understanding and adherence to the wrong philosophy, or how did we get into this trap?
HUDSON: We have an actively erroneous view, not just a lack of understanding. This is not by accident. When you have an error
repeated year after year after year, decade after decade after decade, it's not really insanity doing the same thing thinking it'll
be different. It's sanity. It's doing the same thing thinking the result will be the same again and again and again. The result
will indeed be austerity programs, making budget deficits even worse, driving governments further into debt, further into reliance
on the IMF. So then the IMF turns them to the knuckle breakers of the World Bank and says, "Oh, now you have to pay your debts by
privatization". It's the success. The successful error of monetarism is to force countries to have such self-defeating policies that
they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and
transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane.
It's part of the program, not a bug.
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources
and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into
a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual
cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the
1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources,
so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing
the 99%.
LONG: Well I think most people, without understanding economics, would instinctively tell you they think that's what's happening
right now, in some way.
HUDSON: Right. As long as you can avoid studying economics you know what's happened. Once you take an economics course you step
into brainwashing. It's an Orwellian world.
LONG: I think you said it perfectly well there. Exactly. It gets you locked into the wrong way of thinking as opposed to just
basic common sense. Your book is Killing the Host . What was the essence of its message? Was it describing exactly what we're
talking about here?
HUDSON: Finance has taken over the industrial economy, so that instead of finance becoming what it was expected to be in the 19
th century, instead of the banks evolving from usurious organizations that leant to governments, mainly to wage war, finance
was going to be industrialized. They were going to mobilize savings and recycle it to finance the means of production, starting with
heavy industry. This was actually happening in Germany in the late 19 th century. You had the big banks working with government
and industry in a triangular process. But that's not what's happening now. After WW1 and especially after WW2, finance reverted to
its pre-industrial form. Instead of allying themselves with industry, as banks were expected to do, banks allied themselves with
real estate and monopolies, realizing that they can make more money off real estate.
The bank spokesman David Ricardo argued against the landed interest in 1817, against land rent. Now the banks are all in favor
of supporting land rent, knowing that today, when people buy and sell property, they need credit and pay interest for it. The banks
are going to get all the rent. So you have the banks merge with real estate against industry, against the economy as a whole. The
result is that they're part of the overhead process, not part of the production process.
LONG: There's a sense that there's a crisis lying ahead in the next year, two years, or three years. The mainstream economy's
so disconnected from Wall Street economy. What's your view on that?
HUDSON: It's not disconnected at all. The Wall Street economy has taken over the economy and is draining it. Under what economics
students are taught as Say's Law, the economy's workers are supposed to use their income to buy what they produce. That's why Henry
Ford paid them $5 a day, so that they could afford to buy the automobiles they were producing.
LONG: Exactly.
HUDSON: But Wall Street is interjecting itself into the economy, so that instead of the circular flow between producers and consumers,
you have more and more of the flow diverted to pay interest, insurance and rent. In other words, to pay the FIRE sector. It all ends
up with the financial sector, most of which is owned by the 1%. So, their way of formulating it is to distract attention from today's
debt quandary by saying it's just a cycle, or it's "secular stagnation." That removes the element of agency – active politicking
by the financial interests and Wall Street lobbyists to obtain all the growth of income and wealth for themselves. That's what happened
in America and Canada since the late 1970s.
LONG: What does an investor do today, or somebody who's looking for retirement, trying to save for the future, and they see some
of these things occurring. What should they be thinking about? Or how should they be protecting themselves?
HUDSON: What all the billionaires and the heavy investors do is simply try to preserve their wealth. They're not trying to make
money, they're not trying to speculate. If you're an investor, you're not going to outsmart Wall Street billionaires, because the
markets are basically fixed. It's the George Soros principle. If you have so much money, billions of dollars, you can break the Bank
of England. You don't follow the market, you don't anticipate it, you actually make the market and push it up, like the Plunge Protection
Team is doing with the stock market these days. You have to be able to control the prices. Insiders make money, but small investors
are not going to make money.
Since you're in Canada, I remember the beginning of the 1960s. I used to look at the Treasury Bulletin and Federal Reserve
Bulletin figures on foreign investment in the US stock market. We all used to laugh at Canada especially. The Canadians don't
buy stocks until they're up to the very top, and then they lose all the money by holding these stocks on the downturn. Finally, when
the market's all the way at the bottom, Canadians decide to begin selling because they finally can see a trend. So they miss the
upswing until they decide to buy at the top once again. It's hilarious to look at how Canada has performed in the US bond market,
and they did the same in the silver market. I remember when silver was going up to $50. The Canadians said, "Yes, we can see the
trend now!" and they began to buy it. They lost their shirts. So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
LONG: Absolutely on that one. What are you currently writing? What is your current focus now?
HUDSON: Well, I just finished a book. You mentioned Killing the Host . My next book will be out in about three months:
J is for Junk Economics . It began as a dictionary of terms, so I can provide people with a vocabulary. As we got in the argument
at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary
taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms.
If you look at the television reports on the market, they say that any loss in the stock market isn't a loss, it's "profit taking".
And when they talk about money. the stock market rises – "Oh that's good news." But it's awful news for the short sellers it wipes
out. Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening. For instance, "secular
stagnation" means it's all a cycle. Even the idea of "business cycles": Nobody in the 19 th century used the word "business
cycle". They spoke about "crashes". They knew that things go up slowly and then they plunge very quickly. It was a crash. It's not
the sine curve that you have in Josef Schumpeter's book on Business Cycles . It's a ratchet effect: slow up, quick down. A
cycle is something that is automatic, and if it's a cycle and you have leading and lagging indicators as the National Bureau of Economic
Research has. Then you'd think "Oh, okay, everything that goes up will come down, and everything that goes down will come up, just
wait your turn." And that means governments should be passive.
Well, that is the opposite of everything that's said in classical economics and the Progressive Era, when they realized that economies
don't recover by themselves. You need a-the government to step in, you need something "exogenous," as economist say. You need something
from outside the system to revive it. The covert idea of this business cycle analysis is to leave out the role of government. If
you look at neoliberal and Austrian theory, there's no role for government spending, and no role of public investment. The whole
argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19 th
century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten.
He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit. It's to lower the cost
of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive.
But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions. Obviously
these financialized charges are factored into the price system and raise the cost of living and doing business.
LONG: Well, Michael, we're-I thank you for the time, and we're up against our hard line. I know we didn't have as much time as
we always like, so we have to break. Any overall comments you'd like to leave with our listeners who might be interested this school
of economics?
HUDSON: Regarding the downturn we're in, we're going into a debt deflation. The key of understanding the economy is to look at
debt. The economy has to spend more and more money on debt service. The reason the economy is not recovering isn't simply because
this is a normal cycle. And It's not because labour is paid too much. It's because people are diverting more and more of their income
to paying their debts, so they can't afford to buy goods. Markets are shrinking – and if markets are shrinking, then real estate
rents are shrinking, profits are shrinking. Instead of using their earnings to reinvest and hire more labour to increase production,
companies are using their earnings for stock buybacks and dividend payouts to raise the share price so that the managers can take
their revenue in the form of bonuses and stocks and live in the short run. They're leaving their companies as bankrupt shells, which
is pretty much what hedge funds do when they take over companies.
So the financialization of companies is the reverse of everything Adam Smith, John Stuart Mill, and everyone you think of as a
classical economist was saying. Banks wrap themselves in a cloak of classical economics by dropping history of economic thought from
the curriculum, which is pretty much what's happened. And Canada-I know since you're from Canada, my experience there was that the
banks have a huge lobbying power over government. In 1979, I wrote for the IRPP Institute there on Canada In the New Monetary
Order . At that time the provinces of Canada were borrowing money from Switzerland and Germany because they could borrow it at
much lower interest rates. I said that this was going to be a disaster, and one that was completely unnecessary. If Canadian provinces
borrow in Francs or any other foreign currency, this money goes into the central bank, which then creates Canadian dollars to spend.
Why not have the central bank simply create these dollars without having Swiss francs, without having German marks? It's unnecessary
to have an intermediary. But the more thuggish banks, like the Bank of Nova Scotia, said, "Oh, that way's the road to serfdom." It's
not. Following the banks and the Austrian School of the banks' philosophy, that's the road to serfdom. That's the road
to debt serfdom. It should not be taken now. It lets universities and the government be run by neoliberals. They're a travesty of
what real economics is all about.
LONG: Michael, thank you very much. I learned a lot, appreciate it; certainly appreciate how important it is for us to use the
right words on the right subject when we're talking about economics. Absolutely agree with you. Talk to you again?
Interesting, but after insulting Duncan, Hudson says the banks stopped partnering with industry and went into real estate,
which sounded like what Duncan said.
I mention this because for a non- expert like myself it is sometimes difficult to tell when an expert is disagreeing with someone
for good reasons or just going off half- cocked. I followed what Hudson said about the evils of the IMF, but didn't see where
Duncan had defended any of that, unless it was implicit in saying that capitalism used to function better.
"As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the
words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen
– is basically a set of euphemisms ."Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are
happening."
May consider it's about recognizing and deciphering the "doublespeak", "newspeak", "fedspeak", "greenspeak" etc, whether willing
or unwitting using words for understanding and clarifying as opposed to misleading and confusing dialectic as opposed to sophistry.
What I objected to was the characterization of today's situation as "financialization." I explained that financialization is
the FIRST stage - when finance WORKS. We are now in the BREAKDOWN of financialization - toward the "barter" stage.
Treating "finance" as an end stage rather than as a beginning stage overlooks the dynamics of breakdown. It is debt deflation.
First profits fall, and as that occurs, rents on commercial property decline. This is already widespread here in New York, from
Manhattan (8th St. near NYU is half empty) to Queens (Austin St. in Forest Hills.).
I wrote an article you might be interested in reading. It outlines a tax policy which would help prevent what you are discussing
in your article. The abuse of credit to receive rents and long term capital gains.
Thank you for another eye-opening exposition. My political economy education was negative (counting a year of Monetarism and
Austrian Economics around 1980), so I appreciate your interviews as correctives.
From your interview answer to the question about what we, the 99+% should do,I gathered only that we should not try to beat
the market. Anything more than that?
From my understanding, post Plaza banking lost most of its traditional market to the shadow sector, as a result, expanded off
into C/RE and increasingly to Financialization of everything sundry.
Disheveled Marsupial interesting to note Mr. Hudson's statement about barter, risk factors – ?????
One of the most important distinctions that investors have to understand is the difference between secular and cyclical
trends Let us begin with definitions from the Encarta® World English Dictionary:
Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period
of time
Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions
of an event or phenomenon that occurs regularly
Secular stagnation is a condition of negligible or no economic growth in a market-based economy . When
per capita income stays at relatively high levels, the percentage of savings is likely to start exceeding the percentage of longer-term
investments in, for example, infrastructure and education, that are necessary to sustain future economic growth. The absence of
such investments (and consequently of the economic growth) leads to declining levels of per capita income (and consequently of
per capita savings). With the reduced percentage savings rate converging with the reduced investment rate, economic growth comes
to a standstill – ie, it stagnates. In a free economy, consumers anticipating secular stagnation, might transfer their savings
to more attractive-looking foreign countries. This would lead to a devaluation of their domestic currency, which would potentially
boost their exports, assuming that the country did have goods or services that could be exported.
Persistent low growth, especially in Europe, has been attributed by some to secular stagnation initiated by stronger European
economies, such as Germany, in the past few years.
Words. What they mean depends on who's talking.
Secular stagnation is when the predators of finance have eaten too many sheeple.
Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking.
Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many
markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to
have happened yet consistently.
Perhaps he meant to say that markets are going to shrink as the debt deflation becomes more evident?
Yes, I think we are into turnip country now. Figure 1 in
this
prior article looks clear enough – even if you don't like the analysis that went with it. Wealth inequality still climbs but
income inequality has plateaued since Clinton I. Whatever the reasons for that, the 1% should be concerned – where is the ROI?
Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal,
which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot
be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the
same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites
nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to
be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting
over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt
with Nike gear.
Labor has no problem with multiwhatever presidents, geneticists, psychologists, or economists, trying to hunt down and replace
labor, in or out of turn, but none are going to be any more successful than the others. Trump is being employed to bypass the
middle class and cut a deal. There is no deal. Labor is always going to pay males to work and their wives to raise children. Obviously,
the majority will vote for a competing economy, and it is welcome to do so, but if debt works so well, why is the majority voting
to kidnap our kids with public healthcare and education policies.
I'm not sure I heard an answer to the question of what people, who might be trying to save for the future or plan for retirement,
can do? Is the point that there isn't anything? Because I'm definitely between rocks and hard places
Yeah, he basically said there is no good savings plan. Big-money interests have rigged the rules and are now manipulating the
market (this used to be the definition of what was NOT allowed). Thus, they use computer algorithms to squeeze small amounts out
of the market millions of times. This means that the "investments" are nothing of the sort. You don't "invest" in something for
milliseconds. He said that the 1% are mostly just trying to hold on to what they have. Very few trust the rigged markets.
Low rent & cheap energy are key to the arts & innovations. My model has to work for airports, starts at the fuel farm as the
CIA & MI6 Front Page Avjet did. Well before that was Air America. I wonder if now American Airlines itself is a Front.
All of America is a Front far as I can about tell. Hadn't heard that Manhattan rents were coming down. Come in from out of
town, how you going to know? Not supposed to I guess.
I got that textbook and I liked that guy John Commons. He says capitalism is great, but it always leads to Socialism because
of unbridled greed.
The frenzy to find another stable cash currency showing in Bit Coin and the discussion of Future Tax Credits while the Euro
is controlled by the rent takers demands change on both sides of the Atlantic.
We got shot dead protesting the war, and civil rights backlash is the gift that keeps giving to the Southerners looking up
every day in every courthouse town, County seat is all about spreading fear and desperation.
How to change it all without violence is going to be really tricky.
. . . So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
When one reads the financial press in Canada, every dollar extracted by the lords of finance is a glorious taking by brilliant
people at the top of the financial food chain from the stupid little people at the bottom, but when it counts, there was silence,
in cooperation with Canada's one percent.
The story starts about five years ago, with smart meters. Everyone knows what they are, a method by which electrical power
use can be priced depending on the time of day, and day of the week.
To make this tasty, Ontario's local utilities at first kept the price the same for all the time, and then after all the meters
were installed, came the changes, phased in over time. Prices were increased substantially, but there was an out. If you changed
your living arrangements to live like a nocturnal rodent and washed your clothes in the middle of the night, had supper later
in the evening or waited for weekend power rates you could still get low power rates, from the three tier price structure.
The local utilities bought the power from the government of Ontario power generation utility, renamed to Hydro One, and this
is where Michael Hudson's talk becomes relevant.
The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to
privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like
you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's
part of the program, not a bug .
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural
resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads
us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs
in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically,
financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises,
land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the
top of the pyramid, impoverishing the 99% .
Eighteen months ago, there was an election in Ontario, and the press was on radio silence during the whole time leading up
to the election about the plans to "privatize" Hydro One. I cannot recall one instance of any mention that the new Premier, Kathleen
Wynne was planning on selling Hydro One to "investors".
Where did this come from? Did the little people rise up and say to the politicians "you should privatize Hydro One" for whatever
reason? No. This push came from the 1% and Hydro One was sold so fast it made my head spin, and is now trading on the Toronto
Stock exchange.
At first I though the premier was an economic ignoramus, because Hydro One was generating income for the province and there
was no other power supplier, so one couldn't even fire them if they raised their prices too high.
One of the arguments put forward by the 1% to privatize Hydro One was a classic divide and conquer strategy. They argued that
too many people at Hydro One were making too much money, and by privatizing, the employees wages would be beat down, and the resultant
savings would be passed on to customers.
Back to Michael Hudson
. . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools
in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school,
was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit
. It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing
business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments,
stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system
and raise the cost of living and doing business .
Power prices have increased yet again in Ontario since privatization, and Canada's 1% are "making a killing" on it. There has
been another change as well. Instead of a three tier price structure, there are now two, really expensive and super expensive.
There is no longer a price break to living like a nocturnal rodent. The 1% took that for themselves.
I am so tired of seeing that old lie about Old Henry and the $5 a day. I realize it was just a tossed off reference to something
most people believe for the purpose of describing a discarded policy, but the fact is very, very few of Old Henry's employees
ever got that pay. See, there were strings attached.
Old Henry hired a lot of spies, too. He sent them around to the neighborhoods where his workers lived (it was convenient having
them all in Detroit). If the neighbors saw your kid bringing a bucket of beer home from the corner tavern for the family, you
didn't get the $5.
If your lawn wasn't mowed to their satisfaction, you didn't get the $5. If you were thought not to bathe as often as they liked,
you didn't get the $5. If you didn't go to a church on Sundays, you didn't get the $5. If you were an immigrant and not taking
English classes at night school, you didn't get the $5. There were quite a lot of strings attached. The whole story was a public
relations stunt, and Old Henry never intended to live up to it; he hated his workers.
"... Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy, whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities. Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane. ..."
"... In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish that. ..."
"... At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying. All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw, volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program. ..."
Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks
building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances
to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does
for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population
or the next generation.
It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification
of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times
exposing the company itself to disruption threats from up-and-comers.
Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions . Economics is no exception.
Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment
beforehand.
Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It
honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as
them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices,
yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all
the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy,
possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns.
There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and
2007, amongst others.
Intriguingly, the other way round is accepted and even theorized. Manipulating bond and stock prices, directly or indirectly,
is mainstream policy theory today. From Ben Bernanke's 'portfolio balance channel theory', to the relentless pursuit of the 'wealth
effect' via financial repression under Janet Yellen and Haruhiko Kuroda, to Mario Draghi tackling the fragmentation of credit markets
across the EU via direct asset purchases, the practice has become commonplace. To some, like us, the 'wealth effect' may be proving
to be more of an 'inequality effect' than much, leading to populism and constantly threatening regime change, but that is beyond
the scope of this note today.
What we want to focus on instead is the direct impact that monetary interventionism like Quantitative Easing ('QE') and Negative
or Zero Interest Rate Policies ('NIRP' or 'ZIRP') have on the structure of the market itself, how they help create a one-sided investment
community, oftentimes long-only, fully invested when not levered up, relying on record-highs for bonds and stocks to perpetuate themselves
endlessly - despite a striking disconnect from fundamentals, life-dependent on the lowest levels of volatility ever seen in history
. The market structure morphed under the eyes of policymakers over the last few years, to become a pressure cooker at risk of blowing-up,
with a small but steadily growing probability as times goes by and the bubble inflates. The
positive feedback loops between monetary flooding and the private investment
community are culpable for transforming an ever present market risk into a systemic risk, and for masking as peaceful what is instead
an unstable equilibrium and
market fragility.
Positive Feedback Loops create divergence from general equilibrium, and Systemic Risks
Positive feedback loops , in finance like in biology, chemistry, cybernetics, breed system instability, as they orchestrate a
further divergence from equilibrium . An unstable equilibrium is defined as one where a small disturbance is sufficient to trigger
a large adjustment.
QE and NIRP have two predominant effects on markets: (i) relentless up-trend in stocks and bonds (the 'Trend Factor') , dominated
by the buy-the-dip mentality, which encapsulates the 'moral hazard' of investors knowing Central Banks are prompt to come to their
rescue (otherwise known as 'Bernanke/Yellen/Kuroda/Draghi put'), and (ii) the relentless down-trend in volatility the 'Volatility
Factor').
Two Factors Explain All: Trend and Volatility
The most fashionable investment strategies these days are directly impacted by either one or both of these drivers. Such strategies
make the bulk of the overall market, after leverage or turnover is taken into account : we will refer to them in the following as
'passive' or 'quasi-passive' . The trend impacts the long-only community, crowning it as a sure winner, making the case for low-
cost passive investing. The low volatility permeates everything else, making the case for full- investment and leverage.
The vast majority of investors these days are not independent from the QE environment they operate within : ETFs and index funds,
Risk Parity funds and Target Volatility vehicles, Low Volatility / Short Volatility vehicles, trend-chasing algos, Machine Learning-inspired
funds, behavioral Alternative Risk Premia funds. They are the poster children of the QE world. We estimate combined assets under
management of in excess of $8trn across the spectrum. They form a broad category of 'passive' or 'quasi-passive' investors, as are
being mechanically driven by two main factors: trend and volatility.
Source: Fasanara Presentations | Market Fragility
- How to Position for Twin Bubbles Bust, 16 th October 2017. The slide is described in details in this
video recording.
Extraordinary monetary policies have feedback loops with the asset management industry as a whole, reinforcing the effects on
markets of such policies in a vicious – or virtuous - cycle . QE and NIRP help a large number of investment strategies to flourish,
validating their success and supporting their asset gathering in the process, and are in return helped in boosting bond and stock
markets by their flows joining the already monumental public flows.
Private flows so reach singularity with public flows, and the whole market economy morphs into a one big common bet on ever-rising
prices, in shallow volatility. Here is the story of how $15trn of money printing by major Central Banks in the last ten years, of
which $3.7trn in 2017 alone, is joined by total assets of $8trn managed into buying the same safe and risk assets across, with leverage,
indiscriminately.
How Market Risk became Systemic Risk
Let's give a cursory look at the main players involved (a recent presentation we did is recorded
here) . As markets trend higher, no matter what happens (ever against the
shocked disbeliefs of Brexit, Trump, an Italian failed referendum and nuclear threats in North Korea), investors understand the outperformance
that comes from pricing risks out of their portfolios entirely and going long-only and fully-invested. Whoever under-weighs positions
in an attempt to be prudent ends up underperforming its benchmarks and is then penalized with redemptions. Passive investors who
are long-only and fully invested are the winners, as they are designed to be bold and insensitive to risks. As Central Banks policies
reduce the level of interest rates to zero or whereabouts, fees become ever more relevant, making the case for passive investing
most compelling. The rise of ETF and passive index funds is then inevitable.
According to JP Morgan, in the last 10 years, $2trn left active managers in equities and $2trn entered passive managers (pag.39
here) . We may be excused for thinking they are the
same $ 2trn of underlying investors progressively pricing risk provisions out of books, de facto , while chasing outperformance and
lower fees.
To be sure, ETFs are a great financial innovation, helping reducing costs in an expensive industry and giving entry to markets
previously un-accessible to most investors. Yet, what matters here is their impact on systemic risks, via positive feedback loops.
In circular reference, beyond Central Banks flows, markets are helped rise by such classes of valuations-insensitive passive investors,
which are then rewarded with further inflows, with which they can then buy more. The more expensive valuations get, the more they
disconnect from fundamentals, the more divergence from equilibrium occurs, the larger fat-tail risks become.
In ever-rising markets, 'buy-and-hold' strategies may only possibly be outsmarted by 'buy-the-dip' strategies. Whatever the outcome
of risk events, be ready to buy the dip quickly and blindly. As more investors design themselves up to do so, the dips are shallower
over time, leading to an S&P500 that never lost 3% in 2017, an historical milestone. Machine learning is another beautiful market
innovation, but what is there to learn from the time series of the last several years, if not that buy- the-dip works, irrespective
of what caused the dip. Big Data is yet another great concept, shaping the future of us all. Yet, most data ever generated in humankind
dates back three years only, in and by itself a striking limitation. The quality of the deduction cannot exceed the quality of the
time series upon which the data science was applied. If the time series is untrustworthy, as is heavily influenced by monumental
public flows ($300bn per months), what trust can we put on any model output originating from it? What pattern recognition can we
really be hopeful of getting, in the first place? May some of it just be a commercial disguise for going long, selling volatility
and leveraging up in various shapes or forms? What is hype and what is real? A short and compromised data series makes it hard, if
not possible, to really know. Once public flows abate and price discovery is let free again, then and only then will we be in a position
to know the difference.
Low volatility does what trending markets alone cannot. A state of low volatility presents the appearance of
stuporous, innocuous, narcotized markets, thus
enticing new swathes of unfitting investors in, mostly retail-type 'weak hands'. Weak hands are investors who are brought to like
investments by certain characteristics which are uncommon to the specific investment itself, such as featuring a low volatility.
It is in this form that we see bond-like investors looking at the stock market for yield pick-up purposes, magnetized by levels of
realized volatility similar to what fixed income used to provide with during the Great Moderation. It is in this form that Tech companies
out of the US have started filling the coffers of not just Growth ETF, where they should rightfully reside, but also Momentum ETF,
and even, incredibly, Low-Volatility ETF.
Low volatility is also a dominant input for Risk Parity funds and Target Volatility vehicles . The lower the volatility, the higher
the leverage allowed in such players, mechanically. All of which are long-only players, joining public flows, again helping the market
rise to record levels in the process, in circular reference. Rewarded by new inflows, the buying spree gathers momentum, in a virtuous
circle. Valuations are no real input in the process, volatility is what matters the most. Volatility is not risk, except for them
it is.
It goes further than that. It is not only the level of volatility that count, but its direction too . As volatility implodes,
relentlessly, into historical lows never seen before in history, a plethora of investment strategies is launched to capitalize on
just that, directly: Short Volatility vehicles . They are the best performing strategy of the last decade, by and large. The problem
here is that, due to construction, as volatility got to single-digit territory, relatively small spikes are now enough to trigger
wipe-out events on several of these instruments. Our analysis shows that if equity volatility doubles up from current levels (while
still being half of what it was as recently as in August 2015), certain Short Vol ETFs may stand to lose up to 75% or more. Moreover,
short positions on long-vol ETFs can lose up to 250% of capital. For some, 'termination events' are built into contracts for sudden
losses of this magnitude, meaning that the notes would be prematurely withdrawn. It is one thing to expect a spike in volatility
to cause losses, it is quite another to know that a minor move is all it takes to trigger a default event.
On such spikes in volatility, Morgan Stanley Quant Derivatives Strategy desk warns further that market makers may be forced to
rebalance their exposure non-linearly on a spike in volatility. A drop in the S&P 500 of 5% in one day may trigger approximately
$ 400mn of Vega notional of rebalancing (pag.48 here)
. We estimate that half a trillion dollars of additional selling on S&P stocks may occur following a correction of between 5% and
10%. That is a lot of selling, pre-set in markets, waiting to strike. Unless you expect the market to not have another 5% sell-off,
ever again.
What do ETFs, Risk Parity and Target Vol vehicles, Low Vol / Short Vol vehicles, trend-chasing algos, Machine Learning, behavioral
Alternative Risk Premia, factor investing have in common? Except, of course, being the 'winners take all' of QE-driven markets. They
all share one or more of the following risk factors: long-only, fully invested when not leveraged-up, short volatility, short correlation,
short gamma Thanks to QE and NIRP, the whole market is becoming one single big position.
The 'Trend Factor' and the 'Volatility Factor' are over-whelming, making it inevitable for a high- beta, long-bias, short-vol
proxy to disseminate across. Almost inescapably so, given the time series the asset management industry has to deal with, and derive
its signals from.
Several classes of investors may move to sell in lock-steps if and when markets turn. The boost to asset prices and the zero-volatility
environment created the conditions for systemic risks in the form of an over-compensation to the downside. Record-low volatility
breeds market fragility, it precedes system instability.
Flows Matter, Both Ways!
We will know soon if the fragility of markets is that bad. The undoing of loose monetary policies (NIRP, ZIRP) will create a liquidity
withdrawal of over $1 trillion in 2018 alone (pag.61-62
here) . The reaction of the passive and quasi-passive communities will determine the speed of the adjustment in the pricing for
both safe and risk assets, and how quickly risk provisions will re- enter portfolios. Such liquidity withdrawal will represent the
first real crash-test for markets in 10 years.
As public spending on Wall Street abates, the risk is evident of seeing the whole market turning with it. The shocks of Trump
and Brexit did not manage to derail markets for long, as public flows were overwhelming. Flows is what mattered, above all elusive,
over-fitting economic narratives justifying price action at the margin. Flows may matter again now as they fade
Systemic Risk is Not Just About Banks: Look at Funds
The role of trending markets is known when it comes to systemic risks: a not sufficient but necessary condition. Most trends do
not necessarily lead to systemic risks, but hardly systemic risks ever build up without a prolonged period of uptrend beforehand.
Prolonged uptrends in any asset class hold the potential to instill the perception that such asset class will grow forever, irrespective
of the fundamentals, and may thus lead to excessive risk taking, excess leverage, the formation of a bubble and, ultimately, systemic
risks. The mind goes to the asset class of real estate, its undeterred uptrend into 2006/2007, its perception of perpetuity ("we
have never had a decline in house prices on a nationwide basis''
Ben Bernanke) , the credit bubble built on banks hazardous activities on subprime mortgages as a result, and the systemic risks
which emanated, with damages spanning well beyond the borders of real estate.
The role of volatility is also well-researched, especially low volatility. Hayman Minsky, in his "
Financial Instability
Hypothesis '' in 1977, analyses the behavioral changes induced by a reduction of volatility, postulating that economic agents
observing a low risk are induced to increase risk taking, which may in turn lead to a crisis: "stability is destabilizing". In a
recent study, Jon Danielsson, Director
of the Systemic Risk Centre at the LSE, finds unambiguous support for the 'low volatility channel', insofar as prolonged periods
of low volatility have a strong predictive power over the incidence of a banking crisis, owing to excess lending and excess leverage
. The economic impact is the highest if the economy stays in the low volatility environment for five years : a 1% decrease in volatility
below its trend translates in a 1.01% increase in the probability of a crisis. He also finds that, counter-intuitively, high volatility
has little predictive power : very interesting, when the whole finance world at large is based on retrospective VAR metrics, and
equivocates high volatility for high risk.
Both a persistent trend and prolonged low-volatility can lead banks to take excessive risks. But what about their impact on the
asset management industry?
Thinking at the hard economic impact of the Great Depression (1929-1932) and the Great Recession (2007-2009), and the eminent
role played by banks in both, it comes as little surprise that the banking sector captures all the attention. However, what remains
to be looked into, and perhaps more worrying in today's environment, is the role of prolonged periods of uptrend and low-vol on the
asset management industry
In 2014, the Financial Stability Board (FSB), an international body that makes recommendations to G20 nations on financial risks,
published a consultation paper asking whether fund managers might need to be designated as " global systemically important financial
institution " or G-SIFI, a step that would involve greater regulation and oversight. It did not result in much, as the industry lobbied
in protest, emphasizing the difference between the levered balance sheet of a bank and the business of funds.
The reason for asking the question is evident: (i) sheer size , as the AM industry ballooned in the last few years, to now represent
over [15trnXX] for just the top 5 US players!, (ii) funds have partially substituted banks in certain market-making activities, as
banks dialed back their participation in response to tighter regulation and (iii) , funds can indeed do damage: think of LTCM in
1998, the fatal bailout of two Real Estate funds by Bear Stearns in 2007, the money market funds 'breaking the buck' in 2008 amongst
others.
But it is not just sheer size that matters for asset managers. What may worry more is the positive feedback loops discussed above
and the resulting concentration of bets in one single global pot , life-dependent on infinite momentum/trend and ever-falling volatility.
Positive feedback loops are the link for the sheer size of the AM industry to become systemically relevant. Today more than ever,
they morph market risks in systemic risks.
Volatility will not forever be low, the trend will not forever go: how bad a damage when it stops? As macro prudential policy
is not the art of "whether or not it will happen" but of "what happens if", it is hard not to see this as a blind spot for policymakers
nowadays.
I have never seen it this bad, the numbers are all moutof wack!
It seems many of us are drawn to a good illusion and this proves true for most people in their daily life as well. In some
ways, it could be said that our culture has become obsessed with avoiding what is real.
We must remember that politicians and those in power tend to throw people under the bus rather than rise up and take responsibility
for the problems they create. The article below looks at how we have grown to believe things are fine.
The real estate boom features all the unknowns in today's thinking, which is why they are global.
This simple equation is unknown.
Disposable income = wages – (taxes + the cost of living)
You can immediately see how high housing costs have to be covered by wages; business pays the high housing costs for expensive
housing adding to costs and reducing profits. The real estate boom raises costs to business and makes your nation uncompetitive
in a globalised world.
The unproductive lending involved that leads to financial crises.
The economy gets loaded up with unproductive lending as future spending power has been taken to inflate the value of the nation's
housing stock. Housing is more expensive and the future has been impoverished.
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015.
He wouldn't know, that's financial intermediation theory.
Bank lending creates money, which pours into the economy fuelling the boom; it is this money creation that makes the housing
boom feel so good in the general economy. It feels like there is lots of money about because there is.
The housing bust feels so bad because the opposite takes place, and money gets sucked out of the economy as the repayments
overtake new lending. It feels like there isn't much money about because there isn't.
They were known unknowns, the people that knew weren't the policymakers to whom these things were unknown.
The global economy told policymakers there was something seriously wrong in 2008, but they ignored it, I didn't.
They had pushed Greece into debt deflation by cutting Government spending with austerity.
It wasn't just the IMF, the Troika all went along with this fatally flawed policy, this means the ECB and EU Commission also
didn't know what they were doing.
Richard Koo had watched as Western "experts" told Japan to cut Government spending and seen the fall in GDP as the economy
went downhill. The only way to get things going again was to increase Government spending and he has had decades to work out what
was going on.
The Troika's bad economics has been wreaking havoc across the Club-Med.
Another superficially correct analysis of "Positive Feedback Loops create divergence from general equilibrium, and Systemic
Risks." The vicious feedback loops which have the most leverage are all aspects of the funding of the political processes, which
have resulted in runaway systems of legalized lies, backed by legalized violence, the most important of which are the ways that
the powers of public governments enforce frauds by private banks, the big corporations that have grown up around those big banks.
About exponentially advancing technologies have enabled enforced frauds to become about exponentially more fraudulent. The
underlying drivers were the ways that the combined money/murder systems developed, whose social successfulness became more and
more based on maximizing maliciousness. From a superficial point of view, those results may appear to be due to incompetence,
however, from a deeper point of view those results make sense as due to the excessively successful applications of the methods
of organized crime through the political processes, due to the vicious feedback loops of the funding of those political processes.
The only connections between human laws and natural laws are the abilities to back up lies with violence. Natural selection
pressures have driven Globalized Neolithic Civilization to develop the most dishonest artificial selection systems possible, while
the continuation of the various vicious feedback loops that made and maintained those developments are driving about exponentially
increasing dishonesty. Although the laws of nature are not going to stop working, and the laws of nature underpinned the runaway
development of excessively successful vicious feedback loops of organized crime, on larger and larger scales, to result in Globalized
Neolithic Civilization, the overall results are that Civilization is becoming about exponentially more psychotic. Since Civilization
necessarily operates according to the principles and methods of organized crime, while those who became the biggest and best organized
forms of organized crime, namely, banker dominated governments, also necessarily became most dishonest about themselves, and yet,
their bullshit social stories continue to dominate the public schools, and mainstream mass media, as well as the publicly significant
controlled "opposition" groups.
Political economy is INSIDE human ecology, and therefore, the greatest systematic risks are to be found in the tragic trajectory
of human ecologies which are almost totally buried under maximized maliciousness. "Public debates" about the human death control
systems are based on previously having being as deceitful and treacherous as possible regarding those topics. The most extreme
forms of that manifest as the ways that money is measurement backed by murder. Of course, that the debt controls are backed by
the death controls are issues which are generally not publicly admitted nor addressed.
Global Neolithic Civilization has become almost totally based on being able to enforce frauds, in ways which have become about
exponentially more fraudulent, as the vicious feedback loops which enable that to happen automatically reinforce themselves to
get worse, faster. The almost total triumph of enforced frauds has resulted in social "realities" which are becoming exponentially
more insane, since the social successfulness of enforced frauds requires the most people do not understand that, because they
have been conditioned to not want to understand that. Rather, almost everyone takes for granted deliberately ignoring and misunderstanding
the laws of nature in the most absurdly backward ways possible, because of the long history of successful warfare based on deceits
and treacheries becoming the more recent history of successful finance based on enforcing frauds, despite that tragic trajectory
of vicious feedback loops resulting in about exponentially increasing overall fraudulence.
Various superficially correct analyses, such as the one in the article above, are typical of the content on Zero Hedge , which
does not come remotely close to recognizing the degree to which the dominate natural languages and philosophy of science have
undergone series of compromises with the biggest bullies' bullshit-based world views, which became the banksters' bullshit about
economics. Although it is theoretically possible for human beings to better understand themselves and Civilization, it continues
to become more and more politically impossible to do so, due to the ever increasing vicious feedback loops of enforced frauds
achieving symbolic robberies ...
Although the laws of nature are never going to stop working, it is barely possible to exaggerate the degree to which Civilization
overall is becoming about exponentially more psychotic, due to the social "realities" based on successfully enforcing frauds becoming
more and more out of touch with the surrounding, relatively objective, physical and biological facts. The various superficially
correct analyses presented on Zero Hedge regarding that kind of runaway collective psychosis, driven by the vicious feedback loops
of the funding of all aspects of the funding of the political processes, tend to always grossly understate the seriousness of
that situation, especially including the crucial issues of how to operate the human murder systems after the development of weapons
of mass destruction, which is unavoidable due to the rapid development of globalized electronic monkey money frauds, backed by
the threat of force from apes with atomic weapons.
Those who believe that possessing precious metals, or cryptocurrencies, etc., are viable solutions to those problems are not
remotely close to being in the right order of magnitude. Although there is no doubt that exponentially more "money" is being made
out of nothing as debts, in order to "pay" for strip-mining the natural resources of a still relatively fresh planet, and so,
there is no doubt that the exponentially decreasing value of that "money" is driving the accumulation of apparent anomalies, such
as outlined in the article above, the actually crucial issues continue to be the ways that money is measurement backed by murder,
as the most abstract ways that private property are claims backed by coercions. Stop-gap individual responses to the runaway fraudulence,
such as faith in possessing precious metals or cryptocurrencies, make some relative sense in terms of the public "money" supplies
becoming exponentially more fraudulent, but otherwise dismally fail to be in the ball park of the significant issues driven by
prodigious progress in physical sciences, WITHOUT any genuine progress in political sciences, other than to continue to be able
to better enforce bigger frauds, through the elaborations of oxymoronic scientific dictatorships, which adamantly refuse to become
more genuinely scientific about themselves.
Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves
as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy,
whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization
through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities.
Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated
governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames
of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane.
That Civilization has been driven by natural selection pressures to manifest runaway psychoses is not going to stop the laws
of nature from continuing to work through that Civilization. However, that will nevertheless drive the currently dominate artificial
selection systems to become increasingly psychotic, in ways whereby their vicious feedback loops are less and less able to be
sanely responded to ... Although some human beings have better and better understood some general energy systems, e.g., electric
and atomic energy, etc., since warfare was the oldest and best developed forms of social science and engineering, whose successfulness
was based on being able to maximize maliciousness, and since those then enabled successful finance to become based on runaway
enforced frauds, human beings living within Globalized Neolithic Civilization are so hidebound by adapting to living inside those
vicious feedback loops based on being able to enforce frauds that those human beings are mostly unwilling and unable to better
understand themselves as also manifestations of general energy systems.
As the report, embedded in the article, begins by quoting Leonardo da Vinci:
"Learn how to see. Realize that everything connects to everything else."
In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based
on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent
anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore
increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific
revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations
of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms
of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish
that.
At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying.
All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw,
volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the
money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program.
"... Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy to absorb a great deal more rapid economic growth. ..."
"... But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the reasonable thing to do ..."
"... So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly, for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and that there were responsible people on one side of the debate, and irresponsible people on the other. ..."
"... The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative and managerial work and the upper, leisure, class live a life of luxury and leisure. ..."
"... The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.) We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work. ..."
"... Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital) ..."
"... Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the bottom live a life of bare subsistence. ..."
"... "The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction" ..."
"... "We came, we saw, he died" rinse and repeat for 5,000 years. ..."
"... By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce. ..."
"... They knew that if wealth concentrated too much there would not be enough demand. ..."
"... Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned. ..."
"... Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. ..."
"... Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready for MMT? ..."
"... To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control." ..."
"... Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low growth – because there is not much growth left. ..."
PERIES: James, the Council of Economic Advisors, they put out economic forecasts each year. And there has been some wildly
optimistic ones. For example, if you look at the 2010 predictions for 2012 and 2013 they have not quite been attained. And one would
say it was done in the interest of trying to make the administration that they were serving more impressive. But what accounts for
this particular attack on Friedman's projection and other fellow economists?
GALBRAITH: This was a classic case of professional bad manners and rank-pulling. What we had here were four former chairs
of the president's Council of Economic Advisors, and two from President Obama, two from President Clinton, who decided to use their
big names and their titles in order to launch an attack on a professor of economics at the University of Massachusetts who had written
a paper evaluating the Sanders economic program.
It's likely that the four bigwigs thought that Professor Friedman was a Bernie Sanders supporter. In fact, as of that time he
was a Hillary Clinton supporter and a modest donor to her campaign. What he had done was simply to write his evaluation of the economic
effects of the ambitious Sanders reform program. The four former council chairs announced that on the basis of their deep commitment
to rigor and objectivity, they had discovered that this forecast was unrealistic. And what I pointed out was that that claim was
based on no evidence and no analysis whatsoever. And when you pressed down on it you found that it was simply based on the obvious
fact that we haven't seen the kinds of growth rates that Professor Friedman's analysis suggested the Sanders program would produce.
And for a very simple reason: the Sanders program is bigger. It's more ambitious than anything we've seen in recent years, so it's
not surprising that when you put it through a model it generates a higher growth rate.
So that was the basic underlying facts, and these guys, two men and two women, announced that they, that it was a disreputable
study, but failed to present any analysis that suggested they'd actually even read the paper before they denounced it. And that's
what I pointed out in my counter letter, in a number of articles that have appeared since.
PERIES: James, so in your letter, how do you counter them? What methods did you use to come to your conclusions?
GALBRAITH: Well, I, no need to say anything beyond the fact that I had looked in their letter for the rigor that they were
so proud of, for the objectivity and the analysis that they were so proud of, and I'd found that they had not done any. They had
not made any such claim, not done any such work.
So that began to provoke a discussion. It's fair to say ultimately, without apologizing for effectively launching an ad hominem
attack on an independent academic researcher, one of the former chairs, Christina Romer of President Obama's council, and her husband
David Romer, a fellow economist, did produce a paper in which they spelled out their differences with the, with the Friedman paper.
But that, again, raised another set of interesting issues which we've continued to discuss at various, various outlets of the press.
PERIES: Now, James Friedman's claim that the growth rate from Sanders' plan to be around 5.3 percent. And some economists,
including Dean Baker at the Center for Economic Policy and Research, have claimed that this is unrealistic. What do you make of that?
GALBRAITH: Well, the question is whether it is an effect, let's say, a reasonable projection, of putting the Sanders program
into an economic model. And the answer to that question, yes, Professor Friedman did a reasonable job. He spelled out what the underlying
assumptions that he was using were. He spelled out the basic rules of thumb that macroeconomists had used for decades to assess the
effects of an economic program. In this case, an expansionary economic program. And he ran them through his model and reported the
results, a perfectly reasonable thing to do.
Now, one can be skeptical. And I am, and Dean Baker is, lots of people are skeptical that the world would work out quite that
way, because lots of things, in fact, happen which are not accounted for in a model. And we've talked, we've basically put together
a list of things that you think might be problematic. But the exercise here was not to put everything into paper that might happen
in the world. The exercise was to take the kind of bare bones that economists use to assess and to compare the consequences of alternative
programs, and to ask what kind of results do you get out? And that's what, again, what Jerry Friedman did. It was a reasonable exercise,
he came up with a reasonable answer, and he reported it.
PERIES: Now, Friedman seems to think that the rate of full employment in 1999 is attainable. However, many labor economists
seem to think that the larger share of the elderly currently in society compared to 1999 explains some of the lack of labor participation,
which creates a lower full employment ceiling that's contradicting Friedman's report. Your thoughts on that?
GALBRAITH: Well, I think it is a fact that the population is getting older. But as, I think, any economist would tell you,
that when you offer jobs in the labor market, the first thing that happens is the people who are looking for work take those jobs.
The second thing that happens is that people who might look for work when jobs were available start coming back into the labor market.
And if that is not enough to fill the vacancies that you have, it's perfectly open to employers to raise their wages so as to bring
more people in, or to increase the pace at which they innovate and substitute technology for labor so that they don't need the work.
So there's no real crisis involved in the situation if it turns out five years from now we're at 3.5 percent unemployment, and
they were beginning to run short of labor. That's not a reason to, at this stage, say no, we're not going to engage in the exercise
and run a more expansionary, vigorous reform program, a vigorous infrastructure project, a major reform of healthcare, a tuition-free
public education program. All of those things, which were part of what Friedman put into his paper, should be done anyway. The fact
that the labor market forecast might prove to have some different, the labor market might have different characteristics in five
years' time is from our present point of view just a, it's an academic or a theoretical proposition, purely.
PERIES: And Friedman's paper, he looks at a ten-year forecast. Did you feel that when you looked at the specifics of that,
including college, universal healthcare, infrastructure spending and of course, expanding Social Security and so on, that those categories
and his predictions or projections, rather, made sense to you?
GALBRAITH:Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set
of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written
a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy
to absorb a great deal more rapid economic growth.
But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman
was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the
reasonable thing to do.
On the contrary, and on the other side, when Christina and David Romer did put out their forecast, their own criticism of the
Friedman paper, they concluded by asserting that if this program were tried, inflation would soar. So they there were making an allegation
for which, again, they had no evidence and no plausible model, that in the world in which we presently live would produce that result.
So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the
Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly,
for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result
politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey
the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and
that there were responsible people on one side of the debate, and irresponsible people on the other.
And that was, again, something that–an impression that could be conveyed through the mass media, but would not withstand scrutiny,
and didn't withstand scrutiny, once a few of us stood up and started saying, okay, where's your evidence, on what are you basing
this argument? And revealed the point, which the Romers implicitly conceded, and I give them credit for that, that in order to criticize
a fellow economist you need to do some work.
The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that
was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is
essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work
and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure.
The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory
of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was
written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.)
We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy
has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.
Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital)
Today this is done through the parasitic, rentier trickle up of Capitalism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
All this was much easier to see in Capitalism's earlier days.
Malthus and Ricardo never saw those at the bottom rising out of a bare subsistence living. This was the way it had always been
and always would be, the benefits of the system only accrue to those at the top.
It was very obvious to Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The
Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from
the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every
savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."
Like most classical economists he differentiated between "earned" and "unearned" wealth and noted how the wealthy maintained
themselves in idleness and luxury via "unearned", rentier income from their land and capital.
We can no longer see the difference between the productive side of the economy and the unproductive, parasitic, rentier side.
This is probably why inequality is rising so fast, the mechanisms by which the system looks after those at the top are now hidden
from us.
In the 19th Century things were still very obvious.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
Immense wealth at the top with nothing trickling down, just like today.
This is what Capitalism maximized for profit looks like. Labour costs are reduced to the absolute minimum to maximise profit.
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and
child labour. The function of the system is still laid bare. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure. The majority only got a larger slice of the
pie through organised Labour movements.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to
purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce. They knew that if wealth concentrated too much there would not be enough demand.
In the 1950s, when Capitalism had healthy competition, it was essential that the Capitalist system could demonstrate that it was
better than the competition. The US was able to demonstrate the superior lifestyle it offered to its average citizens.
Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor
and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the
bottom live a life of bare subsistence.
When you realise the true nature of Capitalism, you know why some kind of redistribution is necessary and strong progressive
taxation is the only way a consumer society can ever be kept functioning.
A good quote from John Kenneth Galbraith's book "The Affluent Society", which in turn comes from Marx.
"The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate
survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction"
Marx made some mistakes but he got quite a lot right.
Perhaps, Western civilization had already cultivated and concentrated psychopathic personality traits in its elite before Capitalism
ever begun. Early European history is an endless procession of wars at home and abroad as the elite took their wealth by force
and the masses were kept in check by force whenever necessary.
No peaceful group could ever survive this relentless onslaught of millennia. This psychopathic elite then took their warlike
ways to every corner of the earth. The wealthy elite from this era then became the wealthy elite of the next Capitalist era. Even
today their bloodlust cannot be sated as they look to control a global empire.
Certainly countless hundreds of peaceful, responsible, inclusive, open, empathetic indigenous societies have been co-opted/overthrown
by the western model.
Yes, but it's not just the western model that overthrows peaceful societies. The empires of China, the Japanese monarchies,
the empires of India (together with a cringeworthy caste system), the human sacrificing Aztecs, Mayas, and Incas, all prove that
tyranny is not a western invention.
When a local population becomes too large to be supported by simple egalitarian hunting and gathering, something else is required.
That something is agriculture, and almost inevitably, the organization, specialization, and partial urbanization required by large
scale agricultural society leads to exploitation and tyranny. This is seen in the earliest societies for which we have a written
record, Sumer and Egypt.
Thanks for the explanations of Veblen and Galbraith, which I find enduring basics over more than 100 years of speculation,
real investment, and the best way to keep consumer society healthy.
My unschooled, simple, way to measure the health of an economy is in the Velocity of Money in the real economy of useful products
and services. It appears to be very far below where it was when we did our best, and lower than when we first started measuring
it near the beginning of the Great Depression.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required
to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce.
They knew that if wealth concentrated too much there would not be enough demand.
Of course the Capitalists could never find it in themselves to raise wages and it took the New Deal and Keynesian thinking
to usher in the consumer society.
Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic
philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending
by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the
pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending
and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom
have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in
the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned.
A Monetarily Sovereign government does not need to reduce debt. In the U.S. (which is Monetarily Sovereign) federal so-called
"debt" is actually the total of deposits in T-security accounts at the Federal Reserve Bank. In short, "debt" is bank deposits.
Why anyone would want to reduce the size of deposits at the world's safest bank is a mystery to me - other than the misleading
use of the word "debt."
While all bank accounts are, in fact, debt of banks, most banks boast about the size of their depositors' accounts.
Contrary to popular myth, federal debt (i.e. deposits at the FRB) does not lead to inflation. America's "debt" has grown more
than 9,000% in the past 75 years, and the Fed is struggling to create inflation.
Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have
used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. It
would possibly have given his program more gravitas – first amongst elites, and then more generally. At least it would have had
a chance of changing the broader discussion. Whether you agree with it or not, right now the general MSM reporting on the Sanders
plan is that it doesn't add up.
This is speculative, but since Prof. Kelton is actually the economist for the Minority (the Democrats) of the Senate Banking
committee, there may be reasons of protocol that Sanders isn't using her policy ideas at the moment.
Another possibility is that trying to introduce a new economic paradigm while running for the nomination may be a bridge too
far. If Sanders tried to explain to people that taxes don't fund federal spending, etc., heads would explode.
I'm also not sure how one would use Prof. Kelton's ideas without bringing in a whole bunch of MMT concepts. Maybe if Sanders
wins the nomination he can begin to bring some of these ideas into the conversation.
He won't use her ideas simple because the American voter in not yet amenable to the facts of
Monetary Sovereignty .
Try explaining even to your best friend that:
1. Unlike state and local taxes, Federal taxes do not fund federal spending.
2. Even if FICA were eliminated, Social Security and Medicare benefits dramatically could (and should) be increased. There are
no federal "trust funds."
3. Federal deficits are necessary for economic growth
4. Federal "debt" is nothing more than deposits in T-security accounts at the Federal Reserve Bank.
5. America never has had, and is absolutely in no danger of, hyper-inflation.
Perhaps, if Bernie wins the election, he will be freer to educate the masses, as well as the economics community, but meanwhile
he has to claim the popular myth that federal spending has to be "paid for" by taxes.
Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready
for MMT? I think it's politically OK to use MMT informed policies–"deficits don't matter"–as the Republicans have, but not
OK to openly acknowledge doing so. MMT runs head on into bedrock beliefs like the protestant moral virtues of thrift and fiscal
responsibility. People cling to this stuff as tightly as they cling to their religion and guns.
MMT is a volatile, explosive doctrine. Tell an ordinary off-the-street taxpayer that Federal taxes don't fund Federal expenditures,
that Federal taxes destroy the money they collect and so keep inflation at desired levels, and ready yourself to answer this:
"If I'm just paying taxes so the money can be burned, why should I pay taxes? What good does paying taxes for that do me,
or people like me?"
And be prepared not to have your answer heard, comprehended, or accepted, after it is given.
It could lead directly and quickly to the end of a system of tax collection based on voluntary compliance. It could ignite
a revolution.
MMT is an unpopular doctrine. Whether it is the true theory, or a truer theory than others, of the state of the world–is not
the point.
She can't. She's his staffer (on the Senate Budget Committee) so she is now allowed to work on the campaign. It would be a
big ethics violation and would produce a scandal. Staffers cannot work on any of their bosses campaigns, including re-elections.
Remember, they are government employees, not on Sanders' personal payroll.
My old party has worked hard to try discredit James Galbraith. I was faced with some ridicule from a Bush era international
negotiator for trying to read "The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too" in
an airport waiting area.
To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining
the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth
in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control."
I don't oppose them (at that level) expressing their well thought out views, even using the "persuasive" techniques described
in the document at http://www.informationclearinghouse.info/article4443.htm
but I do fault them for trying to prevent people from freely exploring far more comprehensive information and views.
We left the party ancestors had founded and stayed loyal to for 5 generations, though, because of the lower level dirty tricksters
("opposition researchers") that wanted us to corrupt the processes as one fund raiser told me, "We have to fight dirtier than
Democrats."
Galbraith is a voice that must be listened to, just as there may be many others that we should be able to listen to (as I assume
we could have under the old "Fairness Doctrine" before the corporate take over of almost all fully accessible media).
stg Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low
growth – because there is not much growth left. So maybe we are headed for a no growth world in which stability and sustainability
dictate enterprise which is used to maintain a steady state – so that sounds more socialist than capitalist out of necessity.
I believe this is our future too. And I think I understand Varoufakis' and Galbraith's "modest proposal" in a clearer light because
growth must be used going forward not willy-nilly, but to achieve our ends. And also too – a while back the link that effectively
said we had it backwards when we assume that capitalism supports socialism – because capitalism in reality lives off and is only
possible under sufficient socialism. And it seems the 4 presidential advisors are more out to lunch than their letter showed.
Can't respond to all the nonsense. I just read Wolfer's piece and it seems to miss the point (as with the Romers), as noted
in the following 2 articles. I especially recommend the 2nd one from John Cassidy in the New Yorker.
as usual, i hear a lot "they" failed conservatism, never, Conservatism is just the age old avenue to "scam" the other. Bush
"failed" at conservatism, i.e., it was Bush's fault not the ideology of Conservatism. on and on, this self repeated/reinforced
"idea" that we have just not "found" the correct "application" of the ideal/reality that is Conservatism.
it does get old, too. all the people killed due to Conservatism and its' perpetrators. Greed, in other words, and the age old
scam with "new and improved" tactics. These people have no concept of what "society" is, why we are all interrelated. to scam
one is to scam us all. and these people are definitely not Christian in the "Jesus Christ" i've always heard about. Whatsoever
you do unto the poor, you do unto me!
i just suppose psychopaths use any avenue for their "crimes." as i've heard, too, any great fortune is usually the result of
a great crime.
Stagnation that is gripping several of the world's largest economies should be viewed as a secular, long term phenomenon, not
something transient. It is connected with the neoliberalism entering a new phase of its development, when New Deal was already
devoured, 90% or so of population standard of living slides and thus there are no direct mechanisms to increase consumer demand.
Notable quotes:
"... Stagnation is gripping several of the world's largest economies and many view this as secular, not transient. ..."
"... Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers collectively have. This is the spectre that haunts all economics. ..."
"... For many of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. ..."
"... In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high fructose cotton candy or the collected works of Shakespeare. ..."
"... Profits and income share at the top soared; wages and income share at the bottom fell, and employment was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed. ..."
"... How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed system that makes the rich richer and the poor poorer by increasing government debt? ..."
"... It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few in the absence of the ability of those at the bottom to expand their debt relative to income. ..."
"... It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the concentration of income that led to the bubble economy we have today that has led us into the Great Recession. ..."
"... I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth reflecting persistently weak private demand. ..."
"... The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most cults adherents became more fanatical believers after the prophecy did not materialized. ..."
"... In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état in Ukraine. ..."
This column argues that many economies need both demand-side stimulus and supply-side reform to close the output gap and restore
potential-output growth. A combined monetary-fiscal stimulus – i.e. helicopter money – is needed to close the output gap, and
this should be accompanied with extensive debt restructuring, policies to halt rising inequality, and additional public infrastructure
investment.
Selected Skeptical Comments
Sandwichman -> anne:
Workers, collectively, have a single, incontrovertible lever for effecting change -- withholding their labor power. Nothing
-- not even imprisonment or death -- can prevent workers from withholding their labor power! Kill me and see how much work you
can get out of me.
This is the elementary fact that the elites don't want workers to know. "It is futile!" "It is a fallacy!" "You will only hurt
yourselves!"
Once one comprehends the strategic importance of making the withholding of labor power taboo, everything else falls into place.
Economics actually makes sense as a persuasive discourse to dissuade from the withholding of labor power.
Above all, ideology must conceal, denigrate, diminish, slander and distract from the ONE effective strategy that workers
collectively have. This is the spectre that haunts all economics.
Dan Kervick:
Good stuff by Buiter et al, but here are some suggested additions to the litany of supply side woes:
1. Ineffective economic organization, both inside corporate firms and outside of them.
a. Many corporations are now quite dysfunctional as engines of long-term value creation – but not dysfunctional as vehicles
of short-term value extraction for their absurdly over-incentivized key stakeholders.
b. The developed world societies are facing an extreme failure of strategic economic leadership, at both the national and global
level, and at both the formal level of government and the informal level of visionary public intellectuals and industrial "captains".
There is no coherent consensus on which way lies the direction of progress. Since nobody is setting the agenda for what the future
looks like, risk trumps confidence everywhere and nobody knows what to invest in.
2. Dyspeptic dystopianism. The intellectual culture of our times is polluted by obsessive, nail-biting negativity and
demoralizing storylines preaching hopelessness: the robots are going to destroy all the jobs; the Big One is going to bury everything,
the real "neutral" interest rate is preposterously negative, etc. etc. etc. With so much doom and gloom in the air, there is no
reason to invest wealth, rather than consume it. Robert Schiller touched on this at a recent talk at LSE.
3. The popular culture of 2015 America is – as in so many other areas - a tale of two cultural cities.For many
of those who consume the bottom layers of it, what they are ingesting is a barbarous Pink Slime cultural sludge that makes them
stupid, frivolous, dependent, impulsive and emotionally erratic – something like perpetual 15 year olds. People like this
can be duped by the most shallow demagoguery and consumerist manipulation, and can't organize themselves to pursue their enlightened
self-interest. Enlightened artists and cultural custodians need to step up, organize and find a way to seize the American mind
back from the clutches of consumer capitalist garbage-mongers and philistine society-wreckers.
4. Laissez faire backwardness. We are struggling under left-right-center conspiracy of Pollyanna freedom fools, who
despite their constant kvetching at one another all share in common the view that progress is self-organizing.
On the left we have the Chomsky and Graeber-style "libertarian socialists" who are convinced we could have a functioning and
prosperous society in which seemingly every action is voluntary and spontaneous, nobody is ever compelled to do anything that
their delicate little hearts don't throb to do, and who seemingly have no idea of what it takes even to run a carrot farm.
On the right, we have the clueless paranoid libertarians who think the whole world should revolve around their adolescent desire
not to be "tread on", and seem to have no idea of what it takes – and what it took historically - to build a livable civilization.
In the center, we have the neoliberals, who are convinced that our world will spontaneously and beneficially organize itself
if only we turn the macroeconomic tumblers and stumble on the right interest rate, or inflation rate, or some other version of
the One Parameter to Rule Them All mindset. They are also too devoted to the religion of demand-goosing: the idea that everything
will be all right as long as we generate enough "demand" – as though it makes no difference whether people are demanding high
fructose cotton candy or the collected works of Shakespeare.
5. I'm an optimist! This is all going to change. We have nearly reached Peak Idiocracy. We're on the verge of a new age of
social organization and planning and a return to mixed economy common sense and public-spirited mobilization and adulthood. This
will happen because ultimately all of those teenagers will stop denying reality, and stop struggling to escape the realization
that a more organized and thoughtfully planned way of life is the only thing that will work in our small, resource strapped, crowded
21st century planet.
George H. Blackford:
Since the 80s, US companies have been buying abroad to sell at home as foreign countries used our trade deficits to depress
their exchange rates. Profits and income share at the top soared; wages and income share at the bottom fell, and employment
was maintained by speculative bubbles and increasing debt until the last bubble burst, and the system collapsed.
There seem to be no more bubbles in the offing. The dollar is overvalued. Debt relative to income is unprecedented, and the
concentration of income has created stagnation for lack of investment opportunities.
How is an increasing deficit and QE supposed to solve our problems in this situation other than by propping up a failed
system that makes the rich richer and the poor poorer by increasing government debt? Does anyone really believe this sort
of thing can go on forever in the absence of a fall in the value of the dollar and in the concentration of income? Who's going
to be left holding the bag when this system collapses again?
It seems quite clear to me that it is going to take a very long time for the system to adjust to this situation in the
absence of a fall in the value of the dollar and the concentration of income. That kind of adjustment means reallocating resources
in a very dramatic way so as to accommodate an economy in which resources are allocated to serve the demands of the wealthy few
in the absence of the ability of those at the bottom to expand their debt relative to income.
We didn't smoothly transition from an agricultural economy to one based on manufacturing. That transition was plagued with
a great deal of civil unrest, speculative bubbles, booms and busts that eventually led to a collapse of the system and the Great
Depression.
And we didn't smoothly transition out of the Great Depression. That was ended by WW II and dramatic changes in our economic
system, the most dramatic changes being the role and size of government and the fall in the concentration of income for thirty-five
years after 1940.
It was the fall in the concentration of income that led to mass markets (large numbers of people with purchasing power
out of income) that made investment profitable after WW II in the absence of speculative bubbles, and it was the increase in the
concentration of income that led to the bubble economy we have today that has led us into the Great Recession.
What this means to me is that we are not going to get out of the mess we are in today in the absence of some kind of catastrophe
comparable to WW II if we, and the rest of the world, do not come to grips with the fundamental problem we face in this modern
age, namely, the trade deficit and the concentration of income.
I think neoliberalism naturally leads to secular stagnation. This is the way any economic system that is based on increasing
of inequality should behave: after inequality reached certain critical threshold, the economy faces extended period of low growth
reflecting persistently weak private demand.
An economic cycle enters recession when total spending falls below expected by producers and they realize that production level
is too high relative to demand. What we have under neoliberalism is kind of Marx constant crisis of overproduction.
The focus on monetary policy and the failure to enact fiscal policy options is structural defect of neoliberalism ideology
and can't be changed unless neoliberal ideology is abandoned. Which probably will not happen unless another huge crisis hit the
USA. 2008 crisis, while discrediting neoliberalism, was clearly not enough for the abandonment of this ideology. Like in most
cults adherents became more fanatical believers after the prophecy did not materialized.
The USA elite tried partially alleviate this problem by resorting to military Keynesianism as a supplementary strategy. But
while military budget was raised to unprecedented levels, it can't reverse the tendency. Persistent high output gap is now a feature
of the US economy, not a transitory state.
"Top everything" does not help iether (top cheap oil is especially nasty factor). Recent pretty clever chess gambit to artificially
drop oil price playing Russian card, and sacrificing US shall industry like a pawn (remember that Saudi Arabia is the USA client
state) was a very interesting move, but still expectation are now so low that cheap gas stimulus did not work as expected in the
USA. It would be interesting to see how quickly oil will return to early 2014 price level because of that. That will be the sign
that gambit is abandoned.
In a way behaviour of the USA elite in this respect is as irrational as behavior of the USSR elite. My impression is that
they will stick to neoliberal ideology to the bitter end. But at the same time they are much more reckless. Recent attempt to
solve economic problems by unleashing a new wars and relying of war time mobilization so far did not work. Including the last
move is this game: Russia did not bite the offer for military confrontation that the USA clearly made by instilling coup d'état
in Ukraine.
Now it look like there is a second attempt to play "madman" card after Nixon's administration Vietnam attempt to obtain concession
from the USSR by threatening to unleash the nuclear war.
"... During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of most ordinary people. ..."
"... They pursued them as a matter of faith in the market and its processes, despite the apparent warning signs of their imminent failure. ..."
"... as within many custom or belief systems, what economics enshrines is a social order. One where a dominant minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status. ..."
"... idea of economics as an exploitative mechanism is echoed in the cover picture of the book, Bosch's The Conjurer ..."
"... Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological crisis which the pursuit of economic growth has spawned. ..."
Brian Davey's new book, Credo: Economic Beliefs in a World in Crisis, is an analysis of economic theory as if it were a system
of religious belief.
It's a timely book. The simplistic, perhaps 'supernatural' assumptions which underpin key parts of economic theory demand far
more attention. It's a debate we've failed to have as a society.
... ... ...
During the two decades following the neoliberal economists' take-over of Western governments in the 1980s, many felt that
the almost mystical terms of economics - such as derivatives, hedging, leverage, contangos, etc - were beyond the understanding of
most ordinary people.
And without understanding those terms, irrespective of our gut feeling that there was something wrong, how could we challenge
the political lobby those theories had put into power? In the end it took the
financial crash of 2007/8 to demonstrate
that those in charge of this system didn't understand the complexity and risk of those practices either.
They pursued them as a matter of faith in the market and its processes, despite the
apparent
warning signs of their imminent failure. Those outside 'orthodox' economics could already see where the economy
was heading in the longer-term.
Question is, did economists learn anything from that failure? Or,
through austerity, have they once again committed us to their dogmatic belief system, unchanged by that experience?
... ... ...
However, through simple hubris or optimism bias, the political
class has been convinced that 'fracking' is a solution to our economic woes
- even though there is a paucity of verifiable evidence to demonstrate those claims, and
it has already lost billions of investors money.
Economics is a reflection of power
Ultimately though, as within many custom or belief systems, what economics enshrines is a social order. One where a dominant
minority are able to take a small quantity of wealth from each member of the majority in order to maintain their higher status.
This idea of economics as an exploitative mechanism
is echoed in the cover picture of the book, Bosch's
The Conjurer - where a magician distracts
the public with a sleight of hand trick so that they can be more easily robbed by his associate.
Again, in a world where we're hitting the limits to human material growth, political models of well-being based upon wealth and
consumption are damaging to human society in the long-term. The evidence that we're heading for a longer-term failure is there, as
was the case with the warning signs before the 2007 crash. The problem is that those in positions of power
do not wish to see it.
... ... ...
Within its exposition of economics as a quasi-religious theory, Brian Davey's book helps us to understand why economic theory
is driving us toward a global system failure - and why politics and economics are incapable of responding to the pressing ecological
crisis which the pursuit of economic growth has spawned.
Contrary to the economic hubris of many world leaders, set alongside the reality of ecological limits humanity is not 'too big
to fail'.
"... An interview by Gordon T. Long of the Financial Repression Authority. Originally published at his website ..."
"... One of the most important distinctions that investors have to understand is the difference between secular and cyclical trends Let us begin with definitions from the Encarta® World English Dictionary: ..."
"... Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period of time ..."
"... Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions of an event or phenomenon that occurs regularly ..."
"... Secular stagnation is when the predators of finance have eaten too many sheeple. ..."
"... Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to have happened yet consistently. ..."
"... Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal, which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt with Nike gear. ..."
"... . . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit . It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system and raise the cost of living and doing business . ..."
GORDON LONG: Thank you for joining us. I'm Gordon Long with the Financial Repression Authority. It's my pleasure to have with
me today Dr. Michael Hudson Professor Hudson's very well known in terms of the FIRE economy to-I think, to a lot of our listeners,
or at least he's recognized by many as fostering that concept. A well known author, he has published many, many books. Welcome, Professor
Hudson.
MICHAEL HUDSON: Yes.
LONG: Let's just jump into the subject. I mentioned the FIRE economy cause I know that I have always heard it coming from yourself-or,
indirectly, not directly, from yourself. Could you explain to our listeners what's meant by that terminology?
HUDSON: Well it's more than just people getting fired. FIRE is an acronym for Finance, Insurance and Real Estate. Basically that
sector is about assets, not production and consumption. And most people think of the economy as being producers making goods and
services and paying labor to produce them – and then, labour is going to buy these goods and services. But this production and consumption
economy is surrounded by the asset economy: the web of Finance, Insurance, and Real Estate of who owns assets, and who owes the debts,
and to whom.
LONG: How would you differentiate it (or would you) with what's often referred to as financialization, or the financialization
of our economy? Are they one and the same?
HUDSON: Pretty much. The Finance, Insurance, and Real Estate sector is dominated by finance. 70 to 80% of bank loans in North
America and Europe are mortgage loans against real estate. So instead of a landowner class owning property clean and clear, as they
did in the 19 th century, now you have a democratization of real estate. 2/3 or more of the population owns their own
home. But the only way to buy a home, or commercial real estate, is on credit. So the loan-to-value ratio goes up steadily. Banks
lend more and more money to the real estate sector. A home or piece of real estate, or a stock or bond, is worth whatever banks are
willing to lend against it
As banks loosen their credit terms, as they lower their interest rates, take lower down payments, and lower amortization rates
– by making interest-only loans – they are going to lend more and more against property. So real estate is bid up on credit. All
this rise in price is debt leverage. So a financialized economy is a debt-leveraged economy, whether it's real estate or insurance,
or buying an education, or just living. And debt leveraging means that a larger proportion of assets are represented by debt. So
debt equity ratios rise. But financialization also means that more and more of people's income and corporate and government tax revenue
is paid to creditors. There's a flow of revenue from the production-and-consumption economy to the financial sector.
LONG: I don't know if you know Richard Duncan. He was with the IMF, etc, and lives in Thailand. He argues right now that capitalism
is no longer functioning, and really what he refers to what we have now is "creditism." Because in capitalism we have savings that
are reinvested into productive assets that create productivity, which leads to a higher level of living. We're not doing that. We
have no savings and investments. Credit is high in the financial sector, but it's not being applied to productive assets. Is he valid
in that thinking?
HUDSON: Not as in your statement. It's confused.
LONG: Okay.
HUDSON: There's an enormous amount of savings. Gross savings. The savings we have that are mounting up are just about as large
as they've ever been – about, 18-19% of the US economy. They're counterpart is debt. Most savings are lent out to borrowers se debt.
Basically, you have savers at the top of the pyramid, the 1% lending out their savings to the 99%. The overall net savings may be
zero, and that's what your stupid person from the IMF meant. But gross savings are much higher. Now, the person, Mr. Duncan, obviously-I
don't know what to say when I hear this nonsense. Every economy is a credit economy.
Let's start in Ancient Mesopotamia. The group that I organized out of Harvard has done a 20-study of the origins of economic structuring
in the Bronze Age, even the Neolithic, and the Bronze Age economy – 3200 BC going back to about 1200 BC. Suppose you're a Babylonian
in the time of Hammurabi, about 1750 BC, and you're a cultivator. How do you buy things during the year? Well, if you go to the bar,
to an ale woman, what she'd do is write down the debt that you owe. It was to be paid on the threshing floor. The debts were basically
paid basically once a year when the income was there, on the threshing floor when the harvest was in. If the palace or the temples
would advance animals or inputs or other public services, this would be as a debt. It was all paid in grain, which was monetized
for paying debts to the palace, temples and other creditors.
The IMF has this Austrian theory that pretends that money began as barter and that capitalism basically operates on barter. This
always is a disinformation campaign. Nobody believed this in times past, and it is a very modern theory that basically is used to
say, "Oh, debt is bad." What they really mean is that public debt is bad. The government shouldn't create money, the government shouldn't
run budget deficits but should leave the economy to rely on the banks. So the banks should run and indebt the economy.
You're dealing with a public relations mythology that's used as a means of deception for most people. You can usually ignore just
about everything the IMF says. If you understand money you're not going to be hired by the IMF. The precondition for being hired
by the IMF is not to understand finance. If you do understand finance, you're fired and blacklisted. That's why they impose
austerity programs that they call "stabilization programs" that actually are destabilization programs almost wherever they're imposed.
LONG: Is this a lack of understanding and adherence to the wrong philosophy, or how did we get into this trap?
HUDSON: We have an actively erroneous view, not just a lack of understanding. This is not by accident. When you have an error
repeated year after year after year, decade after decade after decade, it's not really insanity doing the same thing thinking it'll
be different. It's sanity. It's doing the same thing thinking the result will be the same again and again and again. The result
will indeed be austerity programs, making budget deficits even worse, driving governments further into debt, further into reliance
on the IMF. So then the IMF turns them to the knuckle breakers of the World Bank and says, "Oh, now you have to pay your debts by
privatization". It's the success. The successful error of monetarism is to force countries to have such self-defeating policies that
they end up having to privatize their natural resources, their public domain, their public enterprises, their communications and
transportation, like you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane.
It's part of the program, not a bug.
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural resources
and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads us into
a realm where everything that the classical economists saw and argued for – public investment, bringing costs in line with the actual
cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically, financiers – the
1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises, land, natural resources,
so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the top of the pyramid, impoverishing
the 99%.
LONG: Well I think most people, without understanding economics, would instinctively tell you they think that's what's happening
right now, in some way.
HUDSON: Right. As long as you can avoid studying economics you know what's happened. Once you take an economics course you step
into brainwashing. It's an Orwellian world.
LONG: I think you said it perfectly well there. Exactly. It gets you locked into the wrong way of thinking as opposed to just
basic common sense. Your book is Killing the Host . What was the essence of its message? Was it describing exactly what we're
talking about here?
HUDSON: Finance has taken over the industrial economy, so that instead of finance becoming what it was expected to be in the 19
th century, instead of the banks evolving from usurious organizations that leant to governments, mainly to wage war, finance
was going to be industrialized. They were going to mobilize savings and recycle it to finance the means of production, starting with
heavy industry. This was actually happening in Germany in the late 19 th century. You had the big banks working with government
and industry in a triangular process. But that's not what's happening now. After WW1 and especially after WW2, finance reverted to
its pre-industrial form. Instead of allying themselves with industry, as banks were expected to do, banks allied themselves with
real estate and monopolies, realizing that they can make more money off real estate.
The bank spokesman David Ricardo argued against the landed interest in 1817, against land rent. Now the banks are all in favor
of supporting land rent, knowing that today, when people buy and sell property, they need credit and pay interest for it. The banks
are going to get all the rent. So you have the banks merge with real estate against industry, against the economy as a whole. The
result is that they're part of the overhead process, not part of the production process.
LONG: There's a sense that there's a crisis lying ahead in the next year, two years, or three years. The mainstream economy's
so disconnected from Wall Street economy. What's your view on that?
HUDSON: It's not disconnected at all. The Wall Street economy has taken over the economy and is draining it. Under what economics
students are taught as Say's Law, the economy's workers are supposed to use their income to buy what they produce. That's why Henry
Ford paid them $5 a day, so that they could afford to buy the automobiles they were producing.
LONG: Exactly.
HUDSON: But Wall Street is interjecting itself into the economy, so that instead of the circular flow between producers and consumers,
you have more and more of the flow diverted to pay interest, insurance and rent. In other words, to pay the FIRE sector. It all ends
up with the financial sector, most of which is owned by the 1%. So, their way of formulating it is to distract attention from today's
debt quandary by saying it's just a cycle, or it's "secular stagnation." That removes the element of agency – active politicking
by the financial interests and Wall Street lobbyists to obtain all the growth of income and wealth for themselves. That's what happened
in America and Canada since the late 1970s.
LONG: What does an investor do today, or somebody who's looking for retirement, trying to save for the future, and they see some
of these things occurring. What should they be thinking about? Or how should they be protecting themselves?
HUDSON: What all the billionaires and the heavy investors do is simply try to preserve their wealth. They're not trying to make
money, they're not trying to speculate. If you're an investor, you're not going to outsmart Wall Street billionaires, because the
markets are basically fixed. It's the George Soros principle. If you have so much money, billions of dollars, you can break the Bank
of England. You don't follow the market, you don't anticipate it, you actually make the market and push it up, like the Plunge Protection
Team is doing with the stock market these days. You have to be able to control the prices. Insiders make money, but small investors
are not going to make money.
Since you're in Canada, I remember the beginning of the 1960s. I used to look at the Treasury Bulletin and Federal Reserve
Bulletin figures on foreign investment in the US stock market. We all used to laugh at Canada especially. The Canadians don't
buy stocks until they're up to the very top, and then they lose all the money by holding these stocks on the downturn. Finally, when
the market's all the way at the bottom, Canadians decide to begin selling because they finally can see a trend. So they miss the
upswing until they decide to buy at the top once again. It's hilarious to look at how Canada has performed in the US bond market,
and they did the same in the silver market. I remember when silver was going up to $50. The Canadians said, "Yes, we can see the
trend now!" and they began to buy it. They lost their shirts. So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
LONG: Absolutely on that one. What are you currently writing? What is your current focus now?
HUDSON: Well, I just finished a book. You mentioned Killing the Host . My next book will be out in about three months:
J is for Junk Economics . It began as a dictionary of terms, so I can provide people with a vocabulary. As we got in the argument
at the beginning of your program today, our argument is about the vocabulary we're using and the words you're using. The vocabulary
taught to students today in economics – and used by the mass media and by government spokesmen – is basically a set of euphemisms.
If you look at the television reports on the market, they say that any loss in the stock market isn't a loss, it's "profit taking".
And when they talk about money. the stock market rises – "Oh that's good news." But it's awful news for the short sellers it wipes
out. Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are happening. For instance, "secular
stagnation" means it's all a cycle. Even the idea of "business cycles": Nobody in the 19 th century used the word "business
cycle". They spoke about "crashes". They knew that things go up slowly and then they plunge very quickly. It was a crash. It's not
the sine curve that you have in Josef Schumpeter's book on Business Cycles . It's a ratchet effect: slow up, quick down. A
cycle is something that is automatic, and if it's a cycle and you have leading and lagging indicators as the National Bureau of Economic
Research has. Then you'd think "Oh, okay, everything that goes up will come down, and everything that goes down will come up, just
wait your turn." And that means governments should be passive.
Well, that is the opposite of everything that's said in classical economics and the Progressive Era, when they realized that economies
don't recover by themselves. You need a-the government to step in, you need something "exogenous," as economist say. You need something
from outside the system to revive it. The covert idea of this business cycle analysis is to leave out the role of government. If
you look at neoliberal and Austrian theory, there's no role for government spending, and no role of public investment. The whole
argument for privatization, for instance, is the opposite of what was taught in American business schools in the 19 th
century. The first professor of economics at the Wharton School of Business, which was the first business school, was Simon Patten.
He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit. It's to lower the cost
of public services and basic inputs to lower the cost of living and lower the cost of doing business to make the economy more competitive.
But privatization adds interest payments, dividends, managerial payments, stock buybacks, and merges and acquisitions. Obviously
these financialized charges are factored into the price system and raise the cost of living and doing business.
LONG: Well, Michael, we're-I thank you for the time, and we're up against our hard line. I know we didn't have as much time as
we always like, so we have to break. Any overall comments you'd like to leave with our listeners who might be interested this school
of economics?
HUDSON: Regarding the downturn we're in, we're going into a debt deflation. The key of understanding the economy is to look at
debt. The economy has to spend more and more money on debt service. The reason the economy is not recovering isn't simply because
this is a normal cycle. And It's not because labour is paid too much. It's because people are diverting more and more of their income
to paying their debts, so they can't afford to buy goods. Markets are shrinking – and if markets are shrinking, then real estate
rents are shrinking, profits are shrinking. Instead of using their earnings to reinvest and hire more labour to increase production,
companies are using their earnings for stock buybacks and dividend payouts to raise the share price so that the managers can take
their revenue in the form of bonuses and stocks and live in the short run. They're leaving their companies as bankrupt shells, which
is pretty much what hedge funds do when they take over companies.
So the financialization of companies is the reverse of everything Adam Smith, John Stuart Mill, and everyone you think of as a
classical economist was saying. Banks wrap themselves in a cloak of classical economics by dropping history of economic thought from
the curriculum, which is pretty much what's happened. And Canada-I know since you're from Canada, my experience there was that the
banks have a huge lobbying power over government. In 1979, I wrote for the IRPP Institute there on Canada In the New Monetary
Order . At that time the provinces of Canada were borrowing money from Switzerland and Germany because they could borrow it at
much lower interest rates. I said that this was going to be a disaster, and one that was completely unnecessary. If Canadian provinces
borrow in Francs or any other foreign currency, this money goes into the central bank, which then creates Canadian dollars to spend.
Why not have the central bank simply create these dollars without having Swiss francs, without having German marks? It's unnecessary
to have an intermediary. But the more thuggish banks, like the Bank of Nova Scotia, said, "Oh, that way's the road to serfdom." It's
not. Following the banks and the Austrian School of the banks' philosophy, that's the road to serfdom. That's the road
to debt serfdom. It should not be taken now. It lets universities and the government be run by neoliberals. They're a travesty of
what real economics is all about.
LONG: Michael, thank you very much. I learned a lot, appreciate it; certainly appreciate how important it is for us to use the
right words on the right subject when we're talking about economics. Absolutely agree with you. Talk to you again?
Interesting, but after insulting Duncan, Hudson says the banks stopped partnering with industry and went into real estate,
which sounded like what Duncan said.
I mention this because for a non- expert like myself it is sometimes difficult to tell when an expert is disagreeing with someone
for good reasons or just going off half- cocked. I followed what Hudson said about the evils of the IMF, but didn't see where
Duncan had defended any of that, unless it was implicit in saying that capitalism used to function better.
"As we got in the argument at the beginning of your program today, our argument is about the vocabulary we're using and the
words you're using. The vocabulary taught to students today in economics – and used by the mass media and by government spokesmen
– is basically a set of euphemisms ."Almost all the words we get are kind of euphemisms to conceal the actual dynamics that are
happening."
May consider it's about recognizing and deciphering the "doublespeak", "newspeak", "fedspeak", "greenspeak" etc, whether willing
or unwitting using words for understanding and clarifying as opposed to misleading and confusing dialectic as opposed to sophistry.
What I objected to was the characterization of today's situation as "financialization." I explained that financialization is
the FIRST stage - when finance WORKS. We are now in the BREAKDOWN of financialization - toward the "barter" stage.
Treating "finance" as an end stage rather than as a beginning stage overlooks the dynamics of breakdown. It is debt deflation.
First profits fall, and as that occurs, rents on commercial property decline. This is already widespread here in New York, from
Manhattan (8th St. near NYU is half empty) to Queens (Austin St. in Forest Hills.).
I wrote an article you might be interested in reading. It outlines a tax policy which would help prevent what you are discussing
in your article. The abuse of credit to receive rents and long term capital gains.
Thank you for another eye-opening exposition. My political economy education was negative (counting a year of Monetarism and
Austrian Economics around 1980), so I appreciate your interviews as correctives.
From your interview answer to the question about what we, the 99+% should do,I gathered only that we should not try to beat
the market. Anything more than that?
From my understanding, post Plaza banking lost most of its traditional market to the shadow sector, as a result, expanded off
into C/RE and increasingly to Financialization of everything sundry.
Disheveled Marsupial interesting to note Mr. Hudson's statement about barter, risk factors – ?????
One of the most important distinctions that investors have to understand is the difference between secular and cyclical
trends Let us begin with definitions from the Encarta® World English Dictionary:
Secular – occurring only once in the course of an age or century; taking place over an extremely or indefinitely long period
of time
Cycle – a sequence of events that is repeated again and again, especially a causal sequence; a period of time between repetitions
of an event or phenomenon that occurs regularly
Secular stagnation is a condition of negligible or no economic growth in a market-based economy . When
per capita income stays at relatively high levels, the percentage of savings is likely to start exceeding the percentage of longer-term
investments in, for example, infrastructure and education, that are necessary to sustain future economic growth. The absence of
such investments (and consequently of the economic growth) leads to declining levels of per capita income (and consequently of
per capita savings). With the reduced percentage savings rate converging with the reduced investment rate, economic growth comes
to a standstill – ie, it stagnates. In a free economy, consumers anticipating secular stagnation, might transfer their savings
to more attractive-looking foreign countries. This would lead to a devaluation of their domestic currency, which would potentially
boost their exports, assuming that the country did have goods or services that could be exported.
Persistent low growth, especially in Europe, has been attributed by some to secular stagnation initiated by stronger European
economies, such as Germany, in the past few years.
Words. What they mean depends on who's talking.
Secular stagnation is when the predators of finance have eaten too many sheeple.
Markets are shrinking – and if markets are shrinking, then real estate rents are shrinking, profits are shrinking.
Real estate rents in this latest asset bubble, whether commercial or residential, appear to have been going up in many
markets even if the increases are slowing. That rent inflation will likely turn into rent deflation, but that doesn't appear to
have happened yet consistently.
Perhaps he meant to say that markets are going to shrink as the debt deflation becomes more evident?
Yes, I think we are into turnip country now. Figure 1 in
this
prior article looks clear enough – even if you don't like the analysis that went with it. Wealth inequality still climbs but
income inequality has plateaued since Clinton I. Whatever the reasons for that, the 1% should be concerned – where is the ROI?
Barter has always existed and always will. Debt money expands and contracts the middle class, acting as a feedback signal,
which never works over the long term, because the so encapsulated system can only implode, when natural resource liquidation cannot
be accelerated. The whole point is to eliminate the initial requirement for capital, work. Debt fails because both sides of the
same coin assume that labor can be replaced. The machines driven by dc technology are not replacing labor; neither the elites
nor the middle class can fix the machines, which is why they keep accelerating debt, to replace one failed technology only to
be followed by the next, netting extortion by whoever currently controls the debt machine, which the majority is always fighting
over, expending more energy to avoid work, like the objective is to avoid sweating, unless you are dumb enough to run on asphalt
with Nike gear.
Labor has no problem with multiwhatever presidents, geneticists, psychologists, or economists, trying to hunt down and replace
labor, in or out of turn, but none are going to be any more successful than the others. Trump is being employed to bypass the
middle class and cut a deal. There is no deal. Labor is always going to pay males to work and their wives to raise children. Obviously,
the majority will vote for a competing economy, and it is welcome to do so, but if debt works so well, why is the majority voting
to kidnap our kids with public healthcare and education policies.
I'm not sure I heard an answer to the question of what people, who might be trying to save for the future or plan for retirement,
can do? Is the point that there isn't anything? Because I'm definitely between rocks and hard places
Yeah, he basically said there is no good savings plan. Big-money interests have rigged the rules and are now manipulating the
market (this used to be the definition of what was NOT allowed). Thus, they use computer algorithms to squeeze small amounts out
of the market millions of times. This means that the "investments" are nothing of the sort. You don't "invest" in something for
milliseconds. He said that the 1% are mostly just trying to hold on to what they have. Very few trust the rigged markets.
Low rent & cheap energy are key to the arts & innovations. My model has to work for airports, starts at the fuel farm as the
CIA & MI6 Front Page Avjet did. Well before that was Air America. I wonder if now American Airlines itself is a Front.
All of America is a Front far as I can about tell. Hadn't heard that Manhattan rents were coming down. Come in from out of
town, how you going to know? Not supposed to I guess.
I got that textbook and I liked that guy John Commons. He says capitalism is great, but it always leads to Socialism because
of unbridled greed.
The frenzy to find another stable cash currency showing in Bit Coin and the discussion of Future Tax Credits while the Euro
is controlled by the rent takers demands change on both sides of the Atlantic.
We got shot dead protesting the war, and civil rights backlash is the gift that keeps giving to the Southerners looking up
every day in every courthouse town, County seat is all about spreading fear and desperation.
How to change it all without violence is going to be really tricky.
. . . So, basically, if you're a Canadian investor, move.
LONG: So the Canadian investors are a better contrarian indicator than the front page cover, you're saying.
HUDSON: I'd think so. Once they get in, you know the bubble's over.
When one reads the financial press in Canada, every dollar extracted by the lords of finance is a glorious taking by brilliant
people at the top of the financial food chain from the stupid little people at the bottom, but when it counts, there was silence,
in cooperation with Canada's one percent.
The story starts about five years ago, with smart meters. Everyone knows what they are, a method by which electrical power
use can be priced depending on the time of day, and day of the week.
To make this tasty, Ontario's local utilities at first kept the price the same for all the time, and then after all the meters
were installed, came the changes, phased in over time. Prices were increased substantially, but there was an out. If you changed
your living arrangements to live like a nocturnal rodent and washed your clothes in the middle of the night, had supper later
in the evening or waited for weekend power rates you could still get low power rates, from the three tier price structure.
The local utilities bought the power from the government of Ontario power generation utility, renamed to Hydro One, and this
is where Michael Hudson's talk becomes relevant.
The successful error of monetarism is to force countries to have such self-defeating policies that they end up having to
privatize their natural resources, their public domain, their public enterprises, their communications and transportation, like
you're seeing in Greece's selloffs. So when you find an error that is repeated, it's deliberate. It's not insane. It's
part of the program, not a bug .
LONG: Where does this lead us? What's the roadmap ahead of us here?
HUDSON: A thousand years ago, if you were a marauding gang and you wanted to take over a country's land and its natural
resources and public sector, you'd have to invade it with military troops. Now you use finance to take over countries. So it leads
us into a realm where everything that the classical economists saw and argued for – public investment, bringing costs
in line with the actual cost of production – that's all rejected in favor of a rentier class evolving into an oligarchy. Basically,
financiers – the 1% – are going to pry away the public domain from the government. Pry away and privatize the public enterprises,
land, natural resources, so that bondholders and privatizers get all of the revenue for themselves. It's all sucked up to the
top of the pyramid, impoverishing the 99% .
Eighteen months ago, there was an election in Ontario, and the press was on radio silence during the whole time leading up
to the election about the plans to "privatize" Hydro One. I cannot recall one instance of any mention that the new Premier, Kathleen
Wynne was planning on selling Hydro One to "investors".
Where did this come from? Did the little people rise up and say to the politicians "you should privatize Hydro One" for whatever
reason? No. This push came from the 1% and Hydro One was sold so fast it made my head spin, and is now trading on the Toronto
Stock exchange.
At first I though the premier was an economic ignoramus, because Hydro One was generating income for the province and there
was no other power supplier, so one couldn't even fire them if they raised their prices too high.
One of the arguments put forward by the 1% to privatize Hydro One was a classic divide and conquer strategy. They argued that
too many people at Hydro One were making too much money, and by privatizing, the employees wages would be beat down, and the resultant
savings would be passed on to customers.
Back to Michael Hudson
. . . The whole argument for privatization, for instance, is the opposite of what was taught in American business schools
in the 19th century. The first professor of economics at the Wharton School of Business, which was the first business school,
was Simon Patten. He said that public infrastructure is a fourth factor of production. But its role isn't to make a profit
. It's to lower the cost of public services and basic inputs to lower the cost of living and lower the cost of doing
business to make the economy more competitive. But privatization adds interest payments, dividends, managerial payments,
stock buybacks, and merges and acquisitions . Obviously these financialized charges are factored into the price system
and raise the cost of living and doing business .
Power prices have increased yet again in Ontario since privatization, and Canada's 1% are "making a killing" on it. There has
been another change as well. Instead of a three tier price structure, there are now two, really expensive and super expensive.
There is no longer a price break to living like a nocturnal rodent. The 1% took that for themselves.
I am so tired of seeing that old lie about Old Henry and the $5 a day. I realize it was just a tossed off reference to something
most people believe for the purpose of describing a discarded policy, but the fact is very, very few of Old Henry's employees
ever got that pay. See, there were strings attached.
Old Henry hired a lot of spies, too. He sent them around to the neighborhoods where his workers lived (it was convenient having
them all in Detroit). If the neighbors saw your kid bringing a bucket of beer home from the corner tavern for the family, you
didn't get the $5.
If your lawn wasn't mowed to their satisfaction, you didn't get the $5. If you were thought not to bathe as often as they liked,
you didn't get the $5. If you didn't go to a church on Sundays, you didn't get the $5. If you were an immigrant and not taking
English classes at night school, you didn't get the $5. There were quite a lot of strings attached. The whole story was a public
relations stunt, and Old Henry never intended to live up to it; he hated his workers.
"... Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy, whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities. Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane. ..."
"... In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish that. ..."
"... At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying. All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw, volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program. ..."
Macro-prudential regulations follow financial crises, rarely do they precede one. Even when evidence is abundant of systemic risks
building up, as is today, regulators and policymakers have a marked tendency to turn an institutional blind eye, hoping for imbalances
to fizzle out on their own – at least beyond the duration of their mandates. It does not work differently in economics than it does
for politics, where short-termism drives the agenda, oftentimes at the expenses of either the next government, the broader population
or the next generation.
It does not work differently in the business world either, where corporate actions are selected based on the immediate gratification
of shareholders, which means pleasing them at the next round of earnings, often at the expenses of long-term planning and at times
exposing the company itself to disruption threats from up-and-comers.
Long-term vision does not pay; it barely shows up in the incentive schemes laid out for most professions . Economics is no exception.
Orthodoxy and stillness preserve the status quo, and the advantages hard earned by the few who rose from the ranks of the establishment
beforehand.
Yet, when it comes to Central Banking, and more in general policymaking, financial stability should top the priority list. It
honorably shows up in the utility function, together with price stability and employment, but is not pursued nearly as actively as
them. Central planning and interventionism is no anathema when it comes to target the decimals of unemployment or consumer prices,
yet is residual when it comes to master systemic risks, relegated to the camp of ex-post macro-prudential regulation. This is all
the more surprising as we know all too well how badly a deep unsettlement of financial markets can reverberate across the real economy,
possibly leading into recessions, unemployment, un-anchoring of inflation expectations and durable disruption to consumer patterns.
There is no shortage of reminders for that in the history books, looking at the fallout of dee dives in markets in 1929, 2000 and
2007, amongst others.
Intriguingly, the other way round is accepted and even theorized. Manipulating bond and stock prices, directly or indirectly,
is mainstream policy theory today. From Ben Bernanke's 'portfolio balance channel theory', to the relentless pursuit of the 'wealth
effect' via financial repression under Janet Yellen and Haruhiko Kuroda, to Mario Draghi tackling the fragmentation of credit markets
across the EU via direct asset purchases, the practice has become commonplace. To some, like us, the 'wealth effect' may be proving
to be more of an 'inequality effect' than much, leading to populism and constantly threatening regime change, but that is beyond
the scope of this note today.
What we want to focus on instead is the direct impact that monetary interventionism like Quantitative Easing ('QE') and Negative
or Zero Interest Rate Policies ('NIRP' or 'ZIRP') have on the structure of the market itself, how they help create a one-sided investment
community, oftentimes long-only, fully invested when not levered up, relying on record-highs for bonds and stocks to perpetuate themselves
endlessly - despite a striking disconnect from fundamentals, life-dependent on the lowest levels of volatility ever seen in history
. The market structure morphed under the eyes of policymakers over the last few years, to become a pressure cooker at risk of blowing-up,
with a small but steadily growing probability as times goes by and the bubble inflates. The
positive feedback loops between monetary flooding and the private investment
community are culpable for transforming an ever present market risk into a systemic risk, and for masking as peaceful what is instead
an unstable equilibrium and
market fragility.
Positive Feedback Loops create divergence from general equilibrium, and Systemic Risks
Positive feedback loops , in finance like in biology, chemistry, cybernetics, breed system instability, as they orchestrate a
further divergence from equilibrium . An unstable equilibrium is defined as one where a small disturbance is sufficient to trigger
a large adjustment.
QE and NIRP have two predominant effects on markets: (i) relentless up-trend in stocks and bonds (the 'Trend Factor') , dominated
by the buy-the-dip mentality, which encapsulates the 'moral hazard' of investors knowing Central Banks are prompt to come to their
rescue (otherwise known as 'Bernanke/Yellen/Kuroda/Draghi put'), and (ii) the relentless down-trend in volatility the 'Volatility
Factor').
Two Factors Explain All: Trend and Volatility
The most fashionable investment strategies these days are directly impacted by either one or both of these drivers. Such strategies
make the bulk of the overall market, after leverage or turnover is taken into account : we will refer to them in the following as
'passive' or 'quasi-passive' . The trend impacts the long-only community, crowning it as a sure winner, making the case for low-
cost passive investing. The low volatility permeates everything else, making the case for full- investment and leverage.
The vast majority of investors these days are not independent from the QE environment they operate within : ETFs and index funds,
Risk Parity funds and Target Volatility vehicles, Low Volatility / Short Volatility vehicles, trend-chasing algos, Machine Learning-inspired
funds, behavioral Alternative Risk Premia funds. They are the poster children of the QE world. We estimate combined assets under
management of in excess of $8trn across the spectrum. They form a broad category of 'passive' or 'quasi-passive' investors, as are
being mechanically driven by two main factors: trend and volatility.
Source: Fasanara Presentations | Market Fragility
- How to Position for Twin Bubbles Bust, 16 th October 2017. The slide is described in details in this
video recording.
Extraordinary monetary policies have feedback loops with the asset management industry as a whole, reinforcing the effects on
markets of such policies in a vicious – or virtuous - cycle . QE and NIRP help a large number of investment strategies to flourish,
validating their success and supporting their asset gathering in the process, and are in return helped in boosting bond and stock
markets by their flows joining the already monumental public flows.
Private flows so reach singularity with public flows, and the whole market economy morphs into a one big common bet on ever-rising
prices, in shallow volatility. Here is the story of how $15trn of money printing by major Central Banks in the last ten years, of
which $3.7trn in 2017 alone, is joined by total assets of $8trn managed into buying the same safe and risk assets across, with leverage,
indiscriminately.
How Market Risk became Systemic Risk
Let's give a cursory look at the main players involved (a recent presentation we did is recorded
here) . As markets trend higher, no matter what happens (ever against the
shocked disbeliefs of Brexit, Trump, an Italian failed referendum and nuclear threats in North Korea), investors understand the outperformance
that comes from pricing risks out of their portfolios entirely and going long-only and fully-invested. Whoever under-weighs positions
in an attempt to be prudent ends up underperforming its benchmarks and is then penalized with redemptions. Passive investors who
are long-only and fully invested are the winners, as they are designed to be bold and insensitive to risks. As Central Banks policies
reduce the level of interest rates to zero or whereabouts, fees become ever more relevant, making the case for passive investing
most compelling. The rise of ETF and passive index funds is then inevitable.
According to JP Morgan, in the last 10 years, $2trn left active managers in equities and $2trn entered passive managers (pag.39
here) . We may be excused for thinking they are the
same $ 2trn of underlying investors progressively pricing risk provisions out of books, de facto , while chasing outperformance and
lower fees.
To be sure, ETFs are a great financial innovation, helping reducing costs in an expensive industry and giving entry to markets
previously un-accessible to most investors. Yet, what matters here is their impact on systemic risks, via positive feedback loops.
In circular reference, beyond Central Banks flows, markets are helped rise by such classes of valuations-insensitive passive investors,
which are then rewarded with further inflows, with which they can then buy more. The more expensive valuations get, the more they
disconnect from fundamentals, the more divergence from equilibrium occurs, the larger fat-tail risks become.
In ever-rising markets, 'buy-and-hold' strategies may only possibly be outsmarted by 'buy-the-dip' strategies. Whatever the outcome
of risk events, be ready to buy the dip quickly and blindly. As more investors design themselves up to do so, the dips are shallower
over time, leading to an S&P500 that never lost 3% in 2017, an historical milestone. Machine learning is another beautiful market
innovation, but what is there to learn from the time series of the last several years, if not that buy- the-dip works, irrespective
of what caused the dip. Big Data is yet another great concept, shaping the future of us all. Yet, most data ever generated in humankind
dates back three years only, in and by itself a striking limitation. The quality of the deduction cannot exceed the quality of the
time series upon which the data science was applied. If the time series is untrustworthy, as is heavily influenced by monumental
public flows ($300bn per months), what trust can we put on any model output originating from it? What pattern recognition can we
really be hopeful of getting, in the first place? May some of it just be a commercial disguise for going long, selling volatility
and leveraging up in various shapes or forms? What is hype and what is real? A short and compromised data series makes it hard, if
not possible, to really know. Once public flows abate and price discovery is let free again, then and only then will we be in a position
to know the difference.
Low volatility does what trending markets alone cannot. A state of low volatility presents the appearance of
stuporous, innocuous, narcotized markets, thus
enticing new swathes of unfitting investors in, mostly retail-type 'weak hands'. Weak hands are investors who are brought to like
investments by certain characteristics which are uncommon to the specific investment itself, such as featuring a low volatility.
It is in this form that we see bond-like investors looking at the stock market for yield pick-up purposes, magnetized by levels of
realized volatility similar to what fixed income used to provide with during the Great Moderation. It is in this form that Tech companies
out of the US have started filling the coffers of not just Growth ETF, where they should rightfully reside, but also Momentum ETF,
and even, incredibly, Low-Volatility ETF.
Low volatility is also a dominant input for Risk Parity funds and Target Volatility vehicles . The lower the volatility, the higher
the leverage allowed in such players, mechanically. All of which are long-only players, joining public flows, again helping the market
rise to record levels in the process, in circular reference. Rewarded by new inflows, the buying spree gathers momentum, in a virtuous
circle. Valuations are no real input in the process, volatility is what matters the most. Volatility is not risk, except for them
it is.
It goes further than that. It is not only the level of volatility that count, but its direction too . As volatility implodes,
relentlessly, into historical lows never seen before in history, a plethora of investment strategies is launched to capitalize on
just that, directly: Short Volatility vehicles . They are the best performing strategy of the last decade, by and large. The problem
here is that, due to construction, as volatility got to single-digit territory, relatively small spikes are now enough to trigger
wipe-out events on several of these instruments. Our analysis shows that if equity volatility doubles up from current levels (while
still being half of what it was as recently as in August 2015), certain Short Vol ETFs may stand to lose up to 75% or more. Moreover,
short positions on long-vol ETFs can lose up to 250% of capital. For some, 'termination events' are built into contracts for sudden
losses of this magnitude, meaning that the notes would be prematurely withdrawn. It is one thing to expect a spike in volatility
to cause losses, it is quite another to know that a minor move is all it takes to trigger a default event.
On such spikes in volatility, Morgan Stanley Quant Derivatives Strategy desk warns further that market makers may be forced to
rebalance their exposure non-linearly on a spike in volatility. A drop in the S&P 500 of 5% in one day may trigger approximately
$ 400mn of Vega notional of rebalancing (pag.48 here)
. We estimate that half a trillion dollars of additional selling on S&P stocks may occur following a correction of between 5% and
10%. That is a lot of selling, pre-set in markets, waiting to strike. Unless you expect the market to not have another 5% sell-off,
ever again.
What do ETFs, Risk Parity and Target Vol vehicles, Low Vol / Short Vol vehicles, trend-chasing algos, Machine Learning, behavioral
Alternative Risk Premia, factor investing have in common? Except, of course, being the 'winners take all' of QE-driven markets. They
all share one or more of the following risk factors: long-only, fully invested when not leveraged-up, short volatility, short correlation,
short gamma Thanks to QE and NIRP, the whole market is becoming one single big position.
The 'Trend Factor' and the 'Volatility Factor' are over-whelming, making it inevitable for a high- beta, long-bias, short-vol
proxy to disseminate across. Almost inescapably so, given the time series the asset management industry has to deal with, and derive
its signals from.
Several classes of investors may move to sell in lock-steps if and when markets turn. The boost to asset prices and the zero-volatility
environment created the conditions for systemic risks in the form of an over-compensation to the downside. Record-low volatility
breeds market fragility, it precedes system instability.
Flows Matter, Both Ways!
We will know soon if the fragility of markets is that bad. The undoing of loose monetary policies (NIRP, ZIRP) will create a liquidity
withdrawal of over $1 trillion in 2018 alone (pag.61-62
here) . The reaction of the passive and quasi-passive communities will determine the speed of the adjustment in the pricing for
both safe and risk assets, and how quickly risk provisions will re- enter portfolios. Such liquidity withdrawal will represent the
first real crash-test for markets in 10 years.
As public spending on Wall Street abates, the risk is evident of seeing the whole market turning with it. The shocks of Trump
and Brexit did not manage to derail markets for long, as public flows were overwhelming. Flows is what mattered, above all elusive,
over-fitting economic narratives justifying price action at the margin. Flows may matter again now as they fade
Systemic Risk is Not Just About Banks: Look at Funds
The role of trending markets is known when it comes to systemic risks: a not sufficient but necessary condition. Most trends do
not necessarily lead to systemic risks, but hardly systemic risks ever build up without a prolonged period of uptrend beforehand.
Prolonged uptrends in any asset class hold the potential to instill the perception that such asset class will grow forever, irrespective
of the fundamentals, and may thus lead to excessive risk taking, excess leverage, the formation of a bubble and, ultimately, systemic
risks. The mind goes to the asset class of real estate, its undeterred uptrend into 2006/2007, its perception of perpetuity ("we
have never had a decline in house prices on a nationwide basis''
Ben Bernanke) , the credit bubble built on banks hazardous activities on subprime mortgages as a result, and the systemic risks
which emanated, with damages spanning well beyond the borders of real estate.
The role of volatility is also well-researched, especially low volatility. Hayman Minsky, in his "
Financial Instability
Hypothesis '' in 1977, analyses the behavioral changes induced by a reduction of volatility, postulating that economic agents
observing a low risk are induced to increase risk taking, which may in turn lead to a crisis: "stability is destabilizing". In a
recent study, Jon Danielsson, Director
of the Systemic Risk Centre at the LSE, finds unambiguous support for the 'low volatility channel', insofar as prolonged periods
of low volatility have a strong predictive power over the incidence of a banking crisis, owing to excess lending and excess leverage
. The economic impact is the highest if the economy stays in the low volatility environment for five years : a 1% decrease in volatility
below its trend translates in a 1.01% increase in the probability of a crisis. He also finds that, counter-intuitively, high volatility
has little predictive power : very interesting, when the whole finance world at large is based on retrospective VAR metrics, and
equivocates high volatility for high risk.
Both a persistent trend and prolonged low-volatility can lead banks to take excessive risks. But what about their impact on the
asset management industry?
Thinking at the hard economic impact of the Great Depression (1929-1932) and the Great Recession (2007-2009), and the eminent
role played by banks in both, it comes as little surprise that the banking sector captures all the attention. However, what remains
to be looked into, and perhaps more worrying in today's environment, is the role of prolonged periods of uptrend and low-vol on the
asset management industry
In 2014, the Financial Stability Board (FSB), an international body that makes recommendations to G20 nations on financial risks,
published a consultation paper asking whether fund managers might need to be designated as " global systemically important financial
institution " or G-SIFI, a step that would involve greater regulation and oversight. It did not result in much, as the industry lobbied
in protest, emphasizing the difference between the levered balance sheet of a bank and the business of funds.
The reason for asking the question is evident: (i) sheer size , as the AM industry ballooned in the last few years, to now represent
over [15trnXX] for just the top 5 US players!, (ii) funds have partially substituted banks in certain market-making activities, as
banks dialed back their participation in response to tighter regulation and (iii) , funds can indeed do damage: think of LTCM in
1998, the fatal bailout of two Real Estate funds by Bear Stearns in 2007, the money market funds 'breaking the buck' in 2008 amongst
others.
But it is not just sheer size that matters for asset managers. What may worry more is the positive feedback loops discussed above
and the resulting concentration of bets in one single global pot , life-dependent on infinite momentum/trend and ever-falling volatility.
Positive feedback loops are the link for the sheer size of the AM industry to become systemically relevant. Today more than ever,
they morph market risks in systemic risks.
Volatility will not forever be low, the trend will not forever go: how bad a damage when it stops? As macro prudential policy
is not the art of "whether or not it will happen" but of "what happens if", it is hard not to see this as a blind spot for policymakers
nowadays.
I have never seen it this bad, the numbers are all moutof wack!
It seems many of us are drawn to a good illusion and this proves true for most people in their daily life as well. In some
ways, it could be said that our culture has become obsessed with avoiding what is real.
We must remember that politicians and those in power tend to throw people under the bus rather than rise up and take responsibility
for the problems they create. The article below looks at how we have grown to believe things are fine.
The real estate boom features all the unknowns in today's thinking, which is why they are global.
This simple equation is unknown.
Disposable income = wages – (taxes + the cost of living)
You can immediately see how high housing costs have to be covered by wages; business pays the high housing costs for expensive
housing adding to costs and reducing profits. The real estate boom raises costs to business and makes your nation uncompetitive
in a globalised world.
The unproductive lending involved that leads to financial crises.
The economy gets loaded up with unproductive lending as future spending power has been taken to inflate the value of the nation's
housing stock. Housing is more expensive and the future has been impoverished.
" banks make their profits by taking in deposits and lending the funds out at a higher rate of interest" Paul Krugman, 2015.
He wouldn't know, that's financial intermediation theory.
Bank lending creates money, which pours into the economy fuelling the boom; it is this money creation that makes the housing
boom feel so good in the general economy. It feels like there is lots of money about because there is.
The housing bust feels so bad because the opposite takes place, and money gets sucked out of the economy as the repayments
overtake new lending. It feels like there isn't much money about because there isn't.
They were known unknowns, the people that knew weren't the policymakers to whom these things were unknown.
The global economy told policymakers there was something seriously wrong in 2008, but they ignored it, I didn't.
They had pushed Greece into debt deflation by cutting Government spending with austerity.
It wasn't just the IMF, the Troika all went along with this fatally flawed policy, this means the ECB and EU Commission also
didn't know what they were doing.
Richard Koo had watched as Western "experts" told Japan to cut Government spending and seen the fall in GDP as the economy
went downhill. The only way to get things going again was to increase Government spending and he has had decades to work out what
was going on.
The Troika's bad economics has been wreaking havoc across the Club-Med.
Another superficially correct analysis of "Positive Feedback Loops create divergence from general equilibrium, and Systemic
Risks." The vicious feedback loops which have the most leverage are all aspects of the funding of the political processes, which
have resulted in runaway systems of legalized lies, backed by legalized violence, the most important of which are the ways that
the powers of public governments enforce frauds by private banks, the big corporations that have grown up around those big banks.
About exponentially advancing technologies have enabled enforced frauds to become about exponentially more fraudulent. The
underlying drivers were the ways that the combined money/murder systems developed, whose social successfulness became more and
more based on maximizing maliciousness. From a superficial point of view, those results may appear to be due to incompetence,
however, from a deeper point of view those results make sense as due to the excessively successful applications of the methods
of organized crime through the political processes, due to the vicious feedback loops of the funding of those political processes.
The only connections between human laws and natural laws are the abilities to back up lies with violence. Natural selection
pressures have driven Globalized Neolithic Civilization to develop the most dishonest artificial selection systems possible, while
the continuation of the various vicious feedback loops that made and maintained those developments are driving about exponentially
increasing dishonesty. Although the laws of nature are not going to stop working, and the laws of nature underpinned the runaway
development of excessively successful vicious feedback loops of organized crime, on larger and larger scales, to result in Globalized
Neolithic Civilization, the overall results are that Civilization is becoming about exponentially more psychotic. Since Civilization
necessarily operates according to the principles and methods of organized crime, while those who became the biggest and best organized
forms of organized crime, namely, banker dominated governments, also necessarily became most dishonest about themselves, and yet,
their bullshit social stories continue to dominate the public schools, and mainstream mass media, as well as the publicly significant
controlled "opposition" groups.
Political economy is INSIDE human ecology, and therefore, the greatest systematic risks are to be found in the tragic trajectory
of human ecologies which are almost totally buried under maximized maliciousness. "Public debates" about the human death control
systems are based on previously having being as deceitful and treacherous as possible regarding those topics. The most extreme
forms of that manifest as the ways that money is measurement backed by murder. Of course, that the debt controls are backed by
the death controls are issues which are generally not publicly admitted nor addressed.
Global Neolithic Civilization has become almost totally based on being able to enforce frauds, in ways which have become about
exponentially more fraudulent, as the vicious feedback loops which enable that to happen automatically reinforce themselves to
get worse, faster. The almost total triumph of enforced frauds has resulted in social "realities" which are becoming exponentially
more insane, since the social successfulness of enforced frauds requires the most people do not understand that, because they
have been conditioned to not want to understand that. Rather, almost everyone takes for granted deliberately ignoring and misunderstanding
the laws of nature in the most absurdly backward ways possible, because of the long history of successful warfare based on deceits
and treacheries becoming the more recent history of successful finance based on enforcing frauds, despite that tragic trajectory
of vicious feedback loops resulting in about exponentially increasing overall fraudulence.
Various superficially correct analyses, such as the one in the article above, are typical of the content on Zero Hedge , which
does not come remotely close to recognizing the degree to which the dominate natural languages and philosophy of science have
undergone series of compromises with the biggest bullies' bullshit-based world views, which became the banksters' bullshit about
economics. Although it is theoretically possible for human beings to better understand themselves and Civilization, it continues
to become more and more politically impossible to do so, due to the ever increasing vicious feedback loops of enforced frauds
achieving symbolic robberies ...
Although the laws of nature are never going to stop working, it is barely possible to exaggerate the degree to which Civilization
overall is becoming about exponentially more psychotic, due to the social "realities" based on successfully enforcing frauds becoming
more and more out of touch with the surrounding, relatively objective, physical and biological facts. The various superficially
correct analyses presented on Zero Hedge regarding that kind of runaway collective psychosis, driven by the vicious feedback loops
of the funding of all aspects of the funding of the political processes, tend to always grossly understate the seriousness of
that situation, especially including the crucial issues of how to operate the human murder systems after the development of weapons
of mass destruction, which is unavoidable due to the rapid development of globalized electronic monkey money frauds, backed by
the threat of force from apes with atomic weapons.
Those who believe that possessing precious metals, or cryptocurrencies, etc., are viable solutions to those problems are not
remotely close to being in the right order of magnitude. Although there is no doubt that exponentially more "money" is being made
out of nothing as debts, in order to "pay" for strip-mining the natural resources of a still relatively fresh planet, and so,
there is no doubt that the exponentially decreasing value of that "money" is driving the accumulation of apparent anomalies, such
as outlined in the article above, the actually crucial issues continue to be the ways that money is measurement backed by murder,
as the most abstract ways that private property are claims backed by coercions. Stop-gap individual responses to the runaway fraudulence,
such as faith in possessing precious metals or cryptocurrencies, make some relative sense in terms of the public "money" supplies
becoming exponentially more fraudulent, but otherwise dismally fail to be in the ball park of the significant issues driven by
prodigious progress in physical sciences, WITHOUT any genuine progress in political sciences, other than to continue to be able
to better enforce bigger frauds, through the elaborations of oxymoronic scientific dictatorships, which adamantly refuse to become
more genuinely scientific about themselves.
Primates with about exponentially increasing physical technologies continue to deliberately ignore and misunderstand themselves
as much as is humanly possible, due to the history of warfare making and maintaining the currently existing political economy,
whose maliciousness is manifesting through runaway vicious feedback loops, whereby the excessively successful control of Civilization
through applications of the methods of organized crime are resulting in that Civilization manifesting runaway criminal insanities.
Indeed, in that context, where there is almost nothing but the central core of triumphant organized crime, namely bankster dominated
governments, surrounded by various layers of controlled "opposition" groups, which stay within the same bullshit-based frames
of reference regarding those phenomena, the overall situation is that society becoming about exponentially sicker and insane.
That Civilization has been driven by natural selection pressures to manifest runaway psychoses is not going to stop the laws
of nature from continuing to work through that Civilization. However, that will nevertheless drive the currently dominate artificial
selection systems to become increasingly psychotic, in ways whereby their vicious feedback loops are less and less able to be
sanely responded to ... Although some human beings have better and better understood some general energy systems, e.g., electric
and atomic energy, etc., since warfare was the oldest and best developed forms of social science and engineering, whose successfulness
was based on being able to maximize maliciousness, and since those then enabled successful finance to become based on runaway
enforced frauds, human beings living within Globalized Neolithic Civilization are so hidebound by adapting to living inside those
vicious feedback loops based on being able to enforce frauds that those human beings are mostly unwilling and unable to better
understand themselves as also manifestations of general energy systems.
As the report, embedded in the article, begins by quoting Leonardo da Vinci:
"Learn how to see. Realize that everything connects to everything else."
In general, "Asset Managers" are stuck inside taking for granted that everything they do has become almost totally based
on being able to enforce frauds, despite some of them noticing the increasingly blatant ways that there are accumulating apparent
anomalies in those systems, as vicious feedback loops drive those systems to become about exponentially more fraudulent, and therefore
increasingly unbalanced. To come to better terms with those apparent anomalies requires going through series of intellectual scientific
revolutions and profound paradigm shifts, which overall become ways that human beings better understand themselves as manifestations
of general energy systems. However, since doing so requires recognizing how and why governments are necessarily the biggest forms
of organized crime, dominated by the best organized gangsters, the banksters, it continues to be politically impossible to accomplish
that.
At each open, algos compute the increase in their AUM from the prior day and their margin reach. They then begin buying.
All algos do this. Buying whenever cash/margin exists; selling whenever profit targets exist. On pullbacks, the algos withdraw,
volume evaporates, minimizing the drop. The algos collectively increase equity prices without consideration of the value of the
money involved. Not valuations. No fundamentals. Just ones and zeroes. Just a program.
"... Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy to absorb a great deal more rapid economic growth. ..."
"... But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the reasonable thing to do ..."
"... So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly, for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and that there were responsible people on one side of the debate, and irresponsible people on the other. ..."
"... The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative and managerial work and the upper, leisure, class live a life of luxury and leisure. ..."
"... The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.) We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work. ..."
"... Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital) ..."
"... Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the bottom live a life of bare subsistence. ..."
"... "The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction" ..."
"... "We came, we saw, he died" rinse and repeat for 5,000 years. ..."
"... By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic over-supply the Capitalist system could produce. ..."
"... They knew that if wealth concentrated too much there would not be enough demand. ..."
"... Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned. ..."
"... Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. ..."
"... Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready for MMT? ..."
"... To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control." ..."
"... Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low growth – because there is not much growth left. ..."
PERIES: James, the Council of Economic Advisors, they put out economic forecasts each year. And there has been some wildly
optimistic ones. For example, if you look at the 2010 predictions for 2012 and 2013 they have not quite been attained. And one would
say it was done in the interest of trying to make the administration that they were serving more impressive. But what accounts for
this particular attack on Friedman's projection and other fellow economists?
GALBRAITH: This was a classic case of professional bad manners and rank-pulling. What we had here were four former chairs
of the president's Council of Economic Advisors, and two from President Obama, two from President Clinton, who decided to use their
big names and their titles in order to launch an attack on a professor of economics at the University of Massachusetts who had written
a paper evaluating the Sanders economic program.
It's likely that the four bigwigs thought that Professor Friedman was a Bernie Sanders supporter. In fact, as of that time he
was a Hillary Clinton supporter and a modest donor to her campaign. What he had done was simply to write his evaluation of the economic
effects of the ambitious Sanders reform program. The four former council chairs announced that on the basis of their deep commitment
to rigor and objectivity, they had discovered that this forecast was unrealistic. And what I pointed out was that that claim was
based on no evidence and no analysis whatsoever. And when you pressed down on it you found that it was simply based on the obvious
fact that we haven't seen the kinds of growth rates that Professor Friedman's analysis suggested the Sanders program would produce.
And for a very simple reason: the Sanders program is bigger. It's more ambitious than anything we've seen in recent years, so it's
not surprising that when you put it through a model it generates a higher growth rate.
So that was the basic underlying facts, and these guys, two men and two women, announced that they, that it was a disreputable
study, but failed to present any analysis that suggested they'd actually even read the paper before they denounced it. And that's
what I pointed out in my counter letter, in a number of articles that have appeared since.
PERIES: James, so in your letter, how do you counter them? What methods did you use to come to your conclusions?
GALBRAITH: Well, I, no need to say anything beyond the fact that I had looked in their letter for the rigor that they were
so proud of, for the objectivity and the analysis that they were so proud of, and I'd found that they had not done any. They had
not made any such claim, not done any such work.
So that began to provoke a discussion. It's fair to say ultimately, without apologizing for effectively launching an ad hominem
attack on an independent academic researcher, one of the former chairs, Christina Romer of President Obama's council, and her husband
David Romer, a fellow economist, did produce a paper in which they spelled out their differences with the, with the Friedman paper.
But that, again, raised another set of interesting issues which we've continued to discuss at various, various outlets of the press.
PERIES: Now, James Friedman's claim that the growth rate from Sanders' plan to be around 5.3 percent. And some economists,
including Dean Baker at the Center for Economic Policy and Research, have claimed that this is unrealistic. What do you make of that?
GALBRAITH: Well, the question is whether it is an effect, let's say, a reasonable projection, of putting the Sanders program
into an economic model. And the answer to that question, yes, Professor Friedman did a reasonable job. He spelled out what the underlying
assumptions that he was using were. He spelled out the basic rules of thumb that macroeconomists had used for decades to assess the
effects of an economic program. In this case, an expansionary economic program. And he ran them through his model and reported the
results, a perfectly reasonable thing to do.
Now, one can be skeptical. And I am, and Dean Baker is, lots of people are skeptical that the world would work out quite that
way, because lots of things, in fact, happen which are not accounted for in a model. And we've talked, we've basically put together
a list of things that you think might be problematic. But the exercise here was not to put everything into paper that might happen
in the world. The exercise was to take the kind of bare bones that economists use to assess and to compare the consequences of alternative
programs, and to ask what kind of results do you get out? And that's what, again, what Jerry Friedman did. It was a reasonable exercise,
he came up with a reasonable answer, and he reported it.
PERIES: Now, Friedman seems to think that the rate of full employment in 1999 is attainable. However, many labor economists
seem to think that the larger share of the elderly currently in society compared to 1999 explains some of the lack of labor participation,
which creates a lower full employment ceiling that's contradicting Friedman's report. Your thoughts on that?
GALBRAITH: Well, I think it is a fact that the population is getting older. But as, I think, any economist would tell you,
that when you offer jobs in the labor market, the first thing that happens is the people who are looking for work take those jobs.
The second thing that happens is that people who might look for work when jobs were available start coming back into the labor market.
And if that is not enough to fill the vacancies that you have, it's perfectly open to employers to raise their wages so as to bring
more people in, or to increase the pace at which they innovate and substitute technology for labor so that they don't need the work.
So there's no real crisis involved in the situation if it turns out five years from now we're at 3.5 percent unemployment, and
they were beginning to run short of labor. That's not a reason to, at this stage, say no, we're not going to engage in the exercise
and run a more expansionary, vigorous reform program, a vigorous infrastructure project, a major reform of healthcare, a tuition-free
public education program. All of those things, which were part of what Friedman put into his paper, should be done anyway. The fact
that the labor market forecast might prove to have some different, the labor market might have different characteristics in five
years' time is from our present point of view just a, it's an academic or a theoretical proposition, purely.
PERIES: And Friedman's paper, he looks at a ten-year forecast. Did you feel that when you looked at the specifics of that,
including college, universal healthcare, infrastructure spending and of course, expanding Social Security and so on, that those categories
and his predictions or projections, rather, made sense to you?
GALBRAITH:Well, again, what he was doing was running a program of a certain scale, of a large scale, through a set
of standard macroeconomic assumptions. And that, again, is a reasonable exercise. If you ask me what my personal view is, I've written
a whole book called The End of Normal in which I lay out reasons for my chronic pessimism about the capacity of the world economy
to absorb a great deal more rapid economic growth.
But that's not in the standard models, and it would not be appropriate to layer that on to a forecast of this kind. What Friedman
was criticized for was not for putting his thumb on the scale, but for failing to put his thumb on the scale. In fact, that was the
reasonable thing to do.
On the contrary, and on the other side, when Christina and David Romer did put out their forecast, their own criticism of the
Friedman paper, they concluded by asserting that if this program were tried, inflation would soar. So they there were making an allegation
for which, again, they had no evidence and no plausible model, that in the world in which we presently live would produce that result.
So what we had here was a, what was essentially an academic exercise that produced a result that was highly favorable to the
Sanders position, and showed that if you did an ambitious program you would get a strong growth response. It's reasonable, certainly,
for the first three or four years that that would transpire in practice. And what happened was that people who didn't like that result
politically jumped on it in a way which was, frankly speaking, professionally irresponsible, in my view. It was designed to convey
the impression, which it succeeded in doing for a brief while through the broad media, that this was not a reputable exercise, and
that there were responsible people on one side of the debate, and irresponsible people on the other.
And that was, again, something that–an impression that could be conveyed through the mass media, but would not withstand scrutiny,
and didn't withstand scrutiny, once a few of us stood up and started saying, okay, where's your evidence, on what are you basing
this argument? And revealed the point, which the Romers implicitly conceded, and I give them credit for that, that in order to criticize
a fellow economist you need to do some work.
The true nature of Capitalism has obviously been forgotten over time. Today we think it brings prosperity to all, but that
was certainly never the intention. Today's raw Capitalism is showing its true nature with ever rising inequality. Capitalism is
essentially the same as every other social system since the dawn of civilization. The lower and middle classes do all the work
and the upper, leisure Class, live in the lap of luxury. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure.
The nature of the Leisure Class, to which the benefits of every system accrue, was studied over 100 years ago. "The Theory
of the Leisure Class: An Economic Study of Institutions", by Thorstein Veblen. (The Wikipedia entry gives a good insight. It was
written a long time ago but much of it is as true today as it was then. This is the source of the term conspicuous consumption.)
We still have our leisure class in the UK, the Aristocracy, and they have been doing very little for centuries. The UK's aristocracy
has seen social systems come and go, but they all provide a life of luxury and leisure and with someone else doing all the work.
Feudalism – exploit the masses through land ownership. Capitalism – exploit the masses through wealth (Capital)
Today this is done through the parasitic, rentier trickle up of Capitalism:
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
All this was much easier to see in Capitalism's earlier days.
Malthus and Ricardo never saw those at the bottom rising out of a bare subsistence living. This was the way it had always been
and always would be, the benefits of the system only accrue to those at the top.
It was very obvious to Adam Smith:
"The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The
Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from
the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every
savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers."
Like most classical economists he differentiated between "earned" and "unearned" wealth and noted how the wealthy maintained
themselves in idleness and luxury via "unearned", rentier income from their land and capital.
We can no longer see the difference between the productive side of the economy and the unproductive, parasitic, rentier side.
This is probably why inequality is rising so fast, the mechanisms by which the system looks after those at the top are now hidden
from us.
In the 19th Century things were still very obvious.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
Immense wealth at the top with nothing trickling down, just like today.
This is what Capitalism maximized for profit looks like. Labour costs are reduced to the absolute minimum to maximise profit.
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and
child labour. The function of the system is still laid bare. The lower class does the manual work; the middle class does the administrative
and managerial work and the upper, leisure, class live a life of luxury and leisure. The majority only got a larger slice of the
pie through organised Labour movements.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required to
purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce. They knew that if wealth concentrated too much there would not be enough demand.
In the 1950s, when Capitalism had healthy competition, it was essential that the Capitalist system could demonstrate that it was
better than the competition. The US was able to demonstrate the superior lifestyle it offered to its average citizens.
Now the competition has gone, the US middle class is being wiped out. The US is going third world, with just rich and poor
and no middle class. Raw Capitalism can only return Capitalism to its true state where there is little demand and those at the
bottom live a life of bare subsistence.
When you realise the true nature of Capitalism, you know why some kind of redistribution is necessary and strong progressive
taxation is the only way a consumer society can ever be kept functioning.
A good quote from John Kenneth Galbraith's book "The Affluent Society", which in turn comes from Marx.
"The Marxian capitalist has infinite shrewdness and cunning on everything except matters pertaining to his own ultimate
survival. On these, he is not subject to education. He continues wilfully and reliably down the path to his own destruction"
Marx made some mistakes but he got quite a lot right.
Perhaps, Western civilization had already cultivated and concentrated psychopathic personality traits in its elite before Capitalism
ever begun. Early European history is an endless procession of wars at home and abroad as the elite took their wealth by force
and the masses were kept in check by force whenever necessary.
No peaceful group could ever survive this relentless onslaught of millennia. This psychopathic elite then took their warlike
ways to every corner of the earth. The wealthy elite from this era then became the wealthy elite of the next Capitalist era. Even
today their bloodlust cannot be sated as they look to control a global empire.
Certainly countless hundreds of peaceful, responsible, inclusive, open, empathetic indigenous societies have been co-opted/overthrown
by the western model.
Yes, but it's not just the western model that overthrows peaceful societies. The empires of China, the Japanese monarchies,
the empires of India (together with a cringeworthy caste system), the human sacrificing Aztecs, Mayas, and Incas, all prove that
tyranny is not a western invention.
When a local population becomes too large to be supported by simple egalitarian hunting and gathering, something else is required.
That something is agriculture, and almost inevitably, the organization, specialization, and partial urbanization required by large
scale agricultural society leads to exploitation and tyranny. This is seen in the earliest societies for which we have a written
record, Sumer and Egypt.
Thanks for the explanations of Veblen and Galbraith, which I find enduring basics over more than 100 years of speculation,
real investment, and the best way to keep consumer society healthy.
My unschooled, simple, way to measure the health of an economy is in the Velocity of Money in the real economy of useful products
and services. It appears to be very far below where it was when we did our best, and lower than when we first started measuring
it near the beginning of the Great Depression.
By the 1920s, mass production techniques had improved to such an extent that relatively wealthy consumers were required
to purchase all the output the system could produce and extensive advertising was required to manufacture demand for the chronic
over-supply the Capitalist system could produce.
They knew that if wealth concentrated too much there would not be enough demand.
Of course the Capitalists could never find it in themselves to raise wages and it took the New Deal and Keynesian thinking
to usher in the consumer society.
Fiscal conservatism, which champions a balanced budget and expenditure restraints, is often hailed as a politico-economic
philosophy as well as a policy of financial responsibility. In practice, it has been used as an argument against free spending
by governments which can lead to high levels of debt and inflation. It has not been a positive philosophy which advocates the
pro-growth and stability benefits coming from balanced budgets. Rather, it is a negative one – reacting against excessive spending
and its consequences. This is probably why modern examples of fiscal conservatism in the United States and the United Kingdom
have not led to sustainable growth or a significant reduction in public debt. Instead, in the case of the Ronald Reagan era in
the US in the 1980s, public debt soared as fiscal conservatism and other policies were abandoned.
A Monetarily Sovereign government does not need to reduce debt. In the U.S. (which is Monetarily Sovereign) federal so-called
"debt" is actually the total of deposits in T-security accounts at the Federal Reserve Bank. In short, "debt" is bank deposits.
Why anyone would want to reduce the size of deposits at the world's safest bank is a mystery to me - other than the misleading
use of the word "debt."
While all bank accounts are, in fact, debt of banks, most banks boast about the size of their depositors' accounts.
Contrary to popular myth, federal debt (i.e. deposits at the FRB) does not lead to inflation. America's "debt" has grown more
than 9,000% in the past 75 years, and the Fed is struggling to create inflation.
Galbraith is probably my favorite economist, and eminently reasonable here. It makes me think that Sanders should have
used him, or someone like him as an adviser/in house economist, rather than relying on external analyses like Friedman. It
would possibly have given his program more gravitas – first amongst elites, and then more generally. At least it would have had
a chance of changing the broader discussion. Whether you agree with it or not, right now the general MSM reporting on the Sanders
plan is that it doesn't add up.
This is speculative, but since Prof. Kelton is actually the economist for the Minority (the Democrats) of the Senate Banking
committee, there may be reasons of protocol that Sanders isn't using her policy ideas at the moment.
Another possibility is that trying to introduce a new economic paradigm while running for the nomination may be a bridge too
far. If Sanders tried to explain to people that taxes don't fund federal spending, etc., heads would explode.
I'm also not sure how one would use Prof. Kelton's ideas without bringing in a whole bunch of MMT concepts. Maybe if Sanders
wins the nomination he can begin to bring some of these ideas into the conversation.
He won't use her ideas simple because the American voter in not yet amenable to the facts of
Monetary Sovereignty .
Try explaining even to your best friend that:
1. Unlike state and local taxes, Federal taxes do not fund federal spending.
2. Even if FICA were eliminated, Social Security and Medicare benefits dramatically could (and should) be increased. There are
no federal "trust funds."
3. Federal deficits are necessary for economic growth
4. Federal "debt" is nothing more than deposits in T-security accounts at the Federal Reserve Bank.
5. America never has had, and is absolutely in no danger of, hyper-inflation.
Perhaps, if Bernie wins the election, he will be freer to educate the masses, as well as the economics community, but meanwhile
he has to claim the popular myth that federal spending has to be "paid for" by taxes.
Is the American public, trained/indoctrinated to think of the USG budget in terms of a household budget analogy, ready
for MMT? I think it's politically OK to use MMT informed policies–"deficits don't matter"–as the Republicans have, but not
OK to openly acknowledge doing so. MMT runs head on into bedrock beliefs like the protestant moral virtues of thrift and fiscal
responsibility. People cling to this stuff as tightly as they cling to their religion and guns.
MMT is a volatile, explosive doctrine. Tell an ordinary off-the-street taxpayer that Federal taxes don't fund Federal expenditures,
that Federal taxes destroy the money they collect and so keep inflation at desired levels, and ready yourself to answer this:
"If I'm just paying taxes so the money can be burned, why should I pay taxes? What good does paying taxes for that do me,
or people like me?"
And be prepared not to have your answer heard, comprehended, or accepted, after it is given.
It could lead directly and quickly to the end of a system of tax collection based on voluntary compliance. It could ignite
a revolution.
MMT is an unpopular doctrine. Whether it is the true theory, or a truer theory than others, of the state of the world–is not
the point.
She can't. She's his staffer (on the Senate Budget Committee) so she is now allowed to work on the campaign. It would be a
big ethics violation and would produce a scandal. Staffers cannot work on any of their bosses campaigns, including re-elections.
Remember, they are government employees, not on Sanders' personal payroll.
My old party has worked hard to try discredit James Galbraith. I was faced with some ridicule from a Bush era international
negotiator for trying to read "The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too" in
an airport waiting area.
To me, too many of the supposed (and actual) intellectuals and high level advisers were experts in rationalizing and explaining
the chosen party views, but still employed the Cato Institute suggestion to use "Leninist" propaganda techniques as put forth
in the 1996 Newt Gingrich/Frank Luntz GoPac memo, "Language: A Key Mechanism of Control."
I don't oppose them (at that level) expressing their well thought out views, even using the "persuasive" techniques described
in the document at http://www.informationclearinghouse.info/article4443.htm
but I do fault them for trying to prevent people from freely exploring far more comprehensive information and views.
We left the party ancestors had founded and stayed loyal to for 5 generations, though, because of the lower level dirty tricksters
("opposition researchers") that wanted us to corrupt the processes as one fund raiser told me, "We have to fight dirtier than
Democrats."
Galbraith is a voice that must be listened to, just as there may be many others that we should be able to listen to (as I assume
we could have under the old "Fairness Doctrine" before the corporate take over of almost all fully accessible media).
stg Galbraith said casually about the thesis of his new book: This really is the new normal for capitalism – meaning low
growth – because there is not much growth left. So maybe we are headed for a no growth world in which stability and sustainability
dictate enterprise which is used to maintain a steady state – so that sounds more socialist than capitalist out of necessity.
I believe this is our future too. And I think I understand Varoufakis' and Galbraith's "modest proposal" in a clearer light because
growth must be used going forward not willy-nilly, but to achieve our ends. And also too – a while back the link that effectively
said we had it backwards when we assume that capitalism supports socialism – because capitalism in reality lives off and is only
possible under sufficient socialism. And it seems the 4 presidential advisors are more out to lunch than their letter showed.
Can't respond to all the nonsense. I just read Wolfer's piece and it seems to miss the point (as with the Romers), as noted
in the following 2 articles. I especially recommend the 2nd one from John Cassidy in the New Yorker.
as usual, i hear a lot "they" failed conservatism, never, Conservatism is just the age old avenue to "scam" the other. Bush
"failed" at conservatism, i.e., it was Bush's fault not the ideology of Conservatism. on and on, this self repeated/reinforced
"idea" that we have just not "found" the correct "application" of the ideal/reality that is Conservatism.
it does get old, too. all the people killed due to Conservatism and its' perpetrators. Greed, in other words, and the age old
scam with "new and improved" tactics. These people have no concept of what "society" is, why we are all interrelated. to scam
one is to scam us all. and these people are definitely not Christian in the "Jesus Christ" i've always heard about. Whatsoever
you do unto the poor, you do unto me!
i just suppose psychopaths use any avenue for their "crimes." as i've heard, too, any great fortune is usually the result of
a great crime.
It was Open Access week last week, but I was too busy trying to meet the deadline today for submitting my book manuscript to
Open Book Publishers . That sounds like a good excuse if one cares
about open access, right? I slept too little for too many days, so don't expect any creative thoughts or subtle analyses from me
tonight. But here's two interesting things I discovered while having a look on the web figuring out whether anything interesting
happend during Open Access week.
First, Cambridge University digitalised the PhD dissertation
of Stephen Hawking and put it online. Apparently the website crashed when that got announced. Any Cambridge University alumni
who want to make their PhD dissertation Open Access
are invited doing so (no more need to go to the reading room and sign a fat notebook that one has accessed a particular PhD dissertation,
as I once did. Although, I should confess, it felt like an adventure. But it's highly inefficient obviously).
Second, for some weeks now, Open Book Publishers has been offering the PDFs of all of their books open access, to celebrate the
100th book they published (their regular regime is to have the books as html open access and selling the PDFs for a few pounds, or
else the author can pay a fee for making the PDF open access).
Importantly, this may only last for another a day or two (I am drawing from my memory when I saw a tweet on that about two months
ago), so while it lasts it may be worth checking out their collection of books in the humanities and the social sciences, such as
Naom Chomsky's Delhi Lectures , Ruth Finnegan's book
on Oral literature in Africa or
textbooks on maths for university .
All for nothing. Because, as their slogan goes, knowledge is for sharing .
Worth mentioning in this context: the CORE project released the final version of their impressive economics textbook "The Economy",
freely (as in CC by-nc-dd licensed) available at http://www.core-econ.org/the-economy/
I think that having open access publishers is great, and I would love to have books published this way. Here's the concern: I
suspect that my University's promotions committee, etc, will view this kind of publication as "inferior" to one with some snazzy
University Press.
I was wondering whether anyone has any advice about how to handle the fact that there are perverse incentives to publish your
work in a format which will cost someone £70, rather than for free?
I don't see a way of changing the situation Steve mentions except by having well established scholars who don't need to worry
about those kinds of thing take the lead. Eg, Ingrid. and David Velleman (who has two books with Open Book, which I greedily downloaded).
And Sam Bowles! -- thanks for the tip ccc, I knew about this from Bowles and had seen parts of it, but not the whole thing which
looks great!
Steve, I fully understand the worry – and even for me (tenured full professor) there is a "status cost" to be paid by not publishing
with an established University Press. But it's a vicious circle that has to be broken – and I agree with Harry, that those of
us who can "afford" to publish Open Access, should do so, in order to try to contribute to the status of the Open Access Press.
I should say that in terms of refereeing – I've published two co-edited books, one with OUP, one with CUP – and the refereeing
process at Open Books was the same, if not better. And a very important advantage of publishing with a publisher such as Open
Books is the much shorter time between delivering the final manuscript and publication – if you do all your work properly, it's
a matter of weeks or a few months, not, as with the established University Presses, (almost) a year (I've always wondered what
the hell happens in that year, especially if they turn back the proofs which are full with typo's!)
I've been thinking someone should write a paper with the title: "If you have tenure, why don't you publish Open Access?"
@3,4: Possibly the switch to open access needs to be done at an institutional level, rather than by individuals.
e.g. A declaration by government evaluations such as the REF that publications won't be counted unless they are open access,
followed by a declaration by your department that publications from now onwards won't be counted for promotions unless they are
open access, might create the right incentives.
[There are potential issues regarding fairness towards academics who are moving between universities . how do you fairly compare
job candidates when one is from a university that demanded open access publication, and another is from a university that didn't?]
Not to make too much of the obvious, given that I'm writing a blog comment, but blogs offer some great opportunities here.
CT readers got to see nearly all of Zombie Economics before the book appeared, and if I ever finish Economics in
Two Lessons it will be long after much of it was posted here.
This is an old article by Jesse, but today it sound even more pertinent then two years ago, before Trump ascendance to power.
"... Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive, grossly overpriced projects. "
.
"...would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps for
sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows
abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various
forms of intimidation and reward."
. "...The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control."
. "..."Economic powers continue to justify the current global system where priority tends to be given to speculation and
the pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the deified
market, which becomes the only rule." Francis I, Laudato Si "
This video below may help one to understand some of the seemingly obtuse demands from the Troika with regard to Greece.
The video is a bit dated, but the debt scheme it describes remains largely unchanged. The primary development has been the creation
of an experiment called the European Union and the character of the targets. One might also look to the wars of 'preventative intervention'
and 'colour revolutions' that raise up puppet regimes for examples of more contemporary economic spoliation. From largely small and
Third World countries, the candidates for debt peonage have become the smaller amongst the developed Western countries, the most
vulnerable on the periphery. And even the domestic populations of the monetary powers, the US, Germany, and the UK, are now feeling
the sting of financialisation, debt imposition through crises, and austerity. What used to only take place in South America and Africa
has now taken place in Jefferson County Alabama. Corrupt officials burden taxpayers with unsustainable amounts of debt for unproductive,
grossly overpriced projects.
It would be wrong in these instances to blame the whole country, the whole government, or all corporations, except perhaps
for sleepwalking, and sometimes willfully, towards the abyss. For the most part a relatively small band of scheming and devious fellows
abuse and corrupt every form of government and organization and law in order to achieve their private ambitions, often using various
forms of intimidation and reward. It is an old, old story. And then there is the mass looting enable by the most recent financial
crisis and Bank bailouts. If the people will not take on the chains of debt willingly, you impose them indirectly, while giving the
funds to your cronies who will use them against the very people who are bearing the burdens, while lecturing them on moral values
and thrift. It is an exceptionally diabolical con game.
The TPP and TTIP are integral initiatives in this effort of extending financial obligations, debt, and control. You might
ask yourself why the House Republicans, who have fought the current President at every turn, blocking nominees and even stages many
mock votes to repeatedly denounce a healthcare plan that originated in their own think tank and first implemented by their own presidential
candidate, are suddenly championing that President's highest profile legislation, and against the opposition of his own party? The
next step, after Greece is subdued, will be to extend that model to other, larger countries. And to redouble the austerity at home
under cover of the next financial crisis by eliminating cash as a safe haven, and to begin the steady stream of digital 'bailing-in.'
This is why these corporatists and statists hate gold and silver, by the way. And why it is at the focal point of a currency war.
It provides a counterweight to their monetary power. It speaks unpleasant truths. It is a safe haven and alternative, along with
other attempts to supplant the IMF and the World Bank, for the rest of the world. So when you say, the Philippines deserved it,
Iceland deserved it, Ireland deserved it, Africa deserves it, Jefferson County deserved it, Detroit deserved it, and now Greece deserves
it, just keep in mind that some day soon they will be saying that you deserve it, because you stood by and did nothing.
Because when they are done with all the others, for whom do you think they come next? If you wish to see injustice stopped,
if you wish to live up to the pledge of 'never again,' then you must stand for your fellows who are vulnerable. The economic hitmen
have honed their skills among the poor and relatively defenseless, and have been coming closer to home in search of new hunting grounds
and fatter spoils.
There is nothing 'new' or 'modern' about this. This is as old as Babylon, and evil as sin. It is the power of darkness of the
world, and of spiritual wickedness in high places. The only difference is that it is not happening in the past or in a book, it is
happening here and now.
"Economic powers continue to justify the current global system where priority tends to be given to speculation and the
pursuit of financial gain. As a result, whatever is fragile, like the environment, is defenseless before the interests of the
deified market, which becomes the only rule." Francis I, Laudato Si
You may also find some information about the contemporary applications of these methods in The IMF's 'Tough Choices' On Greece
by Jamie Galbraith.
"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search
out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from
the rising to the setting of the sun is enough for them. Among all others only they are compelled to attack the poor as well as the
rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."
Tacitus, Agricola Posted by Jesse at 11:46 AM Email This BlogThis! Share to Twitter Share to Facebook Share to Pinterest
Category: currency war, debt peonage, debt slavery, neo-colonialism, new world order
"... By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet ..."
"... Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. ..."
"... Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free. ..."
"... As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course. ..."
"... New York Times ..."
"... to the people making decisions ..."
"... it's the executives and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards. ..."
"... What is the benefit? What are the risks? ..."
"... Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate . ..."
"... "As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says. A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door. "That's really nice compared to community bathrooms that I lived in last year," Conley says. To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar? "Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder to recruit. " If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have available to offer, we were very far behind." Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says. They expect more privacy than previous generations - and more comforts. "These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at San Diego State University and author of the book "Generation Me." Those students could be in for some disappointment when they graduate , she says. "When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening." Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him. ..."
"... "I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and get the dorm I'm in. It's perfectly fine." In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of its residence halls. ..."
"... Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that "poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions. PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms ..."
"... Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review, College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting to show up on those reviews, too. ..."
"... While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer students resort-like amenities. ..."
"... Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera. ..."
"... Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing something comparable in the U.S. ..."
"... Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job. ..."
"... I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance . The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself. ..."
"... My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still . ..."
"... The reason students accept this has to be the absolutely demobilized political culture of the United States combined with what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving any kind of middle class income. ..."
"... Straight bullshit, but remember our school was just following the national (Neoliberal) model. ..."
Yves here. In May, we wrote up and embedded the report on how NYU exploits students and adjuncts in
"The Art of the Gouge": NYU as a Model for Predatory Higher Education. This article below uses that study as a point of departure
for for its discussion of how higher education has become extractive.
By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written
for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published
at Alternet
Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power
and exploitation. It benefits immensely from right-wing McCarthy wannabes, who in an effort to restrict academic freedom and silence
political dissent, depict universities as left-wing indoctrination centers.
But the reality is that while college administrators might affix "down with the man" stickers on their office doors, many prop
up a system that is severely unfair to American students and professors, a shocking number of whom struggle to make ends meet. Even
the most elementary level of political science instructs that politics is about power. Power, in America, is about money: who has
it? Who does not have it? Who is accumulating it? Who is losing it? Where is it going?
Four hundred faculty members at New York University, one of the nation's most expensive schools, recently released a report on
how their own place of employment, legally a nonprofit institution, has become a predatory business, hardly any different in ethical
practice or economic procedure than a sleazy storefront payday loan operator. Its title succinctly summarizes the new intellectual
discipline deans and regents have learned to master: "The
Art of The Gouge."
The result of their investigation reads as if Charles Dickens and Franz Kafka collaborated on notes for a novel. Administrators
not only continue to raise tuition at staggering rates, but they burden their students with inexplicable fees, high cost burdens
and expensive requirements like mandatory study abroad programs. When students question the basis of their charges, much of them
hidden during the enrollment and registration phases, they find themselves lost in a tornadic swirl of forms, automated answering
services and other bureaucratic debris.
Often the additional fees add up to thousands of dollars, and that comes on top of the already hefty tuition, currently $46,000
per academic year, which is more than double its rate of 2001. Tuition at NYU is higher than most colleges, but a bachelor's degree,
nearly anywhere else, still comes with a punitive price tag. According to the College Board, the average cost of tuition and fees
for the 2014–2015 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state
residents attending public universities.
Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases
in prices are health care and higher education. Lack of affordable health care is a crime, Reich argues, but at least new medicines,
medical technologies, surgeries, surgery techs, and specialists can partially account for inflation. Higher education can claim no
costly infrastructural or operational developments to defend its sophisticated swindle of American families. It is a high-tech, multifaceted,
but old fashioned transfer of wealth from the poor, working- and middle-classes to the rich.
Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative
class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict
as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly
increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year.
The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free.
Meanwhile, NYU has spent billions, over the past 20 years, on largely unnecessary real estate projects, buying property and renovating
buildings throughout New York. The professors' analysis, NYU's US News and World Report Ranking, and student reviews demonstrate
that few of these extravagant projects, aimed mostly at pleasing wealthy donors, attracting media attention, and giving administrators
opulent quarters, had any impact on overall educational quality.
As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors
has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a
Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors
must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and
courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course.
Many schools offer rates far below the average, most especially community colleges paying only $1,000 to $1,500. Even at the best
paying schools, adjuncts, as part time employees, are rarely eligible for health insurance and other benefits. Many universities
place strict limits on how many courses an instructor can teach. According to a recent study, 25 percent of adjuncts
receive government assistance.
The actual scandal of "The Art of the Gouge" is that even if NYU is a particularly egregious offender of basic decency and honesty,
most of the report's indictments could apply equally to nearly any American university. From 2003-2013, college tuition increased
by a crushing
80 percent. That far outpaces all other inflation. The closest competitor was the cost of medical care, which in the same time
period, increased by a rate of 49 percent. On average, tuition in America rises eight percent on an annual basis, placing it far
outside the moral universe. Most European universities
charge only marginal fees for attendance, and many of them are free. Senator Bernie Sanders recently introduced a bill proposing
all public universities offer free education. It received little political support, and almost no media coverage.
In order to obtain an education, students accept the paralytic weight of student debt, the only form of debt not dischargeable
in bankruptcy. Before a young person can even think about buying a car, house or starting a family, she leaves college with thousands
of dollars in debt: an average of $29,400 in 2012. As colleges continue to suck their students dry of every dime, the US government
profits at $41.3 billion per year by
collecting interest
on that debt. Congress recently cut funding for Pell Grants, yet increased the budget for hiring debt collectors to target delinquent
student borrowers.
The university, once an incubator of ideas and entrance into opportunity, has mutated into a tabletop model of America's economic
architecture, where the top one percent of income earners now owns 40 percent of the wealth.
"The One Percent at State U," an Institute for Policy Studies report, found that at the 25 public universities with the highest
paid presidents, student debt and adjunct faculty increased at dramatically higher rates than at the average state university. Marjorie
Wood, the study's co-author, explained told the New York Times that extravagant executive pay is the "tip of a very large
iceberg, with universities that have top-heavy executive spending also having more adjuncts, more tuition increases and more administrative
spending.
Unfortunately, students seem like passive participants in their own liquidation. An American student protest timeline for 2014-'15,
compiled by historian Angus Johnston, reveals that most demonstrations and rallies focused on police violence, and sexism. Those
issues should inspire vigilance and activism, but only 10 out of 160 protests targeted tuition hikes for attack, and only two of
those 10 events took place
outside the state
of California.
Class consciousness and solidarity actually exist in Chile, where in 2011 a student movement began to organize, making demands
for free college. More than mere theater, high school and college students, along with many of their parental allies, engaged the
political system and made specific demands for inexpensive education. The Chilean government announced that in March 2016, it will
eliminate all tuition from public universities. Chile's victory for participatory democracy, equality of opportunity and social justice
should instruct and inspire Americans. Triumph over extortion and embezzlement is possible.
This seems unlikely to happen in a culture, however, where even most poor Americans view themselves, in the words of John Steinbeck,
as "temporarily embarrassed millionaires." The political, educational and economic ruling class of America is comfortable selling
out its progeny. In the words of one student quoted in "The Art of the Gouge," "they see me as nothing more than $200,000."
At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual.
Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited
non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the
more unseemly parts of the US "justice" system.
But I think this is changing. The pressure is building from the bottom as academia loses credibility as an institution capable
of, never mind interested in, serving the public good rather than simply being another profit center for connected workers. It's
actually a pretty exciting time. The kiddos are getting pretty fed up, and the authoritarians at the top of the hierarchy are
running out of money with which to buy off younger technocratic enablers and thought leaders and other Serious People.
P.S., the author in this post demonstrates the very answer to the question. He assumes as true, without any need for support,
that the very act of possessing a college degree makes one worthy of a better place in society. That mindset is why colleges can
prey upon students. They hold a monopoly on access to resources in American society. My bold:
Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only
miserly pay-per-course compensation for their work, and do not receive benefits.
What does having a masters degree or PhD have to do with the moral claim of all human beings to a life of dignity and purpose?
There are so many more job seekers per job opening now than, say, 20 or thirty years ago that a degree is used to sort out
applications. Now a job that formerly listed a high school degree as a requirement may now list a college degree as a requirement,
just to cut down on the number of applications.
So, no, a B.A. or B.S. doesn't confer moral worth, but it does open more job doors than a high school diploma, even if the
actual work only requires high school level math, reading, science or technology.
I agree a phd often makes someone no more useful in society. However the behaviour of the kids is rational *because* employers
demand a masters / phd.
Students are then caught in a trap. Employers demand the paper, often from an expensive institution. The credit is abundant
thanks to govt backed loans. They are caught in a situation where as a collective it makes no sense to join in, but as an individual
if they opt out they get hurt also.
Same deal for housing. It's a mad world my masters.
What can we do about this? The weak link in the chain seems to me to be employers. Why are they hurting themselves by selecting
people who want higher pay but may offer little to no extra value? I work as a programmer and I often think " if we could just
'see' the non-graduate diamonds in the rough".
If employers had perfect knowledge of prospective employees *and* if they saw that a degree would make no difference to their
performance universities would crumble overnight.
The state will never stop printing money via student loans. If we can fix recruitment then universities are dead.
Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value?
Yeah, I have thought a lot about that particular question of organizational behavior. It does make sense, conceptually, that
somebody would disrupt the system and take people based on ability rather than credentials. Yet we are moving in the opposite
direction, toward more rigidity in educational requirements for employment.
For my two cents, I think the bulk of the answer lies in how hiring specifically, and management philosophy more generally,
works in practice. The people who make decisions are themselves also subject to someone else's decisions. This is true all up
and down the hierarchical ladder, from board members and senior executives to the most junior managers and professionals.
It's true that someone without a degree may offer the same (or better) performance to the company. But they do not offer the
same performance to the people making decisions, because those individual people also depend upon their own college degrees
to sell their own labor services. To hire significant numbers of employees without degrees into important roles is to sabotage
their own personal value.
Very few people are willing to be that kind of martyr. And generally speaking, they tend to self-select away from occupations
where they can meaningfully influence decision-making processes in large organizations.
Absolutely, individual business owners can call BS on the whole scam. It is a way that individual people can take action against
systemic oppression. Hire workers based upon their fit for the job, not their educational credentials or criminal background or
skin color or sexual orientation or all of the other tests we have used. But that's not a systemic solution because the incentives
created by public policy are overwhelming at large organizations to restrict who is 'qualified' to fill the good jobs (and increasingly,
even the crappy jobs).
I am not so sure that this is so. So many jobs are now crapified. When I was made redundant in 2009, I could not find many
jobs that fit my level of experience (just experience! I have no college degree), so I applied for anything that fit my skill
set, pretty much regardless of level. I was called Overqualified. I have heard that in the past as well, but never more so during
that stretch of job hunting. Remember that's with no degree. Maybe younger people don't hear it as much. But I also think life
experience has something to do with it, you need to have something to compare it to. How many times did our parents tell us how
different things were when they were kids, how much easier? I didn't take that on board, did y'all?
For various reasons, people seeking work these days, especially younger job applicants, might not possess the habits of mind
and behavior that would make them good employees – i.e., punctuality, the willingness to come to work every day (even when something
more fun or interesting comes up, or when one has partied hard the night before), the ability to meet deadlines rather than make
excuses for not meeting them, the ability to write competently at a basic level, the ability to read instructions, diagrams, charts,
or any other sort of necessary background material, the ability to handle basic computation, the ability to FOLLOW instructions
rather than deciding that one will pick and choose which rules and instructions to follow and which to ignore, trainability, etc.
Even if a job applicant's degree is in a totally unrelated field, the fact that he or she has managed to complete an undergraduate
degree–or, if relevant, a master's or a doctorate – is often accepted by employers as a sign that the applicant has a sense of
personal responsibility, a certain amount of diligence and educability, and a certain level of basic competence in reading, writing,
and math.
By the same token, employers often assume that an applicant who didn't bother going to college or who couldn't complete a college
degree program is probably not someone to be counted on to be a responsible, trainable, competent employee.
Obviously those who don't go to college, or who go but drop out or flunk out, end up disadvantaged when competing for jobs,
which might not be fair at all in individual cases, especially now that college has been priced so far out of the range of so
many bright, diligent students from among the poor and and working classes, and now even those from the middle class.
Nevertheless, in general an individual's ability to complete a college degree is not an unreasonable stand-in as evidence of
that person's suitability for employment.
Students are first caught in a trap of "credentials inflation" needed to obtain jobs, then caught by inflation in education
costs, then stuck with undischargeable debt. And the more of them who get the credentials, the worse the credentials inflation–a
spiral.
It's all fuelled by loose credit. The only beneficiaries are a managerial elite who enjoy palatial facilities.
As for the employers, they're not so bad off. Wages are coming down for credentialled employees due to all the competition.
There is such a huge stock of degreed applicants that they can afford to ignore anyone who isn't. The credentials don't cost the
employer–they're not spending the money, nor are they lending the money.
Modern money makes it possible for the central authorities to keep this racket going all the way up to the point of general
systemic collapse. Why should they stop? Who's going to make them stop?
The only reason the universities can get away with it is easy money. When the time comes that students actually need to pay
tuition with real money, money they or their parents have actually saved, then college tuition rates will crash back down to earth.
Don't blame the universities. This is the natural and inevitable outcome of easy money.
Yes, college education in the US is a classic example of the effects of subsidies. Eliminate the subsidies and the whole education
bubble would rapidly implode.
I'm very curious if anyone will disagree with that assessment.
An obvious commonality across higher education, healthcare, housing, criminal justice, and national security is that we spend
huge quantities of public money yet hold the workers receiving that money to extremely low standards of accountability for what
they do with it.
Correct, it's not the universities, it's the culture that contains the universities, but the universities are training grounds
for the culture so it is the universities just not only the universities Been remembering the song from my college days "my futures
so bright i gotta wear shades". getting rich was the end in itself, and people who didn't make it didn't deserve anything but
a whole lot of student debt,creating perverse incentives. And now we all know what the A in type a stands for at least among those
who self identify as such, so yes it is the universities
I don't understand why the ability to accept guaranteed loan money doesn't come with an obligation by the school to cap tuition
at a certain percentage over maximum loan amount? Would that be so hard to institute?
Student loans are debt issuance. Western states are desperate to issue debt as it's fungible with money and marked down as
growth.
Borrow 120K over 3 years and it all gets paid into university coffers and reappears as "profit" now. Let some other president
deal with low disposable income due to loan repayments. It's in a different electoral cycle – perfect.
You can try to argue, but it will be hard to refute. If you give mortgages at teaser rates to anybody who can fog a mirror,
you get a housing bubble. If you give student loans to any student without regard to the prospects of that student paying back
the loan, you get a higher education bubble. Which will include private equity trying to catch as much of this money as they possibly
can by investing in for profit educational institutions just barely adequate to benefit from federal student loan funds.
A lot of background conditions help. It helps to pump a housing bubble if there's nothing else worth investing in (including
saving money at zero interest rates). It helps pump an education bubble if most of the jobs have been outsourced so people are
competing more and more for fewer and fewer.
I don't disagree with the statement that easy money has played the biggest role in jacking up tuition. I do strongly disagree
that we shouldn't "blame" the universities. The universities are exactly where we should place the blame. The universities have
become job training grounds, and yet continue to droll on and on about the importance of noble things like liberal education,
the pursuit of knowledge, the importance of ideas, etc. They cannot have it both ways. Years ago, when tuition rates started escalating
faster than inflation, the universities should have been the loudest critics – pointing out the cultural problems that would accompany
sending the next generation into the future deeply indebted – namely that all the noble ideas learned at the university would
get thrown out the window when financial reality forced recent graduates to chose between noble ideas and survival. If universities
truly believed that a liberal education was important; that the pursuit of knowledge benefitted humanity – they should have led
the charge to hold down tuition.
I took it to mean blame as in what allows the system to function. I heartily agree that highly paid workers at universities
bear blame for what they do (and don't do) at a granular level.
It's just that they couldn't do those things without the system handing them gobs of resources, from tax deductability of charitable
contributions to ignoring anti-competitive behavior in local real estate ownership to research grants and other direct funding
to student loans and other indirect funding.
Regarding blaming "highly paid workers at universities" – If a society creates incentives for dysfunctional behavior such a
society will have a lot of dysfunction. Eliminate the subsidies and see how quicly the educational bubble pops.
You are ignoring the way that the rich bid up the cost of everything. 2% of the population will pay whatever the top dozen
or so schools will charge so that little Billy or Sue can go to Harvard or Stanford. This leads to cost creep as the next tier
ratchet up their prices in lock step with those above them, etc. The same dynamic happens with housing, at least around wealthy
metropolitan areas.
A European perspective on this: yep, that's true on an international perspective. I belong to the ugly list of those readers
of this blog who do not fully share the liberal values of most of you hear. However, may I say that I can agree on a lot of stuff.
US education and health-care are outrageously costly. Every European citizen moving to the states has a question: will he or
she be sick whilst there. Every European parent with kids in higher education is aware that having their kids for one closing
year in the US is the more they can afford (except if are a banquier d'affaires ). Is the value of the US education good? No doubt!
Is is good value for money, of course not. Is the return on the money ok? It will prove disastrous, except if the USD crashed.
The main reason? Easy money. As for any kind of investment. Remember that this is indeed a investment plan
Check the level of revenues of "public sector" teaching staff on both sides of the ponds. The figure for US professionals in
these area are available on the Web. They are indeed much more costly than, say, North-of-Europe counterparts, "public sector"
professionals in those area. Is higher education in the Netherlands sub-par when compared to the US? Of course not.
Yep financing education via the Fed (directly or not) is not only insanely costly. Just insane. The only decent solution: set
up public institutions staffed with service-minded professionals that did not have to pay an insane sum to build up the curriculum
themselves.
Are "public services" less efficient than private ones here in those area, health-care and higher education. Yep, most certainly.
But, sure, having the fed indirectly finance the educational system just destroy any competitive savings made in building a competitive
market-orientated educational system and is one of the worst way to handle your educational system.
Yep, you can do a worst use of the money, subprime or China buildings But that's all about it.
US should forget about exceptionnalism and pay attention to what North of Europe is doing in this area. Mind you, I am Southerner
(of Europe). But of course I understand that trying to run these services on a federal basis is indeed "mission impossible".
Way to big! Hence the indirect Washington-decided Wall-Street-intermediated Fed-and-deficit-driven financing of higher education.
Mind you: we have more and more of this bankers meddling in education in Europe and I do not like what I see.
@washunate – 6/26/15, 11:03 am. I know I'm late to the party, but I disagree. It's not the workers, it's the executives
and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards.
IMNSHO everyone needs to stop blaming labor and/or the labor unions. It's not the front line workers, teachers, retail clerks,
adjunct instructors, all those people who do the actual work rather than managing other people. Those workers have no bargaining
power, and the unions have lost most of theirs, in part due to the horrible labor market, as well as other important reasons.
We have demonized virtually all of the government workers who actually do the work that enables us to even have a government
(all levels) and to provide the services we demand, such as public safety, education, and infrastructure. These people are our
neighbors, relatives and friends; we owe them better than this.
Unionized support staff at Canadian universities have had sub-inflation wage increases for nearly 20 years, while tuition has
been rising at triple the rate of inflation.
So obviously one can't blame the unions for rising education costs.
Omitted from this account: Federal funding for education has declined 55% since 1972. Part of the Powell memo's agenda.
It's understandable too; one can hardly blame legislators for punishing the educational establishment given the protests of
the '60s and early '70s After all, they were one reason Nixon and Reagan rose to power. How dare they propose real democracy!
Harumph!
To add to students' burden, there's the recent revision of bankruptcy law: student loans can no longer be retired by bankruptcy
(Thanks Hillary!) It'll be interesting to see whether Hillary's vote on that bankruptcy revision becomes a campaign issue.
I also wonder whether employers will start to look for people without degrees as an indication they were intelligent enough
to sidestep this extractive scam.
I'd be curious what you count as federal funding. Pell grants, for example, have expanded both in terms of the number of recipients
and the amount of spending over the past 3 – 4 decades.
More generally, federal support for higher ed comes in a variety of forms. The bankruptcy law you mention is itself a form
of federal funding. Tax exemption is another. Tax deductabiliity of contributions is another. So are research grants and exemptions
from anti-competitive laws and so forth. There are a range of individual tax credits and deductions. The federal government also
does not intervene in a lot of state supports, such as licensing practices in law and medicine that make higher ed gatekeepers
to various fiefdoms and allowing universities to take fees for administering (sponsoring) charter schools. The Federal Work-Study
program is probably one of the clearest specific examples of a program that offers both largely meaningless busy work and terrible
wages.
As far as large employers seeking intelligence, I'm not sure that's an issue in the US? Generally speaking, the point of putting
a college credential in a job requirement is precisely to find people participating in the 'scam'. If an employer is genuinely
looking for intelligence, they don't have minimum educational requirements.
Why would tuition rates come down when students need to pay with "real money, money they or their parents have actually saved.
. . " ? Didn't tuition at state universities begin climbing when state governments began boycotting state universities in terms
of embargoing former rates of taxpayer support to them? Leaving the state universities to try making up the difference by raising
tuition? If people want to limit or reduce the tuition charged to in-state students of state universities, people will have to
resume paying former rates of taxes and elect people to state government to re-target those taxes back to state universities the
way they used to do before the reductions in state support to state universities.
Protest against exploitation and risk being black-listed by exploitative employers -> Only employers left are the ones who
actually do want (not pretend to want) ethical people willing to stand up for what they believe in. Not many of those kind of
employers around . What is the benefit? What are the risks?
The author misrepresents the nature and demands of Chile's student movement.
Over the past few decades, university enrollment rates for Chileans expanded dramatically in part due to the creation of many
private universities. In Chile, public universities lead the pack in terms of academic reputation and entrance is determined via
competitive exams. As a result, students from poorer households who attended low-quality secondary schools generally need to look
at private universities to get a degree. And these are the students to which the newly created colleges catered to.
According to Chilean legislation, universities can only function as non-profit entities. However, many of these new institutions
were only nominally non-profit entities (for example, the owners of the university would also set up a real estate company that
would rent the facilities to the college at above market prices) and they were very much lacking in quality. After a series of
high-profile cases of universities that were open and shut within a few years leaving its students in limbo and debt, anger mounted
over for-profit education.
The widespread support of the student movement was due to generalized anger about and education system that is dearly lacking
in quality and to the violation of the spirit of the law regulating education. Once the student movement's demands became more
specific and morphed from opposing for profit institutions to demanding free tuition for everyone, the widespread support waned
quickly.
And while the government announced free tuition in public universities, there is a widespread consensus that this is a pretty
terrible idea as it is regressive and involves large fiscal costs. In particular because most of the students that attend public
universities come from relatively wealthy households that can afford tuition. The students that need the tuition assistance will
not benefit under the new rules.
I personally benefited from the fantastically generous financial aid systems that some private American universities have set
up which award grants and scholarships based on financial need only. And I believe that it is desirable for the State to guarantee
that any qualified student has access to college regardless of his or her wealth I think that by romanticizing the Chilean student
movement the author reveals himself to be either is dishonest or, at best, ignorant.
Students aren't protesting because they don't feel the consequences until they graduate.
One thing that struck me when I applied for a student loan a few years back to help me get through my last year of graduate
school – the living expense allocation was surprisingly high. Not "student sharing an apartment with five random dudes while eating
ramen and riding the bus", but more "living alone in a nice one-bedroom apartment while eating takeout and driving a car". Apocryphal
stories of students using their student loans to buy new cars or take extravagant vacations were not impossible to believe.
The living expense portion of student loans is often so generous that students can live relatively well while going to school,
which makes it that much easier for them to push to the backs of their minds the consequences that will come from so much debt
when they graduate. Consequently, it isn't the students who are complaining – it's the former students. But by the time
they are out of school and the university has their money in its pocket, it's too late for them to try and change the system.
Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate.
"As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says.
A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door.
"That's really nice compared to community bathrooms that I lived in last year," Conley says.
To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include
classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student
really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar?
"Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls
on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder
to recruit.
"If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have
available to offer, we were very far behind."
Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says.
They expect more privacy than previous generations - and more comforts.
"These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at
San Diego State University and author of the book "Generation Me."
Those students could be in for some disappointment when they graduate, she says.
"When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous
flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening."
Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called
premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives
in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him.
"I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and
get the dorm I'm in. It's perfectly fine."
In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of
its residence halls.
So I wonder who on average will fair better navigating the post-college lifestyle/job market reality check, Noell or Josh?
Personally, I would bet on the Joshes living in the 60's vintage enamel painted ciderblock dorm rooms.
Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for
schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical
to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that
"poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions.
PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms
Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review,
College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting
to show up on those reviews, too.
While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets
up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer
students resort-like amenities.
Bingo! They don't get really mad until they're in their early thirties and they are still stuck doing some menial job with
no vacation time, no health insurance and a monstrous mountain of debt. Up until that point they're still working hard waiting
for their ship to come in and blaming themselves for any lack of success like Steinbeck's 'embarrassed millionaires.' Then one
day maybe a decade after they graduate they realize they've been conned but they've got bills to pay and other problems to worry
about so they solider on. 18 year-olds are told by their high school guidance councilors, their parents and all of the adults
they trust that college while expensive is a good investment and the only way to succeed. Why should they argue? They don't know
any better yet.
Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity
given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the
Great American Workplace if they are caught protesting anything on camera.
Today isn't like the sixties when you could drop out in the confidence that you could always drop back in again. Nowadays there
are ten limpets for every scar on the rock.
the average is such a worthless number. The Data we need, and which all these parasitic professional managerial types won't
provide –
x axis would be family income, by $5000 increments.
y axis would be the median debt level
we could get fancy, and also throw in how many kids are in school in each of those income increments.
BTW – this 55 yr. old troglodyte believes that 1 of the roles (note – I did NOT say "The Role") of education is preparing people
to useful to society. 300++ million Americans, 7 billion humans – we ALL need shelter, reliable and safe food, reliable and safe
water, sewage disposal, clothing, transportation, education, sick care, power, leisure, we should ALL have access to family wage
jobs and time for BBQs with our various communities several times a year. I know plenty of techno-dweebs here in Seattle who need
to learn some of the lessons of 1984, The Prince, and Shakespeare. I know plenty of fuzzies who could be a bit more useful with
some rudimentary skills in engineering, or accounting, or finance, or stats, or bio, or chem
I don't know what the current education system is providing, other than some accidental good things for society at large, and
mainly mechanisms for the para$ite cla$$e$ to stay parasites.
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was
the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S.
This suppression in China led to an increase in Mao's authority (obviously), but kept him delusional. For example, because
China relied on Mao's agricultural advice, an estimated 70 million Chinese died during peacetime. But who else was to be relied
upon as an authority?
Back the the U.S.S.A. (the United StateS of America): One Australian says of the American system: "You Yanks don't consult
the wisdom of democracy; you enable mobs."
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress)
was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing
something comparable in the U.S.
Mao liked chaos because he believed in continuous revolution. I would argue what we're experiencing is nothing comparable to
what China experienced. (I hope I've understood you correctly.)
I am pretty sure a tradition of protest to affect political change in the US is a rather rare bird. Most people "protest" by
changing their behavior. As an example, by questioning the value of the 46,000 local private college tuition as opposed the the
15k and 9k tiered state college options. My daughter is entering the freshman class next year, we opted for the cheaper state
option because, in the end, a private school degree adds nothing, unless it is to a high name recognition institution.
I think, like housing, a downstream consequence of "the gouge" is not to question - much less understand - class relations,
but to assess the value of the lifetyle choice once you are stuck with the price of paying for that lifestyle in the form of inflated
debt repayments. Eventually "the folk" figure it out and encourage cheaper alternatives toward the same goal.
There's probably little point in engaging in political protest. Most people maximise their chances of success by focusing on
variables over which they have some degree of control. The ability of most people to have much effect on the overall political-economic
system is slight and any returns from political activity are highly uncertain.
How does anyone even expect to maintain cheap available state options without political activity? By wishful thinking I suppose?
The value of a private school might be graduating sooner, state schools are pretty overcrowded, but that may not at all be
worth the debt (I doubt it almost ever is on a purely economic basis).
Maybe if we just elect the right people with cool posters and a hopey changey slogan, they'll take care of everything for us
and we won't have to be politically active.
Of course refusal to engage politically because the returns to oneself by doing so are small really IS the tragedy of the commons.
Thus one might say it's ethical to engage politically in order to avoid it. Some ethical action focuses on overcoming tragedy
of the commons dilemmas. Of course the U.S. system being what it is I have a hard time blaming anyone for giving up.
The middle class, working class and poor have no voice in politics or policy at all, and they don't know what's going on until
it's too late. They've been pushed by all their high school staff that college is the only acceptable option - and often it is.
What else are they going to do out of high school, work a 30 hour a week minimum wage retail job? The upper middle class and rich,
who entirely monopolize the media, don't have any reason to care about skyrocketing college tuition - their parents are paying
for it anyway. They'd rather write about the hip and trendy issues of the day, like trigger warnings.
Speaking as one of these college students, I think that a large part of the reason that the vast majority of students are just
accepting the tuition rates is because it has become the societal norm. Growing up I can remember people saying "You need to go
to college to find a good job." Because a higher education is seen as a necessity for most people, students think of tuition as
just another form of taxes, acceptable and inevitable, which we will expect to get a refund on later in life.
I teach at a "good" private university. Most of my students don't have a clue as to how they're being exploited. Many of
the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they
almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available
job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job.
Incoming freshmen were born in the late 90s - they've never known anything but widespread corruption, financial and corporate
oligarchy, i-Pads and the Long Recession.
But as other posters note, the moment of realization usually comes after four years of prolonged adolescence, luxury dorm living
and excessive debt accumulation.
Most Ph.D.'s don't either. I'd argue there have been times they have attempted to debate that exploitation is a good–for their
employer and himself/herself–with linguistic games. Mind numbing . To be fair, they have a job.
I have watched the tuition double–double!–at my alma mater in the last eleven years. During this period, administrators have
set a goal of increasing enrollment by a third, and from what I hear, they've done so. My question is always this: where is the
additional tuition money going? Because as I walk through the campus, I don't really see that many improvements–yes, a new building,
but that was supposedly paid for by donations and endowments. I don't see new offices for these high-priced admin people that
colleges are hiring, and in fact, what I do see is an increase in the number of part-time faculty and adjuncts. The tenured faculty
is not prospering from all this increased revenue, either.
I suspect the tuition is increasing so rapidly simply because the college can get away with it. And that means they are exploiting
the students.
While still a student, I once calculated that it cost me $27.00/hour to be in class. (15 weeks x 20 "contact hours" per week
=
300 hours/semester, $8000/semester divided by 300 hours = $27.00/hour). A crude calculation, certainly, but a starting point.
I did this because I had an instructor who was consistently late to class, and often cancelled class, so much that he wiped out
at least $300.00 worth of instruction. I had the gall to ask for a refund of that amount. I'm full of gall. Of course, I was laughed
at, not just by the administrators, but also by some students.
Just like medical care, education pricing is "soft," that is, the price is what you are willing to pay. Desirable students
get scholarships and stipends, which other students subsidize; similarly, some pre-ACA patients in hospitals were often treated
gratis.
Students AND hospital patients alike seem powerless to affect the contract with the provider. Reform will not likely be forthcoming,
as students, like patients, are "just passing through."
The tuition at most public universities has quadrupled or more over the last 15 to 20 years precisely BECAUSE state government
subsidies have been
slashed in the meantime. I was told around 2005 that quadrupled tuition at the University of Minnesota made up for about half
of the state money that the legislature had slashed from the university budget over the previous 15 years.
It is on top of that situation that university administrators are building themselves little aristocratic empires, very much
modeled on the kingdoms of corporate CEOs
where reducing expenses (cutting faculty) and services to customers (fewer classes, more adjuncts) is seen as the height of responsibility
and accountability, perhaps
even the definition of propriety.
Everyone should read the introductory chapter to David Graeber's " The Utopia of Rules: On Technology, Stupidity and the Secret
Joys of Bureaucracy."
In Chapter One of this book entitled "The Iron law of Liberalism and the Era of Total Bureaucratization" Graeber notes that
the US has become the most rigidly credentialised society in the world where
" in field after field from nurses to art teachers, physical therapists, to foreign policy consultants, careers which used
to be considered an art (best learned through doing) now require formal professional training and a certificate of completion."
Graeber, in that same chapter, makes another extremely important point. when he notes that career advancement in may large
bureaucratic organizations demands a willingness to play along with the fiction that advancement is based on merit, even though
most everyone know that this isn't true.
The structure of modern power in the U.S., in both the merging public and private sectors, is built around the false ideology
of a giant credentialized meritorcracy rather than the reality of arbitrary extraction by predatory bureaucratic networks.
Anecdote: I was speaking to someone who recently started working at as a law school administrator at my alma mater. Enrollment
is actually down at law schools (I believe), because word has spread about the lame legal job market. So, the school administration
is watching its pennies, and the new administrator says the administrators aren't getting to go on so many of the all expense
paid conferences and junkets that they used to back in the heyday. As I hear this, I am thinking about how many of these awesome
conferences in San Diego, New Orleans and New York that I'm paying back. Whatever happened to the metaphorical phrase: "when a
pig becomes a hog, it goes to slaughter"?
Another anecdote: I see my undergrad alma mater has demolished the Cold War era dorms on one part of campus and replaced it
with tons of slick new student housing.
No doubt those Cold War era dorms had outlived their planned life. Time for replacement. Hell, they had probably become inhabitable
and unsafe.
Meanwhile, has your undergraduate school replaced any of its lecture courses with courses presented same model as on-line traffic
school? I have a pending comment below about how my nephew's public university "taught" him introductory courses in accounting
and macroeconomics that way. Please be assured that the content of those courses was on a par with best practices in the on-line
traffic school industry. It would be hilarious if it weren't so desperately sad.
I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal
ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser
reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state
apparatus of the modern capitalist state par excellance. The real purpose of the university was not to level the playing
field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce
itself.
It certainly would explain a lot. It would explain why trying to send everyone to college won't solve this, because not everyone
can have a bourgeois job. Some people actually have to do the work. The whole point of the university as an institution was to
act as a sorting/distribution hub for human beings, placing them at certain points within the division of labor. A college degree
used to mean more because getting it was like a golden ticket, guaranteeing someone who got it at least a petit-bourgeois lifestyle.
The thing is, there are only so many slots in corporate America for this kind of employment. That number is getting smaller too.
You could hand every man, woman, and child in America a BS and it wouldn't change this in the slightest.
What has happened instead, for college to preserve its role as the sorting mechanism/preservation of class advantage is what
I like to call degree inflation and/or an elite formed within degrees themselves. Now a BS or BA isn't enough, one needs an Master's
or PhD to really be distinguished. Now a degree from just any institution won't do, it has to be an Ivy or a Tier 1 school. Until
we learn to think realistically about what higher education is as an institution little or nothing will change.
Any credential is worthless if everybody has it. All information depends on contrast. It's impossible for everybody to "stand
out" from the masses. The more people have college degrees the less value a college degree has.
When I was half-grown, I heard it said that religion is no longer the opiate of the masses, in that no one believes in God
anymore, at least not enough for it to change actual behavior.
Instead, buying on credit is the opiate of the masses.
My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed
to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just
two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill
in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for
attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises
is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands
exactly that this is going on, but still .
This is how 21st century America treats its young people: it takes people who are poor, in the sense that they have no assets,
and makes them poorer, loading them up with student debt, which they incur in order to finance a falsely-so-called course of university
study that can't be a good deal, even for the best students among them.
I am not suggesting the correspondence courses have no worth at all. But they do not have the worth that is being charged for
them in this bait-and-switch exercise by Ed Business.
After further thought, I'd compare my nephew's two courses to on-line traffic school: Mechanized "learning" – forget it all
as soon as the test is over – Critical thinking not required. Except for the kind of "test preparation" critical thinking that
teaches one to spot and eliminate the obviously wrong choices in objective answers–that kind of thinking saves time and so is
very helpful.
Not only is he paying full tuition to receive this treatment, but his family and mine are paying taxes to support it, too.
Very useful preparation for later life, where we can all expect to attend traffic school a few times. But no preparation for
any activity of conceivable use or benefit to any other person.
I read recently that the business establishment viewed the most important contribution of colleges was that they warehoused
young people for four years to allow maturing.
Where are the young people in all this? Is anyone going to start organizing to change things? Any ideas? Any interest? Are
we going to have some frustrated, emotional person attempt to kill a university president once every ten years? Then education
can appeal for support from the government to beef up security. Meanwhile the same old practices will prevail and the rich get
richer and the rest of us get screwed.
The reason students accept this has to be the absolutely demobilized political culture of the United States combined with
what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving
any kind of middle class income.
Really your choices in the United States are, in terms of jobs, to go into the military (and this is really for working class
kids, Southern families with a military history and college-educated officer-class material) or to go to college.
The rest, who have no interest in the military, attend college, much like those who wanted to achieve despite of their class
background went into the priesthood in the medieval period. There hasn't been a revolt due to the lack of any idea it could function
differently and that American families are still somehow willing to pay the exorbitant rates to give their children a piece of
paper that still enables them to claim middle class status though fewer and fewer find jobs. $100k in debt seems preferable to
no job prospects at all.
Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks,
bonds, and real estate. College administrators and their lackeys (the extended school bureaucracy) are propping up another part
of the financial sector – just take a look at Harvard's $30+ billion endowment, or Yale's $17 billion – these are just the top
of a very large heap. They're all deep into the financial sector. Professors and students are simply there as an excuse for the
alumni money machine and real estate scams to keep running, but there's less and less of a reason for them to employ professors,
and I say this as a PhD with ten years of teaching experience who has seen the market dry up even more than it was when I entered
grad school in the early 2000s.
"Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase
stocks, bonds, and real estate. "
Unorthodoxmarxist, I thought I was the only person who was coming to that conclusion. I think there's data out there that could
support our thesis that college tuition inflation may be affecting real estate prices. After all, justification a college grad
gave to someone who was questioning the value of a college degree was that by obtaining a "a degree" and a professional job, an
adult could afford to buy a home in major metropolitan hubs. I'm not sure if he was that ignorant, (business majors, despite the
math requirement are highly ideological people. They're no where near as objective as they like to portray themselves as) or if
he hasn't been in contact with anyone with a degree trying to buy a home in a metropolitan area.
Anyways, if our thesis is true, then if home prices declined in 2009, then college tuition should have declined as well, but
it didn't at most trustworthy schools. Prospective students kept lining up to pay more for education that many insiders believe
is "getting worse" because of widespread propaganda and a lack of alternatives, especially for "middle class" women.
It's hard to say, but there ought to be a power keg of students here primed to blow. And Bernie Sanders' proposal for free
college could be the fuse.
But first he'd have the light the fuse, and maybe he can. He's getting huge audiences and a lot of interest these days. And
here's a timely issue. What would happen if Sanders toured colleges and called for an angry, mass and extended student strike
across the country to launch on a certain date this fall or next spring to protest these obscene tuitions and maybe call for something
else concrete, like a maximum ratio of administrators to faculty for colleges to receive accreditation?
It could ignite not only a long-overdue movement on campuses but also give a big boost to his campaign. He'd have millions
of motivated and even furious students on his side as well as a lot of motivated and furious parents of students (my wife and
I would be among them) - and these are just the types of people likely to get out and vote in the primaries and general election.
Sanders' consistent message about the middle class is a strong one. But here's a solid, specific but very wide-ranging issue
that could bring that message into very sharp relief and really get a broad class of politically engaged people fired up.
I'm not one of those who think Sanders can't win but applaud his candidacy because it will nudge Hillary Clinton. I don't give
a fig about Clinton. I think there's a real chance Sanders can win not just the nomination but also the presidency. This country
is primed for a sharp political turn. Sanders could well be the right man in the right place and time. And this glaring and ongoing
tuition ripoff that EVERYONE agrees on could be the single issue that puts him front-and-center rather than on the sidelines.
I finished graduate school about three years ago. During the pre-graduate terms that I paid out of pocket (2005-2009) I saw
a near 70 percent increase in tuition (look up KY college tuition 1987-2009 for proof).
Straight bullshit, but remember our school was just following the national (Neoliberal) model.
Though, realize that I was 19-23 years old. Very immature (still immature) and feeling forces beyond my control. I did not
protest out of a) fear [?] (I don't know, maybe, just threw that in there) b) the sheepskin be the path to salvation (include
social/cultural pressures from parent, etc.).
I was more affected by b). This is the incredible power of our current Capitalist culture. It trains us well. We are always
speaking its language, as if a Classic. Appraising its world through its values.
I wished to protest (i.e. Occupy, etc.) but to which master? All of its targets are post modern, all of it, to me, nonsense,
and, because of this undead (unable to be destroyed). This coming from a young man, as I said, still immature, though I fear this
misdirection, and alienation is affecting us all.
"... By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published at Alternet ..."
"... Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases in prices are health care and higher education. ..."
"... Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year. The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free. ..."
"... As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course. ..."
"... New York Times ..."
"... to the people making decisions ..."
"... it's the executives and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards. ..."
"... What is the benefit? What are the risks? ..."
"... Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate . ..."
"... "As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says. A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door. "That's really nice compared to community bathrooms that I lived in last year," Conley says. To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar? "Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder to recruit. " If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have available to offer, we were very far behind." Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says. They expect more privacy than previous generations - and more comforts. "These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at San Diego State University and author of the book "Generation Me." Those students could be in for some disappointment when they graduate , she says. "When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening." Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him. ..."
"... "I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and get the dorm I'm in. It's perfectly fine." In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of its residence halls. ..."
"... Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that "poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions. PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms ..."
"... Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review, College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting to show up on those reviews, too. ..."
"... While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer students resort-like amenities. ..."
"... Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the Great American Workplace if they are caught protesting anything on camera. ..."
"... Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing something comparable in the U.S. ..."
"... Many of the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job. ..."
"... I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state apparatus of the modern capitalist state par excellance . The real purpose of the university was not to level the playing field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce itself. ..."
"... My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands exactly that this is going on, but still . ..."
"... The reason students accept this has to be the absolutely demobilized political culture of the United States combined with what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving any kind of middle class income. ..."
"... Straight bullshit, but remember our school was just following the national (Neoliberal) model. ..."
Yves here. In May, we wrote up and embedded the report on how NYU exploits students and adjuncts in
"The Art of the Gouge": NYU as a Model for Predatory Higher Education. This article below uses that study as a point of departure
for for its discussion of how higher education has become extractive.
By David Masciotra, the author of Mellencamp: American Troubadour (University Press of Kentucky). He has also written
for Salon, the Atlantic and the Los Angeles Review of Books. For more information visit www.davidmasciotra.com. Originally published
at Alternet
Higher education wears the cloak of liberalism, but in policy and practice, it can be a corrupt and cutthroat system of power
and exploitation. It benefits immensely from right-wing McCarthy wannabes, who in an effort to restrict academic freedom and silence
political dissent, depict universities as left-wing indoctrination centers.
But the reality is that while college administrators might affix "down with the man" stickers on their office doors, many prop
up a system that is severely unfair to American students and professors, a shocking number of whom struggle to make ends meet. Even
the most elementary level of political science instructs that politics is about power. Power, in America, is about money: who has
it? Who does not have it? Who is accumulating it? Who is losing it? Where is it going?
Four hundred faculty members at New York University, one of the nation's most expensive schools, recently released a report on
how their own place of employment, legally a nonprofit institution, has become a predatory business, hardly any different in ethical
practice or economic procedure than a sleazy storefront payday loan operator. Its title succinctly summarizes the new intellectual
discipline deans and regents have learned to master: "The
Art of The Gouge."
The result of their investigation reads as if Charles Dickens and Franz Kafka collaborated on notes for a novel. Administrators
not only continue to raise tuition at staggering rates, but they burden their students with inexplicable fees, high cost burdens
and expensive requirements like mandatory study abroad programs. When students question the basis of their charges, much of them
hidden during the enrollment and registration phases, they find themselves lost in a tornadic swirl of forms, automated answering
services and other bureaucratic debris.
Often the additional fees add up to thousands of dollars, and that comes on top of the already hefty tuition, currently $46,000
per academic year, which is more than double its rate of 2001. Tuition at NYU is higher than most colleges, but a bachelor's degree,
nearly anywhere else, still comes with a punitive price tag. According to the College Board, the average cost of tuition and fees
for the 2014–2015 school year was $31,231 at private colleges, $9,139 for state residents at public colleges, and $22,958 for out-of-state
residents attending public universities.
Robert Reich, in his book Supercapitalism, explains that in the past 30 years the two industries with the most excessive increases
in prices are health care and higher education. Lack of affordable health care is a crime, Reich argues, but at least new medicines,
medical technologies, surgeries, surgery techs, and specialists can partially account for inflation. Higher education can claim no
costly infrastructural or operational developments to defend its sophisticated swindle of American families. It is a high-tech, multifaceted,
but old fashioned transfer of wealth from the poor, working- and middle-classes to the rich.
Using student loan loot and tax subsidies backed by its $3.5 billion endowment, New York University has created a new administrative
class of aristocratic compensation. The school not only continues to hire more administrators – many of whom the professors indict
as having no visible value in improving the education for students bankrupting themselves to register for classes – but shamelessly
increases the salaries of the academic administrative class. The top 21 administrators earn a combined total of $23,590,794 per year.
The NYU portfolio includes many multi-million-dollar mansions and luxury condos, where deans and vice presidents live rent-free.
Meanwhile, NYU has spent billions, over the past 20 years, on largely unnecessary real estate projects, buying property and renovating
buildings throughout New York. The professors' analysis, NYU's US News and World Report Ranking, and student reviews demonstrate
that few of these extravagant projects, aimed mostly at pleasing wealthy donors, attracting media attention, and giving administrators
opulent quarters, had any impact on overall educational quality.
As the managerial class grows, in size and salary, so does the full time faculty registry shrink. Use of part time instructors
has soared to stratospheric heights at NYU. Adjunct instructors, despite having a minimum of a master's degree and often having a
Ph.D., receive only miserly pay-per-course compensation for their work, and do not receive benefits. Many part-time college instructors
must transform their lives into daily marathons, running from one school to the next, barely able to breathe between commutes and
courses. Adjunct pay varies from school to school, but the average rate is $2,900 per course.
Many schools offer rates far below the average, most especially community colleges paying only $1,000 to $1,500. Even at the best
paying schools, adjuncts, as part time employees, are rarely eligible for health insurance and other benefits. Many universities
place strict limits on how many courses an instructor can teach. According to a recent study, 25 percent of adjuncts
receive government assistance.
The actual scandal of "The Art of the Gouge" is that even if NYU is a particularly egregious offender of basic decency and honesty,
most of the report's indictments could apply equally to nearly any American university. From 2003-2013, college tuition increased
by a crushing
80 percent. That far outpaces all other inflation. The closest competitor was the cost of medical care, which in the same time
period, increased by a rate of 49 percent. On average, tuition in America rises eight percent on an annual basis, placing it far
outside the moral universe. Most European universities
charge only marginal fees for attendance, and many of them are free. Senator Bernie Sanders recently introduced a bill proposing
all public universities offer free education. It received little political support, and almost no media coverage.
In order to obtain an education, students accept the paralytic weight of student debt, the only form of debt not dischargeable
in bankruptcy. Before a young person can even think about buying a car, house or starting a family, she leaves college with thousands
of dollars in debt: an average of $29,400 in 2012. As colleges continue to suck their students dry of every dime, the US government
profits at $41.3 billion per year by
collecting interest
on that debt. Congress recently cut funding for Pell Grants, yet increased the budget for hiring debt collectors to target delinquent
student borrowers.
The university, once an incubator of ideas and entrance into opportunity, has mutated into a tabletop model of America's economic
architecture, where the top one percent of income earners now owns 40 percent of the wealth.
"The One Percent at State U," an Institute for Policy Studies report, found that at the 25 public universities with the highest
paid presidents, student debt and adjunct faculty increased at dramatically higher rates than at the average state university. Marjorie
Wood, the study's co-author, explained told the New York Times that extravagant executive pay is the "tip of a very large
iceberg, with universities that have top-heavy executive spending also having more adjuncts, more tuition increases and more administrative
spending.
Unfortunately, students seem like passive participants in their own liquidation. An American student protest timeline for 2014-'15,
compiled by historian Angus Johnston, reveals that most demonstrations and rallies focused on police violence, and sexism. Those
issues should inspire vigilance and activism, but only 10 out of 160 protests targeted tuition hikes for attack, and only two of
those 10 events took place
outside the state
of California.
Class consciousness and solidarity actually exist in Chile, where in 2011 a student movement began to organize, making demands
for free college. More than mere theater, high school and college students, along with many of their parental allies, engaged the
political system and made specific demands for inexpensive education. The Chilean government announced that in March 2016, it will
eliminate all tuition from public universities. Chile's victory for participatory democracy, equality of opportunity and social justice
should instruct and inspire Americans. Triumph over extortion and embezzlement is possible.
This seems unlikely to happen in a culture, however, where even most poor Americans view themselves, in the words of John Steinbeck,
as "temporarily embarrassed millionaires." The political, educational and economic ruling class of America is comfortable selling
out its progeny. In the words of one student quoted in "The Art of the Gouge," "they see me as nothing more than $200,000."
At a basic level, I think the answer is yes, because on balance, college still provides a lot of privatized value to the individual.
Being an exploited student with the College Credential Seal of Approval remains relatively much better than being an exploited
non student lacking that all important seal. A college degree, for example, is practically a guarantee of avoiding the
more unseemly parts of the US "justice" system.
But I think this is changing. The pressure is building from the bottom as academia loses credibility as an institution capable
of, never mind interested in, serving the public good rather than simply being another profit center for connected workers. It's
actually a pretty exciting time. The kiddos are getting pretty fed up, and the authoritarians at the top of the hierarchy are
running out of money with which to buy off younger technocratic enablers and thought leaders and other Serious People.
P.S., the author in this post demonstrates the very answer to the question. He assumes as true, without any need for support,
that the very act of possessing a college degree makes one worthy of a better place in society. That mindset is why colleges can
prey upon students. They hold a monopoly on access to resources in American society. My bold:
Adjunct instructors, despite having a minimum of a master's degree and often having a Ph.D., receive only
miserly pay-per-course compensation for their work, and do not receive benefits.
What does having a masters degree or PhD have to do with the moral claim of all human beings to a life of dignity and purpose?
There are so many more job seekers per job opening now than, say, 20 or thirty years ago that a degree is used to sort out
applications. Now a job that formerly listed a high school degree as a requirement may now list a college degree as a requirement,
just to cut down on the number of applications.
So, no, a B.A. or B.S. doesn't confer moral worth, but it does open more job doors than a high school diploma, even if the
actual work only requires high school level math, reading, science or technology.
I agree a phd often makes someone no more useful in society. However the behaviour of the kids is rational *because* employers
demand a masters / phd.
Students are then caught in a trap. Employers demand the paper, often from an expensive institution. The credit is abundant
thanks to govt backed loans. They are caught in a situation where as a collective it makes no sense to join in, but as an individual
if they opt out they get hurt also.
Same deal for housing. It's a mad world my masters.
What can we do about this? The weak link in the chain seems to me to be employers. Why are they hurting themselves by selecting
people who want higher pay but may offer little to no extra value? I work as a programmer and I often think " if we could just
'see' the non-graduate diamonds in the rough".
If employers had perfect knowledge of prospective employees *and* if they saw that a degree would make no difference to their
performance universities would crumble overnight.
The state will never stop printing money via student loans. If we can fix recruitment then universities are dead.
Why are they hurting themselves by selecting people who want higher pay but may offer little to no extra value?
Yeah, I have thought a lot about that particular question of organizational behavior. It does make sense, conceptually, that
somebody would disrupt the system and take people based on ability rather than credentials. Yet we are moving in the opposite
direction, toward more rigidity in educational requirements for employment.
For my two cents, I think the bulk of the answer lies in how hiring specifically, and management philosophy more generally,
works in practice. The people who make decisions are themselves also subject to someone else's decisions. This is true all up
and down the hierarchical ladder, from board members and senior executives to the most junior managers and professionals.
It's true that someone without a degree may offer the same (or better) performance to the company. But they do not offer the
same performance to the people making decisions, because those individual people also depend upon their own college degrees
to sell their own labor services. To hire significant numbers of employees without degrees into important roles is to sabotage
their own personal value.
Very few people are willing to be that kind of martyr. And generally speaking, they tend to self-select away from occupations
where they can meaningfully influence decision-making processes in large organizations.
Absolutely, individual business owners can call BS on the whole scam. It is a way that individual people can take action against
systemic oppression. Hire workers based upon their fit for the job, not their educational credentials or criminal background or
skin color or sexual orientation or all of the other tests we have used. But that's not a systemic solution because the incentives
created by public policy are overwhelming at large organizations to restrict who is 'qualified' to fill the good jobs (and increasingly,
even the crappy jobs).
I am not so sure that this is so. So many jobs are now crapified. When I was made redundant in 2009, I could not find many
jobs that fit my level of experience (just experience! I have no college degree), so I applied for anything that fit my skill
set, pretty much regardless of level. I was called Overqualified. I have heard that in the past as well, but never more so during
that stretch of job hunting. Remember that's with no degree. Maybe younger people don't hear it as much. But I also think life
experience has something to do with it, you need to have something to compare it to. How many times did our parents tell us how
different things were when they were kids, how much easier? I didn't take that on board, did y'all?
For various reasons, people seeking work these days, especially younger job applicants, might not possess the habits of mind
and behavior that would make them good employees – i.e., punctuality, the willingness to come to work every day (even when something
more fun or interesting comes up, or when one has partied hard the night before), the ability to meet deadlines rather than make
excuses for not meeting them, the ability to write competently at a basic level, the ability to read instructions, diagrams, charts,
or any other sort of necessary background material, the ability to handle basic computation, the ability to FOLLOW instructions
rather than deciding that one will pick and choose which rules and instructions to follow and which to ignore, trainability, etc.
Even if a job applicant's degree is in a totally unrelated field, the fact that he or she has managed to complete an undergraduate
degree–or, if relevant, a master's or a doctorate – is often accepted by employers as a sign that the applicant has a sense of
personal responsibility, a certain amount of diligence and educability, and a certain level of basic competence in reading, writing,
and math.
By the same token, employers often assume that an applicant who didn't bother going to college or who couldn't complete a college
degree program is probably not someone to be counted on to be a responsible, trainable, competent employee.
Obviously those who don't go to college, or who go but drop out or flunk out, end up disadvantaged when competing for jobs,
which might not be fair at all in individual cases, especially now that college has been priced so far out of the range of so
many bright, diligent students from among the poor and and working classes, and now even those from the middle class.
Nevertheless, in general an individual's ability to complete a college degree is not an unreasonable stand-in as evidence of
that person's suitability for employment.
Students are first caught in a trap of "credentials inflation" needed to obtain jobs, then caught by inflation in education
costs, then stuck with undischargeable debt. And the more of them who get the credentials, the worse the credentials inflation–a
spiral.
It's all fuelled by loose credit. The only beneficiaries are a managerial elite who enjoy palatial facilities.
As for the employers, they're not so bad off. Wages are coming down for credentialled employees due to all the competition.
There is such a huge stock of degreed applicants that they can afford to ignore anyone who isn't. The credentials don't cost the
employer–they're not spending the money, nor are they lending the money.
Modern money makes it possible for the central authorities to keep this racket going all the way up to the point of general
systemic collapse. Why should they stop? Who's going to make them stop?
The only reason the universities can get away with it is easy money. When the time comes that students actually need to pay
tuition with real money, money they or their parents have actually saved, then college tuition rates will crash back down to earth.
Don't blame the universities. This is the natural and inevitable outcome of easy money.
Yes, college education in the US is a classic example of the effects of subsidies. Eliminate the subsidies and the whole education
bubble would rapidly implode.
I'm very curious if anyone will disagree with that assessment.
An obvious commonality across higher education, healthcare, housing, criminal justice, and national security is that we spend
huge quantities of public money yet hold the workers receiving that money to extremely low standards of accountability for what
they do with it.
Correct, it's not the universities, it's the culture that contains the universities, but the universities are training grounds
for the culture so it is the universities just not only the universities Been remembering the song from my college days "my futures
so bright i gotta wear shades". getting rich was the end in itself, and people who didn't make it didn't deserve anything but
a whole lot of student debt,creating perverse incentives. And now we all know what the A in type a stands for at least among those
who self identify as such, so yes it is the universities
I don't understand why the ability to accept guaranteed loan money doesn't come with an obligation by the school to cap tuition
at a certain percentage over maximum loan amount? Would that be so hard to institute?
Student loans are debt issuance. Western states are desperate to issue debt as it's fungible with money and marked down as
growth.
Borrow 120K over 3 years and it all gets paid into university coffers and reappears as "profit" now. Let some other president
deal with low disposable income due to loan repayments. It's in a different electoral cycle – perfect.
You can try to argue, but it will be hard to refute. If you give mortgages at teaser rates to anybody who can fog a mirror,
you get a housing bubble. If you give student loans to any student without regard to the prospects of that student paying back
the loan, you get a higher education bubble. Which will include private equity trying to catch as much of this money as they possibly
can by investing in for profit educational institutions just barely adequate to benefit from federal student loan funds.
A lot of background conditions help. It helps to pump a housing bubble if there's nothing else worth investing in (including
saving money at zero interest rates). It helps pump an education bubble if most of the jobs have been outsourced so people are
competing more and more for fewer and fewer.
I don't disagree with the statement that easy money has played the biggest role in jacking up tuition. I do strongly disagree
that we shouldn't "blame" the universities. The universities are exactly where we should place the blame. The universities have
become job training grounds, and yet continue to droll on and on about the importance of noble things like liberal education,
the pursuit of knowledge, the importance of ideas, etc. They cannot have it both ways. Years ago, when tuition rates started escalating
faster than inflation, the universities should have been the loudest critics – pointing out the cultural problems that would accompany
sending the next generation into the future deeply indebted – namely that all the noble ideas learned at the university would
get thrown out the window when financial reality forced recent graduates to chose between noble ideas and survival. If universities
truly believed that a liberal education was important; that the pursuit of knowledge benefitted humanity – they should have led
the charge to hold down tuition.
I took it to mean blame as in what allows the system to function. I heartily agree that highly paid workers at universities
bear blame for what they do (and don't do) at a granular level.
It's just that they couldn't do those things without the system handing them gobs of resources, from tax deductability of charitable
contributions to ignoring anti-competitive behavior in local real estate ownership to research grants and other direct funding
to student loans and other indirect funding.
Regarding blaming "highly paid workers at universities" – If a society creates incentives for dysfunctional behavior such a
society will have a lot of dysfunction. Eliminate the subsidies and see how quicly the educational bubble pops.
You are ignoring the way that the rich bid up the cost of everything. 2% of the population will pay whatever the top dozen
or so schools will charge so that little Billy or Sue can go to Harvard or Stanford. This leads to cost creep as the next tier
ratchet up their prices in lock step with those above them, etc. The same dynamic happens with housing, at least around wealthy
metropolitan areas.
A European perspective on this: yep, that's true on an international perspective. I belong to the ugly list of those readers
of this blog who do not fully share the liberal values of most of you hear. However, may I say that I can agree on a lot of stuff.
US education and health-care are outrageously costly. Every European citizen moving to the states has a question: will he or
she be sick whilst there. Every European parent with kids in higher education is aware that having their kids for one closing
year in the US is the more they can afford (except if are a banquier d'affaires ). Is the value of the US education good? No doubt!
Is is good value for money, of course not. Is the return on the money ok? It will prove disastrous, except if the USD crashed.
The main reason? Easy money. As for any kind of investment. Remember that this is indeed a investment plan
Check the level of revenues of "public sector" teaching staff on both sides of the ponds. The figure for US professionals in
these area are available on the Web. They are indeed much more costly than, say, North-of-Europe counterparts, "public sector"
professionals in those area. Is higher education in the Netherlands sub-par when compared to the US? Of course not.
Yep financing education via the Fed (directly or not) is not only insanely costly. Just insane. The only decent solution: set
up public institutions staffed with service-minded professionals that did not have to pay an insane sum to build up the curriculum
themselves.
Are "public services" less efficient than private ones here in those area, health-care and higher education. Yep, most certainly.
But, sure, having the fed indirectly finance the educational system just destroy any competitive savings made in building a competitive
market-orientated educational system and is one of the worst way to handle your educational system.
Yep, you can do a worst use of the money, subprime or China buildings But that's all about it.
US should forget about exceptionnalism and pay attention to what North of Europe is doing in this area. Mind you, I am Southerner
(of Europe). But of course I understand that trying to run these services on a federal basis is indeed "mission impossible".
Way to big! Hence the indirect Washington-decided Wall-Street-intermediated Fed-and-deficit-driven financing of higher education.
Mind you: we have more and more of this bankers meddling in education in Europe and I do not like what I see.
@washunate – 6/26/15, 11:03 am. I know I'm late to the party, but I disagree. It's not the workers, it's the executives
and management generally. Just like Wall Street, many of these top administrators have perfected the art of failing upwards.
IMNSHO everyone needs to stop blaming labor and/or the labor unions. It's not the front line workers, teachers, retail clerks,
adjunct instructors, all those people who do the actual work rather than managing other people. Those workers have no bargaining
power, and the unions have lost most of theirs, in part due to the horrible labor market, as well as other important reasons.
We have demonized virtually all of the government workers who actually do the work that enables us to even have a government
(all levels) and to provide the services we demand, such as public safety, education, and infrastructure. These people are our
neighbors, relatives and friends; we owe them better than this.
Unionized support staff at Canadian universities have had sub-inflation wage increases for nearly 20 years, while tuition has
been rising at triple the rate of inflation.
So obviously one can't blame the unions for rising education costs.
Omitted from this account: Federal funding for education has declined 55% since 1972. Part of the Powell memo's agenda.
It's understandable too; one can hardly blame legislators for punishing the educational establishment given the protests of
the '60s and early '70s After all, they were one reason Nixon and Reagan rose to power. How dare they propose real democracy!
Harumph!
To add to students' burden, there's the recent revision of bankruptcy law: student loans can no longer be retired by bankruptcy
(Thanks Hillary!) It'll be interesting to see whether Hillary's vote on that bankruptcy revision becomes a campaign issue.
I also wonder whether employers will start to look for people without degrees as an indication they were intelligent enough
to sidestep this extractive scam.
I'd be curious what you count as federal funding. Pell grants, for example, have expanded both in terms of the number of recipients
and the amount of spending over the past 3 – 4 decades.
More generally, federal support for higher ed comes in a variety of forms. The bankruptcy law you mention is itself a form
of federal funding. Tax exemption is another. Tax deductabiliity of contributions is another. So are research grants and exemptions
from anti-competitive laws and so forth. There are a range of individual tax credits and deductions. The federal government also
does not intervene in a lot of state supports, such as licensing practices in law and medicine that make higher ed gatekeepers
to various fiefdoms and allowing universities to take fees for administering (sponsoring) charter schools. The Federal Work-Study
program is probably one of the clearest specific examples of a program that offers both largely meaningless busy work and terrible
wages.
As far as large employers seeking intelligence, I'm not sure that's an issue in the US? Generally speaking, the point of putting
a college credential in a job requirement is precisely to find people participating in the 'scam'. If an employer is genuinely
looking for intelligence, they don't have minimum educational requirements.
Why would tuition rates come down when students need to pay with "real money, money they or their parents have actually saved.
. . " ? Didn't tuition at state universities begin climbing when state governments began boycotting state universities in terms
of embargoing former rates of taxpayer support to them? Leaving the state universities to try making up the difference by raising
tuition? If people want to limit or reduce the tuition charged to in-state students of state universities, people will have to
resume paying former rates of taxes and elect people to state government to re-target those taxes back to state universities the
way they used to do before the reductions in state support to state universities.
Protest against exploitation and risk being black-listed by exploitative employers -> Only employers left are the ones who
actually do want (not pretend to want) ethical people willing to stand up for what they believe in. Not many of those kind of
employers around . What is the benefit? What are the risks?
The author misrepresents the nature and demands of Chile's student movement.
Over the past few decades, university enrollment rates for Chileans expanded dramatically in part due to the creation of many
private universities. In Chile, public universities lead the pack in terms of academic reputation and entrance is determined via
competitive exams. As a result, students from poorer households who attended low-quality secondary schools generally need to look
at private universities to get a degree. And these are the students to which the newly created colleges catered to.
According to Chilean legislation, universities can only function as non-profit entities. However, many of these new institutions
were only nominally non-profit entities (for example, the owners of the university would also set up a real estate company that
would rent the facilities to the college at above market prices) and they were very much lacking in quality. After a series of
high-profile cases of universities that were open and shut within a few years leaving its students in limbo and debt, anger mounted
over for-profit education.
The widespread support of the student movement was due to generalized anger about and education system that is dearly lacking
in quality and to the violation of the spirit of the law regulating education. Once the student movement's demands became more
specific and morphed from opposing for profit institutions to demanding free tuition for everyone, the widespread support waned
quickly.
And while the government announced free tuition in public universities, there is a widespread consensus that this is a pretty
terrible idea as it is regressive and involves large fiscal costs. In particular because most of the students that attend public
universities come from relatively wealthy households that can afford tuition. The students that need the tuition assistance will
not benefit under the new rules.
I personally benefited from the fantastically generous financial aid systems that some private American universities have set
up which award grants and scholarships based on financial need only. And I believe that it is desirable for the State to guarantee
that any qualified student has access to college regardless of his or her wealth I think that by romanticizing the Chilean student
movement the author reveals himself to be either is dishonest or, at best, ignorant.
Students aren't protesting because they don't feel the consequences until they graduate.
One thing that struck me when I applied for a student loan a few years back to help me get through my last year of graduate
school – the living expense allocation was surprisingly high. Not "student sharing an apartment with five random dudes while eating
ramen and riding the bus", but more "living alone in a nice one-bedroom apartment while eating takeout and driving a car". Apocryphal
stories of students using their student loans to buy new cars or take extravagant vacations were not impossible to believe.
The living expense portion of student loans is often so generous that students can live relatively well while going to school,
which makes it that much easier for them to push to the backs of their minds the consequences that will come from so much debt
when they graduate. Consequently, it isn't the students who are complaining – it's the former students. But by the time
they are out of school and the university has their money in its pocket, it's too late for them to try and change the system.
Sophomore Noell Conley lives there, too. She shows off the hotel-like room she shares with a roommate.
"As you walk in, to the right you see our granite countertops with two sinks, one for each of the residents," she says.
A partial wall separates the beds. Rather than trek down the hall to shower, they share a bathroom with the room next door.
"That's really nice compared to community bathrooms that I lived in last year," Conley says.
To be fair, granite countertops last longer. Tempur-Pedic is a local company - and gave a big discount. The amenities include
classrooms and study space that are part of the dorm. Many of the residents are in the university's Honors program. But do student
really need Apple TV in the lounges, or a smartphone app that lets them check their laundry status from afar?
"Demand has been very high," says the university's Penny Cox, who is overseeing the construction of several new residence halls
on campus. Before Central Hall's debut in August, the average dorm was almost half a century old, she says. That made it harder
to recruit.
"If you visit places like Ohio State, Michigan, Alabama," Cox says, "and you compare what we had with what they have
available to offer, we were very far behind."
Today colleges are competing for a more discerning consumer. Students grew up with fewer siblings, in larger homes, Cox says.
They expect more privacy than previous generations - and more comforts.
"These days we seem to be bringing kids up to expect a lot of material plenty," says Jean Twenge, a psychology professor at
San Diego State University and author of the book "Generation Me."
Those students could be in for some disappointment when they graduate, she says.
"When some of these students have all these luxuries and then they get an entry-level job and they can't afford the enormous
flat screen and the granite countertops," Twenge says, "then that's going to be a rude awakening."
Some on campus also worry about the divide between students who can afford such luxuries and those who can't. The so-called
premium dorms cost about $1,000 more per semester. Freshman Josh Johnson, who grew up in a low-income family and lives
in one of the university's 1960s-era buildings, says the traditional dorm is good enough for him.
"I wouldn't pay more just to live in a luxury dorm," he says. "It seems like I could just pay the flat rate and
get the dorm I'm in. It's perfectly fine."
In the near future students who want to live on campus won't have a choice. Eventually the university plans to upgrade all of
its residence halls.
So I wonder who on average will fair better navigating the post-college lifestyle/job market reality check, Noell or Josh?
Personally, I would bet on the Joshes living in the 60's vintage enamel painted ciderblock dorm rooms.
Competition for students who have more sophisticated tastes than in past years is creating the perfect environment for
schools to try to outdo each other with ever-more posh on-campus housing. Keeping up in the luxury dorm race is increasingly critical
to a school's bottom line: A 2006 study published by the Association of Higher Education Facilities Officers found that
"poorly maintained or inadequate residential facilities" was the number-one reason students rejected enrolling at institutions.
PHOTO GALLERY: Click Here to See the 10 Schools with Luxury Dorms
Private universities get most of the mentions on lists of schools with great dorms, as recent ratings by the Princeton Review,
College Prowler, and Campus Splash make clear. But a few state schools that have invested in brand-new facilities are starting
to show up on those reviews, too.
While many schools offer first dibs on the nicest digs to upperclassmen on campus, as the war for student dollars ratchets
up even first-year students at public colleges are living in style. Here are 10 on-campus dormitories at state schools that offer
students resort-like amenities.
Bingo! They don't get really mad until they're in their early thirties and they are still stuck doing some menial job with
no vacation time, no health insurance and a monstrous mountain of debt. Up until that point they're still working hard waiting
for their ship to come in and blaming themselves for any lack of success like Steinbeck's 'embarrassed millionaires.' Then one
day maybe a decade after they graduate they realize they've been conned but they've got bills to pay and other problems to worry
about so they solider on. 18 year-olds are told by their high school guidance councilors, their parents and all of the adults
they trust that college while expensive is a good investment and the only way to succeed. Why should they argue? They don't know
any better yet.
Perhaps some students are afraid to protest for fear of being photographed or videographed and having their face and identity
given to every prospective employer throughout America. Perhaps those students are afraid of being blackballed throughout the
Great American Workplace if they are caught protesting anything on camera.
Today isn't like the sixties when you could drop out in the confidence that you could always drop back in again. Nowadays there
are ten limpets for every scar on the rock.
the average is such a worthless number. The Data we need, and which all these parasitic professional managerial types won't
provide –
x axis would be family income, by $5000 increments.
y axis would be the median debt level
we could get fancy, and also throw in how many kids are in school in each of those income increments.
BTW – this 55 yr. old troglodyte believes that 1 of the roles (note – I did NOT say "The Role") of education is preparing people
to useful to society. 300++ million Americans, 7 billion humans – we ALL need shelter, reliable and safe food, reliable and safe
water, sewage disposal, clothing, transportation, education, sick care, power, leisure, we should ALL have access to family wage
jobs and time for BBQs with our various communities several times a year. I know plenty of techno-dweebs here in Seattle who need
to learn some of the lessons of 1984, The Prince, and Shakespeare. I know plenty of fuzzies who could be a bit more useful with
some rudimentary skills in engineering, or accounting, or finance, or stats, or bio, or chem
I don't know what the current education system is providing, other than some accidental good things for society at large, and
mainly mechanisms for the para$ite cla$$e$ to stay parasites.
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress) was
the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S.
This suppression in China led to an increase in Mao's authority (obviously), but kept him delusional. For example, because
China relied on Mao's agricultural advice, an estimated 70 million Chinese died during peacetime. But who else was to be relied
upon as an authority?
Back the the U.S.S.A. (the United StateS of America): One Australian says of the American system: "You Yanks don't consult
the wisdom of democracy; you enable mobs."
Mao was perfectly content to promote technical education in the new China. What he deprecated (and fought to suppress)
was the typical liberal arts notion of critical thinking. We're witnessing something comparable in the U.S. We're witnessing
something comparable in the U.S.
Mao liked chaos because he believed in continuous revolution. I would argue what we're experiencing is nothing comparable to
what China experienced. (I hope I've understood you correctly.)
I am pretty sure a tradition of protest to affect political change in the US is a rather rare bird. Most people "protest" by
changing their behavior. As an example, by questioning the value of the 46,000 local private college tuition as opposed the the
15k and 9k tiered state college options. My daughter is entering the freshman class next year, we opted for the cheaper state
option because, in the end, a private school degree adds nothing, unless it is to a high name recognition institution.
I think, like housing, a downstream consequence of "the gouge" is not to question - much less understand - class relations,
but to assess the value of the lifetyle choice once you are stuck with the price of paying for that lifestyle in the form of inflated
debt repayments. Eventually "the folk" figure it out and encourage cheaper alternatives toward the same goal.
There's probably little point in engaging in political protest. Most people maximise their chances of success by focusing on
variables over which they have some degree of control. The ability of most people to have much effect on the overall political-economic
system is slight and any returns from political activity are highly uncertain.
How does anyone even expect to maintain cheap available state options without political activity? By wishful thinking I suppose?
The value of a private school might be graduating sooner, state schools are pretty overcrowded, but that may not at all be
worth the debt (I doubt it almost ever is on a purely economic basis).
Maybe if we just elect the right people with cool posters and a hopey changey slogan, they'll take care of everything for us
and we won't have to be politically active.
Of course refusal to engage politically because the returns to oneself by doing so are small really IS the tragedy of the commons.
Thus one might say it's ethical to engage politically in order to avoid it. Some ethical action focuses on overcoming tragedy
of the commons dilemmas. Of course the U.S. system being what it is I have a hard time blaming anyone for giving up.
The middle class, working class and poor have no voice in politics or policy at all, and they don't know what's going on until
it's too late. They've been pushed by all their high school staff that college is the only acceptable option - and often it is.
What else are they going to do out of high school, work a 30 hour a week minimum wage retail job? The upper middle class and rich,
who entirely monopolize the media, don't have any reason to care about skyrocketing college tuition - their parents are paying
for it anyway. They'd rather write about the hip and trendy issues of the day, like trigger warnings.
Speaking as one of these college students, I think that a large part of the reason that the vast majority of students are just
accepting the tuition rates is because it has become the societal norm. Growing up I can remember people saying "You need to go
to college to find a good job." Because a higher education is seen as a necessity for most people, students think of tuition as
just another form of taxes, acceptable and inevitable, which we will expect to get a refund on later in life.
I teach at a "good" private university. Most of my students don't have a clue as to how they're being exploited. Many of
the best students feel enormous pressure to succeed and have some inkling that their job prospects are growing narrower, but they
almost universally accept this as the natural order of things. Their outlook: if there are 10 or 100 applicants for every available
job, well, by golly, I just have to work that much harder and be the exceptional one who gets the job.
Incoming freshmen were born in the late 90s - they've never known anything but widespread corruption, financial and corporate
oligarchy, i-Pads and the Long Recession.
But as other posters note, the moment of realization usually comes after four years of prolonged adolescence, luxury dorm living
and excessive debt accumulation.
Most Ph.D.'s don't either. I'd argue there have been times they have attempted to debate that exploitation is a good–for their
employer and himself/herself–with linguistic games. Mind numbing . To be fair, they have a job.
I have watched the tuition double–double!–at my alma mater in the last eleven years. During this period, administrators have
set a goal of increasing enrollment by a third, and from what I hear, they've done so. My question is always this: where is the
additional tuition money going? Because as I walk through the campus, I don't really see that many improvements–yes, a new building,
but that was supposedly paid for by donations and endowments. I don't see new offices for these high-priced admin people that
colleges are hiring, and in fact, what I do see is an increase in the number of part-time faculty and adjuncts. The tenured faculty
is not prospering from all this increased revenue, either.
I suspect the tuition is increasing so rapidly simply because the college can get away with it. And that means they are exploiting
the students.
While still a student, I once calculated that it cost me $27.00/hour to be in class. (15 weeks x 20 "contact hours" per week
=
300 hours/semester, $8000/semester divided by 300 hours = $27.00/hour). A crude calculation, certainly, but a starting point.
I did this because I had an instructor who was consistently late to class, and often cancelled class, so much that he wiped out
at least $300.00 worth of instruction. I had the gall to ask for a refund of that amount. I'm full of gall. Of course, I was laughed
at, not just by the administrators, but also by some students.
Just like medical care, education pricing is "soft," that is, the price is what you are willing to pay. Desirable students
get scholarships and stipends, which other students subsidize; similarly, some pre-ACA patients in hospitals were often treated
gratis.
Students AND hospital patients alike seem powerless to affect the contract with the provider. Reform will not likely be forthcoming,
as students, like patients, are "just passing through."
The tuition at most public universities has quadrupled or more over the last 15 to 20 years precisely BECAUSE state government
subsidies have been
slashed in the meantime. I was told around 2005 that quadrupled tuition at the University of Minnesota made up for about half
of the state money that the legislature had slashed from the university budget over the previous 15 years.
It is on top of that situation that university administrators are building themselves little aristocratic empires, very much
modeled on the kingdoms of corporate CEOs
where reducing expenses (cutting faculty) and services to customers (fewer classes, more adjuncts) is seen as the height of responsibility
and accountability, perhaps
even the definition of propriety.
Everyone should read the introductory chapter to David Graeber's " The Utopia of Rules: On Technology, Stupidity and the Secret
Joys of Bureaucracy."
In Chapter One of this book entitled "The Iron law of Liberalism and the Era of Total Bureaucratization" Graeber notes that
the US has become the most rigidly credentialised society in the world where
" in field after field from nurses to art teachers, physical therapists, to foreign policy consultants, careers which used
to be considered an art (best learned through doing) now require formal professional training and a certificate of completion."
Graeber, in that same chapter, makes another extremely important point. when he notes that career advancement in may large
bureaucratic organizations demands a willingness to play along with the fiction that advancement is based on merit, even though
most everyone know that this isn't true.
The structure of modern power in the U.S., in both the merging public and private sectors, is built around the false ideology
of a giant credentialized meritorcracy rather than the reality of arbitrary extraction by predatory bureaucratic networks.
Anecdote: I was speaking to someone who recently started working at as a law school administrator at my alma mater. Enrollment
is actually down at law schools (I believe), because word has spread about the lame legal job market. So, the school administration
is watching its pennies, and the new administrator says the administrators aren't getting to go on so many of the all expense
paid conferences and junkets that they used to back in the heyday. As I hear this, I am thinking about how many of these awesome
conferences in San Diego, New Orleans and New York that I'm paying back. Whatever happened to the metaphorical phrase: "when a
pig becomes a hog, it goes to slaughter"?
Another anecdote: I see my undergrad alma mater has demolished the Cold War era dorms on one part of campus and replaced it
with tons of slick new student housing.
No doubt those Cold War era dorms had outlived their planned life. Time for replacement. Hell, they had probably become inhabitable
and unsafe.
Meanwhile, has your undergraduate school replaced any of its lecture courses with courses presented same model as on-line traffic
school? I have a pending comment below about how my nephew's public university "taught" him introductory courses in accounting
and macroeconomics that way. Please be assured that the content of those courses was on a par with best practices in the on-line
traffic school industry. It would be hilarious if it weren't so desperately sad.
I read things like this and think about Louis Althusser and his ideas about "Ideological State Apparatuses." While in liberal
ideology the education is usually considered to be the space where opportunity to improve one's situation is founded, Althusser
reached the complete opposite conclusion. For him, universities are the definitive bourgeois institution, the ideological state
apparatus of the modern capitalist state par excellance. The real purpose of the university was not to level the playing
field of opportunity but to preserve the advantages of the bourgeoisie and their children, allowing the class system to perpetuate/reproduce
itself.
It certainly would explain a lot. It would explain why trying to send everyone to college won't solve this, because not everyone
can have a bourgeois job. Some people actually have to do the work. The whole point of the university as an institution was to
act as a sorting/distribution hub for human beings, placing them at certain points within the division of labor. A college degree
used to mean more because getting it was like a golden ticket, guaranteeing someone who got it at least a petit-bourgeois lifestyle.
The thing is, there are only so many slots in corporate America for this kind of employment. That number is getting smaller too.
You could hand every man, woman, and child in America a BS and it wouldn't change this in the slightest.
What has happened instead, for college to preserve its role as the sorting mechanism/preservation of class advantage is what
I like to call degree inflation and/or an elite formed within degrees themselves. Now a BS or BA isn't enough, one needs an Master's
or PhD to really be distinguished. Now a degree from just any institution won't do, it has to be an Ivy or a Tier 1 school. Until
we learn to think realistically about what higher education is as an institution little or nothing will change.
Any credential is worthless if everybody has it. All information depends on contrast. It's impossible for everybody to "stand
out" from the masses. The more people have college degrees the less value a college degree has.
When I was half-grown, I heard it said that religion is no longer the opiate of the masses, in that no one believes in God
anymore, at least not enough for it to change actual behavior.
Instead, buying on credit is the opiate of the masses.
My nephew asked me to help him with his college introductory courses in macroeconomics and accounting. I was disappointed
to find out what was going on: no lectures by professors, no discussion sessions with teaching assistants; no team projects–just
two automated correspondence courses, with automated computer graded problem sets objective tests – either multiple choice, fill
in the blank with a number, or fill in the blank with a form answer. This from a public university that is charging tuition for
attendance just as though it were really teaching something. All they're really certifying is that the student can perform exercises
is correctly reporting what a couple of textbooks said about subjects of marginal relevance to his degree. My nephew understands
exactly that this is going on, but still .
This is how 21st century America treats its young people: it takes people who are poor, in the sense that they have no assets,
and makes them poorer, loading them up with student debt, which they incur in order to finance a falsely-so-called course of university
study that can't be a good deal, even for the best students among them.
I am not suggesting the correspondence courses have no worth at all. But they do not have the worth that is being charged for
them in this bait-and-switch exercise by Ed Business.
After further thought, I'd compare my nephew's two courses to on-line traffic school: Mechanized "learning" – forget it all
as soon as the test is over – Critical thinking not required. Except for the kind of "test preparation" critical thinking that
teaches one to spot and eliminate the obviously wrong choices in objective answers–that kind of thinking saves time and so is
very helpful.
Not only is he paying full tuition to receive this treatment, but his family and mine are paying taxes to support it, too.
Very useful preparation for later life, where we can all expect to attend traffic school a few times. But no preparation for
any activity of conceivable use or benefit to any other person.
I read recently that the business establishment viewed the most important contribution of colleges was that they warehoused
young people for four years to allow maturing.
Where are the young people in all this? Is anyone going to start organizing to change things? Any ideas? Any interest? Are
we going to have some frustrated, emotional person attempt to kill a university president once every ten years? Then education
can appeal for support from the government to beef up security. Meanwhile the same old practices will prevail and the rich get
richer and the rest of us get screwed.
The reason students accept this has to be the absolutely demobilized political culture of the United States combined with
what college represents structurally to students from the middle classes: the only possibility – however remote – of achieving
any kind of middle class income.
Really your choices in the United States are, in terms of jobs, to go into the military (and this is really for working class
kids, Southern families with a military history and college-educated officer-class material) or to go to college.
The rest, who have no interest in the military, attend college, much like those who wanted to achieve despite of their class
background went into the priesthood in the medieval period. There hasn't been a revolt due to the lack of any idea it could function
differently and that American families are still somehow willing to pay the exorbitant rates to give their children a piece of
paper that still enables them to claim middle class status though fewer and fewer find jobs. $100k in debt seems preferable to
no job prospects at all.
Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase stocks,
bonds, and real estate. College administrators and their lackeys (the extended school bureaucracy) are propping up another part
of the financial sector – just take a look at Harvard's $30+ billion endowment, or Yale's $17 billion – these are just the top
of a very large heap. They're all deep into the financial sector. Professors and students are simply there as an excuse for the
alumni money machine and real estate scams to keep running, but there's less and less of a reason for them to employ professors,
and I say this as a PhD with ten years of teaching experience who has seen the market dry up even more than it was when I entered
grad school in the early 2000s.
"Colleges have become a way for the ruling class to launder money into supposed non-profits and use endowments to purchase
stocks, bonds, and real estate. "
Unorthodoxmarxist, I thought I was the only person who was coming to that conclusion. I think there's data out there that could
support our thesis that college tuition inflation may be affecting real estate prices. After all, justification a college grad
gave to someone who was questioning the value of a college degree was that by obtaining a "a degree" and a professional job, an
adult could afford to buy a home in major metropolitan hubs. I'm not sure if he was that ignorant, (business majors, despite the
math requirement are highly ideological people. They're no where near as objective as they like to portray themselves as) or if
he hasn't been in contact with anyone with a degree trying to buy a home in a metropolitan area.
Anyways, if our thesis is true, then if home prices declined in 2009, then college tuition should have declined as well, but
it didn't at most trustworthy schools. Prospective students kept lining up to pay more for education that many insiders believe
is "getting worse" because of widespread propaganda and a lack of alternatives, especially for "middle class" women.
It's hard to say, but there ought to be a power keg of students here primed to blow. And Bernie Sanders' proposal for free
college could be the fuse.
But first he'd have the light the fuse, and maybe he can. He's getting huge audiences and a lot of interest these days. And
here's a timely issue. What would happen if Sanders toured colleges and called for an angry, mass and extended student strike
across the country to launch on a certain date this fall or next spring to protest these obscene tuitions and maybe call for something
else concrete, like a maximum ratio of administrators to faculty for colleges to receive accreditation?
It could ignite not only a long-overdue movement on campuses but also give a big boost to his campaign. He'd have millions
of motivated and even furious students on his side as well as a lot of motivated and furious parents of students (my wife and
I would be among them) - and these are just the types of people likely to get out and vote in the primaries and general election.
Sanders' consistent message about the middle class is a strong one. But here's a solid, specific but very wide-ranging issue
that could bring that message into very sharp relief and really get a broad class of politically engaged people fired up.
I'm not one of those who think Sanders can't win but applaud his candidacy because it will nudge Hillary Clinton. I don't give
a fig about Clinton. I think there's a real chance Sanders can win not just the nomination but also the presidency. This country
is primed for a sharp political turn. Sanders could well be the right man in the right place and time. And this glaring and ongoing
tuition ripoff that EVERYONE agrees on could be the single issue that puts him front-and-center rather than on the sidelines.
I finished graduate school about three years ago. During the pre-graduate terms that I paid out of pocket (2005-2009) I saw
a near 70 percent increase in tuition (look up KY college tuition 1987-2009 for proof).
Straight bullshit, but remember our school was just following the national (Neoliberal) model.
Though, realize that I was 19-23 years old. Very immature (still immature) and feeling forces beyond my control. I did not
protest out of a) fear [?] (I don't know, maybe, just threw that in there) b) the sheepskin be the path to salvation (include
social/cultural pressures from parent, etc.).
I was more affected by b). This is the incredible power of our current Capitalist culture. It trains us well. We are always
speaking its language, as if a Classic. Appraising its world through its values.
I wished to protest (i.e. Occupy, etc.) but to which master? All of its targets are post modern, all of it, to me, nonsense,
and, because of this undead (unable to be destroyed). This coming from a young man, as I said, still immature, though I fear this
misdirection, and alienation is affecting us all.
This is about neoliberalism, not about the structure of the university education and the amount of social courses required
to get an STEM degree. The article is a baloney in this sense. And because neoliberalism defy regulation Google and
Facebook were able to built " amazingly sophisticated, computer-driven engines for extracting users' personal information
and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and
opaque to everyone except the companies themselves."
Notable quotes:
"... Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting users' personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely unregulated and opaque to everyone except the companies themselves. ..."
"... Democracy in America ..."
"... All of which brings to mind CP Snow's famous Two Cultures lecture, delivered in Cambridge in 1959, in which he lamented the fact that the intellectual life of the whole of western society was scarred by the gap between the opposing cultures of science and engineering on the one hand, and the humanities on the other – with the latter holding the upper hand among contemporary ruling elites. Snow thought that this perverse dominance would deprive Britain of the intellectual capacity to thrive in the postwar world and he clearly longed to reverse it. ..."
"... Lack of education in the humanities is not the reason for misuse of the tech giant's products, as the author so emphatically states. It simply comes down to greed. That human drive to make more, more and more leads them to overlook things for the sake of making more. A class in political science or sociology is not going to change that. ..."
"... Zuckerberg and similar folks are guilty of the same thing that most people are - greed. Monetary greed is just one part. ..."
"... As for education, it's not easy to get an engineering or comp sci degree. But while you are getting hammered in classes that are far more complex than most other things taught on the campus, you do indeed have to take a variety of other non-technical electives outside of your technical major to complete the overall curriculum. ..."
"... This likely has been pointed out already, but the American University system requires all students to take a core of humanities classes regardless of major. SO they actually have been exposed to, most likely, a fair number of Western Civ, History, and Literature courses. Their deficiency I think lays more in the utopian roots of the internet and technology development of the 1990s. They have been strangely naive and ruthless at the same time, and its changing human interactions and society sometimes for the better and sometimes for the worse. ..."
"... Wow, if there ever was an example of why Trump won, the utter and complete self righteousness of the American liberal, this post is it. Congratulations. ..."
"... If you've every hung out in Silicon Valley with techies you'd know that mild sociopathy is indeed likely part of the problem. ..."
"... Capitalists will do what capitalists do. So ignoring social consequences in the pursuit of money is baked-in. Doesn't matter what your education is. In fact, class has more to do with their blindness than the lack of a liberal arts education. ..."
"... It ties in with what many of the fake-news-complainers are reluctant to discuss: there is an ocean of sociological/economic 'facts' that exist somewhere between 'easily-provable lie' and 'this may be a lie to the elite, but it is a true fact for the unwashed masses'. and in tandem with that: the uneasy questions about censorship that come with *any* attempt at regulating the press. ..."
"... This is too simple. The development of critical thought is the key thing and it isn't monopolized by any discipline. People without any qualifications and without much education can - and do - exercise critical ability. The problem is a cultural one. Consumerism and the pretend world in which people 'think' they can be what they want and live in make believe soaps is the problem. ..."
"... "If you have an issue with tech giants messing around with your personal data, don't give them your personal data." They'll take your personal data, regardless. Because they make money from selling it. ..."
One of the biggest puzzles about our current predicament with fake news and the weaponisation of social media is why the folks
who built this technology are so taken aback by what has happened. Exhibit A is the founder of Facebook,
Mark Zuckerberg
, whose political education
I recently chronicled . But he's not alone. In fact I'd say he is quite representative of many of the biggest movers and shakers
in the tech world. We have a burgeoning genre of "
OMG, what
have we done? " angst coming from former Facebook and Google employees who have begun to realize that the cool stuff they worked
on might have had, well, antisocial consequences.
Put simply, what Google and Facebook have built is a pair of amazingly sophisticated, computer-driven engines for extracting
users' personal information and data trails, refining them for sale to advertisers in high-speed data-trading auctions that are entirely
unregulated and opaque to everyone except the
companies themselves.
The purpose of this infrastructure was to enable companies to target people with carefully customised commercial messages and,
as far as we know, they are pretty good at that. (Though
some advertisers
are beginning to wonder if these systems are quite as good as Google and Facebook claim.) And in doing this, Zuckerberg, Google co-founders
Larry Page and Sergey Brin
and
co wrote themselves licenses to print money and build insanely profitable companies.
It never seems to have occurred to them that their engines could be used to deliver ideological and political messages
It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological
and political messages to voters. Hence the obvious question: how could such smart people be so stupid? The cynical answer is they
knew about the potential dark side all along and didn't care, because to acknowledge it might have undermined the aforementioned
licenses to print money. Which is another way of saying that most tech leaders are sociopaths. Personally I think that's unlikely,
although among their number are some very peculiar characters: one thinks, for example, of Paypal co-founder
Peter Thiel – Trump's favourite techie; and Travis Kalanick, the founder of Uber.
So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational
backgrounds. Take the Google co-founders. Sergey Brin
studied mathematics and computer science. His partner, Larry Page, studied engineering and computer science. Zuckerberg dropped out
of Harvard, where he was studying psychology and computer science, but seems to have been more interested in the latter.
sWhy Facebook is in a hole over data mining | John Naughton
Now mathematics, engineering and computer science are wonderful disciplines – intellectually demanding and fulfilling. And they
are economically vital for any advanced society. But mastering them teaches students very little about society or history – or indeed
about human nature. As a consequence, the new masters of our universe are people who are essentially only half-educated. They have
had no exposure to the humanities or the social sciences, the academic disciplines that aim to provide some understanding of how
society works, of history and of the roles that beliefs, philosophies, laws, norms, religion and customs play in the evolution of
human culture.
We are now beginning to see the consequences of the dominance of this half-educated elite. As one perceptive observer
Bob O'Donnell puts it, "a liberal arts major familiar
with works like Alexis de Tocqueville's Democracy in America , John Stuart Mill's
On Liberty , or even the work of ancient
Greek historians, might have been able to recognise much sooner the potential for the 'tyranny of the majority' or other disconcerting
sociological phenomena that are embedded into the very nature of today's social media platforms. While seemingly democratic at a
superficial level, a system in which the lack of structure means that all voices carry equal weight, and yet popularity, not experience
or intelligence, actually drives influence, is clearly in need of more refinement and thought than it was first given."
All of which brings to mind CP Snow's famous
Two Cultures lecture, delivered in Cambridge in 1959, in which he lamented the fact that the intellectual life of the whole of
western society was scarred by the gap between the opposing cultures of science and engineering on the one hand, and the humanities
on the other – with the latter holding the upper hand among contemporary ruling elites. Snow thought that this perverse dominance
would deprive Britain of the intellectual capacity to thrive in the postwar world and he clearly longed to reverse it.
Snow passed away in 1980, but one wonders what he would have made of the new masters of our universe. One hopes that he might
see it as a reminder of the old adage: be careful what you wish for – you might just get it.
Lack of education in the humanities is not the reason for misuse of the tech giant's products, as the author so emphatically
states. It simply comes down to greed. That human drive to make more, more and more leads them to overlook things for the sake
of making more. A class in political science or sociology is not going to change that.
Middle and high school in the US need to tackle more philosophy, history and other humanities instead of force feeding kids test
material for them to simply memorize. Then, lo and behold, by the time kids get into university, they may already have grasped
the basics of human analytical skills. Why wait till further education?
Wtf? All this hue and cry that Facebook has "ruined" democracy ... and I see you've actually bought into it. Holy cow, who knew
a few hundred thousand $$ gets Brexit and Trump done while $1 billion in actual adverts cannot elect Clinton?
Goodness, that's some powerful analytica, no? You guys should really hear yourselves ... you sound utterly deranged by this
Trump thing!
If we are all concerned, we can remedy 'the problem'. Chuck Cable, ( I did 7 years ago), get off facebook, twitter and the like.
We are all subject to the marketing, the allure of 'like' thinking, etc. Yet we need to 'grow up' mature, and be concerned about
this path. Our youth is our hope, but if they are indoctrinated and sucked into the social network mess, I do not see a future
or much hope. Yes, it is all about marketing, greed, and ego. Pretty difficult to overcome. Soul searching, integrity, and sincere
concern for democracy is crucial.
It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted
ideological and political messages to voters. Hence the obvious question: how could such smart people be so stupid?
So stupid? Is the author claiming to have known this in advance of it happening?
A yes...science. "Once they go up, who cares where they come down, that's not my department, says Werner Von Braun" (Tom Leher)
Man kind has always been willing to subjugate it's essential humanity for the elusive goal of "progress". The computer age is
no different.
Well, actually , they did. Slaves were not allowed to vote in the UK either. And, one must remember, it was the UK that introduced
slavery to North America which was, after all, a British colony ruled by British courts and British jurisprudence at that juncture.
Anyone who finishes engineering cannot be classified as a dim bulb. It's only understood by those that go through it how difficult
it is in comparison to other things. The complexity is hard to explain to anyone outside of it. Most people fail out or quit,
literally, and those are the ones that at least gave it a try. I watched many such people go on to the business or other schools
and rush a frat and barely study and ace their courses. They said straight up that it wasn't even close.
Zuckerberg and similar folks are guilty of the same thing that most people are - greed. Monetary greed is just one part.
Additionally, there's a ton of ego there to want to do things others haven't done or can't do or aren't doing, but ego is not
exclusive to the tech industry. They were negligent in looking the other way while their products were exploited and they hid
under freedom of speech, providing a functionality that isn't necessarily tied with or promotes nefarious conduct so they aren't
responsible when it does. There's no shortage of this through years - radio, TV, nuclear power, guns, drug paraphernalia, chemicals,
photo copiers, MP3 players and file copying services like Napster, on and on. It's not just technical items.
It's all about making money. Twitter is sitting back absolutely loving every Trump tweet, while individually at least some
or many of the people there hate the actual tweets themselves or at least think the POTUS should be communicating in a better
manner and put this ad hoc approach aside. I don't know of too many that think he's doing good things for the country or world
or even his self image and reputation with it and should continue. But for Twitter it promotes their product and service and stock
and pay check and bonus and livelihood. So the greed wins out.
As for education, it's not easy to get an engineering or comp sci degree. But while you are getting hammered in classes
that are far more complex than most other things taught on the campus, you do indeed have to take a variety of other non-technical
electives outside of your technical major to complete the overall curriculum. But there's only so much you can do, only so
much time and interest. You can't necessarily expect each and everyone to be incredibly well rounded without at least sacrificing
their ability to focus and specialize in their strength and interest. Pretty much every doctor I've met is aloof to some degree.
Accountants have trouble thinking outside the strict confines of the accounting box. I know plenty of lawyers who aren't great
with technology or computers. And few people in those professions that are also incredibly versed in the things the author mentions.
Few have time to be once life and family kicks in.
This likely has been pointed out already, but the American University system requires all students to take a core of humanities
classes regardless of major. SO they actually have been exposed to, most likely, a fair number of Western Civ, History, and Literature
courses. Their deficiency I think lays more in the utopian roots of the internet and technology development of the 1990s. They
have been strangely naive and ruthless at the same time, and its changing human interactions and society sometimes for the better
and sometimes for the worse.
He said he was "half educated" not because he finished only half of his comp sci degree (or even psychology) but because he wasn't
educated in other subjects that may have given him insight into human behavior and sociology. There may be some truth to that
but it seems kind of a stretch since pretty much most people are as he describes; he just seems to be picking on Zuckerberg since
he developed something with such huge influence and is now on the hot seat for being at least naive if not deliberately looking
the other way while his platform was used in ways he probably didn't envision or want but made them a ton of money. Most people
aren't really that educated or versed in the things the author mentions, and that includes many people outside of the tech industry
who could never accomplish what Zuckerberg or others have accomplished.
A 4-year engineering degree already takes 5 years to complete (at least for a dim bulb like myself). We already have to take a
bunch of non-technical social science, history, and English "core" classes.
Way to miss the point. Zuckerberg is poorly educated in understanding human behavior. I could've told these tech yokels exactly
what was becoming of their practices.
It's no coincidence that the people I know who eschew things like Twitter and Facebook are the techy people who can remember
the internet in the good ol' days when the maxim was "don't tell anyone anything about anything".
God, I remember that feeling. Still on a modem and proudly watching people excitedly get into the Internet. And then I watched
on in utter horror as they give away their real names. I didn't understand why people didn't understand. You can discard a mask
- you can't discard your face!
And you fail to realize that your existence is not, never has and never will be an island that removes you from the rest of humanity.
It is irrelevant to the rest of us if you volunteer to be ignorant of the rest of us, and yet you think that only if everyone
else was like you the problem would be solved.
Sorry but, our existence is inherently governed by the fact that we are social animals and part of an Earth based biosphere
and politically that requires we show more than smug diffidence. I realise that religions have spent the last 2000 years or so
trying to separate us from each other and nature, by pretending we have individual souls far more important than our collective
being, but that's not an excuse either.
"While seemingly democratic at a superficial level, a system in which the lack of structure means that all voices carry
equal weight, and yet popularity, not experience or intelligence, actually drives influence, is clearly in need of more refinement
and thought than it was first given"
Erm. The inevitable effect of connection-seeking in a low friction environment is called The Singularity and people have
been warning about it for at least the last couple of decades now.
Congratulations. You've recognized the Problem. Now, if you really want to look smart, explain why nobody involved wants to
implement the Solution...
I have a feeling your poor friends get the Big picture while you dont. Trumps get elected while you are offline. Brexit happens
while you are offline cause Cambridge Analytica and Farage .. well they work hard at protecting certain interests. And so on..
is about information wars and power. And their consequences on democracy. And you might not be immediately affected If you are
white male and from an OK bakground. If you are privileged and well off maybe even your children will make it in the offline bubble.
But what about the rest?
The UK history on democracy isn't exactly a roll call of enlightened thinking either. The only gains were made by often violent
demonstrations by The Chartists and Suffragettes. But at least the UK never banned black people from voting.
You are not a nice person. Thinking that people you imagine aren't as intelligent or don't see the world the way you see it deserve
dieing from poverty or opioid overdoses is quite unpleasant.
Sure, pick on the engineers. They make more money than you do. But if your half-courage took a leap forward, you'd target the
quarter-educated people who are driving this because they control the spending. But then, they're also the people you're asking
for a job aren't they?
Wow, if there ever was an example of why Trump won, the utter and complete self righteousness of the American liberal, this
post is it. Congratulations.
You never had a "democracy" ... or if you had one, it was in the very dim past and limited to propertied men ... in recent
times, you've had a two-party oligarchy managed by military-tech corporations. Oh, those good old days of limited choice and Vietnam,
how can we ever go back to those, amirite?
Gosh, I guess they were not joking when they talked about the "global village" ... and anyone knows a village is full of gossip
and half-truths.
I feel like almost every other day i need to point out to my hyperventilating Russia-fearing friends that you all do realize
that all of this online-ness is voluntary, right? That a person can have a complete and real existence with no Facebook profile,
not Tweet, none of that? I'm one such person, and I work in tech.
Are media companies prevented by regulation from reporting "fake news". In any supermarket you'll spot newspapers with headlines
to the effect that "My Mother-in-Law is a Space Alien". Now, while I'd guess that is true some of the time, I have a hard time
believing that there are really that many space aliens around harassing their earthling inlaws. I'm not aware that that reporting
is regulated. Are you saying it is?
The vow claimed by Brin and other Google founders, "Do No Evil," should have been a warning. In a New Yorker piece on tech's influence
on the election last summer, a Facebook employee was quoted as saying, "We joke about who we should give the election to." It
has recently come out that as Apple, the most traitorous of all the giant tech corporations that are a product of the American
educational system (before it was strangled by Republicans like Trump and Betsy DeVos), traitorous because they pay no corporate
taxes in the U.S., had an opportunity to choose between making phones and PDAs addictive pleasure machines or responsible news
devices. They chose addictive pleasures, because it's obviously more profitable, like McDonald's supersizing its French fries
and sugary drinks.
They've created a generation of Americans who will swallow anything that's fed to them ("It must be true. I read it on the
Internet."). These are the people who love Trump, who don't understand or care about the Constitution or the Bill of Rights and
would probably vote against them in a referendum (which some Republicans have promoted as a new Constitutional Convention). Their
minds have become morbidly obese, filled with Angry Birds and empty Twitter posts that leave them unable to comprehend ideas that
take more than 140 characters to express.
Such people deserve their fate (poverty, death by opioids), but it's tragic and evil that they are wrecking the planet with
climate change denial (which, of course, justifies unregulated pollution), science denial (in which Evangelical Christians commit
the child abuse of denying evolution and trying to prohibit its teaching.Such Fake Christians also reject most of Jesus' liberal
teachings.)
Here in the SF Bay Area it's hard to avoid knowing some of these techies. They aren't all clueless about social interaction,
arrogant, selfish, and contemptuous of other people--only 90% of them. The remainder scratch their heads, smile, cash their paychecks
and stock options, and retire to multimillion dollar ranches to write cookbooks and make wine.
So now we have a population of tech geeks who don't know much but think they know everything, who spout "Do No Evil," while
doing the ultimate evil--making a world unsafe for democracy but a pleasure palace for the rich, using a technology that is a
uniquely American product of an educational system that was once a shining example and is now in shambles to destroy the dream
of democracy that America used to champion, but does no longer.
It makes the coming Chinese domination of the world seem like cosmic justice, doesn't it?
More degrees in the humanities is no antidote to or remedy for amoral/harmful tech and those who create and market it. Nor is
this a problem of white privilege and lack of inclusiveness -- minorities run after tech goodies with the same glee as everyone
else.
Schools and just about everyone are promoting STEM degrees as the way to a good job and prosperity, and I don't foresee
anybody creating jobs for philosophers to warn us against new tech developments.
This is one of those dangers that people don't foresee. They only see it when it's happened. Now it has; depending on how bad
the fallout, the pushback and regulation will follow. Not sure if it will be sufficient, though. Especially under an Administration
with little respect for facts or truth while it pursues the maximum dollar gain from the government before skedaddling.
If you've every hung out in Silicon Valley with techies you'd know that mild sociopathy is indeed likely part of the problem.
But the argument that it's because their education lacked learning about history or society is a bit silly when you consider
the bulk of the population has probably not studied such disciplines beyond high school and some of the greatest engineers who
invented or built some of the most important creations in history lacked a degree in the humanities.
What differentiates past engineering eras from present is political and societal will to ensure inventions are used for the
good of humanity. In short, a lack of regulation in the face of rampant neo-liberal capitalism that has enthralled the politicians
who should be looking out for the public, not themselves and their cronies.
Facebook et al should long ago have been classified as media companies and regulated as such. Start hitting Zuckerburg with
billions in fines and/or the threat of regulating him out of business and you'd very quickly see those much vaunted algorithms
and engineering prowess spring into action to tackle the fake news and propaganda epidemic.
Ahh, yeah Aruler...thanks for that....I think....!
If you read this article and his former article on the subject(a big if), then you would be able to enlighten us on exactly
what Laughton means by such comments as below. I actually completed my degree and so am 'fully educated but still struggle with
the logic:-
"the hero's education rendered him incapable of understanding the world into which he was born. For although he was supposed
to be majoring in psychology at Harvard, the young Zuckerberg mostly took computer science classes until he started Facebook
and dropped out
Your post referenced economics, not social issues.
It seems that once the State expands to the size it is now (~43% of GDP is directly spent by government) then virtually everything
becomes political: economics, politics, social.
(ps if i've got this horribly wrong and libertarianism as a word has just been coopted to mean 'minarchist' i apologise)
I suppose it depends on how you define "libertarian". I, and most of the theorists I read, see it as a quite broad label which
stretches from anarchism at one (extreme) end, to small-state minarchism at the other.
And yes, I am "right-wing" in terms of economics (though fascism, typically described as a "far-right" movement, is actually
quite far-left in terms of economics, which is why I try to avoid debating these matters in terms of left/right. But when people
self-describe that way, one doesn't have much choice).
So, yes, I prefer no (or minimal) State involvement in areas of the economy that it is possible to have private suppliers compete
against each other. So that includes healthcare (but not all healthcare; the time-critical nature of A&E services means
they are not amenable to real competition), education, and various other things most people are used to having provided by their
governments.
But the "natural monopolies" (things like roads/railways/pipelines/sewers) can't really be provided by competing suppliers,
so it's reasonable that they are owned (but not necessarily run) by the State. So taxes need to be raised to pay for those things.
Unlike most minarchists, though, I see outright, allodial land ownership as unjustifiable (it's a capital good that no one
created, and thus no-one can claim rightful ownership). So in that regard also I'm quite left-wing.
Capitalists will do what capitalists do. So ignoring social consequences in the pursuit of money is baked-in. Doesn't matter
what your education is. In fact, class has more to do with their blindness than the lack of a liberal arts education.
yeah, but if you read this article (big if) he's calling him 'half-educated' because he has a shoddy background in social systems
that has left him ignorant of a vast body of historical knowledge and political theory, not because he didn't finish his degree.
maybe you should try reading the article and/or writing comments relevant to it...
If it were the Iate 15th century there would be a similar article decrying the printing press and if the 19th, the postage stamp.
Newspapers have been targeting a partisan readership long before social media came along and all controlled & managed by humanities
graduates. Conrad Black & Boris Johnson hardly exemplars of a solid grounding in humanities leading to informed decision making
overcoming self interest.
this half-baked education has left him bewildered and rudderless
He is now claiming that Zuckerberg is 'half-educated'. Just because he did not complete his degree?! This surely does not make
him half-educated? Does that mean that those who do not have a degree are not educated? This smells a little of scholastic snobbery
from our former Cambridge University graduate and Vice President !
What's so appalling is that I don't even think they have the slightest inkling that what you've just posted is the absolute reality
of these types.
They are so convinced they're right, and that everything they think must prevail, that they simply ignore democracy and anything
else that shows that they're actually completely wrong.
You mean you're not economically right wing? Minimal taxes, less state intervention in the economy (including health), etc? Your
post referenced economics, not social issues. Socially we agree on a lot, probably nearly everything to be honest - I'm all for
legalising based on harm caused by drugs, less military, anti snooper's charter/surveillance, etc, but I like taxes and I like
the NHS, and that is where I think you're right wing and I am left! (ps if i've got this horribly wrong and libertarianism as
a word has just been coopted to mean 'minarchist' i apologise)
....Yes, to a certain extent that can happen via reading, but the biggest check on privilege and self-satisfaction is actually
engaging with actual other people who don't share that privilege. And that just isn't happening at Stanford and Harvard....
As someone who grew up both first-world-poor and a nerd i cannot expres in words how much i hate that 'the elite' keeps insisting
that *the truth* about life and love and everything can only be found in a mixture of greec classics and trips to india. You are
only 'enlightened' if you have the time and money to read those books and make those trips and most importantly: if you come home
from all that with the right opinions about detesting money, detesting xenophobia, etc.
they pat themselves on the back any time they listen to what they insist is 'an outsider' but is just someone of a different gender/color
parroting back their own believes.
It ties in with what many of the fake-news-complainers are reluctant to discuss: there is an ocean of sociological/economic
'facts' that exist somewhere between 'easily-provable lie' and 'this may be a lie to the elite, but it is a true fact for the
unwashed masses'. and in tandem with that: the uneasy questions about censorship that come with *any* attempt at regulating the
press.
This is too simple. The development of critical thought is the key thing and it isn't monopolized by any discipline. People
without any qualifications and without much education can - and do - exercise critical ability. The problem is a cultural one.
Consumerism and the pretend world in which people 'think' they can be what they want and live in make believe soaps is the problem.
"If you have an issue with tech giants messing around with your personal data, don't give them your personal data."
They'll take your personal data, regardless. Because they make money from selling it.
"A "liberal arts" education is now a selling point in some schools." Presumably schools from families so wealthy, the children
will never have to worry about competing with 6 billion other people for a job someday.
The author concerns are naive and misplaced (although he probably advocated the interests of the group to which he belongs).
MBA, Master of Business Administration gradates are indoctrinated neoliberals. This is about neoliberalism, not about the structure
of the university education and the amount of social coursers required to get an STEM degree.
Notable quotes:
"... First off, full disclosure: I'm in tech, so I'm an insider. I also absolutely agree that tech has a huge, huge problem with understanding the consequences of our actions. But it's a little bit naïve to act as though taking another year or two of humanities classes would magically prevent tech leaders from making antisocial products. ..."
"... Trump is the quintessential Exceptional American, weaponized. The Trump Organization constructed more than 180 skyscrapers and major properties worldwide within every cesspool of political, military, religious, organized crime, and civil corruption. Trump is the toughest SOB on the planet - and the most experienced. And he's ours. I stand with Trump. ..."
"... "It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted ideological and political messages to voters." That was supposed to be reserved for exclusive use of the Democratic Party. ..."
"... The writer clearly does not know much about the US higher education system where engineers and scientists cannot get away without taking humanities courses, unlike the UK. ..."
Power and influence are not just a battle between STEM and Humanities, though. You've missed the MBA, Master of Business Admistration.
They are the ones who control everything now.
It may have been the case some decades ago, but now it is Managerialism, in the guise of a whole ideology that has sprung from
MBA's, that rules over both the STEM and Humanities workers.
From mid- and large- private companies, to the public sector, they all speak the same language and it is the language of the
MBA. Corporate visions of embracing customer focused cost control while empowering our core mission values.
Time for an article on Managerialism, as it is the air we breathe these days.
Your username rather contradicts the assertions you make about your political orientation..
Well let's have a look at some typical libertarian policies. Recreational drugs decriminalised. The dismantling of the surveillance
State. Stop covering for Israel's crimes in the UN. A much-reduced military that was for purely defensive purposes. How're they
"right-wing", exactly?
My recent example is saying "It's like Quixote tiltiing at windmills" only to find the others, 6 or 7 people all with Firsts in
STEM had no idea what I was on about. Also saying "It's far too Heath-Robinson" had the same effect.
It does dismay me how clever many of my colleagues are, but how painfully narrow their knowledge is. They study their subject
(and I suspect most of that is just for career development i.e. love of money rather than knowledge) but little else.
Our culture has a bad attitude to wisdom in general. Each generation is taught to disregard the old timers, what can they possibly
know about anything?
I guess it's all how the plutocracy like it. Their media can tell us that the Crusades were a defensive war and nobody knows
enough to disagree. They can continually role out nonsense about the "good guys and the evil guys" to explain world problems and
again, nobody knows anything other than that.
Democracy is a political philosophy. Socialism is an economic theory.
Socialism is not an "economic" theory. Socialism (and I use the term in its original, Marxist sense: State ownership & control
of the means of production, distribution, and exchange) has absolutely no economic theory behind it. Nowhere did Marx tell his
followers how to run their economies; after they'd won, the Bolsheviks and Maoists were on their own. No wonder millions starved.
It's impossible to make rational economic calculations in a socialist commonwealth because there is no price signal mechanism.
Hence communist countries' famous gluts and shortages.
At its height, despite the fact its economy was much simpler than any here in the West's, economists of the USSR were setting
the prices of more than 5 million items, and even they admitted it would have been impossible without knowing (and copying) the
prices that arose in our (relatively) free-market economies.
In fact, they joked that once "the revolution" was complete and communism had taken over the world, they'd be required to have
some small country remain free-market capitalist so they could have some clue about what prices should be.
And I have no idea of who concocted the "famous quote".
Lulz. You walked into that one: Alexis de Tocqueville
I can't up-vote this enough. MIT, for example, requires eight semesters of humanities for all undergraduates, regardless of major.
If you talk to the faculty in the humanities dept, they'll tell you how much they enjoy teaching there, because they get really
intelligent students who can think rigorously. (And also because they're almost all tenured professors -- not underpaid "adjuncts".)
Yes, there are a certain percentage of students who meet the stereotype of being socially awkward and not very interested in
thinking about things outside of their science and technology focus, but they're not the majority and are more than balanced by
the bulk of the student body who could hold their own in any liberal arts program in the world.
We live in a plutocracy and we get the tech that the plutocrats want us to have. Drives on diversity aren't working because
those non-white-upper-middle-class-males who get the roles, are those who behave exactly the same as the white-upper-middle-class
elite. So the changes are literally skin deep.
Sadly, most of the women I've encountered at the top of the corporate tree have either been there through nepotism (e.g. MD's
daughter or mistress) or been promoted way beyond their level of competence and have compensated for that with drink, drugs or
appalling bullying.
The educated, savvy women all seem to baled out long before they reach that level!
Harvard required class of 1964 freshmen to read the published version "The Two Cultures" the summer before they matriculated.
The general knowledge of college friends who were scientists and mathematicians (and went on to become university professors)
was at least equal to other friends specializing in social sciences and humanities, because suburban American high schools in
wealthy communities provide a good general education up to age 18, not 16 as in British public, comprehensive and grammar schools,
and because American university courses require a large fraction of a student's course work lie outside their department of specialization.
Snow wrote about the British system. He deplored the willful scientific ignorance of many members of the British Civil Service
of this acquaintance. His comments were not intended for or relevant to the American experience. A bright American student, as
these computer tech executives' work histories show they must have been, will have gained familiarity with both "cultures" by
the time they started their college courses. Their college experiences will have built upon this familiarity.
In my opinion It is inappropriate to blame the failure to regulate internet speech properly upon the education of American
tech leaders. Corbyn and whoever replaces Trump will remedy theunderlying issues because they know unregulated capitalism cannot
be trusted to act responsibly.
But often the customers don't know exactly what they want and constantly want to make changes.
True. "It's just what we asked for, but it's not what we want!", viz. Nimrod. And sometimes a supplier provides a system that
they say is perfect for the task required, yet once it's installed it clearly is nothing of the sort. The customer's ex-MD retires
to the sun, counting his backhander and giggling hysterically. I've encountered that more than once during my career, too.
So what about those teaching and learning 'digital humanities', is this subject then a contradiction in terms? Surly these divides
are redundant as subjects become multi disciplinary in our digital age, each will influence the other in new and interesting ways.
There is no uninventing available to us here only the effort in rebalancing in how we value what it is to be human.
First off, full disclosure: I'm in tech, so I'm an insider. I also absolutely agree that tech has a huge, huge problem
with understanding the consequences of our actions. But it's a little bit naïve to act as though taking another year or two of
humanities classes would magically prevent tech leaders from making antisocial products.
For one thing, more people in tech have humanities backgrounds than you might think (I do--I'm a software developer and educator
with a BA from Stanford and am finishing an MSEE, and I have a fair number of colleagues with similarly mixed educational backgrounds).
For another, Mark Zuckerberg founded Facebook when he was was what, 20? It's foolish to act like you can turn a 20-year-old, *any*
20-year-old, into a wise and thoughtful human who can understand all the consequences of their actions by sticking them in a classroom
for another year or two. I certainly was a moron when I was 20. Shockingly, I was also a moron when I was 22. College kids just
still have a lot of growing up to do.
Don't get me wrong, I work a lot with high schoolers and university students, and I'm a very big proponent of education. But
the thing that makes the biggest difference in knocking adolescent heads is exposing kids to people that aren't like them. Yes,
to a certain extent that can happen via reading, but the biggest check on privilege and self-satisfaction is actually engaging
with actual other people who don't share that privilege. And that just isn't happening at Stanford and Harvard.
I'm white and the child of college-educated parents; at Stanford I still felt out of place, weird, and poor. I was surrounded
by people who went to skiing in Switzerland at Christmas and had boats; it wasn't a world I was familiar with or understood. That
effect is only magnified for kids of color or from more marginalized backgrounds, sprinkled lightly across classrooms that are
overwhelmingly white and privileged. The idea that a white, middle-class kid -- even a gay female kid like me -- would be right
near the bottom of the privilege scale I think tells you just about everything about that university culture that you need to
know.
What's happening in tech is part of the sickness of our entire social and economic system; it's a toxic mixture of privilege
perpetuating privilege, in terms of race and class and gender and money and access. Tech doesn't create antisocial products by
itself. Having a lot of rich white kids sitting around discussing Plato in a classroom might make them more well-rounded on paper,
but if you then still funnel them then into a money sea dominated by bro culture and VCs, with no necessity or encouragement to
engage with people who live outside that bubble, you're still going to get people who are shocked, shocked!! to learn that their
products have negative consequences for the lives of the people on the other side of the screen. Lots of *workers* in tech do
partially bridge that gap, in one way or another. But the people at the top, making the decisions, are selected overwhelmingly
by being white dudes who fit the "poorly socialized iconoclast" mold that VCs understand and then massively isolated by the enormous
*heaps of cash* that investors have thrown at them to make something the investors think will get them the best return on their
investment. *No part* of that is good for society writ large, beginning to end, in very large part because investors have no reason
to care what happens to anyone else.
Here's an example! At this stage, anyone in tech who doesn't think that they're working on making every worker in the world,
*including themselves*, obsolete, is deluding themselves. But most of us *do* know that and keep showing up for work, because
we don't know any other way of paying our bills. We know that social and political action is needed, a lot of us are agitating
for precisely that, but we can't do it on our own, and we have a pretty realistic idea about what kind of future lies for us and
our families if we just decide to walk away from the industry. I'm a little too old to really be a millennial, but this is the
rock and the hard place, for people even 3 years younger than I am, who graduated from college just in time for the crash: if
you're in tech, you're keeping your head above water, barely. If you're not, you're working constantly with no benefits or security,
just so you can live with your parents and form a punchline about avocados.
If you want to check tech, you need *political will.* You have to check the money, because it's never going to check itself.
And if you want to make Silicon Valley actually become capable of making the utopian tech it likes to believe it can produce,
it also wouldn't hurt to check the *overwhelming* bias in tech hiring and in elite education towards people who are white, privileged,
and just like everybody else who's already there.
I once met a man in a Texas prison who was incarcerated for programming a banks software to divert small fractions of (rounded
off) pennies to his personal account. Those added up fast enough to get noticed.
Trump is the quintessential Exceptional American, weaponized. The Trump Organization constructed more than 180 skyscrapers
and major properties worldwide within every cesspool of political, military, religious, organized crime, and civil corruption.
Trump is the toughest SOB on the planet - and the most experienced. And he's ours. I stand with Trump.
Democracy is a political philosophy. Socialism is an economic theory. The two are not mutually exclusive. And I have no idea of
who concocted the "famous quote".
When you refer to someone as "Machiavellian" does an engineer understand? In the US there used to be a required college course
entitled "The History of Western Civilization". It formed a common bond somewhat like serving in the military.
"a liberal arts major familiar with works like Alexis de Tocqueville's Democracy in America, John Stuart Mill's On Liberty,
or even the work of ancient Greek historians, might have been able to recognise much sooner the potential for the 'tyranny
of the majority' or other disconcerting sociological phenomena that are embedded into the very nature of today's social media
platforms..."
Such a person would most have likely held their nose and voted for Trump, knowing the appalling damage Hillary had done during
her tenure in the State department.
The usual Graun assumption that it's only ignorance or selfishness that makes people eschew Leftists and their policies.
Sorry. Progressives are actually more ignorant about politics, economics and history, in my experience. I'm not "right-wing"
myself but far more of my right-leaning friends are likely to know who de Tocqueville was and what he wrote than my Lefty friends.
And most of them will know this rather famous quote:
"Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each
man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality.
But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude."
The old "two cultures debate", which in my student days was conducted between FR Leavis and CP Snow, has not advanced very
far. There is certainly something in it, but I suspect that the intellectuals of the sixteenth century, most of whom could be
found in monasteries, complained that Gutenberg would never have pressed ahead so carelessly with printing using moveable type
if he had had a proper grounding in Rhetoric and in Theology, instead of blacksmithing and goldsmithing...
After all... we went from Gutenberg printing in Strasbourg in 1445 to Martin Luther printing his 95 Theses in 1522...
I think we are seeing a similar democratisation of information today.
We can no more put the genie back in the bottle than could Sir Thomas More. If Zuckerberg, Page and Brin had not invented their
money machines, someone else might have done so.
The only political leader who is actively trying to control the genie is Xi Jinping, and he may not be entirely successful
in keeping up the Great Firewall of China.
I think we have to ride the wave, and keep in mind that political power itself is a matter of technology, as I am sure Marshal
McLuhan would point out.
The Great Dictators of the last century were creatures of the radio and the cinema, which allowed them a one sided conversation
with every household and made them bestride the silver screen.
Television replaced radio and cinema and with its more domestic scale it cut the monsters down to size and promoted democracy.
The social media have galvanised authoritarianism at the moment, but the wheels will continue to turn..
New Model: People who disagree with me are stupid.
Oh, and a column in The Guardian defending Mill's On Liberty ? Priceless.
By the way, the entire premise of the column is flawed. Harvard, like all US colleges, has requirements that students take
classes outside their major, including humanities. My
tech prowess allowed
to me find that out. :)
Translation/TL;DR version:
> Trump won despite the amount of shameless fear-mongering and short-selling we in the MSM did for Hillary and Dems.
> Tech companies did not do their part in preventing Trump victory by actively censoring everyone WE disagree with.
> We need OUR (SJW/Humanities/Marxist/LiberalArts) people to MANAGE/WATCHOVER these tech guys.
> Guys like Zucker/Brin/Page are not essentially evil, they are just not educate ENOUGH in SJW/Marxist agenda.
> Guys like Thiel are pure evil.
> WE KNOW BEST, hence, we must be allowed to control and manipulate what people think and how they act.
So what else could explain the astonishing naivety of the tech crowd? My hunch is it has something to do with their educational
backgrounds. Take the Google co-founders. Sergey Brin studied mathematics and computer science. His partner, Larry Page, studied
engineering and computer science. Zuckerberg dropped out of Harvard, where he was studying psychology and computer science,
but seems to have been more interested in the latter.
Science should left in the hands of the political elite, who know what's best for the people.
People need not be good at math to know when a politician is lying. By the humanities, they know a politician is lying because
their lips are moving. lol
Said this before in a reply: Isn't there some responsibility on the part of the Humanities to give a more accurate portrayal of
history and society? For example, shouldn't we all be well aware that the success of these tech giants is built on state-funded
innovation? Shouldn't we all be less blind to how markets work? A stronger left might provide a clearer vision of how power works,
but we have been silencing that hard left for years.
Agree. But how about the fact that many educated people do not know that much of the technology and innovation behind this wealth
was state-funded and not "sexy" Isn't it the job of the liberal arts - history, sociology, government classes to address the role
of the state in innovation? We are blinded by a worshipful attitude toward the market. Without a strong left it seems we have
lost sight of reality. Isn't this partially the fault of Humanities departments?
Normally I don't single out greedy business leaders to take the blame for society's woes. It is the fault of our political leaders
for allowing them to damage society in their chase for the almighty dollar (or billions of them)...Libertarians, conservatives
and centrist Dems to be exact.
But in this case I think the criticism is spot on since these tech nerds keep on claiming their products will make the country
and world a better place. Time to kill the meme that capitalists and business people are bested suited morally to lead the world
in the 21st Century.
"It never seems to have occurred to them that their advertising engines could also be used to deliver precisely targeted
ideological and political messages to voters." That was supposed to be reserved for exclusive use of the Democratic Party.
One of the changes (still happening) in literature, psychology, sociology, and philosophy departments is a focus on privilege,
"the other", subjugation, the power of elites . . . So studying the humanities may involve a critique - at least a consciousness
- of one's privilege. Not familiar with Snow but there is plenty of lit crit and theory to dismantle or at least challenge the
canon.
I guess the problem being referred to in this article that there are negative implications for all of us because many people's
opinions are shaped by what they read on social media. What all of us read is biased in ways that it is difficult to trace the
source of that bias. In "the good old days" at least most people tended to know the biases of the newspapers and TV news that
you consumed, but now you can be biased by what your friends share with you on social media, or what google choses to show you
in search results but there is no way of knowing the source of those biases. The problem therefore goes far beyond the risks of
sharing personal data.
Yes, I agree and I wasn't disparaging the STEM subjects at all or equating them in some way with capitalist interests. Both can
have that criticism applied to them - for instance, historians can definitely twist facts and more or less propagandise events.
Both are necessary, but I was thinking that both need to have at least a grasp of the influence and range of the other and be
better educated to do that.
Ditto bankers, doctors, lawyers and journalists.... The world (and particularly the US) is full of specialists. The author's assertions
are naive and half-educated.
Nonsense! You were just filling your word count with provocative poo.
Every technology has a good side and a bad one - including and especially the medical arts. Consider the recent news regarding
successful head transplants and face transplants; where will that takes us when humanitarian uses fail to pay the bills???
One book does not make the man. The point is many private and public schools focus on STEM to the detriment of humanities. A "liberal
arts" education is now a selling point in some schools.
Totally understand your point. As a non-tech individual who has been hostile to this massive organization of information and its
consequent requirements to alter human thought and social patterns to use systems, it is certainly expected that designers would
demand compliance from all parties for their own purposes. Even in the SF Chronicle, i often read quips about programmers disguising
coding for their own private use. In SF some loose canon but brilliant guy was asked to redesign the city's computer systems.
He had total mental breakdown and was jailed for some sort of bizarre infraction that had something to do with unauthorized personal
use. I can't quite remember details. The Chron offered to the public that the City may never know what this guy designed into
the systems. Bottom line was the city employees were totally delighted about their new programs and the programmer wouldn't talk.
If i remember correctly he was this eccentric, well liked gay guy.
Horseshit! I read De Toqueville in high school. There are required humanities courses at good universities. And anyone can read
a book on one's own time.
I agree with your overall assessment of the tech owners. However, blaming their academic discipline is short sighted. I suggest
you get to know some math and computer science majors. Many are well versed in the humanities. Not everyone needs a degree in
liberal arts to understand the human race.
Perhaps you are referring to the culture of technology that bred a lack of insight into human behavior.
There are also people with degrees in the liberal arts who go into technological fields. I agree with your views on the naïveté
of the tech leaders, but blaming a college degree strikes me as looking for a parallel that doesn't exist.
The writer clearly does not know much about the US higher education system where engineers and scientists cannot get away
without taking humanities courses, unlike the UK.
I would say that a deep study of the humanities can impart the kind of pessimism about human nature that animated Madison, Jefferson
and the other Framers of the Constitution. Their pessimism, unlike the unrestrained optimism of their counterparts in France,
is what enabled this country to be one of the few to survive a revolution without descending into mass murder and tyranny. But
given their fundamental pessimism, the founders of this country would probably be surprised that the governmental structure they
designed had endured this long.
Many of today's 'tech-elite' are sons of rich, establishment types who only have one interest: making more money. By the time
reports leek this appear, they already have a private island and a few billion in the bank. If you have an issue with tech giants
messing around with your personal data, don't give them your personal data.
I would like to congratulate the vast majority of the people posting here on producing possibly the most thoughtful and considered
set of comments I have read on a Guardian Article.
I will give the Article credit for stimulating the debate but I do think the discussion BTL has been far more interesting than
the original.
Alison I agree, but because the number of arts and sciences students is declining, arts and sciences faculty try to isolate integrated
studies (often called general studies or, at my university, the core curriculum) from professional studies. They do this to try
to save their jobs so it's understandable. The end results are sporadic, half-hearted attempts at integration that don't exactly
foster aha moments. Rather they cultivate thinking such as we see in this article.
The original backers of the "wired" world (such as Stewart Brand and Kevin Kelly who founded Wired, but one could list dozens
of tech legends) were utopian thinkers who were very well versed in history and philosophy. Unfortunately but probably inevitably,
the whole thing was corrupted by corporations as it became part of mainstream consumer society.
"... By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog ..."
"... The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. ..."
"... The pattern of human concerns ..."
"... The pattern of human concerns ..."
"... Journal of Happiness Studies ..."
"... The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states). ..."
"... Psychological Bulletin ..."
"... 1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment". ..."
"... 2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale". ..."
"... in the light of the structure of our society where the job one holds is the prime indicator of status and prestige. ..."
"... Psychological Bulletin ..."
"... Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance". ..."
"... In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point. ..."
"... The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. ..."
"... I think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points. ..."
"... This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. ..."
"... When unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it. ..."
"... When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. ..."
"... Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work . ..."
Posted on
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
.
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
status .
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
The Job
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
sector.
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
process unfolds.
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
cracks"
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
living.
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
might value?
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
Circlejerk.'
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
in 1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
required.
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
societies.
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
alternative).
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
all that.
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
that.
Society means we have obligations to each other. That means work. In rejecting work you
reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
capitalism.
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
wage increase.
Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
drugs.
A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Davidab,
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
that.
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
tax dollars.])
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
suitable job.
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
> when I had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
(economists).
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
Otis;
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
cars .
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
for it.
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
conscious thoughts.
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
dumb.
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
good.
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
adults.
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
unemployment.
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
all.
My $0.02:
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
they seem.
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
motives.
"... By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog ..."
"... The overwhelming importance of having a job for happiness is evident throughout the analysis, and holds across all of the world's regions. ..."
"... The pattern of human concerns ..."
"... The pattern of human concerns ..."
"... Journal of Happiness Studies ..."
"... The results show the differences between having a job and being unemployed are "very large indeed" on the three well-being measures (life evaluation, positive and negative affective states). ..."
"... Psychological Bulletin ..."
"... 1. "unemployment tends to make people more emotionally unstable than they were previous to unemployment". ..."
"... 2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general loss of "morale". ..."
"... in the light of the structure of our society where the job one holds is the prime indicator of status and prestige. ..."
"... Psychological Bulletin ..."
"... Related studies found that the "unemployed become so apathetic that they rarely read anything". Other activities, such as attending movies etc were seen as being motivated by the need to "kill time" – "a minimal indication of the increased desire for such attendance". ..."
"... In spite of hopeless attempts the unemployed continually look for work, often going back again and again to their last place of work. Other writers reiterate this point. ..."
"... The non-pecuniary effects of not having a job are significant in terms of lost status, social alienation, abandonment of daily structure etc, and that has not changed much over history. ..."
"... I think what is missing from this article is the term "identity." If you meet new people, often the conversation starts with what you do for a living. Your identity, in part, is what you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the point is this is part of your identity. When you lose your job long term, your identity here loses one of its main anchor points. ..."
"... This is a crucial point that UBI advocates often ignore. There is a deeply entrenched cultural bias towards associating our work status with our general status and prestige and feelings of these standings. ..."
"... When unemployed, the stress of worry about money may suppress the creative juices. Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with steady income. The great experience of some freelancers notwithstanding, not all are cut out for it. ..."
"... When considering the world's population as a whole, people with a job evaluate the quality of their lives much more favorably than those who are unemployed. ..."
"... Data like that provided by Mitchell is important to demolishing the horrid "economic anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of rugged individualism) and (b) the effects are real and measurable. It's not surprising, when you think about it, that the working class is about work . ..."
Posted on
November 21, 2017 by Yves Smith Yves here. Reader
UserFriendly sent this post with the message, "I can confirm this." I can too. And before you
try to attribute our reactions to being Americans, note that the study very clearly points out
that its finding have been confirmed in "all of the world's regions".
By Bill Mitchell, Professor in Economics and Director of the Centre of Full Employment
and Equity at the University of Newcastle, NSW, Australia. Originally published at billy blog
Here is a summary of another interesting study I read last week (published March 30, 2017)
– Happiness at Work
– from academic researchers Jan‐Emmanuel De Neve and George Ward. It explores the
relationship between happiness and labour force status, including whether an individual is
employed or not and the types of jobs they are doing. The results reinforce a long literature,
which emphatically concludes that people are devastated when they lose their jobs and do not
adapt to unemployment as its duration increases. The unemployed are miserable and remain so
even as they become entrenched in long-term unemployment. Further, they do not seem to sense
(or exploit) a freedom to release some inner sense of creativity and purpose. The overwhelming
proportion continually seek work – and relate their social status and life happiness to
gaining a job, rather than living without a job on income support. The overwhelming conclusion
is that "work makes up such an important part of our lives" and that result is robust across
different countries and cultures. Being employed leads to much higher evaluations of the
quality of life relative to being unemployed. And, nothing much has changed in this regard over
the last 80 or so years. These results were well-known in the 1930s, for example. They have a
strong bearing on the debate between income guarantees versus employment guarantees. The UBI
proponents have produced no robust literature to refute these long-held findings.
While the 'Happiness Study' notes that "the relationship between happiness and employment is
a complex and dynamic interaction that runs in both directions" the authors are
unequivocal:
The overwhelming importance of having a job for happiness is evident throughout the
analysis, and holds across all of the world's regions. When considering the world's
population as a whole, people with a job evaluate the quality of their lives much more
favorably than those who are unemployed. The importance of having a job extends far beyond
the salary attached to it, with non-pecuniary aspects of employment such as social status,
social relations, daily structure, and goals all exerting a strong influence on people's
happiness.
And, the inverse:
The importance of employment for people's subjective wellbeing shines a spotlight on the
misery and unhappiness associated with being unemployed.
There is a burgeoning literature on 'happiness', which the authors aim to contribute to.
They define happiness as "subjective well-being", which is "measured along multiple
dimensions":
life evaluation (by way of the Cantril "ladder of life"), positive and negative affect to
measure respondents' experienced positive and negative wellbeing, as well as the more
domain-specific items of job satisfaction and employee engagement. We find that these diverse
measures of subjective wellbeing correlate strongly with each other
Cantril's 'Ladder of Life Scale' (or "Cantril Ladder") is used by polling organisations to
assess well-being. It was developed by social researcher Hadley Cantril (1965) and documented
in his book The pattern of human concerns .
You can learn more about the use of the 'Cantril Ladder' HERE
.
As we read, the "Cantril Self-Anchoring Scale consists of the following":
Please imagine a ladder with steps numbered from zero at the bottom to 10 at the top. The
top of the ladder represents the best possible life for you and the bottom of the ladder
represents the worst possible life for you. On which step of the ladder would you say you
personally feel you stand at this time? (ladder-present) On which step do you think you
will stand about five years from now? (ladder-future)
[Reference: Cantril, H. (1965) The pattern of human concerns , New Brunswick,
Rutgers University Press.]
[Reference: Bjørnskov, C. (2010) 'How Comparable are the Gallup World Poll Life
Satisfaction Data?', Journal of Happiness Studies , 11 (1), 41-60.]
The Cantril scale is usually reported as values between 0 and 10.
The authors in the happiness study use poll data from 150 nations which they say "is
representative of 98% of the world's population". This survey data is available on a mostly
annual basis since 2006.
The following graph (Figure 1 from the Study) shows "the self-reported wellbeing of
individuals around the world according to whether or not they are employed."
The "bars measure the subjective wellbeing of individuals of working age" by employment
status .
The results show the differences between having a job and being unemployed are "very large
indeed" on the three well-being measures (life evaluation, positive and negative affective
states).
People employed "evaluate the quality of their lives around 0.6 points higher on average as
compared to the unemployed on a scale from 0 to 10."
The authors also conduct more sophisticated (and searching) statistical analysis
(multivariate regression) which control for a range of characteristics (gender, age, education,
marital status, composition of household) as well as to "account for the many political,
economic, and cultural differences between countries as well as year-to-year variation".
The conclusion they reach is simple:
the unemployed evaluate the overall state of their lives less highly on the Cantril ladder
and experience more negative emotions in their day-to-day lives as well as fewer positive
ones. These are among the most widely accepted and replicated findings in the science of
happiness Here, income is being held constant along with a number of other relevant
covariates, showing that these unemployment effects go well beyond the income loss associated
with losing one's job.
These results are not surprising. The earliest study of this sort of outcome was from the famous study published by Philip
Eisenberg and Paul Lazersfeld in 1938. [Reference: Eisenberg, P. and Lazarsfeld, P. (1938) 'The psychological effects of
unemployment', Psychological Bulletin , 35(6), 358-390.]
They explore four dimensions of unemployment:
I. The Effects of Unemployment on Personality.
II. Socio-Political Attitudes Affected by Unemployment.
III. Differing Attitudes Produced by Unemployment and Related Factors.
IV. The Effects of Unemployment on Children and Youth.
On the first dimension, they conclude that:
1. "unemployment tends to make people more emotionally unstable than they were previous to
unemployment".
2. The unemployed experience feelings of "personal threat"; "fear"; "sense of proportion is
shattered"; loss of "common sense of values"; "prestige lost in own eyes and as he imagines, in
the eyes of his fellow men"; "feelings of inferiority"; loss of "self-confidence" and a general
loss of "morale".
Devastation, in other words. They were not surprised because they note that:
in the light of the structure of our society where the job one holds is the prime
indicator of status and prestige.
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings. That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study in
1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might currently
hold to onto a society that clearly still values work is only going to create major social
tensions. Eisenberg and Lazarsfeld also considered an earlier 1937 study by Cantril who explored
whether "the unemployed tend to evolve more imaginative schemes than the employed".
[Reference: Cantril, H. (1934) 'The Social Psychology of Everyday Life', Psychological
Bulletin , 31, 297-330.]
The proposition was (is) that once unemployed, do people then explore new options that were
not possible while working, which deliver them with the satisfaction that they lose when they
become jobless. The specific question asked in the research was: "Have there been any changes of interests
and habits among the unemployed?" Related studies found that the "unemployed become so apathetic that they rarely read
anything". Other activities, such as attending movies etc were seen as being motivated by the
need to "kill time" – "a minimal indication of the increased desire for such
attendance".
On the third dimension, Eisenberg and Lazersfeld examine the questions – "Are there
unemployed who don't want to work? Is the relief situation likely to increase this number?",
which are still a central issue today – the bludger being subsidized by income
support.
They concluded that:
the number is few. In spite of hopeless attempts the unemployed continually look for work,
often going back again and again to their last place of work. Other writers reiterate this
point.
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on their
own opinions, have known that the importance of work in our lives goes well beyond the income
we earn. The non-pecuniary effects of not having a job are significant in terms of lost status,
social alienation, abandonment of daily structure etc, and that has not changed much over
history. The happiness paper did explore "how short-lived is the misery associated with being out of
work" in the current cultural settings.
The proposition examined was that:
If the pain is only fleeting and people quickly get used to being unemployed, then we
might see joblessness as less of a key public policy priority in terms of happiness.
They conclude that:
a number of studies have demonstrated that people do not adapt much, if at all, to being
unemployed there is a large initial shock to becoming unemployed, and then as people stay
unemployed over time their levels of life satisfaction remain low . several studies have
shown that even once a person becomes re-employed, the prior experience of unemployment
leaves a mark on his or her happiness.
So there is no sudden or even medium-term realisation that being jobless endows the
individual with a new sense of freedom to become their creative selves, freed from the yoke of
work. To bloom into musicians, artists, or whatever.
The reality is that there is an on-going malaise – a deeply entrenched sense of
failure is overwhelming, which stifles happiness and creativity, even after the individual is
able to return to work.
This negativity, borne heavily by the individual, however, also impacts on society in
general.
The paper recognises that:
A further canonical finding in the literature on unemployment and subjective wellbeing is
that there are so-called "spillover" effects.
High levels of unemployment "increase fear and heighten the sense of job insecurity". Who
will lose their job next type questions?
The researchers found in their data that the higher is the unemployment rate the greater the
anxiety among those who remain employed.
Conclusion
The overwhelming conclusion is that "work makes up such an important part of our lives" and
that result is robust across different countries and cultures.
Being employed leads to much higher evaluations of the quality of life relative to being
unemployed.
The unemployed are miserable and remain so even as they become entrenched in long-term
unemployment. They do not seem to sense (or exploit) a freedom to release some inner sense of
creativity and purpose.
The overwhelming proportion continually seek work – and relate their social status and
life happiness to gaining a job, rather than living without a job on income support.
Modern Monetary Theory (MMT) allows us to understand that it is the government that chooses
the unemployment rate – it is a political choice.
For currency-issuing governments it means their deficits are too low relative to the
spending and saving decisions of the non-government sector.
For Eurozone-type nations, it means that in surrendering their currencies and adopting a
foreign currency, they are unable to guarantee sufficient work in the face of negative shifts
in non-government spending. Again, a political choice.
The Job
Guarantee can be used as a vehicle to not only ensure their are sufficient jobs available
at all times but also to start a process of wiping out the worst jobs in the non-government
sector.
That can be done by using the JG wage to ensure low-paid private employers have to
restructure their workplaces and pay higher wages and achieve higher productivity in order to
attract labour from the Job Guarantee pool.
The Series So Far
This is a further part of a series I am writing as background to my next book with Joan
Muysken analysing the Future of Work . More instalments will come as the research
process unfolds.
The blogs in these series should be considered working notes rather than self-contained
topics. Ultimately, they will be edited into the final manuscript of my next book due in 2018.
The book will likely be published by Edward Elgar (UK).
Perhaps I'm utterly depressed but I haven't had a job job for over 5 years. Plenty of
work, however, more than I can handle and it requires priorisation. But I am deliberately not part of the organized herd. I stay away from big cities –
it's scary how managed the herd is in large groups – and I suppose that unemployment
for a herd animal is rather distressing as it is effectively being kicked out of the
herd.
Anyway my advice, worth what you pay for it but let he who has ears, etc. – is to go
local, very local, grow your own food, be part of a community, manage your own work, and
renounce the energy feast herd dynamics. "Unemployment", like "recession", is a mechanism of
control. Not very practical advice for most, I realize, trapped in the herd as they are in
car payments and mortgages, but perhaps aspirational?
I think what is missing from this article is the term "identity." If you meet new people,
often the conversation starts with what you do for a living. Your identity, in part, is what
you do. You can call yourself a plumber, a writer, a banker, a consultant, a reporter but the
point is this is part of your identity. When you lose your job long term, your identity here
loses one of its main anchor points.
Worse, there is a deliberate stigma attached with being long term unemployed. In that article
you have seen the word bludger being used. In parts of the US I have read of the shame of
'living off the county'. And yes, I have been there, seen that, and got the t-shirt. It's
going to be interesting as mechanization and computers turn large portions of the population
from workers to 'gig' workers. Expect mass demoralization.
yes the lives many of us have lived, no longer exist though we appear not notice, as we
"can" live in many of same "ways" ..rather well known psychologist defined some 40 years ago, best to "drop through
cracks"
Well, you also lose money, maybe you become homeless etc. as you have nowhere else to turn
(if there are kids involved to support it gets even scarier though there are some programs).
Or maybe you become dependent on another person(s) to support you which is of course
degrading as you know you must rely on them to live, whether it's a spouse or lover when you
want to work and bring in money, or mom and dads basement, or the kindest friend ever who
lets you sleep on their couch. I mean these are the things that really matter.
Privileged people whose main worry in unemployment would be losing identity, wow out of
touch much? Who cares about some identity for parties, but the ability to have a stable
decent life (gig work hardly counts) is what is needed.
I normally wouldn't comment like this, but you have brought up some extremely important
points about identity that I would like to address.
Recently I had the most intense mushroom experience of my entire life–so intense
that my identity had been completely stripped and I was left in a formless state, at the
level of seeing my bare, unvarnished animal neural circuitry in operation. Suddenly with a
flash of inspiration I realized that the identity of everyone, all of us, is inextricably
tied up in what we do and what we do for other people.
Following from that, I understood that if we passively rely on others for survival,
whether it be relying on friends, family, or government, then we do not have an identity or
reason for existing. And the inner self, the animal core of who we are, will realise this
lack of identity (even if the concious mind denies it), and will continually generate
feelings of profound depression and intense nihilism that will inevitably destroy us if the
root cause is not addressed.
Before this experience I was somewhat ambivalent about my politics, but immediately after
I knew that the political right was correct on everything important, from attitudes on sex to
economic philosophy. People need a core of cultural stability and hard work to grow and
become actualized. The alternative is rudderless dissatisfaction and envy that leads
nowhere.
On the topic of giving "out of kindnes and goodwill", giving without demanding anything in
return is a form of abuse, as it deprives those who receive our feel-good generosity the
motivation to form a coherent identity. If the parents of a basement-dweller were truly good
people, instead of supporting said dweller they'd drag her out by the ear and make her grow
food in the yard or some such. Likewise, those who have supported you without also giving
concrete demands and expecations in return have been unkind, and for your own good I hope
that you will immediately remove yourself from their support. On the other hand, if you have
been thoughtlessly giving because it warms the cockles of your heart, then stop it now. You
are ruining other people this way, and if your voting habits are informed by this kind of
malevolence I'd encourage you to change those as well.
Anyway the original poster is right about everything. Working and having a purpose in life
is an entirely different animal from making money and being "successful" in the
government-sponsored commercial economy. Society and government deliberately try to conflate
the two for various reasons, primarily graft of labor and genius, but that is only a
deliberate mis-framing that needlessly harms people when the mainstream economic system is in
catastrophic decline, as ours is today. You should try to clear up this misconception within
yourself as a way of getting better.
Well, I hope this message can give you a few different thoughts and help you find your way
out of the existential angst you're caught in. Don't wallow in helplessness. Think of
something useful to do, anything, whether it earns you money or not, and go out and start
doing it. You'll be surprised at how much better you feel about yourself in no time.
The problem is you said – I – had an extreme experience [burning bush], the
truth was reviled to – I – and I alone during this extreme chemically altered
state. Which by the way just happens to conform to a heap of environmental biases I
collected. This is why sound methodology demands peer review. disheveled some people think Mister Toads Wild ride at Disneyland on psychotropics is an
excellent adventure too.
I think your observation about the importance of work to identity is most perceptive. This
post makes too little distinction between work and a job and glosses over the place of work
in defining who we are to ourselves and to others. I recall the scene in the movie "About a
Boy" when the hero meets someone he cares about and she asks him what he does for a
living.
I believe there's another aspect of work -- related to identity -- missing in the analysis
of this post. Work can offer a sense of mission -- of acting as part of an effort toward a
larger goal no individual could achieve alone. However you may regard the value in putting
man on the moon there is no mistaking the sense of mission deeply felt by the engineers and
technicians working on the project. What jobs today can claim service to a mission someone
might value?
Agreed on your points. Wage slavery is nothing to aspire to. Self-determination within a
context of an interdependent community is a much better way to live. We do our thing in the city, however.
Finding that "interdependent community" is the hard part. My experience has been that this
endeavour is almost chance based; Serendipity if you will.
Here Down South, the churches still seem to have a stranglehold on small and mid scale social
organization. One of the big effects of 'churching' is the requirement that the individual
gave up personal critical thinking. Thus, the status quo is reinforced. One big happy 'Holy
Circlejerk.'
This is a crucial point that UBI advocates often ignore. There is a deeply entrenched
cultural bias towards associating our work status with our general status and prestige and
feelings of these standings.
That hasn't changed since Eisenberg and Lazersfeld wrote up the findings of their study
in 1938.
It might change over time but that will take a long process of re-education and cultural
shift. Trying to dump a set of new cultural values that only a small minority might
currently hold to onto a society that clearly still values work is only going to create
major social tensions.
I would agree about the entenched cultural norms, etc. But not the pessimism and timeline
for change. An individual can communicate a complex idea to millions in seconds, things move
fast these days.
For me, it seems that what we (we being UBI/radical change proponents) are lacking is a
compelling easily accessible story. Not just regarding UBI (as that is but one part of the
trully revolutionary transformations that must occur) but encompassing everything.
We have countless think pieces, bits of academic writing, books, etc that focus on
individual pieces and changes in isolation. But we've largely abandoned the all-encompassing
narrative, which at their heart is precisely what religion offers and why it can be so
seductive, successful, and resilient for so long.
The status quo has this type of story, it's not all that compelling but given the fact
that it is the status quo and has inertia and tradition on its side (along with the news
media, political, entertainment, etc) it doesn't have to be.
We need to abandon the single narrow issue activism that has become so prominent over the
years and get back to engaging with issues as unseparable and intimately interconnected.
Tinkering around the edges will do nothing, a new political religion is what is
required.
Sorry, I disagree vehemently. Deeply held cultural attitudes are very slow to change and
the study found that work being critical to happiness examined a large number of
societies.
Look at feminism. I was a half-generation after the time when women were starting to get a
shot at real jobs. IIRC, the first class that accepted women at Harvard Law School was in the
1950 and at Harvard Business School, 1965. And the number of first attendees was puny. The
1965 class at HBS had 10 8 women out of a graduating class of over 800; my class in 1981 had
only 11% women.
In the 1980s, you saw a shift from the belief that women could do what men could do to
promotion of the idea that women could/should be feminine as well as successful. This looked
like seriously mixed messages, in that IMHO the earlier tendency to de-emphasize gender roles
in the workplace looked like a positive development.
Women make less than 80% of what men do in the US. Even female doctors in the same
specialities make 80% of their male peers.
The Speenhamland in the UK had what amounted to an income guarantee from the 1790s to
1832. Most people didn't want to be on it and preferred to work. Two generations and being on
the support of local governments was still seen as carrying a stigma.
More generally, social animals have strongly ingrained tendencies to resent situations
they see as unfair. Having someone who is capable of working not work elicits resentment from
many, which is why most people don't want to be in that position. You aren't going to change
that.
And people need a sense of purpose. There are tons of cases of rich heirs falling into
drug addiction or alcoholism and despair because they have no sense of purpose in life. Work
provides that, even if it's mundane work to support a family. That is one of the great
dissservices the Democrats have done to the citizenry at large: sneering at ordinary work
when blue-collar men were the anchors of families and able to take pride in that.
Regarding the large number of societies, we often like to think we're more different than
we actually are focusing on a few glaringly obvious differences and generalizing from there.
Even going back a few hundred years when ideas travelled slower we were still (especially the
"west" though the "east" wasn't all that much more different either) quite similar. So I'm
less inclined to see the large number of societies as evidence.
Generally on societal changes and movements: The issue here is that the leadership has not
changed, they may soften some edges here or there (only to resharpen them again when we're
looking elsewhere) but their underlying ideologies are largely unchanged. A good mass of any
population will go along to survive, whether they agree or not (and we find increasing
evidence that many do not agree, though certainly that they do not agree on a single
alternative).
It may be impossible to implement such changes in who controls the levers of power in a
democratic fashion but it also may be immoral not implement such changes. Of course this is
also clearly a similar path to that walked by many a demonized (in most cases rightfully so)
dictator and despot. 'Tread carefully' are wise words to keep in mind.
Today we have a situation which reflects your example re: social animals and resentment of
unfairness: the elite (who falls into this category is of course debatable, some individuals
moreso than others). But they have intelligently, for their benefit, redirected that
resentment towards those that have little. Is there really any logical connection between not
engaging in wage labor (note: NOT equivalent to not working) and unfairness? Or is it a myth
crafted by those who currently benefit the most?
That resentment is also precisely why it is key that a Basic income be universal with no
means testing, everyone gets the same.
I think we should not extrapolate too much from the relatively small segment of the
population falling into the the inherited money category. Correlation is not causation and
all that.
It also seems that so often individuals jump to the hollywood crafted image of the
layabout stoner sitting on the couch giggling at cartoons (or something similarly negative)
when the concept of less wage labor is brought up. A reduction of wage labor does not equate
to lack of work being done, it simply means doing much of that work for different reasons and
rewards and incentives.
As I said in the Links thread today, we produce too much, we consume too much, we grow too
much. More wage labor overall as a requirement for survival is certainly not the solution to
any real problem that we face, its a massively inefficient use of resources and a massive
strain on the ecosystems.
I am really gobsmacked at the sense of entitlement on display here. Why are people
entitled to an income with no work? Being an adult means toil: cleaning up after yourself,
cleaning up after your kids if you have them, if you are subsistence farmer, tending your
crops and livestock, if you are a modern society denizen, paying your bills and your taxes on
time. The idea that people are entitled to a life of leisure is bollocks. Yet you promote
that.
Society means we have obligations to each other. That means work. In rejecting work you
reject society.
And the touting of "creativity" is a top 10% trope that Thomas Frank called out in Listen,
Liberal. It's a way of devaluing what the bottom 90% do.
My argument with the article is that, to me, it smacks of Taylorism. A follow-on study
would analyze how many hours a laborer must work before the acquired sense of purpose and
dignity and associated happiness began to decline. Would it be 30 hours a week of
backbreaking labor before dignity found itself eroded? 40? 50? 60? When does the worker
break? Just how far can we push the mule before it collapses?
The author alludes to this: "The overwhelming proportion relate their social status and
life happiness to gaining a job"
Work equals happiness. Got it.
But, as a former robotics instructor, and as one who watches the industry (and former
students), I see an automated future as damn near inevitable. Massive job displacement is
coming, life as a minimum wage burger flipper will cease, with no future employment prospects
short of government intervention (WPA and CCC for all, I say). I'm not a Luddite, obviously,
but there are going to be a lot of people, billions, worldwide, with no prospect of
employment. Saying, "You're lazy and entitled" is a bit presumptuous, Yves. Not everyone has
your ability, not everyone has my ability. When the burger flipping jobs are gone, where do
they go? When roombas mop the floors, where do the floor moppers go?
We could use a new Civilian Conservation Corps and and a Works Progress Administration.
There's lots of work that needs doing that isn't getting done by private corporations.
The outrage at non-work wealth and income would be more convincing if it were aimed also
at owners of capital. About 30% of national income is passive -- interest, rents, dividends.
Why are the owners of capital "entitled to an income with no work?" It's all about the
morality that underlies the returns to capital while sugaring over a devaluation of labor. As
a moral issue, everyone should share the returns on capital or we should tax away the
interest, rents, and dividends. If it's an economic issue, berating people for their beliefs
isn't a reason.
The overwhelming majority do work. The top 0.1% is almost entirely private equity managers
who are able to classify labor income as capital gains through the carried interest loophole.
Go look at the Forbes 400.
The 1% are mainly CEOs, plus elite professionals, like partners at top law and consulting
firms and specialty surgeons (heart, brain, oncology). The CEOs similarly should be seen as
getting labor income but have a lot of stock incentive pay (that is how they get seriously
rich) which again gets capital gains treatment.
You are mistaking clever taking advantage of the tax code for where the income actually
comes from. Even the kids of rich people are under pressure to act like entrepreneurs from
their families and peers. Look at Paris Hilton and Ivanka as examples. They both could have
sat back and enjoyed their inheritance, but both went and launched businesses. I'm not saying
the kids of the rich succeed, or would have succeed to the extent they do without parental
string-pulling, but the point is very few hand their fortune over to a money manager and go
sailing or play the cello.
What's your take on Rutger Bergman's ted talk? i think most jobs aren't real jobs at all,
like marketing and ceo's. why can't we do 20 hour work weeks so we don't have huge amounts of unemployment? Note, I was "unemployed" for years since "markets" decide not to fund science in the US.
Yay Germany At least I was fortunate enough to not be forced to work at Walmart or McDonalds
like the majority of people with absolutely no life choices. Ah the sweet coercion of
capitalism.
Your hopes for a UBI are undone by some of the real world observations I've made over many
years, with regard to how a guaranteed income increase, of any measure, for a whole
population of an area, affects prices. Shorter: income going up means prices are raised by
merchants to capture the new income.
Examples: A single industry town raises wages for all employees by 2% for the new calendar
year. Within the first 2 weeks of the new year, all stores and restaurants and service
providers in the town raise their prices by 2%. This happens every year there is a general
wage increase.
Example: Medicare part D passes and within 2 years, Pharma now having new captive
customers whose insurance will pay for drugs, raise prices higher and higher, even on generic
drugs.
A more recent example: ACA passes with no drug price ceilings. Again, as with the passage
of Medicare part D, Pharma raises drug prices to unheard of levels, even older and cheap but
life saving drugs, in the knowledge that a new, large group will have insurance that will pay
for the drugs – a new source of money.
Your assumption that any UBI would not be instantly captured by raised prices is naive, at
best. It's also naive to assume companies would continue to pay wages at the same level to
people still employed, instead of reducing wages and letting UBI fill in the rest. Some
corporations already underpay their workers, then encourage the workers to apply for food
stamps and other public supports to make up for the reduced wage.
The point of the paper is the importance of paid employment to a person's sense of well
being. I agree with the paper.
For the vast majority, a UBI would be income-neutral – it would have to be, to avoid
massive inflation. So people would receive a UBI, but pay more tax to compensate. The effect
on prices would be zero.
The advantage of a UBI is mostly felt at the lower end, where insecure/seasonal work does
now pay. At the moment, a person who went from farm labourer to Christmas work to summer
resort work in the UK would certainly be working hard, but also relentlessly hounded by the
DWP over universal credit. A UBI would make this sort of lifestyle possible.
Davidab,
Good for you, but your perspicacity is not scalable. People are social animals and your attitude toward "the herd", at least as expressed here,
is that of a predator, even if your taste doesn't run toward predation. Social solutions will necessarily be scalable or they won't be solutions for long.
> the organized herd a herd animal trapped in the herd
I don't think throwing 80% to 90% of the population into the "prey" bucket is especially
perspicacious politically (except, of course, for predators or parasites). I also don't think it's especially perspicacious morally. You write:
Not very practical advice for most, I realize, trapped in the herd as they are in car
payments and mortgages, but perhaps aspirational?
Let me translate that: "Trapped in the herd as many are to support spouses and children."
In other words, taking the cares of the world on themselves in order to care for others.
Unemployed stay at home dad here. My children are now old enough to no longer need a stay
at home dad. Things I have done: picked up two musical instruments and last year dug a
natural swimming pond by hand. Further, one would need to refute all the increased happiness
in retirement (NBER). Why social security but not UBI? I get being part of the precariat is
painful and this is a reality for most the unemployed no matter where you live in the world.
A UBI is unworkable because it will never be large enough to make people's lives
unprecarious. Having said that, I am almost positive if you gave every unemployed person 24 k
a year and health benefits, there would be a mass of non working happy creative folks.
UBI seems to me to encourage non-virtuous behavior – sloth, irresponsibility,
fecklessness, and spendthriftness. I like the Finnish model – unemployment insurance is
not limited – except if you refuse work provided by the local job center. Lots of work
is not being done all over America – we could guarantee honest work to all with some
imagination. Start with not spraying roundup and rather using human labor to control weeds
and invasive species.
I do agree that universal health insurance is necessary and sadly Obamacare is not
that.
The crux of this problem is the definition used for "non-virtuous behaviour."
A new CCC is a good place to start though. (Your Tax Dollars At Work! [For some definition of
tax dollars.])
As for BJ above, I would suppose that child rearing was his "employment" for years. good so
far, but his follow-up is untypical. The 'Empty Nester' mother is a well known meme.
Spendthriftness on 24K a year? Seriously? If we are disgorging unprofessional opinions, I will add my own: sloth and
irresponsibility are more signs of depression rather than freedom from having to work. In
fact, I believe (and I think much of the stuff here) supports the idea that people want to be
seen as useful in some way. Doesn't include me! :) .. unfortunately, I have the charmingly named "dependents" so there
you have it.
I lived 6 years as a grad student on 24k a year and would say it was easy. Only thing I
would have to had worried about was awful health insurance. A two household each with 24k
would be even easier, especially if you could do it in a low cost area. So I am not sure what
you mean by spendthrift. But again it will never happen, so we will be stuck with what we
have or most likely an even more sinister system. I guess I am advocating for a JG with
unlimited number of home makers per household.
except if you refuse work provided by the local job center
And who's to say that the local "job center" has work that would be appropriate for every
person's specific talents and interests? This is no better than saying that you should be
willing to go work for some minimum-wage retail job with unpredictable scheduling and other
forms of employer abuses after you lose a high-paying job requiring special talents. I have
to call bullshit on this model. I went through a two-year stretch if unemployment in no small
part because the vast majority of the available jobs for my skill set were associated with
the MIC, surveillance state or the parasitic FIRE sector. I was able to do this because I had
saved up enough FY money and had no debts or family to support.
I can also attest to the negative aspects of unemployment that the post describes. Its all
true and I can't really say that I'e recovered even now, 2.5 years after finding another
suitable job.
The job center in the neighbouring Sweden had the same function. Had is the important
word. My guess is that the last time someone lost their unemployment insurance payout due to
not accepting a job was in the early 1980s. Prior to that companies might, maybe, possibly
have considered hiring someone assigned to them – full employment forced companies to
accept what was offered. Companies did not like the situation and the situation has since
changed.
Now, when full employment is a thing of the past, the way to lose unemployment insurance
payouts is by not applying to enough jobs. An easily gamed system by people not wanting to
work: just apply to completely unsuitable positions and the number of applications will be
high. Many companies are therefore overwhelmed by applications and are therefore often forced
to hire more people in HR to filter out the unsuitable candidates.
People in HR tend not to know much about qualifications and or personalities for the job so
they tend to filter out too many. We're all familiar with the skills-shortage .
Next step of this is that the companies who do want to hire have to use recruitment agencies.
Basically outsourcing the HR to another company whose people are working on commission.
Recruiters sometimes know how to find 'talent', often they are the same kind of people with
the same skills and backgrounds as people working in HR.
To even get to the hiring manager a candidate has to go through two almost identical and
often meaningless interviews. Recruiter and then HR. Good for the GDP I suppose, not sure if
it is good for anything else.
But back on topic again, there is a second way of losing unemployment insurance payout:
Time. Once the period covered has passed there is no more payouts of insurance. After that it
it is time to live on savings, then sell all assets, and then once that is done finally go to
the welfare office and prove that savings are gone and all assets are sold and maybe welfare
might be paid out. People on welfare in Sweden are poor and the indignities they are being
put through are many. Forget about hobbies and forget about volunteering as the money for
either of those activities simply aren't available. Am I surprised by a report saying
unemployed in Sweden are unhappy? Nope.
meanwhile NYTimes testimonials Friday, show average family of 4 healthprofit costs
(tripled, due to trump demise ACA) to be $30,000. per year, with around $10,000. deductible
end of any semblance of affordable access, "murKa"
Where does a character like Bertie Wooster in "Jeeves" fit in your notions of virtuous
behavior? Would you consider him more virtuous working in the management of a firm,
controlling the lives and labor of others -- and humorously helped by his his brilliant
valet, Jeeves, getting him out of trouble?
For contrast -- in class and social status -- take a beer-soaked trailer trash gentleman
of leisure -- and for sake of argument blessed with less than average intelligence -- where
would you put him to work where you'd feel pleased with his product or his service? Would you
feel better about this fellow enjoying a six-pack after working 8 hours a day 5 days a week
virtuously digging and then filling a hole in the ground while carefully watched and goaded
by an overseer? [Actually -- how different is that from "using human labor to control weeds
and invasive species"? I take it you're a fan of chain-gangs and making the poor pick up
trash on the highways?]
What about some of our engineers and scientists virtuously serving the MIC? Is their
behavior virtuous because they're not guilty of sloth, irresponsibility [in executing their
work], fecklessness, and spendthriftness? On this last quality how do you feel about our
government who pay the salaries for all these jobs building better ways to kill and maim?
It is a design by David Pagan Butler. It is his plunge pool design, deepend is 14 by 8 by
7 deep. I used the dirt to make swales around some trees. Win win all around.
The answer is yes my spouse works. So I do have a schedule of waking up to make her lunch
everyday, meeting her at lunch to walk, and making dinner when she gets home, but we do all
those things on her days off so .
But again we would need to explain away, why people who are retired are happier? Just
because they think they payed into social security? Try explaining to someone on the SS dole
how the government spends money into existence and is not paid by taxes or that the
government never saved their tax money, so there are not entitled to this money.
I hated working for other people and doing what they wanted. I began to feel some
happiness when I had a half acre on which I could create my own projects. Things improved
even more when I could assure myself of some small guaranteed income by claiming Social
Security at age 62. To arise in the morning when I feel rested, with interesting projects
like gardens, fences, small buildings ahead and work at my own pace is the essence of delight
for me. I've been following your arguments against UBI for years and disagree vehemently.
I feel I would behave the same as you, if I had the chance. *But* no statements about
human beings are absolute, and because UBI would work for either of us does not mean it would
work for the majority. Nothing devised by man is perfect.
first you had to buy the half acre in a suitable location, then you had to work many years
to qualify for social security, the availability of which you paid for and feel you deserve.
You also have to buy stuff for fences gardens and small buildings. At most that rhymes with a
ubi but is significantly different in it's make up.
> when I had a half acre on which I could create my own projects
That is, when you acquired the half acre, which not everyone can do. It seems to
me there's a good deal of projecting going on with this thread from people who are, in
essence, statistical outliers. But Mitchell summarizes the literature:
So for decades, researchers in this area, as opposed to bloggers who wax lyrical on
their own opinions, have known that the importance of work in our lives goes well beyond
the income we earn.
If the solution that works for you is going to scale, that implies that millions more will
have to own land. If UBI depends on that, how does that happen? (Of course, in a
post-collapse scenario, the land might be taken , but that same scenario makes the
existence of institutions required to convey the UBI highly unlikely. )
Very glad to hear that Bill Mitchell is working on the "Future of Work" book, and to have
this post, and the links to the other segments. Thank you, Yves!
I don't agree with this statement. Never will. I'm the complete opposite. Give me more
leisure time and you'll find me painting, writing, playing instruments and doing things that
I enjoy. I recall back to when I was a student, I relished in the free time I got (believe me
University gave me a lot of free time) between lectures, meaning I could enjoy this time
pursuing creative activities. Sure I might be different than most people but I know countless
people who are the same.
My own opinion is that root problem lies in the pathology of the working mentality, that
'work' and having a 'job' is so engrained into our society and mindset that once you give
most people the time to enjoy other things, they simply can't. They don't know what to do
with themselves and they eventually become unhappy, watching daytime TV sat on the sofa.
I recall back to a conversation with my mother about my father, she said to me, 'I don't
know how your father is going to cope once he retires and has nothing to do' and it's that
very example of where work for so many people becomes so engrained in their mindset, that
they are almost scared of having 'nothing to do' as they say. It's a shame, it's this
systemic working mentality that has led to this mindset. I'm glad I'm the opposite of this
and proud by mother brought me up to be this way. Work, and job are not in my vocabulary. I
work to live, not live to work.
I agree with Andrew. I think this data on the negative effects says more about how being
employed fundamentally breaks the human psyche and turns them into chattel, incapable of
thinking for themselves and destroying their natural creativity. The more a human is molded
into a "good worker" the less they become a full fledged human being. The happiest people are
those that have never placed importance on work, that have always lived by the maxim "work to
live, not live to work". From my own experience every assertion in this article is the
opposite of reality. It is working that makes me apathethic, uncreative, and miserable. The
constant knowing that you're wasting your life, day after day, engaged in an activity merely
to build revenue streams for the rich, instead of doing things that help society or that
please you on a personal level, is what I find misery inducing.
I agree. If financial insecurity is removed from the equation -- free time can be used creatively
for self-actualization, whatever form that may take: cultivating the arts, hobbies, community
activities, worthy causes and projects. The ideology wafting from Mitchell's post smells to me like a rationale for wage slavery
(market driven living, neo-liberalism, etc.)
Besides how are people supposed to spend their time "exploring other opportunities" when
unemployed anyway? To collect unemployment which isn't exactly paying that much anyway, they
have to show they are applying to jobs. To go to the movies the example given costs money,
which one may tend to be short on when unemployed. They probably are looking for work
regardless (for the income). There may still be some free time. But they could go back to
school? Uh in case one just woke up from a rock they were under for 100 years, that costs
money, which one may tend to be short on when unemployed, plus there is no guarantee the new
career will pan out either, no guarantee someone is just chomping at the bit to hire a newly
trained 50 year old or something. I have always taken classes when unemployed, and paid for
it and it's not cheap.
Yes to use one's time wisely in unemployment in the existing system requires a kind of
deep psychological maturity that few have, a kind of Surrender To Fate, to the uncertainty of
whether one will have an income again or not (either that or a sugar daddy or a trust fund).
Because it's not easy to deal with that uncertainty. And uncertainty is the name of the game
in unemployment, that and not having an income may be the pain in it's entirety.
Sadly this breaking down into a "good worker" begins for most shortly after they begin
school. This type of education harms society in a myriad of ways including instilling a
dislike of learning, deference to authority (no matter how irrational and unjust), and a
destruction of a child's natural curiosity.
I don't buy your premise that people are "creative". The overwhelming majority do not have
creative projects they'd be pursuing if they had leisure and income. Go look at retirees,
ones that have just retired, are healthy, and have money.
You are really misconstruing what the studies have found and misapplied it to your
situation. Leisure time when you have a job or a role (being a student) is not at all the
same as having time when you are unemployed, with or without a social safety net.
Work: that can be me hiring someone to cut my yard, or another type of one-off thing
filled with precariousness.
Job: that less temporary work, but by no means permanent. Just a step up from the
precariousness of work.
Career: that is work in the same field over a long period of time and it is more likely
that someone will develop an identity through performing the work. Still precarious, but
maybe more fulfilling.
Sense of purpose: I was always under the impression that is something you have to give
yourself. If it can be taken away by someone what was the purpose?
one often has a role when unemployed: finding work. But it's not a very fulfilling one!
But if one is trying to find work, it's not exactly the absence of a role either even if it
still leaves significantly more free time than otherwise, maybe winning the lottery is the
absence of a role.
But then it's also not like we give people a UBI even for a few years (at any time in
adult life) to get an education. Only if they take out a student loan approaching the size of
a mortgage or have parents willing to pony up are they allowed that (to pay not just for the
education but to live because having a roof over one's head etc. is never free, a UBI via
debt it might be called).
> Give me more leisure time and you'll find me painting, writing, playing instruments
and doing things that I enjoy.
Nothing to breed resentment of "the creative class" here! Blowback from Speenhamland
brought on the workhouses, so be careful what you wish for.
UBI won't happen and JG has been tried (and failed).
The argument that JG would allow the public sector to hire more people is demeaning to
people already employed in the public sector and demonstrably false – people are hired
into the public sector without there being a JG. It is most certainly possible to be against
a JG while wanting more people working in the public sector.
The way forward is to have a government acting for people instead of for corporations.
Increase the amount of paid vacations, reduce the pension age and stop with the Soviet style
worship of work: While some people are apparently proud of their friends and relatives who
died while at work it is also possible to feel sad about that.
The JG was tried in Communist countries in Europe, Asia and Americas. The arguments then
and there were the same as here and now, made by the same type of social 'scientists'
(economists).
Would a JG be different here and now as the Republicans and Democrats are representing the
best interests of the people? Or are they representing the same kind of interests as the
Communist parties did?
Data, please. The USSR fell because it was spending on its military to keep up with the
US, a much larger economy. Countering your assertion we have this:
As long as people argue that "it's not fair" to fix the inequality issue and employ things
like debt jubilee or student loan forgiveness, or if we fix the ridiculous cost of health
care what will all those insurance agents do then we will wind up with the real kind of class
warfare, rather than the current punching from the top down, the punching will come from the
bottom, because the situation is not fair now, it's just TINA according to those who profit
from it. In my own life there is a balance of creativity and work, and I find work enables my
creativity by putting some pressure on my time, i.e., I get up earlier, I practice at 8:30 am
instead of sleeping til 10 and winding up with S.A..D., I go to bed rather than watch tv or
drink to excess.. in other words i have some kind of weird schedule, I have days off sort of
When I've been unemployed I feel the way s described in the article. I find the arguments in
favor of ubi tend to come from people who already have assets, or jobs, or family who they
take care of which is actually a job although uncommonly described as such. The only truth I
see in real life is that the unemployed I am intimately familiar with first are mentally
oppressed by the notion that to repair their situation will require they work every waking
hour at substandard wages for the rest of their life and that is a major barrier to getting
started, and that is a policy choice the gov't and elite classes purposefully made which
created the precariat and will be their undoing if they are unable to see this.
Interesting point. I read a science fiction story in which the protagonist arrives for
work at his full time job at 10:00 AM, and he's finished for the day at 4:00 PM. I can't
remember the name of the story or novel, unfortunately.
Agreed. And they already have it in places like Denmark. Why don't we talk about that? It
actually exists unlike utopian schemes for either total UBI or total work guarantee
(government job creation is not utopian, but imagining it will employ everyone is, and I
would like the UBI to be more widely tried, but in this country we are nowhere close). Funny
how utopia becomes more interesting to people than actual existing arrangements, even though
of course those could be improved on too.
The Danish work arrangement is less than a 40 hour week, and mothers especially often work
part-time but both sexes can. It's here in this country where work is either impossibly
grueling or you are not working. No other choice. In countries with more flexible work
arrangements more women actually work, but it's flexible and flexible for men who choose to
do the parenting as well. I'm not saying this should be for parents only of course.
My own situation is that I am unhappy in my well-paying job and would like nothing more
than to devote myself to other interests. I'm thirty years on in a relationship with someone
who grew up in bad financial circumstances and panics whenever I talk about leaving my job. I
tell her that we have 2 years of living expenses in the bank but I can't guarantee making the
same amount of money if I do leave my job. She has a job that she loves and is important and
pays barely 1/2 of my own income. So she worries about her future with me. She worries about
losing her home. I suppose that makes me the definition of a wage slave. And it makes for an
increasingly unhappy marriage. I admire those who have faced similar circumstances and found
a way through this. Sorry to vent, but this topic and the comments hit a nerve with me and
I'm still trying to figure this out.
Otis;
We are presently going through a period where that "two year cushion" has evaporated, for
various reasons. We are seeing our way through this, straight into penury and privation.
Take nothing for granted in todays' economy.
yes find the lower paying job that you like more first. If you just quit for nothing in
the hopes of finding one it might not happen. Of course unemployment also happens sometimes,
whether we want it or not.
The newer generations are worse when it comes to lifestyle. Those of that are older can at
least remember a time without cellphones internet streaming services leasing a new car every
2 years etc.
What about the young? My niece and her husband should be all set , his mom sunk money into
a home on the condition she moved into a mother in law apartment. So far so good right? 2
years in they are imploding even with the free child care she provides. Combined their
wireless bill a month is over $300. The sit on the couch side by side and stream netflix
shows to dueling iphones in front of a 65 inch tv that is not even turned on. Wearing
headphones in silence.
Both driving new vehicles , both have gym memberships they don't use . They buy lattes 3
or 4 times a day which is probably another 500 a month.
My uncle passed away recently and my niece asked if she was in the will. It was literally
her only communication on the subject. They are going under and could easily trim a few
thousand a month from the budget but simply won't. No one in the family is going to lift a
finger for them at this point they burned every possible bridge already. I have seen people
living in cars plenty lately but I think these will be the first I see to living in brand new
cars .
Somewhere along the line they got the impression that the american dream was a leased car
a starbucks in one hand and an iphone in the other .
Confront them with the concept of living within a paycheck and they react like a patient
hearing he has 3 months to live.
Yeah being poor, never mind growing up poor, just well and truly sucks and it can really
@@@@ you up. Gives people all sorts of issues. I'm rather like her, but I have had the joy of
multi-hour commutes to unexciting soul crushing work. Happy, happy, joy, joy! However don't
forget that with the current political economy things are likely to go bad in all sorts of
ways. This whole site is devoted to that. My suggestion is to keep the job unless you have
something lined up. Not being able to rent has it own stresses too. Take my word for it.
I may be engaging in semantics but I think conflating work and jobs makes this article a
bit of a mixed bag. I know plenty of people who are terribly unhappy in their jobs, but
nonetheless extract a sense of wellbeing from having a stable source of INCOME to pay their
bills (anecdotally speaking, acute stress from recent job losses is closely linked to
uncertainty about how bills are going to be paid, that's why those with a safety net of
accumulated savings report less stress than those without). Loss of status, social standing
and identity and the chronic stress borne from these become evident much later I.e. when the
unemployment is prolonged, accompanied of course by the still unresolved top-of-mind concern
of "how to pay the bills".
As such, acute stress for the recently unemployed is driven by financial/income
uncertainty (I.e. how am I going to pay the bills) whereas chronic stress from prolonged
unemployment brings into play the more identity driven aspects like loss of social standing
and status. For policy interventions to have any effects, policy makers would have to
delineate the primary drivers of stress (or lack of wellbeing as the author calls it) during
the various phases of the unemployment lifecycle. An Unemployment Insurance Fund (UIF) like
we have here in South Africa appears to address the early stages of unemployment, and the
accompanying acute stress, quite well by providing the income guarantee (for six months) that
cushions the shock of losing a job. What's still missing of course are interventions that
promote the quick return to employment for those on UIF, so maybe a middle of the road
solution between UBI and a jobs guarantee scheme is how policy makers should be framing this,
instead of the binary either/or we currently have.
Lots' of people think they're unhappy with their jobs. Let them sit unemployed for 9
months and ask them if they want that job back. The usual parade of anecdata is on display here in the comments. Mitchell's real data and
analysis in the article above still stand.
If you'd read through my comment, and not rushed through it with a view of dishing out a
flippant response, you'd have seen that nowhere do I question the validity of his data, I
merely question how the argument is presented in some areas (NC discourages unquestioning
deference to the views of experts no??). By the way, anecdotes do add to richer understanding
of a nuanced and layered topic (as this one is) so your dismissal of them in your haste to
invalidate people's observations is hardly helpful.
Yes people many not like their jobs but prefer the security of having them to not. Yes
even if the boss sexually harasses one (as we are seeing is very common). Yes even if there
is other workplace abuse. Yes even when it causes depression or PTSD (but if one stays with
such a job long term it ruins the self confidence that is one prerequisite to get another
job!). Yes even if one is in therapy because of job stress, sexual harassment or you name it.
The job allows the having health insurance, allows the therapy, allows the complaining about
the job in therapy to make it through another week.
When unemployed, the stress of worry about money may suppress the creative juices.
Speaking from experience. People may well 'keep looking for jobs' because they know ultimately they need a job with
steady income. The great experience of some freelancers notwithstanding, not all are cut out
for it.
I would love to see some more about happiness or its lack in retirement–referenced
by stay-at-home dad BJ , above.
I wonder, too, about the impact of *how* one loses one's job. Getting laid off vs fired vs
quitting vs involuntary retirement vs voluntary, etc feel very different. Speaking from
experience on that, too. I will search on these points and post anything of interest.
There are also other things that are degrading about the very process of being unemployed
not mentioned here. What about the constant rejection that it can entail? One is unemployed
and looking for work, one sends out resumes, many of them will never be answered, that's
rejection. Then if one is lucky they get interviews, many will never lead to jobs, yet more
rejection. Does the process of constant rejection itself have a negative effect on a human
being whether it's looking for jobs or dates or whatever? Isn't it learned helplessness to if
one keeps trying for something and keeps failing. Isn't that itself demoralizing entirely
independent of any doubtful innate demoralizing quality of leisure.
I am not so sure if I agree with this article. I think it really depends on whether or not
you have income to support yourself, hate or love your job, and the amount of outside
interests you have, among other things. Almost everyone I know who lives in the NYC area and
commutes into the city .doesn't like their job and finds the whole situation "soul-crushing".
Those that live in Manhattan proper are (feel) a bit better off. I for one stopped working
somewhat voluntarily last year. I write somewhat because I began to dislike my job so much
that it was interfering with my state of well being, however, if I had been allowed to work
remotely I probably would have stuck it out for another couple of years.
I am close enough to
62 that I can make do before SS kicks in although I have completely changed my lifestyle
– i.e. I've given up a materialistic lifestyle and live very frugally.
Additionally I
saved for many years once I decided to embark on this path. I do not find myself depressed at
all and the path this year has been very enriching and exciting (and scary) as I reflect on
what I want for the future. I'm pretty sure I will end up moving and buying a property so
that I can become as self sufficient as possible. Also, I probably will get a job down the
line – but if I can't get one because I am deemed too old that will be ok as well. The
biggest unknown for me is how much health insurance will cost in the future .
The article made clear that the studies included "unemployed but with income" from
government support. It is amazing the degree to which readers ignore that and want to make
the findings about "unemployed with no income".
That's because we Americans all have work=good=worthy=blessed by God while
workless=scum=worthless=accursed by God engraved into our collective soul. Our politics, our
beliefs, are just overlays to that.
Even when we agree that the whole situation just crushes people into paste, and for which
they have no defense regardless of how hard they work, how carefully they plan, or what they
do, that underlay makes use feel that this is their/our fault. Any suggestions that at least
some support can be decoupled from work, and that maybe work, and how much you earn, should
not determine their value, brings the atavistic fear of being the "undeserving poor,"
parasites and therefore reprobated scum.
So we don't hear what you are saying without extra effort because it's bypassing our
conscious thoughts.
Add my voice to those above who feel that forced labor is the bane of existence, not the
wellspring. All this study says to me is that refusing to employ someone in capitalist
society does not make them happy. It makes them outcasts.
So, I say yes to a JG, because anyone who wants work should be offered work. But at the
same time, a proper JG is not forced labor. And the only way to ensure that it is not forced
labor, is to decouple basic needs from wage slavery.
I am critical of those who distinguish between the job and the income. Of course the
income is critical to the dignity of the job. For many jobs, it is the primary source of that
dignity. The notion that all jobs should provide some intrinsic dignity unrelated to the
income, or that people whose dignity is primarily based on the income they earn rather than
the work they do are deluded, is to buy in to the propaganda of "passion" being a requirement
for your work and to really be blind to what is required to make a society function. Someone
has to change the diapers, and wipe the butts of old people. (yes, I've done both.) It
doesn't require passion and any sense of satisfaction is gone by about the second day. But if
you could make a middle class living doing it, there would be a lot fewer unhappy people in
the world.
It is well known that auto factory jobs were not perceived as good jobs until the UAW was
able to make them middle class jobs. The nature of the actual work itself hasn't changed all
that much over the years – mostly it is still very repetitive work that requires little
specialized training, even if the machine technology is much improved. Indeed, I would guess
that more intrinsic satisfaction came from bashing metal than pushing buttons on a CNC
machine, and so the jobs may even be less self-actualizing than they used to be.
The capitalist myth is that the private sector economy generates all the wealth and the
public sector is a claim on that wealth. Yet human development proves to us that this is not
true – a substantial portion of "human capital" is developed outside the paid economy,
government investment in R&D generates productivity growth, etc. And MMT demonstrates
that we do not require private sector savings to fund public investment.
We are still a ways from having the math to demonstrate that government investment in
caring and nurturing is always socially productive – first we need productivity numbers
that reflect more than just private sector "product." But I think we are moving in that
direction. Rather than prioritize a minimum wage JG of make-work, we should first simply pay
people good wages to raise their own children or look after their elderly and disabled
relatives. The MMT JG, as I understand it, would still require people to leave their kids
with others to look after them in order to perform some minimum wage task. That is just
dumb.
Maybe it's dumb, it's certainly dumb in a system like the U.S. where work is brutal and
often low paid and paid childcare is not well remunerated either. But caretakers also working
seems to work in countries with greater income equality, good job protections, flexible work
arrangements, and a decent amount of paid parental leave – yea Denmark, they think
their children should be raised by professionals, but also work-life balance is still pretty
good.
My take is that capitalism has made the benefits and malus of having a job so ingrained
into culture and so reinforced. Having a job is so closely linked to happiness because it
gives you the money needed to pursue it.
A job affords you the ability to pursue whatever goals you want within a capitalist
framework. "Everything" costs money and so having a job gives you the money to pay for those
costs and go on to fulfill your pursuit of happiness.
Analyzing whether people are happy or not under these conditions seem apparent that it is
going to lead to results heavily biased towards finding happiness through employment.
The unemployed are often living off someone else's income and feel like an undeserving
parasite. Adults are generally ingrained with the culture that they have to grow up and be
independent and be able to provide for a new family that they will start up. Becoming
unemployed is like being emasculated and infantile, the opposite of what is expected of
adults.
There's also that not having a job is increasingly being punished especially in the case
of America. American wages have stayed either largely static or have worsened, making being
unemployed that much more of a burden on family or friends. Unemployment has been demonized
by Reaganism and has become systematically punishable for the long term unemployed. If you
are unemployed for too long, you start losing government support. This compounds the frantic
rush to get out of unemployment once unemployed.
There is little luxury to enjoy while unemployed. Life while unemployed is a frustrating
and often disappointing hell of constant job applications and having many of them lead to
nothing. The people providing support often start to become less so over time and become more
convinced of laziness or some kind of lack of character or willpower or education or ability
or whatever. Any sense of systemic failure is transplanted into a sense of personal failure,
especially under neoliberalism.
I am not so sure about the case of Europe and otherwise. I am sure that the third world
often has little or no social safety nets so having work (in exploitative conditions in many
cases) is a must for survival.
Anyways, I wonder about the exact methodologies of these studies and I think they often
take the current feelings about unemployment and then attempt to extrapolate talking points
for UBI/JG from them. Yes, UBI wouldn't change culture overnight and it would take a very,
very long time for people to let down their guard and adjust if UBI is to be implemented in a
manner that would warrant trust. This article seems to understand the potential for that, but
decides against it being a significant factor due to the studies emphasizing the malus of
unemployment.
I wonder how different the results would be if there were studies that asked people how
they would feel if they were unemployed under a UBI system versus the current system. I know
a good number of young people (mostly under 30) who would love to drop out and just play
video games all day. Though the significance of such a drastic demographic shift would
probably lead to great political consequences. It would probably prove the anti-UBI crowd
right in that under a capitalist framework, the capitalists and the employed wouldn't
tolerate the unemployed and would seek to turn them into an underclass.
Personally I think a combination of UBI and JG should be pursued. JG would work better
within the current capitalist framework. I don't think it is without its pitfalls due to
similar possible issues (with the similar policy of full employment) either under
Keynesianism (e.g. Milton Friedman sees it as inefficient) or in the USSR (e.g. bullshit
jobs). There is the possibility of UBI having benefits (not having the unemployed be a burden
but a subsidized contributer to the economy) so I personally don't think it should be fully
disregarded until it is understood better. I would like it if there were better scientific
studies to expand upon the implications of UBI and better measure if it would work or not.
The upcoming studies testing an actual UBI system should help to end the debates once and for
all.
My $0.02:
I have a creative pursuit (no money) and a engineering/physical science technical career
(income!). I am proficient in and passionate about both. Over the last few years, the
technical career became tenuous due to consolidation of regional consulting firms (endemic to
this era)- wages flat to declining, higher work stress, less time off, conversation to
contact employment, etc.- which has resulted in two layoffs.
During the time of tenuous employment, my art took on a darker tone. During unemployment the
art stopped altogether.
I'm recently re-employed in a field that I'm not proficient. Both the peter principle and
imposter syndrome apply. My art has resumed, but the topics are singular about despair and
work, to the point that I feel like I'm constantly reworking the same one piece over and over
again. And the quality has plummeted too.
In some fields (e.g. engineering), being a wage slave is the only realistic option due to
the dominance of a small number of large firms. The big players crowd out independents and
free lancers, while pressuring their own employees through just-high-enough wages and
limiting time off. Engineering services is a relationship- based field, and the big boys (and
they are nearly all boys) have vastly bigger networks to draw work from than a small firm
unless that small firm has a big contact to feed them work (until they get gobbled up). The
big firms also have more areas of expertise which limits how useful a boutique firm is to a
client pool, except under very narrow circumstances. And if you are an introvert like most
engineering people, there's no way to compete with big firms and their marketing staff to
expand a network enough to compete.
In that way, consulting is a lot like art. To make a living at it you need either contacts or
a sponsor. Or an inheritance.
I would be interested to know what the definition of unemployment was for the purpose of
this study (I couldn't find it in the supplied links). If it's simply "people who don't have
a job," for example, then it would include the likes of the idle rich, retirees, wards of the
state, and so on. Binary statements like this one do make it sound like the broad definition
is the one in use:
When considering the world's population as a whole, people with a job evaluate the
quality of their lives much more favorably than those who are unemployed.
The conclusion seems at odds with results I've seen for some of those groups – for
example, I thought it was fairly well accepted that retirees who are supported by a
government plan that is sufficient for them to live on were generally at least as happy as
they had been during their working life.
If, on the other hand, the study uses a narrow definition (e.g. people who are of working
age, want a job or need one to support themselves financially, but can't find one) then the
conclusion seems a lot more reasonable. But that's a heavily loaded definition in economic
and cultural terms. In that case, the conclusion (people are happier if they have a job) only
holds true in the current prevailing model of society. It doesn't rule out the possibility of
structuring society or the economy differently in such a way that people can be non-working
and happy. The existence of one such population already (retirees) strongly suggests that
outcomes like this are possible. A UBI would be an example of just such a restructuring of
society, and therefore I don't think that this study and its result are necessarily a valid
argument against it.
Which makes a person happier -- being considered worthless by one's society or valuable?
How many studies do we need to answer that question? Apparently, a lot, because studies like
this one keep on going. The underlying assumption is that jobs make one valuable. So if you
don't have a job you're worthless. Now, who's happier on the whole, people with jobs or the
unemployed? That's surely good for a few more studies. Did you know that members of socially
devalued groups (minorities, non-heteros, and the like) have higher rates of dysfunction,
rather like the unemployed? Hmm, I wonder if there's maybe a similar principle at work. And
my solution is not to turn all the people of color white nor to change all the women to men
nor to "cure" gays. Well, maybe a few more conclusive studies of this kind will convince me
that we must all be the same, toeing the line for those whom it has pleased God to dictate
our values to us.
I am convinced that we shouldn't outlaw jobs, because I believe the tons of stories about
happy people in their jobs However, I also believe we shouldn't force everyone into jobs,
because I know tons of stories about happy people without jobs. You know, the stories that
the JG people explain away: parents caring for their children (JG -- "oh, we'll make that a
job!"), volunteers working on local planning issues (JG -- "oh, we'll make that a job, too.
In fact, we'll make everything worth doing a job. The important thing is to be able to force
people to work schedules and bosses, because otherwise, they'll all lie around doing nothing
and be miserable"), the retired (JG -- "that's not really the same, but they'd be better off
staying in a job"). And this is all before we get to those who can't really hold a job
because of disability or geography or other responsibilities.
I support the JG over the current situation, but as to what we should be working for, the
more I read the JG arguments, the more paternalistic and just plain narrow minded judgmental
they seem.
Data like that provided by Mitchell is important to demolishing the horrid "economic
anxiety" frame much beloved by liberals, especially wonkish Democrats.* It's not (a) just feelings , to be solved by scented candles or training (the liberal version of
rugged individualism) and (b) the effects are real and measurable. It's not surprising, when
you think about it, that the working class is about work .
* To put this another way, anybody who has really suffered the crawling
inwardness of anxiety, in the clinical sense, knows that it affects every aspect of one's
being. Anxiety is not something deplorables deploy as cover for less than creditable
motives.
Financial ignorance of students is a big problem. Big fiancne in the USA is predatory and hunts for weaklings and incompetent
to exploit them. In a very sophisticated ways. So a reasonable assumption would be that the US students is a prey hunted by
large financial predators including neoliberal universities themselves.
Notable quotes:
"... They are financially ignorant; mere babes, being unmercifully exploited by the sophisticated (emphasis on Sophist) financialization culture extant across the western world; especially the U.S.. ..."
I am late to write up a research paper that has not gotten the attention it warrants.
As most readers know, the 2005 bankruptcy law reform included provisions that made it
virtually impossible to discharge student debt in bankruptcy. Yet borrowers who miss payments
wind up paying penalty interest rates, with the result that they will carry their student debt
with them to the grave.
But why do student borrowers get such harsh treatment? The justification for the bankruptcy
law change was that student borrowers were prone to abusing the bankruptcy code even though
they had the ability to make good on their loans. I've never bought the "strategic default"
meme, which is almost entirely creditor urban legend to justify squeezing more blood from the
stone of broke borrowers. Bankruptcy is a painful process that leaves your credit record
damaged for years. And why should anyone think that student loans were more prone to abuse? If
someone declared a Chapter 7 bankruptcy pre-2005, the court would take all the assets it could
lay its hands on, allocate the proceeds among the various debts, and wipe out the rest. It's
not as if student loans were treated worse than any other non-collateralized loans.
Nevertheless, the argument was that student borrowers were defaulting opportunistically. If
true, that higher default level would lead lenders to charge higher interest rates to cover for
the cost of abusive defaults.
The prototypical strategic defaulter would be someone with few assets but high actual or
expected income.
In a new Philadelphia Fed working paper, Rajeev Darolia and Dubravka Ritter constructed a
database of private student loan (PSL) borrowers to see if their behavior changed as a result
of the bankruptcy law reforms. We've embedded their article at the end of the post. Their
conclusion:
Our findings contribute to this debate by providing evidence on bankruptcy filing and
default behavior using a unique sample of anonymized credit bureau records. Although the 2005
bankruptcy reform reduced rates of Chapter 7 bankruptcy overall, the provisions making PSL
debt nondischargeable do not appear to have reduced the bankruptcy filing or default behavior
of PSL borrowers relative to other types of student loan borrowers at meaningful levels.
Therefore, our analysis does not reveal debtor responses to the 2005 bankruptcy reform that
would indicate widespread opportunistic behavior by PSL borrowers before the policy change.
We interpret these findings as a lack of evidence that the moral hazard associated with PSL
dischargeability pre-BAPCPA appreciably affected the behavior of student loan borrowers.
So why are default levels now so high? Lenders relaxed their standards and handed out more
credit as a result of the 2005 bankruptcy reforms. And rising higher education costs means
students are borrowing more than ever.
Having been a debt slave; I can understand what the children (they are children, not
adults) are going through. They are financially ignorant; mere babes, being unmercifully exploited by the sophisticated
(emphasis on Sophist) financialization culture extant across the western world; especially
the U.S..
No loan should be allowed (for children) without a course in basic finance, debt, credit,
and income realities. Now retired, debt free, and solvent; I know of what I speak. Critical
thinking skills are at an all time low in the U.S.; a very serious societal problem; not soon
solved
What about the time-worn argument in favor of all the extra money you're going to make
because you went to (genuflects) college? A lot of people have gone deeply into debt because
they've heard this one. And it's a lie.
Today was a stock options expiry.
Gold and silver rallied smartly, back up to the levels where they roughly were before they
were bushwhacked on the Comex into the FOMC meeting and Non-Farm Payrolls boogie woogie.
I guess the theory that this smackdown of gold to retest 1270 earlier this week was a gambit
ahead of stock option expiry was tradeable.
We are in a new era. I am hearing this on TV and in comments and on chat forums.
We are in an era where risk has been abolished by the central banks and their free money. So
there is little difference between prime and subprime, between 2 year and 10 year Treasuries,
and between stocks and bonds.
According to some of the Pied Piper pundits stocks are better than riskless cash, because
stocks are going to keep rallying forever after, and
cash is trash
. Buy buy buy, and
don't be left behind.
This is the kind of mantra that the sell-side and the wiseguys of the Street too often resort
to when they are taking profits from their pool after a big price run higher, and unloading
mispriced junk on mom and pop, through the funds and institutions.
Once the selling starts in earnest, and it will beyond any doubt at some point, by whatever
event that may happen to trigger it, this is going to get ugly very quickly. But this is the
system that we have today. This will be the third bubble and bust since the repeal of
Glass-Steagall, one of the highest funded PR and political campaigns in modern history.
"... Controlling inflation solely by focusing on workers wages since 1980 but allowing monopoly power and economic rents to skyrocket
since 1980 is the main reason for the extreme inequality that has developed ..."
"... Prima facie evidence of distorted labor market where buyers of labor have control. At the very least, the next democratic President
should use their weekly address to point out the metrics relating economic gains, net wealth gains, productivity gains, to wage gains.
The Presudent should remind employers to fairly share the gains. Once the metrics indicate distortion in the labor markets the President
will then introduce corrective legislation using the public communications weight behind this free market notion of a fair labor market,
using these metrics. Let us try this bully pulpit, public communications effort with the idea of building public momentum for correctives,
and maybe we will return to the 1960s future when gains were more proportionally shared. Perhaps we wont need much legislation at all,
afterall we had one generation comport with fairness, you know, rational expectations. ..."
"... if demand cannot be kept up by wages, then the only option is loans and we have seen in 2008 the catastrophic results of that
..."
non accelerating inflation rate of unemployment is a better term
there is nothing "natural" about that rate
there are many factors that play a role, but the most important are
1. monopoly power is the most important, without monopoly power, in a perfectly competitive market, excessive inflation is
not possible
2. factors that affect bargaining power OF workers
Controlling inflation solely by focusing on workers wages since 1980 but allowing monopoly power and economic rents to
skyrocket since 1980 is the main reason for the extreme inequality that has developed
Prima facie evidence of distorted labor market where buyers of labor have control.
At the very least, the next democratic President should use their weekly address to point out the metrics relating economic
gains, net wealth gains, productivity gains, to wage gains. The Presudent should remind employers to fairly share the gains.
Once the metrics indicate distortion in the labor markets the President will then introduce corrective legislation using the
public communications weight behind this free market notion of a fair labor market, using these metrics.
Let us try this bully pulpit, public communications effort with the idea of building public momentum for correctives, and
maybe we will return to the 1960s future when gains were more proportionally shared. Perhaps we wont need much legislation at
all, afterall we had one generation comport with fairness, you know, rational expectations.
We can expect to do that again, especially as all new economists will be trained on the why and on how to accomplish this metric
of shared gains. One can only hope.
if we don't allow median wages to go up to match production/productivity
and if economic rents continue to go up disproportionally then we need to do a redistribution, ideally by taxes, to get the
median wage to keep pace with production/productivity
otherwise demand for products will eventually falter, making us all poorer for it
if demand cannot be kept up by wages, then the only option is loans and we have seen in 2008 the catastrophic results of
that
Should
We Reject the Natural Rate Hypothesis?, by Olivier Blanchard, PIIE : Fifty years ago,
Milton Friedman articulated the natural rate hypothesis. It was composed of two
sub-hypotheses: First, the natural rate of unemployment is independent of monetary policy.
Second, there is no long-run tradeoff between the deviation of unemployment from the natural
rate and inflation. Both propositions have been challenged. Blanchard reviews the arguments
and the macro and micro evidence against each and concludes that, in each case, the evidence
is suggestive but not conclusive. Policymakers should keep the natural rate hypothesis as
their null hypothesis but keep an open mind and put some weight on the alternatives. [
paper ]
"there is a strong case, although not an overwhelming case, to allow U.S. output to exceed
potential for some time, so as to reintegrate some of the workers who left the labor force
during the last ten years."
Blanchard calls for exploring the unknown regions
of lower and lower unemployment
Lower UE rates
Instead of accelerating output price inflation
Or even wage inflation
Given possible productivity pick ups
We may discover
We get a return to higher and higher participation
Not an unhappy result after all
The parting of the ways with the likes of Blanchard and krugman might come
When at long last wage rates do begin to rise faster then
Say
labor productivity plus three percent
But if the acceleration of the expected rate of change
of the rate of output price change
accelerates slowly
We'll have plenty of policy means and time to moderate the expansion of demand
Given the political will
What is completely missed by looking at the impact of a slump on long run output capacity
Is the actual lost output out of existing capacity
And the misery this inflicts now
for many too many
Ten years of sub possible output
Contain How many weeks upon weeks
of reduced Welfare for too many souls ?
Blanchards uses the definition of potential output
That suggests over production has to be off set by under production
I.e. Potential output is not technical maximum output by any means
PO
Is more like a rate of output and consequent rate of existing factor utilization
That does not unduly
stress
the various institutional arrangements and practices
Or overly tax
the stability of existing social norms
Considered necessary
to sustaining the good of society
thru
It's gradual development over time
There is another set of conflicting visions
One of which
That any class pov might hatch
A vision
Perhaps too Faustian for most souls of that class
That is restless
to push faster
To Venture more
Face uncertainty with boldness even audacity
"... So should Mr Azar be confirmed as Secretary of DHHS, the fox guarding the hen house appears to be a reasonable analogy. ..."
"... In this post, I'd like to add two additional factors to our consideration of Azar. The first: Democrat credentialism makes it hard for them to oppose Azar. The second: The real ..."
Clearly, Alex Azar, nominated yesterday for the position of Secretary of Health and Human Services by the Trump Administration,
exemplifies the case of the "revolving door," through which
Flexians slither on their way to (or from) positions of public trust. Roy Poses (
cross-posted at NC ) wrote, when Azar was only Acting Secretary:
Last week we noted that Mr Trump famously promised to “drain the swamp” in Washington. Last week, despite his previous
pledges to not appoint lobbyists to powerful positions, he appointed a lobbyist to be acting DHHS Secretary. This week he is apparently
strongly considering Mr Alex Azar, a pharmaceutical executive to be permanent DHHS Secretary, even though the FDA, part of DHHS,
has direct regulatory authority over the pharmaceutical industry, and many other DHHS policies strongly affect the pharmaceutical
industry. (By the way, Mr Azar was also in charge of one lobbying effort.)
So should Mr Azar be confirmed as Secretary of DHHS, the fox guarding the hen house appears to be a reasonable analogy.
Moreover, several serious legal cases involving bad behavior by his company, and multiple other instances of apparently unethical
behavior occurred on Mr Azar’s watch at Eli Lilly. So the fox might be not the most reputable member of the species.
The literature makes clear that the revolving door process is a source of valuable political connections for private firms.
But it generates corruption risks and has strong distortionary effects on the economy , especially when this power is
concentrated within a few firms.
The ongoing parade of people transiting the revolving door from industry to the Trump administration once again suggests how
the revolving door may enable certain of those with private vested interests to have excess influence, way beyond that of ordinary
citizens, on how the government works, and that the country is still increasingly being run by a cozy group of insiders with ties
to both government and industry. This has been termed crony capitalism.
In this post, I'd like to add two additional factors to our consideration of Azar.
The first: Democrat credentialism makes it hard for them to oppose Azar. The second: The real damage Azar could do is on
the regulatory side.[1]
"I am glad to hear that you have worked hard, and brought fair-minded legal analysis to the department," Democratic
Sen. Max Baucus said at Azar's last confirmation hearing.
And:
Andy Slavitt, who ran the Affordable Care Act and the Centers for Medicare & Medicaid Services during the Obama administration,
said he has reason to hope Azar would be a good secretary.
"He is familiar with the high quality of the HHS staff, has real-world experience enough to be pragmatic, and will hopefully
avoid repeating the mistakes of his predecessor," Slavitt said.
So, if Democrats are saying Azar is "fair-minded" and "pragmatic" -- and heaven forfend that the word "corruption"[2] even be
mentioned -- how do they oppose him, even he's viscerally opposed to everything Democrats supposedly stand for? (Democrats do this
with judicial nominations, too.) Azar may be a fox, alright, but the chickens he's supposedly guarding are all clucking about how
impeccable his qualifications are!
Second, let's briefly look at Azar's bio. Let me excerpt salient detail from
USA Today :
1. Azar clerked for Supreme Court Justice Antonin Scalia .
2. Azar went to work for his mentor, Ken Starr , who was heading the independent counsel investigation into Bill
and Hillary Clinton's Whitewater land deal.
3. Azar had a significant role in another major political controversy when the outcome of the 2000 presidential election
hinged on a recount in Florida . Azar was on the Bush team of lawyers whose side ultimately prevailed [3]
For any Democrat with a memory, that bio provokes one of those "You shall know them by the trail of the dead" moments. And then
there's this:
When Leavitt replaced Thompson in 2005 and Azar became his deputy, Leavitt delegated a lot of the rule-making process to Azar.
So, a liberal Democrat might classify Azar as a smooth-talking reactionary thug with a terrible record and the most vile mentors
imaginable, and on top of it all, he's an effective bureaucratic fixer. What could the Trump Administration possibly see in such
a person? Former (Republican) HHS Secretary Mike Leavitt explains:
"Understanding the administrative rule process in the circumstance we're in today could be extraordinarily important because
a lot of the change in the health care system, given the fact that they've not succeeded legislatively, could come administratively."
1) Administratively, send ObamaCare into a death spiral by sabotaging it
2) Legislatively, gut Medicaid as part of the "tax refom" package in Congress
3) Through executive order, eliminate "essential health benefits" through "association health plans"
As a sidebar, it's interesting to see that although this do-list is strategically and ideologically coherent -- basically,
your ability to access health care will be directly dependent on your ability to pay -- it's institutionally incoherent, a bizarre
contraption screwed together out of legislation, regulations, and an Executive order. Of course, this incoherence mirrors to Rube
Goldberg structure of ObamaCare itself, itself a bizarre contraption, especially when compared to the simple, rugged, and proven
single payer system. ( Everything Obama did with regulations and executive orders, Trump can undo, with new regulations and
new executive orders . We might compare ObamaCare to a child born with no immune system, that could only have survived within
the liberal bubble within which it was created; in the real world, it's not surprising that it's succumbing to opportunistic infections.[2])
On #1, The administration has, despite its best efforts, not achieved a controlled flight into terrain with ObamaCare; enrollment
is up. On #2, the administration and its Congressional allies are still dickering with tax reform. And on #3 . That looks looks like
a job for Alex Azar, since both essential health benefits and association health plans are significantly affected by regulation.
So, yes, there are worse scenarios than the revolving door; it's what you leave behind you as the door revolves that matters.
It would be lovely if there were a good old-fashioned confirmation battle over Azar, but, as I've pointed out, the Democrats have
tied their own hands. Ideally, the Democrats would junk the Rube Goldberg device that is ObamaCare, rendering all of Azar's regulatory
expertise null and void, but that doesn't seem likely, given that they seem to be doing everything possible to avoid serious discussion
of policy in 2018 and 2020.
NOTES
[1] I'm leaving aside what will no doubt be the 2018 or even 2020 issue of drug prices, since for me that's subsumed under the
issue of single payer. If we look only at Azar's history in business, real price decreases seem unlikely.
Business Insider :
Over the 10-year period when Azar was at Lilly, the price of insulin notched a three-fold increase. It wasn't just Lilly's
insulin product, called Humalog. The price of a rival made by Novo Nordisk has also climbed, with the two rising in such lockstep
that you can barely see both trend lines below.
The gains came despite the fact that the insulin, which as a medication has an almost-century-long history, hasn't really changed
since it was first approved.
Nice business to be in, eh? Here's that chart:
It's almost like Lilly (Azar's firm) and Novo Nordisk are working together, isn't it?
[2] Anyhow,
as of the 2016 Clinton campaign , the Democrat standard -- not that of Poses,
nor
mine -- is that if there's no quid pro quo, there's no corruption.
[3] And, curiously, "[HHS head Tommy] Thompson said HHS was in the eye of the storm after the 2001 terrorist attacks, and Azar
had an important role in responding to the resulting public health challenges, as well as the subsequent anthrax attacks "
Oh please, stop quoting Andy Slavitt, the United Healthcare Ingenix algo man. That guy is the biggest crook that made his money
early on with RX discounts with his company that he and Senator Warren's daughter, Amelia sold to United Healthcare. He's out
there trying to do his own reputation restore routine. Go back to 2009 and read about the short paying of MDs by Ingenix, which
is now Optum Insights, he was the CEO and remember it was just around 3 years ago or so he sat there quarterly with United CEO
Hemsley at those quarterly meetings. Look him up, wants 40k to speak and he puts the perception out there he does this for free,
not so.
I think you're missing the context. Lambert is quoting him by way of showing that the sleazy establishment types are just fine
with him. Thanks for the extra background on that particular swamp-dweller, though.
Alex Azar is a Dartmouth grad (Gov't & Economics '88) just like Jeff Immelt (Applied Math & Economics '78). So much damage
to society from such a small department!
Since 2014, Ross has been the vice-chairman of the board of Bank of Cyprus PCL, the largest bank in Cyprus.
He served under U.S. President Bill Clinton on the board of the U.S.-Russia Investment Fund. Later, under New York City Mayor
Rudy Giuliani, Ross served as the Mayor's privatization advisor.
I don't believe that the President's "swamp" ever consisted of crooked officials, lobbyists, and cronies I think it has always
consisted of those regulators who tried sincerely to defend public interests.
It was in the sticky work of those good bureaucrats
that the projects of capitalists and speculators bogged down. It is against their efforts that the pickup-driving cohort of Trump_vs_deep_state
(with their Gadsden flag decals) relentlessly rails.
Trump has made much progress in draining the regulatory swamp (if indeed
that is the right way to identify it), and no doubt will make considerably more as time wears on, leaving America high and dry.
The kind of prevaricator Trump is may simply be the one who fails to define his terms.
I think we've moved past the revolving door. We hear members of the United States Senate publicly voice their concerns about
what will happen if they fail to do their employers' bidding (and I'm not talking about "the public" here). In the bureaucracy,
political appointees keep accruing more and more power even as they make it clearer and clearer that they work for "the donors"
and not the people. Nowhere is this more true than the locus through which passes most of the money: the Pentagon. The fact that
these beribboned heroes are, in fact, setting war policy on their own makes the knowledge that they serve Raytheon and Exxon rather
than Americans very, very troubling.
I suspect Azar's perception is that he is just moving from one post to another within the same company.
Big pharma indeed has so much defense from the supposed left. It combines their faith in technological progress, elite institutions,
and tugs on the heart strings with technology that can save people from a fate of ill health or premature death. Of course, the
aspect of the laws being written to line the pockets of corrupt executives is glossed over. While drug prices and medical costs
spiral ever higher, our overall longevity and national health in the US declines. That speaks volumes about what Democrats really
care about.
John Laurits
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http://www.eindtijdinbeeld.nl/EiB-Bibliotheek/Boeken/The_Next_Million_Years__how_to_kill_off_excess_population___1953_.pdfNathanael says: 11/29/2017 at 4:18 pmFirst of all, Ron, a species which destroys its own food supply or its own habitat *does* go extinct. They're currently referred to as "superpredators" -- it's happened repeatedly throughout history.Dennis Coyne says: 11/29/2017 at 5:15 pm
Well, perhaps I should not have said "gone". There will always be trace amounts of everything left. And nothing will suddenly disappear. There will be a decline curve for everything. But let's deal with the one with the least future abundance, oil. I believe we are at peak oil right, or very near it anyway. The bumpy plateau may last from 5 to 10 years. Then the decline curve will be much steeper than the ascent.Dennis Coyne says: 12/02/2017 at 1:26 pm
My work suggests that the world runs out of more land that can be put under grain by 2035. This is mainly Brazil and Russia. Just about every country in Africa is importing grain now. Therefore most of their population growth has to be fed on imported grain. Most of the costs in producing grain are in energy so a rising oil price will have a leveraged effect on food prices.Dennis Coyne says: 11/29/2017 at 12:31 pmHi Doug,George Kaplan says: 11/29/2017 at 1:10 pm
I think a common factor in all countries seeing large falls in birth rates is that they are preceded by large falls in death rates. This typically takes a couple of generations, which is one of the biggest causes of population overshoot. In Iran it was maybe a bit faster but not much – from above 20 per 1000 in the 50s and 12 in the eighties to around 4 now.yvesT says: 11/30/2017 at 8:39 amRegarding fertilizers, when you realize that there was a "human bones" market in the 19th century, and that for instance England "emptied" the catacombs in Sicily for that, or took back the soldiers bones from Waterloo, you get a sense of the urgency for fertilizer without phosphorus or natural gas based ones.yvesT says: 11/30/2017 at 10:21 am
So how is that wind farm coming along?islandboy says: 11/30/2017 at 9:04 amWay too early to say. The article dated October 4, 2017 says this:GoneFishing says: 11/30/2017 at 11:01 am
Yea, the feud between Gould/Lewontin/Rose VS Wilson/Dawkins/Dennett has been interesting.Fred Magyar says: 12/01/2017 at 8:59 pm
Hi Ron,Doug Leighton says: 12/02/2017 at 6:27 pm
Keeping things in perspective, why not go with the experts until they're proven wrong?Doug Leighton says: 12/02/2017 at 6:36 pmYou can follow this conversation by subscribing to the comment feed for this post.
