Robert Reich on America's Vicious Circle

From a post by Robert Reich on his blog, he points out the vicious circle in which the US is trapped:

The Reverend Al Sharpton and various labor unions have announced a March for Jobs. But I’m afraid we’ll need more than marches to get jobs back.

Since the start of the Great Recession at the end of 2007, America’s potential labor force – that is, working-age people who want jobs - has grown by over 7 million. But since then, the number of Americans who actually have jobs has shrunk by more than 300,000.

In other words, we’re in a deep hole and the hole is deepening. In August, the United States created no jobs at all. Zero.

America’s ongoing jobs depression - which is what it deserves to be called - is the worst economic calamity to hit this nation since the Great Depression. It’s also terrible news for President Obama, whose chances for re-election now depend almost entirely on the Republican party putting up someone so vacuous and extremist that the nation rallies to Obama regardless.

The problem is on the demand side. Consumers (whose spending is 70% of the economy) can’t boost the American economy on their own. They’re still too burdened by debt, especially on homes that are worth less than their mortgages. In addition, their jobs are disappearing, their pay is dropping, their medical bills are soaring.

Consumer spending slowed again in August as incomes dropped.

Businesses, for their part, won’t hire without more sales. So we’re in a vicious cycle. The question is what to do about it.

There is much more. Go read the whole post and access the embedded links. You will find gems like this:

Republicans say America can’t afford to spend more. In truth, we’ll be in worse shape if we don’t. If the economy remains dead in the water, the ratio of public debt to the total economy balloons.

Besides, the United States can now borrow money from the rest of the world at fire-sale rates. Interest on the ten-year Treasury bill is now under 2%. That’s an almost unprecedented deal. With so many Americans unemployed and so much of our infrastructure in disrepair, this is the ideal time to get on with the work of rebuilding the nation.

And this:

For more than 30 years, the median wage in America has barely increased, adjusted for inflation – even though the economy is twice as large as it was three decades ago. Almost all the gains have gone to the top - especially the top 1%, who now receive over 20% of total income (it was just 10% in 1980).

The Political Right's Grand Hypocrisy

I get a chuckle out of the fact that the big intellectual leaders of the fanatical right in the US fought tooth-and-nail to remove social programs for the disadvantaged, but secretly availed themselves of the goodies despite the conflict of their acts with their professions of faith.

Here is an excellent post by Yves Smith in her Naked Capitalist blog that outs the two big shots Friedrich von Hayek and Ayn Rand:

• Hayek was hired by Charles Koch, an infamous right wing ideologue billionaire, who funded the Cato Institute and brought Hayek to the US to be a scholar at one of his right wing think tanks. Hayek was reluctant because he had medical problems and insurance in the US would have been prohibitive. Koch uncovered the fact that during a previous stay in the US Hayek qualified for Social Security. With the promise of US taxpayer supported medical care, Hayek came to the US and took up the role that Koch gave him: to propound arguments why social entitlement programs in the US must be destroyed to bring back "liberty" to the American people.


• Ayn Rand took taxpayer paid for Social Security and Medicare payments while espousing her anti-government, destroy the entitlements to bring back real "liberty" to Americans theme.

It is stunningly hypocritical that these "big thinkers" both pushed a message for others which they refused to follow for themselves. Disgusting.

A Simple Picture of America

Rather than show the faces of 312 million people, here is a statistical distillation that captures what I consider to be the most profound fact about America:

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So much money in so few hands... no wonder the economy is slowly grinding to a halt. The vast majority have so little. They are watching their wages stagnate, many are unemployed, many have lost their homes, many are in poverty and they just don't have money to consume so their part of the economy keeps shrinking. Meanwhile, the few have so much and it keeps growing larger and they can't spend it all. A person can only spend so much, so these people end up sitting on bigger and bigger piles of gold and goodies. But when they spend such a tiny fraction of what they have the economy shuts down. The US is strangling itself because the bottom 90% have so little to spend and the top 1% have so much but after you've bought your 4th "500 foot yacht", you just don't have the urge to buy a half dozen more yachts. You can only sail on one at a time.

The Economic Policy Mess in the US

Here is the opening bit from a post by Jared Bernstein in his blog:

It’s one thing to be up the creek without a paddle. It’s quite another to be stuck up the creek with a paddle that you can’t use.

The latter describes where we are in terms of economic policy. The Federal Reserve is trying to do their part with more easing of interest rates, but absent more action on the fiscal side, like the measures in the President’s jobs plan, I don’t expect anyone much to take advantage of lower rates. What’s missing is demand, customers, orders, projects that inspire investors to come in off the sidelines.

In other words, I think that at a time like this, sequencing matters when it comes to monetary and fiscal stimulus, and fiscal needs to go first…without more demand, I fear we’re unlikely to see the incentive of lower rates gain more traction.

So what’s blocking the fiscal push, as in the jobs plan?

A friend of mine (hat-tip JB) reminded me of this interesting albeit disheartening analysis by James Surowiecki (btw, imho this dude writes a consistently excellent weekly economics column for the New Yorker). His answer to the above question is, of course, Republicans (though I must say, I haven’t seen nearly enough push from the D’s either on the jobs plan), but that begs another question: why is it politically costless for R’s to go to the do-nothing, or worse (austerity!), place on jobs?

Again, the obvious answer is that what hurts the President helps his opponents, but doesn’t that tactic put them in the position I started with: stuck up a creek but not using your paddle to get out?

In order to seal that part of the deal, the R’s have to argue that the paddle doesn’t work—worse, it’s an wasteful, expensive paddle that we should put through the wood-chipper. And that argument has been made much easier for them by the fact that nobody does “counterfactuals”—what would likely have occurred absent the stimulus.

The Recovery Act passed and unemployment got higher. It would have gone higher still without the Recovery Act—that’s a consensus among non-partisan experts—but that’s an awfully hard hand to play.

I blame all the politicos in Washington. The Republicans carry the deepest blame for being cynical nihilist willing to burn down government rather than preserve the country. But I blame the Democrats for being timid and disorganized. And I blame Obama for winning an epic election and then frittering the win away by failing to lead. He is a gutless wonder when it comes to leading. He is a classic politician, i.e. a blowhard who can give a good speech but is a do-nothing when it comes to practical action or leading the troops.

A Little History Lesson

Here is the opening of an interesting essay by writer William Hogeland in his blog Hysteriography:

Given some of my key subjects, I can’t help but be interested in the “occupy” movement that, at the moment, has a few hundred protesters more or less living in Zuccotti Park near the New York Stock Exchange in lower Manhattan, and is apparently starting to engage in similar protests in other cities. You can’t find out much about this action via “mainstream media,” and even much of the left media, such as it is, has been critical in some cases, and outright dismissive in others, regarding the movement’s evident formlessness and absence of specific goals.

That absence is pretty much undeniable. Still, in Salon, Glenn Greenwald has shrewdly criticized liberal-Democrat scorn for Occupy Wall Street. On the other hand, Mother Jones criticizes the movement on bases other than those that Greenwald attacks. . . .

But I write about the deep, founding roots of rowdy, American populist protest and insurrection, often visionary and even utopian, yet informed and practical too, specifically over money, credit, and the purpose and nature of public and private finance. And despite my pop-narrative books on the subject, and despite my articles here, and in such place as Newdeal20.org (articles picked up by AlterNet, Huffington, Salon, Naked Capitalism, and others), key indicators of my relative impact (like royalty statements!) give me a sneaking suspicion that most people still don’t connect the American founding period with a rugged drive on the part of ordinary people for equal access to the tools of economic development and against the hegemony of the high-finance, inside-government elites who signed the Declaration and framed the Constitution and made us a nation.

Sometimes people even ascribe democratic ideas to the famous upscale American Revolutionaries, who to a man actually hated democracy and popular finance. Paine, the exception, was ultimately rebuked and scorned by all of the others.

The difficulty in dealing with our founding battle for democratic economics arises in part because the movement was not against England but against the very American banking and trading elites who dominated the resistance to England. That complicates our founding myth, possibly unpleasantly. Also, it was a generally losing battle. With ratification of the Constitution, Hamiltonian finance triumphed, and people looking to Jefferson and Madison for finance and economic alternatives to Hamilton are barking up the wrong tree, since what those men knew, or even really cared, about finance could be written on a dime. (Anyway, in pushing for creating a nation, Madison supported Hamiltonian finance down the line. Their differences came later.) When Occupy Wall Street protesters say “It’s We the People!” they’re actually referring to a preamble, intending no hint of economic democracy, to a document that was framed specifically to push down democratic finance and concentrate American wealth for national purposes. Not very edifying, but there it is.

The Tea Party, meanwhile, has taken up founding economic issues from a right-wing point of view, associating itself with the upper-middle-class Boston patriots (often mistaken for populist democrats) who led a movement against overrreaching British trade acts in the 1760′s and were important to the impulse toward American independence. I’ve written fairly extensively about where and how I think the Tea Party goes wrong on the history of the founding period. But at least they’re framing their objections to current policy, and framing the historical roots of their ideas, not mainly in cultural but in economic terms.

Like it or not, though, it is Occupy Wall Street that has the most in common, ideologically, not with those Boston merchants and their supporters but with the less well-known, less comfortably acknowledged people who, throughout the founding period, cogently proposed and vigorously agitated for an entirely different approach to finance and monetary policy than that carried forward by the famous founders. Amid horrible depressions and foreclosure crises, from the 1750′s through the 1790′s, ordinary people closed debt courts, rescued debt prisoners, waylaid process servers, boycotted foreclosure actions, etc. (More on that here and here.) They were legally barred from voting and holding office, since they didn’t have enough property, so they used their power of intimidation to pressure their legislatures for debt relief and popular monetary policies. Their few leaders in legit politics included the visionary preacher Herman Husband, the weaver William Findley, and the farmer Robert Whitehill.

Go read the whole essay. It has quite a number of embedded links worth following. Learn some history, get some insights, find out about a side of America you didn't know because it didn't make it into the "official" history books.

The interesting fact about protests and demonstrations is that they have a life of their own. They are like wars. You start by thinking you will have a "limited engagement" and that it will all be over soon, but facts on the ground change quickly and people discover that "in for a penny, in for a pound"... "in for an inch, in for a mile"... and the famous Franklin summary "we will all hang together or we will all hang separately". Things do tend to mushroom. Social change can start in the most obscure ways. Think of an obscure Tunisian street vendor and then envision the whole Middle East aflame.

Bold Move by US Government

Finally, somebody in Washington has awakened and decided to fix the ills in America.

Here are the details of a bold new program to cut the costs of entitlements:



Yes. There is some really innovative ideas taking hold in Washington. I can't wait until they declare Washington, DC to be the new Area 51 and sell permits for "alien hunting"! That can fix two problems at once: increase federal revenues and thin out the overpopulated politician population.

Stories Fumbled and Lost by US Media

Here is Keith Olbermann investigating the strange fact that US media seems to not have noticed the "Occupy Wall Street" demonstrations:

The New and Improved Obama

Why let Madison Avenue have all the fun with its "new and improved" products. The American people deserve an updated Obama 2.0 who speaks directly to the people's needs. Thankfully, Obama has risen to the occasion and is now talking the people's talk and walking the people's walk:



For you unjolly types that want Obama 1.0, here's the earlier, unenhanced, not new, not improved Obama...



How could not not enjoy the infinitely improved Obama 2.0?

Economics as a Morality Play

Here is an excellent bit from a post by Paul Krugman on his NY Times blog:

And it has been an awesome spectacle watching the VSPs [Very Serious People] search, obsessively, for reasons not to fight mass unemployment. Fiscal policy must tighten to appease the invisible bond vigilantes and please the confidence fairy. Interest rates must rise because, well, um, inflation, well, no, low rates cause moral hazard — yes, that must be it.

And we’re not (just) talking about ignorant politicians. This stuff has been coming from the European Central Bank, the Organization for Economic Cooperation and Development, the Bank for International Settlements.

I don’t fully understand it. But a large part of it, it seems obvious, is the intense desire to see economics as a morality play of sin and punishment, where the sinners are, of course, workers and governments, not the bankers. Pain is not an unfortunate consequence of policies, it’s what is supposed to happen.

How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:

Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

Gosh, it’s regrettable that the markets aren’t confirming my warnings! ...

Just to reiterate a point I’ve made before, none of this reflects actual economic theory. Throughout this crisis, people like Adam Posen and yours truly have been basing our arguments on standard textbook macroeconomics, whereas the Very Serious People have been making up stories on the fly to justify their calls for pain. As Wolf, who really seems to have eaten his Wheetabix, puts it,

The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

And this cruelty rules our world.

As through all of history, it is the bottom 90% who pay the price for the idiocy of the top 1%. The know-it-alls at the top see the world through their ideological glasses that just happen to see things the way that suits them fine. That it hurts the bottom 90% doesn't bother them one whit.

David Orrell on the Art & Science of Forecasting

I love to read about "expert opinion" and "forecasting". One of my favourite reads is Dan Gardner's "Future Babble: Why Expert Predictions Fail - and Why We Believe Them Anyway". Here is the author's website for the book. And here is my comment on the book.

David Orrell has written a number of books on economics and in particular the failure of economic models to match reality. I especially enjoy his book Economyths. Here is the author's website and the (author's post on his book.

Here is a presentation by David Orrell for the International Institute of Forecasters entitled "Where's the Puck? 2500 Years of Forecasting". It is a nice survey of the history and failings of forecasting:

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The Brave New World Imposed by the "Moral Majority"

The party of "family values" and Christian pietudes has struck again. Are they attacking the rich who Jesus said were less likely to make it to heaven than a camel make it through the eye of a needle? Nope!

The religious right has decided -- yet again -- to attack the poor. To take food from the mouths of impoverished mothers and children. Yes, the Bible thumpers have notched another victory on their belt.

Here's a bit from a post on Robert Reich's blog:

We dodged another shut-down bullet, but only until November 18. That’s when the next temporary bill to keep the government going runs out. House Republicans want more budget cuts as their price for another stopgap spending bill.

Among other items, Republicans are demanding major cuts in a nutrition program for low-income women and children. The appropriation bill the House passed June 16 would deny benefits to more than 700,000 eligible low-income women and young children next year.

What kind of country are we living in?

The pious are happy to rush to their churches and push to the front so that God will see them and be pleased with them. These devout souls know that God keeps tally and you show your piety by your bank account. If you give a dollar to the poor like Jesus preached, you lose favour with God, so why listen to the junior partner when the big man, God himself, is telling you to hoard your cash to show your devine favour? So the religious right calls for tax cuts and more tax cuts. This is the manna from heaven that will let them pile up the little green bills that show God's accounting. So what if women and children starve? That's their problem.

The devout are winning hearts and minds in America. Here's Reich's tally:

It gets worse. Most federal programs to help children and lower-income families are in the so-called “non-defense discretionary” category of the federal budget. The congressional super-committee charged with coming up with $1.5 trillion of cuts eight weeks from now will almost certainly take a big whack at this category because it’s the easiest to cut. Unlike entitlements, these programs depend on yearly appropriations.

Even if the super-committee doesn’t agree (or even if they do, and Congress doesn’t approve of their proposal) an automatic trigger will make huge cuts in domestic discretionary spending.

It gets even worse. Drastic cuts are already underway at the state and local levels. Since the fiscal year began in July, states no longer receive about $150 billion in federal stimulus money — money that was used to fill gaps in state budgets over the last two years.

The result is a downward cascade of budget cuts – from the federal government to state governments and then to local governments – that are hurting most Americans but kids and lower-income families in particular.

So far this year, 23 states have reduced education spending. According to a survey of city finance officers released Tuesday by the National League of Cities, half of all American cities face cuts in state aid for education.

I love the hypocrisy of the religious right. Their God is the god of Mammon and they literally love to serve their Master.

The Price of Freedom is Eternal Vigilence

Flash! News from the front in the war on terrorism...

Here is an account of the incredible heroism of America's front line defense against terrorism. An alert border agent discovered a Canadian miscreant who willfully refused to divulge that she was carrying a know biohazardous material, the foundations of making a terrorist bomb, the well know "Ontario raspberry" in her car while crossing the border. The alert border agent spotted the illegal item and bravely did his duty to protect the American public from this brazen would-be-terrorist: he performed a strip search. Yes, it is an ugly task, but those officers have been trained to carry out all actions from strip search to waterboarding to protect the American public.

What is shocking is that the Canadian thinks she has some "human rights"! Those Canadians are outrageous. They should realize they have no more rights than Americans and the Americans happily gave up all their rights when their Congress passed the Patriot Act (then reaffirmed it and extended it with Patriot Act II). All law-abiding Americans know they have no rights. When the police tell them to strip, they strip. When the police bring out the rubber truncheons to encourage truth-telling, American speak up and spill the beans. Even the truculent Americans who push their police to bring out the big gun, waterboarding, realize this is all in the name of preserving "democracy" and "liberties" for the liberty-loving Americans.

Listen to what this cur, this dispicable Canadian alleges:

An angry and embarrassed Ontario woman who says she was strip-searched at the Ambassador Bridge without justification has sued two U.S. Customs and Border Protection agents.

The Detroit Free Press says Loretta Van Beek of Stratford filed the suit in Detroit federal court against the unnamed agents. She says she was en route to her Georgia vacation home last March when one agent strip-searched and groped her while the other one watched.

Van Beek says she was detained for two hours, then sent to a windowless cell and ordered to strip because she neglected to disclose she had raspberries in her vehicle.

The lawsuit claims one agent aggressively groped her breasts and genital area while the other watched. Van Beek says she was then photographed and fingerprinted and sent back to Canada.

Attorney S. Thomas Wienner of Rochester tells the Free Press the experience traumatized Van Beek and “She’s concerned she might not be the only victim.”

Every red-blooded American knows she should be grateful than "extreme measures" weren't taken. But rest assured, if she or her kind, try to bring that bright red fruit across the border, America's heros, the Border Agents, stand ready to take them out back and shoot them dead. As Barry Goldwater so eloquently put it: Extremism In The Defence of Liberty Is No Vice



Thank God for America... that beacon on the hill, that shining light of liberty, those patriots will not tolerate raspberries sneaking across the border!

Only pinkos and sissies go for this sick complaint by pastor Martin Niemöller who wimped out in Hitler's Germany:

First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for the Jews,
and I didn't speak out because I wasn't a Jew.

Then they came for me
and there was no one left to speak out for me.

I say:

First they let a woman with a raspberry cross the border,

Then they let somebody with a banana slip by,

Next is was a boy with some blueberries,

Then came those carrying kiwi fruit.

I tell you... we have to draw the line with raspberries. If not, they will be bringing in bombs and rockets, they will be sneaking al Qaeda across the border, and there goes the neighborhood. Property values will fall and the good people will have to flee to the suburbs! So stop them now before it is too late. Strip searches, truncheons, ripping fingernail out raw and bloody, waterboarding... whatever it takes. But don't allow a single raspberry more to cross that border!

American Political Leaders Continue to Turn Down a "Free Lunch"

It isn't often that you see an economist identify a "free lunch" and tell you it isn't a scam, that it literally is like a $100 bill lying on the sidewalk waiting to be picked up. Sure there are right wing economists who would walk right by that $100 bill because they believe in "efficient markets" which assures them the bill can't be real because if it were then somebody would have already bent down and pocketed the free money.

Here is the opening of an excellent article by Brad DeLong pointing out a "free lunch" that Obama, the Republicans, and the Democrats are ignoring. They believe the following is like the $100 on the sidewalk. It can't be real otherwise somebody else (the "job creators" in Republican lingo) would have already bent down and grabbed it. But the "free lunch" is real. Here is DeLong spelling it out:

Former US Treasury Secretary Lawrence Summers had a good line at the International Monetary Fund meetings this year: governments, he said, are trying to treat a broken ankle when the patient is facing organ failure. Summers was criticizing Europe’s focus on the second-order issue of Greece while far graver imbalances – between the EU’s north and south, and between reckless banks’ creditors and governments that failed to regulate properly – worsen with each passing day.

But, on the other side of the Atlantic, Americans have no reason to feel smug. Summers could have used the same metaphor to criticize the United States, where the continued focus on the long-run funding dilemmas of social insurance is sucking all of the oxygen out of efforts to deal with America’s macroeconomic and unemployment crisis.

The US government can currently borrow for 30 years at a real (inflation-adjusted) interest rate of 1% per year. Suppose that the US government were to borrow an extra $500 billion over the next two years and spend it on infrastructure – even unproductively, on projects for which the social rate of return is a measly 25% per year. Suppose that – as seems to be the case – the simple Keynesian government-expenditure multiplier on this spending is only two.

In that case, the $500 billion of extra federal infrastructure spending over the next two years would produce $1 trillion of extra output of goods and services, generate approximately seven million person-years of extra employment, and push down the unemployment rate by two percentage points in each of those years. And, with tighter labor-force attachment on the part of those who have jobs, the unemployment rate thereafter would likely be about 0.1 percentage points lower in the indefinite future.

The impressive gains don’t stop there. Better infrastructure would mean an extra $20 billion a year of income and social welfare. A lower unemployment rate into the future would mean another $20 billion a year in higher production. And half of the extra $1 trillion of goods and services would show up as consumption goods and services for American households.

In sum, on the benefits side of the equation: more jobs now, $500 billion of additional consumption of goods and services over the next two years, and then a $40 billion a year flow of higher incomes and production each year thereafter. So, what are the likely costs of an extra $500 billion in infrastructure spending over the next two years?

For starters, the $500 billion of extra government spending would likely be offset by $300 billion of increased tax collections from higher economic activity. So the net result would be a $200 billion increase in the national debt. American taxpayers would then have to pay $2 billion a year in real interest on that extra national debt over the next 30 years, and then pay off or roll over the entire $200 billion.

The $40 billion a year of higher economic activity would, however, generate roughly $10 billion a year in additional tax revenue. Using some of it to pay the real interest on the debt and saving the rest would mean that when the bill comes due, the tax-financed reserves generated by the healthier economy would be more than enough to pay off the additional national debt.

In other words, taxpayers win, because the benefits from the healthier economy would more than compensate for the costs of servicing the higher national debt, enabling the government to provide more services without raising tax rates. Households win, too, because they get to buy more and nicer things with their incomes. Companies win, because goods and workers get to use the improved infrastructure. The unemployed win, because some of them get jobs. And even bond investors win, because they get their money back, with the interest for which they contracted.

So what is not to like? Nothing.

Go read the whole article.

The political "leadership" in America is a joke. These are political hacks more interested in grandstanding and playing ideological gamesmanship than in saving the ship of state from the shoal of depression and years of economic hardship. It is practically criminal that this is happening!

What History Teaches Us

Here is an interesting article by David Wessel in that bastion of capitalism the Wall Street Journal:

There is an optimistic scenario for the U.S. economy: Europe gets its act together. The pace of world growth quickens, igniting demand for U.S. exports. American politicians agree to a credible compromise that gives the economy a fiscal boost now and restrains deficits later. The housing market turns up. Relieved businesses hire. Relieved consumers spend.

But there are at least two unpleasant scenarios: One is that Europe becomes the epicenter of a financial earthquake on the scale of the crash of 1929 or Lehman Brothers 2008. The other is that Europe muddles through, but the U.S. stagnates for another five years, mired in slow growth, high unemployment and ugly politics…. No one would intentionally choose the second or third, yet policy makers look more likely to stumble into one of those holes than find a path to the happier ending.

Why? Liaquat Ahamed has been pondering that question…. "Is it because people don't know what to do (or there's disagreement about what to do)," he wonders, "or is it the politics, particularly the reluctance to ask some people to pay for the mistakes of others?" "In the '20s," he says, "there was much more ignorance"—the disastrous fealty to the gold standard, the Federal Reserve's failure to understand its role as lender of last resort. Today? Mr. Ahamed can't decide if it's ignorance or insurmountable political barriers that keep governments from doing what needs to be done.

In the 1920s, two crises fed on each other: a banking crisis in the U.S. and a sovereign-debt crisis in Europe. (Sound familiar?) In our time, the U.S. handled its banking crisis better than it did back then. (Yes, much better, despite missteps and criticism.) But Europe? The problems go well beyond the inevitable Greek default on its debts. "We are discussing a broken ankle in the presence of organ failure," Lawrence Summers, the former U.S. Treasury secretary, quipped last week about the fixation on Greece….

I find it funny. I'm reading Ron Suskind's book Confidence Men: Wall Street, Washington, and the Education of a President. He makes it clear that in August 2007 Wall Street insider Robert Wolf let Obama know that a really big crash, not a plain vanilla recession, but a big crash was coming: "This is a market-driven disaster that could crush Wall Street and with it the whole U.S. economy."

That was 4 years ago. Finally in September 2011 Obama announces that he is "worried" about jobs. For those who have been unemployed for 3+ years that has to be good news. But Obama and Wall Street have known for 4 years that the US was going to go into the ditch with a world class depression. But he has done nothing.

It isn't only Obama. The political leadership in Washington continue to do their best imitation of Nero fiddling while Rome burns. They are jockeying to win in 2012 while the country is in the gutter and tens of million are unemployed, many more have joined the impoverished below the "poverty level", many millions have lost their homes, and the future has remained bleak for 3 full years. Nothing. That is Washington's answer. Nothing.

Oh sure, Washington talks up "jobs" but it also talks up "deficits and debt". It talks up a war here and a war there. It talks up putting the pledge of allegiance and Bible reading into every classroom. It talks up making math mandatory until you are 45 so that America can be competitive with the rest of the world. It talks up putting Santa Claus in charge of the poverty program and putting stop loss orders on tooth fairies so that the hungry can wake in the morning with a can of beans under their pillow. Washington is pathetic.

History teaches us that when leaders can't or won't lead, then the people rise up and find their own leaders. That time has come.

Lawrence O'Donnelll Crusading for the Bottom 90%

Here is yet another excellent piece by Lawrence O'Donnell in his The Last Word program at MSNBC. He interviews Michael Moore who is present at the Occupy Wall Street protest:



Best line of the interview: The future has been stolen.

Press Coverage of the "Occupy Wall Street" Demonstration

Here are some bits from a good post by Allison Kilkenny in The Nation where she questions the "official media" coverage of this demonstration:

Over the weekend, my inbox exploded with angry messages from people who had just read this New York Times article (though it reads more like an op-ed) about the Occupy Wall Street protest. Ginia Bellafante gives a devastating account of the event’s attendees, depicting them as scatterbrained, sometimes borderline-psychotic transients.

Bellafante, who is not a reporter but a columnist for the Times, offered a representation of the protesters that is as muddled as the amalgam of activists’ motives she presents in the span of the article. She first claims a Joni Mitchell lookalike named Zuni Tikka is a “default ambassador” of the movement. In one of the following paragraphs, she then describes the protest as “leaderless.” Either the people at Zuccotti Park have official leadership or they don’t (they don’t, by the way). So either Tikka is an official spokesperson who warrants first-paragraph favorability, or Bellafante’s own biases persuaded her to put the kooky girl dancing around in her underwear in the spotlight.

The more serious aspect of the protest—the “scores of arrests” that occurred over the weekend including the arrests of more than eighty people, several of whom the police first penned and then maced—is offered as an aside in Bellafante’s article (she doesn’t mention the macing at all). By the way, none of the young women in the following video are in their underwear.

Bellafante goes on to (rightfully) wonder why the response to the widening class divide hasn’t come in the form of a more serious movement. A proposed hypothesis never emerges, even though Bellafante almost stumbles across one when she describes a young man who is stopping by only in “fits and spurts” because his mother fears he’ll be tear-gassed by the police. It sounds as though Bellafante is on the cusp of critiquing the US police state that has completely terrified the activist community into submission, but then she retreats.

The main bone the article wishes to pick is the scattered ideologies of the attendees—a fair point. However, Bellafante never attempts to do the job of real journalism here, which is to use this slice of life to help her readers understand the world around them. Instead, she comes across as a rubbernecker leering at a particularly bloody wreck.

Go read the whole post. There is a lot more detail and points to consider (plus embedded links).

I remember my experience of demonstrations in the 1960s and 70s. Sure enough, there are a good number of kooks in a crowd. Even the idea of "demonstrating" is felt to be somehow wrong in a democracy where supposedly the people's voice is captured in the election. But elections presuppose and informed public which in turn presupposed an open and effective press. But these are rarely in place, so the role of a demonstration is to kick the system in the rump to force the press to pay attention. This in turn gets the wider public thinking about a topic that heretofore was ignored.

Demonstrations are important and effective. But a journalist who holds them up as a laughingstock is working hard to realize the right wing fantasy of shrinking government down to a size where it can be strangled in a bathtub. If you can turn the public into sleepwalkers by making demonstrations a joke, you will get the "government" you deserve, a robbers' haven where self-interested crooks run the show.

Here's the bottom line for Kilkenny:

... Bellafante reaches a far, far larger readership, and the ones who dismiss protesters always do because their corporate overlords love depicting protesters as flower-waving, stoned-out-of-their-gourds hippies. If you think those are the only people on your side, why get off the couch at all?

This rubbernecking style of journalism is particularly dangerous right now because it amounts to criticizing a burning house for the color of its curtains. The curtains might be brash, ostentatious and completely unhelpful in maintaining the overall flow of the home’s ambiance, but it’s perhaps not the most pertinent detail of the moment. Here’s a more pressing question: Why are the people Bellafante described in her article the ones left behind?

The teargas aside starts to tap into something important: how the police state and its domestic weaponry and bureaucratic assist with the needs for permits to do anything in protests have successfully crippled the activism community. Activists are afraid. You can smell it in their midst. They talk about the constant presence of agent provocateurs and undercovers at every protest. They share battle stories of being abused by the police, like being tazed or held so long in makeshift police pens that they had to defecate in their clothing. And these are the brave ones that still show up to the protests.

It’s not mere paranoia. We know for a fact that the FBI monitors activism groups, and this practice reached a frenzied level during the Bush administration years. These intimidation practices continue under President Obama in the form of raids.

So much for democracy in America. So much for America having a future.

There's a reason why the founders of the America Republic made such blunt statements as the need to "water the tree of liberty with the blood of patriots". Those who run a society are not interested in protests or demonstrations. They will always paint them as loonies and malcontents. Real democracy unfortunately requires a real struggle. The trick is to work for change without being corrupted by the dark forces that those in power use against you. The real task is to remain hopeful and sane while the powerful paint you as a nihilist and crazy.

Pay It Forward

This is what great civilizations are built on. People doing the right thing and giving a helping hand to the next generation. Here is Neil deGrasse Tyson talking about Carl Sagan:



If you want to read a really good book, read Sagan's The Demon-Haunted World.

A Philosophy of Life Given Today's Science & Knowledge

There is a wonderful exploration of what stance we should -- our worldview -- given what various sciences and and wisdom tells us. It is all nicely summarized in simple cartoons at the blog Saturday Morning Breakfast Cereal.

The cartoon format is the perfect way to convert stark intellectual reality into "bite sized" musings appropriate for our poor finite brains. Don't let the blog name or the cartoon format put you off. It is well worth taking a few minutes to ponder the Big Questions. Click the above link and explore.

The Hidden Side of Climate Science

Here is an interview with James Delingpole:



I am a skeptic about "global warming", but Delingpole is way over the top with his claim that "global communism" needed a new organization to cloak their subversive activities so they took up the "green" cause. That is nutty.

I agree with Delingpole that hidebound leftists use an argument about "the end of resources" to sell a new kind of Puritan austerity. My response is to grow the economy and push technology forward to solve problems, not put restrictions and limitations in place to create a stasis in which the poor stay poor and the rich stay rich. But I disagree with Delingpole's right wing politics.

The problem is that the political types on right and left are nutty. The "global warming" crowd is full of ideologues and the hidebound "skeptic" side is filled with right wing nuts. Personally, I side with the skeptics, but I find both right and left political types have burrowed into a scientific debate and turned it into a political fight. It isn't. It is a scientific question. The political types need to be drummed out and the field of climate "science" be handed back to real scientists so that it can become a real climate science and not the ridiculous "the science is settled" pretend science of the global warming crowd.

Oil and Technology Opening the Door to Energy Self-Sufficiency for the US

Here is a bit from a press release by the American Chemical Society:

New technology that combines production of electricity with capture of carbon dioxide could make billions of barrels of oil shale — now regarded as off-limits because of the huge amounts of carbon dioxide released in its production — available as an energy source. That’s the topic of the latest episode in the American Chemical Society’s (ACS) award-winning “Global Challenges/Chemistry Solutions” podcast series.

Adam Brandt, Ph.D., notes in the podcast that almost 3 trillion barrels of oil are trapped in the world’s deposits of oil-shale, a dark-colored rock laden with petroleum-like material. Brandt and colleague Hiren Mulchandani are at Stanford University.

The United States has by far the world’s largest deposits in the Green River Formation, which covers parts of Colorado, Utah and Wyoming. The domestic oil shale resource could provide 1.2 trillion to 1.8 trillion barrels. But concerns over the large amounts of greenhouse gases — mainly carbon dioxide — released by current methods prevent many companies from trying to extract oil from shale.

Brandt’s answer is EPICC — a self-fueled method that generates electricity, as well as the heat needed to produce that electricity from shale. The report, which appears in ACS’ journal Energy & Fuels, describes how EPICC could generate large amounts of electricity without releasing into the atmosphere carbon dioxide from burning the shale. That carbon would be captured and stored underground as part of the production process.

The new podcast is available without charge at iTunes and from www.acs.org/globalchallenges.

The gloom & doom crowd is going to be seriously disappointed. It reminds me of those in the 15th century gnashing their teeth about the disappearance of old oak forest just as Britain was rising to be the world's sea power. Or those doom & gloomsters who have been rushing about for the last 50 years warning about "peak oil". It is always very popular to linearly extrapolate from the past and discover doom awaits us. But their requires a steadfast ignorance about human ingenuity and technological change. The doom & gloom crowd always ignore "the ultimate resource" as they weave their tales of resource shortages and the doom that awaits us.

America's Dirty Little Secret

Here is a bit from an opinion piece by Michael Gerson at the Washington Post:

The human papillomavirus (HPV) is a nasty, sexually transmitted disease contracted by about three-quarters of Americans at some point. You can have it, and spread it, without knowing it. In some women, the virus causes abnormal cells in the lining of the cervix that can develop into cancerous lesions. Virtually all cervical cancer is caused by HPV. There is, however, a vaccine that is highly effective against the most dangerous HPV strains. The main side effect, as you’d expect in a procedure involving a needle, is fainting. The Cen­ters for Disease Control and Prevention recommends that all girls should get it anyway.

At least this approach would have added to the public stock of health information. Instead, Michele Bachmann talked of “innocent little 12-year-old girls” who were “forced to have a government injection” by Rick Perry’s 2007 mandate of HPV vaccinations in Texas. Bachmann later added, on the medical authority of a weeping mother’s anecdote, that the HPV vaccine, or maybe it was some other vaccine, might cause “mental retardation.” Bachmann herself seems prone to a serious condition: the compulsive desire to confirm every evangelical stereotype of censorious ignorance....

Try to imagine a parent-daughter conversation about sexual restraint and maturity that includes the words: “Honey, I’m going to deny you a vaccine that prevents a horrible, bleeding cancer, just as a little reminder of the religious values I’ve been trying to teach you.” This would be morally monstrous. Such ethical electroshock therapy has nothing to do with cultivation of character in children. It certainly has nothing to do with Christianity, which teaches that moral rules are created for the benefit of the individual, not to punish them with preventable death.

This approach to moral education may appeal to a certain kind of conservative politician. How could it possibly appeal to a parent, conservative or otherwise?

America's political right is willing to play dirty, willing to use 12 year old girls, and the ugly painful death from cancer to win its political games. This is called "family values". I call it sadistic, cruel, inhuman, and vicious politics, a no-holds-barred ugly politics whose only purpose is to game power and is willing to stomp all over anybody to get to the top of the heap.

Mitt Romney Catering to the Anti-Intellecutalism of America's Right Wing Politics

This post is funny because the author has caught to pot calling the kettle black... oh so apropos for Romney criticizing Obama...

Harvard-supported Harvard Grad Mitt Romney Criticizes Obama for being a Harvard-supported Harvard Grad

by Wilfred Chan | September 28, 2011 at 8:25 am

Good ol’ scrappy Republican “man of the people” Mitt Romney has been using Barack Obama’s elitist, Ivy-League pedigree as a punchline in recent campaign speeches, deriding the president’s foreign policy as no more than a ill-advised surrender scheme cooked up by effete snobs in the “Harvard faculty lounge,” out of touch with “what they know on the battlefield”.

Ignoring the laughable notion that Mitt Romney ever even got close to a real battlefield, we find a lot of reasons why this most recent spat of Harvard-bashing fails the giggle test (and miserably so).

• Mitt Romney holds not one, but two degrees from Harvard: a JD and an MBA earned in 1975, when he graduated in the top 5% of his class.


• Harvard international relations professor and former Bush aide Meghan O’Sullivan is one of Romney’s foreign policy advisers.


• Harvard economics professor, daddy of the Bush tax cuts — and author of many a textbook – N. Gregory Mankiw is Romney’s chief economic adviser. (Like Romney, Mankiw is also a pretty bad actor.)


• Three of Romney’s sons graduated from Harvard Business School (and also none have served in the armed forces).


• Mitt Romney gave $50,000 to Harvard Business School in 2003.


• The “Harvard faculty lounge” is quite cozy with Mitt: since 2002, Romney has received more than $56,000 from people who are either current Harvard professors or married to one.


• Fuck Mitt Romney.

I have no love for either of them. They are both "plastic people". Obama has shown no concern for the bottom 90% who are suffering through a deep recession. Instead he is busy keeping Wall Street happy. Meanwhile, Romney is a complete bimbo who, like Bush, probably couldn't find his way out of a toilet if he didn't have one of his "staff" to advise him on where to go and how to open and close those complicated things called "door handles".

To refresh your memory, here is a previous Harvard (and Yale) graduate showing some of the smarts he learned from America's Ivy League colleges...

The Future is Closer Than You Think

The day of using science to manipulate unwilling subjects has drawn just a bit closer. Here are some bits from a fascinating post by Mo Costandi in the UK's Guardian newspaper's Neurophilosophy blog:

Magnetic pulses applied to a specific region of the frontal cortex can influence peoples' willingness to lie spontaneously or tell the truth, according to a new study by researchers from Estonia.

The findings, published recently in the journal Behavioural Brain Research, suggest that manipulations of brain activity could be an effective way of obtaining truthful responses from defendants and criminal suspects, raising more ethical questions about the application of neuroscience technologies in the legal profession.

...

The ability to detect deception accurately is of great interest to the legal profession and security agencies, for obvious reasons. The use of brain scanning data as evidence in courts of law has proven to be highly controversial, not least of all because of doubts about the validity of the data. Some researchers argue that we are now in a position to use functional neuroimaging to detect lies, but the general consensus seems to be that neither the technology nor our understanding of the brain are sophisticated enough.

Bachmann is cautious about how to interpret the new findings, because the sample size of 16 participants is small. He adds that they should be replicated before any firm conclusions can be made about the effects of TMS on spontaneous lying. Even so, the study raises the possibility that TMS could be used to increase the likelihood of getting the truth out of suspects or defendants. It seems likely that some may develop the technique and offer it as a service, as was the case with brain scanning.

"Provided that the method is validated and legal norms are established, it could perhaps be allowed and justified," says Bachmann, "but this should not become a routinely used technique. Basic human rights include cognitive privacy and this would be a clear infringement. If a subject freely agrees, maybe it would make sense, but I foresee heated debates on whether 'knocking truth out of the fellow' can be legalized in principle."

I'm sure the dictatorships and autocrats are clapping with glee. The day when they can reduce their subject population to automatons run remotely by the whims of the ruling class have just taken a big step forward. All hail Big Brother!

The Last Bastion of Freedom?

So much for press freedom in the US. Here is the personal story of a PBS reporter being arrested and thrown into jail for 9 hours for standing on the sidewalk and trying to interview pepper-sprayed demonstrators:

When I saw the young women get pepper sprayed, I ran over to interview them. While holding a microphone and wearing a badge identifying myself as an employee of “WNET – New York Public Media,” I found myself suddenly roped into one of the large nets. I was thrown against a wall and handcuffed with hard plastic zip-tie restraints. I sat on the sidewalk with about 50 others. I yelled over and over “I’m press! I’m with WNET MetroFocus! Please do not arrest me.”

I did not possess the press credentials that NYPD allocates to journalists. (As MetroFocus is less than three months old, neither I nor my journalist colleagues have yet met the NYPD’s qualifications.) So even though I work as a professional journalist, the NYPD lumped me in with everybody else.

Lumped me in indeed. I was in police custody for nine hours, eight of which I spent in a jail cell at the 1st Precinct.

An NYPD spokesperson told MetroFocus on Monday that 87 people have been arrested in total since the Occupy Wall Street protests began last weekend; however, the Daily News reported that at least 80 people were arrested on Sept. 24 alone, mostly on charges of disorderly conduct and obstructing traffic. The NYPD would not comment further on my arrest.

...

I also met Rosa A., 33, in the police van while we were being transported to the 1st Precinct for processing. She had been shopping at the Barnes and Noble on Union Square when she saw the protesters outside. As many New Yorkers do when they see something unusual, she snapped a picture. And she was arrested.

“I’ve never been arrested,” said Rosa A., in visible pain from the plastic handcuffs. “I was just there looking at magazines.” She laughed, lightening the mood in the police van. Even our arresting officer, in the van with us, chuckled.

The rich on Wall Street never have to worry about this grubby reality of dealing with brutal police. They can buy their "justice". For the rest of us, to make democracy work we have to demonstrate to get politicians to pay attention. And that means being roughed up and jailed for exercising the "guaranteed freedoms" of the Constitution. As Anatole France so succinctly put it:

"The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."

Sadly, for the average Joe in America they don't realize the "Mr. Policeman is Your Friend" is only true if you are a billionaire. If you live on an average pay cheque, the police are there to make sure you don't linger too long near the property of the ultra-rich.

The good news for all these arrested people is that unlike the shattered societies that the US has created in Afghanistan and Iraq where the "police" are as likely to take you out in the desert and put a bullet in your head as to take you to jail, in the US the police can be brutal and the courts can be slow, but usually you can "get off" after you tell your story to a judge. But as the society gets more like a banana republic and the judges are all from the ultra-rich, it is much more likely that the judges will find you guilty even if you claim to have only stepped out of a store to "take a picture of a demonstration". And it is much more likely that a certain percentage of people will simply "disappear" in the "judicial" system never to be seen or heard from again.

Dominic Streatfeild's "A History of the World Since 9/11"

This is an excellent history of our times. I expected a typical history of events, leaders, and themes. But instead this author presents 8 chapters which introduce a policy stance then burrows down to look at a small handful of "ordinary" people affected by the policy. The author's intent is to lay bare just how badly wrong the "war on terror" has gone. Here is a nice summary of the author's view from the Epilogue:

Outspoken liberals like to display their hatred of the lead players behind the War on Terror. Bush, Cheney, Rumsfeld, Blair: the villains of the piece. The truth is that, with a few notable exceptions, nobody covered themselves with glory. Opposition political parties failed to intervene; the military failed to stand behind its beliefs that operations in Iraq and Afghanistan required better resourcing, manpower and planning; the intelligence community failed to insist that caveats in the products were there for a reason. The media failed to inform the public there were serious problems. Perhaps the blame should be shared? There's enough to go round.

Doubtless there is a case to be made that the world changed as a result of 9/11. But how it changed was not up to Bin Laden, al-Qaeda or the Taliban. It was up to us. We could have reacted differently. We didn't.

As a result, the situation in which we currently find ourselves is not one that has been thrust upon us. It's one that we have chosen. Al-Qaeda doesn't threaten our existence. It never did. Our reaction to it just might.

The book has some wonderfuly graphic stories of individuals and the very real effects of 9/11 on them:

• Chapter 1 looks at Bush's dictum that "the rules have changed" and that "we must take the war to them" and that pre-emptive war was necessary. It ties this with a crazy criminal character in Texas who goes unhinged after seeing the towers fall on 9/11 and decides to go after "the enemy". For him this is anybody ethnically Middle Easternish and he ends up killing an innocent immigrant from India, a Hindu. Streatfeild lays out these characters in great detail. The hard struggle by the Hindu to build a life in America and provide a business built on serving his customers. A very nice guy who worked hard but ended up killed by a madman lashing out at "enemies" to pre-empt their attack on his beloved America. A madman with a criminal past and a mind twisted by drug abuse and violence. Tragic.


• Chapter 2 looks at the "gloves are off" and "the rules have changed. It focuses on a family fleeing Iraq prior to 9/11 but who get caught at sea in the immediate aftermath of 9/11 and harshly interned by Australia. The Australians tried to turn away the boat but the desperate immigrants tried everything to prevent being turned away. The brutal treatment left many deeply injured, some insane, from the years spent in limbo under vicious treatment by an anti-refugee policy by Australia. Tragic.


• Chapter 3 looks at the idea that the "war on terror" had to be fought viciously and that all deaths were the fault of al Qaeda and not of those in the West responding to having been attacked. This chapter looks at the excited and joyous planning of a wedding in Afghanistan. Unfortunately this was in the home province of Mullah Omar and the Americans with their "too little boots on the ground" incompetent intelligence decide that Mullah Omar will show up at the wedding. So they unleash the hell fire of US weapons on innocent people 48 were killed and 117 wounded. This disturbing story is only one of many, many in Afghanistan over a decade of "mistakes" by Americans in their war against a nearly invisible enemy.


• Chapter 8 looks at the "unintended consequences" of a war. In this case, it focuses on the world-wide program to eradicate polio. This program was within a year or two or three of success when 9/11 happened. Sadly, it now appears the world has utterly failed to eradicate polio and since there is now billions with no experience with the disease and many hundreds of millions of children with no immunity, the disease is poised to strike back worse than it was during the height of the great polio epidemics of the mid-20th century. This chapter focuses on the tale of a very dedicated, wonderful doctor who struggles to complete the fight against polio in the tribal areas of Pakistan. Sadly, the Muslims come to believe that the vaccine is a Western plot to sterilize them and that the drugs given to them are adulterated with female hormones and pig fat, they refuse the vaccine. Worse, they blow up the car in which the vaccine team is traveling and kill several including this doctor. Another tragic "consequence" of the war.

The other chapters focus on big policy themes and make them real by looking at the level of individual lives. It is all very tragic. But it makes this book especially powerful and poignant. Wars have consequences. How you fight them is very important. Sadly, the Bush administration was cavalier (cowboyish?) in its conduct of a war that has now killed hundreds and soon thousands more than were ever killed on 9/11.

One final quote from the book to hammer home the obscenities that have come out of "the war on terrorism":

Meanwhile, most of these nations seized on the exceptional nature of the post-9/11 threat, then used it as a justification for enacting domestic legislation that aped US policy regarding human rights: restrictions of rights for foreigners and asylum seekers; indefinite incarceration of suspects without trial; withdrawal of the right to an attorney; suspension of habeas corpus; enhanced surveillance techniques. The list went on and on.

'I do not underestimate the ability of fanatical groups to kill and destroy,' conceded Lord Hoffmann in a famous judgement on the incarceration of terror suspects without trial in the United Kingdom in December 2004. 'But they do not threaten the life of the nation.' The real threat to the United Kingdom, he warned, 'comes not from terrorism but from laws such as these.'

Five years later, the Human Rights Council's Eminent Panel of Jurists on Terrorism, Counter-Terrorism and Human Rights agreed. After an exhaustive three-year study of the effects of the War on Terror on human rights globally, the Panel concluded that human rights protections, assembled over the last sixty years, had been corroded to the point where the international legal order was in jeopardy. Especially worrying was that the nations that had previously argued for the primacy of human rights were the very same nations now busily opting out of them. The result was 'perhaps one of the most serious challenges ever posed to the integrity of a system carefully constructed after the Second World War.'

Everybody should read this book. It will make them sit up and pay attention to the "war" that has been conducted "on their behalf". It will change their way of viewing the world.

Big Government

The political right in the US keeps repeating the lie that "big government" has gotten onerous in the US and is growing larger by the day. They want to cut taxes and shrink government.

But this graph shows that government has been shrinking for at least 15 years in the US:

Click to Enlarge
The above is from a post by Brad DeLong entitled "Atrios Tells Us That Paul Krugman Addresses David Brooks's Zombie Lies".

Here in the U.S. we had a tax-and-transfer stimulus--we put more cash into the hands of households (and banks!). But we did not try an expansionary spending stimulus. Put together localities, states, and the federal government, and our government did not purchase a larger share of the economy's productive potential in 2009 than it had in 2008, and in 2010 and 2011 we cut government purchases as a share of potential GDP--in 2011 sharply.

Sadly the political right is not interested in facts and they drown out the facts so almost nobody in the US understands that their "heavy hand" of government has been getting lighter all the time and that over the last 2 years spending by government has shrunk by 1% of GDP.

Paul Krugman Despairs the Economics is Not a Science

Paul Krugman has devoted his career to economics and has won a Nobel Prize, but he fells that he is living through a "Dark Age" in which economics has unlearned the lessons of the past. He is really despondent. Here is the relevant piece from a post on his NY Times blog:

I’ve never liked the notion of talking about economic “science” — it’s much too raw and imperfect a discipline to be paired casually with things like chemistry or biology, and in general when someone talks about economics as a science I immediately suspect that I’m hearing someone who doesn’t know that models are only models. Still, when I was younger I firmly believed that economics was a field that progressed over time, that every generation knew more than the generation before.

The question now is whether that’s still true. In 1971 it was clear that economists knew a lot that they hadn’t known in 1931. Is that clear when we compare 2011 with 1971? I think you can actually make the case that in important ways the profession knew more in 1971 than it does now.

I’ve written a lot about the Dark Age of macroeconomics, of the way economists are recapitulating 80-year-old fallacies in the belief that they’re profound insights, because they’re ignorant of the hard-won insights of the past.

What I’d add to that is that at this point it seems to me that many economists aren’t even trying to get at the truth. When I look at a lot of what prominent economists have been writing in response to the ongoing economic crisis, I see no sign of intellectual discomfort, no sense that a disaster their models made no allowance for is troubling them; I see only blithe invention of stories to rationalize the disaster in a way that supports their side of the partisan divide. And no, it’s not symmetric: liberal economists by and large do seem to be genuinely wrestling with what has happened, but conservative economists don’t.

And all this makes me wonder what kind of an enterprise I’ve devoted my life to.

I'm stunned that the field has shown itself that incompetent in the face of the 2008 financial crisis. But the academics fell in love with their models, the math, and the simplifying assumptions required to make the math and the models work. They took their eye off what is critical to any real science: the facts. They've turned economics into a branch of theology where the divines of the field debate the number of angels dancing on the head of a pin. They've gotten away from the hard insights of Keynes from the Great Depression. Tragic.

Morality Trumps Economics

Here is an excellent post by Dean Baker in his Beat the Press blog:

Robert Samuelson has a piece today arguing that China's intervention is necessary to save the world economy. He of course is right in arguing that China has enough economic strength to save the euro and prevent a downward spiral that would throw the world economy back into recession, as some of us have argued.

However, the fact that China may have to play this role is due to the failings of the political leadership in both Europe and the United States. It is essential to remember that this is a crisis of a lack of demand, not supply. For this reason, it is ungodly stupid that so many people are being made to suffer from unemployment and declining living standards.

We know how to get out of this mess, we have known how for 70 years. We just need the government to generate demand. That means spending money. Ideally it would spend money on useful things like education, health care, and infrastructure, but even if it spent money in wasteful ways it would still create jobs and put people to work.

In the 30s we got much of the way back to full employment with the Works Progress Administration and other programs. Much of what was done was useful -- look around, you won't have to go far to find infrastructure built by depression-era programs. However, it took the massive spending associated with World War II to get the economy back to full employment. There is no magic associated with war that makes military spending more effective in creating jobs. The only difference was that the threat to the nation from the Axis powers removed the political obstacles to the necessary spending.

The same situation applies today. We just need to spend money. That applies to both the United States and the euro zone countries. The problem is that we have more people in political leadership positions who want to be morality cops and lecture about balancing budgets rather than focus on policies that will restore economic growth. This includes the top officials at the European Central Bank, many of the voting members of the Federal Reserve Board's Open Market Committee and much of the political leadership in the euro zone countries, the United Kingdom and of course here.

The reason why the world might need China to come to the rescue is that our economic policy is being designed by people who prefer to impose their warped sense of morality rather than pursue serious economic policy. The real humiliation of turning to China is not that we actually need China, it's that our political leaders are prevented us from saving ourselves.

The level of economic ignorance and the sheer audacity of pushing austerity in the face of large scale suffering is astounding and demoralizing. When I was a kid in the 1950s and 60s, all things seemed possible. Today the world is many times more productive and technologically advanced, but the it is infested with politicians who want to preach "limits" and "restraint" and the need to stand by while innocents are being mugged by an economy that was created by the very moralizers who say that their "hands are tied". Nuts!

Linda McQuaing Calls for Another Canadian "Me Too!"

Funny how Canada toddles after America. Nothing succeeds in Canada until it "proves" itself in the US. Ideas aren't serious until advocated south of the border. And "leadership" in Canada is pointing out that something is done in the US so it surely must be tried out in Canada as well.

Here's a bit from Linda McQuaig offering a "me too!" on taxes and social policy in her column in the Toronto Sun:

Canada’s ultra-rich — those in the top 0.01 per cent — now have a bigger share of national income than at any point in Canadian history, according to data compiled by McMaster University economist Michael Veall. But the median Canadian family income hasn’t grown in 30 years; in fact, it’s declined from $48,800 (in today’s dollars) to $46,700.

This means ordinary Canadians have little buying power, reducing the incentive for business and the wealthy to invest their substantial cash reserves in ways that create jobs.

As growing inequality becomes a global issue, the subject is strangely absent from Canadian politics, including the current Ontario election.

While the NDP has called for increased corporate taxes, it’s retreated in recent years from urging higher taxes on the rich — as even Bob Rae did when he was Ontario NDP leader. In the 1990 provincial election, Rae ran on a platform that included a provincial estate tax — and won a majority government.

Is it too much to hope that our most progressive party would take a stand as progressive as the president of the United States and America’s second richest man?

Don't get me wrong. I'm behind McQuaig's advocacy. My problem is that it is packaged up with a pretty ribbon and bow of "me too!".

Lawrence O'Donnell Against Police Brutality

It isn't often that somebody with the pulpit of major media uses that position to speak the truth. Here is an excellent segment on the brutal NY City police beating up "Occupy Wall Street" demonstrators behaving legally.



He tells the truth when he says that the police are behaving brutally because they don't want video catching their behaviour. The police want to keep their brutal crimes hidden from the public's eyes. O'Donnell speaks the truth. This video is well worth watching.

Previous posts are here and here.

Update: The UK's Guardian newspaper has identified the cop who maced the woman. He's a repeat offender because he is also up for a previous charge of abusing his powers and assaulting an innocent demonstrator. Here is the key bit:

A senior New York police officer accused of pepper-spraying young women on the "Occupy Wall Street" demonstrations is the subject of a pending legal action over his conduct at another protest in the city.

The Guardian has learned that the officer, named by activists as deputy inspector Anthony Bologna, stands accused of false arrest and civil rights violations in a claim brought by a protester involved in the 2004 demonstrations at the Republican national convention.

Then, 1,800 people were arrested during protests against the Iraq war and the policies of president George W Bush.

Finding the Middle in Middle America

Here is an interesting article by Frank Rich in the New York Magazine that points up the fallacy of believing in a "middle ground" in American politics, the infamous "bipartisanship" that supposedly will save the country. Sadly, from my perspective, this "middle" is always just one more step to the right. But here is Frank Rich's take:

As these elites see it, Obama must always hold his fire because we are perennially just one step away from the nirvana of national unity, no matter how glaring the evidence to the contrary. A classic example was a David Brooks column headlined “The Grand Bargain Lives!” published on July 22 of this year and predicting an Obama–John Boehner mind meld on a far-reaching debt-reduction deal. That same day, embarrassingly enough, those negotiations collapsed, with Obama complaining that Boehner hadn’t returned his calls and Boehner stating that “the deal was never reached, and was never really close.” Brooks, who also flogged the unheeded Simpson-Bowles fiscal commission as “the only way to realistically fix this problem,” has merely picked up where the Polonius of bipartisan Washington punditry, David Broder of the Washington Post, left off when he died in March. So beguiled was Broder after the “Gang of Fourteen” halted filibusters (temporarily) on judicial appointments that in 2007 he wrote that Harry Reid and Mitch McConnell had “forged a personal relationship of unusual trust,” setting off a “powerful current toward consensus building” in the Senate.

This delusional faith in comity reached its apotheosis in the debt-ceiling showdown. With the reliable exception of Paul Krugman, who shuns Washington and calls centrism “the cult that is destroying America,” almost every Establishment observer in our own time bought into the magical thinking that the radical Republicans would never go so far as to risk a default of the American government. Only when the tea-party cabal in the House took Washington hostage did it fully dawn on the Beltway gentry that the country was in danger. But even now, Obama keeps being urged to make nice with the rebels so that he can woo independents, who, we’re constantly told, value bipartisanship every bit as much as the pundits do. The “all-important independent voters,” as the “Lexington” columnist at The Economist recycled the conventional wisdom earlier this month, “are said to be looking for a president who defuses partisan tensions, rather than inflaming them.” Said by whom? Mainly other Washington bloviators.

Obama, after all, is exactly that president. For the good deed of trying to defuse partisan tensions, he has been punished with massive desertions by the very independents who are supposed to love his pacifism.

Rich goes for the jugular with this:

Yet the glorification of bipartisanship as a political steroid is actually gaining favor in the Beltway, especially in liberal quarters, as Election Year approaches. The first trial balloon, all but bursting with hot air, was the announcement of an organization called No Labels last December. Venerating the “vital center” and vilifying “hyperpartisanship,” No Labels was endorsed by Michael Bloomberg, the former George W. Bush operative Mark McKinnon, and MSNBC’s bipartisan-minded morning talk show Morning Joe, which celebrated No Labels’ opening festival of civic-minded treacle as if it were the birth of the United Nations. ... No Labels, meanwhile, has gone on to create a blog that awards “high-fives” to politicians upholding its content-free ideals. Among the winners have been Boehner (for asking his caucus to show up for Obama’s address to Congress) and Gabrielle Giffords (for showing up to vote for the debt-ceiling bill). While Woody Allen may be right that 80 percent of success is showing up, if that’s now the high bar for a functioning government, America can pack it in.

...

The other new bipartisan scheme is a web-based campaign, Americans Elect, promoted by Thomas L. Friedman, ­McKinnon, and Douglas Schoen, a Bill Clinton and Bloomberg pollster with a sideline of using Murdoch outlets to berate Obama for not sufficiently emulating Clinton and Bloomberg. Americans Elect has collected more than 1.8 million signatures to put a third-party presidential candidate on the ballot in six states (so far) next year. ... And what would be Friedman’s third-party platform? His domestic bullet points include a short-term stimulus, Simpson-Bowles deficit cuts, a gasoline tax for government-supported scientific research, and a carbon tax to finance new infrastructure and clean-power innovation. That’s an agenda to delight attendees at the Aspen Ideas Festival, Morning Joe devotees, Bloomberg fanciers, and, for that matter, Barack Obama. It would draw only a fraction of those independent voters identified by Pew and no Republicans except for the one percent that likes Jon Huntsman, a No Labels “high-five” honoree whose presidential campaign, dedicated to bipartisan civility, is in a race to the bottom of the polls with Rick Santorum’s.

If Americans Elect gains traction, virtually every vote it receives will be at the Democrats’ expense. The Democrats, and Obama, may well deserve it. But does the country?

...

“Maybe it’s time to have some provocative language in this country,” Perry said at his maiden debate. It is time, and Obama is certainly capable of giving as good as he gets. The Washington hands who assume Perry and his constituency will self-destruct are as misguided as those who thought the conservative movement couldn’t survive provocative language like the 1964 Goldwater mantra “Extremism in defense of liberty is no vice.” Extremism in defense of liberty may be a vice, but so is retreat in the face of extremism. The many who would have Obama surrender without a fight in 2012—whether Beltway wise men addicted to bipartisanship, vain and deluded third-party entrepreneurs, or White House strategists chasing phantom independents—are fiddling while America burns. If Obama succumbs to their siren call again, he will too.

The Obama "compromises" have been a disaster. Finding middle ground is ridiculous. What is needed is a pragmatic politics, the politics of what is doable. Fighting to win "points" or to "bring down government" (the favourite of the Republicans) is insane. But to continue compromising by giving away your position as Obama has done is equally insane.

The pragmatic politics needed by America is finding solutions and fighting for them. Putting consequence before partisanship and putting needs before negotiation. America needs a leader who will fight for the future.

The CIA Declares that Knowledge about "Global Warming" is Classified Intelligence

The American taxpayer foots the bill for the CIA, but when the CIA goes out and digs up information about "global warming", this is stamped "classified" and the taxpayers aren't allowed to see the results.

Just what about "global warming" is so dangerous that leaking anything about it to "America's enemies" would undermine the American republic? I don't see it.

Here are some bits from an article in Wired magazine:

CIA Says Global-Warming Intelligence Is ‘Classified’

Two years ago, the Central Intelligence Agency announced it was creating a center to analyze the geopolitical ramifications of “phenomena such as desertification, rising sea levels, population shifts and heightened competition for natural resources.”

But whatever work the Center on Climate Change and National Security has done remains secret.

In response to National Security Archive scholar Jeffrey Richelson’s Freedom of Information Act request, the CIA said all of its work is “classified.”

“We completed a thorough search for records responsive to your request and located material that we determined is currently and properly classified and must be denied in its entirety,” (.pdf) Susan Viscuso, the agency’s information and privacy coordinator, wrote Richelson.

...

The CIA’s position, he said, means all “the center’s work is classified and there is not even a single study, or a single passage in a single study, that could be released without damage to national security. That’s a familiar song, and it became tiresome long ago.”

...

When the center was announced, the CIA said it would become “a powerful asset recognized throughout our government, and beyond, for its knowledge and insight.”

President Barack Obama also promised a transparent administration, which he might not be living up to. For instance, in 2009, the Obama administration played the national security card to hide details of the controversial Anti-Counterfeiting Trade Agreement that is still being negotiated across the globe.

What’s more, consider the 33-page report the White House issued Friday, “The Obama Administration’s Commitment to Open Government.” (pdf)

So much for promises about "transparency". So much for the sweet light of reason in government. I guess the spies think that information about CO2 levels is a national secret that can be manipulated by "America's enemies" despite the fact that it is public knowledge.

What Government Could & Should Do

The political right in the US keeps wanting to shrink government to a size where it can be drowned in a bathtub, but most people realize that government is critical to getting us out of the recession/depression we are living through.

Here is an interview with Michael Spence, a Nobel-prize winning economist:



He is dead right that government should focus on:

• Fiscal stabilization


• Growth


• Employment

His views are the "sweet voice of reason" which is exactly what the politicians are ignoring. Spence thinks that slowly and eventually "the government" will finally wrap its mind around its responsibilities. From my perspective the right wing nuts in the US will ensure that no such reasonableness will be evident until after the 2012 election and only if the Republicans are decisively rejected by the electorate.

The True Heart of Communism

Here's a short but too-the-point posting on the BoingBoing site:

China Communist Party official who kept sex slaves in basement loses job

By Xeni Jardin at 12:36 pm Monday, Sep 26

A man who is accused of holding six women as sex slaves in a dungeon for two years and killing two of them has been terminated from his government post and stripped of his Communist Party membership.

I guess they are going to have to dig up Mao and strip him of his "party membership" since he was guilty of enslaving nearly a billion Chinese and killing 40 million Chinese. Sadly, we know they won't because slavery and killing people is at the heart of Communism. It has been there since the "communism" was founded when a minority split from the Marxist Russian Social Democratic Labor Party and had the audacity to call themselves the "majority" (in Russian "Bolshevik").

Burying bodies is something that the political extremes of both the left and right love to indulge in. They both beat their chest over their "love of the people" but as best I can tell, they want robots not people and they are only too happy to kill those who don't fit their blinkered view of "the good life". The 20th century was the scourge of history because of political extremists on right and left indulged their fanaticism and left hundreds of millions of dead bodies littering that "stage of history".

Why Inflation is Preferable to Deflation

Here is a very nice, simple statement by Paul Krugman on his NY Times blog that spells out why government should be pushing for inflation right now and not deflation:

This is probably a good time to point out something that should be widely understood: inflation and deflation are not symmetrical. Four percent inflation does very little harm; four percent deflation is a disaster. Why? Three reasons:

1. The zero lower bound: you can always raise interest rates, but you can’t cut them below zero, so deflation means significantly positive real rates even in the depths of a slump, making monetary stabilization much harder if not impossible.

2. Nominal wage rigidity: it’s hard to get wage cuts — always has been, and always will be. So deflation messes up labor markets.

3. Debt: deflation is always contractionary, because it redistributes wealth to creditors and away from debtors, who are almost by definition more likely to be spending-constrained. And in the euro context this means that imposing deflation on debtor countries worsens the downward pressure on the European economy.

So European policy that requires deflation on the part of a large part of the zone is a real disaster.

The problem is that the politicians listen to the creditors and not the debtors. The fact that listening to the creditors means they extend this recession/depression isn't a big deal for those on top. It is the people on the bottom who pay through unemployment and destroyed lives. For the rich it just means they have to settle on buying a 450 foot yacht and not a 500 foot yacht.