Economy
"You can have wealth concentrated in the hands of a few, or democracy, but you cannot have both." - Louis Brandeis
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is the search for a superior moral justification for selfishness." -- John Kenneth Galbraith
A dirty little secret everyone in Washington knows, or at least should. The vast majority of economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it. David M. Walker the comptroller general of the United States. See www.gao.gov for details.
"For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York Times and Investors Business Daily, considerable coverage in the broadcast media and a joint meeting with representatives of all the government's statistical agencies. Despite minor changes to the system, government reporting has deteriorated sharply in the last decade or so." -- John Williams, Shadow government statistics.
Time is long overdue to engage the conversation about how to move from a permanent war economy to a permanent peace economy. Seymour Melman’s 2003 article “In the Grip of a Permanent War Economy” clarifies this reality. From a letter from Mary Beth Sullivan which is more fully quoted on the war page.
Questions for Republicans: (from 'The War for Wealth' by Gabor Steingart...highly recommended).
Did you really believe that you could live, in the long term, on borrowed money ?
Who actually claimed that such a large nation doesn't need an industrial base ?
Where are the men and women who made us believe that a negative balance of trade is a sign of strength ?
Why did no one sound the alarm bell when the U.S. dollar became eroded and lost value for such a prolonged period ?
Is it possible that no one noticed a country that was once the biggest lender selling off its assets to others ?
How could the entrenchment of economic inequality in a democratic nation have been tolerated for so long ?
What happened to the upward mobility that was once this country's trademark ?
And, last but not least: why did democracy, which is supposed to react more quickly to malfunctions than other forms of government, fail so miserably ?
Meltdown: The Media's blame game (10/16/2008)
Republican Government Bashers Line Up for Federal Aid (9/24/2008)
US has lost control over finance and the economy. (8/11/08)
Good Reasons to throw out the Republicans (8/14/2008) Joe Stiglitz
Economic Free Fall: William Greider (7/30/2008)
RBS Issues Global Stock and Credit Crash Alert By Ambrose Evans-Pritchard The Telegraph, London Wednesday, June 17, 2008 http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml
Preventing a Financial Tsunami (9/4/08) Bill Gross
Growth
Republicans often say that 'growth' can solve many of our economic problems. This is nonsense. Growth can cause further environmental degradation, unlimited devastation. If you doubt this see this video: The greatest shortcoming of the human race is the inability to understand the exponential function. Albert A. Bartlett, PhD, Emeritus Professor of Physics, University of Colorado.
See The Bridge
at the End of the World: Gus Speth (2008)
The greatest shortcoming of the human race is the inability to understand the exponential function.
Albert A. Bartlett, PhD, Emeritus Professor of Physics, University of Colorado.
"...we live in a world where economic growth is generally seen as both beneficent and necessary _ the more, the better; where past growth has brought us to a perilous state environmentally; where we are poised for unprecedented increments in growth; where this growth is proceeding with wildly wrong market signals, including prices that do not incorporate environmental costs or reflect the needs of future generations; where a failed politics has not meaningfully corrected the routinely deploying technology that was created in an environmentally unaware era; where there is no hidden hand or inherent mechanism adequate to correct the destructive tendencies. So, right now, one can only conclude that growth is the enemy of environment. Economy and environment remain in collision." The Bridge at the End of the World: Gus Speth (2008)
Speth also lists the kinds of pathological growth that can occur from the UNDP Human Development Report 1996
"Trickle-down economics, which holds that so long as the economy as a whole grows everyone benefits, has been repeatedly shown to be wrong." Joseph Stiglitz, Making Globalization Work. Pg 23.
Chamber of Commerce Eastern Connecticut
Economic Justice (AFSC)
Post-Autistic Economics Network (what's wrong with economics.)
When You're in Jackson Hole, Stop Digging (8/18/2008) Dean Baker
Congress bailing out bankers...no help for homeowners (6/30/2008) Dean Baker
Central Bank Body warns of Great Depression (6/9/2008)
Total Value of Derivatives exceeds one quadrillion (6/11/2008)
Is this the big one ? From the Nation, April 14, 2008 issue.
Is Cheney Betting on Economic Collapse?
Sorting through the rubble in post bubble America (March 9, 2008)
It's so much worse than you think.
Soros: Dollar will no longer be the world's reserve currency.
Ron Paul on competing currencies
Stimulus is another scam (01/28/2008)
Fed releases crisis preparedness video. (3/3/2008)
Time to dump the Federal Reserve ? (02/21/2008)
The derivative time bomb, a 516 trillion dollar bubble (3/10/2008)
The hypocrisy of free market fundamentalism.
Free-market fundamentalism—just as dangerous as the religious fundamentalisms of our day—trivializes the concern for public interest. The overwhelming power and influence of plutocrats and oligarchs in the economy put fear and insecurity in the hearts of anxiety-ridden workers and render money-driven, poll-obsessed elected officials deferential to corporate goals of profit, often at the cost of the common good. This illicit marriage of corporate and political elites—so blatant and flagrant in our time—not only undermines the trust of informed citizens in those who rule over them. It also promotes the pervasive sleepwalking of the populace, who see that the false prophets are handsomely rewarded with money, status, and access to more power. This profit-driven vision is sucking the democratic life out of American society.
In short, the dangerous dogma of free-market fundamentalism turns our attention away from schools to prisons, from workers’ conditions to profit margins, from health clinics to high-tech facial surgeries, from civic associations to pornographic Internet sites, and from children’s care to strip clubs. The fundamentalism of the market puts a premium on the activities of buying and selling, consuming and taking, promoting and advertising, and devalues community, compassionate charity, and improvement of the general quality of life. How ironic that in America we’ve moved so quickly from Martin Luther King Jr.’s “Let Freedom Ring!” to “Bling! Bling!”—as if freedom were reducible to simply having material toys, as dictated by free-market fundamentalism. Cornel West: Democracy Matters
Many Republicans think that the 'free' market is a beneficial way of determining our social direction or that it is somehow associated with democracy. It is not.
Capitalism works very well in Communist China, it does well under tyrannical dictatorships (see Naomi Klein's "Shock Doctrine"), and in the US it weakens democracy. Since wages have been declining for a number of years, observe that investors and corporations have been winners at the expense of citizens. Robert Reich's book Supercapitalism explains this very well.
As consumers we can shop at Wal-Mart and still know that their employees are poorly paid, ununionized, and lack benefits. We know their products, formerly made in good paying factories in this country, are now made in third-world sweatshops. As a consumer you may shop Wal-Mart thinking you are getting a good deal at those low prices, as an investor you may be pleased that the stock is doing well. As a citizen, you know it's a bad deal.
Bush the First once called 'supply-side' economics, voodoo economics. That lower taxes would produce more Federal revenue was never true. Tax cuts were not only contrary to common sense, they ignored the costs of Bush's war adventures, and, contrary to Christian values, they rewarded the already wealthy at the expense of the poor. They converted the fundamentalist churches into a propaganda conduit for the Republican party. They would not pay for their war.
People no longer believe that their government serves them. Big money buys Congress and legislation keeps people in check. Union busting is accepted, citizens groups are out shouted, the public loses influence, and democracy dies. That's how we come to be on a path to fascism.
To bestow the benefits of the Bill of Rights on Corporations, the Supreme Court ruled that Corporations are persons and they now have the full benefits of the Bill of Rights. The Bill of Rights for actual people is being shredded. Check out this.
In the interest of multinational corporations, we now have the largest military in the world.
It appears now that the economy is collapsing. The US is broke.
Privatization
Republican's think privatization is good policy. What it actually does is remove functions from public accountability, so it is anti-democratic. Result: Blackwater, Enron, prison-industrial complex, financial instability, consumer exploitation, or, worst of all is privatized vote counting. There is now considerable doubt about election integrity.
Karl Marx was wrong when he predicted in an ideal world that the state would wither away. The most successful economies are mixed. Government has functions that it must do, and the private sector has a domain in which it functions better. We ought to have a discussion about just what is the correct mixture.
This may be an area best defined not only by economists, but other stakeholders as well. The market functions best when there are a lot of participants who are free to compete and quality information is available to consumers. A small number of corporations that dominate an industry do not necessarily make for a efficient market These are, for example, not the conditions for healthcare. You do not know which doctor has the best performance record, you cannot know what their charges will be, and you may get different assessments for the treatment that is right for you. Insurance contracts for health care are generally not transparent.
Privatization removes activity from public accountability. Government regulation is needed to assure that the market is orderly. You do not have to look far to see that US corporate governance needs reform.
Other developed countries have universal health care and that is one of the reasons why the global market is not a flat playing field.
Why it is a bad idea to privatize government programs ?
Deregulation
Market fundamentalism has led to massive deregulation and now you can see the consequences: financial instability, bank failures, bad food, market scams, deceitful advertising, commercial lying, predatory lending, absurd CEO salaries, and a widening gap between rich and poor. Make no mistake though: deregulation can kill. as you can verify in lax workplace safety enforcement, unlabelled and unchecked food products, toxic toys, downer cows, or environmental degradation.
Deregulation has again led to out of control markets, bubbles, scams, corruption and ultimately to recession.
Bank deregulation led to the subprime mess. Is it coincidental that Bush I had to bail out the Savings and Loan industry on his watch too ?
The visible results of the unregulated market include unsafe products, huge disparities in income that lead to walled communities, and could produce a new aristocracy.
Republicans have made regulatory agencies (like the FCC, FDA, EPA, SEC, etc) captives of the industries they are supposed to regulate. This allows corporations to serve their own interest instead of the public interest.
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CNBC Coverage of Bear Stearns Bailout
Run on the Dollar
Euro roars to record high: The euro raced to an all-time high of 1.4120 dollars on Friday as the US currency came under heavy selling pressure on http://snipurl.com/1r1kg ....oops. This is out of date. It's over 1.45 now. No. 1.58 and still climbing. You wonder why oil prices went up ?
New Data on Inflation (January 16, 2008)
Bernanke's warning (January 13, 2008)
Impending Destruction of the US economy ( Paul Craig Roberts 11/28/2007)
Economic Democracy and the 2008 Presidential election
Banks Gone Wild (Paul Krugman 11/23/2007)
Dollar could plunge by 90 percent (UPI 11/2007)
Double Digit inflation is here. (12/16/2007)
Central Banks fail to calm money markets.
China Threatens 'nuclear option' of dollar sales.
Dollar Collapse will cripple European economy (Paul Craig Roberts)
How the Markets really work.
Republicans think that the market is a really good decision-making tool. When making this argument they generally do not notice that an unfettered market will gladly sell drugs to your children, put workers in sweatshops, pollute the environment, deindustrialize the US, and more. Capitalism works very well in totalitarian contexts as is plainly evident from the many dictatorships that we can observe. .
Income Gap Is Widening, Data Shows
Beat the Press: Dean Baker's commentary on economic reporting
International Society for Ecological Economics
Return of the Robber Barrons. (Paul Craig Roberts)
Senator Sanders vs Bush Nominee (video)
Richard Wolff, Ph.d Economics professor at the University of Massachusetts (video)
Shadow Stats reports on manipulated government reporting.
"What is a capitalist state? It is a state in which the principal means of production, such as farmland, real estate in the cities, the supply of water, gas, and electricity, public transportation, as well as the larger industrial plants are owned by a minority of the citizenry. Productivity is geared toward making a profit for the owners rather than providing the population with a uniform distribution of essential goods. This propertied minority dominates the rest of the population by dictating working conditions and controlling jobs in accordance with its interests. It dominates public opinion through its influence on schools, the press, government, and legislation. The harshness of this situation is sometimes tempered or at least disguised by a democratic form of government in which all citizens are guaranteed formal equality." Einstein around July 1945. From Einstein on Politics, Rowe and Schulmann
When Bush took office there were surpluses in the federal budget as far as the eye could see. How quickly that changed. Now we have a deficit of over 500 billion and a trade deficit of 700 billion. For about 87 cents you could buy a Euro, now it's over $1.50 and climbing. Is it any wonder that oil is more expensive ?
Job growth has not kept up with population growth as Corporations consolidate, downsize, and claim rights of personhood that were originally intended to protect poor minorities. Corporate media has become useless in providing adequate information to carry on a democracy. Wages have fallen as Corporations have moved to low wage countries, busted unions, cut benefits, and often have abandoned pensions.
Our poor children will pay with interest for Bush's folly. Already they are having to accept lower wage jobs with shrinking benefits. Pensions are disappearing, health expense is being shifted to them, tuition is skyrocketing, they are paying unprecedented rates for heavy credit card debt and income inequality is increasing fast. They have not yet lost Social Security but Republicans are working on it. They will have to fight the endless war that Bush has provoked. In spite of clear warnings about climate change, there is little chance that greenhouse gas emissions will be mitigated any time soon.
To sustain their lifestyle, consumers have gone into heavy debt. Creative real estate financing their homes so that they can consume more now.
Since the Bush election campaign was funded by Corporate elite, it is not surprising that his regressive program was really about benefiting the already very comfortable. "Eighteen of America's wealthiest families, including the Timkens of Canton, are bankrolling efforts to permanently repeal estate taxes that would save their families a total of $71.6 billion, according to a report released by public interest groups".
Democracy, freedom, and the unregulated market are not compatible. As wealth is concentrated, only the powerful have voices in the media, money driven elections produce results for the oligopoly, gated communities with private security forces keep order for the wealthy, the legislative process slowly removes accountability from corporations, deregulation removes corporations further from democratic control. At privatization proceeds, more and more public concerns are removed from public accountability.
A stunning blow to democracy occurred when the Supreme Court ruled that corporations have personhood. Shareholders do not have real voting rights in the current US corporatocracy. Workers are not represented and they are experiencing relentless downward pressure on their wages, benefits, and organizations.
Only when there are many competitors is there a free market. When a single company or a very small number of companies dominate a market, they can act in ways that do not serve the public. There are markets where privatization is dangerous, such as the one that delivers mercenarys. A large private army is a danger to our form of government. A small number of companies control US media and they are a danger to our information streams and, since they are all radically right wing, are undermining our democracy.
The US now has one of the most skewed income distributions. Expect more economic volatility since there are tsunami amounts amounts of speculative derivatives that can cause severe economic upset if the investment community is spooked at all. As one example, rising interest rates are already causing a cooling of the real estate market and a resulting loss of many jobs. Republicans have tightened bankruptcy laws. The Economy is in Crisis.
One of the symptoms of a banana republic is an elite class that rewards itself from massive debt. It is only an apparent prosperity. So it is that CEOs have continued to increase their pay by double digit percentages, that most of the benefits of tax cuts go to the topmost 1 %, war profiteering and loosely accounted public money are going to a select few corporations (which are tightly connected to senior Bush officials). Other regressive Bush policies include tax cuts, cuts in health care, welfare, Veterans Benefits, social security, labor, worker safety, environment, globalization. All of these reductions are at the expense of the US working class.
Many countries are diversifying their currency holdings away from the US dollar since it is visibly losing value and also from ill will. The consequence of hiding war expense have historically been associated with currency collapse. China, alone, holds more than $950 Billion in dollars...but it is diversifying.
While Bush partisans proclaim that the economy is healthy, most economists will tell you that such profligate deficit spending is not sustainable and will ultimately cause currency devaluation. It is not a matter of if...just when. Since Bush took office the economy has lost 3,000,000 manufacturing jobs.
It is expensive to build an empire, and it is clear that healthcare and education are unaffordable as long as we have these global 'responsibilities'. When you think about it, it is healthcare and education that allow us to continue prosperity.
Our children will pay for the military buildup, misadventures, and ill will that Bush has brought on us from the rest of the world. They will need to fight his endless war, they will inherit deep debt, ballooning tuition, interest expense, shredded social safety net, degraded environment, a reduced standard of living, corrupt government, an unchecked President, and sharply reduced civil liberties. They are not safer.
In history all empires share the same fate... only the amount of destruction has accelerated over the centuries. Is Iran next ?
"Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights." Einstein on Politics, Rowe and Schulmann. Monthly Review, May 1949.
Shock Doctrine: the Republican agenda
Naomi Klein If you think that the 'free market' and democracy are compatible try "Shock Doctrine", Naomi Klein's recent book.
"There's a very committed effort to convert the US into something resembling a Third World society, where a few people have enormous wealth and a lot of others have no security." Noam Chomsky
The Coming Collapse of the Middle Class (Lecture Video 57 minutes.)
Bibliography
- The Conscience of a Liberal: Paul Krugman
- Bad Money: Kevin Philips
- The Trillion Dollar Meltdown: Charles R. Morris
- The Great Risk Shift: Jacob S. Hacker
- The Conservative Nanny State: Dean Baker
- The War For Wealth, the True Story of Globalization, or why the flat World is Broken: Gabor Steingart.
- This Land Is Their Land: Barbara Ehrenreich
- The Squandering of America: Robert Kuttner
- Free Lunch: David Cay Johnston
- Super Capitalism: Robert Reich
- Take the Rich Off Welfare: Mark Zepezauer
- Peddling Prosperity: Paul Krugman (1994)
- The Post Corporate World, Life after Capitalism: David C. Korten (1999)
- Top Heavy: Edward Wolff*
- When Corporations Rule the World: David C. Korten
- The Future of Capitalism: Lester C. Thorow.
- The Stakeholder Society: Bruce Ackerman
- Everything for Sale: Robert Kuttner (1997)
- Created Unequal: James K Galbraith
- Wall Street : how it works and for whom: Doug Henwood (1997)
- Natural Capitalism: Paul Hawken, 1999
- New Industrial State: John Kenneth Galbraith
- Culture of Contentment: John Kenneth Galbraith
- Winner Take All Society: Robert Frank
- Triumph of the Market (*): Ed Herman
- Great Mutual Fund Trap: Gregory Baer (2002)
- The Fragile Middle Class: Americans in Debt: Teresa Sullivan (2000)
- Social Security: More , Not Less; Robert Eisner
- America: What Went Wrong: Donald Bartlett
- Return of Depression Economics: Paul Krugman (1999)
- Politics of Rich and Poor: Kevin Phillips
- Peddling Prosperity: Paul Krugman
- Dot.com: John Cassidy (2002)
- Reefer Madness: Sex, Drugs, and Cheap Labor in the American Black Market; Eric Schlosser (2003)
- Coyotes: A Journey through the Secret World of America's Illegal Aliens; Ted Conover (1987)
- Reefer Madness: Eric Schlosser (2003)
Download Doug Henwood's free Book "Wall Street"