Susan's Economics Blog

The economics disaster that began in 2007 has prompted me to write so much about it that I started a new blog just for these thoughts. They are generally in reverse chronological order by the date I wrote them. Your comments are appreciated. I have a backlog of writing to publish here, it will appear a little at a time as I can get to it.

I have come lately to a study of economics, capitalism, and democracy. I am no longer content to leave these to the politicians.

Capitalism no longer benefits society (3-20-2017)
It continues to benefit the truly wealthy, but not the rest of us. So why do we grasp it close as if our very life depended on it? What will it take for us to realize that we need something else now?
How is money created? (12-30-2016)
I've written this up as a two-page PDF. Your feedback is very welcome!
The reactions to BREXIT (7-3-2016)
Almost immediately newspaper articles declared it a disaster. I mean, the votes had only been counted and already it was a disaster? How absurd! I am beginning to see the reaction to the vote as proof that the UK's vote to leave the EU was a good thing. And all the doom-and-gloom op-ed pieces as so much disinformation. Now the UK just has to stay the course.

I wonder at what the essential issue is for the UK. I think that it is globalism. That I can understand, at least to some degree. Globalism is a deliberate practice of bypassing sovereignty in favor of business profits, that would be private profits at the public expense. For a nation to say "stop!" is a real shock to the businessmen who have been engaged in the practice of converting public assets to private wealth. Stopping is not in their best interests. It stands to reason that they will do everything in their power to revert to business-as-usual.

Brexit is a rejection of globalism. Americans have no easy way to do the same—for which our politicians must be deeply grateful.

This is no time to lose determination and courage. Globalism will not give up without a fight. It may prove to be a vicious animal when cornered. We must also demand our leaders fulfill their campaign promises and do the job we hired them to do.

Have you noticed the outpouring of predicted doom and gloom from critics of Brexit? That is how the entrenched and threatened forces begin to retaliate. "Fear this, you know not what you do." They are the ones in fear, and all they can do is try to scare us into letting them have their way—the way that brought on the disasters of globalism.

Free markets (3-11-2016)
The idea that free markets are the best (i.e., most efficient) way of allocating scarce resources is a cornerstone of neoliberal ideology and is now an article of faith for ruling elites in western democracies. And one can see why: after all, markets are the epitome of self-organising systems and in some cases (those where price is the key variable) are probably the best way of allocating some kinds of scarce resources — and of ensuring that those resources become more scarce over time.

Allocation decisions — about who gets what and by what means — are ubiquitous in all human societies. Whose kids get into which school? Which non-urgent medical procedures get priority? Which startup should be funded? Which patient should get the next donated kidney? None of these choices is easy and each decision has its own unique circumstances.

The crassness of neoliberalism lies in its insistence that markets represent the only way of making these decisions. Hence the belief that one can make organisations such as the NHS or the BBC more "efficient" by introducing "internal markets" of the kind that John Birt tried in the BBC during his tenure as director general, with results that were sometimes beyond parody.

In that sense, the evangelical neoliberal is like the mythical tradesman who only possesses a hammer and is therefore condemned to treating everything as if it were a nail. With this ‘mirage of a marketplace’, Uber is taking its customers for a ride.

What we need for the future (1-2-2016)
It is apparent to many that neoliberal capitalism has failed the American people (and likely other peoples as well). A "system" that increasingly divides the haves from the have-nots cannot be maintained indefinitely. A "system" powered by fossil fuels cannot be maintained indefinitely. A "system" that relies on environmental pollution and destruction as well as political corruption cannot, I dearly hope, be maintained indefinitely.

The current situation is endangered even more by the various groups of economic actors who have only their personal interest at heart; they rarely make common cause with others. Consequently, at some level, they are all working against each other—and against the rest of us.

So what to do? Even if the people can wrest their government from the control of corporate oligarchs, many problems have gone too far to be corrected without a price. Will the United States fracture in response to a failed central government? How will we live without cheap energy from fossil fuels? When will we be at last forced to do so?

Many cling, without any rational justification, to the fantasies of unlimited growth and technology. Many believe there can be technological fixes for every problem.

Who is working on a more efficient windmill? Or affordable solar heating? There is still room for improvement in strictly mechanical devices. But who is there to do it? Is shop still taught in high school? Who knows how to build and use a pulley?

Self-sufficiency has had a difficult time resisting the broad support of consumerism and technology. The skills and knowledge needed for self-sufficiency—soon to be deeply needed—are not widely available. We should be building libraries and collecting books that can provide the information needed for self-sufficiency.

The fallacy of the market solution (12-6-2015)
I recommend to you an article on CounterPunch: "American Nightmare: the Depravity of Neoliberalism" by Michael Welton (12-4-2015). This article is a review of the book Undoing the Demos: Neoliberalism's Stealth Revolution by Wendy Brown (2015).

It quite took my breath away.

The market solution is the darling of the neoliberals. They hold that the proper solution to social and environmental problems must involve private profit. Unfortunately, all the market solutions extant involve public subsidies (which by their nature deny the reality of private profit, but this is not admitted). Consider Obamacare: the federal government guarantees the profits of the health insurers while making a personal opt-out of health insurance illegal—subsidy! And California, in an effort to reduce carbon emissions, is granting tax credits to polluters—subsidy! Consider "private contractors" hired to serve as American military in our foreign wars: their private employers make a substantial profit on their labor, paid for by the American taxpayer and a subsidy.

The market solution to encourage home ownership is the mortgage interest tax deduction. This too is a subsidy. Its primary beneficiaries have been the real estate industry.

I live near the shore of San Francisco Bay. I fully expect when the sea level rises enough to threaten the expensive homes that line it that my county will tax me to pay for levees to protect those houses—instead of letting the homeowners solve their own problems with their own funds. In this case, the market solution for global warming will be to erect levees at public expense, a subsidy for the property owners.

What now? (11-27-2015)
Economic theory says that capitalism will create the best of all possible worlds. If that is the case, why our poor health, depression, unemployment, drugs, suicide, homelessness? Are we really meant to ignore these things?

Socialism is comdemned for social planning, centralized planning—planning by the government for the benefit of society. So many modern ills are the result of NO government planning—such as global warming. Corporate "efficiency" is valued above social benefit.

Public pension funds and stock market bubbles (8-30-2015)
Public pension funds have to earn 7.5% annually. Since the Federal Reserve Bank's interest rate is essentially zero, the public funds have turned to "investing" in leveraged credit funds that mimic Long-Term Capital Management of the 1990s. The credit funds, in turn, buy enormous amounts of corporate bonds from companies. These bond purchases put cash onto company balance sheets which is then used for stock buybacks or mergers and acquisitions. Stock buybacks boost demand and drive up the stock price while the corporate debt is ignored.

In 2014 companies spent $553 billion to repurchase outstanding shares. In that year 95 percent of all earnings was directed to returning profits to shareholders through buybacks and dividends. This left five percent for reinvestment. These stock buybacks create short-term rewards for executives who are paid in stock and stock options, and who benefit from an increased stock price. They also make corporate earnings look better by reducing outstanding shares and increasing the commonly reported ratio of earnings-per-share.

To summarize this financial legerdemain, companies sell bonds to credit funds holding public pension fund money. The cash realized from the bond sales is used to buyback company stock, which increases both the companies' stock prices and their executives' compensation. Thus the public pension funds, in their search for the income needed to compensate for underfunding, contribute to increased stock valuations, increased executive compensation, an epic credit boom, and business investment at all time lows. At the bottom of this situation is the Fed's zero interest rate policy—which incentivizes financial engineering and stock manipulation at the expense of growth and productivity. The stock buybacks are a form of margin buying, the same practice behind the Stock Market Crash of 1929. The SEC ignores all of this.

Sources:
"SEC Admits It's Not Monitoring Stock Buybacks to Prevent Market Manipulation" by Dave Dayen, The Intercept, 8-13-2015.
"Looting Made Easy: the $2 Trillion Buyback Binge" by Mike Whitney, CounterPunch, 8-28-2015.
"How a Public Pension Crisis Is Driving an Epic Credit Boom" Financial Sense, 7-10-2015.
Did Adam Smith get it right? (8-30-2015)
Adam Smith, whose name gets dragged out periodically to justify yet another bad idea, was a social philosopher in Scotland and a participant in the Scottish Enlightenment. In The Wealth of Nations he addressed the source of national wealth and how best to preserve and protect it. He concluded that trade was the basis of national wealth. This idea was taken to justify business practices that generate profits for private owners, and the greater the profit the better. His Enlightenment view of society led him to believe that business owners would take care of their workers. In practice business owners were and still are more likely to treat their workers as slaves, and to do so without shame.

The current picture is peopled with businesses who act single-mindedly to increase their profit at the expense of everybody else. This has a strongly negative impact on the nation. Under capitalism, there is little-to-no national wealth, instead the wealth is privatized.

It may be that the real wealth of a nation is its people, infrastructure, and environment. Healthy, productive people need a healthy environment. Allowing business people to trash both is detrimental to the national wealth.
Capitalism and colonialism (8-17-2015)
Colonialism in the Americas beginning in 1492 enabled industrialism and capitalism in England beginning in the 1700s. I now see that capitalism cannot exist without colonialism, and perhaps vice versa. Both need exploitation to thrive. Both use resource extraction to generate profit for the few. Both value power and money over people and the environment. Both cannot be sustained over a long period of time as they will eventually seed their own destruction. Our problem is what do we do until then?
The maw of American capitalism (8-13-2015)
Will Falk's 8-12-2015 article "Call It Murder: the Ecological Basis for Hawaii's De-Occupation" in CounterPunch is remarkable for its clear description of American capitalism as a system of death: "Capitalism cannot function without materials to be turned into commodities." Such materials include trees, salmon, and humans. "If capitalism could not find new life to kill, it would die."

He continues: "The American domination of the world is intentional. We do not live in a broken system or in a failed democracy. The USA was designed this way and with everyday that passes it becomes more effective in destroying what is left of the world. The USA must be stopped."

"Thomas Linzey, chief legal counsel and co-founder of The Community Environmental Legal Defense Fund (CELDF), . . . has made a career helping communities who wish to protect themselves from environmental destruction at the hands of corporations. . . . Linzey, in fact, has demonstrated that, 'Sustainability is illegal under our system of law.' Sustainability is illegal because of the power of four time-honored, fully entrenched legal doctrines that trump local concerns and protect corporate power. Those four doctrines are the Commerce Clause of the United States Constitution, corporate personhood, pre-emption, and Dillon's Rule."

Definitely worth reading.
Scale, economies of scale, scaling up (6-15-2015)
All these are industrial terms. "Economy" here refers solely to monetary costs. The industrial imperative of increasing scale is based on the notion that profit margins increase as production is scaled up. The only ways profit margins increase are: (1) when human costs of labor are not counted, (2) when tax structures favor mechanization over human labor, (3) when foreign workers are imported at lower cost to displace local workers (like H1B visa workers), (4) when legal protections for local workers are denied and rolled back, (5) when workers are not paid a living wage, and (6) when costs such as waste handling are passed on to neighboring communities as externalities.

Regarding the living wage controversy, businesses protest that if they pay their workers a living wage they will not be able to price their product competitively. Americans have been sold the idea that cheap products are their birthright. We need to re-think this. Why should we feel entitled to a cheap product made by other Americans who are paid at poverty level wages? Why should we have non-luxury products that their makers cannot afford to buy? Do we really need these products?
Concentrated wealth guts the national economy (5-21-2015)
The following quotation is from The Archdruid's Blog for 5-20-2015: "It’s one of the repeated lessons of economic history that money in the hands of the rich does much less good for the economy as a whole than money in the hands of the working classes and the poor. The reasoning here is as simple as it is inescapable. Industrial economies survive and thrive on consumer expenditures, but consumer expenditures are limited by the ability of consumers to buy the things they want and need. As money is diverted away from the lower end of the economic pyramid, you get demand destruction—the process by which those who can’t afford to buy things stop buying them—and consumer expenditures fall off. The rich, by contrast, divert a large share of their income out of the consumer economy into investments; the richer they get, the more of the national wealth ends up in investments rather than consumer expenditures; and as consumer expenditures falter, and investments linked to the consumer economy falter in turn, more and more money ends up in illiquid speculative vehicles that are disconnected from the productive economy and do nothing to stimulate demand."
Matt Taibbi returns to Rolling Stone (5-12-2015)
Yes, I am late to the table. I missed Taibbi. I looked ever so often at the website of his new employer after Rolling Stone, and found no writing. No anything actually. Until today when I looked and found him back at Rolling Stone. Since October 2014. Frankly, I think he was wooed away because of his journaliatic skills that some would prefer not reach their way. Fitting into this theory well is that he wrote nothing during his sojourn with First Look Media. I hope Rolling Stone appreciates him!
Socialism, The Future Of (12-5-2014)
Lee Ballinger writes in his article "Dreaming the Future" in Counter Punch Volume 21 Number 9 an introduction that begins with pre-agricultural humans living lives of subsistence and desperation. From which he moves on to the early agriculturalists, a few of which had the time to consider the meaning of life. And the advent of industry that promised to solve the problems of scarcity. He ends with a discussion of the ability of modern technology to eliminate scarcity and of the possible role of dreaming in shaping a socialism for today.

Bunk.

The tens of thousands of years of modern human existence that predated agriculture were composed of populations that grew, supported the specialization of work (think clothes, tools, and medicine), groups that moved to follow the availability of food, both plant and animal, traded for rare substances like salt obtained at great distances, and left luminous paintings deep in caves. Paintings that evoke in us questions of the meaning of life.

People, especially those that live close to their food supply, know that food scarcity happens: the food supply is interrupted by weather, natural disasters, and human intervention. Families and larger groups have been migrating for all of human existence following their food supply. It's our determination to stay put in our homes that is often at odds with the local availability of food. Modern industrial food transportation systems have arisen to satisfy this desire.

A brief look at the beginning of industrialism, the so-called Industrial Revolution, reveals that it was founded on the confluence of a wealth of natural resources (iron, coal, water), scientific endeavors that built, for example, a workable steam engine, and money realized from the slave-driven sugar trade. Many steam-powered factories were built with the sugar wealth by working-class men who became quite rich from their efforts. The fate of the factory workers was much different: forced off their land and into the factories by government soldiers and kept there by laws, they lived lives of subsistence and desperation.

Industrialism did not, in my readings at least, promote itself with the lure of the dispatch of scarcity. Indeed, it created its own.

The socialistic notion of "from each according to his ability to each according to his needs" is a fantasy. No amount of dreaming, drug-induced or otherwise, will bring this into a functioning, enduring way of life.

Lenin's ideas of socialism, perhaps the most pure form ever attempted, lasted five years after the Russian Revolution until they were co-opted by Stalin and others. To me this illustrates the all-too-human desire for power and wealth. It is not realistic to think that this desire, and the other of the seven deadly sins, can be eradicated. Let's get realistic and look to political forms that can limit the damage.

This is indeed what the founders of the USA attempted to do with the Constitution—provide a form of governance that minimized the chances of the mis-use of power. They themselves accepted the natural domination of educated free white male landowners, a hegemony that has been gradually reduced through constitutional amendments.

I believe the dilemma faced by America today is the result of the intrusion of the economic system of Capitalism into government. The success of capitalism in the 1800s was its superiority over the aristocracy. Today it is its superiority over democracy.
The economy defined (7-10-2014)
The news regales us with stories about the improving economy while the employment of workers declines in quantity and quality. Here we see that "economy," especially the thing that we are told to worry about, is all to do about the rising value of investments and nothing to do with the gainful employment and salary income of Americans. Just as GDP is completely inadequate in providing a useful picture of the entire American economic situation, now we see that "economy" is equally deficient. Perhaps we need a new word that refers to employment, and recognizes hourly pay rates and weekly hours of work.

The US Census Bureau defines poverty levels. In 2012 a single person with an income below $12,000 was considered poor, this can be produced by an hourly salary of $6 annualized (obviously below the minimum wage). I looked for low end thresholds for "middle class" income for a single person. I found no government agency that claims to define this. So I turned to informal sources. The lowest I found was about $25,000; this is $13 an hour, currently below the minimum wage of enlightened cities like Seattle. An hourly wage of $15 can produce an annual income of $30,000. Mitt Romney defined the middle class as a single person earning $200,000 annually; this is $100 an hour. So, for argument's sake (!) let me use a figure of $20 an hour ($40,000 a year).

A metric of employment could refer to how many people make more than $20 an hour annualized as a percentage of people of working age (18 to 70), and how many people make the federal minimum wage $7.25 an hour or less annualized.
Capitalism's other lie (7-10-2014)
We continue to be confronted with the message that free-market capitalism is the best of all possible worlds.

Ron Jacobs' article "Prophet of False Hope? The Trouble with Bernie [Sanders]" in the Number 5, 2014 issue of CounterPunch includes this explanation for the lack of progressive political saviors: "The primary reason, though, is because politicians who do not agree with the U.S. insistence on military superiority and economic hegemony rarely get to Washington, much less to the White House."

This sentence clearly reveals the truth of American capitalism: it requires a nearly constant military aggression around the globe.
Capitalism as predator (6-7-2014)
The complete impoverishment of ideas and values of America's capitalist lords is evidenced by their approach to improving the standard of living of a poor region: replace all assets by debt. This is the "new austerity" promulgated by the IMF and others. No free lunch here, only the loan of a cheese sandwich at the price of a pound of beluga caviar with ruiness repayment terms. And if you don't like it, I have an army to enforce my rights. A military army and a media army.

Capitalists are ever vigilent to ensure the poor do not begin to imagine they can organize, can collectivize.
Trust and optimism (5-12-2014)
The May 2014 issue of Harper's Bazaar magazine included an article on Lynn Forrester, wife of Sir Evelyn de Rothschild. This woman will host on May 27 a Conference on Inclusive Capitalism. I was struck by the goals for this conference.

The article explained the conference: "The basic theme of the topics under discussion will be how to restore capitalism's battered image around the world and the ways that the private sector can both profit and achieve the broader purpose of building stronger economies and communities." It then quoted Lynn: "There are some very influential people who are absolutely appalled by what led to the financial crisis and by the growing inequality and lack of opportunity in the world. The point of this conference is to bring these concerned people together in one place to discuss the future in pragmatic terms. What can powerful corporations and investors do to make capitalism work for more people around the globe? In order for things to improve, we have to generate a new sense of trust and optimism. It's imperative."

Every time I read this, I get a different take. I now think that they are more concerned with public image than structural changes. I cannot fit "trust and optimism" into a redefined capitalism in which wealth does not rise to the very top leaving the rest with little.

My studies have led me to the belief that capitalism both causes and relies on the shifting of wealth and opportunity from the many to the few. Its very name reveals its central value: capital is more important than labor, is, in fact, more important than anything else.

Capitalism corrupts democracy (11-24-2013)
Our economic system, which we call capitalism, relies on the corruption of our government. Bribes are a way of life (think PAC). As are threats by politicians and captains of industry.

The Supreme Court—the court of last resort—could not be bothered to see the danger to the Republic (Constitution) in its acts to allow corporations to spend unlimited and undisclosed dollars on influence.

Agencies—actors of the Presidential branch of the government—have official budgets and secret ("black") budgets and suffer no public accounting of either. Thus we cannot see the many ways in which government income, largely from taxes, is spent. We cannot see billions of dollars disappear into private hands, we cannot see the effect of government policies and spending on our employment, our salaries, and our investments.

My main point is that while corporations can spend unlimited and invisible sums of money to influence government and elections, corruption is the name of the game.

An informed electorate is a fantasy for a number of reasons: (1) public education has been gutted, (2) public sources of information are largely confined to corporate media, (3) access to information such as can be found on the internet is not free.

Even if the electorate were informed, what influence could they have? Government subsidies favor the rich and laws and regulations impair the poor. The current political system makes it nigh impossible to put forth a candidate who truly represents his constituency and will continue to do so post election in the face of lobbyists and "this is the way we do things."

Economists who become attached to government are far more ideological than pragmatic, and their capitalist agendas are used to adopt policies which further corporate goals.

Capitalism's god of capital—money in the hands of owners—has taken precedence over human values and a sense of national identity, kicking those two to the curb where the non-union trash workers will eventually collect them and haul them away. The concentration of wealth that has emerged in the 20th century and escalated in the 21st acts to perpetuate itself—at any expense to the nation and its citizens.

A number of writers try to portray real capitalism as good while the bad elements that have proved so corrupting are "crony capitalism," finance, etc. I do not buy this. They are all aspects of capitalism, if they did not exist, some other threat would. It is the nature of capitalism to enable actors who seek to maximize their wealth at the expense of everybody else. This is the problem before us. The fervency with which capitalism wants growth is akin to a religious experience.

I give Thomas Jefferson the last word: "The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations."

Matt Taibbi disagrees (10-17-2013)
Matt wrote in his Rolling Stone blog on 10-11-2013: "The 2008 crash was triggered by the failure of one investment bank, Lehman Brothers, and when that bank collapsed, the world discovered that it was now so interconnected financially that one significant and unexpected failure could start a nuclear chain-reaction of losses. The Lehman impact stunned everyone. The average American family lost 18 percent of its wealth within months. The stock market lost half its value. The repo market collapsed, freezing economic activity and leading to massive declines in asset prices. Unemployment soared past 10 percent almost instantly."

http://www.rollingstone.com/politics/blogs/taibblog/democrats-must-stop-ted-cruzs-hollywood-ending-20131011

Now Matt's purpose for this paragraph was to place the impending federal default as orders of magnitude worse than the 2008 catastrophe. He is repeating the old party line of falling dominoes. Well, they fell anyway. Maybe they their fall was softened by TARP, maybe not.

The dust has settled on the financial crisis that began late 2007 (10-6-2013)
The urgent, strident headlines that began in 2008 have subsided. The truth of the financial situation called a "crisis" by the rumor mongers and their financial masters has been revealed a little at a time while objective non-partisan truth seekers dig and connect the dots. The American people were told that unless they gave a huge amount of money to a very small number of bankers with no strings attached, the world as we knew it would come to an end. Ahh the gullible, for that is what we were then.

With the Great American Giveaway that was TARP began my personal study of economics, banking, and finance. I could find no real details that were consistent with the messages justifying TARP. What I have found is a series of detailed, well-researched, and thought out articles by a number of researchers that illuminate the various corners of the deceit. The most recent is "Financial Terrorism" by Mike Whitney, published September 17, 2013 in CounterPunch. He makes a fine argument that Ben Bernanke's actions of 2008 amounted to financial terrorism.

A story (10-1-2013)
I am a banker, you are an individual.

You come to me and open a deposit account that I agree to pay a modest interest on. You make monthly deposits and I send you monthly statements showing your growing balance.

After a few years you ask to withdraw some funds. I say "I'm sorry, I can't: the funds in your account have been replaced with IOUs by the federal government."

You leave and ponder that. You return. "Where is my money?" I say "it was spent on political wet dreams, all that is left in your account are IOUs."

Food production (9-19-2013)
Some of us know how to grow enough healthy, honest food to feed the population in a sustainable and affordable way. But our economic system rejects it on the basis of insufficient profit and our political system rejects it because their corporate masters pay them to do so. Thus food that is poor in quality, high in poisons, and expensive is the result of modern capitalism.
Our "system" of economics relies on politics (7-26-2013)
Capitalism and industrialism are political entities, i.e., they need political support to exist. There is nothing natural or inevitable about them. They came into existence, and persist, with the aid of laws and military enforcement.
Privatizing profits, socializing losses (5-12-2013)
It used to be that risk management involved the adoption of processes to minimize loss. Now it involves processes to shift the losses onto others, most visibly the American public.
What is consumerism? (4-20-2013)
The idea that most everything you need — food, shelter, clothes, education, medicine — is bought ready-made. That you make little-to-nothing for yourself.

The number of products sold in stores has increased every decade. Think of a grocery store. Such a store in 1940 had far fewer products — fewer in categories, and brands (think Nabisco Saltines) — than today. Why? because we buy them. Why do we buy them? Strong, relentless messages in the media persuade us. Our whole way of life has been skewed by this.
Odds and ends (1-9-2013)
Economics addresses solely large businesses who engage in international trade. It ignores workers and small, local business owners.

Capitalism is anti-humanitarian.

The concept of free-market capitalism, meaning no government constraints, is absurd. Capitalism has always, from its inception, required government support.

The fact that corporations spent so heavily in the 2012 presidential election is evidence for their need for government support. They wanted to buy the winner so that person would reward them—in the manner of their choice.

Allowing the government to address economic issues has hurt the population while increasing the personal wealth of 1%. This practice thumbs its nose at both the Declaration of Independence and the Constitution.

Full employment will only happen when government is restored to its Constitutional form.

The public conversation on the state of the Union is dominated by corporate media who repeat endlessly their masters' agenda to promote capitalism and economics.

We must make conversation channels that are free of economic bias. We must free our government of economic bias.

Consumer society (11-7-2012)
I’ve heard this phrase for years and never really understood what it meant. I recently heard a fragment of a radio show where it was said that the home market is the engine of the national economy. This seemed odd to me then and more so now. As I see it, consumerism is the endless buying of goods by individuals. For several decades now, increasingly since 1945, we are encouraged to buy everything we need, and to buy more than we need. Few make things for themselves, like simple furniture, meals, and clothes. My neighbor daily drives her SUV someplace and returns with a coffee container in her hand. How hard is it to make coffee in your kitchen? Many of my neighbors buy most of their food prepared, so much so that local grocery stores have expanded shelf space for prepared foods. How hard is it to assemble a simple lunch? (I rely on salami, rye crackers, dates, and walnuts.) Instead of playing with our children at night, we give them a computer and a television. Instead of borrowing a book from the library, we buy a Kindle and electronic books. We avoid paying 50 cents for a stamp, and instead pay a lot more for a computer and internet access so we can send emails.

We have been warned that we should be saving more of our income than we do, and that buying on credit is even worse. This situation was held to be a cause of economic problems in earlier decades. But it is hard to save when the pressures to spend are relentless. Perhaps consumerism will prove short-lived, and fall victim to the mis-match between income and retirement savings.

Several events in my life curtailed my mindless spending, most recently long periods of unemployment and the shrinking of retirement funds. They were a wakeup call that I did not sleep through. I feel a strong need to conserve my cash, and so question most every expenditure for true need. And find few.

The book "The Capitalist Papers" explains the origins of consumerism as the globalization of trade that began in the 1940s with the support of the World Bank (created in 1944), the International Monetary Fund (IMF, created in 1945), and eventually the World Trade Organization (WTO, created 1995). Their agenda was that countries should abandon their self-sufficiency in favor of using imported goods. If you cannot make your own goods, your only alternative is to buy them. Voilà! Consumerism.

In conclusion, I find consumerism to be an idea that has failed us. Our expectation that businesses can make endless quantities of goods that will always be bought seems unrealistic. Our expectation that domestic consumer purchasing will increase indefinitely is unrealistic. My willingness to participate in the shopping frenzy has stopped. Let’s rachet down the manufacturing and the retailing and find more useful work for those whose jobs will disappear.

Mortgages and economics (10-12-2012)
The economic disaster of 2008 was based on the housing bubble and the banks' willingness to speculate with borrowed money. The prime vehicle for speculation was the mortgage-backed securities (MBS) sold by the banks. As has been well-explained by others, a MBS is a financial instrument composed of pieces of many mortgages ("sliced and diced") and sold to investors as a bona fide security. Read the full essay. A companion document written in 2009 is "Home Buying in America" which describes Fannie, Freddie, and their kin.
Shareholder value (9-5-2012)
I read an interesting article on Alternet about shareholder value: "America's false and dangerous ideology shareholder value". Makes me wonder why society grants a business legal immunity, indemnification?, as a corporation if that corporation stiffs society at every turn in the name of advancing shareholder value.
Myths (8-29-2012)
The existence of Super PACS proves that free-market capitalism is a myth.
Origins of capitalism (7-29-2012)
I am still mulling this over. Capitalism grew out of the early days of the industrial revolution, especially in England with its rich natural resources of coal and iron. It was aided by the wealth produced from the Caribbean sugar plantations. And it provided a way for the political power to be shifted from the aristocracy to the merchant class. Will and Ariel Durant wrote in The Lessons of History (1968) "Unquestionably the economic interpretation illuminates much history. The money of the Delian Confederacy built the Parthenon; the treasury of Cleopatra's Egypt revitalized the exhausted Italy of Augustus, gave Virgil an annuity and Horace a farm. The Crusades, like the wars of Rome with Persia, were attempts of the West to capture trade routes to the East; the discovery of America was a result of the failure of the Crusades. The banking house of the Medici financed the Florentine Renaissance; the trade and industry of Nuremberg made Dürer possible. The French Revolution came not because Voltaire wrote brilliant satires and Rousseau sentimental romances, but because the middle classes had risen to economic leadership, needed legislative freedom for their enterprise and trade, and itched for social acceptance and political power."
Concentrations of wealth through history (7-29-2012)
The Occupy Wall Street actions have highlighted the current concentration of wealth with the labels "1%" and "99%". Many commentators have addressed this concentration as excessive and dangerous. Will and Ariel Durant in The Lessons of History (1968) also addressed it: "Normally and generally men are judged by their ability to produce . . . Since practical ability differs from person to person, the majority of such abilities, in nearly all societies, is gathered in a minority of such men. The concentration of wealth is a natural result of this concentration of ability, and regularly recurs in history. The rate of concentration varies (other factors being equal) with the economic freedom permitted by morals and the laws. . . . The relative equality of Americans before 1776 has been overwhelmed by a thousand forms of physical, mental, and economic differentiation, so that the gap between the wealthiest and the poorest is now greater than at any time since Imperial plutocratic Rome. In progressive societies the concentration of wealth may reach a point where the strength of number in the poor rivals the strength of ability in the few rich; then the unstable equilibrium generates a critical situation, which history has diversely met by legislation redistributing wealth or by revolution distributing poverty."
After citing several examples of critical situations, "We conclude that the concentration of wealth is natural and inevitable, and is periodically alleviated by violent or peaceable partial redistribution."

I wonder if the American 1% will so resist peaceable redistribution that violence will be viewed by the 99% as their only recourse. White adult Americans are loathe to consider public violence; they quickly forget black riots and student riots. Will our reluctance to find common cause with each other be allowed to perpetuate today's massive economic imbalance?

Bubbles as wealth generators (7-29-2012)
I've been saving this quote for awhile: Bubbles are driven by the delusion that it is reasonable to expect to get rich on unearned wealth. This is excerpted from John Michael Greer's blog The Archdruid Report for December 2011.
Wealth is not a right (2-13-2011)
I can clearly recall the indignation with which radio talkshow hosts have decried public medicine, claiming that we Americans have no right to health. I want to remind you all that Americans have no Constitutional right to wealth. The Declaration of Independence declared life, liberty and the pursuit of happiness to be unalienable rights (unalienable means natural, sovereign, and independent of law). Neither it, the Constitution, or the Bill of Rights declares that wealth is a right.
The causes of the current crisis (1-13-2011)
The current crisis features high unemployment, mortgage defaults, devalued retirement savings, and bankrupt banks. Robert Reich offers a simple explanation: "The truth is our economic problems stem from the biggest concentration of income and wealth at the top since 1928, combined with stagnant incomes for most of the rest of us. The result: Americans no longer have the purchasing power to keep the economy going at full capacity. Since the debt bubble burst, most Americans have had to reduce their spending; they need to repay their debts, can’t borrow as before, and must save for retirement."

I have been complaining here that jobs are lost when people quit buying goods made by those jobs. What Reich has done is connect the huge compensation packages for people at the top of the scale with stagnant incomes in the working class and their unsurprising reluctance to maintain old spending levels which were fueled by consumer debt and reduced saving for retirement. He equates jobs with concentration of wealth: the greater the concentration of wealth, the fewer on-shore jobs. Again let me point out that this is not a sustainable model.

What to do? Government-funded projects that hire the unemployed are a great short-term fix. But they do not address the imbalance caused by the concentration of wealth. It is this imbalance which endangers the long-term success of any recovery. Tax breaks to the very rich will only make this imbalance worse. The rich are not hoarding their money because they are afraid to invest it in businesses that will employ Americans, they hoard their money because they can; "trickle-down" is a myth. Reducing their taxes will serve only to increase the amount of money being hoarded. Clearly what is needed is a way to reduce the concentration of wealth. This can involve increased taxes on the very rich and increased salaries in the working class.

Capitalism was founded on slave labor (11-26-2010)
Capitalism was an unintended consequence of the Industrial Revolution. The massive industrialization was funded largely by the profits made in the Caribbean sugar industry in the 1700s, profits based quite firmly on the slave labor of the sugar plantations. By the time England stopped slavery in 1833, industrialism had become self-perpetuating. A good thing because afterwards the sugar plantations could not maintain their previous high rates of profit. We can only conclude that the wealth made on slave labor jump-started capitalism.
The Industrial Revolution ended food self-sufficiency in Britain (11-24-2010)
In the 1700s British woolen manufacturers, aided by steam-powered machinery, attracted continued investment and expansion which was accomplished by converting more and more tillage to sheep pasture. The peasant farmers were forced from the land and went to work in even more textile factories. Mechanization increased agricultural productivity. And yet by 1800 most of the food eaten by Britons was imported—suggesting that productivity gains could not compensate for land taken out of tillage.
Quantitative easing explained (11-13-2010)
I found a link to this excellent presentation on solari.com. QE explained by Omid Malekan. Do listen to it!
How our federal government funds practices that trash the environment (9-2-2010)
On August 28, 2010 Alternet published an article by Stephanie Rogers titled "10 Ways Your Taxes Pay For Environmental Devastation." It's hard to understand our economic problems and conceive solutions without knowing the extent to which our tax moneys are handed over to the villains.
Overpaid executives contribute to economic instability (8-13-2010)
What are the options for a business with a lot of spare cash?

Why is it that the first choice is the preferred one? It seems the least capable of providing stability.

Bailout is a new name for extortion (8-13-2010)
What's wrong with this equation: No jobs = no consumption, no consumption = no economy? We are, vis-à-vis the corporations, in a heads they win, tails we lose situation. They pursue cheap labor off shore. When our lack of consumption risks their profits, they demand—and get—a bailout from the taxpayers. What part of "NOT SUSTAINABLE" do you not get? But worse, what is the taxpayers' fate when they can no longer pay this extortion?
The "f" word (5-15-2010)
No, not the four-letter word, but the five-letter word: FRAUD.

James K. Galbraith, in his remarks of May 2010 to the Senate Judiciary Committee, asked bluntly how could the causes of the economic collapse NOT have been fraud? He followed this up with a well-reasoned discussion along the lines of if it looks like fraud, smells like fraud, and acts like fraud, it must be fraud. He went to to say (1) when "fraud, or even the perception of fraud, comes to dominate the system, then there is no foundation for a market in securities. They become trash." (2) And when the perps walk away rich, as so many have, they do so by a breakdown in the rule of law.

He concluded saying "the country faces an existential threat." If the legal system fails to do its work, the market cannot be restored. "There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case."

Retire Aged People Early (RAPE), acronyms for this economy (2-1-2010)
This came to me in an email, like many other humorous stories. This one seems especially relevant to the current job situation. It is not dirty! Because of the nature of the acronyms, I am reluctant to publish the story here for fear of having some search engine black list me. So I am providing links to other sites that are braver than me.
Obambi.com blog
on NetJeff.com
Jokes Log on Blogspot
Finding opportunity for good in the current economic crisis (11-6-2009)
The American way of economics has long had its critics. But good times provide little traction for naysayers.

Now, in the aftermath of collapsed investment banks requiring massive government loans and in the face of continuing massive mortgage defaults and unemployment—now when our economic system is down around our ankles—now there is an opportunity to refashion our system into one that is humanitarian and sustainable.

Let's use this moment to revisit and review our values, both individually and communally. Let's forge a list of objectives and characteristics for a new economics, and then use this list as criteria by which to accept or reject the multitude of proposals that are emerging and will continue to emerge. Let's use both our hearts and our minds to envision an economic future that will nurture us and be sustainable.

Let us grasp this opportunity and turn it to our own interests. Not the interests of economic theorists whose ideas brought us here. Not the interests of corporations whose actions brought us here. But our interests.

Let us grasp our democracy and use it to design and build an economic system that suits us, our children, and our grandchildren.

Doing the right thing: our economic system should not trump social values (11-5-2009)
A recent article on Alternet, "Bill Moyers and James Galbraith: Our Free Market Makes Economic Collapse Inevitable" prompted this essay
Summary of reasons for crisis (10-9-2009)
The current recession, with its roots in subprime housing loans, shady repackaging of these same loans, even shadier insurance products created to guarantee these same loans again and massive over-leveraging by any number of firms great and small, domestic and global.
Too big to fail is extortion (10-3-2009)
The American people are not well served by the existence of businesses deemed "too big to fail." These businesses essentially hold the American people hostage—their own credit is demanded to protect the business from bankruptcy. This is the exact opposite of what corporations are chartered to do.
Dear prez (9-29-2009)
I doubt when you committed yourself to the presidential campaign you expected to encounter the current financial situation. Yes the wars were present, yes health care needed fixing, yes immigration could be improved. But tanking banks? Who would have guessed?

Economics may be your downfall. I pray it isn't.

Economists set the stage for the current mess with their short-sighted theories and reliance on human rationality and their determination that theirs was a true science. (Will they ever learn? Probably not, I don't hear any contrition these days.) But the bankers blew it.

What we have heard ever since is bs, pure and simple, from the culprits.

I beg you to use common sense and human values when you consider possible actions. Avoid ensnarement in the economic blatherings that are so obviously self-serving. Our Gordian Knot needs to be cut cleanly apart with one slice. An outsider is necessary for this, as only he (you) is capable of standing apart while taking responsibility. You can let all those misguided economists and bankers off the hook. Just don't listen to them very seriously, as they have proven themselves completely unreliable.

Sooner or later someone has to reconsider what sort of an economy is needed here. I vote for sustainable and in support of human values. I think those two criteria are way more important than failed ideas like free markets and globalism. Start with we the people. That is the only way we will end up with what works for US.

Capitalism is not benign (8-11-2009)
This past year has brought into focus the shortcomings of our form of capitalism. The following list is not complete!
I am tired of the incessant public "dialog" about the rights of corporate profit vs. the grasping freeloader of the public good. Why are we so easily manipulated into seeing this dichotomy as the sole issue?
Democracy at odds with capitalism(7-24-2009)
Democracy is a form of government in which the right to govern is vested in the citizens of a country or a state and exercised through a majority rule. Capitalism is an economic system in which trade, industry and the means of production (also known as capital) are privately controlled (either singly or jointly) and operated for a profit—that is, the right to govern is vested in a few and they are the owners, not the workers. These two organizations are antithetical. Perhaps this is why we Americans are so conflicted over what to do with our economy. It is hard, perhaps logically impossible, to consider how to remedy our economic crisis in the so-called democratic arena when the causes happened in the capitalist arena. Is it possible to use majority rule to remedy private control?
Capitalism needs regulation(7-13-2009)
Paul McCulley, Managing Director for PIMCO, said on InvestmentNews on June 19th, in response to the question is capitalism dead, "capitalism has proven that it can't regulate itself, and you need to have boundaries." He discussed the range of possibilities from unbridled greed (Wall Street) to the sensibility of government, saying some middle position is needed. Makes sense to me. (Which is not to say I believe everything this man says.)
Goldman Sachs' role in the crisis(6-24-2009)
Goldman Sachs securitized toxic mortgages, had them rated AAA, hedged their bets by buying credit default swaps from AIG, then demanded a collateral call from AIG that sent it south. Read the full essay.
Lobotomy?(5-29-2009)
I have just begun reading James K. Galbraith's The Predator State. Wow! The following is my own interpretation based on the first two chapters. People today willingly defer to the "market"—a non-physical institution that is more easily defined by what it is not (the state) than what it is. The "market" is a concept. We do not allow ourselves to analyze it or criticize it. How is it that that we have forfeited so much of our lives to a concept we refuse to examine?
The benefits of securitized mortgages (4-27-2009)
Securitized mortages have all the appearances of a con. Read the full essay.
Investors and securitized mortgages (4-27-2009)
The securitization of home mortgages has been likened to a house of cards. It is interesting that the families who bought homes they could not afford are commonly castigated. I want to consider the buyers of these securities. Read the full essay.
How shall we take back our democracy? (2-6-2009)
The economic mess has had a side effect of illuminating the fact that we do not have a working democracy. Our elected government does the bidding of CEOs and bankers. They have collectively screwed us deeper and deeper into a hole. We can speak out all we want, but they ignore us. What to do? Bending over for the rest of our lives seems uncomfortable, at the least. Rioting? Some writers are reminding us that people in other countries are rioting, and that it has proved successful from time to time. It does not appeal to me. I'm still looking for another approach. What do you suggest?
Obama's first two weeks (2-6-2009)
Some time ago I suspected that the popular enthusiasm for Obama was more of a need for any hopeful enthusiasm than a response to Obama himself, that the popular disgust with Bush primed the voters for a Democrat, that the notion of a Black president was so unbelievable as to be enticing. I have watched his cabinet picks with trepidation. He is touted as a person who prefers consensus. What I want is a bold visionary leader. What I have heard about the "stimulus" bill is disheartening, as it does not directly address the basic problems. I cannot see that it will stimulate any real, lasting move toward a desirable future for the likes of you and me. I am disgusted that regulation is not being pursued and that tax increases for the rich are not being pursued. Borrowing a trillion dollars from the Chinese does not sound like a way to provide security at home. I have come to believe that one "stimulus" bill is an error (I'm being polite here). There should be separate bills for: jobs, unemployment, homeowner preservation, retirement preservation, and regulation.
Globalism (2-6-2009)
Big corporations have been advocating globalism for decades. They succeeded in creating the World Trade Organization and getting sovereign nations, including the USA, to sign treaties abrogating their sovereignty in the name of global trade. What a crock! What is this all about? Producing goods cheaply in one country and selling them at a good profit everywhere—essentially guaranteeing a marketplace for goods that were made using some country's resources (including labor) for which the corporation paid little-to-nothing. And perhaps even receiving a subsidy from that country.

Do you remember some 15–20 years ago American corporations clamoring loudly, even in the pages of the Economist, for the right to sell American rice in Japan? They tried to get the American government to force Japan to buy the rice. Japan—a country that grows its own rice! At the time I was astonished. Now I see this was but one front of an effort that has never slacked.

Globalism has led countries to abandon local production of essential goods in favor of buying those goods from a foreign corporation. The new model: working at slave wages for money to buy products you used to be able to produce for yourself, being a cog in the wheel instead of your own person. Being vulnerable to price increases and shortages. Being vulnerable to financial disasters in other countries. Losing freedom and independence.

This has happened in America and around the world. Globalism and the bankers that finance it have put all of us on the same ship, so when one sinks we all sink.

Extortion is right around the corner. Us poor sinking rats in water up to our knees are about to be asked to voluntarily allow the water to rise so the bankers can profit. Just wait—any moment the water will begin to drop. We'll drop a few crumbs to placate you.

Do you really buy this?

What went wrong (2-5-2009)
There is an interesting article on Alternet, Why Is the Government Hell-Bent on Rewarding Greed, Incompetence and Narcissism? by Jim Hightower.
How to truly help the foreclosures (2-5-2009)
There is an interesting article on Alternet, Why the GOP's Tax Gimmick for Homebuyers Won't Help One Bit by Joshua Holland.
What is a stimulus? (2-4-2009)
Politicians use so many meaningless words. This must be deliberate at least part of the time. For example "bailout." TARP is not a bailout, it is a gift. (And as such should be taxable.) "Stimulus"? Well, I suppose it matters what the subject is. Do you see the current situation as one where banks are losing profit? Corporations losing profit? Workers losing jobs? Homeowners losing homes? The problems I care about are the last two, period. The only stimulus I care about is one that begins to restore jobs and homes—directly. The currently considered legislation purports to remedy perceived problems in the country and, secondarily, creates jobs. It does not seem to be the considered result of true understanding of the causes of the current situation.

I prefer a "jobs" program and a "homeowner preservation" program and a "retirement preservation/restoration" program. And an "unemployment relief" program. And a "regulation" program. These should be individual bills so it can be easy to analyze their likely effectiveness.

Jobs to put Americans back to work so they can pay their bills, keep their families together under a roof, save for emergencies and retirement, and spend a little discretionary income.

Homeowner preservation to keep mortgage defaults from resulting in evictions, to make it possible for people whose mortgage balances exceed the value of their home to get the debt revalued, to reduce excessive interest rates and penalties.

Retirement preservation/restoration to protect the retirement benefits originally guaranteed by employers who now prefer to do something else with the money than honor their commitments. To keep retirees from having to return to work in their seventies and eighties in order to forestall homelessness and hunger. A new program to encourage individual savings for retirement that is safe from the dangers of the stock market. A new program that funds worker retirement savings by employers in such a way as to protect it from hijacking, a program that extends to contractors and full time employees.

Unemployment relief that keeps unemployed workers and their families in their homes with sufficient food, water, and heat until such time as jobs reappear.

Regulation! to prevent a recurrence of the risk taking that has jeopardized the American way of life. Regulation to protect individual savings. Regulation to prevent a Wall Street-Washington theft of taxpayer wealth.

Compassionate pragmatism (2-4-2009)
We are in the current mess because of greed and blind faith in ideology. Our belief in, and commitment to, capitalism has led us here. Many of us cannot or will not see what ills capitalism has wrought. They insist more capitalism is the solution. In this they forget that one definition of insanity is the determination to repeat behaviors while expecting different outcomes.

What we need now are pragmatists who can recognize the current ills, understand their causes, and craft solutions that directly benefit the poor and middle class. We need compassion for the people who have been hurt the most by economic failures.

Prosperity and work (1-25-2009)
Manufacturing is the engine of consumption and materialism. In the last 20 years or so "experts" introduced the idea that America had graduated from manufacturing, as if it has some stigma, and moved into services as an income producing activity. Manufacturing didn't disappear, it just moved offshore in pursuit of cheaper labor.

I think manufacturing is still a valid economic activity, but reliance on consumption of manufactured goods as the sole provider of prosperity is wrong. We cannot consume ourselves into prosperity. Nor can we base our wealth on the price of homes.

We need (1) a definition of sustainable common prosperity, (2) metrics of prosperity, (3) an economic model that has a purposeful role for each of the economic activities focused on achieving prosperity, and (4) government policies supporting all this.

This country has never before addressed itself to achieving true prosperity. It has been content with stories like Horatio Alger with its messages that (1) individuals can of their own initiative and effort get rich and (2) the poor are poor because they won't do what it takes to get rich. Success in this country is all about power and money, those without it are invisible except when they serve as sources of profit for the rich.

There is a disconnect between this reality and the childhood stories of Robin Hood and the Three Musketeers. Helping the needy with resources supplied, even unwillingly, by the rich. One for all and all for one. Both of these egalitarian principles are ridiculed by todays rich and powerful. They don't want to share, I got mine, to hell with you, there's never enough.

Egalitarianism is derided as akin to socialism, surely the evil twin of capitalism. The "s" word is a handy flag deliberately used to deceive. What this country needs is a serious, open, and honest discussion of egalitarianism and the private and public ownership of production.

Capitalism is an economic system based on private ownership of production. Communism is an economic system based on public ownership of production. Actually, these are simplistic definitions that hide a large range of theories and practices. Capitalism is focused on the accumulation of private capital (wealth) while communism and socialism are focused on equitable distribution of economic goods. Both are susceptible to human corruption.

I am more interested in meaningful work that contributes to prosperity than equitable distribution of goods. Such work has yet to make it into public discussion. It is overdue.

Charity(1-25-2009)
Throughout the final time of this recent presidential campaign there was a quality of rabidness to the claims that charity would be the end of us. It verged on hysteria. Assistance for the needy, from veterans to the unemployed to aspiring college entrants, was villified. Proposals to increase taxes on the rich, in order to fund the assistance, were also attacked. Republicans were the worst perpetrators of this. Interesting, as they have aligned themselves with Christian extremists, that they would deny simple "Christian charity." Why are we unable to defend charity?
Poor lose, again (1-23-2009)
The recent government interventions in the economy continue to follow the model where money is thrown at the rich when the symptoms are showing up in the poor. When will we learn that we cannot solve the problems of the poor by giving money to the rich?, especially when the bailout is funded with debt—money borrowed from other countries. Does anyone see a national security threat in that debt?

Let's revisit the current situation. It began, visibly, with mortgage foreclosures. Look behind that to see (1) unemployment because of layoffs, (2) improper mortgage lending (insufficient borrower qualifications, rising interest rates, excessive interest rates), (3) overpriced real estate. Look ahead to see mortage-backed securities whose value is based on the improper mortgage lending practices. Watch the house of cards collapse. What are we left with? Unemployed workers with homes they cannot afford, forced into foreclosure and bankruptcy, screaming. Investment bankers holding worthless mortgage-backed securities and credit default swaps.

Who yells the loudest? You guessed it, the bankers. And government rolls over, giving away cash to the gamblers instead of the homeowners. Rewarding the foxes instead of the chickens.

New jobs (1-23-2009)
Am I the first to wonder what gainful employment there can be in a new economy where we are paid to do something other than make things we cannot afford to buy? The dying economy was based on materialism, that people will spend their money to buy something, and most likely something they do not really need. Buy as opposed to not-buy and . . . even save. No borrowing to buy even more. The seemingly endless round of job layoffs is because of declining sales, sales of unessential items like cars and computers. No buyers, no jobs. This is a self-reinforcing circle. To move forward towards prosperity we need a different model.

We need to imagine what work is truly meaningful, what we need money for and how much, a lifestyle that is based on something other than materialism.

Hope (1-23-2009)
I keep hearing on radio news how much hope is being expressed in the wake of Obama's inauguration. I don't think it is Obama himself that engenders hope, I think the desperate need for it by many Americans is susceptible to his glamour and the opposition of his policies to those of gratefully ex-President Bush. In other words, I willingly express my hope and relief on Obama's ascendancy to the Presidency precisely because he has promised to act completely differently than Bush. It is Bush whose deeds drove me to dispair. Deep dispair. Mind-numbing despair. Expressing hope publicly and joyously is hugely liberating. It frees me from the prison of dispair.
Failed economic model (12-23-2008)
Perhaps 2008 is the year that we see indisputable proof that our economic model is flawed. That growth will not solve our problems. That consumerism is not sustainable. This model looks successful only by placing a lien on future generations. So much for family values.

Recent years saw the attempt to present residential mortgage debt as cash reserves. And the people that did not blink about it call themselves "economists." With that track record we should never again accord them any regard whatsovever. They have proved themselves part of the problem, not the solution.

We tried the war gambit to boost prosperity. That failed.

One underlying problem is likely the looting of the treasury by whomever can. Several years ago the GAO discovered several billions—yes the B word—had disappeared without a trace. This situation never made the newspaper headlines, it was so un-newsworthy. In fact, the government has steadfastly refused to account for its income and expenditures, something it does not let corporations get away with. By so refusing they are complicit in the looting. It makes the whole budget process a joke, why bother with a budget when anyone can take the money and run? when there is no accountability?

Speaking of reserves, whatever happened to the, quaint?, notion of cash reserves by both individuals and businesses, you know those emergency funds? Money to tide you over through hard times? I thought regulations required them of things like banks, but apparently not any more. And what an inspiration to discover that venerable companies like General Motors do not have the reserves to get them through a period of flat sales! I guess they all bought into the scam that reserves could be replaced by margin investments and operating cash could be provided by borrowing, after all the real money is in investment returns. Isn't it?

And perhaps we can now admit we do not have a free-market capitalism? Corporations benefit from government payments, contracts, tax breaks, laws, and regulations—benefits deliberately structured to help the rich shut out the small businesses. True competition only exists among those seeking government handouts.

So what was the Cold War about anyway? It was portrayed as Capitalism against Communism, but as both systems evoke greed and corruption, the only difference seems to be who benefits from the ability to accumulate wealth and power on a grand scale—politicians or CEOs. Russia, some years past the so-called fall of Communism and the break up of the Soviet Union, is back to centralized wealth and power, but the people in charge hold the occasional election to obfuscate the truth of their government.

In 1776 a few men, sadly handicapped by the absence of women, crafted a Constitution with the intention of avoiding the current state of affairs. What were they smoking?

More thoughts, no more money (12-19-2008)
I read an Alternet story that said the underlying force behind America's militarism and its support of Israel is the economic system we erroneously call capitalism. C demands rape and pillage to acquire "raw" materials and labor at as low a price as possible, it will do this in its homeland and offshore. It is a malignant cancer without a conscience. I wonder if my MBA class on conscience was misguided thinking that it was truly possible in a free-market capitalism. Little evidence to date.

The previous day's story was that the banks lied about a credit shortage, a credit crisis: Did America Get Punked?. There is a mortgage crisis (caused by overpriced mortgages, underqualified borrowers, and unemployed borrowers) that affects investors (thanks to securitized mortgages) and homeowners, but this is a different problem than the US Government was asked to help. It is not clear that widespread mortgage defaults could take down the investment banks, regardless if they suggest the possibility.

There seem to be several problems: too many investor thingies (like hedge funds and derivatives) that have proved worthless, dropping sales which leads to fewer jobs, and mortgage defaults.

I'll address these one by one.
(1) That investors may be losing what they thought was equity is (1) poor judgement on their part, (2) bad practices by investment banks, and (3) insufficient government regulation—you know, that thing that is meant to protect American citizens. The immediate action is to protect the mortgage holders who cannot pay. The long term action is to put in place a rigorous regulation system. What should not be done is make good investor losses or prop up bank assets, executive compensation, etc.
(2) Dropping sales that lead to layoffs are a natural result of an unsustainable economic model. It has been known to be finite a very long time ago, it just managed to drag on this long because the US Government has been supporting it. Enough is enough. Let's not throw any more money away on this model. Instead let's create a new model, one that is sustainable and that can provide Americans with solid middle class jobs and prosperity. We need leadership, and not necessarily the government, and absolutely not the corporations that are embedded in the current problems. Until a comprehensive program of economic re-development is well underway, we must increase and extend unemployment benefits—we must take care of the workers who are paying the price of economic failure.
(3) We must require the mortgage holders to (1) write down the mortgage to reflect a realistic current value, (2) lower the interest rate, (3) allow a grace period of no payments so the homeowners can re-establish their equilibrium, and (4) evaluate the homeowner's continued ability to make payments on the new lower mortgage. If the homeowner cannot make the payments after the first three actions, they then should be allowed to remain in the home as renters with a rent set at an affordable level.

Subsidies (12-18-2008)
I asked my Congresswoman how I could get a list of the subsidies granted by the federal government. I got no answer. I am beginning to think that the government's expenditures may be classified as: (1) salaries and office expenses, (2) asset purchases (such as vehicles and buildings), (3) grants, (4) loans, (5) gifts (like condition-free "baillouts"), (6) tax credits, (7) memberships. These may be given to individual US citizens, US organizations-businesses, foreign countries, foreign organizations-businesses.

I also believe that classes 3, 4, 5, and 6 constitute subsidies regardless of who the recipients are.

Hijacked (11-22-2008)
American corporations want to be left unregulated, which they defend with the words of economic theorists (men who gained fame through words that have been discredited by history) demanding loudly that unregulated capitalism is the purest and best form of capitalism.

And at the same time they demand, and get, tax breaks and outright subsidies. Tax loopholes are exploited as a matter of honor by corporations whose profits approach the obscene.

Corporations are probably the largest users of government-funded infrastructure: Their employees commute on public roads, their goods are shipped on public roads, their toilets flush with municipal water, their offices are powered by municipal electricity, their workers were educated by public schools, etc.

Too much money? (11-16-2008)
I read that the impetus for the creation of derivatives, those phoney investments that have recently gone up in flames and taken their investors down, was the great sums of money from billions of dollars of corporate profit and millions of dollars of individual executive compensation that were looking for a home, sugar jars being so passé.

Do you not see the irony? Corporate and executive hoarding caused bankruptcies and the evaporation of wealth. A better strategy, one that would have supported the (flawed) dependency on consumerism, is profit sharing. Think how the economy would have prospered if those billions had been distributed to employees?

Hoard not, want not. Share more, hoard less.

Support America! (11-16-2008)
It's clear we have quite a backlog of infrastructure projects which have become increasingly imperative, from roads to energy independence. These projects always falter on the issue of funding. Instead of relying on taxation or federal borrowing, let's ask the rich to contribute voluntarily. In addition to getting their name on a plaque at the opera house, let's offer them their name on a plaque at a solar power generating facility.
Greed is our economic model (11-14-2008)
The only economic model operating today in America is greed.

Many economics-savvy people have talked about the basis of our healthy economy being consumerism, especially individual consumerism. And the marketing budgets reinforce this. But . . . the corporations whose profits rest on said consumerism have forgotten that in order for people to shop they must have disposable income—a paycheck that provides more than subsistence living.

Other "experts" talk about the desirability of personal savings and little-to-no debt. There's nothing like a time of massive job layoffs and mortgage foreclosures to focus the attention of would-be-workers on paying off their debt and building up a savings nest egg. Both of which preclude the consumerism of just two years ago.

So, how many ways can we have it? Full employment? Well-paying jobs? Personal savings? Little debt? Affordable quality education? Affordable health care? Exorbitant executive salaries? Rising real estate values? Stockholder dividends? High carbon emissions? Foreign wars? Walls on international borders? Overflowing prisons?

Transparency (11-14-2008)
I read an article on Alternet by David Sirota titled "Four Reasons to Oppose the Bush-Obama Request for the Rest of the $700 Billion Bailout." Reason 3, Congress Still Abdicating Its Oversight Responsibilities, talks about the lack of bills that mandate "seriously better transparency." I am struck by the notion of grades of transparency. This seems more of a political reality than something from my life. However I can find an analogy in typography that features a continuum from fully opaque to fully transparent. Nevertheless . . . as long as the people are led to demand transparency and the political response is semi-transparency, then there is really no improvement. What the people want—and need—is a way to monitor government actions. As long as "transparency in government" in only partial, then the decision of what not to reveal is intact and effectively blocks public monitoring. So, partial transparency is no transparency.
Capitalism is dead (11-9-2008)
The theory of free market capitalism has proven itself false. America in 2008 embodies the many errors in that theory. To continue to consider it a desirable goal, even a necessary one, is pure idiocy.

One of America's greatest needs now is an economic model that is sustainable, one whose adoption benefits all citizens, workers and non-workers alike, from the outset and in the long run.

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Revision: 12-30-2016.