THE ‘NOT QUITE’ RAGING STORM IN OUR FEDERAL GOVERNMENT
Images of the future for our Nation (and WORLD too) are now starting to appear clearly to the new Presidency and to our two Legislative Houses. The socio-economic situation is now starting to display its manifest dangers – day by day. The real question still lies below the proper level of wide consciousness : this complex situation has more to do with CONFIDENCE in the ‘shapes’ of the likely coming WORLD than with economics. There is a deep human and human values ‘survival’ issue that lies at the heart of what is going on, and we have the task – collectively – of untangling the semantic issues from the REAL and threatening issues and they are starting to appear in the way that the complicated ‘cure’ legislation is starting to appear to our legislators.
The DEMOCRATS are trying to create a ‘stimulus package’ that is based on a potpourri of concepts with an emphasis on short-term job creation but with a lot of other palliatives that ‘complexify’ easy understandings. The REPUBLICANS, anxious to re-unify themselves, if they can (and still appear to be concerned) are focusing on the notion that moving money and credit around appropriately will somehow or other loosen up the public and then the appropriate spending will start to ‘solve’ all of the major slow downs in ‘consumption’ from all over the place. Foci seem to be lacking in the deliberations about the pending legislation and that may be due to the lack of understanding IN DEPTH about the content of the pending legislative acts. It must be added (with recognitions that the time that these serious deliberations have been in the lead positions in our varied news media has really been short) so that even our White House has not done enough, to help make vivid, the contents of the strategic (and tactical) aspects of the legal designs and their likely impacts that are now starting to emerge to become national Law..
I am old enough to have recollections about the so-called GREAT DEPRESSION in the late twenties until the early forties. I was a teenager then. Coming out of the despair took a lot of time (at least a decade and a half) with a major World War contributing to the ‘coming-out’ prospects and actualities. My youthful recollections (which to say the least were hardly ‘deep’), if I phrased them in the language of the period then with the operative concepts that were placed into action modes were : (1) The DEMOCRATS were wedded to the ideas of Keynes and his fundamental notion that if the PRIVATE ENTERPRISE system was faltering, the FEDERAL GOVERNMENT should move-in to ‘solve’ the problems with a variety of new institutional arrangements (focusing on job creation) and some powerful new ways to control the monetary system of the USA (the GREAT DEOPRESSION had only a few links to global ills then, unlike NOW). The REPUBLICANS seemed to have had little of importance to say (as I recall from my grade school and high school CIVICS classes, because they were largely blamed for the existent fiasco) but were more linked to monetary rather than fiscal policies in order to usher in solutions to end the ‘grand’ malaise of those times.
THE ‘THEN’ REIGNING BASIC FORMULA -- FOR ‘A RETURN TO NORMALCY’
My recollections about ‘then’ were simple : “If the private sector seems unable to act, then the federal government must act. Disaster MUST be avoided. Things may NOT get better automatically.” Vigorous action by our then President and his White House had to grab the reins and try to find sustainable, long-run solutions for the aching economy. There was extant among many of the then ‘elite’ that they hated Keynesianism and his models relating to (1) consumption, (2) investment, and (3) labor theory. The ‘elite’ thought that ‘monetary policy and the so-called ‘quantity theory of money and the velocity of money’ exercising controls via interest rates would do the job was the paramount belief. But they had a hard time convincing ‘non-elites’ that Hoover had done the right things exercising such a narrow view of ‘how to solve the severe unemployment problems, the collapse of prices on the free markets (i.e. price depression), the non-exuberance in the national stock-markets at the time. As a youngster in New York City I remember the homeless, the hobos, and the hunger of children in my public schools. I also sensed, but never saw or experienced, the possibility of violence in the streets.
Was there a debate and was there a deep SEMANTIC problem. I think ‘YES’. I think there still is such a problem. Today when I think about government I usually think about our Federal Government as an institution like any big corporation in the private sector. I have to struggle intellectually to think of our Federal Government as an expression of an active people that I usually refer to as “WE THE PEOPLE”.
When NATIONALIZATION of our banks is talked about or even suggested at the present time, the semantics leaps out at me (I recall the ‘bank holiday’ in the early 30’s and its attendant fears) and we immediately get the response as possibly a major drift toward socialism or worse, communism. The lines are drawn : FREE ENTERPRISE ‘versus’ the FORCES OF DECAY RESIDENT WITHIN GOVERNMENT. Government takes on the appearance as a collection of necessary ‘evils’ rather than as an expression of the ‘WILLS OF ALL OF US USA CITIZENS”. Another characterization : “the PRIVATE SECTOR solutions are always preferable to the PUBLIC SECTOR solutions.”
Should the BANKING system be PUBLIC or PRIVATE? Or BOTH? Or MIXED? After all what our investment banks, commercial banks, and savings banks do is to take ‘WE THE PEOPLE’s savings (monies).’ And lend them out to ‘others’ as loans. And a usual response is that ‘bankers and banks are creative institutions and are really the drivers of innovation and progress. Is that later point TRUE or NONSENSE?
Could well programmed and maintained computers and their technical programs do a better job of investing the ‘WE THE PEOPLE’s monies’ than do the CREATIVE bankers? Why does GREED seem to be so localized in the monetary sectors? Or am I wrong here? Are the bankers working in our PUBLIC-GROWTH interests or their narrow own interests? This is no place to enter into the debate about the issues of controls, and responsibilities of the ‘money-lenders’ and the quality of their past and present performances. Facts are starting to appear. . Think about recent demolition of family retirement funds, frauds of unbelievable magnitude, and the pains of many of ‘WE THE PEOPLE’ who have lost and continue to lose their and their children’s futures for no causative reasons of their own.
Is the BANKING SYSTEM a system that must be brought under reasonable controls and one that we could even possibly do without for now while ‘things are being straightened out’ by and for ‘WE THE PEOPLE’? Our BASIC institution – our FREE Federal Government – democratically elected -- might be able to redesign our BANKING SYSTEM that will protect the savings of our citizenry far more efficaciously than has been done in the recent past. There are exemplary monetary institutions here in the United States (like local Mutual Savings Banks) and abroad that could serve as good or better models than we have today – it seems to me! Factual histories should be colleted and made public with names and data. Transparency needs for efficacy are a sine qua non in future activities of such institutions – along with stringent regulation to dampen fraud and greed.
STIMULI -LOGIC & LONG-RUN SUSTAINABILITY
The REPUBLICAN notion that there should be tax breaks in the ‘stimulus package’ because then the wide distribution of spendable funds could be done easily and quickly seems to lack a few explanatory explanations. Lets assume that ‘tax rebates’ alone needs to be explained. The terms themselves seem to suggest that normal employed ‘tax payers’ alone would be the sole recipients of such ‘help’. I presume that the REPUBLICANS themselves might have to figure out how to keep some funds flowing to the unemployed and the impoverished who do not have he likelihood of being ‘gifted’ in that way. Should the unemployed be dealt with in special ways?
Furthermore, and I may be missing a lot of detail that might explain these seeming shortcomings, I fail to see how such depletions to the Federal Government Tax RECEIPTS would not deeply result in major labor layoffs WITHIN our Federal Government – due to tax revenue decreases because of the decreases in receipts. Maybe I’m missing something here. If this argument is sound, then the FEDERAL and FRB printing presses would have to roll mightily in order to pay salaries and fees to the Federal Workers to sustain the Government itself. This mode of assistance seems on the surface of it to be more political than a sensible part of the ‘stimulus’ that they say is imperative to have a good bill. We have been down this path earlier a few months ago where tax rebates did little or nothing to get at the key problem (getting persons to spend rather than to save for their uncertain futures) as seen by many of WE THE PEOPLE. Namely – how long will this situation last and should I SAVE these funds in order to provide a possible bit of a future cushion if years of ‘slow down are ahead of us in the present agony of what is going on?
HOARDING AS A NON-DIRTY WORD
The real issue is restoration of CONFIDENCE so that people will start to spend for consumables that interest them For those kinds of behavior we need a near certainty that there will be FUTURE money flows into their family coffers. For that JOBS are needed – NOT one time shots received from the USA government. The real legislation design task is to get the ‘going concern’ logic built back in to the normal day to day lives of ALL of us people. This present crisis is ALL ABOUT FUTURE EXPECTATIONS, not short run money help alone. Leguislators must wake-up to this MAJOR point.
I have used the word ‘hoarding’ in prior communications. I am a hoarder by my own definition. On the stock market I am, and always have been, a long-term INVESTOR and do not think of myself as a SPECULATOR (a major distinction made by John Maynard Keynes, I might add). I am waiting to invest the liquidity I have and until I sense that the ‘bottom’ has arrived and I can pick up magnificent bargains at very low prices I will continue to ‘hoard’. I’m working on a new investment strategy for myself now. How much and Where should I INVEST!
I had friends over to see me recently who were literally ‘wiped out’ of all of their retirement funds that were invested in (at the time not long ago) seemingly safe stock. mutual funds, and bond market investments. They managed to save some of the liquidity but not much, and their estimate is that they will never be able – with their present life and job expectations -- ever be able to restore their former level of wealth. They sense that very many of their former hopes are now dashed. They have some monies with which to eat and pay for their lodgings. But their expectations of future formerly anticipated comfort hinge on the nearly impossible. Is BLAME assessable anyplace?
HOPE DOES POSSIBLY SPRING ETERNAL
The centrality of the essence of the DEMOCRATIC/KEYNESIAN approach of Jobs for all and the improvement of our complex living environments is the path that is SUSTAINABLE and desirable. There eems to be no real vitality in the ‘tax-do-it-all’ method proposed by a few REPUBLICANS. WE need infrastructure jobs, new industry jobs, new attention to human health and education, new values and new human consciousnesses that show compassionate understandings of the grave problems that many of the USA citizens are facing. Add in too, citizens of other Nations too.
The best that can be expected by many is that the JOB markets may be buildable (probably very slowly) and may be able to sustain future existences that – hopefully – may be satisfactory. But calamities are everywhere and there is too much ‘yak-yak’ that is unrealistic and fanciful. Every day that passes is another day when we must keep warm, feed our children, transport ourselves around – and keep from becoming physically – and mentally -- ill from grief. Do our legislators understand the pains that are out there? And within their fellow citizens? Do they really have any idea about the anguish, senses of loss and despair that are coming into being? People don’t want ‘handouts’. They want sustainable futures and promising jobs and growth opportunities. Thank GOD we have a President who understands what the fundamental issues are all about : the proper redesign of the ways we think, feel, and wish to live on this Earth in our futures. We don’t want to have claptrap politics sicken us in ways that have been extant before – and not too many months and years ago.
by
Richard Maffei
Member since:
November 15, 2005 "LONG-RANGE" STIMULI & SUSTAINABILITY
February 01, 2009 03:26 PM EST
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Comments: 23
Very much to ponder, but I applaud your comments on the "Keynesian" policy (which I doubt he would agree with.) What strikes me is the funding is left to States, without any clear long-term, coherent policy.
With all due respect...and sympathy...you sound as confused as I about this horrible mess our nation is in. It is not at all clear to me that the current "Obama Plan" will result in short-term improvement in the economy. I thought it was illuminating to read about the Republican "suggestions" to improve it...mostly suggesting tax cuts, and leaving out all the renewable energy funding. One suggestion was to just eliminate income taxes for a year or two. It blew me away that they would suggest this...with many people now barely surviving at or below the poverty level, and hundres of thousands of new unemployed every week. Tax cuts don't help any of those people! But it seems that Bush was representative of a majority of the Republican party that never saw a tax cut they didn't like. Bush's big tax rebate last year didn't do a thing to stimulate the economy, and I am unhappy to see that Obama's plan includes over $300B in tax cuts, and not nearly enough in direct job creation through infrastructure spending and renewable energy development. Those kinds of things put people to work, and they also are a much needed investment in the future health of the nation.
When I did my usual 'minimal' planning to write about (1) stimuli, (2) SEMANTICS, and (3) sustainability I soon began to be taken away -- as I started to actually type -- by the complexity that Bert suggested. I would have added to the length of the 'too long length of what finally appeared above but figured I might add a comment later on. Which is what I have started here.
If I had what I thought was a key point, it had to do with the SEMANTICS of the 'word' GOVERNMENT. I wanted to build the case for te need for us all to see that WE THE PEOPLE are REALLY the TRUE 'government-of-concern'; not the institution that reflects and represents us -- sometimes badly.
In order to get at the bases of the Keynesianism that is really real (not the blab that usually appears in the press and in our new electronic communication modes) we need to 'see' Keynes as a seminal thinker who wrote at least three major works (one not well known at all titled "A TREATISE ON PROBABILITY" wherein he really shows himself to be a sound thinker with an intellectual flair that was deeply scientific and mathematical). For me, a close reading of the other two books shows a very broad understanding of human nature. The indexes can be scanned to see this -- easily. Add in his deep conections with the Bloomsbury Set and we begin to see a man of great depth rising to the task of considering how to make our WORLD an ever improving WORLD in which the philosoiphic roots of how to build a sound, viable, sustainable, creative and contributing society is paramount within his rich and compassionate mind. He was no hack, simple-minded specialist. He seems to me to have been a man of very high HUMAN stature.
His basic dichotomy was really well beyond the notion of PUBLIC / PRIVATE enterprise. It was more like "Societies with common values / the preservation of Individualisms". Another way to express this complex "mind-theory" of Keynes is to learn to see him as a person who knew how to 'see' how democracy could easily be embedded and used within societies where the goal was to have institutions that expressed both communal concerns while preserving and fostering the best possible means of development of FREE (and, yes, compassionate) individuals. In some sense, to use my old tetradic logic (which I find useful) DEMOCRATS : REPUBLICANS :: Emphases on GROUP BEHAVIORS : Emphases on INDIVIDUAL BEHAVIORS.
The last link in the present situation would suggest that our most important WORLD need is to design (diverse) expressions of the above complexities that should always be aimed at a recognition that all proper designs must be understandable as 'reaches for' SUSTAINABLE LONG-RUN CREATIVE CONTRIBUTIONS TO ONE ANOTHER; ALL other human beings on EARTH.
What will 'save us' is a restoration (or perhaps it is a first time recognition) of our dependence on one another. Faith in other minds and education and performances by trained mature skills whose aims go beyond ones selves, are basic essentials. We need to build proper cities and thus we need mechanisms that sustain our NEEDED, well maintained public infrastructures. We can see these efforts being filled by private firms working under federal, state, or local CONTRACTS. We need attention to life's details which means having ways to have satisfying employment and personal skill and understanding growth opportunities for all peoples available at any age--thus jobs, education, and health options. More than anything else we need to realize that no person should want to stand alone (thus dampening inclinations toward GREED and CORRUPTION and CRIME) because it is impossible for an individual to do so without sustaining groups (like farmers, police persons, carpenters, mechanics, musicians, poets and FRIENDS). Many, many skills are needed to 'build' and 'maintain' the created things we need to have ever better lives. GOD builds trees and vegetables; we FINITE humans build i-pods and bicycles.
Dick
As I grow older I get more linkages growing in my mind. You know -- permutations and combinations -- given a growing set of concepts say "n" of them. Then by adding just one more the task becomes even worse and more complex. Remember the high school formula, say 3!=1*2*3 = 6. The next year say I add one new concept. Lo and behold, now 4!=1*2*3*4= 24. We've al got lots and lots concepts, hence n! as n gets bigger and bigger gets more and more complex, especially if complexity is now presumed to be strongly related to 'LINKAGES". What helps? TIME and INTERACTION WITH OTHER MINDS LIKE YOURS! Thanks old friend!
Dick
It is my strong intellectual and emotional belief that our UNIVERSE and the GOD/Creating Universal Process that guides it, is ever busily attempting to create UNIQUE persons. Cooperative "maverick folk" might be the answer we ALL need on our precious EARTH to bring about the promise implied in all of our GREAT RELIGIONS. So I do hope that I have some 'maverickism' in me -- and I hope I am living (and dreaming) with billions of other mavericks on our EARTH, as well.
It seems to me tht the UNIVERSAL struggle is to gain 'clarity' while we 'complexify' our own understandings. Thus BEAUTY may appear. How to weave stuff together by more and more viable concepts and filters provided by common exchanges among many folks may be the way to support our DIVINITY as it (hopefully) will and can grow and grow.
I concluded years ago that as a human being I could not despair about our former President. FOR ME he seemed to be doing almost everything WRONG! But as a person with a religious inclination I could never hate him as a human being and so I merely PRESUMED that he was doing the 'best he could' and he had been properly installed in the job he had gained in our democracy.
By the same token I have presumed that bin Laden has his own set of operational values. He did what he thought was right I presume. I wince every time I hear the comment like "We have not yet killed bin Laden". It sounds unChristian -- at least -- to me. I do not operate with his visions of the 'right' and 'good' and I would rather have him captured, brought to trial and have some degree of light thrown on why he did what he did, if he did so! I would like to know more about his values and mind set. And the same goes for Saddam Hussein too.
Maybe he (bin Laden) was a 'maverick' in his own way. Then the question is "What would a UNIVERSAL MORALITY LOOK LIKE?" And my answer at present is : "I haven't a fully known and knowable, to me, idea -- YET."
My PLAN is to keep seeking out TRUTH and linked ideas that help me to understand and then explain (to myself and others--if I am able to do so).
Dick
Government spending has never gotten us out of any financial crisis. It didn't get us out of the depression; WWII did. Just prior to the war, the tax rate was up to 80%. Tell me, if a person has the choice to work a stressful difficult job and make $100K and only keep $20K or work a mindless job with no stress and make $20K and keep $20K because they are in the lower income tax bracket, what do you think they will choose do? All the brightest hard working people will look for jobs outside this country or will take the no brain jobs and spend their free time on self enlightenment.
Government spending didn't work in Japan and it isn't going to work here. They should just let wage earners keep more money which they will spend and spur economic growth. The government is already bloated. Let's stop feeding the pig.
We're already in two wars. I don't think starting another will help the economy.
So I guess we should just cut income taxes to zero, shut the government down and let nature take its course.
Richard, I love your point about "confidence," which is, I believe, the very foundation of economic trends, and when the foundation crumbles, the structure is in serious trouble. The real key to the end of the Great Depression may well have simply been that WW II rebuilt this nation's and most of the free world's confidence.
Deflation is normally a difficult spiral to break, but it is becoming increasingly apparent that the situation today is compounded by the specter of hyper-inflation that just can't seem to wait its turn to overcome us. Every time the least bit of good news comes out, inflationary bells start ringing. We see it in the price of oil and it is apparent in the leading indicator that is the commodities market.
Unfortunately, this phenomenon is acting like an anchor strapped to any recovery effort, as the net effect of higher prices is to deflate the economy. So far, the inflation factor hasn't been particularly significant but it has clearly let us know that its potential is real and it is there.
And, ironically, the trillions of dollars being created by the stimulus, bailout and under-the-radar Fed programs, at a time when the production of goods and services is shrinking, will only compound this problem, although that is not to say the programs should be terminated or necessarily reduced. I believe that most of this money has gone out for one purpose, to forestall a bank panic, a crisis that would be crippling. And, in this regard, the efforts have so far been successful.
Therefore, it unfortunately appears that the bottom line here is that this is clearly a damned if you do and damned if you don't situation.
Great article, Richard.
The economic system was bound to fail at some point. It was unsustainable. Wages simply were not keeping up with ever raising costs of living. American's were abusing credit far too much. It was a system built on a foundation of imaginary money. When everyone, consumers and businesses alike, are buying everything on credit and relying on others to buy from them, on credit, it's like setting up a house of cards on an unstable surface. It is only a matter of time before one thing or another upsets the fragile balance and knocks the whole structure down.
The reason World War 2 was able to rescue the U.S. economy from the Great Depression of the early 20th century was because we had a blossoming industrial economy. We have since sold a greater majority of that industrial base overseas. Unless we can force congress to do what is best for the people who elected them, in short penalize overseas manufacturing and encourage industrial growth right here on U.S. soil, we are not going to see any sort of end to this fiasco.
You want an economic stimulus plan that will work Sandy, try this one. Free of charge and I won't even demand that you elect me President for it:
1) recall the $350 billion that was given out from the TARP to the banking system and the "Big-3" automakers. If they are going to fail due to their own mismanagement and irresponsibility then let them fail. It is painful, but must be done. Seize the assets of the CEOs and upper management executives that oversaw the businesses that fail and use them to help reimburse the shareholders who suffer due to their incompetence.
2) Institute a made-here-sold-here economic policy. Abort all of our so-called "Free Trade" agreements. Our Trade partners' businesses can build factories here and sell here and our businesses can reciprocate with any product that we want to sell there. If it can be produced in the U.S. then let it be produced in the United States. Instead of the government loaning out billions to save banks, loan out those billions to build factories, at a insanely low interest rate (like 0.25%). I don't care whether they are American companies building the factories or foreign ones. As long as they are on American Soil and employ American workers. And impose prohibitive import tariffs on any goods that can be manufactured in the U.S. and are, instead manufactured outside. Sony can build PS3s, BlueRay DvDs, camcorders and TVs here or pay a 1000.00% Tariff to import them. Apple can open it's own factories to build IPods and IPhones instead of doing it in China. Anyone who wants to build a factory and sell their stuff in America is welcome. And if other countries want toAnd charge prohibitive Payroll taxes on any U.S. company that outsources tech support or customer service to foreign countries (like India). Also, so they can't get around this payroll tax, make it illegal for American companies to higher 3rd party support firms outside U.S. borders. This WILL restore America's industrial copacity and create job growth.
3.) [The Republicans should LOVE this one] Eliminate all Personal and Corporate Income taxes, Capital Gains taxes, Inheritance taxes, The 'Alternative Minimum' tax and payroll taxes (except on companies that are outsourcing jobs overseas). Replace all these taxes with a 23-28% national consumption tax applied to all goods ans services at the retail level. This was tried before and failed due to the greed of our politicians. Force it down their throats. Only the individual can earn and accumulate wealth. Stop using corporations to tax us without our noticing. Stop taxing our wages once when we are alive and once when we die. Stop withholding our hard earned money before we ever see the paycheck.
A national consumption tax would ensure that every person is taxed according to that which they can spend; not according to what they earn. It would stimulate investment by not taxing the gains of wise investment. And, it would allow the rich to enjoy the fruits of their labors without worrying that some socialist is going to try to "redistribute" their wealth. It also means that those who make less would have more so they could save and really have a short at the American Dream too.
But wait, there's more! You know all those pesky illegal aliens that are such a drain on the system without contributing to it? Well, no longer. Everyone, citizen or not, pays the national consumption tax every time they buy anything. So, they are now contributing to the system. In effect, it is like EVERYONE is getting paid under the table!
All we have to do is defeat the tax lawyer-accountant-H&R Block- IRS lobby Axis of Evil and get congress to realize that, in the long run this would be best for everyone.
A national consumption tax would create so much extra revenue for that government that we could actually pay down that looming national debt everyone is always worried about. Not only could we fund our school systems enough so that we have the best educations in the world, but we could provide free college level education to all citizens. And to those that keep begging for Universal Health Care, we could establish a national public hospital system (one that doesn't supplant the existing health care establishment, but acts to take some of the burden off it) that focuses on preventative health care, instead of waiting until people get sick to treat them.
If you really have to tax something beyond this, tax vice. Tax tobacco, alcohol and hell, while you are at it, legalize cannabis for commercial, industrial, medicinal and recreational use and tax that too. Sure there are going to be some people who grow it on their own, but most of us are too lazy for that and as long as those who do pay the taxes on it when they sell it who cares?
That is a stimulus package that would work. Building factories requires resources (steel, lumber etc, etc) which means jobs for those collecting resources. It provides jobs for those who actually do the construction. It provides jobs for those who support the construction workers and resource providers. More jobs to make the machinery that runs the factory. More jobs creating infrastructure to support them. Police, firefighters, paramedics and other public servants. Jobs in service industries. Banks to save the money, investment brokers to manage their retirements. Lawyers to complicate things and paralegals to do all the real work for the lawyers. Teachers to teach their children and doctors and nurses to keep everyone healthy. Jobs out the wazoo! That is what is needed to stimulate the economy.
I'm not going to tell you it could happen over night. It won't. It would take months to get enough support for such a radical set of reforms so that we could shove it down congresses throat for fear of open revolution. Once it passed, it would take a couple years to get it rolling full tilt. But it would work and it would put America back on top as the worlds leading industrial-economic power. It only requires that enough of us. . .WE THE PEOPLE. . .believe it is possible, and be vocal enough to force our will on the unwilling greedy bastards who run the show. But WE THE PEOPLE can make it happen.
Or, we can have faith in our elected representatives that they have the wisdom to fix this mess with President Obama's magic wand and Nancy Pelosi's/ Harry Read's partisan bickering with the Republican leadership (or what passes for leadership in the decimated remains of the Republican party- post Bush). Just ask yourself. . .have the politicians gotten it right yet?
I apologize for being so long. But anything worth doing is worth doing right.
A simple way to look at the health care cost is that interest groups (as AMA, Pharma etc ) so control the politicians that they are able to gain outrageous profits at the public expense without the public seeing how. The same goes for Wall Street and the investment bankers who created a speculative bubble; or how big oil , the auto industry , the military-industrial complex determine legislation and policy . The people are not informed of the game and are persuaded to elect those who do not serve their interest.
The US government used to invest about 7% annually in infrastructure , but for many years it has done barely 4%. There is pork and earmarks, but that is still less than 1% of the budget. The Congress has been serving powerful lobbies and interest groups.
The government can buy time by spending but that will not enough to lay the foundation for a viable economy that has the necessary capital support.
Obama has inspired hope that the government will work to serve the people. No one knows what will prove useful and what won't, although some support old theories - "Keynesian, " for one. I doubt Keynes would think the same way today, because we have a different global monetary system today than existed in his time.
I'm a reasonably avid reader of "The ECONOMIST", a truly fine weekly magazine that is rich with economics and etc basis on a WORLDWIDE basis. After a one day delay in receiving My January 31, 2009 issue because of a not too unusual snow storm here in the NorthEast, I sat down this morning and read a lot of 'stuff' about 'international stimulus packages'. I have had an interest in such look sees for many years because of my interest in International Economics and WORLDWIDE Cultural (including religious) issues.
In the new issue the (unknown) writer of a piece called "Big government fights back: Public debt is rising at its fastest pace since the second world war as governments battle financial crisis and recession. Will the fiscal firepower work?" Then included is a very elaborate table of data with the plans of 11 countries of our Wrl listed with their plans for 'stimulus' and hopefully, improvement in the looming difficulties. There are two major categories noted with information for each of the G7 and BRIC-type countries listed (BRIC=Brazil, Russia, India, China). The category labeled "NATURE OF THE STIMULUS" has (1) 7 check marks for INFRASTRUCTURE; (2) 11 check marks for TAX CUTS, and (3) 10 check marks for NON-BANK BAIL OUTS. This all adds up to the notion that there is a sort of powerful unanimity of opinion about how to proceed with the current painful WORLDWIDE situation. SO? There will be lots and lots of other 'plans' as we move forward (and hopefully not backward). Opinions will abound and be weighed out. And like the old adage says: "the devil is in the details".
Dick
Your response to WAB RIF was likely historically accurate., in its estimate of prospects if we are dumb enough to undertake new military actions of any consequence in our WORLD. Let me ramble a bit on an economic factor of possible importance that has to do with WAR PRODUCTION.
I think it is fair to say that not many, if any, professional economists would ever defend a WAR as a solution to a major trade cycle or credit cycle (which this downturn appears now to have become-- both that is). In addition to the dual complexity (trade and credit) we must also add in worldwide aspects and threats to civilian populations that may lose retirement opportunities and housing and certainly MAJOR further losses in tranquility and confidence).
In short, the major reason why WAR STIMULATED PRODUCTION is a lousy way to solve any economic problem is that the production and distribution efforts that come out of war production have extremely low probabilities of generating any substantial 'MULTIPLIER and ACCELERATION EFFECTS'. These are technical arguments that can be (not easily) understood by noting say the usual non-war production needs where the aim is to create and distribute goods and/or services to the people of the nation s and world. A tractor can be used year after year to churn the soil and prepare it for plantings of food to be distributed year after year. Food will then be packaged when received and processed and will then be used --somewhat continuously -- to fill (and build) supermarkets and distribution needs. And generate visits by automobile driving persons who may stop at a store and buy a computer. In other words, the 'multiplier' is just another way of saying that some investments -- most really -- have 'growth impacts all over the place.
Military weaponry and vehicles (like tanks, aircraft, missiles, submarines, and training camps) have little likelihood of creating much growth in the sense of 'public consumption'. If there were no inclination in human activities to wage war, we'd spend next to nothing on military production and it could be used in other endeavors like (G.I.) Bills to educate, Human Health, Retraining into new skills, and so on and on.
I'd like to see in the years I have left, some indication that we begin to fasten attention on the infrastructures that will improve, improve, improve human lives and skills in long, long, periods of TRUE PEACE ON EARTH. Without rancor!
Dick
Thanks for dropping by. Your observations are always 'aimed' to the key points. In the comment above to WAB RIF I noted some materials recently published in "THE ECONOMIST". There was another article that really grabbed me there that had to do with the fiasco brought about recently by the distribution to senior banking employees of bonuses. The authors (whose names are never included) of the THE ECONOMIST articles were ruminating about the near stupidity of the use of some of the some original 'bail out' funds to fill the pockets of the not so needy bankers. The Article was titled : "The bonus racket".
At a more sobering level I had occasion somewhere on TV this weekend to hear comments by Feldstein of Harvard University and the National Bureau of Economic Research come up with an interesting idea. Feldstein is a MAJOR 'conservative' economist who was criticizing the notion of design of the present 'stimulus package' and his major point was the 'stimulus package' was improperly designed because in it, there was no real incentive to stimulate anything. He wants to write into the BILL some obligations to spend before tax rebates are 'given out'. Like home insulation improvements actually finished, etc I presume. "Not a bad idea I thought!"
Then this morning I was 'close' reading the ECONOMIST and found an interesting idea linked up to Taiwan. hey are thinking about SHOPPING VOUCHERS that the government will issue instead of the usual forms of liquidity. Again: maybe a good incentive to SPEND.
Finally -- for your significant background especially -- I have a suggestion based on my family's experience when I was a boy in the early 30s. My family did not get hit until the late 30's and then not too hard. My father was a good man, and a good thinking man. Early in the GREAT DEPRESSION we actually moved to a fine home in Queens County in NYC. As I recall my parents took out some sort of a loan to BUY the house and did NOT pay down the loan periodically at all. They did pay a monthly INTEREST CHARGE' on the full amount of the loan. I have nothing but an impression. I was less than 10 years old and didn't have much of a notion about money other than my 10 cent a week allowance that let me buy two ice cream cups during the week.
I'm unfamiliar with mortgage 'contracts' these days (I bought mine out decades ago, and have kept it that way) but is there a way to re-write mortgage contracts and defer the capital pay down and pay interest charges only on the outstanding debt. As you can guess I am of the opinion that every effort must be made to keep people in their homes, even if it means that WE THE PEOPLE (via our GOVERNMENT(s)) have to create new banking arrangements to do so PROPERLY and thus to increase the restoration of confidence that both of us see as the prime cause for todays' malaise.
Dick
First, TPOD, take a look at my response to WAB RIF. You have many points that represent possible new ways to look at the present issues and I have no easy way to say 'better or worse'. The 'devil is in the details'. My background has been shaped by perhaps over-formal training in both theoretical economics and science and mathematics-statistics. You probably know that the budget setting process within our government is a most complex one where the analysts -- who are not Representatives or Senatrs -- prepare suggestions and 'quantify them out'. Each suggestion has roots in action realities and $$$$$$ get the upper hand when a suggestion comes about. In this way the Feds are not much different than the usual private firm that tries to guess what the 'suggestion' will cost and what the 'impact' will be.
There comes a time in the proposed legislation when the 'WORDS' must be largely be replaced by an 'empirical evaluation'. Some concepts and ideas are ages old and we know about likely 'impacts' from guesses about 'what will happen if'. The reason that I hesitate to say too much is because I think we need a strategic theoretical support for the particulars that must enter into the assessments of likely resultant effects. In these days that get to involve (1) empirical guesses, (2) accurate (and faulty) data bases, (3) political strength, (4) alternate guesses like optimistic, best guess, pessimistic on each suggestion, (5) a White HOUSE that sends 'yea' and 'nay' signals, ,and possibly and finally (6) prayers and hopes and consensus in our TWO houses; the House of Representatives and our Senate with majority votes.
But thanks for the variety of suggestions.
Dick
The Infrastructure Problem is one of the KEY questions that I would want discussed in any serious deliberation at this time and also at any time we want to get into DEEP discussions about what SOCIO-ECONOMIC GROWTH should be conceived to be.
My judgement at this time is that there is no 'BIG THINK' about infrastructure NEEDS and MAINTENANCE. This whole notion goes deep into the heart of why we human beings are here on EARTH. What will the cities of the future look like? What SHOULD the cities of the future look like in order to provide the possible experiences of human growth, a sense of beauty for all, and -- if you will -- LIFE, LIBERTY, HAPPINESS and PROPERTY for individuals. The lesser governments DON'T do a good job of enhancing our physical environments. These are WORLDWIDE NEEDS. The state and local governments don't do a good job (I've been a member of my town's Finance Committee for fiften years, a consultant for Universities (public and private), a chairman of a Regional Vocational School (planning for the school and then operating the school), and a consultant for my state looking at the welfare problem and the health problems). ETC. There is no 'BIG THINK' going on in many places at all. We need to figure out how to create LIVING ENVIRONMENTS that matter for intensified human intellectual, aesthetic and CULTURAL growth. We must learn how to start building FOR OURSELVES OUR CITIES OF GOD, for the HUMAN divinities.
Dick
This is a lesson in what has been lost because of our "government."
http://www.ft.com/cms/s/0/1fc5dc02-ed65-11dd-bd60-0000779fd2ac.html
Survive the credit crisis the Alpine way
By Peter Marsh
Published: January 28 2009
Draw on a map a circle of 200km radius and centred on Lucerne, Switzerland, and you see the Alpine Ring. What this represents holds valuable lessons for the world as it tries to fight its way out of the economic crisis....
following observation several years ago and it bears great Significance
today:
"You cannot legislate the poor into freedom by legislating the rich out of
freedom. What one person receives without working for, another person must
work for without receiving. The government cannot give to anybody anything
the government does not first take from somebody else. When half of the
people get the idea that they do not have to work because the other
half is going to take care of them, and when the other half gets the idea
that it does no good to work because somebody else is going to get what
they work for, that my dear friend is about the end of any nation."
"You cannot multiply the wealth by dividing it."
If there are no forms of control within the society, the plutocracy can easily collapse into a kleptocracy, "reign of thieves", where the powerholders attempt to confiscate as much public funds as possible as their private property.
Your comment lays the basis for a new 'great debate' that may start altering ideas about ways that people become(?) rich or poor by their own actions or inactions and LUCK(?). There are many people I have known and know who have had family inheritances and few survival problems, and did little to be 'successful' in and by their own right, and by their own efforts, and have done littlle to grow a good deal richer, but have. There are youngsters I knew (as both an undergraduate and graduate school professor and univsersity administrator) who had stories about 'getting through school' to take advantage of the opportunities that they saw and chased after: some made it big, others did OK, and a few did not succeed. Were these the kind of young (and older) persons who were really the 'worthy ones'? How does one 'measure' human worth scientifically? My experience does NOT show me that there are 50% of one 'type' and 50% of another type.
Then there are the current crop of 'very successful(?) and productive(?), and irreplaceable(??) employees' who make anywhere from 10to 50 times an annual salary of a 'typical' worker. Are they -- the successes -- 'earning' their pay? What is one 'doing' to make a $5Million FEE that suggests that they are 'working' and 'earning' unlike the normal kind of 'work', say that an electrician makes, or a day laborer. Is it brain power as the cause at the heart of efforts?? Connections? Tell me what should define 'fair' pay for a day of work! Bankers loan out money that is not 'theirs' and take huge compensations for the deals that may walk into their offices -- or not! What 'risk' are they taking to take such unbelievable FEES and BONUSES? Is that 'pay' fair and just, or just ordinary practice? In short, I do not know what the term 'not working' or 'working' means. And I am further confused by the notion that a man who 'earns' say $10MM a year needs a bonus to 'survive. There are many issues of common, ordinary 'fairness' and 'justice' that our great democracy must face. Think of the awareness of seeming injustices against the idea that the cause of distrust and confidence is more of a JUSTICE PROBLEM than an ECONOMIC or MONETARY or CREDIT or FISCAL PROBLEM. Could a powerful case be built that an awareness of INJUSTICE -- with the FEAR consequence -- is what is making the present malaise in our troubled WORLD and COUNTRY so pervasive. We now have the communications means (TV, I-Net, Mags, Newspapers, Radio, etc) to fan the flames by knowing the facts. Is knowing facts dangerous to the survival of 'old ways'?
Perhaps our government should guarantee a bountiful, everpresent, educational opportunity for every young (or older) person who can educate oneself to become well educated and more skill full no matter what their own (and parents' situations and resource levels) suggest. I suspect that there are a lot of POTENTIALLY very smart, -- financially burdened -- youngsters out there who could become the moguls of the future IF they had the means to go on and learn the skills and have the information from (1) rich experiences, (2) the benefits of a free education, (3) good health services, and (4) viable and enlightened FRIENDSHIPS (from persons and systems) could offer. If you believe that there aere 'superpersons' making annual 'eanings' of multi millions of dollars, I suggest that that is NOT a defensible idea. Anybody, given proper advantages, can become LIKE any such presently successful person -- as I see the characteristics of our 'children' of the present being born today and almost any day in the recent past.
Thanks for opening up this 'can of worms' for open discussion. Herein, with the comment you made we can see the deep roots of what is suggested by the term : "We are -- each and everyone -- a CHILD of GOD." . What should the 'gifts' and 'consequences' be for our young?
A WONDEROUS, DIVINE, POTENTIALITY WAITING TO BE TRAINED SO THAT EACH CAN CONTRIBUTE TO OTHER PERSONS USING THE GIFTS AND TALENTS THAT EACH HAS AND CAN BE INHERITED, if WE THE PEOPLE see the LIGHT. PERHAPS?
Dick
You have a wonderful way of capping off a long and involved 'discussion and explanation' with a few pungent words. I think that the concept of "the unequal distribution of wealth" (which Winston seems aimed at) comes into our INTERNATIONAL deliberations and labor income discussions are about the same issues : greed and imbalances. Behind both issues all of this is about the issue of JUSTICE. When we start to realize that pereption of inequalities (among nations and individuals) have deep roots in ultimately BUILDING new and far more creative and SATISFYING socio-economic systems -- and creative and creating PERSONS who want fairness and justice which does not mean equality, but justifiably perceived IN-EQUALITY.
Dick
Finally, some direction in what to make of this mess, even if it's asking all the right questions, and paying attention to the possibilities within the comments.
I'm returning to the thread to read it in it's entirety now, and may be back with questions of my own.
These are prefatory remarks to a detailed anaylsis (Part II):
http://atimes.com/atimes/Global_Economy/KB05Dj03.html
http://www.atimes.com/atimes/Front_Page/KB06Aa01.html
The contest for global domination
By W Joseph Stroupe
"[...The epic East-West match has always been a raw quest for global domination, despite the gross lack of transparency on both sides with regard to their underlying motives and goals in the game.
Since 1991, in the ongoing game, the West has continued to stridently profess to be unselfishly interested only in spreading democratic freedom, with its potential to help its adherents attain liberal capitalistic wealth, around the globe in order that its peoples may choose for themselves what economic and political systems they wish to have over them, and with emphasis on their right to a much higher standard of living than that generally offered by the authoritarian regimes.
Since 1997, the East has noisily professed to be interested only in an orderly and more equitable distribution of power across the global order under the auspices of the benign-sounding concept of 'multipolarity'. Both sides have vehemently disavowed any hidden agenda of seeking to dominate the globe.
However, throughout the epic match, both sides have extraordinarily given the lie to their noble-sounding professions of good and unselfish motives, no matter how they may have chosen to spin them at any point in the game. How so?
Both sides, each famously discontented with merely a 'reasonable share' of global power and dominion, and perpetually seduced by an almost drunken greed for more and more, have sought to inflict fundamentally intolerable losses on each other, such that the losing side would come under perpetual and insufferable subservience to the winner, who takes virtually all. We shall see that the supposed new era of the move toward geopolitical 'multipolarity', which proclaims that the end of such zero-sum games, has arrived, is largely an intellectual farce perpetrated by clever propagandists.
Post-Soviet history proves the point
In 1992, US president George H W Bush proclaimed that the West had won the Cold War and had emerged with unquestioned global power, and that the world at large had nothing to fear from such power because the US would never abuse it the way the Soviet Union had abused its power. History since then puts the lie to that noble-sounding promise.
The US and the West gained immense "capital" in the form of global recognition, credibility, favor, support and leverage when the old Cold War was won, but that 'capital', which should have been used to formulate a benign and noble American-led world order, has instead been profoundly squandered.
Since 1991, the US, with great arrogance and insensitivity, sought to establish an economic and geopolitical empire of such dimensions and brute economic and military strength that no competitor, nor even any dissenter, dared resist its onslaught. It was called 'US-led unipolarity', and it was famously celebrated in Washington and perpetuated globally through international and regional economic and military-political institutions, organizations and alliances, and by outright military attack, invasion and occupation, regardless of the mounting objections of many of the governments and peoples variously impacted by its almost unrestrained advancement. Only by massive overreach in Iraq did the naked attempt at empire begin to come undone.
Not by accident, the attempted empire was primarily advanced in regions of the globe where control over strategic energy resources would have been a key prize. The attempted creation, extension and maintenance of global empire is a cruel and bloody business. The post-1991 record of US policies, actions, trickery and oppression in the global financial, economic, geopolitical and military spheres provides ample witness to that fact. Virtual complete global domination by economic, military and ideological means has been, at least up until now, unquestionably the clear aim of the US side. Its unrestrained triumphalism in the post-Soviet period took this shameful form.
At length, US-style liberal capitalism is being profoundly discredited, disdained and swiftly abandoned the world over, even by its chief proponents, thanks to the massive credibility hit inflicted on the ideology by the current global financial and economic crisis, which arose out of the very heart of the liberal capitalistic system, the US.
It is being abandoned in the West in favor of Western-style statism, which has become a refuge in the mounting global crisis, and which differs less and less from Eastern-style statism. In truth, liberal, US-style capitalism is going the way communism went in 1989-1991 - it is dying. For the most part, communism discredited itself, terribly plagued its own adherents, collapsed on itself, and became disdained and even hated around the globe as a result. This is happening now, too, with US-style liberal capitalism!
What about the recent record of the East? It is most certainly a legitimate argument to say that the shortsighted triumphalism of the West throughout the post-Soviet era powerfully contributed to the global backlash against US-led unipolarity, a backlash that was born in the East (Russia-China) and continues to be mounted predominantly from there. But this fact cannot possibly provide justification for the nature and extent of the measures and strategies that have been undertaken by the East, because these are ones that betray the same kind of drunken greed for virtual total global control that the US has displayed, as noted above.
The brutality and zeal manifested by the regimes in Russia and China in oppressing their own peoples, in crushing virtually all dissent and in cynically exercising the state's control over the minds of their citizens is both shocking and repulsive. Both regimes continue to accelerate the massive buildup of their militaries, far beyond that required for mere self-defense. The rising East has worked around the globe to counter its Western democracy spreading opponent by bolstering existing, and proliferating new, similarly brutal authoritarian regimes, especially in regions of the globe rich in strategic energy resources.
After the death of communism in 1991, both China and later Russia cleverly amalgamated certain capitalistic and free-market principles with authoritarianism and statism to produce what can only be sarcastically labeled 'sovereign democracy' and 'managed capitalism'. These ideological political and economic systems, characterized by 'democratic' elections almost entirely managed, controlled and 'poisoned' by the state via its media arm, were then pushed and proliferated in resource-rich regions of the globe.
This was a naked attempt to sew up the globe's strategic energy resources for control by the East as an irresistible lever of compulsion with which to extort concessions from the West, and with which to conduct the grandest transfer of wealth in history, from West to East.
The many sponsored authoritarian regimes have been armed to the teeth by Russia and China in order that they can more effectively brutalize their own citizens into submission and also resist attack and invasion by the US. This became known as the global wave of resource nationalism, and it was engineered by Russia and China and has enjoyed outrageous success, riding on the global backlash against US-led unipolarity.
Control of global energy reserves has fully passed to the East, providing it a profoundly potent lever to ultimate global dominance. Especially is that so when one considers that Western dependence on energy imports is matched, and even exceeded, by its massive and growing dependence on capital inflows from its historic opponents in the East.
These players, thanks to the above-mentioned transfer of wealth that capitalized not only on energy resources but also on cheap goods manufactured in Asia, sit atop huge capital reserves, while the West drowns in red ink. The fact that the West has so often foolishly played into the hands of its Eastern opponents in these matters does not excuse the East for its brutal and oppressive policies and strategies aimed at making the West ultimately subservient to the East, largely via potent asymmetric energy, financial/economic and military 'equalizers' that focus the strengths of the East on the strategic vulnerabilities of the West.
It isn't benign 'multipolarity' that the East is striving for. Rather, it is striving for the ability to checkmate the West, to credibly threaten energy-based and/or capital-based economic strangulation, accompanied by the credible threat of military confrontation aimed at the virtual destruction of the ability of the US to any longer project its conventional military power into the East's own hemisphere. The East doesn't just want a more even distribution of power across the globe. It wants, in practice, to achieve genuine global dominance over the policies and actions of the West.
Idealism, compromise and accommodation
In round II (Round I was the old Cold War) of the epic match, we see an East that, despite the mounting hardships of the global economic crisis, continues its rise. And we see an increasingly wobbly-kneed West that, because of that very crisis, continues its rapid decline.
Consequently, if the East ultimately succeeds in seeing the West brought to its knees, who's to say the East would not engage in the same kind of greedy triumphalism which the West engaged in post-1991? What record of modesty, respect for human dignity and freedom, and unselfishness exists on the part of the East such that we can be confident it won't avariciously try to seize virtual domination of the globe if it soon achieves a position of advantage in round II of the match? If the US, with all its laudable principles of liberal democracy, freedom and respect for human rights did not pass the test of humility and benign unselfishness, why should we be assured the East would do so?
The drunken greed for global dominance, only reinforced by colossal mutual distrust, has run so deep on both sides for so long, and has so influenced and complicated the thinking and policies on both sides, that sufficiently setting these obstacles aside now in favor of real progress toward compromise and accommodation is an enormous and incredibly complex undertaking which is probably next to impossible, if not literally impossible, for the grossly imperfect humans that head up the major powers in our global order.
On both sides, the culture of the epic contest for domination of the globe has long since become an inseparable thread that is intertwined throughout almost every level of government, policy-making, and analysis, notwithstanding the frequent but hollow assurances to the contrary from our leaders.
Perhaps US President Barack Obama is genuine in his desire to move the global order from contest to compromise and accommodation. I'm reasonably sure he is genuine in his desire to do so. But the historical record is not encouraging with respect to the ability of such individual leaders of peace to bring real change to a longstanding world order fundamentally characterized by rivalry between its major and minor factions, greed for power, bloodshed and war.
Throughout that record, such men and women of peace were all too often themselves ultimately corrupted by power, or else their voices were drowned out or marginalized by the majority, or they were literally snuffed out to make room for someone else who would carry on in the ignoble way of the long line of predecessors.
Oh, we like to celebrate with fond remembrance leaders of peace on their special days each year, but within our world order the leaders actually present at the helm of government continue for the most part in the path of their reprehensible predecessors, and the epic match goes on. So do the disingenuous spin and outright propaganda designed to hide the real motive and goal of both sides in the game - namely, to achieve global dominance and acquire all the power and wealth that go with it.
The fact that many of the most prominent and powerful world leaders likely imbibe their own spin and deceive themselves into thinking the motives for their policies and actions are nobler than they are greedy doesn't fundamentally change the true picture one iota. It only conveniently masks the true picture for the imbiber of ideology-inspired spin and propaganda, whether it is that spewed by the East or else by the West.
This is the person who doesn't want, or is unable to admit to himself, that our world order, at the governmental levels at least, is all about the insatiable greed for wealth, power and dominance by almost any means, notwithstanding the occasional and brief appearance of genuine men and women of peace who are certainly notable, but nonetheless ineffective, exceptions to the rule.
Against this stark but honest backdrop, what are the prospects for achieving a strategic East-West accommodation? Part II will address that question. "