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Financial skeptic

Notes on "neoliberalism enforced" cruise to Frugality Island for 401K Lemmings

News Neoliberalism as a New Form of Corporatism Recommended Links Peak cheap Energy and Oil Price Slump Secular Stagnation under Neoliberalism Rational Fools vs. Efficient Crooks: The efficient m hypothesis Casino Capitalism
Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime Neoliberal Attacks on Social Security Unemployment Inflation vs. Deflation Coming Bond Squeeze Notes on 401K plans Vanguard
401K Investing Webliography Retirement scams Stock Market as a Ponzy scheme Financial Sector Induced Systemic Instability Neoclassical Pseudo Theories The Great Stagnation Investing in Vanguard Mutual Funds and ETFs
OIL ETNs Peak Cheap Energy and Oil Price Slump Notes on 100-your age investment strategy behavior in rigged markets Chasing a trade The Possibility Of No Mean Reversion Junk Bonds For 401K Investors Tax policies
John Kenneth Galbraith The Roads We Take Economics Bookshelf Who Rules America Financial Quotes Financial Humor Etc

“When the capital development of a country becomes a by-product
of the activities of a casino, the job is likely to be ill-done.”

John Maynard Keynes

"Life is a school of probabilities."

Walter Bagehot

Neoliberal economics (aka casino capitalism) function from one crash to another. Risk is pervasively underpriced under neoliberal system, resulting in bubbles small and large which hit the economy periodically. The problem are not strictly economical or political. They are ideological. Like a country which adopted a certain religion follows a certain path, The USA behaviour after adoption of neoliberalism somewhat correlate with the behaviour of alcoholic who decided to booze himself to death. The difference is that debt is used instead of booze.

Hypertrophied role of financial sector under neoliberalism introduces strong positive feedback look into the economic system making the whole system unstable. Any attempts to put some sand into the wheels in the form of increasing transaction costs or jailing some overzealous bankers or hedge fund managers are blocked by political power of financial oligarchy, which is the actual ruling class under neoliberalism for ordinary investor (who are dragged into stock market by his/her 401K) this in for a very bumpy ride. I managed to observe just two two financial crashed under liberalism (in 2000 and 2008) out of probably four (Savings and loan crisis was probably the first neoliberal crisis). The next crash is given, taking into account that hypertrophied role of financial sector did not changes neither after dot-com crisis of 200-2002 not after 2008 crisis (it is unclear when and if it ended; in any case it was long getting the name of "Great Recession").

Timing of the next crisis is anybody's guess but it might well be closer then we assume. As Mark Twain aptly observed: "A thing long expected takes the form of the unexpected when at last it comes" ;-):

This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

As most 401K investors are brainwashing into being "over bullish", this page is strongly bearish in "perma-bear" fashion in order to serve as an antidote to "Barrons" style cheerleading. Funny, but this page is accessed mostly during periods of economic uncertainty. At least this was the case during the last two financial crisis(2000 and 2008). No so much during good times: the number of visits drops to below 1K a month.

Still I hope it plays a small but important role: to warn about excessive risk taking by 401K investors in neoliberal economic system. It designed to serve as a warning sign and inject a skeptical note into MSM coverage. There are not many such sites, so a warning about danger of taking excessive risk in 401K accounts under neoliberalism has definite value. The following cartoon from 2008 illustrated this point nicely

As far as I know lot of 401K investors are 100% or almost 100% invested at stocks. Including many of my friends. I came across a very relevant to this situation joke which nicely illustrated the ideas of this page:

Seven habits that help produce the anything-but-efficient markets that rule the world by Paul Krugman in Fortune.

1. Think short term.
2. Be greedy.
3. Believe in the greater fool
4. Run with the herd.
5. Overgeneralize
6. Be trendy
7. Play with other people's money

I would like to stress again that it is very difficult to "guess" when the next wave of crisis stikes us: "A thing long expected takes the form of the unexpected when at last it comes".

But mispricing of risk in 401K accounts is systemic for "overbullish" 401 investors, who expect that they will be able to jusp of the train in time, before the crash. Usually such expectations are false. And to sell in the market that can lose 10% in one day is not easy psychologically. I remember my feelings in 2001-2002 and again 2008-2009. That's why many people who planned to "jump" stay put and can temporarily lose 30 to 50% of value of their 401k account in a very short period of time (and if you think that S&P500 can't return to 1000, think again; its all depends on FED). At this point some freak out and sell their holdings making paper losses permanent.

Even for those who weathered the storm and held to their stock holdings, it is important to understand that paper losses were eliminated mostly by Fed money printing. As such risks remains as at one point FED might find itself out of ammunition. The fact that S&P500 recovered very nicely it does not diminish the risk of such behavior. There is no guarantee that the third crisis will behave like previous two.

Next crash will have a new key determinant: the attitude toward the US government (and here I mean the current government of Barack Obama) and Wall Street after 2008 is the lack of trust. That means that you need to hope for the best but prepare for the worst. Injection on so much money into financial system was a novel experiment which is not ended yet. So how it will end is anybody's guess. We are now in uncharted waters. I think when Putin called Bernanke a hooligan, he meant exactly this. Since Bernanke was printing money out of thin air to buy financial paper, his action were tantamount to shoplifting. In some way this probably is more similar to running meth labs inside Fed building. The system was injected with narcotics. Everybody felt better, but the mechanism behind it was not healthy.

The complexity of modern financial system is tremendous and how all those new financial instruments will behave under a new stress is unknown. At the same time in the Internet age we, the great unwashed masses, can't be keep in complete obscurity like in good old time. Many now know ( or at least suspect ) that the neoliberal "show must goes on" after 2008 is actually going strongly at their expense. And while open rebellion is impossible, that results in lack of trust which represents a problem for financial oligarchy which rules the country. The poor working slobs are told be grateful for Walmart's low (poverty-subsidized) prices. Middle class is told that their declining standard of living is a natural result of their lack of competitiveness in the market place. Classic "bread and circuses" policy still works but for how long it will continue to work it is unclear.

But nothing is really new under the sun. To more and more people it is now clear that today the US is trying to stave off the inevitable decline by resorting to all kinds of financial manipulations like previous empires; yesterday, it was the British Empire and if you go further back, you get the USSR, Hapsburg empire, Imperial Russia, Spanish empire, Venetian empire, Byzantium and Roman empire. The current "Secretary of Imperial Wars" (aka Secretary of Defense) Ashton Baldwin Carter is pretty open about this:

“We already see countries in the region trying to carve up these markets…forging many separate trade agreements in recent years, some based on pressure and special arrangements…. Agreements that…..leave us on the sidelines. That risks America’s access to these growing markets. We must all decide if we are going to let that happen. If we’re going to help boost our exports and our economy…and cement our influence and leadership in the fastest-growing region in the world; or if, instead, we’re going to take ourselves out of the game.”

For the US elite it might be a time to rethink its neocon stance due to which the US is exposing ourselves to the enmity of the rising economic powers, and blowing serious cash to maintain it hegemony via maintaining huge military budget, financing wars and color revolutions in distant countries. In a way the US foreign policy became a financial racket, and racket can't last forever because it incite strong opposition from other countries.

Neoliberalism (aka casino capitalism) as a social system entered the state of decline after 2008. Like communism before it stopped to be attractive to people. But unlike communism it proved to have greater staying power, surviving in zombie state as finanfial institutions preserved political power and in some cases even enhanced it. It is unclear how long it will say in this state. Much depends on the availability of "cheap oil" on which neoliberal globalization is based.

But the plausible hypothesis is that this social system like socialism in xUSSR space before entered down slope and might well be on its way to the cliff. Attempts to neo-colonize other states by the West became less successful and more costly (Compare Ukraine, Libya and Iraq with previous instances of color revolutions). Some became close to XIX century colonial conquests with a lot of bloodshed (from half million to over a million of Iraqis, by different estimates, died ). As always this is mainly the blood of locals, which is cheap.

Libya and Ukraine are two recent examples. Both countries are now destroyed (which might be the plan). In Ukraine population is thrown in object poverty with income of less that $5 a day for the majority of population. And there is no other way to expand markets but to try to "neo-colonize" new countries by putting them into ominous level of debt while exporting goods to the population on credit. That is not a long term strategy as Greece, Bulgaria, and now Spain and Portugal had shown. With shrinking markets stability of capitalism in general and neoliberalism in particular might decrease.

Several researchers points to increased importance Central banks now play in maintaining of the stability of the banking system. That's already a reversal of neoliberal dogma about free (read "unregulated") markets. Actually the tale about "free markets", as far as the USA is concerned, actually was from the very beginning mainly the product designed for export (read about Washington consensus).

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[Dec 07, 2016] Macroeconomics in the Crossfire (Again)

""The trouble is not so much that macroeconomists say things that are inconsistent with the facts." -- that's a clear sign of a cult.
Notable quotes:
"... "The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error." ..."
"... The obvious explanation is ideological. While Simon Wren Lewis cannot prove it was ideological, it is difficult to understand why one would choose to develop theories that ignore some of the existing evidence, in an area that lacks data. There is a reluctance among the majority of economists to admit that some among them may not be following the scientific method but may instead be making choices on ideological grounds. This is the essence of Romer's critique. ..."
"... ...it is all but indistinguishable from Milton Friedman's ideologically-driven description of the macroeconomy. In particular, Milton Friedman's prohibition of fiscal policy is retained with a caveat about the zero-lower bound in recent years. To argue otherwise is to deny Keynes' dictum that 'the ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood.' ..."
"... What I find most egregous in Neo-classicism, is it's failure to accept that people invented government to perform tasks they individually could not. ..."
"... Economics is a foul and pestilent ghetto, an intellectual dead-end akin to Ptolemaic astronomy. The priests will continue adding epicycles to epicycles until they are dragged screaming to the asylum. ..."
"... There is always some revered academic economist readily available to support virtually any political narrative imaginable, even if it's total rubbish. It is truly a "science" for all seasons fostered by reverend figures with authority earned by many years diligent practice in translating gibberish into runes of mathematical formulae. That's more dainty than poking about in sheep guts with a sharp stick, but of little more use in the real world which lies outside the ivied towers. ..."
"... Diligence blesses them with tenure followed by offers to serve private or public patrons perpetually engaged in rent-seeking. These made men (and women) are essentially set for life, regardless of whatever nonsense they may forever promote thereafter. A few are blessed by the good luck of a Nobel which guarantees a prosperous sinecure and unlimited opportunity to promote their own vacuous political narratives masqueraded as "science". ..."
"... This cult enjoys perpetual protection within public and private safe spaces created by their well-heeled paymasters. It is one of a number of deeply attached parasites which cannot be safely excised from the corrupt body of the host without killing it. ..."
"... I should add that neoclassical economics has damaged economics by excluding explicitly the government sector in their models. As a result, the impact of government on the macroeconomy has not been properly understood ..."
"... Do the economists he names really not understand the computer stat model they are using? Are they admitting to making up the fudge factors to make their 'data' fit their (wrong headed) totem pole, supply and demand? I mean, there it is in black and white, by the economists' own words, that their math is just flat out wrong. ..."
"... The economics I learned in the early 1960's seems to work as well now as it did back then. I was lucky enough to be so busy at work in the decades that followed, that I did not have a chance to keep up on the mis-education of the time. When I had the time to start paying more attention to the subject again, I couldn't understand what had happened to the knowledge that I had learned that seemed to explain all that was happening in the economy. ..."
"... The Neolib-Globalist Ministry Of Truth erased it. You must not have got the memo. ..."
"... It's 2016 and some Dismal Scientists are still debating whether "involuntary unemployment" exists. ..."
"... If anything, Philip Mirowski has persuasively argued that neoliberalism requires a powerful State. ..."
"... He has shown that the neoliberal thought collective theorized an elaborate political mobilization, and recognized early on that the creation of a new market is a political process requiring the intervention of organized power. The political will to impose a market required a strong state and elaborate regulation and also that the State would need to expand its economic and political power over time. ..."
"... The neoliberal market had to be imposed it did not just happen. A key issue for the future is defining the nature of the state–whether under neoliberalism or MMT or under Trump or Sanders, or left populist or right populist. ..."
"... Mankiw belongs in the non-ideological camp? I don't see how anybody with a brain could read any of his work past the first page and still hold that view. ..."
"... agreed, Mankiw is an intellectual clown and he has been mis-educating students for decades now. ..."
Dec 07, 2016 | www.nakedcapitalism.com

Romer kicked off the debate in an essay, stating that for more than three decades, macroeconomics has gone backwards. He finds that the treatment of identification now is no more credible than in the early 1970s, but escapes challenge because it is so much more opaque. Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as "tight monetary policy can cause a recession." For Romer, the Nobel Prize-winning crop of macroeconomic theorists who transformed the field in the late 1970s and 1980s - Robert Lucas, Edward Prescott and Thomas Sargent – are the main people to be held responsible for this this development. Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by actions that any person takes. Especially when it comes to monetary policy, the belief that it has no or little effect on the economy is disturbing, or as Romer puts it:

"The trouble is not so much that macroeconomists say things that are inconsistent with the facts. The real trouble is that other economists do not care that the macroeconomists do not care about the facts. An indifferent tolerance of obvious error is even more corrosive to science than committed advocacy of error."

... ... ...

Simon Wren-Lewis identifies yet another factor which lies at the heart of macroeconomic criticism: ideology. As an example he quotes Real Business Cycle (RBC) research from a few decades ago. That was only made possible because economists chose to ignore evidence about the nature of unemployment in recessions. There is overwhelming evidence that employment declines in a recession because workers are fired rather than choosing not to work, and that the resulting increase in unemployment is involuntary (those fired would have rather retained their job at their previous wage). Both facts are incompatible with the RBC model. Why would researchers try to build models of business cycles where these cycles require no policy intervention, and ignore key evidence in doing so? The obvious explanation is ideological. While Simon Wren Lewis cannot prove it was ideological, it is difficult to understand why one would choose to develop theories that ignore some of the existing evidence, in an area that lacks data. There is a reluctance among the majority of economists to admit that some among them may not be following the scientific method but may instead be making choices on ideological grounds. This is the essence of Romer's critique.

...it is all but indistinguishable from Milton Friedman's ideologically-driven description of the macroeconomy. In particular, Milton Friedman's prohibition of fiscal policy is retained with a caveat about the zero-lower bound in recent years. To argue otherwise is to deny Keynes' dictum that 'the ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood.'


PlutoniumKun, December 6, 2016 at 4:18 am

I can recall my very first lecture in Macroeconomics back in the mid 1980's when the Prof. freely admitted that macro had very little real world validity as the models simply didn't match the real world data. He advised us to focus on economic history if we wanted to understand how the real world worked. That was the only useful thing I learned from three years studying the subject.


Dr. George W. Oprisko, December 6, 2016 at 7:21 am

I cut y teeth on computer models of rainfall – streamflow relationships. We always started with constants derived from experimental or theoretical bases

Recently I was asked to critique a paper written by a colleague which reported results of a numeric model of plankton distribution in the Arabian Sea. In this paper his original constants based on known relationships gave results which did not agree with reality, so instead of looking for mistakes in his fundamentals, he massaged the constants until he got agreement. When I pointed out that he neglected the Somali Current, he was livid. That is, instead of thanking me for pointing out a glaring deficiency in his methodology, he chose to obfuscate.

I see the same thing prevalent in macro-economics, with the sole exception of Modern Monetary Theory. I find MMT to be the only variant which concretely explains the real economy.

What I find most egregous in Neo-classicism, is it's failure to accept that people invented government to perform tasks they individually could not.

iNDY

Jake, December 6, 2016 at 5:24 am

..and none of the economists were held responsible, refused tenure, tried in court or had their nobel prizes taken away. They continued serving their pay masters or their ideologies and nothing changed. Life went on, gradually becoming shittier, full of anxiety and ultimately meaningless. But hey atleast the great information processor is satisfying your utility!

PlutoniumKun,

December 6, 2016 at 6:23 am


One Irish macro professor did quite well after the Irish economic crash (2008) informing everyone about the correct policy approaches on various public media. His university department had one of his peer reviewed papers online dating from 2005 which advocated the adoption of US style sub-prime mortgages as a 'solution' to rising housing costs. Around 2010 the paper was quietly removed from all servers. I regret not saving a copy so it could be linked to every time he popped up in public.

UserFriendly, December 6, 2016 at 3:01 pm

If you bookmarked it: https://archive.org/web/

or if it was a research papser, find it here: https://scholar.google.com/

look for the doi and plug that in here (site does not work in Chrome) http://gen.lib.rus.ec/scimag/index.php or here http://sci-hub.cc/
The 1st has an author search too, but it isn't as good, but it might work.

I Have Strange Dreams, December 6, 2016 at 5:43 am

Kill it with fire!

Economics is a foul and pestilent ghetto, an intellectual dead-end akin to Ptolemaic astronomy. The priests will continue adding epicycles to epicycles until they are dragged screaming to the asylum.

Burn the whole subject to the ground and sow the razed economics departments with salt. Require economists to ring a bell when approaching the uninfected and cry "unclean! unclean!"

makedoanmend December 6, 2016 at 7:58 am

"unclean! unclean!"

actually belly-laughed – 1st ever belly-laugh from an interweb comment – Bravisimmo!

H/e, can't agree with you re: economics. As a historical and social area of study, it is valid in my book – even a necessity. Still, my eyes cross lately when I read the latest in economic "theory" on any scale. Such a dreary and detached subject these days. Rootless and toothless. Too bad.

best

Steve H. December 6, 2016 at 9:23 am

Every time a bell rings, an angel gets his wings. That is a called a positive externality in macroeconomics, and can therefore be defined in an equation. Which makes it thus so.

bh2 December 6, 2016 at 1:19 pm

There is no chance of killing off this mystery cult as long as politicians rely on its ruminations and incantations to help perpetuate them in office.

There is always some revered academic economist readily available to support virtually any political narrative imaginable, even if it's total rubbish. It is truly a "science" for all seasons fostered by reverend figures with authority earned by many years diligent practice in translating gibberish into runes of mathematical formulae. That's more dainty than poking about in sheep guts with a sharp stick, but of little more use in the real world which lies outside the ivied towers.

Economists, like carny balloon sellers, are paid based on volume, not weight. Diligence blesses them with tenure followed by offers to serve private or public patrons perpetually engaged in rent-seeking. These made men (and women) are essentially set for life, regardless of whatever nonsense they may forever promote thereafter. A few are blessed by the good luck of a Nobel which guarantees a prosperous sinecure and unlimited opportunity to promote their own vacuous political narratives masqueraded as "science".

This cult enjoys perpetual protection within public and private safe spaces created by their well-heeled paymasters. It is one of a number of deeply attached parasites which cannot be safely excised from the corrupt body of the host without killing it.

Lyonwiss December 6, 2016 at 6:31 am

We live in a post-truth or post-fact world, where truth and fact do not matter.

But the fact is: Keynes has never gone away in the sense that governments have always been trying to manage the economy with fiscal and monetary policies – which (to me) is the essence of Keynes and macroeconomics. Most governments run budget deficits to stimulate demand. It is merely cognitive dissonance of academics to think neoclassical economics only is mainstream and solely responsible for the GFC, just because to them there is an apparent bias in research funding at universities.

Yves Smith Post author December 6, 2016 at 6:39 am

Have to tell you I don't agree entirely.

First, government is such a huge portion of the economy that its actions have huge influence and therefore the impact has to be managed. Pretending you can have some type of neutral autopilot is a false idea, but that is the bedrock of economic thinking, that economies have a natural propensity to equilibrium and that equilibrium is full employment.

Second, it's not done much these days, but the best forms of intervention are ones that are naturally countercyclical so you don't have politicians wrangling and have pork and election timing and results and inertia get in the way.

Lyonwiss December 6, 2016 at 6:57 am

I'm not defending neoclassical economics. In economics, the alternative to a wrong is another wrong. Governments are politically compelled to intervene. But with the Keynesian economic fallacy, their interventions make things worse in the long-run. Please visit my blog:

http://www.asepp.com/keynesian-fallacy-collapse/

OpenThePodBayDoorsHAL December 6, 2016 at 3:19 pm

"The Battle of Bretton Woods" is very instructive. Start with two intellectuals (Keynes and Harry Dexter White) who were big fans of Stalinist Russia's command economy ("I've seen the future and it works!"). Last time I checked this kind of tomfoolery ("we will raise X number of cows because we think we'll need leather for Y number of shoes") has been utterly discredited. Implement for the global currency and trade systems. Fast forward to today where there are massive imbalances, global currency wars, and a race to zero and beyond that has sucked all demand from the future to the present and now the past. And the shining answer, the clarion rallying cry, is "we just need more debt, and we need some new rugs to sweep all the bad debt under".

All while "macro-economists" propagate models that completely misunderstand how money is actually created and distributed. All I can say is "Forward Soviet!".

Ruben December 6, 2016 at 9:17 am

Indeed. Gov't is the biggest business in town in every economy, everything else, even giant corporations, are minuscule players in comparison. This is a large source of dynamical behavior, the swings and re-balancing as the State throw its weight around in the marketplace.

diptherio December 6, 2016 at 10:33 am

the bedrock of economic thinking, that economies have a natural propensity to equilibrium and that equilibrium is full employment

And, of course, "full employment" is defined as whatever level of employment actually exists 'cause science!

Lyonwiss December 6, 2016 at 3:52 pm

I should add that neoclassical economics has damaged economics by excluding explicitly the government sector in their models. As a result, the impact of government on the macroeconomy has not been properly understood. The empirical facts, without theories or equilibrium assumptions etc., show the failure of government policy of demand stimulation: http://www.asepp.com/fiscal-stimulus-of-consumption/

Foppe December 6, 2016 at 7:02 am

It seems to me that for something to be called "keynesian", it should also mean that the aim of those policies was to help create robust private demand (though I doubt Keynes was as emotionally handicapped as today's mainstream bean-counting theorists are, if only because gdp figures didn't yet dominate macro thinking in the manner they do today, thanks to everyone having received "economics education" in school); if not, it wolud more fairly be called Marxist, because he was the one from whom Keynes (indirectly, as he refused to read Marx personally) pilfered his insights. What matters is whether we've got 'socialism for the rich / incumbents / industrial complexes', or "socialism" (well, social-democrat, liberal new-dealerism) for the "masses".

craazyboy December 6, 2016 at 8:23 am

Well, I have to say this article reminds me too much of the DNC sole searching over why Hillary didn't win. Just another room full of wantonly clueless people.

Does start out on a high note where Romer states the problem is economists don't care if they are winging and slinging BS from their arses same as chimpanzees.

I guess the article coulda ended there. But no.

Noah Smith laments a shortage of macro data – so the who knows how many gigs at FRED are found wanting and I guess the BLS, etc aren't up to snuff either. Or maybe Noah means they are fabricating phoney data? Then Noah doubles down on the efficacy of interest rate policy – after 9 years in the liquidity trap.

[Caution: The following is allegory – we are speaking of the high priestess here.]

We then are treated to JYell and her discovery of the buggy whip. She states there is current research being done on buggy whips, and more research is necessary. She is able to use big words to speak of these buggy whips. Some of these words are borrowed from real science – making this more scientific. Like hysteresis – and even an example for lay-off people. It's possible you may never work again and add to the long term employment rate! Yikes. Worse yet, their definition of "long term" is longer than 6 months. After that, 7 months or retire at 30 is all the same to them. "Heterogeneity" is another good one. For use in polite company. Has an Evil Twin named inequality and a macro version called crony capitalism. JYell can keep the hits coming!

I'm tired of typing someone else can take up the rest of it.

craazyboy December 6, 2016 at 8:30 am

oops. Editor asleep again. sole s/b soul. Or maybe not.

Ruben December 6, 2016 at 9:06 am

The complaint about not enough data struck me too; actually economist have vasts amounts of data to gain insights from and test hypothesis against because economies are well recorded human endeavours, recorded in actual painful detail thanks to the inexhaustible efforts of statemen and statewomen to know everything about the populations they control and harvest. Probably more data-oriented lines of research would lead to progress in macro-economy as a scholarly discipline?

John Zelnicker December 6, 2016 at 9:40 am

@Ruben – They want more data because the data that exists cannot be explained by their eloquent mathematical theories, which are based on assumptions that are ridiculous on their face e.g., rational expectations and utility maximization. The hope is that additional data will fit the theories better allowing them to remain comfortably ensconced in their fantasy world of regressions and p values.

fledermaus December 6, 2016 at 2:37 pm

Which is how we get adjustments to CPI based on the premise that CPI is overstating inflation. Now the hip thing is that productivity is undermeasured because economists don't like what the numbers are saying, so we can expect an upwards adjustment there as well.

Barry December 6, 2016 at 12:52 pm

One of the problems with all that data is that events not recorded or whose price can't be measured are defined as not really real.

H. Alexander Ivey December 6, 2016 at 9:16 am

I'll take up my keys then.

Read Romer's article, twice. Will need a third try to fully get it, but as someone with a modest background in engineering and engineering mathematics, I still can't quite believe what Romer is saying. Do the economists he names really not understand the computer stat model they are using? Are they admitting to making up the fudge factors to make their 'data' fit their (wrong headed) totem pole, supply and demand? I mean, there it is in black and white, by the economists' own words, that their math is just flat out wrong.

Now Romer is writing for the inside crowd, as an long time, connected insider himself, so don't expect an easy read. But he writes quite clearly what is the problem with economics so the main idea, that macro economics, in rejecting an early model of macro economics (Keynesian) because said model was based on a few openly stated fudge factors, have spent the last 40 years building models that are 1. full with even more fudge factors, 2. these fudge factors are never openly stated, and 3. the new models have given truly disastrous results in the real world (also known as the US economy, amoung others). Along the way, he names names and steps on some toes. Then he finishes up with a full charge of how the 'dismal science' is a lying religion, nothing at all like truth seeking science.

Okay, I'll quit here before I hurt myself. Let someone else slam the keys. (haha)

Steven Greenberg December 6, 2016 at 8:34 am

The economics I learned in the early 1960's seems to work as well now as it did back then. I was lucky enough to be so busy at work in the decades that followed, that I did not have a chance to keep up on the mis-education of the time. When I had the time to start paying more attention to the subject again, I couldn't understand what had happened to the knowledge that I had learned that seemed to explain all that was happening in the economy.

craazyboy December 6, 2016 at 6:10 pm

The Neolib-Globalist Ministry Of Truth erased it. You must not have got the memo.

Katharine December 6, 2016 at 10:05 am

I was surprised to learn that Yellen had expressed any interest in the people permanently out of the labor market. I thought all the discussions of interest rates focused almost exclusively on what in my mind is the unemployment pseudo-rate, which completely ignores those people.

Regardless of which rate is considered, I have never been able to comprehend the mind that can talk about acceptable levels of unemployment. Acceptable to whom? The people who lose their homes, and sometimes their neighborhood networks when they have to move, and may with just a little bad luck slide into still worse conditions? The communities that see more people becoming burglars, muggers, bank robbers, drug dealers, and prostitutes because only the illegal economy has any place for them? I have never seen a sustained or general effort to look at the economic consequences of those events, much less an admission of the immorality of causing so much trouble. It seems to me that a macroeconomics that divorces itself from those possibly micro concerns will be forever irrelevant to good policy.

chuck roast December 6, 2016 at 11:50 am

Way back prior to the great Permian-Triassic Extinction, I was fortunate enough to wander around an Economics Department where I could encounter intellectual dead-ends like Keynes, Marx, Polanyi, Kalecki, Veblen – all of whom prepared me to pump-gas at the local filling station oh wait!
Having somehow successfully survived the subsequent big-brain epoch, I settled comfortably into making a modest annual donation to a scholarship fund for budding economists at the olde U. Then it came to my attention that not only could one still obtain a BA in Economics, but the olde school was also awarding two different Bachelor on Science degrees in Economics. Breathtaking! Economics, an actual science! Like for example physics!
I am now in the reduced circumstance of donating only to my old high school in the doubtless vain hope that the youngsters will study enough science to be able to shoot these aspiring BS cone-heads to the moon.

ChrisAtRU December 6, 2016 at 1:17 pm

It's 2016 and some Dismal Scientists are still debating whether "involuntary unemployment" exists.

#FacePalm

Perhaps we should deploy them to that Carrier plant to investigate. So thankful for heterodox voices:
Abba Lerner – Functional Finance
Hyman Minsky – Financial Instability
Wynne Godley – Sectoral Balances
Entire MMT School – Mosler, Wray, Kelton, Tcherneva et al
#ThereIsHope

witters December 6, 2016 at 4:03 pm

Gee, why attack the one healthy sector of the economy, the Wealth Defence Industry?

(Why did so much of 'the social-democratic left' go along all this? I think John Rawls gave them the excuse. He said inequality is great if the worse off are better off under this economic system than they would be under a more equal one. The poor can therefore protest if they can show that if we did things more equally they would be better off. The task of the economist today is to ward this possibility off by ensuring that economic thought is utterly subservient to oligarchic extraction. It does this by lying – Trickle Down! Rising Tide Lifts all Boats! This has worn out. So next it does There Is No Alternative! – 'Those Jobs are Never Coming Back', 'Robots!' And finally, to make really certain, it turns the whole discipline into toadying intellectual fantasy. Romer homed in on the last.)

Jim December 6, 2016 at 4:28 pm

"Too much market and too little state invites a backlash."

If anything, Philip Mirowski has persuasively argued that neoliberalism requires a powerful State.

He has shown that the neoliberal thought collective theorized an elaborate political mobilization, and recognized early on that the creation of a new market is a political process requiring the intervention of organized power. The political will to impose a market required a strong state and elaborate regulation and also that the State would need to expand its economic and political power over time.

The neoliberal market had to be imposed it did not just happen. A key issue for the future is defining the nature of the state–whether under neoliberalism or MMT or under Trump or Sanders, or left populist or right populist.

ChrisPacific December 6, 2016 at 5:29 pm

Mankiw belongs in the non-ideological camp? I don't see how anybody with a brain could read any of his work past the first page and still hold that view.

I'm imagining them all as engineers on the deck of a half-submerged Titanic, debating about whether the hull integrity model might perhaps not have been 100% accurate.

Robert NYC December 7, 2016 at 2:22 pm

agreed, Mankiw is an intellectual clown and he has been mis-educating students for decades now.

susan the other December 6, 2016 at 5:43 pm

Ann Pettifor. give me ann pettifor always. she never puts the cart before the horse, only the ideological neoliberals try to do that while keeping a straight face – they are quintessential con artists if there ever were.

Dick Burkhart December 6, 2016 at 10:00 pm

Excellent article, except it failed to point out that there are realistic and successful modeling techniques, in addition to historical studies. These techniques are based on the nonlinear nature of real world economies. Just use complexity and evolutionary techniques like agent based models and nonlinear dynamical systems. Nothing new here – I still think that the limits-to-growth models ("system dynamics" = nonlinear dynamical systems) of the early 1970s represent the best mathematical economics ever done. And the economists' agent based models are just a variation on cellular automata, which have been used with notable success in other fields for many decades.

The problem is that economists either maintained a deliberate ignorance of such methods, or have outright rejected them, like Nordhaus with system dynamics. In part this is because these techniques involve a different mind set: they trade off simplistic models that are easy to understand, but whose assumptions are demonstrably false, with complexity results that give much better real world results but have more nuanced narratives.

RBHoughton December 6, 2016 at 10:17 pm

Ann Pettifor is right about Brexit imo. The belief and the fact is that government is trying a fast one on the people without being straightforward in its motives or intentions and a major cause of the discontent and disillusionment seems to stem from the macro-economic error she highlights.

People don't want this mumbo-jumbo any more. The old professions – medicine, accountancy, law – created jargons of specialist words and phrases (usually Latin) to make their speech and writings incomprehensible to the hoi polloi. Then in recent decades all sorts of trades have adopted the same jargon approach to mystifying their work. Enough already! Say what you mean, mean what you say.

ewmayer December 7, 2016 at 4:06 am

"Nick Bunker points out that in a recent speech, the Federal Reserve Chair Janet Yellen raised important questions about macroeconomic research in the wake of the Great Recession."

Hint: Citing an ivory-tower twit like J-Yel as "raising important questions" is a huge bullshit tell. While she was at it, did Janet raise any important questions as to why virtually every highly credentialed macroeconomist on planet earth completely fail to foresee the global financial crisis and the massive distortions, in very large part caused by the machinations of the high priests of those "believers in the power of monetary policy", which portended its coming? But, on to the bullshit:

"The first area of interest is the influence of aggregate demand on aggregate supply. Yellen points to research that increasingly finds so-called hysteresis effects in the macroeconomy. Hysteresis, a term borrowed from physics, is the idea that short-run shocks to the economy can alter its long-term trend. One example of hysteresis is workers who lose jobs in recessions and then are not drawn back into the labuor [sic] market but rather permanently locked out, therefore increasing the long-term unemployment rate."

That's irreversibility, not hysteresis. The latter is a special case of the former, which the chosen example does not illustrate. An example of hysteresis from my shower's temperature control: I find the temp is a tad too high, and turn the control a bit toward the cold setting. But I overshoot my target, and now it's too cold. Nudge back toward hot, but the somewhat-sticky mechanism again overshoots and lands more or less on the starting "too hot" position. But the water is still too cold, and I find I have to nudge even further toward hot to fix that. That's hysteresis. In the context of the recession example, hysteresis would be e.g. if once the E/P ratio had recovered to its pre-recession level but growth and its correlates remained weaker than expected, say due to the "recovery jobs" being on average of poorer quality than those which were lost. Kinda like the current 8-year-long "recovery", come to think of it! But I will admit that glossing over such messy real-world details like "widespread worker immiseration" with hifalutin terminology-borrowed-form-actual-science like "hysteresis:" is a great way to make oneself sound important, cloistered there in one's ivory tower.

"Another open research question that Yellen raises is the influence of "heterogeneity" on aggregate demand. Ignoring this heterogeneity in the housing market and its effects on economic inequality seems like something modern macroeconomics needs to resolve."

Ah yes, "needs to resolve" - that implies lots of high-powered academic conferences and PhD theses. And it's so wonderfully wishy-washy compared to "is something only a joke pretend-scientific discipline would even need to consider stopping doing, because no self-respecting discipline would have abandoned assumptions of homogeneity in roughly Year 2 of said discipline's evolutionary history."

"Yellen raises other areas of inquiry in her speech, including better understanding how the financial system is linked to the real economy and how the dynamics of inflation are determined.

Hey, when y'all finally "better understand" how this whole "financial system" thingy is linked to the real economy, by all means do let us know, because it seems like such a linkage might have, like, "important ramifications", or something. As to inflation, you mean actual inflation, or the fake measures thereof the folks at the world's central banks make their stock in trade? You know, for example, "in determining house price inflation we studiously ignore actual house prices and instead use an artificial metric called Owner's Equivalent Rent, which itself studiously ignores actual prices renters pay. Ain't it cool?"

Sorry if I sound grumpy, but this article is rather reminiscent of reading US Dem-party insiders pretending to "soul search" in re. Election 2016. Let's see:

"Another open research question that Team HRC raises is the influence of "heterogeneity" on voting preference. Ignoring this heterogeneity in the electoral trends and its effects on election outcomes seems like something modern macroelectorodynamics needs to resolve."

UserFriendly December 7, 2016 at 4:13 am

Paragraph 2

1970s and 1980s - Robert Lucas, Edward Prescott and Thomas Sargent – are the main people to be held responsible for this this development.

Is there something I can say to make sure the automod snags me when I'm pointing out a typo so you don't have to keep the comment?

[Dec 07, 2016] Our Gaslight Economy

charleshughsmith.blogspot.com
Correspondent Jason H. alerted me to the work of author Thomas Sheridan ( Puzzling People: The Labyrinth of the Psychopath), who claims to have coined the term gaslighting.

As noted yesterday, gaslighting has often been used in the context of personal relationships to describe a manipulative person's attempts to undermine and control their romantic partner.

In a larger context, these manipulative techniques can also be applied to our perception of the entire economy:

  1. Questioning, belittling, discounting and undermining our experience of economic "animal spirits" and general conditions.
  2. Overwriting our memory of the economy of the past, again by undermining, questioning and belittling our memories.
  3. Discrediting and marginalizing our definitions of economic well-being, in favor of the manipulator's definition of our well-being.
  4. Using authority and "experts" to disqualify and discredit dissenting views.
  5. Denigrate and deny our lived experience of economic conditions by repeating the institutionalized authority-approved narrative of "what actually happened."
  6. Disorient, discredit and destroy dissent with a torrent of false statistics, false narratives, false accusations and false claims of our errors.

[Dec 07, 2016] Bill Gross Reveals The Global Establishments Overall Plan In Eight Simple Steps Zero Hedge

Dec 07, 2016 | www.zerohedge.com
... The full Bill Gross' latest monthly letter courtesy of Janus

...Well, solving the "Orange Is Not Free" dilemma may take time just as the solution to a global debt crisis (now seven years running) may take even longer. It helps though to understand what the plan is in order to invest accordingly. While I and others have been critical of its destructive, as opposed to constructive elements, it is the current global establishment's (including Trump's) overall plan, and the establishment's emphatic "whatever it takes" monetary policies are the law of our financial markets . It pays to not fight the tiger until it becomes obvious that another plan will by necessity replace it. That time is not now, but growing populism and the increasing ineffectiveness of monetary policy suggest an eventual transition. But back to the beginning which was sometime around 2009/2010:

How policymakers plan to solve a long-term global debt crisis :

  1. As in Japan, the Eurozone, the U.S., and the UK, central banks bought/buy increasing amounts of government debt (QE), then rebate all interest to their Treasuries and eventually extend bond maturities . Someday they might even "forgive" the debt. Poof! It's gone.
  2. Keep interest rates artificially low to raise asset prices and bail out over-indebted zombie corporations and individuals . Extend and pretend.
  3. Talk about "normalization" to maintain as steep a yield curve as possible to help financial institutions with long-term liabilities , but normalize very, very slowly using financial repression.
  4. Liberalize accounting rules to make some potentially "bankrupt" insurance companies and pension funds appear solvent . Puerto Rico, anyone?
  5. Downgrade or never mention the low interest rate burden on household savers. Suggest it is a problem that eventually will be resolved by the "market".
  6. Begin to emphasize "fiscal" as opposed to "monetary" policy, but never mention Keynes or significant increases in government deficit spending. Use the buzzwords of "infrastructure" spending and "lower taxes". Everyone wants those potholes fixed, don't they? Everyone wants lower taxes too!
  7. Promote capitalism – even though government controlled, near zero percent interest rates distort markets and ultimately corrupt capitalism as we once understood it. Reintroduce Laffer Curve logic to significantly lower corporate taxes. Foster hope. Discourage acknowledgement of abysmal productivity trends which are a critical test of an economic system's effectiveness.
  8. If you are a policymaker or politician, plan to eventually retire from the Fed/Congress/ Executive Wing and claim it'll be up to the Millennials now. If you are an active as opposed to passive investment manager, fight the developing trend of low fee ETFs and index funds. But expect to retire with a nest egg.

That's the plan dear reader, and President-elect Trump's policies fit neatly into numbers 6, 7 and 8. There's no doubt that many aspects of Trump's agenda are good for stocks and bad for bonds near term – tax cuts, deregulation, fiscal stimulus, etc. But longer term, investors must consider the negatives of Trump's anti-globalization ideas which may restrict trade and negatively affect corporate profits.

In addition, the strong dollar weighs heavily on globalized corporations, especially tech stocks. Unconstrained strategies should increase cash and cash alternatives (such as high probability equity buy-out proposals). Bond durations and risk assets should be below benchmark targets.

On TV, "Orange Is the New Black" yet, in the markets, " Red" (in some cases) may be the new "Green" when applied to future investment returns. Be careful – stay out of jail.


Bill of Rights •Dec 6, 2016 9:50 AM


As in Japan, the Eurozone, the U.S., and the UK, central banks bought/buy increasing amounts of government debt (QE), then rebate all interest to their Treasuries and eventually extend bond maturities. Someday they might even "forgive" the debt. Poof! It's gone.

Load up folks its not gonna be paid back anyway...

[Dec 07, 2016] Economic Growth in the United States: A Tale of Two Countries

Notable quotes:
"... Our first finding-a surge in income inequality ..."
"... Our second finding-policies to ameliorate income inequality fall woefully short ..."
"... Our third finding-comparing income inequality among countries is enlightening ..."
Dec 07, 2016 | economistsview.typepad.com
Thomas Piketty, Emmanuel Saez, Gabriel Zucman:

Economic growth in the United States: A tale of two countries, by Thomas Piketty, Emmanuel Saez, Gabriel Zucman, Equitable Growth : Overview The rise of economic inequality is one of the most hotly debated issues today in the United States and indeed in the world. Yet economists and policymakers alike face important limitations when trying to measure and understand the rise of inequality.

One major problem is the disconnect between macroeconomics and the study of economic inequality. Macroeconomics relies on national accounts data to study the growth of national income while the study of inequality relies on individual or household income, survey and tax data. Ideally all three sets of data should be consistent, but they are not. The total flow of income reported by households in survey or tax data adds up to barely 60 percent of the national income recorded in the national accounts, with this gap increasing over the past several decades. 1

This disconnect between the different data sets makes it hard to address important economic and policy questions...

A second major issue is that economists and policymakers do not have a comprehensive view of how government programs designed to ameliorate the worst effects of economic inequality actually affect inequality. Americans share almost one-third of the fruits of economic output (via taxes that help pay for an array of social services) through their federal, state, and local governments. ... Yet we do not have a clear measure of how the distribution of pre-tax income differs from the distribution of income after taxes are levied and after government spending is taken into account. This makes it hard to assess the extent to which governments make income growth more equal. 2

In a recent paper , the three authors of this issue brief attempt to create inequality statistics for the United States that overcome the limitations of existing data by creating distributional national accounts. 3 We combine tax, survey, and national accounts data to build a new series on the distribution of national income. ... Our distributional national accounts enable us to provide decompositions of growth by income groups consistent with macroeconomic growth.

In our paper, we calculate the distribution of both pre-tax and post-tax income. The post-tax series deducts all taxes and then adds back all transfers and public spending so that both pre-tax and post-tax incomes add up to national income. This allows us to provide the first comprehensive view of how government redistribution in the United States affects inequality. Our benchmark series use the adult individual as the unit of observation and split income equally among spouses in married couples. But we also produce series where each spouse is assigned their own labor income, allowing us to study gender inequality and its impact on overall income inequality. In this short summary, we would like to highlight three striking findings.

Our first finding-a surge in income inequality

First, our data show that the bottom half of the income distribution in the United States has been completely shut off from economic growth since the 1970s. ...

It's a tale of two countries. For the 117 million U.S. adults in the bottom half of the income distribution, growth has been non-existent for a generation while at the top of the ladder it has been extraordinarily strong. And this stagnation of national income accruing at the bottom is not due to population aging. ...

Our second finding-policies to ameliorate income inequality fall woefully short

Our second main finding is that government redistribution has offset only a small fraction of the increase in pre-tax inequality. ...

Our third finding-comparing income inequality among countries is enlightening

Third, an advantage of our new series is that it allows us to directly compare income across countries. Our long-term goal is to create distributional national accounts for as many countries as possible; all the results will be made available online on the World Wealth and Income Database . One example of the value of these efforts is to compare the average bottom 50 percent pre-tax incomes in the United States and France. 8 In sharp contrast with the United States, in France the bottom 50 percent of real (inflation-adjusted) pre-tax incomes grew by 32 percent from 1980 to 2014, at approximately the same rate as national income per adult. While the bottom 50 percent of incomes were 11 percent lower in France than in the United States in 1980, they are now 16 percent higher. (See Figure 3.) ... Since the welfare state is more generous in France, the gap between the bottom 50 percent of income earners in France and the United States would be even greater after taxes and transfers.

The diverging trends in the distribution of pre-tax income across France and the United States-two advanced economies subject to the same forces of technological progress and globalization-show that working-class incomes are not bound to stagnate in Western countries. In the United States, the stagnation of bottom 50 percent of incomes and the upsurge in the top 1 percent coincided with drastically reduced progressive taxation, widespread deregulation of industries and services, particularly the financial services industry, weakened unions, and an eroding minimum wage.

Conclusion

Given the generation-long stagnation of the pre-tax incomes among the bottom 50 percent of wage earners in the United States, we feel that the policy discussion at the federal, state, and local levels should focus on how to equalize the distribution of human capital, financial capital, and bargaining power rather than merely the redistribution of national income after taxes. Policies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:

The different levels of government in the United States today obviously have the power to make income distribution more unequal, but they also have the power to make economic growth in America more equitable again. Potentially pro-growth economic policies should always be discussed alongside their consequences for the distribution of national income and concrete ways to mitigate their unequalizing effects. We hope that the distributional national accounts we present today can prove to be useful for such policy evaluations. ...

Posted by Mark Thoma on Tuesday, December 6, 2016 at 12:30 PM in Economics , Income Distribution | Permalink Comments (37)

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Comments Feed You can follow this conversation by subscribing to the comment feed for this post. pgl : , December 06, 2016 at 12:37 PM

Gabriel Zucman is doing excellent work on this issue as well as how the rich shift income offshore to tax havens.
pgl : , December 06, 2016 at 12:39 PM
"Reforms of labor market institutions to boost workers' bargaining power and including a higher minimum wage"

The argument for this just gets stronger and stronger. Alas, I do not trust Trump to push for this agenda. I hope my distrust is misplaced.

Denis Drew -> pgl... , December 06, 2016 at 02:44 PM
Progressive states can push it on their own -- re-constituting union density locally. Just need to add some dimension of enforcement to what the NLRB helplessly considers illegal -- actually protect employees right to organize commercially.

http://ontodayspage.blogspot.com/2016/11/first-100-days-progressive-states-agenda.html

sanjait -> pgl... , December 06, 2016 at 02:54 PM
"Alas, I do not trust Trump to push for this agenda. I hope my distrust is misplaced."

I would hold out no hope for this. Trumputin is not going to empower the people vs the oligarchs. You can with high confidence expect he will do the opposite.

Paul Mathis -> pgl... , December 06, 2016 at 03:35 PM
Fox Noise Viewers and Trump Voters

Are the folks in the bottom half who are getting screwed over. They blame the Mexicans and Chinese for their fates. They made their choice, let them live with it.

The Rage : , December 06, 2016 at 12:43 PM
This is just capitalism.
DrDick -> The Rage... , December 06, 2016 at 12:46 PM
No, it is unjust capitalism (redundant, I know).
The Rage -> DrDick... , December 06, 2016 at 01:00 PM
All capitalism is "unjust".
pgl -> The Rage... , December 06, 2016 at 01:43 PM
You left out the key line "workers of the world unite". Yep - I'm on a unionization drive.
Peter K -> pgl... , December 06, 2016 at 01:54 PM
Then why were you for Hillary over Sanders? Doesn't make sense.

Did PGL get woke???

LOL

Or is it just that a Republican is in the White House?

pgl -> Peter K... , December 06, 2016 at 02:34 PM
Snore!
DrDick -> The Rage... , December 06, 2016 at 02:40 PM
As I said, redundant.
anne : , December 06, 2016 at 12:45 PM
http://www.nytimes.com/2016/12/06/business/economy/a-bigger-economic-pie-but-a-smaller-slice-for-half-of-the-us.html

December 6, 2016

Economic Pie Grows, but Half of U.S. Gets Smaller Slice
By PATRICIA COHEN

In 35 years, the U.S. economy has more than doubled, but new research shows close to zero growth for working-age adults in the bottom 50 percent of income.

Fred C. Dobbs -> anne... , December 06, 2016 at 12:50 PM
A Bigger Economic Pie, but a Smaller Slice
for Half of the U.S. http://nyti.ms/2hdlnuU
NYT - PATRICIA COHEN - December 6

Even with all the setbacks from recessions, burst bubbles and vanishing industries, the United States has still pumped out breathtaking riches over the last three and half decades.

The real economy more than doubled in size; the government now uses a substantial share of that bounty to hand over as much as $5 trillion to help working families, older people, disabled and unemployed people pay for a home, visit a doctor and put their children through school.

Yet for half of all Americans, their share of the total economic pie has shrunk significantly, new research has found.

This group - the approximately 117 million adults stuck on the lower half of the income ladder - "has been completely shut off from economic growth since the 1970s," the team of economists found. "Even after taxes and transfers, there has been close to zero growth for working-age adults in the bottom 50 percent."

The new findings, by the economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, provide the most thoroughgoing analysis to date of how the income kitty - like paychecks, profit-sharing, fringe benefits and food stamps - is divided among the American population.

Inequality has been a defining national issue for nearly a decade, thanks in part to groundbreaking research done by Mr. Piketty at the Paris School of Economics and Mr. Saez at the University of California, Berkeley.

But now a new administration in Washington is promising to reshape the government's role in curbing the intense concentration of wealth at the top and improving the fortunes of those left behind.

During his tenure in the White House, President Obama pushed to address income stagnation by shifting more of the tax burden from the middle class to the rich and expanding public programs like universal health insurance.

Both strategies are now targeted by President-elect Donald J. Trump and Republicans in Congress, led by House Speaker Paul Ryan. Like many conservatives, Mr. Ryan argues that aid to the poor is ultimately counterproductive because it undermines the incentive to work. Proposals put forward by Republican leaders, though short on details, make clear that they want to roll back benefits like Medicaid and the Affordable Care Act, which primarily help the poor, and direct the largest tax cuts to the wealthiest Americans.

About 30 percent of the country's income is channeled to federal, state and local taxes. Apart from military spending and performing basic public services, much of that is distributed back to individuals through various programs and tax benefits in the form of Social Security checks, Medicare benefits and veterans' benefits. But until now, no one has truly measured the full impact that tax payments, government spending, noncash benefits and nontaxable income together have on inequality.

Abundant documentation of income inequality already exists, but it has been challenged as incomplete. Studies have excluded the impact of taxes and value of public benefits, skeptics complained, or failed to account for the smaller size of households over time.

This latest project tries to address those earlier criticisms. What the trio of economists found is that the spectacular growth in incomes at the peak has so outpaced the small increase at the bottom from public programs intended to ameliorate poverty and inequality that the gap between the wealthiest and everyone else has continued to widen.

Stagnant wages have sliced the share of income collected by the bottom half of the population to 12.5 percent in 2014, from 20 percent of the total in 1980. Where did that money go? Essentially, to the top 1 percent, whose share of the nation's income nearly doubled to more than 20 percent during that same 34-year period.

Average incomes grew by 61 percent. But nearly $7 out of every additional $10 went to those in the top tenth of the income scale.

Inequality has soared over that period. In 1980, the researchers found, someone in the top 1 percent earned on average $428,200 a year - about 27 times more than the typical person in the bottom half, whose annual income equaled $16,000.

Today, half of American adults are still pretty much earning that same $16,000 on average - in 1980 dollars, adjusted for inflation - while members of the top 1 percent now bring home $1,304,800 - 81 times as much.

That ratio, the authors point out, "is similar to the gap between the average income in the United States and the average income in the world's poorest countries, the war-torn Democratic Republic of Congo, Central African Republic and Burundi."

The growth of incomes has probably increased a bit since 2014, the latest year for which full data exists, said Mr. Zucman, who, like Mr. Saez, also teaches at the University of California, Berkeley. But it is "not enough to make any significant difference to our long-run finding, and in particular, to affect the long-run stagnation of bottom-50-percent incomes." ...

DrDick : , December 06, 2016 at 12:46 PM
Damn, it is even worse than I thought, and I thought I was a pessimist.
sanjait -> DrDick... , December 06, 2016 at 02:55 PM
Yup, hard not to get discouraged in these times...
anne : , December 06, 2016 at 12:49 PM
http://www.nytimes.com/2016/12/06/business/economy/a-dilemma-for-humanity-stark-inequality-or-total-war.html

December 6, 2016

A Dilemma for Humanity: Stark Inequality or Total War
By EDUARDO PORTER

Drawing on history, Walter Scheidel of Stanford argues in a coming book that only all-out war might fundamentally alter how resources are distributed.

Fred C. Dobbs -> anne... , December 06, 2016 at 01:05 PM
(Thinking the unthinkable.)

NYT: Is there nothing to be done about galloping inequality?

Last year the typical American family experienced the fastest income gains since the government started measuring them in the 1960s. But the top 1 percent did even better, raising their share of income higher than it was when President Obama took office.

Mr. Obama has led the most progressive administration since Lyndon B. Johnson's half a century ago, raising taxes on the rich to expand the safety net for the less fortunate. Still, by the White House's own account, eight years of trench warfare in Washington trimmed the top 1-percenters' share, after taxes and transfers, to only 15.4 percent, from 16.6 percent of the nation's income. It increased the slice going to the poorest fifth of families by 0.6 percentage point, to a grand total of 4 percent.

The policies also helped push the Republican Party even further to the right, leading to the Tea Party - whose rabid opposition to government redistribution still shakes American politics. They did nothing to salve - and perhaps even added to - the stewing resentment of white working-class Americans who feel left out of the nation's advancements, producing the electoral victory for Donald J. Trump, who has proposed a tax plan that amounts to a lavish giveaway to the rich.

The point is not that President Obama should have done better. He probably did the best he could under the circumstances. The point is that delivering deep and lasting reductions in inequality may be impossible absent catastrophic events beyond anything any of us would wish for.

History - from Ancient Rome through the Gilded Age; from the Russian Revolution to the Great Compression of incomes across the West in the middle of the 20th century - suggests that reversing the trend toward greater concentrations of income, in the United States and across the world, might be, in fact, nearly impossible.

That's the bleak argument of Walter Scheidel, a professor of history at Stanford, whose new book, "The Great Leveler" (Princeton University Press), is due out next month. He goes so far as to state that "only all-out thermonuclear war might fundamentally reset the existing distribution of resources." If history is anything to go by, he writes, "peaceful policy reform may well prove unequal to the growing challenges ahead."

Professor Scheidel does not offer a grand unified theory of inequality. But scouring through the historical record, he detects a pattern: From the Stone Age to the present, ever since humankind produced a surplus to hoard, economic development has almost always led to greater inequality. There is one big thing with the power to stop this dynamic, but it's not pretty: violence. ...

Fred C. Dobbs -> Fred C. Dobbs... , December 06, 2016 at 01:40 PM
Hmmm. At some point, the powers that
be may want to organize a gigantic
apocalyptical world-wide conflict
that does NOT go nuclear because
that would be Really Excessive.
mrrunangun -> Fred C. Dobbs... , December 06, 2016 at 02:10 PM
After his success in the Red- White civil war, Lenin began the destruction of the hereditary rich and the educated professional classes in the Soviet Union. Executions were common as were slower deaths in work camps ridden with lice and typhus. He had to cut back on the pace of destruction after a few years because he found he could not run the country without technical experts and so some of the engineers, doctors, professors, etc were allowed to live out their days and care for some of their impoverished relatives. A book on the subject, "Former People" gives details of the methods used for selecting and liquidating the pre-revolutionary Elite. Not for the squeamish.
anne : , December 06, 2016 at 12:51 PM
http://gabriel-zucman.eu/files/PSZ2016.pdf

December 2, 2016

Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

Abstract

This paper combines tax, survey, and national accounts data to estimate the distribution of national income in the United States since 1913. Our distributional national accounts capture 100% of national income, allowing us to compute growth rates for each quantile of the income distribution consistent with macroeconomic growth. We estimate the distribution of both pre-tax and post-tax income, making it possible to provide a comprehensive view of how government redistribution affects inequality. Average pre-tax national income per adult has increased 60% since 1980, but we find that it has stagnated for the bottom 50% of the distribution at about $16,000 a year. The pre-tax income of the middle class- adults between the median and the 90th percentile-has grown 40% since 1980, faster than what tax and survey data suggest, due in particular to the rise of tax-exempt fringe benefits. Income has boomed at the top: in 1980, top 1% adults earned on average 27 times more than bottom 50% adults, while they earn 81 times more today. The upsurge of top incomes was first a labor income phenomenon but has mostly been a capital income phenomenon since 2000. The government has offset only a small fraction of the increase in inequality. The reduction of the gender gap in earnings has mitigated the increase in inequality among adults. The share of women, however, falls steeply as one moves up the labor income distribution, and is only 11% in the top 0.1% today.

anne -> anne... , December 06, 2016 at 03:34 PM
http://gabriel-zucman.eu/files/PSZ2016.pdf

December 2, 2016

Distributional National Accounts: Methods and Estimates for the United States
By Thomas Piketty, Emmanuel Saez, and Gabriel Zucman

Conclusion

This paper has combined tax, survey, and national accounts data to build series on the distribution of total National Income in the United States since 1913. Our "Distributional National Accounts" estimates capture 100% of National Income and hence provide decompositions of growth by income groups consistent with macroeconomic economic growth. We compute both pre-tax and post-tax series. Post-tax series deduct all taxes and add back all transfers and public spending so that they also aggregate to total National Income. We find an overall U-shape for pre-tax and post-tax income concentration over the century. The surge in income concentration since the 1970s was first a labor income phenomenon but has been mostly a capital income phenomenon since 2000. Since 1980, growth in real incomes for the bottom 90% adults has been only about half of the national average on pre-tax basis and about two-thirds on a post-tax basis. Median pre-tax incomes have hardly grown since 1980. The reduction of the gender gap in earnings has played an important role in mitigating the increase in inequality among adults since the late 1960s but the gender gap is far from being closed especially at the upper earnings end. Tax progressivity at the top has declined since the 1960s but the generosity of transfers at the bottom has increased hereby mitigating the dramatic worsening in inequality.

Our objective is to extend the methods developed in this paper to as many countries as possible in the coming years. The ultimate goal is to be able to compare inequality across countries and over time rigorously. Just like we use GDP or national income to compare the macroeconomic performance of countries today, so could distributional national accounts be used to compare inequality tomorrow. We also hope that our work can contribute to foster international collaborations between academics and statistical institutes in order to produce more and more consistent and systematic "Distributional national accounts." The same methodology is currently being applied and extended to more countries.

Peter K : , December 06, 2016 at 01:18 PM
"Given the generation-long stagnation of the pre-tax incomes among the bottom 50 percent of wage earners in the United States, we feel that the policy discussion at the federal, state, and local levels should focus on how to equalize the distribution of human capital, financial capital, and bargaining power rather than merely the redistribution of national income after taxes."

Krugman:

"So what would a political manifesto aimed at winning over these voters look like? You could promise to make their lives better in ways that don't involve bringing back the old plants and mines - which, you know, Obama did with health reform and Hillary would have done with family policies and more. But that apparently isn't an acceptable answer."

Chris Dillow:

"I have a slightly different beef. It's that this form of centrism offers too etiolated a vision of equality. Inequality isn't simply a matter of pay packets but of power too. Centrism fails to tackle the latter. This is a big failing not least because policies to increase productivity might require greater equality of power in the workplace – something which technocratic centrism has long ignored."

sanjait -> Peter K... , December 06, 2016 at 02:59 PM
It's really easy to say we should "equalize" before tax outcomes, but notably, the authors don't even attempt to say with specificity how to do that.

Not that it isn't a worthwhile endeavor, but when everyone saying we should do it fails to say how to do it, it shows there are neither obvious answers nor long hanging fruit.

It should be noted though that in addition to after tax stuff like Obamacare and family support policies, mainstream Dems like Obama and Clinton also support education at all levels and ages and working bargaining through a friendly NLRB, which fall right into the categories the paper authors specified.

Got better ideas? The world needs them.

pgl -> sanjait... , December 06, 2016 at 03:07 PM
One idea is to counter monopsony power in the labor market by increasing wage floors. But when I suggest this - baby poor PeterK gets confused (he has no idea what we are talking about as usual) so he gets all MAD.
Peter K : , December 06, 2016 at 01:41 PM
"You could promise to make their lives better in ways ... which, you know, Obama did with health reform and Hillary would have done with family policies and more."

Gotta love that "and more."

Boosting the safety net a tiny little bit does help with bargaining power but not much.

Democrats have to be much more bold and explicit - like Bernie Sanders was - or Trump is just going to win again in 2020.

It's not enough for Democrats to just be better than Republicans (even as Obama pushes the TPP). That's a very low bar.

sanjait -> Peter K... , December 06, 2016 at 03:00 PM
ACA and Hillary's family support policies were huge.

Calling those "a little bit" shows you're one of those faux progressives who wants a "revolution" but really doesn't appreciate how actual government policies affect actual working peoples' lives.

pgl -> sanjait... , December 06, 2016 at 03:08 PM
"faux progressives". Bingo! But give PeterK a break - understanding how the real world works gets in the way of his day job - hurling insults.
Peter K : , December 06, 2016 at 01:46 PM
"Given the generation-long stagnation of the pre-tax incomes among the bottom 50 percent of wage earners in the United States, we feel that the policy discussion at the federal, state, and local levels should focus on how to equalize the distribution of human capital, financial capital, and bargaining power rather than merely the redistribution of national income after taxes."

People have no right complain! They're just being racist and nostalgic for old days of white male hetero Christian privilege.

EMichael wants to purge all of the Bernie Sanders voters who voted for Hillary in the general.

He equates them with Susan Sarandon and Jill Stein, since they didn't like Hillary.

When EMichael would defend centrist Bill Clinton and Obama's etiolated record of progressivism, he'd argue that FDR and LBJ had large marjorities of Democrats.

Yeah but back then FDR and LBJ had to work with and compromise with racist Democrats from the South in Congress.

That's why they New Deal and War on Poverty was imperfect but it was a lot better than what Bill Clinton or Obama left behind.

Peter K -> Peter K... , December 06, 2016 at 01:50 PM
http://www.cc.com/full-episodes/np0e6l/the-daily-show-with-trevor-noah-december-5--2016---van-jones-season-22-ep-22032

Last night's Daily Show.

Van Jones is 15 minutes in.

sanjait -> Peter K... , December 06, 2016 at 03:02 PM
Peter K ... light on policy, but heavy on grudges. Epitomizing the more-progressive-than-thou crowd.
pgl -> sanjait... , December 06, 2016 at 03:09 PM
Wow - concise and to the point writing. I should take a writing class from you.
Denis Drew : , December 06, 2016 at 02:40 PM
" coincided with drastically reduced progressive taxation, widespread deregulation of industries and services, particularly the financial services industry, weakened unions, and an eroding minimum wage "

"weakened unions?"

Read disappeared unions. 6% union density in private industry is analogous to 20/10 blood pressure -- it starves every other healthy economic and political process.

Re-constitute union density and unions will be your social cop on every corner -- goodbye "reduced progressive tax, dereged industries and services espec' financial and the eroded minimum wage."
****************************
Just happened to post this somewhere else today -- talk about eroded!!!!!!!!!!!!

dbl-indexed is for inflation and per capita income growth -- 2013 dollars:

yr..per capita...real..(nominal)..dbl-index...%-of
68...15,473....10.74..(1.60)......10.74......100%
69-70-71-72-73
74...18,284.....9.43...(2.00)......12.61
75...18,313.....9.08...(2.10)......12.61
76...18,945.....9.40...(2.30)......13.04........72%
77
78...20,422.....9.45...(2.65)......14.11
79...20,696.....9.29...(2.90)......14.32
80...20,236.....8.75...(3.10)......14.00
81...20,112.....8.57...(3.35)......13.89........62%
82-83-84-85-86-87-88-89
90...24,000.....6.76...(3.80)......16.56
91...23,540.....7.26...(4.25)......16.24........44%
92-93-94-95
96...25,887.....7.04...(4.75)......17.85
97...26,884.....7.46...(5.15)......19.02........39%
98-99-00-01-02-03-04-05-06
07...29,075.....6.56...(5.85)......20.09
08...28,166.....7.07...(6.55)......19.45
09...27,819.....7.86...(7.25)......19.42........40%
10-11-12-13-14-15-16

If we could have foretold to Americans of 1968 that by early 2007 the minimum wage would have dropped almost in half in real terms (instead of almost tripling in real terms to keep up with national productivity gains) -- what could they have possibly guessed: a comet strike, a limited nuclear exchange, multiple world plagues?

sanjait : , December 06, 2016 at 03:06 PM
Good and important stuff.

Decomposed data is tremendously valuable, and making it publicly available for many countries is a huge service.

I will again note that this piece falls into the category of diagnosing-but-not-proposing-anything-specific-to-address-the-problem, from which we are seeing many pieces of commentary these days, but I think it's a useful part of the process to collectively go through this realization phase.

But these authors take a good half-step forward in proposing a useful framework for the *types* of policies that would be helpful. And it's a very good framework (I say with bias, because it's the same one i've long had). That's also worth something, in addition to the invaluable contribution of data.

pgl -> sanjait... , December 06, 2016 at 03:12 PM
Having real world data that would illuminate progressive issues is indeed a useful contribution. But those faux progressives would just call our praise for this hard yet important work centrist neoliberal elitism. Yes - they love their pointless labels as it makes actual analysis so obsolete.
llisa2u2 : , December 06, 2016 at 03:45 PM
How about "CAPS" on all top federal positions- presidents, vice-presidents,cabinet members, senators, representatives. There needs to be Federal and STATE "CAPS" established across the US. "CAPS" on University president wages, University coaches wages, etc. etc. THEN, minimize all the pensions that the present 5 ex-Presidents are still getting, security guards, upkeep and expense on homes etc. etc. The US citizens are really being forced to support a closed ARISTOCRACY. Just start a list of all the extra-perks that the ARISTOCRACY are receiving. Some are receiving benefits to sons, daughter, cousins, close relatives etc. etc. Just how much $$$ is given to 20 year-olds that haven't worked except through patronage positions, because of "cronies" giving them a job because of immediate family connections. The mess of political patronage on the Federal and State levels need to be discussed and dissected. If Us taxpayers had to bail out private investors, insurance companies and hedge-funds because of the TBTF fiasco, then let these companies that were bailed out come to the focus on just how much churning, and bad investment advise occurred that enabled the rape WORKERS in civil-service jobs across the US. Come on MSM and MSE start revealing the behind-the-scenes patronage that has sucked the $$ from the general public. The $$$ was sucked into the DC swamp by the Left, the Right, and the In-Betweeners that hide beyond the snow-job propaganda messages to the GP.
llisa2u2 : , -1
One sentence should include the words:.... the rape of WORKERS PENSIONS.......
Just side note, the old European guilds, and unions KNEW what they were doing in their organizational structures and why. The majority of US workers today don't have a clue. Too many blue collar and white collar workers have been suckered by the New Boss, who's exactly the same as the Old Boss, if not worse!

[Dec 05, 2016] Why dont we save our steelworkers, when weve spent billions on bankers?

Oct 28, 2015 | The Guardian

Every so often a society decides which of its citizens really matter. Which ones get the star treatment and the big cash handouts – and which get shoved to the bottom of the pile and penalised. These are the big, rough choices post-crash Britain is making right now.

A new hierarchy is being set in place by David Cameron in budget after austerity budget. Wealthy pensioners: winners. Young would-be homeowners: losers. Millionaires see their taxes cut to 45%, while the working poor pay a marginal tax rate of 80%. Big business gets to write its own tax code; benefit claimants face harsh sanctions.

When the contours of this new social order are easy to spot, they can cause public uproar – as with the cuts to tax credits. Elsewhere, they're harder to pick out, though still central. It is into this category that the crisis in the British steel industry falls.

It would be easy to tune out the past few weeks' headlines about plant closures and job losses as just another story of business disaster. But what's happening to our steelworkers, and what we do to protect them, goes to the heart of the debate about which people – and which places – count in Britain's political economy.

innocuously 28 Oct 2015 21:02

The British people, the ordinary British people must have complete and utter contempt for this British Government of Cameron and Osborne.

Why the hell does this incompetent, uncaring as well as utterly pedantic government in its pursuit of non-government help (except when it comes to getting their Chinese Communist buddies to build a nuclear power station in Britain. Why on earth do we need to be told by an obviously astute, caring, concerned and intelligent individual by the name of Aditya Chakrabortty what is so manifestly wrong, how the French, Germans and Dutch draw money to help their industries from the European Commission Globalisation Adjustment Fund.

Once Britain (or was it England?) was called the Workshop of the World but the Forcking governments of the likes of Cameron, Osborne, Blair and Brown do not seem to give a stuff. They have poured billions of pounds into the bloody banking system which can be seen to pretty much of a giant cesspit of greed, whose leaders award themselves with giant bonuses from their customers money. Britain is not a country just of greedy Banksters and elitist politicians it should be a country of industry workers.

As Chakrabortty states once the steel industry is gone it is gone and with it so much other manufacturing capability but these Contemptible shitbag-like individuals in this vile- behaving government cannot seem to get this into their apparently stupid heads.

Cameron's and Osborne's government has behaved with utter wickedness, evil and stupidity in selling out Britain, its industry and infrastructure to a China which is even now trampling on the human rights of its people and threating all its neighbours around the South China Sea and all we get in Britain from these contemptible elitist politicians is an uncaring watching of the destruction of its industry and a selling out of its security and infrastructure.

MikeFerro1 28 Oct 2015 20:55

This mess, like much else that's wrong with the current state of Britain, is directly attributable to our membership of the European Union.
Outside the EU we could
1. From our own seat on the World Trade Organisation tackle China over dumping which is illegal under WTO rules
2. Provide state support to our steel industry if we chose to
3. Not have sky high energy prices due to our closing down perfectly good coal fired generating plants at the same time as Germany and China (to name but two) are building new ones
I know some other EU nations appear to get round these difficulties but if we weren't in the EU we wouldn't have to, we'd make our own choices.

Rivett4PM 28 Oct 2015 20:08

The comparison between the steel industry and the City is flawed. It was a consequence of the bail outs of RBS and HBOS that many jobs were saved in the City, but not the reason why the bail outs were undertaken. The banking bail outs were aimed at saving the UK economy as a whole, which would have collapsed without access to the credit/liquidity provided by the banking industry. The knock on effects of the steel industry shut down will be far reaching but nowhere near the same scale as would have been the case if the same had occurred in banking. This is, I am sure, no comfort to the families of steel workers and the surrounding communities, but let's not pretend that bankers received special favor simply because they are bankers.

[Dec 05, 2016] Trump campaign is a similar to Brexit crusade by grassroots activists against big banks and global political insiders . by those who feel disaffected and disenfranchised

Notable quotes:
"... Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton. ..."
"... "I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it." ..."
"... It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom. ..."
Aug 24, 2016 | www.theguardian.com

...the British politician, who was invited by Mississippi governor Phil Bryant, will draw parallels between what he sees as the inspirational story of Brexit and Trump's campaign. Farage will describe the Republican's campaign as a similar crusade by grassroots activists against "big banks and global political insiders" and how those who feel disaffected and disenfranchised can become involved in populist, rightwing politics. With Trump lagging in the polls, just as Brexit did prior to the vote on the referendum, Farage will also hearten supporters by insisting that they can prove pundits and oddsmakers wrong as well.

This message resonates with the Trump campaign's efforts to reach out to blue collar voters who have become disillusioned with American politics, while also adding a unique flair to Trump's never staid campaign rallies.

The event will mark the first meeting between Farage and Trump.

Arron Banks, the businessman who backed Leave.EU, the Brexit campaign group associated with the UK Independence party (Ukip), tweeted that he would be meeting Trump over dinner and was looking forward to Farage's speech.

The appointment last week of Stephen Bannon, former chairman of the Breitbart website, as "CEO" of Trump's campaign has seen the example of the Brexit vote, which Breitbart enthusiastically advocated, rise to the fore in Trump's campaign narrative.

Speaking to a local radio station before the joint rally, Farage urged Americans to "go out and fight" against Hillary Clinton.

"I am going to say to people in this country that the circumstances, the similarities, the parallels between the people who voted Brexit and the people who could beat Clinton in a few weeks time here in America are uncanny," Farage told Super Talk Mississippi. "If they want things to change they have get up out of their chairs and go out and fight for it. It can happen. We've just proved it."

"I am being careful," he added when asked if he supported the controversial Republican nominee. "It's not for me as a foreign politician to say who you should vote for ... All I will say is that if you vote for Hillary Clinton, then nothing will change. She represents the very politics that we've just broken through the Brexit vote in the United Kingdom."

[Dec 05, 2016] Failure of Globalization and the Fourth Estate

Notable quotes:
"... As Mr. Buffet so keenly said it, There is a war going on, and we are winning. ..."
"... Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection, and historical revisionism flow across your screen. And the `objective' straight news reporting is no better. ..."
"... "Why is it afraid of us?" Because we the people are perceived to be the enemy of America the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians and military leaders, provide corporate espionage to the highest payers and more devious machinations than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking around the results tell me that. ..."
"... The fourth estate (the media) has been purchased outright by the second estate (the nobility). I guess you could call this an 'estate sale'. All power to the markets! ..."
naked capitalism
Free Trade," the banner of Globalization, has not only wrecked the world's economy, it has left Western Democracy in shambles. Europe edges ever closer to deflation. The Fed dare not increase interest rates, now poised at barely above zero. As China's stock market threatened collapse, China poured billions to prop it up. It's export machine is collapsing. Not once, but twice, it recently manipulated its currency to makes its goods cheaper on the world market. What is happening?

The following two graphs tell most of the story. First, an overview of Free Trade.

Deficit4-1024x420

Capital fled from developed countries to undeveloped countries with slave-cheap labor, countries with no environmental standards, countries with no support for collective bargaining. Corporations, like Apple, set up shop in China and other undeveloped countries. Some, like China, manipulated its currency to make exported goods to the West even cheaper. Some, like China, gave preferential tax treatment to Western firm over indigenous firms. Economists cheered as corporate efficiency unsurprisingly rose. U.S. citizens became mere consumers.

Thanks to Bill Clinton and the Financial Modernization Act, banks, now unconstrained, could peddle rigged financial services, offer insurance on its own investment products–in short, banks were free to play with everyone's money–and simply too big to fail. Credit was easy and breezy. If nasty Arabs bombed the Trade Center, why the solution was simple: Go to the shopping mall–and buy. That remarkable piece of advice is just what freedom has been all about.

Next: China's export machine sputters.

CAIXEN-1024x527

China's problem is that there are not enough orders to keep the export machine going. There comes a time when industrialized nations simply run out of cash–I mean the little people run out of cash. CEOs and those just below them–along with slick Wall Street gauchos–made bundles on Free Trade, corporate capital that could set up shop in any impoverished nation in the world.. No worries about labor–dirt cheap–or environmental regulations–just bring your gas masks. At some point the Western consumer well was bound to run dry. Credit was exhausted; the little guy could not buy anymore. Free trade was on its last legs.

So what did China do then? As its markets crashed, it tried to revive its export model, a model based on foreign firms exporting cheap goods to the West. China lowered its exchange rates, not once but twice. Then China tried to rescue the markets with cash infusion of billions. Still its market continued to crash. Manufacturing plants had closed–thousands of them. Free Trade and Globalization had run its course.

And what has the Fed been doing? Why quantitative easy–increase the money supply and lower short term interest rates. Like China's latest currency manipulation, both were merely stop-gap measures. No one, least of all Obama and his corporate advisors, was ready to address corporate outsourcing that has cost millions of jobs. Prime the pump a little, but never address the real problem.

The WTO sets the groundwork for trade among its member states. That groundwork is deeply flawed. Trade between impoverished third world countries and sophisticated first world economies is not merely a matter of regulating "dumping"-not allowing one country to flood the market with cheap goods-nor is it a matter of insuring that the each country does not favor its indigenous firms over foreign firms. Comparable labor and environmental standards are necessary. Does anyone think that a first world worker can compete with virtual slave labor? Does anyone think that a first world nation with excellent environmental regulations can compete with a third world nation that refuses to protect its environment?

Only lately has Apple even mentioned that it might clean up its mess in China. The Apple miracle has been on the backs of the Chinese poor and abysmal environmental wreckage that is China.

The WTO allows three forms of inequities-all of which encourage outsourcing: labor arbitrage, tax arbitrage, and environmental arbitrage. For a fuller explanation of these inequities and the "race to the bottom," see here.

Of course now we have the mother of all Free Trade deals –the Trans-Pacific Partnership (TPP)– carefully wrapped in a black box so that none of us can see what finally is in store for us. Nothing is ever "Free"–even trade. I suspect that China is becoming a bit too noxious and poisonous. It simply has to deal with its massive environmental problems. Time to move the game to less despoiled and maybe more impoverished countries. Meanwhile, newscasters are always careful to tout TPP.

Fast Tracking is a con man's game. Do it so fast that the marks never have a chance to watch their wallets. In hiding negotiations from prying, public eyes, Obama, has given the con men a bigger edge: A screen to hide the corporations making deals. Their interest is in profits, not in public good.

Consider the media. Our only defense is a strong independent media. At one time, newsrooms were not required to be profitable. Reporting the news was considered a community service. Corporate ownership provided the necessary funding for its newsrooms–and did not interfere.

But the 70′s and 80′s corporate ownership required its newsrooms to be profitable. Slowly but surely, newsrooms focused on personality, entertainment, and wedge issues–always careful not to rock the corporate boat, always careful not to tread on governmental policy. Whoever thought that one major news service–Fox–would become a breeding ground for one particular party.

But consider CNN: It organizes endless GOP debates; then spends hours dissecting them. Create the news; then sell it–and be sure to spin it in the direction you want.

Are matters of substance ever discussed? When has a serious foreign policy debate ever been allowed occurred–without editorial interference from the media itself. When has trade and outsourcing been seriously discussed–other than by peripheral news media?

Meanwhile, news media becomes more and more centralized. Murdoch now owns National Geographic!

Now, thanks to Bush and Obama, we have the chilling effect of the NSA. Just whom does the NSA serve when it collects all of our digital information? Is it being used to ferret out the plans of those exercising their right of dissent? Is it being used to increase the profits of favored corporations? Why does it need all of your and my personal information–from bank accounts, to credit cards, to travel plans, to friends with whom we chat .Why is it afraid of us?


jefemt, October 23, 2015 at 9:43 am

As Mr. Buffet so keenly said it, There is a war going on, and we are winning.

If 'they' are failing, I'd hate to see success!

Isn't it the un-collective WE who are failing?

failing to organize,
failing to come up with plausible, 90 degrees off present Lemming-to-Brink path alternative plans and policies,
failing to agree on any of many plausible alternatives that might work

Divided- for now- hopefully not conquered ..

I gotta scoot and get back to Dancing with the Master Chefs

allan, October 23, 2015 at 10:03 am

Just type `TPP editorial' into news.google.com and watch a toxic sludge of straw men, misdirection, and historical revisionism flow across your screen. And the `objective' straight news reporting is no better.

Vatch, October 23, 2015 at 10:36 am

Don't just watch the toxic sludge; respond to it with a letter to the editor (LTE) of the offending publication! For some of those toxic editorials, and contact information for LTEs, see:

http://www.nakedcapitalism.com/2015/10/200pm-water-cooler-10162015.html#comment-2503316

http://www.nakedcapitalism.com/2015/10/trading-away-land-rights-tpp-investment-agreements-and-the-governance-of-land.html#comment-2502833

A few of the editorials may now be obscured by paywalls or registration requirements, but most should still be visible. Let them know that we see through their nonsense!

TedWa, October 23, 2015 at 10:38 am

"Why is it afraid of us?" Because we the people are perceived to be the enemy of America the Corporation. Whistleblowers have already stated that the NSA info is used to blackmail politicians and military leaders, provide corporate espionage to the highest payers and more devious machinations than the mind can grasp from behind a single computer. 9/11 was a coup – I say that because looking around the results tell me that.

TG, October 23, 2015 at 3:27 pm

The fourth estate (the media) has been purchased outright by the second estate (the nobility). I guess you could call this an 'estate sale'. All power to the markets!

Pelham, October 23, 2015 at 8:32 pm

Even when newsrooms were more independent they probably would not, in general, have reported on free trade with any degree of skepticism. The recent disappearance of the old firewall between the news and corporate sides has made things worse, but at least since the "professionalization" of newsrooms that began to really take hold in the '60s, journalists have tended to identify far more with their sources in power than with their readers.

There have, of course, been notable exceptions. But even these sometimes serve more to obscure the real day-to-day nature of journalism's fealty to the corporate world than to bring about any significant change.

[Dec 05, 2016] The Great Ponzi Scheme of the Global Economy

www.counterpunch.org
March 25, 2016

CHRIS HEDGES: We're going to be discussing a great Ponzi scheme that not only defines not only the U.S. but the global economy, how we got there and where we're going. And with me to discuss this issue is the economist Michael Hudson, author of Killing the Host: How Financial Parasites and Debt Destroy the Global Economy. A professor of economics who worked for many years on Wall Street, where you don't succeed if you don't grasp Marx's dictum that capitalism is about exploitation. And he is also, I should mention, the godson of Leon Trotsky.

I want to open this discussion by reading a passage from your book, which I admire very much, which I think gets to the core of what you discuss. You write,

"Adam Smith long ago remarked that profits often are highest in nations going fastest to ruin. There are many ways to create economic suicide on a national level. The major way through history has been through indebting the economy. Debt always expands to reach a point where it cannot be paid by a large swathe of the economy. This is the point where austerity is imposed and ownership of wealth polarizes between the One Percent and the 99 Percent. Today is not the first time this has occurred in history. But it is the first time that running into debt has occurred deliberately." Applauded. "As if most debtors can get rich by borrowing, not reduced to a condition of debt peonage."

So let's start with the classical economists, who certainly understood this. They were reacting of course to feudalism. And what happened to the study of economics so that it became gamed by ideologues?

HUDSON: The essence of classical economics was to reform industrial capitalism, to streamline it, and to free the European economies from the legacy of feudalism. The legacy of feudalism was landlords extracting land-rent, and living as a class that took income without producing anything. Also, banks that were not funding industry. The leading industrialists from James Watt, with his steam engine, to the railroads

HEDGES: From your book you make the point that banks almost never funded industry.

HUDSON: That's the point: They never have. By the time you got to Marx later in the 19th century, you had a discussion, largely in Germany, over how to make banks do something they did not do under feudalism. Right now we're having the economic surplus being drained not by the landlords but also by banks and bondholders.

Adam Smith was very much against colonialism because that lead to wars, and wars led to public debt. He said the solution to prevent this financial class of bondholders burdening the economy by imposing more and more taxes on consumer goods every time they went to war was to finance wars on a pay-as-you-go basis. Instead of borrowing, you'd tax the people. Then, he thought, if everybody felt the burden of war in the form of paying taxes, they'd be against it. Well, it took all of the 19th century to fight for democracy and to extend the vote so that instead of landlords controlling Parliament and its law-making and tax system through the House of Lords, you'd extend the vote to labor, to women and everybody. The theory was that society as a whole would vote in its self-interest. It would vote for the 99 Percent, not for the One Percent.

By the time Marx wrote in the 1870s, he could see what was happening in Germany. German banks were trying to make money in conjunction with the government, by lending to heavy industry, largely to the military-industrial complex.

HEDGES: This was Bismarck's kind of social – I don't know what we'd call it. It was a form of capitalist socialism

HUDSON: They called it State Capitalism. There was a long discussion by Engels, saying, wait a minute. We're for Socialism. State Capitalism isn't what we mean by socialism. There are two kinds of state-oriented–.

HEDGES: I'm going to interject that there was a kind of brilliance behind Bismarck's policy because he created state pensions, he provided health benefits, and he directed banking toward industry, toward the industrialization of Germany which, as you point out, was very different in Britain and the United States.

HUDSON: German banking was so successful that by the time World War I broke out, there were discussions in English economic journals worrying that Germany and the Axis powers were going to win because their banks were more suited to fund industry. Without industry you can't have really a military. But British banks only lent for foreign trade and for speculation. Their stock market was a hit-and-run operation. They wanted quick in-and-out profits, while German banks didn't insist that their clients pay as much in dividends. German banks owned stocks as well as bonds, and there was much more of a mutual partnership.

That's what most of the 19th century imagined was going to happen – that the world was on the way to socializing banking. And toward moving capitalism beyond the feudal level, getting rid of the landlord class, getting rid of the rent, getting rid of interest. It was going to be labor and capital, profits and wages, with profits being reinvested in more capital. You'd have an expansion of technology. By the early twentieth century most futurists imagined that we'd be living in a leisure economy by now.

HEDGES: Including Karl Marx.

HUDSON: That's right. A ten-hour workweek. To Marx, socialism was to be an outgrowth of the reformed state of capitalism, as seemed likely at the time – if labor organized in its self-interest.

HEDGES: Isn't what happened in large part because of the defeat of Germany in World War I? But also, because we took the understanding of economists like Adam Smith and maybe Keynes. I don't know who you would blame for this, whether Ricardo or others, but we created a fictitious economic theory to praise a rentier or rent-derived, interest-derived capitalism that countered productive forces within the economy. Perhaps you can address that.

HUDSON: Here's what happened. Marx traumatized classical economics by taking the concepts of Adam Smith and John Stuart Mill and others, and pushing them to their logical conclusion. 2KillingTheHost_Cover_ruleProgressive capitalist advocates – Ricardian socialists such as John Stuart Mill – wanted to tax away the land or nationalize it. Marx wanted governments to take over heavy industry and build infrastructure to provide low-cost and ultimately free basic services. This was traumatizing the landlord class and the One Percent. And they fought back. They wanted to make everything part of "the market," which functioned on credit supplied by them and paid rent to them.

None of the classical economists imagined how the feudal interests – these great vested interests that had all the land and money – actually would fight back and succeed. They thought that the future was going to belong to capital and labor. But by the late 19th century, certainly in America, people like John Bates Clark came out with a completely different theory, rejecting the classical economics of Adam Smith, the Physiocrats and John Stuart Mill.

HEDGES: Physiocrats are, you've tried to explain, the enlightened French economists.

HUDSON: The common denominator among all these classical economists was the distinction between earned income and unearned income. Unearned income was rent and interest. Earned incomes were wages and profits. But John Bates Clark came and said that there's no such thing as unearned income. He said that the landlord actually earns his rent by taking the effort to provide a house and land to renters, while banks provide credit to earn their interest. Every kind of income is thus "earned," and everybody earns their income. So everybody who accumulates wealth, by definition, according to his formulas, get rich by adding to what is now called Gross Domestic Product (GDP).

HEDGES: One of the points you make in Killing the Host which I liked was that in almost all cases, those who had the capacity to make money parasitically off interest and rent had either – if you go back to the origins – looted and seized the land by force, or inherited it.

HUDSON: That's correct. In other words, their income is unearned. The result of this anti-classical revolution you had just before World War I was that today, almost all the economic growth in the last decade has gone to the One Percent. It's gone to Wall Street, to real estate

HEDGES: But you blame this on what you call Junk Economics.

HUDSON: Junk Economics is the anti-classical reaction.

HEDGES: Explain a little bit how, in essence, it's a fictitious form of measuring the economy.

HUDSON: Well, some time ago I went to a bank, a block away from here – a Chase Manhattan bank – and I took out money from the teller. As I turned around and took a few steps, there were two pickpockets. One pushed me over and the other grabbed the money and ran out. The guard stood there and saw it. So I asked for the money back. I said, look, I was robbed in your bank, right inside. And they said, "Well, we don't arm our guards because if they shot someone, the thief could sue us and we don't want that." They gave me an equivalent amount of money back.

Well, imagine if you count all this crime, all the money that's taken, as an addition to GDP. Because now the crook has provided the service of not stabbing me. Or suppose somebody's held up at an ATM machine and the robber says, "Your money or your life." You say, "Okay, here's my money." The crook has given you the choice of your life. In a way that's how the Gross National Product accounts are put up. It's not so different from how Wall Street extracts money from the economy. Then also you have landlords extracting

HEDGES: Let's go back. They're extracting money from the economy by debt peonage. By raising

HUDSON: By not playing a productive role, basically.

HEDGES: Right. So it's credit card interest, mortgage interest, car loans, student loans. That's how they make their funds.

HUDSON: That's right. Money is not a factor of production. But in order to have access to credit, in order to get money, in order to get an education, you have to pay the banks. At New York University here, for instance, they have Citibank. I think Citibank people were on the board of directors at NYU. You get the students, when they come here, to start at the local bank. And once you are in a bank and have monthly funds taken out of your account for electric utilities, or whatever, it's very cumbersome to change.

So basically you have what the classical economists called the rentier class. The class that lives on economic rents. Landlords, monopolists charging more, and the banks. If you have a pharmaceutical company that raises the price of a drug from $12 a shot to $200 all of a sudden, their profits go up. Their increased price for the drug is counted in the national income accounts as if the economy is producing more. So all this presumed economic growth that has all been taken by the One Percent in the last ten years, and people say the economy is growing. But the economy isn't growing

HEDGES: Because it's not reinvested.

HUDSON: That's right. It's not production, it's not consumption. The wealth of the One Percent is obtained essentially by lending money to the 99 Percent and then charging interest on it, and recycling this interest at an exponentially growing rate.

HEDGES: And why is it important, as I think you point out in your book, that economic theory counts this rentier income as productive income? Explain why that's important.

HUDSON: If you're a rentier, you want to say that you earned your income by

HEDGES: We're talking about Goldman Sachs, by the way.

HUDSON: Yes, Goldman Sachs. The head of Goldman Sachs came out and said that Goldman Sachs workers are the most productive in the world. That's why they're paid what they are. The concept of productivity in America is income divided by labor. So if you're Goldman Sachs and you pay yourself $20 million a year in salary and bonuses, you're considered to have added $20 million to GDP, and that's enormously productive. So we're talking in a tautology. We're talking with circular reasoning here.

So the issue is whether Goldman Sachs, Wall Street and predatory pharmaceutical firms, actually add "product" or whether they're just exploiting other people. That's why I used the word parasitism in my book's title. People think of a parasite as simply taking money, taking blood out of a host or taking money out of the economy. But in nature it's much more complicated. The parasite can't simply come in and take something. First of all, it needs to numb the host. It has an enzyme so that the host doesn't realize the parasite's there. And then the parasites have another enzyme that takes over the host's brain. It makes the host imagine that the parasite is part of its own body, actually part of itself and hence to be protected.

That's basically what Wall Street has done. It depicts itself as part of the economy. Not as a wrapping around it, not as external to it, but actually the part that's helping the body grow, and that actually is responsible for most of the growth. But in fact it's the parasite that is taking over the growth.

The result is an inversion of classical economics. It turns Adam Smith upside down. It says what the classical economists said was unproductive – parasitism – actually is the real economy. And that the parasites are labor and industry that get in the way of what the parasite wants – which is to reproduce itself, not help the host, that is, labor and capital.

HEDGES: And then the classical economists like Adam Smith were quite clear that unless that rentier income, you know, the money made by things like hedge funds, was heavily taxed and put back into the economy, the economy would ultimately go into a kind of tailspin. And I think the example of that, which you point out in your book, is what's happened in terms of large corporations with stock dividends and buybacks. And maybe you can explain that.

HUDSON: There's an idea in superficial textbooks and the public media that if companies make a large profit, they make it by being productive. And with

HEDGES: Which is still in textbooks, isn't it?

HUDSON: Yes. And also that if a stock price goes up, you're just capitalizing the profits – and the stock price reflects the productive role of the company. But that's not what's been happening in the last ten years. Just in the last two years, 92 percent of corporate profits in America have been spent either on buying back their own stock, or paid out as dividends to raise the price of the stock.

HEDGES: Explain why they do this.

HUDSON: About 15 years ago at Harvard, Professor Jensen said that the way to ensure that corporations are run most efficiently is to make the managers increase the price of the stock. So if you give the managers stock options, and you pay them not according to how much they're producing or making the company bigger, or expanding production, but the price of the stock, then you'll have the corporation run efficiently, financial style.

So the corporate managers find there are two ways that they can increase the price of the stock. The first thing is to cut back long-term investment, and use the money instead to buy back their own stock. But when you buy your own stock, that means you're not putting the money into capital formation. You're not building new factories. You're not hiring more labor. You can actually increase the stock price by firing labor.

HEDGES: That strategy only works temporarily.

HUDSON: Temporarily. By using the income from past investments just to buy back stock, fire the labor force if you can, and work it more intensively. Pay it out as dividends. That basically is the corporate raider's model. You use the money to pay off the junk bond holders at high interest. And of course, this gets the company in trouble after a while, because there is no new investment.

So markets shrink. You then go to the labor unions and say, gee, this company's near bankruptcy, and we don't want to have to fire you. The way that you can keep your job is if we downgrade your pensions. Instead of giving you what we promised, the defined benefit pension, we'll turn it into a defined contribution plan. You know what you pay every month, but you don't know what's going to come out. Or, you wipe out the pension fund, push it on to the government's Pension Benefit Guarantee Corporation, and use the money that you were going to pay for pensions to pay stock dividends. By then the whole economy is turning down. It's hollowed out. It shrinks and collapses. But by that time the managers will have left the company. They will have taken their bonuses and salaries and run.

HEDGES: I want to read this quote from your book, written by David Harvey, in A Brief History of Neoliberalism, and have you comment on it.

"The main substantive achievement of neoliberalism has been to redistribute rather than to generate wealth and income. [By] 'accumulation by dispossession' I mean the commodification and privatization of land, and the forceful expulsion of peasant populations; conversion of various forms of property rights (common collective state, etc.) into exclusive private property rights; suppression of rights to the commons; colonial, neocolonial, and the imperial processes of appropriation of assets (including natural resources); and usury, the national debt and, most devastating at all, the use of the credit system as a radical means of accumulation by dispossession. To this list of mechanisms, we may now add a raft of techniques such as the extraction of rents from patents, and intellectual property rights (such as the diminution or erasure of various forms of common property rights, such as state pensions, paid vacations, and access to education, health care) one through a generation or more of class struggle. The proposal to privatize all state pension rights, pioneered in Chile under the dictatorship is, for example, one of the cherished objectives of the Republicans in the US."

This explains the denouement. The final end result you speak about in your book is, in essence, allowing what you call the rentier or the speculative class to cannibalize the entire society until it collapses.

HUDSON: A property right is not a factor of production. Look at what happened in Chicago, the city where I grew up. Chicago didn't want to raise taxes on real estate, especially on its expensive commercial real estate. So its budget ran a deficit. They needed money to pay the bondholders, so they sold off the parking rights to have meters – you know, along the curbs. The result is that they sold to Goldman Sachs 75 years of the right to put up parking meters. So now the cost of living and doing business in Chicago is raised by having to pay the parking meters. If Chicago is going to have a parade and block off traffic, it has to pay Goldman Sachs what the firm would have made if the streets wouldn't have been closed off for a parade. All of a sudden it's much more expensive to live in Chicago because of this.

But this added expense of having to pay parking rights to Goldman Sachs – to pay out interest to its bondholders – is counted as an increase in GDP, because you've created more product simply by charging more. If you sell off a road, a government or local road, and you put up a toll booth and make it into a toll road, all of a sudden GDP goes up.

If you go to war abroad, and you spend more money on the military-industrial complex, all this is counted as increased production. None of this is really part of the production system of the capital and labor building more factories and producing more things that people need to live and do business. All of this is overhead. But there's no distinction between wealth and overhead.

Failing to draw that distinction means that the host doesn't realize that there is a parasite there. The host economy, the industrial economy, doesn't realize what the industrialists realized in the 19th century: If you want to be an efficient economy and be low-priced and under-sell competitors, you have to cut your prices by having the public sector provide roads freely. Medical care freely. Education freely.

If you charge for all of these, you get to the point that the U.S. economy is in today. What if American factory workers were to get all of their consumer goods for nothing. All their food, transportation, clothing, furniture, everything for nothing. They still couldn't compete with Asians or other producers, because they have to pay up to 43% of their income for rent or mortgage interest, 10% or more of their income for student loans, credit card debt. 15% of their paycheck is automatic withholding to pay Social Security, to cut taxes on the rich or to pay for medical care.

So Americans built into the economy all this overhead. There's no distinction between growth and overhead. It's all made America so high-priced that we're priced out of the market, regardless of what trade policy we have.

HEDGES: We should add that under this predatory form of economics, you game the system. So you privatize pension funds, you force them into the stock market, an overinflated stock market. But because of the way companies go public, it's the hedge fund managers who profit. And it's those citizens whose retirement savings are tied to the stock market who lose. Maybe we can just conclude by talking about how the system is fixed, not only in terms of burdening the citizen with debt peonage, but by forcing them into the market to fleece them again.

HUDSON: Well, we talk about an innovation economy as if that makes money. Suppose you have an innovation and a company goes public. They go to Goldman Sachs and other Wall Street investment banks to underwrite the stock to issue it at $40 a share. What's considered a successful float is when, immediately, Goldman and the others will go to their insiders and tell them to buy this stock and make a quick killing. A "successful" flotation doubles the price in one day, so that at the end of the day the stock's selling for $80.

HEDGES: They have the option to buy it before anyone else, knowing that by the end of the day it'll be inflated, and then they sell it off.

HUDSON: That's exactly right.

HEDGES: So the pension funds come in and buy it at an inflated price, and then it goes back down.

HUDSON: It may go back down, or it may be that the company just was shortchanged from the very beginning. The important thing is that the Wall Street underwriting firm, and the speculators it rounds up, get more in a single day than all the years it took to put the company together. The company gets $40. And the banks and their crony speculators also get $40.

So basically you have the financial sector ending up with much more of the gains. The name of the game if you're on Wall Street isn't profits. It's capital gains. And that's something that wasn't even part of classical economics. They didn't anticipate that the price of assets would go up for any other reason than earning more money and capitalizing on income. But what you have had in the last 50 years – really since World War II – has been asset-price inflation. Most middle-class families have gotten the wealth that they've got since 1945 not really by saving what they've earned by working, but by the price of their house going up. They've benefited by the price of the house. And they think that that's made them rich and the whole economy rich.

The reason the price of housing has gone up is that a house is worth whatever a bank is going to lend against it. If banks made easier and easier credit, lower down payments, then you're going to have a financial bubble. And now, you have real estate having gone up as high as it can. I don't think it can take more than 43% of somebody's income to buy it. But now, imagine if you're joining the labor force. You're not going to be able to buy a house at today's prices, putting down a little bit of your money, and then somehow end up getting rich just on the house investment. All of this money you pay the bank is now going to be subtracted from the amount of money that you have available to spend on goods and services.

So we've turned the post-war economy that made America prosperous and rich inside out. Somehow most people believed they could get rich by going into debt to borrow assets that were going to rise in price. But you can't get rich, ultimately, by going into debt. In the end the creditors always win. That's why every society since Sumer and Babylonia have had to either cancel the debts, or you come to a society like Rome that didn't cancel the debts, and then you have a dark age. Everything collapses.

[Dec 05, 2016] A Protectionist Moment?

Notable quotes:
"... Furthermore, as Mark Kleiman sagely observes , the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other. ..."
Sep 12, 2016 | economistsview.typepad.com
Paul Krugman:
A Protectionist Moment? : ... if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. ...

But it's also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics ( protectionism causes depressions !), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that...

Furthermore, as Mark Kleiman sagely observes , the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.

Ripping up the trade agreements we already have would, again, be a mess, and I would say that Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump might actually do it, but only as part of a reign of destruction on many fronts.

But it is fair to say that the case for more trade agreements - including TPP, which hasn't happened yet - is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things.

cawley : , Thursday, March 10, 2016 at 03:47 AM
Again, just because automation has been a major factor in job loss doesn't mean "off shoring" (using the term broadly and perhaps somewhat inaccurately) is not a factor.

The "free" trade deals suck. They are correctly diagnosed as part of the problem.

What would you propose to fix the problems caused by automation?

jonny bakho -> cawley... , Thursday, March 10, 2016 at 04:25 AM
Automation frees labor to do more productive and less onerous tasks. We should expand our solar production and our mass transit. We need to start re-engineering our urban areas. This will not bring back the number of jobs it would take to make cities like Flint thrive once again.

Flint and Detroit have severe economic problems because they were mismanaged by road building and suburbanization in the 1950s and 1960s. Money that should have been spent on maintaining and improving urban infrastructure was instead plowed into suburban development that is not dense enough to sustain the infrastructure required to support it. People moved to the suburbs, abandoned the built infrastructure of the cities and kissed them goodbye.

Big roads polluted the cities with lead, noise, diesel particles and ozone and smog. Stroads created pedestrian kill zones making urban areas, unwalkable, unpleasant- an urban blights to drive through rather than destinations to drive to.

Government subsidized the white flight to the suburbs that has left both the suburbs and the urban cores with too low revenue to infrastructure ratio. The inner suburbs have aged into net losers, their infrastructure must be subsidized. Big Roads were built on the Big Idea that people would drive to the city to work and play and then drive home. That Big idea has a big problem. Urban areas are only sustainable when they have a high resident density. The future of cities like Flint and Detroit will be tearing out the roads and replacing them with streets and houses and renewing the housing stock that has been abandoned. It needs to be done by infill, revitalizing inner neighborhoods and working outward. Cities like Portland have managed to protect much of their core, but even they are challenged by demands for suburban sprawl.

Slash and burn development, creating new suburbs and abandoning the old is not a sustainable model. Not only should we put people to work replacing the Flint lead pipes, but much of the city should be rebuilt from the inside out. Flint is the leading edge of this problem that requires fundamental changes in our built environment to fix. I recommend studying Flint as an object lesson of what bad development policy could do to all of our cities.

http://www.flintexpats.com

jonny bakho -> jonny bakho... , Thursday, March 10, 2016 at 04:29 AM
An Interview with Frank Popper about Shrinking Cities, Buffalo Commons, and the Future of Flint

How does America's approach shrinking cities compare to the rest of the world?

I think the American way is to do nothing until it's too late, then throw everything at it and improvise and hope everything works. And somehow, insofar as the country's still here, it has worked. But the European or the Japanese way would involve much more thought, much more foresight, much more central planning, and much less improvising. They would implement a more, shall we say, sustained effort. The American way is different. Europeans have wondered for years and years why cities like Detroit or Cleveland are left to rot on the vine. There's a lot of this French hauteur when they ask "How'd you let this happen?"

Do shrinking cities have any advantages over agricultural regions as they face declining populations?

The urban areas have this huge advantage over all these larger American regions that are going through this. They have actual governments with real jurisdiction. Corrupt as Detroit or Philadelphia or Camden may be, they have actual governments that are supposed to be in charge of them. Who's in charge of western Kansas? Who's in charge of the Great Plains? Who is in charge of the lower Mississippi Delta or central Appalachia? All they've got are these distant federal agencies whose past performance is not exactly encouraging.

Why wasn't there a greater outcry as the agricultural economy and the industrial economy collapsed?

One reason for the rest of the country not to care is that there's no shortage of the consumer goods that these places once produced. All this decline of agriculture doesn't mean we're running out of food. We've got food coming out of our ears. Likewise, Flint has suffered through all this, but it's not like it's hard to buy a car in this country. It's not as if Flint can behave like a child and say "I'm going to hold my nose and stop you from getting cars until you do the right thing." Flint died and you can get zero A.P.R. financing. Western Kansas is on its last legs and, gee, cereal is cheaper than ever.

In some sense that's the genius of capitalism - it's heartless. But if you look at the local results and the cultural results and the environmental results you shake your head. But I don't see America getting away from what I would call a little sarcastically the "wisdom" of the market. I don't think it's going to change.

So is there any large-scale economic fallout from these monumental changes?

Probably not, and it hurts to say so. And the only way I can feel good about saying that is to immediately point to the non-economic losses, the cultural losses. The losses of ways of life. The notion of the factory worker working for his or her children. The notion of the farmer working to build up the country and supply the rest of the world with food. We're losing distinctive ways of life. When we lose that we lose something important, but it's not like The Wall Street Journal cares. And I feel uncomfortable saying that. From a purely economic point of view, it's just the price of getting more efficient. It's a classic example of Schumpeter's theory of creative destruction, which is no fun if you're on the destruction end.

Does the decline of cities like Flint mirror the death of the middle class in the United States?

I think it's more the decline of the lower-middle class in the United States. Even when those jobs in the auto factories paid very high wages they were still for socially lower-middle-class people. I think there was always the notion in immigrant families and working-class families who worked in those situations that the current generation would work hard so that the children could go off and not have to do those kind of jobs. And when those jobs paid well that was a perfectly reasonable ambition. It's the cutting off of that ambition that really hurts now. The same thing has been true on farms and ranches in rural parts of the united states.

http://www.flintexpats.com/2010/05/interview-with-frank-popper-about.html

RC AKA Darryl, Ron said in reply to jonny bakho... , Thursday, March 10, 2016 at 04:45 AM
It is a much different thing to be small minded about trade than it is to be large minded about everything else. The short story that it is all about automation and not trade will always get a bad reception because it is small minded. When you add in the large minded story about everything else then it becomes something entirely different from the short story. We all agree with you about everything else. You are wrong about globalization though. Both financialization and globalization suck and even if we paper over them with tax and transfer then they will still suck. One must forget what it is to be a created equal human to miss that. Have you never felt the job of accomplishment? Does not pride and self-confidence matter in your life?
RC AKA Darryl, Ron said in reply to RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 06:11 AM
"Have you never felt the joY of accomplishment?"

[Apparently I have "jobs" on the mind even though I no longer have one nor need one in the least.]

ken melvin -> jonny bakho... , Thursday, March 10, 2016 at 04:49 AM
America's first course of action is denial; then, we pretend that things are different than the seem a lot.
RC AKA Darryl, Ron said in reply to ken melvin... , Thursday, March 10, 2016 at 05:39 AM
Priceless!
DrDick -> jonny bakho... , Thursday, March 10, 2016 at 08:52 AM
While automation is part of the story, offshoring is just as important. Even when there is not net loss in the numbers of jobs in aggregate, there is significant loss in better paying jobs in manufacturing. It is important to look at the distributional effects within countries, as well as between them

http://www.statisticbrain.com/outsourcing-statistics-by-country/

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=12&ved=0ahUKEwjj9OK1xrbLAhUG92MKHbveBAgQFghhMAs&url=https%3A%2F%2Fwww.wto.org%2Fenglish%2Fres_e%2Fbooksp_e%2Fglob_soc_sus_e_chap1_e.pdf&usg=AFQjCNHRBtLPlhJsKMg5PfxSlUIgOsFuwA&cad=rja

https://www.americanprogress.org/issues/economy/news/2014/07/30/94864/offshoring-work-is-taking-a-toll-on-the-u-s-economy/

Julio -> cawley... , Thursday, March 10, 2016 at 08:24 AM
"off shoring"

[The trending term is "tossing it over the Wall".]

Chris G : , Thursday, March 10, 2016 at 03:58 AM
Legislatively, what would it take to withdraw from the WTO? NAFTA? Other trade agreements?
RC AKA Darryl, Ron said in reply to Chris G ... , Thursday, March 10, 2016 at 04:52 AM
It would probably be cheaper and easier to just fix them. We don't need to withdraw from trade. We just need to fix the terms of trade that cause large trade deficits and cross border capital flows and also fix the FOREX system rigging.
JohnH -> Chris G ... , Thursday, March 10, 2016 at 08:10 AM
What would it take to ignore trade agreements? They shouldn't be any more difficult to ignore than the Geneva Conventions, which the US routinely flaunts.
Richard A. : , Thursday, March 10, 2016 at 04:30 AM
In order to import we must export and in order to export we must import. The two are tied together. Suppressing imports means we export less.

What free trade does is lower the price level relative to wages. It doesn't uniformly lower the price level but rather lowers the cost of goods that are capable of being traded internationally. It lowers the price on those goods that are disproportionately purchased by those with low incomes.

Free trade causes a progressive decline in the price level while protectionism causes a regressive increase in the price level.

RC AKA Darryl, Ron said in reply to Richard A.... , Thursday, March 10, 2016 at 04:56 AM
Are you saying that free trade lowers the cost of rice in India and China and raises the cost of cell phones and autos in the US?
pgl -> RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 05:48 AM
Funny rebuttal! Bhagwati probably has a model that says the opposite! But then he grew up in India and should one day get a Nobel Prize for his contributions to international economics.
pgl -> Richard A.... , Thursday, March 10, 2016 at 05:47 AM
"What free trade does is lower the price level relative to wages."

Which price? Whose wages? Look up Stopler-Samuelson ... a 1941 classic which I suspect Greg Mankiw has never bothered to learn.

Tom aka Rusty said in reply to Richard A.... , Thursday, March 10, 2016 at 06:54 AM
People don't need good wages, they can buy cheap Chinese stuff at WalMart.
JohnH -> Richard A.... , Thursday, March 10, 2016 at 08:14 AM
"In order to import we must export and in order to export we must import." One would think. However, experience shows that that's not the case.

Capital flows from overseas investments help balance the books. When that doesn't work, the US simply prints money to be held by foreign CBs.

ken melvin : , Thursday, March 10, 2016 at 04:53 AM
Our media needs to copy France 24, ... and have real debates about real issues. What we get is along the lines of ignoring the problem then attacking any effort to correct. for example, the media stayed away from the healthcare crisis, too complicated, but damn they are good at criticizing.
JohnH -> ken melvin... , Thursday, March 10, 2016 at 08:16 AM
France 24 promotes neocon-style jingoism...even worse than Big Media in America.

I hope they're better on domestic social policy.

Tom Palley : , Thursday, March 10, 2016 at 05:08 AM
A seriously shameful article. Krugman has been a booster of trade & globalization for 30 years: marginally more nuanced than the establishment, but still a booster.

Now, the establishment has what it wanted and the effects have been disastrous for those not in the top 20 percent of the income distribution.

At this stage, comes insult to injury. Establishment economists (like Mr. Krugman) can reinvent themselves with "brilliant new studies" showing the costs and damage of globalization. They pay no professional costs for the grievous injuries inflicted; there is no mention of the fact that critical outsider economists have been predicting and writing about these injuries and were right; and they blithely say we must stay the course because we are locked-in and have few options.

Forgive me while I puke.

RC AKA Darryl, Ron said in reply to Tom Palley ... , Thursday, March 10, 2016 at 05:44 AM
Bless you my son.

I don't think that they think that we weebles have memories.

Peter K. -> RC AKA Darryl, Ron... , Thursday, March 10, 2016 at 06:13 AM
"I don't think that they think that we weebles have memories."

They insult our intelligence and wonder why people get mad.

pgl -> Tom Palley ... , Thursday, March 10, 2016 at 05:51 AM
Krugman is not Greg Mankiw. Most people who actually get international economics (Mankiw does not) are not of the free trade benefits all types. Paul Samuelson certainly does not buy into Mankiw's spin. Funny thing - Mankiw recently cited an excellent piece from Samuelson only to dishonestly suggest Samuelson did not believe in what he wrote.
Peter K. -> pgl... , Thursday, March 10, 2016 at 06:12 AM
Why are we talking about Mankiw? You can't move the goalposts.
pgl -> Peter K.... , Thursday, March 10, 2016 at 06:40 AM
Why are you mischaracterizing what Krugman has written? That's my point. Oh wait - you misrepresent what people write so you can "win" a "debate". Never mind. Please proceed with the serial dishonesty.
Peter K. -> pgl... , Thursday, March 10, 2016 at 08:55 AM
"The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't."

As Dean Baker says, we need to confront Walmart and Goldman Sachs at home, who like these policies, more than the Chinese.

The Chinese want access to our consumer market. They'd also like if we did't invade countries like Iraq.

"so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't"

And what is that? Tear up trade deals? It is Krugman who is engaging in straw man arguments.

DrDick -> pgl... , Thursday, March 10, 2016 at 09:02 AM
Krugman does indeed misrepresent Sanders' positions on trade. Sander is not against trade, he merely insists on *Fair Trade*, which incorporates human rights and environmental protections. His opposition is to the kinds of deals, like NAFTA and TPP, which effectively gut those (a central element in Kruman's own critique of the latter).
DrDick -> pgl... , Thursday, March 10, 2016 at 08:56 AM
Krugman has definitely backed off his (much) earlier boosterism and publicly said so. This is an excellent piece by him, though it does rather downplay his earlier stances a bit. This is one of the things I especially like about him.
Dan Kervick -> Tom Palley ... , Thursday, March 10, 2016 at 06:11 AM
I can get the idea that some people win, some people lose from liberalized trade. But what really bugs me about the neoliberal trade agenda is that it has been part of a larger set of economically conservative, laissez faire policies that have exacerbated the damages from trade rather than offsetting them.

At the same time they were exposing US workers to greater competition from abroad and destroying and offshoring working class jobs via both trade and liberalized capital flows, the neoliberals were also doing things like "reinventing government" - that is, shrinking structural government spending and public investment - and ending welfare. They have done nothing serious about steering capital and job development efforts toward the communities devastated by the liberalization.

The neoliberal position has seem to come down to "We can't make bourgeois progress without breaking a few working class eggs."

pgl -> Dan Kervick... , Thursday, March 10, 2016 at 06:41 AM
I guess I'm not a neoliberal. Neither is Dani Rodrik. Nor is Paul Krugman.
Dan Kervick -> pgl... , Thursday, March 10, 2016 at 07:50 AM
What does Dani Rodrik have to do with the above comments?
pgl -> Dan Kervick... , Thursday, March 10, 2016 at 08:51 AM
Read his 1997 book. Excellent stuff.
Julio -> Dan Kervick... , Thursday, March 10, 2016 at 08:38 AM
Great points, and a good line too.
JohnH -> Tom Palley ... , Thursday, March 10, 2016 at 08:22 AM
Agreed! "Krugman has been a booster of trade & globalization for 30 years: marginally more nuanced than the establishment, but still a booster.'

Now he claims that he saw the light all along! "much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that..."

You would be hard pressed to find any Krugman clips that cited any of those problems in the past. Far from being an impartial economist, he was always an avid booster of free trade, overlooking those very downsides that he suddenly decides to confess.

Dan Kervick : , Thursday, March 10, 2016 at 05:11 AM
As far as I know, Sanders has not proposed ripping up the existing trade deals. His information page on trade emphasizes (i) his opposition to these deals when they were first negotiated and enacted, and (ii) the principles he will apply to the consideration of future trade deals. Much of his argumentation concerning past deals is put forward to motivate his present opposition to TPP.

http://feelthebern.org/bernie-sanders-on-trade/

So Krugman's point about how difficult it would be diplomatically to "rip up" the existing trade deals seems like a red herring.

Dan Kervick -> Dan Kervick... , Thursday, March 10, 2016 at 05:29 AM
Note also that Sanders connects his discussion of the harms of past trade policy to the Rebuild America Act. That is, his approach is forward facing. We can't undo most of the past damage by recreating the old working class economy we wrecked, but we can be aggressive about using government-directed national investment programs to create new, high-paying jobs in the US.
jonny bakho -> Dan Kervick... , Thursday, March 10, 2016 at 06:16 AM
You could have said the same about the 1920s
We can't undo most of the past damage by recreating the old agrarian class economy we wrecked, but we can be aggressive about using government-directed national investment programs to create new, high-paying jobs in the US.

The march of progress:
Mechanization of agriculture with displacement of large numbers of Ag workers.
The rise of factory work and large numbers employed in manufacturing.
Automation of Manufacturing with large displacement of workers engaged in manufacturing.
What do we want our workers to do? This question must be answered at the highest level of society and requires much government facilitation. The absence of government facilitation is THE problem.

Dan Kervick -> jonny bakho... , Thursday, March 10, 2016 at 06:23 AM
Completely agree. Countries need economic strategies that go beyond, "let the markets sort it all out."
RC AKA Darryl, Ron said in reply to Dan Kervick... , Thursday, March 10, 2016 at 05:47 AM
"...So Krugman's point about how difficult it would be diplomatically to "rip up" the existing trade deals seems like a red herring."

[Win one for the kipper.]

pgl -> Dan Kervick... , Thursday, March 10, 2016 at 05:52 AM
Memo to Paul Krugman - lead with the economics and stay with the economics. His need to get into the dirty business of politics dilutes what he ends up sensibly writes later on.
Peter K. -> pgl... , Thursday, March 10, 2016 at 08:56 AM
""The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't."
Chatham -> Dan Kervick... , Thursday, March 10, 2016 at 09:36 AM
Yeah, it's pretty dishonest for Krugman to pretend that Sanders' position is "ripping up the trade agreements we already have" and then say Sanders is "engaged in a bit of a scam" because he can't do that. Sanders actual position (trying to stop new trade deals like the TPP) is something the president has a lot of influence over (they can veto the deal). Hard to tell what Krugman is doing here other than deliberately spreading misinformation.

Also worth noting that he decides to compare Sanders' opposition to trade deals with Trump, and ignore the fact that Clinton has come out against the TPP as well .

anne : , Thursday, March 10, 2016 at 05:26 AM
http://krugman.blogs.nytimes.com/2016/03/09/a-protectionist-moment/

March 9, 2016

A Protectionist Moment?
By Paul Krugman

Busy with real life, but yes, I know what happened in the primaries yesterday. Triumph for Trump, and big upset for Sanders - although it's still very hard to see how he can catch Clinton. Anyway, a few thoughts, not about the horserace but about some deeper currents.

The Sanders win defied all the polls, and nobody really knows why. But a widespread guess is that his attacks on trade agreements resonated with a broader audience than his attacks on Wall Street; and this message was especially powerful in Michigan, the former auto superpower. And while I hate attempts to claim symmetry between the parties - Trump is trying to become America's Mussolini, Sanders at worst America's Michael Foot * - Trump has been tilling some of the same ground. So here's the question: is the backlash against globalization finally getting real political traction?

You do want to be careful about announcing a political moment, given how many such proclamations turn out to be ludicrous. Remember the libertarian moment? The reformocon moment? Still, a protectionist backlash, like an immigration backlash, is one of those things where the puzzle has been how long it was in coming. And maybe the time is now.

The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious. In this, as in many other things, Sanders currently benefits from the luxury of irresponsibility: he's never been anywhere close to the levers of power, so he could take principled-sounding but arguably feckless stances in a way that Clinton couldn't and can't.

But it's also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions! ** ), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict. I hope, by the way, that I haven't done any of that; I think I've always been clear that the gains from globalization aren't all that (here's a back-of-the-envelope on the gains from hyperglobalization *** - only part of which can be attributed to policy - that is less than 5 percent of world GDP over a generation); and I think I've never assumed away the income distribution effects.

Furthermore, as Mark Kleiman sagely observes, **** the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins - but we now have an ideology utterly opposed to such redistribution in full control of one party, and with blocking power against anything but a minor move in that direction by the other.

So the elite case for ever-freer trade is largely a scam, which voters probably sense even if they don't know exactly what form it's taking.

Ripping up the trade agreements we already have would, again, be a mess, and I would say that Sanders is engaged in a bit of a scam himself in even hinting that he could do such a thing. Trump might actually do it, but only as part of a reign of destruction on many fronts.

But it is fair to say that the case for more trade agreements - including Trans-Pacific Partnership, which hasn't happened yet - is very, very weak. And if a progressive makes it to the White House, she should devote no political capital whatsoever to such things.

* https://en.wikipedia.org/wiki/Michael_Foot

** http://krugman.blogs.nytimes.com/2016/03/04/the-mitt-hawley-fallacy/

*** http://krugman.blogs.nytimes.com/2013/10/01/the-gains-from-hyperglobalization-wonkish/

**** http://www.washingtonmonthly.com/ten-miles-square/2016/03/trade_trump_and_downward_class059814.php

anne -> anne... , Thursday, March 10, 2016 at 05:26 AM
https://en.wikipedia.org/wiki/Michael_Foot

Michael Mackintosh Foot (1913 – 2010) was a British Labour Party politician and man of letters who was a Member of Parliament (MP) from 1945 to 1955 and from 1960 until 1992. He was Deputy Leader of the Labour Party from 1976 to 1980, and later the Leader of the Labour Party and Leader of the Opposition from 1980 to 1983.

Associated with the left of the Labour Party for most of his career, Foot was an ardent supporter of the Campaign for Nuclear Disarmament and British withdrawal from the European Economic Community. He was appointed to the Cabinet as Secretary of State for Employment under Harold Wilson in 1974, and he later served as Leader of the House of Commons under James Callaghan. A passionate orator, he led Labour through the 1983 general election, when the party obtained its lowest share of the vote at a general election since 1918 and the fewest parliamentary seats it had had at any time since before 1945.

pgl -> anne... , Thursday, March 10, 2016 at 05:53 AM
Foot sounds like he was a good leader of the Labour Party.
anne -> anne... , Thursday, March 10, 2016 at 05:27 AM
http://krugman.blogs.nytimes.com/2016/03/04/the-mitt-hawley-fallacy/

March 4, 2016

The Mitt-Hawley Fallacy
By Paul Krugman

There was so much wrong with Mitt Romney's Trump-is-a-disaster-whom-I-will-support-in-the-general * speech that it may seem odd to call him out for bad international macroeconomics. But this is a pet peeve of mine, in an area where I really, truly know what I'm talking about. So here goes.

In warning about Trumponomics, Romney declared:

"If Donald Trump's plans were ever implemented, the country would sink into prolonged recession. A few examples. His proposed 35 percent tariff-like penalties would instigate a trade war and that would raise prices for consumers, kill our export jobs and lead entrepreneurs and businesses of all stripes to flee America."

After all, doesn't everyone know that protectionism causes recessions? Actually, no. There are reasons to be against protectionism, but that's not one of them.

Think about the arithmetic (which has a well-known liberal bias). Total final spending on domestically produced goods and services is

Total domestic spending + Exports – Imports = GDP

Now suppose we have a trade war. This will cut exports, which other things equal depresses the economy. But it will also cut imports, which other things equal is expansionary. For the world as a whole, the cuts in exports and imports will by definition be equal, so as far as world demand is concerned, trade wars are a wash.

OK, I'm sure some people will start shouting "Krugman says protectionism does no harm." But no: protectionism in general should reduce efficiency, and hence the economy's potential output. But that's not at all the same as saying that it causes recessions.

But didn't the Smoot-Hawley tariff cause the Great Depression? No. There's no evidence at all that it did. Yes, trade fell a lot between 1929 and 1933, but that was almost entirely a consequence of the Depression, not a cause. (Trade actually fell faster ** during the early stages of the 2008 Great Recession than it did after 1929.) And while trade barriers were higher in the 1930s than before, this was partly a response to the Depression, partly a consequence of deflation, which made specific tariffs (i.e. tariffs that are stated in dollars per unit, not as a percentage of value) loom larger.

Again, not the thing most people will remember about Romney's speech. But, you know, protectionism was the only reason he gave for believing that Trump would cause a recession, which I think is kind of telling: the GOP's supposedly well-informed, responsible adult, trying to save the party, can't get basic economics right at the one place where economics is central to his argument.

* http://www.nytimes.com/2016/03/04/us/politics/mitt-romney-speech.html

** http://www.voxeu.org/article/tale-two-depressions-what-do-new-data-tell-us-february-2010-update

anne -> anne... , Thursday, March 10, 2016 at 05:28 AM
http://krugman.blogs.nytimes.com/2013/10/01/the-gains-from-hyperglobalization-wonkish/

October 1, 2013

The Gains From Hyperglobalization (Wonkish)
By Paul Krugman

Still taking kind of an emotional vacation from current political madness. Following up on my skeptical post on worries about slowing trade growth, * I wondered what a state-of-the-art model would say.

The natural model to use, at least for me, is Eaton-Kortum, ** which is a very ingenious approach to thinking about multilateral trade flows. The basic model is Ricardian - wine and cloth and labor productivity and all that - except that there are many goods and many countries, transportation costs, and countries are assumed to gain productivity in any particular industry through a random process. They make some funny assumptions about distributions - hey, that's kind of the price of entry for this kind of work - and in return get a tractable model that yields gravity-type equations for international trade flows. This is a good thing, because gravity models *** of trade - purely empirical exercises, with no real theory behind them - are known to work pretty well.

Their model also yields a simple expression for the welfare gains from trade:

Real income = A*(1-import share)^(-1/theta)

where A is national productivity and theta is a parameter of their assumed random process (don't ask); they suggest that theta=4 provides the best match to available data.

Now, what I wanted to do was apply this to the rapid growth of trade that has taken place since around 1990, what Subramanian **** calls "hyperglobalization". According to Subramanian's estimates, overall trade in goods and services has risen from about 19 percent of world GDP in the early 1990s to 33 percent now, bringing us to a level of integration that really is historically unprecedented.

There are some conceptual difficulties with using this rise directly in the Eaton-Kortum framework, because much of it has taken the form of trade in intermediate goods, and the framework isn't designed to handle that. Still, let me ignore that, and plug Subramanian's numbers into the equation above; I get a 4.9 percent rise in real incomes due to increased globalization.

That's by no means small change, but it's only a fairly small fraction of global growth. The Maddison database ***** gives us a 45 percent rise in global GDP per capita over the same period, so this calculation suggests that rising trade was responsible for around 10 percent of overall global growth. My guess is that most people who imagine themselves well-informed would give a bigger number.

By the way, for those critical of globalization, let me hasten to concede that by its nature the Eaton-Kortum model doesn't let us talk about income distribution, and it also makes no room for the possible role of globalization in causing secular stagnation. ******

Still, I thought this was an interesting calculation to make - which may show more about my warped sense of what's interesting than it does about anything else.

* http://krugman.blogs.nytimes.com/2013/09/30/should-slowing-trade-growth-worry-us/

** http://www.nber.org/papers/w11764

*** https://en.wikipedia.org/wiki/Gravity_model_of_trade

**** http://www.gcf.ch/wp-content/uploads/2013/06/GCF_Subramanian-working-paper-3_-6.17.13.pdf

***** http://www.ggdc.net/maddison/maddison-project/home.htm

****** http://krugman.blogs.nytimes.com/2013/09/26/trade-and-secular-stagnation/

anne -> anne... , Thursday, March 10, 2016 at 05:46 AM
http://www.nber.org/papers/w11764

November, 2005

General Equilibrium Analysis of the Eaton-Kortum Model of International Trade
By Fernando Alvarez and Robert E. Lucas

We study a variation of the Eaton-Kortum model, a competitive, constant-returns-to-scale multicountry Ricardian model of trade. We establish existence and uniqueness of an equilibrium with balanced trade where each country imposes an import tariff. We analyze the determinants of the cross-country distribution of trade volumes, such as size, tariffs and distance, and compare a calibrated version of the model with data for the largest 60 economies. We use the calibrated model to estimate the gains of a world-wide trade elimination of tariffs, using the theory to explain the magnitude of the gains as well as the differential effect arising from cross-country differences in pre-liberalization of tariffs levels and country size.

anne -> anne... , Thursday, March 10, 2016 at 05:46 AM
https://en.wikipedia.org/wiki/Gravity_model_of_trade

The gravity model of international trade in international economics, similar to other gravity models in social science, predicts bilateral trade flows based on the economic sizes (often using GDP measurements) and distance between two units. The model was first used by Jan Tinbergen in 1962.

anne -> anne... , Thursday, March 10, 2016 at 05:47 AM
http://www.gcf.ch/wp-content/uploads/2013/06/GCF_Subramanian-working-paper-3_-6.17.13.pdf

June, 2013

The Hyperglobalization of Trade and Its Future
By Arvind Subramanian and Martin Kessler

Abstract

The open, rules-based trading system has delivered immense benefits-for the world, for individual countries, and for average citizens in these countries. It can continue to do so, helping today's low-income countries make the transition to middle-income status. Three challenges must be met to preserve this system. Rich countries must sustain the social consensus in favor of open markets and globalization at a time of considerable economic uncertainty and weakness; China and other middle-income countries must remain open; and mega-regionalism must be prevented from leading to discrimination and trade conflicts. Collective action should help strengthen the institutional underpinnings of globalization. The world should move beyond the Doha Round dead to more meaningful multilateral negotiations to address emerging challenges, including possible threats from new mega-regional agreements. The rising powers, especially China, will have a key role to play in resuscitating multilateralism.

anne -> anne... , Thursday, March 10, 2016 at 05:56 AM
Real income = A*(1-import share)^(-1/theta)

[ Help! What does this mean in words? ]

Peter K. : , Thursday, March 10, 2016 at 05:37 AM
"Furthermore, as Mark Kleiman sagely observes, the conventional case for trade liberalization relies on the assertion that the government could redistribute income to ensure that everyone wins"

That was never the conventional case for trade. Plus it's kind of odd that you have to add "plus have the government redistribute" to the case your making.

Tom Pally above is correct. Krugman has been on the wrong side of this issue. He's gotten better, but the timing is he's gotten better as the Democratic Party has moved to the left and pushed back against corporate trade deals. Even Hillary came out late against Obama's TPP.

Sanders has nothing about ripping up trade deals. He has said he won't do any more.

As cawley predicted, once Sanders won Michigan, Krugman started hitting him again at his blog. With cheap shots I might add. He's ruining his brand.

Peter K. -> Peter K.... , Thursday, March 10, 2016 at 05:41 AM
'A Protectionist Moment?'

So for Krugman, no doing corporate trade deals means you're "protectionist?"

It's a fair trade moment. As Dean Baker points out, corporate trade deals are protectionist:

http://cepr.net/blogs/beat-the-press/tell-morning-edition-it-s-not-free-trade-folks

Tell Morning Edition: It's Not "Free Trade" Folks
by Dean Baker
Published: 10 March 2016

Hey, can an experienced doctor from Germany show up and start practicing in New York next week? Since the answer is no, we can say that we don't have free trade. It's not an immigration issue, if the doctor wants to work in a restaurant kitchen, she would probably get away with it. We have protectionist measures that limit the number of foreign doctors in order to keep their pay high. These protectionist measures have actually been strengthened in the last two decades.

We also have strengthened patent and copyright protections, making drugs and other affected items far more expensive. These protections are also forms of protectionism.

This is why Morning Edition seriously misled its listeners in an interview with ice cream barons Ben Cohen and Jerry Greenfield over their support of Senator Bernie Sanders. The interviewer repeatedly referred to "free trade" agreements and Sanders' opposition to them. While these deals are all called "free trade" deals to make them sound more palatable ("selective protectionism to redistribute income upward" doesn't sound very appealing), that doesn't mean they are actually about free trade. Morning Edition should not have used the term employed by promoters to push their trade agenda.

pgl -> Peter K.... , Thursday, March 10, 2016 at 05:57 AM
This has been Dean Baker's excellent theme for a very long time. And if you actually paid attention to what Krugman said about TPP - he agreed with Dean's excellent points. But do continue to set up straw man arguments so you can dishonestly attack Krugman.
Peter K. -> pgl... , Thursday, March 10, 2016 at 06:06 AM
Some of us have memories. Like Tom Palley up above.
pgl -> Peter K.... , Thursday, March 10, 2016 at 06:42 AM
Memories of things Krugman never wrote. In other words, very faulty memories.
Julio -> pgl... , Thursday, March 10, 2016 at 09:07 AM
No. That is not a sign of a faulty memory, quite the contrary.

Krugman writes column after column praising trade pacts and criticizing (rightly, I might add) the yahoos who object for the wrong reasons.
But he omits a few salient facts like
- the gains are small,
- the government MUST intervene with redistribution for this to work socially,
- there are no (or minimal) provisions for that requirement in the pacts.

I would say his omissions speak volumes and are worth remembering.

Syaloch -> pgl... , Thursday, March 10, 2016 at 11:51 AM
Krugman initially wrote a confused column about the TPP, treating it as a simple free trade deal which he said would have little impact because tariffs were already so low. But he did eventually look into the matter further and wound up agreeing with Baker's take.
pgl -> Peter K.... , Thursday, March 10, 2016 at 05:56 AM
"That was never the conventional case for trade". Actually it was. Of course Greg Mankiw never got the memo so his free trade benefits all BS confuses a lot of people. Mankiw sucks at international trade.
Peter K. -> pgl... , Thursday, March 10, 2016 at 06:11 AM
Actually it wasn't. I remember what Krugman and others wrote at the time about NAFTA and the WTO.

https://uneasymoney com/2016/03/06/krugman-suffers-a-memory-lapse/

David Glasner attacks Krugman from the right, but he doesn't whitewash the past as you do. He remembers Gore versus Perot:

"Indeed, Romney didn't even mention the Smoot-Hawley tariff, but Krugman evidently forgot the classic exchange between Al Gore and the previous incarnation of protectionist populist outrage in an anti-establishment billionaire candidate for President:

GORE I've heard Mr. Perot say in the past that, as the carpenters says, measure twice and cut once. We've measured twice on this. We have had a test of our theory and we've had a test of his theory. Over the last five years, Mexico's tariffs have begun to come down because they've made a unilateral decision to bring them down some, and as a result there has been a surge of exports from the United States into Mexico, creating an additional 400,000 jobs, and we can create hundreds of thousands of more if we continue this trend. We know this works. If it doesn't work, you know, we give six months notice and we're out of it. But we've also had a test of his theory.

PEROT When?

GORE In 1930, when the proposal by Mr. Smoot and Mr. Hawley was to raise tariffs across the board to protect our workers. And I brought some pictures, too.

[Larry] KING You're saying Ross is a protectionist?

GORE This is, this is a picture of Mr. Smoot and Mr. Hawley. They look like pretty good fellows. They sounded reasonable at the time; a lot of people believed them. The Congress passed the Smoot-Hawley Protection Bill. He wants to raise tariffs on Mexico. They raised tariffs, and it was one of the principal causes, many economists say the principal cause, of the Great Depression in this country and around the world. Now, I framed this so you can put it on your wall if you want to.

You can watch it here*

* https://uneasymoney com/2016/02/17/competitive-devaluation-plus-monetary-expansion-does-create-a-free-lunch/

jonny bakho -> Peter K.... , Thursday, March 10, 2016 at 06:26 AM
You obviously have not read Krugman. Here is from his 1997 Slate piece:

But putting Greenspan (or his successor) into the picture restores much of the classical vision of the macroeconomy. Instead of an invisible hand pushing the economy toward full employment in some unspecified long run, we have the visible hand of the Fed pushing us toward its estimate of the noninflationary unemployment rate over the course of two or three years. To accomplish this, the board must raise or lower interest rates to bring savings and investment at that target unemployment rate in line with each other.

And so all the paradoxes of thrift, widow's cruses, and so on become irrelevant. In particular, an increase in the savings rate will translate into higher investment after all, because the Fed will make sure that it does.

To me, at least, the idea that changes in demand will normally be offset by Fed policy--so that they will, on average, have no effect on employment--seems both simple and entirely reasonable. Yet it is clear that very few people outside the world of academic economics think about things that way. For example, the debate over the North American Free Trade Agreement was conducted almost entirely in terms of supposed job creation or destruction. The obvious (to me) point that the average unemployment rate over the next 10 years will be what the Fed wants it to be, regardless of the U.S.-Mexico trade balance, never made it into the public consciousness. (In fact, when I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA advocate, as it happens--exploded in rage: "It's remarks like that that make people hate economists!")

http://www.slate.com/articles/business/the_dismal_science/1996/10/economic_culture_wars.html

pgl -> jonny bakho... , Thursday, March 10, 2016 at 06:44 AM
Yes. But please do not interrupt PeterK with reality. He has important work do with his bash all things Krugman agenda. BTW - it is a riot that he cites Ross Perot on NAFTA. Perot has a self centered agenda there which Gore exposed. Never trust a corrupt business person whether it is Perot or Trump.
Peter K. -> pgl... , Thursday, March 10, 2016 at 07:42 AM
Did you read what Al Gore said? He said nothing about the government redistributing the gains from NAFTA?
Peter K. -> pgl... , Thursday, March 10, 2016 at 07:44 AM
"But please do not interrupt PeterK with reality."

We are talking about the reality of Krugman's past support for free trade agreements.

You can't rewrite the past.

jonny bakho -> pgl... , Thursday, March 10, 2016 at 07:47 AM
Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of the issues. He seems to think that Sanders is a font of economic wisdom who is not to be questioned. I would hate to see the left try to make a flawed candidate into the larger than life icon that the GOP has made out of Reagan.
Peter K. -> jonny bakho... , Thursday, March 10, 2016 at 09:15 AM
"Yes the model PeterK is using is unclear. He doesn't seem to have a grasp on the economics of the issues."

Dean Baker and Jared Bernstein. Like you I want full employment and rising wages. And like Krugman I am very much an internationalist. I want us to deal fairly with the rest of the world. We need to cooperate especially in the face of global warming.

1. My first, best solution would be fiscal action. Like everyone else. I prefer Sanders's unicorn plan of $1 trillion over five years rather than Hillary's plan which is one quarter of the size. Her plan puts more pressure on the Fed and monetary policy.

a. My preference would be to pay for it with Pigouvian taxes on the rich, corporations, and the financial sector.

b. if not a, then deficit spending like Trudeau in Canada

C. if the deficit hawks block that, then monetary-financing would be the way around them.

2. close the trade deficit. Dean Baker and Bernstein have written about this a lot. Write currency agreements into trade deals. If we close the trade deficit and are at full employment, then we can import more from the rest of the world.

3. If powerful interests block 1. and 2. then lean on monetary policy. Reduce the price of credit to boost demand. It works as a last resort.

"I would hate to see the left try to make a flawed candidate into the larger than life icon that the GOP has made out of Reagan.'

I haven't seen any evidence of this. It would be funny if the left made an old Jewish codger from Brooklyn into an icon. Feel the Bern!!!

Sanders regularly points out it's not about him as President fixing everything, it's about creating a movement. It's about getting people involved. He can't do it by himself. Obama would say this too. Elizabeth Warren become popular by saying the same things Sanders is saying.

Syaloch -> jonny bakho... , Thursday, March 10, 2016 at 12:19 PM
The Compensation Principle certainly is part of standard Heckscher-Ohlin trade model, you can find it in any textbook:

http://internationalecon.com/Trade/Tch60/T60-13.php

However to say that the conventional case for trade liberalization relies on the Compensation Principle isn't quite accurate. The conventional case has traditionally relied on the assertion that "we" are better off with trade since we could *theoretically* distribute the gains. However, free trade boosters never seem to get around to worrying about distributing the gains *in practice*. In practice, free trade is typically justified simply by the net aggregate gain, regardless of how these gains are distributed or who is hurt in the process.

To my mind, before considering some trade liberalization deal we should FIRST agree to and implement the redistribution mechanisms and only then reduce barriers. Implementing trade deals in a backward, half-assed way as has typically been the case often makes "us" worse off than autarky.

Peter K. -> jonny bakho... , Thursday, March 10, 2016 at 07:43 AM
From Krugman's wikipedia article:

"Krugman has at times advocated free markets in contexts where they are often viewed as controversial. He has ... likened the opposition against free trade and globalization to the opposition against evolution via natural selection (1996),[167]

167 167 http://web.mit.edu/krugman/www/ricardo.htm

"Ricardo's difficult idea". Web.mit.edu. 1996. Retrieved 2011-10-04.

pgl -> Peter K.... , Thursday, March 10, 2016 at 07:48 AM
Wikipedia. Now there is an unimpeachable source!
Peter K. -> pgl... , Thursday, March 10, 2016 at 09:17 AM
what's your alternative?
Julio -> jonny bakho... , Thursday, March 10, 2016 at 09:10 AM
(In fact, when I made that argument at one panel discussion in 1993, a fellow panelist--a NAFTA advocate, as it happens--exploded in rage: "It's remarks like that that make people hate economists!")

[Thanks to electoral politics, we're all fellow panelists now.]

Peter K. -> Julio ... , Thursday, March 10, 2016 at 09:20 AM
"To me, at least, the idea that changes in demand will normally be offset by Fed policy--so that they will, on average, have no effect on employment--seems both simple and entirely reasonable. Yet it is clear that very few people outside the world of academic economics think about things that way."

As we've seen the Fed is overly fearful of inflation, so the Fed doesn't offset the trade deficit as quickly as it should. Instead we suffer hysteresis and reduction of potential output.

Peter K. : , Thursday, March 10, 2016 at 06:04 AM
"The truth is that if Sanders were to make it to the White House, he would find it very hard to do anything much about globalization - not because it's technically or economically impossible, but because the moment he looked into actually tearing up existing trade agreements the diplomatic, foreign-policy costs would be overwhelmingly obvious."

Here Krugman is more honest. We're basically buying off the Chinese, etc. The cost for stopping this would be less cooperation from the Chinese, etc.

This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites.

pgl -> Peter K.... , Thursday, March 10, 2016 at 06:09 AM
"This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites."

You have Krugman confused with Greg Mankiw. Most real international economics (Mankiw is not one) recognize the distributional consequences of free trade v. protectionism. Then again - putting forth the Mankiw uninformed spin is a prerequisite for being on Team Republican. Of course Republicans will go protectionist whenever it is politically expedient as in that temporary set of steel tariffs. Helped Bush-Cheney in 2004 and right after that - no tariffs. Funny how that worked.

Peter K. -> pgl... , Thursday, March 10, 2016 at 06:20 AM
"Most real international economics (Mankiw is not one) recognize the distributional consequences of free trade v. protectionism."

Obama and others don't defend the TPP that way. Krugman and Hillary don't support the TPP but only because the politics has shifted since the 1990s.

If Krugman wrote today as he did in the 1990s, he'd completely ruin his brand as liberal economist.

Peter K. -> Peter K.... , Thursday, March 10, 2016 at 06:22 AM
Where is the "redistribution from government" in the TPP. There isn't any.

Even the NAFTA side agreements on labor and the environment are toothless. The point of these corporate trade deals is to profit from the lower labor and environmental standards of poorer countries.

pgl -> Peter K.... , Thursday, March 10, 2016 at 06:46 AM
And where did I say TPP was a good thing? I have slammed TPP. And I never said NAFTA included this compensation thing. Nor did Mark Kleiman.

But do continue to misrepresent what I and others have said. It is what you do.

pgl -> Peter K.... , Thursday, March 10, 2016 at 06:12 AM
Hat tip to my Econospeak colleague Sandwichman for noting this from Krugman:

http://econospeak.blogspot.com/2013/06/paul-krugmans-sympathy-for-luddites.html

Mark Thoma also noted this sympathy for the Luddites. But the professional Krugman haters have to deny he would write such things.

Peter K. -> pgl... , Thursday, March 10, 2016 at 06:17 AM
The fact that you resort to calling me a professional Krugman hater means you're not interested in an actual debate about actual ideas. You've lost the debate and I'm not participating.

One is not allowed to criticize Krugman lest one be labeled a professional Krugman hater?

Your resort to name calling just weakens the case you're making.

pgl -> Peter K.... , Thursday, March 10, 2016 at 06:47 AM
You of late have wasted so much space misrepresenting what Krugman has said. Maybe you don't hate him - maybe you just want to get his attention. For a date maybe. Lord - the troll in you is truly out of control.
Peter K. -> pgl... , Thursday, March 10, 2016 at 07:29 AM
I have not misrepresented what Krugman has said.
pgl -> Peter K.... , Thursday, March 10, 2016 at 07:49 AM
Who wrote?

"This is new. He never used to say this kind of thing. Instead he'd go after "protectionists" as luddites."

Did you even bother to read that link to what the Sandwichman posted? Didn't think so.

Peter K. -> pgl... , Thursday, March 10, 2016 at 09:23 AM
Sandwichman's quote is from 2013. I'm talking about before that and especially in the 1990s.

Sandwichman says the quote is notable because Krugman has changed his views. That proves my point.

Did you read it?

pgl -> Peter K.... , Thursday, March 10, 2016 at 10:34 AM
Sandwichman may think Krugman changed his views but if one actually read what he has written over the years (as opposed to your cherry picking quotes), you might have noticed otherwise. But of course you want Krugman to look bad. It is what you do.
Syaloch -> pgl... , Thursday, March 10, 2016 at 12:31 PM
Krugman's views have evolved quite a bit over the years. Can you envision today's Krugman singing the praises of cheap labor?

http://www.pkarchive.org/trade/smokey.htm

In Praise of Cheap Labor (1997)

Peter K. -> pgl... , Thursday, March 10, 2016 at 09:25 AM
Only recently he has begun to say that trade deals are part of diplomacy, like we're giving these countries something in order for them to cooperate.

If we didn't do these trade deals, these countries would cooperate less.

Peter K. -> Peter K.... , -1
It's a legitimate point.

[Dec 05, 2016] The conditions that produced and enabled Trump are the Democratic Party betrayal or working classes, especially its transformation into another wing of neoliberal party of the USA under Clinton. People now view a vote for Hillary as a vote for more of the same - increasing disparity in wealth and income.

Sizeable numbers of Americans have seen wages decline in real terms for nearly 20 years. Many/most parents in many communities do not see a better future before them, or for their children.
Notable quotes:
"... Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule. ..."
"... I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money. ..."
"... My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income. ..."
"... Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. ..."
"... For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations. ..."
"... Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope. ..."
Aug 02, 2016 | crookedtimber.org

Glenn 08.02.16 at 5:01 pm

@William Meyer 08.02.16 at 4:41 pm

Legislators affiliated with the duopoly parties should not write the rules governing the ballot access of third parties. This exclusionary rule making amounts to preserving a self-dealing duopoly. Elections are the interest of the people who vote and those elected should not be able to subvert the democratic process by acting as a cartel.

Democracy demands that ballot access rules be selected by referendum, not by the very legacy parties that maintain legislative control by effectively denying ballot access to parties that will pose a challenge to their continued rule.

Of course any meaningful change would require a voluntary diminishment of power of the duopoly that now has dictatorial control over ballot access, and who will prevent any Constitutional Amendment that would enhance the democratic nature of the process.

bruce wilder 08.02.16 at 8:02 pm

I think the U.S. Party system, in the political science sense, shifted to a new state during George W Bush's administration as, in Kevin Phillip's terms the Republican Party was taken over by Theocrats and Bad Money.

Ronan(rf) 08.04.16 at 10:35 pm

"I generally don't give a shit about polls so I have no "data" to evidence this claim, but my guess is the majority of Trump's support comes from this broad middle"

My understanding is trumps support disproportionately comes from the small business owning classes, Ie a demographic similar to the petite bourgeoisie who have often been heavily involved in reactionary movements. This gets oversold as "working class" when class is defined by education level rather than income.

This would make some sense as they are generally in economically unstable jobs, they tend to be hostile to both big govt (regulations, freeloaders) and big business (unfair competition), and while they (rhetorically at least) tend to value personal autonomy and self sufficiency , they generally sell into smaller, local markets, and so are particularly affected by local demographic and cultural change , and decline. That's my speculation anyway.

bruce wilder 08.06.16 at 4:28 pm

I am somewhat suspicious of leaving dominating elites out of these stories of racism as an organizing principle for political economy or (cultural) community.

Racism served the purposes of a slaveholding elite that organized political communities to serve their own interests. (Or, vis a vis the Indians a land-grab or genocide.)

Racism serves as an organizing principle. Politically, in an oppressive and stultifying hierarchy like the plantation South, racism not incidentally buys the loyalty of subalterns with ersatz status. The ugly prejudices and resentful arrogance of working class whites is thus a component of how racism works to organize a political community to serve a hegemonic master class. The business end of racism, though, is the autarkic poverty imposed on the working communities: slaves, sharecroppers, poor blacks, poor whites - bad schools, bad roads, politically disabled communities, predatory institutions and authoritarian governments.

For a time, the balkanization of American political communities by race, religion and ethnicity was an effective means to the dominance of an tiny elite with ties to an hegemonic community, but it backfired. Dismantling that balkanization has left the country with a very low level of social affiliation and thus a low capacity to organize resistance to elite depredations.

bruce wilder 08.06.16 at 4:31 pm

Watching Clinton scoop up bankster money, welcome Republicans neocons to the ranks of her supporters does not fill me with hope.

[Dec 05, 2016] Trump and the Transformation of Politics

Notable quotes:
"... Journal of Democracy ..."
"... John Feffer is the director of Foreign Policy In Focus. ..."
Sep 04, 2016 | fpif.org
Trump and the other illiberal populists have been benefiting from three overlapping backlashes.

The first is cultural. Movements for civil liberties have been remarkably successful over the last 40 years. Women, ethnic and religious minorities, and the LGBTQ community have secured important gains at a legal and cultural level. It is remarkable, for instance, how quickly same-sex marriage has become legal in more than 20 countries when no country recognized it before 2001.

Resistance has always existed to these movements to expand the realm of civil liberties. But this backlash increasingly has a political face. Thus the rise of parties that challenge multiculturalism and immigration in Europe, the movements throughout Africa and Asia that support the majority over the minorities, and the Trump/Tea Party takeover of the Republican Party with their appeals to primarily white men.

The second backlash is economic. The globalization of the economy has created a class of enormously wealthy individuals (in the financial, technology, and communications sectors). But globalization has left behind huge numbers of low-wage workers and those who have watched their jobs relocate to other countries.

Illiberal populists have directed all that anger on the part of people left behind by the world economy at a series of targets: bankers who make billions, corporations that are constantly looking for even lower-wage workers, immigrants who "take away our jobs," and sometimes ethnic minorities who function as convenient scapegoats. The targets, in other words, include both the very powerful and the very weak.

The third backlash, and perhaps the most consequential, is political. It's not just that people living in democracies are disgusted with their leaders and the parties they represent. Rather, as political scientists Roberto Stefan Foa and Yascha Mounk write in the Journal of Democracy , "they have also become more cynical about the value of democracy as a political system, less hopeful that anything they do might influence public policy, and more willing to express support for authoritarian alternatives."

Foa and Mounk are using 20 years of data collected from surveys of citizens in Western Europe and North America – the democracies with the greatest longevity. And they have found that support for illiberal alternatives is greater among the younger generation than the older one. In other countries outside Europe and North America, the disillusionment with democratic institutions often takes the form of a preference for a powerful leader who can break the rules if necessary to preserve order and stability – like Putin in Russia or Abdel Fattah el-Sisi in Egypt or Prayuth Chan-ocha in Thailand.

These three backlashes – cultural, economic, political – are also anti-internationalist because international institutions have become associated with the promotion of civil liberties and human rights, the greater globalization of the economy, and the constraint of the sovereignty of nations (for instance, through the European Union or the UN's "responsibility to protect" doctrine).

... ... ....

The current political order is coming apart. If we don't come up with a fair, Green, and internationalist alternative, the illiberal populists will keep winning. John Feffer is the director of Foreign Policy In Focus.

[Dec 05, 2016] The most powerful force in Presidential election 2016 is the sense of betrayal pervading our politics, especially among Democratic electorate

Notable quotes:
"... if neo-liberalism is partly defined by the free flow of goods, labor and capital - and that has been the Republican agenda since at least Reagan - how is Trump a continuation of the same tradition?" ..."
"... Trump is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal. ..."
"... Trump is too incoherent to really represent the populist view. He's consistent w/the trade and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc. ..."
"... But the next populists we see might be more full bore. When that happens, you'll see much more overlap w/Sanders economic plans for the middle class. ..."
"... There's always tension along the lead running between the politician and his constituents. The thing that seems most salient to me at the present moment is the sense of betrayal pervading our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan also speak to elite failure, as well as betrayal. ..."
"... Trump is a novelty act. He represents a chance for people who feel resentful without knowing much of anything about anything to cast a middle-finger vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing and distressing. ..."
"... There's also the fact Reagan tapped a fair number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running against him, and taking the party in a much more hard-right direction, sure. But he was repudiated largely because he got caught doing dirty tricks with his pants down. ..."
"... From what I can tell - the 1972 election gave the centrists in the democratic party power to discredit and marginalize the anti-war left, and with it, the left in general. ..."
"... Ready even now to whine that she's a victim and that the whole community is at fault and that people are picking on her because she's a woman, rather than because she has a habit of making accusations like this every time she comments. ..."
"... That is a perfect example of predatory "solidarity". Val is looking for dupes to support her ..."
Aug 12, 2016 | crookedtimber.org
Rich Puchalsky 08.12.16 at 4:15 pm 683
"Once again, if neo-liberalism is partly defined by the free flow of goods, labor and capital - and that has been the Republican agenda since at least Reagan - how is Trump a continuation of the same tradition?"

You have to be willing to see neoliberalism as something different from conservatism to have the answer make any sense. John Quiggin has written a good deal here about a model of U.S. politics as being divided into left, neoliberal, and conservative. Trump is a conservative (or right populist, or whatever), and draws on that tradition. He's not a neoliberal.

... ... ...

T 08.12.16 at 5:52 pm

RP @683

That's a bit of my point. I think Corey has defined the Republican tradition solely in response to the Southern Strategy that sees a line from Nixon (or Goldwater) to Trump. But that gets the economics wrong and the foreign policy too - the repub foreign policy view has not been consistent across administrations and Trump's economic pans (to the extent he has a plan) are antithetical to the Nixon – W tradition. I have viewed post-80 Dem administrations as neoliberals w/transfers and Repub as neoliberals w/o transfers.

Trump is too incoherent to really represent the populist view. He's consistent w/the trade and immigration views but (assuming you can actually figure him out) wrong on banks, taxes, etc.

But the next populists we see might be more full bore. When that happens, you'll see much more overlap w/Sanders economic plans for the middle class. Populists have nothing against gov't programs like SS and Medicare and were always for things like the TVA and infrastructure spending. Policies aimed at the poor and minorities not so much.

bruce wilder 08.12.16 at 7:47 pm 689

T @ 685: Trump is too incoherent to really represent the populist view.

There's always tension along the lead running between the politician and his constituents. The thing that seems most salient to me at the present moment is the sense of betrayal pervading our politics. At least since the GFC of 2008, it has been hard to deny that the two Parties worked together to set up an economic betrayal. And, the long-running saga of the wars in Iraq and Afghanistan also speak to elite failure, as well as betrayal.

These are the two most unpopular candidates in living memory. That is different.

I am not a believer in "the fire next time". Trump is a novelty act. He represents a chance for people who feel resentful without knowing much of anything about anything to cast a middle-finger vote. They wouldn't be willing to do that, if times were really bad, instead of just disappointing and distressing.

Nor will Sanders be back. His was a last New Deal coda. There may be second acts in American life, but there aren't 7th acts.

If there's a populist politics in our future, it will have to have a much sharper edge. It can talk about growth, but it has to mean smashing the rich and taking their stuff. There's very rapidly going to come a point where there's no other option, other than just accepting cramdown by the authoritarian surveillance state built by the neoliberals. that's a much taller order than Sanders or Trump have been offering.<

Michael Sullivan 08.12.16 at 8:06 pm 690

Corey, you write: "It's not just that the Dems went after Nixon, it's also that Nixon had so few allies. People on the right were furious with him because they felt after this huge ratification that the country had moved to the right, Nixon was still governing as if the New Deal were the consensus. So when the time came, he had very few defenders, except for loyalists like Leonard Garment and G. Gordon Liddy. And Al Haig, God bless him."

You've studied this more than I have, but this is at least somewhat at odds with my memory. I recall some prominent attackers of Nixon from the Republican party that were moderates, at least one of whom was essentially kicked out of the party for being too liberal in later years. There's also the fact Reagan tapped a fair number of Nixon people, as did W years later. Reagan went after Nixon in the sense of running against him, and taking the party in a much more hard-right direction, sure. But he was repudiated largely because he got caught doing dirty tricks with his pants down.

To think that something similar would happen to Clinton (watergate like scandal) that would actually have a large portion of the left in support of impeachment, she would have to be as dirty as Nixon was, *and* the evidence to really put the screws to her would have to be out, as it was against Nixon during watergate.

OTOH, my actual *hope* would be that a similar left-liberal sea change comparable to 1980 from the right would be plausible. I don't think a 1976-like interlude is plausible though, that would require the existence of a moderate republican with enough support within their own party to win the nomination. I suppose its possible that such a beast could come to exist if Trump loses a landslide, but most of the plausible candidates have already left or been kicked out of the party.

From what I can tell - the 1972 election gave the centrists in the democratic party power to discredit and marginalize the anti-war left, and with it, the left in general. A comparable election from the other side would give republican centrists/moderates the ability to discredit and marginalize the right wing base. But unlike Democrats in 1972, there aren't any moderates left in the Republican party by my lights. I'm much more concerned that this will simply re-empower the hard-core conservatives with plausbly-deniable dog-whistle racism who are now the "moderates", and enable them to whitewash their history.

Unfortunately, unlike you, I'm not convinced that a landslide is possible without an appeal to Reagan/Bush republicans. I don't think we're going to see a meaningful turn toward a real left until Democrats can win a majority of statehouses and clean up the ridiculous gerrymandering.

Rich Puchalsky 08.12.16 at 9:18 pm

Val: "Similarly with your comments on "identity politics" where you could almost be seen by MRAs and white supremacists as an ally, from the tone of your rhetoric."

That is 100% perfect Val. Insinuates that BW is a sort-of-ally of white supremacists - an infuriating insinuation. Does this insinuation based on a misreading of what he wrote. Completely resistant to any sort of suggestion that what she dishes out so expansively to others had better be something she should be willing to accept herself, or that she shouldn't do it. Ready even now to whine that she's a victim and that the whole community is at fault and that people are picking on her because she's a woman, rather than because she has a habit of making accusations like this every time she comments.

That is a perfect example of predatory "solidarity". Val is looking for dupes to support her - for people to jump in saying "Why are you being hostile to women?" in response to people's response to her comment.

[Dec 05, 2016] Yes, the System Is Rigged

Notable quotes:
"... More than a dozen Republican rivals, described as the strongest GOP field since 1980, were sent packing. This was the year Americans rose up to pull down the establishment in a peaceful storming of the American Bastille. ..."
"... If 2016 taught us anything, it is that if the establishment's hegemony is imperiled, it will come together in ferocious solidarity - for the preservation of their perks, privileges and power. All the elements of that establishment - corporate, cultural, political, media - are today issuing an ultimatum to Middle America: Trump is unacceptable. Instructions are going out to Republican leaders that either they dump Trump, or they will cease to be seen as morally fit partners in power. ..."
"... Our CIA, NGOs and National Endowment for Democracy all beaver away for "regime change" in faraway lands whose rulers displease us. How do we effect "regime change" here at home? ..."
"... Donald Trump's success, despite the near-universal hostility of the media, even much of the conservative media, was due in large part to the public's response to the issues he raised. ..."
Aug 12, 2016 | www.theamericanconservative.com

"I'm afraid the election is going to be rigged," Donald Trump told voters in Ohio and Sean Hannity on Fox News. And that hit a nerve.

"Dangerous," "toxic," came the recoil from the media.

Trump is threatening to "delegitimize" the election results of 2016.

Well, if that is what Trump is trying to do, he has no small point. For consider what 2016 promised and what it appears about to deliver.

This longest of election cycles has rightly been called the Year of the Outsider. It was a year that saw a mighty surge of economic populism and patriotism, a year when a 74-year-old Socialist senator set primaries ablaze with mammoth crowds that dwarfed those of Hillary Clinton.

It was the year that a non-politician, Donald Trump, swept Republican primaries in an historic turnout, with his nearest rival an ostracized maverick in his own Republican caucus, Senator Ted Cruz.

More than a dozen Republican rivals, described as the strongest GOP field since 1980, were sent packing. This was the year Americans rose up to pull down the establishment in a peaceful storming of the American Bastille.

But if it ends with a Clintonite restoration and a ratification of the same old Beltway policies, would that not suggest there is something fraudulent about American democracy, something rotten in the state?

If 2016 taught us anything, it is that if the establishment's hegemony is imperiled, it will come together in ferocious solidarity - for the preservation of their perks, privileges and power. All the elements of that establishment - corporate, cultural, political, media - are today issuing an ultimatum to Middle America: Trump is unacceptable. Instructions are going out to Republican leaders that either they dump Trump, or they will cease to be seen as morally fit partners in power.

It testifies to the character of Republican elites that some are seeking ways to carry out these instructions, though this would mean invalidating and aborting the democratic process that produced Trump.

But what is a repudiated establishment doing issuing orders to anyone?

Why is it not Middle America issuing the demands, rather than the other way around?

Specifically, the Republican electorate should tell its discredited and rejected ruling class: If we cannot get rid of you at the ballot box, then tell us how, peacefully and democratically, we can be rid of you?

You want Trump out? How do we get you out? The Czechs had their Prague Spring. The Tunisians and Egyptians their Arab Spring. When do we have our American Spring? The Brits had their "Brexit," and declared independence of an arrogant superstate in Brussels. How do we liberate ourselves from a Beltway superstate that is more powerful and resistant to democratic change?

Our CIA, NGOs and National Endowment for Democracy all beaver away for "regime change" in faraway lands whose rulers displease us. How do we effect "regime change" here at home?

Donald Trump's success, despite the near-universal hostility of the media, even much of the conservative media, was due in large part to the public's response to the issues he raised.

By campaign's end, he had won the argument on trade, as Hillary Clinton was agreeing on TPP and confessing to second thoughts on NAFTA.

But if TPP is revived at the insistence of the oligarchs of Wall Street, the Business Roundtable, the U.S. Chamber of Commerce - backed by conscript editorial writers for newspapers that rely on ad dollars - what do elections really mean anymore?

And if, as the polls show we might, we get Clinton - and TPP, and amnesty, and endless migrations of Third World peoples who consume more tax dollars than they generate, and who will soon swamp the Republicans' coalition - what was 2016 all about?

Would this really be what a majority of Americans voted for in this most exciting of presidential races?

"Those who make peaceful revolution impossible will make violent revolution inevitable," said John F. Kennedy.

The 1960s and early 1970s were a time of social revolution in America, and President Nixon, by ending the draft and ending the Vietnam war, presided over what one columnist called the "cooling of America."

But if Hillary Clinton takes power, and continues America on her present course, which a majority of Americans rejected in the primaries, there is going to be a bad moon rising.

And the new protesters in the streets will not be overprivileged children from Ivy League campuses.

Patrick J. Buchanan is a founding editor of The American Conservative and the author of book The Greatest Comeback: How Richard Nixon Rose From Defeat to Create the New Majority .

[Dec 05, 2016] Neoliberalism has only exacerbated falling living standards

Notable quotes:
"... the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder. ..."
"... the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources. ..."
Aug 07, 2016 | www.nakedcapitalism.com
Sally Snyder , August 5, 2016 at 11:57 am

Here is an article that explains the key reason why economic growth will be slow for the foreseeable future:

http://viableopposition.blogspot.ca/2016/08/the-baby-bust-and-its-impact-on.html

No matter what central banks do, their actions will not be able to create the same level of economic growth that we have become used to over the past seven decades.

JEHR , August 5, 2016 at 12:57 pm

Economic growth does not come from the central banks; if government sought to provide the basics for all its citizens, including health care, education, a home, and proper food and all the infrastructure needed to give people the basics, then you could have something akin to "growth" while at the same time making life more pleasant for the less fortunate. There seems to be no definition of economic growth that includes everyone.

David , August 5, 2016 at 1:25 pm

This seems a very elaborate way of stating a simple problem, that can be summarised in three points.

And that's about it.

jgordon , August 5, 2016 at 8:10 pm

Neoliberalism has only exacerbated falling living standards. Living standards would be falling even without it, albeit more gradually.

Neoliberalism itself may even be nothing more than a standard type response of species that have expanded beyond the capacity of their environment to support them. What we see as an evil ideology is only the expression of a mechanism that apportions declining resources to the elites, like shutting shutting down the periphery so the core can survive as in hypothermia.

I Lost at Jeopardy , August 5, 2016 at 6:57 pm

I really don't have problem with this. Let the financial sector run the world into the ground and get it over with.

In defference to a great many knowledgable commentors here that work in the FIRE sector, I don't want to create a damning screed on the cost of servicing money, but at some point even the most considered opinions have to acknowledge that that finance is flooded with *talent* which creates a number of problems; one being a waste of intellect and education in a field that doesn't offer much of a return when viewed in an egalitarian sense, secondly; as the field grows due to, the technical advances, the rise in globilization, and the security a financial occuptaion offers in an advanced first world country nowadays, it requires substantially more income to be devoted to it's function.

This income has to be derived somewhere, and the required sacrifices on every facet of a global economy to bolster positions and maintain asset prices has precipitated this decline in the well being of peoples not plugged-in to the consumer capitalist regime and dogma.

Something has to give here, and I honestly couldn't care about your 401k or home resale value, you did this to yourself as much as those day-traders who got clobbered in the dot-com crash.

nothing but the truth , August 6, 2016 at 11:46 am

the capitalist economy is more and more an asset driven one. This article does not even begin to address the issue of asset valuations, the explicit CB support for asset inflation and the effect on inequality, and especially generational plunder.

the problem of living standards is obviously a Malthusian one. despite all the progress of social media tricks, we cannot fool nature. the rate of ecological degradation is alarming, and now irreversible. "the market" is now moving rapidly to real assets. This will eventually lead to war as all war is eventually for resources.

[Dec 04, 2016] Oil is facing 3 different scenarios RBC

Blast from the past...
Notable quotes:
"... RBC Capital Markets' Global Head of Commodity Strategy Helima Croft outlined three potential scenarios for WTI crude on CNBC's "Fast Money" for the new year. The most bullish situation would be seeing more than a million barrels of oil pulled off the market and prices averaging in the $60 dollar range. ..."
"... "If you are thinking about sort of about a mid-$30s average for WTI, low-$40s, I think that's a bearish scenario," said Croft, who's also a CNBC contributor. ..."
"... "Our base case is this sort of middle range... $52 is our WTI call for next year," she said, implying that U.S. crude would be nearly one-third higher than its current trading levels. The fourth quarter "is really where you want to be looking for WTI to sort of take-off," she added. ..."
Dec 30, 2015 | www.cnbc.com

RBC Capital Markets' Global Head of Commodity Strategy Helima Croft outlined three potential scenarios for WTI crude on CNBC's "Fast Money" for the new year. The most bullish situation would be seeing more than a million barrels of oil pulled off the market and prices averaging in the $60 dollar range.

The worst case scenario involves a tsunami of new production from OPEC, Saudi Arabia, Iran and Libya hitting the market -- all but certain to drive prices even lower. On Thursday, the final day of trading before the Christmas holiday, Brent and U.S. crude closed up by more than a percent, but still well under $40 per barrel.

"If you are thinking about sort of about a mid-$30s average for WTI, low-$40s, I think that's a bearish scenario," said Croft, who's also a CNBC contributor.

... ... ....

"Our base case is this sort of middle range... $52 is our WTI call for next year," she said, implying that U.S. crude would be nearly one-third higher than its current trading levels. The fourth quarter "is really where you want to be looking for WTI to sort of take-off," she added.

[Dec 04, 2016] Who Owns the US Post Office

An interesting case study into privatization of one of the essential services. Quote "The state of the Postal Service is an almost perfect reflection of the state of American society. The postal network is an integral part of America's infrastructure, and like much of that infrastructure, the network is crumbling - partly from a lack of political will but more from a cynical individualism that masks the ascendance of narrow and elite economic interests."
Notable quotes:
"... Nothing which tends to facilitate the intercourse between the states can be deemed unworthy of the public care ..."
"... The PRA coincided with a time in American history when thinking was changing, moving away from the broadly inclusive economics of the New Deal towards a model of unadulterated self-interest that sought to privatize gains while undermining public goods and leaving losses to be socialized. ..."
"... It was the time of the Powell memo , a brief by future Supreme Court justice Lewis Powell arguing that corporate America needed to actively take control of our political systems and our public dialogue in order to further its interests. ..."
"... a world where moral choices are squeezed out in favor of an ethic that puts a price on everything and makes everything for sale: consumerism not as a means to raise living standards but as a religion unto itself. ..."
"... preferential rates for periodicals and non-profits. ..."
"... although it did little to acknowledge the public's large investment in the system or the fact that the postal network served as infrastructure and therefore had a much wider impact and benefit to the general public. ..."
"... For example, there don't seem to have been any appointments who had a background in labor. ..."
"... The PRC does have a function for addressing rate and service complaints on its website, but in many if not most cases these complaints are simply forwarded to the Postal Service for resolution. ..."
"... At this point, there are really no mechanisms in place to attend to the broader public interest. ..."
"... The state of the Postal Service is an almost perfect reflection of the state of American society. The postal network is an integral part of America's infrastructure, and like much of that infrastructure, the network is crumbling - partly from a lack of political will but more from a cynical individualism that masks the ascendance of narrow and elite economic interests. ..."
"... There's no doubt that we are migrating to a more electronic based world although there are still 80 billion pieces of first class mail, ..."
"... There remains a value to print based journalism. Winston's job in 1984 is rewriting the news. Funny how the internet makes it possible to reinvent news and eliminate information. The internet is not an entirely positive technology and benefits from the redundancy of print. ..."
"... Why, because hard copy advertising seems to work. The scions of capitalism elicit some of the hardest shrieks when their use of the network is threatened. But I'll endorse almost any idea that reduces our move towards a marketing society. ..."
Mar 19, 2015 | Angry Bear

Guest Post by MARK JAMISON at Save The Post Office

Who owns the post office? Who is the post office designed to serve? What is the system's ultimate function?

These questions are fundamental to the future and the fate of the post office, the postal network, and postal services in this country. How we answer them will have a significant impact on businesses, workers, and communities.

We know the Constitution instructs - or more accurately, permits - Congress to make arrangements for post offices and post roads. That is a good indication that the Founders sawpostal services and the infrastructure that supported them as broadly essential to the nation - nation in their reckoning being the sum of the people.

But Congress has abdicated its responsibilities. It no longer functions as a deliberative body and has become increasingly ineffective as a legislative body. The Postal Service's Board of Governors has proven to be equally ineffective and has left postal managers to run operations as they see fit. The regulatory system is relatively limited and not really able to represent the interests of the public as a whole.

All in all, the Postal Service is simply not accountable to the American people in the way it should be - or the way it must be if it is to survive as a vibrant public postal system, as envisioned by the Founders

In the debates about the Postal Service, the public interest is too often forgotten. It's worth quoting yet again the stirring words of Title 39:

"The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States, authorized by the Constitution, created by Act of Congress, and supported by the people. The Postal Service shall have as its basic function the obligation to provide postal services to bind the Nation together through the personal, educational, literary, and business correspondence of the people. It shall provide prompt, reliable, and efficient services to patrons in all areas and shall render postal services to all communities. The costs of establishing and maintaining the Postal Service shall not be apportioned to impair the overall value of such service to the people."

If these words are to mean anything, the leaders of the Postal Service, Congress, and the Executive branch must be reminded that the Postal Service is there to serve not some narrow economic interests but the people of the United States.

The Vision of the Founders

There are only a couple of mentions of the post office in the Federalist Papers, the set of writings by Madison, Hamilton, and Jay which offered the explanation and underlying reasoning that supported the new Constitution. In Federalist 42, Madison wrote:

"The power of establishing post roads, must in every view be a harmless power; and may perhaps, by judicious management, become productive of great public conveniency.Nothing which tends to facilitate the intercourse between the states can be deemed unworthy of the public care." (emphasis added)

Benjamin Franklin certainly had a great deal to say about the post office. As one of the inspirational leaders of the new nation and its first Postmaster General, Franklin clearly saw the importance and value of a robust postal system. Early in his career as a printer and publisher, Franklin was disadvantaged because a competitor, Andrew Bradford, used his power as a postmaster to deny Franklin's papers access to the postal system - an act that impressed upon Franklin the importance of broad access to the post. In his biography of Franklin, Walter Isaacson says that the benefit of Franklin's tenure as colonial postmaster, greater than the compensation he received, "was that it furthered Franklin's conception of the disparate American colonies as a potentially unified nation with shared interests and needs."

The Founders clearly recognized that an infrastructure that could serve to bind the nation together was essential not only for the free flow of information but also as a means of enhancing commerce. Washington even argued that newspapers and journals should travel the mails for free, while Madison suggested their cost be subsidized but that as matter of economy there should be a charge. Whatever the expectations on funding or self-sufficiency, it is clear that the Founders saw a need for a public post, a postal system that belonged to and served the American people broadly.

The PRA

The American people built and paid for our postal system. We the people own the United States Postal Service. It's as simple as that.

Yet beginning with the 1970 Postal Reorganization Act (PRA) and the reorganization of the system into a corporate-like structure, there has been an ongoing attempt by relatively narrow interests to co-opt, control, and ultimately dictate the direction of our postal system.

The PRA coincided with a time in American history when thinking was changing, moving away from the broadly inclusive economics of the New Deal towards a model of unadulterated self-interest that sought to privatize gains while undermining public goods and leaving losses to be socialized.

Milton Friedman's dogma of shareholder interest was coming into vogue. Even though corporations benefit from public systems like the rule of law, which uses the power of the state to enforce contracts, patents, and intellectual property protections, and even though they take advantage of public goods and infrastructure like the postal network or the interstate highway system, their only obligation, according to the Friedman dogma, was to their shareholders. Communities, the environment, labor - all could be ignored or even damned in the pursuit of private profit and gain. Friedman devalued the idea of public goods and infrastructures, arguing instead that privatization should be the fundamental model.

It was the time of the Powell memo, a brief by future Supreme Court justice Lewis Powell arguing that corporate America needed to actively take control of our political systems and our public dialogue in order to further its interests.

In the ensuing years we've seen our elections devolve into an unending quest for contributions, a system that more and more resembles "pay for play." We've seen a transition from a market economy to what political philosopher Michael Sandel calls a Market Society, a world where moral choices are squeezed out in favor of an ethic that puts a price on everything and makes everything for sale: consumerism not as a means to raise living standards but as a religion unto itself.

These shifts resulted in the Great Recession, the hollowing out of the American middle-class, and the emptying of broad-based opportunity into a narrow trough that primarily feeds Wall Street.

In 1968, just as this transition was taking shape, LBJ created Kappel Commission to come up with ideas for transforming and reorganizing the Post Office Department. The commission was staffed largely by businessman and corporate leaders like its chair Fred Kappel, the retired chairman of AT&T. Following the received wisdom of the time that the words "corporation" and "business" implied efficiency - an idea that went back to Frederick Taylor and his time-and-motion studies, which wrongly conflated process efficiency and the maximization of profit with efficacy and human flourishing - the Kappel Commission set about offering suggestions to reorganize the Post Office Department (POD) more along the lines of a corporation.

Much of what the Kappel Commission recommended became embodied in the Postal Reorganization Act of 1970. The Act transformed the POD into the semi-autonomous United States Postal Service. The Postal Rate Commission became responsible for overseeing the rate-making process as well some customer-service issues. The PRA reorganization also gave general oversight of postal operations to a new Board of Governors.

The BOG

The BOG was something akin to a corporate board, although in reality it lacked the accountability a corporate board has to stockholders. After consultation with leaders of the House and Senate, members of the BOG were appointed by the President and confirmed by the Senate. They could be removed only for cause. In other words, if they chose a direction for the Postal Service that conflicted with the broad interests of the American public, there was no way to hold them or the management of the Postal Service accountable.

Title 39 describes certain qualifications for members of the BOG in Section 202 (a)(1):

"The Governors shall represent the public interest generally, and shall be chosen solely on the basis of their experience in the field of public service, law or accounting or on their demonstrated ability in managing organizations or corporations (in either the public or private sector) of substantial size; except that at least 4 of the Governors shall be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) that employ at least 50,000 employees. The Governors shall not be representatives of specific interests using the Postal Service, and may be removed only for cause."

While the idea that the BOG was to serve the public interest generally, the public interest was never clearly defined, and the PRA essentially reorganized the Postal Service as a corporate entity.

Initially the Act provided for some public support of the Postal Service through appropriations to support the universal service obligation and preferential rates for periodicals and non-profits. (Kevin Kosar, formerly of the Congressional Research Service, wrote a couple of reports that are quite useful: here and here.) But those subsidies were intended to be phased out.

The PRA and subsequent legislation were designed to transfer the financial support of the postal network from the American people solely to mailers, although it did little to acknowledge the public's large investment in the system or the fact that the postal network served as infrastructure and therefore had a much wider impact and benefit to the general public.

Ideally the BOG is supposed to reflect a broad public interest, but it is heavily weighted towards corporate types. For example, a recent past chair of the BOG, Thurgood Marshall Jr., was a well-connected Democratic operative and lawyer who was a founder and board member of Corrections Corporation of America, one of the largest private prison operators. Is it a coincidence that the latest push towards privatization was sanctioned under Mr. Marshall's watch?

If they aren't corporate, they're likely to be political insiders. Other past and current members of the BOG include Dennis Toner, a former board member who was chief assistant to Vice President Biden; Ellen Williams, a current member, who was head of the KY Republican Party; and Mickey Barnett, the most recent chair, who was heavily involved in the New Mexico Republican Party.

The simple fact of the matter is that the BOG has never reflected the larger public interests. For example, there don't seem to have been any appointments who had a background in labor. There have been CEOs of large corporations, but there have been virtually no consumer advocates. Several academics have been nominated, but in almost every instance their focus has been on corporate economics and not public goods.

If the current organization of postal administration wasn't bad enough, the Obama Administration has been absolutely horrible in making appointments to the BOG. Currently there are only three out of nine appointed members serving, and two of them are in their grace year, meaning they are serving beyond their regular appointed term. For the last several years, PMG Donahoe was essentially allowed to implement his vision for what postal services should be in this country without any meaningful oversight or accountability from the Board.

One of Mr. Obama's recent nominations to the BOG was Vicki Kennedy (it's not clear if she is still under consideration). She might seem like a good choice to some Progressives, but the fact is that Mrs. Kennedy's resume offers little comfort. She is a well-connected Democrat who runs a consulting company that services "private clients on the development and execution of public and private strategies for their business needs."

Mrs. Kennedy's selection at least looks good in comparison to the nomination of James C. Miller III, a former governor who has testified before Congress in favor of postal privatization. Earlier this week, President Obama nominated Miller to term as Governor, along with Stephen Crawford and current board member Mickey Barnett. (More on the BOG in a future post.)

Even with these new nominations, given the administration's pace in making nominations and the dilatory pace of the Senate in getting anything done, it isn't likely we'll have a full BOG for many months. For now, anyway, PMG Megan Brennan is pretty much the sole determinant of national postal policy.

The PRC

In the absence of a strong BOG, some might look to the Postal Regulatory Commission to advocate on behalf of the broader public interest. But the PRC has a fairly narrow purview, which pretty much limits it to oversight to the rate making process, in keeping with its previous incarnation as the Postal Rate Commission. The PRC does have a function for addressing rate and service complaints on its website, but in many if not most cases these complaints are simply forwarded to the Postal Service for resolution.

The PRC does collect statistics on these complaints, and it issues a monthly report about the complaints that have come through its system. The statute gives the PRC the ability to open a public inquiry if a particular complaint continually arises, but to my knowledge they have never done so. Over the last several years we have seen continual incidents of the Postal Service bullying people into surrendering house or curb boxes for cluster boxes, and there have been many issues related to declining service standards, post office relocations, post office lease suspensions, and the like. But the PRC's ability to confront these issues has been limited. In fairness, the Commission is largely constrained by both limitations built into the law and its own lack of resources. There have also been efforts by some in Congress to marginalize the role of the PRC even further, as demonstrated by the Carper-Coburn bill last year, which would have pretty much taken the PRC out of regulating postal rates.

In its rate cases and in the general service "N" cases, the PRC does have a mechanism for providing some protections for the public. Its public representative system assigns a PRC staff member to every case, whether it be rate reviews, N cases, or post office closure appeals. Former Chairman Ruth Goldway has often touted the public representative system, as she did in this article in Federal Times.

As much as I respect Ms. Goldway, I find her faith in this flawed system misplaced. There's no clear definition of what the public's interest is, which leaves it somewhat up to the individual filling the PR position in a particular case to decide what their role will be. Worse, the PRC's OIG office is all but inactive, which means there is no consistent independent review of the effectiveness of the program.

When the PRC was hearing the appeal on the closing of the Glenoaks post office in Burbank, California, back in 2013, the PR was quoted in the press supporting the closure because the Postal Service was ""hemorrhaging money." Rather than defending the community's interest in keeping their post office, the PR said, "I understand the petitioners are upset, but they have multiple options. They live in a metropolitan area" where there are other nearby locations to do postal business.

In the Friestatt, MO closure case, the PR assigned to the case did a yeoman's job, but she was undermined by her office, which interfered with the filings from the folks in Friestatt and removed documents without notice. (Some of these issues were raised in this post suggesting changes to the system.)

Probably the worst failure of the PR system was in the POStPlan docket. In this important general service case that looked at service reductions in thousands of post offices, the PR put up virtually no defense, and he refused assistance and information that might have helped in better exploring the Postal Service's proposals.

To be fair, it should also be noted the POStPlan case was complicated by the fact that both NAPUS and the League of Postmasters chose not to participate as a result of a deal they had made with postal management. After years of claiming that their greatest concern was for the American public and small town postal services, the two organizations sat on their hands.

The system review at the PRC really relies on concerned participation by outside entities. In the POStPlan docket the PR would have been overwhelmed even if he had been more assiduous in developing the case.

Overall the people who serve as Public Representative make a commendable effort, but they are hamstrung by lack of resources and a clear mandate. The unfortunate fact is that the way the statute constructs and empowers the PRC, it is not the best vehicle for representing the American public generally.

The Postal Advisory Council

There was one interesting element of the PRA that gave at least some recognition to the idea that the postal system and network were broadly owned by and designed to service the American public. Section 206 of the original act created a Postal Advisory Council. The PAC was to consist of representatives of labor, representatives of the mailers, and members of the public at large. The PAC would have brought stakeholders directly into the process, and more importantly, provided representation for a broad range of consumer interests, which would have created a counter balance to the BOG.

Sadly, the Postal Advisory Council was never constituted, and no appointments were ever made. Then in 1975, the Federal Advisory Committee Act (FACA), a law designed to eliminate unnecessary boards and commissions, wrote the PAC out of existence. In 2008, the APWU sued in an attempt to renew the council, but its effort was dismissed out of hand by the DC District Court.

Given our current political and social environment, it is possible and even likely that the PAC would have been ineffective. Still, it may have served to bring more voices to the table. More importantly, it might have been able to focus on the broad public policy and consumer issues that the current leadership of the Postal Service has intentionally ignored in their unrelenting effort to outsource and degrade postal infrastructure. At this point, there are really no mechanisms in place to attend to the broader public interest.

The Grand Alliance

So who looks out for the broad public interest in postal matters? The sad fact is that there is no institutional entity that has the statutory power or wherewithal to fill what is perhaps the most essential task in determining how we use and maintain our critical postal infrastructure.

There has been one recent interesting development, however. The attempts of the APWU and its president Mark Dimondstein to create a grand alliance of consumer and labor groups might have an impact on how we protect, restore, and renew our postal infrastructure. This alliance is the subject of an excellent article by David Morris on Alternet.

Morris asks the question: Can One Union Save the Slumping Postal Service? Unfortunately, I think the answer has to be a qualified maybe.

Mr. Dimondstein's ideas are both brilliant and ambitious, but the fact is that unions have evolved to take care of their members first and foremost. There is nothing wrong with that, of course. This is a basic responsibility of a union. Just as capital assembles itself in the form of a corporation in order to benefit its shareholders (at least that is the modern view, one worth disputing), labor assembles to defend and protect its interests. I would argue that in both cases the entities have broader obligations, but in today's environment of individualism to the exclusion of all else it is difficult to imagine returning to a time when our institutions looked out for the broader societal interests.

Whether the APWU can pull off the sort of broad-based alliance that genuinely attempts to address the broad public interests at stake in the future of postal infrastructure is open to question. I recently participated in a conference call of those interested in postal banking. I was disappointed to hear some of the participants so focused on their own pet issue that they were unable to understand the current problems related to the degradation of the postal network. They seemed to see an opportunity to advance their cause without seeing the broader picture. Some hadn't done their homework and didn't seem to understand the regulatory and administrative structures they were going to need to address, instead seeming to believe that it was simply a matter of political will and merely piggy backing their project on a creaking and unresponsive postal management structure.

As I've written in previous posts (here and here), as we go forward with trying to find ways to develop and utilize the postal network and postal infrastructure, we need to recognize the flaws in the current organization of the Postal Service. Simply layering new services on top of a crumbling foundation is a prescription for failure. Still, I think that Mark Dimondstein is right in the general vision he expresses.

Someone needs to speak out in the interest of the general public on postal issues. Someone needs to be accountable for the investment we, as a nation, have made in postal infrastructure.

Corporations have come to view the world through the prism of the next quarterly report, and to some extent labor and unions, while fighting a holding action, have come to view the world through the prism of the next contract. That may have been Cliff Guffey's greatest failure. Mr. Dimondstein seems to understand that our future lies in the restoration of an ethic that views common purpose and public goods as a positive good, that sees beyond the next bonus or contract.

The General Welfare

The state of the Postal Service is an almost perfect reflection of the state of American society. The postal network is an integral part of America's infrastructure, and like much of that infrastructure, the network is crumbling - partly from a lack of political will but more from a cynical individualism that masks the ascendance of narrow and elite economic interests.

The Founders sought to balance our inherent drive for individual initiative with the need for a larger civic engagement and commitment. The phrase "general welfare" does not appear in the Constitution accidentally nor is it merely incidental to the construct of American freedom. A necessitous people are not a free people. An economy that ignores public goods like infrastructure is a prescription for special interest, limited advantage, and civic isolation.

The postal infrastructure was built by and for the American people. It remains essential and useful, and it possesses tremendous possibility for the future as a conduit for additional services that both support and maintain legacy systems that millions still rely on.

We must think about renewing and restoring the capacity and capability of the network. It has been undermined and degraded by an empty and self-serving ideology that disdains public goods and common purpose. We have seen the same sort of degradation to our physical infrastructures like roads, bridges, and water and sewer, often in the name of privatization. Our schools are threatened by an increasing corporate encroachment that sees revenue potential not public utility.

After a natural disaster like Hurricane Sandy, we think it perfectly appropriate to do more than clean up, to do more than settle. We talk about rebuilding and restoring, about renewal.

Well, there was nothing natural about the disaster of Hurricane Donahoe, but our response has to be the same as it would be to a natural disaster: Rebuild, Restore, Renew. The postal network, its capacity, and capability, the standards, the jobs, the infrastructure - they are all in need of our commitment.

In order to do that, we must have a postal management and administrative structure that is accountable to the American people.


Mark Jamison is a retired postmaster. He can be reached at markijamison01@gmail.com.

(Image source: B. Free Franklin post office in Philadelphia)

bkrasting, March 20, 2015 9:33 am

You're right. the Title 39 words are "stirring". The problem is those words were written in 1960. A lot has happened in 55 years.

Consider the past 10 years with the internet taking over the distribution of all forms of information that were once on paper. This is not going to stop.

Every financial institution will force their customers to get monthly statements via computer. We don't need catalogs sent to our homes; no one does that any longer. And please don't tell me that it's vital that junk mail be delivered – it's just a waste of paper.

The PO was once vital to the flow of information and commerce. That's not the case any longer. The PO has to adapt itself to the new realities, the old model will not work.

Mark Jamison, March 20, 2015 10:08 am

Title 39 was written in 1970 but what's ten years.

The thing is Bkrasting is that while your narrative sounds plausible, perhaps even good, it isn't entirely borne out by the facts. There's no doubt that we are migrating to a more electronic based world although there are still 80 billion pieces of first class mail, surveys consistently show that people would prefer to receive their bills in hard copy form, and millions in this country don't have reliable access to broadband services (I'm guessing based on most of your comments that you probably aren't in favor of the idea of treating internet services as a public utility).

Yep, banks and the financial industry would love to go paperless, they also would love to find a way to charge people for the privilege of receiving and paying bills – fee extraction is the name of the game. Actually one of the better proposals for building off the postal network is the the idea of introducing a secure electronic bill payment and presentment system that ties a physical address, hard copy mail, and an e-mail address. The network is well positioned to make that happen without the abuses that banks and payday lenders include in similar offerings.

There remains a value to print based journalism. Winston's job in 1984 is rewriting the news. Funny how the internet makes it possible to reinvent news and eliminate information. The internet is not an entirely positive technology and benefits from the redundancy of print.

Then there's "junk" mail. Nope, I really don't like incessant advertising but I'm struck by the fact that many of the folks who raise this shibboleth are believers in markets (and consequently marketing). The printers, the mailers, advertising firms, all great supporters of let the market choose have a love affair with the postal network. Why, because hard copy advertising seems to work. The scions of capitalism elicit some of the hardest shrieks when their use of the network is threatened. But I'll endorse almost any idea that reduces our move towards a marketing society.

Finally there is the issue of e-commerce and how all the stuff that people buy get to their houses. Without the postal network we have the makings of an unregulated private monopoly or at least oligopoly in small package delivery, one that totally ignores universal service. The idea that the postal network has outlived its usefulness is patently false. The narrative of Technological Utopians is an old one that doesn't always play out as expected.

Are postal services challenged by technology? Absolutely, but the story here is not that of the buggy whip manufacturer but of an infrastructure that has been degraded in the service of outsourcing and privatization. It's a story of intentional attempts to undermine labor, eliminate good jobs and good benefit systems while transferring billions of dollars of revenue into private hands and abandoning concepts of universal service and public goods. It's a story of discounting social value and rigging the arguments to only account for a narrow version of market value. It's a story of failing to understand the difference between a communications infrastructure and a competitive delivery service.

Your last sentence has a great deal of truth. Unfortunately it is preceded by utter nonsense. The postal network remains vital and useful – should we choose to see its possibilities and adapt it to changing conditions.

JDM, March 20, 2015 7:28 pm

I've never heard any of the "the Post Office is crap" people explain why UPS and FedEx use the Post Office for part of their delivery system (the WSJ says it's "30% of the express-mail company's total U.S. ground segment" for FedEx). Are these private companies out to spend more for no added value? Are they just really stupid? Seems unlikely.

We know the Post Office still makes money, if you don't count the unprecedented pension requirements Congress put on it. So it must be that they provide a service either better or cheaper or both, while still making money.

run75441, March 20, 2015 7:42 pm

JDM:

Maybe, you already knew this? I will repeat it anyway. FedEx, UPS, etc. use the Post Office to typically deliver in areas which are not frequented by them or call it low traffic FedEx/UPS areas. They can not compete in those areas. If the Post Office as we know it disappeared, those areas would either not be served by commercial enterprises or the cost would be prohibitive. They are in it for the money while the USPS is there because it is legislated to be there.

Mark Jamison, March 21, 2015 8:18 am

UPS, FedEx, and most of all Amazon are co-opting the Postal Service's last mile network through the NSA (negotiated service agreement) process in PAEA. They are getting preferential rates through deals that are essentially secret. None of those entities want to build the infrastructure that gets them to more than 150 million addresses every day. Instead they are using the privilege embedded in the current system to use public infrastructure much more cheaply than the average citizen. This goes far beyond volume discounting.

There's a great deal of reporting on this at the STPO site.

Mark Jamison, March 21, 2015 6:53 pm

Thanks Dale. Yes, I agree entirely about corporations.

The whole idea of "redistribution of wealth" is bullshit. It's a matter of distribution and there is nothing magical, mythical, or spiritual about that. Markets aren't natural occurrences that arise from the hand of a creator on high. Markets are man made creations and we set the rules and guidelines that make them work while also determining who they enrich. In our current environment we establish rules for incorporation that exchange things like limited liability, the power of the government for contract enforcement, and the monopoly power of intellectual property through patents and copyrights for what amounts to very little in terms of social responsibility.

Economics or more appropriately political economy is not exclusively or even mostly an empirical exercise. The rules by which we set up our economy contain fundamental assumptions, premises, and choices. We choose to exclude social responsibility. We choose to elevate shareholder interest above everything and anything else. We choose to ignore externalities.

A corollary to this is the use of the word efficient in the context of economic discussions. The use of the word efficient should almost always include the question "for whom?". Is it more efficient to pay labor less than a living wage. Maybe it is for the the CEO who takes the lion's share of the profits that flow from reduced wages but for workers, communities, and society in general it isn't particularly efficient at all.

A basic element of our human nature is that we build our world view based on stories. We frame our world and how we do that goes very much towards defining outcomes. I am not suggesting that we should ignore data or eschew economic models but I do believe that we need to understand that at the bottom of every technical description of a social or economic system is a set of stories that describes our ethic, our assumptions, and our moral choices. Honor the data but also acknowledge the foundational stories.

For example we are told that our postal infrastructure ought to be self sufficient and self sustaining. However if you examine it closely there's nothing sacrosanct about that assertion, actually it's pretty arbitrary and built on a whole set of normative assumptions about what is "efficient". There really isn't anything odd about the idea of partially supporting our postal infrastructure, paying for reduced rates for periodicals and nonprofits, or paying for universal service with taxpayer funds. We've decided that agricultural subsidies are appropriate and those go largely to wealthy individuals and large corporations. In the end our politicians have decided that a modest appropriation that would support 800,000 good postal jobs is less important that much higher subsidies to big agriculture (or pharma, or energy, or )

This very much applies to the issue you focus on, Social Security. There is a story that underlies the idea of a social retirement system that sets a meaningful income for our elderly, a system that is at least partially based on the individual accountability inherent in the payroll tax. That is at least as compelling a story as the one that suggests that we should all be on our own that saving for retirement is solely an individual responsibility, a concept that largely ignores the fact that advantage and privilege are built into our system in ways that make it much harder for those further from the top of the pyramid to fulfill that responsibility.

In this instance it becomes a matter of choices not some ironclad rule of market efficiency or worse some mythical idea of rational incentives. Plan and simple it is a matter of accepting the word responsibility as a broad concept or a purely individual concept that ignores larger environmental forces.

[Dec 04, 2016] UK election Who really governs Britain

But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control.
Notable quotes:
"... But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control. ..."
"... In the case of Britain, the once-powerful centralized governments of that country are now multiply constrained. As the power of Britain in international affairs has declined, so has the British government's power within its own domain. Membership of the European Union constrains British governments' ability to determine everything from the quantities of fish British fishermen can legally catch to the amount in fees that British universities can charge students from other EU countries. ..."
"... Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted in 2014 alone was nearer 300,000. ..."
"... On top of all that, British governments -- even more than those of some other predominantly capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale force. In a world of substantially free trade, imports and exports of goods and services are largely beyond any government's control, and the Bank of England's influence over the external value of sterling is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good or ill, Britain's government was, and is, effectively helpless to intervene. ..."
"... That's why we need a federal Europe. Local governments for local issues and elected by the local people and a European government for European issues elected by all Europeans. ..."
May 04, 2015 | CNN.com

Once upon a time, national elections were -- or seemed to be -- overwhelmingly domestic affairs, affecting only the peoples of the countries taking part in them. If that was ever true, it is so no longer. Angela Merkel negotiates with Greece's government with Germany's voters looming in the background. David Cameron currently fights an election campaign in the UK holding fast to the belief that a false move on his part regarding Britain's relationship with the EU could cost his Conservative Party seats, votes and possibly the entire election.

Britain provides a good illustration of a general proposition. It used to be claimed, plausibly, that "all politics is local." In 2015, electoral politics may still be mostly local, but the post-electoral business of government is anything but local. There is a misfit between the two. Voters are mainly swayed by domestic issues. Vote-seeking politicians campaign accordingly. But those politicians lucky enough to win discover -- if they did not know already -- that their capacity to affect even their own domestic environment is constrained by forces beyond their control.

Anyone viewing the UK election campaign from afar could be forgiven for thinking that British voters and politicians alike imagined they were living on some kind of self-sufficient sea-girt island. The opinion polls indicate that a large majority of voters are preoccupied -- politically as well as in other ways -- with their own financial situation, tax rates, welfare spending and the future of the National Health Service. Immigration is an issue for many voters, but mostly in domestic terms (and often as a surrogate for generalized discontent with Britain's political class). The fact that migrants from Eastern Europe and elsewhere make a positive net contribution to both the UK's economy and its social services scarcely features in the campaign.

... ... ...

After polling day, all that will change -- probably to millions of voters' dismay. One American presidential candidate famously said that politicians campaign in poetry, but govern in prose. Politicians in democracies, not just in Britain, campaign as though they can move mountains, then find that most mountains are hard or impossible to move.

In the case of Britain, the once-powerful centralized governments of that country are now multiply constrained. As the power of Britain in international affairs has declined, so has the British government's power within its own domain. Membership of the European Union constrains British governments' ability to determine everything from the quantities of fish British fishermen can legally catch to the amount in fees that British universities can charge students from other EU countries.

Not least, the EU's insistence on the free movement of labor caused the Conservative-dominated coalition that came to power in 2010 to renege on the Tories' spectacularly ill-judged pledge to reduce to "tens of thousands a year" the number of migrants coming to Britain. The number admitted in 2014 alone was nearer 300,000.

The UK's courts are also far more active than they were. The British parliament in 1998 incorporated the European Convention on Human Rights into British domestic law, and British judges have determinedly enforced those rights. During the 1970s, they had already been handed responsibility for enforcing the full range of EU law within the UK.

Also, Britain's judges have, on their own initiative, exercised increasingly frequently their long-standing power of "judicial review," invalidating ministerial decisions that violated due process or seemed to them to be wholly unreasonable. Devolution of substantial powers to semi-independent governments in Scotland, Wales and Northern Ireland has also meant that the jurisdiction of many so-called UK government ministers is effectively confined to the purely English component part.

On top of all that, British governments -- even more than those of some other predominantly capitalist economies -- are open to being buffeted by market forces, whose winds can acquire gale force. In a world of substantially free trade, imports and exports of goods and services are largely beyond any government's control, and the Bank of England's influence over the external value of sterling is negligible. During the present election campaign, HSBC, one of the world's largest banks, indicated that it was contemplating shifting its headquarters from the City of London to Hong Kong. For good or ill, Britain's government was, and is, effectively helpless to intervene.

The heirs of Gladstone, Disraeli, Lloyd George and Winston Churchill, Britain's political leaders are understandably still tempted to talk big. But their effective real-world influence is small. No wonder a lot of voters in Britain feel they are being conned.

ItsJustTim

That's globalization. And it won't go away, even if you vote nationalist. The issues are increasingly international, while the voters still have a mostly local perspective. That's why we need a federal Europe. Local governments for local issues and elected by the local people and a European government for European issues elected by all Europeans.

[Dec 04, 2016] James Pinkerton Globalism Hits a Brick Wall Now, What Will Donald Trump and Hillary Clinton Do

Notable quotes:
"... The Guardian ..."
"... it seems fair to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might first step back and consider how we got to this point. ..."
"... An Inquiry into the Nature and Causes of the Wealth of Nations . ..."
"... Clinton will say anything then she'll sell you out. I hope we never get a chance to see how she will sell us out on TPP ..."
"... What we would be headed for under Hillary Clinton is fascism--Mussolini's shorthand definition of fascism was the marriage of industry and commerce with the power of the State. That is what the plutocrats who run the big banks (to whom she owes her soul) aim to do. President, Thomas Jefferson knew the dangers of large European-style central banks. ..."
Aug 30, 2016 | Breitbart
On the surface, it appears that Hillary Clinton and Donald Trump, for all their mutual antipathy, are united on one big issue: opposition to new trade deals. Here's a recent headline in The Guardian: "Trump and Clinton's free trade retreat: a pivotal moment for the world's economic future."

And the subhead continues in that vein:

Never before have both main presidential candidates broken so completely with Washington orthodoxy on globalization, even as the White House refuses to give up. The problem, however, goes much deeper than trade deals.

In the above quote, we can note the deliberate use of the loaded word, "problem." As in, it's a problem that free trade is unpopular-a problem, perhaps, that the MSM can fix. Yet in the meantime, the newspaper sighed, the two biggest trade deals on the horizon, the well-known Trans Pacific Partnership (TPP), and the lesser-known Trans Atlantic Trade Investment Partnership (TTIP), aimed at further linking the U.S. and European Union (EU), are both in jeopardy.

Indeed, if TPP isn't doing well, TTIP might be dead: Here's an August 28 headline from the Deutsche Welle news service quoting Sigmar Gabriel, the No. 2 in the Berlin government: "Germany's Vice Chancellor Gabriel: US-EU trade talks 'have failed.'"

So now we must ask broader questions: What does this mean for trade treaties overall? And what are the implications for globalism?

More specifically, we can ask: Are we sure that the two main White House hopefuls, Clinton and Trump, are truly sincere in their opposition to those deals? After all, as has been widely reported, President Obama still has plans to push TPP through to enactment in the "lame duck" session of Congress after the November elections. Of course, Obama wouldn't seek to do that if the president-elect opposed it-or would he?

Yet on August 30, Politico reminded its Beltway readership, "How Trump or Clinton could kill Pacific trade deal." In other words, even if Obama were to move TPP forward in his last two months in office, the 45th president could still block its implementation in 2017 and beyond. If, that is, she or he really wanted to.

Indeed, as we think about Clinton and Trump, we realize that there's "opposition" that's for show and there's opposition that's for real.

Still, given what's been said on the presidential campaign trail this year, it seems fair to say: Globalism isn't quite the Wave of the Future that most observers thought it was, even just a year ago. And so before we attempt to divide the true intentions of Clinton and Trump, we might first step back and consider how we got to this point.

2. The Free Trade Orthodoxy

It's poignant that the headline, "Trump and Clinton's free trade retreat", lamenting the decay of free trade, appeared in The Guardian. Until recently, the newspaper was known as The Manchester Guardian, as in Manchester, England. And Manchester is not only a big city, population 2.5 million, it is also a city with a fabled past: You see, Manchester was the cradle of the Industrial Revolution, which transformed England and the world. It was that city that helped create the free trade orthodoxy that is now crumbling.

Yes, in the 18th and 19th centuries, Manchester was the leading manufacturing city in the world, especially for textiles. It was known as "Cottonopolis."

Indeed, back then, Manchester was so much more efficient and effective at mass production that it led the world in exports. That is, it could produce its goods at such low cost that it could send them across vast oceans and still undercut local producers on price and quality.

Over time, this economic reality congealed into a school of thought: As Manchester grew rich from exports, its business leaders easily found economists, journalists, and propagandists who would help advance their cause in the press and among the intelligentsia.

The resulting school of thought became known, in the 19th century, as "Manchester Liberalism." And so, to this day, long after Manchester has lost its economic preeminence to rivals elsewhere in the world, the phrase "Manchester Liberalism" is a well-known in the history of economics, bespeaking ardent support for free markets and free trade.

More recently, the hub for free-trade enthusiasm has been the United States. In particular, the University of Chicago, home to the Nobel Prize-winning economist Milton Friedman, became free trade's academic citadel; hence the "Chicago School" has displaced Manchesterism.

And just as it made sense for Manchester Liberalism to exalt free trade and exports when Manchester and England were on top, so, too, did the Chicago School exalt free trade when the U.S. was unquestionably the top dog.

So back in the 40s and 50s, when the rest of the world was either bombed flat or still under the yoke of colonialism, it made perfect sense that the U.S., as the only intact industrial power, would celebrate industrial exports: We were Number One, and it was perfectly rational to make the most of that first-place status. And if scribblers and scholars could help make the case for this new status quo, well, bring 'em aboard. Thus the Chicago School gained ascendancy in the late 20th century. And of course, the Chicagoans drew inspiration from a period even earlier than Manchesterism,

3. On the Origins of the Orthodoxy: Adam Smith and David Ricardo

The beginnings of an intellectually rigorous discussion of trade can be traced to 1776, when Adam Smith published his famous work, An Inquiry into the Nature and Causes of the Wealth of Nations.

One passage in that volume considers how individuals might optimize their own production and consumption:

It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy.

Smith is right, of course; everyone should always be calculating, however informally, whether or not it's cheaper to make it at home or buy it from someone else.

We can quickly see: If each family must make its own clothes and grow its own food, it's likely to be worse off than if it can buy its necessities from a large-scale producer. Why? Because, to be blunt about it, most of us don't really know how to make clothes and grow food, and it's expensive and difficult-if not downright impossible-to learn how. So we can conclude that self-sufficiency, however rustic and charming, is almost always a recipe for poverty.

Smith had a better idea: specialization. That is, people would specialize in one line of work, gain skills, earn more money, and then use that money in the marketplace, buying what they needed from other kinds of specialists.

Moreover, the even better news, in Smith's mind, was that this kind of specialization came naturally to people-that is, if they were free to scheme out their own advancement. As Smith argued, the ideal system would allow "every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice."

That is, men (and women) would do that which they did best, and then they would all come together in the free marketplace-each person being inspired to do better, thanks to, as Smith so memorably put it, the "invisible hand." Thus Smith articulated a key insight that undergirds the whole of modern economics-and, of course, modern-day prosperity.

A few decades later, in the early 19th century, Smith's pioneering work was expanded upon by another remarkable British economist, David Ricardo.

Ricardo's big idea built on Smithian specialization; Ricardo called it "comparative advantage." That is, just as each individual should do what he or she does best, so should each country.

In Ricardo's well-known illustration, he explained that the warm and sunny climate of Portugal made that country ideal for growing the grapes needed for wine, while the factories of England made that country ideal for spinning the fibers needed for apparel and other finished fabrics.

Thus, in Ricardo's view, we could see the makings of a beautiful economic friendship: The Portuguese would utilize their comparative advantage (climate) and export their surplus wine to England, while the English would utilize their comparative advantage (manufacturing) and export apparel to Portugal. Thus each would benefit from the exchange of efficiently-produced products, as each export paid for the other.

Furthermore, in Ricardo's telling, if tariffs and other barriers were eliminated, then both countries, Portugal and England, would enjoy the maximum free-trading win-win.

Actually, in point of fact-and Ricardo knew this-the relationship was much more of a win for England, because manufacture is more lucrative than agriculture. That is, a factory in Manchester could crank out garments a lot faster than a vineyard in Portugal could ferment wine.

And as we all know, the richer, stronger countries are industrial, not agricultural. Food is essential-and alcohol is pleasurable-but the real money is made in making things. After all, crops can be grown easily enough in many places, and so prices stay low. By contrast, manufacturing requires a lot of know-how and a huge upfront investment. Yet with enough powerful manufacturing, a nation is always guaranteed to be able to afford to import food. And also, it can make military weapons, and so, if necessary, take foreign food and croplands by force.

We can also observe that Ricardo, smart fellow that he was, nevertheless was describing the economy at a certain point in time-the era of horse-drawn carriages and sailing ships. Ricardo realized that transportation was, in fact, a key business variable. He wrote that it was possible for a company to seek economic advantage by moving a factory from one part of England to another. And yet in his view, writing from the perspective of the year 1817, it was impossible to imagine moving a factory from England to another country:

It would not follow that capital and population would necessarily move from England to Holland, or Spain, or Russia.

Why this presumed immobility of capital and people? Because, from Ricardo's early 19th-century perspective, transportation was inevitably slow and creaky; he didn't foresee steamships and airplanes. In his day, relying on the technology of the time, it wasn't realistic to think that factories, and their workers, could relocate from one country to another.

Moreover, in Ricardo's era, many countries were actively hostile to industrialization, because change would upset the aristocratic rhythms of the old order. That is, industrialization could turn docile or fatalistic peasants, spread out thinly across the countryside, into angry and self-aware proletarians, concentrated in the big cities-and that was a formula for unrest, even revolution.

Indeed, it was not until the 20th century that every country-including China, a great civilization, long asleep under decadent imperial misrule-figured out that it had no choice other than to industrialize.

So we can see that the ideas of Smith and Ricardo, enduringly powerful as they have been, were nonetheless products of their time-that is, a time when England mostly had the advantages of industrialism to itself. In particular, Ricardo's celebration of comparative advantage can be seen as an artifact of his own era, when England enjoyed a massive first-mover advantage in the industrial-export game.

Smith died in 1790, and Ricardo died in 1823; a lot has changed since then. And yet the two economists were so lucid in their writings that their work is studied and admired to this day.

Unfortunately, we can also observe that their ideas have been frozen in a kind of intellectual amber; even in the 21st century, free trade and old-fashioned comparative advantage are unquestioningly regarded as the keys to the wealth of nations-at least in the U.S.-even if they are so no longer.

4. Nationalist Alternatives to Free Trade Orthodoxy

As we have seen, Smith and Ricardo were pushing an idea, free trade, that was advantageous to Britain.

So perhaps not surprisingly, rival countries-notably the United States and Germany-soon developed different ideas. Leaders in Washington, D.C., and Berlin didn't want their respective nations to be mere dependent receptacles for English goods; they wanted real independence. And so they wanted factories of their own.

In the late 18th century, Alexander Hamilton, the visionary American patriot, could see that both economic wealth and military power flowed from domestic industry. As the nation's first Treasury Secretary, he persuaded President George Washington and the Congress to support a system of protective tariffs and "internal improvements" (what today we would call infrastructure) to foster US manufacturing and exporting.

And in the 19th century, Germany, under the much heavier-handed leadership of Otto von Bismarck, had the same idea: Make a concerted effort to make the nation stronger.

In both countries, this industrial policymaking succeeded. So whereas at the beginning of the 19th century, England had led the world in steel production, by the beginning of the 20th century century, the U.S. and Germany had moved well ahead. Yes, the "invisible hand" of individual self-interest is always a powerful economic force, but sometimes, the "visible hand" of national purpose, animated by patriotism, is even more powerful.

Thus by 1914, at the onset of World War One, we could see the results of the Smith/Ricardo model, on the one hand, and the Hamilton/Bismarck model, on the other. All three countries-Britain, the US, and Germany, were rich-but only the latter two had genuine industrial mojo. Indeed, during World War One, English weakness became glaringly apparent in the 1915 shell crisis-as in, artillery shells. It was only the massive importing of made-in-USA ammunition that saved Britain from looming defeat.

Yet as always, times change, as do economic circumstances, as do prevailing ideas.

As we have seen, at the end of World War II, the U.S. was the only industrial power left standing. And so it made sense for America to shift from a policy of Hamiltonian protection to a policy of Smith-Ricardian export-minded free trade. Indeed, beginning in around 1945, both major political parties, Democrats and Republicans, solidly embraced the new line: The U.S. would be the factory for the world.

Yet if times, circumstances, and ideas change, they can always change again.

5. The Contemporary Crack-Up

As we have seen, in the 19th century, not every country wanted to be on the passive receiving end of England's exports. And this was true, too, in the 20th century; Japan, notably, had its own ideas.

If Japan had followed the Ricardian doctrine of comparative advantage, it would have focused on exporting rice and tuna. Instead, by dint of hard work, ingenuity, and more than a little national strategizing, Japan grew itself into a great and prosperous industrial power. Its exports, we might note, were such high-value-adds as automobiles and electronics, not mere crops and fish.

Moreover, according to the same theory of comparative advantage, South Korea should have been exporting parasols and kimchi, and China should have settled for exporting fortune cookies and pandas.

Yet as the South Korean economist Ha-Joon Chang has chronicled, these Asian nations resolved, in their no-nonsense neo-Confucian way, to launch state-guided private industries-and the theory of comparative advantage be damned.

Yes, their efforts violated Western economic orthodoxy, but as the philosopher Kant once observed, the actual proves the possible. Indeed, today, as we all know, the Asian tigers are among the richest and fastest-growing economies in the world.

Leading them all, of course, is China. As the economic historian Michael Lind recounted recently,

China is not only the world's largest economy in terms of purchasing power parity (PPP), but also the world's largest manufacturing nation-producing 52 percent of color televisions, 75 percent of mobile phones and 87 percent of the world's personal computers. The Chinese automobile industry is the world's largest, twice the size of America's. China leads the world in foreign exchange reserves. The United States is the main trading partner for seventy-six countries. China is the main trading partner for 124.

In particular, we might pause over one item in that impressive litany: China makes 87 percent of the world's personal computers.

Indeed, if it's true, as ZDNet reports, that the Chinese have built "backdoors" into almost all the electronic equipment that they sell-that is to say, the equipment that we buy-then we can assume that we face a serious military challenge, as well as a serious economic challenge.

Yes, it's a safe bet that the People's Liberation Army has a good handle on our defense establishment, especially now that the Pentagon has fully equipped itself with Chinese-made iPhones and iPads.

Of course, we can safely predict that Defense Department bureaucrats will always say that there's nothing to worry about, that they have the potential hacking/sabotage matter under control (although just to be sure, the Pentagon might say, give us more money).

Yet we might note that this is the same defense establishment that couldn't keep track of lone internal rogues such as Bradley Manning and Edward Snowden. Therefore, should we really believe that this same DOD knows how to stop the determined efforts of a nation of 1.3 billion people, seeking to hack machines-machines that they made in the first place?

Yes, the single strongest argument against the blind application of free- trade dogma is the doctrine of self defense. That is, all the wealth in the world doesn't matter if you're conquered. Even Adam Smith understood that; as he wrote, "Defense . . . is of much more importance than opulence."

Yet today we can readily see: If we are grossly dependent on China for vital wares, then we can't be truly independent of China. In fact, we should be downright fearful.

Still, despite these deep strategic threats, directly the result of careless importing, the Smith-Ricardo orthodoxy remains powerful, even hegemonistic-at least in the English-speaking world.

Why is this so? Yes, economists are typically seen as cold and nerdy, even bloodless, and yet, in fact, they are actual human beings. And as such, they are susceptible to the giddy-happy feeling that comes from the hope of building a new utopia, the dream of ushering in an era of world harmony, based on untrammeled international trade. Indeed, this woozy idealism among economists goes way back; it was the British free trader Richard Cobden who declared in 1857,

Free trade is God's diplomacy. There is no other certain way of uniting people in the bonds of peace.

And lo, so many wars later, many economists still believe that.

Indeed, economists today are still monolithically pro-fee trade; a recent survey of economists found that 83 percent supported eliminating all tariffs and other barriers; just 10 percent disagreed.

We might further note that others, too, in the financial and intellectual elite are fully on board the free-trade train, including most corporate officers and their lobbyists, journalists, academics, and, of course, the mostly for-hire think-tankers.

To be sure, there are always exceptions: As that Guardian article, the one lamenting the sharp decrease in support for free trade as a "problem," noted, not all of corporate America is on board, particularly those companies in the manufacturing sector:

Ford openly opposes TPP because it fears the deal does nothing to stop Japan manipulating its currency at the expense of US rivals.

Indeed, we might note that the same Guardian story included an even more cautionary note, asserting that support for free trade, overall, is remarkably rickety:

Some suggest a "bicycle theory" of trade deals: that the international bandwagon has to keep rolling forward or else it all wobbles and falls down.

So what has happened? How could virtually the entire elite be united in enthusiasm for free trade, and yet, even so, the free trade juggernaut is no steadier than a mere two-wheeled bike? Moreover, free traders will ask: Why aren't the leaders leading? More to the point, why aren't the followers following?

To answer those questions, we might start by noting the four-decade phenomenon of wage stagnation-that's taken a toll on support for free trade. But of course, it's in the heartland that wages have been stagnating; by contrast, incomes for the bicoastal elites have been soaring.

We might also note that some expert predictions have been way off, thus undermining confidence in their expertise. Remember, this spring, when all the experts were saying that the United Kingdom would fall into recession, or worse, if it voted to leave the EU? Well, just the other day came this New York Post headline: "Brexit actually boosting the UK economy."

Thus from the Wall Street-ish perspective of the urban chattering classes, things are going well-so what's the problem?

Yet the folks on Main Street have known a different story. They have seen, with their own eyes, what has happened to them, and no fusillade of op-eds or think-tank monographs will persuade them to change their mind.

So we can see that there's been a standoff: Wall Street vs. Main Street; nor is this the first time this has happened.

However, because the two parties have been so united on the issues of trade and globalization-the "Uniparty," it's sometimes called-the folks in the boonies have had no political alternative. And as they say, the only power you have in this world is the power of an alternative. And so, lacking an alternative, the working/middle class has just had to accept its fate.

Indeed, it has been a bitter fate, particularly bitter in the former industrial heartland. In a 2013 paper, the Economic Policy Institute (EPI) came to some startling conclusions:

Growing trade with less-developed countries lowered wages in 2011 by 5.5 percent-or by roughly $1,800-for a full-time, full-year worker earning the average wage for workers without a four-year college degree.

The paper added, "One-third of this total effect is due to growing trade with just China."

Continuing, EPI found that even as trade with low-wage countries caused a decrease in the incomes for lower-end workers, it had caused an increase in the incomes of high-end workers-so no wonder the high-end thinks globalism in great.

To be sure, some in the elite are bothered by what's been happening. Peggy Noonan, writing earlier this year in The Wall Street Journal-a piece that must have raised the hackles of her doctrinaire colleagues-put the matter succinctly: There's a wide, and widening, gap between the "protected" and the "unprotected":

The protected make public policy. The unprotected live in it. The unprotected are starting to push back, powerfully.

Of course, Noonan was alluding to the Trump candidacy-and also to the candidacy of Sen. Bernie Sanders. Those two insurgents, in different parties, have been propelled by the pushing from all the unprotected folks across America.

We might pause to note that free traders have arguments which undoubtedly deserve a fuller airing. Okay. However, we can still see the limits. For example, the familiar gambit of outsourcing jobs to China, or Mexico-or 50 other countries-and calling that "free trade" is now socially unacceptable, and politically unsustainable.

Still, the broader vision of planetary freedom, including the free flow of peoples and their ideas, is always enormously appealing. The United States, as well as the world, undoubtedly benefits from competition, from social and economic mobility-and yes, from new blood.

As Stuart Anderson, executive director of the National Foundation for American Policy, notes, "77 percent of the full-time graduate students in electrical engineering and 71 percent in computer science at U.S. universities are international students." That's a statistic that should give every American pause to ask: Why aren't we producing more engineers here at home?

Moreover, Reuters reported in 2012 that 44 percent of all Silicon Valley startups were founded by at least one immigrant, and a 2016 study found that more than half of all billion-dollar startups were founded by immigrants. No doubt some will challenge the methodology of these studies, and that's fine; it's an important national debate in which all Americans might engage.

We can say, with admiration, that Silicon Valley is the latest Manchester; as such, it's a powerful magnet for the best and the brightest from overseas, and from a purely dollars-and-cents point of view, there's a lot to be said for welcoming them.

So yes, it would be nice if we could retain this international mobility that benefits the U.S.-but only if the economic benefits can be broadly shared, and patriotic assimilation of immigrants can be truly achieved, such that all Americans can feel good about welcoming newcomers.

The further enrichment of Silicon Valley won't do much good for the country unless those riches are somehow widely shared. In fact, amidst the ongoing outsourcing of mass-production jobs, total employment in such boomtowns as San Francisco and San Jose has barely budged. That is, new software billionaires are being minted every day, but their workforces tend to be tiny-or located overseas. If that past pattern is the future pattern, well, something will have to give.

We can say: If America is to be one nation-something Mitt "47 percent" Romney never worried about, although it cost him in the end-then we will have to figure out a way to turn the genius of the few into good jobs for the many. The goal isn't socialism, or anything like that; instead, the goal is the widespread distribution of private property, facilitated, by conscious national economic development, as I argued at the tail end of this piece.

If we can't, or won't, find a way to expand private ownership nationwide, then the populist upsurges of the Trump and Sanders campaigns will be remembered as mere overtures to a starkly divergent future.

6. Clinton and Trump Say They Are Trade Hawks: But Are They Sincere?

So now we come to a mega-question for 2016: How should we judge the sincerity of the two major-party candidates, Clinton or Trump, when they affirm their opposition to TPP? And how do we assess their attitude toward globalization, including immigration, overall?

The future is, of course, unknown, but we can make a couple of points.

First, it is true that many have questioned the sincerity of Hillary's new anti-TPP stance, especially given the presence of such prominent free-traders as vice presidential nominee Tim Kaine and presidential transition-planning chief Ken Salazar. Moreover, there's also Hillary's own decades-long association with open-borders immigration policies, as well as past support for such trade bills as NAFTA, PNTR, and, of course, TPP. And oh yes, there's the Clinton Foundation, that global laundromat for every overseas fortune; most of those billionaires are globalists par excellence-would a President Hillary really cross them?

Second, since there's still no way to see inside another person's mind, the best we can do is look for external clues-by which we mean, external pressures. And so we might ask a basic question: Would the 45th president, whoever she or he is, feel compelled by those external pressures to keep their stated commitment to the voters? Or would they feel that they owe more to their elite friends, allies, and benefactors?

As we have seen, Clinton has long chosen to surround herself with free traders and globalists. Moreover, she has raised money from virtually every bicoastal billionaire in America.

So we must wonder: Will a new President Clinton really betray her own class-all those Davos Men and Davos Women-for the sake of middle-class folks she has never met, except maybe on a rope line? Would Clinton 45, who has spent her life courting the powerful, really stick her neck out for unnamed strangers-who never gave a dime to the Clinton Foundation?

Okay, so what to make of Trump? He, too, is a fat-cat-even more of fat-cat, in fact, than Clinton. And yet for more than a year now, he has based his campaign on opposition to globalism in all its forms; it's been the basis of his campaign-indeed, the basis of his base. And his campaign policy advisers are emphatic. According to Politico, as recently as August 30, Trump trade adviser Peter Navarro reiterated Trump's opposition to TPP, declaring,

Any deal must increase the GDP growth rate, reduce the trade deficit, and strengthen the manufacturing base.

So, were Trump to win the White House, he would come in with a much more solid anti-globalist mandate.

Thus we can ask: Would a President Trump really cross his own populist-nationalist base by going over to the other side-to the globalists who voted, and donated, against him? If he did-if he repudiated his central platform plank-he would implode his presidency, the way that Bush 41 imploded his presidency in 1990 when he went back on his "read my lips, no new taxes" pledge.

Surely Trump remembers that moment of political calamity well, and so surely, whatever mistakes he might make, he won't make that one.

To be sure, the future is unknowable. However, as we have seen, the past, both recent and historical, is rich with valuable clues.

[Dec 04, 2016] Democrat Tom Coyne : Trump Challenging Institutional Elites in Both Parties

Notable quotes:
"... Donald Trump is challenging the very fabric of the institutional elites in this country on both sides that have, quite frankly, just straight up screwed this country up and made the world a mess. ..."
Aug 30, 2016 | www.breitbart.com
Tom Coyne, a lifelong Democrat and the mayor of Brook Park, Ohio, spoke about his endorsement of Republican presidential nominee Donald Trump with Breitbart News Daily SiriusXM host Matt Boyle.

Coyne said:

The parties are blurred. What's the difference? They say the same things in different tones. At the end of the day, they accomplish nothing. Donald Trump is challenging the very fabric of the institutional elites in this country on both sides that have, quite frankly, just straight up screwed this country up and made the world a mess.

Regarding the GOP establishment's so-called Never Trumpers, Coyne stated, "If it's their expertise that people are relying upon as to advice to vote, people should go the opposite."

Coyne has been described as "a blue-collar populist, blunt and politically incorrect":

In an interview last week, Coyne said that Democrats and Republicans have failed the city through inaction and bad trade policies, key themes Trump often trumpets.

"He understands us," Coyne said of Trump. "He is saying what we feel, and therefore, let him shake the bedevils out of everyone in the canyons of Washington D.C. The American people are responding to him."

Breitbart News Daily airs on SiriusXM Patriot 125 weekdays from 6:00 a.m. to 9:00 a.m. Eastern.

[Dec 04, 2016] In Trump We Trust E Pluribus Awesome! Ann Coulter

Notable quotes:
"... Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class. ..."
"... He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors ..."
"... Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages ..."
"... Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us: ..."
"... The RNC has been forcing Republican candidates to take suicidal positions forever They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote. ..."
"... American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago. ..."
"... Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar! ..."
"... Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. ..."
"... The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade." ..."
"... The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country." ..."
"... Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC. ..."
"... Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold. ..."
Aug 26, 2016 | www.amazon.com

Donald Trump isn't a politician -- he's a one-man wrecking ball against our dysfunctional and corrupt establishment. We're about to see the deluxe version of the left's favorite theme: Vote for us or we'll call you stupid. It's the working class against the smirking class.

Frank A. Lewes

No pandering! The essence of Trump in personality and issues , August 23, 2016

Ms. Coulter explains the journey of myself and so many other voters into Trump's camp. It captures the essence of Trump as a personality and Trump on the issues. If I had to sum Ms. Coulter's view of the reason for Trump's success in two words, I'd say "No Pandering!" I've heard many people, including a Liberal tell me, "Trump says what needs to be said."

I've voted Republican in every election going back to Reagan in 1980, except for 2012 when I supported President Obama's re-election. I've either voted for, or financially supported many "Establishment Republicans" like Mitt Romney and John McCain in 2008. I've also supported some Conservative ones like Newt Gingrich and Rudy Giuliani. In this election I'd been planning to vote for Jeb Bush, a superb governor when I lived in Florida.

Then Trump announced his candidacy. I had seen hints of that happening as far back as 2012. In my Amazon reviews in 2012 I said that many voters weren't pleased with Obama or the Republican Establishment. So the question became: "Who do you vote for if you don't favor the agendas of either party's legacy candidates?" In November 2013 I commented on the book DOUBLE DOWN: GAME CHANGE 2012 by Mark Halperin and John Heileman:

=====
Mr. Trump occupies an important place in the political spectrum --- that of being a Republican Populist.

He understands that if we're ever going to get our economy back on its feet the wage-earning middle class will have to prosper along with investors, who are recovering our fortunes in the stock market.

IMO whichever party nominates a candidate like Trump that really "gets" the idea that the economy is suffering because the middle class can't find employment at livable wages, will be the party that rises to dominance.

Mr. Trump, despite his flakiness, at least understood that essential fact of American economic life.

November 7, 2013
=====

Ms. Coulter says it more eloquently: "The Republican establishment has no idea how much ordinary voters hate both parties." Like me, she's especially annoyed with Republicans, because we think of the Republican Party as being our political "family" that has turned against us:

=====
The RNC has been forcing Republican candidates to take suicidal positions forever They were happy to get 100 percent of the Business Roundtable vote and 20 percent of the regular vote.

when the GOP wins an election, there is no corresponding "win" for the unemployed blue-collar voter in North Carolina. He still loses his job to a foreign worker or a closed manufacturing plant, his kids are still boxed out of college by affirmative action for immigrants, his community is still plagued with high taxes and high crime brought in with all that cheap foreign labor.

There's no question but that the country is heading toward being Brazil. One doesn't have to agree with the reason to see that the very rich have gotten much richer, placing them well beyond the concerns of ordinary people, and the middle class is disappearing. America doesn't make anything anymore, except Hollywood movies and Facebook. At the same time, we're importing a huge peasant class, which is impoverishing what remains of the middle class, whose taxes support cheap labor for the rich.

With Trump, Americans finally have the opportunity to vote for something that's popular.

=====

That explains how Trump won my vote --- and held on to it through a myriad of early blunders and controversies that almost made me switch my support to other candidates.

I'm no "xenophobe isolationist" stereotype. My first employer was an immigrant from Eastern Europe. What I learned working for him launched me on my successful career. I've developed and sold computer systems to subsidiaries of American companies in Europe and Asia. My business partners have been English and Canadian immigrants. My family are all foreign-born Hispanics. Three of my college roommates were from Ecuador, Germany, and Syria.

BECAUSE of this international experience I agree with the issues of trade and immigration that Ms. Coulter talks about that have prompted Trump's rising popularity.

First, there is the false promise that free trade with low-wage countries would "create millions of high-paying jobs for American workers, who will be busy making high-value products for export." NAFTA was signed in 1994. GATT with China was signed in 2001. Since then we've signed free trade with 20 countries. It was said that besides creating jobs for Americans, that free trade would prosper the global economy. In truth the opposite happened:

American companies used free trade with low-wage countries as an opportunity to close their American factories and relocate the jobs to lower-paying foreign workers. Instead of creating product and exporting it to other countries, our American companies EXPORTED American JOBS to other countries and IMPORTED foreign-made PRODUCTS into America! Our exports have actually DECLINED during the last five years with most of the 20 countries we signed free trade with. Even our exports to Canada, our oldest free trade partner, are less than what they were five years ago.

We ran trade SURPLUSES with Mexico until 1994, when NAFTA was signed. The very next year the surplus turned to deficit, now $60 billion a year. Given that each American worker produces an average of $64,000 in value per year, that is a loss of 937,000 American jobs to Mexico alone. The problem is A) that Mexicans are not wealthy enough to be able to afford much in the way of American-made product and B) there isn't much in the way of American-made product left to buy, since so much of former American-made product is now made in Mexico or China.

Trade with Japan, China, and South Korea is even more imbalanced, because those countries actively restrict imports of American-made products. We run a 4x trade imbalance with China, which cost us $367 billion last year. We lost $69 billion to Japan and $28 billion to South Korea. Our exports to these countries are actually DECLINING, even while our imports soar!

Thus, free trade, except with a few fair-trading countries like Canada, Australia, and possibly Britain, has been a losing proposition. Is it coincidence that our economy has weakened with each trade deal we have signed? Our peak year of labor force participation was 1999. Then we had the Y2K collapse and the Great Recession, followed by the weakest "recovery" since WWII? As Trump would say, free trade has been a "disaster."

Why do Establishment Republicans join with Democrats in wanting to diminish the future with the WRONG kind of "free trade" that removes jobs and wealth from the USA? As Ms. Coulter reminds us, it is because Republican Establishment, like the Democrat establishment, is PAID by the money and jobs they receive from big corporations to believe it. Ms. Coulter says:

=====
The donor class doesn't care. The rich are like locusts: once they've picked America dry, they'll move on to the next country. A hedge fund executive quoted in The Atlantic a few years ago said, "If the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile [that] means one American drops out of the middle class, that's not such a bad trade."
=====

Then there is immigration. My wife, son, and extended family legally immigrated to the USA from Latin America. The first family members were recruited by our government during the labor shortage of the Korean War. Some fought for the United States in Korea. Some of their children fought for us in Vietnam, and some grandchildren are fighting in the Middle East. Most have become successful professionals and business owners. They came here LEGALLY, some waiting in queue for up to 12 years. They were supported by the family already in America until they were on their feet.

Illegal immigration has been less happy. Illegals are here because the Democrats want new voters and the Republicans want cheap labor. Contrary to business propaganda, illegals cost Americans their jobs. A colleague just old me, "My son returned home from California after five years, because he couldn't get construction work any longer. All those jobs are now done off the books by illegals."

It's the same in technology. Even while our high-tech companies are laying off 260,000 American employees in 2016 alone, they are banging the drums to expand the importation of FOREIGN tech workers from 85,000 to 195,000 to replace the Americans they let go. Although the H1-B program is billed as bringing in only the most exceptional, high-value foreign engineers, in truth most visas are issued to replace American workers with young foreigners of mediocre ability who'll work for much less money than the American family bread-winners they replaced.

Both parties express their "reverse racism" against the White Middle Class. Democrats don't like them because they tend to vote Republican. The Republican Establishment doesn't like them because they cost more to employ than overseas workers and illegal aliens. According to them the WMC is too technologically out of date and overpaid to allow our benighted business leaders to "compete internationally."

Ms. Coulter says "Americans are homesick" for our country that is being lost to illegal immigration and the removal of our livelihoods overseas. We are sick of Republican and Democrat Party hidden agendas, reverse-racism, and economic genocide against the American people. That's why the Establishment candidates who started out so theoretically strong, like Jeb Bush, collapsed like waterlogged houses of cards when they met Donald Trump. As Ms. Coulter explains, Trump knows their hidden agendas, and knows they are working against the best interests of the American Middle Class.

Coulter keeps coming back to Mr. Trump's "Alpha Male" personality that speaks to Americans as nation without pandering to specific voter identity groups. She contrasts his style to the self-serving "Republican (Establishment) Brain Trust that is mostly composed of comfortable, well-paid mediocrities who, by getting a gig in politics, earn salaries higher than a capitalist system would ever value their talents." She explains what she sees as the idiocy of those Republican Establishment political consultants who wrecked the campaigns of Jeb Bush and Ted Cruz by micromanaging with pandering.

She says the Republican Establishment lost because it served itself --- becoming wealthy by serving the moneyed interests of Wall Street. Trump won because he is speaking to the disfranchised American Middle Class who loves our country, is proud of our traditions, and believes that Americans have as much right to feed our families through gainful employment as do overseas workers and illegal aliens.

"I am YOUR voice," says Trump to the Middle Class that until now has been ignored and even sneered at by both parties' establishments.

I've given an overview of the book here. The real delight is in the details, told as only Anne Coulter can tell them. I've quoted a few snippets of her words, that relate most specifically to my views on Trump and the issues. I wish there were space to quote many more. Alas, you'll need to read the book to glean them all!

Frank A. Lewes
Bruce, I would also add that the Republican Establishment chose not to represent the interests of the White Middle Class on trade, immigration, and other issues that matter to us. They chose to represent the narrow interests of:

1. The corporate 1% who believe that the global labor market should be tapped in order to beat American workers out of their jobs; and that corporations and the 1% who own them should be come tax-exempt organizations that profit by using cheap overseas labor to product product that is sold in the USA, and without paying taxes on the profit. Ms. Coulter calls this group of Republican Estblishmentarians "locusts: once they've picked America dry, they'll move on to the next country."

2. Pretending to care about the interests of minorities. Of course, the Republican Establishment has even less appeal to minorities than to the White Middle Class (WMC) they abandoned. Minorities are no more interested in losing their jobs to foreigners or to suffer economic stagnation while the rich have their increasing wealth (most of which is earned at the expense of the middle class) tax-sheltered, than do the WMC.

The Republican Establishment is in a snit because Trump beat them by picking up the WMC votes that the Establishment abandoned. What would have happened if Trump had not come on the scene? The probable result is that the Establishment would have nominated a ticket of Jeb Bush and John Kasich. These candidates had much to recommend them as popular governors of key swing states. But they would have gone into the election fighting the campaign with Republican Establishment issues that only matter to the 1%. They would have lost much of the WMC vote that ultimately rallied around Trump, while gaining no more than the usual 6% of minorities who vote Republican. It would have resulted in a severe loss for the Republican Party, perhaps making it the minority party for the rest of the century.

Trump has given Republicans a new lease on life. The Establishment doesn't like having to take a back seat to him, but perhaps they should understand that having a back seat in a popular production is so much better than standing outside alone in the cold.

Frank A. Lewes
It's funny how White Men are supposed to be angry. But I've never seen any White men:

1. Running amok, looting and burning down their neighborhood, shooting police and other "angry White men." There were 50 people shot in Chicago last weekend alone. How many of those do you think were "angry white men?" Hint: they were every color EXCEPT white.

2. Running around complaining that they aren't allowed into the other gender's bathroom, then when they barge their way in there complain about being sexually assaulted. No, it's only "angry females" (of any ethnicity) who barge their way into the men's room and then complain that somebody in there offended them.

Those "angry white men" are as legendary as "Bigfoot." They are alleged to exist everywhere, but are never seen. Maybe that's because they mostly hang out in the quiet neighborhoods of cookie-cutter homes in suburbia, go to the lake or bar-be-que on weekends, and take their allotment of Viagra in hopes of occassionally "getting lucky" with their wives. If they're "angry" then at least they don't take their angry frustrations out on others, as so many other militant, "in-your-face" activist groups do!

[Dec 04, 2016] Michael Hudson 2016 Is Wall Street and the Corporate Sector (Clinton) vs. the Populists (Trump)

Notable quotes:
"... I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful. ..."
"... (might be the Trump Chaos bc Hillary will strategically turn our war machine on us can't believe this is as good as it gets, sighed out) ..."
"... Having the establishment, the military-industrial complex and Wall Street against him helps Trump a lot. ..."
"... You can fool part of the people all the time, and all people part of the time, but Brexit won, so will Trump, politician extraordinaire ..."
"... Given his family, a Trump presidency may look more like JFK's, where Bobby had more power than LBJ. Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the VP have any power. ..."
"... What is a populist? Somebody that tries to do what the majority want. Current examples: Less wars and military spending. More infrastructure spending. Less support for banks and corps (imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the law' And how that repudiates Obama and both parties.) Gun control (but not possible from within the rep party) ..."
"... What is a fascist? Somebody that supports corporations, military, and military adventures. ..."
"... Actually, it sounds a whole lot like a different candidate from a different party, doesn't it? ..."
"... Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build a better global society for all it means Corporations and our military should be able to run roughshod over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic and military exploitation. Trump is nationalist non – interventionist, which leads to less global military destruction than hillary and less global exploitation. So who is a better for those outside the US, hillary the interventionist OR trump the non-interventionist? ..."
"... Look, the Clintons are criminals, and their affiliate entities, including the DNC, could be considered criminal enterprises or co-conspirators at this point. ..."
"... The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama. ..."
"... The striving for American empire has so totally confused the political order of the country that up is down and down is up. The idea of government for and by the people is a distant memory. Covering for lies and contradictions of beliefs has blurred any notion of principles informing public action. ..."
"... If there is any principle that matters today, it is the pursuit of money and profit reigns supreme. Trump is populist in the sense he is talking about bringing money and wealth back to the working classes. Not by giving it directly, but by forcing businesses to turn their sights back to the US proper and return to making their profits at home. In the end, it is all nostalgia and probably impossible, but working class people remember those days so it rings true. That is hope and change in action. People also could care less if he cheats on his taxes or is found out lying about how much he is worth. Once again, fudging your net worth is something working people care little about. Having their share of the pie is all that matters and Trump is tapping into that. ..."
"... The only crime Trump has committed so far is his language. Liberals like Clinton, Blair and Obama drip blood. ..."
"... The 2016 election cannot be looked at in isolation. The wars for profit are spreading from Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists. Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland. ..."
Jul 24, 2016 | www.nakedcapitalism.com

naked capitalism

Brindle, July 24, 2016 at 10:09 am

I've tuned out Warren-she has become the "red meat" surrogate for Clinton. Just because Taibbi was excellent on exposing Wall St. doesn't mean he really knows s**t about politics. I find the depiction of Trump as some kind of monster-buffoon to be simply boring and not very helpful.

abynormal , July 24, 2016 at 4:51 am

for all the run around Hillary, Trump's chosen circle of allies are Wall Street and Austerity enablers. actually, Trump chaos could boost the enablers as easily as Hillary's direct mongering. War is Money low hanging fruit in this cash strapped era and either directly or indirectly neither candidate will disappoint.
So I Ask Myself which candidate will the majority manage sustainability while assembling to create different outcomes? (might be the Trump Chaos bc Hillary will strategically turn our war machine on us can't believe this is as good as it gets, sighed out)

Norb , July 24, 2016 at 10:54 am

War is only good for the profiteers when it can be undertaken in another territory. Bringing the chaos home cannot be good for business. Endless calls for confidence and stability in markets must reflect the fact that disorder effects more business that the few corporations that benefit directly from spreading chaos. A split in the business community seems to be underway or at least a possible leverage point to bring about positive change.
Even the splits in the political class reflect this. Those that benefit from spreading chaos are loosing strength because they have lost control of where that chaos takes place and who is directly effected from its implementation. Blowback and collateral damage are finally registering.

Plenue , July 24, 2016 at 6:32 am

Trump may be a disaster. Clinton will be a disaster. One of these two will win. I won't vote for either, but if you put a gun to my head and forced me to choose, I'd take Trump. He's certainly not a fascist (I think it was either Vice or Vox that had an article where they asked a bunch of historians of fascism if he was, the answer was a resounding no), he's a populist in the Andrew Jackson style. If nothing else Trump will (probably) not start WW3 with Russia.

cm , July 24, 2016 at 11:28 am

And war with Russia doesn't depend just on Hillary, it depends on us in Western Europe agreeing with it.

A laughable proposition. The official US policy, as you may recall, is fuck the EU .

Where was Europe when we toppled the Ukrainian govt? Get back to me when you can actually spend 2% GDP on your military. At the moment you can't even control your illegal immigrants.

Lambert Strether Post author , July 24, 2016 at 12:46 pm

The political parties that survive display adaptability, and ideological consistency isn't a requirement for that. Look at the party of Lincoln. Or look at the party of FDR.

If the Democrats decapitate the Republican party by bringing in the Kagans of this world and Republican suburbanites in swing states, then the Republicans will go where the votes are; the Iron Law of Institutions will drive them to do it, and the purge of the party after Trump will open the positions in the party for people with that goal.

In a way, what we're seeing now is what should have happened to the Republicans in 2008. The Democrats had the Republicans down on the ground with Obama's boot on their neck. The Republicans had organized and lost a disastrous war, they had lost the legislative and executive branches, they were completely discredited ideologically, and they were thoroughly discredited in the political class and in the press.

Instead, Obama, with his strategy of bipartisanship - good faith or not - gave them a hand up, dusted them off, and let them right back in the game, by treating them as a legitimate opposition party. So the Republican day of reckoning was postponed. We got various bids for power by factions - the Tea Party, now the Liberty Caucus - but none of them came anywhere near taking real power, despite (click-driven money-raising) Democrat hysteria.

And now the day of reckoning has arrived. Trump went through the hollow institutional shell of the Republican Party like the German panzers through the French in 1939. And here we are!

(Needless to say, anybody - ***cough*** Ted Cruz ***cough*** - yammering about "conservative principles" is part of the problem, dead weight, part of the dead past.) I don't know if the Republicans can remake themselves after Trump; what he's doing is necessary for that, but may not be sufficient.

Steve C , July 24, 2016 at 5:09 pm

Republicans won Congress and the states because the Democrats handed them to them on a silver platter. To Obama and his fan club meaningful power is a hot potato, to be discarded as soon as plausible.

Older & Wiser , July 24, 2016 at 8:37 am

Having the establishment, the military-industrial complex and Wall Street against him helps Trump a lot.

Pro-Sanders folks, blacks, and hispanics will mostly vote for Trump.
Having Gov. Pence on the ticket, core Republicans and the silent majority will vote for Trump.
Women deep inside know Trump will help their true interests better than the Clinton-Obama rinse repeat
Young people, sick and tired of the current obviously rigged system, will vote for change.

You can fool part of the people all the time, and all people part of the time, but Brexit won, so will Trump, politician extraordinaire
Even Michael Moore gets it

cm , July 24, 2016 at 11:35 am

Trump has intimated that he is not going to deal with the nuts and bolts of government, that will be Pence's job.

Given his family, a Trump presidency may look more like JFK's, where Bobby had more power than LBJ.

Also, given Trump's negotiating expertise, I would certainly not believe any assertion of support he proclaims for the VP. I expect he had little choice in the matter, and that he also plans to send the VP to the hinterlands at the first opportunity. I'm unclear why so many appear to believe the VP has any influence whatsoever; I believe GWB was the only post-WW2 president who let the VP have any power.

John k , July 24, 2016 at 10:48 am

Minorities will benefit at least as much as whites with infrastructure spending, which trump says he wants to do It would make him popular, which he likes, why not believe him? And if pres he would be able to get enough rep votes to get it passed. No chance with Hillary, who anyway would rather spend on wars, which are mostly fought by minorities.

What is a populist? Somebody that tries to do what the majority want. Current examples:
Less wars and military spending. More infrastructure spending. Less support for banks and corps (imagine how many votes trump would gain if he said 'as pres I will jail bankers that break the law' And how that repudiates Obama and both parties.) Gun control (but not possible from within the rep party)

What is a fascist? Somebody that supports corporations, military, and military adventures.

Uahsenaa , July 24, 2016 at 12:59 pm

I'm saying you have a much better chance to pressure Clinton

Sorry, but this argues from facts not in evidence and closely resembles the Correct the Record troll line (now substantiated through the Wikileaks dump) that Clinton "has to be elected" because she is at least responsive to progressive concerns.

Except she isn't, and the degree to which the DNC clearly has been trying to pander to disillusioned Republicans and the amount of bile they spew every time they lament how HRC has had to "veer left" shows quite conclusively to my mind that, in fact, the opposite of what you say is true.

Also, when NAFTA was being debated in the '90s, the Clintons showed themselves to be remarkably unresponsive both to the concerns of organized labor (who opposed it) as well as the majority of the members of their own party, who voted against it. NAFTA was passed only with a majority of Republican votes.

I have no way of knowing whether you're a troll or sincerely believe this, but either way, it needs to be pointed out that the historical record actually contradicts your premise. If you do really believe this, try not to be so easily taken in by crafty rhetoric.

EndOfTheWorld , July 24, 2016 at 8:19 am

BTW, I'll take Trump's record as a husband over HRC's record as a wife. He loves a woman, then they break up, and he finds another one. This is not unusual in the US. Hillary, OTOH, "stood by her man" through multiple publicly humiliating infidelities, including having to settle out of court for more than $800,000, and rape charges. No problem with her if her husband was flying many times on the "Lolita Express" with a child molester. Could be she had no idea where her "loved one" was at the time. Do they in fact sleep in the same bed, or even live in the same house? I don't know.

EndOfTheWorld , July 24, 2016 at 7:12 am

RE: calling Donald Trump a "sociopath"-this is another one of those words that is thrown around carelessly, like "nazi" and "fascist". In the Psychology Today article "How to Spot a Sociopath", they list 16 key behavioral characteristics. I can't see them in Trump-you could make a case for a few of them, but not all. For example: "failure to follow any life plan", "sex life impersonal, trivial, and poorly integrated", "poor judgment and failure to learn by experience", "incapacity for love"-–you can't reasonably attach these characteristics to The Donald, who, indeed, has a more impressive and loving progeny than any other prez candidate I can think of.

edmondo , July 24, 2016 at 8:01 am

Actually, it sounds a whole lot like a different candidate from a different party, doesn't it?

HBE , July 24, 2016 at 11:06 am

"I have a sense of international identity as well: we are all brothers and sisters."

Neoliberal "Goodthink" flag. What this means when neoliberals say it is not let's build a better global society for all it means Corporations and our military should be able to run roughshod over the world and the people's of other countries. Exploit their citizens for cheap Labor, destroy their environment and move on. These are the exact policies of Hillary Clinton (see TPP, increase foreign wars etc.). Hillary globalism is not about global Brotherhood it's about global economic and military exploitation. Trump is nationalist non – interventionist, which leads to less global military destruction than hillary and less global exploitation. So who is a better for those outside the US, hillary the interventionist OR trump the non-interventionist?

"And not everyone feels the same way, but for most voters there is either a strong tribal loyalty (Dem or Repub) or a weaker sense of "us" guiding the voter on that day.
Mad as I am about the Blue Dogs, I strongly identify with the Dems."

So you recognize you are a tribalist, and assume all the baggage and irrationality that tribalism often fosters, but instead of addressing your tribalism you embrace it. What you seem to be saying (to me)is that we should leave critical thinking at the door and become dem tribalists like you.

"But the Repubs and Dems see Wall Street issues through different cultural prisms. Republican are more reflexively pro-business. It matters."

Hillary Clinton's biggest donors are Wallstreet and her dem. Husband destroyed glass-steagall. Trump wants to reinstate glass-steagall, so who is more business friendly again?

"He is racist, and so he knows how to push ugly buttons."

This identity politics trope is getting so old. Both are racist just in different ways, Trump says in your face racist things, which ensure the injustice cannot be ignored, where hillary has and does support racist policies, that use stealth racism to incrementaly increase the misery of minorities, while allowing the majority to pretend it's not happening.

"First, he will govern with the Republicans. Republican judges, TPP, military spending, environmental rollbacks, etc. Trump will not overrule Repubs in Congress."

These are literally hillarys policies not trumps.
Trump: anti TPP, stop foreign interventions, close bases use money for infrastructure.
Hillary :Pro TPP, more interventions and military spending

"And no, no great Left populist party will ride to the rescue. The populist tradition (identity) is mostly rightwing and racist in our society.
People do not change political identity like their clothes. The left tradition in the US, such as it is, is in the Dem party."

So what you are saying is quit being stupid, populism is bad and you should vote for hillarys neoliberalism. The democrats were once left so even if they are no longer left, we must continue to support them if another party or candidate that is to the left isn't a democrat? Your logic hurts my head.

Arnold Babar , July 24, 2016 at 3:53 pm

Look, the Clintons are criminals, and their affiliate entities, including the DNC, could be considered criminal enterprises or co-conspirators at this point. Those who haven't realized that, or worse, who shill for them are willfully ignorant, amoral, or unethical. The fact that that includes a large chunk of the population doesn't change that. I don't vote for criminals.

sunny129 , July 24, 2016 at 2:20 pm

DNC is no different than RNC!

The very fact that Establishment, Wall St and Koch bros are behind HRC is evidence that the current 'status quo' will be continued! I cannot stand another 4 years of Hilabama.

I hate Hillary more than Trump. I want to protest at the Establishment, which at this represented by Hillary.

http://www.cnn.com/2016/07/24/politics/dnc-email-leak-wikileaks/index.html

John k , July 24, 2016 at 11:13 am

Populism (support for popular issues) is, well, popular.

Fascism (support for corps and military adventures) is, at least after our ME adventures, unpopular.

Commenters are expressing support for the person expressing popular views, such as infrastructure spending, and expressing little support for the candidate they believe is most fascist.

Btw, Most on this site are liberals, few are reps, so to support him they have had to buck some of their long held antipathy regarding reps.

EndOfTheWorld , July 24, 2016 at 12:14 pm

Right, what is changing with Trump is the Republicans are going back to, say, the Eisenhower era, when Ike started the interstate highway system, a socialist program if there ever was one.

local to oakland , July 24, 2016 at 10:48 am

This article by Mckay Coppins was illuminating I thought.
https://www.buzzfeed.com/mckaycoppins/how-the-haters-made-trump?utm_term=.sm0BPXq0g#.qnzvzj8aP

It shows some of his history in a fairly sympathetic light.

Lambert Strether Post author , July 24, 2016 at 1:23 pm

It's a good article; this is a general observation. Sorry!

"Hate" seems to be a continuing Democrat meme, and heck, who can be for hate? So it makes sense rhetorically, but in policy terms it's about as sensible as being against @ssh0les (since as the good book says, ye have the @ssh0les always with you). So we're really looking at virtue signaling as a mode of reinforcing tribalism, and to be taken seriously only for that reason. If you look at the political class writing about the working class - modulo writers like Chris Arnade - the hate is plain as day, though it's covered up with the rhetoric of meritocracy, taking care of losers, etc.

Strategic hate management is a great concept. It's like hate can never be created or destroyed, and is there as a resource to be mined or extracted. The Clinton campaign is doing a great job of strategic hate management right now, by linking Putin and Trump, capitalizing on all the good work done in the press over the last year or so.

Pat , July 24, 2016 at 12:10 pm

For years we have been told that government should be run like a business. In truth that statement was used as a cudgel to avoid having the government provide any kind of a safety net to its citizenry because there was little or no profit in it for the people who think that government largess should only be for them.

Here's the thing, if government had been run like a business, we the people would own huge portions of Citigroup, Goldman Sachs and Chase today. We wouldn't have bailed them out without an equity stake in them. Most cities would have a share of the gate for every stadium that was built. And rather than paying nothing to the community Walmart would have been paying a share of their profits (much as those have dropped over the years).

I do not like Trump's business, but he truly does approach his brand and his relationships as a business. When he says he doesn't like the trade deals because they are bad business and bad deals he is correct. IF the well being of the United states and his populace are what you are interested in regarding trade deals, ours are failures. Now most of us here know that was not the point of the trade deals. They have been a spectacular success for many of our largest businesses and richest people, but for America as a whole they have increased our trade deficit and devastated our job base. When he says he won't go there, this is one I believe him on.

I also believe him on NATO and on the whole Russian thing. Why, because of the same reasons I believe him on Trade. They are not winners for America as a whole. They are bad deals. Europe is NOT living up to their contractual agreement regarding NATO. For someone who is a believer in getting the better of the deal that is downright disgusting. And he sees no benefit in getting into a war with Russia. The whole reserve currency thing vs. nukes is not going to work for him as a cost benefit analysis of doing it. He is not going to front this because it is a business loser.

We truly have the worst choices from the main parties in my lifetime. There are many reasons Trump is a bad candidate. But on these two, he is far more credible and on the better side of things than the Democratic nominee. And on the few where she might reasonably considered to have a better position, unfortunately I do not for a moment believe her to be doing more than giving lip service based on both her record and her character.

GF , July 24, 2016 at 12:51 pm

This article from Talking Points Memo was pointed to by PK in his Twitter feed today. It has some interesting background on Trump's Russian connections:
http://talkingpointsmemo.com/edblog/trump-putin-yes-it-s-really-a-thing

tegnost , July 24, 2016 at 1:03 pm

Is it your opinion that to have globalisation we must marginalize russia to the extent that they realize they can't have utopia and make the practical choice of allowing finance capitalism to guide them to realistic incrementally achieved debt bondage?

DarkMatters , July 24, 2016 at 12:11 pm

World turned upside down.

The Democratic Party has been inching further and further to the right. Bernie tried to arrest this drift, but his internal populist rebellion was successfully thwarted by party elite corruption. The Democratic position is now so far to the right that the Republicans will marginalize themselves if they try to keep to the right of the Democrats.

But, despite party loyalty or PC slogans, the Democrat's rightward position is now so obvious that it can be longer disguised by spin. The Trump campaign has demonstrated, the best electoral strategy for the Republican Party is to leapfrog leftward and campaign from a less corporate position. This has given space for the re-evaluation of party positions that Trump is enunciating, and the result is that the Trump is running to the
left of Hillary. How weird is this?

DarkMatters , July 24, 2016 at 12:59 pm

I meant to use right and left to refer generally to elite vs popular. The issue is too big to discuss without some simplification, and I'm sorry it has distracted from the main issue. On the face of it, judging from the primaries, the Republican candidates who represented continued rightward drift were rejected. (Indications are that the same thing happened in the Democratic Party, but party control was stronger there, and democratic primary numbers will never be known).

The main point I was trying to make is that the Democratic party has been stretching credulity to the breaking point in claiming to be democratic in any sense, and finally the contradiction between their statements and actions has outpaced the capabilities of their propaganda. Their Orwellian program overextended itself. Popular recognition of the disparity has caused a kind of political "snap" that's initiated a radical reorganization of what used to be the party of the right (or corporations, or elites, or finance, or "your description here".)

Besides confusion between which issues are right or left for Republicans or Democrats on the national level, internationally, the breakdown of popular trust in the elites, and the failure of their propaganda on that scale, is leading to a related worldwide distrust and rejection of elite policies. This distrust has been percolating in pockets for some time, but it seems it's now become so widespread that it's practically become a movement.

I suspect, however, there's a Plan B for this situation to restore the proper order. Will be interesting to see how this plays out.

Norb , July 24, 2016 at 2:01 pm

The striving for American empire has so totally confused the political order of the country that up is down and down is up. The idea of government for and by the people is a distant memory. Covering for lies and contradictions of beliefs has blurred any notion of principles informing public action.

If there is any principle that matters today, it is the pursuit of money and profit reigns supreme. Trump is populist in the sense he is talking about bringing money and wealth back to the working classes. Not by giving it directly, but by forcing businesses to turn their sights back to the US proper and return to making their profits at home. In the end, it is all nostalgia and probably impossible, but working class people remember those days so it rings true. That is hope and change in action. People also could care less if he cheats on his taxes or is found out lying about how much he is worth. Once again, fudging your net worth is something working people care little about. Having their share of the pie is all that matters and Trump is tapping into that.

Clintons arrogance is worse because the transcripts probably clearly show her secretly conspiring with bankers to screw the working people of this country. Trumps misdeeds effect his relationship to other elites while Clintons directly effect working people.

Such a sorry state of affairs. When all that matters is the pursuit of money and profit, moving forward will be difficult and full of moral contradictions. Populism needs a new goal. The political machinery that gives us two pro-business hacks and an ineffectual third party has fundamentally failed.

The business of America must be redefined, not somehow brought back to a mythical past greatness. Talk about insanity.

John Wright , July 24, 2016 at 3:14 pm

Thanks for the mention of the Bob Herbert editorial.

I found it by searching for your quoted statement at http://www.nytimes.com/2001/02/26/opinion/in-america-cut-him-loose.html

I was published Feb 26,2001

Herbert has some advice for the Democrats.

"Bill Clinton has been a disaster for the Democratic Party. Send him packing."

"There's not much the Democrats can do about Mrs. Clinton. She's got a Senate seat for six years. But there is no need for the party to look to her for leadership. The Democrats need to regroup, re-establish their strong links to middle-class and working-class Americans, and move on."

"You can't lead a nation if you are ashamed of the leadership of your party. The Clintons are a terminally unethical and vulgar couple, and they've betrayed everyone who has ever believed in them."

"As neither Clinton has the grace to retire from the scene, the Democrats have no choice but to turn their backs on them. It won't be easy, but the Democrats need to try. If they succeed they'll deserve the compliment Bill Clinton offered Gennifer Flowers after she lied under oath: "Good for you." "

Amazing how the New York Times has "evolved" from Herbert's editorial stance of 15 years ago to their unified editorial/news support for HRC's candacy,

In my view, it is not as if HRC has done anything to redeem herself in the intervening years.

Herbert left the NY Times in 2011..

Sound of the Suburbs , July 24, 2016 at 3:28 pm

It takes liberals to create a refugee crisis.
What country are we going to bomb back into the stone age this week?

We are very squeamish about offensive language.
We don't mind dropping bombs and ripping people apart with red hot shrapnel.
We are liberals.

Liberal sensibilities were on display in the film "Apocalypse Now".
No writing four letter words on the side of aircraft.
Napalm, white phosphorous and agent orange – no problem.

Liberals are like the English upper class – outward sophistication hiding the psychopath underneath.
They were renowned for their brutality towards slaves, the colonies and the English working class (men, women and children) but terribly sophisticated when with their own.

Are you a bad language sort of person – Trump
Or a liberal, psychopath, empire builder – Clinton

The only crime Trump has committed so far is his language. Liberals like Clinton, Blair and Obama drip blood.

Richard , July 24, 2016 at 3:39 pm

Lambert strether said: my view is that the democrat party cannot be saved, but it can be seized.
Absolutely correct.
That is why Trump must be elected. Only then through the broken remains of both Parties can the frangible Democrat Party be seized and restored.

VietnamVet , July 24, 2016 at 6:54 pm

The 2016 election cannot be looked at in isolation. The wars for profit are spreading from Nigeria through Syria to Ukraine. Turkey was just lost to the Islamists and is on the road to being a failed state. The EU is in an existential crisis due to Brexit, the refugee crisis and austerity. Western leadership is utterly incompetent and failing to protect its citizens. Globalization is failing. Its Losers are tipping over the apple cart. Humans are returning to their tribal roots for safety. The drums for war with Russia are beating. Clinton / Kaine are 100% Status Quo Globalists. Trump / Pence are candidates of change to who knows what. Currently I am planning on voting for the Green Party in the hope it becomes viable and praying that the chaos avoids Maryland.

[Dec 04, 2016] Dont blame the masses

Notable quotes:
"... Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth. ..."
"... Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China. ..."
Aug 08, 2016 | www.bostonglobe.com
Because we interpreted the end of the Cold War as the ultimate vindication of America's economic system, we intensified our push toward the next level of capitalism, called globalization. It was presented as a project that would benefit everyone. Instead it has turned out to be a nightmare for many working people. Thanks to "disruption" and the "global supply chain," many American workers who could once support families with secure, decent-paying jobs must now hope they can be hired as greeters at Walmart. Meanwhile, a handful of super-rich financiers manipulate our political system to cement their hold on the nation's wealth.
Enrique Ferro's insight:
Moments of change require adaptation, but the United States is not good at adapting. We are used to being in charge. This blinded us to the reality that as other countries began rising, our relative power would inevitably decline. Rather than shifting to a less assertive and more cooperative foreign policy, we continued to insist that America must reign supreme. When we declared that we would not tolerate the emergence of another "peer power," we expected that other countries would blithely obey. Instead they ignore us. We interpret this as defiance and seek to punish the offenders. That has greatly intensified tensions between the United States and the countries we are told to consider our chief adversaries, Russia and China.

[Dec 04, 2016] The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies

This is downright sickening and the people who are voting for Hillary will not even care what will happen with the USA iif she is elected.
By attacking Trump using "Khan gambit" she risks a violent backlash (And not only via Wikileaks, which already promised to release information about her before the elections)
People also start to understand that she is like Trump. He destroyed several hundred American lifes by robbing them, exploiting their vanity (standard practice in the USA those days) via Trump University scam. She destroyed the whole country -- Libya and is complicit in killing Khaddafi (who, while not a nice guy, was keeping the country together and providing be highest standard of living in Africa for his people).
In other words she is a monster and sociopath. He probably is a narcissist too. So there is no much phychological difference between them. And we need tight proportions to judge this situation if we are talking about Hillary vs Trump.
As for people voting for Trump -- yes they will. I think if Hillary goes aganst Trump, the female neoliberal monster will be trumped. She has little chances even taking into account the level of brainwashing in the USA (which actually is close to those that existed in the USSR).
Notable quotes:
"... The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist. ..."
"... U.S. Government Tried to Tackle Gun Violence in 1960s ..."
"... Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them. ..."
"... The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences. ..."
"... "Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor. ..."
"... My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. ..."
"... " the gutters and cutters of neoliberalism" ..."
"... The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck. ..."
"... The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. ..."
"... This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot. ..."
"... Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government. ..."
"... In other words, the MSM's fear is the clearest sign to these voters that their ..."
"... Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase. ..."
"... Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories? ..."
"... Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal. ..."
"... Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders. ..."
"... Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors. ..."
"... Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation. Impose tariffs to compensate for lower labor costs overseas and revise industry. ..."
"... Cut the Defense budget by 50% and use that money for intensive infrastructure development. ..."
"... Raise the national minimum wage to $15 and hour. ..."
"... Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official. ..."
"... Free public education including college (4 year degree). ..."
"... Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left. ..."
"... This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade. ..."
"... Totally agree tegnost, no more democratic neoliberals ! ..."
"... "they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism? ..."
"... Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption. ..."
"... Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people. ..."
"... The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy. ..."
"... America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses. ..."
"... Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy. ..."
www.nakedcapitalism.com
The first comment gives a window into the hidden desperation in America that is showing up in statistics like increasing opioid addiction and suicides, rather than in accounts of how and why so many people are suffering. I hope readers will add their own observations in comments.

seanseamour, June 1, 2016 at 3:26 am

We recently took three months to travel the southern US from coast to coast. As an expat for the past twenty years, beyond the eye opening experience it left us in a state of shock. From a homeless man convulsing in the last throes of hypothermia (been there) behind a fuel station in Houston (the couldn't care less attendant's only preoccupation getting our RV off his premises), to the general squalor of near-homelessness such as the emergence of "American favelas" a block away from gated communities or affluent ran areas, to transformation of RV parks into permanent residencies for the foreclosed who have but their trailer or RV left, to social study one can engage while queuing at the cash registers of a Walmart before beneficiaries of SNAP.

Stopping to take the time to talk and attempt to understand their predicament and their beliefs as to the cause of their plight is a dizzying experience in and of itself. For a moment I felt transposed to the times of the Cold War, when the Iron Curtain dialectics fuzzed the perception of that other world to the west with a structured set of beliefs designed to blacken that horizon as well as establish a righteous belief in their own existential paradigm.

What does that have to do with education? Everything if one considers the elitist trend that is slowly setting the framework of tomorrow's society. For years I have felt there is a silent "un-avowed conspiracy", why the seeming redundancy, because it is empirically driven as a by-product of capitalism's surge and like a self-redeeming discount on a store shelf crystalizes a group identity of think-alike know-little or nothing frustrated citizens easily corralled by a Fox or Trump piper. We have re-rcreated the conditions or rather the reality of "Poverty In America" barely half a century after its first diagnostic with one major difference : we are now feeding the growth of the "underclass" by lifting ever higher and out of reach the upward mobility ladder, once the banner of opportunity now fallen behind the supposedly sclerotic welfare states of Europe.

Praedor, June 1, 2016 at 5:37 pm

So Richard Cohen now fears American voters because of Trump. Well, on Diane Reem today (NPR) was a discussion on why fascist parties are growing in Europe. Both Cohen and the clowns on NPR missed the forest for the trees. The reason Trump and Sanders are doing well in the US while fascists are doing well in Europe is the same reason: neoliberalism has gutted, or is in the process of gutting, societies. Workers and other formerly "safe" white collar workers are seeing their job security, income security, retirement security all go up in smoke. Neoliberals are trying to snip and cut labor protections, healthcare, environmental regulations all for corporate profit. In Europe this is all in addition to a massive refugee crisis itself brought on by neoliberalism (neocon foreign policy is required for neoliberal social policy, they go hand-in-hand). The US and NATO destabilize countries with the intent of stealing their resources and protecting their markets, cause massive refugee flows which strain social structures in Europe (which falls right into the hands of the gutters and cutters of neoliberalism). Of course the people will lean fascist.

In the US we don't have the refugees, but the neoliberalism is further along and more damaging. There's no mystery here or in Europe, just the natural effects of governments failing to represent real people in favor of useless eater rich.

Make the people into commodities, endanger their washes and job security, impose austerity, and tale in floods of refugees. Of COURSE Europeans stay leaning fascist.

Praedor , June 2, 2016 at 3:31 pm

According to NPR's experts, many or most of those parties are "fascist". The fascist label is getting tossed around a LOT right now. It is slung at Trump, at UKIP, or any others. Fascist is what you call the opposition party to the right that you oppose. Now I don't call Trump a fascist. A buffoon, yes, even a charlatan (I still rather doubt he really originally thought he would become the GOP nominee. Perhaps I'm wrong but, like me, many seemed to think that he was pushing his "brand" – a term usage of which I HATE because it IS like we are all commodities or businesses rather than PEOPLE – and that he would drop by the wayside and profit from his publicity).

Be that as it may, NPR and Co were discussing the rise of fascist/neofascist parties and wondering why there were doing so well. Easy answer: neoliberalism + refugee hoards = what you see in Europe.

I've also blamed a large part of today's gun violence in the USA on the fruits of neoliberalism. Why? Same reason that ugly right-wing groups (fascist or not) are gaining ground around the Western world. Neoliberalism destroys societies. It destroys the connections within societies (the USA in this case). Because we have guns handy, the result is mass shootings and flashes of murder-suicides. This didn't happen BEFORE neoliberalism got its hooks into American society. The guns were there, always have been (when I was a teen I recall seeing gun mags advertising various "assault weapons" for sale this was BEFORE Reagan and this was BEFORE mass shootings, etc). Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism. Neoliberalism steals your job security, your healthcare security, your home, your retirement security, your ability to provide for your family, your ability to send your kids to college, your ability to BUY FOOD. Neoliberalism means you don't get to work for a company for 20 years and then see the company pay you back for that long, good service with a pension. You'll be lucky to hold a job at any company from month-to-month now and FORGET about benefits! Healthcare? Going by the wayside too. Workers in the past felt a bond with each other, especially within a company. Neoliberalism has turned all workers against each other because they have to fight to gain any of the scraps being tossed out by the rich overlords. You can't work TOGETHER to gain mutual benefit, you need to fight each other in a zero sum game. For ME to win you have to lose. You are a commodity. A disposable and irrelevant widget. THAT combines with guns (that have always been available!) and you get desperate acting out: mass shootings, murder suicides, etc.

WorldBLee , June 2, 2016 at 6:06 pm

There are actual fascist parties in Europe. To name a few in one country I've followed, Ukraine, there's Right Sector, Svoboda, and others, and that's just one country. I don't think anyone calls UKIP fascist.

John Zelnicker , June 3, 2016 at 12:24 am

@Praedor – Your comment that Yves posted and this one are excellent. One of the most succinct statements of neoliberalism and its worst effects that I have seen.

As to the cause of recent mass gun violence, I think you have truly nailed it. If one thinks at all about the ways in which the middle class and lower have been squeezed and abused, it's no wonder that a few of them would turn to violence. It's the same despair and frustration that leads to higher suicide rates, higher rates of opiate addiction and even decreased life expectancy.

Jacob , June 3, 2016 at 11:35 am

"Machine guns were much easier to come by BEFORE the 1980s yet we didn't have mass killings with machine guns, handguns, or shotguns. ALL that stuff is a NEW disease. A disease rooted in neoliberalism."

Easy availability of guns was seen as a serious problem long before the advent of neoliberalism. For one example of articles about this, see U.S. Government Tried to Tackle Gun Violence in 1960s . Other examples include 1920s and 1930s gangster and mob violence that were a consequence of Prohibition (of alcohol). While gun violence per-capita might be increasing, the population is far larger today, and the news media select incidents of violence to make them seem like they're happening everywhere and that everyone needs to be afraid. That, of course, instills a sense of insecurity and fear into the public mind; thus, a fearful public want a strong leader and are willing to accept the inconvenience and dangers of a police state for protection.

Disturbed Voter , June 2, 2016 at 6:49 am

First they came for the blue collar workers

America has plenty of refugees, from Latin America

Neo-liberal goes back to the Monroe Doctrine. We used to tame our native workers with immigrants, and we still do, but we also tame them by globalism in trade. So many rationalizations for this, based on political and economic propaganda. All problems caused by the same cause American predatory behavior. And our great political choice iron fist with our without velvet glove.

Jeff , June 2, 2016 at 7:58 am

Germany, Belgium, France, Poland, Hungary, Romania, Turkey, Israel, Australia come to mind (if one is allowed to participate in a European song contest, one is supposed to be part of Europe :) They all have more or less fascist governments.
Once you realize that the ECB creates something like 60 billion euros a month, and gives nothing to its citizens nor its nation-states, that means the money goes to corporations, which means that the ECB, and by extension the whole EU, is a fascist construct (fascism being defined as a government running on behalf of the corporations).

Seb , June 2, 2016 at 8:07 am

That's a fallacy. Corporatism is a feature of fascism, not the other way around.

None of the governments you mention, with the possible exception of Israel and Turkey, can be called fascist in any meaningful sense.

Even the anti-immigration parties in the Western European countries you mention – AfD, Front National, Vlaams Belang – only share their nationalism with fascist movements. And they are decidedly anti-corporatist.

BananaBreakfast , June 4, 2016 at 5:28 pm

The problem here is one of semantics, really. You're using "fascist" interchangeably with "authoritarian", which is a misnomer for these groups. The EU is absolutely anti-democratic, authoritarian, and technocratic in a lot of respects, but it's not fascist. Both have corporatist tendencies, but fascist corporatism was much more radical, much more anti-capitalist (in the sense that the capitalist class was expected to subordinate itself to the State as the embodiment of the will of the Nation or People, as were the other classes/corporate units). EU technocratic corporatism has none of the militarism, the active fiscal policy, the drive for government supported social cohesion, the ethno-nationalism, or millenarianism of Fascism.

The emergent Right parties like UKIP, FNP, etc. share far more with the Fascists, thought I'd say they generally aren't yet what Fascists would have recognized as other Fascists in the way that the NSDAP and Italian Fascists recognized each other -perhaps they're more like fellow travelers.

tgs , June 2, 2016 at 9:46 am

True, I posted a few minutes ago saying roughly the same thing – but it seems to have gone to moderation.

Another key feature of fascism is territorial expansionism. As far as I am aware, none of the nationalist parties advocate invading other countries or retaking former colonies. Once again, contemporary neoliberalism is far closer to fascism. But you are correct about both Israel and Turkey – our allies. They are much closer to the genuine article. But you won't hear those complaining about the rise of fascism in Europe complaining too much about them.

Jeff , June 2, 2016 at 10:05 am

When I was young, there were 4 divisions:
* who owned the means of production (public or private entities)
* who decided what those means were used for.
If it is a 'public entity' (aka government or regime) that decides what is built, we have a totalitarian state, which can be 'communist' (if the means also belong the public entities like the government or regional fractions of it) or 'fascist' (if the factories are still in private hands).
If it is the private owner of the production capacity who decides what is built, you get capitalism. I don't recall any examples of private entities deciding what to do with public means of production (mafia perhaps).
Sheldon Wolin introduced us to inverted totalitarism. While it is no longer the government that decides what must be done, the private 'owners' just buy the government, the judiciary, the press, or whatever is needed to achieve their means.
When I cite Germany, it is not so much AfD, but the 2€/hour jobs I am worried about. When I cite Belgium, it is not the fools of Vlaams Belang, but rather the un-taxing of corporations and the tear-down of social justice that worries me.

Jim , June 2, 2016 at 1:57 pm

But Jeff, is Wolin accurate in using the term "inverted totalitarianism" to try to capture the nature of our modern extractive bureaucratic monolith that apparently functions in an environment where "it is no longer the government that decides what must be done..simply.."private owners just buy the government, the judiciary, the press, or whatever is needed to achieve their means."

Mirowski argues quite persuasively that the neoliberal ascendency does not represent the retreat of the State but its remaking to strongly support a particular conception of a market society that is imposed with the help of the State on our society.

For Mirowski, neoliberalism is definitely not politically libertarian or opposed to strong state intervention in the economy and society.

TedWa , June 2, 2016 at 10:19 am

Inverted totalitarianism is the mirror image of fascism, which is why so many are confused. Fascism is just a easier term to use and more understandable by all. There is not a strict adherence to fascism going on, but it's still totalitarian just the same.

jan , June 2, 2016 at 10:54 am

Hi
I live in Europe as well, and what to think of Germany's AfD, Greece's Golden Dawn, the Wilder's party in the Netherlands etc. Most of them subscribe to the freeloading, sorry free trading economic policies of neoliberalism.

schizosoph , June 2, 2016 at 9:28 am

There's LePen in France and the far-right, fascist leaning party nearly won in Austria. The far right in Greece as well. There's clearly a move to the far right in Europe. And then there's the totalitarian mess that is Turkey. How much further this turn to a fascist leaning right goes and how widespread remains to be seen, but it's clearly underway.

myshkin , June 2, 2016 at 11:28 am

Searched 'current fascist movements europe' and got these active groups from wiki.

National Bolshevik Party-Belarus
Parti Communautaire National-Européen Belgium
Bulgarian National Alliance Bulgaria
Nova Hrvatska Desnica Croatia
Ustaše Croatia
National Socialist Movement of Denmark
La Cagoule France
National Democratic Party of Germany
Fascism and Freedom Movement – Italy
Fiamma Tricolore Italy
Forza Nuova Italy
Fronte Sociale Nazionale Italy
Movimento Fascismo e Libertà Italy
Pērkonkrusts Latvia
Norges Nasjonalsosialistiske Bevegelse Norway
National Radical Camp (ONR) Poland
National Revival of Poland (NOP)
Polish National Community-Polish National Party (PWN-PSN)
Noua Dreaptă Romania
Russian National Socialist Party(formerly Russian National Union)
Barkashov's Guards Russia
National Socialist Society Russia
Nacionalni stroj Serbia
Otačastveni pokret Obraz Serbia
Slovenska Pospolitost Slovakia
España 2000 Spain
Falange Española Spain
Nordic Realm Party Sweden
National Alliance Sweden
Swedish Resistance Movement Sweden
National Youth Sweden
Legion Wasa Sweden
SPAS Ukraine
Blood and Honour UK
British National Front UK
Combat 18 UK
League of St. George UK
National Socialist Movement UK
Nationalist Alliance UK
November 9th Society UK
Racial Volunteer Force UK

Lexington , June 2, 2016 at 12:50 pm

"Fascism" has become the prefered term of abuse applied indiscriminately by the right thinking to any person or movement which they want to tar as inherently objectionable, and which can therefore be dismissed without the tedium of actually engaging with them at the level of ideas.

Most of the people who like to throw this word around couldn't give you a coherant definition of what exactly they understand it to signify, beyond "yuck!!"

In fairness even students of political ideology have trouble teasing out a cosistent system of beliefs, to the point where some doubt fascism is even a coherent ideology. That hardly excuses the intellectual vacuity of those who use it as a term of abuse, however.

OpenThePodBayDoorsHAL , June 2, 2016 at 4:39 pm

Precisely 3,248 angels can fit on the head of a pin. Parsing the true definition of "fascism" is a waste of time, broadly, fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks.

As far as the definition "neo-liberalism" goes, yes it's a useful label. But let's keep it simple: every society chooses how resources are allocated between Capital and Labor. The needle has been pegged over on the Capital side for quite some time, my "start date" is when Reagan busted the air traffic union. The hideous Republicans managed to sell their base that policies that were designed to let companies be "competitive" were somehow good for them, not just for the owners of the means of production.

The only way they have avoided complete revolt has been endless borrowing to fund entitlements, once that one-time fix plays out the consequences will be apparent. The funding mechanism itself (The Fed) has even morphed into a neo-liberal tool designed to enrich Capital while enslaving Labor with the consequences.

Jim , June 2, 2016 at 7:40 pm

PodBay stated:

"Every society chooses how resources are allocated between capital and labor." More specifically, isn't it a struggle between various political/economic/cultural movements within a society which chooses how resources are allocated between capital and labor.

Take, for example, the late 1880s-1890s in the U.S. During that time-frame there were powerful agrarian populists movements and the beginnings of some labor/socialist movements from below, while from above the property-production system was modified by a powerful political movement advocating for more corporate administered markets over the competitive small-firm capitalism of an earlier age.

It was this movement for corporate administered markets which won the battle and defeated/absorbed the agrarian populists.

What are the array of such forces in 2016? What type of movement doe Trump represent? Sanders? Clinton?

Lexington , June 2, 2016 at 10:31 pm

fascism is an alliance of the state, the corporation, and the military, anyone who doesn't see that today needs to go back to their textbooks

Which textbooks specifically?

The article I cited above in Vox canvasses the opinion of five serious students of fascism, and none of them believe Trump is a fascist. I'd be most interested in knowing what you have been reading.

As for your definition of "fascism", it's obviously so vague and broad that it really doesn't explain anything. To the extent it contains any insight it is that public institutions (the state), private businesses (the corporation) and the armed forces all exert significant influence on public policy. That and a buck and and a half will get you a cup of coffee. If anything it is merely a very crude descriptive model of the political process. It doesn't define fascism as a particular set of beliefs that make it a distinct political ideology that can be differentiated from other ideologies (again, see the Vox article for a discussion of some of the beliefs that are arguably characteristic of fascist movements). Indeed by your standard virtually every state that has ever existed has to a greater or lesser extent been "fascist".

My objection to imprecise language here isn't merely pedantic. The leftist dismissal of right wing populists like Trump (or increasingly influential European movements like Ukip, AfD, and the Front national) as "fascist" is a reductionist rhetorical device intended to marginalize them by implying their politics are so far outside of the mainstream that they do not need to be taken seriously. Given that these movements are only growing in strength as faith in traditional political movements and elites evaporate this is likely to produce exactly the opposite result. Right wing populism isn't going to disappear just because the left keeps trying to wish it away. Refusing to accept this basic political fact risks condemning the left rather than "the fascists" to political irrelevance.

Roger Smith , June 2, 2016 at 7:13 am

" the gutters and cutters of neoliberalism"

This phrase is pure gold.

allan , June 2, 2016 at 7:44 am

The neoliberals are all too aware that the clock is ticking. In this morning's NYT, yet more talk of ramming TPP through in the lame duck.

sleepy , June 2, 2016 at 7:56 am

I moved to a small city/town in Iowa almost 20 years ago. Then, it still had something of a Norman Rockwell quality to it, particularly in a sense of egalitarianism, and also some small factory jobs which still paid something beyond a bare existence.

Since 2000, many of those jobs have left, and the population of the county has declined by about 10%. Kmart, Penney's, and Sears have left as payday/title loan outfits, pawnshops, smoke shops, and used car dealers have all proliferated.

Parts of the town now resemble a combination of Appalachia and Detroit. Sanders easily won the caucuses here and, no, his supporters were hardly the latte sippers of someone's imagination, but blue collar folks of all ages.

weinerdog43 , June 2, 2016 at 8:25 am

My tale is similar to yours. About 2 years ago, I accepted a transfer from Chicagoland to north central Wisconsin. JC Penney left a year and a half ago, and Sears is leaving in about 3-4 months. Kmart is long gone.

I was back at the old homestead over Memorial Day, and it's as if time has stood still. Home prices still going up; people out for dinner like crazy; new & expensive automobiles everywhere. But driving out of Chicagoland, and back through rural Wisconsin it is unmistakeable.

2 things that are new: The roads here are deteriorating FAST. In Price County, the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis. (Yes, that means there is only enough money to resurface all the county roads if spread out over 200 years.) 2nd, there are dead deer everywhere on the side of the road. In years past, they were promptly cleaned up by the highway department. Not any more. Gross, but somebody has to do the dead animal clean up. (Or not. Don't tell Snotty Walker though.)

Anyway, not everything is gloom and doom. People seem outwardly happy. But if you're paying attention, signs of stress and deterioration are certainly out there.

Jim Haygood , June 2, 2016 at 12:08 pm

"the road commissioner said last night that their budget allows for resurfacing all the roads on a 200 year basis"

while the fedgov spends north of 5 percent of GDP on global military dominance.

We're the Soviets now, comrades: shiny weapons, rotting infrastructure.

Today in San Diego, the Hildabeest will deliver a vigorous defense of this decadent, dying system.

Mary Wehrheim , June 2, 2016 at 8:32 am

This Trump support seems like a form of political vandalism with Trump as the spray paint. People generally feel frustrated with government, utterly powerless and totally left out as the ranks of the precariat continue to grow. Trump appeals to the nihilistic tendencies of some people who, like frustrated teens, have decided to just smashed things up for the hell of it. They think a presidency mix of Caligula with Earl Scheib would be a funny hoot.

You also have the more gullible fundis who have actually deluded themselves into thinking the man who is ultimate symbol of hedonism will deliver them from secularism because he says he will. Authoritarians who seek solutions through strong leaders are usually the easiest to con because they desperately want to believe in their eminent deliverance by a human deus ex machina. Plus he is ostentatiously rich in a comfortably tacky way and a TV celebrity beats a Harvard law degree. And why not the thinking goes the highly vaunted elite college Acela crowd has pretty much made a pig's breakfast out of things. So much for meritocracy. Professor Harold Hill is going to give River City a boys band.

uahsenaa , June 2, 2016 at 9:58 am

Someone at American Conservative, when trying to get at why it's pointless to tell people Trump will wreck the place, described him as a "hand grenade" lobbed into the heart of government. You can't scare people with his crass-ness and destructive tendencies, because that's precisely what his voters are counting on when/if he gets into government.

In other words, the MSM's fear is the clearest sign to these voters that their political revolution is working. Since TPTB decided peaceful change (i.e. Sanders) was a non-starter, then they get to reap the whirlwind.

Praedor , June 2, 2016 at 3:41 pm

Your phrase "Trump is political vandalism" is great. I don't think I've seen a better description. NPR this morning was discussing Trump and his relationship with the press and the issues some GOP leaders have with him. When his followers were discussed, the speakers closely circled your vandalism point. Basically they said that his voters are angry with the power brokers and leaders in DC and regardless of whether they think Trump's statements are heartfelt or just rhetoric, they DO know he will stick it to those power brokers so that's good. Vandalism by a longer phrase.

hunkerdown , June 2, 2016 at 4:29 pm

Meritocracy was ALWAYS a delusional fraud. What you invariably get, after a couple of generations, is a clique of elitists who define merit as themselves and reproduce it ad nauseam. Who still believes in such laughable kiddie stories?

Besides, consumers need to learn to play the long game and suck up the "scurrilous attacks" on their personal consumption habits for the next four years. The end of abortion for four years is not important - lern2hand and lern2agency, and lern2cutyourrapist if it comes to that. What is important is that the Democratic Party's bourgeois yuppie constituents are forced to defend against GOP attacks on their personal and cultural interests with wherewithal that would have been ordinarily spent to attend to their sister act with their captive constituencies.

If bourgeois Democrats hadn't herded us into a situation where individuals mean nothing outside of their assigned identity groups and their corporate coalition duopoly, they wouldn't be reaping the whirlwind today. Why, exactly, should I be sympathetic to exploitative parasites such as the middle class?

Dave , June 2, 2016 at 11:04 am

There are all good ideas. However, population growth undermines almost all of them. Population growth in America is immigrant based. Reverse immigration influxes and you are at least doing something to reduce population growth.

How to "reverse immigration influxes"?

I too am a lifetime registered Democrat and I will vote for Trump if Clinton gets the crown. If the Democrats want my vote, my continuing party registration and my until recently sizeable donations in local, state and national races, they will nominate Bernie. If not, then I'm an Independent forevermore. They will just become the Demowhig Party.

Jack Heape , June 2, 2016 at 10:00 am

Here's a start

  1. Campaign Finance Reform: If you can't walk into a voting booth you cannot contribute, or make all elections financed solely by government funds and make private contributions of any kind to any politician illegal.
  2. Re-institute Glass-Steagall but even more so. Limit the number of states a bank can operate in. Make the Fed publicly owned, not privately owned by banks.
  3. Completely revise corporate law, doing away with the legal person hood of corporations and limit of liability for corporate officers and shareholders.
  4. Single payer health care for everyone. Allow private health plans but do away with health insurance as a deductible for business. Remove the AMA's hold on licensing of medical schools which restricts the number of doctors.
  5. Do away with the cap on Social Security wages and make all income, wages, capital gains, interest, and dividends subject to taxation.
  6. Impose tariffs to compensate for lower labor costs overseas and revise industry.
  7. Cut the Defense budget by 50% and use that money for intensive infrastructure development.
  8. Raise the national minimum wage to $15 and hour.
  9. Severely curtail the revolving door from government to private industry with a 10 year restriction on working for an industry you dealt with in any way as a government official.
  10. Free public education including college (4 year degree).
TedWa , June 2, 2016 at 10:56 am

Obama and Holder, allowing the banks to be above the law have them demi-gods, many of whom are psychopaths and kleptocrats, and with their newly granted status, they are now re-shaping the world in their own image. Prosecute these demi-gods and restore sanity. Don't and their greed for our things will never end until nothings left.

tegnost , June 2, 2016 at 11:56 am

This is why Hillary is so much more dangerous than trump, because she and the demi gods are all on the same page. The TPP is their holy grail so I expect heaven and earth to be moved, especially if it looks like some trade traitors are going to get knocked off in the election, scoundrels like patty murray (dino, WA) will push to get it through then line up at the feed trough to gorge on k street dough. I plan to vote stein if it's not Bernie, but am reserving commitment until I see what kind of betrayals the dems have for me, if it's bad enough I'll go with the trump hand grenade.

TedWa , June 2, 2016 at 12:35 pm

Totally agree tegnost, no more democratic neoliberals ! Patty Murray (up for re-election) and Cantwell are both trade traitors and got fast track passed.

hunkerdown , June 2, 2016 at 4:44 pm

"they are now re-shaping the world in their own image" Isn't this intrinsic to bourgeois liberalism?

Sluggeaux , June 2, 2016 at 9:13 am

Two things are driving our troubles: over-population and globalization. The plutocrats and kleptocrats have all the leverage over the rest of us laborers when the population of human beings has increased seven-fold in the last 70 years, from a little over a billion to seven billions (and growing) today. They are happy to let us freeze to death behind gas stations in order for them to compete with other oligarchs in excess consumption.

This deserves a longer and more thoughtful comment, but I don't have the time this morning. I have to fight commute traffic, because the population of my home state of California has doubled from 19M in 1970 to an estimated 43M today (if you count the Latin American refugees and H1B's).

Vatch , June 2, 2016 at 11:04 am

Thank you for mentioning the third rail of overpopulation. Too often, this giant category of problems is ignored, because it makes people uncomfortable. The planet is finite, resources on the planet are finite, yet the number of people keeps growing. We need to strive for a higher quality of life, not a higher quantity of people.

seanseamour , June 3, 2016 at 7:59 am

The issue goes beyond "current neoliberals up for election", it is most of our political establishment that has been corrupted by a system that provides for the best politicians money can buy.

In the 1980's I worked inside the beltway witnessing the new cadre of apparatchiks that drove into town on the Reagan coattails full of moral a righteousness that became deviant, parochial, absolutist and for whom bi-partisan approaches to policy were scorned prodded on by new power brokers promoting their gospels in early morning downtown power breakfasts. Sadly our politicians no longer serve but seek a career path in our growing meritocratic plutocracy.

paul whalen , June 2, 2016 at 9:19 am

America has always been a country where a majority of the population has been poor. With the exception of a fifty five year(1950-2005) year period where access to large quantities of consumer debt by households was deployed to first to provide a wealth illusion to keep socialism at bay, followed by a mortgage debt boom to both keep the system afloat and strip the accumulated capital of the working class, i.e. home equity, the history of the US has been one of poverty for the masses.

Further debt was foisted on the working class in the form of military Keynesianism, generating massive fiscal deficits which are to be paid for via austerity in a neo-feudal economy.

http://www.counterpunch.org/2015/08/28/the-myth-of-the-middle-class-have-most-americans-always-been-poor/

[Dec 04, 2016] Methheads as a sign of socioeconomic desperation: neoliberalism behaves much like British behaves in China during opium wars

Notable quotes:
"... Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine ..."
"... children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness. ..."
"... "If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist." ..."
"... It's a Wonderful Life ..."
"... as educators ..."
"... OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. ..."
"... I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings. ..."
"... The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher). ..."
"... "In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world. ..."
"... Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me. ..."
"... My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward. ..."
"... I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural" order . ..."
"... Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet . especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great unwashed globally here libertarian priests rang in the good news to the great unwashed ..."
"... I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets). ..."
"... It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual. ..."
Jun 02, 2016 | www.nakedcapitalism.com
bluecollarAl , June 2, 2016 at 10:06 am

I am almost 70 years old, born and raised in New York City, still living in a near suburb.

Somehow, somewhere along the road to my 70th year I feel as if I have been gradually transported to an almost entirely different country than the land of my younger years. I live painfully now in an alien land, a place whose habits and sensibilities I sometimes hardly recognize, while unable to escape from memories of a place that no longer exists. There are days I feel as I imagine a Russian pensioner must feel, lost in an unrecognizable alien land of unimagined wealth, power, privilege, and hyper-glitz in the middle of a country slipping further and further into hopelessness, alienation, and despair.

I am not particularly nostalgic. Nor am I confusing recollection with sentimental yearnings for a youth that is no more. But if I were a contemporary Rip Van Winkle, having just awakened after, say, 30-40 years, I would not recognize my beloved New York City. It would be not just the disappearance of the old buildings, Penn Station, of course, Madison Square Garden and its incandescent bulb marquee on 50th and 8th announcing NYU vs. St. John's, and the WTC, although I always thought of the latter as "new" until it went down. Nor would it be the disappearance of all the factories, foundries, and manufacturing plants, the iconic Domino Sugar on the East River, the Wonder Bread factory with its huge neon sign, the Swingline Staples building in Long Island City that marked passage to and from the East River tunnel on the railroad, and my beloved Schaeffer Beer plant in Williamsburg, that along with Rheingold, Knickerbocker, and a score of others, made beer from New York taste a little bit different.

It wouldn't be the ubiquitous new buildings either, the Third Avenue ghostly glass erected in the 70's and 80's replacing what once was the most concentrated collection of Irish gin mills anywhere. Or the fortress-like castles built more recently, with elaborate high-ceilinged lobbies decorated like a kind of gross, filthy-wealthy Versailles, an aesthetically repulsive style that shrieks "power" in a way the neo-classical edifices of our Roman-loving founders never did. Nor would it even be the 100-story residential sticks, those narrow ground-to-clouds skyscraper condominiums proclaiming the triumph of globalized capitalism with prices as high as their penthouses, driven ever upward by the foreign billionaires and their obsession with burying their wealth in Manhattan real estate.

It is not just the presence of new buildings and the absence of the old ones that have this contemporary Van Winkle feeling dyslexic and light-headed. The old neighborhoods have disintegrated along with the factories, replaced by income segregated swatches of homogenous "real estate" that have consumed space, air, and sunlight while sucking the distinctiveness out of the City. What once was the multi-generational home turf for Jewish, Afro-American, Puerto Rican, Italian, Polak and Bohunk families is now treated as simply another kind of investment, stocks and bonds in steel and concrete. Mom's Sunday dinners, clothes lines hanging with newly bleached sheets after Monday morning wash, stickball games played among parked cars, and evenings of sitting on the stoop with friends and a transistor radio listening to Mel Allen call Mantle's home runs or Alan Freed and Murray the K on WINS 1010 playing Elvis, Buddy Holly, and The Drifters, all gone like last night's dreams.

Do you desire to see the new New York? Look no further than gentrifying Harlem for an almost perfect microcosm of the city's metamorphosis, full of multi-million condos, luxury apartment renovations, and Maclaren strollers pushed by white yuppie wife stay-at-homes in Marcus Garvey Park. Or consider the "new" Lower East Side, once the refuge of those with little material means, artists, musicians, bums, drug addicts, losers and the physically and spiritually broken - my kind of people. Now its tenements are "retrofitted" and remodeled into $4000 a month apartments and the new residents are Sunday brunching where we used to score some Mary Jane.

There is the "Brooklyn brand", synonymous with "hip", and old Brooklyn neighborhoods like Red Hook and South Brooklyn (now absorbed into so desirable Park Slope), and Bushwick, another former outpost of the poor and the last place I ever imagined would be gentrified, full of artists and hipsters driving up the price of everything. Even large sections of my own Queens and the Bronx are affected (infected?). Check out Astoria, for example, neighborhood of my father's family, with more of the old ways than most but with rents beginning to skyrocket and starting to drive out the remaining working class to who knows where.

Gone is almost every mom and pop store, candy stores with their egg creams and bubble gum cards and the Woolworth's and McCrory's with their wooden floors and aisles containing ordinary blue collar urgencies like thread and yarn, ironing boards and liquid bleach, stainless steel utensils of every size and shape. Where are the locally owned toy and hobby stores like Jason's in Woodhaven under the el, with Santa's surprises available for lay-away beginning in October? No more luncheonettes, cheap eats like Nedicks with hot dogs and paper cones of orange drink, real Kosher delis with vats of warm pastrami and corned beef cut by hand, and the sacred neighborhood "bar and grill", that alas has been replaced by what the kids who don't know better call "dive bars", the detestable simulacra of the real thing, slick rooms of long slick polished mahogany, a half-dozen wide screen TV's blaring mindless sports contests from all over the world, over-priced micro-brews, and not a single old rummy in sight?

Old Rip searches for these and many more remembered haunts, what Ray Oldenburg called the "great good places" of his sleepy past, only to find store windows full of branded, high-priced, got-to-have luxury-necessities (necessary if he/she is to be certified cool, hip, and successful), ridiculously overpriced "food emporia", high and higher-end restaurants, and apparel boutiques featuring hardened smiles and obsequious service reserved for those recognized by celebrity or status.

Rip notices too that the visible demographic has shifted, and walking the streets of Manhattan and large parts of Brooklyn, he feels like what walking in Boston Back Bay always felt like, a journey among an undifferentiated mass of privilege, preppy or 'metro-sexed' 20 and 30-somethings jogging or riding bicycles like lean, buff gods and goddesses on expense accounts supplemented by investments enriched by yearly holiday bonuses worth more than Rip earned in a lifetime.

Sitting alone on a park bench by the river, Rip reflects that more than all of these individual things, however, he despairs of a city that seems to have been reimagined as a disneyfied playground of the privileged, offering endless ways to self-gratify and philistinize in a clean, safe (safest big city in U.S., he heard someone say), slick, smiley, center-of-the-world urban paradise, protected by the new centurions (is it just his paranoia or do battle-ready police seem to be everywhere?). Old ethnic neighborhoods are filled with apartment buildings that seem more like post-college "dorms", tiny studios and junior twos packed with three or four "singles" roommates pooling their entry level resources in order to pay for the right to live in "The City". Meanwhile the newer immigrants find what place they can in Kingsbridge, Corona, Jamaica, and Cambria Heights, far from the city center, even there paying far too much to the landlord for what they receive.

New York has become an unrecognizable place to Rip, who can't understand why the accent-less youngsters keep asking him to repeat something in order to hear his quaint "Brooklyn" accent, something like the King's English still spoken on remote Smith Island in the Chesapeake, he guesses
.
Rip suspects that this "great transformation" (apologies to Polanyi) has coincided, and is somehow causally related, to the transformation of New York from a real living city into, as the former Mayor proclaimed, the "World Capital" of financialized commerce and all that goes with it.

"Financialization", he thinks, is not the expression of an old man's disapproval but a way of naming a transformed economic and social world. Rip is not an economist. He reads voraciously but, as an erstwhile philosopher trained to think about the meaning of things, he often can't get his head around the mathematical model-making explanations of the economists that seem to dominate the more erudite political and social analyses these days. He has learned, however, that the phenomenon of "capitalism" has changed along with his city and his life.

Money, it seems to him, has somehow changed its role. It has "increased" (is that possible, he asks?) while at the same time it has become concentrated in fewer and fewer hands. It appears to seek to become an autonomous and dominating sector of economic life, functionally separated from production of real things, almost all of which seem to come from faraway places. "Real" actually begins to change its meaning, another topic more interesting still. This devotion to the world of money-making-money seems to have obsessed the lives of many of the most "important" Americans. Entire TV networks are devoted to it. They talk about esoteric financial instruments that to the ordinary citizen look more like exotically placed bets-on-credit in the casino than genuine ways to grow real-world business, jobs, wages, and family income. The few who are in position to master the game live material lives that were beyond what almost any formerly "wealthy" man or woman in Rip's prior life could even imagine
.
Above all else is the astronomical rise in wealth and income inequality. Rip recalls that growing up in the 1950's, the kids on his block included, along with firemen, cops, and insurance men dads (these were virtually all one-parent income households), someone had a dad who worked as a stock broker. Yea, living on the same block was a "Wall Streeter". Amazingly democratic, no? Imagine, people of today, a finance guy drinking at the same corner bar with the sanitation guy. Rip recalls that Aristotle had some wise and cautionary words in his Politics concerning the stability of oligarchic regimes.

Last year I drove across America on blue highways mostly. I stayed in small towns and cities, Zanesville, St. Charles, Wichita, Pratt, Dalhart, Clayton, El Paso, Abilene, Clarksdale, and many more. I dined for the most part in local taverns, sitting at the bar so as to talk with the local bartender and patrons who are almost always friendly and talkative in these spaces. Always and everywhere I heard similar stories as my story of my home town. Not so much the specifics (there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness.

I am not a trained economist. My graduate degrees were in philosophy. My old friends call me an "Eric Hoffer", who back in the day was known as the "longshoreman philosopher". I have been trying for a long time now to understand the silent revolution that has been pulled off right under my nose, the replacement of a world that certainly had its flaws (how could I forget the civil rights struggle and the crime of Viet Nam; I was a part of these things) but was, let us say, different. Among you or your informed readers, is there anyone who can suggest a book or books or author(s) who can help me understand how all of this came about, with no public debate, no argument, no protest, no nothing? I would be very much appreciative.

tegnost , June 2, 2016 at 2:20 pm

I'll just highlight this line for emphasis
"there are no "disneyfied" Lubbocks or Galaxes out there, although Oxford, MS comes close) but in the sadness of men and women roughly my age as they recounted a place and time – a way of life – taken out from under them, so that now their years are filled with decayed and dead downtowns, children gone away and lost to either the relentless rootlessness of the trans-national economy or the virtual hell-world of meth and opioids and heroin and unending underemployed hopelessness."
my best friend pretty much weeps every day.

Michael Fiorillo , June 2, 2016 at 3:13 pm

bluecollar Al,

As a lifelong New Yorker, I too mourn the demise of my beloved city. Actually, that's wrong: my city didn't die, it was taken from me/us.

But if it's any consolation, remember that Everyone Loses Their New York (even insufferable hipster colonizers)

Left in Wisconsin , June 2, 2016 at 3:24 pm

Beautifully said.

I don't have a book to recommend. I do think you identify a really underemphasized central fact of recent times: the joint processes by which real places have been converted into "real estate" and real, messy lives replaced by safe, manufactured "experiences." This affects wealthy and poor neighborhoods alike, in different ways but in neither case for the better.

I live in a very desirable neighborhood in one of those places that makes a lot of "Best of" lists. I met a new neighbor last night who told me how he and his wife had plotted for years to get out of the Chicago burbs, not only to our city but to this specific neighborhood, which they had decided is "the one." (This sentiment is not atypical.) Unsurprisingly, property values in the neighborhood have gone through the roof. Which, as far as I can tell, most everyone here sees as an unmitigated good thing.

At the same time, several families I got to know because they moved into the neighborhood about the same time we did 15-20 years ago, are cashing out and moving away, kids off to or out of college, parents ready (and financed) to get on to the next phase and the next place. Of course, even though our children are all Lake Woebegoners, there are no next generations staying in the neighborhood, except of course the ones still living, or back, at "home." (Those families won't be going anywhere for awhile!)

I can't argue that new money in the hood hasn't improved some things. Our formerly struggling food co-op just finished a major expansion and upgrade. Good coffee is 5 minutes closer than it used to be. But to my wife and me, the overwhelming feeling is that we are now outsiders here in this neighborhood where we know all the houses and the old trees but not what motivates our new neighbors. So I made up a word for it: unsettling (adj., verb, noun).

Softie , June 2, 2016 at 4:14 pm

Try to read this one:

"If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

- Steve Fraser, The Age of Acquiescence

Jim , June 2, 2016 at 4:25 pm

bluecollar Al:

Christopher Lash in "Revolt of the Elites and the Betrayal of Democracy" mentions Ray Oldenburg's "The Great Good Places: Cafes, Coffee Shops, Community Centers, Beauty Parlors, General Stores, Bars, Hangouts and How they Got You through the Day."

He argued that the decline of democracy is directly related to the disappearance of what he called third places:,

"As neighborhood hangouts give way to suburban shopping malls, or, on the other hand private cocktail parties, the essentially political art of conversation is replaced by shoptalk or personal gossip.

Increasingly, conversation literally has no place in American society. In its absence how–or better, where–can political habits be acquired and polished?

Lasch finished he essay by noting that Oldenburg's book helps to identify what is missing from our then newly emerging world (which you have concisely updated):

"urban amenities, conviviality, conversation, politics–almost everything in part that makes life worth living."

JDH , June 2, 2016 at 4:28 pm

The best explainer of our modern situation that I have read is Wendell Berry. I suggest that you start with "The Unsettling of America," quoted below.

"Let me outline briefly as I can what seem to me the characteristics of these opposite kinds of mind. I conceive a strip-miner to be a model exploiter, and as a model nurturer I take the old-fashioned idea or ideal of a farmer. The exploiter is a specialist, an expert; the nurturer is not. The standard of the exploiter is efficiency; the standard of the nurturer is care. The exploiter's goal is money, profit; the nurturer's goal is health - his land's health, his own, his family's, his community's, his country's. Whereas the exploiter asks of a piece of land only how much and how quickly it can be made to produce, the nurturer asks a question that is much more complex and difficult: What is its carrying capacity? (That is: How much can be taken from it without diminishing it? What can it produce dependably for an indefinite time?) The exploiter wishes to earn as much as possible by as little work as possible; the nurturer expects, certainly, to have a decent living from his work, but his characteristic wish is to work as well as possible. The competence of the exploiter is in organization; that of the nurturer is in order - a human order, that is, that accommodates itself both to other order and to mystery. The exploiter typically serves an institution or organization; the nurturer serves land, household, community, place. The exploiter thinks in terms of numbers, quantities, "hard facts"; the nurturer in terms of character, condition, quality, kind."

I also think Prof. Patrick Deneen works to explain the roots (and progression) of decline. I'll quote him at length here describing the modern college student.

"[T]he one overarching lesson that students receive is the true end of education: the only essential knowledge is that know ourselves to be radically autonomous selves within a comprehensive global system with a common commitment to mutual indifference. Our commitment to mutual indifference is what binds us together as a global people. Any remnant of a common culture would interfere with this prime directive: a common culture would imply that we share something thicker, an inheritance that we did not create, and a set of commitments that imply limits and particular devotions.

Ancient philosophy and practice praised as an excellent form of government a res publica – a devotion to public things, things we share together. We have instead created the world's first Res Idiotica – from the Greek word idiotes, meaning "private individual." Our education system produces solipsistic, self-contained selves whose only public commitment is an absence of commitment to a public, a common culture, a shared history. They are perfectly hollowed vessels, receptive and obedient, without any real obligations or devotions.

They won't fight against anyone, because that's not seemly, but they won't fight for anyone or anything either. They are living in a perpetual Truman Show, a world constructed yesterday that is nothing more than a set for their solipsism, without any history or trajectory."

ekstase , June 2, 2016 at 5:55 pm

Wow. Did this hit a nerve. You have eloquently described what was the city of hope for several generations of outsiders, for young gay men and women, and for real artists, not just from other places in America, but from all over the world. In New York, once upon a time, bumping up against the more than 50% of the population who were immigrants from other countries, you could learn a thing or two about the world. You could, for a while, make a living there at a job that was all about helping other people. You could find other folks, lots of them, who were honest, well-meaning, curious about the world. Then something changed. As you said, you started to see it in those hideous 80's buildings. But New York always seemed somehow as close or closer to Europe than to the U.S., and thus out of the reach of mediocrity and dumbing down. New York would mold you into somebody tough and smart, if you weren't already – if it didn't, you wouldn't make it there.

Now, it seems, this dream is dreamt. Poseurs are not artists, and the greedy and smug drive out creativity, kindness, real humor, hope.

It ain't fair. I don't know where in this world an aspiring creative person should go now, but it probably is not there.

Dave , June 2, 2016 at 10:21 am

Americans cannot begin to reasonably demand a living wage, benefits and job security when there is an unending human ant-line of illegals and legal immigrants willing to under bid them.

Only when there is a parity or shortage of workers can wage demands succeed, along with other factors.

From 1925 to 1965 this country accepted hardly any immigrants, legal or illegal. We had the bracero program where Mexican males were brought in to pick crops and were then sent home to collect paychecks in Mexico. American blacks were hired from the deep south to work defense plants in the north and west.

Is it any coincidence that the 1965 Great Society program, initiated by Ted Kennedy to primarily benefit the Irish immigrants, then co-opted by LBJ to include practically everyone, started this process of Middle Class destruction?

1973 was the peak year of American Society as measured by energy use per capita, expansion of jobs and unionization and other factors, such as an environment not yet destroyed, nicely measured by the The Real Progress Indicator.

Solution? Stop importing uneducated people. That's real "immigration reform".

Now explain to me why voters shouldn't favor Trump's radical immigration stands?

RUKidding , June 2, 2016 at 11:06 am

Maybe, but OTOH, who is it, exactly, who is recruiting, importing, hiring and training undocumented workers to downgrade pay scales??

Do some homework, please. If businesses didn't actively go to Central and South America to recruit, pay to bring here, hire and employ undocumented workers, then the things you discuss would be great.

When ICE comes a-knocking at some meat processing plant or mega-chicken farm, what happens? The undocumented workers get shipped back to wherever, but the big business owner doesn't even get a tap on the wrist. The undocumented worker – hired to work in unregulated unsafe unhealthy conditions – often goes without their last paycheck.

It's the business owners who manage and support this system of undocumented workers because it's CHEAP, and they don't get busted for it.

Come back when the USA actually enforces the laws that are on the books today and goes after big and small business owners who knowingly recruit, import, hire, train and employee undocumented workers you know, like Donald Trump has all across his career.

tegnost , June 2, 2016 at 12:24 pm

This is the mechanism by which the gov't has assisted biz in destroying the worker, competition for thee, but none for me. For instance I can't go work in canada or mexico, they don't allow it. Policy made it, policy can change it, go bernie. While I favor immigration, in it's current form it is primarily conducted on these lines of destroying workers (H1b etc and illegals combined) Lucky for the mexicans they can see the american dream is bs and can go home. I wonder who the latinos that have gained citizenship will vote for. Unlikely it'll be trump, but they can be pretty conservative, and the people they work for are pretty conservative so no guarantee there, hillary is in san diego at the tony balboa park where her supporters will feel comfortable, not a huge venue I think they must be hoping for a crowd, and if she can't get one in san diego while giving a "if we don't rule the world someone else will" speech, she can't get one anywhere. Defense contractors and military advisors and globalist biotech (who needs free money more than biotech? they are desperate for hillary) are thick in san diego.

RUKidding , June 2, 2016 at 12:47 pm

I live part-time in San Diego. It is very conservative. The military, who are constantly screwed by the GOP, always vote Republican. They make up a big cohort of San Diego county.

Hillary may not get a big crowd at the speech, but that, in itself, doesn't mean that much to me. There is a segment of San Diego that is somewhat more progressive-ish, but it's a pretty conservative county with parts of eastern SD county having had active John Birch Society members until recently or maybe even ongoing.

There's a big push in the Latino community to GOTV, and it's mostly not for Trump. It's possible this cohort, esp the younger Latino/as, will vote for Sanders in the primary, but if Clinton gets the nomination, they'll likely vote for her (v. Trump).

I was unlucky enough to be stuck for an hour in a commuter train last Friday after Trump's rally there. Hate to sound rude, but Trump's fans were everything we've seen. Loud, rude, discourteous and an incessant litany of rightwing talking points (same old, same old). All pretty ignorant. Saying how Trump will "make us great again." I don't bother asking how. A lot of ugly comments about Obama and how Obama has been "so racially divisive and polarizing." Well, No. No, Obama has not been or done that, but the rightwing noise machine has sure ginned up your hatreds, angers and fears. It was most unpleasant. The only instructive thing about it was confirming my worst fears about this group. Sorry to say but pretty loutish and very uninformed. Sigh.

tegnost , June 2, 2016 at 2:12 pm

part timer in sd as well, family for hillary except for nephew and niece .I keep telling my mom she should vote bernie for their sake but it never goes over very well

Bob Haugen , June 2, 2016 at 10:35 am

Re Methland, we live in rural US and we got a not-very-well hidden population of homeless children. I don't mean homeless families with children, I mean homeless children. Sleeping in parks in good weather, couch-surfing with friends, etc. I think related.

equote , June 2, 2016 at 10:43 am

Fascism is a system of political and social order intended to reinforce the unity, energy and purity of communities in which liberal democracy stand(s) accused of producing division and decline. . . . George Orwell reminded us, clad in the mainstream patriotic dress of their own place and time, . . . an authentically popular fascism in the United States would be pious and anti-Black; in Western Europe, secular and antisemitic, or more probably, these days anti-Islamic; in Russia and Eastern Europe, religious, antisemitic, and slavophile.
Robert O. Paxton
In The Five Stages of Faschism

" that eternal enemy: the conservative manipulators of privilege who damn as 'dangerous agitators' any man who menaces their fortunes" (maybe 'power and celebrity' should be added to fortunes)
Sinclair Lewis
It Can't Happen Here page 141

Take the Fork , June 2, 2016 at 11:07 am

On the Boots To Ribs Front: Anyone hereabouts notice that Captain America has just been revealed to be a Nazi? Maybe this is what R. Cohen was alluding to but I doubt it.

pissed younger baby boomer , June 2, 2016 at 11:57 am

The four horse men are, political , social, economic and environmental collapse . Any one remember the original Mad Max movie. A book I recommend is the Crash Of 2016 By Thom Hartmann.

rfam , June 2, 2016 at 11:59 am

From the comment, I agree with the problems, not the cause. We've increased the size and scope of the safety net over the last decade. We've increased government spending versus GDP. I'm not blaming government but its not neoliberal/capitalist policy either.

1. Globalization clearly helps the poor in other countries at the expense of workers in the U.S. But at the same time it brings down the cost of goods domestically. So jobs are not great but Walmart/Amazon can sell cheap needs.

2. Inequality started rising the day after Bretton Woods – the rich got richer everyday after "Nixon Shock"

https://www.google.com/search?q=gini+coefficient+usa+chart&client=safari&rls=en&biw=1371&bih=793&tbm=isch&imgil=tRkxcVEo17ID8M%253A%253B-Lt3-YscSzdOaM%253Bhttp%25253A%25252F%25252Fwww.the-crises.com%25252Fincome-inequality-in-the-us-1%25252F&source=iu&pf=m&fir=tRkxcVEo17ID8M%253A%252C-Lt3-YscSzdOaM%252C_&usg=__bipTqXhWx0tXxke6Xcj5MUAcn-o%3D&ved=0ahUKEwjY18rm2onNAhUPeFIKHREjAS4QyjcILw&ei=nFdQV9iZCo_wyQKRxoTwAg#imgrc=tRkxcVEo17ID8M%3A

TedWa , June 2, 2016 at 12:30 pm

Hi rfam : To point 1 : Why is there a need to bring down the cost of goods? Is it because of past outsourcing and trade agreements and FR policies? I think there's a chicken and egg thing going on, ie.. which came first. Globalization is a way to bring down wages while supplying Americans with less and less quality goods supplied at the hand of global corporations like Walmart that need welfare in the form of food stamps and the ACA for their workers for them to stay viable (?). Viable in this case means ridiculously wealthy CEO's and the conglomerate growing bigger constantly. Now they have to get rid of COOL's because the WTO says it violates trade agreements so we can't trace where our food comes from in case of an epidemic. It's all downhill. Wages should have risen with costs so we could afford high quality American goods, but haven't for a long, long time.

tegnost , June 2, 2016 at 12:35 pm

Globalization helps the rich here way more than the poor there. The elites get more money for nothing (see QE before you respond, if you do, that's where the money for globalization came from) the workers get the husk. Also the elite gets to say "you made your choices" and other moralistic crap. The funny(?) thing is they generally claim to be atheists, which I translate into "I am God, there doesn't need to be any other" Amazon sells cheap stuff by cheating on taxes, and barely makes money, mostly just driving people out of business. WalMart has cheap stuff because they subsidise their workers with food stamps and medicaid. Bringing up bretton woods means you don't know much about money creation, so google "randy wray/bananas/naked capitalism" and you'll find a quick primer.

RUKidding , June 2, 2016 at 12:57 pm

The Walmart loathsome spawn and Jeff Bezos are the biggest welfare drains in our nation – or among the biggest. They woefully underpay their workers, all while training them on how to apply for various welfare benefits. Just so that their slaves, uh, workers can manage to eat enough to enable them to work.

It slays me when US citizens – and it happens across the voting spectrum these days; I hear just as often from Democratic voters as I do from GOP voters – bitch, vetch, whine & cry about welfare abuse. And if I start to point out the insane ABUSE of welfare by the Waltons and Jeff Bezos, I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare.

Hey, I'm totally sure and in agreement that there are likely a small percentage of real welfare cheats who manage to do well enough somehow. But seriously? That's like a drop in the bucket. Get the eff over it!!!

Those cheats are not worth discussing. It's the big fraud cheats like Bezos & the Waltons and their ilk, who don't need to underpay their workers, but they DO because the CAN and they get away with it because those of us the rapidly dwindling middle/working classes are footing the bill for it.

Citizens who INSIST on focusing on a teeny tiny minority of real welfare cheats, whilst studiously ignoring the Waltons and the Bezos' of the corporate world, are enabling this behavior. It's one of my bugabears bc it's so damn frustrating when citizens refuse to see how they are really being ripped off by the 1%. Get a clue.

That doesn't even touch on all the other tax breaks, tax loopholes, tax incentives and just general all-around tax cheating and off-shore money hiding that the Waltons and Bezos get/do. Sheesh.

JustAnObserver , June 2, 2016 at 2:51 pm

This statement –

"I'm immediately greeted with random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

is the key and a v. long term result of the application of Bernays' to political life. Its local and hits at the gut interpersonal level 'cos the "someones" form a kind of chain of trust esp. if the the first one on the list is a friend or a credentialed media pundit. Utterly spurious I know but countering this with a *merely* rational analysis of how Walmart, Amazon abuse the welfare system to gouge profits from the rest of us just won't ever, for the large majority, get through this kind emotional wall.

I don't know what any kind of solution might look like but, somehow, we need to find a way of seriously demonising the corporate parasites that resonates at the same emotional level as the "welfare cheat" meme that Bill Clinton and the rest of the DLC sanctified back in the '90s.

Something like "Walmart's stealing your taxes" might work but how to get it out there in a viral way ??

Vatch , June 2, 2016 at 6:54 pm

"random TRUE stories about someone who knew someone who somehow made out like a bandit on welfare."

Hmm. Your acquaintances might need to be educated about urban legends .

Anonymous Coward , June 2, 2016 at 12:04 pm

Wait, you mean we don't all enjoy living in Pottersville?

For anyone missing the reference, you clearly haven't been subjected to It's a Wonderful Life enough times.

Judith , June 2, 2016 at 12:06 pm

People may be interested in an ongoing project by the photographer Matt Black (who was recently invited to join Magnum) called the Geography of Poverty. http://www.mattblack.com/the-geography-of-poverty/

Steve Sewall , June 2, 2016 at 12:07 pm

What a comment from seanseamour. And the "hoisting" of it to high visibility at the site is a testament to the worth of Naked Capitalism.

seanseamour asks "What does that have to do with education?" and answers "Everything if one considers the elitist trend " This question & answer all but brings tears to my eyes. It is so utterly on point. My own experience of it, if I may say so, comes from inside the belly of the beast. As a child and a product of America's elite universities (I have degrees from Harvard and Yale, and my dad, Richard B. Sewall, was a beloved English prof at Yale for 42 years), I could spend all morning detailing the shameful roles played by America's torchbearing universities – Harvard, Yale, Stanford etc – in utterly abandoning their historic responsibility as educators to maintaining the health of the nation's public school system.*

And as I suspect seanseymour would agree, when a nation loses public education, it loses everything.

But I don't want to spend all morning doing that because I'm convinced that it's not too late for America to rescue itself from maelstrom in which it finds itself today. (Poe's "Maelstrom" story, cherished by Marshall McLuhan, is supremely relevant today.)

To turn America around, I don't look to education – that system is too far gone to save itself, let alone the rest of the country – but rather to the nation's media: to the all-powerful public communication system that certainly has the interactive technical capabilities to put citizens and governments in touch with each other on the government decisions that shape the futures of communities large and small.

For this to happen, however, people like the us – readers of Naked Capitalism – need to stop moaning and groaning about the damage done by the neoliberals and start building an issue-centered, citizen-participatory, non-partisan, prime-time Civic Media strong enough to give all Americans an informed voice in the government decisions that affect their lives. This Civic media would exist to make citizens and governments responsive and accountable to each other in shaping futures of all three communities – local, state and national – of which every one of us is a member.

Pie in the sky? Not when you think hard about it. A huge majority of Americans would welcome this Civic Media. Many yearn for it. This means that a market exists for it: a Market of the Whole of all members of any community, local, state and national. This audience is large enough to rival those generated by media coverage of pro sports teams, and believe it or not much of the growth of this Civic media could be productively modeled on the growth of media coverage of pro sports teams. This Civic Media would attract the interest of major advertisers, especially those who see value in non-partisan programming dedicated to getting America moving forward again. Dynamic, issue-centered, problem-solving public forums, some modeled on voter-driven reality TV contests like The Voice or Dancing with the Stars, could be underwritten by a "rainbow" spectrum of funders, commericial, public, personal and even government sources.

So people take hope! Be positive! Love is all we need, etc. The need for for a saving alternative to the money-driven personality contests into which our politics has descended this election year is literally staring us all in the face from our TV, cellphone and computer screens. This is no time to sit back and complain, it's a time to start working to build a new way of connecting ourselves so we can reverse America's rapid decline.

OK, so I hear some of you saying, corporate America will never let this Civic Media get off the ground. My short answer to this is that corporations do what makes money for them, and in today's despairing political climate there's money to be made in sponsoring something truly positive, patriotic and constructive. And I hear a few others saying that Americans are too dumbed down, too busy, too polarized or too just plain stupid to make intelligent, constructive use of a non-partisan, problem-solving Civic Media. But I would not underestimate the intelligence of Americans when they can give their considered input – by vote, by comment or by active participation – in public forums that are as exciting and well managed as an NFL game or a Word Series final.

hunkerdown , June 2, 2016 at 5:40 pm

"Don't hate the media, become the media" -Jello Biafra

Sound of the Suburbs , June 2, 2016 at 12:36 pm

I am paying an exorbitant subscription for the UK Financial Times at the moment. Anyway, the good news is that very regular articles are appearing where you can almost feel the panic at the populist uprisings.

The end is nigh for the Neo-Liberals.

Sound of the Suburbs , June 2, 2016 at 1:04 pm

Whatever system is put in place the human race will find a way to undermine it. I believe in capitalism because fair competition means the best and most efficient succeed.

I send my children to private schools and universities because I want my own children at the top and not the best. Crony capitalism is inevitable, self-interest undermines any larger system that we try and impose.

Can we design a system that can beat human self-interest? It's going to be tricky.

"If that's the system, how can I take advantage of it?" human nature at work. "If that's the system, is it working for me or not?" those at the top.
If not, it's time to change the system.
If so, how can I tweak it to get more out of it?

Neo-Liberalism

Academics, who are not known for being street-wise, probably thought they had come up with the ultimate system using markets and numeric performance measures to create a system free from human self-interest.

They had already missed that markets don't just work for price discovery, but are frequently used for capital gains by riding bubbles and hoping there is a "bigger fool" out there than you, so you can cash out with a handsome profit.

(I am not sure if the Chinese realise markets are supposed to be for price discovery at all).

Hence, numerous bubbles during this time, with housing bubbles being the global favourite for those looking for capital gains.

If we are being governed by the markets, how do we rig the markets?
A question successfully solved by the bankers.

Inflation figures, that were supposed to ensure the cost of living didn't rise too quickly, were somehow manipulated to produce low inflation figures with roaring house price inflation raising the cost of living.

What unemployment measure will best suit the story I am trying to tell?
U3 – everything great
U6 – it's not so good
Labour participation rate – it hasn't been this bad since the 1970s

Anything missing from the theory has been ruthlessly exploited, e.g. market bubbles ridden for capital gains, money creation by private banks, the difference between "earned" and "unearned" income and the fact that Capitalism trickles up through the following mechanism:

1) Those with excess capital collect rent and interest.
2) Those with insufficient capital pay rent and interest.

Neo-Liberalism – It's as good as dead.

perpetualWAR , June 2, 2016 at 1:18 pm

I just went on a rant last week. (Not only because the judge actually LIED in court)

I left the courthouse in downtown Seattle, to cross the street to find the vultures selling more foreclosures on the steps of the King County Administration Building, while above them, there were tents pitched on the building's perimeter. And people were walking by just like this scene was normal.

Because the people at the entrance of the courthouse could view this, I went over there and began to rant. I asked (loudly) "Do you guys see that over there? Vultures selling homes rendering more people homeless and then the homeless encampment with tents pitched on the perimeter above them? In what world is this normal?" One guy replied, "Ironic, isn't it?" After that comment, the Marshall protecting the judicial crooks in the building came over and tried to calm me down. He insisted that the scene across the street was "normal" and that none of his friends or neighbors have been foreclosed on. I soon found out that that lying Marshall was from Pierce County, the epicenter of Washington foreclosures.

The scene was totally surreal. And unforgettable.

Softie , June 2, 2016 at 2:26 pm

You need to take a photograph or two using your above words as caption.

EGrise , June 2, 2016 at 2:31 pm

And nobody cares
As long as they get theirs

Softie , June 2, 2016 at 3:09 pm

The kernel of Neoliberal Ideology: "There is no such a thing as society." (Margaret Thatcher).

Softie , June 2, 2016 at 2:16 pm

"In this postindustrial world not only is the labor question no longer asked, not only is proletarian revolution passé, but the proletariat itself seems passé. And the invisibles who nonetheless do indeed live there have internalized their nonexistence, grown demoralized, resentful, and hopeless; if they are noticed at all, it is as objects of public disdain. What were once called "blue-collar aristocrats"-skilled workers in the construction trades, for example-have long felt the contempt of the whole white-collar world.

For these people, already skeptical about who runs things and to what end, and who are now undergoing their own eviction from the middle class, skepticism sours into a passive cynicism. Or it rears up in a kind of vengeful chauvinism directed at alien others at home and abroad, emotional compensation for the wounds that come with social decline If public life can suffer a metaphysical blow, the death of the labor question was that blow. For millions of working people, it amputated the will to resist."

- Steve Fraser, The Age of Acquiescence

LeitrimNYC , June 2, 2016 at 2:25 pm

One thing I don't think I have seen addressed on this site (apologies if I have missed it!) in all the commentary about the destruction of the middle class is the role of US imperialism in creating that middle class in the first place and what it is that we want to save from destruction by neo-liberalism. The US is rich because we rob the rest of the world's resources and have been doing so in a huge way since 1945, same as Britain before us. I don't think it's a coincidence that the US post-war domination of the world economy and the middle class golden age happened at the same time. Obviously there was enormous value created by US manufacturers, inventors, government scientists, etc but imperialism is the basic starting point for all of this. The US sets the world terms of trade to its own advantage. How do we save the middle class without this level of control? Within the US elites are robbing everyone else but they are taking what we use our military power to appropriate from the rest of the world.

Second, if Bernie or whoever saves the middle class, is that so that everyone can have a tract house and two cars and continue with a massively wasteful and unsustainable lifestyle based on consumption? Or are we talking about basic security like shelter, real health care, quality education for all, etc? Most of the stories I see seem to be nostalgic for a time when lots of people could afford to buy lots of stuff and don't 1) reflect on origin of that stuff (imperialism) and 2) consider whether that lifestyle should be the goal in the first place.

perpetualWAR , June 2, 2016 at 2:49 pm

I went to the electronics recycling facility in Seattle yesterday. The guy at customer service told me that they receive 20 million pounds per month. PER MONTH. Just from Seattle. I went home and threw up.

Praedor , June 2, 2016 at 3:57 pm

It doesn't have to be that way. You can replace military conquest (overt and covert) with space exploration and science expansion. Also, instead of pushing consumerism, push contentment. Don't setup and goose a system of "gotta keep up with the Joneses!"

In the 50s(!!!) there was a plan, proven in tests and studies, that would have had humans on the mars by 1965, out to Saturn by 72. Project Orion. Later, the British Project Daedalus was envisioned which WOULD have put space probes at the next star system within 20 years of launch. It was born of the atomic age and, as originally envisioned, would have been an ecological disaster BUT it was reworked to avoid this and would have worked. Spacecraft capable of comfortably holding 100 personnel, no need to build with paper-thin aluminum skin or skimp on amenities. A huge ship built like a large sea vessel (heavy iron/steel) accelerated at 1g (or more or slightly less as desired) so no prolonged weightlessness and concomitant loss of bone and muscle mass. It was all in out hands but the Cold War got in the way, as did the many agreements and treaties of the Cold War to avoid annihilation. It didn't need to be that way. Check it out: https://en.wikipedia.org/wiki/Project_Orion_(nuclear_propulsion)

All that with 1950s and 60s era technology. It could be done better today and for less than your wars in the Middle East. Encourage science, math, exploration instead of consumption, getting mine before you can get yours, etc.

hunkerdown , June 2, 2016 at 5:48 pm

Or, we could replace Western liberal culture, with its tradition to consume and expand by force an unbroken chain from the Garden of Eden to Friedrich von Hayek, with the notion of maintenance and "enough". Bourgeois make-work holds no interest to me.

Left in Wisconsin , June 2, 2016 at 4:12 pm

My understanding of the data is that living standards increased around the world during the so-called golden age, not just in the U.S. (and Western Europe and Japan and Australia ). It could be that it was still imperialism at work, but the link between imperialism and the creation of the middle class is not straightforward.

Likewise, US elites are clearly NOT robbing the manufacturing firms that have set up in China and other low-wage locations, so it is an oversimplification to say they are "robbing everyone else."

Nostalgia is overrated but I don't sense the current malaise as a desire for more stuff. (I grew up in the 60s and 70s and I don't remember it as a time where people had, or craved, a lot of stuff. That period would be now, and I find it infects Sanders' supporters less than most.) If anything, it is nostalgia for more (free) time and more community, for a time when (many but not all) people had time to socialize and enjoy civic life.

jrs , June 2, 2016 at 5:52 pm

those things would be nice as would just a tiny bit of hope for the future, our own and the planet's and not an expectation of things getting more and more difficult and sometimes for entirely unnecessary reasons like imposed austerity. But being we can't have "nice things" like free time, community and hope for the future, we just "buy stuff".

catlady , June 2, 2016 at 5:12 pm

I live on the south side, in the formerly affluent south shore neighborhood. A teenager was killed, shot in the head in a drive by shooting, at 5 pm yesterday right around the corner from my residence. A white coworker of mine who lives in a rich northwest side neighborhood once commented to me how black people always say goodbye by saying "be safe". More easily said than done.

Skippy , June 2, 2016 at 6:50 pm

I thought neoliberalism was just the pogrom to make everyone – rational agents – as subscribed by our genetic / heraldic betters .. putting this orbs humans and resources in the correct "natural" order .

Disheveled Marsupial for those thinking neoliberalism is not associated with libertarianism one only has to observe the decades of think tanks and their mouth organs roaming the planet . especially in the late 80s and 90s . bringing the might and wonders of the – market – to the great unwashed globally here libertarian priests rang in the good news to the great unwashed

Jim , June 2, 2016 at 8:10 pm

Hi Skippy:

I would argue that neoliberalism is a program to define markets as primarily engaged in information processing and to make everyone into non-agents ( as not important at all to the proper functioning of markets).

It also appears that neoliberals want to restrict democracy to the greatest extent possible and to view markets as the only foundation for truth without any need for input from the average individual.

But as Mirowski argues–carrying their analysis this far begins to undermine their own neoliberal assumptions about markets always promoting social welfare.

Skippy , June 2, 2016 at 10:09 pm

Hay Jim

When I mean – agents – I'm not referring to agency, like you say the market gawd/computer does that. I was referencing the – rational agent – that 'ascribes' the markets the right at defining facts or truth as neoliberalism defines rational thought/behavior.

Disheveled Marsupial yes democracy is a direct threat to Hayekian et al [MPS and Friends] paranoia due to claims of irrationality vs rationally

Rick Cass , June 2, 2016 at 7:32 pm

Neo-liberalism could not have any power without legal and ethical positivism as the ground work of the national thought processes.

seanseamour , June 3, 2016 at 4:32 am

I have trouble understanding the focus on an emergence of fascism in Europe, focus that seems to dominate this entire thread when, put in perspective such splinter groups bear little weight on the European political spectrum.
As an expat living in France, in my perception the Front National is a threat to the political establishments that occupy the center left and right and whose historically broad constituencies have been brutalized by the financial crisis borne of unbridled anglo-saxon runaway capitalism, coined neoliberalism. The resulting disaffection has allowed the growth of the FN but it is also fueled by a transfer of reactionary constituencies that have historically found identity in far left parties (communist, anti-capitalist, anarchist ), political expressions the institutions of the Republic allow and enable in the name of plurality, a healthy exultury in a democratic society.
To consider that the FN in France, UKIP in the UK and others are a threat to democratic values any more that the far left is non-sensical, and I dare say insignificant compared to the "anchluss" our conservative right seeks to impose upon the executive, legislative and judicial branches of government.
The reality in Europe as in America is economic. The post WWII era of reconstruction, investment and growth is behind us, the French call these years the "Trente Glorieuses" (30 glorious years) when prosperity was felt through all societal strats, consumerism for all became the panacea for a just society, where injustice prevailed welfare formulas provided a new panacea.
As the perspective of an unravelling of this golden era began to emerge elites sought and conspired to consolidate power and wealth, under the aegis of greed is good culture by further corrupting government to serve the few, ensuring impunity for the ruling class, attempting societal cohesiveness with brash hubristic dialectics (America, the greatest this or that) and adventurism (Irak, mission accomplished), conspiring to co-opt and control institutions and the media (to understand the depth of this deception a must read is Jane Mayer in The Dark Side and in Dark Money).
The difference between America and Europe is that latter bears of brunt of our excess.
The 2008 Wall St / City meltdown eviscerated much of America' middle class and de-facto stalled, perhaps definitively, the vehicle of upward mobility in an increasingly wealth-ranked class structured society – the Trump phenomena feeds off the fatalistic resilience and "good book" mythologies remnant of the "go west" culture.
In Europe where to varying degrees managed capitalism prevails the welfare state(s) provided the shock absorbers to offset the brunt of the crisis, but those who locked-in on neoliberal fiscal conservatism have cut off their nose in spite leaving scant resources to spur growth. If social mobility survives, more vibrantly than the US, unemployment and the cost thereof remains steadfast and crippling.
The second crisis borne of American hubris is the human tidal wave resulting from the Irak adventure; it has unleashed mayhem upon the Middle East, Sub Saharan Africa and beyond. The current migrational wave Europe can not absorb is but the beginning of much deeper problem – as ISIS, Boko Haram and so many others terrorist groups destabilize the nation-states of a continent whose population is on the path to explode in the next half century.
The icing on the cake provided by a Trump election will be a world wave of climate change refugees as the neoliberal establishment seeks to optimize wealth and power through continued climate change denial.
Fascism is not the issue, nationalism resulting from a self serving bully culture will decimate the multilateral infrastructure responsible nation-states need to address today's problems.
Broadly, Trump Presidency capping the neoliberal experience will likely signal the end of the US' dominant role on the world scene (and of course the immense benefits derived for the US). As he has articulated his intent to discard the art of diplomacy, from soft to institutional, in favor of an agressive approach in which the President seeks to "rattle" allies (NATO, Japan and S. Korea for example) as well as his opponents (in other words anyone who does not profess blind allegiance), expect that such modus operandi will create a deep schism accompanied by a loss of trust, already felt vis-a-vis our legislature' behavior over the last seven years.
The US's newfound respect among friends and foes generated by President Obama' presidency, has already been undermined by the GOP primaries, if Trump is elected it will dissipate for good as other nations and groups thereof focus upon new, no-longer necessarily aligned strategic relationships, some will form as part as a means of taking distance, or protection from the US, others more opportunist with the risk of opponents such as Putin filling the void – in Europe for example.

dk , June 3, 2016 at 8:08 am

Neoliberalism isn't helping, but it's a population/resource ratio thing. Impacts on social orders occur well before raw supply factors kick in (and there is more than food supply to basic rations). The world population has more than doubled in the last 50 years, one doesn't get that kind of accelerated growth without profound impacts to every aspect of societies. Some of the most significant impacts are consequent to the acceleration of technological changes (skill expirations, automations) that are driven in no small part by the needs of a vast + growing population.

https://en.wikipedia.org/wiki/Population_growth
Note that the vertical scale in the of the first graph is logarithmic.

I don't suggest population as a pat simplistic answer. And neoliberalism accelerates the declining performance of institutions (as in the CUNY article and that's been going on for decades already, neoliberalism just picked up where neoconservatism petered out), but we would be facing issues like homelessness, service degradation, population displacements, etc regardless of poor policies. One could argue (I do) that neoliberalism has undertaken to accelerate existing entropies for profit.

Murica Derp , June 3, 2016 at 3:21 pm

Thanks for soliciting reader comments on socioeconomic desperation. It's encouraging to know that I'm not the only failure to launch in this country.

I'm a seasonal farm worker with a liberal arts degree in geology and history. I barely held on for six months as a junior environmental consultant at a dysfunctional firm that tacitly encouraged unethical and incompetent behavior at all levels. From what I could gather, it was one of the better-run firms in the industry. Even so, I was watching mid-level and senior staff wander into extended mid-life crises while our entire service line was terrorized by a badly out-of-shape, morbidly obese, erratic, vicious PG who had alienated almost the entire office but was untouchable no matter how many firing offenses she committed. Meanwhile I was watching peers in other industries (especially marketing and FIRE) sell their souls in real time. I'm still watching them do so a decade later.

It's hard to exaggerate how atrociously I've been treated by bougie conformists for having failed/dropped out of the rat race. A family friend who got into trouble with the state of Hawaii for misclassifying direct employees of his timeshare boiler room as 1099's gave me a panic attack after getting stoned and berating me for hours about how I'd wake up someday and wonder what the fuck I'd done with my life. At the time, I had successfully completed a summer job as the de facto lead on a vineyard maintenance crew and was about to get called back for the harvest, again as the de facto lead picker.

Much of my social life is basically my humiliation at the hands of amoral sleazeballs who presume themselves my superiors. No matter how strong an objective case I have for these people being morally bankrupt, it's impossible to really dismiss their insults. Another big component is concern-trolling from bourgeois supremacists who will do awfully little for me when I ask them for specific help. I don't know what they're trying to accomplish, and they probably don't, either. A lot of it is cognitive dissonance and incoherence.

Some of the worst aggression has come from a Type A social climber friend who sells life insurance. He's a top producer in a company that's about a third normal, a third Willy Loman, and a third Glengarry Glen Ross. This dude is clearly troubled, but in ways that neither of us can really figure out, and a number of those around him are, too. He once admitted, unbidden, to having hazed me for years.

The bigger problem is that he's surrounded by an entire social infrastructure that enables and rewards noxious, predatory behavior. When college men feel like treating the struggling like garbage, they have backup and social proof from their peers. It's disgusting. Many of these people have no idea of how to relate appropriately to the poor or the unemployed and no interest in learning. They want to lecture and humiliate us, not listen to us.

Dude recently told me that our alma mater, Dickinson College, is a "grad school preparatory institution." I was floored that anyone would ever think to talk like that. In point of fact, we're constantly lectured about how versatile our degrees are, with or without additional education. I've apparently annoyed a number of Dickinsonians by bitterly complaining that Dickinson's nonacademic operations are a sleazy racket and that President Emeritus Bill Durden is a shyster who brainwashed my classmates with crude propaganda. If anything, I'm probably measured in my criticism, because I don't think I know the full extent of the fraud and sleaze. What I have seen and heard is damning. I believe that Dickinson is run by people with totalitarian impulses that are restrained only by a handful of nonconformists who came for the academics and are fed up with the propaganda.

Meanwhile, I've been warm homeless for most of the past four years. It's absurd to get pledge drive pitches from a well-endowed school on the premise that my degree is golden when I'm regularly sleeping in my car and financially dependent on my parents. It's absurd to hear stories about how Dickinson's alumni job placement network is top-notch when I've never gotten a viable lead from anyone I know from school. It's absurd to explain my circumstances in detail to people who, afterwards, still can't understand why I'm cynical.

While my classmates preen about their degrees, I'm dealing with stuff that would make them vomit. A relative whose farm I've been tending has dozens of rats infesting his winery building, causing such a stench that I'm just about the only person willing to set foot inside it. This relative is a deadbeat presiding over a feudal slumlord manor, circumstances that he usually justifies by saying that he's broke and just trying to make ends meet. He has rent-paying tenants living on the property with nothing but a pit outhouse and a filthy, disused shower room for facilities. He doesn't care that it's illegal. One of his tenants left behind a twenty-gallon trash can full to the brim with his own feces. Another was seen throwing newspaper-wrapped turds out of her trailer into the weeds. They probably found more dignity in this than in using the outhouse.

When I was staying in Rancho Cordova, a rough suburb of Sacramento, I saw my next-door neighbor nearly come to blows with a man at the light rail station before apologizing profusely to me, calling me "sir," "man," "boss," and "dog." He told me that he was angry at the other guy for selling meth to his kid sister. Eureka is even worse: its west side is swarming with tweakers, its low-end apartment stock is terrible, no one brings the slumlords to heel, and it has a string of truly filthy residential motels along Broadway that should have been demolished years ago.

A colleague who lives in Sweet Home, Oregon, told me that his hometown is swarming with druggies who try to extract opiates from local poppies and live for the next arriving shipment of garbage drugs. The berry farm where we worked had ten- and twelve-year-olds working under the table to supplement their families' incomes. A Canadian friend told me that he worked for a crackhead in Lillooet who made his own supply at home using freebase that he bought from a meathead dealer with ties to the Boston mob. Apparently all the failing mill towns in rural BC have a crack problem because there's not much to do other than go on welfare and cocaine. An RCMP sergeant in Kamloops was recently indicted for selling coke on the side.

Uahsenaa's comment about the invisible homeless is spot on. I think I blend in pretty well. I've often stunned people by mentioning that I'm homeless. Some of them have been assholes about it, but not all. There are several cars that I recognize as regular overnighters at my usual rest area. Thank God we don't get hassled much. Oregon is about as safe a place as there is to be homeless. Some of the rest areas in California, including the ones at Kingsburg and the Sacramento Airport, end up at or beyond capacity overnight due to the homeless. CalTrans has signs reminding drivers that it's rude to hog a space that someone else will need. This austerity does not, of course, apply to stadium construction for the Kings.

Another thing that almost slipped my mind (and is relevant to Trump's popularity): I've encountered entrenched, systemic discrimination against Americans when I've tried to find and hold menial jobs, and I've talked to other Americans who have also encountered it. There is an extreme bias in favor of Mexican peasants and against Americans in the fields and increasingly in off-farm jobs. The top quintile will be lucky not to reap the whirlwind on account of this prejudice.

[Dec 04, 2016] Donald Trump, Brexit Are Blowback From Years of Anti-Government Rhetoric US News Opinion

Notable quotes:
"... The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability. ..."
"... In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump). ..."
"... Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks. ..."
"... Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'" ..."
Aug 07, 2016 | www.usnews.com
In addition, the issues are similar between the two campaigns: The number one issue fueling the leave vote was immigration – a lot like Trump's wall against Mexico. The number two issue was lack of accountability of government: Leavers believe that the EU government in Brussels is unaccountable to voters. For Trump supporters, resentment towards a distant and unaccountable Washington government ranks high as well. The Brexit constituency and the Trump constituency are both motivated by the same sense of loss and vulnerability.

In both the U.S. and the U.K., a large and growing segment of voters has not prospered in today's complex, technology-driven global economy. Their wages have stagnated and in many cases fallen. Too few good-paying jobs exist for people lacking a college degree, or even people with a college degree, if the degree is not in the right field. These people are angry, frustrated, and afraid -- and with very good reason. Both countries' governments have done little to help them adapt, and little to soothe the sting of globalization. The voter's concerns in both places are mostly the same even though these concerns have coalesced around a policy issue ("leave") in the U.K. whereas here in the U.S. they have coalesced around a candidate (Trump).

In both countries, political elites were caught flat-footed. Elites lost control over the narrative and lost credibility and persuasiveness with angry, frustrated and fearful voters. The British elites badly underestimated the intensity of public frustration with immigration and with the EU. Most expected the vote would end on the side of "remain," up to the very last moment. Now they are trying to plot their way out of something they never expected would actually happen, and never prepared for.

Similarly, the elite insiders of the Republican Party and their business allies badly underestimated Trump. Establishment candidates like former Florida Gov. Jeb Bush failed terribly. Now the Republican political insiders are trying to make sense of a presumptive nominee who trashes free trade, one of the fundamental principles of the party, and openly taunts one of most important emerging voting blocks.

How did the elites lose control? There are many reasons: With social media so pervasive, advertising dollars no longer controls what the public sees and hears. With unrestricted campaign spending, the party can no longer "pinch the air hose" of a candidate who strays from party orthodoxy.

Perhaps the biggest reason for the impotence of today's political elites is that elites have trashed the very idea of competent and effective government for 35 years now, and the public has taken the message to heart. Ever since Reagan identified government as the problem, conservative elites have attacked the idea of government itself – rather than respecting the idea of government itself while criticizing the particular policies of a particular government. This is a crucial (and dangerous) distinction. In 1986, Reagan went on to say "the nine most terrifying words in the English language are 'I'm from the government and I'm here to help.'"

Reagan booster Grover Norquist is known for saying, "I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." Countless candidates and elected officials slam "Washington bureaucrats" even though these "bureaucrats" were none other than themselves. It's not a great way to build respect. Then the attack escalated, with the aim of destroying parts of government that were actually mostly working. This was done to advance the narrative that government itself is the problem, and pave the way for privatization. Take the Transportation Security Administration for example. TSA has actually done its job. No terrorist attacks have succeeded on U.S. airplanes since it was established. But by systematically underfunding it , Congress has made the lines painfully long, so people hate it. Take the Post Office. Here Congress manufactured a crisis to force service cuts, making the public believe the institution is incompetent. But the so-called "problem" is due almost entirely to a requirement, imposed by Congress, forcing the Postal Service to prepay retiree's health care to an absurd level, far beyond what a similar private sector business would have to do. A similar dynamic now threatens Social Security. Thirty-five years have passed since Reagan first mocked the potential for competent and effective government. Years of unrelenting attack have sunk in. Many Americans now distrust government leaders and think it's pointless to demand or expect wisdom and statesmanship. Today's American voters (and their British counterparts), well-schooled in skepticism, disdain and dismiss leaders of all parties and they are ready to burn things down out of sheer frustration. The moment of blowback has arrived.

[Dec 04, 2016] Human beings are now considered consumer goods in job market to be used and then discarded. As a consequence, a lot of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape (pope Francis)

Aug 28, 2016 | economistsview.typepad.com

R.L.Love : August 27, 2016 at 09:49 AM

PK has nearly lost all of his ability to see things objectively. Ambition got him, I suppose, or maybe he has always longed to be popular. He was probably teased and ridiculed too much in his youth. He is something of a whinny sniveler after-all.

Then too, I doubt if PK has ever used a public restroom in the Southwest, or taken his kids to a public park in one of the thousands of small towns where non-English speaking throngs take over all of the facilities and parking.Or had his children bullied at school by a gang of dark-skinned kids whose parents believe that whites took their land, or abused or enslaved their distant ansestors. It might be germane here too... to point out that some of this anti-white sentiment gets support and validation from the very rhetoric that Democrats have made integral to their campaigns.

As for not knowing why crime rates have been falling, the incarceration rates rose in step, so duh, if you lock up those with propensities for crime, well, how could crime rates not fall? And while I'm on the subject of crime, the statistical analysis that is commonly used focuses too much on violent crime and convictions. Thus, crimes of a less serious nature, that being the type of crimes committed by poor folks, is routinely ignored. Then too, those who are here illegally are often transient and using assumed names, and so they are, presumably, more difficult to catch. So, statistics are all too often not as telling as claimed.

And, though I'm not a Trump supporter, I fully understand his appeal. As would PK if he were more travelled and in touch with those who have seen their schools, parks, towns, and everything else turn tawdry and dysfunctional. But of course the nation that most of us live in is much different than the one that PK knows.

likbez -> R.L.Love

> And, though I'm not a Trump supporter, I fully understand his appeal

I wonder why everybody is thinking about this problem only in terms of identity politics.

This is a wrong, self-defeating framework to approach the problem. which is pushed by neoliberal MSM and which we should resist in this forum as this translates the problems that the nation faces into term of pure war-style propaganda ("us vs. them" mentality). To which many posters here already succumbed

IMHO the November elections will be more of the referendum on neoliberal globalization (with two key issues on the ballot -- jobs and immigration) than anything else.

If so, then the key question is whether the anger of population at neoliberal elite that stole their jobs and well-being reached the boiling point or not. The level of this anger might decide the result of elections, not all those petty slurs that neoliberal MSM so diligently use as a smoke screen.

All those valiant efforts in outsourcing and replacing permanent jobs with temporary to increase profit margin at the end have the propensity to produce some externalities. And not only in the form "over 50 and unemployed" but also by a much more dangerous "globalization of indifference" to human beings in general.

JK Galbraith once gave the following definition of neoliberal economics: "trickle down economics is the idea that if you feed the horse enough oats eventually some will pass through to the road for the sparrows." This is what neoliberalism is about. Lower 80% even in so-called rich countries are forced to live in "fear and desperation", forced to work "with precious little dignity".

Human beings are now considered consumer goods in "job market" to be used and then discarded. As a consequence, a lot of people find themselves excluded and marginalized: "without work, without possibilities, without any means of escape" (pope Francis).

And that inevitably produces a reaction. Which in extreme forms we saw during French and Bolsheviks revolutions. And in less extremist forms (not involving lampposts as the placeholders for the "Masters of the Universe" (aka financial oligarchy) and the most obnoxious part of the "creative class" aka intelligentsia https://en.wikipedia.org/wiki/Intelligentsia ) in Brexit vote.

Hillary and Trump are just symbols here. The issue matters, not personalities.

[Dec 04, 2016] The myth of Ronald Reagan: pragmatic moderate or radical conservative?

Notable quotes:
"... he changed American politics forever by demonstrating that style was more important than substance. In fact, he showed that style was everything and substance utterly unimportant. ..."
"... Conservatives used "bracket creep" to convince the middle class that reducing marginal rates on the top tax brackets along with their own would be a good idea, then with the assistance of Democrats replaced the revenue with a huge increase in FICA so that the Social Security Trust Fund could finance the deficit in the rest of the budget. The result was a huge boon to the richest, little difference for the middle class, and a far greater burden for the working poor. ..."
"... Any conversation about who the fantasy-projection "Reagan" was, misses an important reality: He was a hologram, fabricated by a kaleidoscope of various sorts of so-called "conservative" handlers and puppeteers. It was those "puppeteers" who ranged from heartlessly, stunningly "conservative" (destroya-tive), all the way further right to the kind of militaristic, macho, crackpots who have finally emerged from under their rocks at this year's "candidates." ..."
The Guardian


cgoodwood 19 Sep 2015 11:40

Do not contradict the memories of all the old teabaggers who desperately need the myth of Saint Ronnie to justify their Greed is Good declining mentality and years.

When Reagan cut-and-ran on Lebanon he showed rare discretion. A lot of the puffery stuff was B-Movie grade, but there was a lot of cross-the-aisle ventures, too.

He was a politician. The current GOP is just a bunch of white Fundie bullies, actually and metaphorically (e.g., Carson).

Zepp -> thedono 19 Sep 2015 11:37

Well, compared to Cruz, or Santorum, or Huckabee, he's a moderate. Of course, compared to the right people, you can describe Mussolini or Khruschev as moderates...

mastermisanthrope 19 Sep 2015 11:37

Lifelong shill

LostintheUS -> William J Rood 19 Sep 2015 11:36

Reagan underwent a political conversion when Nancy broke up his marriage with Jane Wyman and married him.

LostintheUS 19 Sep 2015 11:33

Here is the Reagan administration in a five second video clip:
https://www.youtube.com/watch?v=NR3RqMMIwD4

LostintheUS -> inchoateruffian 19 Sep 2015 11:32

Here is the video clip where Don Regan (former CEO of Merrill Lynch) tells PRESIDENT Reagan to "speed it up".

https://www.youtube.com/watch?v=NR3RqMMIwD4

RightSaid -> ID3732233 19 Sep 2015 11:31

The cold war ended while Reagan was president, but he did not win the cold war. His rhetoric and strategy was wishful thinking - there's no way he could have had the definitive intelligence about the entire military-political-economic that would have justified the confidence he projected. He merely lucked out, significantly damaging the US economy by trying (and luckily succeeding) to out-militarize the soviets.

pretzelattack -> kattw 19 Sep 2015 11:31

both clinton and obama have showed a willingness to "reform social security". try naked capitalism, there are probably a number of articles in the archives.

LostintheUS -> piethein 19 Sep 2015 11:29

And that the emergency room federally funded program that saved his life was soon after defunded...by him.

LostintheUS -> pretzelattack 19 Sep 2015 11:28

Many of us saw through him...I noted the senility during his speeches during his first campaign...as did many people I knew.

pretzelattack -> 4Queeen4country 19 Sep 2015 11:27

thatcher said of reagan "bit of a dim bulb..."

Jim Loftus 19 Sep 2015 11:26

Dementia masquerading as politics.
But you can't say anything negative about Saint Ronald!

Peter Davis -> Peter Davis 19 Sep 2015 11:22

I believe Reagan also is responsible for creating the Hollywood notion in American politics and political thinking that life works just like a movie--with good guys and bad guys. And all one needs is a gun and you can save the world. That sort of delusional thinking has been at the heart of the modern GOP ever since.

loljahlol -> ID3732233 19 Sep 2015 11:21

Reagan did not end the Cold War. Brezhnev rule solidified the Soviet death. Their corrupt, inefficient form of capitalism could not compete with the globalization of Western capitalism.

John78745 19 Sep 2015 11:21

There's not much nuance to Reagan. He was a coward, a bully and a loser. He got hundreds of U.S. Marines killed then he ran from the terrorists in Beirut and on the Archille Lauro personally creating the seeds of the morass of terrorists we now live with. He fostered the republican traditions of sending U.S. jobs overseas at the expense of U.S. taxpayers and of invading helpless, hapless nations, a tradition so adeptly followed by Bush I & II. He also promised that there would never be a need for another amnesty.

I guess it's true that he talked mean to the Russians, broke unions, and helped make the military industrial complex into the insatiable war machine that it is today. Remember murderous Iran-Contra (a real) scandal where he and his minions worked in secret without congressional authorization to overthrow a democratically elected government while conspiring to supply arms to the dastardly Iranians!

We could also say that he bravely fought to save the U.S. from socialized medicine and to expunge the tradition of free tuition for California students. Whatta hero!

thankgodimanatheist 19 Sep 2015 11:19

Reagan, the acting President, was the worst President since WWII until the Cheney/Bush debacle.

Most of the problems we face today can be directly traced to his voodoo economics, huge deficit spending, deregulation, and in retrospect disastrous foreign policies.


LostintheUS 19 Sep 2015 11:17

"these days everyone seems to love Ronald."

Absolutely, not true. The farther along we go in time, the more Americans realize the damage this man and his backers did to America and the world. The inversion of the tax tables, the undoing of union laws, the polarization of Americans against each other so the plutocrats had no real opposition and on and on. His camp stole the election in 1980 through making a back door deal with the Iranian government to hold onto the American hostages until the election when Jimmy Carter had negotiated an end to the hostage crisis, which was the undoing of Jimmy Carter's administration.

"Behind Carter's back, the Reagan campaign worked out a deal with the leader of Iran's radical faction - Supreme Leader Ayatollah Khomeini - to keep the hostages in captivity until after the 1980 Presidential election." This is, unquestionably, treason. http://www.truth-out.org/opinion/item/20287-without-reagans-treason-iran-would-not-be-a-problem

No, Reagan marks the downward turn for our country and has resulted in the economic and social mess we still have not clawed our way back out of. No, Reagan is no hero, he is an American nemesis and a traitor. Reagan raised taxes three times while slashing the tax rate of the super rich...starting the downward spiral of the middle-class and the funneling of money toward the 1%. Thus his reputation as a "tax cutter", yeah, if you were a multi-millionaire.

Check this out for a synopsis of the damage: http://www.dailykos.com/story/2011/02/10/942453/-How-Ronald-Reagan-s-Policies-Destroyed-the-United-States#

namora -> nogapsallowed 19 Sep 2015 11:15

Never thought of Reagan as the first Shrub but it fits. I wonder if future pundits will sing the Dub's praises as well. I think I'm gonna be sick for a bit.

kattw -> namora 19 Sep 2015 11:10

Pretzel is maybe talking about the 'strengthen SS' bandwagon? Perhaps? Not entirely sure myself, but yeah - one of the major democrat platform planks is that SS should NOT be privatized, and that if people want to invest in stocks, they can do that on their own. The whole point of SS is to be a mattress full of cash that is NOT vulnerable to the vagaries of the market, and will always have some cash in it to be used as needed.

SS would be totally secure, too, if congress would stop robbing it for other projects, or pay back all they've borrowed. As it is, I wish *I* was as broke as republicans claim SS is - I wouldn't mind having a few billion in the bank.

William J Rood 19 Sep 2015 11:08

Reagan was former president of the Screen Actors' Guild. Obviously, he thought unions for highly educated workers were great. Meatpackers? Not so much.

RealSoothsayer 19 Sep 2015 11:04

This article does not mention the fact that in his last couple of years as President at least, his mental state had seriously deteriorated. He could not remember his own policies, names, etc. CBS' Leslie Stahl should be prosecuted for not being honest with her everyone when she found out.

Peter Davis 19 Sep 2015 11:04

Reagan was a failed president who nonetheless managed to convince people that he was great. He was a professional actor, after all. And he acted his way into the White House. Most importantly, he changed American politics forever by demonstrating that style was more important than substance. In fact, he showed that style was everything and substance utterly unimportant. He was the figurehead while his handlers did the dirty work of Iran-Contra, ballooning deficits, and tanking unemployment.

nishville 19 Sep 2015 11:03

For me, he was a pioneer. He was the first sock-puppet president, starting a noble tradition that reached its climax with W.

mbidding -> hackerkat 19 Sep 2015 11:03

In addition to:

Treasonous traitor when, as a presidential candidate, he negotiated with Khomeini to hold the hostages till after the election.

Subverter of the Constitution via the Iran-Contra scandal.

Destroyer of social cohesion by turning JFK's famous admonishment of "ask not what your country can do for you, ask what you can do for your country" on its head with his meme that all evil emanates from the government and taxation represents stealing rather than a social obligation for any civilized society that wishes to continue to develop in a sound fashion that lifts all boats.

Incarcerator in Chief through his tough on crime and war on drugs policies, not to mention defunding mental health care.

Pisser in Chief through his successful efforts to imbed trickle down economics as the economic thought du jour which even its original architects, notably Stockman, now confirm is a failed theory that we nonetheless cling to to this day.

Ignoramus in Chief by gutting real federal financial aid for higher education leading to the obscene amounts of student debt our college students now incur.

Terrorist creator extraordinaire not only with the creation of the Latin American death squads you note, but the creation, support, trading, and funding of the mujahedin and Bin Laden himself, now known as the Taliban, Al Qa'ida, and ISIS, only the most notable among others.

namora -> trholland1 19 Sep 2015 10:59

That is not taking into account his greatest role for which he was ignored for a much deserved Oscar, Golden Globe or any of the other awards passed out by the entertainment industry, President of The United States of America. He absolutely nailed that one.

William J Rood 19 Sep 2015 10:58

Conservatives used "bracket creep" to convince the middle class that reducing marginal rates on the top tax brackets along with their own would be a good idea, then with the assistance of Democrats replaced the revenue with a huge increase in FICA so that the Social Security Trust Fund could finance the deficit in the rest of the budget. The result was a huge boon to the richest, little difference for the middle class, and a far greater burden for the working poor.

Tax brackets could have been indexed to inflation, but that wouldn't have been so great for Reagans real supporters.

Doueman 19 Sep 2015 10:55

What sad comments by these armchair experts.

They don't gel with my experiences in North America during this period at all. When Reagan ran for the presidency he was generally ridiculed by much of the press in the US and just about all of the press in the UK for being a right wing fanatic, a lightweight, too old, uninformed and even worse an actor. I found this rather curious and watched him specifically on TV in unscripted scenarios to form my own impression as to how such a person, with supposedly limited abilities, could possibly run for President of the US. I get a bit suspicious when organisations and individuals protest and ridicule too much.

My reaction was that he handled himself well and gradually concluded that the mainly Eastern liberal press in the US couldn't really stomach a California actor since they themselves were meant to know everything. He actually was pretty well read ( visitors were later astonished to read his multiple annotations in heavy weight books in his library). He was a clever and astute union negotiator dealing with some of the toughest Hollywood moguls who would eat most negotiators for dinner. He had become Governor of California and had done a fine job. I thought it was unlikely he was the simpleton many portrayed. He couldn't be easily categorised as he embraced many good aspects of the Democrats and the Republicans. Life wasn't so polarised then.

The US had left leaning Republicans and right wing Democrats. A political party as Churchill noted was simply a charger to ride into action.

In my view, his presidential record was pretty remarkable. A charming, fair minded charismatic man without the advantage of a wealthy background or influential family. The world was lucky to have him.

raffine -> particle 19 Sep 2015 10:50

Reagan's second term was a disaster. But as someone below mentioned, conservative pundits and their financers engaged in a campaign to make Reagan into a right-wing FDR. The most effective, albeit bogus, claim on Reagan's behalf was that he had ended the Cold War.

jpsartreny 19 Sep 2015 14:22

Reagan is the shadow governments greatest triumph. After the adolescent Kennedy, egomaniacs Johnson and Nixon , they needed front guys who followed orders instead .

The experiment with the peanut farmer from Georgia provided disastrous to Zebrew Brzezinski and the liberals. The conservatives had better luck with a B- movie actor with an great talent to read of the teleprompter.

RealSoothsayer -> semper12 19 Sep 2015 14:19

How? By talking? Gobachev brought down the USSR with his 'Glasnost' and 'Perestroika' policies. His vision was what communist China later on achieved: mixed economy that flies a red flag. Reagan was just an observer, absolutely nothing more. Tito of Yugoslavia was even more instrumental.

Marc Herlands 19 Sep 2015 14:17

IMHO Reagan was the second most successful president, behind FDR and ahead of LBJ. Not that I liked anything about him, but he moved this country to the right and set the play book. He lowered taxes on the wealthy, the corporations, capital gains, and estate taxes. He reduced growth in programs for the poor, and made it impossible to increase their funding after his presidency because of he left huge federal deficits caused by lowering taxes and increasing outlays on the military. This Republican playbook still is their way of making sure that the Democrats can't give the poor more money after they lose power. Also, he enlarged the program for deregulating industries, doing away with antitrust laws, hindering labor laws, encouraged anti-union behavior, and did nothing for AIDS research. He was a scoundrel who did a deal with Iran to prevent Carter from being re-elected. He directly disobeyed Congressional laws not to intervene in Nicaragua. He set the tone for US interventions after him.


bloggod 19 Sep 2015 14:17

Obama, Clinton, and the Bushes all hope to be forgiven for their unpardonable crimes.

Popularity is created. It is not populism, or informed consent of the pubic as approval for more of the same collusion.

It is a One Party hoe down.

bloggod -> SigmetSue 19 Sep 2015 14:12

"they"

the indicted Sec of Defense Weinberger; the indicted head of the CIA Casey who "died" as he was due to testify: Mcfarlane, Abrams, Clair George, Oilyver North, Richard Secord, Albert Hakim

Reagan had no genius, he had Bush-CIA and the Jerry Falwell, Billy Graham, and the "immoral majority" of anti-abortion war profiteers.


Marios Antoniou Lattimore 19 Sep 2015 13:52

I agree with everything you mentioned, and I intensely dislike Reagan YET the point of the article wasn't that Reagan was good, it rather points to the fact that Republicans have shifted so far to the right that Reagan would appear moderate compared to the current batch.

Rainer Jansohn pretzelattack 19 Sep 2015 13:52

Interesting had been his speeches during the Cold War.Scientists have subsumed it under "Social Religion",a special form of political theology.Simple dialectical:UDSSR the incarnation of the evil/hell on the other side USA :the country of God himself.A tradition in USA working until now.There is no separation between government and church as in good old centuries sincetwo centuries resulting from enlightening per Philosophie/Voltaire/Kant/Hume/Descartes and so on.Look at Obamas speeches/God is always mixed in!

talenttruth 19 Sep 2015 13:49

Any conversation about who the fantasy-projection "Reagan" was, misses an important reality: He was a hologram, fabricated by a kaleidoscope of various sorts of so-called "conservative" handlers and puppeteers. It was those "puppeteers" who ranged from heartlessly, stunningly "conservative" (destroya-tive), all the way further right to the kind of militaristic, macho, crackpots who have finally emerged from under their rocks at this year's "candidates."

The fact that Reagan was going ga-ga – definitely in his second term, and likely for part of the first – was entirely convenient for his Non-Human-Based-Crackpot-Right-Holographers, since he had was not actually "driven" to vacuousness by a tragic mental condition (dementia) – THAT change was merely a "short putt" – from his entire previous life.

Regarding his Great Achievement, the collapse of the Soviet Union? After decades of monstrous over-spending by the USA's Military-Industrial-Complex, the bogus and equally insane USSR finally bankrupted itself trying to "compete" and fell. Reagan (and his puppeteer handlers), always excellent at Taking Credit for anything, showed up with exquisite cynical timing, and indeed Took Credit.

Lest anyone forget, Reagan got elected in 1980, via a totally illegal and stunningly immoral "side deal" with the Iranians, in which they agreed to not release our hostages to make Carter look like a feeble old man. Then we got Reagan who WAS a "feeble old man" (ESPECIALLY intellectually and morally). Reagan "won," the hostages were "released" and he of course took credit for that too.

So all these so-called "candidates" ARE the heirs of all the very worst of Ronald Reagan: they are all simpleminded, they are totally beholden to Hidden Sociopathic Billionaires hiding behind various curtains, and they all have NO CLUE what the word "ethics" means. Vacuous, anti-intellectual, scheming, appealing only to morons, and puppets all. Perfect "Reaganites."

Bill Ehrhorn -> semper12 19 Sep 2015 13:32

It seems that the teabaggers and their ilk give only Reagan credit.

SigmetSue 19 Sep 2015 13:16

They