5/18/2020—A story in the New York Times said what everybody already knew—the emergency we face economically requires any spending we can muster whatever the effect on the deficit. Much like a war.
But, if this were a normal time, then when we reopened, we would try to bring the deficit down. That would not be so difficult, since these payments are one-time and not recurring—not like social security.
The real danger is that since the Fed is buying Treasury bonds—essentially just printing money—we now believe or want to believe that deficits don’t matter. Really don’t matter.
At that point, why have any taxes at all?
This is the lesson taught by what is called Modern Monetary Theory. It says in effect that the old model of a nation’s budget being like any person’s budget is false. Government just issues money and should do so until full employment is reached. Debt is not “paid back.”
I am not an economist. But I do know snake oil when I hear it. MMTP—and practice—is just like the old supply side idea. Cut taxes and you will have more money come in.
The point is that we have no problem believing this for the same reason we have no problem believing that the virus will disappear or global warming is not real.
It’s reality we don’t believe in. Reality and its limits on anything we want to do. Why should unserious people like this sacrifice? Live within limits? Wear masks? Have an inconvenient child?
Be limited by the resources of the planet?
Once you don’t live in reality, there are no limits.
But reality has the last word.
Showing posts with label hallowed secularism and economics. Show all posts
Showing posts with label hallowed secularism and economics. Show all posts
Monday, May 18, 2020
Saturday, December 7, 2019
Churchill Champions Free Trade and Castigates Republican Tariffs as Secular
12/7/2019--In 1903, Winston Churchill delivered a speech rebuking the policy of his own Party, the Conservative Party, favoring tariffs. He argued that protectionism,
"means a change, not only in the historic English Parties, but in the conditions of our public life. The old Conservative Party, with its religious convictions and constitutional principles will disappear and a new party will rise...perhaps like the Republican Party in the United States of America...rigid, materialist and secular, whose opinions will turn on tariffs and who will cause the lobbies to be crowded with the touts of protected industries." [William Manchester, The Last Lion, 353 (1983)]
Churchill saw that free trade is not just an economic policy. It is a faith in the solidarity of humankind. It is peace. It is a generous spirit that we are all one. This is surprising, since Churchill was an imperialist. But he had a sufficiently great spirit that he could identify with all. He never would have proclaimed England First. He championed a prosperity for everyone. And he believed that free trade would get us there more reliably than any other policy. Furthermore, he believed that the grasping for national advantage must inevitably lead to war.
Again, surprisingly to us, he saw capitalism as inherently moral and religious. We think it is not, because we don't have real capitalism. We have indeed special interests seeking narrow advantage, masquerading as capitalists. Adam Smith, after all, was a supremely religious man.
"means a change, not only in the historic English Parties, but in the conditions of our public life. The old Conservative Party, with its religious convictions and constitutional principles will disappear and a new party will rise...perhaps like the Republican Party in the United States of America...rigid, materialist and secular, whose opinions will turn on tariffs and who will cause the lobbies to be crowded with the touts of protected industries." [William Manchester, The Last Lion, 353 (1983)]
Churchill saw that free trade is not just an economic policy. It is a faith in the solidarity of humankind. It is peace. It is a generous spirit that we are all one. This is surprising, since Churchill was an imperialist. But he had a sufficiently great spirit that he could identify with all. He never would have proclaimed England First. He championed a prosperity for everyone. And he believed that free trade would get us there more reliably than any other policy. Furthermore, he believed that the grasping for national advantage must inevitably lead to war.
Again, surprisingly to us, he saw capitalism as inherently moral and religious. We think it is not, because we don't have real capitalism. We have indeed special interests seeking narrow advantage, masquerading as capitalists. Adam Smith, after all, was a supremely religious man.
Saturday, February 2, 2019
Leaver Agriculture
2/2/2019--In the marvelous book Ishmael, which my students in Law and Philosophy read, Daniel Quinn points out that settlement and agriculture was known by indigenous peoples who lived sustainably within their areas. (Weren't the Iroquois an example of that?) People calls these people Leavers.
But the question has always been whether this model is of any use to us--Quinn's Takers.
There is now a model of the kind of agriculture that a Leaver might practice in our society. You can see it in the writing of California farmer Mike Madison that I ran across in a review by Verlyn Klinkenborg in the New York Review in the September 27 issue--Green and Pleasant Land (locked on the New York Review webpage).
The normal farmer mantra is kill everything but the crops, says Klinkenborg. And the average farmer is a complete slave to the likes of Monsanto--seeds are leased. But there are other ways to farm.
Here is a flavor of Madison's farming, with some quotes from Madison.
************************************************
The point of all these lists and calculations is to help measure Madison’s efforts to keep his farm in balance with the world. “It is instructive,” he writes, “to draw a line around the perimeter of a farm and then to measure the movement of materials (or energy) across that line, onto and off the farm.” By this standard, conventional farms—heavily reliant on petroleum-based chemicals, fossil fuels, and leased seeds—are sinkholes of consumption. Madison’s goal is to make the farm operation as self-provisioning as possible, so that the farm supplies as many of its own requirements—energy and fertility, for example—as it can. This, of course, is one of the basic measures of sustainability. So is the “psychological well-being of the farm family,” a standard you’ll want to keep in mind while reading This Blessed Earth.
In America—thanks to its abundance of land—there have always been two kinds of farmers: movers and improvers. Movers were the ones who farmed out the fertility in a patch of ground and then moved along to the next patch. This is more or less how America was settled. Improvers were the ones who did everything they could to preserve and increase the fertility of their soil. The intensity of the debate over these methods reached its peak in the early nineteenth century.* In the long run, the improvers faded from the discussion, especially after World War II and the introduction of chemical fertilizers. The movers continue to move, but in a different manner these days. When farmers ran out of new land, they simply mined their way downward through the fertility of eroding layers of farmland until they reached the place we are now.
Farmland, instead of being a carbon sink, has been forced to surrender its carbon. Iowa’s once-black soils are now “a washed-out tan color from loss of organic matter.” All that lost fertility is replaced annually by injections of anhydrous ammonia, which is toxic to soil organisms and slowly acidifies the soil. You could argue that modern agriculture has brought about the most wholesale ecocide on the planet by killing the astonishingly rich microbial life of the soil. It’s worth drawing up another analytical model of the kind Mike Madison employs. Ask, simply, where soil is being replenished with organic matter—cover crops and manure, for instance—and where it is not. What you end up with is a perfect map of the division between conventional, large-scale, industrial agriculture and small-market farms. A map like that would also provide a stark reminder of how colossal the scale of conventional farming really is when compared to small, artisanal farming, something that’s easily forgotten when you’re shopping at the farmers’ market.
Madison believes that “farming is not a perversion of nature, but a natural development in our planet’s evolution.” There is a lot of optimism lurking in that thought. Anyone who can write “I expect to still be farming at age 80” is an optimist at heart, no matter how cautionary or skeptical he often sounds. In fact, I would say that Fruitful Labor may be the most optimistic book it is possible to write that also contains this sentence: “We are a flawed species unable to make good use of the wisdom available to us, and we have earned our unhappy destiny by our foolishness.”
**********************************
It turns out that James Madison had a Leaver perspective. Read this last paragraph.
Madison’s fundamental argument about the deep ecology of farming is one that another Madison—James Madison—would have agreed with. In May 1818, while Cobbett was still living on Long Island, the former president—an improving farmer—gave a speech to the Agricultural Society in Albemarle, Virginia. He said something that has become almost unsayable in the world we inhabit now—unsayable at least by the sitting president and his environmental and agricultural appointees. “We can scarcely be warranted,” Madison said, “in supposing that all the productive powers of [Earth’s] surface can be made subservient to the use of man, in exclusion of all the plants and animals not entering into his stock of subsistence.” It is truly painful to leap ahead two hundred years and realize that one of Mike Madison’s reasons for continuing to farm is this: “In an increasingly unstable world it is important to keep the farm as a refuge for family and friends in times of economic collapse and social disarray.”
But the question has always been whether this model is of any use to us--Quinn's Takers.
There is now a model of the kind of agriculture that a Leaver might practice in our society. You can see it in the writing of California farmer Mike Madison that I ran across in a review by Verlyn Klinkenborg in the New York Review in the September 27 issue--Green and Pleasant Land (locked on the New York Review webpage).
The normal farmer mantra is kill everything but the crops, says Klinkenborg. And the average farmer is a complete slave to the likes of Monsanto--seeds are leased. But there are other ways to farm.
Here is a flavor of Madison's farming, with some quotes from Madison.
************************************************
The point of all these lists and calculations is to help measure Madison’s efforts to keep his farm in balance with the world. “It is instructive,” he writes, “to draw a line around the perimeter of a farm and then to measure the movement of materials (or energy) across that line, onto and off the farm.” By this standard, conventional farms—heavily reliant on petroleum-based chemicals, fossil fuels, and leased seeds—are sinkholes of consumption. Madison’s goal is to make the farm operation as self-provisioning as possible, so that the farm supplies as many of its own requirements—energy and fertility, for example—as it can. This, of course, is one of the basic measures of sustainability. So is the “psychological well-being of the farm family,” a standard you’ll want to keep in mind while reading This Blessed Earth.
In America—thanks to its abundance of land—there have always been two kinds of farmers: movers and improvers. Movers were the ones who farmed out the fertility in a patch of ground and then moved along to the next patch. This is more or less how America was settled. Improvers were the ones who did everything they could to preserve and increase the fertility of their soil. The intensity of the debate over these methods reached its peak in the early nineteenth century.* In the long run, the improvers faded from the discussion, especially after World War II and the introduction of chemical fertilizers. The movers continue to move, but in a different manner these days. When farmers ran out of new land, they simply mined their way downward through the fertility of eroding layers of farmland until they reached the place we are now.
Farmland, instead of being a carbon sink, has been forced to surrender its carbon. Iowa’s once-black soils are now “a washed-out tan color from loss of organic matter.” All that lost fertility is replaced annually by injections of anhydrous ammonia, which is toxic to soil organisms and slowly acidifies the soil. You could argue that modern agriculture has brought about the most wholesale ecocide on the planet by killing the astonishingly rich microbial life of the soil. It’s worth drawing up another analytical model of the kind Mike Madison employs. Ask, simply, where soil is being replenished with organic matter—cover crops and manure, for instance—and where it is not. What you end up with is a perfect map of the division between conventional, large-scale, industrial agriculture and small-market farms. A map like that would also provide a stark reminder of how colossal the scale of conventional farming really is when compared to small, artisanal farming, something that’s easily forgotten when you’re shopping at the farmers’ market.
Madison believes that “farming is not a perversion of nature, but a natural development in our planet’s evolution.” There is a lot of optimism lurking in that thought. Anyone who can write “I expect to still be farming at age 80” is an optimist at heart, no matter how cautionary or skeptical he often sounds. In fact, I would say that Fruitful Labor may be the most optimistic book it is possible to write that also contains this sentence: “We are a flawed species unable to make good use of the wisdom available to us, and we have earned our unhappy destiny by our foolishness.”
**********************************
It turns out that James Madison had a Leaver perspective. Read this last paragraph.
Madison’s fundamental argument about the deep ecology of farming is one that another Madison—James Madison—would have agreed with. In May 1818, while Cobbett was still living on Long Island, the former president—an improving farmer—gave a speech to the Agricultural Society in Albemarle, Virginia. He said something that has become almost unsayable in the world we inhabit now—unsayable at least by the sitting president and his environmental and agricultural appointees. “We can scarcely be warranted,” Madison said, “in supposing that all the productive powers of [Earth’s] surface can be made subservient to the use of man, in exclusion of all the plants and animals not entering into his stock of subsistence.” It is truly painful to leap ahead two hundred years and realize that one of Mike Madison’s reasons for continuing to farm is this: “In an increasingly unstable world it is important to keep the farm as a refuge for family and friends in times of economic collapse and social disarray.”
Wednesday, November 21, 2018
Is the New York Times Right About China?
11/21/2018—The New York Times has run a series about China emphasizing how China confounded economic and political prevailing wisdom by accomplishing rapid economic growth and innovation without democracy, free speech, the rule of law, or a more or less free market. It did these things, in part, by improvisation—there actually is a free market and there is criticism of the government. And in part it was luck. But in part the conventional wisdom was just wrong.
Partly this is all correct and interesting. And the economic gains are undeniable. But I have not invested anything directly in China because I remain unconvinced. How many enterprises are one arbitrary arrest away from insolvency? How much of the Chinese economy teeters on the brink of contraction because of contradictions that no one can force the leadership to confront?
China has succeeded because it has one thing the US now lacks—a serious political leadership that is pursuing national policies that benefit the country. If you believe government is the problem, you cannot do this. If you believe government is the solution, you also cannot do this. We are irrational. China is not.
But I believe that the old critique is still valid and that China must change or suffer a real collapse. Prosperity is built on freedom and law. One quote from the China series haunts me. A businessman says, I make a profit and pay taxes, why would bureaucrats bother me? Because they can, as he will eventually find out.
11/21/2018—The New York Times has run a series about China emphasizing how China confounded economic and political prevailing wisdom by accomplishing rapid economic growth and innovation without democracy, free speech, the rule of law, or a more or less free market. It did these things, in part, by improvisation—there actually is a free market and there is criticism of the government. And in part it was luck. But in part the conventional wisdom was just wrong.
Partly this is all correct and interesting. And the economic gains are undeniable. But I have not invested anything directly in China because I remain unconvinced. How many enterprises are one arbitrary arrest away from insolvency? How much of the Chinese economy teeters on the brink of contraction because of contradictions that no one can force the leadership to confront?
China has succeeded because it has one thing the US now lacks—a serious political leadership that is pursuing national policies that benefit the country. If you believe government is the problem, you cannot do this. If you believe government is the solution, you also cannot do this. We are irrational. China is not.
But I believe that the old critique is still valid and that China must change or suffer a real collapse. Prosperity is built on freedom and law. One quote from the China series haunts me. A businessman says, I make a profit and pay taxes, why would bureaucrats bother me? Because they can, as he will eventually find out.
Wednesday, April 25, 2018
It’s the Stupid Tax Cut
4/25/2018—It is almost laughable what financial coverage is like in the US. I took a look at the price of oil in Euros for the past few months and found that there was only a small move higher, from 53.24 on February 1 to 55.64 today. In contrast, in dollars, the price went from $65.32 to $73.20. In other words, 4.5% vs 12%. So, most of the increase is the fall of the dollar, not OPEC or any other supply or demand factor. Gas prices would be higher, but not as high as they are now.
As with so many other catastrophes, the problem is the tax cut. As the deficit explodes, inflation goes up and the dollar goes down—sort of the same phenomenon. Interest rates rise and the market falls. Eventually, you get a recession and the deficit then explodes even more.
I have lost a lot more in the market than I could have gained from the tax cut and even more than that in the loss of stable recovery.
Congratulations, Republican Party. It took Obama 8 years to rebuild the US economy from the last Republican President. You have managed to derail the recovery in only 15 months.
This catastrophe—for that is what it is since it will be hard to undo—cannot be particularly attributed to President Trump. Yes, he needed a legislative victory, but tax cuts as the answer to every issue predated him. It is the Republican Party anti-government mania that believes paying your bills is tyranny. I actually read somebody from George Mason argue that it is better to have a government spending $2 trillion and taxing $1 trillion than a government spending $4 trillion with a balanced budget. Not if that trillion dollar deficit derails the economy, it’s not.
Inflation and recession destroy freedom much more than does taxation. But the lunatic individuals-are-everything crowd cannot see structural limits. The talented individual rises above all that.
Next time you hear bad news, assume it’s the tax cut.
As with so many other catastrophes, the problem is the tax cut. As the deficit explodes, inflation goes up and the dollar goes down—sort of the same phenomenon. Interest rates rise and the market falls. Eventually, you get a recession and the deficit then explodes even more.
I have lost a lot more in the market than I could have gained from the tax cut and even more than that in the loss of stable recovery.
Congratulations, Republican Party. It took Obama 8 years to rebuild the US economy from the last Republican President. You have managed to derail the recovery in only 15 months.
This catastrophe—for that is what it is since it will be hard to undo—cannot be particularly attributed to President Trump. Yes, he needed a legislative victory, but tax cuts as the answer to every issue predated him. It is the Republican Party anti-government mania that believes paying your bills is tyranny. I actually read somebody from George Mason argue that it is better to have a government spending $2 trillion and taxing $1 trillion than a government spending $4 trillion with a balanced budget. Not if that trillion dollar deficit derails the economy, it’s not.
Inflation and recession destroy freedom much more than does taxation. But the lunatic individuals-are-everything crowd cannot see structural limits. The talented individual rises above all that.
Next time you hear bad news, assume it’s the tax cut.
Thursday, March 1, 2018
Want to Make America Great? Pay Your Bills
3/1/2018—I am disgusted by the tax cut. You don’t cut taxes when you are running large deficits, have a 4.1% unemployment rate and have large upcoming bills from an aging population. The predictable result--$1 trillion deficits forever. Oh, and naturally, spending limits were then rescinded. No one is going to give up benefits for the sake of tax cuts that went largely to the rich—where tax cuts have to go since the wealthy pay a lot of the taxes.
What is going to happen is increased inflation followed by higher interest rates followed by a recession. I defended large deficits in 2009, when we were in recession. That was good Keynesian economics. But what do you do in the next recession when you already have $1 trillion deficits going in?
Already, the first signs of inflation have appeared and interest rates have started going up. Therefore, the stock market has already gone down. Enjoying that tax cut? I’ve already lost more in the market than I am going to get back from the tax cut.
The two ridiculous justifications from the right. First, the tax cut will pay for itself. Usually, this line is a fantasy and it is here. Republicans in Congress just repeated it so they could act to cut taxes without a bad conscience. It is a rare situation when cutting taxes brings in more money. Yes, eventually you can get more growth in the economy, but you have related growing federal spending too. You don’t catch up. If it were true, then the tax rate should be 1%--think of the growth you could have. The rare situation can be true when tax rates are so high that they have led to cheating or other avoidances—-the corporate part of the tax cut could have been structured to bring in more money than it cost,from offshore. But the tax cut wasn’t limited to that.
The second ridiculous justification came from right-wing intellectuals. Freedom, they said, does not depend upon deficits, but upon the size of government. Better a $2 trillion federal budget with a $1 trillion deficit than a balanced $4 trillion federal budget.
Two problems with this line of thinking. For one thing, you don’t get reduced spending. You get a $4 trillion budget with $1 trillion in revenue. Worse, you get inflation and recession. These are worse for “freedom” than balanced government spending. Think of what inflation does to the grandmother who has retired. All of her life choices are now constrained. Where is her freedom? Think of the worker who loses his job. Where is his freedom?
But the way, the Democrats were no help here. They don’t care about deficits either. They just prefer to achieve them by unbalanced spending, which they claim will pay for itself—-it also won’t. Their complaint was only that the tax cuts went to the rich.
It would not have been the slightest better if the tax cut had been limited to payroll taxes. There should have been no tax cut at all. I will get some satisfaction from the disaster that this brings. I will say I told you so. But I will be the poorer in money, just like everybody else.
And America will continue her decline. You don’t get national greatness from borrowing. Borrowing means China will eventually determine our foreign policies. She will not have to threaten to sell our bonds on the open market, crashing the dollar. The threat will be obvious.
What is going to happen is increased inflation followed by higher interest rates followed by a recession. I defended large deficits in 2009, when we were in recession. That was good Keynesian economics. But what do you do in the next recession when you already have $1 trillion deficits going in?
Already, the first signs of inflation have appeared and interest rates have started going up. Therefore, the stock market has already gone down. Enjoying that tax cut? I’ve already lost more in the market than I am going to get back from the tax cut.
The two ridiculous justifications from the right. First, the tax cut will pay for itself. Usually, this line is a fantasy and it is here. Republicans in Congress just repeated it so they could act to cut taxes without a bad conscience. It is a rare situation when cutting taxes brings in more money. Yes, eventually you can get more growth in the economy, but you have related growing federal spending too. You don’t catch up. If it were true, then the tax rate should be 1%--think of the growth you could have. The rare situation can be true when tax rates are so high that they have led to cheating or other avoidances—-the corporate part of the tax cut could have been structured to bring in more money than it cost,from offshore. But the tax cut wasn’t limited to that.
The second ridiculous justification came from right-wing intellectuals. Freedom, they said, does not depend upon deficits, but upon the size of government. Better a $2 trillion federal budget with a $1 trillion deficit than a balanced $4 trillion federal budget.
Two problems with this line of thinking. For one thing, you don’t get reduced spending. You get a $4 trillion budget with $1 trillion in revenue. Worse, you get inflation and recession. These are worse for “freedom” than balanced government spending. Think of what inflation does to the grandmother who has retired. All of her life choices are now constrained. Where is her freedom? Think of the worker who loses his job. Where is his freedom?
But the way, the Democrats were no help here. They don’t care about deficits either. They just prefer to achieve them by unbalanced spending, which they claim will pay for itself—-it also won’t. Their complaint was only that the tax cuts went to the rich.
It would not have been the slightest better if the tax cut had been limited to payroll taxes. There should have been no tax cut at all. I will get some satisfaction from the disaster that this brings. I will say I told you so. But I will be the poorer in money, just like everybody else.
And America will continue her decline. You don’t get national greatness from borrowing. Borrowing means China will eventually determine our foreign policies. She will not have to threaten to sell our bonds on the open market, crashing the dollar. The threat will be obvious.
Sunday, January 14, 2018
What President Trump is Accomplishing
1/14/2018—It is good to be reminded of Donald Trump’s racism, as his immigration comments this week showed. It is a reminder that rating a President is not just a matter of policy outcomes.
But if Democrats do not pay attention to policy outcomes, we will be surprised that President Trump retains a great deal of support among people who voted for him in the first place. (President Trump is coming to the 18th congressional district in Pennsylvania to stump for the Republican candidate in an upcoming special election and no one seems to doubt it will help that candidate).
So, start with economic performance. The President’s tweets that the latest jobs report showed the lowest unemployment rate for African Americans ever recorded, 6.8%, is accurate. (The number began to be analyzed in 1972). That’s good news, period.
The point made in an NPR report on the claim—I never even saw coverage of the claim, which says something pretty bad about the mainstream media—that President’s don’t deserve much credit for numbers like that—is ridiculous. Presidents always take blame and credit for numbers like these. And in general the public rewards and punishes precisely along these lines—was President Bush responsible for the 2008 recession? The Republicans were hammered for it.
Then there is the GDP, the gross domestic product—a fairly broad category of economic growth (although it contains the basic biases of this kind of measure—it does not necessarily measure good things, just monetized things). Under President Obama, GDP growth never really gained traction. There were good quarters and bad ones, every year. The GDP growth in 2016 was 1.5%. Under President Trump, 2017 GDP growth will top 2.3%. That may not sound like much, but it is an addition to the economy of around $1.4 trillion. That does not all go to rich people.
The good effects of all this growth are not just higher wages (although that is the best thing—the tightening labor market is the reason wages at Wal-Mart are going up, not the new tax bill.) There was a story in the NY Times today about how workers with criminal records are now getting hired because employers have no choice.
Nor is all the regulatory cut-back bad. On January 12, the New York Times ran a story about how the fraud rule rollback benefits black colleges that probably were not its target in the first place. Not all regulations are good.
And even the tax bill’s fundamental change—lower corporate rates—reflected a policy President Obama basically supported. It was apparently a good idea.
Now none of this reflects that the bills for all this have not come due yet. Presidents Clinton and Bush relaxed regulations on lending that led to the 2008 recession that more than undid all the prior growth. It is poor tradeoff to gain oil drilling jobs by ruining the climate and the national parks.
Nor does any of this change the disaster Trump is internationally—allies cozying up to China, a potential war with North Korea, undermining the successful Iranian nuclear agreement. And much more.
But if we do not note Trump’s successes, not only will we fail to understand his appeal, we will fail to learn from those successes. President Obama would have been very happy to have had these numbers. He never did.
But if Democrats do not pay attention to policy outcomes, we will be surprised that President Trump retains a great deal of support among people who voted for him in the first place. (President Trump is coming to the 18th congressional district in Pennsylvania to stump for the Republican candidate in an upcoming special election and no one seems to doubt it will help that candidate).
So, start with economic performance. The President’s tweets that the latest jobs report showed the lowest unemployment rate for African Americans ever recorded, 6.8%, is accurate. (The number began to be analyzed in 1972). That’s good news, period.
The point made in an NPR report on the claim—I never even saw coverage of the claim, which says something pretty bad about the mainstream media—that President’s don’t deserve much credit for numbers like that—is ridiculous. Presidents always take blame and credit for numbers like these. And in general the public rewards and punishes precisely along these lines—was President Bush responsible for the 2008 recession? The Republicans were hammered for it.
Then there is the GDP, the gross domestic product—a fairly broad category of economic growth (although it contains the basic biases of this kind of measure—it does not necessarily measure good things, just monetized things). Under President Obama, GDP growth never really gained traction. There were good quarters and bad ones, every year. The GDP growth in 2016 was 1.5%. Under President Trump, 2017 GDP growth will top 2.3%. That may not sound like much, but it is an addition to the economy of around $1.4 trillion. That does not all go to rich people.
The good effects of all this growth are not just higher wages (although that is the best thing—the tightening labor market is the reason wages at Wal-Mart are going up, not the new tax bill.) There was a story in the NY Times today about how workers with criminal records are now getting hired because employers have no choice.
Nor is all the regulatory cut-back bad. On January 12, the New York Times ran a story about how the fraud rule rollback benefits black colleges that probably were not its target in the first place. Not all regulations are good.
And even the tax bill’s fundamental change—lower corporate rates—reflected a policy President Obama basically supported. It was apparently a good idea.
Now none of this reflects that the bills for all this have not come due yet. Presidents Clinton and Bush relaxed regulations on lending that led to the 2008 recession that more than undid all the prior growth. It is poor tradeoff to gain oil drilling jobs by ruining the climate and the national parks.
Nor does any of this change the disaster Trump is internationally—allies cozying up to China, a potential war with North Korea, undermining the successful Iranian nuclear agreement. And much more.
But if we do not note Trump’s successes, not only will we fail to understand his appeal, we will fail to learn from those successes. President Obama would have been very happy to have had these numbers. He never did.
Friday, January 27, 2017
Now the Markets Will Fall
1/27/2016—I have been perplexed that the market jumped when Donald Trump became President. After all, Trump is so crazy and the markets, it is said, like stability.
Well, it turns out that markets really like low taxes and little regulation because in the short term that helps rich people make money and keep the money they make. (It does not do that in the short term because you need to sell things to regular people and regulations make economic activity sustainable—see the 2008 crisis).
But now we have a reminder that Trump is not just a typical Republican—he is in fact, well, odd. Now he and his Party are talking about a 20% tariff on goods imported from Mexico to pay for a wall we don’t need in the first place. This is just stupid and I believe would violate existing treaties, which are the law until scrapped. By next week, this should become clear and the markets should go down on the news. Unless the plan is scrapped.
But the main point is that the free flow of goods is good for the economy. This tax if enacted will finally show this to people perhaps. Finally, economists close to politics, like Krugman will have to get their hands dirty. The Democratic Party will have to come up with a real plan on trade that actually is good for everybody. Maybe we will have a real debate finally.
Well, it turns out that markets really like low taxes and little regulation because in the short term that helps rich people make money and keep the money they make. (It does not do that in the short term because you need to sell things to regular people and regulations make economic activity sustainable—see the 2008 crisis).
But now we have a reminder that Trump is not just a typical Republican—he is in fact, well, odd. Now he and his Party are talking about a 20% tariff on goods imported from Mexico to pay for a wall we don’t need in the first place. This is just stupid and I believe would violate existing treaties, which are the law until scrapped. By next week, this should become clear and the markets should go down on the news. Unless the plan is scrapped.
But the main point is that the free flow of goods is good for the economy. This tax if enacted will finally show this to people perhaps. Finally, economists close to politics, like Krugman will have to get their hands dirty. The Democratic Party will have to come up with a real plan on trade that actually is good for everybody. Maybe we will have a real debate finally.
Saturday, December 10, 2016
The Businessman’s Economy
12/10/2016—The markets are really happy with Trump. The New York Times had a story today about the golden age for business. Lower taxes. No regulations. Infrastructure spending. Energy production. No raised minimum wage.
Yay.
This is really silly and you have to wonder about the maturity of business people. For one thing, businesses have been raising wages in response to the market, not the minimum wage, which has not gone up. For another, energy production is already up in the US. We are awash in oil and gas. This infrastructure spending is just Keynesian deficit spending the economy is in no need of—-though infrastructure spending that is paid for is greatly needed.
We did all this under President Reagan and it led to an expanding deficit.
Then there are the corresponding harms. Working people, the ones who supported Trump, are the ones who will be hurt. It is their wages that will not go up and they are the ones who live near toxic projects.
President-elect Trump is in Louisiana and that is interesting because the book about the tea party in Louisiana—-Strangers in Their Own Land—-makes the point that many people there respect and admire business even when it is harming them. I don’t get that but the slogan used to be, the business of America is business. So, these actions will not necessarily make Trump supporters unhappy with him. If they mess with Medicare or Social Security on the other hand, older people will end his political career.
As for the planet, everybody knows and not everybody cares. I don’t have sympathy for people, even working people with tough lives, who sell out their own grandchildren for short term benefits for themselves. I’ll talk more about the questionnaire in the Energy Department in another entry.
Yay.
This is really silly and you have to wonder about the maturity of business people. For one thing, businesses have been raising wages in response to the market, not the minimum wage, which has not gone up. For another, energy production is already up in the US. We are awash in oil and gas. This infrastructure spending is just Keynesian deficit spending the economy is in no need of—-though infrastructure spending that is paid for is greatly needed.
We did all this under President Reagan and it led to an expanding deficit.
Then there are the corresponding harms. Working people, the ones who supported Trump, are the ones who will be hurt. It is their wages that will not go up and they are the ones who live near toxic projects.
President-elect Trump is in Louisiana and that is interesting because the book about the tea party in Louisiana—-Strangers in Their Own Land—-makes the point that many people there respect and admire business even when it is harming them. I don’t get that but the slogan used to be, the business of America is business. So, these actions will not necessarily make Trump supporters unhappy with him. If they mess with Medicare or Social Security on the other hand, older people will end his political career.
As for the planet, everybody knows and not everybody cares. I don’t have sympathy for people, even working people with tough lives, who sell out their own grandchildren for short term benefits for themselves. I’ll talk more about the questionnaire in the Energy Department in another entry.
Sunday, March 20, 2016
Maybe Finally a Debate on Trade
3/20/2016—Maybe now, finally, America will have its debate on free trade. Since Bernie and Donald sound very similar on the issue, and since so much of the working class anger seems to focus on free trade, and since the trade issue has seriously hurt Hillary, the debate now seems inescapable.
Readers of this blog know that I have been writing about the dodges of the free traders for awhile. My favorite foil is Paul Krugman, who, as an economist knows the value of trade, but as a columnist cannot bring himself to challenge the progressive wing of his Party.
It is a fair question and now has to be answered. Would America be better off economically if we avoided trade? The answer seems to me so obviously no that I have a hard time treating it as a real question. The problem with the debate is to estimate fairly the alternatives. Those alternatives have to be pretty open trade versus pretty closed trade. You don’t get to choose only the favorable aspects of trade because your trading partners would then be doing the same thing.
So, if you don’t send some manufacturing jobs abroad, you have to ban a lot of imported products. To keep manufacturing air conditioners, you have to ban the import of foreign air conditioners. But then you have to live with expensive air conditioners in all businesses. Eventually, everybody is worse off, including the workers in those more expensive industries.
Plus, a lot of lost manufacturing jobs are being lost to innovation, not trade. Robots are costing a lot of jobs and are doing the same thing that trade is blamed for-—helping the better educated, better off workers at the expense of workers at the lower end of manufacturing. This exacerbates inequality. But I have not heard any candidate criticizing robots.
It is an important debate and the anger of workers, especially the white working class, shows how democracy has failed to promote actual discussion. We can thank Bernie and Donald for making our elites talk about the reality of trade. But Bernie and Donald are still wrong.
Readers of this blog know that I have been writing about the dodges of the free traders for awhile. My favorite foil is Paul Krugman, who, as an economist knows the value of trade, but as a columnist cannot bring himself to challenge the progressive wing of his Party.
It is a fair question and now has to be answered. Would America be better off economically if we avoided trade? The answer seems to me so obviously no that I have a hard time treating it as a real question. The problem with the debate is to estimate fairly the alternatives. Those alternatives have to be pretty open trade versus pretty closed trade. You don’t get to choose only the favorable aspects of trade because your trading partners would then be doing the same thing.
So, if you don’t send some manufacturing jobs abroad, you have to ban a lot of imported products. To keep manufacturing air conditioners, you have to ban the import of foreign air conditioners. But then you have to live with expensive air conditioners in all businesses. Eventually, everybody is worse off, including the workers in those more expensive industries.
Plus, a lot of lost manufacturing jobs are being lost to innovation, not trade. Robots are costing a lot of jobs and are doing the same thing that trade is blamed for-—helping the better educated, better off workers at the expense of workers at the lower end of manufacturing. This exacerbates inequality. But I have not heard any candidate criticizing robots.
It is an important debate and the anger of workers, especially the white working class, shows how democracy has failed to promote actual discussion. We can thank Bernie and Donald for making our elites talk about the reality of trade. But Bernie and Donald are still wrong.
Sunday, October 11, 2015
Liberals Fooling Themselves About Political Money
10/11/2015—The New York Times today shows how liberals fool themselves about money. On page one, there is the big story about how half of the money spent on the Presidential campaign comes from just 158 families. This money, the story intones, is keeping the Republican Party from supporting policies, like higher taxes on the wealthy, supported by 2/3 of Americans. So, money is the political problem rather than poorly conceived or communicated liberal ideas.
Except that other stories suggest this is not true. First of all, as Frank Bruni suggests in the Sunday Review, money has not been the primary factor this year.
“Remember how much money was supposed to matter, partly for the commercials it could buy? Well, the ads didn’t have, or aren’t having, the intended effect for Bush, Perry, Kasich, Bobby Jindal (another floundering governor) and — on the Democratic side — Hillary Clinton.”
The reason that Republicans don’t propose higher taxes on the wealthy, including someone like Trump who does not chase donor money as much as others do, is that they don’t believe in them. They don’t want government to get more money. They think it is a bad idea.
Consider the case of Ray and Melissa Lewie featured in the Sunday Business Section. They are angry about stagnant wages. But they don’t blame the wealthy. They blame government.
“When asked to assign blame for stagnating wages, he and his wife pointed to the federal government. Regulations and high taxes, he said, not lower wages abroad, led those textile mill companies to move to Mexico.”
“‘Our money is being wasted, wasted, wasted,’ she added. ‘And now we’re paying more and more, and our debts are going up and up, and we need to stop the debt. We have to find someone that’s going to actually take control and say, “‘Stop spending.’”
Her husband said, ‘I don’t think it could get any worse.’
‘The government is taking 39 percent now,’ said Mr. Lewie, a little morosely, referring to the top income tax bracket. Not for the first time during the meal, he worried that high taxes would discourage the wealthy from producing jobs. ‘If they want 45 percent, they’ll take that and spend more. If they want 60 percent, they’ll take that and spend more. How much is enough?’”
Liberals have to stop talking about taxes and start talking about unions. Start talking—-more, that is-—about the minimum wage. That is the kind of message that might reach Mr. and Mrs. Lewie.
Except that other stories suggest this is not true. First of all, as Frank Bruni suggests in the Sunday Review, money has not been the primary factor this year.
“Remember how much money was supposed to matter, partly for the commercials it could buy? Well, the ads didn’t have, or aren’t having, the intended effect for Bush, Perry, Kasich, Bobby Jindal (another floundering governor) and — on the Democratic side — Hillary Clinton.”
The reason that Republicans don’t propose higher taxes on the wealthy, including someone like Trump who does not chase donor money as much as others do, is that they don’t believe in them. They don’t want government to get more money. They think it is a bad idea.
Consider the case of Ray and Melissa Lewie featured in the Sunday Business Section. They are angry about stagnant wages. But they don’t blame the wealthy. They blame government.
“When asked to assign blame for stagnating wages, he and his wife pointed to the federal government. Regulations and high taxes, he said, not lower wages abroad, led those textile mill companies to move to Mexico.”
“‘Our money is being wasted, wasted, wasted,’ she added. ‘And now we’re paying more and more, and our debts are going up and up, and we need to stop the debt. We have to find someone that’s going to actually take control and say, “‘Stop spending.’”
Her husband said, ‘I don’t think it could get any worse.’
‘The government is taking 39 percent now,’ said Mr. Lewie, a little morosely, referring to the top income tax bracket. Not for the first time during the meal, he worried that high taxes would discourage the wealthy from producing jobs. ‘If they want 45 percent, they’ll take that and spend more. If they want 60 percent, they’ll take that and spend more. How much is enough?’”
Liberals have to stop talking about taxes and start talking about unions. Start talking—-more, that is-—about the minimum wage. That is the kind of message that might reach Mr. and Mrs. Lewie.
Sunday, August 30, 2015
Is There a World Beyond Capitalism?
8/30/2015—Between Gar Alperovitz’s DVD of his lecture, “the next American Revolution: beyond corporate capitalism & state socialism,” and a program I attended last week here in Pittsburgh, I can begin to imagine a world beyond capitalism. Alperovitz is describing a different kind of economic system, but it is really an older one, that of worker cooperatives. And, in the program, some people who are doing this kind of thing here in town were describing their experiences.
The difficult part is to imagine how a change takes place. After all, there are worker co-ops now and capitalism is as strong or stronger than ever. Why would not the economic landscape look the same as today in 200 years?
Then there is the question whether it is worth replacing capitalism with cooperative ventures. Right now, most of the benefits and gains go to the top 1%. But, in the context in which we are speaking, that of business organization, the entrepreneur also takes all the risk. By that I mean that if the business goes under, the worker loses nothing but the next paycheck. In contrast, the owner should lose everything. There are advantages to such a system.
It was also revealing that there was a great deal of hostility in the room concerning the new, sharing, economy. For most of the speakers, the new economy is just the way to turn workers into underpaid, self-employed units.
Anyway, I need to contact Gar Alperovitz to find out what law schools are doing, if anything, to speed along the next American Revolution.
The difficult part is to imagine how a change takes place. After all, there are worker co-ops now and capitalism is as strong or stronger than ever. Why would not the economic landscape look the same as today in 200 years?
Then there is the question whether it is worth replacing capitalism with cooperative ventures. Right now, most of the benefits and gains go to the top 1%. But, in the context in which we are speaking, that of business organization, the entrepreneur also takes all the risk. By that I mean that if the business goes under, the worker loses nothing but the next paycheck. In contrast, the owner should lose everything. There are advantages to such a system.
It was also revealing that there was a great deal of hostility in the room concerning the new, sharing, economy. For most of the speakers, the new economy is just the way to turn workers into underpaid, self-employed units.
Anyway, I need to contact Gar Alperovitz to find out what law schools are doing, if anything, to speed along the next American Revolution.
Saturday, June 20, 2015
The Democrats Are Wrong on Trade
6/20/2015—I don’t mean the Democrats are necessarily wrong on the details of the Trans-Pacific Partnership trade deal, which I don’t know much about. But the rejection of the trade agreement by House Democrats last week was not about this particular agreement. It was about the benefits of trade in general.
This is where the failure of leadership by Paul Krugman and people like him has been so glaring. The economy is a dynamic system. The dynamism of that system has benefited the US. Yes, a lot of those benefits have gone to the top .001%, but not all. And even if redistribution is the goal, a growing pie is easier to redistribute than a stagnant one.
Protectionism is part of a general retreat by Democrats from growth and a better future. It says that we have a certain number of good jobs and we have to do everything to keep them. In the end, this hurts most workers. It’s the old story of trying to retain the carriage industry when cars came out.
The irony is that jobs were already coming back to the US. We’re an economy that does not really need protectionism because of our dynamism.
It is an empirical question whether the US economy benefits from freer trade or not. My impression is that the evidence is clear that we do benefit. A lot. So, where is the strong defense of free trade by people like Krugman?
So, I don’t know much about this agreement. On the other hand, if it does protect intellectual property from government confiscation, isn’t that a good thing when many governments do not respect property rights at all? And if the agreement is as much about the politics of Asia—keeping a peaceful counterweight to China—well, isn’t that a good thing as well?
Anyway, Democratic opposition to this trade deal was mostly about latent opposition to NAFTA. And that opposition is a mistake. Trade in general is the issue. And trade in general is good.
This is where the failure of leadership by Paul Krugman and people like him has been so glaring. The economy is a dynamic system. The dynamism of that system has benefited the US. Yes, a lot of those benefits have gone to the top .001%, but not all. And even if redistribution is the goal, a growing pie is easier to redistribute than a stagnant one.
Protectionism is part of a general retreat by Democrats from growth and a better future. It says that we have a certain number of good jobs and we have to do everything to keep them. In the end, this hurts most workers. It’s the old story of trying to retain the carriage industry when cars came out.
The irony is that jobs were already coming back to the US. We’re an economy that does not really need protectionism because of our dynamism.
It is an empirical question whether the US economy benefits from freer trade or not. My impression is that the evidence is clear that we do benefit. A lot. So, where is the strong defense of free trade by people like Krugman?
So, I don’t know much about this agreement. On the other hand, if it does protect intellectual property from government confiscation, isn’t that a good thing when many governments do not respect property rights at all? And if the agreement is as much about the politics of Asia—keeping a peaceful counterweight to China—well, isn’t that a good thing as well?
Anyway, Democratic opposition to this trade deal was mostly about latent opposition to NAFTA. And that opposition is a mistake. Trade in general is the issue. And trade in general is good.
Saturday, May 30, 2015
Krugman on the Economics of the Average American
5/30/2015—Since I have been so critical of Paul Krugman on trade, it seems fair to acknowledge his importance in reminding American policy-makers—-or even just the comfortable top 25%--of the reality of life for everybody else.
He has done this before, but he did it again in yesterday’s New York Times, in a column entitled The Insecure American. Krugman is giving a kind of overview of a new Federal Reserve Study on the financial well-being of American households. He writes specifically that he “hope[s]” readers will not find any of his statistics surprising, but Krugman is plainly worried that well-off people have forgotten what life is like.
Krugman begins with conservative bashing—-not from the study, of course. Three quarters of those who self-identify as conservatives think the poor have it easy because of government benefits.
Do you know anybody like this? I don’t. Instead, people I know—-and this would be true not only of conservatives but of most people—-would say it is hard to be poor. But we have no idea how hard it is. Just watching people taking two buses at 5:15 a.m. to get to a job while dropping children off at daycare—and those are healthy, young people with jobs. Seeing them you think, how do they do this every day? Don’t blame conservatives for our obtuseness.
Krugman makes three major points. First, life expectancy has not risen much at all for the bottom half—-so don’t raise the retirement age for social security. Second, social security provides almost all the income for 25% of Americans over 65—-so don’t cut benefits.
Third—life is precarious for the bottom half, so don’t cut entitlements for anybody. Krugman is shocked by one finding in particular—-47% of Americans report that they would not the resources to meet an unexpected expense of $400. “$400!” he writes.
This reaction reminded me of a scene from a documentary about public defenders that I watched last week. In an opening scene, a young African-American lawyer despairs because she has worked a deal for pre-trial diversion for a young client accused of some minor crime—shoplifting? Charges dropped if he goes to a program and stays out of trouble for a year. But the condition of the program is that he be out on bail and he and his family never are able to find the money--$500? So, he is probably going to jail, which will change the rest of his life utterly.
Moral of the story—-we should be thankful if life is not utterly hard. We should be generous in spirit toward those for whom it is. We should not be so concerned about other political issues that pure class issues escape us. The political left has so forgotten this last point.
He has done this before, but he did it again in yesterday’s New York Times, in a column entitled The Insecure American. Krugman is giving a kind of overview of a new Federal Reserve Study on the financial well-being of American households. He writes specifically that he “hope[s]” readers will not find any of his statistics surprising, but Krugman is plainly worried that well-off people have forgotten what life is like.
Krugman begins with conservative bashing—-not from the study, of course. Three quarters of those who self-identify as conservatives think the poor have it easy because of government benefits.
Do you know anybody like this? I don’t. Instead, people I know—-and this would be true not only of conservatives but of most people—-would say it is hard to be poor. But we have no idea how hard it is. Just watching people taking two buses at 5:15 a.m. to get to a job while dropping children off at daycare—and those are healthy, young people with jobs. Seeing them you think, how do they do this every day? Don’t blame conservatives for our obtuseness.
Krugman makes three major points. First, life expectancy has not risen much at all for the bottom half—-so don’t raise the retirement age for social security. Second, social security provides almost all the income for 25% of Americans over 65—-so don’t cut benefits.
Third—life is precarious for the bottom half, so don’t cut entitlements for anybody. Krugman is shocked by one finding in particular—-47% of Americans report that they would not the resources to meet an unexpected expense of $400. “$400!” he writes.
This reaction reminded me of a scene from a documentary about public defenders that I watched last week. In an opening scene, a young African-American lawyer despairs because she has worked a deal for pre-trial diversion for a young client accused of some minor crime—shoplifting? Charges dropped if he goes to a program and stays out of trouble for a year. But the condition of the program is that he be out on bail and he and his family never are able to find the money--$500? So, he is probably going to jail, which will change the rest of his life utterly.
Moral of the story—-we should be thankful if life is not utterly hard. We should be generous in spirit toward those for whom it is. We should not be so concerned about other political issues that pure class issues escape us. The political left has so forgotten this last point.
Tuesday, March 17, 2015
Sustainable Political Thinking
3/17/2015—The current conservative insistence that social disintegration is unrelated to money—so that the current push by the left to do something about income inequality will not raise taxes on the rich—is curious. It proceeds from an assumption that income inequality is not inherently bad, so that it is necessary to invent another goal other than redistribution to justify it. But, if worker productivity gains do not translate into more money for workers, then the bosses are stealing money that properly belongs to workers. You can correct that in different ways—stronger unions for example—but you don’t need a theory of culture to do something about it.
But the conservative drumbeat, by Ross Douthat and George Will, for example, reminds me that there is more to political life than money. In the same way that ecological systems must be sustainable, political life must also be sustainable. Political life that is nothing but argument by one side against the other is not sustainable.
There are different ways of thinking about the styles of political life. Right now, all America has is ideological confrontation. (It is not really ideological). That is getting us nowhere. This style suggests far more differences among Americans than is really present. We exaggerate our differences because our political goals are merely oppositional.
What would a more sustainable political life look like? I’m not sure. And maybe it is not possible. I’m told that the Permaculture Movement has an aspect of decision-making style. And it was once thought that President Obama’s career as a community organizer would aid him in building consensus in Washington. But that did not happen.
Maybe here, in styles of thought, is where philosophy could be of service to politics. Not philosophy in the analytic style of logic—though a little of that could not hurt in politics—but Martin Heidegger’s questioning after being. A more soulful politics. On the other hand, did Michael Lerner’s politics of meaning go anywhere in the 1990’s?
But the conservative drumbeat, by Ross Douthat and George Will, for example, reminds me that there is more to political life than money. In the same way that ecological systems must be sustainable, political life must also be sustainable. Political life that is nothing but argument by one side against the other is not sustainable.
There are different ways of thinking about the styles of political life. Right now, all America has is ideological confrontation. (It is not really ideological). That is getting us nowhere. This style suggests far more differences among Americans than is really present. We exaggerate our differences because our political goals are merely oppositional.
What would a more sustainable political life look like? I’m not sure. And maybe it is not possible. I’m told that the Permaculture Movement has an aspect of decision-making style. And it was once thought that President Obama’s career as a community organizer would aid him in building consensus in Washington. But that did not happen.
Maybe here, in styles of thought, is where philosophy could be of service to politics. Not philosophy in the analytic style of logic—though a little of that could not hurt in politics—but Martin Heidegger’s questioning after being. A more soulful politics. On the other hand, did Michael Lerner’s politics of meaning go anywhere in the 1990’s?
Saturday, March 14, 2015
Would Prosperity Matter?
3/14/2015—The extent to which working people have contributed to the prosperity of the owners of capital is truly astounding. Since 1979, I read today, productivity has grown over 60%, but wages have climbed only 6%. Put another way, if wages had matched productivity, which in economic theory they should, the median wage today would be $54,000 rather than $35,000. That is a lot of money and it has gone to shareholders of corporations rather than to workers.
Now, what America should do about that, or whether anything could be done about that, is one question. But another question is whether a more equal distribution of the fruits of labor would make any difference.
That second question asks what you think the basic problem in America is. If you think the basic problem is economic, then obviously you try to do something directly about the money. But if you think the basic problem is something else, then you do something about the money, but also you look to do something else as well.
A friend of mine said last night that the basic problem in America is a general social breakdown. Students are dropping out of school. Families are not being formed. There is a general lack of social solidarity. There is great distrust.
If he is right, let’s ask whether a fairer distribution of income might contribute to more social cohesion? Would students be more likely to stay in school if they saw themselves getting really well paying jobs? They might. If the median income were much higher, would some people marry and raise children who now decide not to do so? They might. So, even if we accept what could be called a conservative view of America’s troubles, that the troubles are moral, we might decide that economic inequality has to be aggressively dealt with.
For me, the more fundamental breakdown is not economic or moral. It’s hard for me to give it a name. Let me say for now that the problem is that we hate each other. And it may even be deeper than that. Our language may be exhausted. (But that would not prevent us from doing something to spread the wealth around.) Maybe all our troubles start there.
Now, what America should do about that, or whether anything could be done about that, is one question. But another question is whether a more equal distribution of the fruits of labor would make any difference.
That second question asks what you think the basic problem in America is. If you think the basic problem is economic, then obviously you try to do something directly about the money. But if you think the basic problem is something else, then you do something about the money, but also you look to do something else as well.
A friend of mine said last night that the basic problem in America is a general social breakdown. Students are dropping out of school. Families are not being formed. There is a general lack of social solidarity. There is great distrust.
If he is right, let’s ask whether a fairer distribution of income might contribute to more social cohesion? Would students be more likely to stay in school if they saw themselves getting really well paying jobs? They might. If the median income were much higher, would some people marry and raise children who now decide not to do so? They might. So, even if we accept what could be called a conservative view of America’s troubles, that the troubles are moral, we might decide that economic inequality has to be aggressively dealt with.
For me, the more fundamental breakdown is not economic or moral. It’s hard for me to give it a name. Let me say for now that the problem is that we hate each other. And it may even be deeper than that. Our language may be exhausted. (But that would not prevent us from doing something to spread the wealth around.) Maybe all our troubles start there.
Sunday, December 21, 2014
Questioning Capitalism
12/21/2014—I signed an online petition yesterday for Bernie Sanders to run for President. I don’t believe the petition specified how he might run, whether in the Democratic primaries or as an independent, and I don’t want him to do anything that would help elect a Republican President, but I do want him to run.
Sanders has no realistic chance currently to win the Democratic nomination. That candidate is likely to be Hilary Clinton, which is OK with me. I want Sanders to run to raise the issue of capitalism.
Sanders is a socialist. These days, no one knows what a socialist is. The European socialist parties are essentially social welfare parties, which means they favor broad safety nets and public spending. That would be a big improvement over anything America offers in its politics, but it is still not the reason I support Sanders.
I want to make capitalism a question. Since the collapse of Communism in the late 1980’s, and really long before, since Communism had long been discredited as tyranny, there has not been any alternative to the global capitalist system. The reason cannot be that this system has operated well. It has not. It has been beset by regular crises. Its long term growth has not been rapid. Its benefits have been increasingly concentrated in the wealthy. Its innovations have tended to be trivial. Its skewed price system has contributed to global warming. And right now, it is sputtering.
Making capitalism a question would also lead to political debates in America that would get beyond government and taxes. Why do white working class voters favor the Republican Party? They benefit disproportionately from Obamacare and yet they oppose it. Is this what the Marxists used to call false consciousness? Or is it a sense that liberals despise working people?
Socialism takes no position in theory on issues of race, or gay rights, or guns, or abortion, or religion or immigration or other issues America calls social. I guess socialism must say something about the environment since that is so much a consequence of economic organization.
I hope that a Sanders candidacy would be similarly restrained on all those other issues. A Sanders candidacy would ask the question, is capitalism a good economic system? Can we imagine a better one?
Sanders has no realistic chance currently to win the Democratic nomination. That candidate is likely to be Hilary Clinton, which is OK with me. I want Sanders to run to raise the issue of capitalism.
Sanders is a socialist. These days, no one knows what a socialist is. The European socialist parties are essentially social welfare parties, which means they favor broad safety nets and public spending. That would be a big improvement over anything America offers in its politics, but it is still not the reason I support Sanders.
I want to make capitalism a question. Since the collapse of Communism in the late 1980’s, and really long before, since Communism had long been discredited as tyranny, there has not been any alternative to the global capitalist system. The reason cannot be that this system has operated well. It has not. It has been beset by regular crises. Its long term growth has not been rapid. Its benefits have been increasingly concentrated in the wealthy. Its innovations have tended to be trivial. Its skewed price system has contributed to global warming. And right now, it is sputtering.
Making capitalism a question would also lead to political debates in America that would get beyond government and taxes. Why do white working class voters favor the Republican Party? They benefit disproportionately from Obamacare and yet they oppose it. Is this what the Marxists used to call false consciousness? Or is it a sense that liberals despise working people?
Socialism takes no position in theory on issues of race, or gay rights, or guns, or abortion, or religion or immigration or other issues America calls social. I guess socialism must say something about the environment since that is so much a consequence of economic organization.
I hope that a Sanders candidacy would be similarly restrained on all those other issues. A Sanders candidacy would ask the question, is capitalism a good economic system? Can we imagine a better one?
Thursday, November 13, 2014
The Climate Deal with China
11/13/2014—Well, of course, it’s not a deal in my legal sense—not a treaty and not even aiming at immediate steps within the authority of the two leaders who signed it. And it is not a substitute for rejecting the Keystone pipeline, which Bill McKibben (whose comments I read this morning) seems to feel with be the President’s implicit message when he permits that project to go forward, either on his own or by not vetoing a statute approving the project.
But it is very good news all the same. The United States and China are the leading emitters of greenhouse gases, China the leading developing nation, the United States the least likely to actually act on global warming. So, the seriousness of the action is helpful. Plus, this takes away the argument that we should not act while others refuse to do so.
But, as McKibben also points out, our efforts pale compared to, for example, Germany, which already gets 31% of its power from renewable sources. The only sensible action for me is to finally switch power sources myself, which I have not done yet and will do this week.
All the same, the effort to derail the pipeline makes no sense to me. The economy works as a system. You don’t obstruct a project when the price system says to go forward with it. You change the price system. There are many ways to do that—a tax on carbon, cap and trade, even reducing demand for carbon energy by public persuasion and economic forecasts. The one thing government should not do is command the market not to make rational decisions.
McKibben, a great man whom I adore, seems to feel that if the pipeline is built, it will be used. But, in the context of the sale of a product, that is not so. The oil will be shipped if it is economical to use it. But, if it economical to use it, the oil will likely be used whether the pipeline is built or not. That is not the way to change an economy. It is like saying, don’t build roads because of what will be transported on them. No. You regulate those products, not the way they are transported.
But it is very good news all the same. The United States and China are the leading emitters of greenhouse gases, China the leading developing nation, the United States the least likely to actually act on global warming. So, the seriousness of the action is helpful. Plus, this takes away the argument that we should not act while others refuse to do so.
But, as McKibben also points out, our efforts pale compared to, for example, Germany, which already gets 31% of its power from renewable sources. The only sensible action for me is to finally switch power sources myself, which I have not done yet and will do this week.
All the same, the effort to derail the pipeline makes no sense to me. The economy works as a system. You don’t obstruct a project when the price system says to go forward with it. You change the price system. There are many ways to do that—a tax on carbon, cap and trade, even reducing demand for carbon energy by public persuasion and economic forecasts. The one thing government should not do is command the market not to make rational decisions.
McKibben, a great man whom I adore, seems to feel that if the pipeline is built, it will be used. But, in the context of the sale of a product, that is not so. The oil will be shipped if it is economical to use it. But, if it economical to use it, the oil will likely be used whether the pipeline is built or not. That is not the way to change an economy. It is like saying, don’t build roads because of what will be transported on them. No. You regulate those products, not the way they are transported.
Sunday, November 9, 2014
How Destructive Is Capitalism?
11/9/2014—It is of course absurd to imagine a non-capitalist economy. After all, what is the alternative? China? Russia? Those are not economic systems at all. They are simply systems of occasional political interference with market forms in the name of the self-interest of powerful elites.
So, it is frustrating when the philosopher Martin Heidegger criticizes our prevailing way of life in favor of something else. But it is never clear what the something else is or could be. This is not a criticism of Heidegger. He is not a social mechanic.
Nevertheless, it is important to remember just how destructive capitalism is. For only in that way will any kind of change ever take place.
By destructive, I am not referring to the recent tendency of the world economy to bubbles and to serious recessions. Capitalism is not even producing the results that it promises for poor people and for the world in general. Just ask Europe.
But I suppose those problems can be addressed. I am referring to the way in which capitalism makes us complicit in our own destruction – – something Lenin would have recognized in an instant.
Here is an example. Alaska is a red State. It elected a Republican senator last Tuesday. But I heard a report on NPR that I do not believe reflects any bias by the network. The story interviewed water resource and utility officials. They deal with the effects of global warming everyday. Those effects in Alaska are very clear and very destructive. The permafrost is melting. No one denies what is happening. No one denies that humans are causing it. These officials are in no sense deniers of global warming.
Yet at the same time, because Alaska is so dependent economically on fossil fuel extraction, there is absolutely no support for serious efforts to reduce or halt global warming by holding down greenhouse gas emissions. So Alaska is spending time and money dealing with the consequences.
Not only is this a trap, everyone caught in it knows that it is a trap. Everyone knows that global warming is harming Alaska. But market realities are such that absolutely nothing can be done about it. This is the consequence of capitalism. And it is more irrational and more dictatorial than any religion has ever been.
So, it is frustrating when the philosopher Martin Heidegger criticizes our prevailing way of life in favor of something else. But it is never clear what the something else is or could be. This is not a criticism of Heidegger. He is not a social mechanic.
Nevertheless, it is important to remember just how destructive capitalism is. For only in that way will any kind of change ever take place.
By destructive, I am not referring to the recent tendency of the world economy to bubbles and to serious recessions. Capitalism is not even producing the results that it promises for poor people and for the world in general. Just ask Europe.
But I suppose those problems can be addressed. I am referring to the way in which capitalism makes us complicit in our own destruction – – something Lenin would have recognized in an instant.
Here is an example. Alaska is a red State. It elected a Republican senator last Tuesday. But I heard a report on NPR that I do not believe reflects any bias by the network. The story interviewed water resource and utility officials. They deal with the effects of global warming everyday. Those effects in Alaska are very clear and very destructive. The permafrost is melting. No one denies what is happening. No one denies that humans are causing it. These officials are in no sense deniers of global warming.
Yet at the same time, because Alaska is so dependent economically on fossil fuel extraction, there is absolutely no support for serious efforts to reduce or halt global warming by holding down greenhouse gas emissions. So Alaska is spending time and money dealing with the consequences.
Not only is this a trap, everyone caught in it knows that it is a trap. Everyone knows that global warming is harming Alaska. But market realities are such that absolutely nothing can be done about it. This is the consequence of capitalism. And it is more irrational and more dictatorial than any religion has ever been.
Saturday, July 19, 2014
The Problem With Capitalism
7/19/2014—I have been introduced to the influential Russian Orthodox thinker Sergii Bulgakov. His masterwork is Unfading Light and I also have a collection of his works, Towards a Russian Political Theology.
Russia’s current actions in Ukraine, which culminated in the shooting down of a civilian airplane yesterday, widely attributed to Russian armed separatists in Eastern Ukraine, makes an acquaintance with Russian Orthodox thought increasingly relevant. Putin is reputedly a student of such thought. But Putin is not my particular interest.
The two themes that Bulgakov addresses (for me) are socialism and human salvation. Socialism remains in some sense the only real alternative to capitalism. It also remains the only mirror in which the harms of capitalism can be viewed. Americans have not been able to think about any alternatives to the current political/economic organization. This is a failure of social imagination—as Roberto Unger has emphasized.
For Bulgakov, socialism was a real possibility because he was a proponent of it before the Bolshevik revolution, a critic of it afterward and ultimately a thinker of it. The revolution of 1917 and the subsequent actions of the Soviet government demonstrated the evils of State collectivism. Bulgakov thought the problem was spiritual. Soulless socialism could never work. But soulless socialism is all the left can offer in the United States.
Think of it this way—if materialism is true and individualism is good, why not capitalism? It is best at both. Only if materialism and individualism are false, or at least only partial, is capitalism mistaken.
As for salvation, Russian Orthodoxy, Orthodox Christianity in general, did not shy away from the goal of divinizing humanity. A real change in the human was its goal. America has no such thought. And this lack of hope shows.
Russia’s current actions in Ukraine, which culminated in the shooting down of a civilian airplane yesterday, widely attributed to Russian armed separatists in Eastern Ukraine, makes an acquaintance with Russian Orthodox thought increasingly relevant. Putin is reputedly a student of such thought. But Putin is not my particular interest.
The two themes that Bulgakov addresses (for me) are socialism and human salvation. Socialism remains in some sense the only real alternative to capitalism. It also remains the only mirror in which the harms of capitalism can be viewed. Americans have not been able to think about any alternatives to the current political/economic organization. This is a failure of social imagination—as Roberto Unger has emphasized.
For Bulgakov, socialism was a real possibility because he was a proponent of it before the Bolshevik revolution, a critic of it afterward and ultimately a thinker of it. The revolution of 1917 and the subsequent actions of the Soviet government demonstrated the evils of State collectivism. Bulgakov thought the problem was spiritual. Soulless socialism could never work. But soulless socialism is all the left can offer in the United States.
Think of it this way—if materialism is true and individualism is good, why not capitalism? It is best at both. Only if materialism and individualism are false, or at least only partial, is capitalism mistaken.
As for salvation, Russian Orthodoxy, Orthodox Christianity in general, did not shy away from the goal of divinizing humanity. A real change in the human was its goal. America has no such thought. And this lack of hope shows.
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