Archive for the ‘The Economy’ Category.

General Kelly and Seeing the Real Problem

After the FF (Fat F*ck, aka President Trump) turned the killed servicemen into a political issue, and then totally botched  the call after the Press had asked if he had made any calls (where he lied about other presidents), Generally Kelly came out and made an impassioned plea to depoliticize the whole issue, explaining what happened.  Now this should have both been pointed at his boss and ended the issue, but then he turned around and made a partisan political attack on the Congresswoman in the car where call was made (at the request of the grieving parents).  Trump of course lied about all this instead of saying, I botched and I am truly sorry, to which Kelly did not deny the conversation, but attack the Congresswoman for making a “private” call public.

Well, bull shit.  First she was asked to be there and it was put on speakerphone.  Was the President alone when the call (No)?  Secondly he offended them with his lack of empathy, which is just another instance of why he should not be president.  But then Kelly made a partisan attack on the Congresswoman, racial in undertones, showing he is not the steady hand that some were hoping for.  Kelly even made references to “other” gold star families who have spoken out and he had no right to tell them they cannot use their First Amendment rights. Then there was what was sacred discussion that let you know this man is so far removed from reality that he too is dangerous. I think Lawrence O’Donnell took his attack apart better than anyone because he had the guts to.

I want you to note one other thing.  What General Kelly heard and told the FF to say is not the same thing he said.  It is a classic example of how little understand the FF has of the human condition.

Meanwhile the Republicans passed a budget bill on all Republican votes that most of them do not know what is in it.  It was to get a win.  So far the reasonable experts tell us a couple of things.  It busts the budget and like Kansas, may create a fiscal disaster. Tax cuts don’t necessarily equal growth.  Meanwhile Wall Street is doing great and the FF is taking credit when what is really driving the economy right now is low interest rates, set up in the Obama Administration.  If as most of us think, giant deficit spending that the budget bill and the follow on tax cut will create become a reality, the interest rate will go up, and kiss the economy goodbye.

The other part of this is that less than 52% of Americans own stocks, and the majority of the FF’s supporters do not.  How Wall Street does has little with working Americans, and let’s just review, Bank of America just downgraded Chipotle stocks because they think they pay their employees too much.  Bring back slavery!  That is the mentality we are dealing with.

Meanwhile, ex-Presidents Bush and Obam took on the FF finally.  Of course there is some real hypocrisy here, but at least major figures are starting to stand up.  I am off to Oakland for a Van Morrison concert and will try to ignore the madness that is our government these days.  Happy Friday.

Noise, Total Noise, Smoke and Mirrors

What we are getting right now is noise, smoke and mirrors. Why did he do it? Who cares, because the next one will be a different why? We pretend we will get some kind of closure when we know why, I guess because we think if we know why we can protect ourselves. But the next nut job will have a different why. Take the last big shootings, Sandy Hook, the Virginia Tech Shooting, and the Pulse Club in Florida.

What is the common denominator, their type of craziness, or the assault weapons they used. Oh, and you will feel so much better because look, look, even the NRA is moving to “talk” about banning bump stocks. Note that sales are soaring just in case they do. Unless we do an Australia, we haven’t even moved the needle, yet we are so excited that the NRA and Republicans will let us talk about bumps. I am just giddy. It would appear that the more guns we have, the more we need to protect ourselves from others who have guns. Maybe if I was carrying a rocket launcher I could have taken out that nut job shooting from the 32nd floor.  I wonder when we will ever have a real debate.

I listened to one Republican dissembler tell us that we need to debate and study this issue of bump stocks. Responsible people don’t over react (like tax or healthcare reform).  How long have we been looking at this? More noise, smoke, and mirrors. Remember guns don’t kill people, people do, but guns makes it so much more efficient and effective. So why is it again that we keep handing them more and more dangerous and lethal ways to go postal?  See nukes are not the problem, people are.  See the irrational logic line here?

Almost everywhere I look it is smoke and mirrors, noise instead of real change. Tax reform is a joke. Real tax reform is hard. Everyone has a vested interest and we don’t start from the same place. What has to be paid for before we going giving away treasury? No agreement there so this is nothing but a tax slash for the wealthy which is the only economic policy position Republicans know.

Climate change is happening, and we have just had three of the most disastrous storms we have seen in hundreds of years, predicted by global warming, and who is the lead of the EPA (a climate change denier), and now the Dotard in Charge (DIC) is appointing a coal lobbyist as the second in command at EPA. His boys and girls (Cabinet/White House staff) are using their private emails (lock her up) and flying around the country on private jets at your and my expense, and he is draining the swamp? Oh did I mention he is meeting with the generals on North Korea (“Calm before the storm”), and wants to change the Iran agreement? Meanwhile the Republicans are stonewalling the Russia investigation. It’s noise, smoke, and mirrors while the country slides backwards into chaos.

Now that I have thoroughly depressed you unless you are a LD (Little Dotard, Trump base), let me try to show you how we got on this path of ignorance. Right after the shooting in Las Vegas I heard an interview with a woman who was spouting the conventional wisdom about bringing the country back together. “We just need to start listening to each other. We need to lower the rhetoric and listen and try to understand the other side. Then maybe we can find common solutions.” Sounds great doesn’t it? It is horse shit. Pabulum for those who have not been paying attention. It’s pabulum because we don’t operate on the same set of facts anymore.

Were you not paying attention during the Obama years?  Much to my chagrin, because I don’t think Republicans have workable solutions, President Obama tried to compromise with them.  How many Republican votes did he get on healthcare (0).  It got to be a standing joke that even if Barack proposed a Republican plan (which he did on numerous occasions), they were against it.  There goal was to destroy the his presidency (remember Mitch McConnell’s one term President comment?).

In order to take the positions Republicans have taken and support their policies, one had to create an alternate universe, and they did.  Climate change doesn’t exist, tax cuts pay for themselves, immigrants are the root of all our economic problems, all trade agreements are bad, the EPA just hurts business with regulations, regulations in general are bad, government is bad, guns are a natural right, and they were extremely effect at then explaining away failure to act as both sides do it.  Now they are in charge, and they still can’t do anything.

But the point here is that they created a public that does not agree on a set of facts.  Does it not floor you that much of America gets their news on Facebook trending junk?  We can’t have effective solutions if we cannot come together on root cause and effect.  Republicans believe that more guns makes us safer.  How has that worked out?  Republicans believe that climate change is worst a hoax, at best not man-caused, so we do nothing as the conditions for disastrous climate changes increase.  How can all regulations be bad when many of them came from very bad situations where protections are in order? Obamacare is a disaster, but their answer for a fix is trust us, the market place will solve all issues?  The facts do not support any of their beliefs.

So back the woman who wants me to listen.  But the other side has already ended listening because I must be confused about my facts.  Why should I listen to someone who wants to take away gay, lesbian, or transgender rights?  Why would I want to listen to someone who wants to destroy Obamacare with no viable solution?  Why would I want to listen to someone wants to destroy the EPA and deny climate change?  Until we can establish again the difference between political differences and facts, there is no debate.

Let me leave you with this.  There will be no hand holding and coming together.  We have to re-establish facts before we have political debates about what to do about them.  Climate exists and is man caused.  Tax cuts in this economy do not simulate growth.  All government is not bad.  Immigrants help, not hurt our economy.  More guns are killing more people.  We live in a global economy and we need trade agreements.  If we could just start from those established facts (google them!).  Then maybe the listening could start.  But Republicans have made clear they have an alternate set of facts and no further discussion is necessary.

The only fix is that if we survive this four years, we need to hose out the White House and Congress after we throw all of the Republicans and “moderate Democrats” out, and get about the business of governing again.  We deal with facts, data, and science, develop policies based upon them, and if they need fixing, we do not have an ideological agenda or wanting to believe something that prevents us from doing just that.  It is just amazing to me that the real ideologues are not progressives who can change, but Republicans who cannot, and yet somehow we all just need to hold hands.  Bull shit.

The Agenda

Republicans have lost all sense of morality (see the House and Senate bill on healthcare) as they see their opportunity to enact their conservative agenda and “save America”.  The President’s crude and demeaning behavior, signs of an unstable and dangerous personality are overlooked as just actions in the moment, not deep character flaws that puts our very democracy at risk (attacks on free press, other branches of government, and now voter suppression through his Voter Fraud Commission).  So the obvious is now obvious.  Republicans are going to do nothing.  So unless Special Counsel Mueller rubs their noses in it, we are going to get “the agenda”.  Democrats can do nothing.  They have been removed from power for the simple reason that they did nothing.

So what of the agenda?  Well it is simple, continue the very thing that has caused the malaise in America, unfairness and economic inequality.  I would go on here and explain how Republicans will pass bills that only further transfer wealth to the few (see the Senate healthcare bill), and how Democrats answer to this, is that the market place is a great thing, but needs to be kinder and gentler (a failed policy), but James Kwak has once again come to my rescue.  We are all asking the question, so what happened to the Democratic Party and what should our new direction be, and he has provided it in what should be mandatory reading for everyone. It is titled The Importance of Fairness:  A New Economic Vision for the Democratic Party, and I will give you some of his thinking, but really, you should stop reading this blog and go to the link and read it for yourself.  It is by far the best succinct analysis of what happened to Democrats and our way forward.

He starts out with this quote from Bernie Sanders that gets to the heart of Democratic failure:

The model the Democrats have followed for the last 10 to 20 years has been an ultimate failure. That’s just the objective evidence. We are taking on a right-wing extremist party whose agenda is opposed time after time and on issue after issue by the vast majority of the American people. Yet we have lost the White House, the U.S. House, the U.S. Senate, almost two-thirds of the governors’ chairs and close to 900 legislative seats across this country. How can anyone not conclude that the Democratic agenda and approach has been a failure?”

He then goes into a short summary of his thesis in his book Economism, which is that we have bought into a false god in the market place that will lift all ships:

…the belief that simplistic models accurately describe the real world and should be the basis of public policy… This naive or disingenuous worldview, according to which unregulated markets produce the best of all possible worlds, is frequently invoked to defend policies that favor the wealthy and justify the vast inequality that results.

…Economism was promoted by conservatives who sought to roll back the New Deal and restore a mythical libertarian paradise governed by free markets, with a minimal state and low taxes. Their vision became the platform of the Republican Party in the 1970s and the policy handbook for President Ronald Reagan and every conservative leader since. In response, Democrats have tacked to the right on economic issues. Since Bill Clinton, the Democratic Party’s economic vision has been that prudent management of macroeconomic factors would foster higher private sector growth, which would in turn create jobs and prosperity for working families. The central planks of this platform have included: cutting budget deficits to reduce interest rates; reappointing Republican Federal Reserve chairs who would control inflation; and even seeking a “grand bargain” that would reduce Social Security spending in exchange for modestly higher taxes. As the Republican Party has been taken over by charlatans who insist on cutting taxes and crippling government at every opportunity, Democrats have rebranded themselves as the moderate party of responsible economic stewardship.

…To be clear, the failure of overall economic growth to benefit the middle and working classes is not solely or even primarily the Democrats’ fault. The villain in that story is the Republican conservatives who weakened unions, undermined the social safety net, and slashed taxes on the rich. Globalization and competition from low-wage countries were another factor. But since the onslaught of the conservative revolution, Democrats have played defense by claiming the space once occupied by moderate Republicans. Recall the pivot to deficit reduction in 1993, welfare reform in 1996, the capital gains tax cut of 1997, the commitment to free trade agreements from NAFTA to TPP, and the bipartisan commitment to financial deregulation that helped produce the devastating financial crisis of 2008.

So you get the drift here and it is the truth of our times.  Conservatism has no answers for our future and the Democrats have bought into most of this nonsense and have left themselves with no real answers either, but compromise with failure.

What the Democratic Party needs is an economic message that: addresses the real problems that many Americans face on a daily basis (instead of callously insisting that “America is already great”); and resonates with their very real frustrations and anxieties. Both politically and as policy, the idea that the rising tide of economic efficiency and growth would lift all boats has failed. It is time for something new.

Then he lays out the way forward in detail but I will simply sum it up here:

…Most important, the fetishization of efficiency assumes that our primary goal as a society should be expanding the pie—increasing the total volume of goods and services available for consumption. This assumption is crucial to economism: the ultimate justification for unregulated markets is that they theoretically result in the production of more stuff.

…At this moment in history, however, what a rich country like the United States needs is not more stuff. We need to share the stuff we have in a more fair, more morally acceptable way. In 1980, the bottom 90% of households owned 32.9% of all household wealth and took home 69.9% of national income; by 2012, those figures had fallen to 22.8% and 59.0%, respectively (see Saez and Zucman, Appendix Tables B1, B25). In other words, if we could restore the 1980 wealth and income distribution, the bottom 90% of households would enjoy a 44% increase in net worth and an 18% increase in income—an improvement in living standards that would take decades to achieve in our current economic system.

…Fairness is not just a rallying cry. It is the unifying theme for fundamental policies that will improve people’s lives in the crucial areas of education, housing, health care, employment, and retirement, reducing inequality and improving the material standard of living of ordinary Americans. It also offers something new to the many people who feel left behind on the wrong side of the inequality gap, who have been told that economic growth will solve all their problems but whose own lives have only seen less job security, more debt, and higher health care costs.

This is not some revolutionary new gospel, but a return to the roots of the modern Democratic Party. In his 1941 “Four Freedoms” speech, President Franklin Roosevelt described the principles that Americans would soon be fighting and dying for in these words:

“There is nothing mysterious about the foundations of a healthy and strong democracy. The basic things expected by our people of their political and economic systems are simple. They are: Equality of opportunity for youth and for others. Jobs for those who can work. Security for those who need it. The ending of special privilege for the few. The preservation of civil liberties for all. The enjoyment of the fruits of scientific progress in a wider and constantly rising standard of living.”

These are the core principles of the Democratic Party. They describe the world that most people want to live in. Markets and economic efficiency are tools that may be used to achieve (some of) these ends, not ends in themselves. Ultimately, our goal must be the better, more fair society that Roosevelt envisioned three-quarters of a century ago.

Just as an aside, I had written to Professor Kwak about his book Economism and how important a book it was, and had mentioned the “Four Freedoms” speech and how Republicans had invented a fifth freedom, freedom of the market place, and he replied that my reminder had made him re-read that speech.  Maybe, just maybe, my little contribution is here in his summary.  Or maybe not. He has offered us a great summary of our way forward.  If only Democrats would embrace it.

They Still Don’t Get It

Jimmy Kimmel, the late night TV host, was given great kudos for giving an impassioned plea for a health care plan that covers pre-existing conditions since he is now the father of a new son that has them.

But in this, he said this:

“This isn’t football,” Mr. Kimmel added. “There are no teams. We are the team, it’s the United States. Don’t let their partisan squabbles divide us on something every decent person wants.”

WTF is he talking about?  This isn’t about a partisan squabble unless you consider Republicans feuding with each other partisan.  Democrats gave you coverage of pre-conditions, and Republicans are trying to take it away.  This is not some partisan both sides do it and they just need to get along thing.  It is a basic dividing line between Democrats and Republicans.  Mr. Kimmel just played into the hands of Republicans by being politically correct and not pinning the blame on the Party that deserves it.  The Press does the same thing which is why Americans see the problem as “Washington” instead of doing the brave thing and naming names.

And now they are taking this to a whole new level as we see the reality of President Cheeto-Head as an ignorant, dangerous man and press continues to not label it and tries to pretend things are normal, just different. He is  not and we need to understand that while he has a base that thinks he is doing fine, they are a small minority and he is a true danger to democracy as we know it.  Congress can be as dysfunctional as they want (Republicans actually), but when the man who leads the nation has to lead and not backwards.  He cares less about human rights or America being a beacon of democracy in the world and he is doing his best to destroy it.

As I write this Comey is explaining why he had no choice which is total nonsense and he and the Russians changed the direction of the country.  Now the Russian investigation is being stymied by the Administration and Republican leaders in Congress.  As I wrote yesterday, Cheeto-Head keeps making statements that show he is either delusional or an idiot.  Stephen Colbert did a number on Cheeto-Head on Monday, speaking truth to the nation and people are just shocked, shocked, shocked.

This is the reality.  And up next is his executive order on “Religious Freedom” which will actually be a license to use religion to discriminate in the public square.  It is rolling back history and the Enlightenment to bring religious discrimination back into government.  Add in to that and this Administration’s willingness to lie and deny science and we are really going back to the 17th century. And you want me to be tolerant of the misguided and ignorant people who voted for this moron?  I don’t think so if you really understand what is at stake here.

And I will leave you with caution to President Obama who very much tone-deaf, signed up to cash in with Wall Street.  This what middle America is turning away from along with young people.  They get that the present economic system does not work for most of them and this raises all kinds of flagsas to whether establishment Democrats get this.  Wall Street is not the answer.  It is the reason Hillary never rang true on understanding Progressivism.  But now we are faced with a very damaged and dangerous man in the White House being enabled by Republicans.  They are the enemy.  If Obama doesn’t stand up and take him on he is a fool.  These are not normal times and treating them as such will be our demise.  Resist.

 

Zombie Ideas

They’re back!  Magic tax cuts that actually balance the budget (Laffer Curve) and a Republican healthcare plan that provides more choice instead of actually paying for more care.  Both are zombie ideas.  The ideas have no life left in them because they have never worked, but Republicans keep resurrecting them and the zombies arise again to eat your brain.

Okay, healthcare.  It’s not free so the only question is do you believe that government must provide healthcare (note:  Not access to, but actual healthcare) as a right of every citizen whether they can afford it or not.  Most Republicans don’t and that is just the end of it.  They also have this crazy idea that the market place can provide more choice at cheaper rates than government health insurance.  This is a crazy idea because no country in the world does it, and we tried to do it for 50 years and were unsuccessful.  Oh, and let’s not forget that during this time Medicare has done it cheaper than the private sector.

But Republicans have another problem.  People want it.  They want their kids to be on till they are 26.  They want existing conditions covered, and they want (when they actually have to use it) plans that covered most things.  So sure you can have choice and young heathy people can get really cheap plans.  The rest of us are going to get gouged.  Here is the deal, and it is not ideology, it is arithmetic.  The only way to cover most people and make their plans affordable is to have a giant insurance pool.  Everyone has to pay in like automobile insurance.  Republicans simply aren’t going there.  Bottom line, there is no Republican repeal and replace Obamacare that will be better (except if you are rich or healthy).  It really is that simple.

So they will claim its better, with more choice, and everyone will have access to healthcare and it will be anything but better.  Sure you will have more choice if you are healthy or wealthy and sure you will have access, you just can’t afford that access.  Deregulation across state lines and removing requirements to actually cover fully typical  illnesses and injuries is not going to make it affordable for those who most need it.  You have to pay for what you want. Choice actually giving us viable choices is a zombie idea that has been around forever and keeps rising from the dead.

WAIT!  Tax cuts to save the economy!  When did that ever work?  Ronald Reagan did it and the deficit got out of hand.  He then raised taxes. George Bush 2 did it and the deficit got out of hand and where were the jobs?  George Bush 1 actually called the idea that cutting taxes will be fully funded by growth and tax revenue Voodoo Economics.  Just ask the folks in Kansas how that has worked out.  But here we go again with “dynamic scoring” and note they said that there would not be offsets*.  Just the magic assumptions about growth that no one thinks is realistic is going to pay for everything.  So here we go again with supply side economics on steroids and it has never ever worked.

Oh, and bullshit on the 15% max tax on business is just that.  The big guys don’t pay that now.  If it meant that everyone paid that, it might work, but it is just a massive giveaway.  And bring back into the country off-shored profits so they can now be taxed at a low rate or in a holiday most probably won’t create jobs.  It might just do the opposite and create investment for more automation.

If there were tons of pent-up demand (not just wanting stuff, but having the cash to buy it), it would certainly spur the economy.  But that is not where we are.  Most of the 99% are scraping to get by, kids going into debt to go to college, and retirement savings are non-existent.  So this is a giant give-away program (mostly for rich “job creators”) and we get nothing in return like an investment in infrastructure or our work force.  Here we go again.  The zombies just can’t be killed.

Republicans DO NOT HAVE SOLUTIONS FOR OUR FUTURE!  And there is no free ride.  Now we are recycling old ideas that have failed and never worked.  But ideology over common sense is what they are bringing us.  Economic inequality on steroids.

 

Another One of Those Flashing Lights We Are Ignoring

From the Atlantic Daily email:

The French Election: Far-right candidate Marine Le Pen and her independent centrist counterpart Emmanuel Macron advanced to the second round of the French presidential election yesterday. As neither Macron nor Le Pen is from a major party, the vote looks like a clear rejection of the political establishment; it also marks the decline of the French Socialist Party, whose candidate trailed far behind the winners. As the country prepares for the next round, Macron is expected to win by far—yet in expanding her populist party’s influence, Le Pen has already succeeded.

Let’s see, the establishment was rejected in Britain in the Brexit vote, the establishment (both Republicans and Democrats) was rejected in selecting that nitwit Cheeto-Head in the United States, and now the French have rejected their political establishment in both their runoff candidates.  There is something going on here and it is not what you think. It is economic malaise across the board.  The sad thing is that Brexit and Cheeto-Head were elected to attack the wrong targets, change and immigrants.  That is what Marine Le Pen is also running on, but the French may be way smarter than we are.  We will see in a couple of weeks.

Here is what I think, no, know what is going on.  Our economic system does not work for most of us anymore.  It has nothing to do with immigrants, or rapid change, sending jobs overseas.  Okay, they do cause problems, but easily fixable, and yet not much will change.  As long as the wealthy keep sucking up all the air in the room, nothing is going to get better.  That is what establishment politics has missed.

There is a reason for that. I will borrow here from Upton Sinclair via Paul Krugman, “It’s difficult to get a man to understand something when his salary depends on his not understanding it.” They are all part of the system that profits from wealth accumulation.  So they can’t imagine that our economic system throughout the world today is the problem.  They just want to tweak the system, which is why establishment politicians are being roundly rejected.  Nothing changes.

Anybody remember French economist Thomas Piketty?  Back in 2014 he was all the rage when he pointed out that our economics of wealth accumulation is maybe a natural outcome of capitalism and it usually leads to the decline and fall of empires.  He was attacked from all sides.  See Upton Sinclair’s wisdom above.  But Piketty’s data holds and we continue to concentrate wealth.  The chasm between the super rich and the working class is obscene.  There is no coincidence that the two most pressing threats to our survivability, global warming (because it is changing the climate and upsetting economies everywhere) and increasing economic inequality are both disparaged by Republicans.  They got theirs.

Yesterday, or was it Sunday, anyway I blog about what the Democratic Party needed to resolve, what are they really about.  Well the warning lights are on and flashing.  People are turning away from political establishments for new solutions to their problems because nothing ever changed.  The stage was set for the hucksters, Nigel Farage, Donald Trump, and Marine Le Pine, selling their fear, hate, and isolationism.  But they are not looking at the real issue, reinventing our capitalist system to more fairly distribute the bounty.  And that has to be the core of the Democratic platform.

That will be a tough message because the moderates do not want to hear it.  That is the Howard Dean crowd, and actually most of the establishment Democratic Party.  Hillary was the classic example. Even President Obama was an establishment Democrat when it came to economics.  None of them really wanted to take on a runaway economic system.  Bernie did and then he got slammed by Black Lives Matter about not considering their interests.  His first reaction was the same as mine, that economic inequality and making the system fairer includes blacks, women, gays, you name it.  But he was a savvy enough politician to try to bring them in.  But it is interest group pandering that gets us nowhere and generally doesn’t really change anything.

The theme that will create a new Democratic party is to recognize that economic inequality is the mother of all the other inequalities.  To start to share the wealth of our economy with all those that participate creates spending.  To do this means taking on the whole establishment.  But if you are seeing all the flashing lights, the establishment is being resoundly rejected.  We don’t need a more tweaked and refined establishment with better tactics and talking points.  They need to recognize that there is a new message altogether and start reforming capitalism.  If they don’t, it will not be pretty.  Brexit and Cheeto-Head were just the beginning.

Unaffordable Cities

I want to sell my vineyard and house and move into the city to simplify my life.  It is not happening.  I live on almost 22 acres of Sierra Forrest with 3 acres cleared for vineyards.  I sit on the top of a hill and can see the costal range from my patio.  The house itself is beautiful.  For what I can probably sell my house for, I can’t afford anything but a box in most cities in neighborhoods I want to live in.  The outrageous price of housing fueled by those who have bided up the market, leaves me out.  But forget me, what about all the people who must work in a city to make it work.  What do they do?  You know, teachers, policemen, firemen, waiters, cooks, sales people, government workers, you name it.  They commute.  They can’t afford the city either. Well that or they live stacked 5 to a room.

Remember when New Orleans Lower Ninth Ward flooded (Hurricane Katrina, 2005)?  That was where the working people had established homes they could afford, many passed down from their relatives.  Then came the “Republican” rebuild which was tax breaks and credits to developers.  To maximize profits, they did not rebuild affordable homes, they went after the super rich.  I am trying to make a point here and that point is that if you believe in Economics 101 and don’t consider how economic inequality has skewed the outcomes, you continue to craft solutions that feeds more economic inequality and that economic inequality pushes Econ 101 models further off the rails.

Enter the Republican Party.  The Republican Party believes in Econ 101 (James Kwak’s Economism) as though it were the revealed truth of God.  That theology goes something like this:

Both individuals and firms possess useful things of value, and they trade with each other in a “market” to get other useful things. Because nobody is ever forced to make a trade (in theory, at least), a transaction occurs only if it makes both parties better off. Under these conditions, prices naturally adjust until supply equals demand. The resulting set of prices makes everyone as well-off as possible. In other words, markets produce the best of all possible worlds.  In a competitive economy, prices automatically direct effort and investment where they can do the most good— a feat that no government agency can match.  Private property, production for profit and by private ownership, and regulation by a free competitive economy brings not only maximum prosperity, but also maximum freedom.”*

Many times you hear Republicans simply state that if you are going to restrict trade with regulation and taxes, you simply don’t understand Econ 101.  But this is perversion of Econ 101 taking perfect models into an imperfect world.  Oh, and it thrives because it serves the interest of a powerful interest group, Conservatives:

And while superficial economic arguments can serve multiple purposes, in today’s world they most often justify the existing social order— and the inequality that it generates— while explaining the futility of trying to do anything about it.

So they promulgate free market solutions for everything.  But real markets are very complex and the basic assumptions of the model, that “all suppliers offer the same product— there are no differences in features, quality, or anything else, and that each company is so small that its behavior has no effect on overall supply”, simply don’t exist.  And if these assumptions do not hold, assumptions “such as in the market for cell phone service, or air travel, or automobiles, or books, or almost anything— then supply and demand do not necessarily produce the optimal price, and the allocation of resources may be distorted.

My favorite example is global warming.  The solution is rules on CO2 emissions and a carbon tax to make less carbon producing products more cost effective in markets.  But we don’t feel global warming yet, or are just beginning too.  Markets don’t react because there is no demand.  Conservatives are against rules and taxes because it stifles the market place.  So government must come in and take appropriate measures to change the dynamics of the market place to deal with the future threat.  Conservatives respond by denying science.  So here is a case where unless government intervenes, markets look for the cheap solutions, coal and other carbon producing products, short term solutions that could have disastrous impacts on our future.

And my point here is that the demand is not homogeneous either.  As economic inequality increases, the wealthy create market places the bottom 99% cannot participate in.  What may only be worth $20 to an average citizen (the amount they are will to pay for say a tee-shirt) could be bid up by the wealthy who are willing to pay $100.  That is exactly what has happened in our cities.  And we are going to kill them because the people who make cities work, can’t afford to live there anymore.

Now if you look at the healthcare bill the Republicans are proposing that is full of “market-based solutions,” what you find is a bill that transfer wealth to the wealthy**.  In other words, these simple minded free market solutions don’t work as advertised, generally just benefit the wealthy, and in doing so increases economic inequality.  And this economic inequality further fractures Economism models the Republican push as gospel.

Economic inequality is the issue of our times.  Conservatives spout Economism to justify everything, and nobody challenges them***.  Even our media has swallowed this belief in markets whole.  Markets do the best job when they are properly controlled and regulated.  Economism argues against this regulation and makes the wealthy wealthier which is why they promulgate it.  But markets do operate on rules, that includes property, copyrights, contracts, disputes, and on and on.  The rules in effect today favor wealth accumulation for the few and what few mean by freeing the market place is to keep their rules.  Isn’t time we started to address this before we have a “Let them eat cake moment”?

*Most of this discussion and all the quotes comes from Kwak, James. Economism: Bad Economics and the Rise of Inequality. Knopf Doubleday Publishing Group. Kindle Edition.

**As I have argued before, healthcare is not even close to a normal commodity and if President Cheeto-Head was going to cover everyone, as he promised, that simply eleminates free market solutions given the reality of economic inequality and the fact that young consumers are completely different from either older consumers or people with pre-existing conditions.  And one other thing to note in the world of double speak.  When conservatives change cover everyone to everyone will have access, that is totally different.  I have access to the best healthcare in the world.  I simply can’t afford it.

***See my blog Challenging Republican BS

The Real Fight Finale

A continuation of the discussion in The Real Fight, and The Real Fight Part 2

The current political situation is in chaos.  Democrats were shattered in the last election and Republicans have a leader that is certainly not a Republican, but a populist with Republican leanings.  There is all kinds of nationalism and autocracy in play on the Republican side besides the economic arguments.  But the Nationalism and autocracy that is part of Steve Bannon’s philosophy are really a harking back to times that no longer exist.  Democrats see a more integrated and diverse society whereas Republicans see chaos if the old order is not restored.  But Trump won on the economic argument as reliable Democrtic working class voters bought into Donald Trump’s lies about restoring jobs and renegotiating trade agreements.  Democrats are navel gazing right now trying to figure out what went wrong.  Sadly a lot of this discussion is about listening and engaging more with the white middle America and sounds an awful lot like pandering.  “Well after all Hillary did win the popular vote.”  Frank Bruni put it this way this morning:

Have Democrats learned and implemented all the right lessons from Trump’s victory and from the party’s brutal fade during Barack Obama’s presidency? As the race for the D.N.C. chairmanship lurches toward its conclusion later this month and as Democratic lawmakers sweat the smartest strategy against Trump, I wonder. I worry…They routinely remind me and reassure themselves that Clinton won the popular vote and that if you subtract James Comey, Julian Assange and Vladimir Putin, she might have triumphed as well in the Electoral College, where Trump prevailed by just 77,000 votes…This is no moment for mere tinkering, and the party can’t afford the internal divisions on display in the D.N.C. race. After Joe Biden endorsed Perez last week, Bernie Sanders, who supports Ellison, shot back, “Do we stay with a failed status quo approach or do we go forward with a fundamental restructuring?”

Timothy Egan put it this way on one Saturday:

The way out is not that difficult. Yes, they should engage in hand-to-hand combat in the capital. And certainly, Democrats must turn to the courts when the rule of law is broken. But they have to be for something, as well — a master policy narrative, promoting things that help average Americans. The old Broadway adage was how it will play in Peoria. For Democrats, they should think of Joe Biden’s Scranton, Pa., every time they take to a podium.

My point is that we have to take on all Republicans, not just because they are supporting Cheeto-Head, but more importantly because they have their economics wrong, and with that, just about everything else.  Their brand of the Fifth Freedom (freedom of the market place) is tainting everything and as we get the economics wrong, the world is ripe for Trumps and blaming which leads to all the racism, nativism, xenophobia, and division in this country.  Democrats need to take on the Republican ideas about the economy and change the narrative around the Fifth Freedom. Just being against Cheeto-Head won’t change anything (see Hillary’s campaign). Thankfully James Kwak came along to do that for us.  So I am going to give you a short couple of paragraphs course on where James took us in his book, Economism:  Bad Economics and the Rise of Inequality.  I really recommend you read it.

His basic premise is that the lessons we learned in Econ 101 about supply and demand (In a competitive economy, prices automatically direct effort and investment where they can do the most good— a feat that no government agency can match) are models and concepts in a perfect system that do not apply when markets aren’t perfect and the players aren’t rational.  Or said another way, welcome to the real world.  It is just a logical construct that needs to be adapted to real world complexities.

Here in his own words is that premise:

This invocation of basic economics lessons to explain all social phenomena is economism.  It rests on the premise that people, companies, and markets behave according to the abstract, two-dimensional illustrations of an Economics 101 textbook, even though the assumptions behind those diagrams [supply and demand curves] virtually never hold true in the real world…And while superficial economic arguments can serve multiple purposes, in today’s world they most often justify the existing social order— and the inequality that it generates— while explaining the futility of any attempt to change it.

…the conclusion that we must accept [according to economism] is that the world is as it is, because our attempts to make it better are doomed to fail…[we need] only to accept the principles of Economics 101. This makes economism a supremely convenient tool for the 0.1 percent, the perfect comeback to the Occupy Wall Street protesters. You understand why well-meaning do-gooders want to make taxes more progressive, subsidize health care, provide free higher education, and regulate Wall Street. But they simply don’t understand economics.

…My goal is not to show that one side is right and the other is wrong, but to demonstrate that an unwavering adherence to simplistic models has had a pernicious impact on debates and policies that affect hundreds of millions of people. Most of the time, that impact has the effect of increasing inequality or legitimizing the inequality generated by our economic system.

It is a self-serving philosophy for the conservatives and you hear them argue it every day. Professor Kwak then presents Econ 101 basic concepts and then annihilates them in the real world. Real economists, not shills for the status quo, believe in markets in general, but “they are continuously identifying instances of market failure and then designing government policy responses that can make these markets work better (Mark Thoma).”  See the tension here?  Conservatives and many Democrats who bought into this stuff, want government out of the market place (the Fifth Freedom) and they use Econ 101 arguments (Economism) to show that the government will only screw it up.  The reality is just opposite, but it is complex and most of us don’t do complex.

A great  example of he application of Economism is to the arguments around raising the minimum wage.  In the perfect world of Econ 101, markets find the right price to employ the most people.  Using supply and demand curves you can argue that raising the minimum wage (government interference) simply results in some getting higher wages, but fewer employed.  On the other hand the real result in the real world is a mixed bag depending on many other factors.

Take a store like Starbucks. Most of its clients are affluent and are more than willing to pay the few cents added to their cup of coffee for passing that wage hike onto the customers.  And in instances where it does cause a decrease in employment, it raises many more out of poverty.  So unlike conservatives who believe it is an open and shut argument, it is really a complex issue. Note President Cheeto-Head (Lord Commander Marmalade from Trae Crowder) has told us he is against minimum wages all together.  That is where Economism will get you.  The market will find the right wages to emply the most people. Slaves worked out so well for the South.

Healthcare is my favorite, as Paul Ryan was out spouting all the Economism arguments that the free market would provide health insurance tailored to the individual needs of the market place at the most reasonable price.  Choice and competition became the magic words that would end all our health care woes. Just get the government out of it. There is only one problems with all this.  Reality tells us that health care does not behave like any other market.  We do not incur medical expenses regularly, and we don’t have the medical knowledge to decide the best course for our own care.

The Economics 101 model in which financial incentives turn people into discerning consumers turns out not to work in the real world.”  And here is the thing, before Obamacare we had a system that did not work.  Were we paying attention?  I could make arguments that the business model for Health Insurance companies make them the customer to be served, not the person needing health care, but you get the drift.  In a perfect world it might work, but in our world, every other country has seen the light and moved to single payer systems while we still make Economism arguments.  These systems are not perfect but they provide universal care at a cheaper cost and with better outcomes than our system.

Anyway you get the point here.  Economism arguments make perfect sense and appeal to all of us, but then when applied to reality where the complexities of the markets are not examined, in many cases they give us just the opposite answer to what will actually work.  Professor Kwak takes us through Supply Side economics, free markets in the banking industry, and free trade to show how the arguments of Economism fail, yet we continue to buy into them for simple answers.  Again I have a favorite and that is free trade.

Economism will tell you that international trade simply is a win-win. There is a thing called the theory of comparative advantage which I am not going to go into here, but it basically shows that in the aggregate, trade is always good.  But we just had an election where trade agreements became the bogey man.  Conventional Republicans are free traders (as are many establishment Democrats) and Trump and Bernie were very popular being against it.  So what gives?  Well two things.  First, as always reality is more complex than theory.  If you look at NAFTA, in the aggregate we gained, cheaper products and more trade increasing net GDP.  But the local effects were horrendous, with a loss of jobs in the portion of our population with blue-collar workers, and the least likely to find new work.  In a word, it increased economic inequality.

When a rich country like the United States increases trade with a poor country, some industries will lose jobs because of competition from cheaper foreign labor. This can mean concentrated layoffs in specific sectors, as has happened to American manufacturing. Although those job losses may be balanced by gains in other parts of the economy, longtime assembly-line workers at automotive parts manufacturers in the Midwest cannot easily get hired by New Jersey pharmaceutical companies or Silicon Valley software firms…Within a rich country, in short, the primary winners are people who are already well-off, and therefore one result of increased trade with poor countries is greater inequality within the U.S. workforce.

Then there is the China effect:

“The reality of adjustment to the China trade shock has been far different. Offsetting employment gains either in export-oriented tradables or in non-tradables have, for the most part, failed to materialize.”…the fact that the U.S. economy has adjusted to Chinese competition so slowly and imperfectly calls into question the simple case for free trade.

In other words we get and buy into the Economism arguments and then reality tells us it is a much more mixed and complex picture.  The Establishment, both Democrats and Republicans were supporting trade agreements on Economism arguments when the people rebelled.  And that is the lesson I am trying to get across here.  The problem is not the man, Donald Trump, although he is a true threat to democracy.  The problem is that we as Progressive and Democrats have not challenged Economism as it has been applied to almost every political argument we see by conservatives and are winning those arguments.  Instead, every time Democrats have a big loss they start pandering to kinder gentler Economism.  It is time to take these ideas head on and fight them on the ideological battle field the conservatives have set up and are winning.  It is only when we finally expose these falsehoods and complexities can we progress.

Thank you James Kwak for taking us on an ideological journey to show how we have been duped.

 

The Real Fight Part 2

In the last installment, I pointed out that the Four Freedoms established by FDR held sway with the idea that government’s role was to secure these four freedoms.  But the New Deal got in the way of businesses and corporations, not to mention the wealthy, who have always hated government intervention in the market place. See FDR’s “They are unanimous in their hatred of me, and I welcome their hatred“, 1936 speech.  The reality is that that hatred never ended and around the early 60’s the conservatives representing wealth and business glommed onto a fifth freedom and an ideology to promote it.  That freedom is the freedom of the market place and your right to accumulate as much as you can without interference of  government.

Also note that are really only two ideologies competing here, Progressive and Conservative.  You have the Tea Party and the Trump rubes, but they basically bought into the conservative ideology (including conservative social ideology) and then revolted when those ideologies did not deliver.  They are basically the ignorant and misbehaving children, the result of 40 years of misinformation, but they are not a separate ideological movement other than to break things.  They are still buying conservative ideology at the heart of their discontent (“Donald is a businessman and knows how to run things”).  The establishment Democrats went Conservative Lite which will be discussed below, and is why the Party ended up in the toilet this election.

I am going to use two books as essential references here.  The first is by Thomas Frank, Listen, Liberal: Or whatever Happened to the Party of the People.  In this book Frank takes us on a journey of how the Democrats lost their way, became Republican Lite and bought into much of the ideology that wrote off those left behind by globalization and technology. Note, I discussed some of his findings in my blog Post Listen Liberal Thoughts.

The second book is a really, really important one written by James Kwak, Economism:  Bad Economics and the Rise of Inequality.  In this book, James Kwak traces the conservative ideology of using basic economics concepts (Econ 101) to over simplify and justify their ideology called the Fifth Freedom*, freedom of the market place. Then he takes them apart and in the process offers an argument to begin to building a counter logical construct to undo years of inculcating the fifth freedom with oversimplification of Econ 101.

Okay let me take you on a journey.  First let’s ask the question what happened to the Four Freedoms and the New Deal?  Frank takes us on a journey through history showing how Democrats, in the 70s and particularly after Reagan and Bush I, brought us the new “improved” Clinton Administration that was leaning right toward the Fifth Freedom.  In other words, we had bought into the Fifth Freedom as overriding the other four.  Both he and Professor Kwak described how Bill Clinton took us on the free market journey by being the “other free market party”, including the religion of reducing budget deficits, ratifying NAFTA, enacting welfare reform, cutting capital gains taxes, repealing the Glass-Steagall Act, and signing off on the non-regulation of derivatives.  This has effectively been carried through the Obama years as an ineffective “me too” policy with caveats. We had bought into the idea that Econ 101 explained the markets and we should be more sympathetic to it as the market will save us.  As James Kwak described it:

We also love markets, only we want to make them work even better by correcting for “market failures.” One story is simple: freedom and competition create prosperity; government intervention kills jobs (Republicans). The other (Democrats) is complicated: government programs are necessary to fix market imperfections.

Frank introduces us to our (Democrats) own version of the market place ideology when we, like Republicans started to blame the victims to effectively ignore them.  Republicans have taken on the  ideology of the market place as the adjudicator of justice (social and economic) and those who fail, well, they did not work hard enough or were lazy.  In other words the poor are poor for a reason and to help them upsets the fairness and balance of the market place and hurts all of us.  In the market place mentality, it gives them all the wrong incentives.  The Democratic version of this is that only through economic growth can we all prosper and the answer to that is similar to the Republicans with education thrown in:

that economic justice only comes about through economic growth, and therefore the primary duty of anyone who wants to tackle inequality is “to create a nurturing environment where business leaders and entrepreneurs want to locate and expand in which prosperity arises from higher education and the knowledge-based industries that surround it.

People who are left behind, get left behind because they fail to adapt to globalization and technology.  They did not retrain. They aren’t part of the “technology corridors” and it is sad, but too bad. Globalization and Technology advancements are just realities and we have to accept them. We need to solve all these problems with more education (We have heard this from both Clinton and Obama).  That fell on deaf ears in the last election.  The point I am trying to make, that the authors made, was that we assumed a market model for success that buys into the Fifth Freedom, freedom of the market place to be free of government intervention. That produces the best of all possible worlds. The Democratic establishment has turned away from the working class using a system of education, innovation, and entrepreneurship to justify winners and losers instead of still representing those that got left behind.  The major difference was that the Democrats offered a kinder gentler meritocracy system than Republicans.

Okay a little summary here and then I will try to present Professor. Kwak’s insights in The Real Fight Part III.  At the end of WWII we were strongly in the New Deal camp where government had a strong role in making the economy work for everyone.  But that journey definitely ended in the Reagan years where we had bought into the philosophy of supply side economics (more on that next), and government is the problem. Democrats went Republican lite and all of this is underpinned by an interpretation of Econ 101 and supply and demand curves in a perfect world.  In fact, as Professor Kwak will show us, they give us very false results, yet we have come to accept them almost without thinking.

So when we started out we had the Four Freedoms, secured by our government.  Where we are today is that the Four Freedoms have been supplanted or at least over ruled by the Fifth Freedom, which is now being applied to social policies to say government has only a small roll.  Stay turned to this space.

The Real Fight

I have said many times, Republicans have almost everything wrong. We are in a world where diversity and opportunity are what make America exceptional, and they seem to be hell-bent on killing both.  Of course if you asked them, it would be just the opposite.  They believe in all of those, they are just implementing policies to help both, except they don’t.  That is where the alternate reality comes in.  They have to live in one in order to continue their policies to free the market place and reinstate the entrepreneur as king and believe they work.  They do work in one way. For the rich and wealthy.  For those who already have a strong foothold on prosperity.  But in the real world, not their gated community, their policies fail miserably.

Now there all kinds of forces that have played into their hands.  The feckless and timid Democrats who weren’t sure what they believed and kinda sorta bought into the whole entrepreneur thing.  There were middle American Rubes who knew they were being left behind and got mad as hell.  There was a 50 year Republican effort to push an ideology about the market place which lined their pockets and in the last 40 years, a real effort to discredit real news and facts. When things crashed in 2008 and 2009, they doubled down on their fantasy world, and it really help that we elected a black man.  They could then use fear and racism as the ultimate tool.

One might ask, why science and global warming.  Because people who relied on science and data to make decisions were dangerous to them.  Their first thrust was to create think tanks that twisted the data (selectively screened the data).  But when reality creeped in, they had to sully science and data itself.  President Cheeto Head claims Global Warming is a Chinese plot.  Of Course the Donald was not part of their game plan. He was what happened when all the reality of what conservatives were up to, taking care of the rich, sunk in, and facts did not matter anymore.

So the current state is basically a Republican Party that is holding its nose (or pandering themselves into oblivion) tolerating a basic madman who is feeding the base what they want, with no real ideological foundation of his own (See 3 a.m. call to General Kelly about whether we need a strong dollar or not).  What the base wants is a list from the campaign that will not only damage the Rubes prospects, but hurt our country.  Republicans apparently don’t care because they think they will get their conservative dogma (and social conservative dogma) enacted and life is good for the wealthy getting wealthier.

So Trump is really a side-bar to the real divide in the country.  He is in charge now because people don’t think, but the basic battle is around freedom of the market place, that fifth freedom I (and Professor Engels from SMU) identified in my blog, One Day University, is what is really what this is all about.  A short summary here:  Freedom is the driving word we use to demand what we want.  But we don’t define it.  FDR did back in 1941 as freedom of speech, religion, freedom from want, and freedom from fear.  He saw the government stepping in to secure these freedoms.

A Progressive will tell you that these four freedoms, if you believe in them, say that we need to make sure everyone who wants to work can, that they can make a living wage, and secure health care.  Freedom of Speech, other than from Donald Trump, is not really contested.  Freedom of religion is contested because some have assume that their freedom to worship God entitles them to discriminate against those who don’t share their beliefs. But that impinges on other people’s freedoms.  Freedom from fear is everything from freedom discrimination o freedom from attack domestically or from a foreign body.

The interpretations of these four freedoms and those meanings have held sway after WWII until the early 60’s when Businesses wanted to end the interference of government in their affairs to secure the four freedoms and formed an ideological front to build a conservative economic movement that said that the best way to secure these freedoms in the real world is through the market place, and government interfering in the market place simply hurts the ability of the market place  to provide prosperity for the most people.

So here is what this blog and next one is about, the war for our minds.  What is freedom and what is obtainable, and how should government play in this game?  We are going to start from the mess we have today which I will call the five freedoms, the four FDR gave us and their progressive meanings, and the fifth freedom, the one conservatives are demanding, defined as freedom of the market place, or the freedom to acquire as much as you want.

Here is what I hope to accomplish.  First assuming all the freedoms are legit, how they might clash with each other?  In particular how the view of the freedom of the market place clashes with the other four freedoms and defines them in ways not meant by FDR.  The second part is to look at the fifth freedom and see if maybe the our whole construct of how the market place is warped.  Stand by.