Saturday, April 23, 2011

Donald Trump, or the death rattle of "Voodoo Economics"

I am ugly, but I can buy the most beautiful woman for myself. Consequently, I am not ugly, for the effect of ugliness, its power to repel, is annulled by money.(...) I am a detestable, dishonorable, unscrupulous and stupid man, but money is honoured so also is its possessor. Money is the highest good, and so its possessor is good. Besides, money saves me the trouble of being dishonest; therefore, I am presumed honest. Third Manuscript of Economic and Philosophical Manuscripts, Karl Marx, 1844*
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You may wonder, as I often do, why characters like Sarah Palin, Michele Bachman. Glenn Beck and now, Donald Trump are literally crawling out of the political woodwork these days. What is the force that draws people who would make Huey Long look like Abe Lincoln into the limelight?  What power is it that allows seemingly serious consideration for the highest offices in the land to men and women who, not so long ago, would have been simply laughed off the stage?

The power of money of course... terror stricken money.

Why is money, the most powerful of man-made forces afraid?

Basically because today's rich people are in very serious danger of having to pay taxes again and they have gotten out of the habit of doing so.

With today's economic crisis we are looking at what appears to be the terminal phase of what Bush "the elder" called "Voodoo Economics" and most academics refer to as "Supply Side Economics":
Supply-side economics is a school of macroeconomic thought that argues that overall economic well-being is maximized by lowering the barriers to producing goods and services (the "Supply Side" of the economy). By lowering such barriers, consumers are thought to benefit from a greater supply of goods and services at lower prices. Typical supply-side policy would advocate generally lower income tax and capital gains tax rates (to increase the supply of labor and capital), smaller government and a lower regulatory burden on enterprises (to lower costs). Although tax policy is often mentioned in relation to supply-side economics, supply-side economists are concerned with all impediments to the supply of goods and services and not just taxation. Wikipedia
Well, we have seen the final result of massive deregulation of the economy and radical tax cuts for the wealthy: the USA, supposedly the richest nation in the history of humanity, is courting bankruptcy... Being warned by Moody's and the IMF, like traditionally impoverished Greece and Portugal are today and banana republics were in the recent past.

If another and even worse crisis isn't to ruin the country once and for all, then the way forward is fairly obvious... in fact, much too obvious for some people's taste.

The way forward would basically involve revoking the policies that caused the crisis is the first place.

It would include very detailed and rigorous national and international regulation, the closing of offshore tax havens and of course raising taxes back to where they were before Reagan began to tinker with the economy.

This (naturally) has the wealthy in a panic, they would pay off the nation's debt by laying off policemen and firemen and reducing support and entitlements for America's elder citizens and a long list of the vulnerable and needy and of course these solutions are so psychopathicly antisocial, that  if the American people were allowed to think straight for even a moment they would tar and feather the people who propose them... and raise those taxes, close all the loopholes and regulate a more robustly crisis-proof system... so obviously anything that muddies the water, distracts from something so clear and simple will find ample funding and echo in the media whose owners just happen to be belong to the super rich themselves.... And having Caspar Milquetoast in the White House isn't helping one bit. DS

PS. Just for fun, here's another quote from the same text that tops this post:
Let us assume man to be man, and his relation to the world to be a human one. Then love can only be exchanged for love, trust for trust, etc. If you wish to enjoy art you must be an artistically cultivated person; if you wish to influence other people you must be a person who really has a stimulating an encouraging effect upon others. Every one of your relations to man and to nature must be a specific expression, corresponding to the object of your will, of your real individual life. If you love without evoking love in return, i.e., if you are not able, by the mere manifestation of yourself as a loving person, to make yourself a beloved person, then your love is impotent and a misfortune.

Tuesday, April 19, 2011

The world crisis as it develops

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The other day we went shopping at a huge hypermarket of the French, "Carrefour" chain on the outskirts of Madrid. We hadn't been there for about a year and we were struck by how the quality of the store-brand, discount merchandise had deteriorated in that time. Not that long ago it was possible to buy quite nice things at discount: bluejeans, appliances, etc, for very little money. The prices have held, but what is for sale is shoddy junk. This is a trend that I am noticing in all over the discount stores: hypermarkets, supermarkets, etc.

Obviously to avoid raising prices in the middle of a recession, the merchants are looking for ever more cut rate suppliers...  this appears to be the last "firewall" against inflation and when it is broken it will be difficult  for the great majority to continue to consume, especially since credit has tightened and jobs continue to be offshored; again, an attempt to buck the inflationary trend.

If the consumers in the wealthy countries can no longer afford to consume, many factories in the third world will be closed and their workers laid off, which will lead to turbulence in those countries, where workers and their families are much more exposed to the rising cost of basic food items... and so it goes.

There follow a series of quotes to fill in a possible profile of what awaits us in the coming months:
“The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.” [Marx - Capital, Volume III, Chapter 30]

(...) High inflation endangers China’s status as the low-cost workshop for the world.(...) Food prices are soaring, and the government said on Friday that the consumer price index in March had risen 5.4 percent, its sharpest increase in nearly three years.(...) Beijing and many municipal governments have required employers to raise wages. The government has raised minimum wages in the hope of reducing the big income gap between the rich and the poor, and the urban and rural.(...)  “China is moving into a new era, a new norm,” said Dong Tao, an economist at Credit Suisse in Hong Kong. (...)  In some cases, retailers are bidding for goods at prices the exporters consider too low.“I hear that many Chinese exporters are rejecting orders from Wal-Mart and other Western retailers,” Mr. Tao said. “I’ve been covering the Chinese economy for a long time, and I’ve never heard that before.”(emphasis mine) New York Times

"The hedge funds are now active in commodities and are playing the futures contracts, where upwards of 30 million tons of soybeans for future delivery are contracted for every day. They are also buying the companies that stock grains.(...) Futures purchases of agricultural commodities classically have been the means by which a limited number of traders stabilized future commodity prices and enabled farmers to finance themselves through future sales. Speculative purchases have no other purpose than to make money for the speculators, who hold their contracts to drive up current prices with the intention not of selling the commodities on the real future market, but of unloading their holdings onto an artificially inflated market, at the expense of the ultimate consumer. Even the general public can now play the speculative game; most banks offer investment funds specializing in metals, oil, and more recently, food products. It is astonishing in the present situation that the international financial institutions and government regulators have done little to control or banish this parasitical and anti-social practice. The myth of the benevolent and ultimately impartial market prevails against all contrary evidence." William Pfaff

"The social theories of Karl Marx were long ago discarded as of little value, even to revolutionaries. But he did warn that capitalism had a tendency to generate its own crises. Indeed, the spread of capitalism, and its accelerated industrialization and wealth-creation, may have fomented the food-inflation crisis — by dramatically accelerating competition for scarce resources." Tony Karon - Time
It has always seemed to me that Marx's predictions were foiled by availability of ever cheaper and more abundant consumer goods and ever cheaper and more abundant credit with which to buy them, despite stagnant or falling wages. This formula seems to be in crisis now. It will be interesting to see how we wiggle out of this one. DS

Monday, April 18, 2011

"A Hard Day's Night" remembered

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I saw this film one sultry, summer night in Dalton Georgia, of all places, and two days later I joined a crowd of university students that were playing and singing the songs from the film in Washington Square in New York. Not long after that I saw the Beatles perform the same songs in the surrealistic atmosphere of Madrid's bullring... with Franco's police liberally using billy clubs on any overenthusiastic fans. That sequence of events was real globalization, with no Facebook or Twitter required.

I don't think such a joyous worldwide mania as that one could possibly happen today, if for no other reason than today's market is too "segmented". 

I saw this clip on the New Yorker online and thought I would bring it to the attention of those too young to remember that magic moment and those strangely innocent times. DS

Sunday, April 17, 2011

An Easter Meditation


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The other day, a small child, let us call her "Virginia", asked me a pair of  searching questions: "where does the Easter Bunny get his Easter eggs?" and "do rabbits lay eggs?".

At a loss as to what to tell her, It occurred to me that the framing of her questions themselves was reminiscent of  much of America's present political polemics: a lot of talk avoiding the central question... The Easter Bunny doesn't really exist.... just something invented to sell more stuff.

I would maintain that a huge disinformation industry and a 7 by 24 lobbying and think-tank blitz exists simply to keep Americans from thinking about the salient fact of American life, which is illustrated in the following graph:
So we see that the top one percent of Americans possess 43% of the nation's financial wealth and the bottom 80%, only seven percent of that wealth. This leads to a society which is revealed in the next graph:

So thanks to an enormous effort of the "management of consent" it has been decided that, America being deep in debt and fighting two (three?) wars, cuts are going to have to be made in American's social entitlements, which are the most meager and practically non-existent in the developed world, while it is not "realistic" or even ethical to significantly raise the taxes of that one-percent who owns 43% of the nation's wealth.
The contemporary rationale for oppressing the poor is national debt and deficit, which could otherwise be relieved only by raising taxes on the rich and requiring corporations to bear an equitable share of the national tax burden, which in the Republican party, and a part of the Democratic party today, is unacceptable (and plausibly thought politically suicidal, in view of the current alignment of available political funds and of the legislation governing campaign practice – quite possibly irreversible, since this alignment would seem automatically to disallow reversal). (...) Global war has silenced and numbed America. The national deficit is moral. The people pay in deprivation, indigence, ill-health, insecurity, the humiliation of men and women who cannot find work, support their offspring or properly educate their children in what it should mean to be an American. William Pfaff
It seems obvious to me that if people could think clearly for even a moment, the majority, say 80%, would demand that taxes on the upper one-percent be raised to Scandinavian levels, tax loopholes plugged, offshore tax-havens closed down and defense spending cut to a least only more then the next five countries in the list instead of the next ten, and the money thus raised spent on moving the quality of life in the USA up the second graph to at least the standing of say, Belgium's.

Instead, in the midst of all this mishagoss; just one example of hundreds more: people are being led to discuss Donald Trump as a serious presidential candidate. I would say that a significant portion of the 43% of the nations' wealth that is owned by that one-percent is being spent by them to maintain that sort of level of debate... anything but talking about America's central facts as shown by the two graphs

So, to answer the little girl's questions: yes, Virginia, in Washington, rabbits do lay colored eggs. DS

Wednesday, April 13, 2011

A fairy tale as grim as Grimm could ever be (reprint)

I posted this first on December 8th, 2010, but it seems even more relevant today than it did way back then. DS


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Once upon a time in a far off and pleasant land, during the reign of King George the Idiot, there lived a young man who dreamed of fame and greatness.

He yearned so long and so deeply, that the Good Fairy was moved by his constant pleading and praying and appeared before him in all her beauty and magic splendor.

"Young man," she said, "because of the depth and especially because of the unusual insistence of your desires, I have decided to grant you three wishes. After each wish I shall disappear until the wish has been granted and then return to grant your next request. Now, think hard, what is the first boon that you wish for?"

The young man thought for a moment and said, "Oh Good Fairy, I would like to write my life story and have everyone in the kingdom read it and think that I am wonderful."

"Really?" asked the Good Fairy, "Since you are very young and haven't done very much, that will be a lot of work for me... Are you sure?"

"Puhleeeeeeeeeeze!" the young man begged.

"So be it!" said the Good Fairy, and disappeared.

No sooner had the Good Fairy left then the young man sat down at his table where the few sheets of paper on it magically multiplied into hundreds, and soon a magic quill pen appeared out of thin air, and taking it in his hand he began to write well into the night, as if his hand had a life of its own, which indeed it had.

He awoke the next morning to find that a thick manuscript sat on the table before him. As in a trance he took it in his arms and presented it to a publisher, who, as if hypnotized,  immediately ordered all other work in his print shop to stop and for all the printers to work at nothing else but printing the young man's life story.

The very next day the freshly printed life story of the young man appeared in all the book shops of the land, and it sold out immediately. In no time at all the entire Kingdom could talk of little else than the young man's fascinating life story.

He sat at home enjoying his new found fame, when the Good Fairy appeared for a second time.

"It is time for your second wish." the beautiful Good Fairy said, "Have you thought of what you want to wish for?"

"As a matter of fact I have." the young man replied, "I would like a golden tongue and the power of rhetoric, so that all who hear me will be enchanted by whatever I say, no matter how pompous and platitudinous it might be".

"That won't be so difficult." the Good Fairy said, "Talk is cheap. Are you sure that is all you want?"

"Puhleeeeeeeeeeeze!" the young man implored.

"So be it!" said the Good Fairy, and disappeared.

In a short time everyone in the entire kingdom sat in awe of the young man's marvelous speeches, their mouths dropping open, while visions of sugar-plums danced their heads, as they dreamed of the beautiful land of milk and honey that the young man's golden tongue evoked. Soon crowds followed him wherever he went hanging on his every word.

The Good Fairy appeared for the third time.

"Think carefully young man" she said slowly and gravely, "This is your last wish..." She paused, "Have you decided what you want now?"

"Oh yes!" he cried out, "Old King George is abdicating... I want to be King!"

The Good Fairy looked at him steadily and for a brief instant a cloud of melancholy crossed her charming features. "Are you absolutely sure, young man? George wanted the job as much as you do and look at what a horrible time he is having, all he wants to do now is to retire into the forest and cut brush like a common wood cutter. Are you absolutely sure?"

"Puhleeeeeeeeeeeeeeeeeeeeeeeeeeeeze!" the young man wailed.

She shrugged her pretty shoulders.

"So be it!" said the Good Fairy and disappeared.

No sooner than she had disappeared a great clamor rose up in the land and great cheering crowds appeared before the young man's home and he was carried on their shoulders though the gates of the palace and crowned king of the land with all pomp and splendor. Masses were sung and soldiers paraded and all was feasting and wassailing for days on end as the kingdom reveled in the joy of having such a splendid new ruler.

And then...

The magic spell wore off: the money lenders appeared with insatiable demands and the treasury was emptied by endless wars and sadness gripped the people. In the market place and in the countryside the peasants and nobles muttered and plotted against the new king. The adoring courtiers that once clustered around him, showering him with flattery, abandoned him to his fate and returned to their homes to write their memoirs.

The young man tried to speak to the people as of old, but his tongue seemed glued to his palate and nothing but mumbling issued from his mouth.

One night in the darkened palace, with his hair turned gray, he slumped on his throne in the empty throne room, abandoned by all, weeping disconsolately and ruing his fate.

"Woe is me," he sobbed, "How did I ever get into this mess?"

And then...

The Good Fairy appeared for a fourth time.

The young king fell on his knees and implored her, "Can you help me?" he groaned.

"Sorry, you're on your own now, buster", she replied, a hardness he had never seen before was in her eyes and a coldness he had never heard before was in her voice... once so sweet, now metallic. Slowly her beauty vanished and before him stood a hideous hag.

"You had your three wishes" the apparition said, "I gave you everything you asked for. You could have asked for wisdom, you could have asked for a long life and the gift of contentment, but this is what you wished for, so you have made this misery all by yourself."

"I wish I had never seen you!" the young king shouted, "I wish you didn't exist!"

"So be it." said the Good Fairy and disappeared for the last time.

Moral: Everyone has their wants and their wishes but if a fairy asks, don't tell. DS

Monday, April 11, 2011

Solidarity: the talk and the walk

What have they done with President Obama? What happened to the inspirational figure his supporters thought they elected? Who is this bland, timid guy who doesn’t seem to stand for anything in particular?(...) Mr. Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice! Paul Krugman - New York Times

So here we are pouring shiploads of cash into yet another war, this time in Libya, while simultaneously demolishing school budgets, closing libraries, laying off teachers and police officers, and generally letting the bottom fall out of the quality of life here at home. Bob Herbert's last column in the New York Times

(I)n agreeing Friday night to what he called the largest annual spending cut in the nation’s history, the president further decoupled himself from his party in Congress, exacerbating concerns among some Democrats about whether he is really one of them and is willing to spend political capital to defend their principles on bigger battles ahead. New York Times
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I wonder if all those kids, the ones who worked so hard to get out the vote for Barack Obama in 2008 and thrilled to his "Audacity of Hope" and "We are the change we seek", knew that what they were electing was an animal many thought to be long extinct: a moderate-Republican?

And I wonder if now that they know the score, they are going ring all those doorbells for him again in 2012?

He is letting a lot of people down, who put a lot of hope and trust in him.

You can bet that the budget cuts are going to come out of "entitlements", that is to say, protection for the vulnerable members of society, and certainly not from the budget of what Steve Walt calls,
(...) a military establishment that costs more than all other militaries put together and that is used not to defend American soil but to fight wars mostly on behalf of other people.
I thought it might be interesting to talk about what trust and "solidarity" really mean. To begin with it means standing by the people that you have caused to believe that they can count on you to stand by them when things get really tough for them. Solidarity means "having someone's back." Not letting down the people who are counting on you to protect them. This is sometimes painful and often dangerous.

To illustrate this concept of solidarity I have chosen a short, but powerful video, taken from the Portuguese version of bullfighting.

As you may know, in Portugal, they don't kill the bull, so at the end of the tourada, the animal must be subdued and led alive from the ring. This "final act" is often done in traditional manner, by a group of young amateurs called "Forcados" who take control of the animal with their bare hands.

Belonging to one of these forcado clubs is considered an ultimate masculine rite of passage in Portugal, like playing varsity football in the USA, with the difference that "a pega de cara" is much more dangerous than football, for even with his horns padded the Iberian fighting bull is like a half-ton Rottweiler. Things can go terribly wrong, and when that happens, as the saying goes, "that is when you find out who your real friends are".

Watch this short film and learn the basics of solidarity.


For a long time I have wondered who Obama thought he was fooling... and I have finally come to the conclusion that he is fooling himself.  He is simply afraid to fight and he covers it with talk. I find his lack of self-knowledge frightening.

If he really thinks he got a "deal" from his negotiation, that the Republican Congress is going to go quietly along with what Boehner agreed to, then his self-delusion is total. Read this from former Clinton adviser, morphed into ultra-right agitator a toute faire, Dick Morris.
It is the duty of every Republican Congressman to vote no on this terrible deal. It violates our campaign promises to the American people. We promised $100 billion of cuts and we delivered $38 billion ($62 billion on a twelve month basis). In the Republican House's first real test out of the box it has broken the promise over which it was elected.(...) And the lesson is this: We need to purify our party and purge it of the likes of John Boehner and all those Congressmen who vote for the budget sellout. The Tea Party must take the lead in this purifying fire. We must not let the RINOs win! Dick Morris
This was the ground where he should have made his stand. He had everything to gain by drawing a line in the sand there and declaring, "no pasarĂ¡n".

The president and his handlers seem to have forgotten what a near run thing the 2008 election was until Lehman Brothers went down, and how important the enthusiasm of his base was to to his final victory. This is the battle where he could have broken the Tea Party, split the Republicans and coasted to victory in 2012. What he has done is split the Democrats and alienate progressives and perhaps open himself up to a challenge from his own party or from an independent from the left who inherits the spirit for change that he so fraudulently invoked in 2008. DS

Wednesday, April 06, 2011

Repent! The end is near... or maybe not

Administration officials said that nearly 800,000 federal workers would probably be told to stop working if a deal was not reached in the next two days. Small business loans would stop. Tax returns filed on paper would not be processed. Government Web sites would go dark. And federal loan guarantees for new mortgages would become unavailable. Speaking to reporters on a morning conference call, a senior administration official said the cumulative impact of the shutdown “would have a significant impact on our economic momentum.” New York Times
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I have to admit that I still haven't quite gotten over seeing the Oscar winning documentary, "Inside Job", which is described by its director, Charles Ferguson as being about "the systemic corruption of the United States by the financial services industry and the consequences of that systemic corruption". I found myself especially depressed by the part America's most prestigious educational institutions have been playing in this corruption. This is as if America's mind itself were corrupted, with unimaginably negative consequences for the country.

A healthy intellectual community is vital, central, to any meaningful change.  For at bottom the battle to be fought politically must be first be fought intellectually and if America's intellectuals are corrupt, who is to fight it? As the Bible says, "Ye are the salt of the earth: but if the salt have lost his savour, wherewith shall it be salted? it is thenceforth good for nothing, but to be cast out, and to be trodden under foot of men."

What is the battle that has to be fought? Steve Walt has written a powerful paragraph that shows the outlines of it:
Since the mid-1960s, American conservatism has waged a relentless and successful campaign to convince U.S. voters that it is wasteful, foolish, and stupid to pay taxes to support domestic programs here at home, but it is our patriotic duty to pay taxes to support a military establishment that costs more than all other militaries put together and that is used not to defend American soil but to fight wars mostly on behalf of other people. In other words, Americans became convinced that it was wrong to spend tax revenues on things that would help their fellow citizens (like good schools, health care, roads, and bridges, high-speed rail, etc.), but it was perfectly OK to tax Americans (though of course not the richest Americans) and spend the money on foreign wars. And we bought it. Moreover, there doesn't seem to be an effective mechanism to force the president to actually face and confront the trade-offs between the money he spends on optional wars and the domestic programs that eventually have to be cut back home.  Stephen M. Walt
I confess I don't see any way of winning that battle as things stand today other than if the conservative movement simply collapses under the weight of its own stupidity, unfortunately damaging millions of people's lives and welfare in the process. I wonder how many dumb things anyone can do on borrowed money, for how long?

I am reminded of Marx's much ridiculed prediction that capitalism would eventually collapse under the weight of its internal contradictions.  Where he went wrong, in my humble opinion, was imagining that a revolution would hurry the process. I think he made that error out of the natural and very human desire to see things we would like to happen, happen when we are still alive to see them happen. 

Life is very short and a human being's power to imagine future utopias nearly infinite. How many millenarians over the centuries, have sold everything and then sat in a field waiting for the world to end?  Humans are always seeing signs that the end is near. Today we have the Rapture movement to prove that this waiting hopefully for the world to end is just part of the contradictory and tragic nature of our species. So, in my opinion Marx succumbed to this most human of traits, wishful thinking, when he predicted revolution bringing the end of capitalism and the instrument with which to effect the liberation of humanity. However, inevitably the world will end someday. Won't it?

On the other hand his analysis of the forces within the capitalist system, those which could cause its final collapse seem to me as rationally scientific as a seismologist discussing the San Andreas Fault.... On examining the fault scientists know that something terrible is bound to happen sometime, but the they don't know when, maybe tomorrow or maybe in 300 years. The idea of a revolution causing the collapse of capitalism is like thinking that if all the inhabitants of Los Angeles jumped up and down simultaneously, that this would cause the famous earthquake called, "the big one" to occur. But just because revolution has failed doesn't mean that capitalism is safe, because it can fail all on its own and there is no guarantee that anything better will automatically replace it.

The prime reason that the world's left(s?) appears so helpless today in the face of capitalism is that capitalism has become a truly international or better said, "a-national" movement. Today many corporations are even headquartered officially in offshore tax havens to avoid paying taxes. They are not controlled by any nation, while the left always, despite singing "The Internationale",  is inevitably attached to the states they inhabit and the only state where a revolution might actually change the whole world, The United States of America, is the state least likely to ever see one.

However just like the Rapturettes probably all we can do is wait and hope. DS