Tuesday, December 21, 2010

Doubling down on foolishness

Whenever I get depressed about the future of the USA, three reasons predominate.
  1. Our failure to maintain what we have built 
  2. Our absurd energy "policy" of pretending oil will exist forever 
  3. We are ruled by morons 
Actually, #3 is a bit imprecise and an insult to regular morons.  It requires time, money, and cultural commitment to produce a Sarah Palin, or a Mitch McConnell, or etc.  Yes, the tipping point has been reached and nobody wants to admit the system is broken and we are acting just like every imperialist when the cracks are too big to fix or hide.

My good friend has offered friendly amendments to my core complaints:
  1. The complete indifference to workers, the sick and children. 
  2. The total corruption of the institutions from Congress to health care. 
  3. The glorification of policeman and the constant fear factor of enemies around every corner. 
  4. The private prison industry and the gathering of information by ill-trained monkeys believing they are doing their patriotic duty. 
  5. The use of the Ivy League as the source of stockbrokers and company CEO's and presidents. 
"And the list goes on...primarily the hoarding of the wealth by the predators and the money wasted on keeping the empire intact. The worst for me will be the final tyrannization of the worker and the student once they are economically impotent."

Whose Side is the White House On? 
Monday, 12/6/2010 - 10:33 am by James K. Galbraith 
In a speech given on November 20, 2010 at the ADA Education Fund’s Post-election Conference at the Harvard Kennedy School, Galbraith asks who Obama is really working for, and demands that progressives seek leaders who will fight the good fight.
I want to raise a hard question — a question on which Americans are divided. It seems to me, though, we will get nowhere unless we realize where we are, what has actually happened, and what the future most likely holds.
Recovery begins with realism and there is nothing to be gained by kidding ourselves. On the topics that I know most about, the administration is beyond being a disappointment. It’s beyond inept, unprepared, weak, and ineffective. (my emphasis) Four and again two years ago, the people demanded change. As a candidate, the President promised change. In foreign policy and the core economic policies, he delivered continuity instead. That was true on Afghanistan and it was and is true in economic policy, especially in respect to the banks. What we got was George W. Bush’s policies without Bush’s toughness, without his in-your-face refusal to compromise prematurely. Without what he himself calls his understanding that you do not negotiate with yourself.
It’s a measure of where we are, I think, that at a meeting of Americans for Democratic Action, you find me comparing President Obama unfavorably to President George W. Bush.
In economic policy it was said earlier we have a lack of narrative. This afternoon, Gregory King asked why the people didn’t know that the Republican Party is uniformly and massively opposed to job programs, to state and local assistance, and to every legislative measure that might aid and promote economic recovery from the worst crisis and recession in modern times. Why is that that they didn’t know? Could it have anything to do with the fact that the White House didn’t tell them?
And why was that?
The president deprived himself of any chance to develop a narrative from the beginning by surrounding himself with holdover appointments from the Bush and even the Clinton administrations: Secretary Geithner, Chairman Bernanke, and, since we’re here at Harvard, I’ll call him by his highest title, President Summers. These men have no commitment to the base, no commitment to the Democratic Party as a whole, no particular commitment to Barack Obama, and none to the broad objective of national economic recovery that can be detected from their actions.
With this team the President also chose to cover up economic crime. Not only has the greatest wave of financial fraud in our history gone largely uninvestigated and unpunished, the government and this administration with its stress tests (which were fakes), its relaxation of accounting standards which permitted banks to hold toxic assets on their books at far higher prices than any investor would pay, with its failure to make criminal referrals where these were clearly warranted, with its continuation in office — sometimes in acting capacities — of some of the leading non-regulators of the earlier era, has continued an ongoing active complicity in financial fraud. And the perpetrators, of course, prospered as never before: reporting profits that they would not have been able to report under honest accounting standards and converting tax payer support into bonuses; while at the same time cutting back savagely on loans to businesses and individuals, and ramping up foreclosures, much of that accomplished with forged documents and perjured affidavits. more
And to further demonstrate Keynes' contention that self-described practical men are slaves to the ideas of dead economists, we have someone who actually provides a list of some of the worst economic ideas propagated by the neoliberals.  What is so amazing about this list is that it was published in Foreign Policy Magazine--possibly the MOST establishment rag in USA.  FP has been solidly neoliberal over the years so this MIGHT signal a turn in policy positions at the top.  (or not)
Five Zombie Economic Ideas That Refuse to Die
Two years after the financial crisis, the U.S. economy has steered clear of total disaster, with the Dow Jones industrial average currently near its pre-crash level. But the theories that caused it all are still out there, lurking in the shadows.
The global financial crisis that began with the collapse of the U.S. subprime mortgage market in 2007 ended by revealing that most of the financial enterprises that had dominated the global economy for decades were speculative ventures that were, if not insolvent, at least not creditworthy.
Much the same can be said of many of the economic ideas that guided policymakers in the decades leading up to the crisis. Economists who based their analysis on these ideas contributed to the mistakes that caused the crisis, failed to predict it or even recognize it when it was happening, and had nothing useful to offer as a policy response. If one thing seemed certain, it was that the dominance of the financial sector, as well as of the ideas that gave it such a central role in the economy, was dead for good.
Three years later, however, the banks and insurance companies bailed out on such a massive scale by governments (and ultimately the citizens who must pay higher taxes for reduced services) have returned, in zombie form. The same reanimation process has taken place in the realm of ideas. Theories, factual claims, and policy proposals that seemed dead and buried in the wake of the crisis are now clawing their way through the soft earth, ready to wreak havoc once again.
Five of these zombie ideas seem worthy of particular attention and, if possible, final burial. Together they form a package that may be called "market liberalism," or, more pejoratively "neoliberalism." Market liberalism dominated public policy for more than three decades, from the 1970s to the global financial crisis. Even now, it dominates the thinking of the policymakers called on to respond to its failures. The five ideas are:
The Great Moderation: the idea that the period beginning in 1985 was one of unparalleled macroeconomic stability that could be expected to endure indefinitely.
The Efficient Markets Hypothesis: the idea that the prices generated by financial markets represent the best possible estimate of the value of any investment. (In the version most relevant to public policy, the efficient markets hypothesis states that it is impossible to outperform market valuations on the basis of any public information.)
Dynamic Stochastic General Equilibrium (DSGE): the idea that macroeconomic analysis should not be concerned with observable realities like booms and slumps, but with the theoretical consequences of optimizing behavior by perfectly rational (or almost perfectly rational) consumers, firms, and workers.
The Trickle-Down Hypothesis: the idea that policies that benefit the wealthy will ultimately help everybody.
Privatization: the idea that nearly any function now undertaken by government could be done better by private firms. more


  1. If you want to get more depressed, here are a few links:


    Maybe a little too depressing...

  2. Actually, the stuff Newberry writes about doesn't depress me so much anymore. I have given up on the so-called "left" in the country since about 1970 and I never voted for Obama so he cannot disappoint me-I never expected anything.

    No, my depressions these days are new. For example, I find it very sad that a lifelong habit of recommending books has been a total waste of time because I literally know only one person who can actually understand the sort of writing that was common not so long ago. My supposedly educated friends seem only able to understand anything if its on video or the radio.

    Etc. Of course it's winter and dark in Minnesota. I have a snowbank at the end of my sidewalk that is over 8 feet high and winter only officially started yesterday. So, I may be depressed for regular reasons.

  3. Well, if it helps any, I have a whole folder on my computer of Veblen's writings that I should be getting into soon--mostly based on your recommendations on this site. I'm working on Tocqueville's "Democracy in America" right now, so once I'm done with that I'll start on Veblen.

    And I understand the depression about communicating ideas with others. There's maybe one or two other people I know who can talk about these things with any lucidity--and even then, they're not familiar with many ideas outside of those which are currently in the mainstream, so I find it difficult to keep it from devolving into a lecture. The rest either don't care or subscribe to a Randian or a neo-liberal ideology... both of which present barriers that are very tough to break through given how heavily propagandized they are.

    I actually envy you that amount of snow. I spent 5 years in upstate New York during college and wish I could go back. But my current location in DC and Northern Virginia (the dark heart of the beltway) will have to do for now.

  4. Yeah, it helps to know you are going to try Veblen.

    It's pretty tough sledding at first but reading Veblen is its own reward. Every page you read represents just another set of problems you won't have to solve on your own.

  5. I'll manage :)

    After him I'm going to try some Immanuel Wallerstein, with his World Systems Theory. Then maybe revisit Jane Jacobs. By the way, have you read her book "Systems of Survival?" From what I remember of it, it seemed to discuss something much like the predator/producer dichotomy.

  6. I most certainly did NOT invent the predator / producer dichotomy. But when I read Veblen's distinctions between business and industry, those words just jumped into my head. Pretty soon I discover that concept has been in circulation since at least 1873 out here on the prairie.

    Hey, that's the whole point of reading--it means you are not always re-inventing the wheel.