Monday, November 30, 2015

On selling electric cars

The following is from the New York Times.  They seem to think the reason more electrics cars aren't being sold is that car dealers don't want to sell them.  Having known car dealers since childhood (a neighbor sold Fords), I have little problem believing these stories because electric cars would hardly be the first that died on dealer's floors for lack of sales enthusiasm.  In 1993, Ford shipped their latest best attempt at a world car.  They had spent over $6billion on this project that included two new blank sheet engines, new transmissions, and new production lines in North America and Europe.

While the new car line was a hit in Europe as the Mondeo, the North American dealers HATED the Ford Contour.  It was almost 30% more expensive than the car it replaced (Tempo), it had all those "pretentious" Euro touches, and it was smaller than the competition—especially the rear seat which was a big factor in a car line aimed at families.  Ford wanted this car to succeed for a big reason besides the $6billion—the four cylinder version got 38 mpg.  Sell a bunch of those Contours and the corporate fuel average would go up.  They spent a pile on advertising.  In the end, nothing worked.  Eventually Ford would almost give most of them away to car rental fleets.  So while Ford was having great trouble selling fuel-efficient cars, they could barely keep up with orders for their overpriced SUVs.  I was quite enthused about Ford's big international project so I went to two different dealers looking to test drive a Contour.  In both cases they had what I was looking for but it wasn't on the showroom floor and the sales staff I talked with both actually asked me, "Why would you want one of those?"

I can easily imagine that buying an electric car from your standard automotive superstore would be my experience with the Contour times 10.  Because buying electric involves at least a little lifestyle adjustment.  Even if you have a private garage you'll still probably have to rewire for 240.  If you already have regular habits you probably don't need help remembering to plug in, but if your car is all electric, not having a full charge can lead to expensive and scary situations.  So someone selling electric cars not only needs extensive product knowledge, they need to know how to help customers figure out the lifestyle changes.

So far, electric cars haven't done well for real reasons.  They haven't been very good, they don't have much range, or they are crazy-expensive.  And lately lower gasoline prices have pretty much destroyed the economic rationale.  But the end of the internal combustion engine is in MANY crosshairs.  So eventually, someone will learn how to sell electric—perhaps by dealerships that sell nothing but electric.

Thursday, November 26, 2015

Växjö Sweden—Europe's greenest city?

Växjö Sweden decided in 1991 to become a fossil-fuel-free city.  I shouldn't even speculate why a small city of 100,000 in one of the historically poorer parts of Sweden decided to do what few other municipalities would even try because I wasn't there.  But since my maternal grandmother grew up near there, I am going to guess it had something to do with the desire to stay warm without going broke doing it.

Växjö is located in the rocky state of Småland in SE Sweden.  The farmland is so miserable that most of the Smålanders who left for North America were just hoping for a better diet.  But because the farmland is poor, the folks who stayed behind survived and prospered by becoming unusually inventive in a country where inventors are treated with respect.  The Swedish crystal business was in Småland as is the headquarters of IKEA.  These are people who can organize clever building projects.

Even so, they decided to chase the fossil-free goal 25 years ago and they are not done.  They have had to cope with the headaches of prototype-level technology.  There are probably already decisions they would have made differently with 25 years of hindsight.

This is HARD to do.  Anyone who seriously believes that merely signing some glorious statement of good intentions is all that is necessary for good outcomes should go look at those who have actually tried to pull it off.  Notice that these difficulties surfaced in a political environment that is essentially corruption-free.  And this target was agreed to by all the political parties (8).  And it was STILL hard!

Wednesday, November 25, 2015

Chinese economics without spectacular growth?

The Chinese economy continues to amaze and confuse.  They are discovering that double-digit growth is an historical rarity and that hoping the rest of the world can absorb their excess industrial capacity is a dream. The only alternative to being the world's workshop is to have an economy where Chinese workers can buy most of their industrial output.  What they really need is their version of Henry Ford.

Worse, China is discovering that elbowing your way to the top of the global production heap by paying slave wages and cutting environmental corners is a whole lot easier than growing an economy where you have to invent the next big thing.  Worse, they are discovering that environmental concerns are not some irrelevant first-world problem as the great cities of China disappear in clouds of choking smog.

Throw into this mix the problem that China has a large predator class trying to make a killing in real estate and other forms of speculation.  Gear economic policy to make the thieves happy and the real economy suffers.

Tuesday, November 24, 2015

The Big Short has been made into a movie

Tony and I are big fans of Michael Lewis.  Personally, I don't think of him as especially profound when it comes to the big matters of macroeconomics, but he makes a huge contribution to our understanding of how economics is played out in the real world.  If you believe that the folks who are moving large sums of money around and making major impacts on the global economy don't really know what they are doing, Lewis will provide you with ample and detailed evidence for why such a belief is perfectly justified.

Not surprisingly, his book detailing the story of what created the catastrophes of 2007-8—which he called The Big Short—is still one of the best.  Tony did a huge review of it in a June 1, 2011 post.  Fortunately, a movie has been made of The Big Short that has won the approval of Lewis himself.  Considering how many great books have been turned into truly wretched movies that infuriated the authors, this is no small accomplishment.  If this movie turns into the definitive description of the Wall Street corruption / stupidity that spawned the economic disaster that still negatively impacts billions of people to this day, then it may become one of the more important movies of all time.

Monday, November 23, 2015

TPP—even worse than expected

The TPP covers 5,554 pages of dense legalese which probably means there are at least that many really bad ideas contained therein.  As far as I am concerned, however, the biggest problem of such agreements are twofold:
  • The real economy has many elements.  Trade agreements tend to focus on the merchandising side to the exclusion of almost everything else—most especially manufacturing.  Here in USA, this sort of unbalanced approach has led to an almost complete de-industrialization while at the same time, has caused retailing space to skyrocket to over 85 square ft. per capita.  The structural problems this unbalanced approach has caused to the economy is almost incalculable. 
  • Agreements like TPP essentially outlaw any attempts citizens might want to try to bring some balance to the public sphere including local-content laws, environmental controls, and most especially public banking.  Private finance will NEVER create the funds necessary to address big problems like climate change.  As a result, agreements like TPP will make meaningful attempts to correct the problems that lead to climate change legally and structurally impossible.
As a result, stopping TPP is literally a matter of life and death.

Thursday, November 19, 2015

We Want Our Markka Back!

The thing that Finland is most famous for is their schools.  And with good reason.  Their splendid performance in internationally administered achievements tests is easily verified by visiting the place.  Those educated people not only did well in school, they keep learning all their lives.

So the Finns demonstrate what is possible when it comes to democratic self-government.  If they get something wrong, there are usually pretty good reasons.  And easily the most disastrous public choices they ever made were their decisions to join the EU and adopt the Euro.  I asked one of those scary-smart Finns a few years back why they did something so certain to mess up their lives.  Well, he was not about to agree with assessment that the EU was a disaster waiting to happen.
  • The educated class were nearly unanimous in agreeing that joining EU was an opportunity not to be missed.  Add into the mix the support of the big exporters like Nokia and almost no one dared to question the wisdom of EU membership.
  • Finland still nurses some old wounds and chief among them is the very real lack of respect she feels she has earned.  Hardly anyone can find them on a map.  It was the late 19th century before the Finnish language was used at their national university.  The phenomenal management of post WW II relations with USSR was turned into the insult "Finlandization."  Nokia was mistaken for being Japanese by almost everyone.  Etc.  Joining the EU was designed to fix that problem because Finland was being asked to join one of the more exclusive clubs in the world.  
  • Finland's intellectual classes had no problem with the neoliberal assumptions built into the Euro.  The left in Europe is notoriously weak on monetary policy and the right was pretty enthusiastic about the tight monetary constraints.  Why should we object to the monetary constraints? they asked.  Finland is already managed this conservatively.  I was informed that the Finnish Central Bank had been closed and their lushly appointed building was now being used by the University of Helsinki.  What could go wrong?
Well, actually quite a bit.  Finland now finds her economy in deep trouble.  Nokia is in ruins—rolled over by the smartphone revolution.  The frugal Finns have been forced to cosign for the debts of places like Greece.  And then the most unnecessary disaster—the Eurozone decision to start an economic war on Russia.  Without trade with Russia, Finland's economy is crippled.

I'd like to say I predicted all this trouble but I did not.  I merely pointed out that any currency designed by a University of Chicago extremist like the Euro, had a truly gruesome track record.  Neoliberalism would fail because it was mathematically insane.  The rest of those disasters were essentially random.  And I simply cannot believe that those Finns won't be trying to maintain their commercial ties with Russia.

Wednesday, November 18, 2015

Paul Craig Roberts on re-enserfment of west

Living through the 1980s de-industrialization of USA led me to the conclusion that what I was witnessing was a coordinated attack on the productive middle of the nation.  This was probably the central economic conclusion of Elegant Technology.  Much of USA industrialization was located in the midwest so the Predatory attacks were directed at the geographical middle as well as the economic middle classes.  At one time, this middle looked at the Wall Street moneychangers and recalled the 19th-century Progressives who referred to what is now called flyover territory as the Internal Empire.

The internal empire is where I grew up so I got to know some of the movers and shakers of small-town middle America.  In the town where I graduated from high school, the local high-tech enterprise was this small engineering / manufacturing company that made some of the vital bits necessary for the nuclear power industry.  In fact, they had parts in every nuclear power plant and research facility outside of the Warsaw Pact.  One of the senior management had a son who was fighting the same draft board in 1969-70 as I.  So I got to know him pretty well.  When he got his Ph.D. in electrical engineering in 1944, he was the only doctoral candidate in E.E. that M.I.T. graduated that year.

Anyone watching The Big Bang Theory might conclude that M.I.T. engineers are these Wolowitz-level  buffoons.  My friend was many things but buffoon was certainly not one of them.  With his sons, he built an 8" reflector telescope, a serious ham radio, and a Thistle (a sporty 17' sailboat.)  He built a harpsichord for his wife.  He owned a 38' Alden Challenger that while he was in charge of maintenance was always shipshape.  I helped him launch it one spring and the main chore was stepping the mast.  As we were snugging up the stays, he appeared with this beautiful instrument that could determine the tension on every stay.  When we were done, it was put away in this beautiful teak box lined with red velvet.  This was how he lived his life.  He was the sort of person who built this nation and it is their accomplishments that were destroyed in the great de-industrialization.  I drove by his plant not long ago—it is empty and falling down.  So when I call the banksters vandals, I am not exaggerating one tiny little bit.

Tuesday, November 17, 2015

Climate change is a demand-side problem

Today we examine two approaches to the Paris climate debate.  One points out the inadequacy of the carbon targets being talked about for Paris.  The other cites the massive costs for doing nothing.  Both suggest the futility of such gatherings.

Regular readers understand I think it insane to fly in a bunch of delegates from around the world (at significant expense to the atmosphere) to attempt to find an agreement on targets that governments will pinky-swear to meet by methods still to be determined.  It is insane.  If these people were at ALL serious about the climate-change problem, the FIRST thing they would do is cancel these goofy conferences to show that they intend to at least address their OWN carbon footprints.

But the problem is worse than even that madness.  The environmental bureaucrats on their way to Paris have a serious flaw in their reasoning—they think they can fix the problem on the supply side.  Beat up on the oil companies.  Stop building pipelines.  Tax the shit out of hydrocarbons so people will think harder about their energy-buying decisions.  You know the drill.  But when it comes to addressing the demand side, their suggestions are usually worse than lame.  Of course, they're lame—we can't have carbon considerations change things like big climate conferences or Al Gore flying around in a Gulfstream.

It's kind of like the thinking that gave us the war on drugs.  Use military methods to stop the supply but do nothing to dry up demand (assuming any such thing is possible.)  One might argue that there is essentially an infinite demand for liquid fossil fuels just like there seems to be an unlimited demand for feel-good drugs.  One big difference, however.  If we cannot dry up demand for fossil fuels through intensive infrastructure redesign, we will most certainly destroy the biosphere for human habitation.

Monday, November 16, 2015

Military Keynesianism is the lamest variant

This story about military procurement depresses the hell out of me
  • The free time of my youth was spent in the passionate pursuit of all things aircraft.  I had several relatives who worked for Boeing so I had a tribal rooting interest.  The 50s and 60s were the golden years of USA aerospace.  When I was young, the fact that USA aerospace was #1 was a subject beyond reasonable debate.  So it pains me to admit that my favorite high-performance airplane these days is the Sukhoi Su-35 (of course, my favorite when I was in high school was the F-104 so what do I know?)
  • As someone who believes in the necessity for government spending on basic research, I hate it when such spending stops producing results and is instead squandered on various sorts of corruption.  A society can get into a lot of bad habits when the principles of a building culture are lost.  I just hope they haven't been lost forever.
It is tempting to discuss government spending in terms of those projects that were so successful.  Without it, there would be no cellphones, or GPS, or mass-produced antibiotics, or personal computers, etc.  But the F-35 is a perfect example of why reasonable people often wonder if governments can do ANYTHING right.

Thursday, November 12, 2015

Portugal and their new left government

Well, it looks like the Portuguese left is going to try to gain enough power to vote out the austerity measures passed by the previous government.  If this sounds like Greece round 2, it probably is—including the blackmail by the creditor classes.

That is not to say that such gestures are futile.  Even Greece's was not.  Ultimately, the goal must be to seize power from the club of central bankers and return it to the citizens.  For this to succeed, a lot of players will have to get on board because the current central banking system is VERY entrenched.

What is more, the goal probably isn't to put the central banks out of business (the day that happened something very like a central bank would have to be erected in its place), the goal is to make them enact policies the lead to job creation and a building of the necessary green infrastructure.  And widespread criticism might just be enough to alter the policies of the current system.

We know this is possible because it happened before.  Marriner Eccles, FDR's central banker, was from Utah.  When he was growing up, he had to have heard all the conflicting monetary theories that swirled around the West.  What made him so effective was that he was able to incorporate the growth component of those Western monetary theories into the structure of the Fed.

If the Portuguese concentrate on asking for what they want within the terms of the Central Banking establishment, they will soon pick up political allies.  The central bankers make a big deal out their "independence."  And under normal circumstances, they are granted that independence.  But these are not normal circumstances.  By embracing neoliberalism, the central banks have triggered catastrophic failure to the real economy.  Guys, if you keep screwing up, you're going to lose a significant part of your "independence."

Wednesday, November 11, 2015

Russia defends Christianity

Anyone who believes that religion is just a cushy set-up that allows some corrupt charlatans the opportunity to fleece the rubes, has a valid point because this is often true—especially here in USA.  Yet as disgusting as may be to watch a televangelist take money from widows who are living on Social Security, this is, believe it or not, a VAST improvement over some of the social arrangements that have historically included religious practices.

My background is Lutheran and the realization that religious people like my parents had a long history of messing with government was very slow in coming.  I remember the first time I really looked at a chess set and wondered what the bishop was doing on the back row next to the king and queen because my parents didn't hang out with anyone who was in any way royalty.  And then I spent some time in Scandinavia and realized that even though these were countries where only a tiny number attended devout observances, the Lutheran Church still had considerable clout.  Lutherans with political power—amazing.

One of the perks of having a state church is that it is possible to hire scholars to explain its actions to the outside world.  And since these positions pay fairly well, the scholars tend to be first rate.  Today's piece was written by a Danish scholar who spends her time telling the tales of woe that have befallen Christians in the middle east.  This is also an eye-opener because you could probably count on the fingers of one hand the citizens of USA who even KNOW that there are Christians in places like Iraq.  (Of course, thanks to our bungling, there aren't all that many Christians left in Iraq.)

And so, Putin of Russia, who seems to be a devout Orthodox Christian, has made the rescue of ME Christians part of his mission in Syria.  This is confusing the heck out of the dime-store "Christians" like Mike Huckabee or Ted Cruz.  After all, the USA state propaganda long demonized the USSR for their godlessness.  Now Russia has become too religious for their meager abilities to understand.

Tuesday, November 10, 2015

The costs of economic hopelessness

There are people who actually believe that somehow the USA economy is growing so fast, the Fed will soon have to cool things off by raising interest rates.  That's what comes of creating economic statistics so brazenly phony, they describe almost nothing.  And possibly the worst are those goofy unemployment statistics.  Everyone knows that there are almost no jobs that pay a living wage anymore, and that anyone who once had a decent job can only look back on that job and sigh.

The victims of the prolonged economic stagnation that I know are usually highly educated, crazy hard-working, and often also white and male—the supposed blessed members of society.  They have had their jobs destroyed by downsizing and off-shoring.  Many have tried to become self-employed—which usually is just a term for unemployed with a fancy business card and a website.  So it doesn't take a lot to imagine the plight of those who find themselves further down the economic ladder.

So now, instead of bogus economic statistics that ignore this massive economic distress, the "invisible" army of un and underemployed is now showing up in health and mortality statistics.  The picture is not pretty.  Recently, I asked someone what they had planned for retirement. "Suicide" was the answer.  He wasn't kidding.

Monday, November 9, 2015

Paris COP 21—courting irrelevance

Let's get something perfectly clear.  I doesn't matter one little bit what CO2 targets the various environmental bureaucrats agree to in Paris IF there isn't a serious plan to finance the changes necessary to meet those targets.  NONE!  So it is even less important that the plans they are attempting to pass in Paris aren't even enough to theoretically make a difference.  Some suggestions:
  • Instead of these "30% reduction by 2020"-type targets, the approach should be 100% reduction as soon as possible and get on with an all-fronts program.  Fighting over some numbers is pretty damn juvenile when you think about it.
  • The fossil-fuel industry should stop worrying about its "future."  Considering how complex it will be to eliminate the need for those fuels, they will be hard-pressed to supply the (hopefully) declining demand.  (Of course, considering how far ahead of the curve oil company scientists were on the science of climate change, they probably know this too.)  Besides, even if we stop burning petroleum, we will still need the stuff as lubricants and feedstocks.
  • The article below is from The Guardian.  The Brits are good at showing concern but are very unlikely to contribute to the production of the pieces necessary to build the new green society.  Their industrialization was exposed as second-rate at roughly the time Titanic sank (1912) and it is unlikely to recover.  But they could do the planet a HUGE favor—stop the criminality of the City.  We cannot build a green world with criminals running the economy.  Fix that problem and we will forgive the Brits if they never invent better solar cells or storage devices.

Thursday, November 5, 2015

Paul Craig Roberts on jobs offshoring

Those of us who worked hard to defeat NAFTA had moments when would look at each other and wonder, "Who can possibly be for this thing because it is really hard to see who benefits?"  In fact we could not think of anyone who would benefit.

There were others who agreed with us.  H. Ross Perot, a guy who made a significant fortune creating the computer systems so the government could administer Medicare, called NAFTA "the great sucking sound" as it threaten to destroy the real economy.  So you didn't have to be an assembly-line worker from Ohio making parts for GM to know that your job would be threatened.  You could be a loud, jug-eared, multi-millionaire from Texas and predict the damage.

Paul Craig Roberts was a high treasury department official in the Reagan administration and even he understood the fraudulent and absurd nature of the free-trade argument.  Anyone with a minimal awareness of the history of USA industrialization could see the anti-industrial nature of the "Free" Marketeers.

And yet, 23 years after the passage of NAFTA and overwhelming evidence that the free traitors were completely wrong, they still keep plunging forward with their specious arguments.  We now have ample evidence that indeed, there are winners from these policies.  It's just that they number less than 1% of the population.  Even with all this evidence, there is a pretty good chance that the latest iteration of "free trade," the TPP, will pass.

Perhaps they need Tony to explain how the American System worked.

As for me, the reason I detest the "free trade" thinking that caused almost incalculable damage to USA industrialization, is that building a green sustainable society requires incredible expertise in building the very difficult.  Deindustrialization sold off this expertise for pennies on the dollar and considering the state of our education systems including apprenticeships, rebuilding that expertise will be expensive and time-consuming.

Wednesday, November 4, 2015

DW on climate change and the possibilities for Paris

The best part about getting environmental news from the German press is that for the most part, Germans are environmentalists no matter what party they belong to.  CDU Angela Merkel leads a very right-wing government yet her environmental record easily shames Al Gore's.  The result is that environmental reporting is not beholden to, or afraid of, anyone's political agenda.  The other interesting consideration is that because environmental matters are beyond political controversy, the environmental actions they have taken include massive investments in new hardware.

Deutsche Welle's take on the possibility for meaningful action at the COP 21 conference in Paris is somewhat pessimistic.  Their complaint mirrors mine—when are people going to figure out just how big this problem is? (those are my bold italics below)

The USA press is worse than pathetic.  It has no courage in the face of political controversy.  It cannot explain how to read scientific data.  But mostly, it doesn't give a shit.  Cover a meeting in Paris dealing with a complicated subject?  Are you kidding?—there's a Kardashian posing nude somewhere.

Tuesday, November 3, 2015

$100 trillion (again) Ambrose Evans-Pritchard gets on board

As someone who has been pitching the idea (since the 1980s) that a serious effort for getting out of the practice of using fire to power the various societies that humans have constructed would cost at least $100 trillion, I am always delighted when someone else comes to a similar conclusion.  This time it is Ambrose Evans-Pritchard at the Telegraph.  As he usually reflects the establishment thinking of The City, this is big news.

The Paris summit on climate change will, according to this article, pledge the signatories to a $13.5 trillion expenditure over the next 15 years—and already people are dismissing this figure as peanuts (I agree).  But at least people are talking trillions—not merely millions or billions.  This is progress.  Now if the world's central bankers would pledge to fund such efforts, at least one of my missions in life will have been accomplished.

Sunday, November 1, 2015

Michael Hudson on the American School of Political Economy

Too many liberals and progressives are stunningly ignorant of the war of ideas and ideologies hidden behind the staid mask of the academic discipline of economics. A common assumption is that the corporatist authoritarianism we must deal with today is a direct result of the structure of government established by the Constitution. Corporatism and exploitative financial capitalism were "baked into the cake," according to these people. A fairly typical statement: "The founders were focused almost exclusively on maintaining the status quo of property relations, which they already dominated."

I view the issue entirely differently: ever since the surrender of Cornwallis, the American republic has been under unceasing assault by its oligarchical enemies. The question to ask is: how was the American republic subverted and corrupted from within to erode its natural enmity to oligarchs and concentrations of  power - economic as well as political?

The past few years, Dr. Michael Hudson has provided a number of articles and interviews which comprise important parts of this story. He has explained how the economics profession protects the vested interests of rentier and finance capitalism by completely ignoring the concept of economic rent seeking behavior (i.e., pretending that all income is fairly earned, rather than recognizing that some income, such as from usury or speculation, is actually unearned and often quite harmful to the economy) here, and here. Last week, in How the U.S. Avoided Chronic Deflation by Relinquishing Monetary Control to Wall Street, Hudson discussed how the banksters of Wall Street shifted control over monetary policy from the Treasury Department, to the Federal Reserve. The post is important because it clashes with so much conventional wisdom; for example, Hudson explains that government surpluses drain the economy of liquidity, causing financial crashes. It is remarkable how much ground Hudson covers, including how the need to finance the Civil War led to the issuance of fiat currency (the "greenbacks" which the financial powers hated) and the National Bank Act which reestablished a national banking system.

What I think is particularly important is Hudson's brief discussion of the nineteenth century conflict over economic and monetary policies between the Democratic Party, and the Whigs, then later the new Republican Party. (Note that the Republican Party today has entirely repudiated the noble economic ideas of its founding, and now promotes and defends policies that early Republicans such as Abraham Lincoln devoted their lives to defeating.)

"Southern plantation owners," Hudson writes, "sought to support their slaves at a low enough cost to maintain the South’s dominant export position in cotton and tobacco. Creditors on the Northeast Seaboard also supported deflation. The result was a deflationary agrarianism aimed at countering the growth of northern industrial power."

Wow. These three sentences point to an issue of political economy on which the world literally turns. Unfortunately, it is an issue not many people are even aware of, because of how the economics profession has been used to defend the vested interests of rentier and finance capitalism. And it is an issue on which the left is dangerously vulnerable if it continues to believe that the establishment of the American republic, and the adoption of the Constitution, was merely an exercise in preserving the status quo, rather than the end result of the political and scientific Enlightenment finally defeating feudalism. In their 1937 book, The Power to Govern: The Constitution -- Then and Now, Walton H. Hamilton and Douglass Adair wrote,
The medieval world was, to the souls which tarried in it, a place of order. From pope to peasant every man had his place in the great Christian commonwealth, and was expected to live in accordance with the station in life to which God had appointed him. A hierarchy—ecclesiastic and feudal—offered regimentation to a placid society disturbed by the doughty deeds of a small privileged group…. But the intrusion of new devices, new ideas, and new values was too much for the ancient regime of fief and field, of vassal and lord, of mitre and surplice…. A newness had come into every domain of life to release creative energy—and to touch off conflict. A dogmatic learning had to make place for newly discovered facts. A revealed religion had to patch up a truce with individual freedom. Conduct directed by novel circumstance could no longer accord with accepted standards…. throughout Christendom the rightfulness of authority and the duty of obedience were unquestioned. This impulse toward authoritative control—an aspect of the common sense of the times—marked church and feudal system; it was taken for granted in the "self-government" of manor, guild, and voluntary association…. A struggle over policy was everywhere in evidence. It was concerned, not with the power of regulation—which was taken for granted—but with the objectives it should be made to serve. The gentry of England had once been of the land. The older foundations of public policy, far more deeply rooted in usage than in statute, had been rural. A general belief that land alone is the source of all wealth made common sense a defense of the agricultural interest.
Following this tumult of the passage from feudalism and ecclesiastical authoritarianism to the formation of the American republic and its Constitutional mandate to promote the General Welfare, three major economic philosophies were developed in the nineteenth century, and contended for domination. Dr. Hudson provides a spectacularly useful summary in a table in his 2010 book America’s Protectionist Takeoff: The Neglected American School of Political Economy:  (click table to enlarge).

Both British free market / free trade doctrine, and Marxism, are disastrous economic doctrines to pursue, and both are opposed by the one alternative that simply is not taught in USA economics departments. Nor, apparently, in History departments. Consider how ingrained in Americans’ minds is the idea of Manifest Destiny, and how much Dr. Hudson’s account below clashes with the accepted understanding of Manifest Destiny. As Hudson explains in his book:
….economic historians have treated ... the American School [as if it] never existed. The modern abhorrence of protectionism expunged from history the logic that guided U.S. industrialization under Republican leadership from 1860 through 1912. The American School’s trenchant critique of free trade and the theorizing of Ricardo, Malthus and other British writers caused a cognitive dissonance in the minds of professors eager to promote a view of American history driven by an inexorable drive for free trade and westward expansion as Manifest Destiny.

Actually, westward expansion was a Democratic Party policy to extend slavery and plantation agriculture. In an epoch when protective tariffs were the principal source of revenue for the federal government (that is, until the 16th Amendment created the federal income tax in 1913) the South based its cotton and tobacco production on foreign markets, seeking to feed its slaves with low-priced grain from the West. The Whig and Republican industrial program called for concentrating industry in the Eastern urban centers, whose population would be fed by farms that would find their major market at home, not abroad. But industrialization threatened to bid up food prices, eroding the competitiveness of plantation agriculture. This prompted the Democratic Party to urge free trade, small government and credit aimed mainly at export financing not industry. The slave states in particular decried industrialization and urbanization as culturally decadent rather than the key to economic progress. At issue was the kind of cultural, social and political structure America would develop and national trade policy would act to bring about.

….Indeed, what became known under the portmanteau term “tariff debate” was more accurately a debate as to the dynamics of economic growth itself. Its major issue was whether the nation should remain primarily agricultural or industrialize, whether the South should become the focal point of a westwards-expanding slave system, or the Northeastern and Middle Atlantic states become the focal point of an increasingly industrial national economy.
For those wondering: the shift of the Republican Party away from its American School policies began in the 1870s, as "hard money" advocates, railroad magnates, and trust builders such as Morgan literally bought increasing control of the Party - much as corporatist authoritarians are buying control of both parties today in the wake of the disastrous Citizens United Supreme Court decision. Rentier and financier control of the Republican Party was fully congealed by the 1896 election of McKinley (or, more accurately, Mark Hannah's management of McKinley's1896 election). Lawrence Goodwyn provided the best analysis of how this occurred, along with how the 1896 election also destroyed the populist movement, in Chapter 8 of his book The Populist Moment: A Short History of the Agrarian Revolt in America.

The grip of rentiers and banksters on the nation's political system was shattered by the Depression - and the exigencies of rebuilding industrial capacity to provide the combat material of World War 2. That was the basis of the historic opportunity Franklin Roosevelt seized to transform the political system in the United States by fully aligning the Democratic Party with the hopes and aspirations - and anger - of working and middle class Americans. This was, be it noted, the path to a full repudiation of what the Democratic Party had been, and done, during the Civil War and Reconstruction; a repudiation realized in the form of John Kennedy's and Lyndon Johnson's Civil Rights Act of 1964. Which, under the guidance of Nixon's Southern Strategy, further propelled the Republican Party on its rightward lurch toward "free market" theocratic authoritarianism. Basically, a return to feudalism: conservatives conserving tradition and heritage, indeed!

In Contrast to Roosevelt, Barack Obama has proven unwilling to seize the historical opportunity presented by the Great Recession to once again transform the political system in the United States by fully aligning the Democratic Party with the hopes, aspirations, and anger of working and middle class Americans. As a few predicted back in 2009 and 2010, Obama's refusal to repudiate neo-liberalism and its policies of allowing  rentiers and financiers to command the controlling heights of the economy, has led to a general discrediting of the left in USA, and allowed the right to hijack the populist anger against the machinations and greed of the coporatists and banksters. (So we are treated to the spectacles of Chris Christie boasting the he actually prosecuted miscreant pharmaceutical executives, and Carly Fiorina, Rand Paul and other Republican candidates expressing disgust that the too big to fail banks have become even bigger under Obama).  The resurgence of the right is discussed in Thomas Franks’ recent brilliant book, Pity the Billionaire: The Hard-Times Swindle and the Unlikely Comeback of the Right). But even Franks cannot identify the remedy, because he is apparently not familiar with the American School of political economy.

And that is the core of the problem with Obama, and Hillary Clinton, and many progressives and liberals. Is it actual malicious intent on their part to allow and enable the continued banksters' dictatorship, or "dictatorship of the properteriat" as Stirling Newberry memorably phrased it a few years ago? Or is just that they were never taught that there is an American School of political economy, an alternative to both Marxism and British free trade / free market neo-liberal economics?