Choosing the worst possible alternatives

One of the least pleasant experiences in life is to run into a "true believer"—someone who believes something so strongly that no amount of good evidence will get them to change their minds.  Such people are pretty common in religious circles but it turns out, religious crackpots are probably the least of our worries.  I mean, if you should ever stumble on two people debating whether physical body and blood of Jesus are present during Holy Communion or whether that presence is merely symbolic, chances are you will be mostly amused because the outcome means so little.  Well, yes, there probably have been historical examples where people were burned at the stake for getting this argument "wrong" but that doesn't much happen anymore.

On the other hand, the theological debates that swirl around a subject such as "Is fighting inflation the only concern of central banking?" have massive impacts on the rest of us—how we live, how we are employed, how we educate our children, etc. etc.  And these fierce debates continue until this day.  Witness the fight of the true believers over the monetary crises in Europe.

De-industrialization continues

The closure of the Ford assembly plant in St. Paul provokes a bunch of memories for me.  It was the first place I ever saw cars being made.  My father had discovered by the time I was in second grade that his sons LOVED industrial tours and even better, they were usually free.  Minnesota never did have all that much heavy industry—we are more about transportation, food processing and recently, medical equipment.  But we had the Ford Plant and what I saw so impressed me, I can still close my eyes and see 1956 car and station wagon bodies coming down to meet the awaiting chassis.  And to this day, I will maintain that building vehicles is still the most difficult thing humans do.

Henry Ford insisted that his facilities be located next to water (a known operating preference of his) and the St. Paul plant is no exception.  It is located atop the Mississippi bluffs near a small dam.  The promise of cheap hydropower was the chief reason why in 1924 Henry Ford agreed to build a plant in St. Paul. The dam was initially completed in 1917, making it one of the oldest on the river.  So this plant now sits not far from some of the prime residential real estate in St. Paul, but because it is a screwdriver facility, it has been an astonishing good neighbor over the years.

Why today's Ford management is closing a plant that is trouble-free and has made them a TON of money over the years is anyone's guess.  All I know is that they could not build such a plant today.  Can you imagine the howls of protest if someone were to suggest putting a vehicle assemble plant in the middle of a very chic neighborhood on one of the prettiest pieces of real estate around?

Saturday toons 29 OCTOBER 11

#OWS certainly brings out the best in the cartoonist's art.

#OWS's most important demand

I can't help myself—I am utterly fascinated by the #OWS story.  The creativity and resilience of those people who actually go down to the various protests is beyond magnificent.  And goodness knows I would like to help—without getting in the way, sounding patronizing, or any of the other manifestations of old-fartiness.

But if I could stand up in front of the crowd in Zuccotti Park, it would be to say the following:

People keep asking to see your agenda.  And I LOVE your answer so far which seems to be "Go away, we're working on one."  The reason this answer is perfect is because IF you were to publish a list of demands—even one as good as Matt Taibbi's—the critics would be all over it.  I have a list, too, that I think is spectacularly well thought out but even I don't think the time has come to get that specific. 

But I DO think there is one demand that is so obvious that not only will the vast majority of the 99% of all political persuasions agree to it, but even the paid critics will have difficulty attacking it.  Are you ready? 

No more bailouts of the financial system. 

The reason I think this should be the first demand is simple—refusing to bail out the banksters is the only way their power can be checked effectively.  They may seem powerful because they own all the media, the politicians, the schools of economics, and the pundit classes, but they have one EXTREME vulnerability—their casino is bankrupt and very soon, they are going to need another blood-money transfusion to keep their evil game going.  This prediction can be made with mathematical certainty.  And the moment the long-suffering citizens of the world refuse to pay for the bankster crimes against humanity (and make it stick) is the moment these freeloaders lose their power.  Their magic will be destroyed. 

Of course, the screams that we simply cannot allow the casino to fail will resound again like in 2008.  Spineless politicians who have long relied on the financial sector to fund their campaigns will reliably sell out the rest of their constituents.  And solemn pundits will explain once more why the rest of us should cover the bad bankster bets.  And even more solemn folks will demand to know what we would do with the wreckage.  Whatever.  The idea is to make these jerks defend the outrageous idea of bailing out Wall Street one more time. 

One demand (and the threat of making it stick) would make the banksters treat #OWS very, VERY, seriously.

Regular readers know I HAVE covered the subject of necessary bank reforms but here's a link to one of my favorites Michael Hudson discussing some.  The link has a video and a transcript.

This still hurts (repost from 12.14.09)

Turns out that a belief in free markets is dangerous to more than banking.  Here we see The Guardian's take on the problems the USA has coming to grips with environmental problems when blinded by an ideology.  In this case it led to a disaster in Copenhagen.

When I was writing Elegant Technology back in the 1980s, it had become quite obvious that the Germans and Japanese were the most likely to produce working green technologies—I even put such a claim on my book cover.  This conclusion stemmed from the fact that "green" technologies had to be an improvement on current technologies.  This meant that only the folks who operated on the technological bleeding edge had any hope of advancing the art.

Because the English-speaking world was deliberately de-industrializing behind the public faces of Thatcher and Reagan, it was effectively eliminated in the race for Elegant Technologies in comparison to places like Germany and Japan that still retained their respect for their industrial base.

I always thought that Britain was worse than the USA when it came to environmental cluelessness.  So it is with some pain that I note this spot-on critique from the Guardian of the performance by Dr. Chu at climate change talks in Copenhagen.  Our secretary of energy is a Nobel Laureate in Physics but when it comes to subjects like Energy Efficiency, it's like he is stuck holding a caulk gun trying to figure out how to solve big problems on the cheap.

Hating banksters is hardly new in USA

One of the questions that seems to baffle the academic world is "Why didn't USA have a significant socialist (cooperative, labor) movement?"  After all, they reason, if we are a capitalist country with most of the problems capitalism brings, we should have had a Socialist Labor Party.

Well, that didn't happen and there is a thunderingly obvious reason—the USA had for much of its history an escape valve in the frontier.  Among other things, the Homestead Act turned millions of people into small land-owners and the towns that served those sod-busters filled up with small businesses.  And when these people discovered that there was something rotten in the economic arrangements, they couldn't strike against their evil bosses (themselves), so they developed a critique based on the one segment of capitalism they discovered did not play by the same rules they were forced to play—the moneychangers.  And since this critique is at least as old as the Bible and was certainly reinforced by the giants of American history like Franklin, Jefferson, Jackson, Lincoln, Ford and Edison, the politics of monetary policy REPLACED any impulse towards socialism (which had almost nothing to say about money and banking in any case.)

And since we have arrived at the point in history where even the useful functions of banking have been seized by shameless criminals, the critiques of the banksters developed by the USA Progressives are still relevant while those who mention socialism are treated as distractions.

Here we see a statement supposedly written by a committee of banksters to counter the threat posed by the People's Party Convention of 1892.  It was supposedly read into the Congressional record by Congressman Lindbergh who devoted much of his political career fighting the evil of the "Money Trusts."

Scientists are Producers too

At least the good ones are.  But sometimes, it takes them extra-long to realize that as far as a Predator is concerned, a top-notch scientist is mostly just like an immigrant farm worker—someone who exists to be ripped off.  I remember when my brother-in-law was walking picket lines on cold, rainy, dark, winter, Seattle nights during the 2000 SPEEA strike.  The fact that the strikers were literally the top rocket scientists in the world did not help much.  They were still wet and cold.  Boeing still had management types who did not have a clue why they needed their skills.  And they would have lost their strike, badly, if the local Teamsters hadn't shown up to help—and remind them that the Predators who screw with truckers will screw with rocket scientists and not lose a second of sleep over it.

So it is with some satisfaction that I notice that there are a few scientists in Baltimore who who have joined the #OWS movement and that Scientific American is actually covering it.  After all, the scientific community has everything to lose when banksters make off with the public purse, but meaningful lives if the society can finance the infrastructure upgrades we so desperately need.  In some ways, they should be LEADING the #OWS movements.  (What am I saying? Didn't Veblen die hoping his idealized engineers would create the rational social movement? —sigh—)

More turbulence for renewables

While the Europeans try to figure out a way to find the billions of euros to rescue their absurdly incompetent banks, the Germans are struggling to find the funds to pay for their energy revolution.  And yes, this conversion WILL be expensive but at least there is a giant payoff both economically and environmentally.  You cannot say the same for rescuing the casino banks.

998 and counting

Real economics has been a labor of love.  It has been a place to write about all the interesting things I have discovered in my 62 years of almost abnormal curiosity.  Writing Elegant Technology was the beginning of my greatest research effort but along the way, I discovered many fascinating things that, for one reason or another, got left on the cutting room floor (to use an old film-editing expression).  And of course, once you get interested in a subject, it is easy to add to what you have already learned.

Some men who reach my age have a pile of money to give away.  Unfortunately, I am not one of those folks.  But if knowledge is a treasure in and of itself, then I have reached my declining years a very rich man.  And if I believe that rich men should give away their wealth before they die, and I do, then I feel compelled to give away my riches too.

Hence my blog.  It's just me jumping up and down yelling, "Hey folks, look what I found.  If you understand it, it will make your life better.  Come and see!"

Meanwhile, back in the real economy (again)

While it has been fun to watch kids discover some of the problems associated with allowing criminals to make all the important economic decisions, the real economy continues to stagger from one catastrophe to another.  I figure #OWS has two more phases to go in their intellectual assessments of the link between pathological levels of greed and a world that has very little opportunity for its young.  Right now in Phase One, they are just becoming aware of the evil represented by the moneychangers.  Phase Two will come when they try to come up with proposals for meaningful reform of a rotten system.  Phase Three comes when they attempt to harness a reformed financial system towards solving the big problems of the real economy.

Back when the USA was discovering how dependent their prosperity was on cheap oil after the Arab oil embargo of 1973, a professor from St. Louis by the name of Barry Commoner decided to run for the Presidency in 1980 on a platform of addressing the fact that oil production had peaked in continental USA.  I went to hear him speak.  He was a dreadful public speaker but he did include one of the great gems of wisdom of all time which he called his Iron Law of Non-Renewable Resources.  Briefly it says, "Every barrel of oil (ton of coal, uranium ore, etc.) taken from the ground makes the next barrel (etc.) harder to find and more expensive to extract."  Understand this and understanding much of rest of the real economy is much easier.

Even so, it is interesting to see updated evidence that the law still works—well.

Saturday toons 22 OCTOBER 11

The pundits pretend not to understand what #OWS is all about.  Thankfully, the cartoonists get it.

One of the creators of #OccupyWall Street reflects on its success so far

Without issuing a single concrete demand, the Occupy movement has already scored a significant victory: it has shifted the political discourse in USA back in a more progressive direction, examining real problems. Less than two months ago, most Americans watched morosely as USA elites “debated” the debt ceiling and vied to come up with the most “acceptable” program of austerity, including cuts in Social Security and Medicare at the federal level, and education and police and fire protection at the state and local levels.

Now, the focus of political discourse are the inequalities of wealth and income, and how they cripple our economy and democracy by allowing the rich a disproportionate role in setting national policies.

That is a monumental shift in political direction. Especially considering the billions of dollars the rich and wealthy have poured into trying to dominate the political process and public perceptions, such as by astro-turfing the so-called Tea Party.

Many people have wondered just who is behind the Occupy movement. If you don’t know, the idea of occupying Wall Street was first proposed by the Canadian culture-jammers, Adbusters. I have known about Adbusters for a few years now, because of their excellent work on revealing the darker sides of economic neo-liberalism, and our consumerist culture. (One of the best articles attacking neo-liberalism was Adbusters’ November 2007 take-down of leading economist Gregory Mankiw, Economic Indoctrination.)

Last night, David Graeber, one of the people who had been present at the first “planning” sessions inspired by Adbusters’ call to action, posted his recollections of the (for him) hectic events of the past two months. Graeber identifies himself as a “small ‘a’ anarchist” but his insights into the social forces at work in USA at this point in history are well worth reading. In particular, I believe Graeber correctly identifies one of the key characteristics of the Occupy movement and what drives it:

From the fury of the northmen, deliver us

About 200 pages into Thorstein Veblen's magnum opus The Instinct of Workmanship we discover around thirty pages devoted to perhaps the most intensely personal and motivating question of his writing career, "Why us?"  Why is it that the most disruptive people in human history came from those countries that touched the North Sea?  After all, these trouble-makers not only gave us the Industrial Revolution, but parliamentary democracies, global-scaled imperial colonialism, and industrial capitalism itself.  So instead of some romantic south-sea islanders, Veblen turns the emerging science of cultural anthropology on the most dominating culture of all.

Veblen includes a lot of interesting theories for why the North-Sea troublemakers got the way they did but one of his more fascinating (for me) explains a lot—they went to sea.  While sailors have often been a notoriously superstitious lot, there is probably nothing that so dramatically reinforces the notions of cause-and-effect as sailing.  This is an activity where if you hold some bogus notion as to how the world works, you will almost certainly die of your error.  The sea is very unforgiving and it is easy to lose your way when out of sight of land.

North Sea sailors from England and Holland would not only spend a lot of energy advancing the boatbuilding arts, they would also fund a great deal of basic scientific research into navigation and celestial observation, cartography, time-keeping, meteorology, metallurgy, and anything else that helped you cross large bodies of water and return safely.

On Wednesday, archeologists announced they had found a spectacular new gravesite in Scotland of one of those early North-Sea trouble-makers.  The 16ft-long grave on the west coast's Ardnamurchan peninsula contained the remains of the high-status Viking, laid to rest inside his boat and buried with an axe, a sword and a spear.  He was surrounded by valuable artefacts including a knife, a whetstone from Norway, a ring-pin from Ireland as well as Viking pottery.



And as a reminder that advanced metallurgy is an integral part of going to sea, we here see the contribution Sandvik is making to the preservation of that most popular touchstone of Nordic seafaring—the warship Vasa in Stockholm.

Finance’s Five Fatal Flaws - William Black, from The Archives

When USA elites become willing to hold Wall Street accountable for its many crimes, they will turn to William Black and give him the power to clean up the mess. Perhaps as Attorney General, to replace that simpering corporatist lapdog, Eric Holder, who in over two years has signally failed to take down a single top executive of the predatory financial and banking systems. Not really a surprise - Holder was, after all, a corporate lawyer before Obama tapped him as AG. Only a few people, including myself, warned, before the inauguration, that it was a bad choice. Corporations are running roughshod over our democracy, and the guy who's supposed to reign them in is - a corporate lawyer?

Anyway, if truth and honesty and prescience were actually rewarded in this society, Bill Black would be a very, very rich man. He has bravely, repeatedly, and consistently given the public the details of the "crimonegenic" septic pit our banking and financial systems have become the past 30 years. Put Bill Black in charge, and all the big cheeses on Wall Street will finally be treated as what they really are, sociopathic criminals and financial terrorists.

Two years ago this month, Black posted How the Servant Became a Predator: Finance’s Five Fatal Flaws, describing how the financial system actually loots the real economy, instead of serving its ostensible role of allocating credit and capital to individuals and firms most likely to create new wealth producing enterprises. While Wall Street trades some six trillion dollars a day in stocks, bonds, futures, and derivatives, entrepreneurs with new ideas for clean energy and other thins we really need are begging for mere millions. Millions of dollars are mere table scraps compared to the cyclone of daily trading of trillions of dollars.

#OWS all warm and fuzzy

There comes a moment in social movements when it seems like anything is possible.  One wonders if 15 October wasn't that peak moment for #OWS.  The cops have backed down for once, the rest of the world has noticed you and is applauding, and your enemies are scurrying around like a bunch of cockroaches.

Enjoy this moment, folks, because the fun will soon end and the slogging "that tries men's souls," to quote Tom Paine, will begin.  Valley Forge is straight ahead.  Your enemies will reorganize, the rest of the world will grow tired of your cause if tangible progress is not made, and soon you will need to hammer out an agenda—a process that will reveal how truly annoying your new best friends really are.

Kicking in the rotten door

It would not be hard to find someone on Wall Street who could be found screaming about how the #OWS is nothing but a bunch of dirty hippy commies out to destroy the bestest, most wonderfulest expression of human ingenuity ever.  Some Master of the Universe who wonders why the cops haven't scraped the human scum from the lower Manhattan streets so that the real heroes of finance capitalism can go about their work of allocating capital efficiently.

This young woman is amazing.
She understands that some arguments really are too complex for a protest sign
but damn, if she isn't going to try anyway.  Best sign EVAH!

But strangely enough for this observer, while the right-wing jackals scream in their fury on the teevee, the cops have not moved in force against #OWS—which is something of a surprise considering how brutal they can be against the anti-globalization demonstrators at G20 meetings and other economic protests.  In fact, it is not difficult at all to find voices of reason within the corridors of power who seek to accommodate the concerns of #OWS.

Bank of Canada Head Calls Occupy Protests 'Entirely Constructive'
By scarce  October 16, 2011 03:14 PM

If it sounds unusual to hear the head of a country's central bank speak so positively about the protests going on around the world now it's probably because it is. Mark Carney though is one of more reform-minded of the central bankers (somewhat equivalent to the role Ben Bernanke plays as the head of the Federal Reserve). Carney was notably the target of a profanity-laced tirade by Jamie Dimon (CEO of JP Morgan Chase) last month at a meeting of world bankers and officials. Dimon said the new rules discriminated against American banks and called the new capitalization rules "anti-American". 

Mark Carney - a former Goldman Sachs Co. investment banker himself – is being pushed by Canada to head the G20's Financial Stability Board, a position that would put him even more at odds with people like the "business-as-usual, now-move-along" Jamie Dimons of this world who'd just as soon keep the casino open forever. more

Or how about something from the German Social Democrats who have been textbook examples of left-wing sellouts to the forces of neoliberalism.

Bankers vs banksters

Whenever someone points out the massive criminal behavior of the banksters, inevitably someone else starts reciting a list of all the wonderful services provided by your local friendly bank—a safe place to park your money, a convenient way to make payments, a sound institution where capital for the community's innovation is financed, etc.  And the services that show up on such a list are indeed socially valuable.  If banking did not exist, something very similar would spring up because the need for such services is thunderingly obvious.

So why do I mostly bitch about the evil banksters in this blog?  Because those socially useful functions of banking represent only a TINY fraction of what passes for banking these days.  By volume, over 98% of the monetary transactions have nothing, NOTHING, to do with the functioning of the real economy and are merely the operations of the bankster über-casino.  So the whole idea of any reasonable society is to ensure that we encourage the formation of socially useful banks while severely restricting the destruction of the real economy, the obscene concentrations of wealth, and the other manifestations of casino banking.

And the problems of striking such a balance have been addressed before.  Many times.  And often quite successfully.  So for the young people who are waking up to the serious nature of the problems caused by Wall Street and its imitators, rest assured that while there is very little need to invent anything new, it is a good idea to read up on the history of the struggle to control the banksters.

Putting things in perspective

How the economy is organized makes a HUGE difference in people's lives.  My parents who grew up in the rural midwest during the Depression were scarred for life by the experience.  To the end of their lives what they ate, how they lived, what they bought, how their children were raised, and hundreds of other examples, were profoundly impacted by the economic calamity of the 1930s.

And of course, it wasn't just my parents—it was everyone they knew.  For example.  My grandfather grew increasingly angry at the life of working harder than a slave for literally less than nothing.  Life was brutally difficult in central Minnesota on a farm without electricity.  Summers in the 1930 saw temperatures over 100° F.  Winters were as cold as -40°F and dark.  Kerosine and candles were expensive.  The work was constant.  The food was dreary as in oatmeal for weeks at a time.  Once, in 1934, my grandfather decided to sell a calf for a little money.  By the time the railroads and dealers took their cuts, he was left with 10 CENTS.  After my mother escaped to Minneapolis to work as a domestic and my grandmother died of homesickness and despair (compounded by insanely bad medical care) my grandfather's rage fell on my poor uncle.  To escape the rage, he signs up for the local National Guard unit because it got him off the farm and he got $1 for every meeting he attended.

Uncle's unit was folded into a troop-starved army in late 1941 so he was in the Pacific by early 1942.  He survives the war having been promoted to Captain but is discharged with a thousand mile stare and a nasty drinking problem.  He never does re-integrate into society and dies in a Salvation Army facility a man broken in countless ways.  This is a guy who taught himself calculus because his father couldn't afford to send him to high school.  What a freaking waste!

And yet, regular readers of this blog probably guess that I am more interested in the "Long Depression" of the 1870s.  Just type 1873 in the "search this blog" gadget in the upper left corner of every page and you will see what I mean.  (For example: We need real banking—not casinos, or Fighting inflation.)  But briefly, the economic crises out here in the Internal Empire triggered by the return to the gold standard was long and cruel, and destroyed people's lives for generations.  It also gave us the Greenback and People's Parties—who gave us the most interesting discussions on the subject of money ever written (which is pretty much why I got interested in these movements.)

Anyway, when economic literates start debating whether current conditions are more like the Great Depression or the Long Depression, the fact that there were protests in 951 cities worldwide yesterday should not come as a surprise.

Best summary of the month: It's the philosophy, stupid

Or, more accurately, It's the stupid philosophy.

From bink, one of the notable bloggers on political economy at DailyKos:

It's easy to see villains everywhere -- banks, corporations, politicians -- because the villains aren't just people or institutions but an entire philosophy that came to pervade every aspect of public life in the West, whether it was business or government:

Let Democracy step aside and Markets will take care of the people.

Well it didn't work.

And everyone is pissed.

Problem is, the conservatives are hysterically refusing to accept the reality that their theology of greed has failed to deliver the goods.

Some fine pictures from the London protest

Leave it to the Brits to come up with some especially interesting protest signs.  I especially like the guy who decided to dress up like Christ to make his point about the evil moneylenders.

#OWS goes global

When you have a sound message and you target your protests well, it is not surprising when your movement picks up imitators.  Even so, it will be interesting to see how the transformation to a global movement works out.