Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Class Warfare Page 17 of 36

It’s Clinton’s Election to Lose

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On July 22, 2016

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President-George-W.-Bush-Mission-Accomplished“He denounced “15 years of wars in the Middle East” — a rebuke of President George W. Bush — and pledged to help union members, coal miners and other low-wage Americans,” this traditionally Democrat-sounding politician continued, “These are the forgotten men and women of our country. People who work hard but no longer have a voice.”
the-new-yorker-who-is-donald-trumpIn another forum Donald Trump spoke, a bit incoherently, of the position where the United States foots 75 percent of NATO bills: “If we cannot be properly reimbursed for the tremendous cost of our military protecting other countries, and in many cases the countries I’m talking about are extremely rich. Then . . . I would be absolutely prepared to tell those countries, “Congratulations, you will be defending yourself.”
In NatSec think tanks all over the Beltway, heads were exploding. A national correspondent for The Atlantic said, “Trump is creating conditions for the dissolution of NATO, the demise of Europe, and rampant nuclear proliferation.” This from the scribe who claimed POTUS didn’t have the power to close GITMO. Poor Goldberg, always at the tail end of the main issue because he’s too busy brown-nosing to win the race.
I’ve said it before (and I think Trump’s on to it as well), NATO’s usefulness is analogous to that of the Concert of Europe in late 19th century. What began as a Triple Alliance between Great Britain, NATO has been creating the conditions for its own demise for about 25 years now. As I have repeatedly said on multiple occasions: The more nations adopt into the mutual defense alliance, the more the power of said alliance is diluted. It becomes a club that everyone has to be a member of, a sort of stepping stone into the ultimate club, the EU. Although at present the desire to join the EU is at question.
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The interviewer then brings up the question of non-monetary value, i.e., good will, with large monetary outlays. Trump is having none of this nasty, pocketed, traded, lost, reheated old chestnut that Think Tankers love to trot out: “We’re spending money, and if you’re talking about trade, we’re losing a tremendous amount of money, according to many stats, $800 billion a year on trade. So we are spending a fortune on [our] military in order to lose $800 billion.” I’ve got ocean-side property in New Mexico, folks, anyone interested?
undated-new-f-35c-marylandBut really, who is this Republican nominee? Where did he come from? Sure, he’s quite the bigot and sexist. But what male senator or Representative in Washington DC isn’t? Look at their legislation. The only thing they care more about than getting their hands into women’s pants via abortion legislation, is getting into people’s pocketbooks with new fees. Unimaginable new fees. Fees with names a woman with an advanced forensic accounting degree couldn’t decipher.
Why, someone has to be asking, the fetish with fees?
Easy: They raise revenue but don’t count as taxes.
Suckers. American taxpayers are flat-out suckers.
But this nominee has problems: His use of grotesque race-baiting, his lack of care for the tragedies faced daily in America when innocent brown and black people die at the hands of white cops who never see any form of punishment. Worse, departments across the country are hiring men and women eager to enforce compliance over their fellow citizens with predictably tragic results. Then there is the stomach-turning use of violence at political rallies. It’s not the violence, per se, that churns the gut. It’s the “Brown Shirt” techniques that are utilized, to be frank, that reek of outright fascism. Are the trains running on time? Oh, wait. . .
Does Donlad’ “Flannel-Moth-Larvae-Head” Trump’s message machine have anything to say about these issues? No, because he’s banking on the silence resonating with a group of voters people see every day but rarely take notice of. People like the following group:
Do they see the man or woman who got the raw deal like the plumber in Wisconsin who took out one too many 25 percent APR credit cards intent on paying for Junior’s cracked front tooth? He, too, had a cracked tooth when he was young and never fixed it. He was too poor. He also always felt it held him back from promotions, getting the right girl, the list was long. He was determined that his son have a better chance, even if he was leaving university soon with upwards of $50,000 in debt with a degree from a mid-level state school in English.
indexHow about the voter down Texas-way who had one hundred acres of land within the city limits of a moderately-sized city in the Texas Hill Country and lost it to imminent domain for letting it lay fallow after racking up so many citations for claiming it to be agricultural land with no farm animals. It wasn’t his fault a group of local hoodlums kept killing the animals he put on the land so as to keep it in good standing with the law. It’s also the voter I sneer at because he or she can’t or won’t move past the slogans; and yet at the same time, is a howling hypocrite, taking advantage of every government program available, going around the neighborhood or attending neighborhood meetings (yes, I’ve been to a few) “hoping to make some converts.”
chicago-is-facing-financial-calamity--and-rahm-emanuel-may-not-be-able-to-save-itFinally, there is the voter who understands every government he or she falls under, be it local, toll road, water district, school district, state or federal, is taking, taking, taking. As a result s/he’s pissed. If only I could just make them see how the Ultimate One-Percenter has swindled them, letting local government gut public service by selling off a crown jewel of revenue to a private company (conveniently owned by friends) to solve a short term budget hole. The company then trebles rates, pockets the rainy day fund set up for emergency maintenance, and now has a 1-800-telephone tree giving the customer nothing but bullshit excuses. If you don’t believe me, take a look at Chicago’s parking system. A cash-cow’s cash-cow!
151119_DX_Hillary-Myths.jpg.CROP.promo-mediumlargeNo, I won’t vote for him, because, while I doubt he’s as malevolent as Cruz or malignant as someone like Dick Cheney, he’s letting demons out of our collective closet that are best left in said closet. But, beware and be forewarned if you are a Democrat; especially if you’re certain Hillary is going to steam roll this guy.
You’ll have only yourself to blame if Trump wins.
Why?
It’s her election to lose.

The Role of Politicians in an Oligarchy…

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On May 20, 2016

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…is to wrangle voters for oligarchs then enact policies to make the rich, richer.

This is clearly indicated by jobs for the families of politicians and the way that politicians are rewarded post-career.

The Clintons had a 100 million dollars a few years after leaving the White House.

Seven figure lobbying jobs are routine for Senators after their legislative career. Before that, their families are taken care of, and most of them somehow become multi-millionaires.

The same is true for high ranking bureaucrats. Timothy Geithner, who helped bail out Wall Street was giving six figure speeches almost immediately after leaving his post.

If you want to know who someone works for, look for who pays them.

You pay lawmakers far less than the rich.  They do not work for you.

I would estimate that this is true of well over 90 percent of American politicians.

When Russ Feingold was defeated for re-election to the Senate, he took a job as a university Professor. Now this isn’t a terrible fate, and I’m not crying for him, but being the only person to vote against the Patriot Act and not, in general being corrupt, cost him at least a million dollars.

A year.

Americans seem to believe that people act in their self-interest (and should do so) and then, contradictorily, believe their politician should be willing to give up millions to do the right thing.

This is true, by the way, of Obama. His State department effectively immunized bankers for criminal acts by letting them off with fines (fines that did nothing to harm the money they had earned through illegal acts). His number one priority this last year has been the TPP trade deal.

Obama’s presidency oversaw the rich getting even richer, most of the population getting poorer, and there being fewer jobs per capita which pay less. These are his economic results, and they are not accidental.

The good things you can have in an oligarchical government are the good things of which the oligarchs approve. Oligarchs want workers to be interchangeable. Nonsense about gays or transgenders or whatever is bad business.

So are unions. So are good wages.

None of this is to say that you’ll never get thrown a bone, as with Obama’s sponsoring of overtime. But a clear-eyed look at Obama’s record (or Clinton’s, or Bush’s, or that of any Congress in the past 30+ years) indicates that policies were meant primarily for the benefit of the few, not the many.

Politicians wrangle voters for oligarchs, who pay them well for the service. They then pass bills and regulations which help those oligarchs, because it is those oligarchs who give them almost all their money.

If a politician does not do this, and gets into a position of potential power, the attacks are unrelenting.

For an example, please read the media coverage of Corbyn; note also how much he is attacked by Labour party politicians, EVEN as the vast majority of Labour party members support him (and that support has increased since he won the leadership.)

Corbyn didn’t take the money. For decades he didn’t take the money. He didn’t become a Blairite, even though he had every reason to believe that by not doing so, he was condemning himself to a life as a bank bencher, who would never get rich.

Whether you agree with Corbyn’s beliefs or not, THAT is integrity.

The vast, vast majority of politicians in the developed world are not just corrupt, they are your enemies. The actions they take impoverish and kill you in exchange for wealth and favors from the rich.

A man like Obama or Bill Clinton (or, in the future a woman like Hillary Clinton) is far more likely to ruin your life than Osama bin Laden ever was. Bill Clinton pushing through Welfare “Reform” harmed millions of the poorest weakest people in America. The repeal of Glass-Steagall allowed the financial crisis to happen.

Unless you are an oligarch, or a retainer who is on the gravy train, people like Clinton, Obama, Blair, Cameron, and Thatcher are your enemies. They are a direct threat to your well-being, welfare, and even life.

The first thing anyone who wants to be realistic about politics and power needs to realize is this fact. They are enemies.

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The Panama Papers Leak

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On April 5, 2016

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You’ve probably read about it already. A Panamian law firm had its files leaked, and they reveal how rich people store money offshore to avoid taxes. In some cases legally, in some cases illegally, and, in pretty much all cases, unethically.

This is why we can’t have nice stuff: The rich simply don’t want to pay for a decent society. They just want to be filthy rich.

There are all sorts of additions to that, but that is the essence.

There is no such thing as a good society in which to live that is not relatively egalitarian. Of course, you can all be equal in poverty, but strangely enough, unless it’s desperate poverty, those people tend to be happy. Moving to the cities to get involved with China’s “economic miracle” meant an actual decrease in happiness. When the Chinese government tries to close traditional villages, the villagers often fight, and by that I don’t mean “protest,” I mean crack skulls and even, on occasion, actually fight the army and win.

Rich people caused the financial crisis, got bailed out, then insisted that poor people had to be punished for it.

If you want a good society, you keep the rich poor.

The other rule is that no one gets to opt out of anything which matters. The rich and powerful must use the same schools, airplanes, security, health care, roads, and military service as everyone else.

An absolutely fair draft, a medical system where better care cannot be bought by money or forced by power, where the children of the rich go to the same universities and schools as the poor will be a good society. A society where everyone uses public defenders chosen by lottery is a society with a fair justice system

Why? Because this forces the rich ensure that those schools, hospitals, and so on, work.  And no, your average billionaire is not subjecting his wife to a TSA porno scan and pat down. TSA agents only get to pull aside and molest hotties who aren’t part of the .1 percent.

One of the ways we will know that governments are finally serious about inequality is when they brutally crack down on tax evasion. It isn’t that hard to do, despite what everyone says. I’ve worked in a major financial institution; money going in and out of the country is examined, data is sent to authorities, etc. This stuff can be tracked easily, structuring is easy to detect, and a few criminal sentences (not fines) in high security prisons would make the point nicely.

If you make your money in country X, you pay taxes there. Money is a public utility. If you want to take it out of the country, the government acting for the people has the right to make that difficult, and indeed, tax it again or limit it.

Cyrptocurrencies like blockchain are, in part, a way for ordinary people to move money out of countries just like rich people do. This is a corrupt solution to a real problem: Our elites are corrupt, so we want to have the same right to be as corrupt as them–instead of insisting the corruption end.

There is no war but class war. The rich understand this, they have always understood it.

You keep the rich poor and weak, or they will eat you alive. Then they’ll kill you. The death toll from the 2008 financial collapse is in the millions, by any reasonable modeling of its consequences.

This is about your life, your death, and how well you live.

You should probably make it about the rich’s life, death, and how well they live.

Reasonable accommodations (a la Corbyn or Sanders) will be made. If they are not, unreasonable accommodations will be made. The rich will die or suffer in the same numbers as the poor.

But as a percentage, there just aren’t that many rich.

Too bad.

Update: Clinton supported the Panama free trade deal.

Here’s what Sanders said at the time:

Then, why would we be considering a stand-alone free trade agreement with this country?

Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens.  And, the Panama Free Trade Agreement would make this bad situation much worse.

Each and every year, the wealthy and large corporations evade $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.

According to Citizens for Tax Justice, “A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters.  Panama has all three of those. … They’re probably the worst.”

Mr. President, the trade agreement with Panama would effectively bar the U.S. from cracking down on illegal and abusive offshore tax havens in Panama.  In fact, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.

In 2008, the Government Accountability Office said that 17 of the 100 largest American companies were operating a total of 42 subsidiaries in Panama.  This free trade agreement would make it easier for the wealthy and large corporations to avoid paying U.S. taxes and it must be defeated.  At a time when we have a record-breaking $14.7 trillion national debt and an unsustainable federal deficit, the last thing that we should be doing is making it easier for the wealthiest people and most profitable corporations in this country to avoid paying their fair share in taxes by setting-up offshore tax havens in Panama.

Vote Clinton! She’ll make sure your job gets sent overseas and that the rich don’t pay tax.

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“Trust Me,” Said the 401(k), “A Sucker Is Born Every Day.”

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On February 11, 2016

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As early as 1999, while I cold-called my way into a meager existence my first few years at Morgan Stanley, it was obvious 401(k) plans were going to be worthless for workers and an eventual money grab for Wall Street, if not already. I don’t claim any special prescience. I’m just a guy educated at a state school in Houston, born in the Texas Hill Country, and a bit of a world traveler. But my bullshit detector is world class.

That said, we Americans want everything on the cheap. Down here in Texas, we say cheapskates are “penny wise, but pound stupid.”

Said cheapness, plus an unfortunate tendency to conflate gambling and investing, which blossomed during the Reagan and Clinton eras, has created an American system of finance that is galactic in its boundless stupidity–stupidity that is only matched by how far its influence reaches into the nether regions of our government. Aside from the riveting debates between Byron Wien and Barton Biggs, what little non-sales time I had I spent researching the ins and outs of Wall Street. The first big scheme of bovine excretions I investigated were corporate sponsored 401(k)s with claims of cheap cost ratios and even greater returns. The price for both assumptions were out-sized in 2001, but on the day the last Boomer passes will end up in the trillions.

(I am fundraising to determine how much I’ll write this year. If you value my writing, and want more of it, please consider donating.)

First, cost ratios on managed mutual funds, which form the majority of Wall Street retail mutual fund sales (they get a 5 percent commission) are roughly 2 percent yearly, with some as high as 5 percent. Cost ratios on market-linked annuities (index funds wrapped in insurance blankets seeking market-like returns) can be double that. Just another in a long line of reasons to reinstate Glass-Steagall. Anyone see a problem with insurance companies guaranteeing stock-like returns with insurance wrappers providing a guarantee?

Huh, say you? That sounds like something guaranteed to blow up in your face.

It was. It did. Had AIG failed, the market-backed annuities would have failed as well. Those annuities carrying a guaranteed rate of return, owned by a failing investment bank, er, insurance company were problematic. This is something Glass-Steagall was designed to prevent. Let us put to death the sad canard of the financially ignorant: but G-S is a 1930s law designed for 1930 problems! You now know better. Hopefully you have a rudimentary understanding of its practical applications as well. But I digress.

Compound those cost ratios, as discussed above (2 percent investment fees and costs), and you’ll find yourself with a pretty deep pool of money, one for which Wall Street has created a special beer-bong like contraption, so as to drink it all in one gulp. Like Taibbi’s Vampire Squid and your obnoxious brother-in-law, Bubba, drinking at the Super Bowl party from which you so desperately tried to keep them away. Free beer? Steal it! That’s what they do.

Now, consider how much they salivate (think English Bulldog, 90* F, and 96 percent relative humidity type salivation) over the looming privatization of municipal, county, and state pension plans? It’s that obscene. The pool of money is immense. The cost ratio for one Texas pension plan is as low as Social Security, which is .52 percent or 52 basis points, last I checked. Wall Street can get 2 percent, easily. You see how huge a difference that is? Now does it make sense why there is all this talk of undoing school teacher pension plans, city plans, county plans, state plans? All so Goldman, Morgan Stanley, and a few others can rape the middle class just that little bit more.

But what about stocks? Weren’t they great investments? Sure, if you were an old fuddy-duddy like Col. K., a client of mine at Morgan Stanley. Dude was richer than Croesus, but dressed like Grandpa Clampett. Every now and then, he’d come in and sell 1,000 shares of GE or Ford or Intel. He’d simply forgotten about them and when his bank account got low, he’d dig out a certificate and bring it to me to sell. One sale of Intel was half a million dollars. $500,000. His cost basis was $9.12 and he sold it at $74 3/16. So yeah, if you bought stock like that, the market works. But this is America and everyone wants a cheap buck. So they bought Dell at $25 and sold out at $50 three months later. Or Billing Concepts at $7 and sold at $20. The list goes on forever until we get to the bubble bursting, and then Intel bought at $75 was then sold at $33. Dell bought at $51 was sold at $16. Investing is like being Pete Rose when he’s not gambling: slow and steady when you’re at bat, collecting singles and doubles like they are pennies and dimes. Pretty soon, you’re the champ! Even then, there was fraud to be found in Blue Chip stocks, like GE.

We had a saying back in the day: As GE goes, so does America. Before Jack “the Hack” was made CEO, this was gospel. But once Jack “The Hack” discovered control fraud and accounting larceny at GE, it was only a matter of time. GE was a bellwether for the entire American economy (I cannot stress this enough), but not after Jack left. First, he sold every worthwhile asset the company ever created, and all the while he cheated. How? Well, each quarter, Welch stoked a penny per share from GE’s supposedly over-funded pension fund, and used it to beat the earnings and whisper estimates on the Street. This drove the entire Dow 309. Up, up, and away.

But then the party was over. Enron collapsed, and every bad practice on Wall Street was exposed. Generation X took the brunt of the losses: Almost half of the net worth Generation X had accumulated (46 percent) in the 15 years it had been working a real job (if they’d been lucky enough to avoid a McJob, aka: temp work, that is) was lost. Baby Boomers fared better because most of their wealth was still wrapped up in their homes. Wall Street found a way to steal that money, too.

Boomers saved, bet it all on their homes, and lost. That is reality. Spin it any way you like. Boomers lost at the Blackjack table. Period.

So we’re left with the results and consequences: “We have stagnant wages, whole industries crushed, and entire cities decimated by economic collapse. Yet somehow we were individually supposed to have been able to set aside $1.5 million for our retirement.

     “Most people are retiring with less than $25,000 saved. For the next three decades, we will see an entire generation of Dolores Westfalls roaming our neighborhoods in a dire state of crisis.”

The first time I saw this particular story was in Russia, standing on the balcony of a big Khruschev era blockhouse with my soon-to-be-wife, both looking down at the trash area, watching a babushka (literally: grandmother, informally: old lady) rummaging through the garbage. “She’s here every day,” my wife-to-be said. A year later, we got the news she had died. She was 58. She looked 75.

“That could never happen to us,” I thought, true pity stirring in my heart for this old woman.

But then I remember something I saw in Moscow two years prior; something that has stirred in me a constant feeling of discomfort, and often dread.

Upon walking through красный площадь (Red Square) and admiring Собор Василия Блаженного (St. Basil’s Cathedral), I crossed the frozen Москва-река (Moscow River), on my way to Новоде́вичий монасты́рь (Novodevichy Convent) where Peter the Great imprisoned his sister, Sofia Alekseyevna, that she cease challenging his rule. Before me rose a gorgeous stainless column topped off with a Cosmonaut. Here was Yuri Gagarin, first human in space. Let that sink in for a moment: The first human in space.

Empires and great powers fall swiftly now. Modernity is a cruel Olympian god, exacting his tolls immediately and in full. The United States of America, no matter how much it believes it is immune to the rules of history, that it is “Exceptional” is simply a lie we tell ourselves at night like the little boy whistling past the graveyard.

Scenes of elderly poverty, grim and grinding, as bad as those from our Great Depression, will soon become a regular feature in the life of United States citizens.

And that’s only the best case scenario.

Like Manhattan? If You Don’t Live There Now, You Never Will

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On February 10, 2016

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This is what happens to places where the rich want to live, under an oligarchy:

Inflation Adjusted Manhattan Real Estate Prices

Inflation Adjusted Manhattan Real Estate Prices

Yee-ha!

Yeah.  I dunno.  I could write a bunch of stuff, but the chart kind of speaks for itself, doesn’t it?

(I am fundraising to determine how much I’ll write this year. If you value my writing, and want more of it, please consider donating.)

More recent, but also striking, is this chart, on commute distance in San Francisco:

San Francisco Commute Dstance

San Francisco Commute Distance

This, by the way, is why the idea that countries like the US and the core European countries can’t tax people is bullshit.

There just aren’t that many cities rich people want to live in, and for Western elites, they are essentially all in Western Europe or the US (maybe Canada, in a pinch). They want to live in your country, or do business there? Then you can tax them. This is especially true of the US, Britain (London), and France (Paris, south of France).

As for the peons, let them live in Detroit. Or Flint, wherever Flint is, in the scabrous country beyond where people who matter live.

 

What Sort of Person Does Evil or Stands by While Evil Is Done?

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On February 8, 2016

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Last month, the media reported on a young man who refused to stand by while a classmate was having an asthma attack and was suspended as a result:

Anthony Ruelas watched for what seemed like an eternity as his classmate wheezed and gagged in a desperate struggle to breathe.

The girl told classmates that she was having an asthma attack, but her teacher refused to let anyone leave the classroom, according to NBC affiliate KCEN. Instead, the teacher emailed the school nurse and waited for a reply, telling students to stay calm and remain in their seats.

When the student having the asthma attack fell out of her chair several minutes later, Ruelas decided he couldn’t take it anymore and took action.

“We ain’t got time to wait for no email from the nurse,” a teacher’s report quotes him as saying, according to Fox News Latino.

And with that, the 15-year-old Gateway Middle School student carried his stricken classmate to the nurse’s office, violating his teacher’s orders.

What sort of person is Ruelas?

Mandy Cortes, Ruelas’s mother, told KCEN that she assumed her son–who has been suspended in the past–was to blame when the school informed her that he had been suspended again.

… “He may not follow instructions all the time, but he does have a great heart,” she said, noting that she was now considering home-schooling him.

The boy is, in other words, a troublemaker with authority issues. Thank goodness, eh?

I imagine most readers are familiar with the Milgram experiment, where university students were told to shock people by authority figures and most did so.

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I’ve always been curious what the people who refused were like, but oddly, that research did not appear to have been done.

Until now (h/t S. Brennan).

A new Milgram-like experiment published this month in the Journal of Personality has taken this idea to the next step by trying to understand which kinds of people are more or less willing to obey these kinds of orders. What researchers discovered was surprising: Those who are described as “agreeable, conscientious personalities” are more likely to follow orders and deliver electric shocks that they believe can harm innocent people, while “more contrarian, less agreeable personalities” are more likely to refuse to hurt others.

“The irony is that a personality disposition normally seen as antisocial—disagreeableness—may actually be linked to ‘pro-social’ behavior,'” writes Psychology Today‘s Kenneth Worthy. “This connection seems to arise from a willingness to sacrifice one’s popularity a bit to act in a moral and just way toward other people, animals, or the environment at large. Popularity, in the end, may be more a sign of social graces and perhaps a desire to fit in than any kind of moral superiority.”

…The study also found that people holding left-wing political views were less willing to hurt others. One particular group held steady and refused destructive orders: “women who had previously participated in rebellious political activism such as strikes or occupying a factory.”

Most people who are popular and too agreeable do not have strong red lines. Their morality is set by authority figures and peer groups. Whatever seems okay with the people around them is okay with them.

I wrote about this in the past in my post on the Decline and Fall of Post-War Liberalism. One key part of breaking an essentially egalitarian economic order was finding and destroying the people who wouldn’t go along to get along, the people who would fight.

Graph of incarceration in the US over time

From Wikipedia

This was done by creating a set of bullshit laws: Drug laws. Consensual activity which harmed no one (especially in the case of marijuana) was made illegal.

The sort of people who wouldn’t obey rules, laws, or orders that didn’t make sense to them disobeyed those laws and went to prison in droves, where they were destroyed politically, economically, and personally. The vast majority had committed no violence.

The gut was ripped out of America’s working and lower class troublemakers.

Since then, our method of child-raising has become one of high-surveillance. “Helicopter parenting” means children rarely spend time doing anything not approved of by parents or other authority figures. Police patrol schools. Children have cell phones, allowing their parents to check on them any time they want. Houses increasingly have internal surveillance systems to keep track of children.

People who are under constant supervision with little time to be alone or to be with friends without authority supervision tend to become “go along to get along” people, unused to thinking for themselves, and used to jumping through hoops for the approval of authority. Their entire lives have been about doing so, after all.

This is especially true of our elites, and while it’s usually been truer of them than the lower orders, it has become even more so than it was in the past. You could get into an Ivy league school in the past based on pure genius and talent; today you need excellent grades, an extra-curricular record which precludes alone time, and an essay which hits all the proper, authority-pleasing conformist points.

Society does not work for everyone when it becomes authoritarian and conformist. People are what they do, to a remarkable degree. We already had a system designed to create conformity (school is nothing but a conformity producing machine: sit down, speak only when called on, and do what you are told to do in exchange for adult approval and a decent future). The system we have now is even more designed to produce people who won’t stand up when asked, frankly, to be Nazis. Or torturers (an activity of which most Americans approve).

The troublemakers are the guarantors of your freedom and prosperity. When they are are broken, both will soon follow.

They were broken. Both followed.

Failure Is the Precondition for Fascism

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On February 3, 2016

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Nuremburg

Nuremburg

Well, not all the time, but it is one of the necessary preconditions.

More broadly, when the old regime has failed (lost a war, bungled the economy), then people are willing to try something else. This “something else” may mean electing someone like FDR. It may be allowing someone like Stalin or Hitler to rise to power. It may be opting to try Communism. It may be electing someone as mild as Corbyn.

Or it may take the form of someone like Trump or Cruz.

Unhappiness occurs during decline.

Decline. The US economy has been lousy for most people for decades. Since somewhere between 1968 and 1980. 1968 was the peak of wages for working class white males, for example. You are surprised they are unhappy? They have been in decline for almost 40 years.

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Women’s wages were rising through much of the period. They might be less than men’s, but they were rising.

Happiness is predicated on doing better than in the past. It doesn’t have to better by much, it just has to be better.

Since 2008, the economy, for the majority of the population (over 80 percent, over 90 percent by some calculations), has been bad. They have lost income. Their houses are worth less. They are less likely to be employed, much less have that lesser job.

They are ripe for fascism.

They are ripe for any sort of radical change offered by anyone who doesn’t parse; doesn’t feel, like one of the current set of elites. Trump does not, Cruz does not, Sanders does not. In Britain, where the situation is similar, Corbyn does not.

This is the beginning of the time of changes. Some countries will choose well, others will not, but the issues of how and by whom countries are run is in play–in a way it has not been in my lifetime.

The Bailouts Caused the Shitty Economy, Part 2

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On February 1, 2016

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Back in 2013, I wrote an article making the argument that bailouts were responsible for the bad economy.

The reason the economy has not recovered and will not recover for at least a generation is because of the overhang of bad debt, the glorification of financial “profits” (they aren’t), the failure to de-financialize the economy, and the confirmed control of government by the rich.

There is also a section on alternatives to the what we did. “We should do something,” is not the same as, “We must do what we did.”

But, be clear, the economy would be better now if we had not done anything. Yes, the immediate two years after the financial collapse would have been worse, but we’d be better off now than we are.

I think we need to note, first, where we are.

  • We are about to go into worldwide recession. In other words, the good part of this business cycle is mostly over. In many countries, it has been over for some time.
  • Peak to peak—from the peak of the last recovery to the peak of this recovery, the employment to population ratio has not recovered. It didn’t recover in Bush’s economy either, by the way.
  • Median incomes in the US have dropped. This is true in a number of other countries.
  • All of the gains of the recovery went to somewhere between the top 3 percent to top 5 percent. And really, that means the top 1 percent, .1 percent, and so on.
  • The rich are now richer than they were before the crash.
  • China is has hit the mercantile wall. After the financial collapse, they were the engine of global demand. But with so many of their customers in austerity, this could not be maintained.

In other words, the economy never actually recovered. You can argue it did, dishonestly, by looking at stats like unemployment (which don’t consider people who have given up looking for jobs), or GDP, but for most people, this is a shit economy, at best.

It has, however, been a good economy to be rich in.

Now, as I’ve been writing about what Capitalism is this last week, I think it’s worth noting something very fundamental.

The 2000’s economy was sick. It was doing the WRONG THINGS. It was doing them with trillions of dollars. Derivatives such as CDOs, vast expansion of borrowing for stock buybacks, the housing bubble, and so on.

It was doing things which had negative real returns–even measured in money. That these actions had negative, real returns was revealed in the financial collapse when those derivatives were worth ten cents or less on the dollar, and by the fact that central banks and governments had to spend trillions on the bail out.

Measured in human welfare, the mal-investment was worse. When you measure this in “opportunity cost,” meaning what we could have done with those resources instead, which would have increased human welfare, the cost was beyond vast: There are no words.

Capitalism is a system where markets make the primary economic investment decisions through price signals and the availability of money (these are not always identical, which is why I separate them).

More to the point, markets say, “If you are making money, do more of what you are doing.” The assumption is that if you’re making money, other people want what you’re doing, and that what people want is what has the most social utility—the greatest welfare for the buck.

I trust it is obvious to anyone but those brainwashed by the cult of economic utility that, in the 2000’s, the individuals who were making the most money were not creating welfare. They were, instead, reducing human welfare, absolutely and relative to other options.

The other case for capitalism and markets is that they are supposed to be self-correcting. People may make money doing the wrong thing due to market failures, but eventually they will lose that money.

They did.

I repeat, they did. The people making the wrong decisions lost all their money. They lost more than all their money.

We have a shitty economy now because we bailed them out. They then went back to doing all the wrong things, but with a huge debt overhang and more power.

What we needed was new economic decision makers. We needed the people who had all that money to lose their money and thus their political power, making it possible for a different set of people to make money.

Those people would have started off with a lot less money, and a lot less power, and that means there would have been a lot less money in politics, which would have fixed a swathe of problems political, social, and economic.

All that was required for this to happen was to DO NOTHING. Let the banks and brokerages and so on go out of business, and allow the process of law to proceed. The laws on the books at the time made most of what bankers and shadow bankers and various other decision makers doing illegal. Rather than allowing them to pay fines to indemnify themselves against law breaking, actually apply the law. Start with RICO statutes (conspiracy), grab their emails, and prosecute for fraud. (They were, essentially, all engaged in some fraud or another, though I don’t have time to go into that in this piece).

As an additional slice, all their remaining assets would have been seized as proceeds of crime, and they would have had to rely on public defenders.

This is what happens if you just follow the laws and regulations on the books. No special action is needed. None. Except to ensure laws are actually followed, I guess. That it requires special action for rich people to be subject to the law, is, however, part of the point.

So, we have a shitty economy now because we did not get rid of the people making terrible decisions who caused the financial collapse. We have a shitty economy because of the bailouts.

I went into personal decline in 2009 because I recognized that a watershed opportunity had been missed. It was our last chance to get off the train to Hell, really. Oh, we’ll get off that train one day, but we’ll already be in Hell.

The bailouts caused this shitty economy.

Much of what happened was a case of Obama’s decision making, either through action or inaction. TARP passed because he pushed it, for example. Bankers were not properly prosecuted because his DOJ chose not to do so. Many consider the actions of the Fed beyond his purview, but they are wrong.

The full argument is in my pieces “What Can Obama Really Do?” written in 2010, and “Could Obama Have Fixed the Economy?” written in 2014, though I also wrote an absurd number of pieces at Firedoglake on specific policy in real-time. I know for a fact that those articles reached the White House (though I don’t know if Obama ever read them). I know they were included in Dodd’s briefings.

Many other people were writing good proposals at the time as well. People more famous than I. The ideas were available.

So, I once said I don’t hate Clinton. I don’t hate Obama any more, but I did for a long time. He had a historic opportunity to be the next FDR. He deliberately chose not to be, and to instead help and defend the people who caused the financial crisis.

Obama triumphalists who go on about what a great president he is are either misinformed or cockroaches. The true cost of anything is the opportunity cost, and Obama’s opportunity cost is beyond large. Everything he could have done, and did not even try to do.

This is a bad economy, in terms of the numbers that matter to ordinary people. Less have work, and those who do make less money. It is about to get worse. Obama, and yes, Bernanke at the Fed, and Tim Geithner, and various other central bankers and politicians (including, yes, Bush), are responsible for how bad this economy is.

I will add that the most logical, good stimulus, would have been a massive energy project, in which America’s buildings were all retrofitted to be at least energy neutral. It would have directly put to work the people who needed that work, it could not be offshored, with some fairly simple policy, it could have created a solar manufacturing industry in America, and so on.

This means that some of the losses of climate change will also be Obama’s responsibility. Opportunity cost, again.

Enough.

The Obama presidency will go down as a huge failure to historians looking back in even 20 years. The larger point is this: Capitalism does have some virtues, and one of them is wiping out people who are doing the wrong thing. That doesn’t mean that “all bailouts” were a bad idea, but bailouts of the people who caused the crisis (bankers, shadow bankers) were. The primary bailouts caused the lousy economy.

There will be another crisis. Learn the lesson of the last one. If we don’t, well, crises will continue until we do.

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