Today on CNBC, a "business analyst," Dick Bove, said the US credit rating would be junk if it were evaluated as a business. The point is, government is not a business and it is a huge mistake to apply business financial thinking to government finances. Governments collect taxes the amount of which is strongly dependent on economic activity. Businesses do not. When the government spends less it receives less revenue. When a government spend more it's revenue increases as that spending goes into salaries of the lower and middle classes where it generates growth. When business spends less, at least in the short term, it's revenue does not decrease so it's balance sheet will improve. Conversely when business spends more, often it's revenue does not increase, particularly in the short term and it's balance sheet looks worse. If that spending is for expansion to meet expanded demand then in the longer term revenue will increase.
I think that the mistake of applying business and "kitchen table" economic thinking one's position on government policy is pervasive today. We see it in Congress, particularly now, and surprisingly among those who should know better, like this Mr. Dick Bove. For Mr. Bove to make such a statement is harmful as some people will actually think he is right.
Tuesday, August 9, 2011
Sunday, August 7, 2011
Clarity on use of the word "Taxes" - Please
I hear on Meet the Press today, Greenspan saying that increasing taxes depresses the economy more than reducing spending. Of course both do. This is but one example where using the phrase, Increase Taxes or Decrease Taxes WITHOUT being specific on which segment of the population or what is being taxed, misleads the listener - usually intentionally by the speaker.
Lets be clear. Increasing tax revenue on the income or assets of the wealthy would not depress the economy and in fact it would stimulate it. All but a very few in the group would in fact approve of their being taxed more. They understand the moral and ethical obligation to do their fare share in running the government of the country that made it possible for them to become wealthy. The few dollars they would pay would hardly be noticed by them. Collecting more from the wealthy would be viewed positively in economic circles world wide as it is the single most effective way to bring the deficit under control and as it would demonstrate a commitment to stand by our national values of fairness and integrity. By not putting the burden on the middle and lower classes it would be stimulative and at the same time the increased revenue to the treasury would reduce the need to borrow.
However a broad based tax increase, at this time, would add a depressing effect on the economy as the middle and lower classes would spend even less. Their spending is the driver of the economy.
An obvious fact once one thinks about it is that giving money to the wealthy must reduce economic activity. That money is not spent, instead goes into stocks or funds or cash. Much excess money today goes into Chinese or other foreign company stocks That does not create a single job. There are about 3 Trillion Dollars (by most estimates) of cash sitting around in private and corporate accounts looking for some place to be put to work. To add to this pool does not employ a single person
A frequently heard argument is that if business had confidence in the government and its management of fiscal matters, then they would expand and increase the need for employees. There may be a bit of truth to this but only to the extent that a company must have confidence in a projected increased demand before they would do that. Right now, demand is not there. That is not because of political nonsense in DC but because people don't have the money to spend. Many companies are not running at capacity and until they are they are not going to build more plants or increase the number of employees.
However, restoring the tax rates (at least on the wealthy) to where they were when Clinton was President, would generate the funds to drive infrastructure repair work which is desperately needed and would be very stimulative to the economy. Outside of that small group of about 400 people and the small group of Republicans they put into congress, there is very little objection to doing just that.
Lets be clear. Increasing tax revenue on the income or assets of the wealthy would not depress the economy and in fact it would stimulate it. All but a very few in the group would in fact approve of their being taxed more. They understand the moral and ethical obligation to do their fare share in running the government of the country that made it possible for them to become wealthy. The few dollars they would pay would hardly be noticed by them. Collecting more from the wealthy would be viewed positively in economic circles world wide as it is the single most effective way to bring the deficit under control and as it would demonstrate a commitment to stand by our national values of fairness and integrity. By not putting the burden on the middle and lower classes it would be stimulative and at the same time the increased revenue to the treasury would reduce the need to borrow.
However a broad based tax increase, at this time, would add a depressing effect on the economy as the middle and lower classes would spend even less. Their spending is the driver of the economy.
An obvious fact once one thinks about it is that giving money to the wealthy must reduce economic activity. That money is not spent, instead goes into stocks or funds or cash. Much excess money today goes into Chinese or other foreign company stocks That does not create a single job. There are about 3 Trillion Dollars (by most estimates) of cash sitting around in private and corporate accounts looking for some place to be put to work. To add to this pool does not employ a single person
A frequently heard argument is that if business had confidence in the government and its management of fiscal matters, then they would expand and increase the need for employees. There may be a bit of truth to this but only to the extent that a company must have confidence in a projected increased demand before they would do that. Right now, demand is not there. That is not because of political nonsense in DC but because people don't have the money to spend. Many companies are not running at capacity and until they are they are not going to build more plants or increase the number of employees.
However, restoring the tax rates (at least on the wealthy) to where they were when Clinton was President, would generate the funds to drive infrastructure repair work which is desperately needed and would be very stimulative to the economy. Outside of that small group of about 400 people and the small group of Republicans they put into congress, there is very little objection to doing just that.
Saturday, August 6, 2011
Psychopaths in Congress?
Paul Babiak, Ph.D. and Robert D. Hare, Ph.D. , noted psychologists, tell us in their book: "Snakes In Suits: When Psychopaths Go To Work," that 6% of the general population has some degree of psychopathic personality disorder as do 12% of those in the Board Room & C Suite. Very few psychopathic personalities are murderers but all are very manipulative and care nothing about the consequences of their actions or feel responsible for them. Most have no capacity for empathy or guilt. They are skilled at manipulating their way into positions of power where they lack the knowledge or values to exercise the power responsibly. They bring down corporations and are destructive wherever we find them.
Observing Eric Cantor's body language, smirk, and obvious joy he has when expounding, on killing social security and medicare as well as blocking extension of unemployment benefits despite his actions putting people out of work, it is hard to not see how much he would enjoy accomplishing those feats. It is hard to not conclude from this that Eric Cantor is of the that 6% of the population with psychopathic personality. Further it appears a concentration of psychopathic personalities make up the freshman Republicans in the House. Many are just ignorant of economics but others appear to know what they are doing and want to destroy, cause pain and misery and diminish the United States. Some, no doubt, are following orders in exchange for a future career promised by wealth benefactors whose biding they are serving..
This bunch of extreme Republicans have been emboldened by their small success in putting the President of the United States into a box, where he had no choice but to approve bad legislation in order to get the debt ceiling raised. The spectral of this will likely drive a loss in confidence in the US around the world. It has now become clear that a small group of radicals can actually defeat the will of the majority of Congress and the People who sent them there. The world sees that our system of government is not working and nations will begin looking to others for global leadership.
Observing Eric Cantor's body language, smirk, and obvious joy he has when expounding, on killing social security and medicare as well as blocking extension of unemployment benefits despite his actions putting people out of work, it is hard to not see how much he would enjoy accomplishing those feats. It is hard to not conclude from this that Eric Cantor is of the that 6% of the population with psychopathic personality. Further it appears a concentration of psychopathic personalities make up the freshman Republicans in the House. Many are just ignorant of economics but others appear to know what they are doing and want to destroy, cause pain and misery and diminish the United States. Some, no doubt, are following orders in exchange for a future career promised by wealth benefactors whose biding they are serving..
This bunch of extreme Republicans have been emboldened by their small success in putting the President of the United States into a box, where he had no choice but to approve bad legislation in order to get the debt ceiling raised. The spectral of this will likely drive a loss in confidence in the US around the world. It has now become clear that a small group of radicals can actually defeat the will of the majority of Congress and the People who sent them there. The world sees that our system of government is not working and nations will begin looking to others for global leadership.
Tuesday, June 28, 2011
Are we in an Austerity Bubble?
All we hear now from Washington and from the EU is budget cutting and austerity as if that somehow will fix deficits. Well it won't of course and all economists know that. Government economics is not Kitchen Table economics. When the Government reduces spending it increases unemployment and reduces tax revenue. This is just the opposite of what is needed. What is needed of course is to increase revenue to the Treasury. In the US much could be done to fix our budget problem by simply undoing the tax cuts on the wealthy that Bush put in place and which were the prime driver, along with Iraq war, of the deficit. According to economists, only about 1/2 of the money transferred to the wealthy in tax breaks actually comes back into the economy so such actions depress not expand the economy. We see that from the charts in an earlier post.
It seems that now it has become a matter of faith, a religion really, that giving more money to those who have the most will increase employment and grow the economy. That has never happened. There is no evidence that it will or ever has. It does not make sense. Trillions of dollars are sitting in banks, hedge funds, venture capitalists and accounts of large investors waiting for a place to be invested. The problem is finding a place to invest those funds where they will get a good return.
It appears that we have three groups in Congress.
It seems that now it has become a matter of faith, a religion really, that giving more money to those who have the most will increase employment and grow the economy. That has never happened. There is no evidence that it will or ever has. It does not make sense. Trillions of dollars are sitting in banks, hedge funds, venture capitalists and accounts of large investors waiting for a place to be invested. The problem is finding a place to invest those funds where they will get a good return.
It appears that we have three groups in Congress.
- Those who act on blind faith in the austerity ethic
- Those who know the austerity solution is bunk profess it anyway to intentionally depress the economy with hopes that voters will blame the Obama Administration
- Those who simply are doing what their wealthy benefactors want them to do without regard to the consequences.
Saturday, December 11, 2010
Facts--How we compare right now. From Obama speech at Forsyth Tech.
Here are some facts that everyone should think about:
". . as it stands right now, the hard truth is this: In the race for the future, America is in danger of falling behind. That's just the truth. And when -- if you hear a politician say it's not, they're not paying attention. In a generation we have fallen from 1st place to 9th place in the proportion of young people with college degrees. When it comes to high school graduation rates, we're ranked 18th out of 24 industrialized nations -- 18th. We're 27th in the proportion of science and engineering degrees we hand out. We lag behind other nations in the quality of our math and science education.
When global firms were asked a few years back where they planned on building new research and development facilities, nearly 80 percent said either China or India -- because those countries are focused on math and science, and they're focused on training and educating their workforce. "
". . as it stands right now, the hard truth is this: In the race for the future, America is in danger of falling behind. That's just the truth. And when -- if you hear a politician say it's not, they're not paying attention. In a generation we have fallen from 1st place to 9th place in the proportion of young people with college degrees. When it comes to high school graduation rates, we're ranked 18th out of 24 industrialized nations -- 18th. We're 27th in the proportion of science and engineering degrees we hand out. We lag behind other nations in the quality of our math and science education.
When global firms were asked a few years back where they planned on building new research and development facilities, nearly 80 percent said either China or India -- because those countries are focused on math and science, and they're focused on training and educating their workforce. "
These quotations are from the speech President Obama gave at Forsyth Technical Community College at Winston Salem, North Carolina on December 6, 2010. Transcript is at this link:
http://www.chicagotribune.com/topic/wghp-story-obama-transcript-101206,0,3385092.story?track=rss-topicgallery
He also included this somewhat more upbeat statement:
"Now, in the last century, America was that place where innovation happened and jobs and industry always took root. The business of America was business. Our economic leadership in the world went unmatched. Now it's up to us to make sure that we maintain that leadership in this century. And at this moment, the most important contest we face is not between Democrats and Republicans. It's between America and our economic competitors all around the world. That's the competition we've got to spend time thinking about. (Applause.)
Now, I have no doubt we can win this competition. We are the home of the world's best universities, the best research facilities, the most brilliant scientists, the brightest minds, some of the hardest-working, most entrepreneurial people on Earth -- right here in America. It's in our DNA. Think about it. People came from all over the world to live here in the United States. That's been our history. And those were the go-getters, the risk-takers who came here. The folks who didn't want to take risks, they stayed back home. (Laughter.) Right? So there's no doubt that we are well equipped to win."
He also included this somewhat more upbeat statement:
"Now, in the last century, America was that place where innovation happened and jobs and industry always took root. The business of America was business. Our economic leadership in the world went unmatched. Now it's up to us to make sure that we maintain that leadership in this century. And at this moment, the most important contest we face is not between Democrats and Republicans. It's between America and our economic competitors all around the world. That's the competition we've got to spend time thinking about. (Applause.)
Now, I have no doubt we can win this competition. We are the home of the world's best universities, the best research facilities, the most brilliant scientists, the brightest minds, some of the hardest-working, most entrepreneurial people on Earth -- right here in America. It's in our DNA. Think about it. People came from all over the world to live here in the United States. That's been our history. And those were the go-getters, the risk-takers who came here. The folks who didn't want to take risks, they stayed back home. (Laughter.) Right? So there's no doubt that we are well equipped to win."
Saturday, December 4, 2010
Who is it that believes tax cuts for the rich creates jobs?
The economist for President Kennedy, John Kenneth Galbraith, supported lowering the tax rate on the wealthy from more than 90%. He later rote many books saying that should only seldom be done and that the tax cuts under Reagan should not be done.
The Budget Director for President Reagan who promoted reduced marginal rates on the wealthy , David Stockman, has been on CNN, CBS 60 minutes and other major network interviews recently saying that taxes on wealthy should be increased. By the end of the Reagan administration the tax rates had been raised.
Recent polls report that more than 50% of population do not want to extend the cuts for the wealthy.
Empirical evidence shows that tax cuts on the wealthy do not stimulate the economy but may in fact depress it. See the charts I posted earlier.
Reports are that $ trillions are now available from banks, funds, venture capitalists and the wealthy for good investments. The argument that there is insufficient capital for investment is specious. The problem is lack of demand not lack of supply.
The wealthy do not support reduced taxes on themselves, at least those who are willing to speak about it including Bill Gates, his father and Warren Buffett.
Reported estimates are that only 30% of money from tax cuts to the wealthy actually enter the economy. So they are depressive not expansive. Tax cuts to the lower income segments including unemployment benefits are all spent and are reported to create $2 of activity for $1 spent.
So, who is it that really wants to see the taxes reduced on those making more than $1 million? It seems to only be the Republicans in congress and what James K Galbraith (economist like his father John Kenneth Galbraith) defines as the Predator Class. See his book, "The Predator State." The Congressional Republicans appear to be servants of this Predator Class.
The Budget Director for President Reagan who promoted reduced marginal rates on the wealthy , David Stockman, has been on CNN, CBS 60 minutes and other major network interviews recently saying that taxes on wealthy should be increased. By the end of the Reagan administration the tax rates had been raised.
Recent polls report that more than 50% of population do not want to extend the cuts for the wealthy.
Empirical evidence shows that tax cuts on the wealthy do not stimulate the economy but may in fact depress it. See the charts I posted earlier.
Reports are that $ trillions are now available from banks, funds, venture capitalists and the wealthy for good investments. The argument that there is insufficient capital for investment is specious. The problem is lack of demand not lack of supply.
The wealthy do not support reduced taxes on themselves, at least those who are willing to speak about it including Bill Gates, his father and Warren Buffett.
Reported estimates are that only 30% of money from tax cuts to the wealthy actually enter the economy. So they are depressive not expansive. Tax cuts to the lower income segments including unemployment benefits are all spent and are reported to create $2 of activity for $1 spent.
So, who is it that really wants to see the taxes reduced on those making more than $1 million? It seems to only be the Republicans in congress and what James K Galbraith (economist like his father John Kenneth Galbraith) defines as the Predator Class. See his book, "The Predator State." The Congressional Republicans appear to be servants of this Predator Class.
Sunday, November 28, 2010
"We want a plan to make America great again."
I agree completely with what Thomas Friedman, in the NY Times, Nov. 28, 2010, OpEd. " . . most Americans don’t want a plan for deficit reduction. The Tea Party’s vision is narrow and uninspired. Americans want a plan to make America great again . ."
I disagree with his plan for getting there however. He goes back to the same old saw, tax reductions and reduced government spending. NO. Bill Gates and his father on 60 minutes recently made the case for more taxes on the wealthy. So did David Stockman, the Director of Management and Budget under President Reagan--in fact he wants tax increases across the board. Warren Buffet has many times made it clear that he thinks the wealthy should pay their fair share which they are not now doing. Those who have benefited the most from our form of system have the greatest obligation to it.
To make America great again, we need to get the deficit under control, demonstrate leadership in all matters, including foreign policy, civil rights, environment, energy consumption, oil independence, technical innovation and probably most importantly grow value added businesses. In short, to get our can-do attitude back. Wall Street does not add value, it is necessary just as our water pipes are, but it does not alone make a sustainable economy.
To get the deficit under control, we need to increase income to the Federal treasury - that is tax revenue. Spending reduction can be counter productive as it can reduce income to the Federal treasury so that has to be handled with expertise, competence and responsibility--capabilities our congress does not appear to have much of.
Revenue to the treasury comes from growth of the economy, and a more progressive tax policy. This includes revising the tax code to reduce the loop holes so that as Warren Buffet points out his secretary won't pay more tax than he does.
I disagree with his plan for getting there however. He goes back to the same old saw, tax reductions and reduced government spending. NO. Bill Gates and his father on 60 minutes recently made the case for more taxes on the wealthy. So did David Stockman, the Director of Management and Budget under President Reagan--in fact he wants tax increases across the board. Warren Buffet has many times made it clear that he thinks the wealthy should pay their fair share which they are not now doing. Those who have benefited the most from our form of system have the greatest obligation to it.
To make America great again, we need to get the deficit under control, demonstrate leadership in all matters, including foreign policy, civil rights, environment, energy consumption, oil independence, technical innovation and probably most importantly grow value added businesses. In short, to get our can-do attitude back. Wall Street does not add value, it is necessary just as our water pipes are, but it does not alone make a sustainable economy.
To get the deficit under control, we need to increase income to the Federal treasury - that is tax revenue. Spending reduction can be counter productive as it can reduce income to the Federal treasury so that has to be handled with expertise, competence and responsibility--capabilities our congress does not appear to have much of.
Revenue to the treasury comes from growth of the economy, and a more progressive tax policy. This includes revising the tax code to reduce the loop holes so that as Warren Buffet points out his secretary won't pay more tax than he does.
Saturday, November 27, 2010
Some Favorite Quotations
"A life spent making mistakes is not only more honorable but more useful than a life spent doing nothing."
--George Bernard Shaw (1856-1930)
"Old age is the only disease you don't look forward to being cured of."
--From the movie Citizen Kane, 1941
"We are what we pretend to be."
--Kurt Vonnegut, Jr.
"Humankind cannot bear very much reality."
--T.S. Eliot (1888-1965)
"As scarce as truth is, the supply has always been in excess of the demand."
--Josh Billings (1818-1885)
"Truth is more of a stranger than fiction."
--Mark Twain (1835-1910)
"It's not what we don't know that hurts, it's what we know that ain't so."
--Will Rogers (1879-1935)
"Fiction is obliged to stick to possibilities. Truth ins't."
--Mark Twain (1935-1910)
"Faith is believing what you know ain't so."
--Mark Twain (1935-1910)
"History will be kind to me for I intend to write it."
--Winston Churchill (1874-1965)
These quotations are from Robert Byrne's, "The 2548 Best Things Anybody Ever Said."
--George Bernard Shaw (1856-1930)
"Old age is the only disease you don't look forward to being cured of."
--From the movie Citizen Kane, 1941
"We are what we pretend to be."
--Kurt Vonnegut, Jr.
"Humankind cannot bear very much reality."
--T.S. Eliot (1888-1965)
"As scarce as truth is, the supply has always been in excess of the demand."
--Josh Billings (1818-1885)
"Truth is more of a stranger than fiction."
--Mark Twain (1835-1910)
"It's not what we don't know that hurts, it's what we know that ain't so."
--Will Rogers (1879-1935)
"Fiction is obliged to stick to possibilities. Truth ins't."
--Mark Twain (1935-1910)
"Faith is believing what you know ain't so."
--Mark Twain (1935-1910)
"History will be kind to me for I intend to write it."
--Winston Churchill (1874-1965)
These quotations are from Robert Byrne's, "The 2548 Best Things Anybody Ever Said."
We must change our direction if our nation is to continue as we know it.
The policies followed during the past, starting with Ronald Reagan, are what led to our current situation. We have a self serving concentration of power and wealth in the hands of a small, less than 1%, of the population. Our revolution was to get away from that very concentration of power and our democratic system was designed to prevent its return. The powerful have found a way to subvert that system. If we are to get back to a well balanced society and economy we must change the policies to ones that will empower more of the middle class.
Thomas Jefferson wrote to George Logan, Nov. 12, 1816: "I hope we shall . . crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of their country."
Hacker and Pierson in their book, "Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class," explain that the imbalance of power came about as a result of improved organization of the Republicans in the 70's at a time when the Democrats had become complacent. The organization focused on Republican becoming the party for powerful and wealthy. That focus brought money to the party in amounts many times greater than what the Democrats had to work with.
They show that the share of national income held by the richest 1% went from 8% of income in 1976 to 24% in 2007. Also that the U.S. in 2000 had the highest concentration of income in the top 1% of the 12 richest nations. At the same time, the marginal tax rate for the top 1% income group went from 45% in 1976 to 31% in 2004. The marginal rate for the top .01% income group went from 70% in 1976 to 33% in 2004 (approximate numbers).
Thomas Jefferson wrote to George Logan, Nov. 12, 1816: "I hope we shall . . crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of their country."
Hacker and Pierson in their book, "Winner-Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class," explain that the imbalance of power came about as a result of improved organization of the Republicans in the 70's at a time when the Democrats had become complacent. The organization focused on Republican becoming the party for powerful and wealthy. That focus brought money to the party in amounts many times greater than what the Democrats had to work with.
They show that the share of national income held by the richest 1% went from 8% of income in 1976 to 24% in 2007. Also that the U.S. in 2000 had the highest concentration of income in the top 1% of the 12 richest nations. At the same time, the marginal tax rate for the top 1% income group went from 45% in 1976 to 31% in 2004. The marginal rate for the top .01% income group went from 70% in 1976 to 33% in 2004 (approximate numbers).
Thursday, November 25, 2010
Our Disfunctional Congress--Like the Stanford Prision Experiment?
If there is anything that Americans agree on, it is that our Congress is dysfunctional. Senator McConnell, after the mid term elections, said that his agenda is to be sure that Obama does not remain President past 2011. I thought his agenda was to fulfill the role of Senator as well stated in the Oath of Office that he took:
The demeanor, body language, and tone McConnell showed when he stated his agenda told me that he was driven by emotions approaching sadism and hatred. He seemed to not have any concern for, or awareness of, the consequences of Senate actions regards our economy, employment, respect for our nation by other nations or overall national strength.
This dysfunction in our Congress brings to mind the phenomena demonstrated by the well known Stanford Prison Experiment of 1971 . In this experiment two groups of students were set up in a closed environment where one group were the guards and the other the prisoners. It was planned to go two weeks but it had to be stopped after 6 days as the guards became sadistic and the prisoners become depressed.
Sound like our Congress? Could the political parties be falling into roles which don't really make sense and which neglect the very great issues that face our nation at this time? Could the psychology behind these roles be the same as that found in the Stanford Prison Experiment?
A 2007 book by the creator of the Stanford Prison Experiment, Philip Zimbardo, "The Lucifer Effect: Understanding How Good People Turn Evil,"could perhaps answer that question.
I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.
The demeanor, body language, and tone McConnell showed when he stated his agenda told me that he was driven by emotions approaching sadism and hatred. He seemed to not have any concern for, or awareness of, the consequences of Senate actions regards our economy, employment, respect for our nation by other nations or overall national strength.
This dysfunction in our Congress brings to mind the phenomena demonstrated by the well known Stanford Prison Experiment of 1971 . In this experiment two groups of students were set up in a closed environment where one group were the guards and the other the prisoners. It was planned to go two weeks but it had to be stopped after 6 days as the guards became sadistic and the prisoners become depressed.
Sound like our Congress? Could the political parties be falling into roles which don't really make sense and which neglect the very great issues that face our nation at this time? Could the psychology behind these roles be the same as that found in the Stanford Prison Experiment?
A 2007 book by the creator of the Stanford Prison Experiment, Philip Zimbardo, "The Lucifer Effect: Understanding How Good People Turn Evil,"could perhaps answer that question.
Monday, November 22, 2010
Some Facts on Tax Cuts and Jobs
- During Clinton's 8 years, 22.7 Million Jobs were created and the deficit was reduced by budget surplus.
- During Bush's 8 years, after the Tax Cuts, 1.1 Million Jobs were created and the deficit was increased about $7 trillion.
To check this out, get "Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class" by Jacob S. Hacker and Paul Pierson. Hacker is a Professor of Political Science at Yale and Pierson Professor of Political Science at UC Berkeley.
Sunday, November 21, 2010
What are they thinking? Or are they?
"The Republican governors in Wisconsin and Ohio have pledged to return a total of more than $1.5 billion in federal money by canceling the train projects in their states." This from the November 15, 2010, "Time" magazine, page 23.
Such sentiments are almost beyond belief. Assuming these newly elected governors are not inherently evil, they must be pathetically ignorant. These actions would not only hurt their own states, but the nation as a whole. They appear to be blindly following the right wing ideological script that serves only the wealthiest and the multinational corporations (Koch brothers and oil).
With unemployment in Ohio of 9.6% and Wisconsin of 7.0% (Sept. BLS) they need all the stimulus they can get. Both are industrial states with labor skills that could be employed building these high speed trains. Creating jobs grows the economy and increases tax revenue. Every dollar of stimulus generates more than one dollar of economic activity-known as the multiplier. That is why stimulus works. It creates demand which multiplies and evenually generates enough tax revenue to pay for itself. Conversely, reductions of spending slow the economy and reduce tax revenue and in turn drive more reductions in spending in a declining spiral of depression.
With our nation a hostage of its energy dependence, the need for electric powered high speed trains to get people out of cars and airplanes is glaringly obvious. Anyone who does not agree must have never traveled abroad or read any of the mainstream news media. They must not understand the impact on our economy from importing 382,564,000 barrels of oil at $80 per barrel for $30 billion in a month (August 2010).
With our nation a hostage of its energy dependence, the need for electric powered high speed trains to get people out of cars and airplanes is glaringly obvious. Anyone who does not agree must have never traveled abroad or read any of the mainstream news media. They must not understand the impact on our economy from importing 382,564,000 barrels of oil at $80 per barrel for $30 billion in a month (August 2010).
China has now developed and is operating 220 MPH trains and are the world's leader in that technology. They are thinking ahead and we are not. When I was young, Kennedy was empowering us to go to the moon,. We did. If he were here now, we would likely be tooling up to build 250 MPH trains and export them to the world. Now, we are sitting here with our collective heads in the sand being oblivious to the lost opportunities.
This brings to mind what President Lincoln said in the Gettysburg Address " . . testing whether that nation, or any nation so conceived and so dedicated, can long endure." Will our democratic experiment that is now only 224 years old endure? Will the voting public see through all the right wing media blather, grasp the truth about what needs to be done, and exercise their power at the polls to make it happen?
James Madison said "The advancement and diffusion of knowledge is the only guardian of liberty."
Thomas Jefferson wrote to George Logan, Nov. 12, 1816: "I hope we shall . . crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and to bid defiance to the laws of their country."
We won't recapture the glory of the U.S. by regressing but only by a rebirth of the progressive spirit we had under FDR and JFK. We looked to Obama to lead this rebirth but so far he was not forceful enough to make it happen. His motivational communication skills we saw on the campaign trail did not follow him into the White House. Lets hope he can change during the next two years.
Friday, November 5, 2010
The Paradox of the Right of Center Shift
David Brooks, in his New York Times Op-Ed of November 4, 2010, http://www.nytimes.com/2010/11/05/opinion/05brooks.html?_r=1&hp points out that America has not figured out how to build a decent future for the working class families of New York, Pennsylvania, Ohio, Indiana, Wisconsin and Arkansas. But that to remain a predominant power it must, and if it can't then it won't.
These regions were our base of our manufacturing economy which has now given way to a knowledge worker economy. The knowledge worker economy demands college educated workers but the percentage of the population with college education in these depressed areas is the lowest in the country.So they are out of work.
The paradox is that those areas with lowest levels of education voted overwhelmingly for conservative, tea party and republican candidates who oppose increased funding for college educations. In fact the chief benefactor of the tea party, Charles Koch (per August 30, 2010 New Yorker) would like to eliminate the Department of Education altogether. The Obama administration is pushing for ways to bring college education to a larger proportion of the population, but the victims of inadequate education rejected his policies.
So, how do these folks think that their lot in life will be improved by supporting those who are against doing what is necessary to make it happen for them? Sadly they grasped for help from anything that looked different and were duped. Clearly, the current administration failed to communicate and let the right wing dominate the message for their own interest at the expense of the well being of the people supporting them.
It was recently reported that our education system is now 10th among nations. We will not maintain our predominance unless that is fixed, and now. This was not true when we saw all the innovation in electronics in Silicon Valley back in the 60s. At that time we had the best of everything and the future was very bright - except for the Vietnam war. But over the last 4 decades we have steadily become complacent and yielded to the emerging economies. 40% of our GDP in recent years has come from Wall Street moving money around without adding any value. Manufacturing and knowledge workers add value but we are letting that get away.
These regions were our base of our manufacturing economy which has now given way to a knowledge worker economy. The knowledge worker economy demands college educated workers but the percentage of the population with college education in these depressed areas is the lowest in the country.So they are out of work.
The paradox is that those areas with lowest levels of education voted overwhelmingly for conservative, tea party and republican candidates who oppose increased funding for college educations. In fact the chief benefactor of the tea party, Charles Koch (per August 30, 2010 New Yorker) would like to eliminate the Department of Education altogether. The Obama administration is pushing for ways to bring college education to a larger proportion of the population, but the victims of inadequate education rejected his policies.
So, how do these folks think that their lot in life will be improved by supporting those who are against doing what is necessary to make it happen for them? Sadly they grasped for help from anything that looked different and were duped. Clearly, the current administration failed to communicate and let the right wing dominate the message for their own interest at the expense of the well being of the people supporting them.
It was recently reported that our education system is now 10th among nations. We will not maintain our predominance unless that is fixed, and now. This was not true when we saw all the innovation in electronics in Silicon Valley back in the 60s. At that time we had the best of everything and the future was very bright - except for the Vietnam war. But over the last 4 decades we have steadily become complacent and yielded to the emerging economies. 40% of our GDP in recent years has come from Wall Street moving money around without adding any value. Manufacturing and knowledge workers add value but we are letting that get away.
Wednesday, November 3, 2010
The Big Decision - Be Like Europe or Compete With Emerging Economies
Today is November 3, 2010, the day after the mid term elections which brought a wave of change into state governments, put Republicans in control of the House and weakened the Democrats in the Senate. This vote reflects a population that seeing its standard of living and security decrease. Many are grasping at anything that they think may return things to what they once knew. Many of those supported the upstart Tea Party.
The great irony of course, is that the agenda of the new Republicans and Tea Party will benefit the extremely wealthy elite who fund both but if unchecked will actually make the plight of the middle and lower socioeconomic classes worse. They were duped. This made possible by the elite's newly acquired (thanks to a recent Supreme Court decision) power to spend unlimited amounts on campaigns, propaganda and media ads.
The really big decision before us is one that is not spoken or written about much but is at the root of the ideological differences between the political parties. That is the choice between being a 1st world developed nation with rights of citizenship including health care and social security or devolving to something like the developing economies which don't have similar rights. The latter choice would not require as much government as we now have but would mean a lower standard of living for the middle and lower classes. Either choice will reduce the deficit but in opposite ways. The first choice calls for increasing revenue (taxes - particularly on the very wealthy) to pay for our current programs. The second choice calls for reducing taxes (primarily on the wealthy) and offsetting that with reduced the social and government services (Social Security and Medicare). The outcome either way is something different from what we as Americans have come to expect and different from how we view ourselves as a prosperous, fair, high achieving people of great military power and wealth.
However, with the second choice debt reduction will only occur if the entitlements are actually reduced which has not happened. Proponents have been pursuing the policy of unlimited spending and borrowing with the hope that the nation will be put into a position where the only option to avoid default on the national dept would be to cut the entitlements. They call this "Stave the Beast." Many supporters of the previous Republican administrations (an newly elected congress) may not have realized that they were actually supporting that.
I was pleasantly surprised to hear David Stockman, Director of Office of Management and Budget for President Ronald Reagan who killed our rampant inflation of early 80s come out essentially for the first choice. Recently on 60 minutes he advocated not only eliminating the Bush tax cuts but increasing taxes more on the wealthy. He pointed out that more of the nation's wealth has gravitated to the top 5% of population since 1980 than in history before then. See the link below for a full breakdown of the distribution of wealth. The only country with a larger percentage of wealth in the top 10% than the U.S. is Switzerland. http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
The great irony of course, is that the agenda of the new Republicans and Tea Party will benefit the extremely wealthy elite who fund both but if unchecked will actually make the plight of the middle and lower socioeconomic classes worse. They were duped. This made possible by the elite's newly acquired (thanks to a recent Supreme Court decision) power to spend unlimited amounts on campaigns, propaganda and media ads.
The really big decision before us is one that is not spoken or written about much but is at the root of the ideological differences between the political parties. That is the choice between being a 1st world developed nation with rights of citizenship including health care and social security or devolving to something like the developing economies which don't have similar rights. The latter choice would not require as much government as we now have but would mean a lower standard of living for the middle and lower classes. Either choice will reduce the deficit but in opposite ways. The first choice calls for increasing revenue (taxes - particularly on the very wealthy) to pay for our current programs. The second choice calls for reducing taxes (primarily on the wealthy) and offsetting that with reduced the social and government services (Social Security and Medicare). The outcome either way is something different from what we as Americans have come to expect and different from how we view ourselves as a prosperous, fair, high achieving people of great military power and wealth.
However, with the second choice debt reduction will only occur if the entitlements are actually reduced which has not happened. Proponents have been pursuing the policy of unlimited spending and borrowing with the hope that the nation will be put into a position where the only option to avoid default on the national dept would be to cut the entitlements. They call this "Stave the Beast." Many supporters of the previous Republican administrations (an newly elected congress) may not have realized that they were actually supporting that.
I was pleasantly surprised to hear David Stockman, Director of Office of Management and Budget for President Ronald Reagan who killed our rampant inflation of early 80s come out essentially for the first choice. Recently on 60 minutes he advocated not only eliminating the Bush tax cuts but increasing taxes more on the wealthy. He pointed out that more of the nation's wealth has gravitated to the top 5% of population since 1980 than in history before then. See the link below for a full breakdown of the distribution of wealth. The only country with a larger percentage of wealth in the top 10% than the U.S. is Switzerland. http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
Tuesday, February 9, 2010
Regulations - Tone At The Top & Toyota
The Toyota acceleration problems have been ignored by the U.S. regulators for years according to the article "Insurer warned U.S. on Toyotas" by Peter Whoriskey in the Feb. 9, 2010 Washington Post. This is not surprising and is a good example of the "Tone At The Top" directing how the rank and file perform their duties.
The Bush 2 administration was very strongly against enforcement of government regulations. Similarly, to a lesser extent, were all administrations from Reagan forward. Those in the National Highway Traffic Safety Administration (NHTSA) ignored facts from accident records and insurance companies about a pattern of unintended acceleration in Toyotas that flooded in from 2007 and before. There is a correlation here. The NHTSA clearly knew that their "boss" and administration did not want regulations to be enforced and that, either overtly or sublimally, led them to not cognitively process the facts into action. So people died.
Similar action over the last several decades can be seen in the presumptive ideology that business is moral, ethical and can do no harm. This is of course absolutely false. Business has no morality or ethics other than what is imposed on it by law or direct business feedback in the form of lost profits. This latter feedback is delayed until after the harm is done. The only proactive reason for business to be moral and ethical is the law and proper enforcement of it. The "American Values" that have been admired around the world do in part stem from this integrity of business that is enforced by our system of government.
The biggest example of damage that can be done by not imposing and enforcing regulation is the current economic crisis which poses the greatest threat to U.S. and world economy seen in the last 80 years. This crisis would not have occurred had the Glass-Steagall Act not been repealed and/or other regulations had been put in place to impose responsibility and accountability on the investment banking and Wall Street communities.
It is curious that the current politics in Washington by those out of power (GOP) is to revert to more of the same de-regulation policies that have been proven disastrous. These politicians clearly put their lust for personal power above the interests of their constituents, the nation and it's people. Whether our system will work to correct this problem in time to preserve the union is not clear.
The Bush 2 administration was very strongly against enforcement of government regulations. Similarly, to a lesser extent, were all administrations from Reagan forward. Those in the National Highway Traffic Safety Administration (NHTSA) ignored facts from accident records and insurance companies about a pattern of unintended acceleration in Toyotas that flooded in from 2007 and before. There is a correlation here. The NHTSA clearly knew that their "boss" and administration did not want regulations to be enforced and that, either overtly or sublimally, led them to not cognitively process the facts into action. So people died.
Similar action over the last several decades can be seen in the presumptive ideology that business is moral, ethical and can do no harm. This is of course absolutely false. Business has no morality or ethics other than what is imposed on it by law or direct business feedback in the form of lost profits. This latter feedback is delayed until after the harm is done. The only proactive reason for business to be moral and ethical is the law and proper enforcement of it. The "American Values" that have been admired around the world do in part stem from this integrity of business that is enforced by our system of government.
The biggest example of damage that can be done by not imposing and enforcing regulation is the current economic crisis which poses the greatest threat to U.S. and world economy seen in the last 80 years. This crisis would not have occurred had the Glass-Steagall Act not been repealed and/or other regulations had been put in place to impose responsibility and accountability on the investment banking and Wall Street communities.
It is curious that the current politics in Washington by those out of power (GOP) is to revert to more of the same de-regulation policies that have been proven disastrous. These politicians clearly put their lust for personal power above the interests of their constituents, the nation and it's people. Whether our system will work to correct this problem in time to preserve the union is not clear.
Thursday, January 21, 2010
Morgan Stanley Profit = $714 per unemployed person
Morgan Stanley (MS) reported earnings today, January 21, 2010, of $5 billion. With 7 million unemployed that is $714 for each one. If MS distributed those profits (made from small traders in the proprietary high speed trading operation) to the unemployed, it would be a step to reduce the anger that the public has for these outrageously unfair banks.
Sunday, January 3, 2010
85 years: Stocks v. Administration
Two images below show the DJ-30 first from 1968 forward and then from 1915 forward. Pictures can be worth a thousand words as the saying goes.
From 1968 through 2009 (click to enlarge):
From 1915 to 2010 (click to enlarge):
From 1968 through 2009 (click to enlarge):
From 1915 to 2010 (click to enlarge):
Wednesday, December 30, 2009
The failure of intelligence agencies to connect the dots.
A would-be terrorist just managed to nearly bring down an airliner despite what was known about him at the various intelligence and other agencies. The pieces of information were not put together or the risk made known to those who are in a position to do anything about it. This is an old story. It was blamed for the 9/11 attack on our twin towers and so the new bureaucracy was created, Dept. of Homland Security (DHS), as the fix. That has not worked and in fact it may be doing more harm than good. Combining FEMA into the DHS was certainly a contributing factor to Katrina. Now we have this near catastrophy.
A factor here that one does not hear about on the news or from bloviators is that the people in the intelligence agencies get their personal political power from secrecy and from witholding information. That extends beyond the individuals to the agencies. How many intelligence agencies do we have? I am not sure but I recall hearing something like 20. Why? In my opinion more for polical power than for national security.
I suspect that our President understands these facts - lets hope he can fix the system. One step that will ultimately be needed and will be difficult to get through congress is a solid national identification system that is tied to passports and that incorporate radio frequency identification (RFI) chips in them similar to what the Europeans are now doing. This will allow tracking of people electronically when necessary. Similarly the visas to enter the US should be electronic as well, which should enable better management and ability to tract visitors while here and reduce overstays. Real security however will come from proper collection and analysis of intelligence data and from reduction of the global condiditions that drive young people into terrorism.
A factor here that one does not hear about on the news or from bloviators is that the people in the intelligence agencies get their personal political power from secrecy and from witholding information. That extends beyond the individuals to the agencies. How many intelligence agencies do we have? I am not sure but I recall hearing something like 20. Why? In my opinion more for polical power than for national security.
I suspect that our President understands these facts - lets hope he can fix the system. One step that will ultimately be needed and will be difficult to get through congress is a solid national identification system that is tied to passports and that incorporate radio frequency identification (RFI) chips in them similar to what the Europeans are now doing. This will allow tracking of people electronically when necessary. Similarly the visas to enter the US should be electronic as well, which should enable better management and ability to tract visitors while here and reduce overstays. Real security however will come from proper collection and analysis of intelligence data and from reduction of the global condiditions that drive young people into terrorism.
Saturday, December 26, 2009
Health Care - Insurance or Entitlement
Insurance is to provide financial protection from the cost of devestating events, such as one's house burning down, that are very unlikely to occur. Insurance to cover major medical costs, such as organ transplant, makes sense in that context. But when insurance is to cover everday medical needs then it is no longer insurance but is instead a transfer payment system.
If our society is to provide universal medical care as a right of citizenship, as do all the other developed societies, then a payment transfer process where the burden is spread over the entire society and not just those groups receiving the benefits is required. Insurance is not the right model for this purpose.
The right model is one simliar to existing Medicare or Social Security both of which are managed very well for about 4% of the money transfered. Our medical insurance companies do that same job for 14% to 20% of the money transfered as well as introducing inequities for those receiving care.
The medical insurance companies do not add value to the process and as such are a liability and not a benefit. The purpose they serve is to employ people and enrich their owners and executives. The people they employ could be better employed in activities that add value which would enhance our national GDP. As it stands now they are basically receiving disguised welfare paid for by the middle and lower classes.
If our society is to provide universal medical care as a right of citizenship, as do all the other developed societies, then a payment transfer process where the burden is spread over the entire society and not just those groups receiving the benefits is required. Insurance is not the right model for this purpose.
The right model is one simliar to existing Medicare or Social Security both of which are managed very well for about 4% of the money transfered. Our medical insurance companies do that same job for 14% to 20% of the money transfered as well as introducing inequities for those receiving care.
The medical insurance companies do not add value to the process and as such are a liability and not a benefit. The purpose they serve is to employ people and enrich their owners and executives. The people they employ could be better employed in activities that add value which would enhance our national GDP. As it stands now they are basically receiving disguised welfare paid for by the middle and lower classes.
Monday, December 14, 2009
Does the Post Office bias people to believe that governement can not run health care
Today, I stood in line at the Post Office (United States Postal Service) for over one hour with about 40 other people while a single clerk packed boxes for some of the patrons. When I got to the head of the line, I was greated by a surley and insulting individual. If this were a business that had to compete for customers it would disappear overnight.
I wondered while standing there if these experiences and similar ones that can be experienced while registering one's car are what destroys ones confidence in the abilty of the government to do anything including the delivery of health care. These examples are forunately not really representative of what the governement can do. Medicare operates with a 4% administrative overhead while that of private insurance is about 14% and I have heard 20%. Anyone receiving Medicare or Social Security has nothing but praise at how well those programs run. The Veterans Administration is more efficient in delivering health care than is the private sector.
I wondered while standing there if these experiences and similar ones that can be experienced while registering one's car are what destroys ones confidence in the abilty of the government to do anything including the delivery of health care. These examples are forunately not really representative of what the governement can do. Medicare operates with a 4% administrative overhead while that of private insurance is about 14% and I have heard 20%. Anyone receiving Medicare or Social Security has nothing but praise at how well those programs run. The Veterans Administration is more efficient in delivering health care than is the private sector.
Saturday, December 12, 2009
Capitalism & Regulation
Capitalism of today is what Adam Smith, author of The Wealth of Nations, 1776, called Commercial Society and we sometimes call a Free Market System. Merriam-Webster offers an 1877 definition: "an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market."
The beauty of this system is that under ideal conditions the strongest motivators of human action which include greed, selfishness, lust for power, are directed into activities that benefit the society at large on balance instead of what would otherwise likely be activities that harm society. This is not a totally fair or egalitarian society but one in which the extremes of deprivation at the hands of a cruel dictatorship are not reached - at least if necessary controls and limits are placed on just how far people can go in satisfying their less than savory motivations.
Without some limits, capitalism will devolve in either of two directions. With too few controls it will become a corrupt government of a few who hold all the wealth and power over a largely impoverished society. Examples are Afghanistan, Pakistan, Somalia. With too many controls it will devolve into a brutal dictatorship of controlled economy such as what we had with Communist USSR under Stalin and now we see in Iran and North Korea.
So, we need a balance of control. Enough control to keep the system reasonably fair with a broad distribution of wealth but neither over-controlled nor under-controlled. In our system, as so eloquently and intelligently stated by Thomas Jefferson in the Declaration of Independence and James Madison in our Constitution, the government's job is to provide the controls with a system of laws that are fairly enforced. These laws being drafted by the representatives of the people at large who choose their representatives. Further, the true feedback to achieve stability is the fact that these representatives of the people who are democratically elected by the governed can be thrown out by the people at the polls.
This works only to the extent that the people who go to the polls have accurate information and realistic beliefs for making their decisions. In this technological age, with its flood of mass electronic media, one would think having accurate information would be easy. But as we have seen, it is as easy to put out inaccurate information and those with the greatest wealth and power can pay to get whatever message they want sent to the masses.
The combination of this ability to control the message with the new knowledge from cognitive science about how to impress beliefs into minds with carefully framed mass messages, has led us to the situation we are in today where the stability of our capitalistic system is threatened. Specifically, we have people in those states with the worst health care, worst education, highest unemployment, greatest number of people living in poverty and which receive far more government money than they pay in taxes, electing those politicians who want more tax breaks for the rich, want to not improve health care, oppose education reforms, reject federal money to help relieve poverty, and who support economic policies that will only worsen the situation (but greatly increase the wealth of the few who are already wealthy). How in the world can this happen in our representative democracy?
It happens because those who have gained enough power have learned how to manipulate perceived reality by controlling the mass messages. They do this with framed messages that reinforce certain neural connections in the listener's brain thereby establishing preferred perceptions. This is well explained by Professor George Lakoff, professor of cognitive science at Berkeley in his book, "The Political Mind." One process is to frame a message around the religious values held by many in the largely southern impoverished states, and pound it in with the Republican talking points that are repeated over and over, and with blatantly dishonest campaigns such as the Swift Boaters. All of this is so willingly broadcast by news organizations and enthusiastically by Fox news. In the George W. Bush administration this was skillfully orchestrated by Carl Rove who I call the Brainwasher in Chief. Achieving political power by controlling the message of course is an age-old tactic, the propaganda of Stalinist USSR and now the controls over press in Iran and North Korea even to some extent China are recent examples.
Policies of politicians that, while beneficial to the very powerful and most wealthy are at the same time harmful to the State and its people, if implemented, will pose the greatest risk to the longevity of our capitalistic system. We are in a time now where the stabilizing process of democratic feedback that should prevent such implementation is being severely tested. Will our system work to overcome the negative forces of misinformation campaigns and restore balance to our democratic process?
Clearly, current regulation and laws need to be enforced and others changed or created to prevent the current situation from arising again. We see the power of the powerful being exercised largely through the rampantly out of control lobbying channels and through the control of funds for political campaigns.
The beauty of this system is that under ideal conditions the strongest motivators of human action which include greed, selfishness, lust for power, are directed into activities that benefit the society at large on balance instead of what would otherwise likely be activities that harm society. This is not a totally fair or egalitarian society but one in which the extremes of deprivation at the hands of a cruel dictatorship are not reached - at least if necessary controls and limits are placed on just how far people can go in satisfying their less than savory motivations.
Without some limits, capitalism will devolve in either of two directions. With too few controls it will become a corrupt government of a few who hold all the wealth and power over a largely impoverished society. Examples are Afghanistan, Pakistan, Somalia. With too many controls it will devolve into a brutal dictatorship of controlled economy such as what we had with Communist USSR under Stalin and now we see in Iran and North Korea.
So, we need a balance of control. Enough control to keep the system reasonably fair with a broad distribution of wealth but neither over-controlled nor under-controlled. In our system, as so eloquently and intelligently stated by Thomas Jefferson in the Declaration of Independence and James Madison in our Constitution, the government's job is to provide the controls with a system of laws that are fairly enforced. These laws being drafted by the representatives of the people at large who choose their representatives. Further, the true feedback to achieve stability is the fact that these representatives of the people who are democratically elected by the governed can be thrown out by the people at the polls.
This works only to the extent that the people who go to the polls have accurate information and realistic beliefs for making their decisions. In this technological age, with its flood of mass electronic media, one would think having accurate information would be easy. But as we have seen, it is as easy to put out inaccurate information and those with the greatest wealth and power can pay to get whatever message they want sent to the masses.
The combination of this ability to control the message with the new knowledge from cognitive science about how to impress beliefs into minds with carefully framed mass messages, has led us to the situation we are in today where the stability of our capitalistic system is threatened. Specifically, we have people in those states with the worst health care, worst education, highest unemployment, greatest number of people living in poverty and which receive far more government money than they pay in taxes, electing those politicians who want more tax breaks for the rich, want to not improve health care, oppose education reforms, reject federal money to help relieve poverty, and who support economic policies that will only worsen the situation (but greatly increase the wealth of the few who are already wealthy). How in the world can this happen in our representative democracy?
It happens because those who have gained enough power have learned how to manipulate perceived reality by controlling the mass messages. They do this with framed messages that reinforce certain neural connections in the listener's brain thereby establishing preferred perceptions. This is well explained by Professor George Lakoff, professor of cognitive science at Berkeley in his book, "The Political Mind." One process is to frame a message around the religious values held by many in the largely southern impoverished states, and pound it in with the Republican talking points that are repeated over and over, and with blatantly dishonest campaigns such as the Swift Boaters. All of this is so willingly broadcast by news organizations and enthusiastically by Fox news. In the George W. Bush administration this was skillfully orchestrated by Carl Rove who I call the Brainwasher in Chief. Achieving political power by controlling the message of course is an age-old tactic, the propaganda of Stalinist USSR and now the controls over press in Iran and North Korea even to some extent China are recent examples.
Policies of politicians that, while beneficial to the very powerful and most wealthy are at the same time harmful to the State and its people, if implemented, will pose the greatest risk to the longevity of our capitalistic system. We are in a time now where the stabilizing process of democratic feedback that should prevent such implementation is being severely tested. Will our system work to overcome the negative forces of misinformation campaigns and restore balance to our democratic process?
Clearly, current regulation and laws need to be enforced and others changed or created to prevent the current situation from arising again. We see the power of the powerful being exercised largely through the rampantly out of control lobbying channels and through the control of funds for political campaigns.
Sunday, November 8, 2009
The age of irresponsibility
Our nation was born in the Age of Reason. Has that been supplanted by the Age of Irresponsiblity? Jeremy MccArter's article "Reagan Was Wrong" in the June 29, 2009 issue of Newsweek highlights a lot of what I observe.
The uproar in the 60s devolved into a decade of declining economy ending with Jimmy Carter's depressing steps to restrict speed limits to 55 and limit gas purchases, along the soaring interest and inflation rates. Then comes Ronald Reagan who took the brakes off with an anything goes, do what every you want attitude. No longer did deficits matter, drive as fast as you want, be as greedy as you want, reduce the obligation of those who have benefited the most from our society by reducing their taxes at the expense of the less fortunate, don't worry about environment - just rape the earth, don't feel any obligation to those who can't make it - just abandon them to the streets (he closed the mental hospitals in California as Governor and let the communities assume the responsibility which they did not do), let the homeless sleep under bridges and beg on the streets. Fail to reach the standard of developed nations by limiting the quality and quantity of health care to the ability to pay. I could go on and on with this.
The point is that all of this is contrary to the values of our country which hail from the Scottish philosophers John Locke (with the help of Thomas Jefferson his ideas found their way into the Declaration of Independence) and Adam Smith who in the Wealth of Nations set down the basis of democratically controlled capitalism. Many don't know however that Adam Smith also wrote a book on morality and was clear that his capitalistic system would not work without a moral population. In practice we see that without limits imposed by the government, greed displaces morality among the economic movers and shakers.
The current near collapse of the global economy, a very deep recession with extended unemployment over 17% and approaching that of the great depression is the consequence of this 26 years of irresponsble govenment that did not do its duty to limit the excesses that are part of human nature or tend to the economic realities or foster a tone at the top for proper education and preparation of the population to keep the country globally competitive.
The uproar in the 60s devolved into a decade of declining economy ending with Jimmy Carter's depressing steps to restrict speed limits to 55 and limit gas purchases, along the soaring interest and inflation rates. Then comes Ronald Reagan who took the brakes off with an anything goes, do what every you want attitude. No longer did deficits matter, drive as fast as you want, be as greedy as you want, reduce the obligation of those who have benefited the most from our society by reducing their taxes at the expense of the less fortunate, don't worry about environment - just rape the earth, don't feel any obligation to those who can't make it - just abandon them to the streets (he closed the mental hospitals in California as Governor and let the communities assume the responsibility which they did not do), let the homeless sleep under bridges and beg on the streets. Fail to reach the standard of developed nations by limiting the quality and quantity of health care to the ability to pay. I could go on and on with this.
The point is that all of this is contrary to the values of our country which hail from the Scottish philosophers John Locke (with the help of Thomas Jefferson his ideas found their way into the Declaration of Independence) and Adam Smith who in the Wealth of Nations set down the basis of democratically controlled capitalism. Many don't know however that Adam Smith also wrote a book on morality and was clear that his capitalistic system would not work without a moral population. In practice we see that without limits imposed by the government, greed displaces morality among the economic movers and shakers.
The current near collapse of the global economy, a very deep recession with extended unemployment over 17% and approaching that of the great depression is the consequence of this 26 years of irresponsble govenment that did not do its duty to limit the excesses that are part of human nature or tend to the economic realities or foster a tone at the top for proper education and preparation of the population to keep the country globally competitive.
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