Only a week ago, the Fed cut its bank rate to a historic low, the new range being — can you imagine? — from 0% to 0.25%, while the credit crunch and pressures on the dollar continue unabated. And this rather significant development followed right after the Madoff debacle and so-called “Ponzi scheme,” allegedly defrauding investors worldwide, including banks, hedge funds and financial institutions, to the tune of $50 billion and counting.
Indeed, hardly a day goes by anymore without some news-shattering event or scandal. One could well devote the rest of one's life to blogging away, today on this subject, tomorrow on that, as there certainly isn’t any lack of new material out there and more of the same – it’s a safe bet! – is likely to be forthcoming almost daily.
Unlike other bloggers, however, I find this constant preoccupation with, and focus on, daily events and news-breaking stories a rather futile if not repetitive exercise — both, perhaps, because they all seem to be indicative of one and the same malady. Consequently, I think my time better spent on identifying and addressing systemic weaknesses and causes of our ailments. And of those, time and again I’m brought to deregulation, and its twin brother, privatization, as the main culprits.
Recently, I spoke on the evils of privatization and the evils it generates to compound our already bankrupt capitalist system. It turns the government into an accomplice as it were, only encouraging the system’s most destructive tendencies rather than serving as a kind of stopgap, or as an impediment at least, so as to prevent total breakdown of our culture, cherished ideas, and way of life. From the handling of our prisons to HUD’s scandalous policies – any area, in fact, you can think of where in the name of efficiency privatization has been employed – only corruption had set in its stead and the damage transcends economics for it well nigh affects our perception of government as the perpetrator of fraud. How discouraging! [See “The Case for Fraud” — compliments of Catherine Austin Fitts’ memoirs, Dillon, Read & Co. Inc., and the Aristocracy of Stock Profits.]
Well, only a week ago I’d been alerted to another scheme in the making — Mr. Obama’s so-called stimulus plan involving heavy investment in infrastructure, mass transit in particular. It concerns Mr. Obama’s appointments, especially that of Mr. Lawrence Summers as the Director of the National Economic Council. It’s all on the pages of Democracy Now. The panel included Naomi Klein, Robert Kuttner and Michael Hudson, with Amy Goodman serving as a moderator (see references below) You’d do yourself a favor to read through the entire twelve pages of it. (In fact, make it a point to visit the Democracy Now website on a daily basis; you won’t find more penetrating discussion elsewhere.) What follows is a digest.
Article comments
— go to most recent comments1 - Dave Nalle
Wow, this is positively surreal. Private enterprise is the problem? Makework programs and massive government spending are going to solve an economic crisis percipitated by out of control government spending? Are you out of your mind?
I guess I should have guessed something was off when you suggested we might gain something other than amusement by reading the partisan idiotocracy posting at Democratic Underground.
FDR's makework programs and massive spending deepened and lengthened the depression. The answer to excessive government spending and destructive interference in the private sector is not yet more spending and nationalization. To believe you can spend your way out of poverty is demented and irrational.
As for your panel of progressive poohbahs, they're engaging in one of the classic fallacies of leftist government, trying to reengineer society against its natural inclinations at vast and unnecessary expense to the taxpayers. It's the bridge to nowhere philosophy taken to a massive scale, dedicated to building what central planners think people should want rather than what they actually need. Central planning does not work, especially when it ends up in the hands of bureaucrats and ideologues. It will be the downfall of the nation.
Dave
2 - Dan(Miller)
Here is an interesting video of Fred Thompson explaining his take on all of this. As an added bonus for watching, it's pretty funny.
Dan(Miller)
3 - Dave Nalle
I wonder if there's a market for "If Only Fred Were Pres" bumper stickers.
Dave
4 - Dan(Miller)
Dave,
There just might be; perhaps you could create an appropriate font.
Dan(Miller)
5 - Glenn Contrarian
Dave -
What a wonderful revision of history.
Dave, if there's anything people need, it's WORK. Can you not see what's going on right now? "Trickle-down economics" and grand-scale deregulation does not work. Even Alan Greenspan had the intestinal fortitude to finally admit that! The 'profit motive' rhetoric sounds good...but in a modern society, in a modern economy it is a path to disaster.
Yes, the world's economy is tanking, Dave - and it started HERE. We've been sending our manufacturing base overseas and forcing our domestic industries to compete with overseas sweatshops ever since Reagan began the deregulation crusade and infested the conservatives with the idea that 'government IS the problem'.
I suppose you're against the Sherman Anti-Trust Act, too. I thought it was wrong when the government broke up Ma Bell...but even NOT adjusted for inflation I'm paying far less now than back in the early 70's.
IF the government is bad, then the government IS the problem...but IF the government is good, then the government is NOT the problem! Is that so difficult to understand?
Is there a government on earth that you think is better than America's? I'd really like to hear your answer on that -
- but I'll leave you with a concept: the larger the scale or scope of the human activity, the greater the need for regulation thereof. Small-scale human activity - whether it's political, economic, military, sports, education, whatever - can function well without a great deal of regulation. BUT the larger the scale or scope of the activity, the greater the need for regulation...yet the deregulation crowd would have us believe that this is true with the SOLE exception of economies.
6 - Dan(Miller)
Glen,
I seem to recall that dramatically expanding military production and then getting into WWII had something to do with getting out of the Great Depression. Perhaps what we need now is (another) Lovely War. It would have to be a really big war, not like the puny ones we have fought recently. That would reduce unemployment, help industry, and (assuming educational deferments) increase college enrollment. What a deal!
Dan(Miller)
7 - Baronius
Yeah, but it's tough to make a bumper sticker that reads, "DON'T BLAME ME - BLAME IOWA AND NEW HAMPSHIRE THAT I DIDN'T GET A CHANCE TO VOTE FOR FRED".
8 - Dr Dreadful
Baronius,
Don't knock it - it's a lot simpler than the Rudy Giuliani bumper sticker would be!
9 - Baronius
DON'T BLAME ME THAT RUDY BET HIS POLITICAL FUTURE ON FLORIDA THUS ISOLATING HIMSELF FROM...eh, forget it.
10 - Roger Nowosielski
I hate to barge in - only a short response to Dave Nally. Private enterprise is not the problem, only privatization. In conjunction with government programs, there forms an environment which is the hotbed of graft and fraud. This has nothing to do with competition or free markets, only with which firms are politically connected. As a result, both the government and business are being dragged down into a cesspool of corruption as fraud becomes legitimized.
May I refer you to Chris Sanders writings (Chris Sanders Associates)referenced in "The Case for Fraud: our 'prison industry'" as well as the follow-up on HUD, both on my own weblog.
11 - Glenn Contrarian
Dan -
I hate to refer to the Wikipedia since anyone can edit the entries, but when it comes to non-controversial subjects it's usually fairly reliable when the references are given.
If you check the graphs listed there, it becomes pretty clear that the Great Depression bottomed out in 1933, and that by 1937 - just prior to the massive military spending increase prior to WWII - GDP was already above pre-1929 levels.
To wit: "The turning point in the depression was in 1933, as can be seen in the above Industrial Production graph. Some economists attribute the subsequent recovery to monetary expansion that began after the bank holiday a few days after Roosevelt was inaugurated on March 4, 1933 and devaluation of the U.S. dollar that was then tied to gold."
To be sure, the military spending brought the Depression to an end, but it was ending anyway - the military spending only hastened the end of the Depression.
What's really interesting are the statements by the 'Austrian school' of economics: "...the key cause of the Depression was the expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. In their view, the Federal Reserve, which was created in 1913, shoulders much of the blame. In opinion, Hayek, writing for the Austrian Institute of Economic Research Report in February 1929[21] predicted the economic downturn, stating that "the boom will collapse within the next few months." Ludwig von Mises also expected this financial catastrophe, and is quoted as stating "A great crash is coming, and I don't want my name in any way connected with it,"[22] when he turned down an important job at the Kreditanstalt Bank in early 1929."
The article also mentions that American unemployment was still at 15% in 1940...but we must also bear in mind that unlike then, the government calculates unemployment by counting ONLY those who are currently available for unemployment benefits. If I understand it correctly, once one's unemployment benefits have run out, then one is NOT counted as 'unemployed'. Therefore we don't know what the true unemployment rate really is.
In summary, we do NOT need a 'really big war'. We DO need enforced regulation and CCC-like massive government employment to (1) put the people to work (and keep the idle hands from getting into trouble) and (2) improve the nation's infrastructure.
12 - Dave Nalle
Dave, if there's anything people need, it's WORK.
Meamingless makework is not work, it's just a drain on the wallets of taxpayers. What you suggest is putting more people out of work through excessive taxation so that you can provide a few people with meaningless work. Do you not see how counterproductive that would be?
Can you not see what's going on right now? "Trickle-down economics" and grand-scale deregulation does not work. Even Alan Greenspan had the intestinal fortitude to finally admit that! The 'profit motive' rhetoric sounds good...but in a modern society, in a modern economy it is a path to disaster.
What does this have to do with anything that's going on now? Deregulation is a peripheral part of the problem and although 'trickle down' may or may not work, it has nothing to do with the solutions needed for our current economic situation.
It doesn't solve problems to create false dilemmas so that you can solve them with bogus solutions, while ignoring real problems and vilifying sensible solutions.
It's very simple and it has nothing to do with the things you're talking about.
Taking money out of the economy and devaluing the money which remains is bad for the economy. Putting money back into the economy and making sure that money is worth something is good. Just redistributing money from the productive sector of the economy to the unproductive sector of the economy is just a way to alleviate short-term suffering while driving the economy even deeper into the hole.
Yes, the world's economy is tanking, Dave - and it started HERE. We've been sending our manufacturing base overseas and forcing our domestic industries to compete with overseas sweatshops ever since Reagan began the deregulation crusade and infested the conservatives with the idea that 'government IS the problem'.
No, in this case the false expectations of protectionism is the problem. What is your alternative? To implement tariffs and regulations which will result in price increases, make US products uncompetitive and force our industries to move overseas? Your answer to globalism is massive unemployment and opting out of the world economy. It would be a total disaster.
I suppose you're against the Sherman Anti-Trust Act, too. I thought it was wrong when the government broke up Ma Bell...but even NOT adjusted for inflation I'm paying far less now than back in the early 70's.
Reasonable regulation of business is just fine with me. Monopolistic and unfair trade practices, fraud and unsafe industrial conditions are all legitimate areas for government regulation.
IF the government is bad, then the government IS the problem...but IF the government is good, then the government is NOT the problem! Is that so difficult to understand?
Yes, because once again you're setting up false dilemmas. Government is neither bad nor good. The good or the bad comes from how government power is used, and the more it is used the more chance there is of it becoming excessive.
Is there a government on earth that you think is better than America's? I'd really like to hear your answer on that -
No. So why do you want to make our government worse, more intrusive and more abusive?
Dave
13 - Kenn Jacobine
I am so glad that old Fred Thompson has emerged from his coma. If he had been one of the two establishment candidates on the ballot in November I am sure he would not have been spouting the same wisdom from the video on the campaign trail. I am sure he would have rushed back to Washington too to vote for Bush's Big Bank Bailout Bill.
Anybody, who thinks we have had deregulation of the economy in the last decade is delusional. Granted some regulations have not been enforced, but our current problems have nothing to do with deregulation. If anything needs regulating it is the Federal Reserve Bank. The following article argues better than I ever could that the government not capitalism is the culprit in the current situation: http://lovesliberty.tripod.com/id8.html
14 - Roger Nowosielski
I believe the reference to "war" was facetious.
I'd like to (mis)quote a line from "My Man Godfrey":
"The only difference between a 'solid citizen' (or something to that effect, I believe) and a bum is a job."
I do agree it shoudn't be "meaningless." But how much of our workforce - still intact and no doubt thinking themselves lucky - can truly say that?
15 - Dave Nalle
Roger, let's have a quick reality check on our imperiled workforce. Take a look at the historic data at the BLS.
Our current 6.7% unemployment only seems high because we just got out of a period of 5 years of remarkably low unemployment. In the historic context it's kind of average. We have higher unemployment from 1980-1987 and from 1991-1994, and it was hardly the end of the world. Hell in 1983 unemployment hit double digits. If that happens again, then I'll take your whining seriously.
Dave
16 - Roger Nowosielski
I think you're resorting to a bogus argument, Dave, and bogus figures. It's the same kind of argument that the editors of The Economist use to justify present crisis in view of the prosperity that had been created. They say the gains are unlikely to get wiped out. I'll provide you with exact references shortly.
As to the so-called "unemployment figures," you know that they have always been skewed - to reflect, I suppose, the unflinching faith on the part of the proponents of this economic model or that and general belief that economics is not a dismal science. So your argument, at best, is only a comparative one.
We know, for example, that once your unemployment benefits run out, you're no longer counted among the unemployed, and that's just one example how these statistics do not reflect the true situation. If you take into account all who are on some kind of welfare or who fall in between the cracks as it were, the true figure would be upwards of 30 percent, I'm willing to bet, and growing.
Doesn't the fact that 533,000 have lost their jobs in November, and that we're about to match this figure this month, mean anything to you?
We are in the Depression, however hard many economics and believers in the market economy would like to deny it. A General Motors stock trading barely over $4.00 per share - like some penny or over-the-counter stock of old? Years ago, that would be unthinkable. Don't you think that this world is coming to an end?
17 - Dan(Miller)
Glen, I hate to refer to the Wikipedia since anyone can edit the entries, but when it comes to non-controversial subjects it's usually fairly reliable when the references are given.
I agree. However, it was an easy link for Oh What a Lovey War, the musical. The link was not intended to support my more controversial assertions.
Dan(Miller)
18 - Baritone
The recent surge in unemployment should wake people like Dave up, but apparently not. There is no reason to believe that it is about to slow down. There is a ripple effect running through the country that is gaining momentum. Some predict unemployment levels will reach and perhaps exceed 10% by late spring or early summer.
Further, the reduction in tax revenues for all levels of government owing largely to high unemployment and the consequent curtailing of market participation will have the effect of reducing government programs and services, in turn causing further unemployment and on and on.
Also, it is true that reported government unemployment numbers do NOT reflect those still out of work, but no longer collecting unemployment compensation. There are always a number of people who just give up and no longer actively seek employment.
What Dave describes as "meaningless makework" proposed by Obama is a mis-characterization. There are literally hundreds of significant and badly needed infrastructure projects virtually everywhere in the country. Many are set to go, but simply don't have the funding.
We need significant improvements to our electrical grid. Many cities have disintegrating water and sewage systems. The country could definitely benefit from a rebuilding of our passenger rail system. Hundreds, perhaps thousands of bridges are in dangerously bad repair. Highways and byways are falling apart. The list goes on. These would hardly come under the heading of "meaningless makework" projects.
None of that will ever be addressed by the private sector.
B
19 - Brunelleschi
Dave-
Get a grip! There is more to reality than the GOP web site's mush.
Central planning doesn't work? Tell that to the people that noticed America's industrial power after WW2. Why? Central planning. Wars are complicated of course, but in WW2, people were motivated, they had the tools, the "we are in this together" thing, and it required central planning, the thing we Americans learn to hate-so we don't notice when it works or when it happens.
We can't even use the term central planning politely without being branded a political atheist. That's unless you are talking about the private sector, which is made up of centrally-planned entities. Use it that way and you are normal.
I'm an Army brat. I grew up in centrally planned communities. We didn't have private landlords, established snooty and and "bad" neighborhoods, and we all went to the same schools-central planning. It worked. We were a little piece of the military system that was really there to fight the USSR because they represent what we hate-central planning.
20 - Brunelleschi
Dave (2)
BTW-I'm responding to comment #1 :)
Dave- "Central planning does not work, especially when it ends up in the hands of bureaucrats and ideologues."
It does work and has already, so moving to the latter part, you raise the right point.
But if you expect the worst, you are going to get it. Americans, we can agree, get squeamish even thinking about government centrally planning anything. So, we suck at it! If you are convinced it won't work, you will figure out a way to prove yourself right.
Other industrialized nations could teach America some smart lessons, especially in developing things like a rational, national health care system. This knee-jerk "Can't plan anything" reflex is in the way of progress.
21 - Baronius
Go get'em Dave! (I'm so lazy.)
22 - Glenn Contrarian
Dave -
Looks like you're getting beat up about your reply.
Like the others pointed out to you, if the 'meaningless makework' is going towards rebuilding our nation's infrastructure, then it's not meaningless, is it? Instead, like the hundreds of projects completed by the CCC, the benefits would be around for generations to come.
Deregulation and 'Trickle-down economics' has everything to do with the solutions to our current economic situation! They got us INTO this situation, so the solution MUST include getting rid of the deregulation/trickle-down mindset. Remember, the SAME guy that popularized 'trickle-down' theory and 'government is bad' is the SAME guy who (according to Dick Cheney) "proved that deficits don't matter"!
True, UNLESS that is done in a way that benefits America as a whole, such as by using that money to create jobs that are used to rebuild America's infrastructure! If the money is used to benefit the entire nation, then everyone - including you - benefits!
Um, Dave - I don't know if you've noticed, but our products are ALREADY uncompetitive, and it is ONLY 'deregulation' that has allowed the flood of companies such as oh-so-patriotic Halliburton to move overseas.
And HERE'S the proof of the falsity of your argument - which country is the world's biggest consumer? China? Russia? India? No. You KNOW that America is the world's biggest consumer...so logic would hold that without protectionism and tariffs that so many other countries STILL have, we're forcing the little manufacturing capability America has left to compete against sweatshop labor for AMERICAN business. It's like fighting with one hand tied behind your back!
Oh, good GRIEF! Have you not watched what the Bush administration has done? The instances of refusal to enforce regulations are LEGION! And your boy Bush got rid of whistleblower protection, too. Out of over twelve hundred cases of retaliation by companies against whistleblower, only SEVENTEEN times did the courts rule for the whistleblower. I know from personal experience how this can make a man's life hell.
If regulation of monopolistic and unfair trade practices and fraud had been enforced, then we wouldn't be staring at what the IMF said today could be another Great Depression. I'm sure you remember how I pointed out that the Bush administration had removed ALL regulation by states against the lending industry...and where are we now?
Hate to tell you this, Dave, but the greater the scale or scope of the human activity - whatever that activity may be - the greater level of regulation and governance it will require in order to ensure success. You will not prove that statement wrong.
Hm, gee, let me see - by having a government that follows the RULE OF LAW,
- that believes that torture and invasion on false pretenses are crimes against humanity,
- that believes in a citizen's protections against (1) search and seizure without a warrant, (2) imprisonment without trial or even access to legal counsel, (3) against restrictions of freedom of speech,
- that believes the president and vice president CANNOT make up rules as they go along ("the vice-presidency is NOT part of the Executive Branch" - remember that?)
- that RESPECTS and TRUSTS the Constitution ("Get that G*****ned piece of paper out of my face!" - remember that?)
At NO time in American history have we had a presidency that was so disdainful of following the rule of law. Even NIXON, as paranoid and insecure as he certainly was, did not dare to ignore the Constitution and the laws of the nation AND international laws and treaties as the Bush administration HAS done.
Dave, you will NOT understand the degree of your error until you comprehend the degree to which the Bush administration damaged the rule of law and the Constitution.
23 - Baronius
Come on, Dave! They're saying that the recession was caused by trickle-down economics, and that government "investment" will help everyone! You can destroy these arguments in your sleep!
As much as I'd love to watch this, I'm headed to New York for a few days, so I wish you all a fine Christmas, even you wacky atheists.
24 - Cindy D
I hate to refer to the Wikipedia since anyone can edit the entries, but when it comes to non-controversial subjects it's usually fairly reliable when the references are given.
I LOVE to refer to Wikipedia, since it is like an Anarchist encyclopaedia like open source software. I support it and refer to it every chance I get. Because anyone can change it it usually turns out for the best. Since errors can be corrected and biases disputed. I always go to the sources too. It makes sense no matter what you read to do that.
25 - Cindy D
It will be the downfall of the nation.
One can only hope Dave.