Monday, November 18, 2024

Thomas Frank on the Election: The Elites Had It Coming

The Elites Had It Coming

Thomas Frank [New York Times, via Naked Capitalism Water Cooler 11-13-2024]

"...At the Republican convention in July, JD Vance described the ruination visited on his working-class town in Ohio by NAFTA and trade with China, both of which he blamed at least in part on Mr. Biden, and also the human toll taken by the Iraq War, which he also contrived to blame on Mr. Biden. Today Mr. Vance is the vice president-elect, and what I hope you will understand, what I want you to mull over and take to heart and remember for the rest of your life, is that he got there by mimicking the language that Americans used to associate with labor, with liberals, with Democrats….

“Liberals had nine years to decipher Mr. Trump’s appeal — and they failed. The Democrats are a party of college graduates, as the whole world understands by now, of Ph.D.s and genius-grant winners and the best consultants money can buy. Mr. Trump is a con man straight out of Mark Twain; he will say anything, promise anything, do nothing. But his movement baffled the party of education and innovation. Their most brilliant minds couldn’t figure him out. I have been writing about these things for 20 years, and I have begun to doubt that any combination of financial disaster or electoral chastisement will ever turn on the lightbulb for the liberals….

"Only a resolute determination by the Democratic Party to rededicate itself to the majoritarian vision of old: a Great Society of broad, inclusive prosperity. This means universal health care and a higher minimum wage. It means robust financial regulation and antitrust enforcement. It means unions and a welfare state and higher taxes on billionaires, even the cool ones. It means, above all, liberalism as a social movement, as a coming-together of ordinary people — not a series of top-down reforms by well-meaning professionals. That seems a long way away today. But the alternative is — what? To blame the voters? To scold the world for failing to see how noble we are? No. It will take the opposite sentiment — solidarity — to turn the world right-side up again....”


"The overturning of the New Deal Democrats, the Great Society Democrats was a generational story. I don’t know if there’s a social science term for it but people never betray their betrayals. Once you do something like that, once you turn the Democratic party, which these guys did in the 1970s, once you turn on the Democratic party and say we’ve had enough of organized labor, and we’ve had enough of the party of the New Deal and all that, you’re never going back. That is what you did as a generation. It is your accomplishment. They’re psychologically incapable of saying “Oh, we were wrong, our great moment as a generation was a mistake.” No human can do that.”

Update #1: Democrats and the Cult of Learned Helplessness - from former congressional staffer, anti-monopolist Matt Stoller.

Wednesday, November 6, 2024

Understanding The Election

 



 




 





...

"Never underestimate Joe [Biden]'s ability to f**k things up" - Barack Obama. At first glance, I took Obama's statement to be a kind of insult. Now I think it's praise for Biden's abilities as a "defender" to disrupt the "offense" of federal programs that help the poor.

...also worth remembering: "The Biden—now Harris—campaign committee raised $997.2 million and Trump’s campaign committee raised $388 million in total between Jan. 2023 and Oct. 16, 2024, the most recent date for which Federal Election Commission filings are available, ending with $118 million and $36.2 million in cash on hand, respectively." - Forbes

If your calculator is not handy, that means the Harris campaign raised a little more than two-and-a-half times the Trump campaign, and spent slightly more than that two-and-a-half times what the Trump campaign spent, yet lost decisively, despite the advantages of incumbency and more money. (Note: this doesn't include spending outside the campaigns...which hit record levels)

Update #1:



 

 Post election prediction: D's will blame everyone from the Russians, to the electorate, to aliens from Mars, but will never accept responsibility for the disastrous policies that put them so far in the hole. More validation that it's difficult to get someone to understand something if their paycheck depends on them not understanding.

Update #2: Chris Hedges take on the American Culture of Despair that gave us Trump.

Update #3: Democrats lose...on purpose...[posted 10 months ago].

 
The idea that American elections are as staged as professional wrestling matches, with predetermined outcomes means that the US doesn't have elections, it has election theater. It's like the TSA that's supposed to keep us safe in air travel but missed 19 of the 20 (fake) bombs sent through airport security. We don't have security, we have security theater. It's not a big surprise, at least in retrospect, that someone who thoroughly understands pro wrestling like Trump should emerge victorious.
 
Update #4: (From Michael Roberts' blog, thenextrecession.wordpress.com...one of the best analyses of the composition of voting in the recent presidential election)
 
 
In line with Update #3, "Harris lost the election heavily because the Democrats campaigned on the identity issues that concerned voters much less, while Trump campaigned on what mattered most to Americans in 2024: inflation, the cost of living and what is perceived as uncontrolled immigration.

"Three out of four Americans who said that inflation caused them and their family severe hardship in the last year voted for Trump. And as I have argued in previous posts, the perception that average American households have suffered a loss in living standards in the last four years is no myth, contrary to the views of mainstream economists.


"Between 2020-2023, real pretax income growth for the bottom 50% of income earners in the US was basically zero. Prices of goods and services are up over 20% since the end of the pandemic and for basic foodstuffs it is even higher. Moreover, the huge hike in interest rates by the Federal Reserve to ‘control’ inflation drove up mortgage rates, insurance premiums, car lease payment and credit card bills.

"Inflation and the drop in living standards for many Americans was blamed by sufficient numbers of voters on the Biden-Harris administration. As in many other countries, incumbent governments that presided over the post-pandemic period have been ousted. Indeed, it is the first time since the beginning of universal suffrage that all the incumbent parties in developed countries have lost vote share. The Democrats are the latest – Germany next.

"In 2020, Trump was the incumbent and was blamed for his disastrous handling of the COVID pandemic. But in 2024, the Biden-Harris administration has been blamed for the failure to deal with inflation and for not stopping immigration. Many Americans saw ‘uncontrolled immigration’ as causing a loss of jobs and rising crime – against all the evidence. Nevertheless, this irrational fear had traction, especially in small towns and rural areas where there are few immigrants visible.

"Biden and Harris crowed about a vibrant, healthy, low unemployment US economy, better than anywhere else. Sufficient American voters were not convinced of this message coming from the so-called ‘liberal elite’, given their own experience. They reckoned they were losing out because of high prices and costs, precarious jobs and uncontolled immigration that threatened their livelihoods, while the rich and educated in Wall Street and in mega hi-tech companies made billions.

"Of course, Trump won’t change any of that – on the contrary, his pals and financial backers are a bunch of rogue billionaires who look to gain yet more riches from cuts in taxes and deregulation of their activities.

"But elections are just a snapshot of public opinion at one moment – nothing stands still."


Tuesday, November 5, 2024

More of the effects of daylight savings time...

 

Monday, November 4, 2024

How Money Works: The Overview

© by Mark Dempsey


Since before the Renaissance, businesses have used double-entry bookkeeping to track their finances. This means financial items have two names: asset and liability (debt).

If you have a note and deed of trust—the California equivalent of a mortgage—that is your liability. The note is the IOU, and the deed of trust specifies the security for the loan. People buying a house with a note and deed of trust pay the note holder, that is their liability. But the note holder collects their payments, so to the note holder, the same thing is an asset, not a liability. Similarly, if you have a bank account, that is your asset, but to the bank, it's the money they owe you. It's the bank's liability.

You can march down to the bank and demand it reduce its debt because you hate the word "debt," but it's not a very sensible thing to do. The bank would just make your account—your asset—smaller. Most people don't connect this to national accounting, but the same double-entry naming system applies there, too.

To understand the connection, we need to understand a little federal fiscal policy. First of all, the federal government is the monopoly issuer of currency. Dollars don't grow on billionaires. The Federal Reserve ("the Fed"—the US central bank) and Treasury issue dollars at the direction of Congress.

Incidentally, most of those dollars are electronic entries in Fed bank accounts. A Fed technician types "1" in a special computer terminal to make a dollar. If the technician adds three zeroes, it's a thousand dollars. Three more zeroes and it's a million; three more zeroes and it's a billion...et cetera. We will run out of dollars when the Bureau of Weights and Measures runs out of inches. Never.

The usual description of federal fiscal policy is "tax & spend." That's deceptive but plausible since it's the fiscal sequence for a household. But households don't issue currency. The question the tax & spend crowd needs to answer is this: Where would taxpayers get the dollars with which they pay taxes if the monopoly provider of dollars didn't spend them first? Dollars don't grow on billionaires; the federal government issues them.

So, unlike a household, federal fiscal policy must be "spend first, then retrieve some dollars in taxes." Notice that, unlike a household, the spending is completely independent of tax revenue. This is not a new observation, the chair of the New York Fed, Beardsley Ruml, wrote a paper in 1945 entitled "Taxes for Revenue Are Obsolete."

Taxes are important because they create the demand for the currency, among other things. Taxes do not, and cannot provision federal spending. If you went to the local IRS office to pay your taxes in paper dollars, they would mark your bill paid, and then shred the dollars.

And what are the dollars spent by the government, but not yet retrieved in taxes—you know, the dollars in your wallet? Answer #1: the dollar financial assets of the population. In other words, part of peoples' savings. Answer #2: part of the national debt. Both answers describe the same thing.

You might notice that your dollars are notes—the phrase "Federal Reserve Note" appears on one side. The notes—IOUs—are from the Fed to the note holder. What does the Fed owe you for your dollar? Answer: a dollar's worth of relief from an inevitable liability: your taxes.

Confusing currency creators like the federal government with currency users like households is the source of some mischief, too. And the "Fiscal Responsibility™" illusion has persuaded governments to reduce national debt significantly seven times since 1776. The last of these reductions was the Clinton surplus. Perhaps the most dramatic occurred in 1835 when Andrew Jackson paid the national debt off entirely and refused to renew the charter of the US Central Bank.

That debt payoff meant there was no public currency. People did their business with monetized gold ("specie") and over 7,000 varieties of private bank notes of varying reliability. Jackson effectively sucked all the dollar savings out of the economy. It was an economic nightmare, too, culminating in the "Panic of 1837," a large depression. Speaking of depressions, the Coolidge and Hoover administrations also sought to significantly reduce the national debt which led to a wave of asset forfeitures and foreclosures now known as the Great Depression. Significant economic downturns follow all the substantial reductions in national debt.

So...why are Wall Street financiers who should know better still lobbying for a smaller national debt? Remember, that a government that issues fiat currency, like the US, is fiscally unconstrained. It can pay any debt owed in that currency, and would never be involuntarily insolvent. Why would otherwise financially sophisticated people try to trigger a wave of asset forfeitures or foreclosures?

Unfortunately, we have a plague of vulture capitalists who are eager to take advantage of a population impoverished by national debt reductions. Some want to dominate labor by reducing social safety nets for the sake of "labor discipline"—the message that you had better take whatever crappy job is on offer or suffer the indignities of poverty, even homelessness, and starvation....and if you're rebellious, we'll put you in a cage.

Currently, the US is the world's leading incarcerator. With five percent of the world's population, the US has 25 percent of its prisoners. Labor discipline and vulture capitalism (AKA "disaster capitalism") are currently ascendant. Until people know how money works, this will likely continue, too.

The object is to get cheap labor and pick up distressed assets for cheap. Labor discipline and fiscal austerity serve the wealthy and keep their wealth intact, inflating stock and real estate prices while draining the pocketbooks of the poor.

One frequently heard objection to this overview is this: "If the government just prints lots of money, then we'll get [gasp!][hyper]inflation." This is a theoretical possibility, but history does not support this concern.

The (right-wing, libertarian) Cato Institute published a study of 56 historical hyperinflations. How many originated with a central bank printing too much money? Answer: zero. The typical inflationary episode began with a shortage of goods accompanied by a balance of payments problem.

The classic examples of Zimbabwe and Weimar Germany support that observation, too. In the former Rhodesia (Zimbabwe), the colonial farmers left and the natives were unable to produce the same amount of food. For one thing, raising European livestock requires a tsetse fly eradication program—otherwise the herds die of sleeping sickness. So a country that had previously fed itself was forced to rely on imported food. Hyperinflation followed after the food shortage and balance of payments problems.

In Weimar Germany, the French were impatient that the Germans didn't provide their WWI reparations (in this case, some telephone poles) so they marched their army into Germany's industrial heartland, the Ruhr, and shut it down. A shortage of goods ensued. The reparations were already a balance of payments problem.

The most devastating episode of US inflation in recent years occurred in the '70s when the OPEC used the "oil weapon" to protest the Yom Kippur war fought by the Israelis. US pre-fracking peak oil was in 1971 when the price of oil was $1.75 per barrel, so the US couldn't produce its way out of the OPEC shortfall. The price quadrupled virtually overnight, peaking at $42 per barrel in 1982. The shortage of this critical commodity produced a wave of inflation throughout the country, and not incidentally, a balance of payments to OPEC problem.

Finally, here's a statement no one said, ever: "Hey, the Japanese just attacked Pearl Harbor, but we're a little low on dollars, so we won't respond." On the contrary, the government took over roughly half of the US economy in World War II. Federal taxes increased, not to pay for the war, but to suppress the demand for resources needed to fight the war. Supply shortages might cause inflation, but not if people don't have the money to spend.

The Green New Deal would only consume 5% of the economy, and we would not need to raise taxes to implement it.

That's how the money works.

-----------

The author teaches "Heterodox Economics" for the CSUS Renaissance (senior education) program.

Update #1: One person reminds me that we could balance the budget with a trillion-dollar coin. Congress has authorized Treasury to issue coins of any denomination for coin collectors, but the Obama administration turned down the suggestion of the trillion-dollar coin. It's admittedly a gimmick, and Treasury doesn't count coins as "notes" (debt). The inflationistas could be placated by simply depositing the coin--or several of them--in the Treasury's account at the Fed without spending it. It would make the Treasury's Fed account "balance," but it's too gimmicky to really amount to anything, at least in this writer's opinion.

Friday, October 25, 2024

Sue Frost weighs in on the side of global warming

In County Supervisor Sue Frost’s recent newsletter, she lets us know what’s important to her. No, it’s not the billions of dollars in damage that make the Southeastern US virtually uninsurable because of record hurricane seasons, it’s not the record droughts, subsequent record forest fire seasons and floods that originate with global warming. It’s not continued petroleum dependence that fuels that warming, and is the motivation for the endless wars in the Middle East. And it’s certainly not that important we’re draining county resources available to deal with the enormous climate-related damage barreling down the track toward us, choosing instead to spend a billion dollars to enlarge the County Jail.


No, none of that is important. What’s important is it may take truckers longer to fill their batteries than their gas tanks. That’s what’s important. To Sue.

Monday, October 21, 2024

Socialism = Shock and Awe

 (c) by Mark Dempsey

A while ago I told some politically interested people about the difference between publicly-owned SMUD (Sacramento Municipal Utility District) and privately-owned PG&E (Pacific Gas & Electric). It turns out SMUD's electricity rates are roughly 35% cheaper than PG&E's. In addition, PG&E has had to settle lawsuits for their poor infrastructure maintenance, including an explosion of a gas line in a residential San Bruno neighborhood, and powerlines causing the fires that, among other things, burned down the ironically-named town of Paradise. At one point, PG&E executives were consulting with attorneys about their liability in criminal negligence lawsuits for these little faux pas.

My conclusion, declared aloud: "Socialism! It's cheaper and works better." The conservatives present opened their eyes wide in astonishment. One "liberal" said "Well, that's your opinion!"

Yes, the "s" word ("socialism") is taboo! The idea of public ownership must be unspeakably bad!

In an odd coincidence, this meeting was in a publicly-owned building, in the midst of a publicly-ownd park to which we had all driven over publicly-owned roads. We all drank water from publicly-owned water districts, and our sewage was processed in a publicly-owned regional sewer plant. Several of us were of the age that we enjoyed public pensions and (socialist!) Social Security, never mind the (socialist!) single-payer healthcare for the elderly we call "Medicare."

The idea that something so ubiquitous as public ownership would be taboo, even shocking, is simply bizarre. Yet, that is the current state of play in the US. Anti-socialism has been so heavily marketed that many people simply can't conceive of something good coming from public ownership. 

This doesn't imply that public ownership is perfect. Just like privately-owned PG&E, SMUD has made mistakes. SMUD's mothballed nuclear reactor would be one example. But profit-driven PG&E thought skimping on maintenance would be a good way to boost stock prices and dividends, and SMUD doesn't have that motivation. 

Publicly sponsored projects help private industries too. If you have a smart phone, roughly 80% of the inventions it uses--cell technology, GPS, lithium-ion batteries, etc.--are the fruits of government-funded research. Economist Mariana Mazzucato says 75% of innovative pharmaceuticals come from government-funded research. Privately-owned big Pharma tends to spend its money on marketing (55% of gross profits) not research and development (15%). And big Pharma spends most of that private R&D on extending the life of already-patented drugs (think "time-release Viagra"). 

The government also had a hand in lots of Silicon Valley companies, supplying startup grants to the likes of Google, Yahoo! and Apple--all of whom had immigrant founders, incidentally.

But socialism is taboo. And immigration is a burden.

During big emergencies--World War II is a good example--government takes over large swaths of the economy. WWII meant government took over roughly 50% of the US economy. The supposedly unaffordable Green New Deal would only consume 5% of the current economy.

During a break in this meeting, one of the facilitators spoke to me, saying that if I had my way, his 401K which consisted in stock in privately-owned companies, would diminish, impoverishing his retirement. I had to remind him that the stock mark took a dive all on its own in 2007. The trouble with this point of view is that it believes burning up the planet to make bigger profits is okey-doke. What would his 401K wealth buy then? Nothing but ash would be for sale. Not very sensible.

All of which goes to show that it's easier to fool people than to convince them they have been fooled.

Bonus conclusion: Secret policy formulation follows when governments are too weak to make policy themselves.

Saturday, October 19, 2024

Words, Symbols, etc.

 "Man lives in a world of ideas. Any phenomenon is so complex that he cannot possibly grasp the whole of it. He abstracts certain characteristics of a given phenomenon as an idea, then represents that idea as a symbol, be it a word or a mathematical sign. Human reaction is almost entirely reaction to symbols, and only negligibly to phenomena. As a matter of fact, it can be demonstrated that the human mind can think only in terms of symbols.

"When we think, we let symbols operate on other symbols in certain, set fashions—rules of logic, or rules of mathematics. If the symbols have been abstracted so that they are structurally similar to the phenomena they stand for, and if the symbol operations are similar in structure and order to the operations of phenomena in the real world, we think sanely. If our logic-mathematics, or our word-symbols, have been poorly chosen, we do not think sanely." - Robert Heinlein 1940 short story “Blowups Happen”

...

We carry about with us the burden of what thousands of people have said and the memories of all our misfortunes. To abandon all that totally is to be alone, and the mind that is alone is not only innocent but young. Not to know is the beginning of wisdom.

The ability to observe without evaluating is the highest form of intelligence.

The wall is the idea; the reality, the truth, is on the other side.

The mind must be empty in order to see clearly.

--Jiddu Krishnamurti

 ---

Alfred North Whitehead calls the dominance of symbols "The fallacy of misplaced concreteness" and compares it to going to a restaurant and devouring the paper menu. The Bible calls this "idolatry," and commands devotion to the geniune article, not a symbol for it.

Of course, in economic terms, it’s “Midas Disease”–the belief that more stocks, bonds and cash is wealth, not the things they can buy. How much good would they do if we burn up the planet to get more of those symbols of wealth?

 

Thomas Frank on the Election: The Elites Had It Coming

The Elites Had It Coming Thomas Frank [New York Times, via Naked Capitalism Water Cooler 11-13-2024] "...At the Republican convention i...