Thursday, July 12, 2018

How to Tell (Political) Left from Right

Despite the constant drumbeat of antagonism between the political Right, or conservatives, and the political Left, or liberals, the U.S. political scene muddies the distinction, often intentionally. Generally speaking the political right allies itself with capital, or property, and the political left allies itself with labor, or consumers, but that distinction is not ironclad. For example, “lefties” like George Soros supposedly balance the right-wing Kochs’ money, or at least so say conservatives, but no one is more of a capitalist than Soros.

What did Kochs spend? - $889 million in 2016, while Soros spent $25 million. With contributors like Soros, Hillary Clinton spent more than Trump in running for president. Trump was reportedly 64% self-financed, but spent less than Clinton only if you ignore the immense subsidy of all the free media Trump got.

Worse than that 35-to-1 imbalance between Koch and Soros, though, is the idea that Soros is a friend of labor. He’s a currency speculator, and really one of the most capitalist of politically interested plutocrats. He is not funding any lobbying for improved labor policies, or single-payer healthcare. So if that is the “balance” of the Kochs right-wing spending, it’s very much to the right of someone like Bernie Sanders.

Soros was a big donor to Hillary, so how far left is she, really? She voted for the Iraq war, and for the tightening of bankruptcy law Wall Street wanted. That law favored capital, excluding student loans from even the possibility bankruptcy. Right now, Social Security checks are being garnished to pay off student debt.

"I don't care who people vote for as long as I can pick the candidates" - Boss Tweed (a Democrat)

On the Right, the Koch brothers fund an enormous political campaign apparatus that guarantees party discipline. If a legislator does not follow Koch-approved policy in the next election s/he will face a well-funded resource-draining opponent that does obey the Kochs.

Bernie Sanders’ game-changing breakthrough was his ability to mobilize the small campaign contributors enough to mount a credible presidential campaign. Unlike that pseudo-lefty Obama, Sanders has kept his populist campaign organization intact; Obama dismantled his populist outreach once he was in office. Sanders’ “Our Revolution” continues to lobby to move policy leftward...an actual balance to the Koch’s rightward bias..

How far right are the Kochs? They were raised by Fred Koch, a clever chemist whose method for refining crude oil into useful products led him to found Koch Industries, a company that built oil refineries all over the world--including refineries for Stalin and Hitler. Fred Koch hated the Russians but loved the Germans. In fact, he hired a German nanny to raise his boys. She was literally a Nazi. So...Kochs imbibed right-wing politics from an early age. Heck, a Nazi raised them! Fred Koch also founded some of the extreme right-wing think tanks and organizations, including the John Birch Society--an organization that condemned Dwight D. Eisenhower as a communist, or communist dupe, so he hardly contradicted that nanny.

At least part of Fred Koch’s animus toward government came from his experience in the courts. The Rockefeller oil empire (Standard Oil) started using Koch’s processes to refine its products, but refused to pay the patent royalties they owed. Koch sued...and lost! Later, Kochs found out that Rockefellers bribed the judge in that trial, and Koch re-sued and won, but retained a lasting distrust for government. (Can you blame him?)

Another signature distinction between Right and Left is the refusal by the Right to acknowledge how effective collective action can be. For the political right, all productive actions, all responsibilities, originate with the individual. Conservative British Prime Minister Margaret Thatcher famously said that society does not exist, only individuals and families--a statement roughly equivalent to saying your body does not exist, only cells and organs. Thatcher’s policies reflected her “anti-collectivist” understanding of society, though, and poverty roughly doubled in the U.K. under her supervision. The fight against “collectivism” is explicitly what Kochs say they fund.

What the extreme right misses, however, is that some problems are systemic, not individual. Here’s an example Modern Money Theorist Warren Mosler cites: Imagine throwing 95 bones out in your backyard, then releasing 100 dogs to retrieve a bone apiece. Five dogs will come back “empty-handed” no matter how well trained they are. Teaching the dogs a sense of personal responsibility, training them in bone retrieval techniques will never change that picture, even though it may change which dogs return with a bone. The solution is systemic, not amenable to individual solution.

Solutions to some current social problems are systemic-only, too. Preaching about individual responsibility, telling people to lift themselves up by their bootstraps does not lower the unemployment rate or make more paying jobs appear automatically if the economy’s pessimism tells employers not to expect profit from expanding their hiring. The idea that collective action or government can effectively address some of these problems is fairly new, too, so resistance is understandable. For example, Keynesian economics says government can literally spend the economy out of a depression.

The opponents of “collectivism” decry such government “intrusion” because they fear a government that popular and effective could impair their property rights. The Kochs may say they are “libertarian,” and eschew social conservatism (outlawing gay marriage, or certain drugs), but they are extremely careful to protect property. It does not matter whether property was obtained honestly or not. Dumping toxic waste on your own property is perfectly OK, just as Roman slave owners could legally murder their slaves. Property rights are paramount, no matter how “libertarian” are Kochs. The record high fines levied by the EPA on Koch Industries demonstrates just how absolute they believe are their property rights, too.

A quick scorecard (from Pew polling):




Image result for conservative vs. liberal political spending

I take a back seat to no one in criticizing the wasteful stupidity of government, but unfortunately, because systemic problems exist, collective action is really the only way to solve such problems, as awful as that sausage making is sometimes.



Trump, Trump, Trump

“Politics is a lot like coaching football. You have to be smart enough to actually do the job, but stupid enough to think it makes the slightest difference.” -- (Senator) Eugene McCarthy

What to do about Trump? The whole idea that politics can make a difference is open to question. Eugene McCarthy’s saying is not the only way politics frustrates us. I’ve talked to legislators who spent their entire careers in (California) government, and they tell me they accomplished relatively tiny things. One lobbyist told me he would like to take credit for the successes he enjoyed, but he couldn’t even do that. “Maybe I just got lucky, and our opposition got tired of fighting us.”

So frustration is rampant in American politics, and Trump’s ability to turn that into the material for a reality show (while, sub-rosa, he gets his way in important matters) is a nice change of pace.

The bottom line about Trump: he enjoys the attention. I plan to ignore him as much as possible.

Monday, July 9, 2018

The Job Guarantee

Huffingtonpost covered this proposal recently, and it's interesting to see the objections to guaranteeing employment...

According to this story, managing "random flows of labor" somehow elicits skepticism from even "Progressives."

Yet, regarding the CCC..."President Roosevelt promised if granted emergency powers he would have 250,000 men in camps by the end of July, 1933. The speed with which the plan moved through proposal, authorization, implementation and operation was a miracle of cooperation among all branches and agencies of the federal government. It was a mobilization of men, material and transportation on a scale never before known in time of peace. From FDR’s inauguration on March 4, 1933, to the induction of the first enrollee on April 7, only 37 days had elapsed."

As for the cost considerations, somehow we can buy surplus agricultural products (soybeans, cheese), and even buy surplus Wall Street products ("Quantitative Easing" or QE), but buying surplus labor is taboo. According to its own audit, the Federal Reserve extended $16 - $29 trillion in credit to Wall Street to cure its Ponzi schemes. The illegal war in Iraq and Afghanistan costs $3 - $7 trillion (say Nobel laureate economist Joe Stiglitz). The Fed still has $4 trillion of Wall Street dreck on its books, thanks to QE. Why can we fund all this other stuff, but not take care of ordinary people? [crickets]

The inflation concern is a complete red herring. Only a bidding war between the public and private sectors would lead to inflation, but who else is competing for the unemployed?

For more, see https://www.nakedcapitalism.com/.../jobs-guarantee-make...

Personally, I'd say the JG is a real game changer. It transforms work from a burden borne out of fear into something desirable. The savings in prisons and social safety nets alone should pay for a lot of it, but I'd suggest the transformation available will increase labor productivity and redirect human activity in beneficial ways.

The resistance will largely come from firms who claim they can't pay $15 (you know, the firms who said seat belts and catalytic converters would put an end to their industry). Even those firms could participate in such a program if government partly funded their jobs (so McDonalds pays $10/hr, and the government pays $5).

The objections are, in short, trivial. The *real* objection is that this would impair "labor discipline." In other words, the objectors in business wouldn't get to boss people around, or threaten job loss, poverty, homelessness, prison, starvation... Remember: Ending this threat would remove the whip from the hands of the plutocrats...and make life in our economy far more pleasant.

Friday, July 6, 2018

Turtles All The Way Down

Theatrical director (and M.D.) Jonathan Miller lectured to a British audience about science, and stayed afterwards when he was approached by a petite white-haired woman. She said “Your lecture was alright, but you’re wrong about the earth being suspended in space. It’s on the back of a giant turtle.” “Really,” responded Miller, “But what is under the turtle?” “Young man,” replied the woman, “it’s turtles all the way down.”

Thursday, June 21, 2018

Today's Bee Letter: Family separation at the border. (submitted, not published)


RE:6/21/18 Ruben Navarrette’s Liberals get ‘woke’ that families at the border get separated
Light a candle of the shrine of miraculous agreements! Columnist Ruben Navarrette and I agree! Trump is not the ultimate bad guy for separating immigrant families. In fact it was Obama who set the precedent, tripling his predecessors’ deportations. Trump’s direct solution: build a wall.

Unfortunately, Trump and Navarrette omit any mention of the systemic cause: U.S. military, economic and political aggression south of its borders. Between 1798 and 1994, the U.S. is responsible for 41 changes of government south of its borders, regularly supporting military juntas and dictators.

The people coming north are typically refugees, frequently fleeing problems U.S. policy created. If we’re so serious about diminishing the immigrant problem, how about we stop attacking our neighbors? Let’s not let public sympathy distract from the root of the problem.

Affordable Housing

The Sacramento Bee published it's Influencers solutions to California's housing problems.

The problem with those influencers is that none (so far) mention the real solution: Higher real estate taxes. Low real estate taxes reward land speculation, and drive prices up. Taxing the "rent" (unearned profit) out of real estate keeps prices low, and housing affordable. This is classical economics, BTW (and Henry George). Check out the case for those taxes here.



But the Bee is so liberal! No?

Tuesday, June 19, 2018

The Five Stages of Money (and why we’re stuck at stage 4)


Posted on June 18, 2018

By J.D. ALT



Like everything else, money has evolved. It began in a primitive form and morphed into something more sophisticated, more successful. Then, probing and testing for an even better form, it morphed again. A simplified history of money’s evolution can be outlined in five stages:

STAGE 1: Money is a tangible thing of value—e.g. a gold coin.

At some point in the pre-history of humankind, the “invention” of money solved a time-gap problem in cooperative trade: I’ll give you my baby goat in exchange for your flint-knife—but you have not yet made the knife, so the exchange is stymied. To solve the impasse, you give me a token of gold to temporarily stand in place of the flint-knife, so you can take my baby goat. The gold token is a promise that the knife will be delivered, and that promise is secured by the fact that the gold itself is deemed equally valuable as the knife. In the meantime, I may find someone else with a flint-knife already made who will exchange it for the gold, thus completing the trade. The invention of this place-holder transformed the cooperative trade interactions of human society.

Eventually, this stage of the invention was “perfected” with the innovation of the gold coin—a standardized golden disk, stamped out by an authority, guaranteeing that it contained a specific amount of the precious metal. Thus, the place-holder could be quickly and accurately quantified in transactions without the need for weighing or measuring.

[Note: Although it doesn't have much impact on Alt's argument, archaeology validates none of the above description of money as a substitute for barter. Instead, money appeared as payment for having offended the Gods -- so it was not an accident that there were money changers at the temple in Jerusalem. It also provided a means to repay offended families when they were injured. This prevented blood feuds and made for societal cohesion. So money was not a substitute for barter. It originated as a social construct designed to keep people of common beliefs together in a society. The barter myth apparently originated around the Renaissance. See David Graeber's Debt: The First 5,000 Years for the details here.]

STAGE 2: Money is a paper receipt for a tangible thing (e.g. a gold coin) held in safekeeping.

The next stage dramatically raises the bar for monetary convenience and safety. Instead of carrying the heavy gold or coin around and physically transferring it from person to person in transactions, the precious metal is kept in a secure vault. The owner of the gold receives a paper receipt which can claim the safe-kept gold when presented to the keeper of the vault. The paper receipt, then, is what is carried around—and is used to buy goods and services. Sellers accept the paper receipt as a place-holder because they know they can present it to the gold-keeper and receive the specified precious metal.

There are two important things to notice in Stage 2 money: First is the mechanism of “displacement.” The gold is still the physical place-holder of value, but it is operationally displaced by the paper receipts. It is possible for the paper receipts to be exchanged in many trades before one of them actually makes its way back to the safe-keeper of the gold itself.

Second, the paper receipt being traded is a receipt for a specific gold hoard safe-kept in a specific repository. Having received the paper receipt in a transaction, if you want to get your actual gold place-holder, you must present the receipt to the actual repository where that specific gold has been stored.

STAGE 3: Money is a promissory note for tangible things held in safekeeping.

Stage 3 replaces the idea of a “receipt” with the idea of a “promissory note.” This may seem like a minor detail but operationally it is a huge innovation that changes what money can do, and how it can be used.

In stage 2, the paper place-holder was a receipt for a specific hoard of gold being safe-kept at a specific repository. Your receipt could obtain that specific gold—but not, for example, a different deposit of gold being safe-kept in another, perhaps closer, repository. This inconvenience created an obstacle to trade that Stage 3 money overcame.

The innovation was the “promissory note.” This is a piece of paper that promises to exchange a specific amount of gold for the paper note. Most important, the promissory note could be presented to any safe-kept gold repository—including the one that happened to be just down the road, as opposed to one three hundred miles away. The real innovation here, obviously, was not the promissory note itself, but the cooperative arrangements and agreements between the keepers of the various gold repositories that honored this convention.

The thing to notice is that Stage 3 has added something new to the idea of “displacement.” Gold is still the physical place-holder in a trade transaction, but in addition to being operationally displaced by a piece of paper, it is now “anonymous”: While the gold held in the repositories can be claimed by specific people (the holders of the promissory notes) in specific quantities, in aggregate it is “owned” by all of them together, because any promissory note can claim gold in any repository.

The innovative result of this anonymity—and the ultimate perfection of Stage 3 money—was that the keepers of the gold repositories discovered they could legally make loans backed by the precious metal they held in safekeeping. They could do this without usurping ownership of a specific thing owned by another person. They could, in effect, evolve into what we now call “banks.” The amount of gold in safekeeping could now back-up more than one promissory note at the same time—based on a calculated improbability that more than one note would simultaneously claim the gold. As a consequence, the number of place-holders for cooperative trade, and the ease with which they could be obtained and traded, increased dramatically.

STAGE 4: Money is a promissory note for a tax credit.

Stage 3, as just described, was basically the money status quo for what we think of as modern history. Then something extraordinary happened quite by accident. As is usually the case in evolution, not only was the innovation accidental, but it is still taking time for the benefit to be understood and functionally incorporated in a new operational stage. But there can be no doubt about the fact that Stage 4 money—whether we acknowledge it or not—has arrived.

The accident happened in 1971. At that time, the U.S. dollar was a Stage 3 promissory note promising to exchange a specific amount of gold from the U.S. Treasury, on demand, to the holder of the note. In a spat between French president Charles de Gaul and U.S. president Richard Nixon, the Stage 3 cooperative arrangements and agreements were momentarily abandoned: de Gaul suddenly presented the U.S. promissory notes (dollars) held by France to the U.S. Treasury and demanded the gold in exchange!

Rather than loading ships with gold-bars from Fort Knox (America’s safekeeping repository) Nixon took the unprecedented step of declaring that the promise in the promissory notes would not be honored. U.S. dollars would no longer be exchanged, on demand, for any amount of gold at all. When he did this, Nixon (and the rest of the world) assumed it was a temporary declaration—that the U.S., France, and the rest of the world would soon negotiate a new understanding of how gold exchanges would be handled. It was a big “yawn” that, for the most part, everyone soon forgot about. Of crucial importance, however, the new gold-exchange agreements were never made, and gold quietly slipped from its role as place-holder in trade.

Even though the collective yawn was quite robust—trade amongst people and states and countries continued as always—something quite fundamental had changed. The world had transitioned to another stage of monetary evolution: Money was still a “promissory note” place-holder, but what was promised in exchange for the note was no longer an amount of gold safe-kept in some repository. The promise had been replaced with something else—but what? After half a century, the answer has yet to percolate into the awareness, understanding, and operational policies of mainstream economic thinkers and policy-makers.

In fact, the answer is clearly printed on the front of every U.S. Federal Reserve Note—the promissory notes (which we now use as dollars) that replaced the old U.S. Gold Certificates: “THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE.”

Other than stating the banal fact that you can “legally” use the U.S. dollar to buy your groceries, these words establish the very significant promise that the U.S. government will accept your Federal Reserve Note as a payment for your debt to the government—meaning, most specifically, your tax debt. More to the point, the government’s Federal Reserve Note is the only thing the government will accept as a tax payment.

The accidental innovation that created Stage 4, then, is this: Money has become a promissory note for a tax credit. A tax credit, in a society that regularly and unfailingly requires its citizens to pay taxes, it turns out, is just as valuable as a place-holder in a trade transaction as was a token of gold.

Stuck in Stage 4 with Stage 3 thinking

The innovative twist of Stage 4 money is profound: whereas the amount of Stage 3 gold a society safe-kept to back up its promissory notes was finite and limited, the number of “tax credits” a national government can issue is (a) unlimited, and (b) completely controlled by the discretion of the taxing authority. The U.S. government, in other words, has an infinite supply of U.S. tax credits in its “vault”—and it can issue them, at will, with the stroke of a keyboard.

It is critically important to see that this is different, in fact, from “printing money”—a Stage 3 transgression where promissory notes were issued without having safe-kept the gold they promised. A promissory note for a tax credit, in contrast, can always be backed up by its promise—at no cost, it should be emphasized, to the federal government.

The irony of the present moment is that even though we are now firmly established and operating with Stage 4 money, our mainstream economic planners and political leaders continue to think and operate as if we were still, somehow, in Stage 3. They behave, in other words, as if U.S. dollars are “backed” by some invisible, finite, “gold-like” resource which everyone—including the U.S. government—must compete to have some apportioned share of.

It’s very likely that it will require a new generation of economic explainers and political leaders—individuals not guarding professional claims staked out in the Stage 3 money-structures—to fully understand and utilize the innovation Stage 4 money makes possible. When that does happen, human society will move on to Stage 5. For a lot reasons, we can’t get there soon enough.

STAGE 5: Money is a mechanism for social enlightenment.

This may sound grandiose, but I’m simply referring to the ability of a large society, operating collectively, to (a) build and operate a sustainable interface with earth’s resources, and (b) actively provide each society member opportunities to optimize their potential for health and success. Understanding and creatively managing Stage 4 money makes these aspirations possible.

Specifically, Stage 5 is possible because promissory notes for tax credits can do something new. Not only can they act as place-holders in the trade of profit-making enterprises—as Stage 3 money so efficiently and effectively made possible—they can also be issued and used as direct government payments for non-profitable goods and services.This can happen because (a) it “costs” the government nothing to produce the promissory notes, and (b) they provide real income to the citizens providing the non-profit generating services. In other words, Stage 5 money can uniquely and directly be used to pay citizens, on a large scale, to undertake, design, build, and provide non-profit goods and services which, until now, could not be undertaken or accomplished without stressing the monetary system itself (i.e. by “printing money”).

Given the pressing needs America and the world now face, which profit-making enterprise has no interest in addressing—access to land and affordable housing for low-income people, global warming and rising sea-levels, climate change, drought-induced migration and catastrophic storm and wild-fire events, the collapse of ocean fisheries, loss of agricultural diversity and food self-reliance of local communities—the time for Stage 5 money is at hand. We have it in our grasp. The question is: when we will see what it is and how to use it.

Conventional and Unconventional Economics

(c) by Mark Dempsey 1. The Conventional Economics Narrative   The conventional story says national debt is a (growing) problem. The bigger i...