economy – dowackado

Countering the mythologies of debt, the deficit, and everything

By timmukyPosted on January 16, 2013Posted in economy, neoliberalismTagged mmt, modern monetary theory, stephanie keltonNo Comments

The United States is broke. The deficits we are creating will leave our grandchildren impoverished, and horror of horrors, in hock to the Chinese! The United States must manage its finances the way any family pays its bills. On the path we are on, we are destined to turn out like Greece.

If you agree with any of the above statements, congratulations. You are in step with current conventional wisdom on the economy. Unfortunately, you are also wrong. As Matthew Stoller pointed out a year or so ago, “The U.S. government prints dollars — it can no more run out of dollars than a bowling alley can run out of strikes.” Why, then, the commonly accepted misunderstandings? It’s a long story.

I just spent a couple of unproductive hours trying to explain my conversion to the ideas behind Modern Monetary Theory, and I realize it’s pretty pointless to do so. Better to link to a few places where MMT’s leading proponents make their case. The video above offers a pretty good summary, for starters.

And of course there is the entire New Economic Perspectives blog. The concepts can be heavy sledding for someone like me, who admits to being slightly illiterate macroeconomics-wise. The discussion can quickly get too complex or too contemptuous of opposing, establishment points of view.

Stephanie Kelton, the Deficit Owl, is for me the best preacher of the MMT gospel. She’s poised, polished, articulate, and frequently funny. Also capable of reducing complex concepts to layman’s (or laywoman’s?) terms. Here is a transcript of her appearance on Harry Shearer’s excellent Le Show, and here’s a link to the podcast itself.

Last weekend Dr. Kelton was a guest on Up W/Chris Hayes discussing “the magic coin.”

Visit NBCNews.com for breaking news, world news, and news about the economy

Next, apparently, according to Kelton’s twitter feed, she’s “[g]oing on Oprah to declare truths about money/debt/deficit.” I THINK she’s joking, but wouldn’t it be nice….

In spite of the prevailing moralizing mythologies, deficits are not an indication of a nation going down the road to ruin. Too many people have accepted the argument that austerity is the only solution to the manufactured deficit crisis, that the “tough choices” we face means full employment just isn’t possible, that entitlements are out of control. The trillion-dollar coin idea may be dead (for the time being), but it brought into the mainstream a more sophisticated understanding about the nature of money, how it’s created, and what it’s for. I’m hoping the genie is out of the bottle.

Additional bonus: What is it About Money that Scares the Bejesus Out of People? is a carefully curated, and more than mildly amusing,set of twitter responses to the #mintthecoin hashtag, proof that ignorance of a subject is no obstacle to impassioned tweeting about it.

Work is dead. Happy Labor Day!

By timmukyPosted on September 3, 2011Posted in economyTagged Charles Hugh Smith, Labor’s Dwindling Share of the Economy and the Crisis of Advanced Capitalism2 Comments

Charles Hugh Smith, who blogs at oftwominds.com, has some apt if discouraging Labor Day reading in a piece titled Labor’s Dwindling Share of the Economy and the Crisis of Advanced Capitalism.

I will cheat and lead with his conclusion:

Add all this up and you have to conclude the final crisis of finance-based advanced Capitalism is finally at hand. All the “fixes” that extended its run over the past 70 years have run their course. Life will go on, of course, after the Status Quo devolves, and in my view, ridding the globe of financial predation and parasitism will be a positive step forward.

To make this case he steps through the four mechanisms that have served to stave off, temporarily, the contradictions of capitalism that came to the fore in the thirties. If this sounds like Marxism, it’s because it is.

Not sure how to keep true to this argument by excerpting and summarizing, so I will just be lazy and shovel a large, uninterrupted chunk into your lap, dear reader:

This redistributive “socialist” flavor of advanced Capitalism has bought time–the crisis of the 1930s was staved off for 70 years–but now redistribution as a saving strategy has reached its limits.

The other political-economic strategy that has been used to stave off the crisis is consumer credit: as labor’s share of the economy shrank, the middle class workforce was given massive quantities of credit, based on their earnings and on the equity of the family home.

The credit model of boosting consumption has also run its course, though the Keynesian cargo cult is still busily painting radio dials on rocks and hectoring the Economic Gods to unleash their magic “animal spirits.”

The third strategy to stave off advanced Capitalism’s crisis was to greatly expand the workforce to compensate for labor’s dwindling share of the economy. Simply put, Mom, Aunty and Sis entered the workforce en masse in the 1970s, and their earning power boosted household income enough to maintain consumption.

That gambit has run out of steam as the labor force is now shrinking for structural reasons. Though the system is eager to put Grandpa to work as a Wal-Mart greeter and Grandma to work as a retail clerk, the total number of jobs is declining, and so older workers are simply displacing younger workers. The gambit of expanding the workforce to keep finance-based Capitalism going has entered the final end-game. Moving the pawns of tax rates and fiscal stimulus around may be distracting, but neither will fix advanced finance-based Capitalism’s basic ills.

The fourth and final strategy was to exploit speculation’s ability to create phantom wealth. By unleashing the dogs of speculation via a vast expansion of credit, leverage and proxies for actual capital, i.e. derivatives, advanced finance-based Capitalism enabled the expansion of serial speculative bubbles, each of whcih created the illusion of systemically rising wealth, and each of which led to a rise in consumption as the “winners” in the speculative game spent some of their gains.

This strategy has also run its course, as the public at last grasps that bubbles must burst and the aftermath damages everyone, not just those who gambled and lost.

Two other essential conditions have also peaked: cheap energy and globalization, which opened vast new markets for both cheap labor and new consumption. As inflation explodes in China and its speculative credit-based bubbles burst, and as oil exporters increasingly consume their resources domestically, those drivers are now reversing.

Advanced Capitalism is broken for reasons conventional economics cannot dare recognize, because it would spell the end of its intellectual dominance and the end of the entire post-war political-economic paradigm that feeds it.

So, some happy thoughts to ponder, not just for us, who might squeak through, but certainly for our children and theirs.

I’m not entirely sure what he means by “advanced finance-based global Capitalism will unravel as a result of the internal dynamics described above, and be replaced with an economic and political Localism.” Apparently, you’ll have to invest in Smith’s book to really understand…..

“a nation where No lovely thing can last”

By timmukyPosted on November 15, 2010Posted in economy, environment, farming, food, militarism, sustainable, warTagged wendell berryNo Comments

For what it’s worth, Wendell Berry gets a good deal of the blame and/or thanks for my move, from New York City to my wife’s family farm in central Kentucky, and for my haphazard Adventures in Farming.

For some time, I wrote a blog inspired in part by a poem of his.

So far my actual agrarian experience has not exactly resembled that enjoyed by Berry on his Henry County farm. I am not using draft horses, and, in spite of my best efforts, am surely not making the wisest use of the land and resources at my disposal. Nor am I writing with pencil and 1957 vintage Royal typewriter. My household has not one, but four computers, as well as four vehicles, all with between 140,000 and 210,000 miles on the odometer.

In darker moments, I think my rustic idyll seems more akin to that of the fictional farmer Jean de Florette, an eager, idealistic city-slicker accountant who moves to Provence from Paris, and is driven to madness, to bankruptcy, to death, by unkind weather and scheming provincials. (At this point, I am only partway to madness. Bankruptcy and death still seem to be a good way in the distance.)

Still, Berry’s ideas and attitude loom large over many of my daily actions. Sometimes I feel I should have a wristband engraved with the letters, WWWD (What Would Wendell Do?).

I came face to face with him at a Kentucky Book Fair a few years back. He signed the book I had asked him to sign, and looked up with expectation of conversation of some sort, but all I could conjure was a Ralph Kramden-esque “hummana hummana”.

It has dawned on my in recent months that I am not him, and can never be. There are some, many of his ideas and practices that I strive to adopt, but he has set the bar at a great height. I try as much as I can to be sustainable and conscious in everything I do, but realize that most of the time I fall far short. I realize he might tut-tut the fact that I like to play golf, have 6,000 songs in my ITunes, quaff a 30-pack of Old Style every week, subscribe to women’s fashion magazines. I am pretty sure he would not find much to be amused by in Zoolander or Caddyshack.

Having gotten all that out of the way, I would submit, without fear of overstatement, that he would get my vote for the Greatest Kentuckian Living (well back in the distance: a boxer from Louisville, and a girl singer from Butcher Holler). His poetry can be absolutely transcendent. (start here for a sampling); his fictional world a rival to that of Faulkner for completeness and depth; and his essays are at once uplifting and, as I have hinted here, impossibly challenging.

He will be speaking in several venues in Danville for the entire day, which is pretty thrilling to me. If child care obligations can be rearranged, I am hoping to see him at least once, if not twice.

In preparing for his visit, I have been re-reading some of his essays, and have come across some things I had not seen.

I particularly enjoyed his “Why I am NOT going to buy a computer” from 1987, which comes complete with a series of passionate reactions from readers of Harper‘s magazine, where it was reprinted in the late 80s. Berry’s answers to those reactions, also included, show the man at his most crotchety (to me, a good thing) and most caustic.

Through the genius of hypertext (an innovation Berry finds close to hilarious), that essay links to “The joy of sales resistance”, featuring one of his most contrarian, unpopular (and spot-on) ideas, that education has been turned into just another commodity.

This is another highly acerbic essay, one in which Multiculturalism, the Free Market, and Unlimited Economic Growth come in for a mauling. Though written in the early nineties, it contains what would be a great manifesto for the modern conservative movement, and a large segment of the Democratic Party (although it would surely not be recognized as satire):

Reduce the Government. The government should only be big enough to annihilate any country and (if necessary) every country, to spy on its citizens and on other governments, to keep big secrets, and to see to the health and happiness of large corporations. A government thus reduced will be almost too small to notice and will require almost no taxes and spend almost no money.

Looking for an arbitrary way to wind up this drifting meditation, here, without further comment, a poem from A Timbered Choir—The Sabbath Poems 1979-1997:

The year begins with war.

Our bombs fall day and night,

Hour after hour, by death

Abroad appeasing wrath,

Folly, and greed at home.

Upon our giddy tower

We’d oversway the world.

Our hate comes down to kill

Those whom we do not see,

For we have given up

Our sight to those in power

And to machines, and now

Are blind to all the world.

This is a nation where

No lovely thing can last.

We trample, gouge, and blast;

The people leave the land;

The land flows to the sea.

Fine men and women die,

The fine old houses fall,

The fine old trees come down:

Highway and shopping mall

Still guarantee the right

And liberty to be

A peaceful murderer,

A murderous worshipper,

A slender glutton, Forgiving

No enemy, forgiven

By none, we live the death

Of liberty, become

What we have feared to be.

Are the Dems stupid? Or not?

By timmukyPosted on September 8, 2010Posted in bailout, corporatism, corruption, economy, neoliberalism, plus ca change, politics, populism, prioritiesTagged bob dole, firedoglake, marv albert, rahm emanuel, tom daschle, WITH AUTHORITYNo Comments

Money makes the Democrats stupid is a pretty decent rant by Eli at Firedoglake.

The Republicans, he observes, have a big advantage in terms of money because the ideology of conservatism lines up perfectly with giving rich people and corporations more money and power.

Not because they have more [money], although they usually do. No, it’s because their base is almost completely aligned with their corporate and wealthy big-money donors, while the Democratic base is the complete opposite.

Republicans can deliver their megadonors tax cuts, deregulation, corporate welfare, and protection from prosecution, all cocooned in a conservative narrative of supply-side economics, free enterprise, and independent frontier can-do spirit that their base just loves.

Contrast this with the Dems, who, with a few exceptions, are pretty much on the same level in terms of greed and lack of scruples. But they have this nagging problem with their party’s (purported) ideology, which isn’t a good fit. They have to be sneaky because “there’s simply no way to spin pro-corporate, pro-wealth policies as congruent with progressive values.”

The best they can manage is to play the DLC/Third Way game of pretending that capitulation is really some kind of principled pragmatic centrism which is the only way to win elections or get anything done against the all-powerful GOP and its 55 49 40 41 Senate seats.

Some of the base reluctantly goes along with this because half a loaf is better than the enemy of the good or whatever, but none of us are particularly happy about always settling for a compromise of a compromise of a compromise. Think how much leverage Obama and the Democrats had after two huge electoral landslides, a huge Republican-branded financial crisis, and a huge congressional majority… and how little they did with it. They didn’t deliver on progressive priorities because that wasn’t what their big campaign donors wanted.

And now they’ve failed so miserably, sold out so blatantly, demoralized their base so completely, and ceded the populist ground so thoroughly to the Tea Party, that they’re on the brink of losing the House and maybe even the Senate. All of the Democrats’ kabuki to protect their corporate friends so they could rake in campaign cash and get re-elected will end up costing them their seats instead. Because it is possible to fuck up so badly and so obviously that all the money in the world can’t save you. Just ask the Republicans.

I like this, and I’m down with Eli’s disgust, but wonder if he might be missing something, like maybe the fact that it’s on purpose?

Not sure about this, but I’ll throw it out there and wonder aloud if perhaps we are in for a few decades where control of Congress (and maybe the Presidency) will swing from party to party with every election.

The Party Out of Power promises Change, gets in power, doesn’t change anything, and is sent packing. Or it promises to reverse the Mooslem Socialist Mismanagement of this Once-Great Nation. Until the voters realize they get screwed there too. Rinse and repeat.

Either way the party pros win. If in power, hey, you’re In Power. Out of Power you can make massive amounts of money in the private sector. (Think of Rahm’s waltz with hedge fund Magnetar Capital. Think Tom Daschle. Bob Dole.) Leverage your public service. G’head. You earned it. Take a position with one of the corporations you’ll be in charge of “regulating” when you get back into power. Money’s much better, and you will probably get to spend a little more time with the family.

And don’t worry. You’ll be back in D.C. before you know it. Count on the Other Party not satisfying those pesky voters either. Because there’s no way the non-rich 95 percent can be satisfied–unless legislation happens that actually reverses the flow of wealth. And both parties have shown how firmly they are allied on the issue of wealth distribution.

At the moment, polls indicate voters will throw the current regime out, WITH AUTHORITY as Marv Albert used to say…. To replace it with a regime that makes no bones about its intention to give an ever bigger piece of the pie to the wealthy and powerful.

Does that makes sense? Not so much. Will it work for a few more election cycles? I wouldn’t bet against it.

Green thumbs up: Shopping malls into greenhouses

By timmukyPosted on March 10, 2010Posted in economy, environment, gardening, re-ruralization, sustainableTagged consumerism, greenhouse, kevin bacon, re-ruralization, shopping mall, stir of echoes, urban agricultureNo Comments

Been in the garden digging. Digging like Kevin Bacon. Have you ever seen Stir of Echoes, where Bacon’s character, post-hypnosis, starts tearing up his garden and even basement? “I’m supposed to dig,” is all he can say, except when he mutters, “Tools.”

That’s how I feel this time of year. Dig. Dirt. Tools.

And it puts me in a good mood, a good enough mood to post a link to a story that is not along my customary lines of how we’re being boiled alive like a potful of oblivious frogs by a predatory militarist corporatist state. No, reader, this story is a happy one, or at least it features cause for optimism. It’s about one of the best simple ideas I’ve heard in a while: turning unused (or, in this case, underused) mall space into a greenhouse/farm stand.

From Fast Company:

Shopping malls, those bastions of American consumerism, have not been immune to the recent economic downturn. In a recent piece by our own Greg Lindsay, we looked at the impending decline of the mall, which is part of the “single-use environment” category of real estate development that will slowly disappear over the next thirty years, according to one developer. But what will replace these environments, and more importantly, what will happen to the massive malls of today?

One possible solution can be seen in Cleveland’s Galleria mall. The mall lost many of its retail shops over the past few years, leaving gaping holes in the greenhouse-like space. So employees of the Galleria came up with the idea for the Gardens Under Glass project, a so-called urban ecovillage inside the mall that features carts of fruits and vegetables grown on-site. The project was recently given a $30,000 start-up grant from Cleveland’s Civic Innovation Lab.

In the past I’ve written about Detroit and its gradual, if not exactly planned, transition from urban back to rural. Fast Company’s Ariel Schwartz notices the same thing:

We can see it now: the malls of today turned into the suburban (and urban) farming powerhouses of tomorrow. And while we’re at it, why not turn entire economically depressed cities into agricultural centers as well? It’s already happening in Detroit, where entrepreneurs are turning vacant lots into factory-side farms. And if Cleveland’s mall farm works out, maybe New Jersey can become the next big agricultural innovator–the state has the most malls per square mile in the country.

Re-ruralization. It’s already happening. Cool.

$57,077.60 a minute

By timmukyPosted on December 18, 2009Posted in afghanistan, economy, militarism, warTagged cost of war, mcchrystal, national priorities project, obama, spending, surge, vietnam, warNo Comments

afghan strategy chart — An extremely reassuring chart

On Tomdispatch, Jo Comerford of the National Priorities Project lays out the costs of the Afghan “surge” and it comes to, oh, $57,077.60 a MINUTE!

Some of the more jaw-dropping facts:

[A]dd up the yearly salary of a Marine from Camp Lejeune with four years of service, throw in his or her housing allowance, additional pay for dependents, and bonus pay for hazardous duty, imminent danger, and family separation, and you’ll still be many thousands of dollars short of that single minute’s sum.

…. we might have chosen to direct the $30 billion in surge expenditures toward raising the average individual monthly Food Stamp allotment by $70 for the next year; that’s roughly an additional trip to the grocery store, every month, for 36 million people. Alternatively, we could have dedicated that $30 billion to job creation. According to a recent report issued by the Political Economy Research Institute, that sum could generate a whopping 537,810 construction jobs, 541,080 positions in healthcare, fund 742,740 teachers or employ 831,390 mass transit workers.

…. [I]f you received a silver dollar every second, it would take you 960 years to haul in that $30 billion. Not that anyone could hold so much money. Together, the coins would weigh nearly 120,000 tons, or more than the poundage of 21,000 Asian elephants, an aircraft carrier, or the Washington Monument. Converted to dollar bills and laid end-to-end, $30 billion would reach 2.9 million miles or 120 times around the Earth.

And the numbers being bandied about are, big surprise here, lowball estimates. What we are looking at is a trillion dollar price tag for the war. Singular. Not a trillion for both Iraq and Afghanistan. Just Afghanistan.

Comerford concludes:

At just under one-third of the 2010 U.S. federal budget, $1 trillion essentially defies per-hour-per-soldier calculations. It dwarfs all other nations’ military spending, let alone their spending on war. It makes a mockery of food stamps and schools. To make sense of this cost, we need to leave civilian life behind entirely and turn to another war. We have to reach back to the Vietnam War, which in today’s dollars cost $709.9 billion — or $300 billion less than the total cost of the two wars we’re still fighting, with no end in sight, or even $300 billion less than the long war we may yet fight in Afghanistan.

But if you’re like me, one look at that chart and you know it’s gonna be worth it!

If only…

By timmukyPosted on November 20, 2009Posted in afghanistan, economy, militarism, politics, warTagged afghanistan, obama, politics, warNo Comments

Tom Englehardt has an excellent post on the speech Obama should give, but never will.

Tonight, in response to the realities of Afghanistan as I’ve just described them to you, I’ve put aside all the subjects that ordinarily obsess Washington, especially whether an American president can reverse the direction of a war and still have an electoral future. That’s for the American people, and them alone, to decide….

Given that, let me say as bluntly as I can that I have decided to send no more troops to Afghanistan. Beyond that, I believe it is in the national interest of the American people that this war, like the Iraq War, be drawn down. Over time, our troops and resources will be brought home in an orderly fashion, while we ensure that we provide adequate security for the men and women of our Armed Forces. Ours will be an administration that will stand or fall, as of today, on this essential position: that we ended, rather than extended, two wars.

It’s quite a thought. And of course the consequences of NOT making this speech are cataclysmic for the rest of us. But for the ruling party, short-term calculations trump everything. Better to keep spending a trillion a year on ~~defense~~ keeping the war juggernaut going, than to risk losing a couple seats in the mid-terms.

Populism 101

By timmukyPosted on October 27, 2009Posted in economy, politics, populismTagged economy, politics, populismNo Comments

Matt Taibbi calls this viral video from last week “like the most awesome thing ever.” As much as I like Taibbi, I can’t really go along all the way with him on that one. I like that this mad batsman has done his homework (and he has a damned nice stroke). The guy apparently has a head for numbers and he sees quite clearly that the numbers for the economy don’t come close to adding up. But he sort of loses me when he says no one with a name “like” Barrack Hussein Obama is going to solve our problems. Still, I chucked at a lot of this, was frightened by even more of it.

This is more evidence of a new populism that I can go along with about 90% (which is about as far as I can go with any movement/party). Dylan Ratigan is probably the public face of it, and he will only grow in stature, or get fired. He too is majorly pissed off and quite articulate, and has a bully pulpit. There are real protests in the streets of Chicago, and not by the usual suspects either. It’s not left wing or right wing. It’s kind of outsider vs. insider. And I think its adherents are onto something.

Populism often involves a fair bit of misdirected rage and scapegoating–at Obama personally, at immigrants–but a lot of it is spot on, targeting the bipartisan effort to steer absolutely massive amounts of money to the big banks and the weird organism that Wall Street has become (Taibbi’s notorious “vampire squid” image* comes to mind). The bailouts and the health reform (all but certain to be complicated and low impact, even if passed), trivial pursuits in a time of great crisis, show both parties to be entrenched, dedicated opponents to the common good. Whether a viable alternative presents itself is an interesting question to be watched over the next couple of elections. Or it might be something even worse. That’s in the populist DNA as well.

_______________________
* “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”