Any American who is thinking about voting in November should have a firm grasp of the economic arguments the candidates are making.
The Republicans are all pushing supply-side, top-down economics, which HAS NEVER BEEN SHOWN TO WORK.
Voodoo economics is alive and well in American, despite failing to prevent or curtail the current downturn.
The wealthy are taxed less than they have been in my lifetime, and none of the “trickle-down” benefits have yet made an appearence.
President Obama is firmly in the Keynesian camp, and despite some acknowledged problems, this was the model that got us out of the last Depression and paved the way for a half century of prosperity in America.
David Brin lays it all out in a brilliant post:
Also see his: A Primer on Supply-Side vs Demand-Side Economics
My favorite bit of irony from Brin’s primer is that Supply-Side Economics (SSE) is a Marxist idea:
Interestingly, the most famous proponent of this approach was Karl Marx, who maintained that the owner-capitalist class propels industrial development by re-investing profits in plants and equipment, thus building up society’s capital stock and the means of production. SSE is, in that respect, an entirely Marxist theory.
Of course, Marx then looked farther ahead. He hypothesized an eventual “completion” of this capital-formation process, a final phase when all the factories are finished – an image we now find ludicrous, since productive capacity must be updated at an accelerating pace. (Hence there will always be a need for capitalists.) Still, it seems kind of sad that SSE supporters won’t ever acknowledge this fundamental root of their theory. They do not study their ideological forebear. Nor do they try, as Marx did, to extrapolate where their prescription may eventually lead.
In the new post on the investment incentive of cutting taxes on the wealthy, Brin does a lengthy takedown of the underpinnings of SSE
and compares it to the actual success of the Keynesian approach:
What we need in this depression – and by most of the metrics it has been a depression, not a recession – what’s needed is what ended the last one. The circulation of high velocity money that goes hand to hand very quickly, generating economic activity with every transaction. Not the exact opposite, money that sits in portfolios, not helping capitalize industry but simply fostering the aggrandizement of a parasitic caste. One of the founding father of free enterprise – Adam Smith himself – quite despised.
“All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind. As soon, therefore, as they could find a method of consuming the whole value of their rents themselves, they had no disposition to share them with any other persons.”
So, for some reason we have an uphill struggle against proponents of an idea that has failed spectacularly on many occasions. Meanwhile a tried and true approach to getting the economy roaring is mocked and relagated to the status of “liberal fantasy”.
With the current example of failed European austerity policies (in the place of government spending), you would think that most people who pay attention would begin to understand that the “parasitic caste” that Brin describes is pulling the wool over people’s eyes.
- Supply-Side Guru Backs Gingrich (myfoxny.com)
- Ronald Reagan Practiced Keynesian Economics Successfully (usnews.com)
Science Fiction author David Brin posted Saturday with an insightful piece on several of the problems that are conspiring to actually rob us of liberty.
With an 11% approval rating, you would not be alone, and here are some of the reasons why this may be the case:
The oft-noted phenomenon where Americans hate Congress but love their particular representative is undoubtedly the result of Gerrymandering. The practice leads to homogenization of districts and thus to hyper-partisanship and marginalization of minority (in the sense of political ideas) voices in districts designed to favor candidates of one party or the other.
For balance, this isn’t strictly a partisan issue — Maryland recently went through a bought of the deplorable practice in favor of Democratic candidates. But Gerrymandering is extremely harmful to obtaining consensus and moving forward to solving problems; regardless of who does it.
However, an equally important factor in dividing and immobilizing progress in our political sausage-factory is Republican intransigence and their outright war on facts and science:
I have long pointed out that Newt Gingrich’s Republican Revolution of 1995 started out with some impressive activity. Part of it was disturbing, like the banishing of all scientific advisory staff from Congress, freeing right-wing members to simply declare any facts they felt like uttering. This action was an early harbinger of what became today’s pyrotechnic, outright and open War on Science.
Republicans moved from being merely disagreeable in the mid-1990’s to claiming their rightful mantle as the party of “NO” after 2000. As an example, Brin notes that the Affordable Care Act (Obamacare) is almost exactly modeled on the Republican’s own counter plan in response to Hillary Clinton‘s health care reform proposal. Only now, the same provisions (including the same “market-based” solutions and individual mandates) are now considered horribly socialist.
He explains, “Republicans under Gingrich, in the 1990s, appeared to (occasionally) want to deliberate, negotiate, dicker, come up with some way to move ahead”.
Now they don’t.
And Brin also offers an important note:
…the GOP-led Congresses from 1996 through 2006 were also the laziest and least effective in 100 years.
I don’t say that from any “liberal” perspective. Rather, I base it on objective and unambiguous standards of hard work, time and productivity. Giving their employers what they pay for. The recent Republican Congresses passed fewer bills, held fewer hearings, issued fewer subpoenas and held fewer days in active session than almost any other since the era of William McKinley. The record is damn near perfect. There are no metrics of legislative or deliberative indolence that weren’t broken by the GOP-led Congresses of the last decade or so.
…The GOP owned Congress and the Courts for ten years, and operated all three branches of government for six of those years, with nothing whatsoever to stop them from passing anything they wanted. Yet, amid a tsunami of complaints, they would not even issue subpoenas or hold investigations to harass their enemies! Nor even show up on days that they were paid to.
Americans are acutely aware that we currently have a “do-nothing Congress” but most, shackled by their party loyalties, fail to examine why this is the case.
It certain appears that there is a clear pattern over several decades of GOP candidates using social “wedge issues” to bait their base into the polling places. However, unless some of the more rabid Tea Party candidates manage to convince the Republican establishment otherwise, that base is likely to have a long wait for their “representatives” to introduce legislation to make good on their promises.
Although Brin only gives a brief mention the impeachment debacle, which I feel was defining moment in the ongoing GOP transformation, he is on point with his main observation — given the power to make good on overturning abortion rights and ending Social Security and Welfare, they did nothing.
On the Democratic side, to be fair, candidates have not delivered on a number of issues important to its base, but for the large part, few if any of the candidates even promise to do so. The once progressive party has shifted to the corporate middle as well, with disastrous consequences.
I and other liberals have been very critical of the Obama administration for such lapses, but for anyone paying attention during the 2008 campaign, Obama never promised anything on the checklist of progressive agenda.
There are a few fighters out there, but they are mostly ignored by the Democratic establishment, busy with deregulating and giving up at the earliest sign of Republican resistance to their most tepid requests for any legislative change designed to aid anyone not in the 1%.
On the other hand, this Republican unwillingness to do anything may lead many to question why a group of people so opposed to governing bothers to run for office.
The answer becomes clear when you look at what legislation did pass during those years (admittedly with the help of many Democrats):
One constituency actually got enough attention to get bills passed. Do you remember which? De-regulation of the banking and mortgage and credit industries. Liberation of Wall Street gamblers. Removal of gas mileage standards. Plenty of the sort of thing that sent our economy toward a cliff.
Wall Street and corporations pay the bills and lines the pockets of politicians looking out for their most important constituent; themselves.
Brin also brings in the fact that voting machines are ALL manufactured by the very same far-right company (under several subsidiaries) and that those machines are extremely hackable and insecure — making the result of elections more than a little questionable.
To close out the list he takes a shot at the Citizen’s United ruling that Stephen Colbert has made a mockery of quite effectively:
All of these forces are working to removing the power from the people and concentrate it in the hands of a few very wealthy people. It is not hyperbole to suggest that this arrangement will lead directly to less liberty for the majority of Americans.
The only way to stop this from happening is to get the money out of the system — and no who can make a difference is proposing this at all.
That’s what is missing from the 2012 presidential race and out national conversation.
- David Brin’s Take on Income Inequality (wcward57.wordpress.com)
There are a lot of very good reasons to institute a Financial Transaction Tax (FTT).
A small (0.05 to 0.1 percent for each transaction) FTT would generate billions in profit which could be used to make up the deficit in this country.
A few months ago former French foreign minister Philippe Douste-Blazy wrote an NYT opinion piece about the recent European Commission proposal of an FTT to help alleviate the crisis there:
Douste-Blazy chairs Unitaid and is also a special adviser to the United Nations secretary general on innovative financing, so he has an interest in generating revenue to help poorer countries affected the economic downturn.
A similar tax has already been instituted in Britain. It brings in $6 billion annually — with no measurable effect on the market.
Not surprisingly, the main argument against the FTT is that it would inhibit “market efficiency”.
Read the article. But note that it does not mention the top reason for such a tax! That it might benefit real human investors by slowing finance and equity trading back down to the speed of human thought.
Would that necessarily be a good thing? The concocted rationalization you will hear, in opposition to this proposal, is called “market efficiency.” According to what’s become a bona fide cult, any process or innovation that allows ever-smaller increments of trade to happen ever-faster is “efficiency,” and that will automatically lead to better allocation of society’s capital, and thus a skyrocketing economy.
This is wrong in many ways, starting with the pure fact that the flourishing of fast-cybernetic trading has directly correlated with the steepest decline in the health of capital markets in a century. Indeed, the increase in market volatility that we have seen lately, with sudden spikes in apparently random directions, can be generally attributed to this trend.
According to Brin and Wall Street Analyst Peter Cohan, approximately 70 percent of the volume of trading done on the Stock Exchange is performed by “flash traders” — computers that buy and hold stocks for approximately 11 seconds before selling them again.
These trades, based on increasingly complex algorithms developed from studies of human psychology are often counterintuitive and increase market volatility.
It is becoming less and less clear why markets plunge and soar.
But that’s not the final and most terrifying argument Brin makes:
Take those high-speed trading systems we’ve been discussing. They are growing incredibly sophisticated, at a very rapid rate, absorbing and incorporating models of human psychology, with one goal in mind. To appraise and predict behavior patterns in order for the program to track and to pounce on opportunities for predatory trading. Competitive ferocity is the only criterion for success. Indeed, if you were to even propose inserting balancing factors like ethics or morality or accountability into such a project, you’d at-minimum be laughed down and probably fired.
Moreover, these systems are receiving billions in funding (including their own new transatlantic fiber cable) entirely in secret. There are no public agencies involved. No third party observers. No Congressional oversight committees. No supervision whatsoever. Laboratories developing new genetic strains of wheat are under closer accountability than cryptic Wall Street think tanks that may unleash the first fully autonomous AI… programmed deliberately to have only the behavior patterns, goals, attitudes and morality of parasites.
And so we see the ultimate reason to demand the Transaction Fee. At a low level – say 0.1% – it would never bother a private citizen who is optimizing his portfolio on E-Trade, especially if each trader gets a hundred or so “freebies” that come exempt from the tax. But it would remove the horrific incentives that Wall Street “geniuses” now feel compelled by, to invest in these monstrous, hyper-fast trading programs that swamp the market in a blizzard of uncountable mosquito bites.
The fee (which could also help balance our budget) can be tuned to give that human a fighting chance and to discourage the very worst kind of artificial intelligence from leaping upon our necks out of the dark.
Defeat Skynet. Institute the FTT!
- Time for a financial transactions tax (cbsnews.com)
- Bill Nighy: Robin Hood Tax Can Still be Agreed at the G20 (huffingtonpost.co.uk)
A nice long dissection of Rand’s Atlas Shrugged by Libertarian and Science Fiction writer David Brin:
His take on Randians:
The film then resumed a level of simplistic lapel-grabbing that many of us recall from our Rand-obsessed college friends — underachievers who kept grumbling from their sheltered, coddled lives, utterly convinced that they’d do much better in a world of dog-eat-dog. (Using my sf’nal powers, I have checked-out all the nearby parallel worlds where that happened; in those realms, every Randian I know was quickly turned into a slave or dog food. Sorry fellows.)
I can’t wait until Brin takes on “Avatar” which he has promised in the near future.
Some good stuff there, covering a gamut from lists of good science fiction books for teens to a post eviscerating Frank Miller’s “The 300” in response to Miller’s nasty swipe at the Occupy Wall Street protesters.
* Ask your “ostrich” friends: “Tell us how to avoid “class war” now that 400 families own a greater share of our wealth than 50% of Americans. Is there some disparity that would finally make you worry? When they own more than 75%…Perhaps more than 90%? WHEN will you admit that we’ve returned to the normal condition that reigned in 99% of human cultures? Then will you admit that FDR wasn’t Satan, or that our parents in the “greatest generation” weren’t complete idiots, after all?”
He’s promised to take on the film version of Atlas Shrugged and Avatar, which should be interesting.
I highly recommend taking a look!
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