It's Not Socialism, It's Insanity
5/20/2009 4:28:21 PM

It is necessary now for pastors and other religious leaders to think much more seriously about economics. With the current economic meltdown things have really gotten crazy. That is, we actually have the government now bailing out major financial institutions which have become "too big to fail" which means that taxpayers have to subsidize the very people who caused the crisis in the first place. In a recent interview Naomi Klein says that this is not socialism, it is insanity.

Republicans want to call Obama a socialist, but socialism means careful government planning and regulation of the economic system. What is happening now is that government is being called upon to prop up the so-called private financial system which was built to profit those within it. The deregulation since the Reagan years has created the conditions for the few running the financial system to profit immensely at the expense of the many. Klein calls that what it is, "crony capitalism."

If you want to read a systematic presentation about all this go to this article by Simon Johnson in the current issue of the Atlantic. He worked for the International Monetary Fund and evaluates what is happening in the United States in the context of problems experienced by emerging economies. He says:

Looking just at the financial crisis (and leaving aside some problems of the larger economy), we face at least two major, interrelated problems. The first is a desperately ill banking sector that threatens to choke off any incipient recovery that the fiscal stimulus might generate. The second is a political balance of power that gives the financial sector a veto over public policy, even as that sector loses popular support.

Notice what Johnson is saying here. The financial sector has a "veto" over what government can do. So, our elected officials cannot do what they deem to be wise and best for the American people, they must do what those in positions of power in the financial sector want them to do. To see the degree to which this is true read the whole article. It is the best description of the causes for the mess we are now in.

The only way this is going to change is if the American people wake up to what is going on, to the degree to which a robbery is taking place, as Naomi Klein says, a robbery by the wealthy of the people. It is crazy and it would not be happening if we had a media that told the truth. But then, the media itself is run by corporations.

That's why it's so important for pastors and other religious leaders to begin to be clear with members of their churches about what is going on.






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Without Trust, No Economy
3/19/2009 10:14:01 PM

Michael Maccoby wrote a book years ago called The Gamesman which was the result of character studies of business leaders in the data industry. I remember it because it seemed just somewhat odd that the best metaphor these adult males could come up with for their work was a game. That is, it seemed odd because, after all, the economy is finally the source of that which is needed for the very life of ourselves as human beings. Strange to think of it merely as a game.

But it even takes some trust to enter into a game. And it takes a willingness to play by some rules. The financial speculators in the casino capitalism that was created by Republican politicians over the past couple decades did not even want to play by any rules and it was hardly a game, it was a fight in which only the "fit" survive, as they conceived it, and in such a world there is no room for trust and the sense of responsibility that makes for trust in relationships. Now that the whole thing has crashed it is going to be a very long time coming back.

Nouriel Roubini is an economist who predicted the crisis and whose prognostications are widely followed. He asks in an email today that: "Despite Interventions Global Outlook Deteriorates: A Global Growth Contraction in 2009?"

And then he says from the IMF: "Global economic activity is projected to contract by 0.5% to 1% in 2009 on an annual average basis—the first such fall in 60 years before growing 1.5-2.5% in 2010. The U.S. is expected to contract by 2.6%, the Euro area by 3.2% and Japan by 5.8% with advanced economies as a whole contracting by as much as 3.5% and emerging and developing economies likely to grow only 1.5-2.5%. The contraction in the U.S. is expected to push the output gap to levels not seen since the early 1980s. In the Euro area, the impact of falling external demand has been larger and policy stimulus more moderate than in the U.S., though automatic stabilizers are somewhat larger in the Euro area." You can read more from him at the RGE Monitor.

So it seems it will take a long time to rebuild trust. And that is going to be hard to do as long as those in business and who run businesses and the politicians who think they represent business keep thinking in the ways they have been thinking. It is bad thinking that leads to a bad economy in which there is lacking the one thing needed for any human activity of any kind, trust.


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Exposing the Dual Structure of American Governance
3/19/2009 4:59:17 PM

The current outrage over the bonuses to the very people who caused the financial crisis of the American International Group (AIG) exposes the degree to which what happens inside the modern corporation is hidden from the American public. The media tends to focus on government, and attack the missteps of governmental leaders. It provides much, much less coverage on a regular basis to the decisions inside the big business institutions which are, indeed, the other important "governing structure" of society today.

The idea is that large business is considered to be "private" and makes its decisions behind a veil called the "free market" outside of the interference of anyone and most especially the government. This is what political debates are all about. Giant abstract concepts such as "capitalism" and "socialism" are debated in earnest as if they really mean something. But what they really mean is who gets to govern the world. The free market is no longer an economic concept, it has become something akin to religious dogma and functions as an ideological means to justify the power of one institutional structure over another. The fact is that there are actually-existing institutions out there which make big decisions affecting who gets to eat, who gets what rewards from work, who gets extra benefits, and who gets what honor and glory within the community. So if you vote for someone who says he or she believes in the free market you are voting for someone who wants the power of the so-called private business enterprise to be increased in society, even when a few companies already completely dominate economic infrastructures, such as in food production and distribution. Republican politicians have been able to win elections by appeal to the free market despite the fact that it is plain to see that the market is not free, it is dominated by relatively few giant corporations.

The upshot is that now we are all coming to see that the increasing power which has been given to the private corporation has been so severely abused that the whole economy is coming crashing down. For the financial speculators and bankers operated as if they had no responsibility to anyone except to themselves and their own profits. The more they had the more they wanted.

That is now being revealed and the media is forced to cover the story. I hope we will see much more reporting of how decisions were made within these corporations and how they have benefitted at the expense of the American people. An unaccountable corporate structure can destroy this democracy where government is supposed to serve all the people.










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Uncreative Destruction
3/16/2009 11:10:45 AM

Over these several decades now as I have been reading about economic theory and practice one of the terms which is used again and again to justify capitalism is "creative destruction." The phrase comes from the economic historian Joseph A. Schumpeter who claimed that capitalism is always destroying itself from within. He used biological metaphors in his book Capitalism, Socialism and Democracy in 1942 and people have taken this to mean that it is in the "nature" of how the world works. It is a powerful idea in the belief system which is economics.

So when the cities of this country have been left behind to rot away in the last decades many people say it is merely creative destruction. Perhaps. It may also have to do with the racism that led whites to flee the city and a governmental philosophy which says that capitalism should be allowed to destroy the communities that make life meaningful to people.

These thoughts were generated when I viewed some photos at Time Magazine on the "Beautiful, Horrible Decline" of Detroit, Michigan. I do have to wonder about the values of human beings who have been in the positions of power to make the decisions which have led to the nearly systematic destruction of the creative work of previous generations in cities across this country. Real values don't matter, just the bottom line as narrowly construed.

It is time to ask whether the form of capitalism practiced in the United States has not become the enemy of a good and decent society, whether it is a belief system, not unlike aspects of religious faith, which has separated itself from reality, that is doing more destruction than positive creation. Modern folks like to blame God when bad things happen, when destruction occurs, but it is not belief in God that is powerful in the world today, it is belief in a particular form of cowboy capitalism where moral sense and community values are no longer important.




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Some Truth about Income Tax Rates
3/13/2009 3:43:12 PM

The MoveOn folks sent an item which contained a helpful chart on income tax rates. This is the sort of visual aid which tells some facts quickly. Right now there is lots of debate media debate about "rolling back" the Bush tax cuts. Television news shows allow Republicans to get bny with using these sorts of words, "rollback" as if its a massive thing. They allow Republicans to say that Obama is really a socialist and engaging in "class warfare" and hates rich people.

But the income tax rate under the Obama plan is very, very modest. The wealthiest Americans would move from a 35% rate to an 39.6% rate. Is this a rollback? At the end of Reagan's term the top rate was 50%. Under Richard Nixon? 70%. Under Dwight Eisenhower? 91%!

"And for all the whining about rolling back Bush's irresponsible tax cuts, the truth is that Obama's plan cuts taxes for 95% of working Americans. Further, it closes huge tax loopholes for oil companies, hedge funds and corporations that ship jobs overseas so that we can invest in the priorities that will get our economy back on track."

Here is the chart which originally appeared in an article in the Washington Monthly:




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CNBC: Mouthpiece for Business Ideology
3/11/2009 7:41:07 PM

Isaiah J. Poole reveals how the reporting on CNBC is not real journalism, does not provide anything close to objectivity in looking at market activity, but is a mouthpiece of business, directly. For the reporters there the prime issue is access, access to business leaders. If you report something that those leaders do not like you lose access, they won't talk to you. So then you can't tell the audience what business leaders think.

The end result is that business leaders get their views across with their ideological slant, but the audience doesn't get from the reporter even the reporter's independent perspective.

And this means that investors considering an investment in a business do not hear on CNBC the truth about the condition or worthiness of a business. These reporters do not want to report bad news on a particular business because then they lose access. So CNBC which is supposed to report business news does nothing of the sort. They report what business leaders want them to report.

But, of course, CNBC claims independence, that it is part of a "free press." The problem is that it is bought and paid for by business itself, which means it is not free at all. Free people cannot rely upon it. This is just another example of the corruption of the basic values of this country by a business class that rejects any responsibility for anyone other than themselves and their profits.

No wonder, then, that CNBC did not even begin to report on the signs of the fundamental breakdown of the economy that has now taken place. The feedback loops by which information flows from to another, which determine one's ability to see and know what is going on, are seriously broken when reporters don't report the whole truth. This further means bad decisions will be made for lack of true information, damaging everyone. But you don't want to make that chief executive mad, then he or she won't talk to you.

The Poole piece is at Campaign for America's Future.




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