Re: The State of the Union

There are so many nits to pick, foolish claims to debunk, neoliberal hooey to ridicule…. I shall limit myself to three points the President failed to address last night:

  • Weakening the dollar
  • Dismantling America’s empire
  • Planned reindustrialization

A strong dollar cheapens the price of America’s imports. It also feeds Wall Street with foreign capital. It is, in other words, the chief reason the United States has a service economy dominated by the FIRE sector.

America’s empire absorbs capital and labor power, it wastes both on non-consumable goods, it drives the growth of the security-surveillance apparatus, it directly and indirectly undermines the Constitution and it creates political and military debacles which produce blowback. It must go as quickly as it can be safely dismantled.

Education and training will do Americans little good if they fail to find jobs which make use of their cultural capital. In fact, an educated and trained work force that fails to make good on its talents is one that wastes resources. To avoid wasting these resources, the United States ought to institute an industrial planning agency with the capital resources and legal means to develop an ecologically sound industrial sector. It makes no sense to demand a low rate of employment for a well-educated workforce when those workers will work at service sector jobs that pay little.

These reforms are radical with respect to the social system now in place. If achieved,they would decisively change the identity of that system. But they are not comprehensive and do not touch on so many related problems that would also need to be addressed. These include reforming the tax code, making it strongly progressive; developing public transportation; reforming the campaign-finance laws; etc. But the three points listed above would be one place to start.

Sha na na na, sha na na na na….

Mark Weisbrot shows that the America’s recovery from the Great Depression was hardly a recovery at all:

The U.S. recession officially ended in June of 2009, but most Americans don’t feel like we are in a recovery. That’s because it’s been a weak recovery, with the size of the economy barely bigger today than it was four years ago, when the recession started.

Since America is a rich country, it is not growth itself that matters most but employment and, of course, the distribution of income. And the employment numbers are just terrible.

The simplest measure is the percentage of the working-age population that is employed. That peaked at 63.4 percent in December 2006. It plummeted to a low of 58.2 percent last July and is hardly different now — 58.5 percent in the latest figures.

What this means is that we need about 10 million jobs to get back to full employment. There was a lot of happy talk earlier this month when the December job numbers were released. They showed 200,000 payroll jobs added in December, and the unemployment rate falling to 8.5 percent. Adding even 200,000 jobs a month is not very good for an economy that needs at least 90,000-100,000 jobs a month just to keep up with the growth of the working-age population.

And as my colleague Dean Baker pointed out, the latest jobs numbers have probably been over-optimistic. Realistically, he notes, at present trends of job growth we will not hit full employment until 2028. This would be an economic failure of disastrous proportions.

Chairs moving around the deck

According to a New York Times report:

After crisis talks on Sunday night, Prime Minister George Papandreou and his main rival agreed to create a new unity government in Greece that will not be led by Mr. Papandreou, according to a statement released Sunday night by the Greek president, who mediated the talks.

Mr. Papandreou and the opposition leader Antonis Samaras agreed to meet again on Monday to hammer out the details. The name of the new prime minister is not expected until then.

The new government is intended to govern for several months to put in place a debt agreement with the European Union, a step European leaders consider crucial to shoring up the euro. Then it is to hold a general election and dissolve.

The new government will unify around imposing a new austerity regime on Greece. It will exist only to serve that end. To be sure, this will not be an all-inclusive political settlement. After all, the government will not include representatives of the Greek protesters who have made their will known on this matter. It will merely be a unified Greek elite who will stand alongside of European Union political elite.

Quote of the day

Paul Krugman, once again:

Financial markets are cheering the deal that emerged from Brussels early Thursday morning. Indeed, relative to what could have happened — an acrimonious failure to agree on anything — the fact that European leaders agreed on something, however vague the details and however inadequate it may prove, is a positive development.

But it’s worth stepping back to look at the larger picture, namely the abject failure of an economic doctrine — a doctrine that has inflicted huge damage both in Europe and in the United States.

The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price. So a crisis brought on by deregulation becomes a reason to move even further to the right; a time of mass unemployment, instead of spurring public efforts to create jobs, becomes an era of austerity, in which government spending and social programs are slashed.

This doctrine was sold both with claims that there was no alternative — that both bailouts and spending cuts were necessary to satisfy financial markets — and with claims that fiscal austerity would actually create jobs. The idea was that spending cuts would make consumers and businesses more confident. And this confidence would supposedly stimulate private spending, more than offsetting the depressing effects of government cutbacks.

Quote of the day

Writing for In These Times, Michelle Chen reports:

Everyone knew it was a losing battle, but everyone showed up anyway. In an uprising virtually unprecedented in its size, scope and diversity, malcontents united across Greece to push back against the government’s assault on working people.

This week’s 48-hour strike drew workers from both public and private sectors, students, the unemployed — just about everyone about to get smacked with the austerity measures that the Parliament has approved under pressure from IMF and Eurozone officials. With tens of thousands of civil service jobs to be downsized, pensions and wages to be gutted, and labor and civil rights under siege, the people’s upheaval has proven as severe and persistent as the fiscal butchery that politicians keep ramming down their throats.

People took to the streets because they had nothing to lose. As one protester, civil engineer Vagelis Filezis, told CNN, “We have no hope. The only hope we have is the strength of the people.”

Greeks defend their society against the EU

A General Strike in Greece

Mike Lee likes California so much

Senator Mike Lee (R-UT), Senate class of 2010, wants a Constitutional amendment to impose a ⅔rds supermajority requirement on the Congress whenever it votes for a tax increase. This, of course, is the Constitutional limit on democratic governance that has made California a basket case economy. Lee discussed his desires on Hardball with an incredulous Chris Mathews:

Ian Millhiser of ThinkProgress calls Lee’s gambit extortion:

So Lee wants to rewrite our Constitution to [sic] that the American people must always live under conservative governance, regardless of who they elect, and he’s got a simple plan to force his colleagues in Congress to make this happen. That’s a mighty nice economy we’ve got here, it would be a shame if Mike Lee had to break it.

And so it is.

Quote of the day

Paul Krugman writes:

These are interesting times — and I mean that in the worst way. Right now we’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Capital’s iron fist

After reading the transcript of Obama’s 7.11.2011 Press Conference, I would normally feel the need to say something snarky about lesser-evil voting and the ‘pragmatic attitude’ which motivates the left to throw its lot in with the Democratic Party. But there is no reason to do that now. Obama has shown himself to be such a tool that only those leftwingers who refuse to see something so plain and obvious as him would continue to support him and his party.

I suppose we can be grateful for one thing. The Democratic Party, thanks to Obama’s brutal economic project, can no longer pretend to be the party for the rest of us. It today stands tall as capital’s naked iron fist. The Republicans should stand in awe of what Obama is now proposing, of what he wants to accomplish.

I heard a sound of exasperation over the bleating of the sheep and the growls of the wolves

With America’s recent and dismal unemployment report in his hand, Marshall Auerback, a heterodox economist, was prompted to exclaim:

The collective embrace of fiscal austerity has gone beyond perverse. It’s as if Josef Mengele was reborn as an economist, working on some weird new social experiment to inflict the maximum amount of damage on the maximum amount of people. It’s a sick variation on that old joke:

Patient: “Doctor, it hurts when I do this.”

Doctor: “Then keep doing it.”

Famine in Africa

I believe Auerback wrote this bit of gallows humor because the deficit hysterics, market fundamentalists and con artists now holding decisive political and economic influence and power care not one bit about the misery their preferred policies will generate when implemented. And it is easy to see why a professional economist like Auerback would feel as he does when the powerful in the world appear willing to piously affirm economic orthodoxy while the republic and its political economy burn to the ground. Indeed, our elite seem to want to intensify and expand the destruction.

I, for one, wonder whether these influential and powerful men and women are just stupid and do not know what they are doing or whether they will intentionally destroy the lives of so many people, doing so just because they who have a lot will also get much more.

If I were to place a wager on these alternatives, I would choose the second option. I would feel secure when placing my bet because neoliberalism in practice has already laid waste to much of the planet. Its prescriptions have been revealed to be worthless when formed into a developmental program or a program for economic growth. They produce individual and collective suffering around the world. Who amongst the influential and powerful could now claim to be unaware of this historical failure? Anyone? Today these prescriptions are just nostrums used by a group of class warriors. They indicate an elite preference to take more of the stuff in the world when that stuff it there to be taken. And it is unfortunate that they now inform the program President Obama and his GOP stalking horse want to impose on the United States.

I cross-posted this article to Fire Dog Lake