There are no spontaneous revolutions. Popular anger needs coordination, channeling, resources.
No outsider would have dared trouble the waters in a place like Egypt. The US would have eventually found out and the whole thing become a casus belli.
The security apparatus in a place like Egypt could have put down any manifestation in a matter of hours. The Egyptian Army must have been in.
If all goes well, Capitalism gets a new lease on life, long live democracy for capital!
Meanwhile, the West should hold together, yet the US will re-discover (the virtues of) nylon.
Officially, I am happier
This is a time we'll remember. It's taken history a little over 20 years to re-expose the cracks in our world system, just as they were before the cold war froze them, apt metaphor indeed. Except that this time, it takes the news much less to reach that many more.
In November we had Wikileaks/Cablegate, now we have Tunisia and Egypt, episodes of violence of one type or another. They all challenge the status qvo, which has its own defenders. For one, there are the current elites, who'd been able to stage a smooth show until the 2008 Crisis, or until the most recent onset of the crisis in 2008. Up until 2008, genetically modified food and cheap Chinese imports had kept the hoi polloi climbing the pyramid of growth in this or that market, the up and coming could still find a place at the lower tables, whereas the true elites were taxing the addiction of democracies to credit financed pyramidal-growth.
The underlined text is the least exposed, topmost, yet more interesting, part of a 3-layered machinery whereby to each his own. The low strata provide the labor and standing army in exchange for a chance at The American Dream, the idea that tomorrow ought to be better than today, given that you play by the rules, regardless of the initial conditions. It's a social compact of sorts to which most still subscribe to, in form if not in spirit. In other parts of the world with comparable per capita/GDP metrics, the compact is not framed in such probabilistic terms but actual indemnification--this also goes by the name of welfare state, a creation of contractual parties enlightened by experience. So until 2008, the American Dream had been in sight for many, though people in places like Ohio may take exception--for them, the Crisis started in 2000-2001. We were conditioned to measure our betterment in terms of stuff acquired on credit, but that's part of the status qvo ante. When the magic behind credit is questioned, we all look at a house of cards.
What was the top stratum doing? They have privatized just about everything, including war, the means to persuade the elected few and, most importantly, the money supply. Some could argue that The Fed has been private since its inception, for how else to keep the democratically elected populist from printing more money? To which I'd say, there used to be rules restricting self-serving abuse by the money handlers themselves. Also, more or less functioning markets were supposed to operate and keep the whole financial industry efficient, if not effective, at allocating the money resource in the economy. To return to privatizing everything, it increases liquidity, reduces waste, generates commissions; what's not to like about it? Indeed, it puts The American Dream on the market autopilot. Except that for whatever reasons, and they vary from human nature to the late stage of our capitalism, the money handlers have gone far beyond taxing our addiction for cheap credit into generating virtual capital, orders of magnitude in excess to the real economies of the world combined, and transactions for their own sake. In other words, increased money supply and transactions leading to more commissions--if measured by the banksters' bonuses alone, quite an expensive addiction to have. So, those private entities that were supposed to keep the democratic government fiscally honest must have hijacked the game along the way. Never mind the role of the state, read something about regulatory capture and the cycle is complete.
To open a parenthesis, the 2008 Crisis has reached even those whose money supply has not been privatized. Indeed, they needed growth for an aging population just about as much as we needed for our pyramids, so they had to join in while the music was playing. Who doesn't find it ironic that in Ireland, for example, the population has to suffer because of imprudent private banks' lending practices and not because of some over-generous welfare scheme? These are all details, which the little people may someday put together into a call to action, unless real reform is undertaken. So far, we've been headed where the theorists of socio-economics have told as for about 160 years. Can capitalism regenerate itself? Better yet, what will it morph into?
As I wrote here in the past, downward adjustment is on the books for us. Obama's recently calling for increased competitiveness means that our individual incomes would go down and we can kiss goodbye whatever is left of the welfare state; let's just forget about the alternative of all turning into neurosurgeons or microprocessor designers.(*) An oil crisis brought about by street movements in the Arab world can be a good external diversion to spring the whole west back into action on behalf of capitalism and value$.(**) Indeed, how do you defy the cycle if not by some expansion? If the financial expansion has run its course, what's left? We should also keep in mind the lesson of the late British Empire, at twilight military expansionism speeds things up instead of allowing the belligerent to choose solutions. We cannot bankroll Pax Americana far into the 21 century.
Yes, I am all for supporting the consequences of our pyramidal dreams, meaning downward corrections and/or inflation, but so far I find the idea of justice lacking in the process. Reform ought to be real and aimed at the practices of the top layer, just as much if not more than the base. Otherwise, officially I am told that 2011 will have been already better!
_______________
(*) Lawrence Summers, former Obama's officially economy expert, has given an interview about the way he sees the future; here's an excerpt from NYTimes:
(**) The events in Tunisia and Egypt are most puzzling. I don't believe in street movements beyond drama and opportunity (lost or made). The west has grown too dependent on oil in its own terms, to which the US added dollar-denominated trade. The standing question of the moment is cui prodest, or what's behind? As for the role of (internet) technology in democratizing, allow me to take exception. Moreover, the voting experiment in Palestine yielded populist-Islamics, not the garden variety politician our elite has been so effective at co-opting.
As for the "value$" in question, truth be told, the might dollar has turned us oblivious to many of our deficiencies--see for example the reflex call for money each time we are faced with a problem--thus we stopped learning. The west has gone along, more or less (see the 1971 decoupling of the dollar from gold), for all kinds of reasons, e.g., red scare, security clients, markets, etc. All in all, there has been no one to fundamentally question what we were doing. I would not take this as guarantee for future behavior.
In November we had Wikileaks/Cablegate, now we have Tunisia and Egypt, episodes of violence of one type or another. They all challenge the status qvo, which has its own defenders. For one, there are the current elites, who'd been able to stage a smooth show until the 2008 Crisis, or until the most recent onset of the crisis in 2008. Up until 2008, genetically modified food and cheap Chinese imports had kept the hoi polloi climbing the pyramid of growth in this or that market, the up and coming could still find a place at the lower tables, whereas the true elites were taxing the addiction of democracies to credit financed pyramidal-growth.
The underlined text is the least exposed, topmost, yet more interesting, part of a 3-layered machinery whereby to each his own. The low strata provide the labor and standing army in exchange for a chance at The American Dream, the idea that tomorrow ought to be better than today, given that you play by the rules, regardless of the initial conditions. It's a social compact of sorts to which most still subscribe to, in form if not in spirit. In other parts of the world with comparable per capita/GDP metrics, the compact is not framed in such probabilistic terms but actual indemnification--this also goes by the name of welfare state, a creation of contractual parties enlightened by experience. So until 2008, the American Dream had been in sight for many, though people in places like Ohio may take exception--for them, the Crisis started in 2000-2001. We were conditioned to measure our betterment in terms of stuff acquired on credit, but that's part of the status qvo ante. When the magic behind credit is questioned, we all look at a house of cards.
What was the top stratum doing? They have privatized just about everything, including war, the means to persuade the elected few and, most importantly, the money supply. Some could argue that The Fed has been private since its inception, for how else to keep the democratically elected populist from printing more money? To which I'd say, there used to be rules restricting self-serving abuse by the money handlers themselves. Also, more or less functioning markets were supposed to operate and keep the whole financial industry efficient, if not effective, at allocating the money resource in the economy. To return to privatizing everything, it increases liquidity, reduces waste, generates commissions; what's not to like about it? Indeed, it puts The American Dream on the market autopilot. Except that for whatever reasons, and they vary from human nature to the late stage of our capitalism, the money handlers have gone far beyond taxing our addiction for cheap credit into generating virtual capital, orders of magnitude in excess to the real economies of the world combined, and transactions for their own sake. In other words, increased money supply and transactions leading to more commissions--if measured by the banksters' bonuses alone, quite an expensive addiction to have. So, those private entities that were supposed to keep the democratic government fiscally honest must have hijacked the game along the way. Never mind the role of the state, read something about regulatory capture and the cycle is complete.
To open a parenthesis, the 2008 Crisis has reached even those whose money supply has not been privatized. Indeed, they needed growth for an aging population just about as much as we needed for our pyramids, so they had to join in while the music was playing. Who doesn't find it ironic that in Ireland, for example, the population has to suffer because of imprudent private banks' lending practices and not because of some over-generous welfare scheme? These are all details, which the little people may someday put together into a call to action, unless real reform is undertaken. So far, we've been headed where the theorists of socio-economics have told as for about 160 years. Can capitalism regenerate itself? Better yet, what will it morph into?
As I wrote here in the past, downward adjustment is on the books for us. Obama's recently calling for increased competitiveness means that our individual incomes would go down and we can kiss goodbye whatever is left of the welfare state; let's just forget about the alternative of all turning into neurosurgeons or microprocessor designers.(*) An oil crisis brought about by street movements in the Arab world can be a good external diversion to spring the whole west back into action on behalf of capitalism and value$.(**) Indeed, how do you defy the cycle if not by some expansion? If the financial expansion has run its course, what's left? We should also keep in mind the lesson of the late British Empire, at twilight military expansionism speeds things up instead of allowing the belligerent to choose solutions. We cannot bankroll Pax Americana far into the 21 century.
Yes, I am all for supporting the consequences of our pyramidal dreams, meaning downward corrections and/or inflation, but so far I find the idea of justice lacking in the process. Reform ought to be real and aimed at the practices of the top layer, just as much if not more than the base. Otherwise, officially I am told that 2011 will have been already better!
_______________
(*) Lawrence Summers, former Obama's officially economy expert, has given an interview about the way he sees the future; here's an excerpt from NYTimes:
The key to higher employment, he said, is increasing the demand for the goods and services produced by American companies. “You don’t hire more waiters unless the waiters you have in your restaurants have more work than they can handle,” he said. “There’s a continuing shortage of demand, and that’s the root cause of unemployment. It’s the root cause of low-capacity utilization…What you need to do is have more output with more people, and the way you have more output with more people is you need people who want to buy that output, and that’s why it comes back to demand.”This should give us all an indication of what competitive means to our leaders, waiter-level incomes/benefits. As well, we won't come out of unemployment unless willing to get such jobs. That may well be so for us, what about THEM? THOSE who restart the economy of waiters-based models.
(**) The events in Tunisia and Egypt are most puzzling. I don't believe in street movements beyond drama and opportunity (lost or made). The west has grown too dependent on oil in its own terms, to which the US added dollar-denominated trade. The standing question of the moment is cui prodest, or what's behind? As for the role of (internet) technology in democratizing, allow me to take exception. Moreover, the voting experiment in Palestine yielded populist-Islamics, not the garden variety politician our elite has been so effective at co-opting.
As for the "value$" in question, truth be told, the might dollar has turned us oblivious to many of our deficiencies--see for example the reflex call for money each time we are faced with a problem--thus we stopped learning. The west has gone along, more or less (see the 1971 decoupling of the dollar from gold), for all kinds of reasons, e.g., red scare, security clients, markets, etc. All in all, there has been no one to fundamentally question what we were doing. I would not take this as guarantee for future behavior.
They Have Spoken
Two recent articles, in Foreign Affairs and HBR, feature the views of two Harvard professors about the road ahead. I commented on each one of them, and conclude here that the kind of intellectual leadership that has brought us where we are, through 2008, is alive and well. Have a look for yourself, and draw your own conclusions!
------------8<-------------------------------------------------
Yes, our perceptions about the future have gone up and down through our history, yet people's lives went also up and down unless they counted themselves among the lucky/Ivied. Each time our common fortune went up, it followed some long period of pain and was the result of some major transformation.
Professor Nye doesn't say a word about the type of transformation ahead. He talks generalities and quotes selectively in support of his argument. For example, he counts us as leaders in biosciences, but then why doesn't he look at the flip-side, to the requirement for this? A lousy and expensive medical system whose results are half as good, for twice the money, as in other developed economies. Surely, the argument could be extended to his dear universities--compare $50k to quasi-free in annual college tuition. Oh, his list of where we are #1 is almost comprehensive, for if he added military and financial innovation, the list would have been complete.
What do these observations make me think?
1) That our being #1 cannot be sustainable under status qvo, even in a reduced number of areas. Indeed, for example, an overburdened and socially under-performing medical system cannot be counted on to keep going forever. The author's prescriptions amount to folklore.
2) That Professor Nye may be, well, a bit out of touch. I guess, they don't call some the Boston Brahmin for nothing...
No, China won't go up and higher forever; Yet, a question lost on the author is, How big China's economy needs to be to turn it into a challenger? Going into GDP or per capita comparisons is not as relevant as the author makes it sound. Switzerland may get higher grades on many dimensions, yet it is hardly a menace for the US.
Nor will we reach the bottom in free fall. More likely to happen is a world choosing between our type of capitalism and state-capitalism. If we overcome the political gridlock (à la Fallows/Nye), the two types of capitalism will converge. Meanwhile, texts like this are meant to put the middle class to sleep.
------------8<-------------------------------------------------
Alas, this has been written by:
* E. Porter is the Bishop William Lawrence University Professor at Harvard University. He is a frequent contributor to Harvard Business Review and a six-time McKinsey Award winner.
* R. Kramer cofounded FSG, a global social impact consulting firm, with Professor Porter and is its managing director. He is also a senior fellow of the CSR initiative at Harvard’s Kennedy School of Government.
For the reader skeptical of my comment, let me quote from the article:
"Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking."
How many times has it been that we've heard such calls? Each time, they are similarly worded and meant to supplant government responsibility&action for a clean environment, sustainable societies and so on.
Now, allow me to state what the problem is with this: I have little control over how businesses operate, for they are subject to their institutional imperative of making short-term money. Arguably, the government is responsible to me. Do you see the problem? I can do little to nothing to influence business, I can vote every electoral cycle to keep the government honest. For those countering that we vote for business everyday with our wallet, I'd say, not anymore when you are in debt and/or the business in question is a monopoly. Moreover, if the behavioral requirement is not normative, as in a law subjecting all players to the same constraint, there will always be businesses trying to get advantage of not respecting otherwise self-generated social objectives.
So, the rule must be the same for all businesses, and the enforcer should be from the sphere of government/society, not businesses themselves.
------------8<-------------------------------------------------
Yes, I know, we don't do government, lest someone calls us socialist, but then why all the talk about business-this and business-that? To pacify us while waiting for the next bubble? If so, why not stop sucking on the damn rubber?
------------8<-------------------------------------------------
The Future of American Power
Dominance and Decline in Perspective
Joseph S. Nye Jr.
Summary: It is currently fashionable to predict a decline in the United States' power. But the United States is not in absolute decline, and in relative terms, there is a reasonable probability that it will remain more powerful than any other state in the coming decades.
JOSEPH S. NYE, JR., is University Distinguished Service Professor at Harvard University. Parts of this essay are drawn from his forthcoming book, The Future of Power (PublicAffairs, 2011).
Yes, our perceptions about the future have gone up and down through our history, yet people's lives went also up and down unless they counted themselves among the lucky/Ivied. Each time our common fortune went up, it followed some long period of pain and was the result of some major transformation.
Professor Nye doesn't say a word about the type of transformation ahead. He talks generalities and quotes selectively in support of his argument. For example, he counts us as leaders in biosciences, but then why doesn't he look at the flip-side, to the requirement for this? A lousy and expensive medical system whose results are half as good, for twice the money, as in other developed economies. Surely, the argument could be extended to his dear universities--compare $50k to quasi-free in annual college tuition. Oh, his list of where we are #1 is almost comprehensive, for if he added military and financial innovation, the list would have been complete.
What do these observations make me think?
1) That our being #1 cannot be sustainable under status qvo, even in a reduced number of areas. Indeed, for example, an overburdened and socially under-performing medical system cannot be counted on to keep going forever. The author's prescriptions amount to folklore.
2) That Professor Nye may be, well, a bit out of touch. I guess, they don't call some the Boston Brahmin for nothing...
No, China won't go up and higher forever; Yet, a question lost on the author is, How big China's economy needs to be to turn it into a challenger? Going into GDP or per capita comparisons is not as relevant as the author makes it sound. Switzerland may get higher grades on many dimensions, yet it is hardly a menace for the US.
Nor will we reach the bottom in free fall. More likely to happen is a world choosing between our type of capitalism and state-capitalism. If we overcome the political gridlock (à la Fallows/Nye), the two types of capitalism will converge. Meanwhile, texts like this are meant to put the middle class to sleep.
------------8<-------------------------------------------------
The Big Idea: Creating Shared Value
by Michael E. Porter and Mark R. Kramer
The capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.
Alas, this has been written by:
* E. Porter is the Bishop William Lawrence University Professor at Harvard University. He is a frequent contributor to Harvard Business Review and a six-time McKinsey Award winner.
* R. Kramer cofounded FSG, a global social impact consulting firm, with Professor Porter and is its managing director. He is also a senior fellow of the CSR initiative at Harvard’s Kennedy School of Government.
For the reader skeptical of my comment, let me quote from the article:
"Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking."
How many times has it been that we've heard such calls? Each time, they are similarly worded and meant to supplant government responsibility&action for a clean environment, sustainable societies and so on.
Now, allow me to state what the problem is with this: I have little control over how businesses operate, for they are subject to their institutional imperative of making short-term money. Arguably, the government is responsible to me. Do you see the problem? I can do little to nothing to influence business, I can vote every electoral cycle to keep the government honest. For those countering that we vote for business everyday with our wallet, I'd say, not anymore when you are in debt and/or the business in question is a monopoly. Moreover, if the behavioral requirement is not normative, as in a law subjecting all players to the same constraint, there will always be businesses trying to get advantage of not respecting otherwise self-generated social objectives.
So, the rule must be the same for all businesses, and the enforcer should be from the sphere of government/society, not businesses themselves.
------------8<-------------------------------------------------
Yes, I know, we don't do government, lest someone calls us socialist, but then why all the talk about business-this and business-that? To pacify us while waiting for the next bubble? If so, why not stop sucking on the damn rubber?
covering mirrors
The 2nd installment of wikileaks, Cablegate, has been partially released, as in 1/000.
The story behind the whole data-spill seems to have been initiated by Bradley Manning, 22, one of those we like to cheer about in terms such as our brave men and women serving in harm's way. Until he was locked up in solitary confinement, Manning used to be an intelligence analyst with the Army, outside Baghdad. In his own words, the facts were: "I would come in with music on a CD-RW labeled with something like 'Lady Gaga' … erase the music … then write a compressed split file. No one suspected a thing ... [I] listened and lip-synched to Lady Gaga's Telephone while exfiltrating possibly the largest data spillage in American history." He said that he "had unprecedented access to classified networks 14 hours a day 7 days a week for 8+ months." He even anticipated some reactions, "Hillary Clinton and several thousand diplomats around the world are going to have a heart attack when they wake up one morning and find an entire repository of classified foreign policy is available, in searchable format, to the public ... Everywhere there's a US post, there's a diplomatic scandal that will be revealed. Worldwide anarchy in CSV format ... It's beautiful, and horrifying." Stated motivation: "Information should be free. It belongs in the public domain."
Now, how symptomatic is this for the state of our empire, er, nation? Did we need a 22-year old to come and show how ugly empire is? Below are what can be two answers:
Dovid
Monsey, NY
Monsey, NY
This is what I call treason!
Recommended by NYTimes 237 Readers
Diana
New York
New York
To Commenter #4, [Dovid] I'd say, No, compiling and releasing documents, 'none of which was marked top secret,' is not treason, it's democracy in action.
For a truly treasonous act, see the outing of an undercover CIA operative, Valerie Plame, who had worked for years setting up very successful false operation directed at uncovering 'weapons of mass destruction.' Her husband told the truth about the lies being that would justify getting into war, lies told by very powerful and deeply unpatriotic war profiteers, and she was 'outed' in revenge. She--and our country--continue to pay the price; the war profiteers continue to go free.
Recommended by 371 NYTimes Readers (highest number of recommendations)
I'd posit that running a large and complex system like the US, implies effective and efficient control mechanisms. Effective as in get the job done, efficient as is make those controlled do the control themselves. Efficiency comes wrapped in all the talk about our being a nation of laws, fighting for human rights and justice for all. So, is it that a smart young man, driven by patriotism, enlists with the Army, yet his self-control breaks when he gets deployed and sees our relations with the world out there being so different from what we espouse at home?
From a slightly different angle, let's review all the above from a 1992-perspective in Hollywood, a year after the official demise of the USSR due to our upholding higher values. You'll recognize Colonel Nathan R. Jessep, from 'A Few Good Man' in the You Can't Handle the Truth-moment.
To each his own, but considering the mounting problems we face, both internally and internationally, I'm afraid that not wanting to know the truth is akin to covering mirrors in the house after someone died. It may be efficient but hardly effective.
______________________________________________________
12/12/2010 Update
Whatever one may think of Bradley Manning, who took an oath when joined the Military, the situation with Julian Assange is a whole different matter. Being on offensive will erode our standing, it's about principle not about any one individual. We should accept OUR mistake(s), e.g. of not setting up proper systems, and leave Assange in peace. The earlier we do this, the less painful for all involved. This is neither the way to set an example, nor the type of example you want to set.
______________________________________________________
Whatever one may think of Bradley Manning, who took an oath when joined the Military, the situation with Julian Assange is a whole different matter. Being on offensive will erode our standing, it's about principle not about any one individual. We should accept OUR mistake(s), e.g. of not setting up proper systems, and leave Assange in peace. The earlier we do this, the less painful for all involved. This is neither the way to set an example, nor the type of example you want to set.
A Lincoln or Roosevelt moment?
The latest elections were remarkable for lacking surprise, no wonder many don't bother to vote!
The democratic machinery may be a little overrated to take us out of the many-decades-in-the-making slump. Somehow, the voters are still to figure this out, for this being one among the few dramatic swings, which otherwise would take several electoral cycles to happen, which shows that people still think they control the machinery by playing with a fake knob. Not to forget the enlightened skeptics, who may or may not vote, they think not much can be done anyway since the system is complex, as in don't bother to learn anything about it with the idea of improving. They hope, yet pass it for thinking, that somehow whatever it is they have been doing would keep them in their positions, while the world turns upside down round them. Of course, you recognize their ivory towers as skewers for the meat and vegetables exposed to the flame.
To return to major political/electoral swings, the one before was when we thought Obama and Democratic majorities would go for change. I guess, the 2010 swing is to appease the folk on the right, whereas the one before, in 2008, was to appease the left after 8 too many years of aggravation under Bush the lesser.
That we are going for a gamble has become obvious. It is not so clear how things will go from here. Internally, everybody is going to take a hit on everything they hold in cash--see the $600Bn as fuel for inflation eroding cash and confidence. Another way change will be effected internally is by virtue of the recommendations of the Obama's bipartisan debt-reduction commission.
I read these to mean, status qvo on taxes and cut spending! The conservative approach towards taxes is to keep the elites happy, cutting the federal budget to size is to say 'swim or sink!' to the rest. The risk here is for the most people to perceive that budget cuts are somewhat unjust. If the twin issue of taxes & budget splits the electorate along the same line, I am afraid, it's time we reckon a Lincoln or Roosevelt moment in our nation.
But then again, we may also have war. No, it's not about Bush's open wars. For one, it could be economic war. The other countries are probably running through their options after the recent G20 in Seoul. Nobody wants to give up an inch, make it centimeter, or at least not in the open. If the Chinese-American relation gets rebalanced anew round an exchange rate, chances are that conflict is postponed. Otherwise, it's maybe wise to stock up on some trinkets; of course, I'm joking.
For another variant on the last point, brush up on your pre-1914 history. A good place to start may be here: Is globalization enough carrot...
The democratic machinery may be a little overrated to take us out of the many-decades-in-the-making slump. Somehow, the voters are still to figure this out, for this being one among the few dramatic swings, which otherwise would take several electoral cycles to happen, which shows that people still think they control the machinery by playing with a fake knob. Not to forget the enlightened skeptics, who may or may not vote, they think not much can be done anyway since the system is complex, as in don't bother to learn anything about it with the idea of improving. They hope, yet pass it for thinking, that somehow whatever it is they have been doing would keep them in their positions, while the world turns upside down round them. Of course, you recognize their ivory towers as skewers for the meat and vegetables exposed to the flame.
To return to major political/electoral swings, the one before was when we thought Obama and Democratic majorities would go for change. I guess, the 2010 swing is to appease the folk on the right, whereas the one before, in 2008, was to appease the left after 8 too many years of aggravation under Bush the lesser.
That we are going for a gamble has become obvious. It is not so clear how things will go from here. Internally, everybody is going to take a hit on everything they hold in cash--see the $600Bn as fuel for inflation eroding cash and confidence. Another way change will be effected internally is by virtue of the recommendations of the Obama's bipartisan debt-reduction commission.
"Cap revenue at or below 21% of G.D.P.”
“Lower Rates”
“Reduce the Deficit”
I read these to mean, status qvo on taxes and cut spending! The conservative approach towards taxes is to keep the elites happy, cutting the federal budget to size is to say 'swim or sink!' to the rest. The risk here is for the most people to perceive that budget cuts are somewhat unjust. If the twin issue of taxes & budget splits the electorate along the same line, I am afraid, it's time we reckon a Lincoln or Roosevelt moment in our nation.
But then again, we may also have war. No, it's not about Bush's open wars. For one, it could be economic war. The other countries are probably running through their options after the recent G20 in Seoul. Nobody wants to give up an inch, make it centimeter, or at least not in the open. If the Chinese-American relation gets rebalanced anew round an exchange rate, chances are that conflict is postponed. Otherwise, it's maybe wise to stock up on some trinkets; of course, I'm joking.
For another variant on the last point, brush up on your pre-1914 history. A good place to start may be here: Is globalization enough carrot...
Thoughts on stimulus
To break the deadlock we need a plan before we need more money
There is an economic school of thought in the U.S. that is advocating for more and earlier stimulus as a way to revive the economy. This school has in Paul Krugman its most vocal supporter, and claims no less than Keynesian roots/legitimacy.
I employed "claims" instead of a more categorical verb, for a couple of reasons. On the one hand, Keynes was much more aware of context whenever he made a recommendation than the scores of economists who followed him in all but spirit. On the other hand, Krugman offers NO mechanism by which yet another money supply can stimulate anything except for a bigger bubble.
Given that Krugman, no less than Nobel laureate for economy, has been calling for a bigger stimulus for about 2 years, at least once a week in his NYtimes editorials, I decided to comment on one of his recent pieces. Here it is:
As a study in contrasts, consider how the Germans have approached their crisis. After 2 years of almost ignored calls for dumping money into banks, the Germans are rebuilding their post WWII cities:
What are the Germans doing, do their cities need a makeover? Be it as it may; I think the Germans are investing in quality, for what else can you do in advanced capitalist economies? Just as I called it in 2008, Encourage quality. And we should say, there is a lot of unmet demand for quality in the US. Unless you are, say, in some northeastern American state going through the annual ritual of re-paving the same traffic-jammed highways.
In closing, let's admit that what passes for stimulus has been of little consequence for the real economy. It was meant to slow down the fall and give the decision makers some time. From that perspective it was a qualified success. A bigger stimulus could only have bought us more time, yet we also needed to signal fiscal responsibility/toughness to our partners. Bernake has just told us that he is willing to move a lot of money from one pocket to the other. I wonder who's going to be caught holding a mountain of paper in their hands. To break the deadlock we need a plan before we need more money.
I employed "claims" instead of a more categorical verb, for a couple of reasons. On the one hand, Keynes was much more aware of context whenever he made a recommendation than the scores of economists who followed him in all but spirit. On the other hand, Krugman offers NO mechanism by which yet another money supply can stimulate anything except for a bigger bubble.
Given that Krugman, no less than Nobel laureate for economy, has been calling for a bigger stimulus for about 2 years, at least once a week in his NYtimes editorials, I decided to comment on one of his recent pieces. Here it is:
Krugman keeps talking about stimulus, yet what could a stimulus have done other than reignite another consumption-fueled bubble? And this could be so only if outsiders kept buying US paper.Being treated like adults is a right we gave up long time ago, just see how the other guys keep pushing non-issues such as the Ground Zero Mosque(-rade). Krugman, as if to appease a bunch of kids, is thinking short term and the reason for people like him to ask for stimulus, without a plan to spend it that would actually rebuild our economy, is his complete pessimism and/or his distance from the real economy. The real economy is yet to find a way to move one car 1 mile with Twitter, yet that would be one of the more valuable pieces of American innovation in the last decade.
We should have started rebuilding the country in 2000, yet we cut taxes, started a war on terror, and invaded Iraq in 2003. Bush should have signed Kyoto so the de-industrialization of America could have slowed down. Except that a future Nobel laureate economist was still praising trade liberalization, without concern for the unaccounted negative externalities associated with cheap imports. What was the middle American doing? Playing at the hands of the Government (Bush, Greenspan, Bernake), rating agencies, investment banks, and media&intellectual elites. Anyone still remembers the Republican Congress dealing with such important matters as doping in professional sports in June 2004? The public discourse had been about redoing the desert sands into oases of this and that while the bubbles in housing, defense, banking, healthcare and education (at all levels) were inflating.
At personal level, we should look at lowering expectations and increasing commitments. And, to avoid social collapse, let's make sure everybody puts skin in this game proportionate with their standing. People will mobilize to levels long-unseen if the burden of reinventing America is spread across, in a general climate of fairness. Treating us like responsible adults would be a good place to start. We did it, we'll do it again, just try us!
As a study in contrasts, consider how the Germans have approached their crisis. After 2 years of almost ignored calls for dumping money into banks, the Germans are rebuilding their post WWII cities:
Photo Gallery:A New City Quarter for HamburgThe Germans, sometimes more capitalist than the US, have not fallen for the services economy, or the sanctity of the self-regulating market. They take their time to understand the consequences of their actions, and that goes even for their relation with China.
Living with Sin: Germany Comes to Terms with its Ugliest Buildings (08/20/2010)
SPIEGEL Interview with Architect Christoph Ingenhoven: 'Modernism Is an Attitude, Not a Style' (08/13/2010)
Out of the Ashes: A New Look at Germany's Postwar Reconstruction (08/10/2010)
Interview with Architect Albert Speer: 'Calamity of Postwar Construction Came from Rejecting History' (08/11/2010)
What are the Germans doing, do their cities need a makeover? Be it as it may; I think the Germans are investing in quality, for what else can you do in advanced capitalist economies? Just as I called it in 2008, Encourage quality. And we should say, there is a lot of unmet demand for quality in the US. Unless you are, say, in some northeastern American state going through the annual ritual of re-paving the same traffic-jammed highways.
In closing, let's admit that what passes for stimulus has been of little consequence for the real economy. It was meant to slow down the fall and give the decision makers some time. From that perspective it was a qualified success. A bigger stimulus could only have bought us more time, yet we also needed to signal fiscal responsibility/toughness to our partners. Bernake has just told us that he is willing to move a lot of money from one pocket to the other. I wonder who's going to be caught holding a mountain of paper in their hands. To break the deadlock we need a plan before we need more money.
Break in reason vs. Rational narrative props
Here's a recent quote from the Nobel laureate economist Paul Krugman:
Appeasing the Bond GodsIn this case, the invisible gods are bond merchants, those who move lots of pension/insurance money into lower yield and risk investment vehicles. Given our reliance on reason, at least at every official narrative level, is a moment like this a wake-up call? A call for a return to the whole man, as in the Vitruvian Man's mix of art and science? In our quest to build a better society, by emphasizing the rational, have we come to a point where reason breaks, or reason-based narratives are proven to be just the clever backdrop against which the unabated drama of our human condition goes on?
As I look at what passes for responsible economic policy these days, there’s an analogy that keeps passing through my mind. I know it’s over the top, but here it is anyway: the policy elite — central bankers, finance ministers, politicians who pose as defenders of fiscal virtue — are acting like the priests of some ancient cult, demanding that we engage in human sacrifices to appease the anger of invisible gods.
Let the professional left eat cake!
symptom of a 1-term president
"I hear these people saying he’s like George Bush. Those people ought to be drug tested," Gibbs said. "I mean, it's crazy."
The press secretary dismissed the “professional left” in terms very similar to those used by their opponents on the ideological right, saying, "They will be satisfied when we have Canadian healthcare and we’ve eliminated the Pentagon. That’s not reality."
Of those who complain that Obama caved to centrists on issues such as healthcare reform, Gibbs said: “They wouldn’t be satisfied if Dennis Kucinich was president."
Without psychoanalyzing Gibbs, I take it that we have no chance for change. Obama's middle name could be status qvo, just as well. By 2012 one can say, Der Mohr hat seine Schuldigkeit getan, der Mohr kann gehen. Moreover, by the time we are ready to inflate another bubble the Chinese may well be #1.
Speaking of bubbles, a very real one is in education, where the situation is just as in healthcare, even including the need for a national system* similar to a single payer. Local budgets being already bankrupt and universities being so expensive relative to the earning power of their graduates, turn education into a luxury item. Besides costs, the other taboo in education is the quality of the graduates relative to the needs of an economy that is competitive beyond Twitter or American Idol--just ask the executives at Intel or Microsoft. We have run for so long an economy that functionally distorts education that even if we were able to correct the situation today, we'd still be 20 years away from the results. It was also with this second taboo in mind that, at one point in time, I pledged for turning the US universities in the 21st Century Ellis Island. Obama is considering instead the legalization of the millions of illegal low-skills/intensive laborers when a work permit, if anything less than repatriation, would be the way. So, between the pressures coming from 3rd world low wages and illegal immigrants, and considering the disappearance of the school as a leveling social force, we'll converge quietly to a low station. Will polarization be internalized or tear us apart?
Why is education important in any revival scheme? To match human potential with the needs of the world. How responsible is Obama? At certain level, no more than any individual who's put up with made-up stories about better education for several decades now. Oh well, we really have a chance to see how feedback works in capitalism, won't we?
_____________________
* For those objecting on principle about the idea of a national education system, consider that many a school superintendent makes probably just as much as the secretary of education in a country like France. If that's not enough, consider also the billion dollar industries round testing and textbooks.
The press secretary dismissed the “professional left” in terms very similar to those used by their opponents on the ideological right, saying, "They will be satisfied when we have Canadian healthcare and we’ve eliminated the Pentagon. That’s not reality."
Of those who complain that Obama caved to centrists on issues such as healthcare reform, Gibbs said: “They wouldn’t be satisfied if Dennis Kucinich was president."
Without psychoanalyzing Gibbs, I take it that we have no chance for change. Obama's middle name could be status qvo, just as well. By 2012 one can say, Der Mohr hat seine Schuldigkeit getan, der Mohr kann gehen. Moreover, by the time we are ready to inflate another bubble the Chinese may well be #1.
Speaking of bubbles, a very real one is in education, where the situation is just as in healthcare, even including the need for a national system* similar to a single payer. Local budgets being already bankrupt and universities being so expensive relative to the earning power of their graduates, turn education into a luxury item. Besides costs, the other taboo in education is the quality of the graduates relative to the needs of an economy that is competitive beyond Twitter or American Idol--just ask the executives at Intel or Microsoft. We have run for so long an economy that functionally distorts education that even if we were able to correct the situation today, we'd still be 20 years away from the results. It was also with this second taboo in mind that, at one point in time, I pledged for turning the US universities in the 21st Century Ellis Island. Obama is considering instead the legalization of the millions of illegal low-skills/intensive laborers when a work permit, if anything less than repatriation, would be the way. So, between the pressures coming from 3rd world low wages and illegal immigrants, and considering the disappearance of the school as a leveling social force, we'll converge quietly to a low station. Will polarization be internalized or tear us apart?
Why is education important in any revival scheme? To match human potential with the needs of the world. How responsible is Obama? At certain level, no more than any individual who's put up with made-up stories about better education for several decades now. Oh well, we really have a chance to see how feedback works in capitalism, won't we?
_____________________
* For those objecting on principle about the idea of a national education system, consider that many a school superintendent makes probably just as much as the secretary of education in a country like France. If that's not enough, consider also the billion dollar industries round testing and textbooks.
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