Making Economic Analysis Toxic for Election Year
Just What We Need After "9-9-9"
MeanMesa has watched an intriguing collection of "economists" play down the prospects of infrastructure construction as an engine for US economic recovery. This blog posted about a PBS NewsHour "interview" with Judy Woodruff, Austen Goolsbee and Martin Feldstein in September, 2011. (http://www.meanmesa.com/2011/09/newshour-trainwrecking-obamas-jobs.html)
The relevance of that post to this one has everything to do with a comment by Feldstein, the revered spokesman/intellect for the oligarchs. Further, Feldsteins otherwise drearily predictable comment was repeated last week by the guest on Thom Hartmann's show during an interview with Dr. Ravi Batra -- inescapably a voice from the "other end of the econo-political-commentary spectrum."
Batra, an economics professor at Southern Methodist University, and Feldstein both offered up the same "good reason" not to take the economic recovery potential of infrastructure spending seriously.
By dividing the spending in Obama's Jobs Act by the number of direct new jobs which would be necessary, both of these "geniuses" arrived at a preposterous "cost per job" -- around $1.5 Mn -- and, based on this sophisticated conclusion, both summarily discounted the workability of the proposal to repair infrastructure as a means for economic recovery.
Just as MeanMesa posted then, if the logic employed by these two experts amounted to anything more than "the water left after carrying a leaky bucket all day," they might have had a point. But, of course, they didn't have a point. That "bull" loose in their respective "economic China closets" doesn't require lipstick to become delicious rib eye steaks.
In both cases, their $1.5 Mn/job figure would make sense if there were no new highway when the policy was finally completed and retired. However, there would, indeed, be a new highway!
Batra and Feldstein have both fallen into the [Secondary Model] trap where popularity has become a first priority. Now, instead of being dull, but honest economists, they are both infatuated with their ambition to be the one "who told you so" or "frightened us the most," a prospective role valued much more than the quieter fame of having formulated serious economic recovery strategies.
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"We might consider letting the little people spend some of their tax
dollars to repair a road if we need it fixed for our factory. Not too
much, though -- unemployment might go down. Plus, if we allowed them to
spend the money on a road or something, there's just be that much less
to loot left over in the General Fund."
Obama the "Chicago Economist"
MeanMesa isn't impressed by the "incomprehensible complexity" of our problem presented by these expert monetary policy analysts. Is it possible that the schools which prepared the geniuses taught that passable roads had no value? Did the lesson include the idea that expenditures such as those for infrastructure maintenance were no more than an awkward aside? Some troublesome irritant insisted upon by the little people who were actually trying to live in dismal shards of this wretched economy?
If anyone is still wondering, there's more benefit from repairing a road than job creation. With streets and highways in top notch condition, the delivery trucks for Acme widgets can hand the product to a consumer for less cost. When traffic flows well, these trips are briefer, fewer trucks are required, fewer pot holes trash suspension systems, less gasoline is used and the system suddenly realizes that Acme Widget's profits have gone up enough to hire more employees for an extra shift on the widget assembly line.
New employees who need groceries and tires.
Obama understands this. Economic policy performed horribly in the urban places where he was a community organizer. On the other hand, even the "less than genius" neighborhood observers there knew that more weekly pay checks did more to improve local economic conditions than even the most brilliant and inspired macro-economics model. More pay checks meant new businesses to meet the DEMAND. New businesses meant new jobs to meet the DEMAND.
Macro-economic models seem to have always promised higher profits and less cost for SUPPLY. We've greased the wheels of every obstacle and cost standing in the way of higher SUPPLY side profits for decades, and the results -- suppression of organized labor, out sourcing jobs, stagnant wages for the middle class and savage income and wealth inequality -- have been outrageously awful. The whole country is like the alcoholic who, although his life is thoroughly shambles, is certain that just adding a little more brandy to his Manhattan holds the solution to his problems.
1. This isn't rocket science -- or brain surgery.
2. Lowering the import duties on buggy whips
won't help get the rocket off the pad.
won't help get the rocket off the pad.
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"We pay plenty for our lobbyists and for those Congressmen and Senators. Why would we want to leave any scraps on the table? The damned stimulus was as close as we get. We would never have done that if they hadn't scared the crap out of us."
A Few Reflections on Economic Disaster
Traditional responses are out of reach
Traditional responses are out of reach
On the day of this post, half of Europe is coldly facing the inevitable "next chapter" in the lethal mix born of our recent autocrat's "deregulate everything everywhere forever" scheme. The out of control mortgage securities gizmos coupled with the predictably narcotic "easy money" frenzy -- both here and in Europe -- have left mountains of debt as far as the eye can see. Every trader and banker who could finger in more "zeroes" on his ten key became an expert, and no one was watching.
Is this a new, cruel "outrage of unforeseeable destiny?"
Hardly. And, it turns out, that "hardly" also applies quite nicely to the solution to this serpent.
Is this where "history's economic secret" comes into play? Well, sort of, except, of course, the "secret" isn't a secret.
Yes, international greed has now officially over topped both the material and financial damage of World War II, leaving tangled infrastructure, starving demand, hideous austerity plans, entire nations in poverty and double digit unemployment in its grisly wake. Yes, the same looters who drank all the blood are now demanding the very juiciest steaks which they insist can still be found somewhere on the carcass. Yes, the meatless pots at the soup kitchens are perpetually invisible to them.
You know, what we see around us is basically the state of conditions in post WWII Europe.
History's secret is the Marshall Plan. The goal, the concept, the outcomes, the mechanism and the necessity are all eerily isomorphic even though Harry S. Truman may be missing. The Plan attacked the train wreck which remained after the saturation bombing and field wide tank battles on two fronts. It rebuilt everything possible, and it employed Europeans who had survived the war only to find themselves with empty bellies.
It was NOT a SUPPLY SIDE solution. It was a DEMAND SIDE solution.
Yes, roads, bridges, schools and fields were being rebuilt, but almost as an aside during the process, DEMAND skyrocketed, and Marshall Plan financed pay checks were driving it.
Rather quickly, a truly terrifying, horrible -- at least for Republicans -- development materialized. Prosperity. Further, it didn't take 400 years to repay the cost. Economic prosperity began to create tax bases, and the thing was fundamentally out of control in short order, at least, certainly in short order compared to the length of the war, plus, the successful reconstruction was not only much more pleasant, but almost universally inspiring and hopeful.
With respect to "boosting economic morale," a few economics dreamers have proposed a modern dose of the old WPA approach. Most of these voices have been either blatant or disguised saboteurs with agendas which included, at some point, maneuvering another looter into the Oval Office.
The working population of this country is quite estranged from the "labor ready" days of FDR. Most of the Americans who need a job right now can't particularly do anything compared to the capacities of American workers in the 1930's. They are essentially illiterate and mortally untrained -- if not actually untrainable. In the "horror of horrors" to not only Republican reactionaries but also to other gentrified racists, the demographic exception to this generality rests with the hopeful minorities among us.
Most of these minorities who haven't fallen under the gang hypnosis know how to do something. Most of them also have the human stamina to actually do whatever it is that they know how to do. Vast numbers among the desperately unemployed traditional labor force are lacking such abilities, not to mention such stamina. Worse, when the artificial bubble of easy prosperity finally burst forever, a grotesque, crippling pessimism coated every national spirit like six coats of gray paint.
If it's not going to be easy, it's got to be hopeless.
It's been all the rage to focus on the latest manifestation of the Bush Disaster of 2008 as if each was, somehow, detached from the rest. There have even been brave gambits among the talkers, fleeting, fly-by patinandos, implying that the explosive collapse had causes adjacent to the bloodshed. All this is false.
The hideous thing started in the Oval Office. The persuasive cronies of the handicapped Executive lured his power farther and farther away from an even furtive, modest adherence to his oath and closer and closer to an abattoire of greed and frenetic largesse. When the first spark of administrative cogency was re-installed with the Obama Inauguration, the damage had been done. Recent reports estimate the unilateral reduction in the wealth of American families to be 40%.
It hit Wall Street and the banks first. It hit Europe within weeks as sovereign borrowing rates began their unbridled ascent. It hit the United States in full tsunami force a year later. The Bush handed his over extended friends $1 Tn in ready cash backed up with another $14 Tn in loan guarantees to "make whole" the endangered oligarchs who owned his political party. The Europeans were slow to fire up their printing presses, but they were caught in the terror soon enough.
In the US the printing presses have been steadily busy, applying every advantage of the country's great wealth through stimulus, quantitative easing and other arcane inventions.
This is exactly the point. The oligarchs have already shuddered adequately with the prospect of "dents" appearing in their money bins.
If we dare consider some concept so expansive as the "planetary economy," the crumbling pillars of what we have now are obvious almost at once. The work, resources and money which would have been, more rationally, directed at planetary maintenance is now in a few dozen Swiss bank accounts. Predictably, the rest of the thing is falling apart before our eyes.
The poor old thing we've mindlessly patched together, piece by piece, in an unthinkable jumble of horrendous, careening contradictions is patiently preparing to kill us. All of us. Yes, we may -- ourselves -- be the material actors in this extinction, but of course what will really be killing us is our absolute refusal to do anything to retard -- much less, simply stop -- our inevitable demise.
The "main business" of 7 billion erratic homo sapiens for the previous centuries has been the constant insistence on bringing us to this day. So, since the money presses have already been started, let's get crazy.
No one has dared to confidently present either credentials or insight which might validate the journey MeanMesa can undertake effortlessly right here.
Let's rebuild the world.
Let's rebuild the entire world.
Also, let's make sure that this "rebuild the world" idea is not limited to strictly concrete and steel sorts of items either. Just as important are the terrifically awful "social cultural practices" which have led us to this current precipice. These are the "practices" which we have adopted to maneuver ourselves this perilously close to extinction.
With respect to "boosting economic morale," a few economics dreamers have proposed a modern dose of the old WPA approach. Most of these voices have been either blatant or disguised saboteurs with agendas which included, at some point, maneuvering another looter into the Oval Office.
The working population of this country is quite estranged from the "labor ready" days of FDR. Most of the Americans who need a job right now can't particularly do anything compared to the capacities of American workers in the 1930's. They are essentially illiterate and mortally untrained -- if not actually untrainable. In the "horror of horrors" to not only Republican reactionaries but also to other gentrified racists, the demographic exception to this generality rests with the hopeful minorities among us.
Most of these minorities who haven't fallen under the gang hypnosis know how to do something. Most of them also have the human stamina to actually do whatever it is that they know how to do. Vast numbers among the desperately unemployed traditional labor force are lacking such abilities, not to mention such stamina. Worse, when the artificial bubble of easy prosperity finally burst forever, a grotesque, crippling pessimism coated every national spirit like six coats of gray paint.
If it's not going to be easy, it's got to be hopeless.
The World Wide Marshall Plan of 2013
It's been all the rage to focus on the latest manifestation of the Bush Disaster of 2008 as if each was, somehow, detached from the rest. There have even been brave gambits among the talkers, fleeting, fly-by patinandos, implying that the explosive collapse had causes adjacent to the bloodshed. All this is false.
The hideous thing started in the Oval Office. The persuasive cronies of the handicapped Executive lured his power farther and farther away from an even furtive, modest adherence to his oath and closer and closer to an abattoire of greed and frenetic largesse. When the first spark of administrative cogency was re-installed with the Obama Inauguration, the damage had been done. Recent reports estimate the unilateral reduction in the wealth of American families to be 40%.
 |
| (image source) |
"Marshall Plan??!! Ha!
Maybe someday, but not until we own all the contractors and suppliers."
It hit Wall Street and the banks first. It hit Europe within weeks as sovereign borrowing rates began their unbridled ascent. It hit the United States in full tsunami force a year later. The Bush handed his over extended friends $1 Tn in ready cash backed up with another $14 Tn in loan guarantees to "make whole" the endangered oligarchs who owned his political party. The Europeans were slow to fire up their printing presses, but they were caught in the terror soon enough.
In the US the printing presses have been steadily busy, applying every advantage of the country's great wealth through stimulus, quantitative easing and other arcane inventions.
This is exactly the point. The oligarchs have already shuddered adequately with the prospect of "dents" appearing in their money bins.
If we dare consider some concept so expansive as the "planetary economy," the crumbling pillars of what we have now are obvious almost at once. The work, resources and money which would have been, more rationally, directed at planetary maintenance is now in a few dozen Swiss bank accounts. Predictably, the rest of the thing is falling apart before our eyes.
The poor old thing we've mindlessly patched together, piece by piece, in an unthinkable jumble of horrendous, careening contradictions is patiently preparing to kill us. All of us. Yes, we may -- ourselves -- be the material actors in this extinction, but of course what will really be killing us is our absolute refusal to do anything to retard -- much less, simply stop -- our inevitable demise.
The "main business" of 7 billion erratic homo sapiens for the previous centuries has been the constant insistence on bringing us to this day. So, since the money presses have already been started, let's get crazy.
No one has dared to confidently present either credentials or insight which might validate the journey MeanMesa can undertake effortlessly right here.
Let's rebuild the world.
Let's rebuild the entire world.
Also, let's make sure that this "rebuild the world" idea is not limited to strictly concrete and steel sorts of items either. Just as important are the terrifically awful "social cultural practices" which have led us to this current precipice. These are the "practices" which we have adopted to maneuver ourselves this perilously close to extinction.
In terms of concrete and steel, the new world needs plenty of things. The coastal cities must be moved inland to avoid flooding from the ocean rises along the coastlines. Agricultural lands must be re-established in the regions into which the rain is moving. Global energy generation systems must become sustainable rather than terminally consumptive. Land which is rapidly becoming too hot for its current level of inhabitation must be abandoned. Other land which is gradually becoming arable need to be developed to produce food.
Beyond the terms of concrete and steel, the parasitic oligarch class must be forever and perpetually relegated to the status of the pariahs and sociopaths they are. The obscene wealth now "trapped" in this dung hill of history must be recovered and applied to saving the world. The ancient psychopathy which has driven this grotesquely greedy element of society must be addressed squarely and honestly, then energetically discarded.
In written history we have seen, for example, the practice of cannibalism decline from an arcane acceptability to a uniformly rejected horror. A similar process must transform the acceptability of the old world's greed into a new "something" which can fit into a new world.
Further, the "trash heap" of history must hold more than just the bones of the oligarchs. Explosive population growth without limit must end. Abhorrent religions with appetites only for war and domination must be discarded. For every individual, a profound responsibility to the future good of the species will no longer be unusual, optional, or even strangely idealistic.
For anyone mindlessly trotting out the hackneyed resistance to these ideas, the message is extremely simple. Screw you.
The first step is to create humans capable of rising to this challenge. Step two is to create governments which can be trusted to accomplish what will be needed. Step three is to access and apply the planetary wealth, a process which must flow effortlessly across borders. Step four is to then do the very best that we can with a new, planet wide Marshall Plan.
Conquered Germany and devastated Europe could be controlled. The spending of the Marshall Plan money was not subject to corruption, and -- perhaps even more importantly -- those who were called upon to provide the resources for the Marshall Plan expected and demanded that the money they provided create results.
Today's corruption is the fundamental badger savaging the picnic. The underlying problems which explain the Euro's reluctance to move decisively on the debt problems there have everything to do with corruption. In today's Europe, Greece and Spain are not trusted to spend assistance money any more effectively than they have in the past. Spain negotiated for a "modified bailout" with austerity imposed domestically.
The corruption problem is the foundation of the Arab Spring. Even slightly more effective autocracies could have possibly "sailed through" their respective domestic outrages. It is the "main dinner guest" in countries as disparate as Pakistan and the Peoples Republic.
It would take no longer than five minutes to line up a thousand naysayers to proclaim that every idea in this post is an impossibility. Ten years ago, this might have been a relatively palatable opinion from such cynics. However, this is not ten years ago, this is today.
Just about everything that was previously concealed is now illuminated.
Here and now, deep in this self-imposed disaster, we may be looking at the unlikely face of hope.
We must not look away.
A Few Historical Points
Conquered Germany and devastated Europe could be controlled. The spending of the Marshall Plan money was not subject to corruption, and -- perhaps even more importantly -- those who were called upon to provide the resources for the Marshall Plan expected and demanded that the money they provided create results.
Today's corruption is the fundamental badger savaging the picnic. The underlying problems which explain the Euro's reluctance to move decisively on the debt problems there have everything to do with corruption. In today's Europe, Greece and Spain are not trusted to spend assistance money any more effectively than they have in the past. Spain negotiated for a "modified bailout" with austerity imposed domestically.
The corruption problem is the foundation of the Arab Spring. Even slightly more effective autocracies could have possibly "sailed through" their respective domestic outrages. It is the "main dinner guest" in countries as disparate as Pakistan and the Peoples Republic.
It would take no longer than five minutes to line up a thousand naysayers to proclaim that every idea in this post is an impossibility. Ten years ago, this might have been a relatively palatable opinion from such cynics. However, this is not ten years ago, this is today.
Just about everything that was previously concealed is now illuminated.
Here and now, deep in this self-imposed disaster, we may be looking at the unlikely face of hope.
We must not look away.
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