The Offshored Economy
By Paul Craig Roberts
In the 20th century, Detroit, Michigan, symbolized American industrial might. Today it symbolizes the off-shored economy.
Detroit’s population has declined by half. A quarter of the city — 35 square miles — is desolate with only a few houses still standing on largely abandoned streets. If the local government can get the money from Washington, urban planners are going to shrink the city and establish rural areas or green zones where neighborhoods used to be.
President Obama and economists provide platitudes about recovery. But how does an economy recover when its economic leaders have spent more than a decade moving high productivity, high value-added middle class jobs offshore along with the Gross Domestic Product associated with them?
Some very discouraging reports have been issued this month from the Bureau of Labor Statistics. There have been record declines in both jobs and hours worked. At the end of last year, the U.S. economy had fewer jobs than at the end of 1997, 12 years ago. Hours worked at the end of last year were less than at the end of 1995, 14 years ago.
Broken Incentives: “People See What They’re Incentivized to See. If You Pay Someone Not to See the Truth, They Won’t See the Truth.”
hat tip: Washington’s Blog
Monday, March 15, 2010
Upton Sinclair said:
It is difficult to get a man to understand something, when his salary depends upon his not understanding it.
Bestselling financial writer Michael Lewis is now saying the same thing. In an interview with 60 Minutes, Lewis said:
Wall Street is able to delude itself because it’s paid to delude itself. That’s one of the lessons of this story. People see what they’re incentivized to see. If you pay someone not to see the truth, they won’t see the truth.
As Lewis makes clear, the broken incentive system causes the heads of the Wall Street giants to act in ways which are not only destructive to the economy as a whole and to American jobs, but to the long-term health of their own companies.
If the broken incentive system were fixed, Wall Street big shots could suddenly be able to “see” the destructive effects of fraudulent and risky behavior. That would take politicians getting out of bed with Wall Street for a couple of minutes, which is unlikely, given how warm and cozy it is Unfortunately, that’s probably not politically feasible.
Of course, executive compensation should be linked to performance, in the sense of creating sustainable wealth for shareholders and the economy as a whole. But if the companies and politicians are too spineless to do that, at least ill-gotten gains could be taken away after the fact when executives are found to have committed fraud or driven their companies into the ground.For example, as I wrote last April:
[William K. Black - the senior regulator during the S&L crisis, and an Associate Professor of Economics and Law at the University of Missouri ] provided the historical background to the PCA [The Prompt Corrective Action Law (PCA)] in a little-noticed essay last month:
… PCA also recognized that failing bankers had perverse incentives to “live large” and cause larger losses to the FDIC and taxpayers. PCA’s answer was to mandate that the regulators stop these abuses by, for example, strictly limiting executive compensation and forbidding payments on subordinated debt.
We Stand on the Cusp of one of Humanity’s Most Dangerous Moments
By Chris Hedges
Aleksandr Herzen, speaking a century ago to a group of anarchists about how to overthrow the czar, reminded his listeners that it was not their job to save a dying system but to replace it: “We think we are the doctors. We are the disease.” All resistance must recognize that the body politic and global capitalism are dead. We should stop wasting energy trying to reform or appeal to it. This does not mean the end of resistance, but it does mean very different forms of resistance. It means turning our energies toward building sustainable communities to weather the coming crisis, since we will be unable to survive and resist without a cooperative effort.
These communities, if they retreat into a pure survivalist mode without linking themselves to the concentric circles of the wider community, the state and the planet, will become as morally and spiritually bankrupt as the corporate forces arrayed against us. All infrastructures we build, like the monasteries in the Middle Ages, should seek to keep alive the intellectual and artistic traditions that make a civil society, humanism and the common good possible. Access to parcels of agricultural land will be paramount. We will have to grasp, as the medieval monks did, that we cannot alter the larger culture around us, at least in the short term, but we may be able to retain the moral codes and culture for generations beyond ours. Resistance will be reduced to small, often imperceptible acts of defiance, as those who retained their integrity discovered in the long night of 20th-century fascism and communism.
We stand on the cusp of one of the bleakest periods in human history when the bright lights of a civilization blink out and we will descend for decades, if not centuries, into barbarity. The elites have successfully convinced us that we no longer have the capacity to understand the revealed truths presented before us or to fight back against the chaos caused by economic and environmental catastrophe. As long as the mass of bewildered and frightened people, fed images that permit them to perpetually hallucinate, exist in this state of barbarism, they may periodically strike out with a blind fury against increased state repression, widespread poverty and food shortages. But they will lack the ability and self-confidence to challenge in big and small ways the structures of control. The fantasy of widespread popular revolts and mass movements breaking the hegemony of the corporate state is just that a fantasy.
Hightower: Two Right-Wing Billionaire Brothers Are Remaking America for Their Own Benefit
How billionaires’ money took over Washington — and created the mobs who rant against reform.
by Jim Hightower
hat tip: Hightower Lowdown
March 19, 2010
Despite a constant racket from the forces of the far-out right (Fox television’s yackety-yackers, just-say-no GOP know-nothings, tea-bag howlers, Sarah Palinistas, et al.), the great majority of Americans support a bold progressive agenda for our country, ranging from Medicare for all to the decentralization and re-regulation of Wall Street. Indeed, in the elections of 2006 and 2008, people voted for a fundamental break from Washington’s 30-year push to enthrone a corporate kleptocracy.Yet the economic and political thievery continues, as the White House, Congress, both parties, the courts, the media, much of academia, and other national institutions that shape our public policies reflexively shy away from any structural change. Instead, the first instinct of these entities is to soothe the fevered brow of corporate power by insisting that corporate primacy be the starting point of any “reform.” Thus, when Washington began its widely ballyhooed effort last year to reform our health-care system, step number one was to announce publicly that the monopolistic, bureaucratic insurance behemoths that cost us so much and deliver so little would retain their controlling position in the structure. Likewise, Wall Street barons who crashed America’s financial system were allowed to oversee the system’s remake–and (Big Surprise!) the same top-heavy structure and shaky practices that caused the crash are being kept in place.
In other words, the foxes who ate the chickens keep being put in charge of designing the new hen house–so nothing really changes.
This is more than frustrating, it’s infuriating –and it’s debilitating for our democracy. As a fellow said to me about the lack of real changes in national policy during the Clinton presidency, “I don’t mind losing when we lose, but I hate losing when we win.”
Why does this keep happening to us, and who’s doing it? It’s not merely a matter of too many fickle and pusillanimous politicians–they’re the on-stage actors in this drama, but not the producers, not the ones behind the scenes plotting to thwart the people’s democratic will. Who, specifically, are these plotters, and how do they impose their narrow agenda of self-interest over the public interest?
The Growing Movement for Publicly-Owned Banks
by Ellen Brown
Hat tip: web of debt
March 18th, 2010
As the states’ credit crisis deepens, four states have initiated bills for state-owned banks, and candidates in seven states have now included that solution in their platforms.
“Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs.”
–Lansing Mayor Virg Bernero in the Detroit News, May 9, 2010
Struggling with 14% unemployment, Michigan has been particularly hard hit by the nation’s economic downturn. Virg Bernero, mayor of the state’s capitol and a leading Democratic candidate for governor, proposes that the state relieve its economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; and could help community banks by buying mortgages off their books and working with them to fund development projects.
Bernero joins a growing list of candidates proposing this sensible solution to their states’ fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit; and publicly-owned banks could fill that need.
Politics Cannot Be Fixed
by D.W. MacKenzie
Hat tip: Mises Daily
Friday, March 12, 2010
There have been many complaints recently about the way Washington works — or rather its recent failures to efficiently implement Obama’s policy priorities.
Paul Krugman compares the present state of American politics to the gridlock that afflicted 17th-century Poland. Use of the Liberum Veto froze the Polish parliament (the Sejm). Now senators are holding up new legislation in America. Many others have added complaints about special-interest groups and an alleged need for public financing of elections.
Evan Bayh cites partisanship and gridlock as reasons for his departure from the Senate. Bayh claims that it was easier to serve the public “in the old days.” Generally speaking, there is a feeling among many that the legislative process can and ought to work better, and that elected officials can and should do a better job of serving the public.
While critics of the status quo in Washington are no doubt sincere, there are good reasons to see their views as naïve. Ideology does influence the way many senators vote. According to one study, voter preferences are a minor influence on how senators vote, except for senators who face strong opponents in upcoming elections.[1] In highly competitive politics, politicians must ignore more ideological and extreme viewpoints in favor of the centrist positions that Bayh favored. It is, however, quite normal to lack competition in a two-party system. There is a lack of competition in many areas of American politics, but this is normal.
Trade War: China Versus the West?
by Staff (of Daily Bell) Report
hat tip: Daily Bell
Monday, March 15, 2010
China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand. Within a month the US Treasury must rule whether China is a “currency manipulator”, triggering sanctions under US law. This has been finessed before, but we are in a new world now with America’s U6 unemployment at 16.8%. “It’s going to be really hard for them yet again to fudge on the obvious fact that China is manipulating. Without a credible threat, we’re not going to get anywhere,” said Paul Krugman (pictured left), this year’s Nobel economist. China’s premier Wen Jiabao is defiant. … “Some say China has got more arrogant and tough. Some put forward the theory of China’s so-called triumphalism’. My conscience is untainted despite slanders from outside,” he said. Days earlier the State Council accusing America of serial villainy. “In the US, civil and political rights of citizens are severely restricted and violated by the government. Workers’ rights are seriously violated,” it said. “The US with its strong military power has pursued hegemony in the world, trampling upon the sovereignty of other countries and trespassing their human rights,” it said. “At a time when the world is suffering a serious human rights disaster caused by the U.S. subprime crisis-induced global financial crisis, the U.S. government revels in accusing other countries.” And so forth. Is the Politiburo smoking weed? – UK Telegraph
Dominant Social Theme: The Chinese are acting uppity. Too bad for them.
Free-Market Analysis: So China and the West are headed for a protectionist spat over an under-performing yuan? We have some difficulty believing this. China and America in particular have a 21st century symbiotic relationship, though the hostile posturing may be helpful to the political classes. In fact, the rhetoric has apparently been kicked up a notch, according to the Telegraph, as follows: “Beijing [has shown a] willingness to up the ante. It has vowed sanctions against any US firm that takes part in a $6.4bn weapons contract for Taiwan, a threat to ban Boeing from China and a new level of escalation in the Taiwan dispute.”
Sabbath Thoughts: The Importance of Morality
John Adams
Signer of the Declaration of Independence and Second President of the United States
[I]t is religion and morality alone which can establish the principles upon which freedom can securely stand. The only foundation of a free constitution is pure virtue.
(Source: John Adams, The Works of John Adams, Second President of the United States, Charles Francis Adams, editor (Boston: Little, Brown, 1854), Vol. IX, p. 401, to Zabdiel Adams on June 21, 1776.)
[W]e have no government armed with power capable of contending with human passions unbridled by morality and religion. . . . Our constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.
(Source: John Adams, The Works of John Adams, Second President of the United States, Charles Francis Adams, editor (Boston: Little, Brown, and Co. 1854), Vol. IX, p. 229, October 11, 1798.)
The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If “Thou shalt not covet,” and “Thou shalt not steal,” were not commandments of Heaven, they must be made inviolable precepts in every society, before it can be civilized or made free.
(Source: John Adams, The Works of John Adams, Second President of the United States, Charles Francis Adams, editor (Boston: Charles C. Little and James Brown, 1851), Vol. VI, p. 9.)
A Sign of Empire Pathology
More US military personnel have taken their OWN lives than have died in action
by Finian Cunningham
Gulf Daily News and Global Research
Here is a shocking statistic that you won’t hear in most western news media: over the past nine years, more US military personnel have taken their own lives than have died in action in either the wars in Iraq or Afghanistan. These are official figures from the US Department of Defense, yet somehow they have not been deemed newsworthy to report. Last year alone, more than 330 serving members of the US armed forces committed suicide – more than the 320 killed in Afghanistan and the 150 who fell in Iraq (see wsws.org).
Since 2001, when Washington launched its so-called “war on terror”, there has been a dramatic year-on-year increase in US military suicides, particularly in the army, which has borne the brunt of fighting abroad. Last year saw the highest total number since such records began in 1980. Prior to 2001, the suicide rate in the US military was lower than that for the general US population; now, it is nearly double the national average.
A growing number of these victims have been deployed in Iraq or Afghanistan. What these figures should tell us is that there is something fundamentally deranged about Washington’s “war on terror” – which is probably why western news media prefer to ignore the issue. How damning is it about such military campaigns that the numbers of US soldiers who take their own lives outnumber those killed by enemy combatants.
