Big new vision for what the US should be

I haven't been posting, but I've been very active following the huge news events in the US, where the covid pandemic and Black Lives Matter demonstrations have superseded  even the presidential race in importance (until recently, like October).

I've been well aware of the killings that have sparked the Black Lives Matter movement. Trayvon Martin. Michael Brown. Philando Castille. Eric Garner. And many more. This spring it was Ahmaud Arbery, followed by the egregious slow-motion asphyxiation of George Floyd caught on tape as neighborhood folks pleaded with police to let him up so he wouldn't die. 

But he did die. And it was a latest stick of dynamite, setting off demonstration, looting, and vandalism in dozens of cities. My town had a BLM demonstration that was peaceful. We have a bit of BLM graffiti that isn't overwhelming in the least or destructive. 

Something clicked inside me though. It happened after looking at the 30 minutes of body cam tape of  Rayshard Brooks. There was something about it... And I realized what it was. This was a guy desperately trying to do the right thing and avoid arrest. He was polite to the police, helpful with his paperwork, not belligerent in the least until they tried to put the cuffs on him, and then he fought them like a man desperate to escape. Even as he was fighting them, he didn't yell epithets. Even as he shot a taser (grabbed off one of the cops), he didn't insult them. And then he was shot as he tried to run away. A possibly important detail is that Brooks was on parole, and a new arrest might have landed him immediately in prison. 

While I was mulling over what had happened, I read Brooks described as a convicted felon, an angry drunk, a very violent man. What I witnessed in that video was very different, and I don't think the video lied. 

Suddenly I was able to see someone who could have been a neighbor of mine. He was trying so hard to be a good guy, not cause any harm to anyone, and he ended up arrested for SLEEPING IN HIS CAR. How the fuck did things go so wrong? 

So I started to think about how it could go so wrong. He was desperate to avoid arrest after having done nothing bad, nothing irresponsible. So how did this happen?

Going Wrong #1 - Making too many people criminals

In the US, people lose a lot of their employment potential if they are convicted of a felony. And some fairly smalltime offenses get classified as felonies because of the 'tough on crime' ethos in the US. Do we really want to keep punishing someone years after their conviction? Wouldn't it be better to make it easier to go straight and be a law-abiding person? I think it would be better. 

So I want reform of our laws, particularly reducing the number of crimes labeled as felonies. I want people to no longer be considered guilty of a felony (have to report it on forms) after a certain number of years. Maybe 5 years for lesser felonies and 10-20 for more serious ones. I want three strikes laws used only for violent felonies, not shoplifting or burglary. 

I also think that more county or municipality should have a heavy dependence on fines for funding. Don't use traffic violations to fund your courts. Keep fines high enough to discourage but not so high that it strangles people. Possibly fines should be a portion of percentage of income or your electricity bill, so on a sliding scale. That way it's close to equally painful whether you are rich or poor. Definitely the poor shouldn't be soaked as they have been in many towns and counties, like Ferguson, Missouri. 

Going Wrong #2 - The Underclass

Underclasses are almost always a given in history. The poor, the peasants, the serfs, the slaves, the plebians, the workers. The owners don't want to pay too much because owners are generally greedy and want to have more profit for themselves. However, you do need workers, at least some of the time. You also sometimes need soldiers, and sometimes a lot of soldiers. And you need the next generation to carry on or old age for the last generation is going to be horrific. 

So the owners/nobility want workers who are as cheap as possible. They may pay near-starvation wages or give near-starvation rations. They probably aren't going to be generous.

In the US and probably almost every other country, we inherited this system and outlook. I think it's the worst part of our economic system because it is greedy, cruel, and dehumanizing. I don't think all wages should be equal, but all jobs should provide a decent wage for doing the work well. 

Pay should be good enough to support the person and a small family in a basic, healthful condition. That means decent shelter, decent food, education, medical, and clothing. To me, any job should pay well enough, even at the bottom of the ladder because too often there aren't higher rungs. Some extra generosity to folks at the bottom, including teenage workers wouldn't be a horrible waste when it ensures that everyone has decent wages. 

Wages aren't the sole issue. There's also housing and education. Traditionally, poor housing was what peasants had to put up with. That shouldn't be tolerated anymore. We should upgrade housing for everyone. Similarly with schools. Decent schools, good curricula, and reasonably small class sizes for everyone. 

How to get there

Maybe that seems overly simplistic, but those are the changes I'd like to see in the US. I want a country with respect for all its citizens, and decent wages, housing, and education for all its citizens. That means no group is considered dirty, underclass, undeserving, or disposable. 

Unfortunately, poor folks (blacks, whites. latinos, native americans) have been considered unimportant and disposable. So that has to stop. All people must be valued. This is a big change, but it shouldn't psychologically be that difficult. 

Can we afford these changes? With the average income in the US being $72K for household, this should be possible. However, we may not be able to maintain high levels of immigration and have good wages for all. So I would choose higher wages and lower immigration. It may also be important to emphasize small families so that the next generation isn't swollen with too many for the available jobs and resources. 

I do foresee that we'll need guest workers. I think guest workers should be paid at least the minimum wage so that there isn't a preference for guest workers over American workers. Housing should also be decent. Families as guest workers may be discouraged if the need for labor in the future may be reduced. I would maintain birthright citizenship. 

While I think this vision is doable over time, I don't believe that the US will take this path. It's outside the box and too different from tradition. It also requires more laws and regulation, less greed and more sharing. The wealthy in the US haven't been in favor of that. Just consider Jeff Bezos, the richest person in the US, and how little he pays many of his workers. His great wealth is more than he'll ever need, so it's not immoral to impose a reduction on him to raise others up. 

I think people still need incentive to work, and a good wage that takes care of your family is a powerful incentive. Being respected also makes even unpleasant jobs worth it. I wouldn't support a 'universal basic income' since that might stifle the incentive to work.

While I think crime would decrease, I doubt it would disappear. For repeat criminals who show little interest in reform, prison is proper. For one-time criminals who do reform, society should welcome them back. 

No One Left Behind

I've mentioned Black Live Matters and the problem of having an underclass. However I don't see this as an issue involving only minorities. It's bigger than that. It's a matter of seeing all Americans as 'one of us.' That includes traditionally marginalized groups, like black or Latino folks, but also everyone, including rural folks, rust belt workers, etc. Everyone. 

With this inclusion, we should no longer have out-groups that are disdained. We should cherish all Americans and not let small differences set us deeply against each other. 

So that is my big new vision for the US. I'm inspired by the possibility. I'm inspired to have finally come to understand what I'd like to see in a fair society.

Image: cnn.com

Extras. Link to the Moynihan Report back in 1965 about poverty and lack of opportunity for black families. 

What went wrong with the neoliberals

 This might be a thought dump.

Neoliberalism made a lot of sense in the 80s and 90s. Liberalism had spawned some crappy outcomes, such as huge welfare rolls. There was also a huge increase in crime, though it wasn't clear that liberalism caused it. Liberalism might have been abetting it. 

Liberalism was anti-war, and also anti-military, sometimes to the point of advocating that the US get rid of nuclear weapons and greatly reduce the military. Liberalism was pro-union, and some of the unions were driving uncompetitive pay and benefits. Some liberalism bordered on communism, with the profits being vilified.

So it made sense to have a different flavor of liberalism where a strong military helped the US and the rest of world. Where unions shouldn't go crazy. Where free trade was better than protectionist tariffs. Where profits were good as long as workers shared in the benefits. Where welfare should be reformed and work emphasized. Where crime was an individual choice and was damaging to society and therefore should be prevented and punished. In many ways, neoliberalism was a better fit for the US, which is a fairly conservative country. I'm not sure why the US is such a conservative country, but it has been that way for quite a long time, maybe throughout our history. 

Yes, neoliberalism made sense. I was very much a neoliberal. But it failed to address some huge issues, though, to be fair, no other political ideology handled the issues either. The big issue was the hollowing out of American manufacturing. This affected jobs everywhere, but most strongly in the cities, where urban populations were left without decent sources of income. 

Maybe even more so, no one has found an answer to the worsening income inequality, which makes all sorts of economic situations worse. The opportunities to work hard and better oneself are diminished for all but the most entrepreneurial and risk-hardy. Job security becomes less and less, and that also means that people don't have security in their health insurance and healthcare. The middle class has been getting more and more insecure. The lower class have always been insecure, with even less chance for improvement. 

So on fundamental issue of economic well-being, neoliberals have failed the US, as has everyone. 

If I'm right and the fundamental issue is economic well-being, what should the policy plans be? That's the topic of a different post. 

Image: marketwatch.com

Extras. I found a relevant article after I wrote this. It's more historical than mine. It also fails to have an alternative. 

Details and loose ends of the covid disaster

This is a mishmash of links related to covid-19. Like this one, zerohedge declare that Bill Gates planned this hoax. The virus is real, but the warning of carnage are hype meant to control the populace.

3M is exporting masks when the US doesn't have enough. Terrible but with a good explanation. It may be the main or only supplier to other countries that need masks too.

The conservative site Washington Examiner says that Trump is right to focus on reopening the economy. Maybe, but they also claim that he was thwarted from this task by 'collusion of the public health network, both political parties, and the media.' Clueless! Tin-foil hat theories of collusion with no realistic understanding of this disease's spread. This is a more serious report about the goal of the Trump administration to reopen. Trump may feel that it's necessary to his prospect of winning that the economy is in good shape again, but the virus may ruin those plans, and Trump won't be able to get around that.

A cogent analysis of Trump's attempts to grab the headlines. That's still the most important outcome to Trump, the huge egotist. And unable to handle criticism. Hopefully this is the last addition to this short list of people criticizing Trump for his egotism during this crisis. This time it's mild criticism from other Republicans. For a broader view of how Trump handled the beginnings of this crisis, see this article and this one.

What happens when non-experts drown out the experts: we have Trump touting a drug (based on an adviser's beliefs), that then gets bought up and creates shortages for the people who need it.

Slices from the crisis in New York. The field hospital set up at the Javits Center, the hospital ship, and protective clothing and masks being manufactured right in the vicinity. One sick person pushes another sick person, causing a fall and subsequent death. Not unforeseeable in crowded, chaotic conditions. Perhaps New York is over the hump of admissions, but the death toll drops much later.

Another concern. Covid is striking minority communities harder. Why?

Fallout from Wisconsin being unable to delay it primary due to inaction on the part of Republican legislators: many mail-in ballots won't be counted. Yes, the Republicans are looking like power-hungry charlatans, but that's what some people want. Lip service to fairness is ok, but the GOP needs to maintain its power (my interpretation). The country will need to consider how to run elections if this pandemic continues, but the GOP will be keeping an eye on what helps them electorally.

I intensely dislike that lying jerk Alex Jones and his conspiracy factory. He is at it again, this time with a mouthwash that protects you from covid-19. More ugh from a Florida police chief who connected a covid-19 death of a deputy to homosexuality in a long rant to other deputies.

A brouhaha over Dr. Fauci stating the obvious--that earlier distancing measures would have saves lives. Trump got petulant and retweeted someone who called for #FireFauci. But that could have been partly to stir the pot and capture eyeballs yet again. Scientists also warn that cheap easy immunity tests may not be coming soon. That's bad news for workers

Close to my home. The Soldiers Home in Holyoke had a growing problem with covid-19 and a director who didn't do anything about it, and didn't seek help. It spread through the workforce and the residents. Who knows how many will be dead when it's all done? So far about 20 residents but there's no reason to think that will be all. More local news.

Image: propublica.org

Extras and updates added free-form. It's worth seeing how CNN fact-checks Trump. How fair are they?

A nursing home in New Jersey handled its outbreak by stacking the bodies in its morgue and not telling state authorities. A short-term solution, not long-term.

Nurses suspended from their jobs for refusing to care for covid patients if they weren't given safety equipment. For workplaces have a safety first ethos where you're not supposed to put yourself into harm's way. I support that.

Important picture. Bodies laid out in a refrigerated trailer in New York City.

Image: talentrecap.com

Hotspots---------

South Dakota has a large cluster based around a large meat processing plant. Because there was a partial voluntary social distancing, the state government thinks it's in good shape to handle the cluster. Other meat processing operations are also having problems. Also other food processing operations.

Bus drivers are dying at higher rates, though not everywhere.

Lots of elderly are dying in Sweden. It seems like it was planned not to provide protective equipment to workers in elder care facilities. Or at least the lack of equipment didn't change in response to all the information blasting around the world.

In the US, longterm care facilities are sitting ducks. They don't have enough protective equipment, the right kinds of protective equipment, the extra personnel or time for gowning, and a population in close quarters that is ideal for spread. Lots of older people are dying in nursing homes (see New Jersey item above), including in my state, Massachusetts. Here's a report from Illinois, but it's going to be the same everywhere. There is at least one law firm ready to sue if Grandma died. Never mind that this is very tough to protect residents from. A reasonable list of precautions from a different law firm, but based on my experience, it's not enough. I'm very worried that the court cases after this epidemic are going to be a clusterfuck. And... New York fucks over nursing homes by requiring them to take covid patients. Yes, recovering covid patients need rehab, which nursing homes normally do. However, they are ill equipped to do the necessary separation, so separate facilities should have been set up. Cuomo screwed this one up. Let me emphasize that: SEPARATE FACILITIES. A long article about many facilities and the problems with staffing that they faced even before the virus hit. Reference materials for Massachusetts and the US as a whole.

Related: The lieutenant governor of Texas defends his view that grandparents would happily die to keep the economy going. I disagree that the choice was that clear or easy. Many people 50 and younger are getting sick too, and that's very disruptive to workplaces.

Also related: Another long term institution with crowding and vulnerable people: prisons. I support somewhat early release for those nearing the end of their sentences, but not releases in general. Criminals are imprisoned for the reason that they are a possible danger to society, and also because they are sserving time earned by their criminal actions. Those issues don't disappear because there's an epidemic.

Covid-19 is a weird virus with unexpected behavior, including causing clots and strokes in youthful adults.

One of the important turning points was when Trump started talking about potential deaths in a serious way. The first estimates that the administration released (when they got serious) was 100-200K deaths. That was revised down to 60K deaths by Aug. 4. Instead we passed the 60K mark on April 29.

A shooting/killing with racial overtones happened in February, but complications and covid has delayed the investigation and arrests. Also perhaps because it as a white-on-black shooting with a connection to law enforcement. Video has energized the issue, but it shows the very worrisome effects of covid-19 on fair and reasonable application of the laws. I hope this won't be an opening for backsliding in bad old habits of discrimination. (Not that discrimination in law enforcement has been eliminated.)

No, Bill Gates, don't give China a pass on what they did wrong, especially the coverups and misinformation.

Rats are suffering and getting desperate since restaurant garbage isn't available.

A church that defied social distancing norms was burned down in an arson incident. Congregants had been aggressive, even staging a mass gathering at a Walmart.

Shootings and August links

In less than 24 hours, there were two major mass shootings, following up a mass shooting at a festival in California (so three in fairly short span). The shooting in El Paso, TX targeted Mexicans. The shooting in Dayton, OH was by a young man with a long history of violent fantasies, including having a kill list and a rape list while he was in high school. (Google these shootings for details. I won't choose one link as representative). This article about the background of the El Paso shooter is chilling: mostly 'normal' but with all too familiar undercurrents including bullying at school along racial lines, hopelessness about job prospects while automation continues, and open racist sentiments expressed after Trump was elected.

Ignore the headline of this article (Washington Post again - a good source). It's not so much that there's pushback from the NRA on gun legislation, as there is deep worry from GOP legislators. Can they stay in office if they sign on to gun legislation? Probably not if they depend on votes from GOPers, which they do. According to polls, the wide majority of Republicans are still against even partial gun control measures. So it's less the NRA standing in the way, but instead the very popular Guns R Us ethos among Republicans.

Faltering Dem candidates. A Politico author contrasts the Republicans, who understand the importance of legacy and a winning historical narrative, with the Democrats, who are sniping at each other over the party's recent past. Part of this is due to a leadership vacuum since Obama is gone and the Clintons are gone, and both failed in some major ways.

Stealth reform measures for Social Security. Why hasn't this been big news? With funding issues looming, the Dems in the House are working on a big change to SS. This should be drawing a lot of attention, debate, number-crunching, and fact-checking, but the press barely utters a peep. Sure, it's not likely to get through the Senate, but it's a real proposal with seemingly real numbers, and these numbers are likely to be the basis for future work on SS.

Zero interest on bonds. A big difference from when I was young is that now the return on bonds is almost nothing. I find this fascinating. The world is awash in money chasing after profits. We've created so much wealth, and so much paper or digital money that there isn't enough ways to spend it or invest it. This doesn't worry me, however. We won't turn dirt poor even if there's a crash. There will just be another inflation via QE (quantitative easing) as there was last time.

Update on Gaza. Tensions rise and fall, but nobody wants a repeat of the last useless, destructive war. Progress!

Image: wikipedia.org

Extras. Gun control (now called gun safety) advocacy group shows how common private sales are without a background check.

The biggest danger to the US

My siblings and I are all politically involved. We follow the news. We consider the issues. We decide on our policy preferences. It's a legacy from our mother who was always politically involved, even with so many children to raise.

We don't all see eye-to-eye. I had a fascinating argument with my brother, until I cut it short because he was yelling too much. He wants the Dems to play hard ball. Specifically, he wants the Dems to increase the size of the Supreme Court if and when they get the political muscle to do so.

I'm horrified by this possibility. And I realized that I'm deeply distrustful of Dems these days. They remind me of the radicals in the 1970s who wanted endless new social programs, extremely generous welfare, and high taxes to support it all. Worst than that, the Democratic Socialists want to nationalize the energy sector, and maybe banks too. And this faction seems to be growing in its influence.

Republicans have been warning for decades that Dems wanted to turn this country into Venezuela. For some Dems, it's probably true. I remember Dems looking at the changes in Venezuela when Chavez came to power, and hoping that they would succeed. There would be a new model for socialism, one that the US might consider following.

Venezuela turned out the way the GOP predicted, not the way the sympathetic Dems hoped. But you can't teach some people anything. They are immune from learning even simple lessons. So it is with some Dems and socialism. Some of them actually want to follow a Chavez-like model, thinking it will be OK for the US because ... [some unfathomable reason].

I don't want these Dems to gain power. I'm still glad I don't have to deal with the embarrassment of what Hillary won't have done as president--her waffling, her mealy-mouth policies as she tries to sound tough. I greatly dislike Trump with his bombast, indifference to truth, and hate-mongering, but I like some of what he's doing. We should have reduced immigration back in 2001, if not sooner. We should be enforcing immigation law. It's not crazy to have a summit with North Korea. It's not crazy to tell European countries to carry more weight in NATO. It's good to negotiate harder on international treaties. It's good to give military commanders more leeway in military decisions instead of micromanaging from the top. I wish I could have all these outcomes without Trump, but it's not likely to have happened. Other establishment politicians would probably have failed, just like the previous ones did. So I hate Trump but like some of the results. I hoped it would be this way when Trump was inaugurated, so I guess I'm lucky it's followed one of the rosier scenarios.

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So it was easy to figure out how the Dems scare me. Certainly, it might not happen, but I think the risk is there. So what is the biggest risk with the GOP? Maybe I have a blind spot, but I couldn't think of one as scary as with the Dems.

Food shortages, so military in stocked markets

Image: philipparrish.com

Extras. Read the mess that Chavez inherited on his initial election (the end of the article). Praise for Chavez and his social programs. Optimistic prediction for Venezuela, so obviously not the conservative media. The same outlet overturns its optimism and explains some reasons for the crisis. Chavez wasn't so good, even economically, since other South American countries battled poverty well without policies leading to collapse. Venezuelan ex-pats in Florida burn Bernie. I wonder if they support current democratic initiatives that have a strong socialist favor.

Ten years after the crisis

Bloomberg, my favorite opinion site, had a bunch of reflections on the 2008 financial crisis and what has happened since then. Some of it makes me worried. We might have avoided a worldwide depression then, but have we just delayed an inevitable reckoning. Or have we learned the intricate methods needed to deal with financial crises, so that we're probably safe?

Just to review, the Great Depression in the US in the 1930s was rather horrid. Unemployment at 25%, wages low, people hungry, in worn shoes and clothes, living off the kindness of family, scratching out a living. However, many more people lived on farms back then, so they could provide susbsistence living. Should a depression occur now, we'd have that many more people totally dependent on others, with no means to even feed themselves. (And we have a lot more weapons now too. Will crime be a horrendous problem if we have another depression?)

One author is optimistic that emerging economies won't have a crisis like we did in 2008. That was sparked by too much savings chasing risky investments in pursuit of return. Emerging markets are riskier and give higher returns, so they might seem vulnerable to fright-and-flight in a crisis. But that's less likely for two reasons: 1) Emerging markets are now a standard part of large portfolios, not just a high-risk high-return asset, and 2) local investment pools are larger and will grow even more as pensions become important in emerging countries.

Another article isn't optimistic. It's about a world swimming in debt, with little hope to pay it off. Somehow I'm overly worried about this. I figure everyone takes a haircut, tightens their belts, and lives, though less lavishly.

Image: en.actualitix.com

No one solves the problems

Trump is promising to bring good jobs back to the US. He doesn't say how this will happen, but we're supposed to trust him because he knows how to make good deals.

Is he different from other politicians (both right and left) who have promised good jobs? Were the earlier politicians (right and left) different from one another when they promised good jobs?

In many ways, they weren't different. Both sides failed. Their promises were half-baked words meant to get them elected, but not suitable to be implemented. Trump's promises look a lot like this.

I'm not an economist--not that economists have delivered all that well on their predictions/solutions (i.e. promises). I haven't seen an economist discuss which economies in the world are working well, and whether the US can emulate their success. I suspect that the US can't emulate their success. If we are to recapture our former higher level of economic success, we'll have to figure out our own path there.

The GOP path was tax cuts for 'job creators' and the trickle-down economy. Since Bush Jr., that path has clearly been a failure. The Democratic path seems like a hodge-podge of security nets programs and tax increases on the wealthy. How that brings more jobs isn't clear. I'd have to classify as a redistribution program, not a jobs-creation plan.

The failure of both the GOP and Dem plans have left the door wide open for Trump, and he has taken full advantage. I don't know how many of his supporters actually believe him. But for sure, they know that the GOP and the Dems have failed, so maybe it's time to try something else.

Ask the question: Is this working?

Worst of all, neither the Dems nor the GOP have grappled with their failures. Dems are doubling-down on the social safety net, while the GOP continues their trickle-down fantasies. Dems, for electoral reasons, won't consider that large-scale immigration has hurt average Americans. Many in the GOP elites won't talk about it either because they benefit from cheap immigrant labor, and they're looking at electoral demographics too.

So, it is no surprise that Trump wins the GOP presidential nomination, since he is the only candidate who will talk about immigration in forceful, if ugly, terms.

As for the general election, I'm not confident that Trump will lose. Hillary represents one failed plan, so she certainly doesn't deserve to win. Trump doesn't deserve to win either. No one seems to deserve the office. No one has strong, new ideas.

I recently read a history of the US from 1932 to 1972 (The Glory and the Dream by William Manchester). It was enlightening how Roosevelt tackled the depression. The problem is that the US is so much larger now with so many more layers of spending. Can we actual do anything major now? I have strong doubts.

Nonetheless, I wish more politicians were making big proposals that are outside of the same-old partisan failures. Instead of Trump vs. generic-Dem, we should have had the choice of a half-dozen new ideas. But we didn't, and that's the shame and the pity.

Image: deliberatemeans.com

Extras. Are there countries we can learn from? HuffPost's top ten. US News and their ranking of 60 countries. Also by quality of life.

The Rich should be worried

The Rich is this country are doing well, unlike many of the rest of us. Many of us in the middle class suffer from lack of jobs, insecurity of future decent-paying jobs, and diminished prospects for us or our children. The working class has their prospects diminished too.

But it's the Rich who are moaning the loudest on some days. Perkins infamously wrote in the Wall Street Journal that he feared a Kristallnacht against the wealthy. To me, this seems like an overreaction and bitching about taxes going up on the wealthy, but those taxes still aren't terribly high. Romney paid only 14%, so a rise to 20% (the new capital gains rate) hardly seems like a major hardship.

I wish the Rich had more to worry about. The kings of financial firms should be sweating in non-country-club cells while federally appointed special masters hunt down and liquidate their assets. People are rightly pissed at the execs at Wall Street firms, GE and other huge companies that play the tax code like squash, energy giants like the Koch brothers, hedge fund managers and clients, and the foolish, spoiled rich like Sheldon Adelson who think they can buy elections.

People like Jeff Bezos, Bill Gates, Apple execs, Oprah Winfrey, and George Lucas don't have anything to worry about. They created great things that we all enjoy, and got rich in an honest way. That's not true for the others. The GOP may have labeled them "job creators" but that's proved disgustingly hollow.

Americans aren't mobs, rebels, or robbers, yet some Rich are stupidly worried. The U.S. has never had a French Revolution-style uprising, much less one like the Russian Revolution. Even in the midst of the Great Depression, the poor continued to let the Rich be rich. Little Orphan Annie adored Daddy Warbucks instead of wanting to whack his head off, and that reflected the general population.

So why are the Rich so worried? I don't care. They have a lot more resources to slow or soften their fall than I do (as I have much more than the average American). If need be, I'll live on much less and I won't bellyache like these Rich.

We are all facing living with less. Why do the Rich think they have the brunt of it? Nothing could be further from the truth. So why the angst? In this column (and an earlier one) a leftish pundit tried to figure it out. This is what rang true to me:

It is that mix of insecurity, a sense of the brittleness of one's hold on wealth, power, privileges, combined with the reality of great wealth and power, that breeds a mix of aggressiveness and perceived embattlement. . .

But over the last few years (since 2008), I think there's been a pretty dramatic growth in what we'd call Tea Party politics in that set - extreme conservatism . . . the kind of feverish mindset in which you could write with a straight face that progressives might be building toward some sort of mass wealth confiscation or internment or even extermination.. . .

Image: bradblog.com

Extra. Wealth concentration is normal. No surprise that the powerful try to maintain their power.

What is slowing the economy: Low demand, not Dems

First the apology and the explanation. This is the first post that I totally lost, despite some effort to save it. I'm sorry, but I'm not going to try to reconstruct the whole thing. Instead I'll give just an outline. Sorry about that, but I'll keep all the highlights. (Unless my prose was the highlight for you, which I don't think is likely.) Here goes. The post roughly said:

• The GOP blames regulation, current poor Dem policies, and uncertainty over healthcare and taxes for lack of higher growth in private enterprise.
• However, this GOP talking point wasn't based on this survey, which showed that lack of demand is the biggest problem for businesses.
• It's not surprising if investors aren't spending or investing that much after the rollercoaster of 2007-2008. They're holding on the cash that they have.
• This situation won't last forever as long as the economy doesn't tank again. Eventually physical needs will push people and investors to spend more, and the uptick in spending will nudge the business cycle into an upward trend.
• Please don't try to goose demand with low interest rates from the Fed forever, a big stimulus, more tax cuts, etc. Those haven't worked to build demand, and they'll just make the deficit worse or have other negative consequences.

What parts of the stimulus worked?

Previously, I've shown some evidence that the stimulus worked in halting the spiral of job losses. There are very legitimate questions as to whether this was true, since the slide stopped before much of the stimulus money filtered into the economy. Looking at the evidence again, I think the stimulus was successful at stemming the recession, and I'll present that case here.

 Tax Credits

First of all, much of the stimulus was in tax credits, some paid in 2010, but about $140 billion in 2009. This money probably benefited the economy right away. Some of the money went into spending as intended, some into paying down personal debt, and some into savings.
Comments: Savings rate went up, so not all the money went into consumer spending. However, it's better for individuals to decide how to use the money, since they better comprehend their financial situation. In this atmosphere, the money probably didn't go into bubble investments.

Payments to States

The federal government gave states approximately $175 billion to make up for their sharply declining revenues. States would have been forced to make significantly deeper cuts in teachers, police, firefighters, Medicaid, Head Start, community development programs, and health programs.
Comments: This portion was very effective at reducing massive public job losses. However, that means that it shielded public employees, who tend to vote Democratic. I doubt that cash infusion into the private sector could have be as effective, unless we set up programs like those in Germany that help companies keep people in jobs at fewer hours.

Infrastructure

The government allocated $184 billion for various infrastructure (highway, other transportation, broadband, water projects, schools, and veteran hospitals).
Comments: These are classic stimulus and/or pork barrel projects, which tend to range from excellent projects for safety and efficiency to throwing money down a sinkhole. On the plus side, it funneled money to a sector especially hard-hit by the recession, and some project were a boon to their regions. But among the negatives, it takes time to plan wisely before construction can begin. There's also a risk of boondoggles, such as the notorious high-speed rail program costing $8 billion. One important lesson: A recession is not a good time to spend on expensive, highly speculative projects. Put away the wishlists and stick with vanilla, well-understood engineering projects.

Direct Aid to the Poor, Disabled, and Unemployed

For those you didn't receive tax credits due to lack of taxable income, the government gave $82 billion. About half was unemployment benefits, but also included extra payments to those on SSI (federal disability) and Social Security and a large expansion of food stamps to meet increased demand.
Comments: I've read many places that money given to the poorer people in society ends up flowing very quickly back into the economy as consumer spending. This is helpful in keeping our economy afloat, but not in building it back up or correcting imbalances. I support food stamps as basic necessity, though the allotment is often more generous than necessary. I'm against raising and disability and unemployment benefits when working people are generally doing with less. This may work as a fairly pure Keynesian stimulus, but it is terrible as a prolonged policy. It also looks like a gift to a favored cause.

Science, Research, Energy, and Technology

This is a grab bag, some of which are like infrastructure spending, but on a smaller scale, only $67 billion. It includes grants for many green energy and efficiency programs, information technology upgrades for many federal agencies, and small grants increases for scientific research.
Comments: As with infrastructure projects, it's hard to tell good projects from wasteful ones, but at lest most of these projects were small and probably created future savings in energy costs. However, it also looks like a gift to favored causes and constituencies--environmentalists and white collar scientists and engineers in government agencies. Again, it may be easiest to stem unemployment by saving the jobs of government workers. But I'd argue that it's an expensive short term benefit and are likely areas to be cut when necessary budget cutting is finally undertaken.

Why (I Think) The Stimulus Worked

The stimulus worked because the federal government showed that it wasn't going to let employment go down the tubes--it would throw money at the country to prevent a depression. That, along with quantitative easing and the auto bailout, reassured businesses and people that we weren't going to let the free-fall continue, and it was safe to spend somewhat, rather than saving every scrap we could.

Parts of the stimulus were wasted, but time was of the essence, so careful consideration wasn't possible. The biggest boondoggle was probably high-speed rail. Probably some of the energy projects were also wastes, but of much smaller amounts of money.

This stimulus definitely had a liberal spin on it--money to ensure jobs for government employees and green energy, but not for large defense systems or oil exploration or coal projects. I can understand Republican anger about it. The stimulus does look like a big jobs program for Democratic constituencies. However, I think a temporary funneling of money into government was the best way to staunch to loss of jobs.

 Why a Conservative Stimulus Wouldn't Have Worked

Funneling money through more corporations probably wouldn't have helped, since corporations that had cash were mostly hoarding it. (The TARP, a different topic, was necessary to unfreeze money circulation). Giving more money directly to people in the form of tax cuts wouldn't have directly saved jobs. State governments would have had to cut very deeply. And people who had extra money mostly saved it to create extra cushions in case they were next to lose their jobs. Giving extra money to individuals and companies that already had money didn't work to the extent it was done.

The conservatives are definitely right about something though. You can't maintain stimulus year after year without getting into a monstrous level of debt. As I've said before, it's high time to end stimulative spending and start intelligent cuts.


Extras:
The graphic is from Wikipedia, but I put some of the money into different categories. These are also interesting sources:

• video with charts
• Politifact on job creation
• New York Times article on stimulus success
• Good breakdown on stimulus spending
• IHS global insights (economics firms cited by other sources)

The Shredded Safety Net

I was thinking about what could loosen the purse-strings and get people spending again. Now, I'm not an advocate of profligate spending at any time (my family will confirm that), so I wouldn't want people to falsely feel safe to overspend.

For some people, having a bonus in their pocket is enough stimulus to spend, but most of us take a longer view. We want to feel sure that we won't regret the expenditure, so we have to believe the money will keep coming in.

It's hard to do that now with the job market as lousy as it is. Being able to count on our jobs or the good chance of getting another job is the safety net for most people. Rather, it was the safety net. No other safety net is going to take the place of a robust job market. Even if we once counted on our home equity or credit lines, no one these days realistically believes they can live on their home equity, credit cards, or savings for very long.

With the job safety net so tenuous, most of us are going to try to bulk up our other safety systems--our savings and any other income streams -- and pare back our obligations so we can live on less if the dreaded event occurs and we lose that job.

The renewed focus on jobs by all political parties is welcome, but I'm not hopeful that we can stimulate job creation by supply-side methods (lowering taxes) or by government programs. Both methods will raise both the deficit and doubts about our future, which isn't good for our job climate. I eagerly await the job proposals by all serious national leaders.

Cross of Gold

One of the best things about living in the U.S. is the abundance of economic and political ideas. This is a diverse society of both ethnic groups and ideas, and I wouldn't change either of those. So I won't attack the existence of loony ideas, just their particular merits and demerits. I won't even throw the label "loony idea" around since that would antithetical to my belief that most political ideas have strong reasons behind them.

With that in mind, maybe I shouldn't consider a return to the gold standard a loony idea. It's one of tenets of Ron Paul's long campaign to return the US to the straight-and-narrow of the constitution or die trying. But the drive to reestablish the gold standard is a poster child for the blindness of adherents to the disadvantages and risks of an idea.

Here are the highlights for the advantages of the gold standard:

• Paper currency has no intrinsic value because it isn't gold and isn't convertible to gold.
• Governments, politicians, and central banks often cause massive inflation of the currency.
• A gold standard makes it impossible for politicians or a central bank to inflate currency. The value of our national currency can stay stable for decades or longer.
• A gold standard forces the government to behave soundly, to avoid budget or trade deficits, in order to preserve the country's gold store.
• If there's a gold standard, we can return to using gold coins, which have intrinsic value in the precious metal.

Here are some risks and disadvantages:

• The gold-based currencies are subject to attack by currency speculators. That's why there are no longer any gold-based currencies.
• A gold-based currency doesn't necessarily stop governments from misbehaving. Governments have been known to run deficits and ended up bankrupting their precious metal reserves.
• The gold standard favors one kind of wealth over all others. Gains in non-gold wealth (agriculture, housing, infrastructure, a varied economy) are devalued unless there is also significant growth in gold holdings. That was possible during the mining boom in the 1800's, but not likely now.
• The inflexibility of the gold standard can lead to deflation, which has much worse economic effects than slight inflation rate of 1-2%.
• The history of financial panics in the 19th century doesn't support the idea that the gold standard promotes economic stability.

When I look at these two lists, the disadvantages clearly seem the weightier side of the equation. I don't know how someone supports the gold standard unless they completely ignore the mountain of evidence against it. When supporters embrace the policy as a magic cure to vagaries of financial systems, they look more like an unquestioning cult than a reasonable political movement. No, Paulites, the gold standard will not be our salvation from ourselves.

Update 6/12/23. Blogger flagged this post as having virus-infested links. I removed the links I thought were the most questionable. They were to a Lew Rockwell site. 

Our new economic outlook: Austerity

Yesterday the stock market dropped over 500 point, 4.3%. This is more evidence that we aren't going to bounce out of the recession, but we already knew this. As I wrote earlier, our economy isn't responding to the usual medicine.

What is the outlook? It feels strange to be a layman economic forecaster, but I've already been doing it in my own head and for my family, so now I'll go public. We are going to have some relatively hard times.Unemployment is going to hover around 10%, maybe higher. Barely anyone but the lowest will be getting a raise. We'll have a lot of youth unemployment.

The best way to deal with these financially uncertain times is to be careful with your resources. Not just your money, but also your relationships. You shouldn't burn though your money, or burn your bridges at home or at work. Party less, waste not, save more for the rainier days. Enjoy the simple pleasures. It doesn't have a feel awful.

I have a relative who lives in Oklahoma, which was hit especially hard during the Depression. The stories from the old-timers there is that everyone was dirt poor, but didn't know it because all their neighbors lived the same way. Life went on. And so it will for us, but not nearly so impoverished. We are a much richer country than back then, so we can weather a downturn. We will be making sacrifices, but do we need to fear sacrifices? I hope we aren't so incredibly greedy that we can't give up anything.

One problem with my prescription for dealing with the financial aspects of our economy is that it doesn't help lift the country out of recession. It's a valid complaint. However, I keep thinking about Japan and their unsuccessful attempts to spend their way out of their recession. We already have a huge debt. Let's not add to it in vain attempts to escape this fate. As I wrote before, perhaps the best way to grow is slow, organic, small steps. I'm optimistic we can do it.

Why the medicine stopped working

Our economic woes haven't been solved with supply-side tax cuts or Keynesian stimulus, but why? Both cures depend on redirecting money, but lack of money isn't the root of our economic problems. People have buckets of money to invest. Our stock market sloshes around $69 billion every single day. People (including me) have poured $11.8 trillion into mutual funds. Money sloshes into oil futures, CDOs, ETFs, REITs, hedge funds, etc. Everyone is trying to get good return on their bucket of money. Sometimes people are being enticed with slightly higher returns or considerably higher returns to invest with Bernie Madoff or in offshore Icelandic banks or in well-rated but not-so-solid American mortgage-backed securities.

OK, that isn't happening today. But it was happening in the 2000's until about 2008. Some of that money (including some of mine) vaporized in 2008-2009. But much of it was replaced somehow, maybe with quantitative easing (QE) cash, maybe with money we had shipped to China, maybe with money that was sitting on the sidelines. I don't know where all that replacement money came from, but the Dow soared from a low of 6626 in 2009 to a high of 12810 in 2011.

I may not know where all the money came from, but I can guess what it means. Our economy, and economies around the world, are going to be unusually susceptible to financial bubbles. Since around the mid-1990's, we've had a tech bubble, a housing bubble, and an oil bubble. Maybe there's a stock bubble right now. Maybe there's a gold bubble.

With all the available money, why isn't there more investment and growth? Because there aren't strong new ventures to invest in or expansion opportunities, particularly in the US, but also elsewhere in the world where bubbles have popped. Demand is strongly depressed in the US, where people and business are belatedly paying down debt instead of spending and investing. It's not wrong for people and business to do this, because there was too much debt burden. But how can our economy start growing again?

I wish I knew, or wish that old cures (supply-side or Keynesian stimulus) showed signs of working. We might be in for Japan-style economic drift. The only hope I have is that better fiscal management of the federal budget will encourage optimism and new investment. I'd love to see some manufacturing return to the US, new manufacturing that starts small and local with potential to grow, and export-oriented manufacturing based on our natural resources like farming and forests.

To me, this seems like the kind of organic growth that can work... if the environment is right. That means regulation that is light enough to both protect and encourage. We also need taxation rates that don't unduly add to the risk or subtract too much from the reward. However, decreases in taxation need to be measured against the loss of the revenue. Perhaps easing regulation is the more fruitful approach.

Conservatives are saying "Duh!" but that's OK, because this is more a message for liberals. If you want a stronger economy with more jobs available, get over your instinctive distrust of business. What suffocates business suffocates our economy and suffocates our country. The purpose of regulation isn't to tie business up in knots, but to keep people safe. Use it for that purpose only! Abusive regulation is no one's friend.

Medicine for a sick economy

So many of the policy disagreements in our government today center on how to best tend to our economy. Our economy is sick, hampered, weighed down, understimulated, over-regulated....  That's a lot of diagnoses, but which diagnosis is correct, and what is the best treatment?

I haven't ever officially studied economics, so like all of my analysis, this is based on observation conducted over 3 decades. The two main schools of economic policy seem to be Keynesian and supply-siders. In our current doldrums, Keynesians think we need another big stimulus to drive up demand, get money moving again, and spur job creation. Supply-siders focus on barriers to economic growth that diminish the natural impulse to innovate and seek profit-making opportunities.

In the last 30 years, we've seen both the benefits and the limits of supply-side economics. Lowering marginal tax rates from a ridiculously high rate of 70% to the neighborhood of 25% to 40% did encourage growth, as did breaking up the telephone monopoly and computing monopoly. It was great fun in the 80's watching and cheering on the fireworks of economic change. The mothership of Ma Bell (AT&T) was hit with a killing blow, cracked open, gave birth to the 5 Baby Bells, and her death fertilized the ground for the flowering of the telecoms boom. (Yes, it was a modern-day replay of a polynesian creation myth.)

But in the past 10 years, additional tax cuts have given us decreasing-return-on-investment, that dreaded point where the same strategy starts to fail, and you glumly realize you've got a real puzzle on your hands.

Be warned, this doesn't mean it's time to turn back to Keynesian theory, which failed us so badly during the stagflation of the 70's. We've had nearly 3 years of open money-supply spigots. Though it stopped the hemorrhaging of jobs in 2009, it hasn't returned the economy to its norms of the 1990's or 2000's. The cost of this stimulus (perhaps $1.3 trillion over the last 2 years and still high when compared to spending levels of 2007-8) is heaped onto our $14 trillion debt. If stimulus could be done at no cost, it would be wonderful. We'd just wind up the top a bit, and then let it go. But there is a huge cost to a big stimulus. I don't support another one because the jobs situation has stabilized for over a year now, and additional spending since then hasn't bought a significant increase in employment.

If the economy refuses to be cured by Keynesian stimulus, and hasn't responded to supply-side medicine in the past decade, what are we going to do? The electorate and their representatives may demand some kind of medicine, but maybe the economy can only be cured by time and minimally-invasive prudent policy. We may hate it when our doctor tells us to eat right, lose weight, get more sleep, and exercise regularly, because that is the only thing that will cure us of being a fat slob. But that is the best advice from the doctor when medicine K and medicine S/S aren't working. So stop thinking there will be a cure in pill form, and get ready for the slow, gradual, tedious, bumpy recovery.