The Endless USA Elections and Why I'm Going to Go On Writing About Them

Your Humble Correspondent tried to do something I had been threatening myself to do for some time--to stop blogging about the current elections.  Anyone who knows me from my Multiply blog knows this a radical step for me. I' wasn't t even sure I could stop it--is there such a thing as Election Junkies anonymous?  

As it turns out I can't keep that promise.  Not even for a day.  Politics is my nicotine.  Here I go again.

One thing that is clear is that we have two and one half months to go before the General Election and, honestly, if anyone hasn't decided whom they are going to vote for (Obama, Romney, Jill Stein of the Greens, The Libertarian Guy Who I Can Never Remember) than they really haven't been paying attention.

Part of the reason for this has been my sheer frustration in seeing candidates like Romney get away with not disclosing the most basic information one should have about their candidacy in the modern Presidency; at least 5-7 years of their tax returns.  Why did isn't a law that all candidates to high office need to disclose their taxes when they are running for national office baffles me!  The other is the notion that Romney and Obama are essentially the same.  In some ways, perhaps they are I'll admit in foreign policy matters; but Romney candidacy will have a very  different impact on professional, and  middle and lower  income families and the elderly.             

In plain terms the Romney Ryan ticket will devastate the social safety net  for the jobless, those who are seriously ill , the elderly and for all people who actually have to work for a living.  And then give yet another round of tax breaks to millionaires!  So while the policies of the USA in the Middle East may not change so much if one or the other of these political birds wins, it makes a huge difference to a middle-aged and   middle class guy like me.

 

As it should to anyone who has paid into the Medicare system since I started working and now, because I am just under 55 at this point, I and million of others will face paying thousands of extra dollars for health care for the "crime" of living to age 65 or 67, and/or be handed a "voucher" for health care and put to the tender mercies of the private health care system when I am in my 70s if I have the good or bad luck of living that long. And, even if I don't, no one of my age bow should have to face that!  

So, yes, there is a difference in this election, at least to me and some of my co-horts, even among the two candidates.

The USA has a lot of problems right now, at home and abroad.  We have had high unemployment since 2008 and a stagnant economy in part  because greedy people played fast and loose with the personal housing market, and investment bankers on Wall Street shovelled money into a system that created a huge bubble that burst on us and took an estimated 14 trillion dollar out of the pockets of people who were the bedrock of our economy.

This economic tsunami will not be cleared up by anyone in four years or even eight.  The country is in a state of slow and painful recovery.    I see the only way out is to for the average income Americans coming together and saying "NO" to anyone who wants to take us back to the Wild West days on Wall Street.  No one likes being regulated but we all have to drive on the right hand side of the road and stop at a red light over here to drive. Just as a driver of a car or a truck needs regulations, so do mortgage holders and bankers.  Romney and Ryan want to pretend that 30 years of deregulation and increased income inequality under Reagan, and the Bushes didn't happen. Sorry it did.  We need to restore a serious regulatory system such has the Glass-Stegall Act again and we need to start making the wealthy pay their fair share again---not 13 percent or 17 percent but more like 30-35 percent to build up our infrastructure.  And cut the loopholes back as even Ronald Reagan and the Democrats in Congress did in 1986.

And lest you cry our "class  warfare" my visiting Republican friends bare  in mind that    the last and longest post-World War II  growth we had  was under  Bill Clinton and he raised taxes through Congress to a top rate of 39 percent. 

As Warren Buffett the enlightened billionaire investor ruefully put it, "Yes, there is class warfare in this country.  And my side is winning."

It's time we change that course, once and for the rest of the decades to come.

Rich Republicans Love Clean Environments and Government Regulations---Where They Live,That Is

An interesting editorial from the Provincetown Journal's fine writer, Froma Harrop, on why the Republican rich really, deep down, do like lots of government regulations---where they live and vacation that is.  (right, Mitt and Ann Romney at their vacation retreat in New Hampshire.)   

There are places in the United States, especially back east, where it is so difficult to access the local open areas--those localized control areas--that even so much as drinking an open  can of soda pop along a beach trail is considered a violation of some small-town, big dollar municipal code and worthy of a fine. 

 

Thank goodness for some states, like Oregon, which has a Land Use Commission and many state parks and beaches to be open to the public, with less onerous regulations. How long this lasts in an era of falling revenue for government-held public lands and recreation sites in the West is a good question.  

Most Americans likely have ,as I have, run up accidentally into a "gated communities" where even stopping and asking directions is considered an act of willful disobedience.  And one dares not tread a foot inside such a place unless invited.  

 

 Yet where did the money come from for these people to wall themselves off from the rest of us?       

 

 From the article:  "New Englanders fanned across the country extracting riches from other regions. They did mining, oil drilling, railroad building. How their activities harmed these other environments was, in most cases, the last thing on their minds. They made sure that their kids attended prized schools back East and that they themselves would not spend their summers near an open pit mine in southern Arizona. They came home to the fresher breezes and charming villages of the Northeast. And the rich from other regions joined them for the summer party.

"It's one thing to pollute other areas. It's another to despoil where one goes for recreation. It's animal nature not to dirty one's own nest."

**************************************************

This is one more indicator about one of the advantages of big business: if you own a empire as the Koch Brothers and others do, you can make your money in a place where your company fights against environmental regulations. And then you live far away in another part of the state or nation or globe,   far enough away in fact for the results of your extraction-and-pollution schemes to have no effect on you or your family. More here:  http://www.rasmussenreports.com/public_content/political_commentary/commentary_by_froma_harrop/where_they_play_rich_conservatives_like_zoning

Nick Hanauer: Who Are the Real Job-Creators?

Link

Please follow the link above to a six-minute TED conference speech  by Nick Hanauer, a successful businessman who started three businesses and is major-shareholder at Amazon.   He talks straight about the economics of job creation and why multi-millionaires who tell you they create jobs for thrrest of us aren't giving you the full story.  

My thanks to my friend Marty for the original post. 

Who was Ayn Rand and Why is She Still a Big Deal?

“Observe how many people evade, rationalize and drive their minds into a state of blind stupor, in dread of discovering that those they deal with- their "loved ones" or friends or business associates or political rulers- are not merely mistaken, but evil. Observe that this dread leads them to sanction, to help and to spread the very evil whose existence they fear to acknowledge.”
― Ayn Rand, The Virtue of Selfishness

Let me admit I'm not a keen  student  of philosopher and novelist Ayn Rand (1905-1985).   I certainly was aware in college of fellow students who read her novels and admired or deplored her Objectivist  philosophy.  Most of the articles I read about her made me think her philosophy of hyper-individualism was an overreaction to the collectivist ethics of revolutionary Russia, the place of her birth.  I didn't think I had to  to read a book saying people needed to be more selfish, less charitable. Nor one to give more credit to elitists than other writers and pundits already provided in surplus. But I supposed one book needed to be read since she was so controversial and liked by many.

 

 

Rand's background I think is a clue to her obsessions. Her family were Russian Jews, and they were alos part of the urban bourgeoisie, an urban and well-educated  family with some property interests (her father was a pharmacist  and a supported of a rival socialist party, the Menshieiks.)   Her father lost  his business to the Bolsheviks in Petrograd when Ms. Rand was a teenager and they fled to the Crimea.  Later the family returned to the metropolis--later called Leningrad--after the civil war. She received an  education at a state university, and was expelled with other students for a time for not following the doctrines of the new state system.   

 

She left Russia in the mid-twenties and came to New York City.  She really liked the skyscrapers and the bustle of the new world so she stayed, living with family members for a time in Chicago.  Eventually like many young people looking for become something, she found her way out to Hollywood where she worked as a an extra in movies like Cecil B. DeMille's 1927 story of Jesus, "King of Kings".  She worked in the costume department of RKO studios and began writing screenplays and plays in her spare time.

 

By the mid-thirties she had a play --a murder mystery--running on Broadway. She  worked on movie scenarios in the studio factory system and wrote "The Fountainhead", a book about an uncompromising architect named Howard Roack.  It was published in 1941 and was a best seller.  A movie was made of the film in 1949 with Cary Cooper and Patricia Neal.  In a ironic twist, like her book's main character, Rand didn't like the film adaptation on many levels. 

 

The book that she is best remembered for is "Atlas Shrugged", published in 1957.  She had by this time developed an intellectual circle in New York City centered around her ideas. One of her followers was the future Treasury Secretary and Chairman of the Federal Reserve, Alan Greenspan. Mr. Greenspan later presided over the Fed when it adopted a "hands off" policy toward the Wall Street securities and credit-default boomlet that led up to the economic crash of 2008. 

 

    

 

 

  America in the Cold War era (1947-1992) was already a nation where collectivism or even the most watered-down versions  were despised. Self-centered persons of all financial stripes were quite amply rewarded.   So, where was the fire, Ayn? 

 

Objectivism was, to me, nothing more or less than a philosophy more geared to commercial success than intellectual rigor.  There's something to be said for simple ideas clearly brought out, but the  American philosophy  of Ralph Waldo Emerson--with the great emphasis on "Self-Reliance"---and the careful personal protection of the people from government laid out by Thomas Jefferson and James Madison and later on propelled to modernity by the modern conservative movement  seemed already to have staked out the place for the individual in the "polis".   

 

 Besides, even as a non-believer in God as I was as a student in college ,  I realized that any decent philosophy and religious teaching I was aware of called on people to try, in Aldous Huxley's phrase, "to just be a little nicer to each other".    

 

The major work by Rand I have read and have returned to from time to time is a slim tome of essays called "The Virtue of Selfishness". Co-written with psychologist and Rand acolyte Nicholas Brenden, it was published in 1964.   The book essentially is  warmed-over, cold blooded  cruel-to-be-kind social Darwinism only with a fetish for eliminating anything society asks people to do for the greater good or for the poor or victimized or handicapped, no matter how small. 

 

 

 

 Nothing in that book's fifteen or so essays--or in the film documentary or articles about her--inspired me to want to read any of her famous novels "The Fountainhead" (1941) or "Atlas Shrugged" (1957).  

"Virtue of Selfishness" as a book is a dedication to stamping out anything that supported the notion of the modern American or European "mixed economy" where government has a role, though not a predominant one,  in regulation and protection for citizens of all levels  in a private economy. All state action for the benefit of others is seen as irrational and unjustified.  To Rand and her ilk, all roads that would benefit thy neighbors or the larger society is a slippery slope to collectivism.  There  are no compromises, no mixed-economic regulations and supports for small or large business  or individuals and so on.

 

 

Ms. Rand, to me, seemed to be overreacting to her family misfortunes and experiences under Bolshevism and the chaos and political turmoil of the  revolutionary Russia of her youth. She thought any help for just about anybody was irrational, and would  lead society inevitably to totalitarianism.  To me, a very secular atheist at the time as she was, this seemed too much, a fear of state power in a nation where state power was more diffused than almost any other capitalist-pluralistic society. She and Dr. Branden seemed to be providing a cure for a social "disease" that didn't exist in 1980's America.  

 

 

 Even an ultra-conservative like William F. Buckley (who said jokingly ot an interviewer in 2003 that he had to be "flogged"  into reading through "Atlas Shrugged"), the late neo-Conservative Christopher Hitchens,  and former Reagan aide and best-selling conservative writer Dinesh D'Sousa had or have sharp reservations about her teachings.   

So it surprises me that Ms. Rand and her teachings are still popular, especially with the new breed of ultra-conservatives .   GOP House Budget guru Paul Ryan is a big fan, although he recently denounced her teachings when he was criticized by Catholic officials for trying to meld Randism with church teachings.  We'll see how others in the Republican far right do, trying to "square the circle" of being a practitioner of economic heartlessness and still pretend to prescribe to basic Judeo-Chrisitan precepts.    

   

A preface to the video, from ThinkProgress.org:  

"Some of the right's leading political and media lights have heaped praise upon Rand. The author of the Republicans' new budget plan to gut Medicare and Medicaid, Rep. Paul Ryan (R-WI), has said Rand is the reason he entered politics. Sen. Rand Paul (R-KY) and Rep. Ron Paul (R-TX) have both declared themselves devotees of her writing. Conservative Supreme Court Justice Clarence Thomas has his law clerks watch the film adaptation of Rand's book The Fountainhead. She's also received accolades from right-wing pundits Sean Hannity, Rush Limbaugh, Glenn Beck, John Stossel, and Andrew Napolitano.

"During her lifetime, Rand advocated "the virtue of selfishness," declared altruism to be "evil," opposed Medicare and all forms of government support for the middle-class and the poor, and condemned Christianity for advocating love and compassion for the less fortunate:

Rand also dismissed the feminist movement as a "false" and "phony" issue, said a female commander in chief would be "unspeakable," characterized Arabs as "almost totally primitive savages," and called government efforts to aid the handicapped and educate "subnormal children" an attempt to "bring everybody to the level of the handicapped."

 

 

"Pity the Billionaire: The Hard Times Swindle and the Unlikely Comeback of the Right" (2012)

Rating:	★★★★
Category:	Books
Genre:	Nonfiction
Author:	Thomas Frank

In 2003, Thomas Frank (a former writer for "The Wall Street Journal" who contributes to Harper's and other periodicals) previously penned the insightful "What's the Matter With Kansas?" A best-selling tome that traced how one American midwest state changed from being a hot-bed of progressive politics in the 1900's to a bastion of conservatism a century later.

Frank has now written a book to explain one of the knotty problems of recent US politics: how the free-market, hard line de-regulators of corporate capitalism (the GOP) emerged as the dominant party in the 2010 Elections s despite the tremendous losses in the economy just two years earlier under the Bush-Cheney Administration.

Mr. Frank shows in short and snappy prose how the far right revitalized itself and used corporate power to finance a lightning-fast conservative revival with the help of former Bush campaign guru Karl Rove, former Congressman Dick Armey's lobbying prowess and the money from the likes of billionaire Charles Koch and his brother in an alliance to "change the story" of the Wall Street banking crash and the mortgage crisis into a government plot rather than a failure of the heights of investment macro-capitalism and shady schemes like the credit-default swap and toxic securities games that led to the worst downfall in economic US history since the Crash of 1929 and subsequent free-fall.

Frank's book follows the rise of the American Tea Party and its appeal to the simple and accessible heartland-narrative that everything the government does is wrong and all regulations are bad because they hurt "small" business (i.e., multi-national banking and financial speculators and bond and futures traders.) Frank spends a good deal of the book showing the rise of unlikely "populists" like the commentator Glenn Beck and the enduring power of the super-capitalist propaganda writer Ayn Rand to help explain the "intellectual energy" behind the movement.

This book is a very good analysis of how the right wing of America continues to regroup over and over again (for the fourth time in forty years if you count the rise of Richard Nixon's "Silent Majority" in 1968, The Reagan "Revolution" of the 1980s and Newt Gingrich and the "Contract With America" movement in 1994.) Counting the recent upsurge in 2010 and its apparent that, like clockwork, every dozen years or so, a "thunder on the right" campaign emerges from the boardrooms and think-tanks of the American rightward establishment. And, s far, each time said movement is more radical rather than conservative than the last movement. So radical indeed that previous leaders like Nixon and Reagan would be considered too soft to lead the movements they inspired not so long ago.

Here's a portion of Frank's main themes in the book, taken from a analysis he wrote on the "Reuters" website: http://blogs.reuters.com/great-debate/2012/01/12/how-everyone-got-the-right-wrong/

"Rather than acknowledge that they had enjoyed thirty years behind the wheel, they declared that they had never really got their turn in the first place. The true believers had never actually been in charge, the “Conservative Ascendancy” never really existed—and therefore, the disastrous events of recent years cast no discredit on conservative ideas themselves. The solution was not to reconsider conservative dogma; it was to double down, to work even more energetically for the laissez-faire utopia.

"Pure idealism of this sort is unusual in American politics, however, and the jaded men of the commentariat sat back and waited for the system to punish the wayward ones, for the magnetic pull of the “center” to work its corrective magic. But this time the gods didn’t intervene in the usual way. In 2010, a radicalized GOP scored its greatest victory in congressional elections in many decades.

'The simplest explanation for the conservative comeback is that hard times cause people to lash out at whoever is in power. In 2010, that happened to be Democrats. Ergo, their rivals staged a comeback. But surely the two parties are not simply interchangeable, like Coke and Pepsi. They are able to control their own fate to some degree, to differentiate themselves from each other. Besides, history provides enough examples of public sentiment moving consistently in a particular direction to show that it need not always flop aimlessly back and forth."

Yet flop the average "independent voter" who bothered to vote in 2010 did--flopping right back into the main party that led the way (along with pliable semi-conservative Democrats) to the sub-prime mortgage/toxic securitization scams that put us in trouble in the first place!

Oh, well. At least I feel better having read this engaging 187 page book. I now at least understand better how the swindlers operated.

Here's an interview with the author from January.





For access to Thomas Frank's recent essays: http://www.tcfrank.com/essays.php

Mitt Romney and "The Wild Bunch" at Bain Capital

There are at least two types of capitalism. One, which we used to have in America, was about striking a balance between people and profits with labor and management working together (well, most of the time) to create actual products that were built in America and made labor agreements that gave employees a decent work and benefits package for a day's pay.

The 1980's brought the other breed of capitalists into the forefront. They have been a plague on the economy ever since.

 Froma Harrop of the Providence (Rhode Island) Journal is one of the best liberal editorial syndicated writers I've come across. 

(the original Captain Pike Bishop, as played here by William Holden in the 1969 Sam Peckinpah film "The Wild Bunch".  Here Captain Bishop demonstrates a new-fangled  "firearm" at a Mexican gun show.)          

Here she put some needed perspective and facts about the Hole in the Wall Gang/Wild Bunch  style of free marketing: "venture capitalists". 

"If anybody moves, fire 'em."

 

(above, center, the new "Captain Pike Bishop" aka "Mitt" Romney and his "Gang" at Bain, celebrating another successful raid on a pension fund. )

 

These groups of Wall Street "venturers"  take over a company they likely don't care about because, well, they can.   They then spin it either into broken-up shell, selling it off as fast as they can, or cash out and let someone else actually build-up the company or padlock the company later on.  

 

 

 

 The Wild Bunch, of which Mitt Romney is the leader, created nothing in the way of an actual product  (as opposed to his father and former moderate Republican Governor of Michigan, George Romney).   Romney Senior was no saint, but he actually ran a major automobile company (American Motors) which actually (gasp!) made cars, jeeps and trucks and made deals with the UAW that gave its worker-members a measure of security and civilized treatment in their jobs.

 

Read about it from Ms. Harrop's editorial here:     

"My father later built a prosperous small business and became a reliable Republican (until the Bill Clinton impeachment). But he never saw working people as nobodies. Profits, while important, were not all.

 

"A lack of similar empathy is what many find most disquieting about Mitt Romney, whose private-equity firm pumped his fortune to perhaps $250 million. It's more than just the nature of the business. It was a certain inhumanity of the Bostonians running Bain Capital, namely Mitt."

http://www.realclearpolitics.com/articles/2012/01/12/the_missing_humanity_clause_at_bain_112741.html

The Problem With the "Big Government" Argument

One of the problems of candidate selection in American politics is that so many potential voters believe there is only one "big dog" on the block to worry about: an over-reaching and big-spending government.  Yet many of these same people support the largest public-private defense establishment in the world and many more take ready advantage of the benefits that past government projects offer, such as safe highways or transfer payments to keep the elderly out of poverty, or grants and loans for public institutions of higher education and vocational training for those who can't afford private universities. 

A conundrum, eh?    

It's true in a sense that government doesn't "create" jobs because in a participatory system government can't exist without the support of at some some measure of the body politic. 

 

But consider that from earliest days of the American republic, from the Erie Canal Project in the1820's that united the Great Lakes Region with the seaboard metropolis of New York, to the transcontinental telegraph system in 1861 that first united the nation from coast to coast on the eve of the Civil War, to the US Army oversight of the Panama Canal construction starting in 1906, to the build up of hydroelectric power projects during the  New Deal in the 1930s that made it possible for ordinary people in the Deep South to have rural electrification and made the Pacific Northwest a major center for economic expansion thank to the Bonneville Dam and other projects, government has taken the helm.

 

Want more?  How about the NASA space program of the 1950's-60's thru today that contributed a great deal to the computer and technology industry we take for granted, the ongoing Interstate Highway System, (started under the Republican Pressident Democrat Dwight D. Eishower)  that  makes it possible for trucking commerce to flow unimpeded from all over the lower 48 states, all these projects came through government sponsorship and coordination. 

More recently, it was "big government" under Barack Obama that provided support for General Motors and Chrysler when they needed help to keep the American auto industry viable. It was derided as a boondoggle by some. But it successfully saved an industry and now thousands of people in Michigan, Ohio and Indiana aren't filling out job apps for minimum-wage positions at Wal-Mart or the local delis and coffee bars because they have better paying jobs in the manufacturing and supply industry.   

Yet,  despite all these programs, segments of the conservative American political character have made a fetish of "big gov'ment", as the late Texas progressive Molly Ivins put it. Millions of Americans and several Presidential candidates can't seem to differentiate between a government boondoggle project--like a "bridge to nowhere" in Alaska, say, or a defense program to build a war plane even the Air Force doesn't want because it will create jobs in a few Congressional districts (or even the odd disastrous "war of choice" that costs hundreds of billions) --to  a necessary government project like keeping up our interstate highway system, providing public services in cases of economic or natural disaster,  or expanding passenger railways in this nation to boost energy savings.

     

A case in point can be found in Andrew Rosenthal's  brief blog below. 

"The candidates want to steer the conversation to the abstract idea of excess government, because they cannot acknowledge that government continues to play a concrete role in the daily lives of most citizens. When the Republican candidates pledge to slash federal spending by trillions of dollars, as all have done, they never bother to mention that a huge portion of that reduced spending would have been transferred to states and cities for projects voters actually care about."

Hence the problem with the "big government" argument in my view; you have to be careful and precise when you determine what public spending can be cut, and what price people will pay for the loss of needed expenditures.   

See link for full article:

http://loyalopposition.blogs.nytimes.com/2012/01/10/romneys-big-government-critique-runs-into-a-new-hampshire-roadblock/

 

In other words it's not a win-win game, knee-jerk conservatives like the born-again Reagan-naut Mitt Romney would have us believe.  If you want low taxes, fine.  But what do you do when you're driving on roads covered with potholes, or all the other developed nations in the world have comprehensive health care program while United States citizens pay more out for pocket for the same or worse overall results in disease control, medical care and life expectancy? 

To see America continue to invest in its own public infrastructure and economic progress (and we need to if we are going to keep up with the emerging economic powers from northern Europe to Brazil to East Asia) we are going to have to do some nation-building right here for the general health and safety of our own nation.    

 

Yes, we need to keep an eye on the big dog on the block. But not lose sight of the full condition the neighborhood is in.   

Truman fights back: A Lesson For Obama

The 1948 Election was not unlike what America faces in 2012--a do-nothing Congress against a president with low approval ratings and an economy with problems (higher prices then, unemployment today) and trouble spots overseas.

Rather than play an accommodating "Associate Professor of America" as Barack Obama did in 2010 and most of 2011, the underdog candidate for the 1948 election, Harry Truman fought back and put the onus on the "80th Do-Nothing" Republican dominated Congress, which had pushed against increases in minimum wages, labor rights and a national health care program.

The result was a complete turnaround in voters perceptions of President Truman and his party. This is a good lesson for all Democrats running for office. A discouraged enlightened electorate does little but to encourage its adversaries.

Can history repeat itself? Let's just say this is how a Democratic President running for election SHOULD sound like.

Huey Long: Man of the People or Dangerous Autocrat? Or Both?

Perhaps no one politician in the 20th Century held so much power in one state than governor, and later Senator from Louisiana, Huey P. Long (1893-1935) , held in the early 1930's.   

Long rose to power as the Railroad Commissioner of the Bayou State, when he was elected in 1918, only three years after he was admitted to the bar to practice law. He set about reforming and creating new regulations for public utilities and campaigned for taxes to bear on the mighty Standard Oil Company. He also set about to do battle with the "old regulars" in the do-little Democratic Party machine that was based in New Orleans. 

When elected Governor in 1928, he went to work raising taxes on the rich for  new public projects: 2,000 miles of new paved roads in Louisiana, free textbooks for school children, a major improvement to the Louisiana State University and major public works projects for charity hospitals and proper facilities for the mentally ill. 

 

Long also was a grafter and a leader  who once said to a legislator "I am the law now," in Louisiana.  He expected every pubic employee in his state to  contribute ten percent of their respective earnings to his "De-duct Box", a personal cache of money in the millions that  he planned to use to buy votes and slander his enemies through a newspaper he expected all good public workers to subscribe to. He  planned a national campaign for President in 1936, in an alliance with the future anti-semite and pro-fascist speaker, Catholic Father Charles  Coughlin, a demagogue figure from Michigan who was the Rush Limbaugh of his day.       

Long also proposed a major wealth redistribution that, at least to many , would cure the excesses of the Depression.  With so many out of work, his "Share the Wealth" ideas  broadened Long's appeal to millions all over the country that, like those in the backwoods of Louisiana, had felt oppressed  for far too long. 

 

Long was no shrinking violet when it came to backroom deals: (the following is an excerpt on Long's entry from Wikipedia:)

 

 

"On occasion, (while governor)  he even entered the legislative chambers, going so far as to sit on representatives' and senators' desks and sternly lecture them on his positions. He also retaliated against those who voted against him and used patronage and state funding (especially highways) to maneuver Louisiana toward what opponents called a Long "dictatorship". Having broken with the Old Regulars and T. Semmes Walmsley in the fall of 1933, Long inserted himself into the New Orleans mayoral election of 1934 and began a dramatic public feud with the city's government that lasted for two years.

"In 1934, Long and James A. Noe, an independent oilman and member of the Louisiana Senate, formed the controversial Win or Lose Oil Company. The firm was established to obtain leases on state-owned lands so that its directors might collect bonuses and sublease the mineral rights to the major oil companies. Although ruled legal, these activities were done in secret and the stockholders were unknown to the public. Long made a profit on the bonuses and the resale of those state leases, using the funds primarily for political purposes.^[37]

"By 1934, Long began a reorganization of the state government that reduced the authority of local governments in anti-Long strongholds New Orleans, Baton Rouge, and Alexandria. It further gave the governor the power to appoint all state employees. Long passed what he called "a tax on lying" and a 2 percent tax on newspaper advertising revenue. He created the Bureau of Criminal Identification, a special force of plainclothes police answerable only to the governor. He also had the legislature enact the same tax on refined oil that in 1929 had nearly led to his impeachment, which he used as a bargaining chip to promote oil drilling in Louisiana. After Standard Oil agreed that 80 percent of the oil sent to its refineries would be drilled in Louisiana, Long's government refunded most of these tax revenues."

There is more than a whiff of fascism in all this.

 

On the far left, both the Socialist and Communist Parties opposed this income scheme as just a manipulation of a failed capitalist system that had brought about the Great Depression. His fellow Democratic politicos abandoned the somewhat loutish but brilliant "Kingfish" when he turned against Franklin Roosevelt's  "New Deal" and promoted his "Every Man A King" book.  Millions of regular people bought his ideas and its clear that his challenge to Roosevelt as a third-party candidate might have swung the election to the Republican candidate in 1936.   By 1940, given the GOP's lackluster track record on economic fixes in those days, Huey Long might have been the President of the United States.           

Upon his death at 42 from an assassin's bullet in September 1935--by a young surgeon named Carl Weiss, who was upset that his father-in-law was going to lose a judgeship thanks to Long's maneuvering--the point became moot. 

 

What would have become of the country had he lived?   Would be have helped the nation--some say he already had by pushing FDR toward Social Security and more public works projects--or would he have destroyed the Constitutional "separation of powers" in pursuit of a Caesar-ian dictatorship that would have unleashed revolutionary ferment in the country?    

I.F. Stone, the late prominent progressive journalist, thought Long was not a positive force but more of a Greco-Roman tyrant  (i.e., a manipulator of public policy for his own gain) ,  rather than a legitimate reformer who empowers the people.  On this I agree. But he certainly made enemies,  like political bosses and big oil companies, who were worthy opponents to any reformer in one of the poorest states in America..

 

Even today, while Long's legacy is controversial, its safe to say many of his ideas  have a modern resonance in  the times we live in  today.      

"'Hillbillies(?) versus Bankers": The Plot Against American Consumer Rights in Congress

Those of you old enough to remember a popular if inane situation comedy from the 1960's called "The Beverly Hillbillies" likely also recall a shady banker called "Mr. Drysdale".  Drysdale--no relation to the Baseball Hall of Fame Don Drysdale, the L.A. Dodger right-hander who helped pitch his team into their share of National League titles and some World Series victories--was a  caricature but like all caricatures that catch on, one with a kernel of truth to him.  Drysdale and his mythical "Commerce Bank of Beverly Hills" was always scheming up ways to try and hold on to the millions that were held by a family of rich bumpkins, headed by Jed Clampett, who struck oil in some hoary patch of land in the Ozark mountains. 


"They loaded up the truck and moved to Bevelree--hills that is," so the song went. And despite the fact that the Clampetts were out of their rural element, somehow they always got the best of Mr. Drysdale, the slick big-city banker.  This was a common theme in American pop culture at least since the rise of progressive politics in America in the 1890's--the notion that cities were full of corruption and greedy people, but it was the heartland of America that could always be counted on to uphold moral values and clean up the worst excesses of these metropolitan robber barons. 
   If only this notion were true.


As I see it, the truth is that the "heartland" people have for the most part been fooled and taken to the cleaners lock, stock and barrels by the real banker-schemers of American banking, investments and financial chicanery.  At least two trillion dollars in retirement savings and housing values have gone up the chimney in the last four years and is not coming back k. It's so bad that, as President Obama pointed out in a recent interview for CBS, many of these Wall Street investors manipulate the laws so well through their shock troops in the lobbying sector that what they did was not technically illegal.  That is, once the firewall between the investment banks and the regular commercial banks and mortgage industries was removed with the final repeal of the Glass-Stegall Act of 1933, sixty-six years after it was passed to prevent an economic calamity, Wall Street's major players indeed went on a spree, cashed in on their winnings and took the rest of us to the cleaners by the necessity of bailing them out.
O.K., a lot of you are saying this is old news.  Yes it is.  But what isn't old news--what is damn pertinent to people all over this nation and in Europe and other parts of the globe--is that these same high finance forces are fighting tooth and nail to prevent the establishment of new (i.e. restored  )  regulations to keep it from happening again.  A new Consumer  Protection Agency  has been established by an earlier Democratic-controlled Congress but now it faces being rendered powerless by the same people who put us all in an economic ditch.  
These banksters want to keep us as many folks as ignorant as possible of what their rights are and of what is really going on  when they sign on the  dotted line for a line of credit or a home mortgage.       

How fitting that today, when the powers of unregulated financial clout have driven us to the not-so pretty pass we see today--that one of West Coast's best editorial writers, Bill Varble of the Medford Mail Tribune, has drawn a paralell between the benign pop culture zaniness  of the 1960's to the malignant  aspects of unregulated consumer-capitalism of today. Here is the main thrust of his December 11 editorial: 

"The CFPB (Consumer Finance Protection Bureau) is the brainchild of Harvard law Professor (and now Massachusetts Senate candidate) Elizabeth Warren, who was passed over to lead the agency because Republicans objected to her, and because Cordray, although a Democrat, was considered more politically palatable. But Republicans, who had said for months they would block any nomination to run the agency, say it should have no director at all. They say it should be run by an "oversight board." And they want to require it to seek congressional approval of its budget instead of being funded by the Federal Reserve, of which it is a part.

"Republicans denied they want to weaken the new agency or undermine its mission to protect Wall Street cronies.

"This notion we are against consumer protection, that we're trying to gut CFPB, is just silly," Sen. David Vitter, R-La., a member of the Senate's banking committee, declared with a straight face.

"What's silly is to insist a new agency to protect consumers be run by a five-person committee, and that you get to hold the purse strings, and then to suggest there's any other explanation than the obvious: When it comes down to consumers vs. Wall Street, you're looking out for the Street.

"Where does it go from here? Bet on Obama appointing Cordray to the post through a "recess appointment" when the Congress is not in session, probably in January, and Republicans howling that that's not fair, and off we'll go again.

"In the meantime, the CFPB is overseeing mortgages to prevent some of the abuses that led to the mortgage meltdown, one of its main duties. It is not, however, doing anything about issues such as payday loan abuses. And as Washington watchers know, no agency in town is going to be effective without capable, energetic leadership.

In the classic TV sitcom "The Beverly Hillbillies," the money-hungry bank president, Mr. Drysdale, was always willing to jump through any hoops to toady up to the nouveau riche Clampetts. In real life, 99 percent of us are anonymous cyphers playing a zero-sum game with the colossus that is the financial industry."

  http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20111211/NEWS/112110314/-1/news0104



 'Caveat Emptor' is a slogan we can no longer afford.  Regulations must be restored and consumers must have protections against under-handedness. To do otherwise, to let a second economic crisis befall us, would be the height of bumpkin-ness. 

It remains to be seen if enough American voters have learned the lesson--that rich or poor, smart or just aware , it doesn't pay to be a Jed Clampett.    

Simon Schama on the European Debt Crisis and European Unity

"On this {North American} side of the Atlantic (and perhaps in parts of the Pacific, too), there is a certain amount of unseemly schadenfreude mixed into the apprehensiveness of the markets at the prospect of the unraveling euro zone taking the whole larger common European enterprise down with it. Credit-rating agencies—those ravening hyenas of fiscal trouble—move on from one economy, mutilated by sovereign-debt downgrade, to another, traveling north from the basket cases of the Mediterranean, crossing the Alps in search of freshly fallen game. You might think that the agencies that were the enablers of the subprime calamity and were capable of making a trillion-dollar error in calculating American debt reduction over the next decade would have the decency to go into hiding for just a while before presuming to decree the viability of hard-pressed states to meet their bond obligations. But a kind of reverse Marshall Plan ethos of meanness is at work these days, combining maximum sanctimoniousness about unsustainable deficits with an insistence on precisely the kind of measures least likely to reduce them: draconian public-sector austerity that leaches demand out of the economy, precluding a return to growth, and opportunistically punitive interest rates for sovereign debt bonds that only add to their burden, stoking the fires of political rage.

"None of this is to discount the true magnitude of the disaster, but there is a distinct whiff of Mr. (rather than Harry) Potter in the air: the prudent layaways forced to the rescue of the prodigal layabouts. And as resentment mounts, there is a real possibility of a recoil from the assumption of mutual dependence on which postwar European—and indeed Atlantic—prosperity was founded. Many on the right who profess doubts about Darwinian evolution certainly seem eager to see it practiced, with the weaker species left to hang. Message to Athens, the cradle of Western culture: drop dead, and do it soon."

*************************************************************

 

No matter what you think of the idea of a greater European unity, I would gather most people would like to see a European stability of nations which have opportunities to grow their economies and escape the trap of endless austerity and monkey business fromWall Street based credit agencies (the same agencies like  Standard and Poors that helped create the mortgage and derivitives meltdown that started the United States and other Euroopean nations down the rabbit hole of endless recession four years ago.

Simon Schama is a art and history professor at Columbia University, who also has written comprehensive books on British history, a documentary on great works of art in Europe, and his series  about American life "The  American Future: A History" is now being shown on BBC America.

 

Profesor Schama wrote a very  concise book on the history of the French Revolution, "Citizens" (1990) , which I found highly useful in getting an overall view of how France fell into a whirlpool of political chaos from royalism to reform to radicalism to revolutonary oligarchy to war-driven empire all in a span from only 1789 to 1804.  I hope there will not be too many parallels in extremism, internecine violence and external wars to be found  when historians of the future come to write about our collective econommic  history in the next 15 years!      

His analysis of the current situation regarding how Europe and America are linked seems well thought out and has a historical perspective most other editorials and essays I've come across recently.  See the link below: 

     

http://www.thedailybeast.com/newsweek/2011/12/04/why-america-should-care-about-the-collapse-of-european-unity.html

The Price of Civilization:Reawakening America's Virtue and Prosperity (2011)

Rating:	★★★★
Category:	Books
Genre:	Nonfiction
Author:	Jeffrey Sachs

Jeffrey Sachs, a macro-economist from Columbia University, has written a book that makes a compelling case that one of the things that ails the United States is a loss of civic policy, the notion that there is a role for the national government in a democratic society for creating a better life for Americans. This loss of confidence in government--which grew out of the stalemate of the Vietnam War in the 1960's and the cultural "youth quake" and civil rights movements--gradually moved by 1980 into a pincher strategy for Reagan Republicans and conservative Democrats, an opportunity to reignite a one-sided attack on the "mixed economy" were tax rates on the rich were historically high and the gaps between the rich and the middle class were, to them, far too narrow.

After thirty years of intense corporate lobbying, we have seen the country go in a direction that has seen more jobs outsourced off-shore, a greater tax burden placed on the poor and the middle class and a dramatic shift in power away from the American worker/consumer and toward what Sachs calls a "Corporatocracy".

External forces like the rise of former third world nations (China, India) have also played their part, but America itself has seen a greater gap between rich and poor in health care access, the quality of public education and the capturing of our elected officials by special interest groups, particularly financial and military-industrial groups, that has left the public sphere looking more and more like Central and South America and less like our peer nations in northern Europe (especially Germany and the Scandinavian nations) and Japan.

There are a lot of distressing graphs in this book showing just how far we have slipped in terms of income inequality and life expectancy and plain happiness-in-life ratings as compared to a a lot of the developed world.

Sachs' case boils down to this: given that no level of government is perfect (nor any corporate entity, either, as the Crash of 2008 on Wall Street and the Housing Bubble bear mute testimony) are we as a nation willing to invest in America again and restore the public-private "mixed economy" that made us one of the most prosperous nations in the world?

We need to invest again in public spheres, Sachs argues, especially in higher education but also in reformed health care system, put limits on money in political campaigns, and an end to ex-Congressmen coming right back to work for the very industries they once oversaw.

Or are we content to be the world's biggest three-tier banana republic? (With a small but powerful elite, a shrinking middle-class, and more people falling through the cracks into a tattered net of diminished social programs.

The fact is our very political system--with its two-year election cycles for most federal government offices--puts all of our lower House of Congress in perpetual state of running for re-election and seeking short-term fixes to long term problems like budgeting and investment. We have far more elections on a national level than any other developed democracy and, paradoxically, it is making us less a nation of public power and more a nation where office holders are in hock to those who can bundle money for television ads to perpetuate their incumbency. And, with another election always just around the corner, no-one is doing anything long-term on our econoic and budget messes that might make them unpopular by reaching across the aisle to the other party leaders.

Sachs make clear both Republicans and Democrats party hacks and elected officials are complicit in this, but only we as citizens can get us out of it.

Some of Sachs findings are all too familiar:

"The United States" now has the most income disparities of any advanced developed nation."

"Three million U.S. manufacturing jobs were lost between 1998 and 2004."

"Google uses a tax dodge called the “Double Irish” to avoid taxes on billions of dollars of revenue." (By declaring themselves an Irish company and putting their profits in Bahamian banks, saving themselves billions in taxes on profits earned in the USA.)

"Since 1980, the average compensation of the top 100 U.S. CEOs increased from 50 times the average worker’s salary to more than 700 times."

How long can this go on?

Global mass protests 15th October 2011

Link

Gee, the "tea party" reactionaries aren't  the only bunch that can draw a crowd.   Check local listings in your paper this Saturday for a demonstration near you.  

 

Global mass protests 15th October 2011

Link

FYI: From Wall Street to Washington to town squares like my home town to European capitals and lots of other places, it's looks like groups like the USA tea party folk are starting to get some competition in the protest biz.   

Captured: Great Depression Photos: America in Color 1939-1943 | Plog — World, National Photos, Photography and Reportage — The Denver Post

Some amazing color photographs of ordinary rural and urban life, both showing poverty  and the rebuilding and rearming of  the United States at a critical point in democratic history.  

 

 

Link

Wall Street Windfalls---Ry Cooder "No Banker Left Behind"

Musician and composer Ry Cooder has some thoughts on the state of the American economy, from his album "Pull Up Some Dust and Sit Down".

(from Sweet lyrics website) "Ry Cooder, born in Los Angeles in 1947, is a guitarist, composer and producer, though he gained his world-wide reputation primarily as a Slide-Guitarist.

"He played in Captain Beefheart's Magic Band, and has also accompanied such artists as Gordon Lightfoot, the Rolling Stones, Eric Clapton, Randy Newman, John Lee Hooker and many others.

"Although influenced early on by blues, he became a pioneer in resurrecting the traditions of "World Music," a concept that was entirely new at the time. He devoted himself to Country and Folk music, Calypso, Hawaiian music, Gospel, Salsa, Jazz, Ragtime and Vaudeville.

"Ry Cooder has composed soundtracks for more than twenty films, among them Wim Wenders' "Paris, Texas", and "The End of Violence."



Cooder: (from an interview in "Truthdig"). “No Banker Left Behind”—I said, that’s the voice of Uncle Dave Macon speaking to me. Uncle Dave, who was the very … at one time very well-known medicine show country musician—you’d have called him a banjo player—just the greatest, par excellence. And he had a great gift for making simple statements about life and about society. And this was also during the Depression; he was very popular at that time, made hundreds of records. And so he would take a thing like this and reduce it down to one little statement, and you heard this and you understood it completely, and by the end of the song you’d learned something. He was very entertaining; he’d dance while he played the banjo, and lived to be a very old man. So I thought, “No Banker Left Behind.”

http://www.truthdig.com/arts_culture/item/exclusive_ry_cooders_no_banker_left_behind_20110526/?ln

"The Great American Stick Up"

Rating:	★★★★
Category:	Books
Genre:	Nonfiction
Author:	Robert Scheer

The former Los Angeles Times journalist and author Robert Scheer takes no prisoners in this account of how Wall Street managed to pull a compliant Clinton Administration over to its side. Clinton's acquiesence to further financial deregulations for Wall Street, especially repeal of the New Deal Glass Stegall Act of 1934 and other "modernizations" of banking laws helped lay the gorundwork that libertarian Republicans had started in the 1980's.

This book, one of many that have come out tracking the downfall of the American economy in the last decade or so, also shows that much of the personnel of that most recent crash like Fed Chairman Ben Bernake and Larry Summers (Clinton's Treasury Man, along with Robert Rubin) are still around to supposedly help "fix" the problem.

For those who want an insider's look at how much Washington and Wall Street are intertwined, look no further.

Here is Scheer interviewed on "Democracy Now" in the Fall of 2010.

"What Became of Georgie Bush?", Or, "My! What Big Debt We Got, Grandma!"

The first graph shows the difference between budget projections and budget reality. In 2001, President George W. Bush inherited a surplus, with projections by the Congressional Budget Office for ever-increasing surpluses, assuming continuation of the good economy and President Bill Clinton’s policies. But every year starting in 2002, the budget fell into deficit. In January 2009, just before President Obama took office, the budget office projected a $1.2 trillion deficit for 2009 and deficits in subsequent years, based on continuing Mr. Bush’s policies and the effects of recession. Mr. Obama’s policies in 2009 and 2010, including the stimulus package, added to the deficits in those years but are largely temporary.

Anybody seen George W. Bush lately?

Other than a brief period where he came out of hiding at his mansion complex near Dallas to bask off the reflected glory of Bill Clinton's trip to meet and talk to Haitian earthquake victims (and wipe his dirty hand on Clinton's shirt at one point) or a few book signings for his "Decision Points" book (all done here in the United States to avoid problems with torture and the World Court) George is AWOL.

It is odd that Bush wants no part of the limelight for the job he did for the two terms he and his merry men and women served as the Chief Executive of the USA. Or maybe it isn't, given that the job was probably a major contributor, but not the only one, to the enormous recession we are still suffering from as a nation.


O.K., so Bush left the nation as it was swirling down from huge losses of credit in confidence in the wake of under regulated "too-big-to-fail" investment banks and a series of major tax cuts that benefited the wealthy but added no income to a national government busy fighting two major wars halfway across the globe. Add to this the Prescription Drug Plan for Medicare he got through Congress, which cost hundreds of billions but didn't raise taxes nor even allow the government to bargain with Big Pharma for reduced prices on drugs (as the Veterans Administration does) and the beginnings of the great corporate banking bail-out and the housing bubble burst that somehow he and his cabinet and their friends at the Federal Reserve never saw coming, or saw and just didn't care, and you have the situation for which the present administration is taking the majority of the blame.

Could it be that George W is lying low to not remind people he deserves a hefty share of the blame for the troubles we're in? He is, after all, an exercise buff and hardly in his dotage. Why was not out campaigning for his flock back in 2010? Why isn't he part of the current deficit debate, as is President Clinton who recently said he would allow the Congress to default on government debt and would invoke the 14th Amendment to stop such shenanigans?

I got an idea. Maybe George knows he screwed up and, indeed, just wants to lay low.

O.K, what did Georgie Boy leave us in economic terms when he left in January 2009?

According to two articles by Paul Wiseman of the Associated Press, the United States has the fifth highest debt percentage in the world among developed nations, comparing what it owes ($14.3 trillion) to the total economy. What the federal government takes in is 14.4 percent of the gross domestic product, the lowest share since 1950. (Thank the Bush tax cuts of 2001 and 2002 for most of that. Also thank the GOP Congress from 2001 to 2007 whose rank and file uped the debt ceiling several times.)

17.4 percent of the GDP of the USA is spent on health care. The next highest is twelve percent, spent by the Netherlands. It's the highest percentage among wealthy countries. Among 34 other wealthy nations, the average spent on health care is only 9.5 percent, according to the Organization for economic Cooperation and Development. (What did Bush do about that. Preach about "individual health care accounts", as if the average family could salt away 100,000 bucks in case one of their children gets in a car accident or contracts leukemia. Nice try , George.)

Surely, health care reform wasn't a silly idea after all.

"We as a society will either have to pay more our government, accept less in government benefits, or both," according to Douglas Elmendorf of the nonpartisan Congressional Budget Office.

I'm guessing the only rational way to go about this is to look seriously at both revenues and cuts in benefits. Obviously, with the diminishing power of the middle class in America, any choices not cutting entitlements will be much harder to achieve unless voters stop accepting the "trickle-down" economic policies and the Lords of the Flat Tax and the No New Taxes-Ever Bunch like radicals Michelle Bachmann and the pledge-happy lobbyist Grover Nordquist stalk the country, offering simple 19th Century panaceas to 21st Century issues. Bush provided cover for these nimrods for eight years.

But has the middle class really lost so much clout since Bush the Younger left office? Well, yes. "Wages and salaries account for just one percent of economic growth since the (US) recession officially 'ended' in June of 2009." Corporate growth on the other hand, according to the Wiseman Article "Boom in Corporate Profits, Bust in Jobs and Wages" accounted for 88 percent of the growth in the economy. (This is unprecedented in recent American history. Prior to Bush assuming office, previous recessions over the last thirty years had seen middle-class buying power rise anywhere from 15 to 50 percent after a recession receded. The average corporate gains after a downturn were anywhere from 28 to 53 percent.

US Corporations are seeing that the middle class has lost its buying power and is either rushing new jobs overseas or simply holding onto their accumulated post-recession bank of funds (estimated at 1.9 trillion dollars.)

And because of the present gridlock in Washington, in part caused by Bush's role of letting the adjustable-rate mortgage and over-the-counter derivatives breeds of foxes to guard the financial hen-house, we have a nation where there is no clear way ahead for the government to form a fiscal policy on. (Bush could have rectified some of this by impasse by coming forward and supporting a new series of regulations and strengthened agencies to stop what happened on his watch from happening again.)

Instead, he works out in his home gym and keeps his head low. Ex-Presidents are supposed to help the nation with their collective wisdom, not hide like a bandit on the lam. Surely Bush has learned something from the Economic Titanic he helped steer the nation into. You'd think he'd want to help make up for it, if only to get another big book deal.

Mark Blyth on the Dangers of Economic Austerity

I happened to hear this gentleman interviewed on a public radio show ("To The Best Of Our Knowledge", produced out of the University of Wisconsin) while driving home from work this evening.

Since Professor Blyth seemed to be makling more sense than almost anybody else I've heard talk about the current financial crisis in several weeks, I'd thought I'd share this with those interested. I hope you will share any thoughts on his analysis.




Mark Blyth is a professor of International Political Economy at Brown University and faculty fellow at its Watson Institute for International Studies. He is writing "Austerity: The History of a Dangerous Idea," forthcoming from Oxford University Press in 2011.

John Maynard Keynes and "The Stock Market as Beauty Contest"

John Maynard Keynes (1883-1946) was considered one of the great economists of the 20th Century. His most popular economic ideas were incorporated, however imprecisely, in the United States, Britain and other nations during The Great Depression.  

The main point Keynes is remembered for--at least as I recall from my college economics-- is the idea that public debt must be enlarged in times of economic crisis because the normal process of investment dries up.  In effect, governments must try to put people to work and create aggregate demand, projects aimed at putting money in people's pockets so they spend more on products that produce more jobs in other sectors, etc.

  As opposed to classical economics, where the markets are left alone and "iron laws of wages" determined who gets paid what, Keynes, saw that an economy was govern by "animal spirits". The visceral attitudes caused business to go into thrift mode precisely when the general welfare of a country could least afford it:  in bad times.

By increasing  the money supply you grow your way out of an economic slump. 

 

Once a certain point of recovery is reached, the private sector "rentier" and corporate groups will step in to boost up the now revived system and the government can go back to a regulatory role to prevent the sort of stock-market/mortgage bubble disaster we have just started slowly recovering from.This can also be called "saving capitalism from the capitalists."  

But how do we get in such sticky situations in the USA?   And just how rational is the stock market/financial sector in the first place?  How does it differ from a bunch of "turf accountants" or a casino or even a beauty contest?  This was brought up recently in a report on National Public Radio's "Weekend Edition".  A transcript of the story and a link to the audio report is available here: http://www.npr.org/blogs/money/2011/01/14/132906135/ranking-cute-animals-a-stock-market-experiment

“It is not a case of choosing those [faces] that, to the best of one’s judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practice the fourth, fifth and higher degrees.” (Keynes, General Theory of Employment Interest and Money, 1936).

 

In other words value-determination is often so far off track in general that investors  are placing values on a stock, or a house to use the mortgage market, based not on their private needs but on the hunch that something will grow and grow creating a bubble.  When enough investors guess wrong about what demand for housing or a tech company  is really worth,  we get a economic recession...or worse.

Whether you agree with Keynes theories or not, he did a service to breaking up the idea that markets couldn't be steered away from troubled times, but had to be "free", as the economist F.A. Hayak and Milton Friedman in later times believed and expounded upon.   There was a role for the public sector, an idea that today is  under attack again as further regulation is sought to prevent another boondoggle that only ends with banks getting paid off by the government for their follies while giving many of these CEOs and their minions  big bonuses for their gross misjudgements.   

 

For this idea alone, and for stripping away the notion of markets as best guided by "invisible hands", Keynes "beauty contest" is worth remembering.