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For some unknown reason, the New York Times editors chose to print on the front page of my delivered Times a confusing "news analysis" by its business/economics writer, Floyd Norris. Norris is surprised, shocked that interest rates are at record low levels when "financial circles" he apparently listens to predicted just the opposite.
As 2010 began, there was nearly unanimous agreement in financial circles on at least one thing: Interest rates were sure to rise during the year.
Quite to the contrary. As Labor Day approaches, interest rates have collapsed, plunging along with economic optimism.
That turn of events, which has shocked savers and stunned investors, appears to indicate that financial markets’ worries are turning in a very different direction from those of many governments.
. . .
Now, far from showing a reluctance to finance the American government, investors are seeking safety and evidently believe American government debt is the safest possible investment. They have rushed to send money to the Treasury, thereby reducing borrowing costs for the government.
Lions and tigers and bears, Oh My! What could this mean? Norris just can’t seem to sort it out.
He might start by reading the Times economic writers, some of whom have figured out, as the Times columnist, a Nobel economist, and friends have been explaining for more than a year, that rising interest rates and inflation were never going to be a problem as long as the economy languished in a near depression. They knew the government’s fiscal and monetary policies remained woefully inadequate to stimulate aggregate demand enough in a nation that had just lost $12-14 trillion in housing and stocks/pensions wealth.
Under those conditions, an even half-sentient Federal Reserve — about what we have today — would be unlikely to raise interest rates nor need to worry about inflation. So for more than a year, Paul Krugman, Brad DeLong and others who understood this have been alternating between educating us (thank you!) and ridiculing those deficit hysterics who fear-mongered about exploding inflation and rising interest rates when the economic recovery was timid, jobless and, so far, virtually groundless. They’ve been proven right.
What this hardly "news" to those paying attention means is that everyone who has been hysterical about near-term deficits, loading "unsustainable debt" on our grandchildren and interest payments leading to sovereign default has been 100 percent dead wrong, and listening to them, even without the "deficit [catfood] commission" has made matters worse.
There’s no surprise that the same people who were wrong about the market’s self-correcting ideology and unable to see the recession’s causes nor the need to deflect/mitigate them have proved incapable of fashioning effective remedies. They were wrong about the theory and now Norris notes they’re wrong on the facts and their predictions. No kidding. They were wrong. Just say it straight out, Mr. Norris, and you’d have a coherent column.
Unfortunately, Norris gets lost on a detour of Greece and Germany, neither of whose circumstances are similar to the US economy, though he does concede this:
The problems that confronted Greece could not precisely replicate themselves in either the United States or Britain. Both borrow in their own currencies, which they could print if others were reluctant to make loans.
"Not precisely?" Uh, if you have to mention Greece, how about explaining why Greece is "not even remotely" applicable to the US, so those who draw parallels are charlatans.
And what exactly is the point of suggesting the end of Keynes, when the facts Norris is surprised by tell us the Keynesians are correct?
Norris recognizes that, gosh, with interest rates so low, this is a really good time for smart businesses to be borrowing and investing. But he doesn’t explain that strategy makes sense only if we can stimulate demand for their products/services or our trading partners are not similarly crippled by inappropriate austerity measures.
Worse, Norris doesn’t draw the obvious conclusion for government: with government able to pay record low interest rates to US bond holders, this may be the most propitious time in his or my lifetimes for the US to spend and invest in American jobs, public infrastructure and institutions. And that’s especially true since business investment remains risky as long as aggregate demand is low.
The nation’s economic conditions cry out for more government spending and public investment now. The cost is as low as it may ever be, the need is obvious and virtually unlimited, and the dividends to our future would be immense. And if that’s not enough, the correct policy just happens to be the best politics for the governing party.
But instead of drawing the obvious conclusion that Congress’ deficit hysteria and fear of spending are not only belied by the facts but grossly irresponsible, Norris can quote only Republican Senator Lamar Alexander:
Deficit hawks are leaning forward in the United States as well. “Many Americans and most senators feel that the level of the federal debt is at crisis levels,” Senator Lamar Alexander, a Tennessee Republican, said in a Senate debate last month, adding that the debt “threatens the security of our country.”
Uh, this is where Norris should give us a resounding "Wrong!" The federal debt is not at "crisis levels," and it doesn’t "threaten[] the security of the country," so if most senators believe that, they should be hounded out of office and sent to reeducation camps.
There are genuine threats to America’s economic present and future, starting with the failure to make public investments in its future when it makes sense to do so. That failure can only leave a crumbling nation and impoverished, not to mention uncompetitive, people. The only surprise here is that what is so obvious to the rest of us remains a surprise to much of America’s elite media and political leadership.
61 Comments
May I say that Floyd Norris is an id10t?
Why yes, yes I can.
May I second your motion?
Why yes I can.
Floyd Norris is an idiot.
Boy, how hard do you have to contort in order to lay out the facts, leading straight to an obvious conclusion, and then jump back to reach an entirely opposite confusion?
The phrase deficit hawks should be banned from the English language.
When applied to people like Lamar Alexander, Ben Nelson or Kent Conrad,
who front for corporate looters of the US Treasury, it loses all meaning.
As a side note, the current ultra-low interest rates in the medium- and long-term credit markets
have all the makings of another Fed-induced bubble. With retirees, insurance companies and
non-profits desperate for fixed income returns and locking into the current low rates,
it is going to get very ugly when rates start to rise.
As the Wall Street saying goes, when Joe Sixpack shows up, the party’s over.
Come on, be fair. Its now like the NY Times has a Nobel Prize winning economist on staff whom Norris could call to ask for an explanation.
:o)
Supply side economics has become such a matter of ideology for the wingnuts that no amount of evidence to the contrary will convince them otherwise.
Norris would not be able to comprehend the explanation, even if it were in words of one syllable in simple declarative sentences.
We have a nation of Herbert Hoovers.
The fallacy of the personal pocketbook analogy. And the failure to understand that the US government in fact has hundreds of trillions of dollars in assets that, if Congress was willing, it could create income streams from. Up the lease rates on Western public lands and the leases on mining and drilling rights. Charge advertisers premium rates for delivering junk mail. And so on.
The government debt should be like household debt. So government debt can be as high as 90% of assets. A lot of homeowners have 90% of the debt on their homes yet to pay off.
The second fallacy is that good times produce inflation. They might produce competitively bid increases in prices but as long as the money supply moves up and down to support the existing level of transactions, there will not be inflation. What Wall Street want is for the Fed to stimulate and contract the money supply independently of the economic activity so as to produce opportunities for financial profit. Loosened when they want to borrow and tightened when they want to be paid back. And since they are in finance, they want the value of money to be higher when they are paid back and lower when they borrow. And they have been borrowing at zero percent for two years. They want higher interest rates for when they loan out that money or invest it in advance of demand.
Another example that the economy is a closed system and hoarding by one sector causes a chain of events to come around and create a loss in the value of that hoarded asset. What goes around, comes around. Or it takes two to trade. Or one man’s debit is another man’s credit.
Good post. Keynes was not wrong after all.
P.S. Just listen to some of the commentators on CNBC and the “Money Honey” and you know that Keynes must be dead wrong. We are headed to hell in a hand basket.
all discretionary spending is going to healthcare,drugs copays,premiums
i remember when Maria started about12 years ago,she was clueless but,not venturing opinions,now she is still clueless but spews total BS
you could lose your ass watching CNBC
Yeah, I’ve always preferred Digby’s term of “Deficit Scolds.” Much more accurate.
Main problem that Norris overlooks is that debt levels were far, FAR higher during World War II than they ever were before or ever have been since. That debt was paid off pretty quickly because all of the new skills gained and all of the new technology developed during the war made the economy run absolutely red-hot.
It’s kind of like all this putzing around with trying to appeal to middle of the road voters. Total waste of time. The way to get the middle of the road is to succeed in achieving things. If you’re successful and are doing a good job, the middle of the road voters will support you. If you’re failing to pull the US out of a recession, nobody gives a damn that you’re taking what the press corps regards as centrist positions. Same thing with the economy. If you’re making good investments, no one’s going to care that you engaged in a lot of deficit spending. What matters at the end of the day is “What were the results?”
They came of age as supply siders. God forbid they learn anything along the way.
The most honest thing ever said by George H.W. Bush was when he looked at the economic garbage the holiest of Supply Siders Ronald Reagan was spouting and termed the phrase “Voodoo Economics“.
The response to anything said by Conrad, Kent, McCain, Alexander, et al:
If it is believed by the acolytes of Phil Gramm it is either wrong or a plot to steal every penny you have.
and taxes after WW2 were topped at 93% iirc
To quibble, the post-WWII red hot economy stemmed from the wages and employment piled up during the war, with nothing to spend it on, i.e., delayed consumer spending. The technology developed during the war was a minor add-on in those products. My guess is that the biggest supply side contribution of the war was learning how to make the assembly lines run faster so that consumer demand could be met more rapidly.
a plot to steal every penny you have.
well on their way
And gee…wow…amazingly enough, people still went to work and invested, even though taxes were at *wa-a-ah* *sob* *wail* “crippingly high levels”!!1!!1!!
Yes, that’s absolutely true. People had major amounts of unspent dollars sitting in their accounts, just waiting to be spent on things.
ruh oh!
Reported on KFI, AM Talk Radio – Barbara Streisand, Steven Spielberg and other big name celebrities were no shows for the Obama fundraiser that was held tonight at the home of TV executive John Wells, writer, director and producer on the series “The West Wing”.
I didn’t catch all the names, but it sounded like quite the snub. I don’t know how credible these guys are on KFI, but they made it sound pretty bad.
rather, let’s put the hammer right on the head of the nail instead of all this counter productive diversion;
the reason interest rates are low is because greenspan, under reagan, in order to keep middle class wages down and profits rising, decided interest rates are going to be decided by wage pressure, when wages were going up money would be harder to borrow, when wages were not going up money would be easy to borrow, thereby pressuring business to keep wages low
depraved, true, a fact though never the less
And therein lies the critical difference with today. Consumer is tapped out. Rising real wages are considered inflationary by the PTB, all sorts of actions have been taken to make sure that never happens again, like a concerted union-busting program by Rs and Ds alike (think O’s education policy). Employment is not healthy and debt possibilities are more in the past than in the future. So how the ff can the U.S. economy possibly grow fast enough to ignite inflation? BTW, exports aren’t large enough to make up for consumers, esp when you consider that for years the U.S. consumer has been a main underpinning of global demand.
And leadership to match.
That deserves some further probing, and if accurate, wide publicity.
and all the blogs that told obama so should shout it out, “we told you so”
left of the left,proffessional liberals bail on Obie…imagine that
good on Babs and Spielberg,now i must run bbl
Barbra Streisand and Jeffrey Katzenberg were no-shows at a Democratic Congressional Campaign Committee fundraiser
Who coulda anticipated.
I have to bump my own post because I really think that fact needs far more attention then it gets
Nobody can be this stoopid. I suspect that American fiscal policy is now being dictated by someone like the IMF and that the time HAS come ( at least to them) to Shock doctrine the USA out of existence.
Any government which contained members with even half a brain would know that starving the people is the only way to get meat puppets for work like the Chinese workers, who are working in such bad conditions that they try to throw themselves out of the factories to their deaths
Foxconn suicide toll rises as 13th worker dies
Interesting name of the factory, no?
So, which is it, stoopidity or malice aforethought with our gov?
The way things are going for the last 10 years, I tend to choose the latter.
but then I’ve been called a conspiracy theorist by more than one of my acquaintance.
that rising interest rates and inflation were never going to be a problem as long as the economy languished in a
neardepressionFixed.
hypocrites on the right and soft-in-the-middle DINOs cry outrage at more stimulus spending which has a theoretical possibility of taxing children and grandchildren, if the expansion doesnt raise all boats and more tax revenue.
But they have NO problem with looting the benefits and raising the retirement age on these same children and grandchildren.
Let’s see. Can Demos say:
The republicans plan amounts to looting the social security benefits of our children and grandchildren when there is a very simple fix. Ask everyone to pay social security taxes on all their income instead of exempting the rich.
Dean Baker calls them “deficit chicken hawks.” A lot more accurate.
It would be really really nice if the Times were to hire business reporters who, you know, had actually studied economics.
My guess is that those that say that deficits don’t matter are not a lot more correct than those that say that deficits need to be fixed now. Money spent to prop up the TBTF, via taxpayer debt, is not well spent. Money used in the process of having a military that costs more than the rest of the world spends is foolishly wasted. Years of money moved from the Social Security fund into the Treasury with an IOU in exchange is bad policy. Truth be told the spending policies of Ds and Rs are only subtly different.
A policy that actually creates jobs must lead to inflation, since productivity is measured against general income and spending power. Since the current team is made up of Rubin protégés spending will continue to focus on protecting the economy from the diabolical specter of inflation. In order for current high deficit spending to actually lead to jobs a sea change in DC would first need to take place. The general problem is that not all spending is equal and current spending is not ever going to be targeted to things that a wholesale improvement in jobs.
One might even argue that Norris’s surprise in not seeing inflation is based on the idea that all of the trillions of new debt we have acquired as a nation has benefited a much smaller group than might be expected by the trickle down folks. They were sure that making the rich richer would improve the economy in general, leading to inflation. Turns out the rich don’t like to share.
After WWII the US emerged to a world which had to rebuild, and was the only industrial economy intact, had encumbered the UK with huge war debts, had asset stripped the UK under the lend lease act, and had no competition in world markets.
I remember the ’50s in a different way. War time rationing in the UK lasted into the early ’50s for some items.
My parents sold their house for the same price in 1959 as they bought it in 1952.
Well, ok, but if Norris is only just now figuring THIS out …
I’m no economist; I have not much of a financial background; but I am smart. I constantly wonder why it is that I can figure simpleton stuff like this out, but other smart, but conservative, citizens cannot and continue to be bamboozled by charlatons like the Norris’s and the CNBC crowd. Amazing.
For Norris or even neocons and neoliberals the problem is the same. Their wonderfully high incomes are based upon conforming to the popular dialog that shows you are part of the politically correct. Norris or Team Obama – the idea that trickle down works is still the popular ideal that keeps the guys on top employed. Their jobs depend upon keeping the boat steady.
So those that scream at the top of their lungs that we have to let the market make the decisions and that any government intervention is the equal of fiscal suicide, are completely baffled at why we don’t have high interest rates. What do we expect from them? Their thinking is illogical and has been for 30 years.
A fellow I frequently correspond with says that govt. borrowing is starving all the capital out of the private markets and therefore private enterprise can’t expand and create jobs and that is why there are so many out of work and it is all the Dems. fault. I counter with, “if that is so then the short supply of money will surely cause the interests rates to rise, yet they are not”, and of course there is no answer from him.
In their world, the market rules unless of course it doesn’t. There doesn’t seem to be any way to get through to these thinkers. Perhaps we shouldn’t waste the time to try and instead go at them the way they go at us-with fear and lies.
Why not? I know that it is hard for those on our side to ignore evidence and contribute to the hysteria, but it works for them and they already think we are lying to them anyway. Just a thought. (PS. I have no idea how we would implement this strategy. It would be like invading a tribal country and then expecting a democracy in anything less than a 100 years.)
I’m no expert on this, but it seems that we/the USA really benefited bc Europe (and Japan) were really decimated by the war. Soviet communism didn’t provide much competition, plus right after the war, Stalin was busy killing everyone and/or sending them to the Gulags.
I remember going to Europe in 1968, and Germany, in particular, was still pretty decimated and rebuilding.
The USA didn’t have a lot of competition in those days, and we had only suffered one attack on our “soil,” which was Pearl Harbor – many miles away from the mainland.
There were loads of reasons why the USA did so well after WWII, but it also helped that the progressive tax rates were enforced, plus CEOs had not set up their old-boys network of gaming the system for themselves, plus US businesses had a concept that it was “good” to have business here in the USA, that it was “right” to pay workers reasonably fairly, and that we should be making stuff here.
Everyone did a lot better in those days, albeit we were still struggling under USA Apartheid and women had a crappy deal, etc.
But Europe’s & the UK’s status really enured to the benefit of the USA, and you’re correct in pointing that out. Someone suffers, and someone gains. And so: on it goes…
I hear you. I wonder about that as well. It certainly does NOT work to have “reasoned discussions” and bringing facts to the table. I’ve tried that a lot, and I either get the stonewalling that you describe, where there’s simply no answer. Or I get the commentary: “oh you liberals only look at liberal websites, etc and those are all just a bunch of LIES. So your “facts” are lies, and I don’t have to listen to them. Nanny nanny boo boo.”
So, since most conservatives have been carefully taught to view anything that we say as outright LIES, then why not go on the attack?? A point I’ve long pondered. Certainly taking the “high road” has NOT worked at all, and certainly believing that the “truth will out” also does not work.
Not sure, though, if most liberals have the stomach for attacking and lying, which, I guess, is what the PTB count on. Good point, though.
But of course ZIRP and the primary dealers currently are established to make sure that starving of capital is not a problem. Starving capital is a hold over from the gold based currency days. Interest rates are related to the cost of borrowing from the Fed and are only a function of the market so long as the Fed decides to react to inflation. In the previous quarter JP Morgan borrowed $250 billion at -.025 interest. Paying banks to borrow will almost certainly keep the cost for the other banks borrowing from the primaries down.
Nietzche: The New Idol – the State
“Somewhere there are still peoples and herds, but not with us, my brethren: here there are states.
A state? What is that? Well! open now your ears unto me, for now will I say unto you my word concerning the death of peoples.
A state, is called the coldest of all cold monsters. Coldly lieth it also; and this lie creepeth from its mouth: “I, the state, am the people.”
It is a lie! Creators were they who created peoples, and hung a faith and a love over them: thus they served life.
Destroyers, are they who lay snares for many, and call it the state: they hang a sword and a hundred cravings over them.
Where there is still a people, there the state is not understood, but hated as the evil eye, and as sin against laws and customs.
This sign I give unto you: every people speaketh its language of good and evil: this its neighbour understandeth not. Its language hath it devised for itself in laws and customs.
But the state lieth in all languages of good and evil; and whatever it saith it lieth; and whatever it hath it hath stolen.
False is everything in it; with stolen teeth it biteth, the biting one. False are even its bowels.
Confusion of language of good and evil; this sign I give unto you as the sign of the state.
< <<>>>
“Just see these superfluous ones! They steal the works of the inventors and the treasures of the wise. Culture, they call their theft–and everything becometh sickness and trouble unto them!
Just see these superfluous ones! Sick are they always; they vomit their bile and call it a newspaper. They devour one another, and cannot even digest themselves.
Just see these superfluous ones! Wealth they acquire and become poorer thereby. Power they seek for, and above all, the lever of power, much money–these impotent ones!
See them clamber, these nimble apes! They clamber over one another, and thus scuffle into the mud and the abyss.
Towards the throne they all strive: it is their madness–as if happiness sat on the throne! Ofttimes sitteth filth on the throne.–and ofttimes also the throne on filth.
Madmen they all seem to me, and clambering apes, and too eager. Badly smelleth their idol to me, the cold monster: badly they all smell to me, these idolaters.
My brethren, will ye suffocate in the fumes of their maws and appetites! Better break the windows and jump into the open air!
Do go out of the way of the bad odour! Withdraw from the idolatry of the superfluous!
Do go out of the way of the bad odour! Withdraw from the steam of these human sacrifices!
Open still remaineth the earth for great souls. Empty are still many sites for lone ones and twain ones, around which floateth the odour of tranquil seas.
Open still remaineth a free life for great souls. Verily, he who possesseth little is so much the less possessed: blessed be moderate poverty!
There, where the state ceaseth–there only commenceth the man who is not superfluous: there commenceth the song of the necessary ones, the single and irreplaceable melody.
There, where the state CEASETH–pray look thither, my brethren! Do ye not see it, the rainbow and the bridges of the Superman?–”
Thus spake Zarathustra.
The low interest rates he talks about must be for home mortgages or new cars. And those rates are low because there are so many millions of empty homes, and idle car inventories, that people who still have money need to be enticed to spend it.
All other interest rates have gone up. Checked your credit cards lately? We’re supposed to have deflation, not inflation. That’s true if you’re talking about the money supply. It’s not true for anything else. Just walk down a supermarket aisle. Pet food up 25%. Sugar up 35%. Packaging downsized by 1/3 but the price is the same.
Got your school/property tax bill yet? I bet it went up even if your home value did not. How about utilities? They went up too. All this crap about the CPI hardly moving is nothing but crap. So who isn’t confused?
That’s true, and just wait for the price of bread to rise now that Russia and Ukraine have lost wheat harvests to fires.
The low rates are all artifical creations of Obama. They’ve pulled out all the stops. The plan is simple. Hurt as many retirees on fixed incomes as possible. Those same retirees will remember in November.
Oh, and if you don’t think prices have gone up just go to the grocery.
I had an online discussion with a right-winger who was going on about BP giving more money to Obama than to any other candidate. They were, he was telling the truth, but the rest of the story is that they only supplied him with 0.17% of his total campaign cash. He immediaely started in on campaign cash from Goldman Sachs.
The problem is, there doesn’t seem to be any way to gracefully admit error. Neither one of us can say “Oops, I messed up,” because then, in our minds, it becomes “Well, why should I believe anything you say?”
In an old B&W film, the prosecutor described how the expert might have gotten confused and then showed how the expert’s testimony was flawed. The expert leaned on the “out” that the prosecutor had given him and “confessed” that he had gotten confused. IOW, The prosecutor allowed the expert to save face.
Must be some way to do that in online discussions.
Wages haven’t increased more than nominally since the concerted attack against the middle class began in 1973. Around that time the increased use of part-time workers and temps kept wages down and benefits but allowed unions to extract dues from the part-timers even though they didn’t get the same benefits as full-time workers. That trade-off made it harder for full-time workers to get wage increases because productivity was increasing through the use of a part-time workforce and the stagflation that was present kept wage demands down.
Now we’ve gotten to a point where productivity and wages have become completely disconnected and thanks to both parties manufacturing jobs and the unions that represented workers are a moot point. The service economy with its financial analysts and real estate brokers and low wage retail jobs isn’t supplying this country’s GDP with anything tangible or productive yet people in Washington and talking heads are all talking about an economic recovery because the Dow goes up a few days. There will be no sustainable recovery in this country until a few things happen including at the top of the list ending the wars of choice that are sucking dry whatever funds are left in the treasury; financial reform that outlaws or heavily taxes the use of derivatives and derivatives trading; a transaction tax on trades with a cutout for pension plans; reclassifying hedge fund managers’ income as income instead of capital gains; raising the capital gains tax; letting the Bush tax cuts expire; and prohibiting US-based corporations from writing off profits made overseas with some exceptions.
We cannot afford to live like we did in the glorious 50s and 60s. Those times were designed to get people in the habit of spending and borrowing so that capitalism could grow and expand in its never-ending search for markets and profit. This is a different time and different circumstances. The American consuming class has been whittled down considerably and like Humpty Dumpty ain’t coming back in her original shape any time soon.
I think that when we stopped making stuff, ( and I think that the only way you can create real wealth is through the extraction of earth’s resources and the addition of labor to make something better than it was) that the pie which we all want a piece of started to shrink. With a shrinking pie, and a class that has taken more and more of it for itself, there is much less left for the rest of us. When that happens to the extreme we have what we have now. At some point the haves got so big that they controlled the pie. When we cut taxes and started borrowing the money that we then didn’t have, we started on the road that got us here. Unions have no power when they can’t control the labor demand, and with so many out of work there is no power.
The only way to reverse this is through the election process. We need to raise taxes on the rich to maintain the economy; stimulate more; give up temporarily our pet projects no matter how important to us because they are divisive, and band together like a rock until we get back on our feet.
If Republicans take back the house, we are all screwed much worse than we currently are. We need to get mad at what caused all this, instead of at each other, even though we and our inability to unite behind one common goal are a big part of the cause of our demise, so we ought to be angry at ourselves as well, but we need to get energized and on the same page. One thing the leadership of the Democratic party seems to realize is that divided we fall. So even though we blanch at getting under the sheets with some of the leadership, we must grit our teeth and fight harder than we did the last time, because we won’t get too many more chances to pull our collective asses out of the fire.
When I was a little kid back in the early 1950s, I opened a savings account at a local bank in Mount Lebanon, Pennsylvania to put in some of my earnings from my morning Pittsburgh Post-Gazette paper route. The bank paid me 3% interest on my savings, which was not much in my mind. Today, I get 0.16% interest in a savings account at a California bank. So, in about sixty years, the rate of return on savings accounts has dropped by a factor of eighteen or about 95%. Heck of a job in destroying an incentive for Americans to save money, federal reserve…
you make a good point. Unfortunately, people often vote against their own self interest or, what is the same thing, just sit it out. We need to find a way to keep control of congress so that the asses on the other side don’t make life even worse, if only out of ignorance.
You have indeed put your finger on it. When we shipped our manufacturing jobs to China, we sent away our engine of wealth creation. Wall Street made a bundle in making the arrangements, and as a result, finance became a huge percentage of American economic activity. Not because finance grew by an astounding amount so much as the disappearance of the true mode of wealth creation.
Replacement of manufacturing by a service economy? Well, the financiers figured out that call centers can be shipped abroad as easily as industrial plants. You can check out any zip code in America, and ask around, “where ‘were’ the good jobs here?” and every one will answer, “that now-shuttered factory over there was where our parents worked, and made a good living at it.” And now, from coast to coast, American townspeople try to make do flipping each other’s burgers and giving each other haircuts.
What few manufacturing concerns are left in America are turning to robots, because Wall Street prefers a single capital expenditure to a payroll every time. Trouble is, robots are a bore on the weekend, and with that vanished payroll, so vanishes consumption. What Henry Ford knew back a century ago, the business class has taken over a half-century to forget, but they have managed to forget nonetheless.
And today, we have a Democratic administration wringing its hands in worry over how to spark job growth in America, while carefully avoiding any inquiry as to how to get anyone to open a factory in America. Oh, they might say that we have to work smarter, and learn how to make stuff too sophisticated to be made in China. Given the engineering-school graduation rates over there, “they” are blowing wind. What I need, as well, are plastic ice cube trays, and they can be cranked out on an American assembly line as efficiently as in China. Sure, the payroll is a bit higher here, but the shipping costs are lower, and if the USA-made ice cube tray winds up being %15 more expensive, I’ll pay if it keeps my family working.
But the denizens of Richistan are not concerned with jobs for my family. We live here; they live there. Is there any way short of overthrow of the capitalist system to get the owning class to utilize the American working class again? Unions might have helped,. but they were killed off in order to facilitate “offshoring”. There is a political system in this country, but the Tea Party is the brandname populist group here in 2010, and they are a good deal worse than useless. If we have to await a Republican politician to demand that the factory gates be opened, we are fucked.
Great post, scarecrow!
Well said, clamberite. Nice summary of recent history.
Still, I doubt the premise, that keeping the Dems in control of the House will do us any good. What has having the Wall Street Dems in control of the House done for us lately?
That nation-jacking slogan is exactly what I mean by malicious political myth-making. It’s time we all learn to see through their masks.
Barack Obama is a bought-and-paid-for Wall Street Democrat, not a friend of average Americans. Far from fearing it, I think he’d like to have the GOP in control of the House as cover for his own corporatist policies.
Remember this, if nothing else: two party faces, one unending bogus holy war. I don’t think changing labels on the stooges of Top Secret America will help as much as will reclaiming our usurped sovereignty.
Until then, we’ll keep getting taken for a ride by both parties, and stuck with the bill, in the name of “good governance.”
Herbert Hoover was a liberal and an interventionist. Why do we have to keep promoting the myth that he was opposed to intervention in the economy? He was the first president who argued for federal intervention in private economic concerns.
Will you retract this once interest rates reverse? Of course not, then you’ll use the excuse that Krugman has been priming for a year now. The “deficit hawks” caused the government to shy away from an adequate stimulus, spending too little and too late. So even though the stimulus was far too small, according to Krugman and others, this week the Keynesians are proven right. But should this all fall apart tomorrow, the Keynesians are also proven right. Heads the Keynesians win and tails the “deficit hawks” lose.
I can’t comprehend why progressives are buying into this at all. Sides have been defined but that doesn’t mean you have to chose what you are baited to chose. Is this consistent with your principles? You have to be pro-interventionist because your president will look bad if the economy fails on his watch?
I hear lefties talk about a destructive consumerist culture, yet they are apparently wishing for another bubble. All that extra cash, borrowed from future generations, enables reckless consumption. People don’t just wish money into existence, right? What about sprawl? What about tearing down the old neighborhoods to build roads to the suburbs? What drives the economics of this? Must be mean, right wing warlocks.
I hear lefties talk about social and economic justice, yet they are apparently now champions of The Federal Reserve. Now why should the people’s government have to borrow money on interest from a private corporation? Really? Do you realize that it’s a private corporation with private shareholders? Oh yeah, it’s only kooks who oppose it. Kooks are those other guys on that other side.
I hear lefties talk about housing for all, yet how does creating bubbles and driving up the cost of homes help the poor find housing? How does fighting like hell to keep home prices high accomplish this goal or support this principle? Your Keynesian hero, Krugman, called for a bubble in 2002. Do you realize who this actually helped and continues to help? It’s those big banks and super rich execs that you hate. Meanies.
If there’s any reason this country is doomed it is that we have a population of fools who can’t be bothered to understand the world in which they live. We have degenerated into scrapping against sides that are entirely artificial while the crooks continue to strip us of all we have.
Drop your pom poms and start seeing the truth. I’ve about had enough of this increasingly ridiculous, blindly partisan site.
YES. and apparently so were Marx and Engles. “wal st.” IS finance capital. finance capital is the most rabidly, brain dead-ed-ly reactionary sector of capital, the place where up is down and poor is rich, and black is white. i think its completely, obviously clear to anyone watching that finance capital has consolidated economic and political power (as was predicted by Marx)and we are entering the capitalism end game. its not going to be pretty,and unless we can start thinking in terms of GENUINE alternatives to capitalism, instead of trying to rescue it, it will get monstrously ugly indeed.
BWAHAHAHAHA!
Thanks. I haven’t had a laugh like that in a long time.
Not sure how long you’ve been coming to FDL and environs but you truly have no understanding of it here if you think it is “blindly partisan”
ROFLMAO! You got that right, dakine01.
Hey, slonob, take a look at any of my comments, esp. the one directly above yours. And while you’re at it, maybe you can GAFC.
On further review (ie, after a couple imperfectly chilled New Belgium Skinny Dips and the butt end of a rather scraggly j with some friends), I’m also going to take exception to this assertion (even though I’m almost surely commenting on an empty thread):
Oh really, I say in l’espirit d’escalier, and what have we here, in these words and spaces you’re reading (or not) right now?
What value does your Stone-Age definition of wealth place on the fine arts? Why do people pay obscene sums of money, better spent on alleviating suffering in a far wider scope than the titillation of whoever can shoot the biggest wad on a masterpiece, for works of art?
Forsaking art for Art’s sake for the moment (forgive me, my jealous muses, I’ll be right back), why do people pay stupid prices for concerts, even if by fakes?
Your peculiar neglect of the humanities reminds me of an article in Harpers.org from May, 2005:
Aside from that (!), we’re in substantial agreement.
(PS: HA! I even over-format when I’m nicely toasted. Owhatageekiam.)