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Blog: Poets and Mechanics Friends Worship Group
Post: Call To Meeting -- May 21, 2017
Link: http://poetsandmechanicsfriends.blogspot.com/2017/05/call-to-meeting-may-21-2017.html
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Saturday, May 20, 2017
Case on Krugman: What's Wrong With Republicans? Or, What's Wrong with Paul Krugman?
What's Wrong With (Paul Krugman's (What's wrong with Republicans?))?
John LeCarre, master spy story teller, and Brit intelligence officer himself, built an entire novel (The Russia House) around the proposition that the questions one asks an reveal as much as the answers. It's interesting, in this case, that one of the world's foremost economists -- certainly the most widely read -- abandons economics in favor of a bourgeois morality play: if I may paraphrase a thesis in the article below: There is nothing wrong with Republicans other than a moral decay that has permitted a mockery of civilized, respectable, scientific, rational, values to capture their party. France, and French "conservatives" are less depraved -- deplorable? -- and thus did not embrace La Pen.
For my own moral sensibilities -- those that remain at age 70 anyway -- I am entirely sympathetic with Krugman's caricature of Trumpery and his exposure of the Republican hypocrisies that dominate that party and indeed make it virtually impossible for them to govern a democracy with even the slightest integrity.
But is "What's Wrong With The Republican Party?" the right question to ask? I think not. Like LeCarre, I hear the message in the question: "That would be the problem the Democrats don't have...".
Already, buried in the question, is a signal that "BILLIONAIRES WEALTH AND CONSEQUENT DOMINATION OF POLITICAL POWER will not be the first answer. Why? I don't think it's rocket science. Because liberal billionaire interests, although they appear to be a minority among the billionaire class, are very much a part of the Democratic Party leadership, as they were in the Hillary Clinton presidential campaign. These interests (I picture Robert Rubin, Warren Buffet, Bill Gates, George Soros, Google and Amazon guys, and others) are no doubt far more moral, humane, wise, rational, anti-racist, anti-sexist, pro-science and pro-green than their class brothers and sisters. Paul Krugman, on political commentary at least, has become fairly reliable ideologist for these folks.
However failure to focus on the billionaires and inequality leaves the right wing billionaires with oceans of fertile ground and opportunity to perpetuate diverse divisive, including fascist, campaigns that have effectively neutralized MOST, although not ALL,of the forward progress hoped for in the Clinton and Obama presidencies. There was not much net forward progress in either case, viewed from the point of view of working class income and well-being. High tech fueled an income blip in the late 90's under Clinton; expanded Medicaid under Obamacare restored and expanded care for many whose employment rights and standards won in the New Deal and Great Society reforms have been eroded or effaced by decades of deindustrialization, globalization and union-destruction. The Supreme Court Republicans cut it from the states where it would do the most good -- including threatening the careers of the modern day Southern racists. Still, real median worker income has gone nowhere since 1972, with the greatest per capital relative (to total) wealth losses concentrated very near the median income of Trump voters in the 2016 election --- 72K per year. That's 20K per year above the actual median income family household. It's actually a classic Fascist recipe: recruit the ruined petit-bourgeois to blame the poor for his misery and turn themselves into cadre for monsters.
Both Clinton and Obama were far better leaders than their counterparts, the Bushes, and Reagans, and Nixon. Hillary would have been a far better choice than any Republican who ran for office. But again, from the standpoint of the working class share of the economy, Lyndon Johnson was the last president who honored and continued the hard-fought social contract under Roosevelt where labor and capital should share roughly equal shares of the growth in national wealth. Carter barely spoke of it. Clinton explicitly rejected it. After Obamacare, Obama was neutralized on almost every initiative that required congressional or Supreme Court cooperation.
By all means, Dump Trump, by any means, necessary. But just doing that will not be enough to slay or diminish the source of the fascist threat.The question is not what's wrong with the Republicans, or, for that matter, what are the weaknesses of the Clinton campaign, or liberal billionaires. The question is: what's wrong with capitalism? Thomas Piketty's predictions and analyses become more confirmed every day. Markets and commerce will not put to bed the dragons that inevitably arise. Capitalism cannot save itself from its unregulated abuses. Capitalists will not voluntarily refuse the compelling forces of capital in motion. Only governments can. And only governments NOT dominated by the interests, especially highly concentrated interests, of capital, liberal or not.
That does NOT mean the overthrow of capitalism -- an impossibility as long as commodities are in circulation. Further the global economy and civilization itself requires vast economies of scale that in many cases simply cannot be command-controlled by governments -- an infantile fantasy of early socialist experiments. But nor can they be developed and become pervasive, an emergent necessity of life, as solely or even primarily private ventures. Note, however, China is proving that active industrial policy alternative model can drive huge successes as well. And not all giant firm or enterprise organization -- even private ones -- has to follow the US model.
Enter Bernie Sanders --- always the thing, the phenomenon, that the liberal billionaires, and some shamefaced socialists-turned-liberals too, and Paul Krugman, simply cannot stomach. The elephant in the room of all the anti-Trump/Russia/"he's unfit" hullabaloo -- the most popular politician in the country now, as straight-up an transparent a politician as any in its history. Bernie is like the message in a bottle to those driven mad by the winds of globalized capitalism: The workers have to be empowered. The working people have to lift themselves up, so THEY can lift up the entire country.
I do not know if the decision to NOT have a Hillary/Bernie ticket, or a Bernie/Hillary ticket was the decision of the Clinton camp, the Sanders camp, or both. But it was one of the key decisions, and there only needed to be one KEY decision, that lost the election to Trump. Bernie has a class approach -- as we used to say in the left of the labor movement -- to most questions. He always asks and probes policy from a deep appreciation of the perspectives of working class people. At the same time, the math of the two party system both dooms most independent electoral strategies (except those seeking to become one of the TWO) while almost forcing competing sections of the billionaires to stake out claims and competing alliances in both parties.
That begs the question: Is it even possible for one party in a two party electoral system to led by NON-billionaire forces? It's beginning to sound like the same question as this one: Is it possible for ANY billionaire led party to overcome austerity, the the strongest source of the fascist threat?
We are about to find out. we HAVE to fight for leadership of working people in at least one of the two parties if a peaceful, democratic, electoral path out of this global crisis, and the dangers of global war as well, are to be averted.
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Paul Krugman
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On Wednesday, Paul Ryan held a press conference just after the revelation that Donald Trump had pushed James Comey to kill the investigation into Michael Flynn — you know, the guy Trump appointed as national security adviser even though his team knew that Flynn's highly suspicious foreign ties were under investigation.
Faced with questions about the Flynn scandal and the Comey firing, Ryan waved them away: "I don't worry about things that are outside my control."
This might sound like a reasonable philosophy — unless you realize that Ryan is speaker of the House of Representatives, a legislative body with the power to issue subpoenas, compel testimony and, yes, impeach the president. In fact, under the Constitution, Ryan and his congressional colleagues are effectively the only check on a rogue chief executive.
It has become painfully clear, however, that Republicans have no intention of exercising any real oversight over a president who is obviously emotionally unstable, seems to have cognitive issues and is doing a very good imitation of being an agent of a hostile foreign power.
They may make a few gestures toward accountability in the face of bad poll numbers, but there is not a hint that any important figures in the party care enough about the Constitution or the national interest to take a stand.
And the big question we should be asking is how that happened. At this point we know who and what Trump is, and have a pretty good idea of what he has been doing. If we had two patriotic parties in the country, impeachment proceedings would already be underway. But we don't.
What's the matter with Republicans?
Obviously I can't offer a full theory here, but there's a lot we do know about the larger picture.
First, Republicans are professional politicians. Yes, so are most Democrats. But the parties are not the same.
The Democratic Party is a coalition of interest groups, with some shared views but also a lot of conflicts, and politicians get ahead through their success in striking compromises and finding acceptable solutions.
The G.O.P., by contrast, is one branch of a monolithic structure, movement conservatism, with a rigid ideology — tax cuts for the rich above all else. Other branches of the structure include a captive media that parrots the party line every step of the way. Compare the coverage of recent political developments on Fox News with almost everywhere else; we're talking North Korea levels of alternative reality.
And this monolithic structure — lavishly supported by a small number of very, very wealthy families — rewards, indeed insists on, absolute fealty. Furthermore, the structure has been in place for a long time: It has been 36 years since Reagan was elected, 22 years since the Gingrich takeover of Congress. What this means is that nearly all Republicans in today's Congress are apparatchiks, political creatures with no higher principle beyond party loyalty.
The fact that the G.O.P. is a party of apparatchiks was one crucial factor in last year's election. Why did Marine Le Pen, often portrayed as the French equivalent of Trump, lose by a huge margin? Because France's conservatives were only willing to go so far; they simply would not support a candidate whose motives and qualifications they distrusted. Republicans, however, went all in behind Trump, knowing full well that he was totally unqualified, strongly suspecting that he was corrupt and even speculating that he might be in Russian pay, simply because there was an "R" after his name on the ballot.
And even now, with the Trump/Flynn/Comey story getting worse by the hour, there has been no significant breaking of ranks. If you're waiting to find the modern version of Howard Baker, the Republican senator who asked "What did the president know, and when did he know it?" you're wasting your time. Men like that left the G.O.P. a long time ago.
Does this mean that Trump will be able to hold on despite his multiple scandals and abuses of power? Actually, yes, he might. The answer probably hinges on the next few special elections: Republicans won't turn on Trump unless he has become such a political liability that he must be dumped.
And even if Trump goes, one way or another, the threat to the Republic will be far from over.
In a perverse way, we should count ourselves lucky that Trump is as terrible as he is. Think of what it has taken to get us to this point — his Twitter addiction, his bizarre loyalty to Flynn and affection for Putin, the raw exploitation of his office to enrich his family, the business dealings, whatever they were, he's evidently trying to cover up by refusing to release his taxes.
The point is that given the character of the Republican Party, we'd be well on the way to autocracy if the man in the White House had even slightly more self-control. Trump may have done himself in; but it can still happen here.
John Case
Harpers Ferry, WV
Harpers Ferry, WV
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Friday, May 19, 2017
Links for 04-19-17
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Links for 04-19-17 // Economist's View
http://economistsview.typepad.com/economistsview/2017/04/links-for-04-19-17.html
Inequality or poverty - mainly macro Inequality in France - Thomas Piketty Trade, redistribution, and social dumping - Dani Rodrik Ricardo and comparative advantage at 200 - Douglas IrwinImpact of immigration barriers on native workers - VoxEU Aggregate Productivity versus Aggregate Technology - Dietrich VollrathA Reply to Fioramanti and Waldmann - European Commission Why Renegotiating NAFTA Could Disrupt Supply Chains - Liberty Street Worried About Concentration? Then Worry About Rent-Seeking - ProMarket
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Thursday, May 18, 2017
Household Borrowing in Historical Perspective [feedly]
Household Borrowing in Historical Perspective
http://ritholtz.com/2017/05/household-borrowing-historical-perspective/
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http://ritholtz.com/2017/05/household-borrowing-historical-perspective/
Household Borrowing in Historical Perspective Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw Liberty Street Economics, May 17, 2017 Today, the New York Fed's Center for Microeconomic Data released its Quarterly Report on Household Debt and Credit for the first quarter of 2017. The report shows a rise in household debt balances in the quarter of…
The post Household Borrowing in Historical Perspective appeared first on The Big Picture.
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A Tax on Wall Street Trading is the Best Solution to Income Inequality [feedly]
A Tax on Wall Street Trading is the Best Solution to Income Inequality
http://cepr.net/publications/op-eds-columns/a-tax-on-wall-street-trading-is-the-best-solution-to-income-inequality
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http://cepr.net/publications/op-eds-columns/a-tax-on-wall-street-trading-is-the-best-solution-to-income-inequality
A Tax on Wall Street Trading is the Best Solution to Income Inequality
Dean Baker
The Hill, May 17, 2017
In the years since the 2008 economic crisis, financial transactions taxes (FTTs) have gone from a fringe idea to a policy that is in mainstream policy debates. They are seen as a way to both raise large amounts of money and to slow the pace of churning in financial markets. For this reason, most progressive Democrats have come out in support, and even the Clinton campaign provided a hat-tip to some form of taxation on high frequency trading.
This is a welcome change from where things stood before the crisis, when the only people supporting FTTs were the far left of the party. As a long-time proponent of an FTT, I welcome this change, but even many of the proponents of FTTs don't realize the full benefits of such a tax.
To get some bearing, it is first worth recognizing how much money is potentially at stake. The Joint Tax Committee projected that a modest tax of 0.03 percent on all trades of stocks, bonds, and derivative instruments, along the lines of a proposal by Representative Peter DeFazio, would raise more than $400 billion over the course of a decade. This is roughly equal to 0.2 percent of gross domestic product (GDP. This would be enough money to cover 60 percent of the cost of the food stamp program.There have been proposals for larger FTTs. The Tax Policy Center of the Urban Institute and the Brookings Institution analyzed an FTT with a varying rate structure on stocks, bonds, and derivative instruments. They calculated that the maximum revenue would be achieved with a rate on stocks of 0.34 percent, with lower tax rates on other financial instruments. This tax would raise more than $800 billion, or 0.4 percent of GDP, over the course of a decade.
Bernie Sanders and Keith Ellison have sponsored bills for a 0.5 percent scaled tax on stocks and other financial instruments. The Congressional Progressive Caucus in its "Better Off Budget" has adopted this tax. Their own estimates put the take from the tax considerably higher than the Tax Policy Center numbers.
Without trying to adjudicate between these estimates, it is clear that there is potentially a large amount of money at stake with an FTT. If we think that the government will want to tax away more money to fund infrastructure, healthcare, and other areas of public spending, FTTs seem like promising way to go. In addition, the idea of reducing some of the short-term trading in financial markets is attractive. The evidence on whether reductions in trading volume can reduce the likelihood of bubbles and crashes is not conclusive, but it seems worth a shot.
However, there is another important aspect of an FTT that has gotten much less attention. The burden of an FTT is borne pretty much in full by the financial sector. The basic story is that trading volume can be expected to decline roughly in proportion to the percentage increase in trading costs. This means that if a tax increases the cost of trading by 40 percent, then can expect trading volume to decline by roughly 40 percent.
This is a very important point. In the case of most items we buy, say food or housing, we value the item itself, so that if we had less food or housing because a tax raised the price, we would feel some loss. That is not the case with trading financial assets. At the end of the day, we don't care how much we traded, we care what happened to the value of our assets after trading. (Let's ignore the possibility that some people see trading like gambling and enjoy the process itself.) If we trade less because of a tax, it doesn't matter to the average consumer, unless it reduces the value of our assets.
In the case where trading volume falls in proportion to the increase in the cost per trade, there would be little change in the total amount spent on trading. If we pay 40 percent more on each trade, but carry through 40 percent fewer trades, the total amount spent on trading would not rise. (Total trading costs actually fall somewhat in this example, but we can ignore that point.)
The issue then is whether our portfolios will be smaller as a result of fewer trades. That seems unlikely. Trading is mostly a zero sum game. If you end up selling your stock at a high price, then some sucker paid too much for it and will incur a loss. On average, there is a loser for every winner, meaning that the trading costs are simply a waste.
There is a story that trading makes the market more efficient, better allocating capital to its best uses. There clearly is something to this story, if there was no market in which to sell Apple stock, no one would ever buy its shares in the first place. This would mean that Apple and other companies would not be able to use the stock market to raise capital.
However we almost certainly reached the point where the markets were deep enough to efficiently allocate capital long ago. Trading volumes have more than doubled in the last two decades and are an order of magnitude larger than they were in the seventies. Someone would be hard pressed to argue that capital was better allocated in the housing bubble years than fifteen or twenty years earlier when volume might have been less than half of its current level.
This means that the only losers from an FTT are the people who earn their money from doing the trades, not the pension funds or middle income people with 401(k)s. In effect, an FTT will allow the financial sector to serve its function of allocating capital from savers to investors more efficiently. If an FTT raises $40 billion a year, then it will reduce the amount of annual revenue of the financial sector by roughly $40 billion. If the tax revenue is $80 billion, then the financial sector will be roughly $80 billion smaller.
However, the really great benefit from these savings is that they will come out of the pockets of many of the richest people in the country: Wall Street traders and hedge fund partners. An FTT will radically reduce the income of a group of people who stand at the very top of the income ladder. By reducing the opportunities to get rich through trading, we will force many of these high flyers to look for jobs in designing software, biotech, or other areas in which their skills may still command a premium, even if they don't provide the millions they could expect on Wall Street.
And, the increased flow of people into these other high-paying professions will put downward pressure on the pay there as well. In effect, we will be reducing the number of very high paying positions in the economy, meaning that these positions will on average pay less as a result. We can think of an FTT as the equivalent of job-killing robots for the very high paid crew.
This is a great example of a clearly defined policy that will directly reverse some of the upward redistribution of income over the last four decades. Of course FTTs still face an enormous uphill battle before they could be implemented. As with other policies that would reverse the upward redistribution the problem is not the difficulty of designing the policy, the problem is the power of the rich people who don't want a fairer and more efficient economy.
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