CRAZY GOVERNMENT SPENDING!

27 06 2010

LLLLLLLLLLL

(an almost apolitical post)

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What’s with that, anyway?  Everyone knows that if a family or business spends way too much money and gets too far into debt, it runs a very great risk of going bankrupt, right? So isn’t a government — in the case to be addressed here the government of the United States — in the same danger?

Nope. Why not? False analogy.

There is a crucial difference between one family’s deficit spending, and that of the government of a large country: The family’s spending is too small to affect the  prevailing market conditions around it in any way,

but the spending of a national government can be big enough to change that intensity of activity across a nation’s whole economy.

This was the first great insight of the founder of the species of economic analysis of whole societies (commonly called macroeconomics) now being followed by the Obama administration. The founder of this approach to macroeconomics was John Maynard Keynes, and his approach to large-scale economic analysis is called Keynesian economics.

Mr. Keynes’ second great insight, born out of his study of  the Great Depression, was simply that

Markets do not have any automatic mechanism to self-correct in the short run.

This means that they are prone, under extreme conditions, to go into “death spirals”: A sudden large decrease, for example, in overall business activity all across a large market like that of the United States can produce a widespread fearful expectation on the part of many consumers and investors within that market that greater decreases will be forthcoming. They therefore cut back on their spending, in the case of the consumers, and hoard their capital, in the case of the investors. Likely result: less business activity, just as feared! And that round of decline is likely in turn to produce yet more fear, leading in turn to even less spending and investing, producing yet another frightening decrease in economic activity.

This cycle can go on for a long time, until a new overall equilibrium is reached at a some low level of production and spending. This overall process, once started by an initial severe recession, can lead to a years-long Depression that threatens to become permanent.

Keynes’ third great insight was that

the government of a nation suffering such a death spiral is often in a unique position to interrupt it,

because: 1) governments  are not as prone to acting out of  panic as people are; and 2) governments often have such strong assets, in the form of taxes due or expected, that they are actually able to borrow and spend enough money to increase economic activity across the whole society. If enough is spent, a reverse, upward expectation/action spiral can be generated that can head off the development of a severe recession into an economically-crippling Depression. Moreover, as the stimulated economy recovers, the government’s tax revenues will grow, allowing it to pay back much of what it borrowed to finance the stimulus

(Keynesian macroeconomics also recognizes a similar kind of harmful upward spiral in economic activity / expectations that can lead to excess, even runaway, inflation. For that situation Keynes called for the enactment of higher taxes to damp down “irrationally exuberant” economies.)

Keynesianism thus provides a complete methodology for evening out the business cycle, which all flavors of economists recognize is intrinsic to capitalism.

A Bit of Recent History

From 1941 to 1979 Keynesianism was the standard macroeconomic model followed  in advanced countries, and its prescriptions were frequently and successfully applied to decrease the intensity of recessions.

Around 1979-1981, though, there was a  shift among US economists and decision-makers to another approach to macroeconomics that had been a very minority position among economists up to then. That shift probably came about largely due to Keynesianism’s apparent inability to fix the unprecedented problem of “stagflation” which was then bedeviling the United States. Sadly, throughout the 1970s the Congress and the Federal Reserve Bank had been unwilling to halt the upward spiral of prices and wages by raising taxes (as the Congress could have done) and/or tightening the money supply (as the Fed could have done).

Then Paul Volker became Fed Chairman and tightened the hell out of the money supply, provoking a very severe recession in 1981 that eventually choked off inflation.

Since Voelker had been able to handle inflation so well just by adjusting the money supply, the view gained ground that major periods of dysfunction of the country’s economy could always be ended by monetary adjustments alone. There was no need, ever, for Keynesian stimulation, a vocal body of economists led by Milton Friedman declared.  That view, called Monetarism, was accepted by many, and so at last ended its long exile as a minority position within economic thought.

Monetarism gradually lost a bit of its authority over the two decades after 1981, however.  I’m not sure why. I believe that waning of influence happened because monetarism proved ineffective at handling some substantial economic fluctuations.

Except for the recession of 2000-2001, however, from 1982 to 2008 the USA enjoyed a long period without either much inflation or any major recessions. Concurrently, the American Right tirelessly argued in every forum that the nation’s (and world’s) economy almost never truly need major macroeconomic correction anyway. The “invisible hand” of the marketplace could be counted on to make all upsets temporary.

Relax, There’s Nothing to Worry About!”

Most people who thought about such things came to agree with Greenspan’s trust in the invisible hand, what with that long period of  stability and all; and  Allan  Greenspan, popular Federal Reserve Chairman for  many  years, was a strong figure who could be cited as agreeing with the “hands off” crowd to those who doubted. We were back to the good old days prior to 1929, when everyone “knew” that, though endless lternating booms and busts might be intrinsic to a free market economy, such an economy would always return to equilibrium at a robust level of economic activity in the end.

Then came 2007-2008!

The housing bubble collapsed, a bunch of “derivative” financial instruments based on it became valueless, and that was followed by a recession so deep it took the jobs of millions of us and scared the hell out of the rest. Certain banks and investment houses had become so big that just the prospect of their failure frightened wealthy people and other banks into withdrawing their funds from the investment market in droves.

What effect would the actual bankruptcy of those financial institutions have? Would investment of new capital in old and new businesses dry up permanently? The Bush administration concluded that those huge institutions had to be rescued from bankruptcy at a cost of hundreds of billions of public dollars in order to prevent economy-wide investment paralysis from happening.

Meanwhile, many economists and others began to use the old-fashioned word “Depression”, which in my 45 years of adult life I’ve never before heard opinion leaders dare to utter during any US recession.

Let’s Try Keynes!

A change of administration occurred, and with it came another way of looking at the problem: “Hey, President Obama and lots of economists then said, “The big banks have been saved, but capital is still frozen. And the figures show that this recession has already become worse than anything we’ve experienced since 1930! Can we take the chance of doing nothing more, and a second Great Depression developing, when we have another recovery tool we haven’t used yet? ”

(Recall again that, once it had started, the last Great Depression ended only after 11 years, when the extraordinarily stimulatory Second World War came along.)

Keynesian fiscal stimulation by injection of government money into the economy  — hence a LOT of government borrowing — followed, as the Obama administration set out to apply the Keynesian prescription.

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Here’s a short explanation of Keynesian stimulation along the same lines as the above, but written by an actual EXPERT:

http://www.californiachronicle.com/articles/view/92595

And here’s an excellent and thorough description of Keynes’ theories, their current applicability, etc.

http://en.wikipedia.org/wiki/2008%E2%80%932009_Keynesian_resurgence

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Upshot

The effort of the Obama administration to “fix” the US economy was not a mere panicky act of throwing money at the problem. It was done in accordance with one of the standard macroeconomic theories of this century. It was an effort to intervene in the economy at a time when our most recent market/economic crash has definitively demonstrated that the “leave the market alone no matter what” approach can lead to frightful chaos.

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As of July, 2010

The jury is still out at this writing as to whether the stimulation worked. Paul Krugman, prominent Keynsian economist and New York Times commentator, said at the time it was adopted that it was too small. As of this writing, it looks like stimulation worked to head off another Depression, but not to prevent a serious recession. Maybe Krugman was right.

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THE WAGES OF WEAKNESS II

21 11 2009

Some comments on my last post on “The Wages of Weakness”:

1.

The minor slights I reported in my last post were nothing compared to what I suspect most black people in the South experience! Those trivial events in my life are connected to the local virulent racism only in that they may have stemmed from it in some attenuated way, as I theorized in the last post.

But my little experiences do represent what I suspect is the most frequent FORM in which racism is experienced by its victims these days. Direct insult is now out. Violence is now out (except by cops). Firing at will, and quietly refusing to hire, are IN.

And the “inexplicable slight”, above all,  must happen every day. I would hate to be as hypersensitive as I, alas, am—and have to confront a world that contains so much scorn for folks like me.

2.

Nothing I experience in the way of inconvenience or occasional insult will deter me from pursuing my plan of avoiding driving—and the inevitable anxiety attacks that go with it.

When something seriously sucks, I believe it’s OK to avoid it. Millions of people have dramatically decided to avoid things that made them miserable or threatened to harm them during my lifetime.

The first group of people who did this that I remember were the Viet Nam War era draft dodgers. They were willing to go to Canada and live as foreigners for a lifetime — and in a country that’s COLD MOST OF THE TIME to boot — rather than die or suffer in any of a number of ugly ways. They didn’t believe any such suffering could be justified by the call to defend, not our nation, but our Empire.

I’m glad I personally got a high draft lottery number back in 1970. Viet Nam would have destroyed me (assuming I lived through it)….The only treatment they had for major depression in 1970 was electroshock, and it was not only traumatic by only episodically successful. I don’t think they had any treatment for major anxiety disorders at all.

3.

In the back of the mind of every old American man looms the ghost of John Wayne, exhorting him to perpetual toughness. I never had a shot at achieving that even when I was young. Now that I’m old, I look back sadly at my half a lifetime of struggling to be Waynian when I am by nature Barney Fifeian.

From now on I’m using to the full the amazing opportunity that age gives us to become no less and no more than what we truly are  — and in my case to get off the macho hook for good.





PHILOSOPHY WORKS !

2 11 2009

In the contemporary world (USA version) I wonder if the name

Søren Kierkegaard

is known by anyone any more, except by a few philosophy professors. And from what I hear of the state of American higher education these days, I think that even those professors may no longer be allowed to teach Kierkegaard’s work to anyone but philosophy graduate students.

But college was different 40 years ago, and difficult old philosophers were thought then to be worth undergraduates’ time, so I walked into the third meeting of my Existentialism class in the early spring of 1968 absolutely ignorant of philosophy and ripe to be snared by the mere first paragraph by Mr. K’s great book The Sickness Unto Death.

Søren Kierkegaard (1813-1855) was a philosopher with a twist–a pioneering analyst of despair whose description of the many varieties of that state later became, I believe, the source of one of the most familiar truisms of our present place and time:

Be yourself!

aka

High self esteem is good for you.

We didn’t know about “self-esteem” back in 1968. And if I had ever made enough progress in the first reading assignment for that class in  to discover the original progenitor of that self esteem concept lurking in The Sickness Unto Death I wouldn’t have understood it anyway. Mr. K’s description of the various kinds of sorrow that can come to one who does not accept himself* would have fallen on deaf ears for me then for one very simple reason—I couldn’t stand myself.

I had no self-esteem at all. In its place I had grandiosity. After a lifetime of abuse of various sorts, I saw myself as simply a kind of unwanted and inchoate mess….

…”but that’s OK”, I always thought back then, when I was forced to take notice of what an unsavory creature I seemed to be, “because I’m going TO DO GREAT THINGS SOMEDAY…”

…”because I’m SO SMART!”

Could there be any kind of person in the world better prepared to be stopped dead by the following gaudily incomprehensible  introductory sentence of The Sickness Unto Death?

A human being is a spirit. But what is spirit? Spirit is the self. But what is the self? The self is a relation that relates itself to itself or is the relation relating itself to itself in the relation.

Nope. Someone with vast intellectual pretensions constructed on a foundation of nothing, like I was then, was maybe never going to get past that sentence.

And I never did. I was the guy, after all, who was so smart that I could understand anything if I only put my mind to it! I exhausted myself pondering the meaning of K’s impenetrable introductory sentence and a few very abstract pages following it, and never read further into the book to discover the much more accessible, and very insightful, dissection of spiritual despair in all its varieties that was to be found there.

Too bad! Because it was information that I could have used, and at that time in fact desperately needed. I might even say that if I had absorbed what Kierkegaard had to say and realized how much it applied to me then, the experience might have changed the rest of  my life for the better.

So don’t  you be the same as I was! And don’t be the opposite kind of person, who yells “BORING!” and runs away in panic when confronted with anything “hard”, either!  Instead, take a look at this brief appreciation of Søren Kierkegaard:

http://happydays.blogs.nytimes.com/2009/10/28/kierkegaard-on-the-couch/?em

As for me, 25 years after that first abortive encounter I got out my old copy of The Sickness Unto Death and skipped the hard first part and read the perfectly accessible remainder.  The experience was instrumental in making me what I am now — very odd, and OK with that.

The desire to be some other self than one’s own sweet, inescapable one-and-only self wears many disguises, and Mr. K. describes them all. Some of them you wouldn’t guess in a million years.

Who knows? You might be wearing one of  those right now. Buy the book and see.

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*Kierkegaard wasn’t writing a self-help book. He was proselytizing. His purpose was to show that a human self, being partially a spiritual being, had to be “grounded” in God to avoid falling into despair. Without that connection, the self would be unstable, and would be forever pursuing things to complete it that could not complete it. Anyone who watches the antics of the powerful people of the earth for a while, as they display this “seeking” behavior in various forms on a huge scale, would have to agree. See, most recently, American investment bankers.





WHAT DOES DEPRESSION FEEL LIKE?

29 09 2009

If it’s the disease “major depression” it feels just like THIS:

http://anothernobody.wordpress.com/2009/05/02/more-badd-rantings-anti-depressants





LEARN ALL ABOUT WHAT MAKES OUR ECONOMY TICK—IN ONE POST

3 09 2009

LLLL

I know economics is “the dismal science”, but this man is such a good writer that the information slips into your brain with a minimum of pain:

http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=1&_r=1&hp

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The greatest thing I’ve learned over my 62 years of life is that if you think you’re totally right, you have just become wrong.

The above url leads to a clear description of how the immense demonstration of this truth which all of us have just lived through came to occur.

Check it out!





CUBICLE HELL

20 06 2009

Friday Night I Wrote This:

“As I left work (the last worker to leave, by chance), on my way to the door I passed through the gray and disorderly space left behind by people who do boring and/or irritating things for most of the hours and days of their lives. I felt great pity for us all. Cubicle dwellers are the modern equivalent of the millworkers who sweated their lives away for peanuts a hundred years ago.

I’ll never understand how they stand it. I’ll never understand why they don’t rebel, like the more educated portion of the people of Iran are doing now. Working Americans live in “the richest country on earth” (as our media propagandizers never tire of telling us), and these same workers watch on their TVs every night those Americans not incarcerated like them fling money around like water for fun, and destroy peoples’ lives in the process. They accept it all.

I guess the Poor have always done this. My fellow Poor, modern American variety, are kind and friendly to each other as they serve out their life sentences in their little gray cubicles. Maybe they make a statement of a kind by doing that.

But I think it’s more likely that “the most social animals on earth” (as I have heard humans called), simply accept whatever pecking order they live in as natural, without ever thinking about it. They only rebel when society become so oppressive that they can’t kid themselves any more that its structure is fair.”

On Saturday, I Think I Know

How They Stand It:

1. Most go home to families, unlike me, and forget the day’s work as soon as they enter their front doors. During the day, when they’re stuck at work, the knowledge that they have no choice but to go on enduring the boredom and irritation if they and their loved ones are to survive economically keeps them numbed.

2. Many never saw any other way of life growing up, so they never question their working conditions at all.

3. A lot never question the standard American ideology: The USA is “The Greatest Country on Earth.” And we alone have “Freedom”, and “the American Dream.” Moreover, the USA is totally a meritocracy, so we all have the “Opportunity to Get Ahead” and realize that dream.

a. So those whose jobs offer good prospects of advancement know that they are on the right track in doing their boring work, and they buckle down!

b. Ditto those whose bosses have DECEIVED them into thinking that their jobs have good prospects of advancement.

c. And the rest have to conclude, if they’re still sitting in little cells shuffling papers, then it must be their own fault, and they should just shut up and endure it.

4. Some like the work! (I even like a small part of mine.)

5. Some are not smart enough to do any better-paid work, and they know it.

6. A lot know that they are smarter than their work, but also know that for various other, apparently-unchangeable reasons they CAN’T do any better-paid work.

a. Of these, a minority (unlike me) are temperamentally able to accept and live with perpetual boredom and wasted brain power in return for economic survival.

b. And the rest aren’t, so they suffer each and every day of their working lives.

7. And some, of course, are simply people born with a sunny temperament who are not bothered by much of anything.

My personal problem is that I belong in the 6b group.

The problem of America, IMHO, lies in groups 2 and 3. In their thoroughly-propagandized heads, they are still living under the ancient “root hog or die” economic regime that now prevails only in underdeveloped countries.

These group 2 and 3 folks, who I think make up the majority of us, do as they’ve been taught to do in order to live in a world of perpetual scarcity. They ignore the vast sums generated by this society and then squandered on unneeded military junk, and they also dutifully refrain from envying or coveting the vast wealth of their betters.

No “spread the wealth” for them!

So, for a lot of us, no hope of escape from drudgery either.





REVOLUTION NEVER COMES WITH A WARNING

24 05 2009

LLLLLLLLLLLL

by Michael Franti and Spearhead

Here’s the YouTube video:

http://www.youtube.com/watch?v=Q1gIOqJzCDw

(which takes this very strong rap and visualizes it perfectly. But don’t watch it if you’re a right winger!)

Now the Lyrics:

A revolution never come with a warning

A revolution never sends you an omen

A revolution just arrive like the morning

Ring the alarm we come to wake up the snoring

They tellin’ you to never worry about the future

They tellin’ you to never worry about the torture

They tellin’ you that you’ll never see the horror

Spend it all today and we will bill you tomorrow

Three piece suits and bank accounts in Bahamas

Wall street crime will never send you to the slammer

Tell all the children in the arms of their mammas

The F-15 is a homicidal bomber

TV commercials for a popping pill culture

Drug companies circling like a vulture

An Iraqi baby with a G.I. Joe father

Ten years from now is anybody gonna bother?

Yell Fire, yo, yo, yo

Here we come here we come

Fire, yo, yo , yo, yo

Revolution a comin’

Fire, yo, yo, yo, yo

Fire, yo, yo, yo, yo

Everyone addicted to the same nicotine

Everyone addicted to the same gasoline

Everyone addicted to a Technicolor screen

Everybody tryin’ to get their hands on the same green

From the banks of the river to the banks of the greedy

All of the riches taken back by the needy

We come from the country and we come from the city

You play us on the record, you can play us on the CD

All the shit you’ve given us is fertilizer

The seeds that we planted you can never brutalize them

Tell the corporation they can never globalize it

Like Peter Tosh said Legalize it

Girls and boys hear the bass and treble

Rumble in the speakers and it make you wanna rebel

Throw your hands up, take it to another level

And you can never, ever, ever make a deal with the devil

Yell Fire, yo, yo, yo

Here we come here we come

Fire, yo, yo, yo, yo

Revolution a comin’

Fire, yo, yo, yo, yo

Fire, yo, yo, yo, yo

Kind of reminds me of Alan Ginsberg’s poem Howl! Or the leftest ferment of the 1960s. But none of that did any good. Nothing changes. Did the serfs ever manage to revolt against the feudal lords?