Archive for April 8th, 2013
Automation is not the great job killer, shipping jobs overseas is the great job killer and tax base destroyer. That’s why the deficit is so great.
Posted in corruption, income redistribution, Politics, the Rigged Game, Uncategorized, wealth redistribution, tagged Affordable Care Act, David Stockman, Franklin Delano Roosevelt, Keynesian Economics, Trans Pacific Partnership (TPP), Wall Street on Jpm4000000pmMon, 08 Apr 2013 14:09:20 +000013 10, 2010| Leave a Comment »
Former Reagan Budget Director David Stockman wrote an op-ed in the New York Times arguing that it is “sundown in America.” His main argument is that government intervention in the economy, Keynesian economics, spiraling debt, and political corruption have destroyed the United States, or rather, has come very close to doing so.
“The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is.” I can’t disagree with this.
However, while I can’t completely disagree with Stockman on much of his analysis, it is simplistic and fraught with intellectual peril, of which he seems to be oblivious. For example, he blames the New Deal for much of what ails the USA. Poppycock! Stockman has no clue that the New Deal came about because worldwide capitalism had collapsed and was collapsing even more. President Roosevelt enacted the New Deal to rescue the system, and he did. However, for Stockman, rescuing the system was the worst thing anybody could have done.
When FDR became president in March 1933, the official unemployment rate was 25.3 percent and getting worse. What did Stockman expect FDR to do? Wait for everybody to be unemployed? The economic system, which is radically different than what many people think it is, had self-destructed. Like a lot things, Stockman is clueless in some (but not all) of his details even if he might be correct that it is Sundown in the USA, at least for the 99 percent.
Let me give you an example. In Stockman’s quotes below, I show in parenthesis what he doesn’t understand:
“Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold, to $3.2 trillion from $500 billion. Yet during that stretch, economic output has grown by an average of 1.7 percent a year, the slowest since the Civil War (see A through D below); real business investment has crawled forward at only 0.8 percent per year (A. Because demand is slack due to the massive redistribution of income over the last thirty-three years from the 99 to the 1 percent); and the payroll job count has crept up at a negligible 0.1 percent annually (See A above. BTW, the 99 percent earn about 68 of the total national income, down from 92-93 percent thirty-three years ago). Real median family income growth has dropped 8 percent (B. Because their income is being redistributed to the 1 percent), and the number of full-time middle class jobs, 6 percent (C. Because millions of jobs a year are being shipped overseas and the difference between the new lower wages there and the old higher wages here are shoveled into the hip pockets of the 1 percent via higher dividends, share prices and record corporate profits. Also, see B above). The real net worth of the “bottom” 90 percent has dropped by one-fourth (D. Housing prices have dropped, millions are underwater on their mortgages and Wall Street is the culprit that engineered the whole thing, which Stockman does mention is his op-ed). The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans (The reasons why are A, B, C, and D).
Stockman rolls on and on. He doesn’t mention income redistribution over the last 33 years as a culprit for all the crap he says has pushed the US to the cusp of sundown. He doesn’t mention the tens of millions of jobs that have been shipped overseas (See the graph above), how the 1 percent have encouraged immigration as a means to lower wage rates. He doesn’t mention how the Immigration Reform Act of 1986 dropped real wage rates in this nation for eleven years afterwards. He doesn’t mention how comprehensive immigration reform will lower wage rates even further, and along with the Trans Pacific Partnership (TPP), will likely lower wages of the 99 percent even further. He doesn’t the TPP is being crafted in secret with the aid of 600 corporate lobbyists and that the primary purpose of the Act is to circumvent the US Constitution for the 99 percent. He doesn’t mention the Affordable Care Act was written by health insurance executives, or that the Monsanto Protection Act was written by representatives of Monsanto. Stockman doesn’t mention a lot of things, except entitlements which aren’t such things, such as the Social Security Insurance Trust Fund.
On the other hand, he does say a lot of things, and many of them are worth reading whether you agree with him or not. Click on the link below for the complete op-ed. (more…)