Synthesis Found: Governmentalism.

In “Synthesis Lost” the honorable Paul Krugman courageously ponders the unthinkable:“you have to ask why, if markets are imperfect enough to generate the massive waste we’ve seen since 2008, we should believe that they get everything else right. I’ve always considered myself a free-market Keynesian — basically, a believer in Samuelson’s synthesis. But I’m far less sure of that position than I used to be.

Indeed, the economic beliefs that built-up civilization, East or West, rested on a completely different notion: the irreplaceable genius of government funded & commissioned Public Works.

Pont Du Gard: Not built By The Free Market

Pont Du Gard: Not built By The Free Market

The aqueduct above brought water to Nimes (Latin Nemausus, local Celtic god).

The first three aqueducts built into Rome, about 23 centuries ago, later carried 400,000 tons of water into the city, each day

The first one, the Aqua Appia (312 BCE) was one of two major public projects commissioned by the censor Appius Claudius Caecus; the other was a strategic, super strong and super durable road between Rome and Capua, way south.

Eleven (11) giant public aqueducts served Rome at her peak, some piercing mountains through tunnels. Although extremely expensive to build and operate, the water the aqueducts brought to the public was free. So were the uncountable baths found in all Roman cities (many had curative properties… Thus, RomanCare was free!). 

Rome was not called a Republic for no good reason.

That Republic worked as long as the law limiting wealth absolutely was enforced; as I have argued, globalization was the undoing of the law first, and the republic, next. A vivid lesson for today, when the situation is pretty much the same.

Don’t try to explain the relevance of Public Works to the economists who helped bring the present Greater Depression, slowly morphing into a Great Degeneration. They will look around with boiled cod eyes.

In “Colbert Good, Keynes Not So Smart” and in “To Save The World, Please default!” I have attacked Keynes as one of the creator of the vengeful Nazi mental system and a promoter of the powerlessness of the plebs (I may fire another blast against him, and his admirers some day soon). “Keynes” does not deserve to be honored in economics. All the more as the correct parts of “Keynesianism” have been known ever since there are serious governments, and they erect pyramids. 

Here is a proof:

Grand Canals Of China: Built By Government

Grand Canals Of China: Built By Government

The Grand Canal Hangzhou-Beijing, 1,800 kilometers long,  was built from 581 BCE to 1290 CE (when the Mongols/Yuan finished an elevated section to reach Beijing, using locks, the first summit level canal in the world). At some point during the Sui dynasty, 14 centuries ago, over a 6 year period, 3 million worked on the Grand Canal.

Looking at this, one understands better why China has built a gigantic Very High Speed Train network. It’s the very Chinese thing to do.

The Middle Kingdom found, all by itself, just as Egypt, the Middle East, Persia, Roma, and Europe (starting with Francia and the re-emerged Italian Republics), that only public works can achieve certain tasks. The most important tasks.

Grand Canal: Public Utility For 26 Centuries.

Grand Canal: Public Utility For 26 Centuries.

So much for the concept “Keynes”. Now for eliminating the so-called “free market”, as a most fundamental concept. (In a follow-up essay, I will explain what allows the free market in the first place,”governmentalism“).

There is an entire religion around the free market. It is immodestly compared to god, complete with his ”invisible hand“. Adam Smith, a student of the French physiocrats, had mentioned the “invisible hand” no more than a handful of times in his entire works. Wall Street made a cult of these two words… Yet, Adam Smith was a government official, and no rabid free marketer. Some of the French economists had previously stridently, and correctly, called for freeing the markets… but for excellent reasons. However:

***

THERE IS NO REALLY FREE MARKET:

This is a basic, but fundamental observation. The free market is a carefully contrived illusion, a myth. Plutocrats have recently exploited that myth, to make their hands invisible as they manipulate society into submission. (That’s why the plutocrats want us all to worship the ‘invisible hand’, so that we will worship their invisible influence too!)

As long as there were ferocious Marxists all over to bark naïvely about “capitalism”, plutocrats had to stay honest enough to prevent a critical mass of critics to not go over to the other side. But, when Stalinism collapsed, the ex-USSR embraced the Harvard version of plutocracy (not as bad as Hitler’s, but still pretty bad). On the other side of the Amur, cynical Chinese plutocrats embraced all capitalists willing to change from their pesky, expensive workers at home. Soon enough, the German Socialist Chancellor introduced tough reforms of the German welfare state, making it distinctly less comfy… And it, literally, worked!

The leftists, the progressives, the socialists, the liberals and the humanitarians were thrown in total confusion and spastic despondency by this collapse of the idols. Still are. (Hence Obama’s feverish clinging to Warren Buffet and Summers).

All the more as a heavy propaganda from the plutocrats, pouncing for the kill, insisted that the ‘free market’, namely themselves, was everything. In a word: god.

Yet. There always was no free market, and there will never be any free market. The free market is a playground set-up by the government, always. That’s done through various laws and regulations, and the exchange of personnel.

That became very clear in 2008. The ex-chairman of Goldman Sachs, Sec. of Treasury that G.W. Bush and Barack Obama had left in total control, Hank Paulson, went on his knees to beg Nancy Pelosi, a democrat in control of Congress, for nearly a trillion dollars to save all the largest banks of Wall Street (we are now, with “Quantitative Easing”, and counting a similar aid in Europe, well above ten trillions!).

Pelosi gave the People’s money to Paulson.

Yet that was not hers to give. In a democracy, people would have voted to see if they wanted all their money to go to the richest owners in the land.

Left unsaid was the fact that the richest people in the land had lost all their money to the… richest people in the land. To themselves! It’s a case of insurance fraud: plutocrats stole the loot, and then asked the people to pay for it.

Pelosi gave all the People’s money to the richest, because she is an immensely rich woman, and got there by being extremely kind to families controlling assets 100 times (of more) her own wealth. By being kinder than ever, to the powers that be, no doubt her family will prosper, further and better than it would otherwise.

The entanglement of plutocracy and supposedly democratic politics is a worldwide phenomenon. For example Pompidou, director of bank Rothschild in France, was selected as Prime Minister by president De Gaulle, and then later succeeded him. In Britain, past Prime Ministers Thatcher, Major and Blair, were handsomely rewarded, no doubt to encourage their successors to be just as kind to plutocrats. Clinton, a simple man driven by basic instincts, was little more than the puppet of Goldman-Sachs’ Robert Rubin, and then his assistants Summers and Geithner (all of them plutocratically connected, just as Susan Rice, a fixture of plutocracy under Clinton, now Obama’s National Security Adviser.).

In the Obama administration, most personnel with a say in economics are young multi-millionaires shuttling back and forth between White House, giant banks and Wall Street; this corruption is even considered an objective criterion of seriousness. It is reproached loud and clear to Janet Yellen, the very qualified, and prophetically accurate, Vice President of the Fed,  who ought to be the obvious successor to Bernanke, to “lack experience” at being such a corrupt double dipper!

There is no such a thing as an economy independent of the government. The government rules. The real question is who is ruling the government. (In the USA, the likes of Susan Rice rule, for now more than 20 years, in her case; she was only elected by the plutocracy, but that’s good enough; Summers, just as unelected, was in the White House already 32 years ago…).

In a democracy, We the People rule. In a plutocracy, an oligarchy of admirers of the Dark Side rules, more or less invisibly. That oligarchy will use whatever means to stay in power, and their impudence knows no bounds. As Anne of Austria, queen and regent of France, sneered to the head of the Paris Parliament during the Fronde:“Do you believe this is a republic?”

Question, Ms Anne of Austria:”When and how did it stop being republic?” Answer: well, insensibly. Just the way a frog is being boiled by rising the temperature slowly. And that is exactly what today’s plutocrats, who hold the government, are doing.

Banks using leverage insured by the government are not private, but agents of the state. Indeed, they could not exist without that insurance and implicit back-up (“the lender of last resort”). They claim to be private, so that the few individuals who manage and “own” them can grab what are, truly public funds and public profits.

Jamie Dimon, for example, is a rogue agent of the private-public financial system. The government gave him the huge bank Bears-Sterns in the famous “Jamie deal”.

A number of private mercenaries feeding at the teat of the Public are the dark lords of that system. While of course denying that this teat is a teat, or has any milk, or value.

(That’s why plutocrats love Summers; because he is so dark; the richest banks have been given eight trillion dollars, in the USA alone; the problem Summers will have to solve is how they keep most of that while making it appear otherwise; the trick of paying TARP with QE may not work again…)

There is no such a thing as an independent financial system when the fractional reserve system is used. Finance is an instrument of the government, at least proportional to the leverage used. For example with 3% reserve, one can view a bank as 97% government (and 3% private!).

Why? Because if there was no governmental back-up, people who have deposited money in the bank, understanding that the bank has lent 30 times the money it really has, would rush to recover their money. In hours, the bank would have zero reserve, and then would be bank-rupt.

Hence a new synthesis has to be founded, with these truths made central. I call it “governmentalism”.

Grand Canal: No Mountain Is High Enough To Stop The Government

Grand Canal: No Mountain Is High Enough To Stop The Government

It’s nothing new.

***

Patrice Ayme

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35 Responses to “Synthesis Found: Governmentalism.”

  1. Mike Borgman Says:

    Hi Patrice,

    Every person in this country needs to know this:

    THERE IS NO REALLY FREE MARKET:
    This is a basic, but fundamental observation. The free market is a carefully contrived illusion, a myth. Plutocrats have recently exploited that myth, to make their hands invisible as they manipulate society into submission. (That’s why the plutocrats want us all to worship the ‘invisible hand’, so that we will worship their invisible influence too!)

    • Patrice Ayme Says:

      Thanks Mike!
      There is no public central bank either (Jamie Dimon sits on the Fed, a representation of T Rex watching over a herd of tapirs). And so on. It’s rigged, and time for a different rigging…
      PA

      • pshakkottai Says:

        Hi Patrice:
        The CUMULATIVE sum of all annual (deficits – net_imports ) from years 0
        to N = net worth of all household and non_profits at year N = gross
        national wealth at Year N = about 70 trillion dollars at present, year 0
        being 1776 when USA was born.

        http://pshakkottai.wordpress.com/2012/07/31/cumulative-deficit-vs-household-net-worth/

        (deficit- net import) is the creator of wealth.

        So the value of a dollar is the national wealth divided by 70 trillion,
        the wealth being all the buildings, all the roads, all the institutions,
        all the industry, all the skills, all the know-how,…

        which means education(know how) has the most to contribute to wealth.

        REAL INFLATION ( a loss of value) occurs only when the nation loses know-how (and natural resources.)

        Why is it so? [deficits – net_imports = private savings], is an accounting identity, that’s why!

        Education (and deficits) creates real wealth.
        So where is the free market? What is it? For a monetary sovereign it is just a myth.

        Partha

        • Patrice Ayme Says:

          Dear Partha: I guess, when you talk about “deficit”, you mean “trade deficit”.

          Debt is terrible as long as the lender has a bigger gun, and is capable and willing, to terrifiesy the debtor with it. Otherwise, it’s like spitting in a volcano.

          France gave birth to the USA, and not just militarily. The debt is immense. However…

          Militarily, Louis XVI, a naïve young man who did not want to be king, spent, 6 trillion (constant) dollars paying the French army and navy to go fight Britain.. The amount was kept secret, to minimize the French invasion of the British colony. The British army, encircled by land and by sea, capitulated at Yorktown. The French won. The USA had promised reimbursement. However, it did not pay a dime. The king lost his head. The USA prospered.
          PA

          • pshakkottai Says:

            I mean the normal deficit meaning deficit minus taxes. In MMT deficits are good (and taxes are bad and unnecessary).
            (deficit- net import) is the creator of wealth. For a creator of money deficits are relatively unconstrained. In the old days money was created by the plutocrats which led to all sorts of problems Like the compound interest (also there right now). USA made do with green backs during Lincoln’s time with no borrowing. Too bad Louis lost his head even after winning the war.
            Partha

  2. EugenR Says:

    Dear Patrice, The major and very first political-economic question is not if the best system to coordinate the economy is the markets or the politically motivated regulations. Also the question is not who runs the economy the private entities, or the political entity. Both this systems and instruments have their advantages and defects.
    Just to mention the very first and most important once;
    Markets are absolutely unable to cope with long term problems, viz. their failure to handle the environment catastrophe overwhelming and endangering the human existence. On the other hand the governments, that proved again and again to be totally incompetent to manage efficiently an economic entity. But even if trying to act as regulator and not as direct manager, because of its character centralized management system, concentrating the decision process in very few hand, at the end of the day fail to recognize the difference between the issues that serve the wide general public and those that serve interests of particular group of people. At certain point the politically chosen government will always choose after certain period of establishing its rule the particular interest upon the general one.
    Yet these major defects of the two systems just cover the real issue of both economic systems have difficulty to cope with, which is; “How to create a system of continuous self destruction and rebirth, without to fall into too big calamities”. While the market economy claims that it has composed in its system the law of orderly default, the politically managed system claims that tight regulation and supervision is the tool to ensure clean and smooth continuous revival. Yet we all know both systems brought the economy many times to absolute collapse. The politically managed system in 1992 and the market system in 1939 and evidently again in 2008. (We still don’t know when and how will this list crisis end up).
    When the system shows signs of weakness, the usual response is that it is not implemented rigorously enough. I would prefer if the signs of weakness would be checked inwardly in the system and not outwardly in rejecting dogmatically any combination of the two systems. Some may say the market economy failed because it didn’t implement rigorously its principles, by introducing government regulations it is stuck to a dogma religiously.
    Since the every political system is a centralized system with few on top of the political hierarchy, which is truth in every place on earth (except maybe of the cantonised Switzerland with all the referendums, that doesn’t need real governance, since its economy is based on bank deposits of thieves, burglars and other kind of scoundrels,) it shouldn’t surprise us that the politicians tend to associate with the few at the top of the economic hierarchy. There was not found other cure to this phenomena except of centralizing also the economic system, with all the grave consequences it necessarily brings.
    Dear Patrice, if your blog could use its intellectual capacity and find cure to this negative phenomena of this negative political and economic interweaving leadership, without to create even a more monstrous despotic econ-political system, it could be a great help to the humanity.

    As to the subject of grievances of the centrally managed economy i would suggest to read chapter 6 of my book.

    https://rodeneugen.wordpress.com/2013/04/10/1801/

    • Patrice Ayme Says:

      Dear Eugen: Let me reassure you, I’m not advocating Sovietism. You assume the government rests in only a few hands. Superficially, this is how China was run, but often, not really: there was a huge mandarin class, that served the decisions to be taken by the government.

      The Grand Canal was built for 18 centuries, one year per kilometer. It was mostly the fruit of CORRECT THINKING.

      It was also not the sort of work that was feasible in any sense by a peculiar free market agent trying to earn more money from it that it put in, as the scales, in number of workers involved (dozens of millions), time (26 centuries, as the canal has to be kept in functioning order), and distance, were, and still are, astronomical.

      As I tried to explain, the free market is a playground with toys and toddlers. The parents are (or ought to be) governing. In the modern world, it’s We the People themselves, and not some guy taking himself for an irreplaceable autocrat. (Think about it: the president of the USA has a special fleet of unique helicopters, 28 of them, of a special type, made just for him, because he is the Son of Heaven! I don’t think president Washington would have been amused…)

      You are not fair to Switzerland.The wealth of Switzerland is greatly due to its direct democracy. Total democracy allows it to take smart decisions. At least in the last ten years. Before that, OK, it was nasty… But even more so Sweden.

      I am not advocating central planning per se, otherwise I would not call it “governmentalism”.”Governmentalism” is better, the more direct the democracy, and that’s the exact opposite of central planning. (Once again, consider switzerland1 … And the USA itself is quite a bit decentralized. Silicon Valley works, because it’s 5,000 kilometers from Washington DC. It’s to a great extent, self governed.

      San Francisco, in recent years, has taken local decisions to make itself more welcoming to high tech. this is local, swiss style… The local economy of SF invested a billion dollars into a biotech pole… and made poorer parts of SF appropriate to high tech workers and businesses… That’s governmentalism at its best.

      So is the fact the government of Switzerland has imposed 20% bank reserves (the USA is rather around 3%…).
      PA

    • pshakkottai Says:

      Hi Eugen:
      “How to create a system of continuous self destruction and rebirth, without to fall into too big calamities”. While the market economy claims that it has composed in its system the law of orderly default, the politically managed system claims that tight regulation and supervision is the tool to ensure clean and smooth continuous revival.
      Why is a continuous destruction necessary for a monetary sovereign? All a govt needs to do is to create enough deficits. It is not a critical function. An example is India creating metro rail.
      Partha

      • EugenR Says:

        Sorry sir, don’t get the connection. Every being and even more every system is going through aging (even the Universe), it is the second low of thermodynamics called entropy. Governments deficit when exaggerated will bring to such a destruction, before something new is built. It can be in form of hyperinflation, social or political unrest, because of uncontrolled intervention of the government in economy and uncontrolled shift in distribution of the wealth, etc.
        When this process of aging brings deadlock to an entity, or to a system, it has to be destroyed to create space to the new. Yes this process is very cruel when it happens in economy or in human societies, but to me it seems almost unpreventable, (unless the human knowledge will reach the level of divinity). The first step to try to avoid the necessity of such a destruction is to be aware of it.
        By the way to your opinion is India in the stage of aging society? Probably not.
        You can read about it in my blog; http://rodeneugen.wordpress.com/category/economics/

        • pshakkottai Says:

          Hi Eugene R: I believe that aging is not the most significant variable.
          India has a relatively young population. This requires more educational expense, more infrastructure and less medical expense. Is any of this unaffordable for a money creator?
          USA can afford all this too and more easily by creating money as required.

          http://mythfighter.com/2013/08/26/what-of-the-children-the-death-of-a-nation/

          The problem with USA is a deliberate misunderstanding of the economy and outright swindling by the plutocracy.

          Nine Steps to Prosperity:
          1. Eliminate FICA (Click here)
          2. Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
          3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
          4. Free education (including post-grad) for everyone. Click here
          5. Salary for attending school (Click here)
          6. Eliminate corporate taxes (Click here)
          7. Increase the standard income tax deduction annually
          8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
          10. Gradually remove federal taxation all together.

  3. Paul Handover Says:

    Just started into your latest essay, Patrice, before getting the day under way intervened. But can’t wait to read it in full later on!

    • Patrice Ayme Says:

      Dear Paul: I am waiting for your fedback, which is always full of the common sense of the businessman, seaman and world traveller who has seen and felt a lot!
      PA

  4. EugenR Says:

    Since i grew up in a communistic country the consequences of centrally managed economy on the life of the citizens is my element. so let me share with you my impressions as they are reflected in my book;

    http://www.amazon.com/What-happens-WORLD-ECONOMY-ebook/dp/B00COJIQ5G/ref=sr_1_1?ie=UTF8&qid=1376490618&sr=8-1&keywords=what+happens+to+the+world+economy+when+you

    Here we come back to our theory of the collapse of the centrally managed communist economy. One of the basic production management principles in the market economy is known as “Just in Time”. There are professionals who claim that Japanese production efficiency owes much to this production principle.

    To explain very briefly the meaning of “Just in Time”: the idea is that the most efficient and cost-effective production system is when the inventory of products in production and final products is reduced to a minimum. To have a large inventory is very costly; the goods may be stolen, damaged or may deteriorate, and above all they may become outdated and unwanted, as happened to the CO2 soda chargers, but also to last season’s fashion clothing. Obviously, if in storage for too long these products lose all or most their value…….

    …..In a centrally managed economy the production management system is exactly the opposite of the “just in time” system. Some products are produced even if there is no demand for them, while products in high demand are stored in the houses of the consumers in their final form, waiting for the right time to be used, if ever. Sometimes the right time comes only after months or years, and sometimes it never comes. This is obviously very contrary to the ideal way of keeping inventory in the form of raw material. Interestingly, the jargon in the communist countries perfectly reflected this reality. In a communist country, if a citizen passed a queue of people who had heard rumors that this particular shop would be getting a delivery of some scarce product, he would always stop and ask them, “What are they giving out here today?”. He would never ask, “What are they selling here today?” The unrealistically low price of the scarce product makes it look as if it is virtually free of charge in the eyes of the purchaser.

    One time when I was visiting a communist country, I noticed queues for the most basic food products, like vegetables or meat. Talking to a local friend I asked him, “How do you survive under such conditions?” At first he looked at me with surprise and then chuckled as he opened his cupboards. They were full of home-made smoked sausages, smoked meat, pickles and jams, and then my friend showed me his refrigerator stuffed with frozen products. All this is exactly the opposite of the production system of “just in time”. He kept all the final products in the most expensive long-term storage place, his home. I would add that this friend of mine, a professor of physics, used to focus his extraordinary technical skills on improving the sausage machine he had made out of empty tins.

    • Patrice Ayme Says:

      dear Eugen: In a real democracy, there is no centrally managed economy. As it is, the USA has a centrally managed economy. So does the EU. As i tried to explain, the banks are part of said centralization. The power of Switzerland, as it is now, is decentralization, and big decisions being taken (mostly) by referenda (although the EU over-rules much, only what’s not really atrocious goes through, thanks to nearly 600 treaties between CH and EU)…
      OK, got to run right now, so I will read you more carefully later…
      PA

  5. Paul Handover Says:

    Not being an economist or even particularly knowledgeable about economics, at that level I struggled with the essay. But the essence of the argument is very clear and, for the first time in my life (I’m 69!!) I understand the true nature of the role of Government in a democratic society. It strikes me as almost identical to the true role of an entrepreneur within a business.

    That is to hold the vision of the ‘enterprise’, to fund and build the architecture of the enterprise to maximise success, and to inspire all those who work in the enterprise to do of their best.

    The laying down of key infrastructures in a country is equally valid: Education; Health; Transport; Technology; Core research; and more, I don’t doubt.

    Then one looks around at countries and their governments across much of the world and how they ‘run’ their country and one is truly gob-smacked; to use a good old British term!

    Again and again, that silly (may be not so silly!) joke comes to mind, “Why has Planet Earth not been visited by aliens from another world?” Answer: “Because they have seen no signs of intelligent life!”

    Take this recent item in Naked Capitalism: Why is Obama So Keen to Appoint Larry Summers to the Fed?

    Read here: http://www.nakedcapitalism.com/2013/08/why-is-obama-so-keen-to-appoint-larry-summers-to-the-fed.html

    Have no answers. But have these questions: How does it revert to a fairer, more democratic society?; Can it be done without significant levels of social unrest, with all that is implied by aforementioned social unrest?

    And this question above all: Given the sounds of approaching galloping hooves from such ‘challenges’ as loss of drinking water, climate instability, terrible unemployment levels, increasing social stratification, to name but a few, how is it going to play out over the next 5 to 10 years?

    (Now where did I put those candles?)

    • Patrice Ayme Says:

      Dear Paul: Obama and company remind me of Louis XV’s famous quip:”Apres moi, le deluge!” (After me, the flood!)

      I think your analogy between the government and an antrepreneur is to the point, it’s perfect. The government is an entrepreneur who ought not to have to worry about short term profits. This actually shows why “representative” democracy does not work: as the “representatives” worry about re-election (that their “jo”), they are not obsessed about the long term profits.

      This is also why real democracy is superior: when “We the People” lead, hopefully “We the People” is only thinking aboout long term profit (when properly motivated by a small professional political class as found in Switzerland, and other institutional brakes such as independent supreme and constitutional courts, meta-national governance such as UNESCO, the UN, WHO, WTO, even NATO, and NGOs, etc.)

      I will look at the Naked Capitalism piece you linked. My own explanation about Summers’ envy is double-layered:1) Obama has been told to pick him up by his bosses. Hey, he wants to charge more than Clinton per lecture in three years. Hillary charges 200,000 dollars/hour. Most expansive w… in the world? (let me suggest a new song for the Stones:”Who wants yesterday’s whore? Nobodyyyy in the woooo…ooorrld!”)

      2) The bosses know that Yellen will leverage the fact the banks (in the USA alone) have to regurgitate 8 TRILLION dollars (half of GDP). Summers will insure they don’t have to. There was an interview of Yellen, the Fed VP, in the WSJ, in the last two days saying that she feels ever more like cracking down on the banks.
      PA

    • Patrice Ayme Says:

      I read the “Naked Capitalism” opinion piece. Very interesting. I do not deny the sexism. They brandish the reason I gave, close, but not really. What they explictly said, as I did, is that he will follow the Clinton coruption model, lectures and (tax free, big power yielding) foundation. Actually they don’t mention the 8 trillions. If Summers is in charge, and will be maybe for decades after Obama is gone and Rand Paul is president, Obama’s legacy will survive, and he will be honored for it. By the powers that be.
      PA

    • pshakkottai Says:

      I have blogged this before.India is a role model for democracies.
      The civil servant can be a “strong hand of careful wisdom”. The framework is where the wisdom resides. I give this using the example of India with a better constitution.
      India has a better government with “socialism” and “fraternity” added and “pursuit of happiness” deleted. I copy the preamble from the wiki:
      WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:
      JUSTICE, social, economic and political;
      LIBERTY of thought, expression, belief, faith and worship;
      EQUALITY of status and of opportunity;
      and to promote among them all
      FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;
      IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.

      http://en.wikipedia.org/w/index.php?title=File:Preamble_to_Constitution_of_India.pdf&page=1

      India supports the commons well, with low taxes to the agriculture sector, free university education, rural employment for infrastructure development, funding for science and technology development etc. The central bank, RBI was nationalized in the year 1949 and combines the treasury and federal reserve, is owned by the govt and operates as a bankers bank for all state banks (owned by the individual states). Its banking is mostly government owned and operated by well qualified civil servants (from the Indian Administrative Service) and the plutocracy is kept away. Letting banks be private is a disaster because it gives money creation power to the wealthy which leads to corruption of the government. There are no too-big-to-fail banks in India.
      Railways, oil and gas, National Airlines, post and telegraph, Ship building, Steel Industry are government owned. There are also many private airlines. Private enterprise is not discouraged but anything related to mineral wealth is owned by the government.
      The treasury and fed are combined into a central bank and money creation is not restricted by “debt limits”. It offers T bills for sale but is not required to do so. It is left to the banking department. Projects approved for funding from various ministries are directly funded by the central bank. Commercial banks are restricted to support the commons:
      Banks are mandatory required to keep 24% of their deposits in the form of government securities.
      Banks are required to lend to the priority sectors to the extent of 40% of their advances.
      As per the CIA World Fact-book, in 2010, India ranks 49th in the world, with respect to the public debt, with a total of 51.90% of GDP. India must know Modern Monetary Theory just like Japan!
      There are many parties and proportional representation in elections. In general, coalitions govern better than a two party bought-and- paid- for government as in USA. In the lower house of the parliament, 33% is reserved for women( a proposal not finally voted on), 50% for men and the rest for socially backward classes and tribes. There are no lobbies but only selected (by peer review) committees and ad hoc committees to assist in policy making. There is no filibuster. Money matters are formulated by the lower house as here and the upper house has two weeks to consider changes. If nothing happens in that time the bill passes.
      The idea “government is your enemy” will never fly in India.
      The wealth inequality in India is similar to that of Canada and Australia. Of course, India is much poorer than western democracies but is doing the right things for the future of the country. The corruption in India is small scale and is not hyper-scale as here, approved by the Supreme court that corporations are people and money is free speech.
      India has no plutocracy and very little private money creation
      India has no state income tax.
      India has No lobbying.

  6. Lovell Says:

    Dear Patrice,
    Thanks for the info snippet about Pompidou being a protege of the Rothschilds. Current crop of Wall Street criminals seem to also aspire to at least approximate the wealth and the power and the glory attributed to the Rothschild dynasty which, central to its money making scam, co-opted the monetary power of states and governments around the world.

    • Patrice Ayme Says:

      Dear Lovell: the Pompidou story is all the more remarkable as he was just a French professor in a high school. No mathematics, financial, or economics background for him. Then, mysteriously, he is hired in 1953 by Guy de Rothschild to work at Banque Rothschild. In 1956, he was appointed the bank’s general manager, a position he held until 1962.

      Then he reigned over France (first below De Gaulle) for 12 years, until his death from a horrible cancer. As I often mentionned, president Jackson, one of the fiercest men in history, absolutely hated the Rothschilds, and blocked their entry in the USA, or the entry of the centralized fractional reserve system they represented. At the time the Rothschild crowed that they were the ones really reigning in Europe. There is no doubt that Jackson did good, and that the rise of the USA was greatly helped by avoiding the frac (frack?) system incarnated by the Rothschild, who had a clamp on the UK (or France).

      In turn, this sort of mixed up between loudly Jewish and the frac system, inspired anti-Judaism. The Nazis identified with glee “plutocracy” (which actually financed them) and Judaism.

      The Rothschild (made up name from the coat of arms they gave themselves) made it big in (un-unified) Germany, and then crossed over to the UK to finance various enormous wars (doing sort of the same in France after a while)… Und so weiter…
      PA

      • Lovell Says:

        Give me control of a nation’s money supply, and I care not who makes its laws.”

        That was supposedly the famous quote attributed to Mayer Amschel Rothschild, the patriarch of the dynasty who, in the early years of 1800’s, began to issue international loans by co-opting the political and monetary power of the Landgrave of Hesse.

        • Patrice Ayme Says:

          … One of the patriarchs. The “red shields” were drawn around a century before…
          BTW, this is the principle of QE: sending MONEY, the so-called “monetary base” to banks, so they can leverage that. Economists supporting the demoncratic program are always careful to talk of “monetary base”, to confuse the folks…
          PA

  7. Old Geezer Pilot Says:

    Let us not fail to acknowledge the work of George HW Bush (Bush the Wiser) in the fall of the Soviet Union. While only Ray-Gun’s vice President, he had valuable ties to his Saudi “family” as well as the CIA which he once ran as well as spied for.

    In the mid 80s, CIA intel forecast that Soviet oilfields would peak. You will note that somehow, Saudi production went up as prices went down to about $11/bbl.Suddenly, the USSR’s main source of foreign exchange was cut in half, and they were unable to make up the shortfall through efforts to produce more.

    Bankruptcy loomed. It was only a matter of time.

    • Patrice Ayme Says:

      Dear OGP: Good point! In any essay, BTW, I have to restrain myself not to mention the entire universe, so the best I do is present just a fraction. G.H. Bush is a strange case. Sandwitched between his father, one of Hitler’s most important collaborators, and his son, the despicable W. Overall, he made a pretty honorable president, considering the company (yes, and the “company”). Actually arguably the only honorable president since the self contradicting, conniving, crashing, exploding and disintegrating LBJ… A similar career to Putin, although he was born to plutocracy… And was an authentic war hero! (Like JFK!)

      Probably related: a man who has faced death for the best reasons, is not going to make his life into a sewer…
      PA

  8. Patrice Ayme Says:

    Homo is a mental animal. Domination of the environment comes from determining, through debate, what the best ideas are. Thus the superiority of democracy. The Internet allows this debate, globally, and thus better governance. That way, there is hope to stop the plutocratic take-over, dead in its tracks…
    PA

  9. via fCh Says:

    What is that people hate so much in socialism, centrally planned economy or the limits to wealth accumulation by the few?

    I know, free markets and socialism are supposed to instantly activate unconditional reflexes, preventing the more careful analysis showing a million shades of grey, as in grey matter.

    Central planning can come in degrees itself, and this country came out of the previous recession and war by… central planning. It knew better to decentralize decision making after the war, yet the soon unemployable smarts managed to convince the nation/world to be allowed to centrally develop a mighty defense apparatus, which provided over 50% of the funding for R&D for decades to come.

    BTW, we can all agree that the government should not be in the business of how many underwear of a given color or pickles of some type reach the shelves, but that’s where the others got it all wrong.

    I think the aversion to socialism, never defined, stems from 1) the plutocrats’ wanting to protect their assets, and 2) the commoners’ thinking that one day they’ll be just as rich. Suffice it to say, #2 above is a statistical impossibility.

    As you see, I’m not even talking about democracy or human rights, for these are no longer the banners of the day. Since that day on September 2001, 10 short years after the Soviet Union was dissolved by those who had been won over by the ways of the plutocrats, there was nothing more to prove–we could paint Putin as an unreformed (KGB) brute, that’s worked just fine, so far.

    And for those who echo that Churchill chameleon, when saying that ‘yeah, it’s bad, but it’s the best we’ve got’, I can say: 1) read a bit more about that man, as in find out how he’d say/do just about anything to get to, and stay in power, and 2) if we don’t EVEN take apart these notions (free market, socialism, taxation, etc.), how are we supposed to come up with that better today?!

    • Patrice Ayme Says:

      Via fCh: I pretty much agree with all what you say (it seems; I had to read you real fast, because I am on the go, and preparing an essay blasting the hypocritical attitude of the West relative to the Muslim Brotherhood in Egypt!)

      For me plutocracy is the reign of Satanic impulses. The rule of wealth, and, more generally of the powerful rule of the most basic nasty instincts, are just aspects of it.

      So Putin is a plutocrat. But true, there are plutocrats and plutocrats. Putin, a better plutocrat, cracked down on the Harvard instigated plutocrats of the Yeltsin era, and rightly so…
      PA

  10. Jeff McG Says:

    Patrice,

    I read these two: Governmentalism, Summers

    Wall Street is of course an easier target if you’re writing for an audience which is open-minded rather than one that fears holding high finance accountable for its sins will hamstring the nation’s economy, a myth that many apparently believe. The problem is that nearly everyone has some sort of a bias with respect to politics which influences in turn their views on the economy.

    The economics profession has a demonstrably poor track record when its members are asked to forecast interest rates over the next 6 months, as routinely polled by the Wall Street Journal, for example.

    Practitioners of “the dismal science” clamor to be associated with Wall Street firms for the high salaries they offer despite the fact that Wall Street habitually distorts the importance of certain economic data like the monthly non-farm payroll jobs (see 8.20.13 Barry Ritholtz interview at http://finance.yahoo.com/blogs/daily-ticker/why-investors-ignore-economists-121046880.html). ;

    Judging from the massive wealth destruction occasioned by certain instruments in the derivatives markets based on mortgage-backed securities or MBS such as CDOs and synthetic CDOs during the finance crisis, Summers’ zealous, ideologically motivated drive to strip high finance – and derivatives in particular – of regulation, would appear to render him unfit to hold public office, much less to be given serious consideration as a candidate for the next Federal Reserve chief.

    Making the real economy derivative to reckless greed, contemptible as it is, is apparently not considered an unpardonable sin in the economics profession.

    • Patrice Ayme Says:

      Dear Jeff. Glad you like them!

      The White House wants Summers, precisely because he is a disaster. As far as the plutocrats are concerned, the more disasters, the better. As long as they can hedge, and We the People pay.

      Most of present day economists are just cheer leaders for the exploitative-to-death mentality.

      I have a new essay coming out today, in the same general area…
      PA

  11. What Plutocracy Giveth… | Some of Patrice Ayme's Thoughts Says:

    […] over-exploitation, there is just one solution: the rule of democratically controlled governments, governmentalism, worldwide. The Swiss example can be followed, to start […]

    • pshakkottai Says:

      Hi Patrice: I am repeating this blog about India being a model democracy.
      India is a role model for democracies.
      The civil servant can be a “strong hand of careful wisdom”. The framework is where the wisdom resides. I give this using the example of India with a better constitution.
      India has a better government with “socialism” and “fraternity” added and “pursuit of happiness” deleted. I copy the preamble from the wiki:
      WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:
      JUSTICE, social, economic and political;
      LIBERTY of thought, expression, belief, faith and worship;
      EQUALITY of status and of opportunity;
      and to promote among them all
      FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;
      IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.

      http://en.wikipedia.org/w/index.php?title=File:Preamble_to_Constitution_of_India.pdf&page=1

      India supports the commons well, with low taxes to the agriculture sector, free university education, rural employment for infrastructure development, funding for science and technology development etc. The central bank, RBI was nationalized in the year 1949 and combines the treasury and federal reserve, is owned by the govt and operates as a bankers bank for all state banks (owned by the individual states). Its banking is mostly government owned and operated by well qualified civil servants (from the Indian Administrative Service) and the plutocracy is kept away. Letting banks be private is a disaster because it gives money creation power to the wealthy which leads to corruption of the government. There are no too-big-to-fail banks in India.
      Railways, oil and gas, National Airlines, post and telegraph, Ship building, Steel Industry are government owned. There are also many private airlines. Private enterprise is not discouraged but anything related to mineral wealth is owned by the government.
      The treasury and fed are combined into a central bank and money creation is not restricted by “debt limits”. It offers T bills for sale but is not required to do so. It is left to the banking department. Projects approved for funding from various ministries are directly funded by the central bank. Commercial banks are restricted to support the commons:
      Banks are mandatory required to keep 24% of their deposits in the form of government securities.
      Banks are required to lend to the priority sectors to the extent of 40% of their advances.
      As per the CIA World Fact-book, in 2010, India ranks 49th in the world, with respect to the public debt, with a total of 51.90% of GDP. India must know Modern Monetary Theory just like Japan!
      There are many parties and proportional representation in elections. In general, coalitions govern better than a two party bought-and- paid- for government as in USA. In the lower house of the parliament, 33% is reserved for women( a proposal not finally voted on), 50% for men and the rest for socially backward classes and tribes. There are no lobbies but only selected (by peer review) committees and ad hoc committees to assist in policy making. There is no filibuster. Money matters are formulated by the lower house as here and the upper house has two weeks to consider changes. If nothing happens in that time the bill passes.
      The idea “government is your enemy” will never fly in India.
      The wealth inequality in India is similar to that of Canada and Australia. Of course, India is much poorer than western democracies but is doing the right things for the future of the country. The corruption in India is small scale and is not hyper-scale as here, approved by the Supreme court that corporations are people and money is free speech.
      India has no plutocracy and very little private money creation
      India has no state income tax.
      India has No lobbying
      Partha

  12. Plot Against France 1912-2013 | Some of Patrice Ayme's Thoughts Says:

    […] The Anglo-Saxons talk about Keynes all the time, another way to steal the attribution of very old ideas that came from, you guessed it, France. Just as in Rome, or even before that, Athens, in France the government is known to be the core of the economy. One can call that “governmentalism“. […]

  13. Housing & the Money Trap | Some of Patrice Ayme's Thoughts Says:

    […] Big time energy policy, both in research (Thorium reactors, Thermonuclear Fusion, etc.) and development (replacing planes by nuclear-electric trains, so to speak, etc.) scientifically driven is needed. There are simply projects only the government is big enough, and free from short term profit enough to engage in; see “Synthesis Found”. […]

  14. Future Economics Was Seen Before | Some of Patrice Ayme's Thoughts Says:

    […] As I have argued, the sort of public-private government sponsored technologically progressing economy we need today was fully, and self-consciously, in command of France in 1600. Hence Henri IV’s slogan “workers ought to have a chicken in every pot”. A cursory inspection of history show that, from dams in Yemen, thousands of years ago, to the Roman army building roads, to Caesar’ draining the swamps to the construction of China or Europe’s canal systems in the Middle Ages, the biggest picture, in economics, is from the government. […]

  15. Think Or Sink | Patrice Ayme's Thoughts Says:

    […] See:  http://patriceayme.wordpress.com/2013/08/13/synthesis-found-governmentalism/ […]

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