OBAMA’S REAGANOMICS ARE AS WRONG AS WRONG CAN BE.
Abstract: Obama, hiding behind the republicans, as usual, is pushing for a second round of cutting taxes to alleviate the suffering of the hyper rich. This will make the situation better short term, and much worse, long term. The failure of the emotional intelligence of the so called democrats is, once again, epic.
A quick revisitation of the basic idea of the republic, as invented by the Romans, is in order.
LET THE HYPER RICH PAY NO TAX, THEY WILL BE KIND:
This is the second time that Obama is cutting taxes lower than Bush for that exalted group, and calling this butchery a stimulus for the economy, to the great applause of most clueless American economists (sorry about the pleonasm). Overall, 69% of Americans support the Obama tax deal, as if they decided to overlook the gift to the hyper rich (69% is also the approval of the plutocratic Clinton: the USA loves its plutocrats). But the same crowd of the gullible used to approve the invasion of Iraq with even greater enthusiasm.
The deal with the hyper rich is grievously wrong on taxes, wrong on the economy, wrong to the republic, and against the tide of civilization. But Americans have been so brainwashed, they cannot understand it. Obama, as a good Reagan admirer, gloats that "all economists" agree that this second stimulus will create jobs. They probably all got the Nobel Peace Prize too. And all write children books and invented biographies, while cutting their own taxes on their own multi-millionaires’ fortunes.
Sure, the latest Obama tax cut on the hyper rich will create jobs, Reagan style. But a country’s economy does not grow on hamburger flippers and valets for the hyper rich. The bone marrow of the states are the schools, and they are getting gutted.
Brazil, under Lula, gave money to the poor, as long as they sent their children to school, and to the doctor. That injection of public money in the economy boosted educational level, consumption, and the Brazilian industry. So Brazil has been growing at an enormous rate.
In the USA, the increasingly impoverished population is watching their worth wilt. Because the state does not have enough money for the public where it matters. A good example is idle construction workers and machinery, when there is so much to build. This lack of activity is what tax cuts into the bone of the state fabricate. This is why the US median income is going down more, and more durably, than during the Great Depression of the 1930s itself (on most, if not all, 10 years time slices).
Obama and his apologists have found reasonable word assemblies to justify their ignominious cave-in to the richest. But passion can see further, and better, than reason. It is because the Germans were microscopically reasonable, and emotionally disconnected, that they goose stepped in perfect cool discipline behind the Nazis.
It is emotionally disconnected to give so much power to the rich, and more of it, the more they mess up. It is not just about the money, it is also about the respect that flow of money implies. It’s typical of an abusive relationship, that the more the submissive is abused, the more submissive that victim gets. (A variant is the Stockholm syndrome hostages go through, and, incredibly, Obama quasi admitted to it, as he used the concept of “hostage”!)
This so called second "stimulus" , Obama style, will bring a very short term lift, as when a plane stalls, and rears on its tail, gaining altitude while losing all forward momentum. Ultimately, though, what the present leaders of the USA keep on cutting is the republic itself. After spending trillions of public money on private banks, the pattern is clear: the politicians of the USA have chosen the plutocracy over the republic.
Why? The plutocracy make the politicians ultra rich: look at Clinton, or the just resigned director of budget of Obama. He is 41 year old, and will earn millions of dollars from Citigroup, towards which the government just "directed" more than 45 billion dollars.
The enormous income and estate tax gift to hyper rich Americans, will make the situation of the American economy, even worse than it already is. In truth, it is the American republic, the public thing, which is being devoured by the hyper rich.
The government of the USA could have done differently, and swiftly: the European Union is cracking down on banker bonuses, worldwide, effective on January first, 2011: financiers will get between 20% and 30% cash, The rest will be locked in shares for the long term (to prevent them to suck up all of a bank money, and then ask for taxpayer money). It is a first step. Let ignorant American pundits be reminded that there are 500 million European citizens (and that Great Britain is part of the EU). Of course the democratic president, the democratic Congress and the democratic Senate could have taken such a decision long ago. Funny how the mighty USA is more indecisive than the 27 countries European Union.
Democratic or demoncratic? Plutocratic is the word, and demoncratic, its translation.
WEALTHFARE IS COSTLY:
Total government spending (Federal, state, local) in 1950 was 24% of GDP. Under Bush it went up to 35% of GDP in 2003, and then 37% of GDP in 2008. It is projected to be 44% of GDP under Obama 2010 (which happens to be exactly the same ratio as Germany).
Notice the peak caused by WWII. Also notice that the squeeze in spending FDR is often accused of in 1937 does NOT show much (the 1937 downswing is one of Krugman’s pet fixations). The explosion of spending under Obama is due in great part to economic stabilizers (for example welfare, extending unemployment benefits, etc.), but also to military spending, the highest ever, with two very expensive defeats in the making. The explosion of spending is not caused by investment (whereas the World War Two budget ought to be viewed that way).
A really horrible graph would include all the money the Federal Central Bank has "printed" for the private banks. We cannot draw this graph. It’s a secret graph. it would involve trillions of dollars secretly sent to these money losing operations which lost so much of it because they divert it to the worldwide plutocracy (the Fed also made direct payments to foreign banks). In any case, not enough money has been left for trains, schools, and cutting edge businesses, so the entire socio-economy of the USA has turned into a wasting asset.
ROTTEN FISHES HAVE NO BRAINS:
In his autobiography, Obama mentions using a "little blow". Well, Obama’s vision of the economy is a big blow to civilization, as it promotes its enemy, plutocracy.
OK, may be deep down Obama is a revolutionary, as demonstrated by trying his best to make the USA blow up (this is a theory pushed by some employees of the plutocrat Murdoch, or even some ex allies of … Obama). Would not that be ironical…
Last Friday, Obama rolled out Bill Clinton, who gave a press conference at the White House to explain how good the latest Obama idea on taxes was. Clinton is an American politician who made more than 200 million dollars in apparent pay-back from his good service to the plutocracy.
What else? What is his job? He goes in front of various plutocrats, and they give him money. Lots of money. In a variant on that theme, Clinton arranges business deals between worldwide plutocrats and various local potentates. Sometimes Clinton carries a rice bag on his shoulder for worldwide propaganda, a bit like Hitler promised to only wear a grey uniform as the war was going on. Both Clinton and Hitler became very popular in their respective realms, and the worst the consequences of their actions were, the more popular they got. All too many people hate to admit they are wrong, and the more wrong they look, the more they insist they were right.
Under Clinton several Goldman Sachs employees (Rubin, Summers, etc.) destroyed the legislative achievement of Franklin D. Roosevelt, the separation of banks and financial speculation with the public money the banks are trusted to create.
Clinton went away, but not the men and policies he had put in place. A systematic pursuit of the exact same policies that created the bubble of the 1920s has been pursued under Bush (in the 1920s, the Fed printed money, while taxes on the hyper rich were crushed down from 70% to something insignificant, exactly what has happened since Reagan).
ROME BECAME SUPERLATIVE BECAUSE OF ITS INVENTION OF THE PUBLIC THING:
Obama and company are children of Reagan style economics: they believe a tax cut, especially to the hyper rich, is all what it takes to get the economy to restart. They think the economy is all about private parties, and especially those private parties having the most money having even more money. It is as if the meaning of the word "republic" had totally escaped them.
The Romans were all about private enterprise. The Romans had private companies hunting for escaped slaves (as the USA did, 2,000 years later). Rome even had private companies punishing and torturing slaves, for a fee, privately. Anything that could be privatized, the Romans privatized.
However the Romans also discovered something else, which was the opposite, complementary concept. The Romans discovered that the economy of a civilization is also about public spending on infrastructure. Thus, the Roman state was organized to take into account that some crucial parts of the economy would not exist if all they had was a profit motive. Crucial parts of the Roman socio-economy were nationalized.
Indeed, what financial motive would an individual find in drafting good laws? What financial motive would an individual find in having a national army of free citizens? Or in having a national fleet? What would be the financial motive of individuals for building a road network that everybody could use, from armies to the poorest of the poor, free of charge? Or aqueducts, or theaters, public latrines, theaters, administrative buildings and the like?
Rome had typically a family, private tutoring system (often using expensive educated Greek slaves). However some Patricians families came upon hard times, and some families sponsored by the higher ups could not afford such luxuries, hence the Roman state decided to fund public schools.
The Army, and especially the Navy, even in Athens, had been a private-public partnership (and that was Athens’ undoing!). Rome, instead, went all the way, making the Army completely public, with national factories making standardized weapons. Roman military surgery, a public service, was so advanced that both its knowledge base and instruments were used for 2,000 years (and have been fully integrated in today’s medicine). The Roman republic also invented free food distributions for the poor, and welfare.
The Romans summarized all this public structure in one neologism: respublica. Res publica: the public thing. The Romans discovered that one could not have civilization without it. they also discovered one would get a better, superior civilization with it.
All these collective services characterized Rome, above and beyond civilization prior. The Roman PUBLIC THING allowed the Roman state to do many things, and to be endowed with a culturally superior population, that no other state had.
Then the Romans proceeded to destroy all the plutocracies around them, starting with the enlightened plutocracies the Etruscans were governed by, and going on with Carthage, an unbalanced plutocracy, and the Hellenistic kingdoms (plutocracies which had dispossessed the Greek City-states).
Reciprocally though, as the plutocrats became too powerful, pieces of the state became their thing, and civil war started. It would not really stop. what is known as the Roman empire was a long war between the army (more or less representing the people) and the Senate, fief of the plutocracy. Ultimately the hyper rich refused to pay taxes, and protected themselves with private thugs. The state had to use cheaper foreign bands for defense (including the Huns!) The Roman republic’s last remnants faded away.
THE EUROPEAN MIDDLE AGES BUILT THE REPUBLIC FURTHER:
As centuries passed, the public thing regained importance in Europe. After the Late Roman empire theocracy, the Franks re-established the primacy of the state over religion, and created their own Church of Francia (which enraged the impotent Pope Gregory "The Great", a pyromaniac). The Franks financed monasteries to help preserve knowledge, especially as the Muslim devastation of most of the empire cut them off from paper, scholarly exchanges and libraries.
The Franks passed a law that forced religious establishments to teach all the children. That went much further than the loose arrangements the Romans had in education.
Meanwhile the Franks took under their wing official republics such as Venice, which were autonomous, but protected. In theory, and sometimes in practice, the kings and emperors of the Franks were elected.
In the Middle Ages guilds and corporations were officialized to marry professionalism and democracy (a pretext for Plato’s hostility to democracy). Corporations such as the law and police became pillars of the state. The law became soon as powerful as in the Roman republic. Public hospitals were created, complete with windows to drop unwanted infants, no questions asked.
The Great Fire of 1666 in London brought the realization that only a public fire brigade would be respected enough to be able to blow up houses to stop the fire (that is how the Navy stopped it).
This sort of public services are undone in the 21C USA, as the fire brigade may not come if it has not been paid, or the police may not come if only a burglary is in progress (the official policy in Oakland, California).
STRUCTURE IS NOT A STRICTURE: DESTROY IT, AND ALL WILL GO.
In 1862, California was isolated from the rest of the USA, by the Civil War. So the US Congress authorized public spending to build a railway across the USA. It is still used today, same as 150 years ago, and most of New York salads are brought by it in winter. If the US Congress had waited for private profit seekers to build the railway, it would have never happened.
As it was, it was heavily subsidized. One could even say, astronomically subsidized. The "Pacific Railroad Act" of 1862 was a "land-grant railroad". The government gave each railroad company 6,400 acres of land and up to $48,000 for every mile of track it built (it seems that was one million in 2010 dollars). The difference with Obama and Bush giving trillions to banks, as is done nowadays, is that, first, no money was given to the banks.
Banks are indeed intermediaries. giving a message to intermediaries make sense. Giving them the house does not. Roosevelt did the same as the Congress of 1862. Under the WPA, the work Progress Administration, he used government money to provide directly millions of jobs. The same strategy ought to be used today.
When the Roman army did not have to fight, it was used to build vias, canals, and other public utilities. No doubt that if American soldiers were brought back from the Middle Eastern butcheries, they could be used profitably too. Profitably in a non financial sense (Israel uses its defense establishment to push high tech much higher than it would be otherwise).
Under republican president Eisenhower, the top tax margin rate was 92% (starting at $400,000 of income). It was a time of giant work programs, as the USA was covered with freeways, airports, and education was free in the omnipresent public schools, and second to none. .
Nowadays, the richest Americans pay the lowest rates (say above the median income). The infrastructure of the USA, including public schools and universities is crumbling, and that is augmenting the crisis. The infrastructure is starving because it is not getting enough public money (which, instead, is going to the hyper rich).
The Obama administration is even destroying NASA. Why not? let’s replace NASA by a South African billionaire; a young divorcee called Musk, to whom three billions of dollars of NASA money is presently diverted. He looks good: Musk is tall, dashing, a Silicon Valley money manipulator, he looks good in photo ops next to the president. Musk also gets plenty of money from the government for his laptop batteries luxury cars.
Eisenhower, an old style republican, had created NASA, precisely as a public service. Eisenhower knew it was important to have an organization motivated by cutting edge rocket science, instead of having only organizations which were motivated by profit (as private companies such as Boeing, Lockheed, Northrop, Mac Donnell, North American, etc. were). NASA is an asset of the USA that Europe does not have (ESA being much less financed and restricted to space).
This is a crucial point: public service has a different motive from private profit, so it can explore and exploit avenues which are barred to the profit minded. It is the essence of the difference between the crocodile, the shark, and other lower predators, and man. Lower predators look only for profit. Man looks beyond the hills, beyond self interest, beyond where the eyes can see. An entrepreneur operating for profit operates like a shark. Calling him a philanthropist does not make it more reassuring. An enterprise founded on something else than private profit can reflect more, all what the mind of man is capable of.
A country or regime refusing the full wealth the human mind is capable of is diminished, and will fall off history, if confronted to fully democratic republics.
The rockets Musk is building use oxygen-kerosene engine, decades more primitive than the oxygen-hydrogen engines used by the American space shuttle or the European Ariane V (and which have never failed).
As NASA goes down, vampirized by Musk, the cutting edge is lost, and it is lost on the public dime. The result will be the irreversible loss of this American know-how (and thousands more forever jobless in some of the more advanced jobs; meanwhile India and China are pushing for advanced space programs, publicly financed; they are going to the moon).
Another flaw in giving more power to the hyper rich is that too much power and money in the CEO class and the financial class have created the present crisis.
The health care plutocracy even enticed the delusional Obama administration to violate the Constitution’s commerce clause by forcing individuals to purchase for profit health insurance (this has just been struck down yesterday by a federal judge). The power of the CEO class ruins democracy, ruins profitable investments for the entire country, and even now the Constitution (the Supreme Court, mesmerized by the hyper rich, just like Obama, has decided to allow secret campaign contributions by the richest organizations, giving its full depth to the "Pluto" part in the word "plutocracy").
The CEO class is so powerful that it can divert investment money towards itself, and the derivatives crooks and their valets (for some of course obscure reason, thousands of these are not in jail, keeping company to Madoff).
The stimulus, as it is, one more tax cut for the hyper rich, and it augments their money and power, so it will augment the power of what caused the crisis, and thus will augment the crisis.
Eisenhower in his farewell address told Americans to “avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow”. It seems instead that Americans live mostly for the ease and plunder of the hyper rich. I have seen on European TV, Versailles sized estates built by Iraq war profiteers on Long Island. These estates speak volumes. But only on European TV. The US propaganda is careful not to show the same aerial pictures.
CRITTERS SWIMMIMNG ON THEIR KNEES, AGAINST THE TIDE:
Obama and company are in for a shock, like lemmings at sea. Their trickle down plan will not work anymore than giving more power to the state enterprises in the USSR as it collapsed worked. In both cases, the basic mechanism is the same, and will fail, again, for the same reason. A class, an oligarchy, is in power, and has so much power that the rest of the economy has not enough power left to function properly. In a way, it’s an application of the principle of the conservation of energy.
During the Spanish Civil War La Pasionara declared: "the Spanish people would rather die on its feet than live on its knees".
It is conventional wisdom, in modern, cynical America to view such an attitude as naïve and un-American. But it is not. At the Alamo, Crockett and his friends made a hopeless stand, but thanks to such a stand, Texas became independent. La Pasonaria’s uncompromising principle ultimately led to the fall of the fascist regime in Spain, because it inspired enough people to resist fiercely, or craftily.
Had no one ever taken such an exemplary position, Spain would still be fascist. In truth we would all still be subject to the most brutish regimes. The only reason we are standing up, is that heroes in the past refused to live on their knees. To be a hero starts with the proper cognition, though. And it is very tiring to be right, much more so than to be a bleating sheep. Plundering with ease and convenience the most trivial considerations is definitively the coolest way for those for whom "cool", the absence of passion, is the highest compliment. I think Nietzsche called that the "last man". "Lowest man" may fit even better.
Nor is it All-American to be on one’s knees in front of creepy billionaires who insist to be called "philanthropists" at every turn. If they are so much in love with the rest of mankind, why don’t they start by paying 50% tax? Instead of promising crumbs after their death, while letting most of their money locked in tax free foundations, for the exclusive use of their class, or their descendants?
Remember; the 400 richest have an average income of 348 million and pay only 17% average tax. Obama did not suggest to the democratic Congress and democratic Senate to tax these people 50%. That would bring in 50 billion. Better: it would suck out power from this vulture class. At the Eisenhower rates, 150 billions would be brought in. And the best young minds would stop being corrupted by the idea of extravagant riches. (In France, a billionaire had forgotten to declare, among other belongings, a private island she owns in the Seychelles and to which she regularly jets in onto her private giant runway; don’t worry, she is not going to jail; such is the extravagance of riches). Obama has no excuses.
Until the very end of the nineteenth century, the USA had NO BILLIONAIRE (in 2010 dollars). So, if anything, BILLIONAIRES ARE UN-AMERICAN.
The Obama republican tax cut will provide a transient lift, from one more tax cut to the hyper rich. It will be followed by an economic deterioration, worse than ever before. Because the infrastructure, the public thing, will have deteriorated further.
To give more power to those who organized the crisis, reminds me of drug addicts buying a little more blow from their dealers. One will need more imagination than that to get out this pathetic descent to hell. The time has come to become as tough as the opposition. And it’s not just China, but those who pull its strings, the same sort of strings that their ancestors pulled 80 years ago. The lucrative strings of foreign fascists.
The leaders of the USA are at sea. They can swim all they want; they understood nothing of the tide of history. They are swimming against it, and many who are forced to follow them will drown too.
Note1: In "Block Those Metaphors" Paul Krugman explained that " The idea that the economic “engine” is going to catch encourages policy makers to settle for sloppy, short-term measures when the economy really needs well-designed, sustained support."
This erroneous metaprinciple ("the economy engine" will come on line on its own) is typical Voodoo economics (as Bush I put it; Bush I was not a bad economist, but ironically lost the election because of the economy and the giant sucking sound of Ross Perrot). In truth, there is no "engine", and it’s not automatic. Nor is there a car in the ditch, as Obama likes to say. In truth, there is Obama, a multi millionaire who lives like the world’s richest man, and partakes to a system which sends too much money to his friend Dimon (a super banker, and a central banker, thus thief, judge and executioner) and his friend Buffet. Hey, if, like Clinton, he wants to be invited at the billionaires’ table, in a short six years, he better be nice! Change is what you make it be, as he likes to say!
Well designed support means up to date Colbertism. It will also entail appropriate protectionism, in cooperation with the EU. China, and others, use protectionism, and should be paid in kind. In particular imbalances on fighting the carbon dioxide problems ought not to be tolerated anymore (they are intrinsic to the Kyoto treaty, and a pretext for the USA to stay out).
Note 2: Why is the abused inviting more abuse? As In Obama’s relationship with the republicans, or the Stockholm syndrome? Because psychobiology has to be seen in a global ecological context. two points: a) the prey ought not to resist too much, lest the predator be damaged. b) among humans, intellectual certainty is rewarded by leadership, because presumably the more correct ideas bestow more certainty. Thus those who are not too sure, those who are mentally divided such as the progressive Reaganite cold caring oxymoronic Obama, are psychobiologically primed for submission to those who are sure of themselves. And this explains a lot of Obama’s floundering presidency.