If we think the very rich are indeed different from you and me, it may not be much of a complement to them.
The talk around the Yacht Club these days involves a lot of snickering about Barak Obama and what "that man" will do to the economy. No, I'm not joking, but then neither are they. Perhaps Malcom Gladwell is right that material success has as much or more to do with circumstances than with talent or intelligence. Take the fellow with a yacht worth far, far more than than Joe the Plumber will make in his lifetime; a fellow who thinks that we're seeing a "slowdown" that will "bounce back" shortly and a slowdown that has nothing to do with George Bush, a Republican congress, deregulation or the idea that debt has no consequences if you cut taxes and pour money down a hole. I have as much faith in his genius as he has in the notion that America's success has been the result of its Christian piety.
Obama of course will raise taxes. That's axiomatic because he's a Democrat. Raising taxes will harm the economy, they say, even though it would be as fair to say that a bullet will harm a dead horse and the economy has done better under Democrats since WW II. Supply side economics will work eventually and even if it doesn't, even if the "slowdown" becomes a full blown depression, we have to keep making it easy for the Great Gatsby to keep the twin Diesels fed. Did I mention that Obama is going to ruin the economy by raising my taxes?
Theory's failure, however, has placed a much higher premium on humility.
ReplyDeleteSomething GWB and his minions never had. Maybe it is not stupidity as much as arrogance that was their downfall ... an expression of that first original sin: Pride, hubris, narcissism, or whatever we call it these days.
It seems Obama wants to work with some Republicans, and the most oft mentioned names are Hegel and Lugar. If such is the case, do we really want to wrap the stereotype of “stoopid” around all Republicans? I am trying to err on the side of kindness because there are Republicans who have been just as damaged by the Bush presidency as the rest of us (although they won't admit to it).
ReplyDeleteWhere am I going with this comment? Have a look at this video of Bush attending the G20 Summit last week.
Discussing this video with friends, some have said: “He appears depressed to me.” However, I would also characterize Bush as appearing “peevish, petulant, and contemptuous.” I go with “contemptuous” because that has been his most serious character flaw since the beginning.
I go with “contemptuous” for another reason. Knowing full well that his approval ratings are in the tank, one would think Bush would back off from unpopular positions and take more moderate actions in his final days. No such luck.
It appears the administration is trying to gut environmental regulations currently in place. Thus, “contemptuous to the end” is my assessment.
Depressed or contemptuous? What do you see?
Both. He looks more than 8 years older than he was when he took office.
ReplyDeleteI'm not calling all Republicans stupid. In theory there may be some who are not. I'm just playing off the "Stupid Liberal" meme geniuses like Ann Coulter loves to use.
Now now, Fogg. (“In theory….”) But seriously, I would agree that Rovian conservatism is a recipe for marginalization. The Republicans have a strong role to play, as I think used to be said decades ago, in providing a reality check for Democrats when they start proposing government-based solutions beyond anything that actually makes sense to attempt, or just plain become corrupt because they’ve been in power too long. But Rove and Company’s strategy has long been to push divisive “social issues,” and they don’t seem to care a damn about balancing budgets or limiting the power of government. If there’s an agenda, “turning back the clock” sounds about right.
ReplyDeleteOcto, I think it’s that people get too comfortable with their outlook and stop questioning it. The recent economic troubles have not been caused by “big government” (even though we have a huge federal government) but rather by corporate movers and shakers complacently thinking that their ideology was unquestionable and, therefore, that the profits would never cease. Not so. Our economy has been not so very different from a ponzi scheme in recent years, what with all the leveraging and fancy speculation on speculation. What a sad sight to see the automakers going to Congress these last few days, hat in hand, saying, “please give us billions of dollars—people don’t like our cars or can’t afford them. We don’t know what to do, and we’re about to go broke.”
A “Stupid Lizard” thought: would it be accurate to suggest that the economic theory we’re lurching towards is not socialistic at all but instead closer to the policies that prevailed during the European fascist era? I don’t mean to invoke all the horrifying practices associated with that term, only the loose economic theory that seems to have prevailed then. Namely, under that theory the government allows private firms to profit, but calls the shots regarding the productive process. It does not wrest that process from private hands, but is instead content to let big corporations reap profits so long as they do what they are told. Under the initial financial sector bailout, not many strings were attached, but as we see the inadequacy of that generous spirit, more lawmakers are saying, “First you tell us how you’re going to use this money, then we’ll consider the bailout.” So far, that’s understandable. But if bailouts become a way of life, how far is it from there to, “look, here’s exactly what you’re going to do—now do you want this money or not?” What you would have is private enterprise still making money, but you’d also have the government playing the central role in the economy and jettisoning all pretense that the market actually works on its own. What I’m suggesting isn’t a desire on the part of our politicians to sign on with fascismus, but rather that if the system is in as dire trouble as many of us fear, this would be the economic path down which we would most likely go in future administrations. We certainly wouldn’t be going in the direction of Fidel, Chavez, or the Sandinistas. I hope this is just Dino-Little nattering about the comet that’s sure to fall from the sky and wipe us all out, but I’m not convinced this is just a bad but ordinary recession.
Good evening, Bloggingdino. About the causes of the current economic meltdown, I lay blame on the corporatists but I do not exonerate the government, most especially those who turned the Bush II reiteration of Reaganomics into a preamble for disaster.
ReplyDeleteHow fundamentals of the national economy got compromised:
• The tax cuts of 2001 and 2003 created a budget deficit black hole;
• Tax cuts favored corporatists and the wealthy resulting in a massive transfer of wealth away from the middle class;
• 9/11 started a period of military buildup but Bush II insisted on a guns and butter economy, going so far as to say after 9/11 that the nation should: “Go shopping;”
• The middle class saving rate as a percentage of disposable income went into the red;
• After 9/11, Federal Reserve rate reductions (Greenspan’s handiwork) created cheap mortgages thus triggering a wave of speculation, i.e. the so-called housing bubble;
• The bubble brought out shady mortgage originators who created substandard loans (note: Fannie Mae and Freddie Mac did not make these loans but lost substantial market share to those who did);
• Mortgages were bundled into derivatives and sold as investments but the problem was that good and bad loans were bundled together and could no longer be separated with the effect that bad loans made the entire barrel rotten;
• Commissions on derivative were front-loaded (meaning paid in advance), and commission rates were as high as 50% of the value of the investments thus triggering a wave of junk derivative sales;
• These derivatives spread throughout the global economy like a metastasized cancer;
• For decades, deregulation allowed unregulated institutions to act like investment banks but without proper oversight.
• Starved of a fair share of economic growth due to Bush II tax and economic policies, the middle class could no longer serve as an engine for economic stimulus or growth.
The above is merely a snapshot of recent economic missteps; I believe the problem started 28 years ago. But my little diatribe doesn’t respond to your comment: Are we heading down a path of economic fascismus?
I would prefer to think we are returning to the basics of Keynesian economic theory that was abandoned in the Reagan era (which favored Milton Friedman and the Chicago School). To mitigate the adverse effects of economic boom and bust cycles, Keynes advocated an interventionist policy by which the government would use fiscal and monetary measures to smooth out these business cycles. A return to basics, I would call it, but certainly not the 1930s model of private enterprise at the point of a gun.
Perhaps I stick my tentacles out too far here. Fogg, what do you say? You know something about this stuff.
The only piece of economic advice I will give today is never to listen to me. Henceforth, when it comes to economics, I'm a "Schultzian" I know nothing.
ReplyDeleteI haven't quite lost my shirt, but all I have left is a collar and a few buttons.
If our saurian colleague is saying that societies like ours are more prone to failing toward fascism than toward Communism however, I tend to agree. Fascists have always been the loudest protesters against anything that could be twisted into looking like mild socialism, after all.
Fogg, as our previous president used to say: “I feel your pain.” I haven’t quite lost my shirt, but I am certainly close to dropping my pants.
ReplyDeleteIt could be argued that economic fascismus is what we have, and bailout socialismus is what we may need … subject to terms and conditions that protect the public interest during the life of the loan.
Getting back to our esteemed colleague, Bloggingdino, I should add parenthetically that bailouts are time-delimited. Presumably, after government loans have been paid in full, and all terms and conditions have been met, there is a return to business as usual, no strings attached. A history of bailouts has shown that the government usually recovers loaned monies with a slight profit.
I am not against bailouts in theory, as you may surmise from these comments. The prospects of a massive meltdown with high unemployment and the cascade effect rippling through the national economy would be catastrophic.
Yes, debt from these bailouts presents a serious problem, but the nature of sovereignty is such that governments never actually go bankrupt; they merely suffer a serious liquidity crisis, which is manageable in the long term. More manageable than, say, a decade-long depression with all the human suffering that goes with it.