The truth about the economy

[Edward theurj Berge]

in less than 3 minutes, by Robert Reich.

[e]

I wish he would have connected dots 1 & 6.

 

The fact is that an hour of labor is now a commodity that can be purchased anywhere on the globe. So corporations no longer need the American worker.

 

I can't find where I saw it but half of Proctor and Gamble's sales are now out of the US. So not only do they no longer need the American worker, they soon they will no longer need the American consumer. This is why wealth is concentrating in the US.

 

What is his solution (he was a proponent of MORE stimulus wasn't he) i.e. print more money and drive our grandkids further into debt?

 

[kelamuni]

The solution is more tax cuts for Exxon. haha.

[Edward theurj Berge]

In the end of December last year Reich was well aware of the manufacturing and consumer shift abroad.

He’s also aware that a major reason the economic recovery is stalled is due to conservative legislative obstructionism, as they want it to remain bad so as to defeat Obama. So his solutions to fix it—like increasing the taxes on the rich and corps, reducing military spending (by getting out of some wars, for one), eliminating oil subsidies—can never happen with the current conservative House.

Yes, it is a world economy now so protectionism is dead. However we do need “universal” laws and regulations for a world economy so that US corps cannot take advantage of poor economies, like paying pennies on the dollar for wages under unsafe working conditions abroad to maximize profit. Such wage and safety standards need to become the world standard everywhere in a world economy. And ideas like Rifkin and Arnsperger are invaluable and “integrally” informed.

And don’t forget the People’s Budget proposed by the Progressive caucus. I keep hearing there is no liberal alternative but it’s been around for a while.

[Edward theurj Berge]

This article notes the following about the People's Budget:

"The People’s Budget from the Congressional Progressive Caucus...brings the budget into balance by 2021, with primary balance by 2014, without any cuts to social programs and even a modest but sustained stimulus package to create US jobs. It does so through progressive taxation, an end to two unnecessary wars in Iraq and Afghanistan and further cuts to the defense budget. More specifically, it ends most of the Bush tax cuts and adds millionaire’s brackets. It taxes capital gains and dividends as ordinary income. It adds additional brackets to the estate tax to progressively tax the largest estates. It limits itemized deductions for high earners. It eliminates corporate welfare and adds a financial speculation tax on derivatives and foreign currency swaps. It includes the financial crisis responsibility fee proposed by the Obama Administration in early 2010. It adds a public option and institutes negotiation of prescription drug prices in Medicare and Medicaid. It increases the payroll tax cap to collect 90% of earnings on the employee side and eliminates it on the employer side. It ends the wars, producing a savings of $1.8 trillion in the process. It makes deeper cuts in defense by reducing procurement and conventional forces. This provides all the money needed to institute a 10-year doc fix, patch the Alternative Minimum Tax so it doesn’t dip into the middle class, increase Social Security benefits, and invest $1.45 trillion in job creation through education, infrastructure and R&D."

[Edward theurj Berge]

Also see the Economic Policy Institute's analysis of the People's Budget. Some excerpts:

"Based on the policy adjustments noted above, the People’s Budget would reduce primary spending by $868.9 billion, increase general revenue by $2.8 trillion, and increase payroll tax receipts by $1.2 trillion over a decade relative to the adjusted CBO baseline. Responsibly ending the wars in Afghanistan and Iraq and recalibrating Department of Defense priorities would save $2.3 trillion. Roughly $1.7 trillion would simultaneously be invested for general public investment and a surface transportation reauthorization bill, including an I-Bank. Health care savings would decrease deficits by $308.1 billion from 2012 to 2021, more than offsetting the 10-year cost of maintaining the current rate of Medicare physician reimbursements, adjusted for inflation. Based on all of these policy adjustments, net interest payments are projected to fall by $856.3 billion over 2012-21.55 In total, the People’s Budget would reduce deficits by $5.6 trillion
over 2012-21 relative to the adjusted CBO baseline (see Table S-2).

"The People’s Budget is projected to run lower deficits and place public debt on a more sustainable trajectory than either the House Republican Budget or the president’s budgets. The projected surplus in 2021 (0.1% of GDP) compares with a deficit of 1.6% of GDP under the House Republican Budget and 4.9% of GDP under the president’s budget (see Figure 4). The People’s Budget is projected to bring debt as a share of GDP in 2021 to 64.1%, compared with debt at 67.5% of GDP under the House Republican Budget and 87.4% of GDP under the president’s budget (see Figure 5)."

[Edward theurj Berge]

The tax cut lie: In this video clip Lawrence O'Donnell exposes the fallacy of the conservative mythological belief that tax cuts create government revenue. And of course the standard "proof" is Reagan's tax cuts. O'Donnell's provides ample examples from the conservative side to refute the myth, including his guest this evening Bruce Bartlett, former executive director of the joint economic committee in the Regan Whitehouse. O'Donnell concludes the interview noting Bartlett will henceforth have troubling getting conservative dining companions after revealing the lie at the heart of their economic policy to enhance the rich at the expense of the poor.

[kelamuni]

The current global economic system is a giant ponzi scheme.

[James Barrow]

Hi Kela

K: "The current global economic system is a giant ponzi scheme."

I agree - would you mind if I used your pithy quote? I find it encapsulates the apparently overwhelming complexities in helpfully succinct manner. :-)

 

[Edward theurj Berge]

While true we cannot just accept it as the way of the world and escape into our own narcissitic lifestyle. If we take personal responsibility and organize we have tremendous power to change the course of the corrupt system. Yes, it requires time, effort and money. But the alternative is to accept a system that degrades the life of much of humanity to enrich the few. And to do this is not very “spiritual” (or humane) by any definition, postmetaphysical included.

[Christophe]

I watched Sloterdijks newest TV show yesterday and they were talking about the economy and the irrationality of the financial markets. Very interesting stuff. The Events surrounding the 2008 Crisis, especially the speech acts commited by politicians around that time, were compared with the rise of the dadaist and surreal movements, since the level of absurdity and tautology was almost the same. (Chancellor Merkel, 2008: "We hereby declare that the saving deposits of the german people will not be affected by the global crisis, we guarantee this with the capital reserves of our nation state") :-o

 

The experts present at the debate concluded that it is highly difficult nowadays to theorize about the speculative financial markets - there is almost no theory that can hold pace with the speed of the developments in that sector. No Marx, no Keynes and no Ayn Rand could have ever imagined that markets could trade speculative data with almost sevenfold the amount of the "real money" available in the "real markets". There is no work and no worker involved here, no product and no surplus value. What is traded in these markets are platonic ideas like expectations, risks, bets and trends-to-come.

 

The crisis becomes real when these future events somehow begin to push into the present, when expectations and promises begin to crumble and the debt chain begins to curl back into the fetal position, chaining the unborn future child. (Ah the poetry involved in all this. Too bad there are almost no poets dedicated to writing in-depth about the economy. Well except Brecht. Ah, Brecht).

 

So, coming back on another theme, namely that of the post-metaphysical interpretation of the apocalypse, or Judgement Day (see here), in financial terms, there is another term for this: it's called the balance sheet. At the end of the day, the columns of numbers will be added, Jehova's cash register will ring-ring and the assets and debits will be sharply defined in the light of day, the Judgement Day.