Austerity or Communism

by Glen Wallace

If we don't transform into more of a resource based economy in the form of a libertarian communist, socialist system, we will inevitably, gradually, slump into a global recession of austerity where the masses will be spending the bulk of their monetary funds in paying off debts to the rentier class. 

People are constantly working for free.  In fact, it could be argued that the new internet economy is largely built on the backs of individuals gladly toiling without remuneration.  It is through the efforts of the so-called users of Facebook with their millions of updates from millions of unremunerated man-hours of labor writing status update posts and uploading photos and videos that has drawn visitors to view the ads that generate the ad revenue that has made Zuckerberg one of the wealthiest individuals on the planet.  It is also difficult to calculate the massive amount of value added to Amazon through all the in depth product reviews provided by the site visitors -- also without remuneration.  Many of the top rated product reviews on Amazon read like something a professional writer might post as a magazine article.  But I don't think those reviewers are secretly professional reviewers, rather, I think they really enjoy the ideal of sharing their insights and helping their fellow humans.  I have written a couple of in depth product reviews myself without any remuneration just because I wanted to help other consumers. 

We need  to look into how we can build an economy that harnesses that innate desire to create and help the world.  The collectivism could be used to pool the resources necessary for the makers of stuff to make and invent. 

Hoarding for the purposes of financial gain and hedging could become a thing of the past.  There are whole warehouses around the world used for the sole purpose of storing copper in pallet sized sheets that are stacked on pallets.  The copper is stored as financial investment in the form of physical copper -- it is treated as investment just like many people invest in gold or silver by owning physical gold or silver.  I'm not necessarily disparaging the practice of hoarding metals, precious or otherwise, on the contrary, doing so is very understandable.  In the current world of economics there is all sorts of volatility that could threaten the value of traditional national currencies.  Ownership of metals can provide a hedge against such volatility.  The problem is that our current global economic model creates a demand for the hoarding of natural resources.  In a resource based economy, those resources, like copper, could be put to good uses instead of sitting in some remote warehouse.  We need an economy where there is no demand to hoard the supply.

Societal economic planning decision making protocol

by Glen Wallace

I would categorize a decision making tree, regarding economic systems, into three main parts.  Each part should be addressed in order, however, there may be some overlap between each adjoining category.

The three categories or phases to be addressed in order are:

1.) The Ethical Question -- Is the plan ethical?
2.) The Utilitarian Question -- Will the plan work if implemented?
3.) Political Feasibility -- Can the public & politicians be convinced to go along with  the plan?

The first category that needs to be addressed is the ethical question -- this is where we ask if enacting a specific plan is ethically acceptable for everyone impacted by the plan.  As an example of an ethically unacceptable plan or protocol, I would refer to the instance I remember reading about some 20 years or so ago about the Chinese government executing a number of business managers due to poor performance (I'm hoping they don't perform those kind of executions anymore but I don't know).
 
This brings us to the second category, the utility or utilitarian question.  The utilitarian question asks whether the plan to be implemented will be effective in terms of improving the prosperity of the citizens of the nation or state that they will reside in.  But it is important that we don't skip the first category before addressing the second.  It doesn't matter how much executing or threatening to execute the business managers due to poor business performance may or may not improve the overall prosperity of the rest of the nation (I highly doubt it would help, more likely to hurt the economy) the executions are ethically unacceptable and therefore should never have gotten past the ethical consideration phase and entered into the utilitarian consideration phase. 

If the ethical category had been addressed in the first place, as it should have been, then the planning stage for the Chinese execution plan wouldn't even have gotten to the second, utilitarian addressing stage and would have instead been tossed into the planning waste bin where it belongs early on.  But if a plan does pass the ethical test, then we go on to ask if the plan will work -- the utilitarian question stage.

The third stage to address is the political feasibility addressing stage.  In this stage we look at how or if we can go about convincing the electorate and their representatives to ascend to a given plan.

But once again it is important that we don't just jump to this stage before addressing the first two stages.  That is because once the first two questions have been answered to a satisfactory extent that they pass muster, then it will be that much easier to convince the constituents and politicians of the benevolence of the plan.  For it is the answers to the first two categories of questions where the arguments can be found that will convince the populace and politicians to accept the plan.

I was watching on the local public television channel a presentation by Sheila Bair, former Chair of the FDIC.  And following her presentation was a Q&A session.  One of the questions she was asked was whether or not the Glass-Steagall act should be reinstated.  Now I'm going by memory, but I believe her answer was something to the extent that she didn't know if it was politically feasible given the current political environment.  I would argue that her answer then skipped the first two categorical questions that should have been answered first regarding Glass-Steagall before addressing the political feasibility question. 

There is nothing overtly unethical about the reinstating the Glass-Steagall act -- first categorical test passed.  I don't think a whole lot of attention needs to be paid here towards arguing for the ethical acceptability of reenacting Glass-Steagall.  I don't believe, for instance, that many people would contend that bankers have some inalienable right to engage in both traditional banking and speculative investing within the same company.  I believe the strongest case is for a moral imperative that those two areas be handled by separate financial institutions as was required by Glass-Steagall.  Without such separation, the systemic risk to the economic infrastructure of the nation is put at risk by the speculative bets of traders.  We have come to a point where the traditional banking system of savings and lending is regarded as a necessary utility.  When the ability of a bank to lend to businesses or meet the withdrawal requests of savers is undermined by the speculative division of the bank that made some bad bets, the entire economic infrastructure as a necessary utility can be put at risk.  Thus, the so-called 'too big to fail' that really mean 'too important to be allowed to fail' protections may be required that call on public resources to bail out the failing bank. 

For the second category, in addressing the utility question we need to look at the possibility that repealing Glass-Steagall created a financial environment that either directly led to the great recession or helped bring it about or made it that much worse.  If a case can be made linking the repeal causally to the economic meltdown and great recession and that causal link were presented to the public then the third step of passing the political feasibility phase, regarding the reenacting of Glass-Steagall, would be greatly enhanced.  Nobody is going to want another financial crisis; especially since we haven't even recovered fully from this most recent great recession. If the public can be convinced that reenacting Glass-Steagall will have the utilitarian value of preventing another financial crisis like we saw in 2008, then passing political feasibility will be that much easier. 

Why hasn't Congresswoman Betty McCollum yet cosponsored H.R. 676 Medicare for all single payer act?

I just discovered that Democratic Party congresswoman Betty McCollum has not yet signed on as a co-sponsor of  H.R. 676 Medicare for All bill that has already garnered 112 cosponsors.  Here is the official listing of the co-sponsors.  I thought about this after watching a Jimmy Dore youtube video where he interviews a guy who is primarying against Nancy Pelosi -- Pelosi also not yet a cosponsor and has said words to the effect that she is against single payer.  This makes me wonder if maybe I should primary against McCollum, even though she doesn't represent my residential district.  That would be a little ironic because Represents congressman Jason Lewis 'represents' my district, but resides in McCollum's district.

Democratic constituents, in these congressional districts that lean so heavily Democratic that the Dem candidate is all but guaranteed to get elected, should see the primaries as brass ring opportunities to get the most progressive candidate possible.  By that I mean there isn’t much of a need in those districts for a candidate to compromise in order to acquire the moderate fence sitters that might get put off by the far left progressive positions of a candidate.  But instead, it seems more so that the opposite has occurred, whereby the constituents of perennial House Democrats settle for progressive mediocrity in electing very conventional neoliberal, corporate friendly candidates.

Democrats need to embrace good regulations and progressive taxations to lure the Republican vote.

by Glen Wallace

We need a strong central government imposing regulations to protect the common man from the tyranny of the wealthy.  While, as a leftie progressive, I'm willing to admit that some regulations are onerous and unnecessary, I never seem to hear from a right wingnut regressive admitting that some regulations are helpful and needed to protect the worker, the consumer and the environment from harm or exploitation at the hands of a ruthless businessman.  It seems like the free market set want to create a social political environment where we return to the days of company towns where the residents are considered to have freedom because they aren't physically restrained from leaving -- never mind that the company town is in the middle of nowhere and none of the residents own a car or have a dime to their name that could be used to move out.

Let's remove the income tax and put in its place a federal property tax on the wealthy that covers not just real estate but any and all assets held by the top one tenth of one percent.

Good regulations are proactive whereas, any competitive marketplace without any regulation, is, at best, reactive in dealing with problems.  I say 'at best' because some business can go on harming customers, the environment or workers for years or decades before, or if ever, they get punished in the marketplace for their actions.

The Democratic Party could gain their biggest strength by undermining or outright removing the biggest rallying points for the political right wing.  Democrats could start by eliminating income tax for most, if not all, the 99 percent.  The loss of revenue could be compensated for by increasing the income tax on the top one tenth of the top one percent.  Additionally, there are a great number of other sources of potential revenue the could, and should be tapped -- high frequency trading machine tax, VAT tax, where resource extraction on Federal lands is a given, the transaction should be designed with a fiduciary responsibility towards the owners of that land -- the citizens of the U.S.

Additionally, the power over the ability to create money needs to be returned entirely to the people and taken away from the private Federal Reserve Banking system.  I'm not saying "end the Fed".  If they want to continue as a industry association where banks can voluntarily join, that's fine.  But monetary policy should be set by the US Treasury.  While supporters and representatives may claim that the Fed is audited and nothing untoward has been found, I would counter that there still could be something untoward going on with the Fed and its relationship to the American people it is supposed to be looking out for.  While the Fed may have only one set of accounting books, it may have two sets of strategy books.  That is, it may have a public strategy that complies with the Congressional mandate it is supposed to follow, it may have a private strategy that it instead follows that is directed at aiding the Fed's shareholders at the expense of the American people.  For, instance, had Fed insiders known early in the 2000's where the housing crisis was heading they could have made some strategic shorts, thus benefiting from the Fed's strategy to blow up the housing bubble.  Then when the bubble burst, Fed insiders could have had inside knowledge of the QE program and how it would be used to boost commodities and the stock market for which the insiders could take a long position ahead of the rise.    

But regardless, Democrats need to look at what is motivating the populist base of the Republican party that leads them to vote the way they have.  And then have an answer that might just persuade them to switch sides.  Remember, most of those Republican voters are not rich.  Hired disinfo agents may try to fire up that middle to lower class Republican base by complaining about wealth redistribution.  But I find it hard to believe that base will get worked up into much of a lather when hearing about how some sherry swilling, tailored suit wearing, manicured men with soft hands that never have seen a callous in its life, with a sixty thousand dollar Patek Philippe watches sitting just above those soft hands, has to fork over more in taxes -- especially when that would mean those working class Republicans get to avoid paying income tax altogether.

Additionally, where regulations are concerned, show how good regulations protect the consumer, the environment and the worker from unscrupulous business owners and how a strong government acts as a measure against such businesses.  Without a strong government there is a power mismatch between the little guy and the tycoon.  But where there is unnecessary, onerous regulations, Democrats should be seen working hard to end such bad regulations while continuing to strengthen, tweak, enhance good existing regulations while enacting new good helpful regulations.

Michael Hudson, how do we extricate the economic parasites from the main street host?

Comment I posted following the above youtube video speech by economist Michael Hudson.

by Glen Wallace

I still have some questions.  I guess my main question, from which all my other questions or concerns regarding Michel Hudson's philosophy, revolves around how to safely extricate the parasitic elements of FIRE (finance, insurance and real estate) from the main street host.  I  say, the parasitic elements of FIRE, because I think it oversimplifies things to imply that all of FIRE is a parasitic malevolent force on society.  But reading and listening to Mr. Hudson, it isn't entirely clear to me whether he thinks all of FIRE is parasitic or for what aspects are so, how do we go about the extrication process safely.  It would seem to me that we living in a much more complicated situation insofar the parasite and the host are sharing the same 'blood supply', so to speak.  Therefore, just yanking off the parasite could be very hazardous to the health of the host.  While the top 5 percent may own the bulk of stock equities, I think a lot more than 5 percent of the population own a significant amount of stocks, usually through their 401k's or 403b's and IRA's.  So any actions that has knock-on effect of crashing the stock market and a lengthy trough could be financially devastating to much of the remaining middle class population.  While maybe the markets and the economy could have let Citibank fall, I'm not so sure about AIG.  While lending may be currently tight, correct me if I'm wrong, but I believe there is still a great deal of small business lending going on with banks and credit unions providing loans for businesses very frequently.   However, if that lending were to really dry up completely as we were warned could have happened if not for the infusion of stimulus cash into the economy soon after the fall of Lehman Brothers, then wouldn't we be facing an economic crisis on a scale severe enough to lead to a civil emergency similar to a natural disaster?

Further complicating matters, isn't that there is a legitimate element to each area of FIRE.  How are we going to, in any parasite extraction process, separate any legitimate actors from the malevolent ones?  I'm not saying it can't be done, but we need to make sure we aren't throwing the baby out with the bath water, so to speak.  To take an analogy from the movies that I think has some realistic relevance to main street finance -- let's make sure we don't take measures that bring down the Bailey's Savings and Loan of the world while trying to go after the Potter's empire of the world, from the movie 'It's a Wonderful Life'.  And to take examples not from the movies but straight from today's economic realities -- in terms of a mass discharging of debt, that sounds nice for the students facing mounting student loans but it doesn't sound so nice for the current and future retirees expecting municipalities and corporations to meet their highly underfunded pension debt obligations.

I don't mean to be a naysayer but we need to come up with a plan where we have covered all the bases so that we can not only answer the tough questions, but also to get to where we are to trying to go.   Indeed, I'm concerned that if we were to implement a plan, for instance, that did crash the markets and dry up small business loans, then the parasitic malevolent elements would sweep in like the Potter character from the movie previously mentioned, and say to the effect "see, you were wrong all along, so from now on let me do the thinking and planning while I buy up all of your land and shares for pennies on the dollar."

I have all sorts of ideas myself for how to go about the parasite extraction process.  I think Bernie Sanders has some good ideas that are a good start, but I think we can safely be a lot more aggressive with progressive reforms than even he is suggesting.  For instance, I haven't heard Sanders even mention what I think we need to delve into and that is Federal asset taxes on corporations and the top one tenth of one percent of individuals.  That, and we need to access revenue from other novel sources as well such as a Wall Street high frequency trading machine transaction tax.  We can also get revenue from increased Tariffs and Excise taxes.  We should also be better leveraging revenue when natural resources are extracted from federal lands.  Personally I would rather Federal lands be preserved as much as possible in their natural state, but if it is already decided to sell some of the land's resources, we might as well do so in a financially responsible manner.  So, instead of selling off the rights to all the timber in a tract of Federal land in a no-reserve auction, sell the timber for the going rate per board foot just as a private landowner would.  Additionally, the US Treasury could bypass the private Federal Reserve, and increase the money supply by minting more coins in larger denominations.  Then all this new revenue and money could be used towards instituting an FDR type of civilian conservation corp like program to rebuild our nations infrastructure.  Additionally we will be needing a lot of revenue if we are to have any chance of making up for the looming pension shortfalls that, if not remedied, will be hard on not only the pensioners, but also the overall economy due to the resultant lowering of aggregate demand from retirees have much less dollars to spend in their pockets.  

Wealth Redistribution to Lift All Boats

The dwindling middle class indicates that the only boats rising are yachts sitting in the torpid pools of wealth amassed by the capitalist sharks. Meanwhile, the middle class tributaries are running bone dry, leaving the middle class row boats sitting on dust. Therefore, the only logical solution is to install pumps in the form of asset taxes into those stagnant wealth pools to insure that the wealth gets rerouted and redistributed back into those tributaries. Trickle down economics has been proven false time and again. However, getting money into the hands of those who will in turn put those funds back into circulation by spending it, the middle class, has been shown to have a tremendous positive knock-on effect throughout the overall economy. But to keep the economy booming you need to keep those tax pumps going to insure money doesn't start stagnating again and rotting in those torpid wealth pools.

Everything is pointing to Hayek being completely wrong -- in fact he had everything backwards. Instead of a free-market being the road to freedom, it turns out that the term 'free-markets' is just a rebranding of the term 'laissez faire'. And laissez faire has always been and always will be the direct route to serfdom -- and with the struggling middle class we are seeing that first hand in the form of the handywork of Hayek's intellectual descendants, the Chicago School of economics. And despite the clear evidence that the Chicago school's laissez faire or freemarket methods of hands-off through repeal of Glass-Steagall and lack of oversight and control of the derivatives market lead directly to the great recession, there has been little corresponding acknowledgment or recognition of the evident refutation of the Chicago School's economic paradigm.

We can get the middle class back on its feet again, but we need judicious government oversight and regulation along with a good amount of wealth redistribution. One excellent means of redistributing the wealth would be through programs similar to FDR's programs involving the Civilian Conservation Corp. A massive government program to repair, rebuild and reinforce our nations infrastructure would go a long ways towards getting money back into the economy and refresh and enhance the conduits of commerce. It would be a win win for everyone, including the much more heavily taxed very wealthy who didn't even know what to do with all that they had, but with such a program, could be proud that their tax dollars were put to such good use; rebuilding a great America.

Venus Project oversimplifying scarcity and human behavior

by Glen Wallace

I think Jacque Fresco of the Venus Project is oversimplifying the principle of scarcity and how that relates to how humans value any given good or services.  People don't, wont and wouldn't act in a way that would fit in so neatly into his idea of how people respond to an abundance of any material good.  When some thing that is needed or wanted by the public becomes abundant, there is always some subset of the population that wants that abundant thing in an improved form that is not so abundant.  People often are not satisfied with some thing being merely adequate in a utilitarian sense.  It varies with the product as to how satisfied the general population of consumers tends to be with some product being merely adequate to getting a job done.

It is not difficult to find examples for demonstrating how the principle of dissatisfaction with adequate works and comes into play in everyday consumerist life.  In fact, the difficult part is in finding examples of products where satisfaction with adequate is nearly universal.  Instead, just look at any group of consumers in any category of shopping and you discover a plethora of varying desires and ideas for what they are looking for in a product beyond merely getting the job done.  

For a first example, think of any of the house shopping and house remodeling reality TV shows.  If you watch one of those shows, it wont take long to find either the potential buyer or seller or often both complaining about how a perfectly functional kitchen is outdated.  I watch such shows and I wonder to myself what are they complaining about as the kitchen usually looks perfectly fine to me.   And usually such kitchens are indeed perfectly functional but merely the style is no longer in vogue.  So in they come with all their drills, saws, pry bars and hammers and start ripping the thing apart, expending all sorts of human labor and money and time to get right back where they started from functional point of view.  

And even for a product where a large majority of the population is satisfied with merely getting the job done, there usually is going to be some subset of connoisseurs that are unsatisfied with adequate and still want something special in the product.  An example there would be the ordinary CD player that has become so ubiquitous that you can find them built into the cheapest boom box and still sound pretty good.  Nonetheless, audiophiles insist that the sound of CD players can be significantly improved through circuitry and better DAC chips.  As a result a demand quickly emerged in the audio market sufficient for a great number of manufacturers building and selling boutique CD players for prices ranging from hundreds of dollars for a single unit to many thousands of dollars.  The demand for a product and a scarcity of the higher end product emerged despite a dearth of scarcity of the adequate, lower end product.  

But from my understanding of Jacque Fresco, he seems to be claiming that people wouldn't do in his vision of the ideal Venus Project world what people are indeed already are doing time and time again here in today's everyday world.   Even if something is not scarce, people will continue to desire that same something in a deluxe form that some of those people believe is a better form, but is scarce in that deluxe form.  All this demonstrates two of my main concerns with the Venus Project and the Zeitgeist movement -- First, there seems to be disconnect with the reality of everyday world and how people behave in this world and how they would behave in the worlds envisioned by those movements.  The people behind those movements seems to have become so fanciful in their ideas that they never seem to come up with a starting point in today's world where the first 'baby steps' are taken that would move society towards their utopia and what those first steps would and should be.  The second concern is with the possibility that people might be told, by the powers that be in a Venus Project that has come to fruition, what they, the citizens, want or should want in terms of products.  Would the Venus Project political powers make it illegal to buy and sell scarce, hand crafted objects? 

 OK, now were delving into the area of where it might sound like I'm supporting the ideas of Hayek in his book 'The Road to Serfdom' -- but I'm not, at least I am not a universal supporter of the so-called free market system of economics.   Indeed, I think a great deal of government intervention is needed to create an environment where smaller entrepreneurs are on a more even competitive plane with the larger corporations.   It is these smaller crafts people that improve the merely adequate product, that have a more difficult time absorbing many of the costs of doing business compared with the giant corporation.   So with government intervening to redistribute the wealth of the big business towards the small business, the freedom of both the budding entrepreneurs ability to bootstrap and start a small business and the shopping consumers ability to choose from a greater variety of products, is increased.  With Hayek's brand of laissez faire economics, the economies of scale present inherent advantages to the large conglomerates that lead to monopolies and trusts that decrease the choices of the consumer, the worker and the budding entrepreneur.