"Crony Capitalism Comes Home"

Nicholas Kristof:

When I lived in Asia and covered the financial crisis there in the late 1990s, American government officials spoke scathingly about “crony capitalism” in the region. As Lawrence Summers, then a deputy Treasury secretary, put it in a speech in August 1998: “In Asia, the problems related to ‘crony capitalism’ are at the heart of this crisis, and that is why structural reforms must be a major part” of the International Monetary Fund’s solution.

The American critique of the Asian crisis was correct. The countries involved were nominally capitalist but needed major reforms to create accountability and competitive markets.

All Coffered Up With No Place To Go!

Even the banks are falling on "hard times"...uh...if that means "more money than you know what to do with."  These jerks royally screwed us, crashing the economy...and their narrow-gauge profiteering even has them tripping up themselves, having broken their own business model. If you want to use a bank to deposit savings - which one assumes from the origins and alleged social utility of banks would be as welcome as buying a hamburger at MacDonalds - increasingly their message is "don't bother."

The New York Times - "Banks Flooded With Cash":

Bankers have an odd-sounding problem these days: they are awash in cash.

"Iraq by the numbers...$3-5 trillion in total economic cost to the US..."

Think Progress' Eli Clifton, "Iraq By The numbers - The World's Costliest Cakewalk":

"Heckuva Job!"

(W)hile the return of all U.S. service men and women by Christmas is a cause for celebration, the costs of the war are only beginning to be fully understood. The “cakewalk” to Baghdad, as George W. Bush adviser Kenneth Adelman infamously wrote in February, 2002, has been anything but. The Iraq War, and the faulty premise that Saddam Hussein was developing weapons of mass destruction, has had a staggering humanitarian and economic cost.

Here are some relevant numbers:

The "Official" GDP Lag

The US economy is producing close to a trillion dollars less in goods and services annually than it should be producing under "normal" conditions. That is disastrous for employment, the revenue base and economic competitiveness as skills erode and innovation slows.

 From the Wall Street Journal:

6.7%: The gap between U.S. GDP and its potential.

It looks as if, despite everything, gross domestic product picked up in the third quarter, easing fears that the U.S. was on the cusp of another recession. But that doesn’t mean the economy is anywhere near where it needs to be...

Experts quibble about exactly where potential GDP is these days, and that’s especially true in light of all the damage the economy has suffered. Companies have invested less on new plants and equipment, unemployed workers’ skills have eroded, and some people have exited the work force for good — all things that have likely lowered the economy’s potential. But even so, everyone agrees it is still much, much higher than what we’re getting now.

US median wage is just $4000 above the "family of 4" poverty line

Reported at NASDAQ:

The 3-decade shift of income to the economic elite

The Social Security Administration released data on U.S. wages and payroll in 2010 this week, and the news isn't good for most of the working class or middle class.

Though the average wage of a single earner stood at $39,959.30 per year, that number was skewed by those at the very top of the survey - the 93,725 earners who took home more than $1 million annually. That top sliver - a fraction of a fraction of the top 1 percent - collectively took home $224.6 billion, or about $2.4 million per top earner. (Ed. note - over a quarter of total W2-type wage income, that figure does not include income from sources such as capital gains.)

The Global 1%

Via Think Progress:

Millionaires Control Almost 40 Percent Of The World’s Wealth, Make Up Less Than 1 Percent Of Its Population | According to a new Global Wealth Report from Credit Suisse, millionaires and billionaires control nearly 40 percent of the world’s wealth, while making up less than 1 percent of its population. “The 29.7 million people in the world with household net worths of $1 million (representing less than 1% of the world’s population) control about $89 trillion of the world’s wealth. That’s up from a share of 35.6% in 2010,” the report said. As the Wall Street Journal’s Robert Frank put it, “here’s another stat that the Occupy Wall Streeters can hoist on their placards.”

Thoughts for the day...on the "Cut Social Security and Medicare that drive deficits" hype

From Dean Baker:

(I)t would take just 5 percent of the projected wage growth over the next 30 years to make the Social Security trust fund fully solvent for the rest of the century.

Health care costs are projected to take more of people's income, but this is far more the result of our broken health care system. If we paid the same per person for our health care as other wealthy countries we would be facing enormous budget surpluses in the decades ahead. If our per person costs were the same as the average of other wealthy countries it would free up more than $1.2 trillion a year ($4,000 per person) for other uses.

The impact of Herman Cain's "9-9-9" tax plan...

...in one REALLY LONG graph, via Jared Bernstein and the Tax Policy Center.

Cain:"Stupid people are ruining America!"

Presidential aspirant, book tour star and pizza Godfather Herman Cain has a tax plan that raises taxes on the bottom 80% of the population.

The working poor see their taxes raised nearly $2000 on average.  Most Americans who have jobs will see a tax increase of around $4000 - while the top 20% of earners will see a tax reduction of over $14,000 on average.  But even that average distribution is deceptive.  What's most startling is how Cain's plan benefits the top 1% - and even more amazing, how his plan cuts taxes on the top 10% of that top 1%:

Wall Street thrives while Main Street struggles

Corporate profits are at a 60 year high - but 40% of small businesses see their earnings declining. Travis Waldron at Think Progress has it:

Even as the economy struggles, corporate profits continue to rise. Wells Fargo, the largest consumer lender in America, announced today that its third-quarter earnings rose 21 percent, to $4.1 billion. Citigroup, the nation’s third-largest bank, also released its earnings statement today, announcing that its third-quarter earnings rose 73 percent over last year, with $3.8 billion in profits. Even though JP Morgan Chase saw its earnings fall from a year ago, it still raked in more than $3 billion in profits.

Corporate profits as a share of the nation’s gross domestic product, in fact, are at their highest point since 1950. Recent snapshots, however, tell a much different story on Main Street, where small businesses are limping through an economic recovery that treated corporations much more kindly. According to the National Federation of Independent Businesses’ September report, two out of every five small businesses reported that profits are falling:

A voice from the "1%"...in solidarity with "Occupy Wall Street"

I just saw this via Ezra Klein ("Financiers for Occupying Wall Street"), having missed it last week.  Mohammed el-Erian is co-CEO of PIMCO, one of the world’s largest — and wealthiest — bond trading operations, with more than $1 trillion under management. Surprsingly and to his great credit, el-Erian has written a commentary on the virtues of "Occupy Wall Street," cautioning the media,  the economic elite of which he is a part, and the politicians to take notice, to listen and to collaborate on fundamental reforms:

To those wondering whether to pay attention to the "Occupy Wall Street" (OWS) protests, the answer is yes. This is more than just a nascent movement that will grow in the weeks and months ahead. It is part of a worldwide drive for greater social justice. 

Like recent examples of peaceful grass-root protests -- from those that delivered the Egyptian and Tunisian revolutions to the massive street demonstrations in Israel -- OWS has taken many by surprise. In just a few weeks, a self-organized group of diverse individuals planted the seed for what is becoming a national movement that exponentially gains energy and visibility… 

A peaceful drive for greater social justice can unify people from diverse cultural backgrounds, political affiliations, religions, and social classes. 

If you doubt this, go ask the Arab governments overthrown by secular forces that they were slow in understanding and inept in reacting to...

"Inequality not only stinks, but also damages economies"

New York Times columnist Nicholas Kristof - calling the Occupy Wall Street movement "America's Primal Scream" - looks at income inequality as the measure of an economy as damaged and dysfunctional:

RIP Jimmy Stewart

Living under Communism in China made me a fervent enthusiast of capitalism. I believe that over the last couple of centuries banks have enormously raised living standards in the West by allocating capital to more efficient uses. But anyone who believes in markets should be outraged that banks rig the system so that they enjoy profits in good years and bailouts in bad years.

The banks have gotten away with privatizing profits and socializing risks, and that’s just another form of bank robbery.

“We have a catastrophically bad misregulation of the financial system,” said Amar Bhidé, a finance expert at the Fletcher School of Law and Diplomacy at Tufts University. “Its consequences led to a taint of the entire system of modern enterprise.”

Economists used to believe that we had to hold our noses and put up with high inequality as the price of robust growth. But more recent research suggests the opposite: inequality not only stinks, but also damages economies.

In his important new book, “The Darwin Economy,” Robert H. Frank of Cornell University cites a study showing that among 65 industrial nations, the more unequal ones experience slower growth on average. Likewise, individual countries grow more rapidly in periods when incomes are more equal, and slow down when incomes are skewed.

Graph via Mother Jone

That’s certainly true of the United States. We enjoyed considerable equality from the 1940s through the 1970s, and growth was strong. Since then inequality has surged, and growth has slowed.

One reason may be that inequality is linked to financial distress and financial crises. There is mounting evidence that inequality leads to bankruptcies and to financial panics.

Calculating the costs of the Bush tax cuts...

Just for the top 5% of incomes:


(Source: National Priorities Project)
 via Wonkblog

"Britain's Self-Inflicted Misery"

An excellent editorial in the New York Times on the disastrous British austerity strategy - which, as the authors point out, is an ideology more than a viable economic plan:

PM Cameron cogitates

For a year now, Britain’s economy has been stuck in a vicious cycle of low growth, high unemployment and fiscal austerity. But unlike Greece, which has been forced into induced recession by misguided European Union creditors, Britain has inflicted this harmful quack cure on itself.

Austerity was a deliberate ideological choice by Prime Minister David Cameron’s ruling coalition of Conservatives and Liberal Democrats, elected 17 months ago. It has failed and can be expected to keep failing. But neither party is yet prepared to acknowledge that reality and change course.

Britain’s economy has barely grown since the budget cuts began taking effect late last year. The most recent quarterly figures showed the economy flat-lining, with growth at 0.1 percent.

New figures released this week reported Britain’s highest jobless numbers in more than 15 years.

Remembering The New Deal

This excerpt, published at Slate courtesy of the Free Press, comes from Michael Hiltzik’s new book, The New Deal: A Modern History.

During the years of the New Deal, America’s government built as it never had before—or has since. 

The New Deal physically reshaped the country. To this day, Americans still rely on its works for transportation, electricity, flood control, housing, and community amenities. The output of one agency alone, the Works Progress Administration, represents a magnificent bequest to later generations. The WPA produced, among many other projects, 1,000 miles of new and rebuilt airport runways, 651,000 miles of highway, 124,000 bridges, 8,000 parks, and 18,000 playgrounds and athletic fields; some 84,000 miles of drainage pipes, 69,000 highway light standards, and 125,000 public buildings built, rebuilt, or expanded. Among the latter were 41,300 schools.

The transformative power of this effort is inestimable. The Tennessee Valley in 1933 was a quintessential backwoods region of “grim drudgery, and grind” in the words of its savior George Norris: beleaguered by floods, drained of its manpower by the siren call of the cities, the latent wealth of its river and lumber left fallow. The TVA of Norris and Franklin Roosevelt turned it into a land of plenty that called its workers home, put its natural endowments to productive use, and delivered to its residents the promise of a secure American middle-class lifestyle.

The Republican Rabbit Hole

Paul Krugman marvels at the GOP's "adventures in Wonderland":

Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.

And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.

In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.

But down the rabbit hole, none of that happened.

Polish Hero Lech Walesa in Solidarity with Occupy Wall Street

It will be interesting to see how Occupy Wall Street's critics respond to this:

Solidarity hero Lech Walesa is flying to New York to show his support for the Occupy Wall Street protesters.

"How could I not respond," Walesa told a Polish newspaper Wednesday. "The thousands of people gathered near Wall Street are worried about the fate of their future, the fate of their country. This is something I understand."

A former shipyard worker who led Poland's successful revolt against Soviet communism, Walesa said "capitalism is in crisis" and not just in America.

"This is a worldwide problem," he told the Lublin-based Dziennik Wschodni newspaper. "The Wall Street protesters have focused a magnifying glass on the problem."

Cainsian Economics - "The Devil is in the details"

Lawrence O'Donnell and Bruce Bartlett - with an assist
from Michele Bachmann - dissect the GOP "frontrunner du
jour" and pizza Godfather's devilish 9-9-9 Plan to raise
taxes on the working poor and cut taxes for the rich:

Visit msnbc.com for breaking news, world news, and news about the economy

"Founding Fathers" quote of the day - and what it means for us in the present tense

We are free today substantially,  but the day will come when our Republic will be an impossibility.

It will be an impossibility because wealth will be concentrated in the hands of a few. A republic cannot stand upon bayonets, and when that day comes, when the wealth of the nation will be in the hands of a few, then we must rely upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions.

The "Father of the Constitution", President James Madison,  cited in "The Great Quotations" by George Seldes - via Washington Monthly.

Rick Ungar adds this perspective on our current problems to Madison's quote:

Robert Reich - The 7 Biggest Economic Lies (in 2.5 minutes)

Via robertreich.org

Occupy Wall Street - the view from a "Wall Street Insider" at Big Business journal, FORBES

This commentary on the Wall Street protests from Gene Marcial is interesting primarily because it appeared on the Forbes magazine website. Forbes characterizes itself as "Information for the World's Business Leaders." Marcial wrote the "Inside Wall Street" column at Business Week for 28 years:

Surely, it’s time for the nation’s leaders to meet with the Occupy Wall Street protesters and publicly address their grievances. The country’s decision makers, most notably those in Congress, can’t simply watch idly by and wish them away, as they appear to be doing...

One of the major problems that most Americans feel is their utter sense of frustration and helplessness in the face of the mounting oppressive problems that the gasping economy and rudderless leadership in Congress have engendered. So this expanding public outcry shouldn’t be  surprising at all.

9-9-9: "Raising Cain" or just raising taxes on those who can least afford it?

"Don't condemn me because the first black one was bad."

Republican Presidential aspirant, pizza Godfather and book tour star Herman Cain has caused controversy with various remarks. He's labeled peaceful demonstrators "anti-American" because they call into question income inequality, waves of foreclosures after bailouts of banks and tax-fairness issues.

Worse, he has called African-Americans "brainwashed" because they've trended overwhelmingly toward the Democratic Party - their "plantation masters" according to Cain - since the 1960s when the GOP first ran a presidential candidate who opposed the Civil Rights Act and Republicans began eagerly embracing Dixiecrats who couldn't accept change.  In recycling that racial attack and posing as the "responsible" black man, Cain is giving cover to bigots like Rush Limbaugh who routinely smear black Democrats in the same vein.

And, while pandering to the GOP's racial polarization, Cain has the temerity to describe himself as a "real black man" - as opposed to President Obama.  That one is worthy of contempt, but no further comment.

In all of the brouhaha about Cain's rhetoric as he's rising in the GOP polls, appealing directly to the Tea Party base that is steeped in white resentment and hatred of President Obama, Cain's 9-9-9 tax plan tends to get overlooked. It's a 9% tax on income, a 9% tax on business profits and a 9% national sales tax.  Cain would entirely eliminate capital gains taxes - making even worse one of the most unfair income tax loopholes on the books.

On it's face, Cain's 9-9-9 scheme is obviously a tax break for the rich. Worse, it's a tax increase for the folks with the lowest incomes.  And as formulated it's even a bad deal for many businesses and for job creation.

The Wall Street Protests

In a stunningly on-point editorial, the New York Times gets it:

As the Occupy Wall Street protests spread from Lower Manhattan to Washington and other cities, the chattering classes keep complaining that the marchers lack a clear message and specific policy prescriptions. The message — and the solutions — should be obvious to anyone who has been paying attention since the economy went into a recession that continues to sock the middle class while the rich have recovered and prospered. The problem is that no one in Washington has been listening.

Willful Distortion

William Galston of Brookings Institution and The New Republic on George Will's "misunderstanding" of Elizabeth Warren and modern liberalism:

"Baseball should be beyond the whims of the unwashed"

George Will and I have something in common: We were both trained in the close reading of political texts. Will recently applied his interpretive skills to a statement by Elizabeth Warren, who is running for the Democratic senatorial nomination in Massachusetts. Here is what Warren said:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. … You built a factory and it turned into something terrific or a great idea—God bless, keep a big hunk of it. But part of the underlying social contract is [that] you take a hunk of that and pay forward for the next kid who comes along. 

After applying to Warren’s words William F. Buckley’s description of John Kenneth Galbraith—a pyromaniac in a field of straw men, refuting propositions no one asserts—Will moves to the gravamen of his argument: Warren’s vision entails a collectivist political agenda. He tartly and uncharitably described that agenda as follows:

Annals of Class Warfare - "Look who's talking" edition!

Quote of the Day

Via Eric Alterman:

“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few,” the great liberal jurist Louis Brandeis prophesied in the second decade of the 20th century. “But we can't have both.”

"Bernanke's Mostly Right"

Administration critic Robert Kuttner gives Federal Reserve Chair Ben Benanke pretty good marks on the substance of his testimony before Congress this past week.

I would not expect these guys could agree on ordering lunch - and while the substance of the commentary is worrisome, it's heartening to see some of the distance lessen between Bernanke and one of the administration's toughest liberal critics:

Fed Chairman Ben Bernanke says the economy is on the verge of another recession—“close to faltering” was his euphuism of choice in his testimony to Congress Tuesday—and there is only so much the Federal Reserve can do about it.

For once, he is mostly right.

"Krugman's Army?"

Rich Yeselson, an experienced organizer,  research coordinator at Change to Win and historian of social movements in America and Europe, commenting at Ezra Klein's WonkBlog on "Occupy Wall Street":

(T)he emergence of the Wall Street movement is a reminder that the liberal left has not in quite a few years actually driven anything like a mass social movement in this country. When Obama was elected, some people made the mistake of thinking that an election-bounded jolt of energy that conflated a charismatic candidate with a popular political vision was such a movement. Nobody thinks that anymore.

The left does have something important however: a coterie of several thousand intellectuals, academics, writers, and engaged professionals who articulate liberal public policy, generate empirical and analytical expertise through the Internet, the media, and universities, and staff the offices of advocacy groups and progressive politicians on the local and national level.

David Frum: "On the most urgent issue of the day...the GOP is seriously wrong"

I am loathe to credit former "W" Bush speech-writer David Frum - a leading proponent of the Iraq war and author of the nutty and utterly incoherent "Axis of Evil" (Iraq-Iran-North Korea) locution that signaled the cynicism and delusions of the Bush-Cheney inner circle - but increasingly Frum has come around to a relatively reasonable and chastened  conservatism that rejects the aggressive ignorance of the Tea Party Right and takes a step back from the most assertive neo-conservative expressions of global bullying as a "national security" strategy.

In a commentary entitled, paradoxically, "What Romney Gets Right", the conservative gadfly Frum acknowledges that the GOP is totally bankrupt in its economic agenda.

Frum's conclusions about the chameleon Romney are tepid at best ("the only one who has shown any degree of skepticism about the profoundly and dangerously mistaken Republican consensus"), but his indictment of Republican orthodoxy is brutal, considering it's coming from a very conservative author:

On the most urgent economic issue of the day – recovery from the Great Recession – the Republican consensus is seriously wrong.

Jon Stewart on the GOP "Front-Runner" - Mitt Romney & his dueling personalities

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

The "One Percenters" - charting the economic elite

From Think Progress - The top five facts we should know about the wealthiest 1% at the pinnacle of growing U.S. income inequality:

1. The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth: As Nobel Laureate Joseph Stiglitz points out, the richest 1 percent of Americans now own 40 percent of the nation’s wealth.

The "Government regulations are killing jobs!" canard - Desperate claims by desperate men

The Republicans are desperate. They have no serious policy agenda in the face of our jobs crisis - other than  recycling the most stale, disreputable and evidence-free assertions about taxes and federal regulations "killing jobs," despite all evidence to the contrary.

Lingering extreme unemployment is driven by lack of consumer demand - there's not enough spending to sustain full recovery.  Businesses - small businesses in particular - are not hiring because they're not making sales. Taxes are lower than ever and government regulations have nothing to do with the extended crisis - other than regulatory failure in the financial sector helping to trigger the economic collapse three years ago.

Conservative commentator and former Reagan White House aide Bruce Bartlett, writing at NYTs Economix, takes the regulation hysterics apart and finds an empty shell of an argument lodged by opportunistic politicians totally comfortable with fabrication and misdirection:

Once more...it's "Yes, We Can!' - not "Yes, He Can!"

E.J. Dionne columnizes at WAPO:

Why hasn’t there been a Tea Party on the left? And can President Obama and the American left develop a functional relationship?

That those two questions are not asked very often is a sign of how much of the nation’s political energy has been monopolized by the right from the beginning of Obama’s term. This has skewed media coverage of almost every issue, created the impression that the president is far more liberal than he is, and turned the nation’s agenda away from progressive reform.

Annals of Class Warfare

Warren Buffett:  

"The rich people are doing so well in this country. I mean, we never had it so good...It's class warfare, my class is winning, but they shouldn't be."

From Protest to Policy: "Three Concrete Demands to Hold Wall Street Accountable"

 Mike Konzcal of the Roosevelt Institute:

The (Occupy Wall Street) protesters emphasize that their demands are "a process" intended to allow people to "talk to each other in various physical gatherings and virtual people's assemblies ... [and] zero in on what our one demand will be, a demand that awakens the imagination."

Since they're looking for suggestions, here are three policy changes that should be on their list of demands. There is often a conflict between demands that are specific requests versus visions of where we want to end up. These three try to do both. They are specific demands that speak to the long-term end goal of a better, more just economy.

A National Infrastructure Movement - proposed organizing strategy as the first, concrete step to "Rebuilding the Dream" (discussion draft)

I'm going to break with much of the "sturm and drang" convention of the blogosphere and, rather than register my "outrage" at events, suggest a way forward from some of the impasse and negativity - a proposal predicated on political organizing beyond the constraints and constricted expectations of electoral politics that are too-often reduced to the cynicism of "voting against" rather than "voting for."

I believe it is imperative for sensible people to offer some alternatives to the "grass-roots" (such as it is) far-right populism of the Tea Party movement that has managed to gridlock Beltway politics around the most retrograde notions, and for self-styled progressives,  liberals and, yes, concerned "moderates" to begin the difficult work of bringing the country together - beginning at the grass-roots community level - around  constructive agendas and the realization that there is more to civic action and engagement than electoral politics.

The Jobs Crisis

Mark Thoma ("Economist's View") asks, "Why isn't the unemployment crisis a national emergency?"

Fourteen million people are unemployed, long-term unemployment remains near record highs, the ratio of job seekers to job openings is 4.3 to 1, and the employment to population ratio has dropped precipitously. Even if the economy grows at a robust average of 3.5% beginning in 2013, labor markets won’t fully recover until 2017. And if average growth is only 3.0% – well within the range of possibility – it will take until 2020. In short, labor markets are in crisis and the longer the crisis persists, the more permanent and growth-inhibiting the damage becomes.

Class Warfare Alert! - The GOP's budget proposal guts skills training for unemployed job seekers

 

GOP Speaker of the House, John Boehner:  “Since the moment Americans entrusted us with the majority, our focus has been on job creation...

"Helping Americans get back to work is our number one priority..."

Think Progress reports on how this "priority" works in practice:

House Republicans yesterday released their draft budget proposal for labor, health, and human service, which in one fell swoop revives the assault on all their favorite bugaboos, including Planned Parenthood, National Public Radio, the National Labor Relations Board, and President Obama’s health care reform law. The GOP also targeted heat subsidies that prevent low-income families from freezing in the winter, and slashed education funding by $2.4 billion. The bill also eliminates the Administration’s “Race to the Top” education reform program and reduces eligibility for Pell Grants for low-income college students.

Perhaps most surprisingly for a party that claims to be focused on job creation, the GOP budget reduces funding for job training programs that give the unemployed the skills they need to find work in an ailing economy:

Right Wing Market "Theology" vs. Econ 101

Paul Krugman, observing that "Markets Can Be Very, Very Wrong":

The Gospel According to Milton Friedman

Externalities like pollution are one of the classic forms of market failure, and Econ 101 says that this failure should be remedied through pollution taxes or tradable emissions permits that get the price right...

Today’s American right doesn’t believe in externalities, or correcting market failures; it believes that there are no market failures, that capitalism unregulated is always right. Faced with evidence that market prices are in fact wrong, they simply attack the science.

What this tells us is that we are not actually having a debate about economics. Our free-market advocates aren’t actually operating from a model of how the economy works; they’re operating from some combination of knee-jerk defense of the haves against the rest and mystical faith that self-interest always leads to the common good.

The slogan is "Yes We Can," not "Yes He Can"

Winning Progressive offers an excellent perspective on the 2012 re-election campaign, on President Obama's leadership and on the responsibilities of his supporters:

A significant challenge facing the Obama Administration as it gears up for the 2012 re-election campaign is that the President is not positively defined in the minds of many voters.  A look at the entire record of President Obama shows that he has been a pragmatist who, while far from perfect, has led our country through daunting times and achieved significant progressive victories in the face of intractable opposition.  Yet far too many progressives see him as a compromiser always ready to sell out progressive values, while many moderates see our President as a failure who has achieved very little.  Neither of these views is accurate and, consistent with the slogan “Yes We Can,” we must all pitch in to help get out to the public an accurate portrayal of the Obama Administration, its successes, and the areas where improvement is needed.

Helluva job - if you can get it...

Eric Dash @ New York Times - "Outsize Severance Continues for Executives, Even After Failed Tenures":

Graphic: Mintblog - How The Bankers Went Down

Just last week, Léo Apotheker was shown the door after a tumultuous 11-month run atop Hewlett-Packard. His reward? $13.2 million in cash and stock severance, in addition to a sign-on package worth about $10 million, according to a corporate filing on Thursday.

At the end of August, Robert P. Kelly was handed severance worth $17.2 million in cash and stock when he was ousted as chief executive of Bank of New York Mellon after clashing with board members and senior managers. A few days later, Carol A. Bartz took home nearly $10 million from Yahoo after being fired from the troubled search giant.

A hallmark of the gilded era of just a few short years ago, the eye-popping severance package continues to thrive in spite of the measures put in place in the wake of the financial crisis to crack down on excessive pay.

Where the Tea Party has taken us...

It's not likely we'll ever again have the opportunity to use a news item from the Oil And Gas Financial Journal, but here's their piece on Kentucky's Tea Party Senator, Rand Paul, and his fight to end government regulation of business:

San Bruno CA gas pipe explosion

Republican Senator Rand Paul of Kentucky is single-handedly blocking federal legislation on pipeline safety that the pipeline industry overwhelmingly supports. Paul says he opposes the regulation on “philosophical grounds.” He was elected to the Senate in 2010 with Tea Party support, and Paul and that group are committed to reducing government regulations and “downsizing” the federal government.

Paul is the lone member of the US Senate who opposes a bill that would strengthen safety rules for oil and gas pipelines, a measure that some of the largest trade associations in the pipeline industry, including the Interstate Natural Gas Association of America (INGAA), the American Gas Association (AGA), and the Association of Oil Pipelines, support.

Small businesses are hurt by lack of demand, not taxes or regulations

The right-wing mantra is that taxes and regulations are the biggest problems afflicting small businesses.  This contention is fabulist - as in "made up BS unsubstantiated by the evidence."  Here's a graph, courtesy of the Economic Policy Institute,  showing the relative concerns of small business people dating back to the Nixon years. The problem in today's economy is lack of demand - consumer spending - not taxes or regulations. Overwhelmingly. In fact, concern over taxes and regulations under Obama are at about the same levels they were during Reagan's second term:

The Lovely Lands of Low Taxes

Conservative economics commentator Bruce Bartlett (domestic policy advisor to Ronald Reagan and Treasury official under GHW Bush), at the NYTs, takes a look at the reality of countries where tax rates are super low:

I’m not saying that Republicans are anarchists, only that when it comes to taxes they talk as if they are. Their default position is that there is no level of taxation below which it would be unwise to go, no tax cut too large not to be taken seriously and no justification for a government any larger than one that could be drowned in a bathtub, as the Republican activist Grover Norquist once put it. The Wall Street Journal editorial page routinely refers to those who pay no taxes as “lucky duckies,” as if zero taxation is the ideal state of nature.

Oddly, one never hears Republicans praise those countries where people are lucky duckies — those where taxation is a small fraction of what it is here. Let’s take a look at some of the places.

The Great Green Obama Scandal! Brace yourselves!

GOP's Issa engaged in oversight.

Joe Nocera at the NYTs on the GOP-led investigation into a failed solar panel manufacturer, Solyndra, which originally was given the green light for government loans by the Bush administration. The federally-guaranteed loan materialized after Obama took office, with the new administration's support of green energy innovation:

The company’s recent bankruptcy — which the Republicans are now rabidly “investigating” because Solyndra had the misfortune to receive a $535 million federally guaranteed loan from the Obama administration — was largely brought on by a stunning collapse in the price of solar panels over the past year or so. The company’s innovative solar panels, high-priced to begin with, became increasingly uncompetitive in the marketplace. Solyndra didn’t have enough big commercial customers to create the necessary economies of scale...

The purpose of the hearing — indeed, the point of manufacturing a Solyndra investigation in the first place — is to embarrass the president. That’s how Washington works in the modern age: the party out of power gins up phony scandals aimed at hurting the party in power.

Rick Perry might want to reconsider his threat that if Ben Bernanke shows up in Texas it'll get "pretty ugly"

Brad Plumer at WaPo "Wonkblog":

Turns out Rick Perry’s “Texas Miracle” owes much of its success to... Ben Bernanke. A new research paper from the Dallas Fed finds that Texas has rebounded from recession faster than the rest of the country thanks, in no small part, to actions by the U.S. Federal Reserve. (Yep, the same central bank that Perry occasionally deems “almost treasonous.”)

"Euro Zone Death Trip"

"Don't go down those stairs..."

"B" horror movie with subtitles?  No. It's Paul Krugman painting a bleak economic picture: "Europe’s situation is really, really scary: with countries that account for a third of the euro area’s economy now under speculative attack, the single currency’s very existence is being threatened — and a euro collapse could inflict vast damage on the world." 

For a short overview of the crisis brewing in the Euro Zone, check out his complete column in today's NYTs.

"Be afraid - very afraid."

Nouriel "Dr. Doom" Roubini - one of the few economists who foresaw the '08 disaster brewing - adds his frightening outlook HERE: "In my view there is a high likelihood that there is going to be another global financial crisis. My data suggests that most advanced economies are already entering a recession. We’re not any more in an anaemic recovery, we’re not any more at stall speed. We’re at the beginning of a contraction..."  

If you're prepared for a real scare regarding a second global economic crisis triggered by the deep problems in Europe, read the entire Roubini interview. 

President Obama is fired up and ready to go!

President Obama addresses the Congressional Black Caucus:

“With patient and firm determination, I am going to press on for jobs. I'm going to press on for equality. I'm going to press on for the sake of our children. I'm going to press on for the sake of all those families who are struggling right now...

“I expect all of you to march with me and press on. Take off your bedroom slippers, put on your marching shoes. Shake it off. Stop complaining, stop grumbling, stop crying. We are going to press on. We’ve got work to do..."

Part One


Part Two

Austerity is not the answer...

Former CEA Chair Christina Romer on the notion that austerity, not stimulus, is the solution to current unemployment and economic stagnation:

This argument makes me crazy. There’s simply no evidence that concern about the current deficit is a significant factor limiting consumer spending or business investment. And government borrowing rates are at record lows, suggesting that financial markets are not worried about the deficit, either.

Moreover...the best evidence shows that fiscal austerity depresses growth and raises unemployment in the near term. That’s the experience of countries like Greece, Portugal and Britain, which have embarked on drastic deficit reduction plans over the last two years. Cut the current deficit and you will raise unemployment, not lower it.

Like many other countries, the United States has two terrible problems: a devastating lack of jobs right now and an unsustainable budget deficit over the longer run. The right question is not whether we can reduce unemployment by lowering the deficit (we can’t), but whether we can make progress on both problems.

With 14 million Americans unemployed and no prospect of rapid recovery on the horizon, we really have no choice: we must take additional measures to create jobs. What policy makers need to discuss is which measures will be most effective in putting people back to work, and in hastening the day when government support is no longer needed.

How bad is it?

Here's a chart from "Calculated Risk" that puts the current Great Recession in context of all of the post-WWII recessions the US has faced:

As you can see...it's pretty bad.  Far worse than anything since the Great Depression, as we now well know.  Small comfort, but via Ezra Klein there is this:  Even given the slow, staggering recovery and the prolonged unemployment, compared to big economic meltdowns that have hit comparable industrialized countries in recent decades, "the U.S. labor market has performed better than 4 of the previous Big 5 crises.”

Former President Bill Clinton put the Obama administration's performance managing the crisis in perspective last week: