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Neoliberalism as a New, More Dangerous, Form of Corporatism

Neoliberalism = Casino Capitalism = "Transnational elites, Unite!"
(It is a neoTrotskyism with the word "proletarians" substituted by the word "elites"
 in famous "Proletarians of all countries, Unite!" slogan
and "Color revolutions" instead of Communist  "Permanent revolution"  )

Version 6.1

Skepticism and Pseudoscience  > Who Rules America > Neoliberal Brainwashing

News An introduction to Neoliberalism Recommended books Recommended Links Neoliberalism war on organized labor Neoliberalism as Trotskyism for the rich Globalization of Financial Flows
Brexit as the start of the reversal of neoliberal globalization Neoliberal rationality Neoliberal "New Class" as variant of Soviet Nomenklatura Neoliberalism and Christianity Key Myths of Neoliberalism Ayn Rand and her Objectivism Cult Anti-globalization movement
Zombie state of neoliberalism and coming collapse of neoliberalism Pope Francis on danger of neoliberalism  Over-consumption of Luxury Goods as Market Failure Definitions of neoliberalism Neoliberal Brainwashing Neoclassical Pseudo Theories  US Presidential Elections of 2016 as a referendum on neoliberal globalization
Media-Military-Industrial Complex Neocons New American Militarism Casino Capitalism Neocolonialism as Financial Imperialism War is Racket Inverted Totalitarism
Financial Crisis of 2008 as the Crisis of Neoliberalism and shift to neo-fascism Neoliberal corruption Financial Sector Induced Systemic Instability of Economy Corruption of Regulators "Fight with Corruption" as a smoke screen for neoliberal penetration into host countries   Deconstructing neoliberalism's definition of 'freedom' Resurgence of neofascism as reaction on crisis of neoliberalism and neoliberal globalization
Alternatives to Neo-liberalism Elite Theory Compradors Fifth column Color revolutions  Key Myths of Neoliberalism Audacious Oligarchy and "Democracy for Winners"
If Corporations Are People, They Are Psychopaths IMF as the key institution for neoliberal debt enslavement Gangster Capitalism Neoliberalism as a Cause of Structural Unemployment in the USA Neoliberalism and inequality Blaming poor and neoliberalism laziness dogma Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime
Peak Cheap Energy and Oil Price Slump The Deep State Predator state Disaster capitalism Harvard Mafia Small government smoke screen Super Capitalism as Imperialism
The Great Transformation Monetarism fiasco Neoliberalism and Christianity Republican Economic Policy  In Goldman Sachs we trust: classic example of regulatory capture by financial system hackers Ronald Reagan: modern prophet of profligacy Milton Friedman -- the hired gun for Deification of Market
Libertarian Philosophy Media domination strategy Neoliberal Brainwashing -- Journalism in the Service of the Powerful Few In Foreign Events Coverage Guardian Presstitutes Slip Beyond the Reach of Embarrassment History of neoliberalism Humor Etc


Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare. “There’s class warfare, all right, "Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning."

- New York Times

Make no mistake, the neo-Liberal fuckers are just as bad as the Stalinists

May '68 and its Afterlives [Review]

GB: once a great cultured nation, now a poorly-educated gangster mafia state, ruled by oligarchs and inhabited by soccer hooligans

The Kremlin Stooge

Neoliberalism is a very interesting social system which by-and-large defeated and replaced both New Deal capitalism and socialism (and facilitated the dissolution of the USSR). It is the only social system in which the name of the system is somehow is prohibited by MSM to mention.  It is also unstable social system which led to impoverishment of lower 80% of the society and the rise of far right nationalism. After approximately 40 years of global dominance is shows cracks. Backlash against neoliberal globalization became really strong and demonstrated itself in Brexis, election of Trump is defeat of Italian referendum.

It can be defined as "socialism for the rich, feudalism for the poor" or, more correctly "Trotskyism for the rich"("Elites of all countries unite !"  instead of “Proletarians of all countries, Unite! ...). Due to the size the introduction was moved to a separate page --  Neoliberalism: an Introduction


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(Research materials to the paper Neoliberalism: an Introduction)

Neoliberalism Bulletin, 2017 Neoliberalism Bulletin, 2016 Neoliberalism Bulletin, 2015 Neoliberalism Bulletin, 2014 Neoliberalism Bulletin, 2013 Neoliberalism Bulletin, 2011 Neoliberalism Bulletin 2009 Neoliberalism Bulletin 2008

[Feb 21, 2017] Attempt to cover the nature of American neoliberal imperialism ?

Feb 21, 2017 | economistsview.typepad.com
anne : February 21, 2017 at 07:11 AM , 2017 at 07:11 AM
http://www.bradford-delong.com/2017/02/twenty-first-century-american-nationalism-needs-to-be-profoundly-cosmopoiltan.html

February 20, 2017

Twenty-First Century American Nationalism Needs to Be Profoundly Cosmopolitan

The right pose--substantive and rhetorical--is to recognize that, just as since 1620 the good American nationalism has always held that people anywhere can elect to become Americans by joining our utopian project here at home, so in the twentieth and twenty-first centuries that good American nationalism is one that puts global prosperity and being a good neighbor and benevolent hegemon first....

-- Brad DeLong

libezkova -> anne... , February 21, 2017 at 08:00 AM
Attempt to cover the nature of American neoliberal imperialism ?

[Feb 21, 2017] We need to focus not on what is happening on average - as GDP leads us to do- but on how the economy is performing for the typical citizen, reflected for instance in median disposable income.

Feb 21, 2017 | economistsview.typepad.com
RGC : , February 21, 2017 at 07:31 AM
Re: Joe Stiglitz: How to Survive the Trump Era - Joseph E. Stiglitz

Joe says: "One of the main challenges in this new era will be to remain vigilant and, whenever and wherever necessary, to resist."

I disagree. I think we need a clearly articulated alternative to Trump and I think Joe provided one in his recent comment:

Joseph Stiglitz Says Standard Economics Is Wrong. Inequality and Unearned Income Kills the Economy

The rules of the game can be changed to reverse inequality

http://evonomics.com/joseph-stiglitz-inequality-unearned-income/

In that comment Joe says:

Reversing inequality

A wide range of policies can help reduce inequality.

Policies should be aimed at reducing inequalities both in market income and in the post-tax and-transfer incomes. The rules of the game play a large role in determining market distribution- in preventing discrimination, in creating bargaining rights for workers, in curbing monopolies and the powers of CEOs to exploit firms' other stakeholders and the financial sector to exploit the rest of society. These rules were largely rewritten during the past thirty years in ways which led to more inequality and poorer overall economic performance. Now they must be rewritten once again, to reduce inequality and strengthen the economy, for instance, by discouraging the short-termism that has become rampant in the financial and corporate sector.

Reforms include more support for education, including pre-school; increasing the minimum wage; strengthening earned-income tax credits; strengthening the voice of workers in the workplace, including through unions; and more effective enforcement of anti-discrimination laws. But there are four areas in particular that could make inroads in the high level of inequality which now exists.

First, executive compensation (especially in the US) has become excessive, and it is hard to justify the design of executive compensation schemes based on stock options.

Executives should not be rewarded for improvements in a firm's stock market performance in which they play no part. If the Federal Reserve lowers interest rates, and that leads to an increase in stock market prices, CEOs should not get a bonus as a result. If oil prices fall, and so profits of airlines and the value of airline stocks increase, airline CEOs should not get a bonus. There is an easy way of taking account of these gains (or losses) which are not attributable to the efforts of executives: basing performance pay on the relative performance of firms in comparable circumstances. The design of good compensation schemes that do this has been well understood for more than a third of a century, and yet executives in major corporations have almost studiously resisted these insights. They have focused more on taking advantages of deficiencies in corporate governance and the lack of understanding of these issues by many shareholders to try to enhance their earnings- getting high pay when share prices increase, and also when share prices fall. In the long run, as we have seen, economic performance itself is hurt.

Second, macroeconomic policies are needed that maintain economic stability and full employment. High unemployment most severely penalises those at the bottom and the middle of the income distribution. Today, workers are suffering thrice over: from high unemployment, weak wages and cutbacks in public services, as government revenues are less than they would be if economies were functioning well.

As we have argued, high inequality has weakened aggregate demand. Fuelling asset price bubbles through hyper-expansive monetary policy and deregulation is not the only possible response. Higher public investment- in infrastructures, technology and education- would both revive demand and alleviate inequality, and this would boost growth in the long-run and in the short-run. According to a recent empirical study by the IMF, well-designed public infrastructure investment raises output both in the short and long term, especially when the economy is operating below potential. And it doesn't need to increase public debt in terms of GDP: well-implemented infrastructure projects would pay for themselves, as the increase in income (and thus in tax revenues) would more than offset the increase in spending.

Third, public investment in education is fundamental to address inequality. A key determinant of workers' income is the level and quality of education. If governments ensure equal access to education, then the distribution of wages will reflect the distribution of abilities (including the ability to benefit from education) and the extent to which the education system attempts to compensate for differences in abilities and backgrounds. If, as in the United States, those with rich parents usually have access to better education, then one generation's inequality will be passed on to the next, and in each generation, wage inequality will reflect the income and related inequalities of the last.

Fourth, these much-needed public investments could be financed through fair and full taxation of capital income. This would further contribute to counteracting the surge in inequality: it can help bring down the net return to capital, so that those capitalists who save much of their income won't see their wealth accumulate at a faster pace than the growth of the overall economy, resulting in growing inequality of wealth. Special provisions providing for favourable taxation of capital gains and dividends not only distort the economy, but, with the vast majority of the benefits going to the very top, increase inequality. At the same time they impose enormous budgetary costs: 2 trillion dollars from 2013 to 2023 in the US, according to the Congressional Budget Office. The elimination of the special provisions for capital gains and dividends, coupled with the taxation of capital gains on the basis of accrual, not just realisations, is the most obvious reform in the tax code that would improve inequality and raise substantial amounts of revenues. There are many others, such as a good system of inheritance and effectively enforced estate taxation.

Redefining economic performance

We used to think of there being a trade-off: we could achieve more equality, but only at the expense of overall economic performance. It is now clear that, given the extremes of inequality being reached in many rich countries and the manner in which they have been generated, greater equality and improved economic performance are complements.

This is especially true if we focus on appropriate measures of growth. If we use the wrong metrics, we will strive for the wrong things. As the international Commission on the Measurement of Economic Performance and Social Progress argued, there is a growing global consensus that GDP does not provide a good measure of overall economic performance. What matters is whether growth is sustainable, and whether most citizens see their living standards rising year after year.

Since the beginning of the new millennium, the US economy, and that of most other advanced countries, has clearly not been performing. In fact, for three decades, real median incomes have essentially stagnated. Indeed, in the case of the US, the problems are even worse and were manifest well before the recession: in the past four decades average wages have stagnated, even though productivity has drastically increased.

As this essay has emphasised, a key factor underlying the current economic difficulties of rich countries is growing inequality. We need to focus not on what is happening on average- as GDP leads us to do- but on how the economy is performing for the typical citizen, reflected for instance in median disposable income. People care about health, fairness and security, and yet GDP statistics do not reflect their decline. Once these and other aspects of societal well-being are taken into account, recent performance in rich countries looks much worse.

The economic policies required to change this are not difficult to identify. We need more investment in public goods; better corporate governance, antitrust and anti-discrimination laws; a better regulated financial system; stronger workers' rights; and more progressive tax and transfer policies. By 'rewriting the rules' governing the market economy in these ways, it is possible to achieve greater equality in both the pre- and post-tax and transfer distribution of income, and thereby stronger economic performance.


[Joe had it right with this essay and progressives should elaborate and emphasize this message - not just rant about Trump.]

[The whole essay is worth reading, imo.]

RGC -> RGC... , February 21, 2017 at 07:42 AM
I don't trust the Democratic party.

I fear that if they did defeat trump, they would go back to the same old policies that have given us this mess.

I want to see new leadership that commits to new policies like those articulated by Joe Stiglitz and Bernie Sanders.

I don't want to work for them until I see new policies emerge.

pgl -> RGC... , February 21, 2017 at 07:45 AM
Max Sawicky has a new blog. You might enjoy this description of what his new blog will be about:

http://thepopulist.buzz/2017/02/16/who-we-are-what-we-do/

libezkova said in reply to RGC... , February 21, 2017 at 07:56 AM
"I don't trust the Democratic party."

That's the key point of the whole discussion. Dems are just a party of neoliberals. Who are in the pocket of Wall Street.

So they are in the pocket of the same guys who bought Republicans (and both parties are also puppets of MIC -- with Dems becoming the major War party; not that different from neocons ).

Stiglitz actually is very shy to criticize neoliberal "cult of GDP":
== quote ==
As this essay has emphasised, a key factor underlying the current economic difficulties of rich countries is growing inequality. We need to focus not on what is happening on average - as GDP leads us to do- but on how the economy is performing for the typical citizen, reflected for instance in median disposable income.

People care about health, fairness and security, and yet GDP statistics do not reflect their decline.

Once these and other aspects of societal well-being are taken into account, recent performance in rich countries looks much worse.

== end of quote ==

This is why "pro growth liberals" are just crooks in disguise... With a smoke screen of mathematical nonsense and obscure terminology to cover their tracks.

[Feb 21, 2017] The Term "Deep State" in Focus: Usage Examples, Definition, and Phrasebook

Notable quotes:
"... By Lambert Strether of Corrente . ..."
"... The Atlantic ..."
"... derin devlet ..."
"... Glenn Greenwald, Democracy Now! ..."
"... Peggy Noonan, Patriot Post ..."
"... Breitbart ..."
"... Jefferson Morley, Alternet ..."
"... Greg Grandin, The Nation ..."
"... Benjamin Wallace, The New Yorker ..."
"... Counterpunch ..."
"... New York Times ..."
"... Marc Ambinder, NPR ..."
"... Marc Ambinder, Foreign Policy ..."
"... "Deep State Blooper" ..."
"... "Deep State Operation" ..."
"... "Deep State Actor" ..."
"... "Deep State Faction" ..."
"... That's ..."
"... Extreme Prejudice: The Terrifying Story of the Patriot Act and the Cover Ups of 9/11 and Iraq ..."
"... Conjuring Hitler: How Britain and America Made the Third Reich ..."
"... within the territory of the State ..."
"... Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics ..."
"... "permanent government" ..."
"... "permanent government", ..."
"... "permanent government", ..."
"... "conducting killings" ..."
"... The Deep State: The Fall of the Constitution and the Rise of a Shadow Government ..."
Feb 21, 2017 | www.nakedcapitalism.com
Posted on February 20, 2017 by Lambert Strether By Lambert Strether of Corrente .

Since today is President's Day, there will be no Water Cooler. Which is a good thing, because this puppy took forever to write. –lambert

* * *

"It's called the ruling class because it rules." –Arthur Silber

Readers know that I've been more than dubious about that incredibly virulent earworm of a term, "deep state" ( December 1, 2014 ). However, in the last week or so, "deep state" is all over mainstream discourse like kudzu, and so it's time to look at it again. As we shall see, it's no more well-defined than before, but I'm hoping that if we aggregate a number of usage examples, we'll come up with a useful set of properties, and a definition. Following the aggregation, I'll propose a number of phrases that I hope can attenuate deep state 's virulence, and render it a sharper and more subtle analytical tool in posts and comments.

While the usage of "deep state" exploded last week after General Flynn's defenestration by Trump, it seems likely to me that the term had been spreading in the recent past before that, given that a series of politically motivated leaks by the "intelligence community" (IC) from summer 2016 onwards could colorably be attributed to such an entity. The examples are in no particular order; I haven't had the time to find a "patient zero."

Usage Examples of "Deep State"

1. The Atlantic . Since "deep state" as a term originated in Turkey ( derin devlet ), I'll start with a Turkish analyst:

There Is No American 'Deep State'

Zeynep Tufekci, a Turkish sociologist and writer at the University of North Carolina, tweeted a string of criticisms about the analogy Friday morning. " Permanent bureaucracy and/or non-electoral institutions diverging with the electoral branch [is] not that uncommon even in liberal democracies," she wrote. "In the Turkey case, that's not what it means. There was a shadowy, cross-institution occasionally *armed* network conducting killings, etc. So, if people are going to call non electoral institutions stepping up leaking stuff, fine. But it is not 'deep state' like in Turkey."

Comment: One danger I always face is projecting American politics onto other countries. Tufekci warns us the opposite is a bad idea too!

Properties: Permanent bureaucracy and/or non-electoral institutions; "shadowy," cross-institutional. We cross out "conducting killings" for the American context (or do we?).

2. Glenn Greenwald, Democracy Now! . Greenwald thinks the term is sloppy too (though "scientific" is a high bar):

The deep state, although there's no precise or scientific definition , generally refers to the agencies in Washington that are permanent power factions . They stay and exercise power even as presidents who are elected come and go. They typically exercise their power in secret , in the dark, and so they're barely subject to democratic accountability, if they're subject to it at all. It's agencies like the CIA, the NSA and the other intelligence agencies, that are essentially designed to disseminate disinformation and deceit and propaganda, and have a long history of doing not only that, but also have a long history of the world's worst war crimes, atrocities and death squads. This is who not just people like Bill Kristol, but lots of Democrats are placing their faith in, are trying to empower, are cheering for as they exert power separate and apart from-in fact, in opposition to-the political officials to whom they're supposed to be subordinate.

Comment: Later in the show, Greenwald says that the deep state is "almost engag[ing] in like a soft coup." Here's the Kristol tweet to which Greenwald alludes, explicitly applauding that coup with the bracing clarity so foreign to most Democrats:

I characterized Greenwald's soft coup - and Kristol's - more delicately as "a change in the Constitutional Order" ( "Federalist 68, the Electoral College, and Faithless Electors" ) but the sense is the same.

Properties: Kristol, not normal, not democratic, not constitutional; Greenwald: permanent power factions, agencies, especially intelligence agencies, which specialize in deception and require secrecy.

3. Peggy Noonan, Patriot Post :

Is [the current chaos], as some suggest, "deep state" revenge for the haughty, dismissive way Donald Trump spoke of the U.S. intelligence community during and after the campaign? Is it driven by the antipathy of the permanent government toward Mr. Putin, and a desire to bring down those, like Mr. Trump, who hope for closer relations with Russia?

It is a terrible thing if suddenly, in America, there is a government within the government that hates the elected government - and that secretly, silently, and with no accountability , acts on it.

Properties: Government within a government; secret; not accountable.

4. Breitbart . I don't normally cite to Breitbart, but since they're in the heart of the battle and have a usage example:

The "deep state" is jargon for the semi-hidden army of bureaucrats, officials, retired officials, legislators, contractors and media people who support and defend established government policies .

Comment: Interestingly, Breitbart finds it necessary to define the term for its readership, meaning it didn't originate on the right. Even more interestingly, Breitbart - very much unlike the more staid Peggy Noonan - urges, in my view correctly, that actors outside the alphabet agencies need to be considered.

Properties: Bureaucrats, officials (some retired), legislators, contractors, media. Brietbart doesn't use Janine Werel's term, Flexian - retired officials become talking heads, for example - but the concept is implicit.

5. Jefferson Morley, Alternet :

What Is the 'Deep State'-And Why Is It After Trump?

The Deep State is shorthand for the nexus of secretive intelligence agencies whose leaders and policies are not much affected by changes in the White House or the Congress . While definitions vary, the Deep State includes the CIA, NSA, Defense Intelligence Agency, and components of the State Department, Justice Department, Department of Homeland Security, and the armed forces.

With a docile Republican majority in Congress and a demoralized Democratic Party in opposition, the leaders of the Deep State are the most-perhaps the only-credible check in Washington on what Senator Bob Corker (R-Tenn.) calls Trump's "wrecking ball presidency."

And Roger Stone, a man who knows his memes:

"This is an effort by the Deep State to destabilize the president," Stone said.

Comment: Morley, then, agrees with Kristol (the "only check" in Trump).

Properties: Intelligence agencies; permanent.

6. Greg Grandin, The Nation . A useful review of the literature:

What Is the Deep State?

So at least as long as there has been private property, there has been private plotting, and talk of a "deep state" has been a vernacular way of describing what political scientists like to call "civil society," that is, any venue in which powerful individuals, either alone or collectively, might try to use the state to fulfill their private ambitions, to get richer and obtain more power .

Much of the writing frames the question as Trump versus the Deep State, but even if we take the "deep state" as a valid concept, surely it's not useful to think of the competing interests it represents as monolithic , as David Martin in an e-mail suggests. Big Oil and Wall Street might want deregulation and an opening to Russia. The euphemistically titled "intelligence community" wants a ramped-up war footing. High-tech wants increased trade. In 1956, C. Wright Mills wrote that "the conception of the power elite and of its unity rests upon the corresponding developments and the coincidence of interests among economic, political, and military organizations." If nothing else, the "Trump v. Deep State" framings show that unity is long gone.

Comment: Grandin does give an early usage example, but I'm totally unpersuaded by his identification of the "deep state" with "civil society." Rather - as Breitbart, amazingly enough, suggests - the deep state more plausibly includes components of civil society (media, contractors, etc.).

Properties: Not monolithic; includes (components of) civil society.

7. Benjamin Wallace, The New Yorker :

The Deep-State Theory Cuts Both Ways

This pattern of dissent ["#TheResistance"], and its early successes, has brought about a vogue for the theory of the deep state, usually used in analyzing authoritarian regimes, in which networks of people within the bureaucracy are said to be able to exercise a hidden will of their own

The federal government employs two million people; its sympathies move in more than one direction. While many federal employees may want to oppose the White House, others (especially border-patrol and immigration agents, whose support Trump often cited on the campaign trail) have already been taking some alarming liberties to advance the President's politics.

Comment: Wallace urges that some Federal employees in the permanent bureaucracy are, in essence, "working toward the Fuhrer," which is a consequence of the deep state not being monolithic. He attributes the "vogue" for "deep state" to the resistance, but I (and most others cited here) think it's the Flynn firing.

Properties: Bureaucratic networks; hidden.

8. Counterpunch

A Deep State of Mind: America's Shadow Government and Its Silent Coup

So who or what is the Deep State?

It's the militarized police, which have joined forces with state and federal law enforcement agencies in order to establish themselves as a standing army. It's the fusion centers and spy agencies that have created a surveillance state and turned all of us into suspects. It's the courthouses and prisons that have allowed corporate profits to take precedence over due process and justice. It's the military empire with its private contractors and defense industry that is bankrupting the nation. It's the private sector with its 854,000 contract personnel with top-secret clearances, 'a number greater than that of top-secret-cleared civilian employees of the government.' It's what former congressional staffer Mike Lofgren refers to as 'a hybrid of national security and law enforcement agencies': the Department of Defense, the State Department, Homeland Security, the CIA, the Justice Department, the Treasury, the Executive Office of the President via the National Security Council, the Foreign Intelligence Surveillance Court, a handful of vital federal trial courts, and members of the defense and intelligence committees."

Comment: Seems pretty big to be deep

Properties: Law enforcement, contractors, agencies, the courts.

9. New York Times

As Leaks Multiply, Fears of a 'Deep State' in America

Though the deep state is sometimes discussed as a shadowy conspiracy, it helps to think of it instead as a political conflict between a nation's leader and its governing institutions.

That can be deeply destabilizing, leading both sides to wield state powers like the security services or courts against one another, corrupting those institutions in the process.

In countries like Egypt, Mr. El Amrani said, the line is much clearer.

There, "the deep state is not official institutions rebelling," he said, but rather "shadowy networks within those institutions, and within business, who are conspiring together and forming parallel state institutions."

Comment: Weird all around: The President is the President , the Chief Magistrate of the United States. He's not the "nation's leader," like in the title of sone kinda hardback in the "Business" section of your airport bookstore. And quite frankly, the description of the deep state in Egypt ("shadowy network," "parallel state institutions") jibes with a several of the other usage examples I've collected, right here in the United States.

Properties: I'll use Egypt's! Network, shadowy, businesses forming parallel state institutions.

10. Marc Ambinder, NPR :

With Intelligence Leaks, The 'Deep State' Resurfaces

GARCIA-NAVARRO: So how do you define the deep state?

AMBINDER: Well, I try to define it simply – maybe the national security and intelligence bureaucracy , the secret-keepers in the United States, people who have security clearances, who have spent 10 to 20 to 30 years working in and around secrets.

GARCIA-NAVARRO: So when we're hearing about this term this week to do with Michael Flynn, what do we – what are people making that connection with potentially a huge group of people and this particular case?

AMBINDER: They're essentially alleging that the national security state, this metastate that exists and, again, traffics totally in secret – used its collective power in order to bring down a duly chosen national security adviser because they disagreed with him or they disagreed with his president or they disagreed with his policies. It is a term of derision, a term that suggests people are using their power for ill-begotten ends. And that, if true, sets up a crisis.

Comment: Ambinder, then, rejects putting a "civil society" construction on "deep state." (He also rejects Greenwald, and Kristol's, "soft coup.")

Properties: National security and intelligence bureaucracy; long-term.

11. Marc Ambinder, Foreign Policy . Ambinder gives an example of the deep state in action:

Trump Is Showing How the Deep State Really Works

The fact the nation's now-departed senior guardian of national security was unmoored by a scandal linked to a conversation picked up on a wire offers a rare insight into how exactly America's vaunted Deep State works. It is a story not about rogue intelligence agencies running amok outside the law, but rather about the vast domestic power they have managed to acquire within it.

Sometime before January 12, the fact that these [Flynn's] conversations [with the Russian ambassador] had occurred was disclosed to David Ignatius, who wrote about them. That day, Sean Spicer asked Flynn about them. Flynn denied that the sanctions were discussed. A few days later, on January 16, Vice President Mike Pence repeated Flynn's assurances to him that the calls were mostly about the logistics of arranging further calls when Trump was President.

Comment: Note the lack of agency in "was disclosed." Had the deep state not been able to use David Ignatius as a cut-out, the scandal would never have occured. Therefore, a media figure, a member of civil society, was essential to the operation of the Deep State, even though Ambinder's definition of the deep state doesn't reflect this.

Properties: Network; civil society.

* * *

So now I'm going to aggregate the properties suggested by these 10 sources, and make some judgements about what to keep and what to throw away. Throwing out Noonan's concept of "a government within a government", I get this. The deep state:

1. Gains power through (legal) control of state functions of secrecy and deception

2. Is "permanent"

3. Is not monolithic

4. Is composed of "cross-institutional" networks of individuals in both state (agencies, law enforcement) and civil society (media, contractors)

5. Is not democratic in its operation; and (potentially) is not accountable, not normal, not constitutional.

(Individuals within the deep state belong to factions that compete and cooperate, often in addition to their "day jobs," rather as in a "matrix management" construct.)

So, what'd I miss?

A "Deep State" Phrasebook

So, here are some phrases to use that reflect the above - very tentative - understanding. What I really want to do - and who know, maybe I'm trying to shovel back the tide here, too - is get away from the notion of "the" deep state. The deep state is not monolithic! Factional conflict within the deep state exists! So, in my view, the definite article is in this case disempowering; it prevents you from, as it were, knowing your enemy. So, if I have to join the chorus of people using the term, I'm going to think carefully about how do it. This list is a step toward doing that. (I'm going to use examples from the run-up to the Iraq War because it's less tendenitious and way less muddled than the Flynn defenestration.)

1. "Deep State Blooper" . I'm putting this first as an antidote to CT. Quoting Frank Herbert's Dune :

" [I]t occurred to Kynes that his father and all the other scientists were wrong, that the most persistent principles of the universe were accident and error."

It's important to put into our thinking right from the start that Deep State actors are not all-powerful, and that Deep State operations are not invariably successful. I mean, can anybody look at the foreign and nationally security outcomes from what these guys are doing and urge that the baseline for performane is very high? I don't think so. Accidents happen all the time, and these guys, for all the power their positions bring them, are accident-prone. (After all, they're not accountable, so they never get accurate feedback, in a typical Banana Republic power dynamic.

Example: "The Iraq WMD's yellowcake uranium episode was a Deep State Blooper." ( See here for details; the yellowcake uranium was part of the Bush administration's WMD propaganda operation to foment the Iraq War.)

2. "Deep State Operation" . I think it's important to view the Deep State (as defined above) as able to act opportunistically; although many Deep State Actors work for agencies, their operations are not bureaucratic in nature.

Example: "The White House Iraq Group was a Deep State propaganda operation that succeeded tactically but failed strategically" (See here for details ; the WHIG planted stories in the press to foment the Iraq War. They succeeded in that narrow goal, but the war itself was a debacle, and the damage to the credibility of the press as an institution took a hit.)

3. "Deep State Actor" . An individual can be a member of the Deep State as an official, and then later as media personality or contractor. (It also seems to me that once you have been within the intelligence community, you can never be said to have left it, since how could anyone know you have really left?

Example: "Leon Panetta is a consummate Deep State Actor." ( Panetta has been OMB Director, CIA Director, White House Chief of Staff, and Secretary of Defense. "[Panetta] regularly obtains fees for speaking engagements, including from the Carlyle Group.[55] He is also a supporter of Booz Allen Hamilton."

4. "Deep State Faction" . This is a no-brainer:

Example: "The Neoconservatives are a Deep State Faction."

Conclusions

I apologize for the length as I fought my way through the material, and I hope I haven't made any gross errors - especially political science-y ones! And any further additions to the Deep State Phraseology will be very welcome (but watch those definite articles!).

1 0 27 0 0 This entry was posted in Banana republic , Politics on February 20, 2017 by Lambert Strether . About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism ("Because markets"). I don't much care about the "ism" that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don't much care, as long as the benefits are delivered. To me, the key issue - and this is why Medicare for All is always first with me - is the tens of thousands of excess "deaths from despair," as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics - even the worthy fight to help the refugees Bush, Obama, and Clinton's wars created - bright shiny objects by comparison. Hence my frustration with the news flow - currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press - a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let's call such voices "the left." Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn't allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I've been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

View all posts by Lambert Strether → Subscribe to Post Comments 109 comments Carolinian , February 20, 2017 at 2:21 pm

Gee you didn't even mention California's Bohemian Grove meeting where CEOs romp in togas and such.

And taken literally Deep State would presumably mean a secretive (deep) and more or less permanent ruling apparatus. We may have the latter but it doesn't seem all that secretive since they love to join think tanks and talk about their loony ideas. The term is often used to bolster conspiracy theories about how the CIA killed Kennedy and are secretly running the country. While recent movies like to portray CIA operatives as super human martial arts specialists they are just as likely boobs who make many mistakes but nevertheless don't mind ratting out Trump's phone calls as petty revenge. I'd say it's the not so secretive but still behind the scenes state we have to worry about. Think the CFR or that Kristol guy. In other words if the term means anything it could be the secondary tier of influencers who have the ear of our MSM.

sgt_doom , February 20, 2017 at 3:59 pm

Nothing theoretical about elements within the CIA (such as the fired Allen Dulles, and his still-in-the CIA cousin, Tracy Barnes - oopsy, Fake News never told you they were cousins, now did they?) - just requires a bit of reading and cross-referencing with declassified documents from the CIA, State and the FBI.

Deep State is really the financial-intelligence-complex who believes they are running things - the intel establishment was originally founded by the super-rich and their minions (such as Lovett and McCloy, etc.). When JFK was assassinated the Deputy Director of the CIA was Gen. Marshall Carter, recommended to McCone for that position by Nelson Rockefeller. And the fellow in charge of the reorganization of the CIA at the same time was Gen. Schuyler, Nelson Rockefeller's assistant.

You just have to look a bit . . .

Direction , February 20, 2017 at 4:34 pm

Juicy comment! Can you recommend any books or favorite articles?

James McFadden , February 20, 2017 at 11:42 pm

Some book recommendations about the deep state:

C. Wright Mills "The Power Elite" – describes how the indoctrination mechanisms create the deep state (military industrial political complex).

David Talbot "The Devil's Chessboard" – about the rise of the CIA and Allan Dulles

Laurence Shoup "Wall Street's Think Tank" – about the Council on Foreign Relations – the deep state's premier think tank

Michael Parenti "Dirty Truths" – about empire

John Perkins "Confessions of an Economic Hit Man" – CIA coups and soft coups

I'm sure other readers can recommend many more on this subject.

Caveat Emptor , February 21, 2017 at 12:39 am

The Deep State: The Fall of the Constitution and the Rise of a Shadow Government
Mike Lofgren

The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy
Peter Dale Scott

WhatsNotToLike , February 21, 2017 at 10:27 am

James Galbraith, Deep State: The Fall of the Constitution and the Rise of a Shadow Government

nonsense factory , February 21, 2017 at 12:55 am

There are a couple of books by Dan Briody that are very illuminating about how Deep State actors in government interface with corporate agendas:
The Halliburton Agenda: The Politics of Oil and Money (2004)
The Iron Triangle: Inside the Secret World of the Carlyle Group (2003)

I think of the Deep State as the military-industrial-intelligence-Congressional long-term national-security complex that grew up after World War II, there are perhaps four major elements:
(1) military and intelligence contractors who rely on the massive $600 billion military budget for their profits.
(2) executive branch bureaucrats who develop the contracts that are delivered to contractors (State/Pentagon/CIA/NSA/NRO/FBI/DOE etc.)
(3) Congressmembers (long-serving) on appropriations, intelligence, etc. committees who sign off on budget requests.
(4) Elements of mass media and think tanks who work overtime to promote the interests of the Deep State elements of the above actors.

It's a kind of self-perpetuating system that's primary agenda is to keep their budget from being cut by a healthy 50% – which is what we'd need to do to rebuild infrastructure, set up high-quality public education, and create a first-world health care system, i.e. to get up to German or Japanese standard-of-living norms.

Some have also pointed out that there's an element of the judicial branch that can be included in "Deep State" definitions (such as FISA Court); note that judicial review of executive foreign policy decisions is very rare in the American court system.

It's also factionalized; i.e. there's the nuclear weapons sector (DOE/NNSA and their contractors), the various Pentagon branches and their suppliers, NSA and their contractors, CIA and their contractors, etc. So they compete with each other for a share of the pie, but they all have a shared interest in preventing the overall pie from shrinking.

jo6pac , February 20, 2017 at 6:44 pm

Please a little help as Direction ask just to get us started. The dulles bros were truly evil and have trained their puppets well.

Vatch , February 20, 2017 at 7:18 pm

he intel establishment was originally founded by the super-rich and their minions (such as Lovett and McCloy, etc.).

Wow, Robert Lovett and John J. McCloy. For about three decades they were at the pinnacle of the United States Establishment. They were like Sejanus during the reign of Tiberius or Marcus Agrippa during the reign of Augustus. Very, very influential behind the scenes.

DH , February 20, 2017 at 8:08 pm

Yeah, and they totally missed Davos.

I always thought the original deep state was the networks of the Knights Templar, Masons, and Illuminati.

However, I was wrong – according to the definitions above, it is probably Treadstone and Blackbriar.

Enquiring Mind , February 20, 2017 at 2:23 pm

Rex Tillerson's dealing with the seventh floor apparatchiks at the State Department is another productive step in calling out the nomenklatura . Russian themes seem so popular these days.

Cat's paw , February 20, 2017 at 2:39 pm

Perhaps helpful to know the original provenance of the term it comes from Turkish journalism when one fine evening a sedan was involved in a nasty wreck. Passengers in said sedan included a high ranking military official, a state or federal(?) representative/official, a crime boss, and a beauty queen.

My understanding: trying to comprehend what such a collection of worthies were doing in the same car led journalists to coin the term deep state. A networked web of power interests/relations across sectors and institutions that operate beyond above below out of sight of normative or visible politics.

Emma , February 20, 2017 at 4:27 pm

Here are more details: https://en.wikipedia.org/wiki/Susurluk_scandal

Charles Tuttle , February 20, 2017 at 2:41 pm

David Chibo in Unz Review Political Science's "Theory of Everything"
http://www.unz.com/article/political-sciences-theory-of-everything/

neo-realist , February 20, 2017 at 9:05 pm

I checked out that article from a previous post of the link and thought it was a very valuable, terrific and detailed explanation of Deep State theories w/ some fine literature recommendations.

Grebo , February 20, 2017 at 10:45 pm

The totality of truths is that the US "elephant" consists of a power elite hierarchy overseeing a corporatocracy, directing a deep state that has gradually subverted the visible government and taken over the "levers of power."

Complete with tables and diagrams! A must read IMHO.

oh , February 21, 2017 at 8:51 am

It's a good recommendation and well worth reading.

Qufuness , February 20, 2017 at 2:42 pm

People within the American Deep State are said to have compassed the removal of General Flynn, who was a prominent member of DS organizations himself, so yes, the DS is not a monolith. But are there powerful "permanent" factions with the DS that pursue long-term strategies?

There is another way of asking this. Much of what is now labelled "DS" grew out of the investment-banker+intelligence nexus in the immediate postwar period, or at least came to the surface around that time. America has made a series of disastrous unforced errors in the past 70 years, Vietnam and Iraq being the most prominent examples. While these errors have been harmful to the American people at large, is there a clique (besides the Military Industrial Complex) that benefits from these "errors," that has far-reaching goals that completely diverge from those of American constitutional democracy?

Minh , February 20, 2017 at 5:58 pm

Both Kennedy's and Diem brothers' assasinations and 911 mass murders were deep events to sell and organize war for the Empire part of American democracy. Not mentioning Peter Dale Scott is a minus of the listing of properties. What does the Deep state did ? 911 and JFK so Afghan Iraq and Vietnam wars.

ex-PFC Chuck , February 20, 2017 at 8:33 pm

It's my understanding that the investment banking crowd served as the government's intelligence arm on an informal, sub rosa basis well before WW II. Prescott Bush, GHWB's father, was involved in that.

Mark P , February 20, 2017 at 2:48 pm

Lambert, there is a Deep State in the U.S. as distinct from the mere ruling class (and yes, by definition, it has competing factions and power centers at different agencies).

A clarifying example of that is this guy, Andy Marshall, aka Yoda, who arguably had more effect on the direction of U.S. policy than any U.S. president over the last half-century and was finally removed from heading the Pentagon's Office of Net Assessment just before his 95th birthday. That's power.
https://en.wikipedia.org/wiki/Andrew_Marshall_(foreign_policy_strategist)#cite_note-5

Yet most people have never heard of Marshall and he never enriched himself particularly. You won't be able to tell the influence he exerted from his Wiki page either, except perhaps for the mention of Marshall 'proteges' being the likes of Rumsfeld, Cheney, etc. Furthermore, before Nixon installed him at the Pentagon, in the 1950s and 60s Marshall was at the RAND corporation helping to formulate nuclear strategy.

Here's an old trove of press material from over the years.
https://web.archive.org/web/20070309161816/http://portland.indymedia.org:80/en/2004/02/281049.shtml

Emma , February 20, 2017 at 4:04 pm

Interesting. And taking into account the comment from Cat's Paw above, I'd suggest to Lambert there are two distinct components to the term 'Deep State'. One element comprises the majority ie. the facilitators who foster the deep state, while the other element consists of the all-important minority ie. the instigators or 'deep state en nom propre' .

michael hudson , February 20, 2017 at 2:50 pm

I think the key to the "Deep state" is simply COVERT.
It is all covert activities that a public relations officer for the neocons and neoconservatives would not acknowledge in their fairy-tale view of the state.

Mark P. , February 20, 2017 at 2:53 pm

Yes.

Josh Stern , February 20, 2017 at 3:18 pm

Technical note – for CIA/Pentagon, a *covert* activity is something that is known, but where US influence or the extent of that is supposed to stay hidden – e.g. a coup d'etat. And a *clandestine activity* is something where the entire activity is supposed to stay hidden – e.g. CIA running Heroin and Cocaine, unlicensed human experimentation, or controlling the editorial desk & ownership if the Washington Post. In that sense, the clandestine activity are even deeper, and the set of people in the know, is even smaller.

Jim Haygood , February 20, 2017 at 3:58 pm

" barely subject to democratic accountability, if they're subject to it at all " - Glenn Greenwald

The $50 billion-plus black budget for the IC, covering many clandestine projects and activities, is not even subject to Congressional accountability. It is discussed verbally with the majority and minority leaders, and the ranking members of the intelligence committees.

Then the other 427 members (or at least a majority of them) are obliged on instructions from their caucus to whoop it through, without a clue (or even a right to ask) what is in it. To paraphrase the great stateswoman Nancy Pelosi, " We have to pass it to avoid finding out what's in it. "

Secret funding via this procedure is unconstitutional and illegitimate. Yet neither the president, the judiciary, nor anyone in Congress appears able to stop it. The IC is a fourth-stage cancer devouring the guts of the former republic.

Josh Stern , February 20, 2017 at 4:59 pm

Secret funding is a huge unknown. Everything from mostly legitimate front companies, to business donations for favors, to drug running. One would think, incorrectly, that the drug running is some kind of big secret the following links show it is not:
Collection of quotes from DEA agents, John Kerry, etc:
http://www.democraticunderground.com/?com=view_post&forum=1002&pid=5878115
Video with Robert Bonner, ex-head of DEA, on 60 minutes in 1993, just after he stepped down:
https://www.youtube.com/watch?v=lx1bL_Gp03g

Persona au gratin , February 20, 2017 at 5:37 pm

YES!

Crazy Horse , February 20, 2017 at 7:42 pm

50 billion? That is just the cost of coffee and donuts. A week before 911 Rumsfeld acknowledged that 2.3 TRILLION dollars was missing and unaccounted for in the DOD budget.

" CBS News Correspondent Vince Gonzales reports, while its own auditors admit the military cannot account for 25 percent of what it spends.
"According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted.
$2.3 trillion - that's $8,000 for every man, woman and child in America. To understand how the Pentagon can lose track of trillions, consider the case of one military accountant who tried to find out what happened to a mere $300 million.
"We know it's gone. But we don't know what they spent it on," said Jim Minnery, Defense Finance and Accounting Service.

http://www.cbsnews.com/news/the-war-on-waste/
https://www.youtube.com/watch?v=xU4GdHLUHwU

Conveniently the accounting records that might have made possible an investigation of that little error were located in Building 7 of the WTC and in the exact section of the Pentagon which the skilled Saudi pilots targeted and and then vaporized their airliner leaving only a few token pieces on the lawn.Of course 911 is ancient history that nobody cares about anymore. Apparently we are in need of another accounting cleansing, since the Inspector General reports that an additional 6.5 TRILLLION has gone missing since then.

http://www.newstarget.com/2016-08-18-how-did-the-pentagon-lose-over-6-5-trillion-in-taxpayer-money.html

JTMcPhee , February 20, 2017 at 8:46 pm

What, me worry? those are all MMT dollars, after all plenty more where that came from.

ex-PFC Chuck , February 20, 2017 at 9:19 pm

Susan Lindauer, in her memoir of her role as a CIA asset serving as a go-between in the failed negotiations to avert the Iraq War ( Extreme Prejudice: The Terrifying Story of the Patriot Act and the Cover Ups of 9/11 and Iraq ), recounts that in the desperate last few weeks before March 20, 2003, she was paying her considerable expenses out-of-pocket. Her handler was having trouble getting her reimbursement approved, and by the time he did she was making a pest of herself about the fact that the negotiations had been deliberately sabotaged, and had become a pariah. At that point the handler had no difficulty, not to mention compunction, about simply stiffing her and diverting the funds to the McMansion he was building.

How much of that $50B black budget is similarly diverted?

Elasmo Branch , February 20, 2017 at 4:28 pm

"Covert" means the activity is against the law. "Clandestine" means the activity is secret but within the confines of the law. The military undertakes clandestine activity authorized by law, not covert activity. A US soldiers cannot break the law. On the other hand paramilitary activity is often covert.

For example, a US soldier on a clandestine mission is captured. Since the soldier is acting legally, albeit in secret, he is afforded all of the rights as a prisoner of war if he id's himself as a US soldier in uniform, name, rank, serial number. A CIA agent [likely a contractor and not a gov't employee] is captured on a covert mission, he can be summarily executed, legally, on the spot for a number of reasons: conducting warfare in civilian clothes and not in uniform, espionage, piracy, etc. There is grey area, for instance, if soldiers ingress to an area in civilian clothes [or the enemy's uniform] then put on their own uniforms before conducting an attack, as the SS did in the Ardenne.

Josh Stern , February 20, 2017 at 4:54 pm

This article: Joseph Berger III. "Covert Action – Title 10, Title 50, and the Chain of Command." Joint Force Quarterly 67 (Q4 2012). http://ndupress.ndu.edu/Portals/68/Documents/jfq/jfq-67/JFQ-67_32-39_Berger.pdf . is exactly on this topic. I take my definitions from there. The article does note that it takes some doing to resolve the different usages within CIA and DOD.

DH , February 20, 2017 at 8:10 pm

Sounds like the Koch Brothers network.

SerenityNow , February 20, 2017 at 2:52 pm

It seems to me that the Canadian "poet, academic and diplomat" author Peter Dale Scott should be included in any mention of "Deep State" Activities.

Here is an excerpt from his well foot-noted book:

"The American Deep State: Wall Street, Big Oil and the Attack on U.S. Democracy"

He has many more interesting excerpts and articles on the same site :

Lambert Strether Post author , February 20, 2017 at 4:04 pm

I bought, read, and reviewed one of Scott's books; link in the first para .

NotSoSure , February 20, 2017 at 2:58 pm

Don't forget the final property of Deep State: "No objections to Goldman Sachs". At least in that one they see eye to eye with Trump.

ebr , February 20, 2017 at 3:12 pm

No Illuminati ? - but I jest.

It would be good if we could separate 'what is the deep state' and 'what are the factions of the deep state' and 'who belongs to the deep state' I suspect that Cambridge Analytics & their Facebook scraping could answer the question 'who belongs to the deep state' as they could they easier track a social network of people more loyal to each other than to the US Gov or the POTUS of the day. Asking the 'Deep State' to define itself could be an exercise in futility as members of the 'Deep State' likely mix ideology & the opportunity to make money in ways that blind them to the full implications of their actions.
Slate magazine today had an article up of a doctor who tried the revolving door and then wrote about it
http://www.slate.com/articles/health_and_science/medical_examiner/2017/02/going_undercover_through_washington_s_revolving_door.html
If you all need a fun book to read, try Interface by Neal Stephenson (written after Snow Crash and before Cryptonomicon)

UserFriendly , February 20, 2017 at 7:19 pm

IMO: Deep State: Anyone who will be in DC regardless of who is president and can still have some degree of power. They are sometimes well known people like Neera Tanden and sometimes they work in the IC. They are the people who no matter how many times they fuck up, destroy lives, lose a campaign, or completely fail at whatever task they are given, they can always count on a nice cushy paycheck and a new gig where they can [Family Blog} it up some more. The entire class of DC insiders who just can't fail down no matter what.

Carla , February 20, 2017 at 3:15 pm

A couple more books of interest: "National Security and Double Government" by Michael J Glennon (2014) and "The Deep State" by Mike Lofgren (2016).

ewmayer , February 20, 2017 at 6:33 pm

A PDF version of Glennon's book is freely available online at the Harvard National Security Journal website.

REDPILLED , February 20, 2017 at 3:16 pm

DEEP STATE READING LIST:

The Devil's Chessboard: Allen Dulles, the CIA, and the Rise of America's Secret Government by David Talbot

The American Deep State: Wall Street, Big Oil, and the attack on U.S. Democracy by Peter Dale Scott

The Deep State: The Fall of the Constitution and the Rise of a Shadow Government by Mike Lofgren

Shadow Government: Surveillance, Secret Wars, and a Global Security State in a Single-Superpower World by Tom Engelhardt and Glenn Greenwald

Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right by Jane Mayer

Manufacturing Consent: The Political Economy of the Mass Media by Edward S. Herman and Noam Chomsky

The New Media Monopoly: A Completely Revised and Updated Edition With Seven New Chapters by Ben H. Bagdikian

They Rule: The 1% VS. Democracy by Paul Street

NATO's Secret Armies: Operation GLADIO and Terrorism in Western Europe (Contemporary Security Studies) by Daniele Ganser

An Act of State: The Execution of Martin Luther King (Updated Edition) by William F. Pepper

The True Story of the Bilderberg Group by Daniel Estulin

JFK and the Unspeakable: Why He Died and Why It Matters by James W. Douglass

9/11 Ten Years Later: When State Crimes Against Democracy Succeed by David Ray Griffin (2011)

JFK: The CIA, Vietnam, and the Plot to Assassinate John F. Kennedy by Fletcher L. Prouty (2011)

The Secret Team: The CIA and Its Allies in Control of the United States and the World by Fletcher L. Prouty (2011)

Mounting Evidence: Why We Need A New Investigation Into 9/11 by Paul W. Rea (2011)

The War Conspiracy: JFK, 9/11, and the Deep Politics of War by Peter Dale Scott (2013)

JFK-9/11: 50 Years of Deep State by Laurent Guyenot (2014)

All the Presidents' Bankers: The Hidden Alliances That Drive American Power by Nomi Prins (2014)

The Orwellian Empire by Gilbert Mercier (2015)

The Hidden Structure of Violence: Who Benefits from Global Violence and War
by Marc Pilisuk (2015)

Base Nation: How U.S. Military Bases Abroad Harm America and the World (American Empire Project) by David Vine (2015)

The New Confessions of an Economic Hit Man by John Perkins (2016)

The End of the Republic and the Delusion of Empire by James Petras (2016)

Two web sites:

Architects and Engineers for 9/11 Truth: http://www.ae911truth.org/

Patriots Question 9/11 – Responsible Criticism of the 9/11 Commission Report: http://patriotsquestion911.com/

Jim Haygood , February 20, 2017 at 4:03 pm

Excellent list.

Don't forget the late, great Chalmers Johnson, who coined the term blowback and left us with guides such as The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic.

Lambert Strether Post author , February 20, 2017 at 4:05 pm

Chalmers Johnson is great.

Emma , February 20, 2017 at 6:17 pm

Another suggestion for your list of additional reading material:
https://wikispooks.com/wiki/Document:Democratic_State_v_Deep_State
It's a document/paper by Ola Tunander ( https://en.wikipedia.org/wiki/Ola_Tunander ) who is quite familiar with the topic (see his experience/research of US/UK PSYOPs naval activities in Scandinavian waters ..).

Ulysses , February 21, 2017 at 9:21 am

Good book!!

dbk , February 20, 2017 at 4:32 pm

Yes, thanks for that list, much appreciated.

As long as we're on the subject, more or less, I have a question about Dark Money (I'm reading Mayer's book these days) and the Deep State: Do they overlap, or are they rivals? Or are their goals sometimes in sync and sometimes at odds with one another?

Another way of posing this question is this: If we assume that the President is not the preference of the Deep State, are we also to assume he was not the preference of Dark Money?

I'm having a hard time figuring out who's going after whom these days, and what short- and long-term objectives are being fought out, almost – but not quite – before our eyes.

Here's a case from a different field, education, which is the one I follow most closely. A blogger has recently identified the "blueprint" for the new Sec of Education to follow, laid out in a planning document by a Dark Money group which is below the radar (well, below my radar, anyway). It's pretty clear that the Sec is their cabinet member, but are there others? Were these appointments made in the form of favors called in? For what, though, if the Pres isn't part of this network?

The Sec of Education, it emerged in the course of contentious hearings, had contributed to no less than 23 Republican Senators' campaign war chests. What are we to conclude about them?

Anyway, here's the link to the post (link to the actual document through it – it was removed from the organization's own site, so is no longer available there):
http://www.eclectablog.com/2017/02/chilling-this-is-why-weve-been-trying-to-warn-the-usa-about-betsy-devos-destroying-the-wall-between-church-state.html

Josh Stern , February 20, 2017 at 5:12 pm

Another good book to mention, which plays a different role, is "Legacy of Ashes" by Tim Weiner. It covers a lot of CIA dirt – coups, assassinations, defying/lying to Presidents, etc. – but it is different because basically all of it is drawn from the CIA's own files. So it is purely historical and outside of any "conspiracy" controversy. The files are not complete. Richard Helms ordered the most incriminating ones destroyed in a giant purge in the early '70s – this is described in the book too. But what is there and was saved is often pretty dirty.

Scott Noble's film series is entertaining on free video: http://metanoia-films.org/counter-intelligence/

Persona au gratin , February 20, 2017 at 6:11 pm

To add: Family of Secrets : The Bush Dynasty, America's Invisible Government, and the Hidden History of the Last Fifty Years, by Russ Baker (2010).

JCC , February 20, 2017 at 9:15 pm

Definitely a good list. I've read a few of these books and want to read more on the list. And don't forget any of Sheldon Wolin's recent books and essays. This one is 13 to 14 years old and still appropriate – https://www.thenation.com/article/inverted-totalitarianism/

He points out the basic structure, I think, in which following the money makes the most sense.

neo-realist , February 20, 2017 at 9:38 pm

Pepper's last book on the MLK assassination, The Plot to Kill King: The Truth behind the Assassination of Martin Luther King would also be a worthy addition to the list.

Excellent discussion about it on this podcast.

https://kpfa.org/episode/guns-and-butter-june-29-2016/

ex-PFC Chuck , February 20, 2017 at 9:56 pm

I second your recommendation of Pepper's book.

Kim Kaufman , February 20, 2017 at 10:05 pm

Imo, a must read: Operation Gladio: The Unholy Alliance Between the Vatican, the CIA and the Mafia by Paul Williams. I think it's newer than most of the books above and connects a lot of dots.

peter , February 21, 2017 at 6:24 am

I've always throught that 'Manufacturing Consent: The Political Economy of the Mass Media by Edward S. Herman and Noam Chomsky' should be mandatory on high school curriculum as a speed course on intellectual self-defense.

nobody , February 21, 2017 at 9:42 am

Another for the list:

Conjuring Hitler: How Britain and America Made the Third Reich , by Guido Giacomo Preparata

nobody , February 21, 2017 at 10:24 am

Three essays by Charles Hollander: "Pynchon's Inferno," "Pynchon's Politics: The Presence of an Absence," and "Pynchon, JFK and the CIA: Magic Eye Views of The Crying of Lot 49."

PlutoniumKun , February 20, 2017 at 3:25 pm

I would put it simpler and define a 'Deep State' as a major (i.e. not minority rogue) element within the existing government structures (or quasi-government structures) which is willing to commit serious illegal acts or unauthorised acts of violence within the territory of the State to achieve its aims independent of the legally constituted government. In other words, I'd not define it by its structure or nature, but by what it actually does.

I'd define it this way to distinguish it from the sort of bureaucratic plotting which takes place within any large institution which finds itself led by someone who doesn't buy into the organisations core consensus. An example I would use would be Operation Gladio . If Operation Gladio had simply operated as designed, as a secretive military operation which government leaders may not have been aware of, then it was not an example of Deep State. But if, as alleged (but never proved), it carried out acts of terrorism and false flag operations with the specific aim of forcing elected governments to do what they didn't want to do, and this was part of a deliberate high level strategy (i.e. not just the act of a rogue element), then it would be an example of the Deep State at work within democratic western governments.

Put into contemporary terms, if the internal resistance to Trump takes the form of leaks, internal manoeuvres to slow down his agenda, etc., then that is 'normal' bureaucratic operations. If it takes the form of blackmail, false flag terrorist attacks, assassinations, etc., then it is the Deep State in operation.

Given that we know parts of the US and allied intelligence communities have for decades been involved in highly illegal operations around the world which has included torture, murder, blackmail and high level assassinations, is it really so far fetched that there is an element willing to do the same thing within the US?

Greg Taylor , February 20, 2017 at 4:18 pm

Defining "Deep State" by its actions is appealing. Would the military veto of Kerry-negotiated ceasefire in Syria count? Some officers acted without apparent authority and were not reprimanded as a result. Would this have transpired "within the territory of the State" and, thus, meet this definition? Should it?

PlutoniumKun , February 21, 2017 at 3:34 am

Thats an interesting question. There can be a fine line between bureaucratic infighting and actual illegal and anti-democratic actions. On my definition I would say 'no', its not Deep State in that the actions were insubordinate and dangerous, but they took place outside the US so arguably were more the result of a power struggle between government factions. It was the result I think of Obama's weakness as a leader, not an actual Deep State action.

Quentin , February 20, 2017 at 3:32 pm

Wouldn't any so-called Deep State be supported by factions in Congress? Sure. For instance, John McCain is in my view the epitome of the Deep State, one of its chief representatives, out in the open, a vanguard. The Clintons too, doubtless, though now outside government. If Congress gives no pushback, it bestows tacit/active agreement. Congress can rescind the privileges and power of all the organisations observers ascribe to the Deep State. So what's so mysterious? The notion of a Deep State's existence might just serve as a way to avoid responsibility, accountability, deny agency. Some shadowy bunch is running things, anything else new? On the other hand think tanks, contractors and subcontracters are less easily kept in place. Yet Congress can put an end to prisons for profit and erase one element of the deception, reduce the numbers if security clearances by defunding, etc. not things were are about to do. Eminence grise, one two buckle my shoe

sgt_doom , February 20, 2017 at 4:13 pm

McCain is too stupid. To better understand the Deep State, one must go a bit higher up the ladder.

Look into the membership of the Bretton Woods Committee - the lobbyist group for the international super-rich (www.brettonwoods.org), and the Group of Thirty (www.group30.org).

Once you understand these two groups, you'll be more aware.

Persona au gratin , February 20, 2017 at 6:05 pm

Loved the Group of Thirty pictorials on their home page. I counted exactly one genuine person of color (aka, "token negro") among the melange, with a handful of "half and halfs" of former British colonial heritage who of course have had time to assimilate and duly "see the light" as to the wisdom of continued perpetual white northern European supremacy. As for the few token Asians, they'll come around soon enough as well, although they ARE amazing students, aren't they?

Kim Kaufman , February 20, 2017 at 10:06 pm

Politicians are the puppets not the puppetmasters.

Steve H. , February 20, 2017 at 3:47 pm

We can avoid definite articles, but this is a defining article, and could become the definitive article.

The most curious fact is that the phrase is showing up in the msm. I take it as confirmation of Lambert's point: 'Factional conflict within the deep state exists!'

roger gathmann , February 20, 2017 at 4:11 pm

I always attributed the use of the word to Peter Dale Scott. The Turkish phrase seems to me more of a parallel usage than the place from which the phrase is derived. In my cursory reading, the phrase originated in conspiracy theory – particularly around the assassination of JFK. I am not using conspiracy theory in a disparaging sense, since I don't think a belief in conspiracies (which is legally recognized, and was long one of the great themes of political science, from Aristotle to Montesquieu) is per se disqualifying. Scott, in the preface to Deep Politics and the Death of JFK, has a good take on the prototype of the Deep State – in his theory, there is always a deep political practice that is unacknowledged officially. For instance, Tammany New York of the late 19th century operated, on the surface, according to the legal order with a mayor and a bureaucracy, etc., but in practice, it was run by an elaborate system of kickbacks and the investment of certain private players with enormous governmental power. The Deep State, under this p.o.v., shouldn't be confused with bureaucrats and those invested with public power, but instead, is a collaboration between such bureaucrats and those in private positions who retain unacknowledged public power. To quote Scott: " A deep political system or process is one which habitually resorts to decision making and enforcement procedures outside as well as inside those publicly sanctioned by law and society." By this definition, the endorsement of Trump by the National Border Patrol Council and the way in which, under Obama, certain Border Patrol officials sought to impede or change processes for taking in and giving due process to refugees are evidences of a deep political process.

Cat's paw , February 20, 2017 at 5:33 pm

Well, Scott's Deep Politics is published in 93. The Turkish term Deep State appears in print around 96 (maybe as late as 98–I'd have to look around for a cite). While the terms are relatively synonymous they are by no means equal. Best I can tell, Scott's starts using the word Deep State widely in the mid-2000's.

Additionally, as I've come to understand it the term did not originate in conspiracy theory. Rather the term was picked up by conspiracy theorists from Turkish journalism as a useful shorthand for the alleged (and hidden) events and actors they were trying to describe. Personally, not that it matters, I think it's important to keep the original usage/meaning in mind. 1. b/c it was coined to describe a real yet inexplicable event–not speculation or a theory of some conspiracy: i.e., the JFK assassination. Wherein agents of military, representative government, and criminality (along with a "bimbo" straight out of central casting) who have no legitimate business doing business were obviously doing business–but what kind of business? Who knows, that's why it's Deep. 2. The term itself can easily drift into being an amorphous, ill-defined, but overdetermined and overly unified signifier on the order of "cabal" which is likely to happen anyway now that its wound its way into common parlance.

I may just be quibbling, but I don't see deep political processes like Tammany or Border Patrol shenanigans as being of the same phenomena as the so-called Deep State. Deep State would usually imply elements of the military or, more especially, elements of the security apparatus (public and private) at times coordinating with, at other times interfering with, known political/institutional actors, corporate power, and criminal concerns that might involve money laundering or drug and human trafficking. As most here are noting, it is factional and adversarial–a network of several or many discreet entities that coordinate, align, and conflict according to shifting interests. It's paralegal, parapolitical, paraeconomic (or paramarket), and parainstitutional.

And all of that to say that such a definition is wholly contingent upon there being empirical and on-going phenomena which corresponds approximately to the term itself.

Yves Smith , February 20, 2017 at 7:58 pm

Lambert debunked Scott's sloppy and internally inconsistent analysis, per the link he provided at the very top of the post. That's why he kept arguing against its use.

DonCoyote , February 20, 2017 at 4:13 pm

Thanks Lambert. Here's a bit more grist for this particular mill/passages from the rabbit hole (depending on what set of metaphors you like)

1) Paranoia , a tabletop RPG game from the 80's. "The game's main setting is an immense, futuristic city called Alpha Complex. Alpha Complex is controlled by The Computer, a civil service AI construct The Computer employs Troubleshooters, whose job is to go out, find trouble, and shoot it. Player characters are usually Troubleshooters The player characters frequently receive mission instructions from the Computer that are incomprehensible, self-contradictory, or obviously fatal if adhered to, and side-missions (such as Mandatory Bonus Duties) that conflict with the main mission each player character is generally an unregistered mutant and a secret society member (which are both termination offenses in Alpha Complex), and has a hidden agenda separate from the group's goals, often involving stealing from or killing teammates."

So: big on non-monolithic, also big on double/triple identities (troubleshooter/mutant/secret society), which we associate with the intelligence agencies, but also with revolving door politicians/lobbyists.

2) The "incomprehensible/self-contradictory/conflict with the main mission" made me think of seven/eleven/twelve (depending on scholarship/personal preference) chess, most recently attributed to BHO–that is, actions who on the surface don't seem to make sense given the situation, but which conspiracy theorists/true believers think are actually directed at a future/buried/hidden/alternative problem. Although this would seem to fit better with at least a semi-monolithic Deep Society, because it is strategy, and a non-monolithic Deep Society would presumably be less organized/more tactically inclined.

3) The Final Reflection , and especially the Klingon "equivalent" of chess, klin zha , and it's reflective version. Reflective klin zha is played with only one set of pieces. "The Reflective is not so much a variation but a strategic approach to an otherwise tactical game Once set up, the first to place is also the first to move. During each turn, the player chooses one piece, making all others the enemy. The player who captures the Goal on his turn is the victor." So I kill a piece protecting (next to) the goal, but on your turn you now control that piece, use it to capture the goal, and beat me.

So: a smaller (but still non-monolithic) Deep State, with a large unitary set of "pieces" (the non-Deep State?). Again, while there are two sides playing, they are both using the same pieces to try to do the same thing, and they only have "control of the board" some of the time.

So my takeaways: non-monolithic (and especially more than two sides), partial control (whether because of multiple/hidden identities or non-monolithic is unknown), and given the pathetic state of most of our media, most motives are "hidden", at least from casual view (cf for the media's "hidden" motives in today's links

sgt_doom , February 20, 2017 at 4:14 pm

Globalists against (non-deep state capitalists) economic nationalists?

susan the other , February 20, 2017 at 4:26 pm

Here's a reminder (from NC a while back). It is a waste of time to deliberate over the existence of the deep state. What's important is participating in a state – a society – that is well run; where inequality is always exposed; where propaganda is always obvious. It's impossible to define "the deep state." I think Lambert was right when he said the definition of the deep state always turned out to be a big hairball.

hemeantwell , February 20, 2017 at 8:15 pm

I agree with the spirit of what you're saying, but try this: I think that factional conflict, occurring during periods of systemic strain/crisis, is what leads otherwise contented and inertial sections of the state to act in ways that require concealment, either of actor or action. Reading a bit from the Glennon book linked above, wherein he makes much of Bagehot, reminded me of how the French political system used to be described as having something like a bureaucratic ballast keeping the ship of state from capsizing. That sort of conservative, continuity-maintaining function can grow claws, and that's what we're seeing now, particularly when US elites are trying to cobble a revised foreign/imperial policy to deal with China and Russia and the president is having trouble intoning the verities of US exceptionalism.

barrisj , February 20, 2017 at 4:41 pm

Well, that lengthy disquisition seems to indeed "validate" – as it were – the "deep state" terminology if not its epistemological derivation(s) at the very least, readers keeping to the various formulae offered for "correct usage" won't be whacked upside their haids by the moderators if the term appears in a comment.
Cheers.

Michael , February 20, 2017 at 4:43 pm

My first encounter with the idea of the Deep State was from Mike Lofgren's 2014 essay, "Anatomy of the Deep State", based upon his 25 year career as a Capitol Hill staffer. Here is the link:

http://billmoyers.com/2014/02/21/anatomy-of-the-deep-state/

JTMcPhee , February 20, 2017 at 4:44 pm

Maybe worth a footnote or something? Is Charlie Wilson "deep state" in any way? https://en.wikipedia.org/wiki/Charlie_Wilson_(Texas_politician) And his apparently occasional bed partner, Joanne Herring? https://en.wikipedia.org/wiki/Joanne_Herring

How about those little quiet gatherings of the Koch-convened sort, that attract so little "press" attention, at Palm Springs and etcetera? Is the "deep state" limited to Great Game and globalism, or is the long steady erosion of even the myth of "democracy" and the transformation of that word into its opposite, via the efforts of all those very small number of people who profit from killing public education and regulatory capture and ascension to elected positions in everything from little town councils and school boards to state legislatures and statehouses, constitute part of what might qualify as some sort of "deep state?" ALEC is not on everyone's tongue, after all, but the power the people in it exert, through long application, sure forks over a whole lot of what maybe most people would think of as "the general welfare" and "public goods." IS Davos "over?" Is Bilderburg?

Interesting how many of what would seem to me to be deep-staters are tied to Afghanistan, and of course Israel. One might even posit the Israelites have their own deep state, that has interlocking membership with players and factions and elements of the unelected and maybe public but mostly invisible thing that the phrase calls up in the minds of many of us.

Having named the demon, if there is ever any agreement on a name and frame, does that give us mopes any power over the demon, or just another opening for its immanence in our sad little lives?

integer , February 20, 2017 at 10:49 pm

The first step would seem to be forcing the demon out from the shadows and into the sunlight so everyone can get a good look at it. I imagine it will then lash out with everything it has like a cornered animal, which will harden public opinion against it, and then it will be game on for real. A very dangerous game, to be sure, but what is the alternative?

Horsewithnoname , February 20, 2017 at 5:04 pm

From http://www.oftwominds.com/blogfeb14/dollar-deep-state2-14.html [Charles Hugh Smith, 02/2014]
I have been studying the Deep State for 40 years, before it had gained the nifty name "deep state." What others describe as the Deep State I term the National Security State which enables the American Empire, a vast structure that incorporates hard and soft power–military, diplomatic, intelligence, finance, commercial, energy, media, higher education–in a system of global domination and influence.

Back in 2007 I drew a simplified chart of the Imperial structure, what I called the Elite Maintaining and Extending Global Dominance (EMEGD):

stockbrokher , February 20, 2017 at 5:14 pm

1. "Example: "The Iraq WMD's yellowcake uranium episode was a Deep State Blooper." (See here for details; the yellowcake uranium was part of the Bush administration's WMD propaganda operation to foment the Iraq War.)"

How is this an example of a blooper? It helped to achieve its intended goal. That it was exposed much later as a fabrication didn't vitiate its effect.

2. Surprised so many examples/references (especially here) but none with Wall Street as a primary Deep State actor. Read something revelatory ( to me, anyway) recently re the CIA ( post WWII) being engineered mostly by Wall Street for the sole purpose of protecting big U.S Corporate interests. Sorry no time to dig it up, but I'm sure others more knowledgeable can expound. (As SerenityNow notes, Scott's book puts WS in the title.)

Skip Intro , February 21, 2017 at 10:23 am

Good points.
What is interesting to me is the similarity of the modus operandi revealed in the yellowcake episode, where privileged information was 'leaked' to a tame 'journalist' to take out an enemy. In the case of the yellowcake, we generally accept the narrative that blowing Joe Wilson's wife's Non-Official Cover, but as part of a non-proliferation team, Valerie Plame was also in a position to directly interfere with WMD claims from the administration. OTOH, the WHIG and OVP are not very deep.
In addition, it is easy to point to the Iraq debacle as a failure on the part of the 'deep state' that contrived it, but a more cynical view would consider that a quick victory is less profitable than a slow defeat. In that light, apparently glaring errors, like the disbanding of the Iraqi Army, may be understood to be insurance that has paid off with a successful insurgency, a weakened state where oil can be bought or taken without any pesky national government interference, and eventually, trained military leaders for IS, the next-gen enemy with actual ground troops and conquered territory.

I was surprised that there wasn't a reference to Ike's warning about the Military Industrial Complex, which seems like the original American reference to an extra-democratic coalition of interests that could influence or control policy.
Another milestone would be the Iran-Contra affair, where we heard North and Poindexter drooling over an 'off the shelf operational capacity' to circumvent constitutional control of foreign policy (a market niche now filled by Erik Prince and Blackwater/Xe/Academi). In connection with this scheme, we also witnessed intelligence officials colluding with arms merchants to influence a US election by arming enemies, as well as running drugs into the US to fund said independent foreign policy. I think the illegality is well established, as for killings within the US territory, we can ask Orlando Letelier.

scraping_by , February 20, 2017 at 6:10 pm

Ran into an interesting passage in Kevin Phillips's 1994 book Arrogant Capital: Washington, Wall Street, and the Frustration of American Politics . He speaks of an 'iron triangle' of politics, interest groups, and media that turns aside the cyclic outsider revolutions that would otherwise renew American political institutions. If Trump has this view of his populism, it makes sense he spends so much time disparaging the MSM; not just a celebrity feud, not just annoyance about bitchiness, but a reasoned effort to break an elite power tool.

If Phillips's iron triangle fits the description of a Deep State, and it can, this may be an actual conflict over principles and convictions. Because the elite believe deeply in their own position, and are convinced they're doing God's work.

PhilM , February 20, 2017 at 6:10 pm

To me this is the kind of synthetic journalism that really sifts meaning from noise. And uniquely, on this site, the reading lists and comments are sophisticated and thoughtful additions and refinements, like the peer review offered from any scholarly community. This article is not definitive; but it could grow and grow, and then one could easily call it "seminal." This is work that I happily pay for.

From the history of the 1930s: one notes that for Heydrich to consolidate his bosses' power over Germany, he felt it necessary to "declare war" on the existing German civil service in 1935–not just the police force, but the entire bureaucracy; and to seize control of the foreign intelligence services as well as the domestic. The only successful hold-out was the Abwehr, the military intelligence service, which succeeded in preserving its independence in a very much more closely circumscribed field.

So Heydrich definitely felt there was a "state within the state" that needed to be co-opted and ideologically purified and above all surveilled, before Hitler's power was secured. That, in my humble view, is what the "deep state" is. It's the most important part of the question "quis custodiet custodes ipsos," and why Plato had a philosopher king instead of just a bunch Guardians, and why a nobility requires a monarchy.

integer , February 20, 2017 at 10:42 pm

Yes it's great to see this issue being given the attention it deserves and being subjected to serious analysis by NC and the commentariat. Thanks Lambert!

witters , February 21, 2017 at 2:22 am

A philosopher king who was poor, lived on public provision, owned no property, had no family, and lived in accomodation from whom none could be forbidden. And so just & virtuous.

Gman , February 20, 2017 at 6:15 pm

Only relatively recently having become aware of the term, 'deep state' I would assume, in its most basic form, it refers to those mostly 'unseen' and 'unknown' conservative we know best types who wield uninterrupted, often disproportionate influence without having to suffer the dreadful inconvenience or potential indignity of seeking a periodic democratic mandate.

Watt4Bob , February 20, 2017 at 6:29 pm

It seems to me that there was a lot of talk about the birth of the DHS being the biggest reorganization of the federal government since the New Deal.

That talk included concerns that Bush was putting thousands of dead-enders in bureaucratic positions, and that they would be impossible to remove in the future.

From Occupy.com (May 2013);

But here's the strange thing: unlike the Pentagon, this monstrosity draws no attention whatsoever - even though, by our calculations, this country has spent a jaw-dropping $791 billion on "homeland security" since 9/11. To give you a sense of just how big that is, Washington spent an inflation-adjusted $500 billion on the entire New Deal.

We've been talking around here about the breaking of rice bowls and its affect on the credentialed class, the implication being the hysterical, unorganized revolt of people who feel their well-being threatened by the rise of Trump.

Bush II broke a lot of rice bowls when he leveraged the fearful post 9/11 environment to bring about the reorganization of the federal government under the DHS;

From Legislating Civil Service Reform:
The Homeland Security Act of 2002
; (emphasis mine)

The Administration presents their strategy as one that requires them
to have more control over federal personnel in order to provide national
security and protect America. For example, President Bush argued that he needed the freedom "to put the right people at the right place at the right
time to protect the American people."

The metaphor of physical placement-to "put" federal workers in particular places at particular times-is rationalized as a strategy to protect America,
much like one would move a Bishop or Knight in a chess game to protect
the King.

This physical placement metaphor was also picked up by the news
media. In one summary of the issues, an article in the Washington Post
noted, "The White House wants to retain the ability to remove
some employees from unions for national security reasons," and "Bush
wants the ability to move workers from one part of the department to
another to meet rapidly changing needs.

This metaphor of physical placement suggests that the Administration requires a particularly high degree of power and control over personnel,
but that degree of power is presented as rational and justified in light of national security.

To the extent that the audience is concerned about national security, then
they are invited to see the Administration strategy-in this case,
its need for power over personnel-as one that is consistent with that concern.

From the same paper, the other side of the argument ; (emphasis mine)

Union leaders saw this issue in a different light; they disputed the details of the proposal and also questioned the motives behind them.
Brian DeWyngaert, Assistant to the President of AFGE, saw the reforms
as an attempt by the administration to weaken the civil service system, to shift from "public administration" to "political administration."

DeWyngaert cites a paper, written by two former Republican personnel
management officials, that asserts, " The President can expect opposition
from official Washington's 'permanent government ,' a network that includes the career civil service, and its allies in Congress, the leaders of federal
unions, and the chiefs of managerial and professional associations
representing civil servants."

DeWyngaert expresses union distrust of the administration, arguing that
the real goal of the administration was to "control what agencies do
[ ] to change some of the personnel rules [ ] to the point where they are going to follow your line because you control their pay, their determination at will,
their layoff.

W4B;

What I'm pointing out, is that what we're calling the Deep State includes the "permanent government" mentioned above, and that in reorganizing the government under the control of the new DHS, the right, in the person of Bush II was attempting to replace a unionized, independent, New Deal flavored government bureaucracy with one that could be more easily controlled, because it was more politicized.

I'm saying that both the democratic, and the republican wings of the republican party have made peace with the notion of a more politicized "permanent government", and that more politicized "permanent government", is now showing its loyalty to the status quo by doing what's expected of it, joining the resistance.

PhilM , February 20, 2017 at 9:24 pm

This is exactly what I think, too, and what Heydrich recognized in 1935: that a large government has a hive mind. Without the SD ("Security Services"), the SS, and the Nazi Party organization, he could never have bent that hive mind, made of all those entrenched, entitled, relatively law-abiding functionaries, to his will.

Trump has none of those tools at his disposal, so there's no reason to expect his lasting very long or getting much done.

That's what makes the hysteria about his being like Hitler so very misplaced. If Trump had an organization like the Nazi party hundreds of thousands strong, ready to die in the streets for him, with operatives ready to put into place to take over the management of the government effectively at all upper levels, it would be another matter. As it is, he's grasping at straws from other talent pools. No wonder the bookies are giving him lower odds.

schultzzz , February 20, 2017 at 6:48 pm

Chris Hedges, on his RT show, recently defined it almost exclusively in terms of big business. I think the quote was something very short like, "It's Raytheon, Goldman, and Exxon!!!"

Which complicates things, as Trump's cabinet has reps from Goldman and Exxon in it.

neo-realist , February 20, 2017 at 10:36 pm

On that tip more or less, I recall watching a video of Dick Gregory and Mark Lane talking about the MLK Assassination, and Gregory made a point of saying more or less that the intelligence apparatus doesn't act unilaterally, but that it acts at the direction of the aristocrats, i.e., oligarchs, big business, etc. The aristocrats tells the apparatus to go after those governments and politicians that are acting against their interests.

In a documentary called King–Montgomery to Memphis (GREAT DOCUMENTARY), Harry Belafonte said that when King antagonized the "money power" , he was pretty much marked for death.

Anonymous , February 20, 2017 at 6:52 pm

Anecdotally, I was working with a former Senator at the time of the DHS formation who was still highly involved with the Bush administration. in fact Cheney had them on speed dial. I can tell you flat out that despite spouting the same garbage about freedom to reorganize on the fly, if you talked with them long enough the ability to fire employees at will ALWAYS ended up being the reason when anyone pinned him down about how departments would be reorganized on the fly. Very clearly it was about making sure that employees would know that they should show no integrity at all in doing their job most particularly in regards to either upholding the Constitution or recognizing the legal rights of any person, citizen of America or not.

Dave in Austin , February 20, 2017 at 7:16 pm

Deep state versus deep government

All modern states are bureaucratic. So the surface state which the public can replace, what we usually call "the government", is underpinned by a deep and essentially invisible substrate of people and institutions. The characteristics of the deep government are 1) opaque bureaucratic decision-making and written output designed to mislead not inform, 2) invisibility because the press cant easily turn the story into a narrative with individuals who represent good and evil, and because the national press (NYT, WP, and even the WSJ) no longer reports the news but filters the policies to either spark outrage or encourage cooperation, 3) The deep government employees are smart, educated and have come up through the ranks (think Bob Gates). They are great people, fun to be with but often incredibly insular and sure that "You people out there don't understand". And they are often right about that. Don't underestimate their knowledge.

Under most conditions the surface government, the deep government and the parts of the deep state outside the government (ie the press) are in general agreement and work together smoothly. Today the surface state (President, congress and soon probably the courts) are trying to bring about change that the individuals within the deep government fundamentally disagrees with on issues like immigration, national self-sufficiency and overseas threats. All major changes (our entry into WWI and WWII, the civil rights movement, tax and subsidy law, Obama's immigration program) generate resistance. Sometimes I agree with the deep, sneaky part of the government (entering WWII); other times, I don't (Vietnam, Bush in Iraq, Obama's immigration policy).

Our deep state is like that of most democracies and differs from authoritarian deep states in a number of fundamental ways: 1) our military is adamantly apolitical. All officers take an oath of allegiance to the Constitution, not the government (in the late 1960s, as the military got sucked into domestic policing, many senior officers started reading and discussing the Constitution among themselves), 2) No U.S. deep state emerged out of our two formative struggles, the revolution and the Civil War . Much of the world (China, Russia and the colonies that became free in the 1950s and 60s) had a different history, 3) We have no ethnic and religious deep states- no Moslem Brotherhood, no Burmese Buddhist nationalist, although we do have passionate ethnic groups that prefer to operate out-of-sight (Jewish, Irish Catholic, Cuban, Indian to name a few) . 4) Countries that fight overseas wars or that fear internal revolutions all develop a deep state. All the ex-colonies that didn't (Iraq, Egypt, Guatemala and a hundred more) had the weak state overthrown and replaced with a strong and deep state. In the US the first deep state hints came after WWI (not WWII) with large caches of unappropriated money going into the hands of Naval Intelligence (who do you think paid for the Flying Tigers?). The original sin of our liberal deep state was the campaign to get us into WWII. A good cause- and a terrible precedent.

Finally, the deep government and the national elite are not the same. The deep government is largely a meritocracy filled with alert people who know which way the wind is blowing. If real Communists or real Fascists took over they would either stay inside, keep getting paid, and quietly try to undermine the new leaders or they would take early retirement. They don't write biographies or make statements because they are essentially private people immersed in their private lives, what the Communists used to call Careerists. The national elites are something else. They either feel independent (the hereditary rich, celebrities and Trump and the self-made billionaires) or are the insecure product of upper middle class families, Ivy League and second-level private colleges and good social backgrounds. They work in large institutions they don't own or control. The latter group wants to exercise power because it gives meaning to their otherwise uninteresting lives (think, academics, the non-profit sector and Federal judges). The self-made rich exercise power to become richer and because they love to control organizations that compete (Who owns all the NFL teams?). Both the deep state and the deep government are open to people of education, good breeding, ambition, discretion and good luck.

Is there any way to fix this? Probably not but nobody seems to bother the countries that don't do foreign adventures To roughly quote from the Bin Laden interview after 9/11, when he as asked "Why did you attack America?" he laughed and said "We didn't attack Switzerland". A better national press would help. If there are any billionaires out there interested in providing $100K salaries to real smart MBA students who like to dig, let me know. A few platoons of young I.F. Stones of various political hews might go a long way. But deep states are here to stay. The best we can do is monitor. analyze and publicize them.

Patricia , February 20, 2017 at 8:03 pm

What a fascinatingly bland presentation, revering deep state careerists for their solid private lives and good-breeding, while others are power-hungry insecure product searching for a cure to their dullness.

And calling for "platoons" of new IF Stones from among MBAs, of all places!

Thanks for the entertainment.

integer , February 20, 2017 at 10:31 pm

+1

Tomonthebeach , February 20, 2017 at 7:54 pm

As a retired member of the Deep State, I find it amusing at the imbecility of right- (or left) wing conspiracy nuts who can invent amazing chains of undermining collaboration across agency lines orchestrated by some powerful shadow demons.

If federal employees were really that effective, there would be no private sector wage gap, the VA and DOD would share a seamless electronic record system, and Snowden would have the Medal of Freedom, and HRC's fingerprints would have been all over the gun that killed Vince Foster.

The Deep State, if you want to call it that, exists so the people get the support and services they need despite confusing and often conflicting legislation, presidential directives, and agency regulations.

DH , February 20, 2017 at 8:27 pm

I generally apply Occam's Razor to conspiracy theories. It is generally more likely that events occur due to incompetence, lack of attention, or emotional reactions than conspiracy. To pull a secret conspiracy off successfully over a long time, you need to be really smart, really focused and not have many people, otherwise it is no longer secret.

The bigger the organization, the more likely you are to have a reversion to the mean of most of the population, and most people are more likely to turn a blind eye than participate in something that means they could lose their pension as well as getting home late for dinner.

So the biggest issue that Trump has with the bureaucracy is how to manage Parkinson's Law. He did in the private sector by running around saying "You're fired" but he can't do that to career civil servants. http://www.economist.com/node/14116121

I am sure that there are a bunch of bureaucrat top dogs that don't like the invasion of their turf. They are, after all, fundamentally political animals very jealous of their territory. Some of them might even talk to each other, but probably half of them despise the other half.

The biggest threat to us is that we slowly acquiesce to security theater that quietly gets more and more invasive. The police etc. are the most likely to be organized as some sort of "deep state" as some departments already have an us vs. them attitude.

JTMcPhee , February 20, 2017 at 8:43 pm

Tom, maybe one part of the bigger thing called "federal service" does that. I spent 13 years with the US EPA through the Reagan Revolution (and it was an amazing coup). A number of EPA employees, despite the threats of "RIFs" (reductions in force, or wholesale politically motivated firings), worked hard and quietly to do everything they could to slow the assault on "regulation" of sh!tty corporate behavior that threatened human health and the environment. There were a lot of go-alongs, usually later comers who were looking to get their resumes padded before moving to the dark side, but there were a lot who were serious in their commitment, and aware of their vulnerability, who continued to press for enforcement actions, regulations with teeth that required industries to spend money ("internalize") to install process changes and end-of-pipe-or-stack controls (which often resulted in increased profits for the corpos who had an excuse and tax deductions to update their plants. And there was continued insistence on doing the data gathering that supported the proofs of harm that pollution and toxics cause. There was an 'environmental justice" initiative despite the "f__k the poor" administration attitudes and policies, and a criminal enforcement operation that actually put corporate officers in jail and at least made them take notice of potential consequences. There are obviously still a lot of employees at EPA to take their mission to be protection of public health and the environment, preserving decades of data collection and soldiering on despite the "Mandate for Leadership" quackery and fear-and-loathing fomenting.

But your limiting the definition as you do is incomplete at best. The state security overlords, the oligokleptocracy, and the other inimical factions and parties that have been described in this post and comments, seem to me the real nuts and bolts of what 'deep state' is getting at. Not the many federal employees who, despite all the sh!t that flows down from above and laterally from the culture inside and outside the agencies, actually try to do the job of "positive governance," like a few people I have dealt with in the Social Security Admin, the VA, the CMS behemoth and a few others. I often wonder how people persist in those jobs and don't burn out or get fired. I was close to both while doing my thing at EPA, 1980-90 (the Reagan years - I had two-plus with Carter as president before that, to see how a less hostile-to-regulation-in-the-best-sense admin might operate.

Vatch , February 20, 2017 at 9:27 pm

Tom, I'm curious. In which department of the federal government were you employed?

integer , February 20, 2017 at 10:22 pm

Hard to take your comment seriously. Do you really think that the Deep State consists of federal employees who are concerned with VA and the rank and file of the DOD, or that they are interested in providing "support and services" to the people? I think it's likely that your belief that you were part of the Deep State is incorrect.

Mothy , February 20, 2017 at 8:01 pm

No discussion of the Deep State would be complete without reading "Spooks," by Jim Hougan. It was a seminal book written in 1980 (I believe) that introduced the notion of retiring IC operatives joining private company security apparati. Tell your compatriots you're acting on behalf of the government and a patriot will do ANYTHING. "The Conversation" was a depiction of one of the main characters in the book who had previously wiretapped most of Manhatten back in the early Sixties; he worked for either Hoffa or the Kennedy brothers or both. Really an unbelievable book getting more and more difficult to find. Ironically– or not– I believe it was Hougan's last piece of investigative journalism.

No Idea , February 20, 2017 at 9:14 pm

We cross out "conducting killings" for the American context (or do we?).

"Character assassination. What a wonderful idea. Ordinary assassination only works once, but this one works every day."
― Terry Pratchett, The Truth

Fool , February 20, 2017 at 10:02 pm

A succinct way that i like to think of the "deep state" is whoever the CIA works for.

Vatch , February 20, 2017 at 10:13 pm

"It's called the ruling class because it rules." –Arthur Silber

The rulers are the ones who rule. The ruling class includes non-rulers who are in the same socio-economic class as most of the people who rule.

buermann , February 21, 2017 at 12:48 am

I'd always assumed the concept originated with Peter Dale Scott, who, before he wrote the book "The American Deep State", used it all over the place in 2007's "The Road to 9/11". I've read neither but for excerpts, the concept merely referred to covert agencies acting outside the scope of democratic oversight - whether it's local police departments running out of control torture squads and black sites or national intelligence agencies acting as the private armies of the executive. That such groups might oust a sitting executive is of course the heart and soul of all his conspiracy mongering about the JFK assassination (I like his poetry an awful lot, but I remember trying to get through Cocaine Politics and either the sources didn't check out or they were untraceable, in any case I gave up on it).

https://books.google.com/books?id=op39ymd2um0C&printsec=frontcover&q=%22deep%20state%22

H. Alexander Ivey , February 21, 2017 at 1:18 am

If you want to find a consistent, broad, and useful meaning of a concept, and a phase or 'name' for that concept, look for books written on the subject. Postings, blogs, and even published articles do not have the authority that books have (it's not just because being hit upside the head with a book will hurt a lot more than with a blog posting, har,har).

My recommendation is Deep State, based on my understanding on Mike Lohgren's The Deep State: The Fall of the Constitution and the Rise of a Shadow Government .

I must say I personally don't like the term. When I use it with people who believe that Rep & Dem describe the US government, I get the old eye roll, tin foil hat outfitting treatment. Humm, maybe I'll lead in with the term 'Washington Consensus'. They get that one around here in Southeast Asia. They haven't forgotten or forgiven the IMF about the 1997 Asian financial crisis.

St Jacques , February 21, 2017 at 4:03 am

I hate the term deep state because, unlike the mic, for example, which has a clarity about it, it is so vague and malleable a term as to be almost useless except for Hollywood films and conspiracy nutters, but if there is such a thing, here is what it might look like:
https://www.youtube.com/watch?v=B8IvKx0c19w

Damson , February 21, 2017 at 6:56 am

It goes back to 9/11.

A must-read is the 'Collateral Damage' investigation in which the Office Of Naval Intelligence features as the main exposing agency of exactly this issue – a parallel power structure operating on a black budget:

https://wikispooks.com/wiki/File:Collateral_Damage_-_part_1.pdf

fairleft , February 21, 2017 at 7:36 am

The central task of the U.S. 'deep state' is to maintain or expand the permanent war economy. So it is the military-industrial complex. The top-of-food-chain spy agencies - whose primary task within the MIC is to create enemies and paranoia - are the brains and mouthpiece of the deep state.

begob , February 21, 2017 at 7:58 am

Didn't see any mention of organised crime. And does the DS distinguish between unlawful and illegal?

PH , February 21, 2017 at 8:53 am

Think kaleidoscope in motion. Colors are real but hard to predict. Preset patterns, but affected by outside movement.

I love histories, but I know they simplify and often mislead. Anyway, the trick is to spot the power emerging, not how it turned out with the last generation.

I suggest that the best approach looking forward is to start with the existing visible power bureaucracies both inside govt and outside govt but on its periphery.

For each behemoth, daily routine is the biggest driver. And with that usually goes shared values. Such things usually push events.

Offhand, I can think of a few starting points. If these separate bureaucracies are subject to some common control, I would like to know exactly who and exactly how.

Military/defense contractors. Mostly consumed with myopic concerns. Top generals and bureaucrats do think tank type stuff, but mostly technical. Obvious collusion with industry over defense budgets.

Not sure what attitude is toward Donald.

NSA and tech contractors. Foreign world to me, but obvious iceberg.

State Dept and White House and press chattering class. Propaganda organizations, basically. I am sure they have clubs and secret handshakes, but not sure should've called organized.

Main CIA. Narrow bureaucrats.

Off-the-books CIA intersecting with business. These have been the most spectacular stories and escapades. Edwin Wilson. Air America. Coups in the 50s. Maybe CIA assassination of Kennedy.

Did these operations drive history? Maybe. If those types of connections drive events today, what are they?

I do not see a unitary deep state.

Steven Greenberg , February 21, 2017 at 9:10 am

Nobody has raised the issue of COG. Here is one excerpt from Peter Dale Scott's book that talks about and somewhat defines it. Much more in the book of course.

One factor linking Dallas, Watergate, the 1980 "October Surprise" plot to prevent Carter's reelection, Iran-Contra, and 9/ 11 has been the background involvement in all these deep events of personnel from America's highest-level emergency planning, that is, Continuity of Government (COG) planning, known inside the Pentagon as "the Doomsday Project." The implementation of COG plans on 9/ 11 was the culmination of decades of such planning, and has resulted in the permanent militarization of the domestic United States, and the imposition at home of institutions and processes designed for domination abroad.

Scott, Peter Dale. The American Deep State: Wall Street, Big Oil, and the Attack on U.S. Democracy (War and Peace Library). Rowman & Littlefield Publishers.

Mattski , February 21, 2017 at 9:28 am

"Seems pretty big to be deep "

Not logical. The Deep State is those elements of the establishment that direct the course of government irrespective of e pluribus.

Perfectly good term, arising from popular usage, whose boundaries–hopefully needless to say–people who know better will not dictate anyway. Would have been much better, rather than to attack its use at the outset, just to investigate it. Elitist exercise, shaped like this.

[Feb 21, 2017] Designing and managing large technologies

Feb 21, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron : February 20, 2017 at 04:48 AM , 2017 at 04:48 AM
RE: Designing and managing large technologies

http://understandingsociety.blogspot.com/2017/02/designing-and-managing-large.html

[This is one of those days where the sociology is better than the economics or even the political history.]

What is involved in designing, implementing, coordinating, and managing the deployment of a large new technology system in a real social, political, and organizational environment? Here I am thinking of projects like the development of the SAGE early warning system, the Affordable Care Act, or the introduction of nuclear power into the civilian power industry.

Tom Hughes described several such projects in Rescuing Prometheus: Four Monumental Projects That Changed the Modern World. Here is how he describes his focus in that book:

Telling the story of this ongoing creation since 1945 carries us into a human-built world far more complex than that populated earlier by heroic inventors such as Thomas Edison and by firms such as the Ford Motor Company. Post-World War II cultural history of technology and science introduces us to system builders and the military-industrial-university complex. Our focus will be on massive research and development projects rather than on the invention and development of individual machines, devices, and processes. In short, we shall be dealing with collective creative endeavors that have produced the communications, information, transportation, and defense systems that structure our world and shape the way we live our lives. (3)

The emphasis here is on size, complexity, and multi-dimensionality. The projects that Hughes describes include the SAGE air defense system, the Atlas ICBM, Boston's Central Artery/Tunnel project, and the development of ARPANET...


[Of course read the full text at the link, but here is the conclusion:]


...This topic is of interest for practical reasons -- as a society we need to be confident in the effectiveness and responsiveness of the planning and development that goes into large projects like these. But it is also of interest for a deeper reason: the challenge of attributing rational planning and action to a very large and distributed organization at all. When an individual scientist or engineer leads a laboratory focused on a particular set of research problems, it is possible for that individual (with assistance from the program and lab managers hired for the effort) to keep the important scientific and logistical details in mind. It is an individual effort. But the projects described here are sufficiently complex that there is no individual leader who has the whole plan in mind. Instead, the "organizational intentionality" is embodied in the working committees, communications processes, and assessment mechanisms that have been established.

It is interesting to consider how students, both undergraduate and graduate, can come to have a better appreciation of the organizational challenges raised by large projects like these. Almost by definition, study of these problem areas in a traditional university curriculum proceeds from the point of view of a specialized discipline -- accounting, electrical engineering, environmental policy. But the view provided from a discipline is insufficient to give the student a rich understanding of the complexity of the real-world problems associated with projects like these. It is tempting to think that advanced courses for engineering and management students could be devised making extensive use of detailed case studies as well as simulation tools that would allow students to gain a more adequate understanding of what is needed to organize and implement a large new system. And interestingly enough, this is a place where the skills of humanists and social scientists are perhaps even more essential than the expertise of technology and management specialists. Historians and sociologists have a great deal to add to a student's understanding of these complex, messy processes.

[A big YEP to that.]


cm -> RC AKA Darryl, Ron... , February 20, 2017 at 12:32 PM
Another rediscovery that work is a social process. But certainly well expressed.

It (or the part you quoted) also doesn't say, but hints at the obvious "problem" - social complexity and especially the difficulty of managing large scale collaboration. Easier to do when there is a strong national or comparable large-group identity narrative, almost impossible with neoliberal YOYO. You can always compel token effort but not the "intangible" true participation.

People are taught to ask "what's in it for me", but the answer better be "the same as what's in it for everybody else" - and literally *everybody*. Any doubts there and you can forget it. The question will usually not be asked explicitly or in this clarity, but most people will still figure it out - if not today then tomorrow.

[Feb 21, 2017] Paul Krugman On Economic Arrogance

Feb 21, 2017 | economistsview.typepad.com
libezkova : , February 20, 2017 at 12:28 PM
Fumbling Towards Collapse - KUNSTLER
http://kunstler.com/clusterfuck-nation/fumbling-towards-collapse/

== quote ==
...In it, Krugman attempts to account for the no-growth economy by marshaling the stock-in-trade legerdemain of academic economics: productivity, demographics, and labor metrics. Krugman actually knows zip about what afflicts us in the present disposition of things, namely the falling energy-return-on-energy-investment in the oil industry, which is approaching the point where the immense activity of getting oil out of the ground won't be worth the cost and trouble of doing it. And since most of the things we do and produce in this economy are based on cheap oil - with no reality-based prospect of replacing it with so-called "renewables" or as yet undiscovered energy rescue remedies - we can't generate enough wealth to maintain anything close to our assumed standard of living. We can't even generate enough wealth to pay the interest on the debt we've racked up in order to hide our growing energy predicament. And that, in a nutshell, is what will blow up the financial system. And when that department of the economy goes, the rest will follow.
... ... ...
So, on one side you have Trump and his trumpets and trumpistas heralding the return of "greatness" (i.e. a booming industrial economy of happy men with lunchboxes) which is not going to happen; and on the other side you have a claque of clueless technocrats who actually believe they can "solve" the productivity problem with measures that really only boil down to different kinds of accounting fraud.


You also have an American public, and a mass media, who do not question the premise of a massive "infrastructure" spending project to re-boot the foundering economy. If you ask what they mean by that, you will learn that they uniformly see rebuilding our highways, bridges, tunnels, and airports. Some rightly suspect that the money for that is not there - or can only be summoned with more accounting fraud (borrowing from our future). But on the whole, most adults of all political stripes in this country think we can and should do this, that it would be a good thing.

And what is this infrastructure re-boot in the service of? A living arrangement with no future. A matrix of extreme car dependency that has zero chance of continuing another decade. More WalMarts, Target stores, Taco Bells, muffler shops, McHousing subdivisions, and other accoutrement of our fast-zombifying mode of existence? Isn't it obvious, even if you never heard of, or don't understand, the oil quandary, that we have shot our wad with all this? That we have to start down a different path if we intend to remain human?

It's not hard to describe that waiting world, which I've done in a bunch of recent books. We're going there whether we like it or not. But we can make the journey to it easier or harsher depending on how much we drag our heels getting on with the job.

History is pretty unforgiving. Right now, the dynamic I describe is propelling us toward a difficult reckoning, which is very likely to manifest this spring as the political ineptitude of Trump, and the antipathy of his enemies, leaves us in a constitutional maelstrom at the very moment when the financial system comes unglued. Look for the debt ceiling debate and another Federal Reserve interest rate hike to set off the latter. There may be yet another converging layer of tribulation when we start blaming all our problems on Russia, China, Mexico, or some other patsy nation. It's already obvious that we can depend on the Deep State to rev that up.

[Feb 21, 2017] People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed. The voters no longer believe them. Theyre like the boy who cried wolf

Feb 21, 2017 | economistsview.typepad.com
Peter K. -> Peter K.... February 20, 2017 at 08:13 AM

, 2017 at 08:13 AM
https://www.ft.com/content/cd4e8576-e934-11e6-967b-c88452263daf

Revoking trade deals will not help American middle classes

The advent of global supply chains has changed production patterns in the US

by Larry Summers
FEBRUARY 5, 2017

Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will "make America great again" by substantially increasing job creation and economic growth swept Donald Trump into office.

More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties.

As Senator Daniel Patrick Moynihan once observed, participants in political debate are entitled to their own opinions but not their own facts. The reality is that the impact of trade and globalisation on wages is debatable and could be substantial. But the idea that the US trade agreements of the past generation have impoverished to any significant extent is absurd.

There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US.

My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago.

But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.

American tariffs on Mexican goods, for example, averaged about 4 per cent before Nafta came into force. China had what was then called "most favoured nation" trading status with the US before its accession to the World Trade Organization and received the same access as other countries. Before the Korea Free Trade Agreement, US tariffs on Korea averaged a paltry 2.8 per cent.

The irrelevance of trade agreements to import competition becomes obvious when one listens to the main arguments against trade agreements. They rarely, if ever, take the form of saying we are inappropriately taking down US trade barriers.

Rather the naysayers argue that different demands should be made on other countries during negotiations - on issues including intellectual property, labour standards, dispute resolution or exchange rate manipulation. I am sympathetic to the criticisms of TPP, but even if they were all correct they do not justify the conclusion that signing the deal would increase the challenges facing the American middle class.

The reason for the rise in US imports is not reduced trade barriers. Rather it is that emerging markets are indeed emerging. They are growing in their economic potential because of successful economic reforms and greater global integration.

These developments would have occurred with or without US trade pacts, though the agreements have usually been an impetus to reform. Indeed, since the US does very little to reduce trade barriers in our agreements, the impetus to reform is most of what foreign policymakers value in them along with political connection to the US.

The truth too often denied by both sides in this debate is that incremental agreements like TPP have been largely irrelevant to the fate of middle class workers. The real strategic choice Americans face is whether the objective of their policies is to see the economies of the rest of the world grow and prosper. Or, does the US want to keep the rest of the world from threatening it by slowing global growth and walling off products and people?

Framed this way the solution appears obvious. A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

Peter K. -> Peter K.... , February 20, 2017 at 08:16 AM
" The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges."

People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed.

The voters no longer believe them. They're like the boy who cried wolf.

cm -> Peter K.... , February 20, 2017 at 01:05 PM
I would actually agree with the stance in general, if there would be an actuall intention to help the affected people/populations, but there is none. Retraining for yet another job that doesn't exist (in sufficient volume so you can realistically get it) is not help. It is just cover for victim blaming - see we forgive you for choosing an incorrect career, here is your next chance, don't blow that one too (which we know "you will" as there are not enough jobs there either).
Peter K. -> Peter K.... , February 20, 2017 at 08:14 AM
http://www.bradford-delong.com/2017/02/must-read-four-things-are-going-on-technology-globalization-macro-policy-trade-agreements-lawrence-summ.html

DeLong Feb. 20, 2017

Must-Read: Five things are going on with respect to America's blue-, pink-, and--increasingly--white lower-middle and middle-middle working classes. Three of them are real, and two of them are fake:

Technology: It has--worldwide--greatly amplified manufacturing labor productivity, accompanied by limited demand for manufactured goods: few of us want more than one full-sized refrigerator, and very very few of us want more than two. That means that if you are hoping to be relatively high up in the wage distribution by virtue of your position as a hard-to-replace cog on a manufacturing assembly line, you are increasingly out of luck. If you are hoping for high blue-collar wages to lift your own via competition, you are increasingly out of luck.

Legal and institutional bargaining power: The fact that bargaining power has flowed to finance and the executive suite and away from the shop- and assembly-floor is the second biggest deal here. It could have been otherwise--this is, primarily, a thing that has happened in English-speaking countries. It has happened much less elsewhere. It could have happened much less here.

Macro policy: Yes, the consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries. Yes, the low-pressure economies of Volcker, late Greenspan, and Bernanke wreaked immense damage. Any more questions?

Globalization: Globalization deepens the division of labor, and does so in a way that is not harmful to high-paying manufacturing jobs in the global north. The high-paying manufacturing jobs that require skills and expertise (as opposed to the lower-paying ones that just require being in the right place at the right time with some market power) are easier to create and hold on to if you can be part of a globalized value chain than otherwise. This is largely fake.

Trade agreements: This is a nothingburger: completely fake.

As somebody who strongly believes that supply curves slope up--are neither horizontal nor vertical--and that demand curves slope down--are neither horizontal nor vertical--I think that Larry Summers is misguided here when he talks about how "companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource." This was certainly true since the 1950s with the move of American manufacturing to the south, and the rise of deceptively-named "right-to-work" laws. But the threat to outsource is zero-sum on a national level: the balance of payments balances. Individual sectors lose--and manufacturing workers have been big losers. But that is, I think, only because of our macro policies. If we were a normal global North manufacturing power--a Germany or a Japan--exporting capital and running a currency policy that did not privilege finance, he would not be talking a out how "companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource." He would be talking about how the opportunity to participate in global value chains increases the productivity of semi-skilled and skilled manufacturing workers in the U.S.

Thus I think Larry conceded too much here. Blame macro policy. Blame technology. Blame the conflict between the market society's requirements that only property rights matter and that everything pass a profitability test against people's strong beliefs that even if they have no property rights they have rights to stable communities, stable industries, and stable occupations. But, to channel Pascal Lamy, look not at the finger but at the moon here.

However, Larry is right on his main point: NAFTA really ain't the problem:

Lawrence Summers: Revoking Trade Deals Will Not Help American Middle Classes: "There is a debate to be had about the impact of globalisation on middle class wages and inequality...

Tom aka Rusty -> Peter K.... , February 20, 2017 at 09:27 AM
For Delong to be right on trade, thousands of rust belt politicians, journalists, and business leaders and a few hundred thousand workers would have to be delusional.

He is right in the sense that it is too late to revoke NAFTA, the damage is done.

[Feb 21, 2017] Mainstream economists, being a stooges of financial oligarchy, have depicted capitalism as natural, as though God-given rather than as a product of institutions and/or politics.

Feb 21, 2017 | economistsview.typepad.com
Peter K. : February 20, 2017 at 12:34 PM , 2017 at 12:34 PM
"Larry sees the coming of globalization as bringing with it a sharp reduction in the market power of American blue-collar workers in mass-production industries, and thus as exerting significant downward pressure on middle class wages and upward pressure on inequality. The live question, he thinks, is how large and significant these pressures have been."

As if this was natural and ordained by God. Can't argue with economics.

And hence the populist backlash.

pgl -> Peter K.... , February 20, 2017 at 12:49 PM
Catholic economics? Lord - the troll parade continues.
RGC -> pgl... , February 20, 2017 at 01:32 PM
Peter K is exactly right.

Mainstream economists have depicted capitalism as natural, as though God-given rather than as a product of institutions and/or politics.

That's how they became mainstream and got jobs at "elite" universities and columns in major newspapers.

Peter K. -> pgl... , February 20, 2017 at 03:14 PM
They say don't feed trolls so I guess I shouldn't feed you and your constant need for attention.
libezkova -> pgl... , February 20, 2017 at 06:04 PM
Did you ever read Evangelii Gaudium ?

http://www.vatican.va/holy_father/francesco/apost_exhortations/documents/papa-francesco_esortazione-ap_20131124_evangelii-gaudium_en.html

If not, you probably can benefit from reading it.

It looks like there should strict external "moral" constrains on economic activity, like they were most of human history. For some activities which are now legal you can spend life in jail even in rather relaxed 30th ( for example, credit cards interest rates are usury rates, no question about it)

All this mathiness junk and operating with unreliable and politically fudged (as in employment numbers and GDP) statistics (as in "There are three kinds of lies: lies, damned lies, and statistics."

We already saw to what economic outcomes neoliberals have led us. While neoliberal were eating the carcass of New Deal things were not that bad.

Now it's over and they are in deep trouble. Election of Trump is just the fist sign of troubles ahead. One swallow does not a summer make.

The problem is that financial oligarchy does not want to part with their illicit gains.

In the past this dilemma, especially in case Jewish bankers, was resolved by killing some part and exiling another part. It would be nice for our Masters of the Universe to remember this historical fact.

[Feb 21, 2017] Roger Farmer's ideas are a combination of market monetarism and New Keynesianism.

Feb 21, 2017 | economistsview.typepad.com
rayward : February 20, 2017 at 05:21 AM , 2017 at 05:21 AM
Roger Farmer's ideas are a combination of market monetarism and New Keynesianism. I recommend his interview by David Beckworth. https://soundcloud.com/macro-musings/rogerfarmer

[Feb 21, 2017] The rise in income inequality was promoted by the Reagan revolution. That in many ways was its purpose. It is also the agenda of Paul Ryan and his A Better Way .

Notable quotes:
"... Democrats sold out 35 years ago. ..."
"... Yes it's more profitable to have a non-unionized workforce. ..."
"... Doesn't mean we should. Doesn't mean we should get rid of environmental or safety regulations. ..."
Feb 21, 2017 | economistsview.typepad.com
pgl : , -1

"it is never good to pass up an opportunity to remind readers that the rise in inequality since 1980 has been something that those who made the Reagan Revolution hoped to accomplish and are proud of.

Bargaining power has flowed to finance and the executive suite and away from the shop- and assembly-floor. Top tax rates have come way down. It could have been otherwise--this is, primarily, a thing that has happened in English-speaking countries. It has happened much less elsewhere. It could have happened much less here."

The rise in income inequality was promoted by the Reagan revolution. That in many ways was its purpose. It is also the agenda of Paul Ryan and his "A Better Way".

We used to know how to lower trade barriers and welcome new technology and have the benefits accrue to all. We lost our political will some 35 years ago. And electing Trump has not exactly regained our old mojo.

Peter K. -> pgl... February 20, 2017 at 12:24 PM , 2017 at 12:24 PM
"We lost our political will some 35 years ago. "

Who is this we kemosabe?

Democrats sold out 35 years ago. And you keep defending them.

libezkova -> Peter K.... , February 20, 2017 at 05:41 PM
"Democrats sold out 35 years ago."

Bill Clinton was elected in 1982. He essentially sold the Party to Wall Street, although first signs appeared under Carter/

Peter K. -> Sanjait... , February 20, 2017 at 03:39 PM
Yes it's more profitable to have a non-unionized workforce.

Doesn't mean we should. Doesn't mean we should get rid of environmental or safety regulations.

libezkova -> Peter K.... , February 20, 2017 at 05:44 PM
"it's more profitable to have a non-unionized workforce"

And that was partially accomplished by moving manufacturing South.

[Feb 21, 2017] Does the Chicago Bears quarterback really need 126 million for seven years -- up from to top NFL paid Joe Namath's 600K a couple of generations back?

Feb 21, 2017 | economistsview.typepad.com
Denis Drew : February 20, 2017 at 02:10 PM , 2017 at 02:10 PM
Manufacturing, manufacturing, manufacturing. Everybody misses the BRONTOSAURUS in the room. 4% of jobs gone from automation and trade - half and half -- true. But, 50% of employees have lost 10% of overall income -- out of the 20% of a couple of generations back.

(This reminds me of comparing EITC's 1/2 1% redistribution with 45% of workers earning less than $15 an hour.)

Could 50% of the workforce squeeze 10% of income back out of the 49% who take 70% (14% of their earnings!)? They sure could if they could collectively agree not to show up for work otherwise. Could if the 49% in turn could squeeze 10% out of the 1% (the infamous one percent) who lately take 20% of overall income -- up from 10% a couple of generations back.

(Does the Chicago Bears quarterback really need $126 million for seven years -- up from to top NFL paid Joe Namath's $600,000 [adjusted truly] a couple of generations back?)

Mechanism? Ask Germany (ask Jimmy Hoffa).

* * * * * *

In case nobody thought about it -- I never thought about until Trump -- it goes like this. The NLRA(a) was written in 1935 leaving blank the use criminal sanctions for muscling the labor market. Even if it did specify jail time for union busting it is extremely arguable that state penalties for muscling ANY persons seeking to collectively bargain (not just union organizers and joiners following fed procedure) would overlap, not violate federal preemption.

It seems inarguable -- under long established First Amendment right to organize collective bargaining -- that federal preemption cannot force employees down an organizing road that is unarguably impassable, because unenforceable.

Upshot: states may make union busting a felony -- hopefully backed by RICO for persistent violators.

6% union density is like 20/10 blood pressure. It starves every other healthy process.

RC AKA Darryl, Ron -> Denis Drew ... , February 20, 2017 at 02:14 PM
Understood. Lost manufacturing jobs was a big hit to union employment aside from the longshoremen.
ken melvin -> RC AKA Darryl, Ron... , February 20, 2017 at 02:37 PM
In 1967-68 was working the waterfront in SF. Saw the crews of Stevedores and Longshoremen load the ships; on the docks, down in the holds, using boom winches, forklifts, and muscle (dangerous work). By 1970, containerization had replaced 90% of them. And, it continues with computerization of storage and loading of containers (something I worked on in 1975). Remember the nephew in the 'Wire'? One day a week if he was lucky. David Simon knew of what he wrote.
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 05:02 PM
One of the Michael Moore movies (probably but not sure whether about Flint) made the point rather explicitly - former manufacturing workers retrained as law enforcement or prison officers perhaps for employment in other states or "dealing with" their former colleagues driven to crime or at least into the arms of the law enforcement system.

[Feb 21, 2017] The low-pressure economies of Volcker, late Greenspan, and Bernanke wreaked immense damage

Notable quotes:
"... There is no need to assume nefarious motives under neoliberalism. They are the essence of the system, especially among the financial oligarchy. Wolf eats wolf and "Greed is good!" is the most typical mentality. ..."
"... In some way, it is close to the Italian mafia mentality. The mentality of organized mob. They put themselves outside and above the society. ..."
Feb 21, 2017 | economistsview.typepad.com
Sanjait -> pgl... February 20, 2017 at 01:10 PM , 2017 at 01:10 PM
You can point to the fact that Delong says it, and then the goalposts will move ... and they will complain he hasn't said it often enough, or loudly enough, or recently enough, or something.

People determined to assume nefarious motives will usually succeed: evidence, logic and common sense be damned.

Peter K. -> Sanjait... , February 20, 2017 at 03:41 PM
""The low-pressure economies of Volcker, late Greenspan, and Bernanke wreaked immense damage."'

It's good to see Democrats make having a high-pressure economy a priority.

Oh wait no.

You and PGL are huge liars.

libezkova -> Sanjait... , February 20, 2017 at 05:37 PM
There is no need to assume nefarious motives under neoliberalism. They are the essence of the system, especially among the financial oligarchy. Wolf eats wolf and "Greed is good!" is the most typical mentality.

In some way, it is close to the Italian mafia mentality. The mentality of organized mob. They put themselves outside and above the society.

[Feb 21, 2017] February 20, 2017 at 09:31 PM

Feb 21, 2017 | economistsview.typepad.com

David Stockman provides one of the best commentaries on Flynn assassination by deep state and Obama neocon holdovers in the administration. This is a really powerful astute, first class analysis of the situation:

Flynn's Gone But They're Still Gunning For You, Donald

http://ronpaulinstitute.org/archives/featured-articles/2017/february/17/flynns-gone-but-theyre-still-gunning-for-you-donald/

== quote ==
... ... ...
This is the real scandal as Trump himself has rightly asserted. The very idea that the already announced #1 national security advisor to a President-elect should be subject to old-fashion "bugging," albeit with modern day technology, overwhelmingly trumps the utterly specious Logan Act charge at the center of the case.

As one writer for LawNewz noted regarding acting Attorney General Sally Yates' voyeuristic pre-occupation with Flynn's intercepted conversations, Nixon should be rolling in his grave with envy:

Now, information leaks that Sally Yates knew about surveillance being conducted against potential members of the Trump administration, and disclosed that information to others. Even Richard Nixon didn't use the government agencies themselves to do his black bag surveillance operations. Sally Yates involvement with this surveillance on American political opponents, and possibly the leaking related thereto, smacks of a return to Hoover-style tactics. As writers at Bloomberg and The Week both noted, it wreaks of 'police-state' style tactics. But knowing dear Sally as I do, it comes as no surprise.
Yes, that's the same career apparatchik of the permanent government that Obama left behind to continue the 2016 election by other means. And it's working. The Donald is being rapidly emasculated by the powers that be in the Imperial City due to what can only be described as an audacious and self-evident attack on Trump's Presidency by the Deep State.
Indeed, it seems that the layers of intrigue have gotten so deep and convoluted that the nominal leadership of the permanent government machinery has lost track of who is spying on whom. Thus, we have the following curious utterance by none other than the Chairman of the House Intelligence Committee, Rep. Devin Nunes:
'I expect for the FBI to tell me what is going on, and they better have a good answer,' he told The Washington Post. 'The big problem I see here is that you have an American citizen who had his phone calls recorded.'
Well, yes. That makes 324 million of us, Congressman.
But for crying out loud, surely the oh so self-important chairman of the House intelligence committee knows that everybody is bugged. But when it reaches the point that the spy state is essentially using its unconstitutional tools to engage in what amounts to "opposition research" with the aim of election nullification, then the Imperial City has become a clear and present danger to American democracy and the liberties of the American people.
As Robert Barnes of LawNewz further explained, Sally Yates, former CIA director John Brennan and a large slice of the Never Trumper intelligence community were systematically engaged in "opposition research" during the campaign and the transition:
According to published reports, someone was eavesdropping, and recording, the conversations of Michael Flynn, while Sally Yates was at the Department of Justice. Sally Yates knew about this eavesdropping, listened in herself (Pellicano-style for those who remember the infamous LA cases), and reported what she heard to others. For Yates to have such access means she herself must have been involved in authorizing its disclosure to political appointees, since she herself is such a political appointee. What justification was there for an Obama appointee to be spying on the conversations of a future Trump appointee?
Consider this little tidbit in The Washington Post . The paper, which once broke Watergate, is now propagating the benefits of Watergate-style surveillance in ways that do make Watergate look like a third-rate effort. (With the) FBI 'routinely' monitoring conversations of Americans...... Yates listened to 'the intercepted call,' even though Yates knew there was 'little chance' of any credible case being made for prosecution under a law 'that has never been used in a prosecution.'
And well it hasn't been. After all, the Logan Act was signed by President John Adams in 1799 in order to punish one of Thomas Jefferson's supporters for having peace discussions with the French government in Paris. That is, it amounted to pre-litigating the Presidential campaign of 1800 based on sheer political motivation.
According to the Washington Post itself, that is exactly what Yates and the Obama holdovers did day and night during the interregnum:
Indeed, the paper details an apparent effort by Yates to misuse her office to launch a full-scale secret investigation of her political opponents, including 'intercepting calls' of her political adversaries.
So all of the feigned outrage emanating from Democrats and the Washington establishment about Team Trump's trafficking with the Russians is a cover story. Surely anyone even vaguely familiar with recent history would have known there was absolutely nothing illegal or even untoward about Flynn's post-Christmas conversations with the Russian Ambassador.
Indeed, we recall from personal experience the thrilling moment on inauguration day in January 1981 when word came of the release of the American hostages in Tehran. Let us assure you, that did not happen by immaculate diplomatic conception -- nor was it a parting gift to the Gipper by the outgoing Carter Administration.
To the contrary, it was the fruit of secret negotiations with the Iranian government during the transition by private American citizens. As the history books would have it because it's true, the leader of that negotiation, in fact, was Ronald Reagan's national security council director-designate, Dick Allen.
As the real Washington Post later reported, under the by-line of a real reporter, Bob Woodward:
Reagan campaign aides met in a Washington DC hotel in early October, 1980, with a self-described 'Iranian exile' who offered, on behalf of the Iranian government, to release the hostages to Reagan, not Carter, in order to ensure Carter's defeat in the November 4, 1980 election.
The American participants were Richard Allen, subsequently Reagan's first national security adviser, Allen aide Laurence Silberman, and Robert McFarlane, another future national security adviser who in 1980 was on the staff of Senator John Tower (R-TX).
To this day we have not had occasion to visit our old friend Dick Allen in the US penitentiary because he's not there; the Logan Act was never invoked in what is surely the most blatant case ever of citizen diplomacy.
So let's get to the heart of the matter and be done with it. The Obama White House conducted a sour grapes campaign to delegitimize the election beginning November 9th and it was led by then CIA Director John Brennan.
That treacherous assault on the core constitutional matter of the election process culminated in the ridiculous Russian meddling report of the Obama White House in December. The latter, of course, was issued by serial liar James Clapper, as national intelligence director, and the clueless Democrat lawyer and bag-man, Jeh Johnson, who had been appointed head of the Homeland Security Department.
Yet on the basis of the report's absolutely zero evidence and endless surmise, innuendo and "assessments", the Obama White House imposed another round of its silly school-boy sanctions on a handful of Putin's cronies.
Of course, Flynn should have been telling the Russian Ambassador that this nonsense would be soon reversed!
But here is the ultimate folly. The mainstream media talking heads are harrumphing loudly about the fact that the very day following Flynn's call -- Vladimir Putin announced that he would not retaliate against the new Obama sanctions as expected; and shortly thereafter, the Donald tweeted that Putin had shown admirable wisdom.
That's right. Two reasonably adult statesman undertook what might be called the Christmas Truce of 2016. But like its namesake of 1914 on the bloody no man's land of the western front, the War Party has determined that the truce-makers shall not survive.
The Donald has been warned.

[Feb 21, 2017] Degrowth and Disinvestment: Yea or Nay?

Feb 21, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron : February 20, 2017 at 04:39 AM , 2017 at 04:39 AM
RE: Degrowth and Disinvestment: Yea or Nay?

...So my question for the degrowth community is whether declining investment is an occasion for celebration? Does this mean that economic policy is actually getting something right?

Here's one answer I won't accept: we don't care about growth in general, just growth of bad stuff, like fossil fuels, accumulation of waste, destruction of coastlines, etc. That isn't a degrowth position. Everyone wants more of the good and less of the bad, however they define it. I'm in favor of only toothsome pizza crusts and I'm dead set against the soggy kind, but that's not the same as being on a diet.

This is a practical, policy-relevant question. There are many smart economists trying to understand the investment slump so they can devise policies to turn it around. You'll notice this concern is prominent in the writing on increasing industrial concentration, the shareholder value obsession, globalization and outsourcing, and other topics. The goal of these researchers is to reform corporate and market structure in order to restore a higher rate of investment, among other things. That of course would tend to accelerate economic growth. So what's the degrowth position on all this? Should economists be looking for additional measures to discourage investment?

Again, please don't tell me that it's just investment in "bads" that needs to be discouraged. That's a given across the entire spectrum of economic rationality (which is admittedly somewhat narrower than the political spectrum). In the aggregate, is it good that investment is trending down?

My own view, as readers of this blog will know (see here and here), is that degrowth is a suicide cult masquerading as a political position. I'm pretty sure that radically transforming our economy to make it sustainable will involve a tremendous amount of investment and new production, and it seems clear to me that boosting living standards through more and better consumption is both politically and ethically essential. But I could be wrong. I would sincerely appreciate intelligent arguments from the degrowth side.

[Asked and answered, sort of. Degrowth or beneficial degrowth is relative to what metrics (i.e., resources rather than capital) and realistically a far enough ways from where we are now to be moot.]

cm -> RC AKA Darryl, Ron... , February 20, 2017 at 12:24 PM
I think this is too simplistic. There is (and has always been) a growing realization that more is not always better. This insight is not uniform for any given geographic or socioeconomic population group, but often informed by how one relates to the economic process (which correlates with age), individually as well as at the peer group level.

When a larger group is exposed to a situation where the trappings of success are hard to obtain (e.g. younger people coming out of school/college into a bad job market), or where there is an appearance that new technology/gadgets may be initially exciting but don't really translate into better quality of life or better effectiveness of work/activities ("productivity"), or even degrade either (more typical for older people who are not seeing new gadgets/technologies for the first time?), then rejection of whatever is proclaimed as "improvement" can become socially acceptable.

I'm also at the point where I don't really want new stuff, because my impression is that it is generally not better than the previous edition, or if better, then not better in a write-home-about-it way. And the realization many acquisitions create more liabilities than benefits in the long term (for one thing, accumulation of junk and need to throw out "something" - which I may not really want to throw out).

[Feb 21, 2017] The consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries. The switch from government surpluses to deficits under George W. Bush had much the same consequences

Feb 21, 2017 | economistsview.typepad.com
PPaine : February 20, 2017 at 02:41 PM

, 2017 at 02:41 PM
"The consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries. The switch from government surpluses to deficits under George W. Bush had much the same consequences. "


Where's carters volcker ?


And the bit about going from surplus to deficit
Is utterly undeveloped here
Lots of Rubinte lice crawling around under that mossy rock

anne -> PPaine ... , February 20, 2017 at 02:48 PM
Lots of -------- ---- crawling around...

[ Using such language is intolerable. ]

PPaine -> PPaine ... , February 20, 2017 at 02:51 PM
Blaming the GOP ...The business class party...f or this thirty year decimation
Is grotesque ...of course they didn't give a damn about wage types !


The people's party the party of the CIO and the new deal
That is the party that betrayed the assembly line workers of America !

Peter K. -> PPaine ... , February 20, 2017 at 03:32 PM
"Where's carters volcker ?"

"Lots of Rubinte lice crawling around under that mossy rock"

Which PGL always fails to mention, dishonest neoliberal that he is.

Think Harder? Let's study the effects of Lincoln's sky high tariffs? Or East Asian Mercantilism? Globalization not a natural disaster : , February 20, 2017 at 02:54 PM
There was no coming of "globalization" as if it were a hurricane.

US financial sector elites pushed pro-trade deficit policies so that the US would have huge surpluses on the capital accounts, boosting asset prices and financial sector wealth.

Globalization for East Asia means dramatically undervalued currencies and taking over every and all tradable goods sectors.

The US can return to wealth but only if it adopts Abraham Lincoln-inspired strict protectionism - sky high tariffs to fund industrial and infrastructure development and nurture infant industries. Think harder? Why don't economists stop lying and stop shilling for the big banks? THEN and only then can we speak of "alternative facts".

President Trump should draw on Lincoln's example for inspiration...

anne : , February 20, 2017 at 04:11 PM
The consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries....

Brad DeLong

[ I do not understand this passage. ]

Chris G : , -1
Related reading: Josh Bivens, "Brad DeLong is far too lenient on trade policy's role in generating economic distress for American workers" - http://www.epi.org/blog/brad-delong-too-lenient-on-trade-policy-economic-distress/

[Feb 21, 2017] People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason.

Feb 21, 2017 | economistsview.typepad.com
RGC -> Ron Waller ... February 20, 2017 at 01:51 PM

, 2017 at 01:51 PM
People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich.

-John Kenneth Galbraith
The Age of Uncertainty (1977)
Chapter 1, p. 22

cm -> RGC... , February 20, 2017 at 03:58 PM
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

I would say this is rational. Surrendering advantages will generally weaken your position and thus increase the risk of complete destruction or being stripped of further advantages. Also quite often members of the elite, individually or as a group, have likely acted in ways that enraged their opponents to the point that they will likely not stop at just stripping advantages until a "reasonable" point, but indeed seek complete destruction. History is full of things like guillotines and hunting down and murder or lifelong imprisonment of all family members (who have not been plausibly disavowed or disassociated while the old regime was still comfortably in power).

cm -> cm... , February 20, 2017 at 04:00 PM
Of course in the past, rulers and elites were often dethroned by other elites, with popular uprisings only used as a temporary tool. In any case, once it gets close to that point, it's an all or nothing fight for either side.
cm -> cm... , February 20, 2017 at 04:06 PM
There have been examples where elites have ceded advantages in a peaceful transition. But that usually happen in a context where there had already been gradual transitions to shared/broader power in the past (generally not peaceful in the initial stages). The UK and its royals/nobility are an obvious example, probably also Scandinavia which are mostly still nominally kingdoms (?), or the royal family and former or still existing nobility has influence but officially only a figurehead role. The transition to democracy happened largely peacefully in the past 1-2 centuries, prior to that not so much.
libezkova -> cm... , February 20, 2017 at 06:10 PM
"Surrendering advantages will generally weaken your position and thus increase the risk of complete destruction or being stripped of further advantages."

This is not a chess party. Sometimes people kill each other if differences are irreconcilable. In 1917 a lot of Russian bankers were simply killed.

[Feb 21, 2017] Democratic Ex-Dove Proposes War on Iran

Notable quotes:
"... Rep. Alcee Hastings has sponsored a bill to authorize President Trump to attack Iran. ..."
"... Alcee Hastings is better known to the public as a federal judge who was impeached for bribery and for a series of ethical lapses as a Congressman than for his legislative record. The 2012 Family Affairs report by the Committee for Responsibility and Ethics in Washington found that Hastings paid his partner, Patricia Williams, $622,000 to serve as his deputy district director from 2007 to 2010, the largest amount paid to a family member by any Member of Congress in the report. ..."
"... Alcee Hastings's voting record on war and peace issues has been about average for a Democrat. He voted against the 2002 Authorization for the Use of Military Force (AUMF) on Iraq, and his 79 percent lifetime Peace Action score is the highest among current House members from Florida, although Alan Grayson's was higher. ..."
"... In the new Republican-led Congress, with the bombastic and unpredictable Donald Trump in the White House, Hastings's bill could actually serve as a blank check for war on Iran, and it is carefully worded to be exactly that. It authorizes the open-ended use of force against Iran with no limits on the scale or duration of the war. The only sense in which the bill meets the requirements of the War Powers Act is that it stipulates that it does so. Otherwise it entirely surrenders Congress's constitutional authority for any decision over war with Iran to the President, requiring only that he report to Congress on the war once every 60 days. ..."
"... The wording of Hastings's bill perpetuates dangerous myths about the nature of Iran's nuclear program that have been thoroughly investigated and debunked after decades of intense scrutiny by experts, from the U.S. intelligence community to the International Atomic Energy Association (IAEA). ..."
"... As former IAEA director Mohamed ElBaradei explained in his book, The Age of Deception: Nuclear Diplomacy in Treacherous Times, the IAEA has never found any real evidence of nuclear weapons research or development in Iran, any more than in Iraq in 2003, the last time such myths were abused to launch our country into a devastating and disastrous war. ..."
"... In Manufactured Crisis: the Untold Story of the Iran Nuclear Scare, investigative journalist Gareth Porter meticulously examined the suspected evidence of nuclear weapons activity in Iran. He explored the reality behind every claim and explained how the deep-seated mistrust in U.S.-Iran relations gave rise to misinterpretations of Iran's scientific research and led Iran to shroud legitimate civilian research in secrecy. This climate of hostility and dangerous worst-case assumptions even led to the assassination of four innocent Iranian scientists by alleged Israeli agents. ..."
"... The discredited myth of an Iranian "nuclear weapons program" was perpetuated throughout the 2016 election campaign by candidates of both parties, but Hillary Clinton was particularly strident in claiming credit for neutralizing Iran's imaginary nuclear weapons program. ..."
"... President Obama and Secretary of State John Kerry also reinforced a false narrative that the "dual-track" approach of Obama's first term, escalating sanctions and threats of war at the same time as holding diplomatic negotiations, "brought Iran to the table." This was utterly false. Threats and sanctions served only to undermine diplomacy, strengthen hard-liners on both sides and push Iran into building 20,000 centrifuges to supply its civilian nuclear program with enriched uranium, as documented in Trita Parsi's book, A Single Roll of the Dice: Obama's Diplomacy With Iran. ..."
"... When Brazil and Turkey persuaded Iran to accept the terms of an agreement proposed by the U.S. a few months earlier, the U.S. responded by rejecting its own proposal. By then the main U.S. goal was to ratchet up sanctions at the U.N., which this diplomatic success would have undermined. ..."
"... Trita Parsi explained that this was only one of many ways in which the two tracks of Obama's "dual-track" approach were hopelessly at odds with each other. Only once Clinton was replaced by John Kerry at the State Department did serious diplomacy displace brinksmanship and ever-rising tensions. ..."
"... Rand Paul: If John McCain Were In Charge, U.S. 'Would Be In Perpetual War' "John McCain is the guy that has advocated for war everywhere." ..."
"... How many wars are enough? ..."
"... That begs the question "What's Rand Paul's definition of perpetual war?" We've been at war since 2003. There's no end in sight. That seems like "perpetual" to me. Do they need to be bigger wars or for there to be more of them in order to meet Paul's threshold for perpetual? ..."
"... 'Know neither your enemy nor yourself', is how US got into this predicament. How many places has the CIA 'organized' to such good effect? Most effectively with Jihadis grown from Afghanistan reorganized in Syria over nearly 40 years. ..."
"... What are you who calls the 'enemy' sinners when your country out does the 'enemy' in war crime across the world? ..."
"... I have never seen a ranking federal bureaucrat do something illegal by accident. ..."
"... Or the faux security services who found yellow cake that don't exist found GOP spies that do not exist. ..."
"... Deep State = Big Brother ..."
Feb 21, 2017 | economistsview.typepad.com
RGC -> RGC... February 20, 2017 at 06:02 AM , 2017 at 06:02 AM
Democratic Ex-Dove Proposes War on Iran

February 19, 2017


Exclusive: The Democrats' rush to rebrand themselves as super-hawks is perhaps best illustrated by the once-dovish Rep. Alcee Hastings proposing stand-by authorization for the President to attack Iran, reports Nicolas J S Davies.


By Nicolas J S Davies

Rep. Alcee Hastings has sponsored a bill to authorize President Trump to attack Iran.

Hastings reintroduced H J Res 10, the "Authorization of Use of Force Against Iran Resolution" on Jan. 3, the first day of the new Congress after President Trump's election.

Hastings's bill has come as a shock to constituents and people who have followed his career as a 13-term Democratic Member of Congress from South Florida. Miami Beach resident Michael Gruener called Hastings's bill, "extraordinarily dangerous," and asked, "Does Hastings even consider to whom he is giving this authorization?"

Fritzie Gaccione, the editor of the South Florida Progressive Bulletin noted that Iran is complying with the 2015 JCPOA (Joint Comprehensive Plan of Action) and expressed amazement that Hastings has reintroduced this bill at a moment when the stakes are so high and Trump's intentions so unclear.

"How can Hastings hand this opportunity to Trump?" she asked. "Trump shouldn't be trusted with toy soldiers, let alone the American military."

Speculation by people in South Florida as to why Alcee Hastings has sponsored such a dangerous bill reflect two general themes. One is that he is paying undue attention to the pro-Israel groups who raised 10 percent of his coded campaign contributions for the 2016 election. The other is that, at the age of 80, he seems to be carrying water for the pay-to-play Clinton wing of the Democratic Party as part of some kind of retirement plan.

Alcee Hastings is better known to the public as a federal judge who was impeached for bribery and for a series of ethical lapses as a Congressman than for his legislative record. The 2012 Family Affairs report by the Committee for Responsibility and Ethics in Washington found that Hastings paid his partner, Patricia Williams, $622,000 to serve as his deputy district director from 2007 to 2010, the largest amount paid to a family member by any Member of Congress in the report.

But Hastings sits in one of the 25 safest Democratic seats in the House and does not seem to have ever faced a serious challenge from a Democratic primary opponent or a Republican.

Alcee Hastings's voting record on war and peace issues has been about average for a Democrat. He voted against the 2002 Authorization for the Use of Military Force (AUMF) on Iraq, and his 79 percent lifetime Peace Action score is the highest among current House members from Florida, although Alan Grayson's was higher.

Hastings voted against the bill to approve the JCPOA or nuclear agreement with Iran and first introduced his AUMF bill in 2015. With the approval of the JCPOA and Obama's solid commitment to it, Hastings's bill seemed like a symbolic act that posed little danger – until now.

In the new Republican-led Congress, with the bombastic and unpredictable Donald Trump in the White House, Hastings's bill could actually serve as a blank check for war on Iran, and it is carefully worded to be exactly that. It authorizes the open-ended use of force against Iran with no limits on the scale or duration of the war. The only sense in which the bill meets the requirements of the War Powers Act is that it stipulates that it does so. Otherwise it entirely surrenders Congress's constitutional authority for any decision over war with Iran to the President, requiring only that he report to Congress on the war once every 60 days.

Dangerous Myths

The wording of Hastings's bill perpetuates dangerous myths about the nature of Iran's nuclear program that have been thoroughly investigated and debunked after decades of intense scrutiny by experts, from the U.S. intelligence community to the International Atomic Energy Association (IAEA).

As former IAEA director Mohamed ElBaradei explained in his book, The Age of Deception: Nuclear Diplomacy in Treacherous Times, the IAEA has never found any real evidence of nuclear weapons research or development in Iran, any more than in Iraq in 2003, the last time such myths were abused to launch our country into a devastating and disastrous war.

In Manufactured Crisis: the Untold Story of the Iran Nuclear Scare, investigative journalist Gareth Porter meticulously examined the suspected evidence of nuclear weapons activity in Iran. He explored the reality behind every claim and explained how the deep-seated mistrust in U.S.-Iran relations gave rise to misinterpretations of Iran's scientific research and led Iran to shroud legitimate civilian research in secrecy. This climate of hostility and dangerous worst-case assumptions even led to the assassination of four innocent Iranian scientists by alleged Israeli agents.

The discredited myth of an Iranian "nuclear weapons program" was perpetuated throughout the 2016 election campaign by candidates of both parties, but Hillary Clinton was particularly strident in claiming credit for neutralizing Iran's imaginary nuclear weapons program.

President Obama and Secretary of State John Kerry also reinforced a false narrative that the "dual-track" approach of Obama's first term, escalating sanctions and threats of war at the same time as holding diplomatic negotiations, "brought Iran to the table." This was utterly false. Threats and sanctions served only to undermine diplomacy, strengthen hard-liners on both sides and push Iran into building 20,000 centrifuges to supply its civilian nuclear program with enriched uranium, as documented in Trita Parsi's book, A Single Roll of the Dice: Obama's Diplomacy With Iran.

A former hostage at the U.S. Embassy in Tehran who rose to be a senior officer on the Iran desk at the State Department told Parsi that the main obstacle to diplomacy with Iran during Obama's first term was the U.S. refusal to "take 'Yes' for an answer."

When Brazil and Turkey persuaded Iran to accept the terms of an agreement proposed by the U.S. a few months earlier, the U.S. responded by rejecting its own proposal. By then the main U.S. goal was to ratchet up sanctions at the U.N., which this diplomatic success would have undermined.

Trita Parsi explained that this was only one of many ways in which the two tracks of Obama's "dual-track" approach were hopelessly at odds with each other. Only once Clinton was replaced by John Kerry at the State Department did serious diplomacy displace brinksmanship and ever-rising tensions.

https://consortiumnews.com/2017/02/19/democratic-ex-dove-proposes-war-on-iran/

RGC -> RGC... , February 20, 2017 at 06:19 AM
02/19/2017 11:53 am ET

Rand Paul: If John McCain Were In Charge, U.S. 'Would Be In Perpetual War' "John McCain is the guy that has advocated for war everywhere."

By Laura Barron-Lopez

http://www.huffingtonpost.com/entry/rand-paul-john-mccain-perpetual-war_us_58a9c139e4b07602ad55ad23

RGC -> RGC... , February 20, 2017 at 06:21 AM
How many wars are enough?
Chris G -> RGC... , February 20, 2017 at 09:09 AM
That begs the question "What's Rand Paul's definition of perpetual war?" We've been at war since 2003. There's no end in sight. That seems like "perpetual" to me. Do they need to be bigger wars or for there to be more of them in order to meet Paul's threshold for perpetual?
EMichael -> RGC... , February 20, 2017 at 06:30 AM
"There are no regular units of the Russian military in the breakaway provinces"

Amazing coordination of these volunteer irregulars. Must be social media.....

ilsm -> EMichael... , February 20, 2017 at 06:53 AM
'Know neither your enemy nor yourself', is how US got into this predicament. How many places has the CIA 'organized' to such good effect? Most effectively with Jihadis grown from Afghanistan reorganized in Syria over nearly 40 years.

What are you who calls the 'enemy' sinners when your country out does the 'enemy' in war crime across the world?

ilsm -> RGC... , February 20, 2017 at 01:01 PM
I would rather find out that the deep state hacking was caused by politics rather than [the lie of] coincidence.

I have never seen a ranking federal bureaucrat do something illegal by accident.

Or the faux security services who found yellow cake that don't exist found GOP spies that do not exist.

EMichael -> RGC... , February 20, 2017 at 05:41 AM
Yeah, I'll pay attention to a guy who seems to have no knowledge whatsoever of what McCarthyism was.
pgl -> EMichael... , February 20, 2017 at 05:50 AM
I wonder if he has read 1984.
Mike S -> pgl... , February 20, 2017 at 05:57 AM
I don't think liberals are going to establish a committee on un-American activities or blackball people.

On the other hand, I do think that some people would publish things like Robert Parry's article because they don't like sunshine shining on their activities.

ilsm -> pgl... , February 20, 2017 at 06:46 AM
I only read historical novels why bring in Orwell?
RGC -> pgl... , February 20, 2017 at 06:51 AM
Deep State = Big Brother
ilsm -> EMichael... , February 20, 2017 at 06:45 AM
Say what was McCarthyism? Do you think Zwicker was handled differently than Flynn?

How so?

Pity HRC is not d=running the deep state they would not be running scared telling the world they wiretap US citizens!

EMichael -> ilsm... , February 20, 2017 at 06:51 AM
Mc·Car·thy·ism
məˈkärTHēˌizəm/
noun
noun: McCarthyism

a vociferous campaign against alleged communists in the US government and other institutions carried out under Senator Joseph McCarthy in the period 1950–54. Many of the accused were blacklisted or lost their jobs, although most did not in fact belong to the Communist Party.

ilsm -> EMichael... , February 20, 2017 at 06:55 AM
How does Stalin lead communist equal GOPster talking to Russians?

Or even suggest trampling the bill of rights?

EMichael -> ilsm... , February 20, 2017 at 07:05 AM
When you become incomprehensible, there is no sense talking.

Before it is too late,

http://www.tricare.mil/CoveredServices/Mental/GettingMHCare

ilsm -> EMichael... , February 20, 2017 at 07:12 AM
I had 20 or 30 more questions about how the deep state is justified by not looking like Joe McCarthy.

You are smart enough to quit before I commence a "forlorn hope" effort to teach you how to think.

At least you did not toss out some vague phrase about marshy land.

HEH!

kthomas -> RGC... , February 20, 2017 at 06:41 AM
GOOD!

You deserve to live in fear. Facists like you love to throw stones.

ilsm -> kthomas... , February 20, 2017 at 06:47 AM
while patriots like you stand by and watch the bill of rights trampled!
RGC -> kthomas... , February 20, 2017 at 06:59 AM
The Nazis are in the Ukraine government and were supported by the Obama state department.
ilsm -> RGC... , February 20, 2017 at 07:08 AM
k has TDS, cognitive dissonance, everything else is confirmation bias leading from a severe case of self pity over the neolibs' Clinton losing and missing the chance to experience WW III over Putin.

[Feb 21, 2017] The Did-You-Talk-to-Russians Witch Hunt

Notable quotes:
"... Exclusive: Democrats, liberals and media pundits – in their rush to take down President Trump – are pushing a New McCarthyism aimed at Americans who have talked to Russians, risking a new witch hunt. ..."
"... As Democrats compete to become the new War Party – pushing for a dangerous confrontation with nuclear-armed Russia – some constituents are objecting, as Mike Madden did in a letter to Sen. Amy Klobuchar. ..."
Feb 21, 2017 | economistsview.typepad.com
RGC : February 20, 2017 at 05:29 AM , 2017 at 05:29 AM
The Did-You-Talk-to-Russians Witch Hunt

February 18, 2017

Exclusive: Democrats, liberals and media pundits – in their rush to take down President Trump – are pushing a New McCarthyism aimed at Americans who have talked to Russians, risking a new witch hunt.

By Robert Parry

https://consortiumnews.com/2017/02/18/the-did-you-talk-to-russians-witch-hunt/

RGC -> RGC... , February 20, 2017 at 05:35 AM
February 17, 2017

France: Another Ghastly Presidential Election Campaign; the Deep State Rises to the Surface

by Diana Johnstone

As if the 2016 U.S. presidential election campaign hadn't been horrendous enough, here comes another one: in France.

The system in France is very different, with multiple candidates in two rounds, most of them highly articulate, who often even discuss real issues. Free television time reduces the influence of big money. The first round on April 23 will select the two finalists for the May 7 runoff, allowing for much greater choice than in the United States.

But monkey see, monkey do, and the mainstream political class wants to mimic the ways of the Empire, even echoing the theme that dominated the 2016 show across the Atlantic: the evil Russians are messing with our wonderful democracy.

The aping of the U.S. system began with "primaries" held by the two main governing parties which obviously aspire to establish themselves as the equivalent of American Democrats and Republicans in a two-party system. The right-wing party of former president Nicolas Sarkozy has already renamed itself Les Républicains and the so-called Socialist Party leaders are just waiting for the proper occasion to call themselves Les Démocrates. But as things are going, neither one of them may come out ahead this time.

http://www.counterpunch.org/2017/02/17/france-another-ghastly-presidential-election-campaign-the-deep-state-rises-to-the-surface/

RGC -> RGC... , February 20, 2017 at 05:53 AM
Challenging Klobuchar on Ukraine War

February 19, 2017

As Democrats compete to become the new War Party – pushing for a dangerous confrontation with nuclear-armed Russia – some constituents are objecting, as Mike Madden did in a letter to Sen. Amy Klobuchar.


From Mike Madden (of St. Paul, Minnesota)

Dear Senator Klobuchar, I write with concern over statements you have made recently regarding Russia.

These statements have been made both at home and abroad, and they involve two issues; the alleged Russian hack of the presidential election and Russia's actions in the aftermath of the February 22, 2014 coup in Kiev.

U.S. intelligence services allege that President Vladimir Putin ordered an influence campaign to denigrate Hillary Clinton and help elect Donald Trump. The campaign is purported to include the production of fake news, cyber-trolling, and propaganda from Russian state-owned media. It is also alleged that Russia hacked the email accounts of the Democratic National Committee and Clinton campaign chair John Podesta, subsequently providing the emails to WikiLeaks.

Despite calls from many quarters, the intelligence services have not provided the public with any proof. Instead, Americans are expected to blindly trust these services with a long history of failure. Additionally, the former Director of National Intelligence, James Clapper, and the former Director of the Central Intelligence Agency, John Brennan, have both been known to lie to the public and to Congress, Mr. Clapper doing so under oath.

Meanwhile, WikiLeaks founder Julian Assange maintains the emails did not come from Russia (or any other state actor) and his organization has an unblemished record of revealing accurate information in the public interest that would otherwise remain hidden. While responsible journalists continue to use the word 'alleged' to describe the accusations, Republicans with an ax to grind against Russia, and Democrats wishing to distract from their own failings in the campaign, refer to them as fact. Indeed, on the Amy in the News page of your own website, Jordain Carney of The Hill refers to the Russian meddling as "alleged".

A congressional commission to investigate the alleged Russian hacking is not necessary. Even if all the allegations are true, they are altogether common occurrences, and they certainly don't rise to the level of "an act of aggression", "an existential threat to our way of life", or "an attack on the American people" as various Democratic officials have characterized them. Republican Senator John McCain went full monty and called the alleged meddling "an act of war".
Joining War Hawks

It is of concern that you would join Senator McCain and the equally belligerent Senator Lindsey Graham on a tour of Russian provocation through the Baltics, Ukraine, Georgia, and Montenegro. The announcement of your trip (December 28, 2016) on the News Releases page of your website renewed the unproven claim of "Russian interference in our recent election". It also claimed that the countries you were visiting were facing "Russian aggression" and that "Russia illegally annexed Crimea".

It is unfortunate that these claims have become truisms by sheer repetition rather than careful examination of the facts. Russia has not invaded eastern Ukraine. There are no regular units of the Russian military in the breakaway provinces, nor has Russia launched any air strikes from its territory. It has sent weapons and other provisions to the Ukrainian forces seeking autonomy from Kiev, and there are most certainly Russian volunteers operating in Ukraine.

However regrettable, it must be remembered that the unrest was precipitated by the February 22, 2014 overthrow of the democratically elected president Viktor Yanukovych which, speaking of meddling, was assisted by U.S. State Department, other American government agencies, and one Senator John McCain. The subsequent military and paramilitary operations launched by the coup government against the People's Republics of Donetsk and Luhansk were described by President Putin as "uncontrolled crime" spreading into the south and east of the country. In American parlance, both the interim coup government in Kiev and the current government of President Petro Poroshenko have engaged in "killing their own people".

https://consortiumnews.com/2017/02/19/challenging-klobuchar-on-ukraine-war/

[Feb 21, 2017] My Kaspersky Internet Security blocked the No Hesitations link for phishing. I trust Kaspersky more between the two.

Feb 21, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron : , February 20, 2017 at 04:09 AM
My Kaspersky Internet Security blocked the No Hesitations link for phishing. I trust Kaspersky more between the two.
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 11:04 AM
Probably a false positive, or the site may run ads/third party code that was flagged, which are not controlled by the author. Ads with their intrusiveness have been well-known malware vectors. Ad funded sites (or which "monetize" their brand by selling ad space) typically outsource the mechanics of inserting ads, user tracking etc. to third parties, and necessarily give them control over what content is delivered to readers. In part due to high overheads and low margins, there is not a lot of "vetting" what content gets on the page.

And of course intrusive tracking code may be legitimately viewed as malware in itself, even if it doesn't try to "infect" your system.

No reason to distrust the authors.

cm -> RC AKA Darryl, Ron... , February 20, 2017 at 11:25 AM
Even if you use an ad blocker, the schemes they use are necessarily heuristic and reactive in nature - basically block/avoid accessing content by known domain name, URL patterns, common "standard" image sizes and other tells, known suspicious patterns in programmable content, etc.

It comes with the usual heuristic-detection/classification problem - you can increase the result rate only by increasing the error, and you can only choose whether you want to err on the side of more false positives or false negatives (misses). This is because of the forced binary outcome (block/let through, or flag/don't flag).

Usually the algorithm computes some sort of confidence score that is used to detect (and possibly reject) "inconclusive" results. If the algorithm is any good, there is a region where it accurately detects (presence or absence of the targeted feature) with high confidence. To simplify, the choice is then to map low confidence scores to "detect" (more security) or "not detect" (more convenience).

[Feb 21, 2017] How will President Trump reshape the Fed?

Feb 21, 2017 | economistsview.typepad.com
Fred C. Dobbs -> RC AKA Darryl, Ron... February 20, 2017 at 07:51 AM , 2017 at 07:51 AM
(The door was briefly ajar.)

How will President Trump reshape
the Fed? http://on.ft.com/2lW9bB7
FT.com = Gavyn Davies - Feb 19

President Trump has an almost unprecedented opportunity to reshape the key personnel and legal basis of the Federal Reserve in the next 12 months, essentially rebuilding the most important economic organisation in the world in his own image, if he so chooses.

The President may be able to appoint five or even six members to the seven-person Board of Governors within 12 months, including the Chair, Vice Chair for monetary policy, and a new Vice Chair for banking supervision. He may also be able to sign into law a bill that alters aspects of the Fed's operating procedures and accountability to Congress, based on a bill passed in 2015 by the House of Representatives.

Not surprisingly, investors are beginning to eye these changes with some trepidation.

Some observers fear that the President will fill the Fed with his cronies, ready to monetise the budget deficit if that should prove politically convenient. Others fear the opposite, believing that the new appointments will result in monetary policy being handed over to a policy rule (like the Taylor Rule) that will lead to much higher interest rates in the relatively near future. Still others think that the most important outcome will be a deregulation of the banking system that results in much easier credit availability, with increased dangers of asset bubbles and economic overheating.

It is not difficult to see how this process could work out very badly indeed. But, at present, I am optimistic that a modicum of sense will prevail.

During the election campaign, Trump was fairly consistent in calling for a Republican to replace Janet Yellen as Chair in February 2018, and for bank credit to be made more readily available to corporate America, especially to small companies. On the setting of interest rates, he has been inconsistent, and on rules-based monetary policy he has been largely silent. Meanwhile, Republicans in Congress seem focused on deregulation of the banking sector, with the partial removal of Dodd Frank, and a rules-based monetary policy mandate, with audits of the Fed by the GAO.

Fortunately, there does not seem to be any Republican support for using the Fed balance sheet to support inflationary financing of the fiscal deficit. Although that might come later, it will be hard to impose on the Fed once the appointments and institutional changes have been implemented in the next 12 months. After that, the new regime will be relatively free to operate under the new arrangements. A lurch towards inflationary populism is therefore not high on the list of worries at present.

The first test for the administration will probably be the nomination of the new Vice Chair for Supervision, a post left unfilled by President Obama, though the functions have been undertaken by the now departing Daniel Tarullo. It has been reported that Gary Cohn and Treasury Secretary Steven Mnuchin have been actively engaged in picking the nominee, which is very reassuring since they are likely to select an impressive professional who is fit to hold the most important regulatory post in America.

David Nason, identified as the front runner, certainly fits that bill. He has been strongly supported by Hank Paulson, his former boss at Treasury, and that support might influence Cohn and Mnuchin, both of whom, like Paulson, are Goldman Sachs alumni. The nomination of someone like Nason would calm concerns about the entire process.

Donald Trump has also been talking about giving the job to John Allison, a libertarian who admires the gold standard and doubts whether the Fed should even be setting interest rates. He has strong academic and business credentials, with coherent views about the capital requirements and regulation of the banks, but the markets would worry about the unpredictable consequences his appointment might have for monetary policy.

Although an important litmus test, the appointment of the Vice Chair on supervision pales into insignificance compared to the probable decision to replace Janet Yellen and Stanley Fischer in the two top slots next year. These appointments are not yet on the political agenda but the markets are already thinking about what they may portend for monetary policy after 2017. After all, unless reconfirmed, Yellen and Fischer will soon be viewed as lame ducks.

The administration can turn to a lengthy list of respected, mainstream macro-economists with broad affiliation to the Republicans: John Taylor, Greg Mankiw, Glen Hubbard and many others. There is another list of former Fed officials who would fit the bill, including Kevin Warsh and Richard Fisher. Then there is a very long list of business people or bankers that might be considered appropriate, some of whom could unfortunately be portrayed as Trump "cronies". Finally, there are some "Austrian" economists, a school that has apparently influenced Vice President Pence.

An "Austrian" candidate would certainly alarm the markets. Assuming that is avoided, investors will be interested in a couple of issues.

Where does the new leadership sit on the divide between economist and non economist? The last four Fed Chairs have all been clearly on the economist side of the line, and because they have all bought into the Fed's economic orthodoxy, their actions have been considered somewhat predictable by the markets. A business person or banker might be less predictable, at least initially, and more prone to shake up the Fed's orthodoxies, for good or ill.

The second question will be whether the new team is supportive of rule-based monetary policy, with GAO audits. In recent years, the House of Representatives has tried on several occasions to bring forward legislation that would require the FOMC to establish an appropriate rule for setting interest rates and then explain to Congress why it had deviated from the rule in any future decisions. This would clearly shift the bias of policy making somewhat away from discretion, especially if a "rules guru" like John Taylor, or one of his academic supporters (listed here), becomes Chair.

The possibility of Congress forcibly imposing a rules-based regime is being taken increasingly seriously inside the present Board, which has followed the Fed tradition in strongly preferring discretion to the rigidity of formal algorithms, even if they are selected by the Fed itself.

Janet Yellen, in her Congressional testimony last week, was unusually explicit about the adverse consequences, as she saw them, of adopting the Taylor Rule. She said this would require interest rates to rise to 3.5-4.0 per cent, leading to lower growth and higher unemployment.

Stanley Fischer has also weighed in, suggesting that the Taylor Rule would have resulted in a premature tightening in monetary policy after 2011 (see Appendix below). But a new law similar to the bill passed by the House in 2015 would allow them plenty of scope to deviate from the rule if they so choose.

How will the Fed emerge from these potential shocks? The organisation has an extraordinarily strong and much admired culture, which will be hard for Trump to shake, even if he wanted to. All his nominations will be reviewed internally by Cohn and Mnuchin, and externally by the Senate.

My guess is that the institution will survive largely unscathed, albeit with onerous regulation of bank credit, and some increased role for specified monetary rules, with formal reporting on these rules to Congress. Compared to the present regime, this may lead to higher, rather than lower, interest rates.

The current Fed Board will (rightly) try to minimise any restriction on their discretion and independence. But in practice the likely new framework would not represent much of a threat to the sensible conduct of monetary policy in President Trump's term.

(At the link:)

Appendix: Recent Fed Comments on the Taylor Rule

RC AKA Darryl, Ron -> Fred C. Dobbs... , February 20, 2017 at 08:25 AM
THANKS!

[Feb 21, 2017] Debt slavery and high unemployment are two the most direct method of keeping wages low

Feb 21, 2017 | economistsview.typepad.com
J ohnH -> New Deal democrat... February 20, 2017 at 07:31 AM , 2017 at 07:31 AM
I expect that if you look at the pre-bellum South, there will be plenty of examples of stagnant wages, low interest rates...

In Mexico, wages never rose regardless of monetary policy.

The point that I've been making for a while: despite a few progressive economists delusions for rapid economic growth to tighten wages, it won't happen for the following reasons.

1) most employers will just say 'no,' probably encouraged centrally by the US Chamber of Commerce and other industry associations. Collusion? You bet.

2) employers will just move jobs abroad, where there's plenty of slack. Flexible labor markets has been one of the big goals of globalization, promoted by the usual suspects including 'librul' economists like Krugman.

3) immigration, which will be temporarily constrained as Trump deports people, but will ultimately be resumed as employers demand cheap, malleable labor.

New Deal democrat -> JohnH... , February 20, 2017 at 07:35 AM
If what we get is easy money, no inflation, and stagnant wages, then that is the Coolidge bubble. We know how that ends.
Peter K. -> JohnH... , February 20, 2017 at 07:36 AM
I disagree. It happened in late 90s. The ideas you mention are factors, including the decline of unions.

What has happened in recent decades is that asset bubbles - like the dot.com and housing bubbles - have popped sending a high pressure economy into a low pressure one with higher unemployment.

Neoliberal economists often talk about "flexible labor markets" as desirable but I don't think Krugman ever has. Maybe he has in a roundabout, indirect way.

JohnH -> Peter K.... , February 20, 2017 at 07:58 AM
Peter K still insists on propagating the myth that the 1990s was a period of easy money that led to increasing wages. Not so:
https://fred.stlouisfed.org/series/FEDFUNDS

Fed funds rates were consistently about double the rate of inflation.

The fact that the economy boomed and wages increased was due to the tech boom--an unrepeatable anomaly. The Fed and Clinton administration unsuccessfully attempted to stifle it with high rates and budget balancing.

To make sure that wages never rose again, Clinton signed China PNTR, granting China access to WTO, ushering in the great sucking sound of jobs going to China. Krugman cheered.

Peter K. -> JohnH... , February 20, 2017 at 08:28 AM
Again I just disagree with you.

"Fed funds rates were consistently about double the rate of inflation."

That doesn't matter. What matters is if they were tightening or loosening. Where they reducing access to credit or expanding it.

The real history is that Democrats on the FOMC wanted to raise rates - as Dean Baker has discussed.

Greenspan decided not to raise rates for various reasons and unemployment stayed low at around 4 percent with wages sharing in productivity gains until the Dot.com stock bubble popped.

I see no reason why you should believe labor markets will never get tight again and that even if they do it won't lead to increased worker bargaining power and higher wages.

Your reasoning and logic isn't sound.

Peter K. -> Peter K.... , February 20, 2017 at 08:30 AM
Some people were afraid of inflation but it never came. But wages did share in productivity gains.
JohnH -> Peter K.... , February 20, 2017 at 03:17 PM
There are numerous reasons why wages won't increase even if labor markets tighten...you just don't want to acknowledge the nefarious consequences of neoliberal policies: business collusion, offshoring, immigration, and the tax system's preference for returns of returns to capital over wages, which preferences technology.
pgl -> JohnH... , February 20, 2017 at 10:36 AM
The real interest rate was around 2.5% per your own argument which was a lot lower than real rates in the 1980's. So by any reasonable standard - we did have easy money.
JohnH -> pgl... , February 20, 2017 at 01:35 PM
lol!!! 2.5% real Fed funds rates as cheap money? Who are you kidding???

If pgl is good at anything, it's producing nonsense!

Julio -> JohnH... , February 20, 2017 at 08:35 AM
Another round of tax and regulatory giveaways can create a short-term boom and keeping jobs at home.

Of course, with the giveaways they're hitting the zero lower bound...

JohnH -> Julio ... , February 20, 2017 at 03:21 PM
"Another round of tax and regulatory giveaways can create a short-term boom," as part of the race to the bottom for wages...IOW Republicans and their Democratic allies will have succeeded when American wages are about the same as wages in China or Mexico. But, per their logic, then jobs will be plentiful because there will be no need to off-shore.
pgl -> JohnH... , February 20, 2017 at 09:11 AM
"the pre-bellum South"? You mean slavery. Yeah - wages were incredibly low.
JohnH -> pgl... , February 20, 2017 at 01:37 PM
Yep...slavery is the most direct method of keeping wages low. The policies I outlined--monopsony, offshoring, and immigration--are all a fall back, to be used when industry can't use their best policy.
libezkova -> JohnH... , February 20, 2017 at 12:02 PM
If the neoliberal elite can't part with at least a small part of their privileges, the political destabilization will continue and they might lose everything.

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." -- John Kenneth Galbraith

ilsm -> libezkova... , February 20, 2017 at 12:53 PM
You may know that JK Galbraith served on the US' evaluation of strategic bombings effect in WW II.

He is one of the minority whose opinion was suppressed by the military industry complex which concluded outside the A bomb no relation to bombing and victory was proven, including both industry output and energy production in Germany.

Allied bombing did kill a lot of civilians, which if Germans or Japan had won bomber commanders would have been hanged.

Julio -> libezkova... , February 20, 2017 at 05:44 PM
"...the political destabilization will continue and they might lose everything."

Or they might find a way to end the political destabilization. You know, we're not arresting you, we just want to know, in the war on Muslim terrorists and Mexican criminals, are you with us or against us? You'd be surprised (or maybe you wouldn't!) how the question is enough to quiet everybody down.

Julio -> Julio ... , February 20, 2017 at 05:46 PM
Just heard an interview clip with candidate Trump defending his Muslim ban as being the same as the Japanese interment, and saying we're in a war.

[Feb 21, 2017] Did post-Marxist theories destroy Communist regimes?

Feb 21, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron : February 20, 2017 at 04:12 AM , 2017 at 04:12 AM
RE: Did post-Marxist theories destroy Communist regimes?

[Branko discusses "A slender volume by Wisła Suraska (How the SovietUnion disappeared, Duke University Press, 1998)." Interesting stuff and reasonably cogent enough for idle curiosity, but nowhere near the center of my world.]

cm -> RC AKA Darryl, Ron... , -1
The short answer is no. (I guess it depends on how one interprets what "destroy" means.)

Suraska explains in much detail, and IMO correctly, the exact mechanisms and critical motivations/actions of leaders by which the regime lost or ceded its power.

The underlying reasons are as always social and economic processes and facts. Summarized, with increasing complexity, expressing itself in good part in increasing maintenance liabilities and stagnation of progress, the "empire" became too large to be manageable. This also explains the decentralization aspect - the central government recognized that with the available technology and state organization (which could not be altered either by fact or ideological principle), it was simply not able to control everything effectively. It could (and did) send its agents to mete out enforcement actions and punishments, but you cannot manage something that depends on producing value with a stick only.

One "mistake" may have been that the recognition that the prevailing management system could not be sustained, or its translation into action (under Gorbachov), came too late. But had the corrective action happened earlier, the end result may have been approximately the same, only accelerated by so many years. And it would also have affected the West - had the late 80's/early 90's "shock" happened let's say 10 years earlier, what of what happened in the 80's would have happened differently?

libezkova said in reply to cm... , February 20, 2017 at 08:23 PM
Was not it the infection of neoliberalism that brought down the Soviet Union?
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 11:52 AM
I find the following relatively short exposition very convincing, and have recommended it before. It explains the underlying economic principles at a very high "metabolic" level. At that level, it is not very actionable, nor explains anything in detail, but it is straightforward.

http://www.ecoshock.org/transcripts/greer_on_collapse.pdf

Or search for "greer catabolic" or similar keywords.

[Feb 21, 2017] Our situation with neoliberalism reminds me lines from the Hotel California

Feb 21, 2017 | economistsview.typepad.com
February 20, 2017 at 04:51 PM , 2017 at 04:51 PM
Plato oil might throw a monkey wrench into such projections.

Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do we need more battleships, fighter planes and attack helicopters?

Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil extraction technologies.

The political stability of neoliberal society much like stability of Bolshevism depends on whether the promises of higher standard of living for everybody are delivered.

If not, and for the bottom 80% they were not, the society enters the period of political instability.

Which in the USA probably has started with the election of Trump.

MSM dogs who are now barking at Trump are barking to the wrong tree.

im1dc -> libezkova... , February 20, 2017 at 07:16 PM
We can agree that all politico-economic systems tried thus far by man have fatal flaws. Ours just works better, or has, for longer than any other, so far that is.
libezkova said in reply to im1dc... , February 20, 2017 at 07:18 PM
Very true.
libezkova -> libezkova... February 20, 2017 at 08:36 PM , 2017 at 08:36 PM
Our situation with neoliberalism reminds me lines from the "Hotel California " ;-)

http://www.azlyrics.com/lyrics/eagles/hotelcalifornia.html
== quote ==
Last thing I remember, I was
Running for the door
I had to find the passage back
To the place I was before
"Relax, " said the night man,
"We are programmed to receive.
You can check-out any time you like,
But you can never leave! "

[Feb 21, 2017] Are you willing To kill the Goose That Laid the Golden Eggs .

Notable quotes:
"... Free trade always and everywhere leads to poverty. The US must return to Lincoln's protectionist tariff regime if it wants to recovery the prosperity Krugman and co. helped destroy in the free trade "globalization" period from 1973 to January 20, 2017. ..."
"... It is easier said then done. Many US companies now depends on foreign manufacturing and foreign markets. The train has left the station. ..."
"... Careful actions might help to change the situation for better, but any abrupt or reckless action will definitely make the current situation worse, as employment in the USA now depends on employment in Mexico like one auto part manufacturer recently explained to Trump: you institute tariffs -- we lay off the US workers, because we have no other option. ..."
Feb 21, 2017 | economistsview.typepad.com
Arrogance of free traders... February 20, 2017 at 08:06 PM , 2017 at 08:06 PM
Arrogant economists? Yes - the US may not have much, but it is overflowing with arrogant economists.

A trillion dollar goods trade deficit that persists year after year? A wealthy country stripped of its manufacturing and turned into a debtor nation thanks to economists refusing to bother with economic history that could not be more clear.

Free trade always and everywhere leads to poverty. The US must return to Lincoln's protectionist tariff regime if it wants to recovery the prosperity Krugman and co. helped destroy in the free trade "globalization" period from 1973 to January 20, 2017.

Trump should revive Lincoln protectionism - then he will rightfully take his place among the greats.

libezkova : , February 20, 2017 at 08:44 PM

"Trump should revive Lincoln protectionism - then he will rightfully take his place among the greats."

It is easier said then done. Many US companies now depends on foreign manufacturing and foreign markets. The train has left the station.

Careful actions might help to change the situation for better, but any abrupt or reckless action will definitely make the current situation worse, as employment in the USA now depends on employment in Mexico like one auto part manufacturer recently explained to Trump: you institute tariffs -- we lay off the US workers, because we have no other option.

Are you willing "To kill the Goose That Laid the Golden Eggs". Paradoxically this idiom means an unprofitable action motivated by greed

[Feb 21, 2017] Stockman Warns Trump Flynns Gone But Theyre Still Gunning For You, Donald

Notable quotes:
"... In any event, it was "intercepts" leaked from deep in the bowels of the CIA to the Washington Post and then amplified in a 24/7 campaign by the War Channel (CNN) that brought General Flynn down. ..."
"... But here's the thing. They were aiming at Donald J. Trump. And for all of his puffed up bluster about being the savviest negotiator on the planet, the Donald walked right into their trap, as we shall amplify momentarily. ..."
"... But let's first make the essence of the matter absolutely clear. The whole Flynn imbroglio is not about a violation of the Logan Act owing to the fact that the general engaged in diplomacy as a private citizen. ..."
"... It's about re-litigating the 2016 election based on the hideous lie that Trump stole it with the help of Vladimir Putin. In fact, Nancy Pelosi was quick to say just that: ..."
"... 'The American people deserve to know the full extent of Russia's financial, personal and political grip on President Trump and what that means for our national security,' House Minority Leader Nancy Pelosi said in a press release. ..."
"... And Senator Graham, the member of the boobsey twins who ran for President in 2016 while getting a GOP primary vote from virtually nobody, made clear that General Flynn's real sin was a potential peace overture to the Russians: ..."
"... We say good riddance to Flynn, of course, because he was a shrill anti-Iranian warmonger. But let's also not be fooled by the clinical term at the heart of the story. That is, "intercepts" mean that the Deep State taps the phone calls of the President's own closest advisors as a matter of course. ..."
"... As one writer for LawNewz noted regarding acting Attorney General Sally Yates' voyeuristic pre-occupation with Flynn's intercepted conversations, Nixon should be rolling in his grave with envy: ..."
"... Yes, that's the same career apparatchik of the permanent government that Obama left behind to continue the 2016 election by other means. And it's working. The Donald is being rapidly emasculated by the powers that be in the Imperial City due to what can only be described as an audacious and self-evident attack on Trump's Presidency by the Deep State. ..."
"... Indeed, the paper details an apparent effort by Yates to misuse her office to launch a full-scale secret investigation of her political opponents, including 'intercepting calls' of her political adversaries. ..."
"... Yet on the basis of the report's absolutely zero evidence and endless surmise, innuendo and "assessments", the Obama White House imposed another round of its silly school-boy sanctions on a handful of Putin's cronies. ..."
"... Of course, Flynn should have been telling the Russian Ambassador that this nonsense would be soon reversed! ..."
"... But here is the ultimate folly. The mainstream media talking heads are harrumphing loudly about the fact that the very day following Flynn's call -- Vladimir Putin announced that he would not retaliate against the new Obama sanctions as expected; and shortly thereafter, the Donald tweeted that Putin had shown admirable wisdom. ..."
"... That's right. Two reasonably adult statesman undertook what might be called the Christmas Truce of 2016. But like its namesake of 1914 on the bloody no man's land of the western front, the War Party has determined that the truce-makers shall not survive. ..."
"... The Donald has been warned. ..."
Feb 21, 2017 | www.zerohedge.com
Submitted via The Ron Paul Institute for Peace & Prosperity,

General Flynn's tenure in the White House was only slightly longer than that of President-elect William Henry Harrison in 1841. Actually, with just 24 days in the White House, General Flynn's tenure fell a tad short of old "Tippecanoe and Tyler Too". General Harrison actually lasted 31 days before getting felled by pneumonia.

And the circumstances were considerably more benign. It seems that General Harrison had a fondness for the same "firewater" that agitated the native Americans he slaughtered at the famous battle memorialized in his campaign slogan. In fact, during the campaign a leading Democrat newspaper skewered the old general, who at 68 was the oldest US President prior to Ronald Reagan, saying:

Give him a barrel of hard [alcoholic] cider, and a pension of two thousand [dollars] a year and he will sit the remainder of his days in his log cabin.

That might have been a good idea back then (or even now), but to prove he wasn't infirm, Harrison gave the longest inaugural address in US history (2 hours) in the midst of seriously inclement weather wearing neither hat nor coat.

That's how he got pneumonia! Call it foolhardy, but that was nothing compared to that exhibited by Donald Trump's former national security advisor.

General Flynn got the equivalent of political pneumonia by talking for hours during the transition to international leaders, including Russia's ambassador to the US, on phone lines which were bugged by the CIA. Or more accurately, making calls which were "intercepted" by the very same NSA/FBI spy machinery that monitors every single phone call made in America.

Ironically, we learned what Flynn should have known about the Deep State's plenary surveillance from Edward Snowden. Alas, Flynn and Trump wanted the latter to be hung in the public square as a "traitor", but if that's the solution to intelligence community leaks, the Donald is now going to need his own rope factory to deal with the flood of traitorous disclosures directed against him.

In any event, it was "intercepts" leaked from deep in the bowels of the CIA to the Washington Post and then amplified in a 24/7 campaign by the War Channel (CNN) that brought General Flynn down.

But here's the thing. They were aiming at Donald J. Trump. And for all of his puffed up bluster about being the savviest negotiator on the planet, the Donald walked right into their trap, as we shall amplify momentarily.

But let's first make the essence of the matter absolutely clear. The whole Flynn imbroglio is not about a violation of the Logan Act owing to the fact that the general engaged in diplomacy as a private citizen.

It's about re-litigating the 2016 election based on the hideous lie that Trump stole it with the help of Vladimir Putin. In fact, Nancy Pelosi was quick to say just that:

'The American people deserve to know the full extent of Russia's financial, personal and political grip on President Trump and what that means for our national security,' House Minority Leader Nancy Pelosi said in a press release.

Yet, we should rephrase. The re-litigation aspect reaches back to the Republican primaries, too. The Senate GOP clowns who want a war with practically everybody, John McCain and Lindsey Graham, are already launching their own investigation from the Senate Armed Services committee.

And Senator Graham, the member of the boobsey twins who ran for President in 2016 while getting a GOP primary vote from virtually nobody, made clear that General Flynn's real sin was a potential peace overture to the Russians:

Sen. Lindsey Graham also said he wants an investigation into Flynn's conversations with a Russian ambassador about sanctions: "I think Congress needs to be informed of what actually Gen. Flynn said to the Russian ambassador about lifting sanctions," the South Carolina Republican told CNN's Kate Bolduan on "At This Hour. And I want to know, did Gen. Flynn do this by himself or was he directed by somebody to do it?"

We say good riddance to Flynn, of course, because he was a shrill anti-Iranian warmonger. But let's also not be fooled by the clinical term at the heart of the story. That is, "intercepts" mean that the Deep State taps the phone calls of the President's own closest advisors as a matter of course.

This is the real scandal as Trump himself has rightly asserted. The very idea that the already announced #1 national security advisor to a President-elect should be subject to old-fashion "bugging," albeit with modern day technology, overwhelmingly trumps the utterly specious Logan Act charge at the center of the case.

As one writer for LawNewz noted regarding acting Attorney General Sally Yates' voyeuristic pre-occupation with Flynn's intercepted conversations, Nixon should be rolling in his grave with envy:

Now, information leaks that Sally Yates knew about surveillance being conducted against potential members of the Trump administration, and disclosed that information to others. Even Richard Nixon didn't use the government agencies themselves to do his black bag surveillance operations. Sally Yates involvement with this surveillance on American political opponents, and possibly the leaking related thereto, smacks of a return to Hoover-style tactics. As writers at Bloomberg and The Week both noted, it wreaks of 'police-state' style tactics. But knowing dear Sally as I do, it comes as no surprise.

Yes, that's the same career apparatchik of the permanent government that Obama left behind to continue the 2016 election by other means. And it's working. The Donald is being rapidly emasculated by the powers that be in the Imperial City due to what can only be described as an audacious and self-evident attack on Trump's Presidency by the Deep State.

Indeed, it seems that the layers of intrigue have gotten so deep and convoluted that the nominal leadership of the permanent government machinery has lost track of who is spying on whom. Thus, we have the following curious utterance by none other than the Chairman of the House Intelligence Committee, Rep. Devin Nunes:

'I expect for the FBI to tell me what is going on, and they better have a good answer,' he told The Washington Post. 'The big problem I see here is that you have an American citizen who had his phone calls recorded.'

Well, yes. That makes 324 million of us, Congressman.

But for crying out loud, surely the oh so self-important chairman of the House intelligence committee knows that everybody is bugged. But when it reaches the point that the spy state is essentially using its unconstitutional tools to engage in what amounts to "opposition research" with the aim of election nullification, then the Imperial City has become a clear and present danger to American democracy and the liberties of the American people.

As Robert Barnes of LawNewz further explained, Sally Yates, former CIA director John Brennan and a large slice of the Never Trumper intelligence community were systematically engaged in "opposition research" during the campaign and the transition:

According to published reports, someone was eavesdropping, and recording, the conversations of Michael Flynn, while Sally Yates was at the Department of Justice. Sally Yates knew about this eavesdropping, listened in herself (Pellicano-style for those who remember the infamous LA cases), and reported what she heard to others. For Yates to have such access means she herself must have been involved in authorizing its disclosure to political appointees, since she herself is such a political appointee. What justification was there for an Obama appointee to be spying on the conversations of a future Trump appointee?

Consider this little tidbit in The Washington Post . The paper, which once broke Watergate, is now propagating the benefits of Watergate-style surveillance in ways that do make Watergate look like a third-rate effort. (With the) FBI 'routinely' monitoring conversations of Americans...... Yates listened to 'the intercepted call,' even though Yates knew there was 'little chance' of any credible case being made for prosecution under a law 'that has never been used in a prosecution.'

And well it hasn't been. After all, the Logan Act was signed by President John Adams in 1799 in order to punish one of Thomas Jefferson's supporters for having peace discussions with the French government in Paris. That is, it amounted to pre-litigating the Presidential campaign of 1800 based on sheer political motivation.

According to the Washington Post itself, that is exactly what Yates and the Obama holdovers did day and night during the interregnum:

Indeed, the paper details an apparent effort by Yates to misuse her office to launch a full-scale secret investigation of her political opponents, including 'intercepting calls' of her political adversaries.

So all of the feigned outrage emanating from Democrats and the Washington establishment about Team Trump's trafficking with the Russians is a cover story. Surely anyone even vaguely familiar with recent history would have known there was absolutely nothing illegal or even untoward about Flynn's post-Christmas conversations with the Russian Ambassador.

Indeed, we recall from personal experience the thrilling moment on inauguration day in January 1981 when word came of the release of the American hostages in Tehran. Let us assure you, that did not happen by immaculate diplomatic conception -- nor was it a parting gift to the Gipper by the outgoing Carter Administration.

To the contrary, it was the fruit of secret negotiations with the Iranian government during the transition by private American citizens. As the history books would have it because it's true, the leader of that negotiation, in fact, was Ronald Reagan's national security council director-designate, Dick Allen.

As the real Washington Post later reported, under the by-line of a real reporter, Bob Woodward:

Reagan campaign aides met in a Washington DC hotel in early October, 1980, with a self-described 'Iranian exile' who offered, on behalf of the Iranian government, to release the hostages to Reagan, not Carter, in order to ensure Carter's defeat in the November 4, 1980 election.

The American participants were Richard Allen, subsequently Reagan's first national security adviser, Allen aide Laurence Silberman, and Robert McFarlane, another future national security adviser who in 1980 was on the staff of Senator John Tower (R-TX).

To this day we have not had occasion to visit our old friend Dick Allen in the US penitentiary because he's not there; the Logan Act was never invoked in what is surely the most blatant case ever of citizen diplomacy.

So let's get to the heart of the matter and be done with it. The Obama White House conducted a sour grapes campaign to delegitimize the election beginning November 9th and it was led by then CIA Director John Brennan.

That treacherous assault on the core constitutional matter of the election process culminated in the ridiculous Russian meddling report of the Obama White House in December. The latter, of course, was issued by serial liar James Clapper, as national intelligence director, and the clueless Democrat lawyer and bag-man, Jeh Johnson, who had been appointed head of the Homeland Security Department.

Yet on the basis of the report's absolutely zero evidence and endless surmise, innuendo and "assessments", the Obama White House imposed another round of its silly school-boy sanctions on a handful of Putin's cronies.

Of course, Flynn should have been telling the Russian Ambassador that this nonsense would be soon reversed!

But here is the ultimate folly. The mainstream media talking heads are harrumphing loudly about the fact that the very day following Flynn's call -- Vladimir Putin announced that he would not retaliate against the new Obama sanctions as expected; and shortly thereafter, the Donald tweeted that Putin had shown admirable wisdom.

That's right. Two reasonably adult statesman undertook what might be called the Christmas Truce of 2016. But like its namesake of 1914 on the bloody no man's land of the western front, the War Party has determined that the truce-makers shall not survive.

The Donald has been warned.

xythras , Feb 20, 2017 10:02 PM

Assange is about to face censorship from one LENIN Moreno (next Ecuadorian president)

Assange must Reduce "Meddling" in US Policies While in Ecuadorian Embassy

http://dailywesterner.com/news/2017-02-20/assange-must-reduce-meddling-i...

How ironic

Darktarra -> xythras , Feb 20, 2017 10:11 PM

We haven't had deep state (successfully) take out a President since JFK. I am sure they will literally be gunning for Donald Trump! His election screwed up the elite's world order plans ... poor Soros ... time for him to take a dirt knap!

Be careful Trump! They will try and kill you! The United States government is COMPLETELY corrupt. Draining the swamp means its either you or they die!

wanglee -> Darktarra , Feb 20, 2017 10:18 PM

Let us help Trump's presidency to make America (not globalist) great again.

Not only democrats rigged Primary to elect Clinton as presidential candidate last year even though she has poor judgement (violating government cyber security policy) and is incompetent (her email server was not secured) when she was the Secretary of State, and was revealed to be corrupt by Bernie Sanders during the Primary, but also democrats encourage illegal immigration, discourage work, and "conned" young voters with free college/food/housing/health care/Obama phone. Democratic government employees/politicians also committed crimes to leak classified information which caused former National Security Adviser Michael Flynn losing his job and undermined Trump's presidency.

However middle/working class used their common senses voting against Clinton last November. Although I am not a republican and didn't vote in primary but I voted for Trump and those Republicans who supported Trump in last November since I am not impressed with the "integrity" and "judgement" of democrats, Anti-Trump protesters, Anti-Trump republicans, and those media who endorsed Clinton during presidential election and they'll work for globalists, the super rich, who moved jobs/investment overseas for cheap labor/tax and demanded middle/working class to pay tax to support welfare of illegal aliens and refugees who will become globalist's illegal voters and anti-Trump protesters.

To prevent/detect voter fraud, "voter ID" and "no mailing ballots" must be enforced to reduce possible "voter frauds on a massive scale" committed by democratic/republic/independent party operatives. All the sanctuary counties need to be recounted and voided county votes if recount fails since the only county which was found to count one vote many times is the only "Sanctuary" county, Wayne county, in recount states (Pennsylvania, Michigan and Wisconsin) last year. The integrity of voting equipment and voting system need to be tested, protected and audited. There were no voting equipment stuck to Trump. Yet, many voting equipment were found to switch votes to Clinton last November. Voter databases need to be kept current. Encourage reporting of "voter fraud on a massive scale" committed by political party operatives with large reward.

Cashing in: Illegal immigrants get $1,261 more welfare than American families, $5,692 vs. $4,431 ( http://www.washingtonexaminer.com/cashing-in-illegal-immigrants-get-1261... ) DEA Report Shows Infiltration of Mexican Drug Cartels in Sanctuary Cities ( http://www.breitbart.com/texas/2015/09/08/dea-report-shows-infiltration-... ) Welfare Discourages Work( http://www.breitbart.com/big-government/2015/04/27/the-science-is-settle... ) Hillary Clinton Says Bernie Sanders's "Free College" Tuition Plan Is All a Lie ( http://www.teenvogue.com/story/clinton-says-sanders-free-tuition-wont-wo... UC Berkeley Chancellor: Hillary Clinton 'Free' College Tuition Plan Won't Happen ( http://www.breitbart.com/big-government/2016/09/30/uc-berkeley-chancello... ) Bill Clinton Impeachment Chief Investigator: I'm 'Terrified' of Hillary because we know that there were "People" who "Disappeared" ( http://www.breitbart.com/2016-presidential-race/2016/10/30/exclusive-bil... ) Former FBI Asst. Director Accuses Clintons Of Being A "Crime Family" ( http://www.zerohedge.com/news/2016-10-30/former-fbi-asst-director-accuse... ) FBI boss Comey's 7 most damning lines on Clinton ( http://www.cnn.com/2016/07/05/politics/fbi-clinton-email-server-comey-da... ). Aides claiming she "could not use a computer," and didn't know her email password– New FBI docs ( https://www.rt.com/usa/360528-obama-implicated-clinton-email/ ). 23 Shocking Revelations From The FBI's Clinton Email Report ( http://dailycaller.com/2016/09/02/23-shocking-revelations-from-the-fbis-... ) DOJ grants immunity to ex-Clinton staffer who set up her email server ( http://www.cnn.com/2016/03/02/politics/hillary-clinton-email-server-just... ) Former House Intelligence Chairman: I'm '100 Percent' Sure Hillary's Server Was Hacked ( http://www.breitbart.com/2016-presidential-race/2016/11/06/former-house-... ) Exclusive - Gen. Mike Flynn: Hillary Clinton's Email Setup Was 'Unbelievable Active Criminal Behavior' ( http://www.breitbart.com/2016-presidential-race/2016/11/06/exclusive-gen... ) Clinton directed her maid to print out classified materials ( http://nypost.com/2016/11/06/clinton-directed-her-maid-to-print-out-clas... ) Obama lied to the American people about his secret communications with Clinton( http://www.thepoliticalinsider.com/president-barack-obama-hillary-email-... ) Former U.S. Attorney General, John Ashcroft: FBI didn't 'clear' Clinton ( https://www.youtube.com/watch?v=VFYQ3Cdp0zQ ) When the Clintons Loved Russia Enough to Sell Them Our Uranium ( http://www.breitbart.com/2016-presidential-race/2016/07/25/flashback-cli... ) Wikileaks: Clinton Foundation Chatter with State Dept on Uranium Deal with Russia ( http://www.breitbart.com/big-government/2016/10/08/wikileaks-putting-on-... ) Russian officials donated $$$ to Clinton Foundation for Russian military research ( http://www.breitbart.com/radio/2016/12/16/schweizer-insecure-left-wants-... ) Cash Flowed to Clinton Foundation Amid Russian Uranium Deal ( https://www.nytimes.com/2015/04/24/us/cash-flowed-to-clinton-foundation-... ) HILLARY CAMPAIGN CHIEF LINKED TO MONEY-LAUNDERING IN RUSSIA ( HTTP://WWW.WND.COM/2016/10/HILLARY-CAMPAIGN-CHIEF-LINKED-TO-MONEY-LAUNDE... ) The largest source of Trump campaign funds is small donors giving under $200 ( http://www.huffingtonpost.com/entry/donald-trump-self-fund_us_57fd4556e4... ) How mega-donors helped raise $1 billion for Hillary Clinton ( https://www.washingtonpost.com/politics/how-mega-donors-helped-raise-1-b... ) Final newspaper endorsement count: Clinton 57, Trump 2 ( http://thehill.com/blogs/ballot-box/presidential-races/304606-final-news... ) Journalists shower Hillary Clinton with campaign cash ( https://www.publicintegrity.org/2016/10/17/20330/journalists-shower-hill... ) Judicial Watch Planning to Sue FBI, NSA, CIA for Flynn Records ( http://www.breitbart.com/big-government/2017/02/16/judicial-watch-planni... )

President Trump Vowed to Investigate Voter Fraud. Then Lawmakers Voted to "Eliminate" Election Commission Charged with Helping States Improve their Voting Systems ( http://time.com/4663250/house-committee-eliminates-election-commission-v... ) California's Recipe for Voter Fraud on a Massive Scale( http://www.breitbart.com/california/2017/01/27/voter-fraud/ ) California Republican Party Official Alleges Voter Fraud In California, a "Sanctuary" state ( http://sanfrancisco.cbslocal.com/2016/11/28/trump-among-those-saying-vot... ) BREAKING: Massive Voter Fraud Discovered In Mailing Ballots In Pennsylvania! See Huge Twist In Results! ( http://www.usapoliticstoday.com/massive-voter-fraud-pennsylvania/ ) "Voting Fraud" revealed during "Recount": Scanners were used to count one vote many times to favor Clinton in Wayne County, a "Sanctuary" county including Detroit and surrounding areas.( http://www.zerohedge.com/news/2016-12-06/michigan-republicans-file-emerg... ) Illegal Voters Tipping Election Scales ( http://www.frontpagemag.com/fpm/243947/illegal-voters-tipping-election-s... ) Voter Fraud: We've Got Proof It's Easy ( http://www.nationalreview.com/article/368234/voter-fraud-weve-got-proof-... ) Voter Fraud Is Real. Here's The Proof ( http://thefederalist.com/2016/10/13/voter-fraud-real-heres-proof/ ) Here's Why State Election Officials Think Voter Fraud Is a Serious Problem ( http://dailysignal.com/2017/02/17/heres-why-state-election-officials-thi... ) Documented Voter Fraud in US ( http://www.discoverthenetworks.org/ViewSubCategory.asp?id=2216 ) No, voter fraud isn't a myth: 10 cases where it's all too real ( http://www.washingtontimes.com/news/2016/oct/17/no-voter-fraud-isnt-myth... ) Non-US citizen gets eight years for voter fraud in Texas after "Sucessfully Illegally Voted for at least Five Times" in Dallas county, a "Sanctuary" county( http://www.theblaze.com/news/2017/02/09/non-us-citizen-gets-eight-years-... ) Democratic party operatives tell us how to successfully commit voter fraud on a massive scale ( http://www.thegatewaypundit.com/2016/10/james-okeefe-rigging-elections-d... ) Texas Rigged? Reports Of Voting Machines Switching Votes To Hillary In Texas( http://www.zerohedge.com/news/2016-10-25/texas-rigged-first-reports-voti... ) Voting Machine "Irregularities" Reported in Utah, Tennessee, Pennsylvania, & North Carolina ( http://www.zerohedge.com/news/2016-11-08/voting-machine-irregularities-r... ) Video: Machine Refuses to Allow Vote For Trump in Pennsylvania ( http://www.infowars.com/video-machine-refuses-to-allow-vote-for-trump-in... ) Electoral fraud ( https://en.wikipedia.org/wiki/Electoral_fraud ) Voter fraud ( https://ballotpedia.org/Voter_fraud ) Sanctuary Cities Continue to Obstruct Enforcement, Threaten Public Safety( http://cis.org/Sanctuary-Cities-Map ) List of Sanctuary cities( http://www.apsanlaw.com/law-246.List-of-Sanctuary-cities.html ) Map Shows Sanctuary City Islands of Blue In Sea of Red ( http://www.infowars.com/map-shows-sanctuary-city-islands-of-blue-in-sea-... )

Chris Dakota -> wanglee , Feb 20, 2017 10:59 PM

I hit some long click bait about famous people IQ

Barack Obama 140

Donald Trump 156

Trump knows whats coming. Rush Limbaugh said "I've known Trump for a long time, he is a winner and I am sure none of this phases him at all. The media didn't create him, the media can't destroy him."

CheapBastard -> Darktarra , Feb 20, 2017 10:19 PM

Flynn has been there for several years. If he was such a threat why did they not take action sooner since Soweeto appointed him in 2012? It must be that Soweto Obama is his spy buddy then, both of them in league with the Russians since Obama has been with Flynn for a much longer time he had to know if something was up.

The entire Russian spy story is a complete Fake news rouse.

I am wondering what they'll say tomorrow to draw attention awya form the muslim riots in Sweden. If the news of Muslim riots in Sweden, then Trump will be even more vindicated and the MSM will look even more stupid and Fake.

Chupacabra-322 -> CheapBastard , Feb 20, 2017 10:54 PM

The Deep State has accentually lost control of the Intelligence Community via its Agents / Operatives & Presstitute Media vehicle's to Gas Light the Masses.

So what Criminals at large Obama, Clapper & Lynch have done 17 days prior to former CEO Criminal Obama leaving office was to Decentralize & weaken the NSA. As a result, Intel gathering was then regulated to the other 16 Intel Agencies.

Thus, taking Centuries Old Intelligence based on a vey stringent Centralized British Model, De Centralized it, filling the remaining 16 Intel Agenices with potential Spies and a Shadow Deep State Mirror Government.

All controlled from two blocks away at Pure Evil Criminal War Criminal Treasonous at large, former CEO Obama's Compound / Lair.

It's High Treason being conducted "Hidden In Plain View" by the Deep State.

It's the most Bizzare Transition of Power I've ever witnessed. Unprecedented.

http://www.zerohedge.com/news/2017-02-18/jay-sekulow-obama-should-be-hel ...

oncefired -> CheapBastard , Feb 20, 2017 11:07 PM

http://www.thomaswictor.com/leakers-beware/

Duc888 -> CheapBastard , Feb 20, 2017 11:11 PM

Flynn did not tell Pence that Pence's best friend was front and center on the Pizzagate list. That's what cost Flynn his job...it had fuck all do do with the elections.

[Feb 21, 2017] Aging of baby boomers has some interesting political side effects as the past is always seen by this age category through rose-colored glasses.

Feb 21, 2017 | economistsview.typepad.com
W hen they were younger, at least looking back things were more hopeful and remembered quality of life as being better

ken melvin : , February 20, 2017 at 02:49 PM

The Nostalgia of Trump: Remembering the days when birds fell from the sky from the polluted air in L.A., When the Cuyahoga River caught fire in Cleveland, death from black lung desease, death from white lung desease, death by crushing, ...

I don't ever see nostalgia for Trump. I wish to see him expunged from the Nation's as quickly as possible.

cm -> ken melvin... , February 20, 2017 at 03:06 PM
I'm not sure what any of that has to do with nostalgia for Trump.

Quite a while back Paine (who seems to be back here) characterized contemporary Republicans as "the party of a better yesterday". This refers to many people's impression that when they were younger, at least looking back things were more hopeful and remembered quality of life better. This is independent from the things you mentioned. In my own observation the same phenomenon could be observed in prior generations of family and their acquaintances that experienced in various degrees WW1 and WW2 and the postwar fallouts. Life had always been better when they were young, war or not.

libezkova -> cm... , February 20, 2017 at 04:41 PM
Very true.

Aging of baby boomers has some interesting political side effects as the past is always seen by this age category through rose-colored glasses.

cm -> libezkova... , February 20, 2017 at 08:35 PM
As by most other generations apparently - I don't think this is anything specific to the boomers. By credible accounts the Greeks were already complaining about "kids these days" a few millenia ago. "They are so not like 'we' used to be - no merit and all depravity." How could society possibly continue to exist with this unfit generation having responsibility?
cm -> libezkova... , February 20, 2017 at 08:42 PM
The difference between now and the pre-internet era is that now anybody and everybody can take a dump on current and previous generations, and things in general, at the cost of next to nothing.

[Feb 20, 2017] Paging Robert Shiller?

Feb 20, 2017 | economistsview.typepad.com
Fred C. Dobbs : February 20, 2017 at 07:29 AM , 2017 at 07:29 AM
(Is this anything?)

(The Dow index is up 15.3% since Nov 4. Go figure.)

Goldman: 'Cognitive dissonance exists in the US stock market'
http://finance.yahoo.com/news/goldman-cognitive-dissonance-exists-in-the-us-stock-market-132336034.html
via @YahooFinance - Feb 20

Goldman Sachs analysts believe investors and traders in the stock market are acting irrationally.

"Cognitive dissonance exists in the US stock market," Goldman Sachs' David Kostin said. "S&P 500 is up 10% since the election despite negative [earnings per share] revisions from sell-side analysts."

Earnings and expectations for earnings growth are the most important drivers of stock prices in the long run. In the short run, however, earnings and prices will often diverge.

"Investors, S&P 500 management teams, and sell-side analysts do not agree on the most likely path forward," Kostin continued. "On the one hand, investors, corporate managers, and macroeconomic survey data suggest an increase in optimism about future economic growth. In contrast, sell-side analysts have cut consensus 2017E adjusted EPS forecasts by 1% since the election and 'hard' macroeconomic data show only modest improvement." ...

pgl -> Fred C. Dobbs... , February 20, 2017 at 09:21 AM
Paging Robert Shiller?

[Feb 20, 2017] Plato oil problem is looming large and overshadows other problems.

Feb 20, 2017 | economistsview.typepad.com
libezkova -> Tom aka Rusty... , February 20, 2017 at 01:18 PM
"Repealing some of the dumber regulations might have a tiny positive impact on some industries and some areas."

I agree. "Plato oil" problem is looming large and overshadows other problems.

And nothing but high prices can probably restore the USA shale industry to its previous glory days after "Obama destruction" of 2014-2016.

Chris G -> libezkova... , February 20, 2017 at 02:13 PM
Article in NYT yesterday re an essentially jobless recovery in the TX oil industry. Technology has advanced to the point where they only need a small fraction of workers they did a few years ago to get the oil out of the ground. (Lose-lose in that lower extraction costs support lower fuel costs which support higher CO2 emissions and there's no employment gain.) Will post the link to the NYT article later.
anne -> Chris G ... , February 20, 2017 at 03:58 PM
https://www.nytimes.com/2017/02/19/business/energy-environment/oil-jobs-technology.html

February 19, 2017

Texas Oil Fields Rebound From Price Lull, but Jobs Are Left Behind
The industry is embracing technology, and finding new ways to pare the labor force. But as jobs go away, what of presidential promises to bring them back?
By CLIFFORD KRAUSS

cm -> Tom aka Rusty... , February 20, 2017 at 02:50 PM
The temporary adrenaline shot may help some people "temporarily" (probably a decade or so), vs. no help at all. In the long run we are all dead, but you can have had more or less of a life before that. A decade is a significant period in anybody's life.

[Feb 20, 2017] People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed. The voters no longer believe them. They're like the boy who

Feb 20, 2017 | economistsview.typepad.com
Peter K. -> Peter K.... February 20, 2017 at 08:13 AM , 2017 at 08:13 AM
https://www.ft.com/content/cd4e8576-e934-11e6-967b-c88452263daf

Revoking trade deals will not help American middle classes

The advent of global supply chains has changed production patterns in the US

by Larry Summers
FEBRUARY 5, 2017

Trade agreements have been central to American politics for some years. The idea that renegotiating trade agreements will "make America great again" by substantially increasing job creation and economic growth swept Donald Trump into office.

More broadly, the idea that past trade agreements have damaged the American middle class and that the prospective Trans-Pacific Partnership would do further damage is now widely accepted in both major US political parties.

As Senator Daniel Patrick Moynihan once observed, participants in political debate are entitled to their own opinions but not their own facts. The reality is that the impact of trade and globalisation on wages is debatable and could be substantial. But the idea that the US trade agreements of the past generation have impoverished to any significant extent is absurd.

There is a debate to be had about the impact of globalisation on middle class wages and inequality. Increased imports have displaced jobs. Companies have been able to drive harder bargains with workers, particularly in unionised sectors, because of the threat they can outsource. The advent of global supply chains has changed production patterns in the US.

My judgment is that these effects are considerably smaller than the impacts of technological progress. This is based on a variety of economic studies, experience in hypercompetitive Germany and the observation that the proportion of American workers in manufacturing has been steadily declining for 75 years. That said I acknowledge that global trends and new studies show that the impact of trade on wages is much more pronounced than a decade ago.

But an assessment of the impact of trade on wages is very different than an assessment of trade agreements. It is inconceivable that multilateral trade agreements, such as the North American Free Trade Agreement, have had a meaningful impact on US wages and jobs for the simple reason that the US market was almost completely open 40 years ago before entering into any of the controversial agreements.

American tariffs on Mexican goods, for example, averaged about 4 per cent before Nafta came into force. China had what was then called "most favoured nation" trading status with the US before its accession to the World Trade Organization and received the same access as other countries. Before the Korea Free Trade Agreement, US tariffs on Korea averaged a paltry 2.8 per cent.

The irrelevance of trade agreements to import competition becomes obvious when one listens to the main arguments against trade agreements. They rarely, if ever, take the form of saying we are inappropriately taking down US trade barriers.

Rather the naysayers argue that different demands should be made on other countries during negotiations - on issues including intellectual property, labour standards, dispute resolution or exchange rate manipulation. I am sympathetic to the criticisms of TPP, but even if they were all correct they do not justify the conclusion that signing the deal would increase the challenges facing the American middle class.

The reason for the rise in US imports is not reduced trade barriers. Rather it is that emerging markets are indeed emerging. They are growing in their economic potential because of successful economic reforms and greater global integration.

These developments would have occurred with or without US trade pacts, though the agreements have usually been an impetus to reform. Indeed, since the US does very little to reduce trade barriers in our agreements, the impetus to reform is most of what foreign policymakers value in them along with political connection to the US.

The truth too often denied by both sides in this debate is that incremental agreements like TPP have been largely irrelevant to the fate of middle class workers. The real strategic choice Americans face is whether the objective of their policies is to see the economies of the rest of the world grow and prosper. Or, does the US want to keep the rest of the world from threatening it by slowing global growth and walling off products and people?

Framed this way the solution appears obvious. A strategy of returning to the protectionism of the past and seeking to thwart the growth of other nations is untenable and would likely lead to a downward spiral in the global economy. The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges.

Peter K. -> Peter K.... , February 20, 2017 at 08:16 AM
" The right approach is to maintain openness while finding ways to help workers at home who are displaced by technical progress, trade or other challenges."

People like Summers, DeLong, PGL and Krugman have been saying this for 30 years ever since NAFTA was passed.

The voters no longer believe them. They're like the boy who cried wolf.

[Feb 20, 2017] With high unemployment rate employers can more broadly discriminate

Feb 20, 2017 | economistsview.typepad.com
Peter K. : Reply Monday, February 20, 2017 at 10:35 AM , February 20, 2017 at 10:35 AM
PGL says "reverse hysteresis" is fair dust.

More trolling from out neoliberal friend?

https://economix.blogs.nytimes.com/2014/03/03/undoing-the-structural-damage-to-potential-growth/?_r=0

Economix - Explaining the Science of Everyday Life

Undoing the Structural Damage to Potential Growth
By JARED BERNSTEIN MARCH 3, 2014 11:00 AM

What follows is macroeconomics, but I'll start with the micro - a microcosm, in fact, of the larger idea I'm hoping to get at here.

I think it was around 1998, and I was on a tram between terminals at O'Hare Airport in Chicago. Two young men, who clearly worked for the airport (they had a bunch of badges dangling around their necks) were trying to figure out how they knew each other, while I eavesdropped. Turned out they had met each other in prison.

At the time, I was beginning a research project on the benefits of full employment, and my first thought was, "Aha - another example of how tight labor markets pull in the hard-to-employ." This was also the era of work-based welfare reform, and while analysts worried that employers would avoid those with welfare histories, strong demand turned out to an antidote to such preferences.

Basically, profiling based on gender, race and experience is a luxury that employers can't afford when the job market is really tight. That is not to imply, of course, that employers broadly discriminate, but there is strong evidence that many do, most recently against the long-term unemployed. In tight markets, however, they face a choice of indulging their preferences or leaving profits on the table, and profits usually win.

Now, put this story aside for a second and let's turn to the macro. A few months ago, I reported on a study by a few Federal Reserve economists with pretty striking results of the damage done to the economy's future growth rate by the deep and protracted downturn known as the Great Recession. The Congressional Budget Office just published a similar analysis, resulting in the chart below showing growth in gross domestic product as projected in 2007, before the recession, and a revised projection from this year. By 2017, the budget office predicts that the new and decidedly not-improved level of G.D.P. will be 7.3 percent below the old projection.

What does 7.3 percent of lost gross domestic product actually mean? Well, last year G.D.P. amounted to about $16.8 trillion, and 7.3 percent of that comes to around $1.2 trillion. Conventional estimates translate that into more than 10 million jobs.

It would be very good to avoid that fate. The thing is, both the Fed economists and the Congressional Budget Office basically argue that while their estimates are admittedly uncertain, that fate cannot be avoided - it's baked into the economic cake by the assumption that once your trend growth rate slows as ours has, it does not come back barring some positive, unforeseen shock. Here is how the Fed guys put it:

Policy makers cannot undo labor market damage once it has occurred, but must instead wait for it to fade away on its own accord; in other words, there is no special advantage, given this specification, to running a high-pressure economy.

I disagree! I think the damage can be at least partly reversed precisely by running "a high-pressure economy." I saw it myself that day in the airport.

Technically, I'm talking about "reverse hysteresis." When a cyclical problem morphs into a structural one, economists invoke the concept of hysteresis. When this phenomenon takes hold, the rate at which key economic inputs like labor supply and capital investment enter the economy undergoes a downshift that lasts through the downturn and well into the expansion, reducing the economy's speed limit. But what I'm suggesting here is that by running the economy well below conventional estimates of the lowest unemployment rate consistent with stable inflation, and doing so for a while, we can pull workers back in, raise their career trajectories, improve their pay and their living standards, and turn that downshift to an upshift that raises the level and growth rate of G.D.P.

Won't that be inflationary? Three points. First, if anything, the current economy is suffering from inflation that is too low (same with Europe), so near-term growth-oriented policy seems clearly safe in this regard. Second, the precise relationship between full employment and inflation is poorly understood. When that latter-1990s story above was taking place, economists frequently and incorrectly warned that full employment would dangerously juice inflation. Third, the correlation between these two variables - inflation and labor market tightness - has become far weaker in recent years (i.e., the Phillips Curve has flattened, for those who like the jargon).

How do we reverse the hysteresis process (which is to ask: How do we get back to very tight labor markets)? In earlier posts, I've suggested a number of policies that would help, including investment in public goods, direct job creation, reducing the trade deficit and work-sharing. Still, you may well be wondering, "Wait a minute - this dude wants us to go with him down this path because of a conversation he overheard 16 years ago?"

O.K., I'll admit that the economic journals are not busting with evidence in support of reverse hysteresis. But those of us who closely monitored full-employment economies have observed and documented significantly positive labor supply and investment outcomes. (True, a lot of that investment has flowed into bubbles; I'm not saying this idea solves every problem.)

The employment rates for young African-American adults, like the guys I saw in the airport, averaged around 70 percent in the 1970s and '80s, but hit 80 percent in the late 1990s; they are in the mid-60s now. The employment rates for single mothers also hit new highs in those years. The labor force participation rate, itself an important victim of hysteresis right now, hit its all-time high at the end of the 1990s expansion. In other words, full employment pulled a lot of new people into the job market.

As part of the full-employment project I'm running at the Center on Budget and Policy Priorities (and have written about before on this blog), a number of top economists are looking into the relationships between fiscal policy, and hysteresis and reverse hysteresis. They are coming up with some compelling findings, which I'll share once they are ready. For now, allow me to assert the following: We have shown we can do a lot of economic damage. With the political will, sorely lacking these days, it can also be undone.

Peter K. -> Peter K.... , February 20, 2017 at 10:38 AM
"What does 7.3 percent of lost gross domestic product actually mean? Well, last year G.D.P. amounted to about $16.8 trillion, and 7.3 percent of that comes to around $1.2 trillion. Conventional estimates translate that into more than 10 million jobs."

https://www.bloomberg.com/view/articles/2016-04-28/president-obama-s-economic-disappointment

Obama's Economic Disappointment by Narayana Kocherlakota

In January 2009, at the beginning of Obama's first term, the nonpartisan Congressional Budget Office issued a 10-year forecast for the U.S. economy, including such indicators as unemployment, gross domestic product, the budget deficit, government debt and interest rates. Here's a table comparing the CBO's expectations for the year 2015 to what has actually happened:

NGDP forecast to grow 33 percent, actually grew 22 percent.

Real GDP, forecast 20 percent, actual 10.

----------------

Peter K. -> Peter K.... , February 20, 2017 at 10:42 AM
https://www.federalreserve.gov/newsevents/speech/yellen20150327a.htm

Yellen

"A final argument for gradually adjusting policy relates to the desirability of achieving a prompt return of inflation to the FOMC's 2 percent goal, an objective that would be advanced by allowing the unemployment rate to decline for a time somewhat below estimates of its longer-run sustainable level. To a limited degree, such an outcome is envisioned in many participants' most recent SEP projections. A tight labor market may also work to reverse some of the adverse supply-side developments resulting from the financial crisis. The deep recession and slow recovery likely have held back investment in physical and human capital, restrained the rate of new business formation, prompted discouraged workers to leave the labor force, and eroded the skills of the long-term unemployed.15 Some of these effects might be reversed in a tight labor market, yielding long-term benefits associated with a more productive economy. That said, the quantitative importance of these supply-side mechanisms are difficult to establish, and the relevant research on this point is quite limited."

[Feb 20, 2017] Republicans as the party of a better yesterday

Feb 20, 2017 | economistsview.typepad.com
ken melvin : , February 20, 2017 at 02:49 PM
The Nostalgia of Trump: Remembering the days when birds fell from the sky from the polluted air in L.A., When the Cuyahoga River caught fire in Cleveland, death from black lung desease, death from white lung desease, death by crushing, ...

I don't ever see nostalgia for Trump. I wish to see him expunged from the Nation's as quickly as possible.

cm -> ken melvin... , February 20, 2017 at 03:06 PM
I'm not sure what any of that has to do with nostalgia for Trump.

Quite a while back Paine (who seems to be back here) characterized contemporary Republicans as "the party of a better yesterday". This refers to many people's impression that when they were younger, at least looking back things were more hopeful and remembered quality of life better. This is independent from the things you mentioned. In my own observation the same phenomenon could be observed in prior generations of family and their acquaintances that experienced in various degrees WW1 and WW2 and the postwar fallouts. Life had always been better when they were young, war or not.

[Feb 20, 2017] Trump sold to Russia is Clintonista fantasia sold by the yellow press

Feb 20, 2017 | economistsview.typepad.com
New Deal democrat -> RC AKA Darryl, Ron... , February 20, 2017 at 05:06 AM
Well, even without the FT telling us, it seems obvious that Trump, a real estate developer who loves debt, is going to want an easy money policy. So he will presumably stock the Fed with cronies who want interest rates reduced back to zero or even lower if possible, with no restrictions (like reserves) on borrowing.

He probably won't be able to gain actual control of the Fed until Yellen's term is over, and it is certainly possible that by that time he will have been removed from office (as we have discussed, this latter possibility depends on Trump having alienated enough GOP voters that the GOP establishment feels it can removed him and install Pence without losing primary challenges).

I suspect that a combination of easy money and stagnant wages is not something that can last long. But so far I have been unable to find a historical example. Certainly in the US, the 1970s do not fit (wages grew as well as inflation), nor 1948 (inflation was 20% or more, but at the pinnacle of union power wages also grew by at least as much. 1948 was an inventory correction, like 2001 but if anything actually milder). Maybe 1920 comes close, but I haven't examined wages from that time.

Does anybody else know of an easy money/high inflation/stagnant wage historical example?

RC AKA Darryl, Ron -> New Deal democrat... , February 20, 2017 at 06:09 AM
There is an alternative view that aligns Trump with high interest rent seeking gold bugs. I don't know which is true. It may even be true that behind all of the bravado that Trump actually knows how deep in over his head that he is with regards to monetary policy. In that case he would protest a lot to the contrary while unceremoniously seeking to preserve the status quo at the Fed. Certainly your guess is as good as mine and probably even better. OTOH, nothing is certain with Trump.
ilsm -> RC AKA Darryl, Ron... , February 20, 2017 at 06:39 AM
Trump Derangement Syndrome (TDS). Spread by neolib propaganda organs claiming to be the "free" press.

More dangerous than Obama's deep state wiretapping republicans and raping the Bill of Rights falsely screaming 'Trump the traitor'!

There is no freedom to lie and to mislead 'we the people'.

New Deal democrat -> ilsm... , February 20, 2017 at 07:34 AM
At risk of being flamed by everybody else with an opinion on this matter, I can see both sides of the issue:

You are correct if Trump is not selling out to Russia.

You are also correct if (1) Trump *is* selling out to Russia, *AND* (2) his voters were aware that he is selling out to Russia, but voted for him with eyes wide open on that issue.

In either of those two cases the Intelligence Community leakers are trying to subvert the democratic will of the people in elected Trump president.

You are wrong if: (1) Trump is selling out to Russia, *AND* (2) his voters did not believe it when they voted for him. In this case the Intelligence Community leakers, in my opinion, are patriotic heroes.

Just because the Intellligence Community is not laying the sources of its intelligence out in the open on the table does not mean that the leakers are wrong. My suspicion is that they are correct (see, e.g., Josh Marshall today. Google is your friend.) The deeper problem is that I suspect Trump's voters simply don't care, even if the Intelligence Community is correct.

RC AKA Darryl, Ron -> New Deal democrat... , February 20, 2017 at 08:07 AM
No flames from me, Dude. Ya nailed it.
ilsm -> New Deal democrat... , February 20, 2017 at 08:09 AM
I did a mini max regret: More regret with Clinton sold out to neoliberal profiteering war mongers who care only for perpetual war, the max regret I see is unneeded nuclear war over a few hundred thousand Estonians who hate Russia since the Hanseatic league was suppressed by Ivan the Terrible.

Lesser regret with Trump sold out to Russia* that would only bring China I against both US and Russia in about 50 years.

*Trump sold to Russia is Clintonista/Stalinist fantasia sold by the yellow press.

Julio -> New Deal democrat... , February 20, 2017 at 08:25 AM
I disagree. It is not enough that Trump voters were aware of Trump selling out to Russia and didn't care; if there had been conclusive proof of that before the election, other people might have come out to vote against him.

Besides, some of his voters might not care and some might.

In any case, whether the leakers are patriots or traitors does not have to do with subverting "the will of the people". At the most extreme, leaks could lead to, say, impeachment, which is another way to express the will of the people. (Or actually, the will of the plutocrats and their Republican and Democratic running dogs, but that's another discussion).

ilsm -> Julio ... , February 20, 2017 at 04:54 PM
Read this:

http://thefreethoughtproject.com/deep-state-trump-dangerous-washington/

It concerns "deep State" treason, a deep state built by democrats working for Clinton, attempting a coup!

It is time to stand with the US constitution against the deep state!

Julio -> ilsm... , February 20, 2017 at 05:29 PM
It has always been time to stand for the Constitution and against the deep state.

And you really think this was built by democrats and Clinton? Since you are about my age, I'll keep it brief and just say one word: COINTELPRO.

And it's not either or. There are plenty of bad actors, some as dangerous as the spooks. E.g. a President that believes we're in an existential war against Islam, and who is likely pull every trigger available to him if some Muslim stages an attack in the US. Frankly, if such a time comes I'll feel safer thinking that Trump and the spooks at not working too closely together.

libezkova -> ilsm... , February 20, 2017 at 11:59 AM
New Deal democrat and couple of other Hillary enthusiasts here used to sing quite a different song as for Hillary bathroom email server ;-).

Russia bogeyman (or "ruse" as Trump aptly defined it) is now used to swipe under the carpet the crisis of neoliberal ideology and the collapse of Democratic Party which is still dominated by Clinton wing of soft neoliberals). Chickhawks like a couple of people here (for example, im1dc), are always want to fight another war, but using some other ("less valuable") peoples bodies as the target of enemy fire.

Democratic Party now is playing an old and very dirty trick called "Catch the thief", when they are the thief.

Why we are not discussing the key issue: how the redistribution of wealth up during the last two decades destabilized the country both economically and politically?

Also it is unclear whether a simple, non-painful way out exists, or this is just something like a pre-collapse stage as happened with Brezhnev socialism in the USSR. The Damocles sword of "peak/plato oil" hangs over neoliberal globalization. That's an undeniable and a very important factor. Another ten (or twenty) years of the "secular stagnation", and then what? Can the current globalized economy function with oil prices above $100 without severe downsizing.

The economic plunder of other countries like the plunder of xUSSR economic space (which helped to save and return to growth the USA economics in 90th, providing half a billion new customers and huge space for "dollarization") is no longer possible as there are no any new USSR that can disintegrate.

Obama achievement of reinstalling neoliberal regimes in Brazil and Argentina ( https://nacla.org/news/2015/10/10/brazil%C2%B4s-sudden-neoliberal-u-turn ) was probably the "last hurrah" of neoliberalism, which is in retreat all over the globe.

And "artificial disintegration" of the countries to open them to neoliberal globalization (aka "controlled chaos") like practiced in Libya and Syria proved to be quite costly and have unforeseen side effects.

The forces that ensured Trump victory are forces that understood at least on intuitive level that huge problems with neoliberalism need something different that kicking the can down the road, and that Hillary might well means the subsequent economic collapse, or WWIII, or both.

Trump might not have a solution, but he was at least courageous enough to ask uncomfortable questions.

Blackmailing Russia can probably be viewed as just an attempt to avoid asking uncomfortable questions (Like who is guilty and who should go to jail ;-) , and to distract the attention from the real problems. As if the return us to the good old Obama days of universal deceit (aka "change we can believe in") , can solve the problems the country faces.

And when neoliberal presstitutes in MSM now blackmail Trump and try to stage "purple" color revolution, this might well be a sign of desperation, not strength.

They have no solution for the country problem, they just want to kick the can down the road and enjoy their privileges while the country burns.

As Galbright put it: "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." -- John Kenneth Galbraith

ilsm -> libezkova... , February 20, 2017 at 12:49 PM
libezkova,

The fake liberals directed the intelligence services to target the political opposition. Now the opposition is in power the intelligence services could be held to respond to their destruction of the US Bill of Rights.

It is not just the fake liberal economics the democrats will answer to in 2018.

In 15 months people like me will spend a lot of time reminding the democrats of their ignoble treatment of the US constitution because their neoliberal scam artist was defeated.

Julio -> ilsm... , February 20, 2017 at 05:35 PM
"Now the opposition is in power..."

Well, now I see very clearly why I disagree with you so much.

This government is the apotheosis of neoliberalism. I'm only sorry we didn't get the pure version with Mitt, instead of this one stained with a cabal of White Christian jihadis.

libezkova -> Julio ... , February 20, 2017 at 07:24 PM
Julio,

"This government is the apotheosis of neoliberalism."

I respectfully disagree. Trump neoliberalism is a "bastard neoliberalism" (or neoliberalism in a single county, in you wish) as he rejects globalization and wars for the expansion of the US led neoliberal empire.

New Deal democrat -> libezkova... , February 20, 2017 at 12:59 PM
I was a Bernie supporter, but thanks for playing.

[Feb 20, 2017] Trump Chooses General McMaster as National Security Adviser

Feb 20, 2017 | economistsview.typepad.com
Fred C. Dobbs : , February 20, 2017 at 12:28 PM
Trump Chooses H.R. McMaster as National
Security Adviser https://nyti.ms/2lo3mNK
NYT - PETER BAKER - February 20, 2017

WASHINGTON - President Trump picked Lt. Gen. H.R. McMaster, a widely respected military strategist, as his new national security adviser on Monday, calling him "a man of tremendous talent and tremendous experience."

Mr. Trump made the announcement at his Mar-a-Lago getaway in Palm Beach, Fla., where he has been interviewing candidates to replace Michael T. Flynn, who was forced out after withholding information from Vice President Mike Pence about a call with Russia's ambassador.

The choice continued Mr. Trump's reliance on high-ranking military officers to advise him on national security. Mr. Flynn was a retired three-star general and Defense Secretary Jim Mattis is a retired four-star general. His first choice to replace Mr. Flynn, who turned the job down, and two other finalists were current or former senior officers as well.

Shortly before announcing his appointment, Mr. Trump wrote on Twitter: "Meeting with Generals at Mar-a-Lago in Florida. Very interesting!"

General McMaster is seen as one of the Army's leading intellectuals, first making a name for himself with a searing critique of the Joint Chiefs of Staff for their performance during the Vietnam War and later criticizing the way President George W. Bush's administration went to war in Iraq.

As a commander, he was credited with demonstrating how a different counterterrorism strategy could defeat insurgents in Iraq, providing the basis for the change in approach that Gen. David H. Petraeus adopted to shift momentum in a war that the United States was on the verge of losing.

ilsm -> Fred C. Dobbs... , February 20, 2017 at 01:38 PM
He is an armor guy with a Ranger tab!

Passed over for Brigadier twice but made it by the board run by Petraeus who looked for "combat leaders".

[Feb 20, 2017] Globalism is just a mirage to lead the weak minded into subservience to corporatism.

Feb 20, 2017 | economistsview.typepad.com
rayward : February 20, 2017 at 05:29 AM , 2017 at 05:29 AM
A problem with today's views about globalization is that they look backward rather than forward. The future's globalization is much different from the past's globalization. In particular, growing nationalism is the future in the places, such as China, that have benefited from globalization. By that I mean China is beginning to produce goods for China firms rather than for western firms to compete with goods produced for western (American) firms including goods produced in China for western firms.

It's a much different dynamic than what we have experienced in the past 30 years. And the response to the new globalization should (and will) be much different.

Ironically, Trump's views about globalization come closer to what will be the response as western firms adjust to the new globalization. Is Trump that smart? No, it's just that everybody else is that dumb.

RC AKA Darryl, Ron -> rayward... , February 20, 2017 at 08:36 AM
China has never not had nationalism. Globalism is just a mirage to lead the weak minded into subservience to corporatism.

[Feb 20, 2017] Free-trade globalization is so ridiculous on so many levels one can only conclude that economic theologians who support it are either utterly incompetent or corrupt.

Feb 20, 2017 | economistsview.typepad.com
Ron Waller : February 20, 2017 at 01:24 PM , 2017 at 01:24 PM
Free-trade globalization is so ridiculous on so many levels one can only conclude that economic theologians who support it are either utterly incompetent or corrupt.

First take skyrocketing inequality and government debt. Both are related to free-trade outsourcing schemes. When production is moved out of country to cut wage costs and cut corners on regulations the only people who profit from it are corporate executives and shareholders. In the US, the top 20% own 80% of all investments. If the top 20% are the only ones benefiting – while workers are getting slaughtered – then clearly this is a major source of rising inequality.

In a functioning economy – and yes America once had a functioning economy during the Keynesian New Deal era that began with FDR and was ended with Reagan – all segments of society benefit from GDP growth – not just self-aggrandizing robber barons.

Next factor in twin deficits. When a country is importing more goods than it is exporting it has a trade deficit. The US has had a whopping structural trade deficit for about 40 years spanning the entire Friedmanian neoliberal era that began with Reagan. How does a nation purchase imports it is not earning with exports? By borrowing: i.e., running government deficits.

A simple analysis of international trade over the Friedmanian neoclassical era shows that economists must be mental midgets or they are on the take. During the Ricardian era, economists railed against mercantilist monarchs on the basis it was illogical: i.e., as Krugman puts it, if all countries want to run trade surpluses they have to trade with another planet because if some countries are running structural trade surpluses then others must run structural trade deficits.

But what happened during the Friedmanian era? Economists looked the other way on the most mercantilist period in economic history. The oligarchs of undeveloped countries ran massive net trade surpluses. Most developing countries ran whopping net trade deficits. This is the very opposite of Ricardian free-trade ideology predicated on countries having a net balance of trade.

Next factor in lost GDP. It's definition: all final goods and services produced in a country in a year. Not all final goods outsourced from a country. Which is to say, outsourcing kills GDP dollar for dollar. So it's really no wonder that GDP growth collapsed after decades of outsourcing schemes – along with the entire Western economy. (Of course this was not the only kind of economic corruption that caused economic collapse.)

But it's really funny to think that looting oligarchs in developed countries are willing to destroy the economy for a percentage. Because they only make a profit cutting labor costs. That's a one time deal. The outsourced GDP is GDP that is lost every year – from which they would've otherwise profited. (This is not to suggest that all GDP must be fiercely protected. Simply that there must be some balance that can only be accomplished with some form of managed trade.)

Next factor in the destruction of demand. Take a $30 an hour auto job in the US or Canada. Ship it off to Mexico where workers are paid $3 an hour. It's an economic miracle! How many people making $3 an hour can afford to buy a new car? Oh that's right! If the central bank prints money by buying up toxic assets created by barbarian bankers tearing up the global financial system – this will make up for all the loss in demand. It's call "economic science."

Now for some salt in the wounds: for all the wealth that flows out of the country from these outsourcing schemes an equal amount must flow back and in the form of foreign debt. Right now Chinese oligarchs are producing a massive housing bubble in Canada snatching up real estate. Of course the bubble won't burst overnight like in the US whose housing bubble was predicated on predatory mortgage-lending fraud. It will deflate like Japan in something like a 15-year bear market which caused their economy to fall apart. (Note that Japan's 22-year "lost decade" is actually a decades-long Great Depression. 2015 GDP is the lower than 1993 – and falling. Now that's an economic miracle: akin to the 7 plagues of Egypt.)

Long story short: looting barbarian plutocrats are even dumber than their lapdog economists. First they started burning the furniture to heat the house. Now they are tearing up the rafters. Like the frog and scorpion story they don't want to think about the consequences of their actions – i.e., the inevitable collapse of the Western economy into fascist revolutions and world war.

The establishment is hysterical now that Trump has come along – on behest of the American people – and put this nonsense to a stop – which Obama in Hillary Clinton had planned to accelerate with the TPP and whatever other "open border" schemes across the Americas. ("Need more rafters!")

Like Keynes and FDR, Trump is at least taking some kind of action to save capitalism and capitalists from themselves. Americans had tasked their first African-American president with this job. Now it's Plan B time.

It's amazing how many people think Trump is dumb when they are so much dumber. Trump is smart enough to realize that free-trade globalization is the problem (one of many; : but at least he's smart enough to realize part of the problem.)

I don't believe in Trump. Never have. But I believe in him a lot more than this tumorous growth of fake technocrats, fake-news journalists, fake public servants and fake meritocrats eroding the foundations of this primitive barbarian proto-civilization by liquidating the public trust and committing crimes against humanity.

RGC -> Ron Waller ... , February 20, 2017 at 01:51 PM
People of privilege will always risk their complete destruction rather than surrender any material part of their advantage. Intellectual myopia, often called stupidity, is no doubt a reason. But the privileged also feel that their privileges, however egregious they may seem to others, are a solemn, basic, God-given right. The sensitivity of the poor to injustice is a trivial thing compared with that of the rich.

-John Kenneth Galbraith
The Age of Uncertainty (1977)
Chapter 1, p. 22

cm -> RGC... , February 20, 2017 at 03:58 PM
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

I would say this is rational. Surrendering advantages will generally weaken your position and thus increase the risk of complete destruction or being stripped of further advantages. Also quite often members of the elite, individually or as a group, have likely acted in ways that enraged their opponents to the point that they will likely not stop at just stripping advantages until a "reasonable" point, but indeed seek complete destruction. History is full of things like guillotines and hunting down and murder or lifelong imprisonment of all family members (who have not been plausibly disavowed or disassociated while the old regime was still comfortably in power).

cm -> cm... , February 20, 2017 at 04:00 PM
Of course in the past, rulers and elites were often dethroned by other elites, with popular uprisings only used as a temporary tool. In any case, once it gets close to that point, it's an all or nothing fight for either side.
cm -> cm... , February 20, 2017 at 04:06 PM
There have been examples where elites have ceded advantages in a peaceful transition. But that usually happen in a context where there had already been gradual transitions to shared/broader power in the past (generally not peaceful in the initial stages). The UK and its royals/nobility are an obvious example, probably also Scandinavia which are mostly still nominally kingdoms (?), or the royal family and former or still existing nobility has influence but officially only a figurehead role. The transition to democracy happened largely peacefully in the past 1-2 centuries, prior to that not so much.
RC AKA Darryl, Ron -> Ron Waller ... , February 20, 2017 at 02:02 PM
THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU! THANK YOU!

It makes sense of course that your name is Ron.

ken melvin -> Ron Waller ... , February 20, 2017 at 02:26 PM
Things can not change and stay the same.
Jesse : , February 20, 2017 at 01:43 PM

Until the Democrats reform their leadership and recommit to working people again, they will have no future as a party.

Brad and Larry and Paul are a big part of the status quo for the liberal establishment, and the incredible failure of leadership they have achieved.

Continuing to argue about it here, with the quick resort to personal attacks and name-calling, is irrelevant, because the Democratic party is dead. Seriously, how big of a loss can they take before the leadership gets tossed? It was not just the presidency. They have lost almost everything.

http://jessescrossroadscafe.blogspot.com/2017/02/jimmy-dore-and-thomas-frank-on-what.html

RC AKA Darryl, Ron -> Jesse... , February 20, 2017 at 02:10 PM
Don't count the Democratic Party out yet. Politicians need to make a living. After the Civil War the Democratic Party had to scrape together what it could find that Republicans had tossed out with the garbage. So, the Democratic Party took to supporting immigrants and unions. Times have changed and the Democratic Party lost the unions to corporatism, but tried to make it up with racial politics. That worked some, but the problem with identity politics is that eventually people get their rights and freedoms and next thing you know they want jobs and college educations for their children. The Democratic Party made a big mistake abandoning the interests of ordinary working people, but that is what their corporate donors demanded. So, it is time for a makeover and if the next one does not take then they will be back at it again because politicians have to make a living.
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 04:33 PM
The Democratic party, much less so than the Republican party, is not homogenous. All the things you ascribe to them past or present don't apply to most of their current members or operatives.

It is one of the pernicious aspects of an effectively two-party system that all progressives have a strong motivation or even necessity to associate themselves with the "least bad" party. By way of official narrative the Democrats definitely fit the bill, even though they contain a lot of "co-opted" (if not corrupted) establishment baggage. That just happens with any major party - elites and interest groups that nominally stay out of politics but factually participate and not just a little are never resting.

In Germany, the 80's (perhaps late 70s?) saw an ascendancy of the Green party which was strongly associated with environmentalism, and by implication resistance to then prevalent politics, social mores, etc. They were successful as environmentalism and (I would say secondarily but that can be debated) civil/individual liberties and gender/ethnic equality which they also featured big time were themes that found wide appeal, and the time was ripe for them (e.g. environmental degradation had become undeniable, and gender/ethnic discrimination had become recognized as a factor hindering progress, aside from just fairness concerns).

A few decades later (and starting even a few years after the success) there was a noticeable bifurcation in the Greens - it turned out they were not all on the same page regarding all social issues. A number of Greens "defected" from the party and associated themselves with Red (Social Democrats, equivalent of US Democrats) or Black (Christian Democrats, equivalent of US Republicans) - showing that environmental or general (dimensions of) equal opportunity concerns are perhaps orthogonal to stands on other more or less specific social issues (or if one wants to be more cynical, that some people are careerist and not so much about principles - that exists but I would prefer (with little proof) to think it doesn't explain the larger pattern).

[Feb 20, 2017] Why did Krugman insist free trade would be wonderful?

Feb 20, 2017 | economistsview.typepad.com
why did Krugman insist free trade would be wonderful?... : , February 20, 2017 at 04:08 PM
Did he really know nothing of economic history? Did he not think that the US would follow 19th century free trade colonies and semi-colonies into dustbin and economic hell of deindustrialization? Had Krugman never honestly heard of the city of Camden? Did he never wonder at the consequences of 0% tariffs in a mercantilist world?

Time for free trade economists to sit down, be quiet and admit their mistakes.

libezkova -> why did Krugman insist free trade would be wonderful? ... , February 20, 2017 at 04:54 PM
"Why did Krugman insist free trade would be wonderful?"

Because that's what pays and what brought him where he is now.

Krugman is not a scientist ready to be burned for his convictions.

He is a despicable presstitute. Such people have no morals.

im1dc : , February 20, 2017 at 04:20 PM
Absolutely the best description and explanation of Trump and his presidency that I read

" Trump administration is basing its budget projections on the assumption that the U.S. economy will grow very rapidly over the next decade - in fact, almost twice as fast as independent institutions like the Congressional Budget Office and the Federal Reserve expect. There is, as far as we can tell, no serious analysis behind this optimism; instead, the number was plugged in to make the fiscal outlook appear better.

I guess this was only to be expected from a man who keeps insisting that crime, which is actually near record lows, is at a record high, that millions of illegal ballots were responsible for his popular vote loss, and so on: In Trumpworld, numbers are what you want them to be, and anything else is fake news. ..."

I'm going to keep this metric in mind whenever Trump or his Administration declares something to be right and everyone else wrong, i.e., fake news

libezkova -> im1dc... , February 20, 2017 at 04:51 PM
Plato oil might throw a monkey wrench into such projections.

Also Kunsler question stands: what type of growth do we need? Growth of what? Of Wall Street banks and hedge funds? Of private equity sharks ? Do we need more Wal-Marts, more McDonalds? Do we need more battleships, fighter planes and attack helicopters?

Or we need more hybrid and electrical cars, huge upgrade of the US national grid (east-West high voltage lines, new, safer types of nuclear reactors and huge investments in improving oil extraction technologies.

The political stability of neoliberal society much like stability of Bolshevism depends on whether the promises of higher standard of living for everybody are delivered.

If not, and for the bottom 80% they were not, the society enters the period of political instability.

Which in the USA probably has started with the election of Trump.

MSM dogs who are now barking at Trump are barking to the wrong tree.

im1dc -> libezkova... February 20, 2017 at 07:16 PM

We can agree that all politico-economic systems tried thus far by man have fatal flaws. Ours just works better, or has, for longer than any other, so far that is.

libezkova -> im1dc... February 20, 2017 at 07:18 PM

Very true.

[Feb 20, 2017] The robot that takes your job should pay taxes, says Bill Gates

Feb 20, 2017 | qz.com
Robots are taking human jobs. But Bill Gates believes that governments should tax companies' use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.

It's a striking position from the world's richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.

In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.

"You ought to be willing to raise the tax level and even slow down the speed" of automation, Gates argues. That's because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it's important to be able to manage that displacement. "You cross the threshold of job replacement of certain activities all sort of at once," Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.

You can watch Gates' remarks in the video above. Below is a transcript, lightly edited for style and clarity. Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.

Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you'd think that we'd tax the robot at a similar level.

And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.

So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you're net ahead. But you can't just give up that income tax, because that's part of how you've been funding that level of human workers.

And so you could introduce a tax on robots

There are many ways to take that extra productivity and generate more taxes. Exactly how you'd do it, measure it, you know, it's interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don't think the robot companies are going to be outraged that there might be a tax. It's OK.

Could you figure out a way to do it that didn't dis-incentivize innovation ?

Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, "OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?"

You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there's quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It's important to have the policies to go with that.

People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won't shape it for the positive things it can do. And, you know, taxation is certainly a better way to handle it than just banning some elements of it. But [innovation] appears in many forms, like self-order at a restaurant-what do you call that? There's a Silicon Valley machine that can make hamburgers without human hands-seriously! No human hands touch the thing. [ Laughs ]

And you're more on the side that government should play an active role rather than rely on businesses to figure this out?

Well, business can't. If you want to do [something about] inequity, a lot of the excess labor is going to need to go help the people who have lower incomes. And so it means that you can amp up social services for old people and handicapped people and you can take the education sector and put more labor in there. Yes, some of it will go to, "Hey, we'll be richer and people will buy more things." But the inequity-solving part, absolutely government's got a big role to play there. The nice thing about taxation though, is that it really separates the issue: "OK, so that gives you the resources, now how do you want to deploy it?"

[Feb 20, 2017] Lots of Rubinte lice crawling around under that mossy rock

Feb 20, 2017 | economistsview.typepad.com
PPaine : , February 20, 2017 at 02:41 PM
"The consequences of the Reagan deficits were to cream midwestern manufacturing and destroy worker bargaining power in export and import-competing industries. The switch from government surpluses to deficits under George W. Bush had much the same consequences. "


Where's carters volcker ?


And the bit about going from surplus to deficit
Is utterly undeveloped here
Lots of Rubinte lice crawling around under that mossy rock

PPaine -> PPaine ... , February 20, 2017 at 02:51 PM
Blaming the GOP ...The business class party...f or this thirty year decimation
Is grotesque ...of course they didn't give a damn about wage types !


The people's party the party of the CIO and the new deal
That is the party that betrayed the assembly line workers of America !

libezkova -> PPaine ... , February 20, 2017 at 07:08 PM
"The people's party the party of the CIO and the new deal. That is the party that betrayed the assembly line workers of America !"

Exactly: CIO realigned with the capital owners.

Peter K. -> PPaine ... , February 20, 2017 at 03:32 PM
"Where's carters volcker ?"

"Lots of Rubinte lice crawling around under that mossy rock"

Which PGL always fails to mention, dishonest neoliberal that he is.

[Feb 20, 2017] Reply

Feb 20, 2017 | onclick="TPConnect.blogside.reply('6a00d83451b33869e201bb097b6699970d'); return false;" href="javascript:void 0">
Monday, February 20, 2017 at 01:18 PM Tom aka Rusty said in reply to Sanjait... If it was technology why do US companies buy from low labor producers at the end of supply chains 2000 - 10000 miles away? Why the transportation cost. Automated factories could be built close by. Reply Monday, February 20, 2017 at 01:55 PM ken melvin said in reply to Tom aka Rusty... Send for an accountant. Reply Monday, February 20, 2017 at 02:24 PM cm said in reply to Tom aka Rusty... There is no such thing as an automated factory. Manufacturing is done by people, *assisted* by automation. Or only part of the production pipeline is automated, but people are still needed to fill in the not-automated pieces.

And it is not only automation vs. in-house labor. There is environmental/compliance cost (or lack thereof) and the fully loaded business services and administration overhead, taxes, etc.

You should know this, and I believe you do. Reply Monday, February 20, 2017 at 03:14 PM Peter K. said in reply to Sanjait... Trade policy put "low-skilled" workers in the U.S. in competition with workers in poorer countries.

What did you think was going to happen? The Democrat leadership made excuses.

David Autor's TED talk stuck with me. When automation increased productivity in agriculture, the government guaranteed free high school education as a right.

Now Democrats like you would say it's too expensive. So what's your solution? You have none. You say "sucks to be them."

And then they give you the finger and elect Trump.
Reply Monday, February 20, 2017 at 03:14 PM cm said in reply to Peter K.... It wasn't only "low-skilled" workers but "anybody whose job could be offshored" workers. Not quite the same thing.

It also happened in "knowledge work" occupations - for those functions that could be separated and outsourced without impacting the workflow at more expense than the "savings". And even if so, if enough of the competition did the same ...

And not all outsourcing was offshore - also to "lowest bidders" domestically, or replacing "full time" "permanent" staff with contingent workers or outsourced "consultants" hired on a project basis.
Reply Monday, February 20, 2017 at 03:19 PM Peter K. said in reply to cm... True. Reply Monday, February 20, 2017 at 03:33 PM Peter K. said in reply to Sanjait... "People sure do like to attribute the cause to trade policy."

Because it coincided with people watching their well-paying jobs being shipped overseas.

The Democrats have denied this ever since Clinton and the Republicans passed NAFTA, but finally with Trump the voters had had enough.

Why do you think Clinton lost Wisconsin, Michigan, Pennysylvania and Ohio?
Reply Monday, February 20, 2017 at 03:35 PM

[Feb 20, 2017] Union busting that started under Reagan emasculated the US work force

Feb 20, 2017 | economistsview.typepad.com
Denis Drew : , February 20, 2017 at 02:10 PM
Manufacturing, manufacturing, manufacturing. Everybody misses the BRONTOSAURUS in the room. 4% of jobs gone from automation and trade - half and half -- true. But, 50% of employees have lost 10% of overall income -- out of the 20% of a couple of generations back.

(This reminds me of comparing EITC's 1/2 1% redistribution with 45% of workers earning less than $15 an hour.)

Could 50% of the workforce squeeze 10% of income back out of the 49% who take 70% (14% of their earnings!)? They sure could if they could collectively agree not to show up for work otherwise. Could if the 49% in turn could squeeze 10% out of the 1% (the infamous one percent) who lately take 20% of overall income -- up from 10% a couple of generations back.

(Does the Chicago Bears quarterback really need $126 million for seven years -- up from to top NFL paid Joe Namath's $600,000 [adjusted truly] a couple of generations back?)

Mechanism? Ask Germany (ask Jimmy Hoffa).
* * * * * *
In case nobody thought about it -- I never thought about until Trump -- it goes like this. The NLRA(a) was written in 1935 leaving blank the use criminal sanctions for muscling the labor market. Even if it did specify jail time for union busting it is extremely arguable that state penalties for muscling ANY persons seeking to collectively bargain (not just union organizers and joiners following fed procedure) would overlap, not violate federal preemption.

It seems inarguable -- under long established First Amendment right to organize collective bargaining -- that federal preemption cannot force employees down an organizing road that is unarguably impassable, because unenforceable.

Upshot: states may make union busting a felony -- hopefully backed by RICO for persistent violators.

6% union density is like 20/10 blood pressure. It starves every other healthy process.

RC AKA Darryl, Ron -> Denis Drew ... , February 20, 2017 at 02:14 PM
Understood. Lost manufacturing jobs was a big hit to union employment aside from the longshoremen.
ken melvin said in reply to RC AKA Darryl, Ron... , February 20, 2017 at 02:37 PM
In 1967-68 was working the waterfront in SF. Saw the crews of Stevedores and Longshoremen load the ships; on the docks, down in the holds, using boom winches, forklifts, and muscle (dangerous work). By 1970, containerization had replaced 90% of them. And, it continues with computerization of storage and loading of containers (something I worked on in 1975). Remember the nephew in the 'Wire'? One day a week if he was lucky. David Simon knew of what he wrote.
cm -> RC AKA Darryl, Ron... , February 20, 2017 at 05:02 PM
One of the Michael Moore movies (probably but not sure whether about Flint) made the point rather explicitly - former manufacturing workers retrained as law enforcement or prison officers perhaps for employment in other states or "dealing with" their former colleagues driven to crime or at least into the arms of the law enforcement system.
libezkova said in reply to Denis Drew ... , February 20, 2017 at 07:06 PM
"6% union density is like 20/10 blood pressure. It starves every other healthy process."

That was the goal. Or more correctly an important strategy for achieving the goal: redistribution of wealth up.

Union busing is the key part of the strategy of "atomization" of labor which is probably one of the most important programs under neoliberalism.

Again, this is a government supported, and government implemented strategy.

[Feb 20, 2017] Obama as a pusher of austerity

Feb 20, 2017 | economistsview.typepad.com
Peter K. -> Peter K.... February 20, 2017 at 07:52 AM , 2017 at 07:52 AM
http://www.politifact.com/truth-o-meter/statements/2016/jan/12/barack-obama/we-have-cut-our-deficits-three-fourths-obama-state/

We have cut 'our deficits by almost three-quarters,' Obama says in State of the Union

By Louis Jacobson on Tuesday, January 12th, 2016 at 10:39 p.m.

A year ago, President Barack Obama said during his 2015 State of the Union address that the United States has seen "our deficits cut by two-thirds" during his tenure. We rated that claim Mostly True. During his 2016 State of the Union address, Obama raised the bar.

After citing some of his administration's economic accomplishments, he said, "We've done all this while cutting our deficits by almost three-quarters."

Has the deficit-reduction expanded during the past year? We took a closer look.

Let's start with an important reminder: The deficit is not the same as the debt.

A country's deficit is the difference between what the government collects in revenues and spends in one year. The national debt, by contrast, is the accumulation of all annual deficits minus any annual surpluses.

When we checked Obama's assertion a year ago, he compared his first budget year in office -- 2009 -- to 2014, using the deficit as a percentage of gross domestic product, or GDP. Economists consider this a valid way to measure the size of the deficit -- in fact, for most purposes, it's the best way, since it factors in the economy's change over time.

Here's the recent history of the deficit as a percentage of GDP. The years 2009 through 2014 come from historical data maintained by the Office of Management and Budget. The 2015 figure is the most recent estimate by the nonpartisan Congressional Budget Office, released in August 2015.

Fiscal year Deficit as a percentage of GDP
2009 9.8
2010 8.7
2011 8.5
2012 6.8
2013 4.1
2014 2.8
2015 2.4

According to this data, the deficit as a percentage of GDP has fallen by 76 percent -- almost exactly what Obama said.

If you use dollars rather than percentage of GDP, the decline is a bit smaller but still pretty close -- 70 percent.

That said, experts have told us that while Obama's math may be correct, it's missing some important caveats.

First, it's important to note that the deficit swelled in 2009 partly because of the massive stimulus program to jumpstart the cratering economy. This temporarily elevated level set the stage for the unusually precipitous decline.

"This is not to say that that the large deficit was his fault, but if one used the 2008 deficit as a frame of reference, the comparison would be quite different," Alan Auerbach, University of California Berkeley professor of economics and law, told us a year ago.

Also, some economists we've consulted pointed out that the 2009 fiscal year was Obama's first year in office, and so not necessarily a good starting point since he had little control over the spending in that year.

There's another issue. Princeton University economics professor Harvey Rosen told us the more important question is whether Obama has put the government on a path that will keep deficits stable.

"And the answer is no," Rosen said, because entitlement programs, such as Medicare, Medicaid and Social Security, have not had substantial reform.

The long-term forecast for the deficit illustrates this point. Absent substantial reform, the Congressional Budget Office expects a few more years of short-term deficit decreases followed by bigger shortfalls in 10 and 20 years.

The most recent projections show deficits as a percentage of GDP remaining lower than today's level through 2018, then beginning an upward curve. Between 2019 and 2022, the deficit is set to rise from 2.8 percent of GDP to 3.7 percent of GDP. It is not projected to fall below 3.4 percent through 2025.

We should also note that the picture on the debt is not as rosy as it is for the deficit. When Obama took office, the debt held by the public stood at $6.3 trillion. Since then, it has more than doubled to $13.6 trillion.

Finally, presidents don't move the economy on their own (the economy can be affected for good or ill by global trends and technological change) and must cooperate with Congress when steering fiscal policy.

Our ruling

Obama said we have cut "our deficits by almost three-quarters."

The numbers check out if you start with fiscal year 2009, his first year in office. But it's worth remembering that 2009 had a historically high deficit, and that projections show the deficit increasing again in just a couple years.

We rate the claim Mostly True.

Fred C. Dobbs -> Peter K.... , February 20, 2017 at 08:08 AM
'Let's start with an important reminder:
The deficit is not the same as the debt.'

This is one of those 'half-full/half-empty'
propositions.

We have no real hope (or expectation) of
reducing the Debt, short of something
REALLY dramatic happening.

(Go back on the Gold Standard,
at ~$1M per ounce maybe.
$Trillion coins?)

But we can get the rate of
increase to decline, now & then.

Meanwhile, the Debt is going to
just keep being rolled-over.

Peter K. -> Fred C. Dobbs... , February 20, 2017 at 08:22 AM
Wrong.

Bill Clinton balanced the budget and gave us surpluses thanks to the Dot.com stock bubble.

Greenspan and conservatives argued we needed Bush's tax cuts b/c balanced budgets are bad.

They're hypocrites with their double standards.

Meanwhile Obama brags about bringing our deficit down by about three-quarters during a time of stagnant wages.

He helped give us Trump. Mission accomplished. Time to go party at billionaire Richard Branson's private island.

Fred C. Dobbs -> Peter K.... , February 20, 2017 at 10:24 AM
'Bill Clinton balanced the budget and gave us surpluses thanks to the Dot.com stock bubble.'

Credit is due to Internet-inventin' Al Gore.

Fred C. Dobbs -> Peter K.... , February 20, 2017 at 10:30 AM
We can get the rate of Debt
increase to decline, now & then.

Invent *teleportation* (say) and
we can cut the rate to zero yet again.

Meanwhile, the Debt is going to
just keep being rolled-over.

ilsm -> Peter K.... , February 20, 2017 at 01:19 PM
The surpluses did not go to buying back T Bills.

Cash surpluses in the entitlements (payroll receipt were in the SS and medicare accounts exceded outlays) were spent on programs not covered by cash received from "general tax revenues".

[Feb 20, 2017] Social contract is the key. And it was abolished with the ascendance of neoliberalism with its wolf eats wolf philosophy of individual responsibility read the law of jungles instituted in the job market

Feb 20, 2017 | economistsview.typepad.com
ken melvin -> sanjait... February 20, 2017 at 02:21 PM , 2017 at 02:21 PM
One would think that a Berkeley Prof would be better at arithmetic, or counting. In the early days, companies did indeed create tech bureaucracies that offset any gains in reduction of work force, say back in the 70s, maybe 80s. Today, these groups number in the tens. Point being, these are indeed middle class jobs, just no where near the number of jobs replaced.
jonny bakho -> sanjait... , February 20, 2017 at 04:03 PM
Many working- and middle-class Americans believe that free-trade agreements are why their incomes have stagnated over the past two decades. So Trump intends to provide them with "protection" by putting protectionists in charge.

But Trump and his triumvirate have misdiagnosed the problem. While globalization is an important factor in the hollowing out of the middle class, so, too, is automation.

Trump and his team are missing a simple point: twenty-first-century globalization is knowledge-led, not trade-led. Radically reduced communication costs have enabled US firms to move production to lower-wage countries. Meanwhile, to keep their production processes synced, firms have also offshored much of their technical, marketing, and managerial knowhow. This "knowledge offshoring" is what has really changed the game for American workers.

The information revolution changed the world in ways that tariffs cannot reverse. With US workers already competing against robots at home, and against low-wage workers abroad, disrupting imports will just create more jobs for robots.

Trump should be protecting individual workers, not individual jobs. The processes of twenty-first-century globalization are too sudden, unpredictable, and uncontrollable to rely on static measures like tariffs. Instead, the US needs to restore its social contract so that its workers have a fair shot at sharing in the gains generated by global openness and automation. Globalization and technological innovation are not painless processes, so there will always be a need for retraining initiatives, lifelong education, mobility and income-support programs, and regional transfers.

By pursuing such policies, the Trump administration would stand a much better chance of making America "great again" for the working and middle classes. Globalization has always created more opportunities for the most competitive workers, and more insecurity for others. This is why a strong social contract was established during the post-war period of liberalization in the West. In the 1960s and 1970s institutions such as unions expanded, and governments made new commitments to affordable education, social security, and progressive taxation. These all helped members of the middle class seize new opportunities as they emerged.

Over the last two decades, this situation has changed dramatically: globalization has continued, but the social contract has been torn up. Trump's top priority should be to stitch it back together; but his trade advisers do not understand this.

https://www.project-syndicate.org/commentary/trump-trade-policy-tariffs-by-richard-baldwin-2017-02

libezkova -> jonny bakho... , February 20, 2017 at 05:33 PM
Jonny,

Thank you ! Social contract is the key. And it was abolished with the ascendance of neoliberalism with its wolf eats wolf philosophy of "individual responsibility" (read the law of jungles in job market).

For some times, while neoliberalism was eating the carcass of New Deal there was almost no rebellion against it. Even in 2008 none of the top honchos of financial institutions who caused the disaster went to jail, although rank-and-file employees of major banks and investment firms did feel very insecure. "Jump suckers" was the slogan on the corner NYC cafe close to Wall Street.

This time probably ended now. The problems is that financial oligarchy does not want to share spoils of their stealing with anybody.

And yes, communication technologies + huge growth of the power of personal computers since 1986 are two very important factors here.

They allowed new level of centralization, which was impossible before. With the corporate headquarters on a different continent then factories (among other things) and teams consisting of members of different continents.

[Feb 20, 2017] Globalisation and economic nationalism

Notable quotes:
"... The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not. ..."
"... "Chinese imports" is only an expression, or correlate, of something else - the neoliberal YOYO principle and breakdown/deliberate destruction of social cohesion ..."
"... As a side effect, this removes the collective identity, and increased tribalism is the compensation - a large part it is an attempt to find/associate with a group identity, which of course gives a large boost to readily available old identities, which were in the past (ab)used by nationalist movements, largely for the same reasons. ..."
Feb 20, 2017 | economistsview.typepad.com
RC AKA Darryl, Ron : February 20, 2017 at 04:15 AM , 2017 at 04:15 AM
RE: Globalisation and economic nationalism - VoxEU

[The abstract below:]

The revival of nationalism in western Europe, which began in the 1990s, has been associated with increasing support for radical right parties. This column uses trade and election data to show that the radical right gets its biggest electoral boost in regions most exposed to Chinese exports. Within these regions communities vote homogenously, whether individuals work in affected industries or not.

[I am shocked, shocked I say!]

cm -> RC AKA Darryl, Ron... , February 20, 2017 at 11:55 AM
"Chinese imports" is only an expression, or correlate, of something else - the neoliberal YOYO principle and breakdown/deliberate destruction of social cohesion.

As a side effect, this removes the collective identity, and increased tribalism is the compensation - a large part it is an attempt to find/associate with a group identity, which of course gives a large boost to readily available old identities, which were in the past (ab)used by nationalist movements, largely for the same reasons.

cm -> RC AKA Darryl, Ron... , February 20, 2017 at 12:08 PM
It seems to be quite apparent to me that the loss of national/local identity has not (initially?) promoted nationalist movements advocating a stronger national identity narrative, but a "rediscovery" of regional identities - often based on or similar to the geography of former kingdoms or principalities prior to national unification, or more local municipal structures (e.g. local administrations, business, or interest groups promoting a historical narrative of a municipal district as the village or small town that it descended from, etc. - with the associated idyllic elements).

In many cases these historical identity narratives had always been undercurrents, even when the nation state was strong.

cm -> cm... , February 20, 2017 at 12:12 PM
And I mean strong not in the military or executive strength sense, but accepted as legitimate and representing the population and its interests.

In these days, national goverments and institutions (state/parties) have been largely discredited, not least due to right wing/elite propaganda (and of course due to observed corruption promoted from the same side).

ilsm -> cm... , February 20, 2017 at 12:56 PM
Clinton and Obama have discredited the deep state.... using it for politics and adventuring.
cm -> ilsm... , February 20, 2017 at 01:36 PM
I'm not aware that either have discredited any deep state (BTW which Clinton?). The first thing I would ask for is clarification what you mean by "deep state" - can you provide a usable definition?

Obama has rejected calls for going after US torturers ("we want to move past this").

ilsm -> cm... , February 20, 2017 at 05:03 PM
Do not take treason lightly.

And if you don't know where the 6 months of innuendo about the Russians comes from since Aug 16 you are reading the treasonous agitprop from the democrat wind machine centered in NY, Boston and LA.

A background:

http://thefreethoughtproject.com/deep-state-trump-dangerous-washington/

The most rabid tea partiers were correct about Obama and his placing the deep state attempting to ruin the US.

cm -> ilsm... , February 20, 2017 at 06:03 PM
I'm not sure this answers my question, and it seems to accuse me of something I have not said or implied (taking treason lightly) - or perhaps cautioning me against such?

Are you willing to define the terms you are discussing? (Redirecting me to a google search etc. will not address my question. How exactly do you define "deep state"? You can quote from the internet of course.)

From a previous life I know a concept of "a state within the state" (concretely referring to the East German Stasi and similar services in other "communist" countries in concept but only vaguely in the details). That is probably related to this, but I don't want to base any of this on speculation and unclear terms.

[Feb 20, 2017] All the faux media wind about Russians hacking the crooked DNC, nothing about the deep states surveillance of Hillarys opposition.

Feb 20, 2017 | economistsview.typepad.com
ilsm : February 19, 2017 at 04:06 AM
all the faux media wind about Russians hacking the crooked DNC, nothing about the deep states surveillance of Hillary's opposition. First the NKVD came for GOPsters........ Stop whining about fascist threats. DNC neoliberal gestapo is working
ilsm -> Fred C. Dobbs... , February 19, 2017 at 07:23 AM
The dems' failed coup the demise of their partisan deep state surveillance. The US cannot afford to allow the crooked democrat party to abide.

[Feb 20, 2017] Why Extreme Inequality Causes Economic Collapse naked capitalism

Notable quotes:
"... Fig. 3a Income Share of U.S. Top 1% (Reich, 2013) & 3b Reich notes that the two peaks look like a suspension bridge, with highs followed by precipitous drops. (Original Source: Piketty & Saez, 2003) ..."
"... Paying for policy favors ..."
"... Removing constraints on dangerous behavior ..."
"... Increasing the public's vulnerability ..."
"... Increasing their own intake ..."
"... financial intermediaries. ..."
"... Or Ben Bernanke in his book "The Courage to Act": "Money is fungible. One dollar is like any other". ..."
"... "I adapted this general idea to show how, by affecting banks' loanable funds, monetary policy could influence the supply of intermediated ..."
"... no longer depend exclusively on insured deposits for funding, nondeposit sources of funding are likely to be relatively more expensive than deposits" ..."
"... The first channel worked through the banking system By developing expertise in gathering relevant information, as well as by maintaining ongoing relationships with customers, banks and similar intermediaries ..."
"... and thus hurt borrowers" (Bernanke [1983b]). ..."
"... A herding started by William McChesney Martin Jr, that thought "banks actually pick up savings and pass them out the window, that they are intermediaries ..."
"... obviously not so in any human activity. ..."
"... We believe Regenerative Economics can provide a unifying framework capable of galvanizing a wide array of reform groups by clarifying the picture of what makes societies healthy. But, this framework will only serve if it is backed by accurate theory and effective measures and practice. This soundness is part of what Capital Institute and RARE are trying to develop. ..."
"... haha, unfortunately it's the apex predator species that is in danger of sudden extinction as its prey declines. Of course the Darwinian analogy doesn't hold up well because Darwinian selection works on all individuals of a species without distinction. A much better analogy is a rigged game. ..."
Feb 20, 2017 | www.nakedcapitalism.com
According to a recent study by Oxfam International, in 2010 the top 388 richest people owned as much wealth as the poorest half of the world's population– a whopping 3.6 billion people. By 2014, this number was down to 85 people. Oxfam claims that, if this trend continues, by the end of 2016 the top 1% will own more wealth than everyone else in the world combined. At the same time, according to Oxfam, the extremely wealthy are also extremely efficient in dodging taxes, now hiding an estimated $7.6 trillion in offshore tax-havens.[3]

Why should we care about such gross economic inequality?[4] After all, isn't it natural? The science of flow says: yes, some degree of inequality is natural, but extreme inequality violates two core principles of systemic health: circulation and balance.

Circulation represents the lifeblood of all flow-systems, be they economies, ecosystems, or living organisms. In living organisms, poor circulation of blood causes necrosis that can kill. In the biosphere, poor circulation of carbon, oxygen, nitrogen, etc. strangles life and would cause every living system, from bacteria to the biosphere, to collapse. Similarly, poor circulation of money, goods, resources, and services leads to economic necrosis – the dying off of large swaths of economic tissue that ultimately undermines the health of the economy as a whole.

In flow systems, balance is not simply a nice way to be, but a set of complementary factors – such as big and little; efficiency and resilience; flexibility and constraint – whose optimal balance is critical to maintaining circulation across scales. For example, the familiar branching structure seen in lungs, trees, circulatory systems, river deltas, and banking systems (Fig. 1) connects a geometrically constant ratio of a few large, a few more medium-sized, and a great many small entities. This arrangement, which mathematicians call a fractal, is extremely common because it's particular balance of small, medium, and large helps optimize circulation across different levels of the whole. Just as too many large animals and too few small ones creates an unstable ecosystem, so financial systems with too many big banks and too few small ones tend towards poor circulation, poor health, and high instability.

In his documentary film, Inequality for All, Robert Reich uses virtuous cycles to clarify how robust circulation of money serves systemic health. In virtuous cycles, each step of money movement makes things better. For example, when wages go up, workers have more money to buy things, which should increase demand, expand the economy, stimulate hiring, and boost tax revenues. In theory, government will then spend more money on education which will increase worker skills, productivity and hopefully wages. This stimulates even more circulation, which starts the virtuous cycle over again. In flow terms, all of this represents robust constructive flow, the kind that develops human and network capital and enhances well-being for all.

Of course, economies also sometimes exhibit vicious cycles, in which weaker circulation makes everything go downhill – i.e., falling wages, consumption, demand, hiring, tax revenues, government spending, etc. These are destructive flows, ones that erode system health.

Both vicious and virtuous cycles have occurred in various economies at various times and under various economic theories and policy pressures. But, for the last 30 years, the global economy in general and the American economy in particular has witnessed a strange combination pattern in which prosperity is booming for CEOs and Wall Street speculators, while the rest of the economy – particularly workers, the middle class, and small businesses – have undergone a particularly vicious cycle. Productivity has grown massively, but wages have stagnated. Consumption has remained reasonably high because, in an effort to maintain their standard of living, working people have: 1) added hours, becoming two-income families, often with two and even three jobs per person; and 2) increased household debt. Inequality has skyrocketed because effective tax rates on the 1% have dropped (notwithstanding a partial reversal under Obama), while their income and profits have risen steeply.

We should care about this kind of inequality because history shows that too much concentration of wealth at the top, and too much stagnation everywhere else indicate an economy nearing collapse. For example, as Reich shows (Figure 1a & b), both the crashes of 1928 and 2007 followed on the heels of peaks in which the top 1% owned 25% of the country's total wealth.

Fig. 3a Income Share of U.S. Top 1% (Reich, 2013) & 3b Reich notes that the two peaks look like a suspension bridge, with highs followed by precipitous drops. (Original Source: Piketty & Saez, 2003)

What accounts for this strange mix of increasing concentration at the top and increasing malaise everywhere else? Putting aside the parallels to 1929 for a moment, most common explanations for today's situation include: the rise of technology which makes many jobs obsolete; and globalization which puts incredible pressures on companies to lower wages and outsource jobs to compete against low-wage workers around the world.

But, while technology and globalization are clearly creating transformative pressures, neither of these factors completely explains our current situation. Yes, technology makes many jobs obsolete, but it also creates many new jobs. Yet, where the German, South Korean and Norwegian governments invest in educating their workforce to fill those new jobs, the American government has been cutting back on education for decades. A similar thought holds for globalization. Yes, high-volume industrialism – that is, head-to-head competition over price of mass-produced, uniform goods – leads to a race to the bottom; that's been known for a long time. But in The Work of Nations (2010), Robert Reich also points out that the companies that are flourishing through globalization and technology are ones pursuing what he calls high-value capitalism, the high-quality customization of goods and services that can't be duplicated by mass-produced uniformity at cheap places around the world.

So, while the impacts of globalization and technology are profound, the real explanation for inequality lies primarily with an economic belief that, intentionally or not, serves to concentrate wealth at the top by extracting it from everywhere else. This belief system is called variously neoliberalism, Reaganomics, the Chicago School, and trickle-down economics. It is easily recognized by its signature ideas: deregulation; privatization; cut taxes on the rich; roll back environmental protections; eliminate unions; and impose austerity on the public. The idea was that liberating market forces would cause a rising tide that lifted all boats, but the only boat that actually rose was that of the .01%. Meanwhile, instability has grown.

The impact this belief system has had on the American economy and its capacities can be seen in American education. Trickle-down theories are all about cutting taxes on the wealthy, which means less money for public education, more young people burdened with huge college debt, and fewer American workers who can fill the new high-tech jobs.

To be fair, this process is not just about greed. Most of the people who participate in this economic debacle do not realize its danger because they believed what they were told by the saints and sages of economics, and many are rewarded for following its principles. So, what really causes the kind of inequality that drives economies toward collapse? The basic answer from the science of flow is: economic necrosis. But, let me flesh out the story.

Institutional economists talk about two main types of economic strategies: extractive and solution-seeking. (Hopefully, these names are self-explanatory.) Most economies contain both. But, if the extractive forces become too powerful, they begin to use their power to rig the rules of the economic game to favor themselves. This creates what scientists call a positive feedback loop, one in which "the more you have, the more you get." Seen in many kinds of systems, this loop creates a powerful pull that sucks resources to the top, and drains it away from the rest of the system causing necrosis. For example, chemical runoff into the Gulf of Mexico accelerates algae growth. This creates an escalating, "the more you have, the more you get" process, in which massive algae growth sucks up all the oxygen in the surrounding area, killing all of the nearby sea life (fish, shrimp, etc.) and creating a large "dead zone."

Neoliberal economics set up a parallel situation by allowing the wealthy to use their money to extract ever more money from the overall economy. The uber-wealthy grow wealthier by:

All of these processes help the already rich concentrate more, and circulate less. In flow terms, therefore, gross inequality indicates a system that has: 1) too much concentration and too little circulation; and 2) an imbalance of wealth and power that is likely to create ever more extraction, concentration, unaccountability, and abuse. This process accelerates until the underlying human network becomes exhausted and/or the ongoing necrosis reaches a point of collapse. When this point is reached, the society will have three choices: learn, regress, or collapse.

What then shall we do? Obviously, we need to improve our "solution seeking" behavior in realms from business and finance to politics and media. Much of this is already taking place. From socially-responsible business and alternative forms of ownership, to democratic reform groups, alternative media, and the new economy movement – reforms are arising on all sides.

But, the solutions we need are also often blocked by the forces we are trying to overcome, and impeded by the massive merry-go-round momentum of "business as usual." Today's reforms also lack power because they are taking place piecemeal, in a million separate spots with very little cross-group unity.

How do we overcome these obstacles? The science of flow offers not so much a specific strategy, as an empowering change of perspective. In essence, it provides a more effective way to think about the processes we see every day.

The dynamics explained above are very well known; they are basic physics, just like the law of gravity. Applying them to today's economic debates can be extremely helpful because the latter have devolved into ideological debates devoid of any scientific foundation.

We believe Regenerative Economics can provide a unifying framework capable of galvanizing a wide array of reform groups by clarifying the picture of what makes societies healthy. But, this framework will only serve if it is backed by accurate theory and effective measures and practice. This soundness is part of what Capital Institute and RARE are trying to develop.

55 0 0 3 11 This entry was posted in Banana republic , CEO compensation , Doomsday scenarios , Economic fundamentals , Guest Post , Income disparity , The destruction of the middle class on February 18, 2017 by Yves Smith . Subscribe to Post Comments 69 comments Disturbed Voter , February 18, 2017 at 6:18 am

System Dynamics of Steve Keene is clearly more useful than equilibrium dogma. He predicted the 2008 crash, though I think he was only lucky .. modeling is always only good for interpolation, never for extrapolation, unless you are lucky enough to only be dealing with linear changes over time.

Spencer , February 18, 2017 at 7:02 am

POSTED: Dec 13 2007 06:55 PM |
The Commerce Department said retail sales in Oct 2007 increased by 1.2% over Oct 2006, & up a huge 6.3% from Nov 2006.
10/1/2007,,,,,,,-0.47,,,,,,, -0.22 * temporary bottom
11/1/2007,,,,,,, 0.14,,,,,,, -0.18
12/1/2007,,,,,,, 0.44,,,,,,,-0.23
1/1/2008,,,,,,, 0.59,,,,,,, 0.06
2/1/2008,,,,,,, 0.45,,,,,,, 0.10
3/1/2008,,,,,,, 0.06,,,,,,, 0.04
4/1/2008,,,,,,, 0.04,,,,,,, 0.02
5/1/2008,,,,,,, 0.09,,,,,,, 0.04
6/1/2008,,,,,,, 0.20,,,,,,, 0.05
7/1/2008,,,,,,, 0.32,,,,,,, 0.10
8/1/2008,,,,,,, 0.15,,,,,,, 0.05
9/1/2008,,,,,,, 0.00,,,,,,, 0.13
10/1/2008,,,,,,, -0.20,,,,,,, 0.10 * possible recession
11/1/2008,,,,,,, -0.10,,,,,,, 0.00 * possible recession
12/1/2008,,,,,,, 0.10,,,,,,, -0.06 * possible recession
Trajectory as predicted:
BERNANKE SHOULD HAVE SEEN THIS COMING. IN DEC. 2007 I COULD.

Disturbed Voter , February 18, 2017 at 10:39 am

With a simple spreadsheet projection of flows one can see a lot, without fancy mathematics, using just simple difference equation models, even models that display cyclical behavior. For example, with any internal software development, the quantity of legacy applications increase as they are created, unless retirement of legacy applications is more rapid.

More often replacement occurs, rather than actual retirement. But retirement of legacy applications is harder than you might think, because of real dependency one can't retire them by fiat. The cost of maintaining legacy applications, isn't zero. So with a fixed software development/maintenance budget, the percentage of expenditures to legacy applications approaches saturation, even without figuring in the cost of replacement (similar to the rolling over of loans vs retiring of loans). Short term maintenance using patches, can only continue for so long, eventually wholesale replacement is necessary.

Usually the only way to retire a legacy application is to produce a newer and more expensive application, that itself has higher maintenance costs. We dig the problem well deeper. Thus the exponential decay of funds available for new development, or replacement development, not only strangles new initiatives, but even strangles the ability to maintain operations long term. That is why there are still millions of lines of Cobol still working every day.

There is no free lunch, entropy reigns unless countered by new forms of initiative. Usually the end result is an extension and dilution of the problem, which then resumes decay on a larger scale. This is what happens with the attempt to allay insurance costs by ever larger pools, but there is a limit to the size of the pool, once that limit is reached, the gambit no longer works. Long term problems overwhelm short term solutions.

Generalfeldmarschall von Hindenburg , February 18, 2017 at 1:28 pm

That's Joseph Tainters rap if I remember it right.

Disturbed Voter , February 18, 2017 at 1:33 pm

An exponentially increasing real economy covers all sins. In absence of that, an exponentially increasing debt economy covers all sins, temporarily because interest has a way of catching up with you. See Greece.

Mattski , February 18, 2017 at 6:38 pm

"An exponentially increasing real economy covers all sins." Not if you're Mother Nature–or maybe only for another 10-40 years.

kimsarah , February 18, 2017 at 9:17 pm

Banks turned off the money spigot to developers by the start of '07, if I recall. Developers and policy makers knew then there was a recession, but the public was kept in the dark. After the market crash, the consumers were punished instead of the Wall Street looters.

John , February 19, 2017 at 7:23 am

The only people who predicted the crisis were a handful of post-Keynesians and Marxists. I'm more familiar with the work of the latter, but for them it wasn't luck. They identified structural problems with the economy that could not be fixed by simply utilizing stabilizers (fiscal/monetary policy) and knew a massive crisis would occur once the bubbles popped and exposed the real economy's underlying weakness. Some believed that this crisis was the result of the tendency of the rate of profit to fall and simultaneous downturns in the business cycle and the profit cycle. I think the more convincing view is that low profit rates in the manufacturing sector caused by a global crisis of overproduction/under-utilization of capacity has meant that the real economy has been weak since the 70's and that growth since then has come from asset bubbles (Japanese real estate in the 80's, US stock market in the 90's, US real estate in the 00's). These are problems that no amount of fiscal stimulus can fix in the long run.

Spencer , February 18, 2017 at 6:58 am

The author briefly touched on it. It's ALL about the circular flow of savings. And the flow's stopped beginning in 1981, though really in 1966 (also Larry Summer's start of secular strangulation). That's why N-gDp decelerated and there was a 35 year bull market in bonds.

You have to retain the capacity, like Albert Einstein, to hold two thoughts in your mind simultaneously – "to be puzzled when they conflicted, and to marvel when he could smell an underlying unity". "People like you and me never grow old", he wrote a friend later in life. "We never cease to stand like curious children before the great mystery into which we were born".

The smartest man to walk on earth was Leland Pritchard, Ph.D. Chicago, 1933, Economics, MS, Syracuse, statistics.

All bank-held savings originate, and are impounded and ensconced, within the commercial banking system. Say what? Yes, the CBs do not loan out existing deposits, saved or otherwise. The CBs always create new money whenever they lend/invest (loans + investments = deposits). Thus bank-held savings are un-used and un-spent. They are lost to both consumption and investment. From the standpoint of an individual bank, the institution is an intermediary (micro-economics), however, from the standpoint of the collective system of member banks (macro-economics), the institution is a deposit taking, money creating, financial institution, DFI.

The upshot is profound. The welfare of the CBs is dependent upon the welfare of the non-banks (the CB's customers). I.e., money (savings) flowing through the NBs never leaves the CB system. Consequently the expansion of "saved" deposits, in whatever deposit classification, adds nothing to a total commercial bank's liabilities, assets, or earning assets (nor the forms of these earning assets). And the cost of maintaining interest-bearing deposit accounts is greater, dollar for dollar, than the cost of maintaining non-interest-bearing demand deposits. Interest collectively for the commercial banking system, is its' largest expense item (and thus its' size isn't necessarily synonymous with its profitability).

This is the source of the pervasive error (and our social unrest, e.g., higher murder rates), that characterizes the sui generis Keynesian economics (the Gurley-Shaw thesis), that there is no difference between money and liquid assets.

Spencer , February 18, 2017 at 7:34 am

The CBs & NBs have a symbiotic relationship. And so do the have's and have not's. Unless the upper quintile's savings are expeditiously activated, a corrosive degenerative economic impact is subsequently fostered.

The Golden Era in U.S. economics (Les trente glorieuses) was where democratized pooled savings were expeditiously activated (put back to work) and matched with real-investment, non-inflationary, outlets by the thrifts, MSBs, CUs, and S&Ls (principally investments in long-term residential mortgages). And in the good ol days, we had gov't incentivized, FSLIC safety nets for non-bank conduits. Now we only have FDIC safety nets for the commercial bank clientele (which further retards savings velocity).

I.e., "risk on" is not higher FDIC insurance coverage (the FDIC formally modified the assessment base in 2011 to include all bank liabilities – which along with the LCR, contracted the E-$ market), not increased Basel bank capital adequacy provisioning (which literally destroys the money stock), not an increased FDIC assessment fee on 1/1/2007, or 4/1/2009, or 4/1/2011, or an increased churn in speculative stock purchases (the transfer of ownership in existing assets).

digi_owl , February 18, 2017 at 7:39 am

"uses recent scientific advances – specifically, the physics of flow[2″

Ye deities

craazyman , February 18, 2017 at 7:53 am

This post laudably critiques wealth inequality, but it suffers from the "Newtonia Delusion" that confuses economic thought in general through metaphorical malapropism.

Physcial systems possess a determinism and time-invariant structure that enables mathematical modelling. Economic systems are cultural artificacts that are not time-invariant. Money is a cultural construct, a form of social imagination and lacks any sort of deterministic attributes. Newtonian metaphors of flow and accumulation restrict analytical illlumination even though they enable quick and simple calculation.

Money is only one form of a "coordinate system" that enables the measurement of forms of social interaction and cooperation. And it's one-dimensional. This makes it useful given its parsimonious simplicity but it badly restricts complete explanatory power. Physicists know the choice of a coordinate systems influences measurements of phenomenon, and they developed math techniques to neutralize that influence - I think use of tensors in relativity is one example. Economics relies on "money" and resultant ideas of "growth" or 'recessionn" because that's all it knows how to do.

First, what does "collapse" mean in the context of the post. The word is vague, undefined and subject to a multitude of interpretations - that's not "scientific" at all. "Wealth" is also vague. Presumably it means possession of assets that can be converted into money, so in effect is uses "money" as a sole coordinate basis, and that's reasonable as a form of dimensional reduction, but it fails to measure the implied asset value of any sort of social safety net available to those without assets. That's no rationale for inequality - and anybody wants a job more than a safety net - but it's a logical flaw. Third, the nature of economic structures and cultural relations isn't easily quantifiable or translateable into money; living in a just, fair and inclusive society has an intrinsic value that defies easy measurement through the "money basis". Measuring relies instead on application of a sense of justice and honest sensibility.

It would be bettter to start analysis with a non-monetary vision of the social rights any citizen of a community should have access to. This form of thinking in fact was the normal and dominant form over most of human history, when people lived in non-monetary tribal structures. And what their implied responsibilities are to gain that accesss. Use that as a time-invariant basis and then introduce money but only as one method of measurement of economic change, there could be other social indicators that might be used as coordinate systems too; use of these could result in very different measurements of ecoonomic phenomeenon than result with the money basiis. That would force the sort of thinking that's required for analytical clarity and ompleteness, but that doesn't exist in economics

(See I can bang out a comment that doesn't mention jungle boogie butts or hot women! Calling women hot isn't bad, as long as it's respectful and flattering and inclusive. Women in general are hot! What do you want? to live in a world full of gay guys or what? Hahaha. Sorry I can't help it.)

Steve H. , February 18, 2017 at 11:46 am

Turchin has been working on proxies, to get some measures of well-being and political instability. One measure of social rights could be the right to live, so life expectancy could be used. Dead is dead and is a hard number. Chicago police historically have a different criteria of what my rights are than I do, so the ecological measures can avoid such definitional fuzziness.

Another Turchin point relevant to the post is that in-group variance is only meaningful used as a multiplier of in-group selection, and in context of other groups. Extreme inequality does not necessarily cause economic collapse, and coherent elites consistently crush popular revolts. The "the more you have, the more you get" feedback loop can also be seen as a consolidation and success of a certain trait ("rich"), and a re-sort of within-group dynamics (national citizenry) to between-group dynamics (haves & nots).

(Also, economics does not concern itself with ompleteness, as rational actors cannot be omplete, and an agent who is omplete often withdraws from economic systems.)

Vedant Desai , February 18, 2017 at 1:03 pm

I believe that biggest problem in economics is not the dogma created by money(though its a problem of Course) , but rather biggest problem is lack of a clearly defined goal. "Economic development" ,which is generally termed as goal of economics , is very ambiguous and this ambiguity is creating problems.

susan the other , February 18, 2017 at 1:51 pm

Thanks Craazy – that was very coherent. more please.

UserFriendly , February 18, 2017 at 2:28 pm

Physcial systems possess a determinism and time-invariant structure that enables mathematical modelling. Economic systems are cultural artificacts that are not time-invariant.

Very, very few physical systems involve time invariant modeling. Almost every physical system represented by a mathematical model describes how that system changes with time. Otherwise it wouldn't be a very useful model. Few things can be said to be at steady state and even when they are it is usually a simplification, not an outgrowth of time invariance. For example a chemical reaction A + B-> C at rate k1 and C -> A + B at rate k2 is said to be at equilibrium (steady state) when k1=-k2. Even at steady state the reaction is proceeding in both directions and can be thrown out of equilibrium by a change in concentration, temperature, volume, or any host of other factors. After the shock the system will again tend towards an equilibrium but there is no requirement that the new equilibrium be the same as the last one. And all the equations that describe how we went from equilibrium 1 to 2 all involve time. Neoclassical morons obsessed with equilibrium seam to be confused by this and assume time is irrelevant and that full employment will always return.

Economists are pretty much the only people I see that try to use time invariant models. I think it is a great step forward that economists like Keen have been trying to use the full spectrum of time variant models. The fact that the models are relatable to models of other physical systems is more an outgrowth of calculous than anything else.

craazyman , February 18, 2017 at 3:06 pm

I actually was out today doing stuff & plan to go star gazing tonite!

What I meant is the equations that map the movement of the moon and planets or heat diffusion or chemical reactions or sound propagation worked in November 1887 the same way they'll work in July 2020.

Of course experimental measurements change through time, depending on the phenomenon being measured. But the natural phenomenon modeled by the equations themselves are time invariant as are the equations, or science wouldn't work. That's why they're called natural laws.

UserFriendly , February 18, 2017 at 4:17 pm

Ah. You mean Frame Invariant , not time invariant.

craazyman , February 18, 2017 at 4:55 pm

Timeframe invariant! :-)

H. Alexander Ivey , February 19, 2017 at 3:25 am

Now wait a minute here. While I appreciate getting my terms correct and such – frame invariant, yeah, that's what I need to know – craazyman is a gift not to be distracted or encouraged wrongly. Yes, his posting clarified the great lie of most economic theory and its teaching and modeling, but his calling is greater than that. "jungle boogie butts or hot women" are rare on this site and should not be lightly diverted. Not that I'm implying that our hostess or commentators of the female persuasion aren't "hot women" or that jungle boogie butts aren't finance, economics, politics, or power, but based on past personal history, if I tried a craazyman, or even a craazyboy, posting, I would be forever marked as hopeless.

Ruben , February 19, 2017 at 12:36 am

Physical systems can be time-variant in that way too, it's called a regime shift. We have observed that in several real natural systems. In some cases apparent randomness actually is very complicated but fully deterministic dynamics. Look up "bifurcation diagram". Mathematical analysis can deal with that too.

Instead of the monetary system and flow, the analysis of human populations, including the production and exchange of the fruits of their labour, should start with the amount of cooperation as the driving variable (or coordinate as you prefer to say)?

Thanks for the thought-provoking post.

Sam F , February 18, 2017 at 8:01 am

Odd that education investment is shown in the article as part of the loop between employment and consumer spending. That is a very slow regenerative path compared with the direct effect of employment, spending, and labor demand.

The article wastes time extolling circulation merely because it resembles that in natural systems such as tigers, but these do not necessarily serve human interests. It benefits most people simply because they need the inputs and outputs.

oho , February 18, 2017 at 9:10 am

>>> But this sounds an awful lot like a new improved version of system dynamics,

One of the board members from Capital Institute (sounds like the "Human Fund") is from Soros-backed the Institute for New Economic Thinking.

And Soros loves reflexivity, which is basically repackaged system dynamics.

not being aluminum foil-y. just interesting how Soros has his fingers in so many pots.

http://capitalinstitute.org/board/

oho , February 18, 2017 at 9:12 am

just institute a progressive tax on bank assets above-say-$700 billion. would literally only affect a handful of banks and do much to rein in the seize of the megabanks.

oh wait, all these banks are blue state banks (JPM, C, WFC, BAC) and friends w/Schumer, Pelosi and Uncle Warren owns big chunks in WFC and AXP.

Sound of the Suburbs , February 18, 2017 at 9:41 am

Capitalism is a balance between supply and demand but we only put in half a system.

1) Money at the top is mainly investment capital as those at the top can already meet every need, want or whim. It is supply side capital.

2) Money at bottom is mainly consumption capital and it will be spent on goods and services. It is
demand side capital.

Marx noted the class struggle between the two sides that neither can win, to do so destroys the system, either supply or demand will cease to exist.

The balance has yet to be recognised and we flick between the two sides until everything crashes into the end stops.

Before the 1930s – Supply Side, Neoclassical Economics

By the 1920s, productivity has reached a stage where supply exceeds demand and extensive advertising is required to manufacture the demand for the excess supply.

Taxes are lowered on the wealthy and there is an excess of investment capital which pours into the US stock market. The banks get in on the act and use margin lending to fuel this boom in US stocks.

There is a shortage of consumption capital and the necessary consumption can only be maintained with debt.

1929 – Wall Street Crash

The investment capital was used to blow an asset bubble and not for productive investment, it all ends in tears. The Great Depression is the debt deflation that follows from an economy saturated with debt.

After the 1930s – Demand Side, Keynesian Economics

The New Deal starts the turnaround of the US economy and after the Second World War there is the Golden Age of the 1950s and 1960s. Redistributive capitalism looks after the demand side of the equation.

With the target of full employment, the unions start to abuse their power and by the 1970s we enter into stagflation. There is a shortage of investment capital and demand exceeds supply leading to inflation, there is not enough investment capital to redress the balance.

After the 1980s – Supply Side, Neoclassical Economics

Taxes are lowered on the wealthy and there is an excess of investment capital which pours into various different asset classes and the first round of crashes occur in the late 1980s. Leading to an early 1990s recession.

There is a shortage of consumption capital and the necessary consumption can only be maintained with debt.

After the early 1990s recession the speculative, investment capital look for another bubble to blow and finds the new dot.com companies.

Housing booms take off around the world, a speculative bubble for everyone to get involved with and the UK and Japan have already been through their first boom/bust by 1989.

Wall Street get's into 1920s mode and leverages up the speculative bubble that is occurring there.

2008 – Wall Street Crash

The West is laid low and growth is concentrated in the East but they start to use debt to keep things running.

Even with the Central Banker's best efforts the global economy falls into the new normal of secular stagnation, the debt repayments are a constant drag on the global economy.

2017 – World's eight richest people have same wealth as poorest 50%

All that investment capital with almost nowhere to invest due to the lack of demand.

We just swing from the supply side, to the demand side and back again until we crash into the end stops.

We could recognise the system requires a balance between supply and demand.

Jabawocky , February 18, 2017 at 1:58 pm

An interesting idea, which adds economics itself to the dynamics of the economic system.

susan the other , February 18, 2017 at 2:14 pm

a balance in real time, not over decades with crashes and booms harder to do globally than nationally which is prolly why nationalism is rising it was China imploding c. 2008 that brought the growth of the global economy to a stop, I read somewhere .anyway the growth-forever premise of globalism was nuts. Not even the push for austerity by the neoliberals could make the required adjustments – and not for lack of trying. Yes a new balance (good shoes ;-) is what we need. One that understands the old saying 'form follows function' and create a functioning economy, the scaffold of a new sustainable human society. One in which banking actually follows the economy.

Sound of the Suburbs , February 18, 2017 at 5:39 pm

Bankers should be servants of the real economy and nothing more.

flow5 , February 19, 2017 at 11:28 am

It's not a math error, it's an accounting error. It wasn't precipitated as Alan Greenspan pontificated in his book "The Map and the Territory", viz., FDR's Social Security Act. It wasn't Nixon who introduced "indexing". It wasn't because from 1959 to 1966 the federal gov'ts net savings was in a rare surplus. It wasn't because between 1965 & 2012 total gross domestic savings (as a percent of gDp) declined from 22% to 13% (9 percentage points).

No, the New York Times sobriquet, the "Three-Card Maestro's" error, like all other Keynesian economists, is the macro-economic persuasion that maintains a commercial bank is a financial intermediary (conduit between savers and borrowers matching savings with investment):

Greenspan: "Much later came the evolution of finance, an increasingly sophisticated system that enabled savers to hold liquid claims (deposits) with banks and other financial intermediaries. Those claims could be invested by banks in in financial instruments that, in turn, represented the net claims against the productivity enhancing tools of a complex economy. Financial intermediation was born"

Or Ben Bernanke in his book "The Courage to Act": "Money is fungible. One dollar is like any other".

"I adapted this general idea to show how, by affecting banks' loanable funds, monetary policy could influence the supply of intermediated credit" (Bernanke and Blinder, 1988)."

For example, although banks and other intermediaries no longer depend exclusively on insured deposits for funding, nondeposit sources of funding are likely to be relatively more expensive than deposits"

The first channel worked through the banking system By developing expertise in gathering relevant information, as well as by maintaining ongoing relationships with customers, banks and similar intermediaries develop "informational capital."

"that the failure of financial institutions in the Great Depression increased the cost of financial intermediation and thus hurt borrowers" (Bernanke [1983b]).

A herding started by William McChesney Martin Jr, that thought "banks actually pick up savings and pass them out the window, that they are intermediaries in the true sense of the word."

From the standpoint of an individual bank (micro-economics), a bank is an intermediary, however, from the standpoint of the entire economy, the system process (macro-economics), a bank is a deposit taking, money creating, financial institution.

The promulgation of commercial bank interest rate deregulation (banks introducing liability management, buying their liquidity, instead of following the old fashioned practice of storing their liquidity), i.e., the removal of Reg. Q ceilings (the non-banks were already deregulated until 1966), by the oligarch – the ABA, (public enemy #1), or an increasing proportion of time to transaction deposits liabilities within the DFIs, metastasized stagflation and secular strangulation. Remunerating IBDDs exacerbates this phenomenon (as subpar R-gDp illustrates).

I.e., every time a commercial bank buys securities from, or makes loans to, the non-bank public it creates new money – deposit liabilities, somewhere in the system. I.e., deposits are the result of lending, and not the other way around. Bank-held savings are un-used and un-spent. They are lost to both consumption and investment. Unless savings are expeditiously activated outside of the system (and all savings originate within the payment's system), thru non-bank conduits, said savings exert a dampening economic impact (destroying saving's velocity & thus AD). I.e., savings flowing thru the non-banks, never leaves the CB system.

LT , February 19, 2017 at 12:28 am

I've never believed a country joining the casino economy was a sign of strength.

Sound of the Suburbs , February 19, 2017 at 5:36 am

Debt based consumption is always unsustainable, people max. out on debt.

Greece was happy with debt based consumption until it maxed. out on debt.

Anything that relies on debt based consumption in the long term can only fail.

Neoliberalism relies on debt based consumption, it works until it doesn't.

witters , February 18, 2017 at 5:36 pm

"With the target of full employment, the unions start to abuse their power."

Yeah, sure.

Actually full employment is experienced by capital as an abuse of its power.

Here is Kalecki in 1943 explaining beforehand how this generates neoliberalism.

http://delong.typepad.com/kalecki43.pdf

tongorad , February 18, 2017 at 6:18 pm

Yes, I'd like to see what this abuse of union power looked like. Any evidence of this?
Landlords and bosses were reduced to beggars?

PhilM , February 18, 2017 at 10:13 am

Craazyman says it all, but I have to say it too, just for my own mental health.

How often do social "scientists" have to make this same mistake? Biology is not physics, and human society is biology, and economics is not even close to accurately describing human society, not even the economics part of it.

Equilibria are achieved, and thermodynamic laws obeyed, on much greater and on much smaller scales than an economy, which is not even a system, per se. Life is anti-entropic, but the universe, the solar system, is not. Communities are not "social networks." Terry Pratchett as usual brings common sense to bear on metaphors like this. Metaphor, you know, using words to convey something like the truth, but not exactly: "Oh, so it's a lie, then."

Vedant Desai , February 18, 2017 at 12:50 pm

How economy is not a system?

Jabawocky , February 18, 2017 at 2:07 pm

You have just lost me. Of course economics is a complex system but it is a system nonetheless. Wynne Godley's sectoral balance model is an excellent example of a systems approach to economics, and it's precisely the systems peoperties that attract me to it. MMT is a systems approach by design and easily approached mathematically in that way if desired. I have often considered how I would do it but no doubt there is someone more able to do it than me.

The bonus of a systems approach would be the possibility of a multitude of possible equilibrium states, some could be fixed, some oscillatory if they include feedback with delay.

The author could also consider adding futile cycles to her list of cycles, long recognised by biochemists.

PhilM , February 19, 2017 at 4:10 am

Craazyman says it above. A "system of pulleys" is a system. A "solar system" is a system. A galaxy, a liter of sodium bicarbonate solution under defined temperature and pressure conditions, these are systems. How is "economics" a system? What is it even a system of? Can you define the parameters of even one of the aspects of economics in some way that does not "leak energy" through every other aspect of human activity, which is not accounted for in some way by the "system" of economics? You can try, but you can't do it. That is why economics is scientific just like astrology: it describes and explains everything, but its only prediction is more jobs for its practitioners.

Foppe , February 19, 2017 at 6:28 am

There are "closed" and "open" systems. The behavior of the former can be modeled and understood; the latter, less so (possible only to some extent, and heavily dependent on the intellectual framework that you bring to the table).

Jabawocky , February 19, 2017 at 7:24 am

My experience is opposite. Usually in systems approaches most of the detail can be ignored until it becomes important. They do not require knowing the details of the system, instead they try to simplify as far as is practical. Systems approaches attempt to infer micro from gross macro behaviour. This is fundentally opposite to orthodox economics. Godley's model illustrates this well. You don't need to know details about every transaction because parameters for aggregated transactions can be inferred from macro data. You don't need to assume anything about motivations of individuals or firms, but if necessary you could try to infer them.

PhilM , February 19, 2017 at 12:28 pm

I clearly need to go and do reading on open systems, because understanding them makes for a richer intellectual life, like poetry, or skimming rocks. For me, the chafing starts when people try to apply a rigorous, mathematically based scientifically accepted reproducible set of theories like those of fluid dynamics (itself by no means fully elaborated) to a field where the described system cannot be even be defined by consensus.

What, for instance, exactly constitutes an "economic system," or a "system of economics," or an "economy"? Where is the universally accepted definition of something even as basic as money, a definition with scientific reliability, like the definition of an atom in 1930? They just aren't there. You can tell me yours, but it will not be the same as his, or hers. If real scientists behaved that way, there could be no breakthroughs: without a definition, there is nothing even solid enough to break through.

And by scientific, I just have to fall back on Popper, however old-fashioned that may seem. The propositions of economics, like those of astrology and sociology, and also of human nutrition, and so many other fields flogged by their practitioners, remain unaccompanied by experimental methodologies that result in reliable predictions of reproducible results. They are therefore prolific with unfalsifiable claims. They are, therefore, fraudulent at worst and noisy at best, at a time where the direction of the public discourse is increasingly controlled by central authorities with agendas. A signal among the noise is harder and harder to distinguish without the further impediment of additional publish-or-perish verbiage which will be, more often than not, weaponized by an interest group, if that was not actually the reason for its creation to begin with.

Systematizers of non-scientific systems are either virtuous "pre-scientists" or frauds. What they claim as the wider social value of their work is the discriminating test. Alchemy and astrology of yore ultimately evolved into chemistry and astronomy, without actually contributing much information as such: but without the need to make magic or gold from powders, alembics, crucibles, and retorts, those tools moved into hands directed by serious, patient minds, where they produced useful and reliable information. (Not that circus entertainment, handwaving, and noise were not great disseminators and motivators of science, and remain so today!)

Until the dynamics of human society and psychology have been fully described by anthropology, there will not be a "fundamental atomic theory" for Economics to use to underpin its scientific pretensions. It still rests completely on demonstrably untrue assumptions, rules that can be proven not to apply to human behavior. Most recently, the use of the "normal curve" as generally applicable to economic "systems," because of its near-universal employment in statistics, had catastrophic results. This was easily predicted by anyone who has worked with the normal curve; the Central Limit Theorem that underpins the normal curve assumes that the assembled variables are independent, not related functions of each other; and this is obviously not so in any human activity. So much of the use of the normal curve is nothing more than hand-waving hocus-pocus.

No serious reputable historian would claim any longer to be a scientist, and if he did, he would be no true Scotsman, either. But then, despite what I seem to be doing on these forums, neither would a professionally trained historian think to dictate public policy by appealing to the systematic rigor of his craft.

Economists today should modestly retreat from their claims to exercise any influence on public policy and direct their efforts elaborating a true science. I believe that may never happen; and I personally fear the unintended consequences that will result from the political use of the kind of knowledge about human motivations and collective activity that will be required to bring it about; maybe less, however, than I fear nuclear war or planetary desolation through aggressive environmental destruction, which may be the alternative outcomes to that kind of advance.

Bam_Man , February 18, 2017 at 10:16 am

"Flow Dynamics" of Money Supply are a BIG tell.
Velocity of MZM Money Supply (Money of Zero Maturity) is falling like a rock and at an ALL-TIME low.

flow5 , February 19, 2017 at 12:43 pm

Money velocity falls because more and more savings are impounded and ensconced within the payment's system. This started in 1981 with the plateau in deposit financial innovation, the widespread introduction of ATS, NOW, and MMDA accounts. Thus money velocity, formally a monetary offset, started decelerating dropping N-gDp with it (and producing the 35 year bull market in bonds).

This should be evident with the remuneration of IBDDs beginning in Oct. 2008. I.e., the 1966 S&L credit crunch is the economic paradigm and precursor (lack of funds, not their cost). The "complete evaporation of liquidity" on 8/9/2007 for BNP Paribas, "runs on ABCP money funds", "shortage of safe, liquid, assets", "the funding crunch forced fire sales", "efforts to replace funding that had evaporated in the panic", i.e., non-bank dis-intermediation (an outflow of funds or negative cash flow).

"Our goal was to increase the supply of short-term funding to the shadow banking system"
Ben Bernanke, August 10, 2007:

"Our goal is to provide liquidity not to support asset prices per se in any way. My understanding of the market's problem is that price discovery has been inhibited by the illiquidity of the subprime-related assets that are not trading, and nobody knows what they're worth, and so there's a general freeze-up. The market is not operating in a normal way. The idea of providing liquidity is essentially to give the market some ability to do the appropriate repricing it needs to do and to begin to operate more normally. So it's a question of market functioning, not a question of bailing anybody out."

I.e., Bankrupt u Bernanke doesn't know a credit from a debit. Bad Ben was solely responsible for the world-wide GR. My "market zinger" forecast of Dec. 2012 foretold of the expiration of unlimited transaction deposit insurance (putting savings back to work), not a "taper tantrum, not budget "sequestration".

Jesper , February 18, 2017 at 10:17 am

Seems like a sales-pitch to the 1% trying to convince the 1% that sharing would be good .. I have my doubts about that strategy, the 1% respects power and care very little (if anything at all) for the common good. Use the power of the many in an democracy and force through the needed changes.

Disturbed Voter , February 18, 2017 at 10:45 am

Continuing the model of a firm that requires software to function. If the executives of the firm keep taking expensive vacations at the expense of the firm, starving the software development/maintenance department of resources .. then even if there were no other systemic problems, the firm will fail (unless bailed out by a greater entity, as happened in 2008/2009). But in the end, who will be big enough, after we have extended the risk pool to the entire planet, to bail out the planet, from foolish management? I would suggest that the Roman Empire failed because it was unable to overcome either long term systemic trends, nor irresponsible management.

Robert NYC , February 18, 2017 at 11:11 am

Inequality is directly correlated to corruption and the U.S. has an exceeding corrupt political economy, hence the extreme inequality. Germany and Japan, to take two prime examples, are part of the same global system and are subject to the same forces, technology, corporate tax arbitrage strategies, etc but neither of them have any where near the inequality of the U.S. It's also worth noting they don't have financial grifters like Mitt Romney and Steven Schwarzman amongst their most esteemed citizens.

So yes, it is all pretty complicated but at the end of the day the U.S. is one of the most corrupt countries on Earth, certainly the most corrupt of the Western democracies so our problems are no surprise. All this talk about globalization, tax policy, education and technology are all distractions. And that doesn't even begin to touch on the subject of our monetary system which is at the root of the corruption.

Dick Burkhart , February 18, 2017 at 1:03 pm

Right on! – And the corruption is permitted, even encouraged, by the "greed is good" philosophical basis of mainstream economics, and the concentration of both media ownership and campaign finance and lobbying in the hands of the wealthy.

David , February 18, 2017 at 11:15 am

Yes, this does deserve some kind of award for expressing a simple idea in a pointlessly complicated way. When I was studying economics in the paleolithic era, we were taught about the "propensity to consume" – in other words the idea that the poorer you were the more of any extra income you would spend as opposed to save. So if you give everyone on the minimum wage 20% more, then they will probably put it straight back into the economy. If you give billionaires 20% more they probably won't. The more widely wealth is spread, the more of it will be spent. This isn't a scientific law, but it's an observation borne out by common sense.

Gman , February 19, 2017 at 4:06 am

Hallelujah!

Even Henry Ford, not exactly known for his altruism or philanthropy, knew it made sense to give his workers a significant rise so that they could afford the cars they were building for him.

Denis Drew , February 18, 2017 at 11:22 am

I can't read this whole post this morning - but - my one note tune: 6% labor union density in non-gov work is like 20/10 blood pressure : it starves every other healthy process - even while starving the employee herself.

Easy way back: if the 1935 Congress had intended (they didn't) to leave any criminal enforcement of NLRA prohibited union busting to individual states - Congress would not have had to change one word of the NLRA. States in fact were left to make any form of collective bargaining (NLRA connected or not) muscling an economic felony. There is no problem of federal preemption when the area has been left blank.

Nor may the fed force local labor down an impassable road to union organizing - because rules of road unenforceable and unenforced - when a First Amendment protected right is at stake. To state that clearly: the First Amendment is violated when government insists on a mode of action that dismembers freedom of economic association before it starts.

JEHR , February 18, 2017 at 12:07 pm

Sometimes metaphors bring clarity to a vision and sometimes metaphors befuddle: I am befuddled.

heresy101 , February 18, 2017 at 1:27 pm

I'll second that. He is either a scab and Pinkerton employee or provides a confused argument in support of unions?

Grebo , February 18, 2017 at 5:00 pm

I think he's saying more unions are needed, but the Federal Government left it up to the states to stop the union busting, which they have declined to do. The Feds can't enforce union membership or collective bargaining as that would violate the first amendment right to free association.

Denis Drew , February 18, 2017 at 8:50 pm

Let's try again - maybe it was too compressed

[cut-and-paste]
America should feel perfectly free to rebuild labor union density one state at a time - making union busting a felony. Republicans will have no place to hide.

Suppose the 1935 Congress passed the NLRA(a) intending to leave any criminal sanctions for obstructing union organizing to the states. Might have been because NLRB(b) conducted union elections take place local by local (not nationwide) and Congress could have opined states would deal more efficiently with home conditions - or whatever. What extra words might Congress have needed to add to today's actual bill? Actually, today's identical NLRA wording would have sufficed perfectly.

Suppose, again, that under the RLA (Railroad Labor Act - covers railroads and airlines, FedEx) - wherein elections are conducted nationally - that Congress desired to forbid states criminalizing the firing of organizers - how could Congress have worded such a preemption (assuming it was constitutionally valid)? Shouldn't matter to us. Congress did not!

Dick Burkhart , February 18, 2017 at 1:19 pm

"Renewable energy" is obviously the foundation of Regenerative Economics, simply because energy itself is the foundation of all economics (as well as of all life and of the "active" part of the universe). Yet all the focus on renewable energy in recent years has done little or nothing to stop escalating economic inequality.

I think a big thing missing from RARE is a theory and program for power. What we need are institutional values and structures that will keep greed under control without much effort. This means not just getting the incentives right, but also the "political revolution" that will be needed to implement them.

So I think not just about limits-to-growth but about the need for partial universal ownership of all the major sources of wealth, combined with limited stakeholder ownership (fossil fuels, large corporations, etc).

susan the other , February 18, 2017 at 2:39 pm

flow is entropy

HotFlash , February 18, 2017 at 3:26 pm

We believe Regenerative Economics can provide a unifying framework capable of galvanizing a wide array of reform groups by clarifying the picture of what makes societies healthy. But, this framework will only serve if it is backed by accurate theory and effective measures and practice. This soundness is part of what Capital Institute and RARE are trying to develop.

Accuracy of analytical method aside, who will implement it? Who can? Not those 8 dudes with 1/2 the world's wealth.

Hilario , February 18, 2017 at 5:01 pm

And what does extreme economic equality lead to?

witters , February 18, 2017 at 5:40 pm

Give me all your income and wealth and let us find out

Steve Roth , February 19, 2017 at 4:42 am

Not really a salient issue for us at the moment, is it?

Carla , February 19, 2017 at 2:40 pm

Equality–economic or any other kind–cannot be extreme. Equality exists, or it does not.

Temporarily Sane , February 19, 2017 at 8:02 pm

That depends on what kind of inequality you're talking about. Men being paid $10/hr and women $8/hr to perform the same task is an example of "binary" inequality. Either everyone is paid the same wage (before the first performance review anyway) or they are not.

Income inequality is a bit different. If a CEO takes home 20 x more per year than the lowest paid worker in the company income equality is low (way lower than in any modern capitalist economy) if the CEO makes 300 x as much as the lowest paid worker, it is high. Income equality – everyone being paid the same wage regardless of what they're doing to earn it – is not the goal. Rather, it is reducing the gap between the lowest and highest paid members of society.

Scott , February 18, 2017 at 6:31 pm

Only jet settesr get the advantages of civilization at its heights. My own partial solution has been an airport nation that advances flying literacy and availability.
There is an amorphous factor arising out of the defined structure and standard rights afforded travelers & businesses based on a separate airport nation. (I admit this amorphous factor which causes me some presentation problems.)
No human system will function without a common committed belief in it.
Airport movement of people & parcels is simpler to make comprehensive.
For example I have difficulty in attempting to expand passenger service in NC because the corporation Norfolk Southern was given power to inhibit it while getting the advantages of state responsibilities created with a buyout of a rail company state company where it was controlled by shareholders.
A trick was done on us with the collusion of legislators.
We can simply say the RR as analogous is a matured industry to the point of immaturity compared to an international airport accommodating both freighters & passenger airliners.
These things will not directly make an economic theory, but are about economic activity as enabled from basic port theory & the sociology of ports.
For instance I advise women in nations prone to put them at a disadvantage to put business offices on international airports which tend to be more culturally neutral.

Chauncey Gardiner , February 19, 2017 at 12:12 am

Appreciated the author's thought-provoking observations about the effects of extreme concentration of wealth, with its enormous feedback loops and low circulation of money that materially reduce the overall debt servicing capacity of the private sector. But I also felt that she understated the roles that private sector debt growth, central bank monetary policy, asset price speculation and manipulation, and financial fraud have historically played in causing economic collapse.

Gman , February 19, 2017 at 8:38 am

Playing Devil's Advocate I suppose you could argue that there is something Darwinian about the way things are nowadays.

Apex predators are indeed flourishing and in a curious way they are searching further afield and adapting to new 'food sources' as those closer to home become less appealing, less nourishing and less worth the effort of expending the energy trying to exploit, particularly when other tastier morsels are so plentiful and readily available elsewhere.

Maybe we should just all get with the programme, know our places in the grand scheme of things and resign ourselves to our evolutionary fate?

;-)

LT , February 19, 2017 at 12:10 pm

If it's Darwinian, it's an example of artificial selection – nothing natural about it.

Gman , February 19, 2017 at 3:47 pm

'Life is like a box of chocolates. More and more people know what they're gonna git'

Darwin's artificial selection.

St Jacques , February 19, 2017 at 5:20 pm

haha, unfortunately it's the apex predator species that is in danger of sudden extinction as its prey declines. Of course the Darwinian analogy doesn't hold up well because Darwinian selection works on all individuals of a species without distinction. A much better analogy is a rigged game.

Altandmain , February 19, 2017 at 10:09 am

We basically have an economic system where the very rich steal the productive capacity of the rest of us and add it to their own wealth.

That is the dirty not so secret truth. As the Spirit Level demonstrates, inequality is as bad for the rich at times as it can be for the rest of us.

There is also this:
https://www.theatlantic.com/magazine/archive/2011/04/secret-fears-of-the-super-rich/308419/

Our problem is that the rich really suck. They are greedy and I would not be surprised if many were psychologically diagnosed with anti social personality disorder. They are without integrity and would fight tooth and nail for their pilfered money.

But the status quo is like the Congo under Mobut Sese Seko. It is a society build on kleotocracy. Like any such society, it is inherently unstable with money going to a few.

The late 1960s had problems. The costs of the Vietnamese War, the excess deficit spending, and the dependence on Middle Eastern oil all lead to problems in the 1970s.

Ruben , February 19, 2017 at 12:24 pm

"As Paul Samuelson stressed, that assumption [propensity to equilibrium] is necessary for economics to be science, as in mathed up, and the dominance that economists have achieved is due to their scientific appearances and the fact that their mathematical exposition enables them to dismiss lay critics."

Why? Non-equilibrium is accessible to maths.

In branching systems such the one imagined for monetary flow in this article, growth in the number of nodes at the terminals (and thus necrosis of excess of nodes) is controlled/limited by the number of terminals of the branching, let's call these capillaries, that can be accommodated inside the volume of the whole versus the number of nodes than can be accommodated inside the whole. Since the total number of capillaries grow at a lower rate than the number of nodes as the volume of the whole increases, growth is limited and excess growth in times of higher volume of the whole suffers necrosis when the volume of the whole shrinks.

IHTH

[Feb 20, 2017] Economist's View Links for 02-18-17

Feb 20, 2017 | economistsview.typepad.com
anne : , February 19, 2017 at 08:32 AM
http://cepr.net/publications/op-eds-columns/ecuador-s-decade-of-reform

February 14, 2017

Ecuador's Decade of Reform
By Mark Weisbrot

In a shift supported and welcomed in Washington, Latin America has been moving to the right in the last year or so. Three of South America's largest economies - Brazil, Argentina, and Peru - now have right-wing presidents with close ties to Washington and its foreign policy. The standard "Washington Consensus" narrative, while ignoring any US role in the region, sees the left governments that were elected in South America over the past couple decades as having ridden a commodities boom to populist victories, with handouts to the poor and unsustainable spending. When that boom collapsed, the story goes, so did the finances of left governments and therefore their political fortunes.

But this is a highly exaggerated and self-serving narrative. Ecuador is a good example of how a left government achieved success over the past decade through positive and creative changes in economic policy, as well as financial, institutional, and regulatory reform.

The details are also worth looking at because Ecuador's experience shows that much of the rhetoric about how "globalization" restricts the choices of governments to those that please international investors is also exaggerated. It turns out that even a relatively small, middle-income developing country can adopt workable alternative policy options - if people can elect a government that is independent and responsible enough to use them.

The results for the decade-plus of left government in Ecuador (2007–16) include a 38 percent reduction in poverty and a 47 percent reduction in extreme poverty. Social spending as a percentage of GDP doubled, including large increases in spending on education and healthcare. Educational enrollment increased sharply for ages 17 and under, and spending on higher education as a percent of GDP became the highest in Latin America. Average annual growth of income per capita was much higher than in the prior 26 years (1.5 versus 0.6 percent), and inequality was considerably reduced.

Public investment as a percent of GDP more than doubled, and the results were widely appreciated in new roads, hospitals, schools, and access to electricity.

Rafael Correa was elected president of Ecuador in 2006 and took office in January of 2007. A former economy minister who was trained in the United States, he set out to fix some of the structural and institutional problems that had kept Ecuador from advancing. Policy was handicapped by the fact that Ecuador had adopted the US dollar as its currency in 2000. This meant that the government couldn't influence its exchange rate and was limited in how much it could use monetary policy. And it reduced the Central Bank's ability to act as a lender of last resort to the banking system.

This meant that the government had to be more efficient and creative, and exert more control over the financial system. In 2008, a new constitution was approved in a referendum, and the central bank - which was previously "independent" and mandated to focus on low inflation - was now made part of the government's economic team. This was very important in coordinating economic policy. The conventional wisdom among most economists-and a pillar of neoliberalism - is that central banks should be independent of elected officials. In practice, this usually means that they are unaccountable to the public, but not so independent of powerful financial interests.

A new law in 2009 required that banks in Ecuador bring 45 percent of their liquid assets back into the country; this requirement increased to 60 percent in 2012, and the actual level was more than 80 percent by 2015. These and other reforms that kept dollars in the country were essential to overcoming the new government's first serious challenge: the world financial crisis of 2008 and world recession of 2009. Ecuador was one of the hardest-hit countries in the hemisphere, since oil prices collapsed and the government depended on oil for the majority of its revenue. Another major source of dollars, remittances - mostly money sent home by Ecuadorians working abroad - also collapsed during the recession. This double shock could have caused a prolonged recession or depression, but it didn't, thanks to large increases in government spending and a large stimulus in 2009. The recession lasted just three quarters, costing about 1.3 percent of GDP.

The next big economic shock was the much more prolonged collapse in oil prices that began in the third quarter of 2014. This time, the government was even more creative: In addition to some expansionary fiscal policy (i.e., running bigger budget deficits), the central bank actually engaged in quantitative easing, much as the US Federal Reserve did in response to the recession. Ecuador's central bank created billions of dollars that it lent to the government for spending (and also to state-owned banks). This was unexpected for a government that did not even have its own currency, but it proved to be very helpful in the recovery.

The most important decision in bringing about Ecuador's current economic recovery was also perhaps the most unorthodox: The government imposed a variety of tariffs on imports under the World Trade Organization's provision for emergency balance-of-payments safeguards. This reduction of imports in 2015–16 added about 7.6 percentage points to GDP during those years. This counteracted spending cuts that the government had to make as revenues crashed.

The government of Correa and his party (Alianza PAIS) was thus able to achieve considerable economic and social progress, despite two recessions caused by serious external shocks. Contrary to the Washington narrative, this depended on major institutional reforms, financial regulation, and smart policy choices, many of which went against the conventional neoliberal wisdom.

Of course it helped that the president himself has a PhD in economics and knew what he was doing, and that he had a serious commitment to progressive governance from the beginning. Still, Correa's government had to fight powerful entrenched interests, including the bankers who owned most of the television media when he took office. A referendum in 2011 prohibited banks from owning media (and vice versa), and that helped to reduce their stranglehold on public debate. But the media have remained a powerful and politicized right-wing force, as in other countries with left governments - e.g. Brazil, where the major media led a successful effort last year to remove Workers' Party President Dilma Rousseff from office - despite the lack of any impeachable offense.

The government's legacy will be tested in an election this Sunday for president and national assembly....

anne -> anne... , February 19, 2017 at 08:35 AM
https://fred.stlouisfed.org/graph/?g=cKAw

August 4, 2014

Real per capita Gross Domestic Product for United States, Ecuador and Bolivia, 2000-2014

(Percent change)


https://fred.stlouisfed.org/graph/?g=cKAx

August 4, 2014

Real per capita Gross Domestic Product for United States, Ecuador and Bolivia, 2000-2014

(Indexed to 2000)