Zombie economics

From the New York Times:

When historians look back at 2008-10, what will puzzle them most, I believe, is the strange triumph of failed ideas. Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.

How did that happen? How, after runaway banks brought the economy to its knees, did we end up with Ron Paul, who says “I don’t think we need regulators,” about to take over a key House panel overseeing the Fed? How, after the experiences of the Clinton and Bush administrations — the first raised taxes and presided over spectacular job growth; the second cut taxes and presided over anemic growth even before the crisis — did we end up with bipartisan agreement on even more tax cuts?


Class War in Congress

“This apparent contradiction makes sense only if you understand what has become so manifestly obvious that writing it out makes me bored and angry: conservatives do not care about deficits or the national debt. Nothing they have done over the past several decades—from the record deficits of the Reagan and Bush/DeLay years to their party-line opposition to nearly every legislative measure (public option healthcare reform, cap and trade) that would reduce the deficit—suggests otherwise. The great spokesman for the so-called fiscal hawks in the GOP caucus, Wisconsin’s Paul Ryan, not only voted against the largely conservative recommendations of the president’s deficit commission but in 2003 cast the deciding vote for Medicare Part D, a corporate giveaway and entitlement expansion that was unfunded and will, according to the Washington Post’s Ezra Klein, add “$400 billion to the deficit in the first 10 years, and trillions more in the decades after that.”

What Republicans do care about is defending the incomes of the country’s wealthiest, distributing income upward and cutting taxes in order to make progressive governance impossible. Obama was right to say in his press conference that tax cuts for the rich are the Republicans’ Holy Grail.”

So this was Chris Hayes’s post on the tax cut “Compromise” that essentially puts the lie to any and all wankery about “deficits.” And he’s spot on, and the only thing I wish he’d added to it was to call it what it is: class warfare. As Sherrod Brown said the other day on John King: “I work in a place that too often sings with an upper-class accent…I’m not engaging in class warfare, I’m just pointing out what happened.”

See, when people cry “class warfare” in this country, it inevitably means “they’re coming for my money!”  It’s the rich whining about it, and the idea is that people don’t want class warfare because they might someday be part of the class with the cash. But let’s be real, here: if I ever get to a point where I make $250,000 a year, I will gladly pay more in taxes, especially if I’m making that kind of money in an economy where 10% unemployment is becoming normal.

Let’s put some other key votes that happened today into context as well, shall we?  Don’t Ask Don’t Tell was the focus for a lot of people, but Claire McCaskill tweeted about the bill and brought up what else it contained: “Rs just blocked modest pay raises 4 military cuz we haven’t yet given them tax cuts for multi millionaires.”

And if that isn’t disgusting enough, how about this, from the New York Times? “Republican senators blocked Democratic legislation on Thursday that sought to provide medical care to rescue workers and residents of New York City who became ill as a result of breathing in toxic fumes, dust and smoke from ground zero.”

This is the same party that has used 9/11 as a political football for the last nine years, insisting that we get felt up at airports and invade two countries, that we couldn’t have a community center near the site of the attacks that might have a place for Muslims to pray inside it, but they just voted AGAINST pay raises for the troops they claim to support, AGAINST health care for the rescue workers who rushed in to help the victims that day.

Let’s stop pretending this is anything other than a blatant attack on the working class in the name of further enriching those who are already rich. Let’s call it what it is, already: it’s class warfare.

Getting Your Class War On: The 99ers

Edrie Irvine: I think the first thing, I don’t know whether it’s unique to the media, but in general, is that there are real people being affected by this. The unemployed have tended to be this sort of silent group of people off to the side, occasionally you see pictures and they’re standing in some long line or applying to jobs, but they’re not thought of as–they’re not thought of, is really what it gets down to. In terms of Congress, idea that they are linking tax cuts for people making millions of dollars a year, which will only deplete the economy, and linking that with emergency benefits for people who are jobless through no fault of their own, and spending the money to give those people these benefits will actually help the economy, is just crazy-making, I think. Congress doesn’t seem to realize that the rich can afford not to have their tax cuts and it won’t change anything for them. It won’t affect their lives. We don’t have that choice.

So here in the good old U.S. of A., we have this new term floating around. We call people “99ers” when they’ve reached 99 weeks of unemployment, and somewhere in our genius, we have decided to CUT OFF benefits for these people. Because they’re just not trying hard enough, right? RIGHT? All those jobs out there…

Sarcasm aside, Congress is too busy blathering on about all sorts of useless crap to vote to extend benefits for the 9.8% of America still unemployed (oh, you know, about 15 MILLION people). Republicans are demanding spending cuts when they’re not also demanding tax cuts and for some reason the only street protests gaining traction in this country are FOR “austerity” as defined as taking it out on poorer, darker-skinned people than those in the protests…

OK, clearly this all makes me pretty angry.

You’d be angry too if you’d spent your workday watching these two lovely women, who’ve worked hard all their bloody lives, discussing calmly and coolly their unemployment benefits running out.

See, the unemployed are getting ORGANIZED. For now it’s not become a “movement” on the scale of the “Tea Party,” probably because the Koch brothers and the Murdoch media don’t actually give a fuck about them. But if you watch these two women talk, maybe you’ll want to get involved…

Connie Kaplan: They’re just in denial, they’re blinded by their greed, they know the reality of their situation. There are 55 people in Congress, I’m not going to name them now, who are millionaires, so there’s sort of a conflict of interest here. They’re fighting for things that affect them personally. They’re not concerned with people like us. I spent–when I used to get unemployment–every single penny was toward paying rent or food. Bills were a luxury. I have to have the internet–can’t get a job without the internet or a cell phone, one of the two.

Laura Flanders: How do you feel being used as a hostage in the party political fighting that’s happening in Washington–we saw a delay in benefits this summer and they eventually came through, people say these will eventually come through, but in the meantime, what happens to somebody whose benefits are in the balance?

Connie Kaplan: To me what happened yesterday with that letter that the Republicans delivered on the floor…

Laura: That they will not even consider it till the tax cuts have been extended…

Connie Kaplan: they’re not going to do anything, they don’t even care about other things, like the START treaty, which is critical for our national safety. These people are using a form of blackmail and I’m a victim.

You can watch the full interview here.

Some links:

Skewed priorities

More on the skewed priorities of the austerity age.  From Ezra Klein at the Washington Post:

The pay freeze for [American] federal workers will raise about $60 billion over 10 years. It’s necessary, the president said, because these are times “where all of us are called on to make some sacrifices.”

Contrast that with the tax cuts for income over $250,000, which benefit workers doing much better than the average federal employee and cost about $700 billion over 10 years.

Yeah, but that’s different.  They’re already loaded.


Closed circuits

Further to the previous post about the disparity between record profits and high unemployment, a good post from Frank Pasquale about the closed circuits of spending among the super rich in the US.

The economy has now reached a “new normal” of soaring profits and stalled employment. Why aren’t stock market gains, bank bonuses, and rising CEO pay translating into more jobs for American workers?

Firms could be buying more labor-saving technology or speeding up production. They may also be investing overseas. Brazil, India, and China have more growth potential than the US. As Keynes stated, “Owing to [a developed economy’s] accumulation of capital already being larger . . . the opportunities for further investment are less attractive unless the rate of interest falls at a sufficiently rapid rate.” While American securities markets have long been reputed to be far more transparent and law-governed than “developing” markets, the gap may not seem so great nowadays. This will be a painful transition for the U.S., all the more so due to our repeated failure to follow stabilizing models of industrial policy. But it is an overdue “rebalancing” of global economic flows.

More troubling is the possibility that buying power is being segregated by the very wealthy into closed circuits of spending and investment (among themselves). Inequality has now become so extreme that it’s difficult to imagine how, say, America’s Fortunate 400 could spend their money.

Pasquale goes on to argue that spending among the super-rich consists primarily of finance financing itself, with little flow-through to the rest of the economy besides the comparatively limited trickle from luxury markets.  Go read the rest.

“The invisible hand belongs to a thief”

Melissa at Shakesville in reference to this New York Times story:

The nation’s workers may be struggling, but American companies just had their best quarter ever.

American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.

Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.

Trickle down works!  Even though it doesn’t!  At all!  Work!  So yes, whatever the ruling economic/politico/media class have to say, this has nothing to do with there not being profits – no, it’s about screwing workers further, exacting more productivity from an ever-decreasing amount of workers.

Consider that in relation to the ever-increasing number of people in prison or the military, mostly from the US’s poorest communities of colour, and it becomes clear: multinational state-supported capitalism doesn’t need us as workers, at least not workers paid enough for a living wage.  The contradiction signaled by the NYT’s first line – “The nation’s workers may be struggling, but American companies just had their best quarter ever” – shows that “austerity” is a fundamentally false, constructed problem.

Tax those who are making such outrageous profits, propped up the rest of us, and the public coffers would be just fine.  And then put the money back into public works (and hence public employment), because it is clear the private sector has no need for workers.

A Business Plan For Every Human Activity

Great piece by John Pilger in the New Statesman over the weekend.  He argues the utter moral bankruptcy of the recent UK “austerity” cuts and its devastation of the welfare state.

Born of the “never again” spirit of 1945, social democracy has surrendered to an extreme political cult of money worship. This reached its apogee when £1trn of public money was handed unconditionally to corrupt banks by a Labour government whose leader, Gordon Brown, had previously described “financiers” as the nation’s “great example” and his personal “inspiration”.

This is not to say parliamentary politics is meaningless. It has one meaning now: the replacement of democracy with a business plan for every human activity, every dream, every decency, every hope, every child born. [italics added]

This is the sheer mundanity of neo-liberalism in its quotidian form, the becoming-business of everything from the social sphere to the psyche itself–and the reason why bohemia, the sheer dream of an outside not determined by the capitalistic–is itself vitally necessary.  As Nina Power has pointed out recently, the very idea of higher education has been itself sidelined as a useless pursuit , “predicated on the idea that three years is a very long time, especially doing subjects that are a ‘waste’” [that is, the humanities and social sciences which have been decimated by the Osborne review].  But as Powers rightly notes, the raising of the pension age means 45 years of wage earning, compared to the mere three spent at college or university.  What a waste of time, eh?  But there is no outside to the business rationale in public discourse from which to argue that knowledge (not to mention art and culture) is valuable in and of itself. Yes, even for the plebs not attending the country’s upper echelon of universities.

Yet as the UK struggles to come to terms with this dour new regime of misery, Pilger points out how blatantly untruthful the idea of false scarcity really is:

The theft of £83bn in jobs and services matches almost exactly the amount of tax legally avoided by piratical corporations. Without fanfare, the super-rich have been assured they can dodge up to £40bn in tax payments in the secrecy of Swiss banks. The day this was sewn up, Osborne attacked those who “cheat” the welfare system. He omitted the real amount lost, a minuscule £0.5bn, and that £10.5bn in benefit payments was not claimed at all. Labour is his silent partner.

Welfare cheats are the phantoms of contemporary discourse, the imaginary figure that allow us to focus all of our rage on this rort and not the larger, more damning picture in which it is the rich who caused the crisis who are committing welfare scams on an unheard-of scale – being forgiven their sins, while the rest suffer.  The super-rich have been the stealing of the very possibility of social welfare from the population itself.

And of course, to build on what I was talking about recently here, the language around the attacks on disability benefits suggest that disability is being figured as a form of welfare cheating itself, a burden which the public simply cannot shoulder (unlike the tax dodges of the super-rich).

It is here that the foundations for a collective struggle against the cuts must be found- those who are feeling the pain must band together, because they must.  Because the government has betrayed almost everyone, in the name of supporting a few wealthy and the appalling ideological agenda of the ruling class.

The BA workers, the firefighters, the council workers, the post office workers, the NHS workers, the London Underground staff, the teachers, the lecturers, the students can more than match the French if they are resolute and imaginative, forging, with the wider social justice movement, potentially the greatest popular resistance ever. Look at the web; listen to the public’s support at fire stations. There is no other way now. Direct action. Civil disobedience. Unerring. Read Shelley and do it.