Sunday, December 26, 2010

Choosing your Christmas

One of my relatives worked selflessly promoting fundamentalist Christianity all over the world.  As a result of her dedication, she avoided getting the treatment that could have cured her brain cancer, and died way too young.

Fundamentalist christianity opposes birth control, abortion, and modern science, three things which continue to be essential in bringing humanity into harmony with the planet on which we depend.  In promoting fundamentalist religion, my relative may have done more harm than good in the largest view.

I believe there is a lesson here, and it is not the lesson promoted by Randian Objectivists and their many predecessors, who claim that charity is futile.

The lesson is: it is essential to choose the correct side.  The same is true in charity and trade and art and love, in all the ways we build humanity.

I pity the early slain Jesus, elevated to an object of pointless and obsessional devotion, and who could often see far more clearly than most of his time.

How then, shall we know which is which?  Well, Jesus himself is alleged to have responded to this question: by their works.

But that answer is now quite inadequate, in part due to religions such as Christianity itself.  We need a further developed answer now.

The answer seems to me now: that which promotes the greater harmony and solidarity in all its aspects.  One of the more important aspects is living in harmony with our world and the other species within it.  That cannot be done with a continually expanding human population.

Not choosing sides is choosing the wrong side, and has been the path of least resistance into futility for modern liberals (social democrats actually) in the USA.

There can be no final answer, while life continues.  That is why fundamentalism is wrong.

Friday, December 17, 2010

December 17th Banana Republic Day

The continuation of the Bush era tax cuts for the rich is proof that the United States has become a Banana Republic, run by and for a self-serving plutocracy.

The term Banana Republic was applied both by Paul Krugman and Bernie Sanders to describe Obama's tax cut deal with Republican senators.

Make no mistake about it, it has been proven over and over that tax cuts for the extreme wealthy do not stimulate an economy.  Instead, they discourage long term targeted investment, encouraging destructive short term speculations instead, creating the bubble economies that have persisted since the Reagan tax cuts of 1981.

If there is to be any hope for the United States, we must make this our milestone, as Texas settlers did with their defeat The Alamo.

Remember December 17th as Banana Republic day.

Saturday, December 11, 2010

Tax Cut Poison Pill

I very strongly oppose the President's tax cut poison pill hostage deal.  In exchange for a few small benefits today, it trades away the political economic future of the USA.

The vast majority of Americans are in favor of extending unemployment benefits anyway; that does not have to be combined with tax cuts for the wealthy which are very unpopular.  The extension of unemployment benefits could be put up for a vote every day, and would probably pass before long anyway.

The tax cut deal creates very little economic stimulus for each dollar of federal revenue lost.  By being so large, it squeezes out the possibility of more effective stimulus programs such as federal investment in renewable energy and electrified transportation.

It does nothing to provide long term democratic leadership of the economy which is sorely needed now, in fact it undermines such leadership.

By continuing unsustainable tax cuts on the wealthy, it exacerbates top down class war in the US, possibly leading to future showdowns over Social Security and other social programs.

It undermines the Estate Tax, the best method of taxing large wealth in the US, particularly by lowering the top rate to 35%.  A high ultimate estate tax rate prevents the rise of economic dynasty which means tyranny for most Americans.

It undermines the future of Social Security again by initiating a 2% cut in the Payroll Tax.  Once this tax is cut, it will be politically difficult to restore it, and in future the revenue lost could be counted against Social Security and will certainly be used in rhetoric by opponents of Social Security.

It sets the stage for many future showdowns over extension of unemployment benefits and restoration of tax rates.  The major stimulative effects of the bill will tail off in 2012, likely leading to poor electoral consequences for Democrats that year.

Because of the politicall economic consequences of the deal, Paul Krugman has described it as a hostage deal in which Obama is buying off Republican hostage takers by giving them more hostages.

The House of Representatives, which is supposed to initiate all revenue bills according to the constitution, previously passed a perfectly fine tax cut bill.

Friday, December 10, 2010

Menus, not Markets

In his conception of freedom as "freedom to choose," which Jamie Galbraith correctly relabels as "freedom to shop", Milton Friedman conflated two kinds of things: price choice and variety choice.

To be able to choose among varieties is one of the things humans generally enjoy.   Menus are the tool that provide that kind of choice.

To be able to find the best price, which is always contingent (such as, the best price while retaining some level of quality, service, social responsibility, etc) is usually a big pain, known in economics as part of "transaction costs."  Markets are the tool that provide that choice.  Unlike menus, which are one-dimensional, markets are two dimensional, at least in principle.  Allegedly you can choose among identical products at different prices, based on the efficiency of the producers.  But the more closely you look, the more you see that what is obtained at different prices cannot be identical.

What you generally get at the lowest price is not the best "value", but the least social responsibility.  To get you the best price, positive externalities are minimized and negative ones maximized.  Employees are paid less or denied rights such as healthcare; damage to the environment is permitted, or not cleaned up, etc.

Now you might ask, why should I worry about these things?  Why should I not choose the best price for me?  The reason is that the earth is fundamentally a closed system.  What goes around comes around.

Markets are fundamentally atomizing and destructive; they encourage all sorts of anti-social behaviors.

Markets teach that the highest virtue is self-interest.  But that is not true in the closed system.  The highest virtue is solidarity with all others.

For each variety, there is really only one price, the socially responsible price.  All other prices are, in real world, higher.

The greatest freedom is the freedom not to have to choose.

Saturday, December 4, 2010

(Financial) Saving and Virtue ???

Just posted to Interfluidity (see previous post) as reply:

Investment does not equal savings, it does not even necessarily come from savings unless you count all wealth (which is mostly nonfinancial) as savings. Our greatest wealth is not numerated, it just is, the knowledge of ages and the planet earth which includes ourselves. Really the decision to invest is decisions to invest. It should be the social decision to invest. We (or they) are doing very badly, but that’s not because of credit money, the most efficient system of money, but our decisions as to how it should be used are badly flawed, driven by greed alone, that cannot work.

Investment has to be chosen, either to advance private or public ends. Right now our society sees nothing wrong with trashing our commonwealth for private gains. Really what we need to do is advance social economic investment. This is all twisted now so that vice of self interest becomes virtue.

There is a great need, a crisis IMO, to invest in the conversion from life destroying fossil energy to renewable energy and energy efficiency, and sustainable electric transportation. Will that be enabled purely by “the market”? Well, perhaps if we could levy sufficient taxes on it, and there we run into capture of the government and media. I can’t imagine this happening. Instead, perhaps we should think about the damage that probably will be done, such as sea level rise over 200ft and the deaths of billions, negative externalities certainly greater than all the fossil created wealth. But by the time the water rises, there will be no one to collect from even without the scam of limited liability.

I can’t see the economist’s rosy scenario of our children being wealther ad infinitum, when it’s clear we’ve already reached the abyss. I pity the future. I hope I am wrong.

But it doesn’t seem like capitalism has created wealth at all, just borrowed it from a future that will never be.

And what about China?

Friday, December 3, 2010

Recession as morality play? Yes, but not as usually claimed

This is fairly heavy stuff, but worth reading at least the main article IMO.

Explains quite clearly why bad debt overhang must be written off (to the loss of bondholders) or inflated away (everyone with money loses a bit in proportion to how much money they have).  That's Austrian medicine or Keynesian medicine in a nutshell.

And we must do things differently from here with regards to investment.  THAT is the point of recession, what has brought us to this pass, not the irresponsibility of consumer borrowers (there will always be irresponsible people asking for loans; bankers are paid to know better and say no...especially central bankers).  We suffer unemployment because the monied refuse to change their ways.  And the situation cannot change until they do.

Unemployment is not the way out of a debt trap.  And the kinds of austerity that are being proposed are not ways out of unemployment.  Either the austrian medicine or the keynesian medicine must be taken.  The sooner the better.  Then we can move on with new investment to build a sustainable future.