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Neo-liberalism, De-capitalization/De-industrialization, and the Res Publica

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By Tony Wikrent, who sells books (among them out-of-print manuals for equipment, including machine tools) at NB Books. Previously published at Corrente.

Lambert here. I’ve got a soft spot for theories of everything, and the thesis presented here, of neo-liberalism systematically de-industrializing/de-capitalizing America, and transforming it into an extractive economy (see under fracking, mountaintop removal, Keystone and Trailbreaker pipelines, road and rail projects, etc.) with concomitant Second World-style political structures (elite impunity, secret police) has a lot of appeal for me.

* * *

Bill Neil’s most recent exegesis, The Costs of “Creative Destruction”:  Wendell Berry vs. Gene Sperling, provides a devastating critique of the economic thinking of Democratic Party elites, using Sperling’s speech before the National Press Club on March 27, 2012. Sperling is Chairman of President Obama’s Council of Economic advisors, and his speech was entitled “Renaissance of American Manufacturing.” Neil writes:

It was Sperling’s statement, though, that in the decades which we think of as witnessing our deindustrialization, from 1965-1999, the nation had a fairly steady component of about 17.3 million manufacturing jobs. For someone who had seen the factory shells and crumbling walls of manufacturing districts in Philadelphia, Camden and Newark close up, and had worked as a social worker in old industrial Trenton, NJ during the 1970’s, this was an astounding claim. Once again, just as I felt when I came of political age during the Vietnam War, I was at odds in a great “accounting dispute” over “costs” with the nation’s best and brightest. How could this economist who had served in Democratic administrations, advance such a blasé base line on manufacturing jobs, for the very years when a key part of that party’s base, organized labor, and the working class, were being evicted from middle class Main Street?

(Here is the link to Part I: The Hidden History of Deindustrialization; the links to the remaining three parts are at the end of this post.)

One of the first links Neil provides is to a stunning March 2012 report, Worse Than the Great Depression: What Experts Are Missing About American Manufacturing Decline, by the Information Technology and Innovation Foundation, which refutes the common wisdom that the loss of U.S. manufacturing jobs is because of gains in productivity. If new, more productive manufacturing technology is the primary reason for the loss of manufacturing jobs, then we should be seeing a pattern of rising capital investment in that technology. But there is no such pattern. In the chapter entitled, “Capital Investment Trends in U.S. Manufacturing”, the study notes:

…a more accurate measurement of U.S. manufacturing output suggests that superior productivity was not principally responsible for the loss of almost one-third of U.S. manufacturing jobs in the 2000s. If it were, we would also expect to see a reasonable increase in the stock of manufacturing machinery and equipment, for it is difficult to generate superior gains in productivity without concomitant increases in capital stock. Conversely, if loss of output due to declining U.S. competitiveness caused the decline of jobs, we would more likely see flat or declining capital stock. In fact, we see the latter, which is more evidence for the competitiveness failure hypothesis.

U.S. Manufacturing Capital Stock is Stagnant
Over the past decade, as Figure 45 shows, the overall amount of fixed capital investment (defined as investment in structures, equipment, and software) made by manufacturers as a share of GDP was at its lowest rate since World War II, when the Department of Commerce started tracking these numbers. An analysis by year shows that the annual rate has generally declined in the 2000s, going under 1.5 percent for several years for the only time since 1950. (See Figures 45 and 46) This decline represents the decreasing amounts invested, on average, in new manufacturing plants and equipment every year.

These two graphs show clearly show the decline in capital investment in manufacturing.

But if these were adjusted to a per capita basis, the trend would be even worse, because of growing population. This is important, because it means that as a nation, the United States is becoming less capital intense. It is becoming, in other words, less capitalistic. This is a symptom, as well as a function, of the U.S. economy coming to be dominated by rentiers and usurers, rather than producers. On these grounds is the most devastating critique of Mitt Romney’s Bain Capital: their private equity operations, forcing companies to borrow money to pay out fees and dividends to Bain, actually de-capitalize those victim companies. But President Obama and Democratic Party elites are unable and unwilling to attack Romney and Bain on these grounds. The reason, of course, is that the Democratic Party is as much in thrall to rentiers and usurers as the Republican Party is. More on this later.

The next graph, providing a break down of capital investment by industrial sector, is extremely important, because it shows that almost all the positive growth in capital expenditures is accounted for by one, huge industry – oil and gas. All other manufacturing industries except primary metals, chemicals, and food and beverage products show negative rates of capital investment. Again, in other words, de-capitalization. This is extremely important because it shows that the U.S. economy is being returned to a neo-colonial status of being a supplier of raw materials. This probably applies to the oil and gas industry, also: recall that there has not been a new refinery built in the U.S. for over three decades. So, the gains in capital investment shown by oil and gas is almost entirely for extraction.

The same trend of de-capitalization was found by Steve Roth, who reposts what he writes to the blog Angry Bear. In December 2011, Roth wrote Capital in the American Economy Since 1930: Kuznets Revisited, and reported what he had found:

The most notable and consistent postwar trend is the decline
in net investment, even while gross investment remained mostly flat with slight
decline, and capital consumption increased slightly. Those two small trends
compound to result in the quite large (35%) decline in net investment as a
percent of GDP from the 50s to the 00s.

That oil and gas are such an outlier on the graph above also shows the outsize political economy effect of the rentier influence exerted by the oil and gas industry. If we were seriously trying to address resource constraints and climate change, we would not be seeing such an outsize impact by oil and gas. There should be trillions (not merely billions) of dollars of new investment going into clean energy technologies, new energy distribution systems, retrofitting all types of structures for energy efficiency, replacing all vehicles with new, high efficiency vehicles, and so on.

This lack of investment in what the country really needs shows why government regulations are crucial. We need to have regulations and taxes that encourage economic activity that society needs, and discourage economic activity that harms society. Now, everything wrong is incentivised, while support for education and clean energies is being cut in a mad dash to austerity. We need regulations and policies that it make it more profitable to invest in wind farms and solar arrays, than in credit default swaps and currency futures. In his 1973 study of the economic principles established at the foundation of the United States, The Foundations of American Economic Freedom: Government and Enterprise in the Age of Washington (University of Minnesota Press),  E.A.J. Johnson wrote:

The general view, discernible in contemporaneous literature, was that the responsibility of government should involve enough surveillance over the enterprise system to ensure the social usefulness of all economic activity. It is quite proper, said Bordley [John Beale Bordley], for individuals to “choose for themselves” how they will apply their labor and their intelligence in production. But it does not follow from this that “legislators and men of influence” are freed from all responsibility for giving direction to the course of national economic development. They must, for instance, discountenance the production of unnecessary commodities of luxury when common sense indicates the need for food and other essentials. Lawmakers can fulfill their functions properly only when they “become benefactors to the public”; in new countries they must safeguard agriculture and commerce, encourage immigration, and promote manufactures. Admittedly, liberty “is one of the most important blessings which men possess,” but the idea that liberty is synonymous with complete freedom from restraint “is a most unwise, mistaken apprehension.” True liberty demands a system of legislation that will lead all members of society “to unite their exertions” for the public welfare. It should therefore be the policy of government to aid and foster certain activities or kinds of business that strengthen a nation, even as it should be the duty of government to repress “those fashions, habits, and practices, which tend to weaken, impoverish, and corrupt the people.”  (pp. 194–195)

The very concepts of the public welfare, general welfare, and common good , of course, has been under constant attack by conservatives and libertarians since the New Deal. But these concepts were fundamental to the creation of the republic. (Please note we are not referring to “Republic” as in the Republican Party, which has, since the early 1900s, transmogrified from the Party of Lincoln into the party of social Darwinism). I have, for nearly a year now, been urging people to read two books that explicate these concepts: The Ideological Origins of the American Revolution, by Bernard Bailyn, Belknap Press of Harvard University Press, Cambridge, Mass., 1967, and The Creation of the American Republic 1776-1787, by Gordon S. Wood, University of North Carolina Press, Chapel Hill, NC, 1969.

As Wood explains:

The sacrifice of individual interests to the greater good of the whole formed the essence of republicanism and comprehended for Americans the idealistic goal of their Revolution. From this goal flowed all of the Americans’ exhortatory literature and all that made their ideology truly revolutionary….

From the logic of belief that “all government… is or ought to be, calculated for the general good and safety of the community,” …followed the Americans’ unhesitating adoption of republicanism in 1776. The peculiar excellence of republican government was that it was “wholly characteristical of the purport, matter or object for which government ought to be instituted.” By definition it had no other end than the welfare of the people: res publica, the public affairs, or the public good. “The word republic, said Thomas Paine, “means the public good, or the good of the whole, in contradistinction to the despotic form, which makes the good of the sovereign, or of one man, the only object of government.”

….In a republic “each individual gives up all private interest that is not consistent with the general good, the interest of the whole body.” For the republican patriots of 1776 the commonweal was all encompassing—a transcendent object with a unique moral worth that made partial considerations fade into insignificance. “Let regard be had only to the good of the whole” was the constant exhortation by publicists and clergy. Ideally, republicanism obliterated the individual. “A Citizen,” said Sam Adams, “owes everything to the Commonwealth.” “Every man in a republic,” declared Benjamin Rush, “is public property. His time, his talents—his youth—his manhood—his old age—nay more, life, all belong to his country.” “No man is a true republican,” wrote a Pennsylvanian in 1776, “that will not give up his single voice to that of the public.” (pp. 53-61)

Neo-liberalism in economic policies can never be anything else but an abdication – repudiation, really – of this Revolutionary concept of republicanism. In fact, when the Information Technology and Innovation Foundation report derides “egregious foreign mercantilism policies,” it is demonstrating a crippling lack of understanding of what the American republic is supposed to be. Policies favoring and promoting a nation’s industries, and the earning power of its people, are an essential part of republican statecraft. These policies were explicitly laid out in first Treasury Secretary Alexander Hamilton’s series of reports to Congress on banking, credit, and manufactures. While Hamilton’s report on manufactures initially received a cold response, many of its policies were later enacted after the War of 1812 showed again how important it was for the United States to control its own industrial base. But in the general sense, of the battle between Hamilton and Jefferson, it should be stressed that Hamilton’s vision was of a nation developing its industries and becoming ever more capital intensive. And Hamilton was fully supported by President Washington.

With the de-capitalization shown in the above graphs, with the de-capitalization of Mitt Romney and Bain – and the hedge fund managers who fund the Democratic Party – we are moving rapidly away from the vision and policies of Washington and Hamilton for a more capital intensive economy. This of course begs the question of what are the differences, if any, between today’s Republican Party and Democratic Party. To understand this, it is useful to first identify the major shift in economic paradigms that occurred in the 1970s and 1980s. For this, we turn to former AFL-CIO economist Thomas Palley, who has recently published what looks to be perhaps the most important book of the year, From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics:

…the roots of the financial crisis of 2008 and the Great Recession can be traced to a faulty U.S. macro-economic paradigm that has its roots in neoliberalism, which has been the dominant intellectual paradigm. One flaw in the paradigm was the growth model adopted after 1980 that relied on debt and asset price inflation to drive demand in place of wage growth linked to productivity growth. A second flaw was the model of engagement with the global economy that created a triple economic hemorrhage of spending on imports, manufacturing job losses, and off-shoring of investment.

The combination of stagnant wages and the triple hemorrhage from flawed globalization gradually cannibalized the U.S. economy’s income and demand-generating process that had been created after World War II on the back of the New Deal. However, this cannibaliztion was obscured by financial developments that plugged the growing demand gap.

Financial deregulation and financial excess are central parts of the story, but they are not the ultimate cause of the crisis. Financial developments contributed significantly to the housing bubble and the subsequent crash. However, they served a critical function in the new model, their role being to fuel demand growth by making ever larger amounts of credit easily available. Increasing financial excess was needed to offset the increasing negative effects of the model of growth and global economic engagement that undermined the demand-generating process on which the U.S. economy depended.

As Palley explained in The Debt Delusion in February 2008 (before the collapse of Bear Sterns laid bare the rot within the financial system):

America’s economic contradictions are part of a new business cycle that has emerged since 1980. The business cycles of Presidents Ronald Reagan, George H.W. Bush, Bill Clinton, and George W. Bush share strong similarities and are different from pre-1980 cycles. The similarities are large trade deficits, manufacturing job loss, asset price inflation, rising debt-to-income ratios, and detachment of wages from productivity growth.

The new cycle rests on financial booms and cheap imports. Financial booms provide collateral that supports debt-financed spending. Borrowing is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against. Cheap imports ameliorate the effects of wage stagnation.

This structure contrasts with the pre-1980 business cycle, which rested on wage growth tied to productivity growth and full employment. Wage growth, rather than borrowing and financial booms, fuelled demand growth. That encouraged investment spending, which in turn drove productivity gains and output growth.

In an interview about his new book, Palley identified three political groupings according to their view of the financial crises, its causes, and proposed solutions:

Broadly speaking, there exist three different perspectives. Perspective # 1 is the hardcore neoliberal position, which can be labeled the “government failure hypothesis”. In the U.S. it is identified with the Republican Party and the Chicago school of economics. Perspective # 2 is the softcore neoliberal position, which can be labeled the “market failure hypothesis”. It is identified with the Obama administration, half of the Democratic Party, and the MIT economics departments. In Europe it is identified with Third Way politics. Perspective # 3 is the progressive position which can be labeled the “destruction of shared prosperity hypothesis”. It is identified with the other half of the Democratic Party and the labor movement, but it has no standing within major economics departments owing to their suppression of alternatives to orthodox theory.

The government failure argument [#1] holds the crisis is rooted in the U.S. housing bubble and bust which was due to failure of monetary policy and government intervention in the housing market. With regard to monetary policy, the Federal Reserve pushed interest rates too low for too long in the prior recession. With regard to the housing market, government intervention drove up house prices by encouraging homeownership beyond peoples’ means. The hardcore perspective therefore characterizes the crisis as essentially a U.S. phenomenon.

The softcore neoliberal market failure argument [#2] holds the crisis is due to inadequate financial regulation. First, regulators allowed excessive risk-taking by banks. Second, regulators allowed perverse incentive pay structures within banks that encouraged management to engage in “loan pushing” rather than “good lending.” Third, regulators pushed both deregulation and self-regulation too far. Together, these failures contributed to financial misallocation, including misallocation of foreign saving provided through the trade deficit. The softcore perspective is therefore more global but it views the crisis as essentially a financial phenomenon.

The progressive “destruction of shared prosperity” argument [#3] holds the crisis is rooted in the neoliberal economic paradigm that has guided economic policy for the past thirty years. Though the U.S. is the epicenter of the crisis, all countries are implicated as they all adopted the paradigm. That paradigm infected finance via inadequate regulation and via faulty incentive pay arrangements, but financial market regulatory failure was just one element.

Palley’s overall schema of the shift from an economy based on rising wages and increased productivity, to one based on inflation of assets and increased debt, is another way of describing how the U.S. economy is being made less capital intense, or de-capitalized. If a corporate raider or “private equity partner” is able to gain control of an industrial company for $1 billion, and is able to break it apart and sell it piecemeal for $1.2 billion, the nation’s capital intensity has NOT been increased. The stock of capital did NOT increase by $200 million, contrary to all the numbers on all the financial statements dutifully reported by the dupes of the financial press. And this is an extremely simple example. Reality is more often characterized by complex financial arrangements that, when boiled down, amount to asset stripping and outright de-capitalization through imposing debt. These are not new tactics: Donald Bartlett James Stewart detailed this financial piracy in a nine-part series originally published by the Philadelphia Inquirer in October 1991, which was published as the book America: What Went Wrong?. (Look especially at Chapters 8 and 9.)

True republican statesmanship depends on a more than passing familiarity with the frontiers of science and technology, and a firm understanding of the economic problems that need to be solved, because republican statesmanship requires the economic incentives of the society be structured in such a way as to encourage the application of the leading edges of science and technology to solving those problems. Without promotion and directed application of the leading edges of science and technology, a society is doomed to crash into the constraints of its natural environment – with the catastrophic results Jared Diamond writes about in his book, Collapse: How Societies Choose to Fail or Succeed. If society fails to steer the flows of credit and money creation into socially useful economic activities, social collapse is inevitable. All the great texts of the world’s religions offer examples of what happens when a society allows itself to fall under the control of an oligarchy of rentiers and usurers. Combine this social imperative with what we now know about the requirement for scientific and technological progress – for example, climate science – and we see how the rise of “special interests” that are basically rentiers and usurers, fundamentally clash with the intended political economy of a functioning republic. At some level, the Founders understood this: they identified the two greatest threats to the survival of a republic as a standing army, and the rich. De-capitalization and de-industrialization are wrecking not just the economy, but the nation as a self-governing republic. It is no coincidence that the words plutocracy and oligarchy – both deadly enemies of republicanism – have come to be used more and more often as we discuss and debate our system of political economy today.

This is a greatly expanded version of what first appeared as US Manufacturing: “Worse Than the Great Depression” on Real Economics.

The last three parts of Bill Neil’s The Costs of “Creative Destruction”:  Wendell Berry vs. Gene Sperling are:

Part II: Wendell Berry Applies Conservative Classical Christian Humanism to the Economy

Part III: The Search for Community in the 1930′s

Part IV: The American Left in the 2nd Great Crisis of Capitalism….2008…???

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122 comments

  1. JamesW

    I appreciate this blog post, I really do, it’s highly informative and intellectually honest and correct, but really, we’ve been predicting this and forecasting this for ages and ages.

    The defunding and “pump and dump” Ponzi scheme called America, is just that: offshoring all the production assets and capital assets dismantles an economic system; any economic system.

    To summarize in a most pithy fashion: the way banking is done today in America and Europe (supposed to be even worse in China) is thus — the banksters loan themselves $100,000 through a bank or financial entity, then repay themselves the loan, so they end up with $110,000 at their starting account.

    Now, since that loan interest repayment is tax deductible, that $10,000 the “earned” is subtracted from their income tax, i.e., the tax base, which is how and why we end up with a dramatically shrinking tax base, a humongous debt and continuous deficit spending.

    It’s really very elementary, but thanks for an excellent blog posting.

    1. EconCCX

      >>I appreciate this blog post, I really do, it’s highly informative and intellectually honest and correct, but really, we’ve been predicting this and forecasting this for ages and ages.<<

      Glad it's so clear to you. Later this week, watch for MMT posts to tell us that greater deficits or faster money creation will grow the US into boom by rebuilding the industrial base, stimulating consumer demand, or turning cautious savers into inflation-denuded fools unless they buy stuff now.

      Even with a big-picture understanding, we need the structural/institutional story told repeatedly, from every angle, in rich, persuasive detail.

    2. UnlearningEcon

      I second these two. This is all true, and good, but it’s been repeated ad nauseum on this site. We really need some deeper perspectives on this stuff – how about some marxist/anarchist points of view? Some deeper criticisms of Austrian, libertarian and neoclassical theory? Something from the section of the right that also dislikes the financial sector?

      1. Breton

        Really a terrific Post; begins to explore some serious stuff re: republicanism and the madness that is the USA today.
        Long old story that runs to the heart of the founding of this Country.
        A decent contemporary analysis or overview can be found here:

        “Why America Failed”
        Morris Berman

        http://xrl.us/bnaokr

        Breton

  2. rotter

    Sperlings speech is typical politcal double talk and lies. They respond to a crisis not by fixing it but by proclaiming through speeches and propaganda news stories that magically, its fixed! and actually what crisis?

  3. F. Beard

    This is a symptom, as well as a function, of the U.S. economy coming to be dominated by rentiers and usurers, rather than producers. On these grounds is the most devastating critique of Mitt Romney’s Bain Capital: their private equity operations, forcing companies to borrow money to pay out fees and dividends to Bain, actually de-capitalize those victim companies. Tony Wikrent

    Let me guess? Bain Capital uses “credit” to gain control of companies before destroying them with debt and dividends? So that the workers’ own stolen purchasing power is used to destroy their jobs?

    1. JamesW

      No, of course not — they use debt loading, debt capital, debt financing, etc., always and constantly increasing debt, as that has the greatest tax deductibility (please see my first comment).

      A perfect example is how Peter G. Peterson’s Blackstone Group decreased the Danish tax base an estimated 10% (for at least one year, probably more, but I’m uncertain how long exactly)with their leveraged buyout of Danish telecom operator, TDC.

      It’s all about stealing form the tax base; financial engineering, LBO “pump and dumps” etc.

      1. F. Beard

        Debt and credit are not mutually exclusive. Credit is money lent into existence which is what the banks do. The purchasing power for that new money is stolen by dilution of the existing stock of money and credit.

    2. JamesW

      They do use union pension funds, idiotically invested in private equity buyout funds (usually managed by private equity firms, ‘natch!!!!) to destroy unions.

      The ultimate OPM to screw the working people.

    3. LeonovaBalletRusse

      AND the kicker: the “acquired” company is strapped with the obligation to pay off the debt plus interest incurred by Bain or other “acquirer,” which leads to massive layoffs of employees called “cost cutting.” This abduction, rape, and plunder “private equity” style is asset stripping of the most devious kind. It ‘s a perversion of capitalism, really. There is no “wealth creation,” only wealth transfer to the 1% of the new company from the 99% of the old company.

      The top dogs have perverted and subverted capitalism completely, creating a monster cash cow for the 1% out of every capital resource in sight, which after milking unto exhaustion is discarded for “others” to take care of. This is very wicked business indeed. These private equity grifters are evil.

  4. F. Beard

    Borrowing [new money into existence] is also supported by an easing of credit standards and new financial products that increase leverage and widen the range of assets that can be borrowed against. Thomas Palley

    There, fixed it.

    It should be obvious by now that the problem is very simple – some are allowed to borrow money into existence – and loot the rest of us with it. Honest usury would be an improvement but since credit creation lowers interest rates it is seen as anti-usury missing the point that counterfeiting is much worse that renting existing money!

      1. F. Beard

        Did I mis-attribute the quote? Is that why you mis-attribute my “correction” to “Jim?”

        Pardon me if I can’t follow a who-said-what when quote marks followed by the author’s name are not generously used.

  5. F. Beard

    The very concepts of the public welfare, general welfare, and common good , of course, has been under constant attack by conservatives and libertarians since the New Deal. But these concepts were fundamental to the creation of the republic.

    Let’s be fair. The money system is NOT libertarian. If it were then the general welfare might well take care of itself to a very large extent. Let’s not confuse fascism with a free market.

  6. Mole

    Its ironic that “helping” people via welfare programs harms them instead.

    The attack is not on the people needing the help, its on the government manipulation of people’s money.

    Give a man a fish, help him for a day, teach the man how to fish, help him for life. A simple concept that the geniuses in DC can’t seem to understand.

    And than we ask why can’t seem to be able to get out of the gettos. What do you expect of people getting free food and housing?

    1. F. Beard

      And than we ask why can’t seem to be able to get out of the gettos. What do you expect of people getting free food and housing? Mole

      So the solution is to starve them and make them homeless?

      Do you EVER feel ashamed of yourself for such drivel?

      A poor man who oppresses the lowly is like a driving rain which leaves no food. Proverbs 28:3

      But thanks for showing us where the true Austrian emphasis is – blaming and punishing the victims of the banks.

      1. Mole

        Am go after them?

        I’ve lived around these people my whole live. You think I’m the one trying to punish them?

        Have you lived in the ghetto? If you have, than you know what I mean.

        People need to have the ability to be responsible for feeding themselves. Many go through live on these programs and their children follow the cycle.

        I am not downplaying the need for some social safety net for peoplepeople in need. Enhancing these programs to better integrate these folks into the workforce is needed. Why not use some of them to help build bridges and clean roads?

        1. wunsacon

          >> People need to have the ability to be responsible for feeding themselves.

          Then, tell them where the empty land is upon which they may stake a claim.

          You see, societies often treat their underclass poorly. In the past, that led to emigration to new lands. Now though, there’s nowhere to go.

          Either society will grow more compassionate/smarter or society will kill off its underclass.

          1. skippy

            Go West young man! Awww crap… some one beat me to it…

            Skippy… is murica feeling like Japan did… pre WWII?

          2. Nathanael

            The underclass has another alternative: take the food from the rich people. If they are given no other alternative, eventually that’s what they’ll do.

            If the elite think they can stop this with massacres, they are wrong. This has never worked in the past. You can only do that to a small fraction of the population; if you try to do that to a large underclass, one upwards of 25% of the population, eventually your own enforcers turn on you.

        2. American Slave

          “I am not downplaying the need for some social safety net for peoplepeople in need. Enhancing these programs to better integrate these folks into the workforce is needed. Why not use some of them to help build bridges and clean roads?”

          Than give the wellfare dept. ownership of an oil company that sells to the military that way they have there own source of income rather than taxes and they can give people jobs. Sorry to say but the era of social enterprises is loooonng overdue. hows that for a solution.

          1. leafleaper

            Excellent Idea, of course the Oiligarchs would have a fit and say that it would be wrong for them to compete with an arm of the Government. However the government is the way that we combine our resources for the common good to accomplish things we can not alone. What the oil companies do not tell is that they are also creatures of the Government, depending on the government for infastructure that allows demand of their product, defense of their interests and enforcement of their contracts.

        3. MG

          You realize that organized state food relief programs were created by Bismarck and other Europeans politicians in the late 19th century not out of liberalism or benevolence to the poor.

          These European statesman wanted to avoid the utter chaos of the 1848 revolutions and ensure that there were not large amount of potentially hungry/starving people living together in urban areas as Europeans increasingly moved to urban areas during the Industrial Revolution. It was a domestic security issue for the state.

          End the Food Stamp program in the US entirely and see what happens in a number of US cities where you will truly start to see larger amounts of people going hungry. Baffled how utterly stupid the modern conservative movement in America has become for the most part.

          1. Nathanael

            Absoutely right. I’m glad people like you, MG, also see what I’ve been saying.

            The right-wingers are crazy. A system which provides a solid minimum standard of living to everyone is a system where *the current rich get to keep their money*. A system which doesn’t is a system where *the current rich get killed by angry, hungry mobs*.

            I would actually prefer the former, but most of our current rich seem intent on creating the latter.

        4. Nathanael

          Mole wrote:

          “Why not use some of them to help build bridges and clean roads?”

          Well, exactly! Offer a new CCC or WPA! Print money and spend it on building bridges, thus employing these people!

          Oh, wait, the financial elite and the Republican Party and the right-wingers in the Democratic party don’t want to do that.

      2. Nomenkultur

        “Empty land?”

        It’s quite revealing to see guys in the ghetto sitting around all day and being pointed to as the reason why more “job creation” programs are needed while fifty feet away a bunch of Central Americans who have snuck into Mexico, crossed Mexico,
        snuck into the U.S.,
        crossed the Arizona desert in the summer,
        crossed the U.S.,
        stand there at the curb and wait for work.

        Are Blacks incapable of work? They used to work. The work is there in smaller amounts. Why are Blacks letting Central Americans steal their jobs?

        I have never seen a black man lined up at the curb waiting to jump in the back of a pickup truck. Blacks are physically strong and atheletic. Blacks are more versed in English and the ways of the U.S. than the illegals at the curb. What is controlling their lack of enterprise?
        It’s purely sociological and is the result of brainwashing that tells them that they have two options: Drug dealer or affirmative action hireling.

        1. F. Beard

          What is controlling their lack of enterprise? Nomenkultur

          Negative real interest rates are at least part of the problem. Money is a great equalizer but if one’s saving are eroded by price inflation and one is deemed less “credit-worthy” then how can one acquire sufficient amounts of it?

          As usual, the banks are a major part of the problem.

        2. fairleft

          Those immigrants are willing to accept wages that are good by Central American standards, and note that they don’t have the option of U.S. welfare. Americans are almost never willing to accept wages that are less than welfare (or workfare) payments. But isn’t the preceding dead obvious, and notice I didn’t have to racialize it?

    2. Lambert Strether Post author

      I guess this post must be really important, given the importance mole attaches to deflecting onto irrelevant issues.

      UPDATE Adding, oh, I’ve got it. “General welfare” (Article I, section 8) triggered a “welfare system” reflex. Straighten up and fly right, mole.

          1. skippy

            “There’s a difference between an Austrian and a bot?”… Lambert.

            Sure!

            Austrians create the fertilizer… and bots spread it.

            Skippy… not unlike the process on my grandfathers farm using the sunshine spreader, cleaning up the offerings left from winters months around the barn. Warning!!! Don’t drive the tractor to fast, the stuff will hit you on the back of the head!

            PS. If only the Austrians could make the grass grow… sigh.

    3. skippy

      As heard by bloated 18th century looking Ass Hat on hannitys great murican panel.

      Poverty – is – a mental disorder. Face growing redder as he emphasize his point! About a week or so ago.

      Skippy… Hay Mole, what happens when the physical solutions to a problem set… are diametrically opposed to the prevailing ideology

      1. Mole

        Oh I don’t know.. perhaps revolution??

        What happens when the number of entitled surpasses the number on the work force by a mile?

        Skippy..no fancy and meaningless words here… only the truth that needs to be told.

        1. Nathanael

          You’re an idiot. What happens when the number of people with money is approximately 0.1%, and the rest of the population is begging them for crumbs while working like slaves?

    4. Paul C.

      It is not ironic, but the veryfoundation of the welfare state. A weak, available, dependent reserve labor mass, funded by the working labor mass is useful to both factions of the Demo/Republican party and their supporters.

  7. Capo Regime

    You state: The very concepts of the public welfare, general welfare, and common good , of course, has been under constant attack by conservatives and libertarians since the New Deal. But these concepts were fundamental to the creation of the republic.

    its a partisan issue? How about Obama or Wall streets buddy Bill Clinton and enablers Rubin et al? It only it were so easy as partisan lables and wearing black hats and white hats/ Next you will be telling us that 4 more years of Obama will cure what ails us as we have to keep those evil conservatives and libertarians away, best cling on to those fascists who call themselves democrats and spout the things “progressives like to hear” reality be damned….. Good peice if a bit shallow. John Gray wrote the best work on this back in 1998 in False Dawn and was and is smart enough not to taken in by partisan nonsense a.ka. superstition that parties arranged by elites really differ or matter.

      1. Capo Regime

        Lambert,

        Good point. I do wonder if indeed the U.S. has had true conservatives or liberals for some time (other than journalists or academics). Ideology vs Tribal identity is an interesting dichotomy. Guess we can agree that there is one ideology and that is some sort of neo-liberal faith in globalisation and corporate wisdom with varieties of branding (independdent, democrat, republican, etc…) Whether than is an ideology or a superstition or even a religion (neo liberalism seems to travel well with secular humanism of the american variety) I leave to the philosophers….

        1. wunsacon

          Clinton:

          - NAFTA

          - Grants China “Most-Favored Nation” trading status

          - Commodity Futures Modernization Act

          - Eliminated capital gains taxes on first $250k of housing price appreciation

          - Eliminated last remains of Glass-Steagall

          - With his abrasive and arrogant handling of his perjury case, he cost Al Gore the 2000 election. I wonder whether 200,000 Iraqi’s would still be alive today had Gore won the election.

          Caesar Clinton reduced taxes and eliminated regulation. I have no idea what anyone on the left sees or saw in him.

          1. Ames Gilbert

            Clinton’s defense of Romney and Bain Capital last week says it all. Like Obama, his lust for power is his defining feature. For both, the Democratic Party was the most useful tool and route available to achieve power. Both are at heart ruthless neocons, both are persuasive charlatans able to dupe the sheeple.

            “Power attracts the corruptible, absolute power attracts the absolutely corruptible” Anne Herbert

  8. Capo Regime

    Read Gray: False Dawn The Delusions of Global Capitalism” “Global economic system is immoral, in equitable, unworkable and unstable. He recognized that the movement toward free markets, goods and ideas is not a naturally occuring process but rather a political project that rests on american power” All in all this all stems from an American Utopian and twisted exceptionalism… Its not about parties, the underlying ideas are religuous in nature and not based on reality. As they say you can ignore reality for a long time but not the consequences of reality. All of american leadership in both parties is complicit, maybe not (for their quirks they are human after all) Kucinitch, Wellstone, Paul and a few others

  9. F. Beard

    If society fails to steer the flows of credit and money creation into socially useful economic activities, social collapse is inevitable. Tony Wikrent

    Is it not glaringly obvious that it is the ETHICS of money creation that is ALL important? Let government steer its money supply and let the private sector steer their money supplies.

    1. skippy

      Hint… that’s how we got here.

      Skippy… Please remember.. Capital and Government are commingled… they are in the process of becoming a singularity. There is little distinction between the two, save, one gives you a preselected candidate to vote for and the other none.

      1. Mole

        Skippy,

        You are confusing a few things. The country is composed by the people. The government works for the people.

        So capital is commingled with the people, not government.

        The government should be there to safeguard the capital of the people, not to manage it.

        1. skippy

          If you have not noticed – The People – are the 1%ish, the rest are labor. Provenance does have its rewards… eh.

          As I informed beardo, if you don’t understand sovereign bond issuance, its reason for creation, its history’s consequences and its evolution, you are uninformed.

          Sovereign Defaults and Debt Restructurings:
          Historical Overview

          http://mitpress.mit.edu/books/chapters/0262195534chapm1.pdf

          The BOE creation is pivotal in my book.

          England’s crushing defeat by France, the dominant naval power, in naval engagements culminating in the 1690 Battle of Beachy Head, became the catalyst to England rebuilding itself as a global power. England had no choice but to build a powerful navy if it was to regain global power. No public funds were available, and the credit of William III’s government was so low in London that it was impossible for it to borrow the £1,200,000 (at 8 per cent) that the government wanted.

          In order to induce subscription to the loan, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The bank was given exclusive possession of the government’s balances, and was the only limited-liability corporation allowed to issue bank-notes.[12] The lenders would give the government cash (bullion) and also issue notes against the government bonds, which can be lent again. The £1.2m was raised in 12 days; half of this was used to rebuild the Navy.

          As a side-effect, the huge industrial effort needed, from establishing iron-works to make more nails to agriculture feeding the quadrupled strength of the Royal Navy, started to transform the economy. This helped the new United Kingdom – England and Scotland were formally united in 1707 – to become powerful.

          The power of the navy made Britain the dominant world power in the late eighteenth and early nineteenth centuries.[13]

          http://en.wikipedia.org/wiki/Bank_of_England

          Skippy… just remember, some sovereigns are more sovereign than others… eh.

          1. F. Beard

            Bond issuance by a monetary sovereign is a scam. Bill Mitchell calls it “corporate welfare”. Gold is a scam too; what really backed England’s money was its power to collect taxes – force beats shiny, don’t you know?

          2. Mole

            Let me ask you skippy…

            Would you save your money in a bank about to go bankrupt? Would you invest in a stock about to collapse? Would you lend a thieves your live savings?

            Of course some nations are more sovereign than others.

            Skippy…Lets not just shoot the pretty kid, when the few ugly ones were in on the theft. For justice requires that we try all of them. Anything less will make the other pretty ones leave, while the ugly ransack what’s left.

          3. skippy

            “what really backed England’s money was its power to collect taxes.” … beardo.

            Skip here… yes and no, it was their military power (a projection of private and state agency) in securing cheap resources and labor via colonization that gave it power.

            Taxes were a tool to influence inflation, keep them hungry, enforce the power of the state upon even law abiding citizens (cough well behaved labor), et al.

            Which is it beardo, free market dystopia or the tyranny of the sovereign state? Is there even a difference anymore, if there ever was.

            If you have not noticed, they have become one in the same. Private capital and Government have completely melded… hence QE, alphabet soup of freebies – backstops, future taxes, et al. One hand washes the other thingy.

            Skippy… FFS… Just look at T. Friedmans career. He was on deck when his paper combined both D.C. and economics to one posting. There was a reason for that IMO.

          4. F. Beard

            free market dystopia or the tyranny of the sovereign state? Skippy

            Neither. Jesus implied the solution nearly 2000 years ago – coexisting government and private money supplies in Matthew 22:16-22. The former allows social and infrastructure needs to be met and the later allows a healthy private sector with minimal exploitation by the usurers and counterfeiters.

      2. F. Beard

        I doubt it because government is the ultimate backer of conventional money, a fact the bankers have known for centuries while confusing the population with shiny metals.

    2. Mole

      Sounds like a system designed for disaster and worst than today’s.

      Say taxes are 10%, if government money drops 10% or more companies will be paying no taxes. And trust me, a currency solely based on taxes will sink daily and rapidly reach zero.

      This is not a better solution, its worst.

      1. F. Beard

        And trust me, a currency solely based on taxes will sink daily and rapidly reach zero. Mole

        English Tally Sticks lasted 826 years and still had value when they were abolished. Tally Sticks were used to buy BoE stock.

    3. Warren Celli

      F. Beard said; “Is it not glaringly obvious that it is the ETHICS of money creation that is ALL important? Let government steer its money supply and let the private sector steer their money supplies.”

      What is glaringly obvious is that you have bought in to the ‘private sector’ and the ‘government sector’ meme. That is an intentionally divisive meme created by the corporate overlords that “glaringly” and “obviously” presently own and control the U S Government lock stock and barrel.

      Take a cue from the post and strive for the one sector. In the one sector, credit if needed, will be in the hands of all of the people not the few.

      From the post; “The word republic, said Thomas Paine, “means the public good, or the good of the whole, in contradistinction to the despotic form, which makes the good of the sovereign, or of one man, the only object of government.”

      Deception is the strongest political force on the planet.

      1. F. Beard

        In the one sector, credit if needed, will be in the hands of all of the people not the few. Warren Celli

        Government does not need credit since it can and should simply spend money into existence and tax some of it out of existence.

        As for the private sector, either everyone has to have absolutely equal access to the same amount of credit regardless of income or wealth or no one should have credit.

        1. Warren Celli

          F. Beard said; “As for the private sector, either everyone has to have absolutely equal access to the same amount of credit regardless of income or wealth or no one should have credit.”

          Yes, that’s the one sector, strive for it. Its all in the language.

          Deception is the strongest political force on the planet.

  10. john c. halasz

    D’oh! Ancestor worship aside, what part of the Wall St./MNC FX arbitrage haven’t you understood til now?

  11. chris

    “…the Founders understood this: they identified the two greatest threats to the survival of a republic as a standing army, and the rich.”

    Indeed, and with the MIC, which Ike famously named well over 50 years ago, the two greatest threats are now so solidly joined at the hip that all the rest of us can do is to either watch helplessly as the first-class juggernaut (in which we are not passengers) pushes us over the cliff, or patriotically cheer for our own destruction.

    Praise the lord and pass the ammunition!

    1. Mole

      You better nor hit the lotto or start a successful business that makes you wealthy.

      I don’t like to insult, but someone making such statements need to have their heads examined.

      The worst threat we have today is not the army nor the rich, its a whole bunch of incompetent professors, and entitled irresponsible individuals.

      These people will keep beating the same drum for failed policies and then point fingers when the same policies destroy society. They fail time after time and still have the balls to blame it on “austerity”, or “conservatives”, or liberterians. Liars… cowards…

        1. Sufferin' Succotash

          I agree with Mole. Incompetent fresh-water economics professors are at the root of our problems.

      1. F. Beard

        You are an ass. The population was dispossessed, looted and now dis-employed with their own stolen purchasing power.

        He who oppresses the poor to make more for himself or who gives to the rich, will only come to poverty. Proverbs 22:16

        According to Dr. Michael Hudson, periodic debt forgiveness was the norm for about 3000 years in the Middle East till Skippy’s buddy Hillel got the poor to sign away their rights in Israel.

        Read it and weep: http://michael-hudson.com/1992/03/the-lost-tradition-of-biblical-debt-cancellations/

        1. skippy

          Hillel is just an example of the inherent duopoly that existed then, and even now.

          Skippy… Personally, I think all of it sucked. Debt forgiveness in 7 years or credit addiction, profiteering, fraud, et al. All stemming from inequality and the power relationships required to enforce that paradigm.

  12. psychohistorian

    Amazing content in this posting. How do we get this in front of the TV public?

    The original US motto was E Pluribus Unum or Out of Many, One. And now we have, courtesy of narrow minded folk like F Beard, author of ongoing comments on this site,…In God We Trust as the US motto. It has just been reasserted as such by the congress puppets in this past year so that Faith lemmings like F Beard can drool over the loss of our secular government.

    Out of many, one. What a concept. I would like to see that concept as the motto of our next government. It still makes sense to me.

    1. F. Beard

      Narrow minded?

      What thought have you ever espoused here except punish (kill?) the inherited rich?

      1. psychohistorian

        Never have I alluded to killing and you put it in your comment so that it is out there. How sick can you get in defense of your faith?

        I say narrow minded because you apply your faith based hammer to everything. I consider that a fine example of narrow minded thinking. I do indeed consider all faith based screed as narrow minded thinking, limiting mankind’s potential.

        I will stick with awesome ignorance of our universe as an alternative to faith any day.

        Your one trick pony prattle is tedious and tiresome to scroll around and through….and seems unending. Why don’t you go convert the Mormons?

        1. F. Beard

          Your one trick pony prattle is tedious and tiresome to scroll around and through….and seems unending. psychohistorian

          I opine on several topics including a universal bailout, abolishing the National Debt, abolishing the banking cartel, allowing usury-free money supplies and the necessity for inexpensive fiat for government money.

          That’s more than one trick.

          1. F. Beard

            Add to that fending off trolls and gold-bugs like Defiant and Mole that many of you seem incapable of dealing with.

          2. Mark P.

            Beard believe what he believes and thinks what he thinks.

            I wouldn’t go so far as to call him a “NC treasure,” but it’s a viewpoint that needs to be heard from somebody, and repeated till people at least start asking “hey, what if this stuff is true?”

        2. wunsacon

          Don’t be hatin’ Beard, please. WHEN in the last 30 years have you heard someone “publicly” quote Bible verses that aren’t from its horrifyingly cruel first half and instead support very humane social policies (that appeal to an atheist such as myself)? I consider F. Beard to be an NC treasure (along with some others present and past — like “Deep South”) for presenting “something different” that I don’t see elsewhere.

          1. psychohistorian

            I am not offend by the values so much as the source of faith for them. 12 years of Catholic education w/ 4 yrs in Jesuit land taught me to think past the values proscribed and those excused. IMO we could have religion safely on the way to myth status by now if the global inherited rich didn’t make some devils compact with Xtians over social control during and after the Enlightenment period.

            Faith is a blind path and we have lost our humanity to each other because of faith in inheritance and accumulated private ownership of stuff that gave us the global inherited rich that has set the narrative for “Western Democracies” for centuries.

            I say lost our humanity to each other as my current reflection on the reported results of the Wisconsin recall election……anyone doubt the power of the global inherited rich?

            I will keep laughing at them and their F.Beard faith lemmings until my essence is gone.

          2. F. Beard

            12 years of Catholic education w/ 4 yrs in Jesuit land taught me to think past the values proscribed and those excused. psychohistorian

            You poor thing! So the Jesuits are now in the business of destroying faith?

          3. F. Beard

            Good point. The purpose of the Jesuits was to obey the Pope regardless:

            In 1534, Ignatius and six other young men, including St. Francis Xavier and Bl. Pierre Favre, gathered and professed vows of poverty, chastity, and later obedience, including a special vow of obedience to the Pope. Rule 13 of Ignatius’ Rules for Thinking with the Church said: “That we may be altogether of the same mind and in conformity[...], if [the Church] shall have defined anything to be black which to our eyes appears to be white, we ought in like manner to pronounce it to be black.” [3] from http://en.wikipedia.org/wiki/Society_of_Jesus [emphasis added]

            We were discussing just the other day that men should obey the authorities but NOT when they countermanded God. But how can one know what God’s will is unless he reads the Bible? So then it occurs to me that unless a Christian organization encourages Bible reading then it is no such thing. But we know the RCC’s traditional attitude to Bible reading has been to DISCOURAGE it as too confusing. But isn’t temporary (or even prolonged) confusion better than a false and deadly certainty?

          4. Aquifer

            Beard,

            Psycho’s story is not unusual – in act it is fairly “common” knowledge that the best way to destroy faith is to go to Catholic schools – either familiarity breeds contempt or knowledge and faith don’t mix. If one returns to take a second look to see if one might be throwing the baby out with the bathwater, as i have, it is usually only after some time away from Catholic “education” ….

            Ironically it may well be that this “falling away” is the result of teaching the rigorous application of logic and reason to all pursuits that the Jebbies are known for …

          5. F. Beard

            of teaching the rigorous application of logic and reason to all pursuits that the Jebbies are known for … Aquifier

            Rigorously based on a false premise? The premise that the Pope is Christ’s Representative on Earth is very flimsy indeed.

          6. Nathanael

            The Jesuits are excellent at destroying faith.

            As is actually reading the whole Bible. It’s obviously not divinely inspired.

            If you want to know the desires of God, some have suggested that you study the natural world (since if God exists and created it, it clearly shows his intent). I’d suggest doing that.

        3. F. Beard

          Never have I alluded to killing and you put it in your comment so that it is out there. psychohistorian

          I do apologize. You’ve said this: “If our struggle ultimately isn’t to laugh control out of their hands, I don’t know what it is.”

          Me bad. I’ve misunderstood you.

          1. Nathanael

            I’m the one who keeps predicting blood. I really genuinely don’t want it, but I think it’s becoming inevitable, unless we get our own Earl Grey or FDR within the next couple of decades.

  13. freedomny

    Why does Skippy end his/her posts with “notes” or postscripts to his/herself?

    Does Lambert S really like Henry James?

    These are a few of the things I find a bit fascinating.

    I see alot of folks at the bottom, gaming the system with respect to welfare, food stamps, disability.

    I also see alot of folks at the top gaming the system.

    The message is trickling down from the top.

    1. skippy

      Why did G. Washington rip off the soldiers that actually fought and died, of the land promised them? The very contract established to get them to leave their farms, during harvest, to fight their betters war.

      Skippy… Smedley D. Butler laid it out, whats so hard to understand?

      PS. his/hers? This blog contains the answer to that question, amongst many others. Seek and not accuse, less you become an uniformed agitator… cough… troll.

      1. F. Beard

        Why did G. Washington rip off the soldiers that actually fought and died, of the land promised them? skippy

        I vaguely recall that from American History. Link or more details?

        1. skippy

          The tubes will provide that, and much more, if you seek.

          Skippy… remember to use more than one book or source… and… always, always, cross reference.

          1. bob

            It’s very telling that the first president was a Real estate developer, first and foremost.

        2. Paul Tioxon

          http://www.ushistory.org/us/15a.asp

          Shays rebellion, was triggered by the foreclosure of farms and other real estate property to be sold for silver to pay off French bank loans that paid for the Revolution. Interestingly enough, one of the great French supporters of the American Revolution, Beaumarchais, the opera guy,

          http://en.wikipedia.org/wiki/Pierre_Beaumarchais

          personally lent money to the fledgling US cause only to be stiffed by the welshers. The other monies that he wheeled and dealed from the French and Spanish governments, of course, had to be paid in hard currency. The only people who had that in the US, were the well to do traders who had real silver coinage. By the force of paper currency debt, real estate was confiscated by the state, sold to the capitalist with silver and then, using the silver, retired the debt owed to the foreign governments. The circulation of capital requires the republic to possess the legitimate authority to confiscate property, via due process, the rule of law and not the arbitrary and capricious whim of a despotic king. Of course, the rule of law legally allows the state to take the monies from the capitalist, keeping the business man’s hands free of blood, while the cops do the dirty work. The newly formed res publica of the US of A, based on the French model of a strong fiscal federal union with tax authority and requisite bureaucratic administrative structure, carried out the dispossession in a way that did not appear to be just a savage Viking like raid, but more of a MERS operation of efficiency. Shay stilled fought back, despite the rule of law, the rights of investors and the sacred duty to repay as per contractual obligation. Fuck that shit man!

          1. skippy

            That’s not what I’m on about but, for starters see:

            Born into a well-to-do Virginia family near Fredericksburg in 1732 [O.S. 1731], Washington was schooled locally until the age of 15. The early death of his father when he was 11 eliminated the possibility of schooling in England, and his mother rejected attempts to place him in the Royal Navy.[2] Thanks to the connection by marriage of his half-brother Lawrence to the wealthy Fairfax family, Washington was appointed surveyor of Culpeper County in 1749; he was just 17 years old. Washington’s brother had purchased an interest in the Ohio Company, a land acquisition and settlement company whose objective was the settlement of Virginia’s frontier areas, including the Ohio Country, territory north and west of the Ohio River.[3] Its investors also included Virginia’s Royal Governor, Robert Dinwiddie, who appointed Washington a major in the provincial militia in February 1753.[4][5]

            Commander of Virginia Regiment

            Governor Dinwiddie rewarded Washington in 1755 with a commission as “Colonel of the Virginia Regiment and Commander in Chief of all forces now raised in the defense of His Majesty’s Colony” and gave him the task of defending Virginia’s frontier. The Virginia Regiment was the first full-time American military unit in the colonies (as opposed to part-time militias and the British regular units). Washington was ordered to “act defensively or offensively” as he thought best.[28] In command of a thousand soldiers, Washington was a disciplinarian who emphasized training. He led his men in brutal campaigns against the Indians in the west; in 10 months units of his regiment fought 20 battles, and lost a third of its men. Washington’s strenuous efforts meant that Virginia’s frontier population suffered less than that of other colonies; Ellis concludes “it was his only unqualified success” in the war.[29][30]

            http://en.wikipedia.org/wiki/Military_career_of_George_Washington

            ———————–

            George Washington…
            In 1779, George Washington instructed Major General John Sullivan to attack Iroquois people. Washington stated, “lay waste all the settlements around…that the country may not be merely overrun, but destroyed”. In the course of the carnage and annihilation of Indian people, Washington also instructed his general not “listen to any overture of peace before the total ruin of their settlements is effected”. (Stannard, David E. AMERICAN HOLOCAUST. New York: Oxford University Press, 1992. pp. 118-121.)

            http://www.greatdreams.com/lies.htm

            Skippy… I’m talking about land bounties, the pilfering of them and not shays rebellion. He was not alone in these acts IMO. In addition I would add that the relative relationship between the 1% and the rest of the lands occupants (native or otherwise) is the same to day. Hay.. was FDR just an aristocrat with a sense of genial husbandry?

            PS. Like Marx, had the British given him his commission (Marx a pay raise), what reality would we live in… today… eh.

          2. Warren Celli

            Oh no! I am effing shocked!
            Not my childhood cherry tree chopping George Washington hero?
            Really?

            Does this mean that someone has filled my head full of empty phony baloney myths on purpose to control me, and does this mean that my childhood mythic public and religious heroic role models might in reality be psychopathic evil terrorists?

            I wonder if Lincoln picked the Indians he was going to hang from photos in their “case records”. Did he pick them like warm and fuzzy family man psychopathic scum bag Barrack Obama does on Terrorist Tuesdays in the ‘people’s’ White House?

            Consider…

            “Text of Order to General Sibley, St. Paul Minnesota:
            “Ordered that of the Indians and Half-breeds sentenced to be hanged by the military commission, composed of Colonel Crooks, Lt. Colonel Marshall, Captain Grant, Captain Bailey, and Lieutenant Olin, and lately sitting in Minnesota, you cause to be executed on Friday the nineteenth day of December, instant, the following names, to wit [39 names listed by case number of record: cases 2, 4, 5, 6, 10, 11, 12, 14, 15, 19, 22, 24, 35, 67, 68, 69, 70, 96, 115, 121, 138, 155, 170, 175, 178, 210, 225, 254, 264, 279, 318, 327, 333, 342, 359, 373, 377, 382, 383].

            The other condemned prisoners you will hold subject to further orders, taking care that they neither escape, nor are subjected to any unlawful violence.

            Abraham Lincoln,
            President of the United States”

            “On December 6 (1862) President Lincoln notified Sibley that he should “cause to be executed” thirty-nine of the 303 convicted Santees, Execution date was the 26th of December. At the last minute, one Indian was given a reprieve. About ten o’clock the thirty-eight condemned men were marched from the prison to the scaffold. They sang the Sioux death song until soldiers pulled white caps over their heads and placed nooses around their necks. At a signal from an army officer, the control rope was cut and thirty-eight Santee Sioux dangled lifeless in the air.”

            I wonder if there was a normalizing, sanctioning, and validating, Charles Krauthammer like editorial in the US newspapers of the next day calling Lincoln ‘our hanging warrior president’ and saying he did not go far enough and only did it to appear tough.

            http://www.goerie.com/article/20120606/OPINION09/306069992/Krauthammer%3A-Obama-is-%27our-drone-warrior-president%27

            Deception is the strongest political force on the planet.

        1. skippy

          The amount and quality of the information you proffer will take a long time to digest. Amends if I can not offer a factual rebuttal to “feelings hurt”, as due to my military – merc experience, I’m a bit modified in that regard.

          Skippy… BTW I said “Seek and not accuse, less you become* an uniformed agitator… cough… troll.”

          *You have done nothing to dispel the meaning this sentence imbues. Try harder.

  14. BlahBlahBlah

    “There should be trillions (not merely billions) of dollars of new investment going into clean energy technologies, new energy distribution systems, retrofitting all types of structures for energy efficiency, replacing all vehicles with new, high efficiency vehicles, and so on.”

    Beam us up, Scotty. Really, is this horse manure or what? Tell us, Mr. Genius, how can you replace a work truck used by small business?

    1. James Cole

      With a work truck powered by a battery that is charged with energy derived from wind, solar, geothermal, tidal or other renewable source.

    2. Walter Wit Man

      Someone posted a link to the light bulb conspiracy documentary in another thread. You should check it out.

      It’s about planned obsolescence and I would bet we could reduce our energy by half in about a decade and boost jobs to boot. It’s not rocket science.

      Hell, we have the technology to make cars twice as fuel efficient as they are. It’s a matter of will.

      We could also make public transport free in major cities for instance, and pump billions of dollars into these systems, and it would create jobs (to make the trains and buses and to drive them and work on the tracks, etc.). It would also reduce the number of people that drive.

      I’m sure there are lots of other practical and easy steps that could be taken if one thinks about it.

  15. American Slave

    The solution is simple. They need to sacrifice the utility and energy sectors to government ownership so the rest of us dont have to pay taxes, than you will really see the economy grow. They need to find a different source of income other than taxes.

  16. American Slave

    As a side note why does Germany build wind turbines when they have enough coal to make power. Because there smart enough to save it to make steel or export which is what the US should be doing instead of burning it for no reason.

    1. EBoat

      Or to make a bunch of state of the art submarines to
      gift to Israel so that hallunciNation can put nuclear cruise missiles on them? Tres sustainable, no?

  17. BlahBlahBlah

    Germany is deindustrializing. The idiots at “Real Economics” believe in renewable fairy tales.

  18. BlahBlahBlah

    The so-called anti-bankster boob at “Real Economics” is either a banker shill or unwittingly is advocating the greatest slavery racket ever devised:

    “And renewables will only be a serious source of power IF there are ways to connect the areas where the sun is shining and the wind is blowing with those areas where it is not. Smart grids and storage folks.”

    In other words, bankster says agree to our austerity terms or the “weather” will make your power go off, Debt serf.

  19. Nomenkultur

    Let’s rewrite the Johnson quote:

    “It should therefore be the policy of government to aid and foster certain activities or kinds of business that strengthen a nation, even as it should be the duty of government to repress “those people that tend to weaken fashions, habits, and practices and impoverish, and corrupt the people.”

    Just look at Wall Street, Hollywoood and academia to see who “those people” are.

    1. William Neil

      And to think we got to this point in “the thread” of the comments, starting from Tony Wikrent’s comments on deindustrialization and the decline of the best of the old notions of the Republic, passed on to us from Gordon Wood, which are themselves disputed.

      Since I’m the author Toni quoted from to get things started, let me try to refocus things on a couple of the main issues in my essay, “The Costs of ‘Creative Destruction’: Wendell Berry vs. Gene Sperling.

      First, Berry is coming from a “conservative” position in his criticisms of the present economy, from a Classical-Christian-Humanist” perspective, with his talk of hubris, the need for limits, decentralization and so forth. I’ve long maintained that no true conservative in this sense can be happy with the price paid for our current “abundance” – poorly distributed as it is becoming.

      Second, Berry is close to the positions of Naomi Klein, Gus Speth, Bill McKibben that we can’t go on pursuing this level of abundance through the current system. I continue this theme of abundance vs. austerity in Part IV of my essay about how the American left is reacting to the current economic crisis.

      Those on the Marxist left share a similar disposition to the Keynesian tradition where the idea is not to abandon the mechanisms which produce the abundance but to change the whole context in which they operate; the Marxists, of course, seeking to drastically change social relationships, the Social Democrats hoping for a grand compromise: let the creative destruction continue, reining in the worst “collateral damage” on nature and community, and put the people which that “abundance system” no longer needs – the “surplus” to work at remediating the damage to nature and communities.

      My estimate, and this is the hardest thing for societies in the West to face, is that the economic system no longer needs 15-25% of the workforce to produce the goods. Can you imagine the press posing that notion to Romney and Obama? They would go ballistic, each in his own trajectory.

      Of course, the business community and the austerians want intensified creative destruction, absolutely no sharing of economic directions or decision making, and reject the social democratic compromise. I write about their prescription for abundance and how many of us will have to pass through their austerity program to be allowed to partake of it – and then only along current wealth and income distribution lines. Crumbs, I think are our fate.

      So go at it commentators, I spent 110 pages “sketching” this out in greater detail, but that’s where I think we are: in deep, deep trouble, as most of the readers of this blog know very well. Still, it’s very interesting to see the fault lines ripple across the land.

  20. steelhead23

    This is an excellent piece – above even the usual standards for this blog. Might I suggest you solicit Mr. Palley for a post? This is food for a hungry soul. But hey, I happen to be a fan of J.J. Rousseau and Karl Marx and logic.

  21. Aquifer

    Good post, generally, but i take exception to: “Without promotion and directed application of the leading edges of science and technology, a society is doomed to crash into the constraints of its natural environment –”

    Methinks this “technology can save us” meme is a good part of what got us here – the “cornucopiast” vision. In fact science and tech notwithstanding, a society will always “crash” into the constraints of its natural environment – unless it understands what those constraints are and consciously, deliberately lives within them.

    One thing i liked about this post is what appears to be a co-equal assigning of blame for our predicament to the decision to become “involved” in the global economy – never mind that the definition of “globalization” fostered was designed by TPTB to suit themselves. The next step, it seems to me, is to have a serious discussion as how to “deglobalize”. Some bits and pieces here and there – of which “localization” is the best description, but no coherent vision of how to get from here to there on a broad basis, at least not coming from the legacy parties. It is a good deal because of this that I have abandoned them and gone elsewhere politically ….

    I would suggest, again, that we start having such serious discussion and include the concept of “protection” – stop being in denial about economic AIDS ….. Whack the banks all you want – but until we “protect” our domestic industry and workers from the ravages of the products of cheap/slave labor as well, the wasting disease will continue ….

    1. BlahBlahBlah

      “I would suggest, again, that we start having such serious discussion and include the concept of “protection””

      Hell no, we need at least another 100 million people to run through the Diploma Mills.

      Education Education Education Education

      Lol. Look at what a paradise these pillar of “society” asshole economists and lawyers and doctors have brought us

    1. F. Beard

      I watched the whole video and enjoyed it. I just ordered Thomas Palley’s book, Plenty of Nothing too.

  22. Mickey Marzick in Akron, Ohio

    So long as we remain mired in conventional thinking – political, economic, and ideological – we will engage in seemingly endless banter. Meanwhile the clock is ticking…

    For example, – political – if only we could go back to the “Founders” and the real intent of res publica? Huh, anyone ever read Federalist Paper #10 where James Madison lays out the divide and conquer strategy of the republic? It is a blueprint for minority rule by the propertied few against the tyranny of the majority. The Founders had no faith in popular government with the French Revolution to remind them. Neither do the 1%.

    So long as we hold both the Founding and the US Constitution sacred NOTHING will change!

    Economic – whether Keynesianism or Neoliberalism both presume economic GROWTH is the solution, avoiding any discussion of distribution. Moreover, the “efficient allocation of scarce resources” is the underlying premise of both sides of this economic coin. Efficient allocation is so frought with normative connotations as to not even merit discussion. It becomes inefficient when any discussion of redistribution is broached. But why? Because we are all imbued – indoctrinated – with values that make WORK the dominant criteria by which the efficient allocation of scarce resources occurs. I’m just better [more efficient] at it than you, not to mention the trust fund I inherited… And since most wealth is inherited and not earned please explain efficient allocation in this context? Equal opportunity – the war of all against all – is for the rest of US.

    But let’s take this economic paradigm one step further. Scarce resources? Are they scarce in an absolute sense or only in a relative sense? However much one might want to condemn capitalism it has been a progressive force insofar as it has scoured Mother Earth for natural resources so well that that these resources – oil, iron ore, bauxite, lithium, copper, tin, etc – and the material production dependent on them is no longer an issue for a significant segment of the population. What makes these resources RELATIVELY scarce is the institution of private property that enables an individual and/or corporation to CONTROL the supply of these resources. Peak oil does not mean we will run out of oil tomorrow or ten years from now. It just means that it will become more expensive in the decades to come with those most able to afford it to buy it. But the same can be said with regard to corn, wheat, soybeans… Isn’t this simply a reformulation of the efficient allocation of scarce resources set out above? And environmentalists had better beware lest they play right into the hands of those who stand to gain from artificially-induced scarcity and find themselves pitted against those who will bear the brunt of austerity.

    So, as long as we remain mired the efficient allocation of scarce resources paradigm – whether Keynesianism or Neoliberalism – NOTHING will change. For it is no longer efficient. Not are resources scarce in an absolute sense.

    Finally, with regard to the ideological, I don’t know where to start. Idolatry comes in many forms. First it was God. Then the fuedal lord. But the bourgeoisie killed HIM and the latter off. Currently it’s the entrepreneur – “job creator” – who we must worship. Just ask Mitt Romney or Barack Obama. That’s the whole point of the efficient allocation of scarce resources, right? Just ask any proponent of creative destruction. More tax cuts and less regulation will “incentivize” those with the cash [success] to invest and create more jobs… Down on your knees in an act of economic fellatio…

    Yet where are the BLOW jobs? Could it be that they simply are not here? That productivity has increased to the point that LABOR is increasingly superfluous? Gainful employment is increasingly the only scarcity! Hence any talk of resurrecting manufacturing and millions of good paying jobs is BULLSHIT – plain and simple, even if spouted by well meaning “progressives”. Last time I checked the BLS, there was a report on Chinese manufacturing that stated that China had more people employed – 100 million – in manufacturing than the rest of the world combined, with at least another 100 million available for employment. So the “job creation” touted by Mitt and Barack is likely to occur offshore where LABOR is abundant and much more efficiently allocated by the “job creators” on Wall Street. And let’s not blame the Chinese or the Indian workers. It’s largely white, male Americans screwing them and us under the rubric of progress, aka the “Washington Consensus”.

    So until we dismantle the idolatry of the “job creator”, the sacredness of the Founding, and the efficient allocation of scarce resources paradigm NOTHING will change.

    Until we redefine PROGRESS or, at least, realize that the definition of progress is THEIR definition nothing will change.

    Lest I leave you in the lurch without offering an alternative consider the concept of POSTSCARCITY and its ramifications for conventional economics, politics, and ideology and go from there. Then consider the notion that progress is intimatley bound up with both a reduction in the work week and a reduction in labor force participation rates – not an increase. For both attest to the productivity increases of the past century by humanity – not only the job creators. Someobody had to do the WORK. Why is it that the 40 hour work week has remained the standard work week in this country since 1938? Doesn’t it seem strange in the wake of the productivity increases experienced since then?

    I do not have all the answers but would argue that so long as we try to solve current problems within conventional economic, political, and ideological frameworks nothing will change. Thinking outside the box is imperative.

    1. be'emet

      I suppose Mickey’s post is the most useful I’ve seen on NC. “job’s” is a futile dream, industrial work in USA is about as useful as agricultural work was generations ago. Social well-being, justice, prosperity, security, all this long ago became a distribution problem, how to get tickets to the goods to the people that want them. the work paradigm now a self deceiving avoidance. Putting down the rentiers who own the sources of money is now the highest priority for our nation. (note, even the spell checker doesn’t recognize “rentiers!)

      You would think that Kucinich wouldn’t be the only Pol who has figured out that a nation can create our own money! or that NC’ers have a place to begin.

    2. JTFaraday

      “For example, – political – if only we could go back to the “Founders” and the real intent of res publica? Huh, anyone ever read Federalist Paper #10 where James Madison lays out the divide and conquer strategy of the republic?”

      Yes.

      Good comment.

  23. JIm

    As the liberal/progressive paradigm self-destructs (see Wisconsin) a significant proportion of the the commetariat at NC continues to endorse the model of economic and political development first advocated by Alexander Hamilton.

    “Policies favoring and promoting a nations industries, and the earning power of the people, are an essential part of republican statecraft. These policies were explicitly laid out in first Treasury Secretary Alexander Hamilton’s series of reports to Congress on banking, credit and manufacturing.”

    Instead of considering that this model of development (arguing, in essence for a greater partnership and increased collaboration between the public and private spheres in order to strengthen the nation-state) as possibly being at the origins of our present financial/economic/political/cultural crisis, progressives continue to offer it as a solution to our present problems.

    It may be the case that until the liberal/progressive community has the courage to seriously examine its most cherished assumptions (especially the “sacredness” of the nation-state and all of the institutional forces in the public, private and professional spheres that are aligned with it)–its paradigm will continue to self-destruct under the hegemony of Big Capital, Big State and Big Bank—an hegemony which, ironically, its own paradigm helped to create.

    1. fairleft

      I assume we’ll never get a chance to try it (again?), but long-term successful social democratic state construction has to think very carefully about distributing political power so that the capitalists, the 1%, and especially financial capital can never take over. You won’t succeed with the media owned by the capitalists and the 1%, for example. There needs to be dispersed ownership with diverse forms of ownership: state, party, union, cooperative, and small-scale capitalists. You’ll have to keep banks small or the state must own them. And of course a no to capital controlling countries through campaign contributions. The preceding likely would preserve effective enough social/popular democratic control, in global or national contexts; I don’t see how ‘global/not global’ is important for this (theorized/pie-in-the-sky) struggle, really.

      1. Nathanael

        1 — private control of public goods — including media monopolies — should be illegal and everyone should disapprove of it.
        2 — honest elections and the related control of government by the people should be sacred and anyone interfering with them should be killed by angry mobs.
        3 — getting ‘too rich’ should be prohibited and socially disapproved of. They do this in Scandanavia.

        This is just for starters.

  24. JTFaraday

    “For the republican patriots of 1776 the commonweal was all encompassing—a transcendent object with a unique moral worth that made partial considerations fade into insignificance. “Let regard be had only to the good of the whole” was the constant exhortation by publicists and clergy. Ideally, republicanism obliterated the individual. “A Citizen,” said Sam Adams, “owes everything to the Commonwealth.” “Every man in a republic,” declared Benjamin Rush, “is public property.”

    So, this is what we get from selectively quote farming Wood’s 653 page opus. What did you get out of Bernard Bailyn?

  25. Nathanael

    Since social collapse is inevitable at this point, I think our priority is organizing people and developing an education which will allow us to organize a new society from the ashes.

    Anyone else game?

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