Links 1/18/11

Genes may play role in friends we choose, says study BBC

Video: SARTRE Self-Driving Road Train Conducts First Test Motor Authority

Wage and inflation risks loom after Australia floods Reuters. Reader Skippy adds:

The response by the citizens over all has been astounding (strengthening of the commons thingy), flip side is that many of the worst effected areas were industrial (toxicity / legacy / ground zero like) plus 100 klm upstream ( west east flows ) AG / industrial pollution. This is occurrence is repeated from Rockhampton to Victoria on both sides of the great divide (east of it to the coast AG / Grazing / Great Barrier Reef and just west of the divide flowing down south to NSW and Victoria ).

The next six months will be telling, its anyone’s guess till then.

Cheers from the wet, muddy, bruised, tired but, feeling satisfied hopeful for me and my fellows gumboot brigade.

California’s ‘Big One’ could be massive ‘superstorm’ that floods state: scientists Raw Story

Why Tunisia’s Revolution Is Islamist-Free Foreign Policy (hat tip reader May S)

In Corrupt Global Food System, Farmland Is the New Gold IPS (hat tip reader May S). The writing is a bit strident, but the argument has merit.

A world in breakdown Paul Rogers, Open Democracy (hat tip reader May S)

Ike was right all along: The danger of the military-industrial complex Independent

The broken heart of capitalism Robert Peston

The Anti-Regulators Are the “Job Killers” Bill Black

21st Century Segregation: Inverting King’s Dream TruthOut

China’s lending hits new heights Financial Times

Europe is running fast to stand still Mohamed El-Erian, Financial Times. Some of the logic here is dubious, and El-Erian presumably knows better. The distinction he draws between ” highly indebted European countries” and supposedly sounder ones bears scrutiny, since the banks in countries like France and Germany hold a lot of periphery country debt and will need to be restructured and recapitalized at large expense to their governments.

The ‘new normal’ of unemployment Dean Baker, Guardian (hat tip reader John M)

Cumulative Output Loss Menzie Chinn. In case you forgot.

The Need for Social Insurance Mark Thoma

Seeing Like a Policy Wonk, Left-Wing Critique, Freddie deBoer 2011 edition Mike Konczal. A very good take on the “naming names” part of his post, an aspect I pointedly ignored (in that I though some of his readings were apt, others less so), as well as wonkdom generally.

Martin Luther King’s Last Speech Jesse

Antidote du jour:

Screen shot 2011-01-18 at 4.23.36 AM

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  1. attempter

    Re the neoliberal food assault:

    This is a good rundown on the issue. (I didn’t catch the strident part; it’s quite sober.)

    The global food system is designed to generate profits not feed people, and nothing has changed since 2008, she said. “There has been no focus on how to achieve food security or on regulating the food trade,” Mittal noted.

    Instead, the World Bank, World Trade Organisation and other multilateral organisations are pushing for more production and more trade liberalisation, she said. That approach is exactly how Africa became unable to feed itself after being previously food secure.

    This is the assault we face. Food production obviously should never under any circumstances be commodified. Yet that’s the core of the neoliberal ideology and assault on humanity. Global food production has been forced into the commodity strait jacket, rendering the very physical sustenance of billions the vulnerable plaything of a handful of criminals. This should be seen and dealt with as a crime against humanity.

    (And then there’s the GMO-purveyors’ quest for literal world domination through total control of all seeds, which this article doesn’t discuss. But that’s the first of a long list of reasons we must eradicate the GMO paradigm as well. It’s a clear and present danger to human freedom.)

    For anyone who wants a full understanding of the history, forces, and trends, and how to fight back, the best source I know is Monthly Review’s magisterial survey in their book-length 2009 double-issue:

    All this demonstrates why the most important idea humanity must embrace is Food Sovereignty. Any Constitution not based upon it is insufficient to withstand the now proven criminal plots against humanity. That’s why any new Constitutional Convention worthy of the name must start from this principle.

    1. Anonymous Jones

      “Food production obviously should never under any circumstances be commodified.” You hedge too much, my friend. You should tell us how you really feel.

  2. Toby

    Re: “The ‘new normal’ of unemployment”

    This says it all really:

    “The fact that the overwhelming majority of economists in policy positions failed to see the signs of this disaster coming, and supported the policies that brought it on, did not seem to be a major concern for most of the economists at the convention. Instead, they seemed more intent on finding ways in which they could get ordinary workers to accept lower pay and reduced public benefits in the years ahead. This would lead to better outcomes in their models.”

    Now read the Paul Rogers article, “A world in breakdown”:

    1. vlade

      Well, what it seems to me that Baker argues for is that by returning to drinking some more we will not have the hangover headache, and if we continue to drink while we live, we will never have a hangover headache.

      Or does he really believe that the extra employment created by unsustainable PRIVATE credit expansion is something we can easily return to? He argues that the “new normal” need not be a real new normal, that we can return to the “old normal”, but makes no arguments that would show the “old normal” was really a (sustainable) normal.

      His argument that now we have the tools – well, if he really believes we can control the economy any better, in meaningfull ways, I’ll say that’s what Gordon Brown believed too… Surely, if we a) had them b) were able to deploy them we would not have had the problem we have now, right? (aka communism/perfectly free market (to satisfy both sides of the spectrum) are beautiful ideas. Pity that they have to work with imperfect people, who just so spoil them)

      1. ScottS

        It seems to me that Baker’s point is that we have idle capacity and plenty of necessary projects that the government is best at handling (road repair, large construction) — that is the textbook scenario for Keynesian stimulation.

        It’s not being done because of politics. Politics which are based on policies that came from economic think-tanks that missed the housing bubble.

        I think that Baker is making a short-term suggestion for preventing civil collapse. The problem of credit bubbles is a long-term problem, that can be dealt in a post-scarcity framework.

  3. Jim the Skeptic

    The ‘new normal’ of unemployment: “The methods for generating demand are not a mystery. It basically amounts to the government spending more money until the private sector is again in a position to fuel demand. The fears of deficits and debt that the pessimists promote stem from a misunderstanding of basic economics.”

    This seems to be the best that economists with consciences can propose. If we look back to the end of the Great Depression we find another piece of a better answer.

    Tax brackets from:
    Year__Tax Rate Over $4000__Highest tax rat__For Income over
    1951________27% ___________91%___________$200,000
    1952________29% ___________92%___________$200,000
    1954________26% ___________91%___________$200,000
    Note : The rates stayed the same between the years shown.

    It is currently assumed that high taxes lower productivity. Looking at those tax rates, would you have predicted that the US economy was in a booming growth from 1946 to at least 1973?

    Here is a Productivity chart at the Bureau of Labor Statistics:
    Years________Average Annual Percent Change
    1949-1973_____________2.8 Very high!
    1973-1979_____________1.1 Price of oil dinged the economy?
    1979-1990_____________1.4 Could this rise be due imported parts?
    1990-2000_____________2.1 Imported parts were increasing.
    2000-2007_____________2.6 Imported parts and low tax rates.
    2007-2009_____________2.3 But still couldn’t reach 1949-1973 levels.

    So productivity was the highest during the time of the largest tax rates on the highest income earners!

    In 1964 President Kennedy lowered the highest rate from 91% to 77%, the economy improved, and tax revenues increased. Since then the mantra from the right is that high taxes leave less money for investment and the economy suffers.

    Why haven’t economists challenged this logic, are they biased?

    1. Jim the Skeptic

      Still not convinced?

      Let’s try GDP from:

      Year_______GDP in Billions___Percent Increase/Years
      1973_________1382.3____________.1739 Highest from 1949-1973

      So the highest GDP occurs at the same time that the highest productivity occurred which was at the time when taxes were very high for the highest income earners!

      This doesn’t look like rocket science to me.

      1. aet


        The numbers rule – these low-tax guys are really out to lunch.

        Oh, they talk a good “theory”, these “let’s -but it …just…doesn’t…work…that…way.

    2. Jim the Skeptic

      One more data set from the same table which showed GDP:

      Year_______PCE in Billions___Percent Increase/Years
      1973__________852.0____________.1572 Highest from 1949-1973
      Note: Personal Consumption Expenditures (PCE)

      So the PCEs are also tracking with the Productivity and GDP and all are their best when taxes were very high for the highest income earners!

      I have often wondered why banana republics were always poor and the same for Africa. In all those cases the rich elite do just fine, there are only small numbers of middle class, and the rest of the population is poor. We can get there if we just keep up our current methods!

      Is this because of the low velocity of money in the economy when the rich save or invest?

  4. Transor Z

    Massachusetts State Legislature to receive bill converting state to judicial foreclosure jurisdiction

    Scores of housing advocates are expected to head to Beacon Hill today to lobby for the new bills that would require all foreclosures to be reviewed by a judge, force lenders to negotiate with troubled borrowers, and protect former homeowners from eviction, said Grace Ross, coordinator of the nonprofit Massachusetts Alliance Against Predatory Lending. Ross said the bills should all be introduced by the end of the week.

  5. Ignim Brites

    “In any historical or international context– in the context of a country that once had a robust socialist left, and in a world where there are straightforwardly socialist parties in almost every other democracy– is Hamsher particularly left-wing? ” Here’s the problem. There is no place where there are straightforwardly socialist parties, as the events in Greece have recently validated. Freddie deBoer is suffering from an illusion.

    1. aet

      “Straightforward” is an interesting and useless qualifier when discussing politics.

      All politics are local: nothing is “straightforwardly” comparable across separate and distinct polities.

      Can one be “straightforwardly” capitalist? Or “socilaist”?
      or even “American” or “Greek”, without some arbitrariness in the definition?

      I say “No – NO truth is simple”.

      1. aet

        I’ll re-phrase your bolded sentence: “There are no socialist parties”.

        That is false.
        The addition of the qualifier does not make it true.

        1. Ignim Brites

          Yep. The addition of “straightforwardly” does not make the statement, “there are no socialist parties”, true. But are any of the major socialist parties really socialist. The Greek or Spanish socialist parties? What is constitutive of a socialist party? It would seem that a rejection of a natural right to private property would have to be part of it.

  6. aletheia33

    “If and when that [unprecedented levels of protest worldwide] happens, perhaps it will be the beginning of the end of the stunning complacency that still grips banks, ministries, the financial establishments and their media. Even after the implosions of 2007-10, the elite belief persists that nothing has changed and nothing needs to change. The realities of the world’s combined environmental, economic and security problems say otherwise.” 

    and perhaps the elites have also failed to perceive that they themselves have changed and are not living/functioning/acting as they used to, hence cannot assume they have the same kind of power they once had.

    1. aet

      The universe shall continue to unfold.

      People may have to change a lot more than they thought they would if they really want things to remain the same.

  7. aletheia33

    reader comment no. 6 on “broken heart of capitalism” post is a good fable for the children, beginning as follows:

    “At 10:07am on 18th Jan 2011, Norman-no-mates wrote:
    Hello all,
    This is an unconventional post from a newcomer but I am struggling to reduce this ongoing crisis to its most elemental level, not least for the benefit of explanation to my pre-teen children. To that end I’d be grateful if those with sufficient wisdom would read the (acknowledgedly!) amateurish ‘fable’ below with a view to highlighting its gravest errors of understanding;

    There were once two brothers. One ended up running the country while the other ran the bank but the brother in charge of the bank was really the stronger of the two because all the money the country borrowed or spent required his services (at a price) and because (it was said), the taxes on his considerable profits were such an important part of the money the country needed to run; money that would be lost if ever he decided to emigrate.

    Now a large storm was brewing and although the brothers, in truth, both knew that a mighty flood was inevitable, the one brother believed that his bank, like a mighty ocean liner, was too modern, too clever and too big for any storm to sink, while the other brother was afraid of the people’s reaction to such grave news. Thus it suited both neither to say nor do anything.

    But the storm turned out truly to be a terrible one! So the brother in charge of the bank rushed to go and see the brother in charge of the country. . . .”

    (continued at the site)

  8. Positroll

    “since the banks in countries like France and Germany hold a lot of periphery country debt and will need to be restructured and recapitalized at large expense to their governments.”

    That’s one opinion. Prof Sinn of the Ifo-Institutes calculates in this presentation of 14 dec 2010 (“Europa in der Krise” in German,

    that the losses of German bank on peripheral loans (-20-30% haircut on a big amount of loans) were covered by TWICE AS BIG GAINS on German bunds (+10% on a huge amount of loans).

    Now, I don’t know how many Bunds the banks sold back when the chart was made and since then the German Bunds came back down again due to fears that Germany would be saddled with GIPS-debt. But that would reverse the moment Germany decides not to bail out the GIPS-countries. If true, this means no real risk for the German banks: either they are saved via bailout, or they make up for their losses by selling the then surging German Bunds. Win – win for the banks. Tough luck for the GIPS countries counting on a German bailout …

    This in turn might be one factor to explain why Germany can currently afford to take a tough stance (while French banks might be in a weaker position, as they tend to buy more French bonds than their German collegues).

  9. ScottS

    In case you were worried about all those financial regulations stifling the economy, Obama’s on the job:

    “Administration officials say they’ve been working on the re-vamped regulatory strategy for months. But Cornelius Hurley, director of Boston University’s Morin Center for Banking and Financial Law a former counsel to the Federal Reserve’s Board of Governors, says Obama’s announcement seems more like a “response to the tenor of the times.” According to Hurley, the administration appears to be “pruning regulations” at the same time that it has committed to filling in regulatory gaps.

    The executive order “sends not just a symbolic, but a written message from the White House that, ‘Hey, we may have gone too far,’” he adds.”

  10. Maju

    I do not think that there is any mystery on why there was and there is no Islamism in the still ongoing Tunisian Revolution: why would there be?! Who gave asylum to Ben Ali? The mother of all fundamentalisms: Saudi Arabia. If you read what North Africans have to say, they often accuse “secular” regimes like the ones of Tunisa, Algeria or Egypt of being Islamist. And it is very true: they are Islamist and Fascist in all but name.

    However I noticed that, while the BBC did not make a single mention to the many communists arrested, it gave a lot of stage to the mysterious self-proclaimed “moderate islamist” leader of Tunisia. NATO is therefore doing as it did in Iran and Afghanistan before: playing the Islamo-Fascists against any genuinely socialist trend. It is in the end the same the UK did in the 1930s, covertly supporting Hitler and Franco against the revolutionaries in Germany and Spain.

    Why would the Tunisians or the Arab and Berber peoples in general be as stupid as to believe in said Islamo-Fascists promoted by the NATO, Israel and Saudi Arabia and not different at all from the current dictatorships, supported by the same imperialist agents? They know better, at least in some cases: they want freedom and social justice, not burqas.

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