Michael Hoexter: Deficit Hawks (Obama, Romney, Bowles, Boehner) Plan to Shrink YOUR Economy – Part 2

Michael Hoexter is a policy analyst and marketing consultant on green issues, climate change, clean and renewable energy, and energy efficiency. Originally published at New Economic Perspectives.

Shrinking “Their” Economy Shrinks Yours

The word “economy” comes from the Greek “oikos” meaning “hearth” or “household”. Everybody has a household economy that looks slightly different from that of their neighbors. However, because of the nature of a monetary economy, household economies are linked quite tightly together and trends that effect one household start to have effects in other households soon or over the longer term. While within the same economy some households can prosper while others do not, generally there is a movement in tandem for some obvious reasons related to how society and the monetary system work.

Very obviously, when more people have surplus income, they are more inclined to spend it on more goods and services which in turn brings in income (profits or wages) for other people. When there is a decrease in the surplus of income, this has a knock-on effect of reducing the incomes of others. These observations are implied in the paradox of thrift based on ancient observations of how commerce works as an entire economic system, which Keynes also observed. As well, on a social level, people influence each other creating trends that sweep through society, having both cultural and economic effects.

Over the longer term, as well as movements in tandem there are movements in the differential between households that create large-scale systemic effects. Over a period of decades, imbalances in savings, i.e. growing wealth inequality, can start to undermine the ability of goods and services in the economy to find buyers. For a time, the ability to borrow money, if available, enables those with lesser incomes to buy enough or more than enough to live on, including larger asset purchases, but this too collapses when incomes do not rise enough to cover both daily needs and servicing increasing amounts of debt. Unemployment rises as effective demand for goods and services goes down.

Now that the functions of the economy have increasingly become distributed across nations, some economic sectors within the historically more prosperous nations weaken, threatening the ability of many of the less advantaged to find sources of work that were previously abundant or for which they had received training. Debt instruments become themselves derivative financial instruments and sources of financial speculation as do shares of equity in productive and unproductive capital. Increases in speculation and the spiral towards ever more uncontrolled lending leads to a Ponzi economy, where trading real and virtual assets becomes the primary focus of significant groups within and outside the financial industry. That the debts or assets upon which some of this speculation is based become themselves “bad” and unable to be paid or are revealed to be overvalued, eventually triggers a crisis. As observed by Minsky, financial crises and crashes become more frequent, which in turn threaten the credit system used by businesses to fund their operations.

While government spending is always necessary, increased government spending becomes during and after a great financial crisis a critical support for an economy such as the one we live in. To cut government spending is not to cut “someone else’s” livelihood but to cut into the web of spending, selling, debt repayment, and saving that means the difference between economic growth and economic stagnation or decay. Households are affected by marginal differences in the amount of demand for goods and services and as demand is weakened by a heavily indebted private sector, employment falls and/or wages decrease, and government must step in, in order to energize demand enough so that people can find work and receive incomes.

So while, to austerity advocates, they believe that they are meting out “justice” to “slackers” within the economy, a category in which they include government but as well “lazy people” who may also be of a different race, they are actually cutting down the size of their own future incomes by shrinking the overall economy. They are so focused on or would like to focus the credulous public’s attention upon a quixotic struggle between supposed “good” actors and supposed “evil” actors in the economy, that they misconstrue or misrepresent how the macro-economy actually works.

Probably there are a few austerity advocates, no doubt among its leadership, who are not at all interested in public welfare and increasing economic prosperity for the general public: their focus is on a power struggle to maintain political power in Washington and in the economy of whatever health or size more generally for powerful private interests. The “defeat” of their enemies and attempt to realize unrealistic visions about the economy acquired from reading the fiction of Soviet émigré Ayn Rand is more important to them than actual broad-based prosperity.

In summary, cutting government spending pursued as a good “in itself”, and the cutting of government spending in particular to programs that supply those with the greatest propensity to spend the funds, like Medicare, Social Security, Medicaid, unemployment insurance, and aid to state governments, reduces demand overall for goods and services from the private sector, cutting the size of the private sector, thereby downsizing the whole national economy, both public and private sectors. Thus, in this effort, in the mind of austerians, the “surgical” pain that austerity is supposed to deliver to the economic “malefactors,” “deadbeats,” or “slackers”, ends up stalling the whole economy,

Very Little Choice at the Ballot Box

As the title of this piece states, the mainstream of both major parties in the US, Democrats and Republicans, are currently united in their commitment to ritual self-sabotage of the economy. Voters in November do not have a clear anti-austerity electoral choice in a vast majority of districts. To declare partisan support for one or the other party is to make no clear statement about one’s “position” on austerity. The only politician on the national stage who is principled and well-enough informed to resist the drive towards austerity is the soon-to-be-ex Congressman Dennis Kucinich. Senator Sanders and members of the Congressional Progressive Coalition are “deficit doves” of greater or lesser ferocity in their commitment to bailing out the public.

The Democrats with Obama at the helm seem to offer a form of “Austerity Lite” that suggests to voters that somehow Democrats “care” more than austerity-crazed Republicans and are therefore to be campaigned for. Unfortunately, as far as the economy is concerned, this supposed “caring” does not do people much good if it is not accompanied by a willingness to spend or fight for maintained or increased spending by government. This makes the Democrats and Obama a dangerously seductive choice for voters: they seem to be voting their “conscience” but instead get policies that hurt their economic interests and the economy more generally.

The person of Obama has a very critical role at this time which may or may not be entirely intentional on his part. Obama’s personality, his African-American heritage, and his unique personal story make him a talisman of liberal good intentions despite that fact that many of his policies are not very “liberal” or progressive at all. The talismanic function of his person is, if it is engineered, a master stroke in achieving a split or even the compliant assent to the destruction of the economic content of progressive and liberal policies by progressives/liberals themselves. Yes, Obama is “better than” a number of recent Presidents on issues of gay rights and women’s rights but this is not saying much at all. While important issues, these concerns are also well within the neoliberal policy program of individual empowerment having priority over community and societal empowerment. Uncritical supporters of Obama for these reasons alone have to ask themselves if they are willing to stop campaigning for economic prosperity and justice overall in favor of the particular type of social progress that is, at least at the moment, most important to them.

If Obama is viewed as a type of “Manchurian Candidate” either of his own manufacture or cultivated by political operatives and patrons from the FIRE sector, his effect is equally devastating on the black community, the heart of progressive politics in the United States. Lingering feelings of pride in the African American community at having elected the first black President mean that blacks and nominal black progressives are often some of the President’s most vociferous defenders, despite his apparent interest in furthering the austerity agenda. Glen Ford of the Black Agenda Report has called Obama “the more effective evil” because his personal characteristics enable him to pursue conservative or right-wing policies without the resistance of the black community and the left. Thus progressives and the black community are effectively split or even participate in making their own political principles irrelevant. Meanwhile the black community will be one of the communities most severely effected by austerity.

Criticizing Obama or calling him “the more effective evil” doesn’t make Republican legislators and candidates any better than he and they may in some ways be worse. Republican intentions would, if realized, in many cases be more damaging than Obama’s though they would also meet more resistance than has Obama from progressives. The masterstroke for those who support the austerity agenda, is that Obama’s personal appeal splits resistance to austerity. A Republican Administration would probably be met with mass demonstrations and civil unrest, while with an Obama Administration, some of the organizational nucleus of such a movement has seemingly been “pacified”.

Without a substantive choice at the ballot box, lobbying, public education, protest, and civil disobedience then become the means by which the general public can hope to influence policymakers to use government for the greater good and for their individual benefits. An argument can be made that voting for Democrats and Obama but with no illusions and “speaking truth to power” may be the most popular choice that people have currently. There is also no substitute for vigorous protest that captures the moral high ground and is based in sound social and economic theory.

Standing Up for a Strong Mixed Economy

There are a number of specific issues that anti-austerity activists are already working on or might be working on in the future:

1. Popular debt restructuring and forgiveness

2. Cuts to social services and federal aid to local governments

3. Enhanced social services, public transportation, and social programs

4. Resisting and protesting privatized replacements for public goods and infrastructure.

Yet there is also the danger that an anti-austerity movement becomes defined by the specific issues it focuses upon, leading to a loss of vision and ability to make coalitions between single-issue activists.

I wrote the “Mixed Economy Manifesto” a few months ago as a means to clarify and accurately name what is both the actual object of study of most modern economists as well as what is the political terrain upon which politicians, pundits, and ordinary citizens fight to shape the economy as it serves their ideals and/or interests. Different political tendencies and economic schools for the most part are fighting over what kind of mixed economy to have not whether to have a mixed economy (public sector + private sector) in the first place. Lack of time has prevented me from writing up a taxonomy of existing and potential future mixed economies but at some point I will do this.

However, before that taxonomy gets written, political actors acting in different social institutions need to act to stop the economic self-sabotage of austerity by, I believe, offering a positive view of what they want to see happen in government policy and the economy as a whole. Rather than simply being anti-austerity, a successful movement towards a better society needs a vision of where it is going. I’m going to suggest one medium-term vision of where to go which is a much better place than where we are currently headed.

The functioning of our current monetary capitalist economies requires government as a stabilizer and support for the private sector, helping both those who are vulnerable and less advantaged as well as those who have many advantages and power in the private sector. We have seen devastating problems with societies that are structured purely around the state (i.e. Soviet Communism) as well as societies that are led largely by a private sector that is a “law unto itself” (19th Century and early 21st Century America, failed states, warlordism etc.). Meanwhile it appears that nations where governments take an active role in the economy are showing fewer signs of dysfunction and are facing some of the 21st Century dilemmas more fully than the US. These are the nations of Western Europe (especially pre-Euro), Canada, Australia, post-reform China, and Korea.

There is then a type of mixed economy which we could call a “strong mixed economy” where government is allowed an independent and differentiated role from the private sector. Not everything in society can be reduced to market-like interactions and dynamics and one of them is the role of government. The social-scientific and political race to reduce everything to markets (see “public choice theory”) must be halted and reversed in many cases. Rather than let institutions like the public education system and US Post Office decay and crumble because it isn’t a “market” institution, those in favor of a strong mixed economy will support adequate investment in these public institutions. The struggle is not just over preserving individual institutions but over a complete vision of what is the “good society”. One of the critical roles of government in a strong mixed economy is the supply and management of the currency to grow or maintain general prosperity, including full employment.

In order for a strong mixed economy to function, the emerging plutocracy needs to be dismantled, as currently large corporations and super-rich individuals have inordinate power over government. In this context, the government cannot serve a broadly shared “public purpose” but instead overtly, covertly and indirectly serves the powerful private interests, whose interests at many points conflict with those of the broad population. Electoral and campaign reforms are required as are higher standards of quality for public media and political information.

Activists and writers then, in opposing austerity, can offer the vision of a strong mixed economy where government doesn’t shirk from supplying needed services to the population and uses its sovereign powers to maintain effective demand. Additionally, as below, it is only via a strong mixed economy that many of the transformations we require to live prosperously in the 21st Century will be put into effect, transformations that include reducing the carbon and ecological footprints of economic activity..

Sidebar: What if the Economy Should Shrink (For Ecological Reasons)

As someone who works on advancing ecological and biophysical approaches to economics, to find myself in the position of defending economic growth is an interesting place to be. In bringing this up here, I am not at all suggesting that austerity advocates consciously intend to shrink the economy, nor if they did, do they have any recognizable ecological concerns. Austerity advocates are so far from having a grasp of the real macro-economy let alone, beyond that, the real biophysical substrate of that economy that, in a way, I’m honoring them by bringing up this issue in the context of this piece.

In my opinion, we have not yet developed adequate formal tools for understanding the complex “layer cake” of social, economic and biophysical systems. Advocates of real economic shrinkage, generally associated with the Peak Oil community, have not completely thought through the social and economic dynamics involved and some, who revel in Schadenfreude, don’t care. A shrinking economy is a grim place to be: with a diminishing economic “pie” more economic actors will sink into despondency or turn to criminal and violent means to secure a slice of what remains. The trust that is required for trade to occur will be undermined and the transaction costs of every exchange will go up. This is what the ecological economist Robert Costanza calls the “Mad Max” scenario. Without a great deal of thought and understanding of the interaction of social systems and natural systems, one does not simply and spontaneously end up with a “leaner” greener economy where people make do with less.

Much of the economic surplus and ecological excess of the existing economy is unevenly distributed both within nations and between nations. To declare, suddenly after an economic crisis, that the economy should shrink on a permanent basis begs the question of where it should shrink and by how much. If it should shrink in even measure for everyone (i.e. “shared sacrifice”), the shrinkage will be on a personal level painless for those of substantial means while enormously painful if not lethal for many of lesser wealth. In their still more harebrained strategy, austerity advocates seem to want to take away the few supports that the less advantaged have (social insurance) while only making theatrical gestures towards sacrifice for the powerful players that they represent. Advocates of environmental and climate justice often overlook inequities within societies and instead focus on international inequities, assuming, it would seem that the less advantaged within the richer nations should be satisfied with their current lot or be willing to sacrifice for the global greater good. A fundamental sense that the domestic social order is just will enable people to decide to make group sacrifices for planetary well-being.

In the almost immediate future, our economies in order to survive need to reduce their carbon and ecological footprints as the population of the world grows and its “free” resources diminish, including the buffering capacity of the atmosphere and oceans. The irreversible effects of climate change have already begun but humans’ biological niche can be narrowed still more by rampant disregard for planetary limits. Runaway emissions and runaway material expansion of the world’s economies are the death knell of the natural basis for a livable economy.

There are three dynamics that need to be pursued in tandem to enable this to happen at all smoothly:

1. More equitable distribution of the benefits of economic activity and/or growth

2. Greater detachment of increases in the production of economic value (what we call “growth”) from the consumption of fossil energy and non-renewable material goods (decarbonization of economic growth).

3. Greater coordination of human activity both via market mechanisms and via non-market mechanisms (international cooperation and domestic government fiscal policy) towards the transition to a decarbonized economy.

In order to make the transition to a more sustainable economy, a very dynamic but focused economy is required to build the infrastructure necessary to provide the basis for a future fairly prosperous economy powered by non-fossil energy sources. A stagnant economy might slow the growth of carbon emissions but will not be able to fundamentally reduce them as it will operate with tools that require fossil fuel inputs.

The only political economic instrument/set of institutions capable of managing the transition to a more sustainable economy is some version of a strong mixed economy, where government and the private sector cooperate but have differentiated roles. Beyond the obvious anti-ecological predilections and tendencies of its advocates, austerity is a direct attack on the institutions of a strong mixed economy and therefore leads away from durable solutions to our ecological and climate crises.

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  1. Jane Doe

    “Sidebar: What if the Economy Should Shrink (For Ecological Reasons)”

    This is the discussion that I want to have because I don’t think any field of economics, including those on the left, really deals much in the ecological realities of a complex system.

    This is not to justify the dynamic of the elite creating a lopsided situation with existing resources.

    This is to point out that we do live in a limited complex system. The idea that anyone can know fully what the means seems like hubris to me.

    Its my view that the reason why you want a strong social democracy with attempts to control resources is because those resources are finite, and that there is no such thing as growth that can continue forever.

    There are only so many jobs on the planet. There are only so many resources to go around. The choice is about equitably using those limited resources rather than pretending we can grow the pie forever. Of course, things like technology matter, but ultimately, we are limited by time and other factors as well.

    I am not really making an argument about leftist environmentalism as you are. I have a different point. Even if its not fossil fuels, it will be something that will be limited or in short supply because we have a lot of humans and those are increasing each year by millions if not hundred of millions on this planet.

    Something has got to give. May be the reason you can’t find a solution to things like monetary policy is that there are enough actual real resources to grow our way out of every problem since this is one small planet.

    I am not sure if I am being clear here. These ideas- seeing the economy and a complex ecological system- is something that’s new for me, and its late, and I am working on other things.

    The point is that I don’t understand how you can have a real discussion of economics other than as a system of psychology and ecology.

    1. J Sterling

      There are two kinds of economic shrinkage: one where the economy shrinks and the numbers of people do not, and another where the numbers of people shrink and the economy shrinks, possibly by less than the number of people. In the first, if we destroy our environment so badly that the amount of economy per person is less, then that would be very bad. But in the second, we could have less impact on the environment, while having more wealth per person, which would be good, on average.

      Unfortunately, in a world where the labor of the many contributes to the wealth of the few, the second kind is as bad as the first, which is why the rich don’t like population control. They want more workers, even if the workers are poorer. Especially if the workers are poorer.

      1. mmckinl

        You haven’t accounted for the “overhang” of staggering debt. Unless this debt is forgiven and rescheduled the entire financial system implodes … Chaos ensues and any thought of an orderly transition evaporates …

        1. Carol Sterritt

          You seem to have overlooked what people did in Iceland,w here they forgave the indebtedness, and imprisoned those who had imploded their economy. And of course, since our politicians are all bought and paid for by the Big Financial types, we won’t see that here. Better, they say, to take away from us citizens the monies we have saved for our retirement, and raid Social Security with its 2.1 trillion dollar surplus.

          Of course, it has to work this way – our Big Finance People certainly don’t want to end up like Madoff did.

          1. mmckinl

            I didn’t overlook what happened in Iceland … the previous poster did.

            He does however make a viable argument for the resource limitations we face and that is population reduction.

            I would posit that the world’s population is now in extreme overshoot and that there will be horrendous consequences.

          2. J Sterling

            It’s implicit in Ricardo’s Theory of Rent that the more people you have, the more resources must be worked to support the people (in Ricardo’s language, the “extensive margin of cultivation” is moved outward). Since resources are obviously worked in order of richness (who would ever do it the other way round, working the poorest fields and drilling the worst oil reserves first?) then the average value gotten out of our work falls. But the theory says the average rent rises, since it’s determined by the zero-rent resources on the margin. So a falling population is good for the working majority, while a rising population is good for the rentier and employer minority.

        2. Susan the other

          For starters, after debt forgiveness, we need to refocus our private sector from profit to non-profit. Destructive, toxic and wasteful practices were the very stuff of “growth” and debt-driven profit. We gotta change that whole idea. And this reality coincides with a plateau in capitalism – today we have become so “productive” and efficient that we need far less labor to produce that same destructive profit, so inequality is taking off like a rocket. What we need are clear goals, a long to-do list and cooperation. My favorite prescription is that we need “lots of low productivity jobs of high social value.” The very jobs austerity minimizes.

    2. ZygmuntFraud

      For one thing, manufacturing, mining, transportation and refining and chemical plants all produce Heat. How about working on industrial & economic Heat Growth (Btus per year).

      If Heat increases just 1% a year, Heat production doubles every 35 years. In 350 years, doubling 10 times over or “multiply by 1024”; fry eggs in Winter at North pole; way to go …

  2. mmckinl

    “one does not simply and spontaneously end up with a “leaner” greener economy where people make do with less.”

    This fact is deeply appreciated by the “Peak Oil” crowd. In fact the Peak Oil blogosphere has gamed peak oil and all its different consequences and ramifications depending on various responses from the “powers that be”.

    In the movement an almost universally accepted fact is that peak oil will in fact completely undermine a financial system based on private bank fractional reserve banking. A shrinking economy will be a financial Armageddon …

    The fact is we are already on the plateau of peak liquid fuels and have passed peak oil. Unless there is a severe economic down turn we will see oil prices, ergo food and fuel prices, skyrocket in no more than two years.

    What we need is a public central bank that creates our currency and credit without leveraged debt. Leveraged debt based on future growth and profits, the public and private debt we have now is becoming increasingly unpayable and this phenomena will accelerate as the world economy decelerates.

    Currently governments are in denial, at least publicly, about peak oil and have made no provisions other than the underwriting of banks and debt … in other words the assets of the already wealthy. Catastrophe is in the cards which is why a police state is being assembled legally and physically.

  3. jake chase

    It is too bad that our Presidential candidates cannot be required to respond sentence by sentence to this brilliant post, which demarks the enormous distance between contemporary political rhetoric and reality. It is impossible to believe any progress on these issues can be made so long as it remains so profitable for politicians and plutocrats to ignore them. Nor can we hope that the next financial crash will enforce their attention, since nothing will prevent another Fed bailout of the predatory financial sector, again rewarding the worst elements at the expense of everyone else. I fear a strategy of sauve qui peut remains in order.

      1. prostratedragon

        It’s the relative fictions that interest here, I think, not the actual numbers. What are we to make of that enormous gap?

  4. Gerard Pierce

    I have a simple question about peak oil – sincerely meant because I don’t know who’s lies to believe.

    We heard stories about the amount of unexplored oil in Iraq, supposedly larger than Saudi Arabia. We hear recent stories about oil reserves in Venezuela – supposedly larger than Saudia Arabia ever was.

    We may not drill for either of these because they quietly hate our guts, but somebody is going to drill.

    Supposedly Canadian Oil Shale contains enough oil to ecologically destroy the planet if all the other reserves (greater than Saudi Arabia) don’t destroy it first. And by the way, we are supposed to have enough coal to provide all of our energy needs for the next 500 years – if we run out of fracked natural gas before we run out of country to live in.

    My simple question is: who is lying here. If all of these reserves actually exist, how are we supposed to have reached peak oil.

    1. taunger

      i’m more than willing to let others correct me if i am wrong, but peak oil was generally an economic limit rather than a geophysical one. peak oil was said to be the point at which the cost of extraction exceeded the revenue.

      perhaps the MMT folks should take a look at the petrodollar system to see if it works like their monetary sovereign, wherein there are always enough dollars to fund debt/oil (or is this where they found the theory to begin with?)

      1. Bert_S

        OPEC already signed off on MMT by saying they can charge anything they want for oil.

        Not particularly good news for us household folks tho, methinks.

    2. Bert_S

      It’s probably safe to assume that they are all lying, and we will never know what world oil reserves really are.

      Matt Simmons (oil expert and proponent of peak oil) claims the Saudis overstate reserves because that makes them sound more important in the world and they get our military protecting them for free. Critics of Simmons say he is a broker for US oil properties and he profits from peak oil fears because it makes US properties seem to be worth more.

      Most oil around the world is owned by state governments and they generally don’t let anyone independently audit reserves (Matt points out that is very true of the Saudis).

      Then if you are such a government you can decide if you want to make yourself look important, or maybe you are worried about being invaded. Must be quite conflicting which way to lie.

      1. Susan the other

        Oil itself replaced gold in the 70s. It is a logical measure of value because everything is dependent on it. When the dollar was allowed to reflect the value of oil we lost our shirt back then. Oil was the original Paul Volcker. It does make sense that oil should be a strictly controlled commodity. Everybody is pegged to the dollar and the dollar is pegged to oil. If we are not fighting in the Middle East to gain control of the price and distribution of oil, I’m at a loss to understand why we are there at a probable cost of 1Tr/year. Both to protect fragile economies and a fragile environment. It is conceivable to me that this is the military objective of the 21C. If this is true, the military needs to get its act together and begin leading the way to a cleaner world because they area the A-number-one pollluter.

        1. Bert_S

          Yes, the score so far for the 21stC is we got oil prices to go from $15 to $100 and spent $3 trillion(?) doing it.

          This can only make sense to the government.

    3. J Sterling

      “Peak oil” is not what happens when the oil suddenly goes away: that’s people confusing peak oil with a movie called Mad Max. Peak oil is when the cheap reserves are used first, then the more expensive ones (that’s logical–who would extract the expensive reserves first?) As the price goes up, people buy less of it. Peak oil is when the total world oil extraction stops being more than it was last year, and starts being less than than it was last year.

      The trouble is that there aren’t going to be fewer people each year. Since oil use is comfort, there’s going to be less comfortable living per person as the years go by, unless a substitute for oil is found that is perfect and no more expensive, the way synthetic chemicals were a perfect substitute for whale products. Far more of us enjoy the things that used to be made with whales, even though we passed “peak whale killing” a long time ago.

      It doesn’t look like there is a substitute for oil, at 2000-2012 oil prices.

      1. Aussie F

        Too right, in fact peak oil is really about net energy – how much juice has to be deployed to get the stuff out of the ground. Back in the day you got around ten barrels of oil with the energy contained in one barrel (10:1). Right now the ratio is a about 4 to 10, and closing. The low hanging fruit has gone, and it’s costing more to get less.

        When the ratio reaches 10:10 the games probably over, though never underestimate the power of corporate welfare to keep the show on the road.

  5. Aquifer

    “Voters in November do not have a clear anti-austerity electoral choice in a vast majority of districts. ……. The only politician on the national stage who is principled and well-enough informed to resist the drive towards austerity is the soon-to-be-ex Congressman Dennis Kucinich. ……. Without a substantive choice at the ballot box, ….. An argument can be made that voting for Democrats and Obama but with no illusions and “speaking truth to power” may be the most popular choice that people have currently.”

    These statements are clearly false, as i would hope many folks would realize by now – and ISTM that the author should be aware that in propagating this TINA meme he is sabotaging the possibility that his analysis of finance prescriptions for repair/remake of the system will ever be used for more than wall paper ….

    So why, i wonder, does he fail not only fail to mention, but seems to deny even the existence of, a political choice, available to the majority in Nov., whose analysis and RX match his own to a MUCH greater extent than the ones he DOES mention …. Why does he shoot himself and his system in the foot ….

    This political pathology is so prevalent that it is considered the norm – otherwise intelligent human beings spouting off such BS. Our political conversation has been genetically engineered by TPTB and is systemically poisoning us …

    1. Michael Hoexter

      I think I worded this poorly: I don’t think voters have an EFFECTIVE choice in November. You can choose other candidates on the ballot but due to our electoral system, the incumbent 2 parties have overwhelming advantages.

      Think of voters in Florida in 2000: they voted their consciences by choosing Nader but they thereby gave us George W. Bush over Al Gore. If you see both parties as ENTIRELY interchangeable this is not a problem but as much as both parties are bought off by plutocrats there are some differences. I don’t think those differences should stop people from telling the truth about the existing party system and even organizing third parties…only that they may have the opposite effect of the intentions of their organizers..

      Long term the solution is substantial electoral reforms that enable votes for minority candidates not to be “thrown away”… a proportional representation system is preferable though also not immune from some of the problems we are experiencing.

  6. Hal Roberts

    A shrinking economy is what happened when the bubbles burst in 2008 and our leader sunk into despondency and turned to crime. They are in the Mad Max scenario in the nice nasty sort of a way.

    “There are a lot of people in our government (USA) ripping off a lot of innocent bystanders in a illegal way according to our Republics Constitution. Our Constitution has a prescribed method of fixing the problems we have now. The people in charge and a lot of citizens know this. If they insist on keeping on with their rogue out of order acts of treason it’s a matter of them begging to be brought back to order with in the confines of our Constitution (2nd amendment Militia Act).” A lot of rich and well to do people lost their ass in 2008 right along with the banks. Their can be no fix with same people in charge. Think Iceland.

  7. JEHR

    In my pessimistic way, I think that our world is representative of the people who live on the sides of a dormant volcano. As long as the volcano does not explode, people live, work and reproduce and carry on as it everything were normal. Then one day, the volcano erupts and rains down ash and molten lava and wipes out all the villages. End of that story.

    Once the volcano goes dormant again, people begin building houses on the rich slopes and the cycle begins again. The end of all the cycles seems to be so far away that no one worries about what will eventually happen when all the world is one big volcano that will erupt–eventually.

    1. JTFaraday

      Yeah, at this point our entire dysfunctional society is a natural disaster waiting to happen.

  8. bluntobj

    “Meanwhile it appears that nations where governments take an active role in the economy are showing fewer signs of dysfunction and are facing some of the 21st Century dilemmas more fully than the US. These are the nations of Western Europe (especially pre-Euro), Canada, Australia, post-reform China, and Korea.”

    Contextual basis for the examples of countries that “work well” when government takes an active role:

    Western Europe, Pre-Euro: defense spending offloaded to US, plus rebuilding after WW2

    Canada: Oil Driven economy, currently in RE Bubble
    Australia: Mineral/China Driven economy, popping RE bubble, massive reduction in demand for minerals ahead.
    China: They’re Fascists. Not a good example for the US >.<
    And their economy is crashing.
    Korea: Not enough information to make a determination, but again a country rebuilt and defended by the US.

    Mr. Hoexter, I agree with the issues you raise, especially with the capture of the government by the elites.

    I disagree with the fundamental basis of these posts:

    "The only political economic instrument/set of institutions capable of managing the transition to a more sustainable economy is some version of a strong mixed economy, where government and the private sector cooperate but have differentiated roles. Beyond the obvious anti-ecological predilections and tendencies of its advocates, austerity is a direct attack on the institutions of a strong mixed economy and therefore leads away from durable solutions to our ecological and climate crises."

    The Third Reich was a "strong mixed economy"
    China has been a "strong mixed economy"
    Pre-WW2 Italy was a "strong mixed economy"
    Spain, until the late 1970's, was a "strong mixed economy"
    India is a "strong mixed economy"

    "Strong", in the context you use, does not mean the strength on the economy, but in the governing mechanisms available to government.

    Based on what you have described in both posts, I think you are using the incorrect verbage to describe the kind of economy you espouse.

    The correct word is Fascist.

    I asked yesterday if you were indicating that price controls were needed to control demand in the economy. I think the question has been answered in this post.

    I absoutely understand your characterization of Objectivism. Rand was a passionate opponent of "mixed economies."

    Lastly, this:

    "In order for a strong mixed economy to function, the emerging plutocracy needs to be dismantled, as currently large corporations and super-rich individuals have inordinate power over government. In this context, the government cannot serve a broadly shared “public purpose” but instead overtly, covertly and indirectly serves the powerful private interests, whose interests at many points conflict with those of the broad population. Electoral and campaign reforms are required as are higher standards of quality for public media and political information."

    Control of media to suit state purposes, and the state as the elite in control, for a "broadly shared public purpose."

    After that, I don't really have any more questions. I understand quite well.

    1. Michael Hoexter

      What is your solution for coordinating society? What would you replace the leadership role of government with?

      Calling everything that involves government activism and leadership “Fascist” leaves us with nowhere to go. There are democratic processes by which people decide that they share common purposes (not unanimously but majority).

      Provide solutions and preferably not under a pseudonym… then we can talk.

      1. bluntobj

        Mr. Hoexter,

        I will consider your request in regard to solutions and emailing, and since I am not a public figure or blogger I use a pseudonym out of habit. I’ll converse over email so Big Sis can read and enjoy.

        Yet a pseudonym does not negate the basic characteristics of the government type you describe. My real complaint is that you pussyfoot around it.

        Unfortunately, my solutions are not nice or happy, either.

          1. bluntobj

            My solutions are on a personal and community level. There are an huge number of blogs and ideas out there about how to remove yourself from the “farming” systems set up by the plutocratic elite. Try the works of Charles Huges Smith for a start. Change on a personal and community level is within every person’s reach. I prefer the “Opt-out” strategy of passive resistance.

            Yet on the large scale such as Mr. Hoexter is discussing here it is not possible for 99.99% of people to physically influence. This is why I don’t like to try to propose solutions on this level, and truly dislike the response often given by an academic of the “if you have no solutions you shouldn’t comment” kind.

            Influence on the national policy level is built up over the course of decades of studies, papers, stories, meme’s, blogs, etc. That is the nature of this blog post.

            I comment and passionately oppose ideas that involve a powerful central state without limits, or under the gudance of a “democracy,” as it leads quickly to plutocratic control and elite capture of the government…like we have now.

            Our path now must lead through destruction of malinvested capital. It will do so anyhow; the only question is how long we’re going to suffer. We are always moving forward into a future that is unknown, but we can make good guesses. One of those is that labor intensive work and jobs, on the same scale of the past, are not coming back. That means that there will be a large number of people who are effectively surplus’d in a world that only wants them to consume, and does not need them to produce. It’s too bad that we have cheapened the meaning of the word “horror”
            with so many cheesy movies. Horror truly describes how I feel looking at how surplus populations have been treated historically.

            Couple surplus populations with “strong mixed economy” states in a time of resource scarcity, and you have the forumla for war and suffering on a scale we have not seen on this planet since WW2. Or ever, who knows.

            Which, in the end, means I would prefer degenerated states over fascist states.

  9. DM

    Thanks for questioning the “growth” mantra. No organism can groow forever. Read Lester Brown’s “Plan B 4.0” offers at least a studied possibilty of changing direction. If a candidate could put something like that forward, there might be real hope.

  10. Hugh

    Hoexter still seems to be skirting the issues. Austerity is not self-sabotage. It is looting. Criminality which should be central to any analysis of what is going on does not rate a mention.

    Along with this, there is a refusal to question the validity of the system itself. I have made this point many times, but reform, and Hoexter looks very much a reformist, is only possible if one believes the economic foundations of the current system are sound. They aren’t. This leads Hoexter to counsel us to seek change from the very elites who are looting us:

    “Without a substantive choice at the ballot box, lobbying, public education, protest, and civil disobedience then become the means by which the general public can hope to influence policymakers”

    This reformist tendency can also be seen in his call to dismantle the “emerging plutocracy.” Emerging implies that there is still time for reform and plutocracy is just a way to reference wealth inequality without the criminality which produced it. But there is nothing emerging or non-criminal about the late stage kleptocracy we are in.

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