March 6, 2012 archive

Hurtling Towards a War with Iran

Cross posted from The Stars Hollow Gazette

In his annual speech to AIPAC, President Obama said:



“Already, there is too much loose talk of war. Over the last few weeks, such talk has only benefited the Iranian government, by driving up the price of oil, which they depend on to fund their nuclear program. For the sake of Israel’s security, America’s security, and the peace and security of the world, now is not the time for bluster; now is the time to let our increased pressure sink in, and to sustain the broad international coalition we have built. Now is the time to heed that timeless advice from Teddy Roosevelt: speak softly, carry a big stick. And as we do, rest assured that the Iranian government will know our resolve – that our coordination with Israel will continue.”

If there is “too much loose talk of war”, perhaps President Obama needs to stop threatening to start one with Iran. The only ones who are driving up the price of oil with loose talk are Obama and the Prime Minister of Israel, Benjamin Netanyahu. The president needs to stop perpetuating lies that his own national security advisors have said are not true and of which there is no evidence:

“A nuclear-armed Iran is completely counter to Israel’s security interests. But it is also counter to the national security interests of the United States. Indeed, the entire world has an interest in preventing Iran from acquiring a nuclear weapon. A nuclear-armed Iran would thoroughly undermine the non-proliferation regime that we have done so much to build. There are risks that an Iranian nuclear weapon could fall into the hands of a terrorist organization. It is almost certain that others in the region would feel compelled to get their own nuclear weapon, triggering an arms race in one of the most volatile regions in the world. It would embolden a regime that has brutalized its own people, and it would embolden Iran’s proxies, who have carried out terrorist attacks from the Levant to southwest Asia.”

Iran, like the United States signed and ratified the Treaty on Non-Proliferation of Nuclear Weapons.

And this statement certainly doesn’t sound like Obama was backing away from banging the drum for a war:

“Iran’s leaders should know that I do not have a policy of containment,” he said. “I have a policy to prevent Iran from obtaining a nuclear weapon. And as I’ve made clear time and again during the course of my presidency, I will not hesitate to use force when it is necessary to defend the United States and its interests.”

Just how legal an attack, or even the threat of one, on Iran would be is discussed on this article by Glenn Greenwald at Salon:

Regardless of how one wants to rationalize these threats of an offensive military attack – they’re necessary to persuade the Israelis not to attack, they’re necessary to gain leverage with Iran, etc. – the U.N. Charter, to which the U.S. is a signatory, explicitly prohibits not just a military attack on another nation, but also the issuance of threats of such an attack. From Chapter II, paragraph 4:

   All Members shall refrain in their international relations from the threat or use of force against the territorial integrity or political independence of any state, or in any other manner inconsistent with the Purposes of the United Nations.

Does this matter at all? Should we even pretend to care in any way what the U.N. Charter prohibits and whether the U.S. Government’s threats to attack Iran directly violate its core provisions? I’m not asking this simple question rhetorically but rather to hear the answer.

The UN was of little concern to George W. Bush; it’s no wonder it’s of little concern for Barack H. Obama

So what are Iran’s leaders saying? From Juan Cole:

“A week and a half ago, Khamenei gave a major foreign policy speech in which he said,

The Iranian nation has never pursued and will never pursue nuclear weapons. There is no doubt that the decision makers in the countries opposing us know well that Iran is not after nuclear weapons because the Islamic Republic, logically, religiously and theoretically, considers the possession of nuclear weapons a grave sin and believes the proliferation of such weapons is senseless, destructive and dangerous.

There is no evidence that Iran is trying to even develop a nuclear weapon. Getting into another war in the Middle East is not in the best interests of the US, Israel or the rest of the world.

Barack are you listening?

Wrong Finale

Crossposted from The Stars Hollow Gazette

In two previous posts I’ve collected some of letsgetitdone’s reactions to Dylan Matthews’ Washington Post article on Modern Monetary Theory and the responses of other authors-

In this final installment is some of his extensive treatment of Dean Baker’s critiques.

In his first reaction to Dean Baker, letsgetitdone outlines 7 areas of specific differences between Keynesian Deficit Doves and MMT and their policy implications-

  1. Government deficit spending for recovery.
  2. Government fiscal policy over the business cycle.
  3. Long Term Deficit Reduction Planning.
  4. Long Term Deficit Reduction Projections.
  5. Funding Government spending.
  6. Social Security Solvency.
  7. Proposed progressive reform programs.

The end for MMT is achieving public purpose including full employment with price stability as one aspect of it. Since the MMT view is that fiscal policy is much more useful for doing this than monetary policy MMT focuses on how fiscal policy should be set.

Its general view is that alternative budgetary plans have to be assessed from the viewpoint of their anticipated outcomes, without regard to deficits or surpluses as outcomes valued in themselves. Of course, full employment is positively valued and unemployment negatively valued, but a whole range of valued outcomes is relevant for such assessments. Those are the ends, and fiscal policy is the means. Monetary policy and trade policy are also means, but are not nearly as important as fiscal policy in their effective short-term impact.

Baker wrote a second article which letsgetitdone also felt largely ignored the critical differences between MMT and Deficit Dove Keynesianism and this time responded with a 3 part piece-

In the first part he discusses these issues-

Like MMT Says: Monetary Policy Would Be Ineffective

I won’t go into the details here, but the bottom line seems to be that he thinks the Fed could add $20 Billion to aggregate demand mostly through mortgage refinancing arrangements.

My own bottom line is that what he outlines might work, but only proves the MMT point that monetary policy can do very little to help solve our present economic problems. We have about a 28 million person U6 employment problem, which could take as much as $1.2 Trillion in carefully formulated deficit spending. So, adding $20 Billion in aggregate demand to the economy makes very little contribution compared to the scale of the problem. It’s the proverbial drop in the bucket and justifies the lack of emphasis MMT places on this channel.

Expanding US Exports at the Expense of Decreasing Real Wealth?

The MMT argument is that as long as other nations are willing to send us more real wealth in return for dollars, than we send them, then that is a net benefit for American consumers. Certainly, our willingness to accommodate their desire to exchange exports for dollars has caused real damage to US industries, and the erosion of skills and capabilities among workers and has also cost the jobs of Americans.



In other words, the big negatives that are related to our positive current account balance with the rest of the world (colloquially known as our trade deficit) are costs that we don’t have to bear, according to MMT, to get the benefits of imports. We could employ Americans fully, our people could be developing new skills and experiences, our wealth in facilities and social conditions we all share could be vastly increased, if the Government used its capability to help us fulfill the opportunities the current account balances give us to turn to other things that badly need doing, rather than making televisions, toys, clothes, and all the other things we no longer make. MMT says that the Government’s deficit will equal private sector savings plus the current account balance. So, if both are high that makes room for large Government deficits, and, in fact, actually demands them, since if we try to reduce them the end result will be less real wealth coming from imports and less nominal wealth accumulated from savings.

letsgetitdone continues in the second part

Expanding US Exports at the Expense of Decreasing Real Wealth? (continued)

(W)hy do economists like Dean and Paul Krugman insist on relying on far-fetched scenarios to try to argue against simple truths that may apply today? The current account balance will probably be around 4-5% of GDP this year. As the economy recovers it will probably rise to 6% of GDP again, which represents a very real benefit to the United States. But there’s no reason to expect that this growth would continue indefinitely or ever reach 50% of GDP. Why should it? What are the dynamics that would drive things this way, and make other nations value the dollar so much, that they will keep their own populations barefoot?



Dean then continues with other arguments about re-balancing trade and its effects which are largely correct. But his remarks on the devaluation strategy not being “a beggar thy neighbor” strategy are only correct if we assume that such a strategy would not lead to negative compositional effects at the higher level of the international economic system.

If US attempts to devalue were followed by other nations responding in kind, then a race-to-the-bottom could result which would harm workers in all the major nations of the world. In this context MMT would probably say, don’t devalue. Instead use fiscal policy to fully employ all of your working people, and then let other nations devalue your currency as they please. There will be far less danger of a race to the bottom in this scenario, since your attempt to employ all of your own people to domestic tasks producing valued outcomes, can hardly be viewed as an attack on the desires of other nations to continue to export to you.

Is Work Sharing a Separate Channel for Raising Aggregate Demand?

I find myself in complete agreement with the proposals in the past few paragraphs and the arguments for the benefits of work sharing. I have only one problem with it, and that is why Dean classifies this proposal as a separate channel from the Government deficit spending channel?

From my point of view, making the standard work week 35 hours and mandating the kinds of fringe benefits they have in Europe and compensating workers directly with Government subsidies for the reduction of 5 hours of work per week they receive, is definitely using the Government channel to raise aggregate demand, since the increased demand comes from the Government subsidy assumed by the proposal. It’s not a proposal the economists developing MMT have put forward. But I’ve put forward a similar proposal, and I see nothing in it that is in conflict with MMT.

In the third part letsgetitdone concludes with a discussion of Dean Baker’s contention that MMT relies “exclusively” on the fiscal channel-

Pitfalls of the Fiscal Policy Channel

MMT doesn’t advocate wasteful spending, or digging holes for the sake of the activity, or spending money on projects and programs that will waste real resources or people’s lives. There is a risk that any spending, private or public, will be wasteful or involve an excess of real costs over real benefits. But that’s no excuse for avoiding private sector spending, so why should it be one for avoiding public sector spending when that’s called for?

The events of the last ten years show that both Federal spending on Wars, and private spending on financial adventures can be disastrous, but it was wasteful investments on fantasy sand castles that crashed much of the world economy; not deficit spending in the United States intended to achieve public purpose. In fact, that kind of spending has been starved for the past 35 years at least. And right now, there is no record of wasteful public spending that remotely compares with the record of wasteful private spending over that same period.



MMT, itself, it favors spending that can be justified based on projections of its real benefits and costs, not projections of its nominal benefits and costs to a Federal Government that can never have any solvency problem. MMT is against crony capitalism, and for prosecutions of banksters and fraudsters. MMT proposals in the health care area would not only improve health care outcomes and reduce private sector expenditures on health care but would also produce millions of new jobs in the health care sector, while putting the health insurance barons out of business. MMT stimulus proposals for ending the recession, include Revenue Sharing grants to States on a per person basis, so that States could re-hire staff laid off in response to the recession’s impact on tax revenues. It’s very doubtful that hiring back Police, Firefighters, Teachers, and other State Civil Servants would be viewed as wasteful to most people.

Dean’s Conclusion and Mine

(M)y view is that Washington in its current state doesn’t care about logical inconsistency, or rationality, or arithmetic. At this point it is a closed “village” of opinion. As Dean implies, points of view that have no currency in the village don’t get discussed, or ridiculed when they are. The question however, is how does a closed system like this change, since it is fairly closed to changes in viewpoint that may be necessary to use to solve its problems?

I think the answer to that question is raw failure that destroys confidence in the governing world view which is neoliberalism. The highly visible failure of neoliberalism in 2008 wasn’t capitalized on by this Administration. It was loyal to the neoliberal point of vew and followed the prescriptions of neoliberals for fixing the problems it created.

However, the failures of neoliberalism continue. We see the disaster in Europe now taking shape, we see the extreme discontent among so many in American society, including most importantly the young who cannot see any acceptable future. The stresses grow with each passing year of injustice and maintenance of levels of real unemployment that haven’t been seen in this country since the 1930s.



The worst of the anger is yet to sweep this country. When it does, when the banking system falls either in Europe or here, when the big banks are taken into resolution and the serious investigations start under a new Attorney General, the changing of the guard in Washington will come; and the old regime, along with their neoliberal paradigm, will be swept away. And it is then that MMT will be accepted in Congress and the Executive Branch sufficiently, so that its policies will get a chance. If those policies succeed, then neoiberalism will be gone, hopefully for good.

Cartnoon

Crusader vs. the Pirates

Crusader Rabbit Crusade 2 Episode 03

Open Thread

Noam Chomsky Endorses Jill Stein!!!

Now, I wonder…. did my arguing with Noam on WWL Radio have anything to do with changing his mind? He was gonna vote Obama on Friday, when I spoke with him. And after, he came out with this endorsing Jill Stein! YAYYYY!

http://www.greenpartywatch.org…

Photobucket“Dear friends, I hope you’ll take the opportunity of the March 6th Green-Rainbow primary to cast a vote for resurgent democracy. A democracy that thrives outside of the Democratic and Republican Parties that are sponsored by and subservient to corporate America. And I hope you will consider joining me in supporting Green Party presidential candidate Jill Stein – both with your vote and with a contribution to her campaign for people, peace and the planet.As you know, popular anger at the political and economic institutions, and the subordination of the former to the latter, has reached historic heights. And for sound reasons. There could hardly be a better time to open up the political debate to the just anger and frustrations of citizens who are watching the country move towards what might be irreversible decline while a tiny sector of concentrated wealth and power implements policies of benefit to them and opposed by the general population, whom they are casting adrift.

Jill Stein’s campaign is unifying the national Green Party, and ensuring that an urgently needed voice for democracy and justice will have a place on the ballot in the November election. Please join me in supporting Jill on March 6, and securing a voice foe a peaceful, just, green future in the presidential race.”

More below:

On This Day In History March 6

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

March 6 is the 65th day of the year (66th in leap years) in the Gregorian calendar. There are 300 days remaining until the end of the year.

On this day in 1857, the US Supreme Court hands down its decision on Sanford v. Dred Scott, a case that intensified national divisions over the issue of slavery.

Dred Scott v. Sandford, 60 U.S. 393 (1857), was a ruling by the U.S. Supreme Court that people of African descent imported into the United States and held as slaves (or their descendants, whether or not they were slaves) were not protected by the Constitution and could never be U.S. citizens. The court also held that the U.S. Congress had no authority to prohibit slavery in federal territories and that, because slaves were not citizens, they could not sue in court. Furthermore, the Court ruled that slaves, as chattels or private property, could not be taken away from their owners without due process. The Supreme Court’s decision was written by Chief Justice Roger B. Taney.

Although the Supreme Court has never overruled the Dred Scott case, the Court stated in the Slaughter-House Cases of 1873 that at least one part of it had already been overruled by the Fourteenth Amendment in 1868:

   The first observation we have to make on this clause is, that it puts at rest both the questions which we stated to have been the subject of differences of opinion. It declares that persons may be citizens of the United States without regard to their citizenship of a particular State, and it overturns the Dred Scott decision by making all persons born within the United States and subject to its jurisdiction citizens of the United States.

The Decision

The Supreme Court ruling was handed down on March 6, 1857, just two days after Buchanan’s inauguration. Chief Justice Taney delivered the opinion of the Court, with each of the concurring and dissenting Justices filing separate opinions. In total, six Justices agreed with the ruling; Samuel Nelson concurred with the ruling but not its reasoning, and Benjamin R. Curtis and John McLean dissented. The court misspelled Sanford’s name in the decision.

Opinion of the Court

The Court first had to decide whether it had jurisdiction. Article III, Section 2, Clause 1 of the U.S. Constitution provides that “the judicial Power shall extend… to Controversies… between Citizens of different States….” The Court held that Scott was not a “citizen of a state” within the meaning of the United States Constitution, as that term was understood at the time the Constitution was adopted, and therefore not able to bring suit in federal court. Furthermore, whether a person is a citizen of a state, for Article III purposes, was a question to be decided by the federal courts irrespective of any state’s definition of “citizen” under its own law.

Thus, whether Missouri recognized Scott as a citizen was irrelevant. Taney summed up,

   Consequently, no State, since the adoption of the Constitution, can by naturalizing an alien invest him with the rights and privileges secured to a citizen of a State under the Federal Government, although, so far as the State alone was concerned, he would undoubtedly be entitled to the rights of a citizen, and clothed with all the rights and immunities which the Constitution and laws of the State attached to that character.

This meant that

   no State can, by any act or law of its own, passed since the adoption of the Constitution, introduce a new member into the political community created by the Constitution of the United States.

The only relevant question, therefore, was whether, at the time the Constitution was ratified, Scott could have been considered a citizen of any state within the meaning of Article III. According to the Court, the authors of the Constitution had viewed all blacks as

   beings of an inferior order, and altogether unfit to associate with the white race, either in social or political relations, and so far inferior that they had no rights which the white man was bound to respect.

The Court also presented a parade of horribles argument as to the feared results of granting Mr. Scott’s petition:

   It would give to persons of the negro race, …the right to enter every other State whenever they pleased, …the full liberty of speech in public and in private upon all subjects upon which its own citizens might speak; to hold public meetings upon political affairs, and to keep and carry arms wherever they went.

Scott was not a citizen of Missouri, and the federal courts therefore lacked jurisdiction to hear the dispute.

Despite the conclusion that the Court lacked jurisdiction, however, it went on to hold (in what Republicans would label its “obiter dictum”) that Scott was not a free man, even though he had resided for a time in Minnesota (then called the Wisconsin Territory). The Court held that the provisions of the Missouri Compromise declaring it to be free territory were beyond Congress’s power to enact. The Court rested its decision on the grounds that Congress’s power to acquire territories and create governments within those territories was limited. They held that the Fifth Amendment barred any law that would deprive a slaveholder of his property, such as his slaves, because he had brought them into a free territory. The Court went on to state – although the issue was not before the Court – that the territorial legislatures had no power to ban slavery. The ruling also asserted that neither slaves “nor their descendants, were embraced in any of the other provisions of the Constitution” that protected non-citizens.

This was only the second time in United States history that the Supreme Court had found an act of Congress to be unconstitutional. (The first time was 54 years earlier in Marbury v. Madison).

Late Night Karaoke

Taking a Ride in the Austerity Train

Cross posted from The Stars Hollow Gazette

James Crotty: Obama’s budget is a “less savage” attack on social programs, but still assumes we are “living above our means”

Thanks to the David Dayen at FDL News Desk for the links to articles that there is still a big push from the White House for cutting the deficit in the proposed budget despite the denials. There is a bipartisan group headed by House Minority Whip Steny Hoyer on the Democratic side to sell more deficit reducing austerity

The push is intended to disrupt the consensus among most political leaders that Congress will punt budget consolidation efforts until after November – when the election returns are in, and the January 1, 2013 expiry of the Bush tax cuts and deep across-the-board spending cuts make real action inevitable.

In a speech hosted Monday morning by Third Way, Hoyer revealed that he and other lawmakers are looking for the right moment to introduce a bill that would achieve the sorts of deficit reduction goals that have eluded Congress and the White House thus far. [..]

“There is ongoing work…to put concrete proposals to paper in legislative form, so that as I said there will be an opportunity to offer those proposals,” Hoyer said. “Obviously you want to create a large consensus for that before you offer it so that its defeat is, if defeated, temporary only and not undermining of what the objective is, and that is getting a big, bold, balanced plan adopted.”

The Hill identified some of the other members of this secretive committee but others don’t even want to be identified:

A small, bipartisan group of lawmakers in both the House and Senate are secretly drafting deficit grand bargain legislation that cuts entitlements and raises new revenue. [..]

The core House group of roughly 10 negotiators is derived from a larger Gang of 100 lawmakers led by Reps. Mike Simpson (R-Idaho) and Health Shuler (D-N.C.), who urged the debt supercommittee to strike a grand bargain last year. [..]

The talks are so sensitive that some members involved do not yet want to be identified.

Dayen, as do others, doesn’t believe anything will happen with the budget and these massive cuts until after the election during the lame duck session but that doesn’t mean that the grand plan would pass. He had a major concern that “those defenders of the safety net left in Congress have a plan of their own.”

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