Policies of FAIL!

What is amazing (or maybe not) is the amount of denial among the elite class that has profited from our current dysfunctional system of their level of personal incompetence and how much people (of all political persuasions) hate them for their positions of privilege despite demonstrated non-performance. You think The Donald is scary? Wait until the torches and pitchforks come out.

CAN BERNIE DO IT? The View of a Non-Establishment Economist
by L. Randall Wray, New Economic Perspectives
Posted on April 17, 2016

(A)nyone who understands sovereign government finance knows that a program’s ability to “pay for itself” is not an important consideration for undertaking programs that are in the public interest. Government is not like a firm that needs to focus narrowly on recovering costs and making profits. The question for government is whether there are the resources and know-how to achieve success—whether the mission is landing on the moon, prosecuting a war, or building an interstate highway system. Financial affordability is not the issue—what matters is the impact on the private sector should the government’s efforts require withdrawing resources from private use. If the government takes too many resources, this could set off a bidding war and cause inflation.

But even if policy makers, elected representatives, and voters at large fail to understand this, it strains credulity to believe that Bernie’s programs would not “pay for themselves”. All one needs to do is to look at history to remind oneself of the substantial—and continuing—pay-offs from previous efforts on the scale proposed by Bernie Sanders.

Does anyone seriously doubt whether Roosevelt’s New Deal paid for itself? In 1929 the US was a broken, under-developed country, unprepared for the 20th century. When Roosevelt took over, income and wealth inequality was the worst the US had ever seen. Unemployment and poverty had skyrocketed. The nation’s infrastructure was inadequate—much of the country lacked even basic paved roads, electrification, and indoor plumbing, let alone adequate schools, public buildings, dams, and airports. The 13 million workers of Roosevelt’s New Deal jobs programs built that infrastructure—much of it still in use today.
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Roosevelt also fixed the banking system. He declared a banking holiday—shutting down all the banks–and put Jessie Jones in charge of reopening them. Jones demanded letters of resignation from the top management—and where he found evidence of shady practices, he accepted those letters before reopening the banks. Finance was downsized and constrained—for two generations it was kept under lock and key.
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The New Deal’s infrastructure provided the basis for the expansion of the productive basis needed for the war effort. Eventually the war came to an end, but the New Deal infrastructure remained, supplemented by the industrial capacity built up during the war. All of it was now ready for peace time consumption.

The nation prospered. Roosevelt’s programs paid for themselves, with unprecedented dividends. The middle class grew—and rightly, or wrongly, the vast majority of Americans considered themselves to be members of that growing middle.

Gradually the government debt ratios fell—not because the government paid off the debt (it didn’t repay any of it) but because GDP grew rapidly. There was no “debt burden”—rather, the postwar economic boom was facilitated by the safe private portfolios stuffed full of risk-free US Treasuries.

When the Cold War began, no one asked whether the renewed militarization of the economy would “pay for itself”. We needed to get into space to demonstrate our superiority. That required an interstate highway system and college educations for our young, which meant nearly free tuition at public universities supplemented with low interest National Defense Student Loans. Did all of this “pay for itself”? Of course it did—it produced the highly educated baby boom generation. The generation that fought US apartheid and demanded civil rights, that fought for women’s rights, for free speech, and that made substantial progress toward finally realizing our nation’s Bill of Rights—which had hitherto been a pipedream.

However, for the sake of argument, let us concede that Bernie’s programs might not “pay for themselves”. What if we break-up and downsize the banks, jail the banksters, tax the rich, create jobs for the unemployed, raise the minimum wage, build infrastructure, restore democracy, reverse Citizens United, get money out of politics, stop droning and bombing our neighbors, and bring a united America into the 21st century.

But the budget deficit and debt rise.

Would it have been worth it? Only a fool would claim otherwise.

Hillary Clinton prefers to downsize expectations. She refuses to commit to policy that the crazy Republican majority won’t support. The biggest banks don’t want to be downsized. Further, her Wall Street supporters would rather not go to jail. Nor are the One Percenters (of which she and Bill are relatively new members) behind Bernie’s plan for taxes on their outsized incomes. The Clinton years and the aftermath were good for her, even if they were terrible for the bottom 99%. She prefers small changes around the edges—not Bernie’s “revolution”.
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Hillary Clinton prefers to downsize expectations. She refuses to commit to policy that the crazy Republican majority won’t support. The biggest banks don’t want to be downsized. Further, her Wall Street supporters would rather not go to jail. Nor are the One Percenters (of which she and Bill are relatively new members) behind Bernie’s plan for taxes on their outsized incomes. The Clinton years and the aftermath were good for her, even if they were terrible for the bottom 99%. She prefers small changes around the edges—not Bernie’s “revolution”.

Speaking of which. I know that the word scares voters. Bernie’s an admitted Democratic Socialist. Some feel he hasn’t been entirely forthcoming about what “socialism” and “revolution” mean to him.

He has, however, just made it crystal clear in the speech he gave at the Vatican in Rome. It is a remarkable speech. The contrasts between Bernie and the Neoliberals—both Democrat and Republican—that he’s running against have been delineated. One cannot imagine a Hillary, a Donald, a Ted, or a Paul articulating anything like what he laid out.
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Forget the protestations of the mainstream economists and politicians that this is just the efficient operation of our free market economy, which rewards highly productive individuals for the tremendous contributions they’ve made to our global well-being. In fact, our economies reward rentiers—those with monopolies that create pricing power. Even if their real contributions to our economy are negative—which is surely the case for the fraudsters on Wall Street.

The math is quite simple. We could take away most of the wealth of those 60 individuals—leaving them still quite wealthy—and redistribute it to the 3.5 billion poorest people on planet earth, raising their living standards considerably without negatively impacting global production. Hillary’s surrogates will insist that it is politically impossible, but we cannot know until we try. The first step is to elect a US president willing to try.

I, personally, do not support Bernie’s propensity to link taxing the rich to his spending programs. The rich should pay more taxes because they are too rich. This has nothing to do with making his spending programs affordable. Uncle Sam does not need the money of the rich in order to pay for spending on the poor. Besides, Bernie’s spending programs will pay for themselves—just as New Deal programs paid for themselves as they created our middle class.
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There has been much debate about whether Hillary Clinton is “qualified” to be President, after accepting hundreds of thousands of dollars for speeches before Wall Street banks, and the millions those banks have provided to her family’s foundation. Bernie has questioned her judgement, not her qualification.

For me, the distinction comes down to the content of her speeches. Many have called on Hillary to release the transcripts of her talks. If she used the opportunity to scold the banks for their fraudulent—indeed, criminal—behavior, then it comes down to a judgement call. If she donated her fees to real charities (I do not mean her family foundation which quite naturally promotes her family’s interests), and if she warned the banksters that if elected president she would direct her Attorney General to investigate their frauds, then I would congratulate her for her judgement.

But if she had done that, she would be happy to release the transcripts. We must presume that her reluctance to do so indicates that she did not berate her Wall Street supporters. While we cannot conclude that she congratulated them for their frauds—and for mostly getting away with slaps on the wrist—we might conclude that she fell far short of what we could reasonably expect a potential president should have done in such circumstances. The reluctance to release the transcripts is evidence that her judgement is poor; release of the transcripts might reveal that she is not qualified for the job.

How does Bernie feel about the banksters on Wall Street? Well, we can be pretty darned sure he would not take their money. He recognizes how the flow of money from Wall Street and other corporations undermines our democracy.
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(o)ur barriers are self-imposed by leaders without vision, by leaders who find it acceptable to take “what is offered” by Wall Street, who claim to know “how to get things done” but who choose to do too little.
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For the past three decades or so, our leaders have been satisfied with progress that enriched those that already had too much, while those with too little had to learn to get by with even less. This is the challenge facing our democracy today, just as Roosevelt faced it in 1937.