Category: Economy

Earlier today I posted up an article I found on one of my sites, this one related to the Green Economic growth going on mostly everywhere but here in the U.S., though here we are finally doing some things. I was going to leave it at that posting but low and behold I started streaming NPR and caught a related short interview with an author that wasn’t directly related to Green but was about what we once had as an economy here in the States, which gives me the title.  

Crossposted from The Stars Hollow Gazette

At least the way many economists practice it.  Instead it is a faith based Voodoo cult.

For one thing science is predictive and replicable.

Neo-classical synthesis predicts that reduction in Government spending, without increases in spending of other sectors of the overall economy like Business and Consumers, decreases Aggregate Demand.  In the absence of Demand businesses stop producing now surplus goods and services (there’s no demand for them you see) and reduce marginal expenses (fire people and close factories) and hoard capital (money).

Pretty predictive huh?

And in terms of replicable- we have seen this same phenomena time after time ever since there have been economies and the end result is always the same.  Voodoo economics believes in Tinkerbell and Pixie Dust.

How to Kill a Recovery

By PAUL KRUGMAN, The New York Times

Published: March 3, 2011

Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right.

…

(W)e have a lot of evidence from other countries about the prospects for “expansionary austerity” – and that evidence is all negative. Last October, a comprehensive study by the International Monetary Fund concluded that “the idea that fiscal austerity stimulates economic activity in the short term finds little support in the data.”

And do you remember the lavish praise heaped on Britain’s conservative government, which announced harsh austerity measures after it took office last May? How’s that going? Well, business confidence did not, in fact, rise when the plan was announced; it plunged, and has yet to recover. And recent surveys suggest that confidence has fallen even further among both businesses and consumers, indicating, as one report put it, that the private sector is “unprepared to fill the hole left by public sector cuts.”

…

Over the next few weeks, House Republicans will try to blackmail the Obama administration into accepting their proposed spending cuts, using the threat of a government shutdown. They’ll claim that those cuts would be good for America in both the short term and the long term.

But the truth is exactly the reverse: Republicans have managed to come up with spending cuts that would do double duty, both undermining America’s future and threatening to abort a nascent economic recovery.

I’m not taking any bets on whether Obama caves again or not, or what the results will be when he does, just over/unders on how long it will take.

Cross posted from The Stars Hollow Gazette

David Cay Johnson, professor at Syracuse University, author of “Free Lunch” and columnist for Tax.com, spoke with Rachel Maddow about the Republican plans to cut funding to the IRS and the direct impact that will have on the governments ability to collect taxes and reduce the deficit.

Johnson also reported in an article at Tax.com, that tax revenues in 2010 were smaller than in 2000 before the Bush tax cuts.

We take you now to the official data for important news. Federal tax revenues in 2010 were much smaller than in 2000. Total individual income tax receipts fell 30 percent in real terms. Because the population kept growing, income taxes per capita plummeted.

Individual income taxes came to just $2,900 per capita in 2010, down 36 percent from more than $4,500 in 2000. Total income taxes and income taxes per capita declined even though the economy grew 16 percent overall and 6 percent per capita from 2000 through 2010.

Corporate income tax receipts fell 27 percent and declined 34 percent per capita, even though profits boomed, rising 60 percent.

Payroll taxes increased slightly overall, but slipped per capita because the nation’s population grew five times faster than the number of people with any work. The average wage also declined slightly.

You read it here first. Lowered tax rates did not result in increased tax revenues as promised by politician after pundit after professional economist. And even though this harsh truth has been obvious from the official data for some time, the same politicians and pundits keep prevaricating. Some of them even say it is irrelevant that as a share of GDP, income tax revenues are at their lowest level since 1951, when Harry S. Truman was president.

No matter how many times advocates of lower tax rates said it, tax rate cuts did not pay for themselves, did not spur economic growth, did not increase jobs, and did not make America better off.

(emphasis mine)

The full transcript for the video can be read a Rachel’s blog.

There’s a lot of ways to be petty and cheap and stupid, and a lot of ways to stick it to a program you don’t like, and by extension, the clients of that program…and this week the House Republicans have embarked on an effort to combine the two into one petty, cheap, and stupid way to stick it to the clients of Social Security and the workers who administer the program.

They’re going to sell it to you, if they can, as a way to “lower the deficit”, or words similar…but what this is really about is making the actual Social Security program work less well-because, after all, if a program is popular today, the best way to make it less so is to apply a bit of “treat ’em like their cars were impounded” to every interaction customers have with the system.

And what better way to make sure that happens…then to aggressively demoralize everyone who works down at the ol’ Social Security office?

So it’s Day 3 of my fake campaign for Congress, and we’ve run into our first obstacle

The Fake Campaign, as you may recall, is fake headed for Wisconsin, to show solidarity, and we’ve fake hitched a ride on a delivery truck headed for Rush Limbaugh’s Florida broadcasting studios-but we fake found ourselves caught up in the all-too-real Giant Grip Of Winter that has seized the Midwest over the past week.

We’re back on the road now, but we were stuck for darn near a half-day there at Wall…and if you know anything about South Dakota, you know there are really only two things to do in the City of Wall: you can shuffle back and forth between Gold Diggers and the Badlands Bar, partaking of numerous intoxicating liquors along the way…or you can head on into Wall Drug (the same one that’s on all those bumper stickers and signs) and partake of the finest display of Giant Jackalopia on the planet.

The Campaign, naturally, chose Jackalopia-and that’s why today’s Manifesto is all about the fake impromptu 5-cent-coffee-fueled Social Security Town Hall that we held in the Wall Drug Mall for several hours while we waited for I-90 to reopen.

“We deal in illusions, man. None of it is true. But you people sit there day after day, night after night, all ages, colors, creeds. We’re all you know. You’re beginning to believe the illusions we’re spinning here. You’re beginning to think that the tube is reality and that your own lives are unreal. You do whatever the tube tells you. You dress like the tube. You eat like the tube. You raise your children like the tube. You even think like the tube. This is mass madness — you maniacs! In God’s name you people are the real thing, WE are the illusion.”

 – Howard Beale from the movie Network

 When the movie Network was released 35 years ago it was considered a satire. No one at the time could imagine how far the standards of television, and society in general, would decay.

 Today it is considered prophesy.

 While the character Howard Beale touched on the merging of fiction and reality, I doubt that creators of the movie could have dreamed where it would lead us today.

We have spent the past two years watching as insanity has gripped Congress, and even more so with Republicans now running the House.

We have a wavering President, far too many feckless Democrats, and Republicans that have decided to dive headfirst into total “insane mode” in a full-blown effort to destroy this country just as fast as possible.

To give but one example, in my own District, WA-08, we are represented by the absolutely useless Republican Dave Reichert, whose best-known legislative achievement is that he has virtually no record of any legislative achievement whatever.

Now we’ve had a very interesting relationship, you and I, over these past few years; in my efforts to “bring you the story” I’ve been a fake political consultant, a fake lobbyist, even a fake historian…and now, I think it’s time to try to bring our relationship to a new level.

And that’s why, America, I’m announcing my fake candidacy for Congress.

  I’ve been out of work for 96 weeks. That’s about four times the combined duration that I was previously unemployed in my life, starting when I graduated high school a quarter century ago.

 It’s been a hard pill to swallow. It undermines your sense of self-worth. It’s very humbling.

 You can’t go through something like this without taking a good, hard look at your life and figuring out a few things.

 For those of you who are unemployed now, or expect to be in the near future, you might be interested in what I’ve learned. Maybe you already know these things. If you do then perhaps you can share your insight with the rest of us.

 If you don’t know these things, then you should.

  The unemployment rate is dropping through the floor, and Republicans are taking credit for it. Don’t believe me? Then look at the latest employment report.

 The unemployment rate is suddenly sinking at the fastest pace in a half-century, falling to 9 percent from 9.8 percent in just two months – the most encouraging sign for the job market since the recession ended.

 That certainly sounds like the job market is going gangbusters to me.

  Now here’s the trick: only 36,000 jobs were created to get the unemployment rate to drop by 0.4%.

 Given those facts, I did a little math.

No doubt the Obama administration will tout today’s news that unemployment has fallen .4% to 9.0% as an indication the US economy is improving. It will be quite a back aching twist of logic in the face of poor job growth of only 36,000 jobs in January far below expectations. So what’s really happening? David Dayen at FDL explains the drop in the face of such dismal job growth:

How does this happen? Well, January is always a month when the establishment survey gets revised. New population estimates get incorporated into the survey, and the seasonal adjustment factors get updated. So there is a difference in the January survey of 600,000 less unemployed people; that number is down to 13.9 million according to the BLS (Bureau of Labor Statistics).

Does this mean that those people got a job in this month? Not really. The employment/ population ratio rose slightly to 58.4%, and the labor force participation rate declined to 64.2%, the lowest rate since the early 1980s. Basically, the drop in the top line unemployment rate is entirely due to changes in the total population estimates and other adjustments.

The U-6, which counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.” Note that some of these part-time workers counted as employed by U-3 could be working as little as an hour a week. And the “marginally attached workers” include those who have gotten discouraged and stopped looking, but still want to work, is currently 16.1%.

Another explanation of the job growth numbers is the horrendous weather across the country since late December:

January’s snowstorms probably had some effect on the anemic numbers, given that sectors like construction and transportation and warehousing shed jobs. The private sector added 50,000 jobs, so government layoffs, particularly at the state and local level, also restrained growth. Analysts had forecast an increase of about 145,000.

However, the real problem is what kind of jobs are being created, the number of people who have had to settle for part time employment as their job benefits run out and the number of jobless who are no longer counted in the numbers that are reported.

The other bad news is, this rate may not hold since austerity measures by the states and localities, facing huge budget deficits and no hope of relief from Congress, will most likely be laying off huge numbers of workers in attempts to salvage education and other vital programs.

President Barack Obama’s goal of driving the unemployment rate below 9 percent this year is threatened by state and local budget cuts that are likely to intensify as Federal stimulus money runs out.

Austerity measures may add as much as 0.25 percentage point to the unemployment rate this year, according to Mark Zandi, chief economist of Moody’s Analytics Inc.

“This could make the difference between ending 2011 with unemployment above or below 9 percent,” he said. “There’s no more serious drag on economic growth than the severe budget cutbacks at the state and local level.”

Cross Posted from The Stars Hollow Gazette

“Our current way of life is unsustainable. We are the first species that will have to self-consciously impose limits on ourselves if we are to survive.” — Robert Jensen

In 2010 we watched, aghast, as British Petroleum’ s Macondo Well in the Gulf of Mexico blew it’s top and leaked umpteen millions of gallons of raw crude oil into the Gulf, poisoning and killing much of the sealife, ruining gulf coast ecosystems, and destroying a way of life for millions of south coast people.

We watched, as business and political leaders and mainstream media went into paroxysms of delusional denial to cover up the sheer unabashed criminality of the event, and tried to create a reality built of smoke and mirrors in which something approaching “normalcy” would once again reign and we could all just jump into our cars and drive off into the sunset as if nothing important or even noteworthy had happened,  while those business and political “leaders” operate in the delusion that military might, invasions and occupations, and wholesale oppression and killing of millions of people in “other” parts of the world – as if there is more than “one” world – all done using a military that paradoxically is the single largest consumer of energy in the world – will somehow secure a never ending supply of the energy required to keep our “advanced civilization” operating forever.

Remind you of a hampster wheel? Faster and faster to nowhere.

Milo informed him solemnly. “A strong Egyptian-cotton speculating industry means a much stronger America.”…

“You see?” said Yossarian. “You’re much better at it than I am. You almost make it sound true.”

– Joseph Heller, Catch-22

 The price of Egyptian cotton, now at its highest level since post-Civil War Reconstruction, is causing concern on Wall Street.

 Despite the fact that Egypt doesn’t produce much oil, the price of crude oil has now reached $103 a barrel, and Egypt’s protesters are being blamed.

 “Economic interests have been exposed to real danger,” Al Desouky said.

 If there is one thing that we can be certain of, as far as the financial markets are concerned it’s never a good time for people to demand basic human rights and dignity. Financial markets tend to applaud military coups, and frown on popular democracy.

 The trick is recognizing that the financial markets only represent a very small, elite, section of society.