Mother Jones - Comments for "Pitchforks and Torches"

Splitist

It seems the great victory of the libertarian right has been to split the commonality between workers and farmers in the rust belt, unions in the east and liberals in the west. All the while they enacted their master plan of running effective government into the ditch. What the hell are they striving for? Somalia? There's your example of a tax-free, non-government-interfering paradise.

I've been reading a lot of

I've been reading a lot of Gaibraith lately, and I recommend it. Many of his observations were spot on, and many of his predictions have come to pass. Granted much of what he said was more sociology instead of economics, but in that way he pointed out the huge blind spots that economic teaching has.

Sometimes, to this humble observer, our chief economists remind me of the CIA analysts who were instructed by Bush to repeat their analysis until they gave him the answers he wanted to hear. In this case it is the ultra-rich who are asking the economists to produce a result which always favors their interests. Whether this pressure is overt or covert, direct or indirect, obvious or devious seems to matter little. The end result is always the same.

The moneyed interests are satisfied first. Look at Goldman Sachs projecting, what, tens of billions of dollars in payoffs this year? You can buy a lot of politicians with that kind of payola. The rest of us don't stand a chance.
Tripp

Notice that the Right's "populism"

is always directed away from financial interests?

The political propaganda that is current academic economics

Max is completely correct. What happened when Keynes published the first comprehensive theory of Macro economics was that it became possible to model the overall economy mathematically - if you had the data. Since then government at every level, especially the federal government, has spent large sums of money collecting economic data for use in macro economic models. It's important that they do so. But the data is predominantly demographic data (relatively static over any short period of time) and accounting data which is the aggregation of the pricing results of large numbers of exchange transactions using money.

Remember that about the accounting data. There is no effective data collected on the power relations between the buyers and sellers, and nothing in that data addresses the equity of any of the transactions involved, either before or after that accounting transaction data is accumulated and aggregated.

Unfortunately it had a really bad side effect. Historically the discipline was called political-economics because in Marx' formulation the intent was to understand the materialism at the root of society, recognize the essential inequity of what he identified as the class distinction between property owners and the workers who had little control over their own lives, and change society so that there was more equity between people. The discipline has changed since 1936 into the statistical manipulation of the data the government collects.

It is now left to politicians to deal with the power relations involved in economic transactions, and since all the money belongs to wealthy capitalists, only the financial manipulations that can use accounting data are rewarded. The various economic models have become politically a great source of political propaganda, and the most widely respected economists in the academic world are actively discouraged from studying or speaking out on economic power relations unless it is to support capitalism as the perfect system and demonize socialism (which was designed to get government to deal with the power relations such as monopolies and such.)

This also permits the very wealthy in America to manipulate the government to both give them contracts in preference to competitors since they send many of the politicians into office, and also to get the laws changed so that procedures and taxes that give preference to the wealthy get passed. The most extreme example is the effort to eliminate the inheritance tax which is of no economic value to society, but works to maintain the wealthy families at their high (and mostly inherited) social positions. As Madoff and Stanford have recently demonstrated, control of large sums of money makes you immune to most oversight and regulation, even when the law is expected to take those actions. Both of those ponzi schemes were maintained way too long in spite of good reasons to be suspicious.

The result of the fact that the economics profession has become totally dependent on things that can be quantified is that today economists are very adept statisticians - and the study of power relations between people is actively discouraged in the profession. If you want to discuss the social value of economic society, the "economic" profession has nothing to offer except the assumptions they make when they create their statistical models. You see, there are no numbers that can be reliably and validly assigned to "equity" and "justice" or even to "humanity" that allows those thiings to be entered in the aggregations that make up the statistical models.

That's what Max is talking about. So was J. K Galbraith, which is why as famous as he got, he was never a very respected academic economist.

Consumerism in perspective

wbinmd,

In the larger perspective, to function 'correctly' the global economy does require ever increasing demand. In general that is the foundation to support the always expanding worldwide GDP which solves some of the innate problems with capitalism by making the pie bigger.

We've been told the global economy requires the American people to be big consumers. In that respect I think you can hardly blame people for doing what they have been told is not only right, but absolutely required to make the world economy function.

I can't say american consumerism caused the recent crisis, but I think the expansion of the US economy to a global scale has made such crisis much wider in scope.

I've said this before - the finite supply of natural resources will eventually slow the global economy, whether we want it to or not. In the meantime I think it is best to work on putting back the safety nets so that the rising tide does to some degree lift all boats.

Tripp

Of course the finance

Of course the finance industry will blame the consumer, after all no one put a gun to their heads when they took out loans they couldn't afford.

But just as the modern food industry is probably responsible for the obesity epidemic, the finance industry is responsible for the over-borrowing. Both industries have legions of specialists who are tasked with pushing people's behavorial buttons to have them engage in actions that hurts the consumer but profits industry.

I would guess that most people reading this blog are relatively immune to the crap that industry throws at us, but most Americans aren't, and we all sufffer the consequences.

Deterrence?

But what good would the pitchforks do? At best get rid of one crop of malefactors, but others would take their place.

That may be so. But the new 'crop of malfactors' would have a precedent to remind them that there may be limits in terms of what the average Joe is willing to tolerate, no? The historical logic is that the pitchfork exercise needs repeating every now and then.

I wonder too

I wonder how much that fraudulent behavior was driven (no excuse) by consumer demand for more credit, bigger house, fancier cars, higher investment returns.

I wonder how much bank robbers are driven (no excuse) to rob banks because that's where the money is.

I think you'll find that the

I think you'll find that the demand for "free / easy money" is pretty much insatiable and common across all peoples. You could also flip this back the other way and ask how much fraudulent behavior on the part of the financial sector was driven by demand for bigger bonuses, bigger houses, ect....

supply and demand

While there were certainly fraudulent activities within the financial sectors, I wonder how much that fraudulent behavior was driven (no excuse) by consumer demand for more credit, bigger house, fancier cars, higher investment returns. It would be interesting to plot this demand signal versus the magnitude of the economic "bubble."

This demand may not be the single reason for our current economic situation, completely explain what happened. However, I'd bet there is a direct correlation and that consumer demand signal leads the resulting crisis and ultimate crash.

Anyone with ideas on how to collect or present such data? BTW, Kevin is not allowed to present graphical data anymore unless he uses a realistic frame of reference.

pfft

Cancel American Idol. Blame it on Goldman Sachs. Then you'll see some pitchforks and torches, by golly.

When our 'government is

When our 'government is fundamentally broken and corrupt' it is because of people working to prevent it from working in the first place.

Wish Max Sawicky were again

Wish Max Sawicky were again blogging. Anybody know where he got to?

g. powell: "And how did

g. powell: "And how did 'populist' become a pejorative?"

Good question. I've stopped using it since I've come to realize that it's what I call a "Rorschach word". In other words how people interpret it has more to do with their own POV than the actual meaning of the word. Some take it as a synonym for demagogue, and others as "will of the people". Interesting psychological test, but a rotten word to use for clearly communicating an idea.

As for Kevin's sudden interest in "pitchforks and torches", I guess better late than never.

Lou Dobbs

When the pitchforks and torches come out, will the mob be able to find Dobbs' 30 acre horse farm in New Jersey? Or are horses o k? That guy needs a new gig, this one was old the day after he started it. What a maroon.