Susan's Economics Blog

The economics disaster that began in 2007 has prompted me to write so much about it that I started a new blog just for these thoughts. They are generally in reverse chronological order by the date I wrote them. Your comments are appreciated. I have a backlog of writing to publish here, it will appear a little at a time as I can get to it.

I have come lately to a study of economics, capitalism, and democracy. I am no longer content to leave these to the politicians.

Wealth is not a right (2-13-2011)
I can clearly recall the indignation with which radio talkshow hosts have decried public medicine, claiming that we Americans have no right to health. I want to remind you all that Americans have no Consitutional right to wealth. The Declaration of Independence declared life, liberty and the pursuit of happiness to be unalienable rights (unalienable means natural, sovereign, and independent of law). Neither it, the Constitution, or the Bill of Rights declares that wealth is a right.
The causes of the current crisis (1-13-2011)
The current crisis features high unemployment, mortgage defaults, devalued retirement savings, and bankrupt banks. Robert Reich offers a simple explanation: "The truth is our economic problems stem from the biggest concentration of income and wealth at the top since 1928, combined with stagnant incomes for most of the rest of us. The result: Americans no longer have the purchasing power to keep the economy going at full capacity. Since the debt bubble burst, most Americans have had to reduce their spending; they need to repay their debts, can’t borrow as before, and must save for retirement."

I have been complaining here that jobs are lost when people quit buying goods made by those jobs. What Reich has done is connect the huge compensation packages for people at the top of the scale with stagnant incomes in the working class and their unsurprising reluctance to maintain old spending levels which were fueled by consumer debt and reduced saving for retirement. He equates jobs with concentration of wealth: the greater the concentration of wealth, the fewer on-shore jobs. Again let me point out that this is not a sustainable model.

What to do? Government-funded projects that hire the unemployed are a great short-term fix. But they do not address the imbalance caused by the concentration of wealth. It is this imbalance which endangers the long-term success of any recovery. Tax breaks to the very rich will only make this imbalance worse. The rich are not hoarding their money because they are afraid to invest it in businesses that will employ Americans, they hoard their money because they can; "trickle-down" is a myth. Reducing their taxes will serve only to increase the amount of money being hoarded. Clearly what is needed is a way to reduce the concentration of wealth. This can involve increased taxes on the very rich and increased salaries in the working class.

Capitalism was founded on slave labor (11-26-2010)
Capitalism was an unintended consequence of the Industrial Revolution. The massive industrialization was funded largely by the profits made in the Caribbean sugar industry in the 1700s, profits based quite firmly on the slave labor of the sugar plantations. By the time England stopped slavery in 1833, industrialism had become self-perpetuating. A good thing because afterwards the sugar plantations could not maintain their previous high rates of profit. We can only conclude that the wealth made on slave labor jump-started capitalism.
The Industrial Revolution ended food self-sufficiency in Britain (11-24-2010)
In the 1700s British woolen manufacturers, aided by steam-powered machinery, attracted continued investment and expansion which was accomplished by converting more and more tillage to sheep pasture. The peasant farmers were forced from the land and went to work in even more textile factories. Mechanization increased agricultural productivity. And yet by 1800 most of the food eaten by Britons was imported—suggesting that productivity gains could not compensate for land taken out of tillage.
Quantitative easing explained (11-13-2010)
I found a link to this excellent presentation on solari.com. QE explained by malekanoms. Do listen to it!
How our federal government funds practices that trash the environment (9-2-2010)
On August 28, 2010 Alternet published an article by Stephanie Rogers titled "10 Ways Your Taxes Pay For Environmental Devastation." It's hard to understand our economic problems and conceive solutions without knowing the extent to which our tax moneys are handed over to the villains.
Overpaid executives contribute to economic instability (8-13-2010)
What are the options for a business with a lot of spare cash?

Why is it that the first choice is the preferred one? It seems the least capable of providing stability.

Bailout is a new name for extortion (8-13-2010)
What's wrong with this equation: No jobs = no consumption, no consumption = no economy? We are, vis a vis the corporations, in a heads they win, tails we lose situation. They pursue cheap labor off shore. When our lack of consumption risks their profits, they demand—and get—a bailout from the taxpayers. What part of "NOT SUSTAINABLE" do you not get? But worse, what is the taxpayers' fate when they can no longer pay this extortion?
The "f" word (5-15-2010)
No, not the four-letter word, but the five-letter word: FRAUD.

James K. Galbraith, in his remarks of May 2010 to the Senate Judiciary Committee, asked bluntly how could the causes of the economic collapse NOT have been fraud? He followed this up with a well-reasoned discussion along the lines of if it looks like fraud, smells like fraud, and acts like fraud, it must be fraud. He went to to say (1) when "fraud, or even the perception of fraud, comes to dominate the system, then there is no foundation for a market in securities. They become trash." (2) And when the perps walk away rich, as so many have, they do so by a breakdown in the rule of law.

He concluded saying "the country faces an existential threat." If the legal system fails to do its work, the market cannot be restored. "There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case."

Retire Aged People Early (RAPE), acronyms for this economy (2-1-2010)
This came to me in an email, like many other humorous stories. This one seems especially relevant to the current job situation. It is not dirty! Because of the nature of the acronyms, I am reluctant to publish the story here for fear of having some search engine black list me. So I am providing links to other sites that are braver than me.
Obambi.com blog
on NetJeff.com
Jokes Log on Blogspot
Finding opportunity for good in the current economic crisis (11-6-2009)
The American way of economics has long had its critics. But good times provide little traction for naysayers.

Now, in the aftermath of collapsed investment banks requiring massive government loans and in the face of continuing massive mortgage defaults and unemployment—now when our economic system is down around our ankles—now there is an opportunity to refashion our system into one that is humanitarian and sustainable.

Let's use this moment to revisit and review our values, both individually and communally. Let's forge a list of objectives and characteristics for a new economics, and then use this list as criteria by which to accept or reject the multitude of proposals that are emerging and will continue to emerge. Let's use both our hearts and our minds to envision an economic future that will nurture us and be sustainable.

Let us grasp this opportunity and turn it to our own interests. Not the interests of economic theorists whose ideas brought us here. Not the interests of corporations whose actions brought us here. But our interests.

Let us grasp our democracy and use it to design and build an economic system that suits us, our children, and our grandchildren.

Doing the right thing: our economic system should not trump social values (11-5-2009)
A recent article on Alternet, "Bill Moyers and James Galbraith: Our Free Market Makes Economic Collapse Inevitable" prompted this essay
Summary of reasons for crisis (10-9-2009)
The current recession, with its roots in subprime housing loans, shady repackaging of these same loans, even shadier insurance products created to guarantee these same loans again and massive over-leveraging by any number of firms great and small, domestic and global.
Too big to fail is extortion (10-3-2009)
The American people are not well served by the existence of businesses deemed "too big to fail." These businesses essentially hold the American people hostage—their own credit is demanded to protect the business from bankruptcy. This is the exact opposite of what corporations are chartered to do.
Dear prez (9-29-2009)
I doubt when you committed yourself to the presidential campaign you expected to encounter the current financial situation. Yes the wars were present, yes health care needed fixing, yes immigration could be improved. But tanking banks? Who would have guessed?

Economics may be your downfall. I pray it isn't.

Economists set the stage for the current mess with their short-sighted theories and reliance on human rationality and their determination that theirs was a true science. (Will they ever learn? Probably not, I don't hear any contrition these days.) But the bankers blew it.

What we have heard ever since is bs, pure and simple, from the culprits.

I beg you to use common sense and human values when you consider possible actions. Avoid ensnarement in the economic blatherings that are so obviously self-serving. Our Gordian Knot needs to be cut cleanly apart with one slice. An outsider is necessary for this, as only he (you) is capable of standing apart while taking responsibility. You can let all those misguided economists and bankers off the hook. Just don't listen to them very seriously, as they have proven themselves completely unreliable.

Sooner or later someone has to reconsider what sort of an economy is needed here. I vote for sustainable and in support of human values. I think those two criteria are way more important than failed ideas like free markets and globalism. Start with we the people. That is the only way we will end up with what works for US.

Capitalism is not benign (8-11-2009)
This past year has brought into focus the shortcomings of our form of capitalism. The following list is not complete!
I am tired of the incessant public "dialog" about the rights of corporate profit vs. the grasping freeloader of the public good. Why are we so easily manipulated into seeing this dichotomy as the sole issue?
Democracy at odds with capitalism(7-24-2009)
Democracy is a form of government in which the right to govern is vested in the citizens of a country or a state and exercised through a majority rule. Capitalism is an economic system in which trade, industry and the means of production (also known as capital) are privately controlled (either singly or jointly) and operated for a profit—that is, the right to govern is vested in a few and they are the owners, not the workers. These two organizations are antithetical. Perhaps this is why we Americans are so conflicted over what to do with our economy. It is hard, perhaps logically impossible, to consider how to remedy our economic crisis in the so-called democratic arena when the causes happened in the capitalist arena. Is it possible to use majority rule to remedy private control?
Capitalism needs regulation(7-13-2009)
Paul McCulley, Managing Director for PIMCO, said on InvestmentNews on June 19th, in response to the question is capitalism dead, "capitalism has proven that it can't regulate itself, and you need to have boundaries." He discussed the range of possibilities from unbridled greed (Wall Street) to the sensibility of government, saying some middle position is needed. Makes sense to me. (Which is not to say I believe everything this man says.)
Goldman Sachs' role in the crisis(6-24-2009)
Goldman Sachs securitized toxic mortgages, had them rated AAA, hedged their bets by buying credit default swaps from AIG, then demanded a collateral call from AIG that sent it south. Read the full essay.
Lobotomy?(5-29-2009)
I have just begun reading James K. Galbraith's The Predator State. Wow! The following is my own interpretation based on the first two chapters. People today willingly defer to the "market"—a non-physical institution that is more easily defined by what it is not (the state) than what it is. The "market" is a concept. We do not allow ourselves to analyze it or criticize it. How is it that that we have forfeited so much of our lives to a concept we refuse to examine?
The benefits of securitized mortgages (4-27-2009)
Securitized mortages have all the appearances of a con. Read the full essay.
Investors and securitized mortgages (4-27-2009)
The securitization of home mortgages has been likened to a house of cards. It is interesting that the families who bought homes they could not afford are commonly castigated. I want to consider the buyers of these securities. Read the full essay.
How shall we take back our democracy? (2-6-2009)
The economic mess has had a side effect of illuminating the fact that we do not have a working democracy. Our elected government does the bidding of CEOs and bankers. They have collectively screwed us deeper and deeper into a hole. We can speak out all we want, but they ignore us. What to do? Bending over for the rest of our lives seems uncomfortable, at the least. Rioting? Some writers are reminding us that people in other countries are rioting, and that it has proved successful from time to time. It does not appeal to me. I'm still looking for another approach. What do you suggest?
Obama's first two weeks (2-6-2009)
Some time ago I suspected that the popular enthusiasm for Obama was more of a need for any hopeful enthusiasm than a response to Obama himself, that the popular disgust with Bush primed the voters for a Democrat, that the notion of a Black president was so unbelievable as to be enticing. I have watched his cabinet picks with trepidation. He is touted as a person who prefers consensus. What I want is a bold visionary leader. What I have heard about the "stimulus" bill is disheartening, as it does not directly address the basic problems. I cannot see that it will stimulate any real, lasting move toward a desirable future for the likes of you and me. I am disgusted that regulation is not being pursued and that tax increases for the rich are not being pursued. Borrowing a trillion dollars from the Chinese does not sound like a way to provide security at home. I have come to believe that one "stimulus" bill is an error (I'm being polite here). There should be separate bills for: jobs, unemployment, homeowner preservation, retirement preservation, and regulation.
Globalism (2-6-2009)
Big corporations have been advocating globalism for decades. They succeeded in creating the World Trade Organization and getting sovereign nations, including the USA, to sign treaties abrogating their sovereignty in the name of global trade. What a crock! What is this all about? Producing goods cheaply in one country and selling them at a good profit everywhere—essentially guaranteeing a marketplace for goods that were made using some country's resources (including labor) for which the corporation paid little-to-nothing. And perhaps even receiving a subsidy from that country.

Do you remember some 15–20 years ago American corporations clamoring loudly, even in the pages of the Economist, for the right to sell American rice in Japan? They tried to get the American government to force Japan to buy the rice. Japan—a country that grows its own rice! At the time I was astonished. Now I see this was but one front of an effort that has never slacked.

Globalism has led countries to abandon local production of essential goods in favor of buying those goods from a foreign corporation. The new model: working at slave wages for money to buy products you used to be able to produce for yourself, being a cog in the wheel instead of your own person. Being vulnerable to price increases and shortages. Being vulnerable to financial disasters in other countries. Losing freedom and independence.

This has happened in America and around the world. Globalism and the bankers that finance it have put all of us on the same ship, so when one sinks we all sink.

Extortion is right around the corner. Us poor sinking rats in water up to our knees are about to be asked to voluntarily allow the water to rise so the bankers can profit. Just wait—any moment the water will begin to drop. We'll drop a few crumbs to placate you.

Do you really buy this?

What went wrong (2-5-2009)
There is an interesting article on Alternet, Why Is the Government Hell-Bent on Rewarding Greed, Incompetence and Narcissism? by Jim Hightower.
How to truly help the foreclosures (2-5-2009)
There is an interesting article on Alternet, Why the GOP's Tax Gimmick for Homebuyers Won't Help One Bit by Joshua Holland.
What is a stimulus? (2-4-2009)
Politicians use so many meaningless words. This must be deliberate at least part of the time. For example "bailout." TARP is not a bailout, it is a gift. (And as such should be taxable.) "Stimulus"? Well, I suppose it matters what the subject is. Do you see the current situation as one where banks are losing profit? Corporations losing profit? Workers losing jobs? Homeowners losing homes? The problems I care about are the last two, period. The only stimulus I care about is one that begins to restore jobs and homes—directly. The currently considered legislation purports to remedy perceived problems in the country and, secondarily, creates jobs. It does not seem to be the considered result of true understanding of the causes of the current situation.

I prefer a "jobs" program and a "homeowner preservation" program and a "retirement preservation/restoration" program. And an "unemployment relief" program. And a "regulation" program. These should be individual bills so it can be easy to analyze their likely effectiveness.

Jobs to put Americans back to work so they can pay their bills, keep their families together under a roof, save for emergencies and retirement, and spend a little discretionary income.

Homeowner preservation to keep mortgage defaults from resulting in evictions, to make it possible for people whose mortgage balances exceed the value of their home to get the debt revalued, to reduce excessive interest rates and penalties.

Retirement preservation/restoration to protect the retirement benefits originally guaranteed by employers who now prefer to do something else with the money than honor their commitments. To keep retirees from having to return to work in their seventies and eighties in order to forestall homelessness and hunger. A new program to encourage individual savings for retirement that is safe from the dangers of the stock market. A new program that funds worker retirement savings by employers in such a way as to protect it from hijacking, a program that extends to contractors and full time employees.

Unemployment relief that keeps unemployed workers and their families in their homes with sufficient food, water, and heat until such time as jobs reappear.

Regulation! to prevent a recurrence of the risk taking that has jeopardized the American way of life. Regulation to protect individual savings. Regulation to prevent a Wall Street-Washington theft of taxpayer wealth.

Compassionate pragmatism (2-4-2009)
We are in the current mess because of greed and blind faith in ideology. Our belief in, and commitment to, capitalism has led us here. Many of us cannot or will not see what ills capitalism has wrought. They insist more capitalism is the solution. In this they forget that one definition of insanity is the determination to repeat behaviors while expecting different outcomes.

What we need now are pragmatists who can recognize the current ills, understand their causes, and craft solutions that directly benefit the poor and middle class. We need compassion for the people who have been hurt the most by economic failures.

Prosperity and work (1-25-2009)
Manufacturing is the engine of consumption and materialism. In the last 20 years or so "experts" introduced the idea that America had graduated from manufacturing, as if it has some stigma, and moved into services as an income producing activity. Manufacturing didn't disappear, it just moved offshore in pursuit of cheaper labor.

I think manufacturing is still a valid economic activity, but reliance on consumption of manufactured goods as the sole provider of prosperity is wrong. We cannot consume ourselves into prosperity. Nor can we base our wealth on the price of homes.

We need (1) a definition of sustainable common prosperity, (2) metrics of prosperity, (3) an economic model that has a purposeful role for each of the economic activities focused on achieving prosperity, and (4) government policies supporting all this.

This country has never before addressed itself to achieving true prosperity. It has been content with stories like Horatio Alger with its messages that (1) individuals can of their own initiative and effort get rich and (2) the poor are poor because they won't do what it takes to get rich. Success in this country is all about power and money, those without it are invisible except when they serve as sources of profit for the rich.

There is a disconnect between this reality and the childhood stories of Robin Hood and the Three Musketeers. Helping the needy with resources supplied, even unwillingly, by the rich. One for all and all for one. Both of these egalitarian principles are ridiculed by todays rich and powerful. They don't want to share, I got mine, to hell with you, there's never enough.

Egalitarianism is derided as akin to socialism, surely the evil twin of capitalism. The "s" word is a handy flag deliberately used to deceive. What this country needs is a serious, open, and honest discussion of egalitarianism and the private and public ownership of production.

Capitalism is an economic system based on private ownership of production. Communism is an economic system based on public ownership of production. Actually, these are simplistic definitions that hide a large range of theories and practices. Capitalism is focused on the accumulation of private capital (wealth) while communism and socialism are focused on equitable distribution of economic goods. Both are susceptible to human corruption.

I am more interested in meaningful work that contributes to prosperity than equitable distribution of goods. Such work has yet to make it into public discussion. It is overdue.

Charity(1-25-2009)
Throughout the final time of this recent presidential campaign there was a quality of rabidness to the claims that charity would be the end of us. It verged on hysteria. Assistance for the needy, from veterans to the unemployed to aspiring college entrants, was villified. Proposals to increase taxes on the rich, in order to fund the assistance, were also attacked. Republicans were the worst perpetrators of this. Interesting, as they have aligned themselves with Christian extremists, that they would deny simple "Christian charity." Why are we unable to defend charity?
Poor lose, again (1-23-2009)
The recent government interventions in the economy continue to follow the model where money is thrown at the rich when the symptoms are showing up in the poor. When will we learn that we cannot solve the problems of the poor by giving money to the rich?, especially when the bailout is funded with debt—money borrowed from other countries. Does anyone see a national security threat in that debt?

Let's revisit the current situation. It began, visibly, with mortgage foreclosures. Look behind that to see (1) unemployment because of layoffs, (2) improper mortgage lending (insufficient borrower qualifications, rising interest rates, excessive interest rates), (3) overpriced real estate. Look ahead to see mortage-backed securities whose value is based on the improper mortgage lending practices. Watch the house of cards collapse. What are we left with? Unemployed workers with homes they cannot afford, forced into foreclosure and bankruptcy, screaming. Investment bankers holding worthless mortgage-backed securities and credit default swaps.

Who yells the loudest? You guessed it, the bankers. And government rolls over, giving away cash to the gamblers instead of the homeowners. Rewarding the foxes instead of the chickens.

New jobs (1-23-2009)
Am I the first to wonder what gainful employment there can be in a new economy where we are paid to do something other than make things we cannot afford to buy? The dying economy was based on materialism, that people will spend their money to buy something, and most likely something they do not really need. Buy as opposed to not-buy and . . . even save. No borrowing to buy even more. The seemingly endless round of job layoffs is because of declining sales, sales of unessential items like cars and computers. No buyers, no jobs. This is a self-reinforcing circle. To move forward towards prosperity we need a different model.

We need to imagine what work is truly meaningful, what we need money for and how much, a lifestyle that is based on something other than materialism.

Hope (1-23-2009)
I keep hearing on radio news how much hope is being expressed in the wake of Obama's inauguration. I don't think it is Obama himself that engenders hope, I think the desperate need for it by many Americans is susceptible to his glamour and the opposition of his policies to those of gratefully ex-President Bush. In other words, I willingly express my hope and relief on Obama's ascendancy to the Presidency precisely because he has promised to act completely differently than Bush. It is Bush whose deeds drove me to dispair. Deep dispair. Mind-numbing despair. Expressing hope publicly and joyously is hugely liberating. It frees me from the prison of dispair.
Failed economic model (12-23-2008)
Perhaps 2008 is the year that we see indisputable proof that our economic model is flawed. That growth will not solve our problems. That consumerism is not sustainable. This model looks successful only by placing a lien on future generations. So much for family values.

Recent years saw the attempt to present residential mortgage debt as cash reserves. And the people that did not blink about it call themselves "economists." With that track record we should never again accord them any regard whatsovever. They have proved themselves part of the problem, not the solution.

We tried the war gambit to boost prosperity. That failed.

One underlying problem is likely the looting of the treasury by whomever can. Several years ago the GAO discovered several billions—yes the B word—had disappeared without a trace. This situation never made the newspaper headlines, it was so un-newsworthy. In fact, the government has steadfastly refused to account for its income and expenditures, something it does not let corporations get away with. By so refusing they are complicit in the looting. It makes the whole budget process a joke, why bother with a budget when anyone can take the money and run? when there is no accountability?

Speaking of reserves, whatever happened to the, quaint?, notion of cash reserves by both individuals and businesses, you know those emergency funds? Money to tide you over through hard times? I thought regulations required them of things like banks, but apparently not any more. And what an inspiration to discover that venerable companies like General Motors do not have the reserves to get them through a period of flat sales! I guess they all bought into the scam that reserves could be replaced by margin investments and operating cash could be provided by borrowing, after all the real money is in investment returns. Isn't it?

And perhaps we can now admit we do not have a free-market capitalism? Corporations benefit from government payments, contracts, tax breaks, laws, and regulations—benefits deliberately structured to help the rich shut out the small businesses. True competition only exists among those seeking government handouts.

So what was the Cold War about anyway? It was portrayed as Capitalism against Communism, but as both systems evoke greed and corruption, the only difference seems to be who benefits from the ability to accumulate wealth and power on a grand scale—politicians or CEOs. Russia, some years past the so-called fall of Communism and the break up of the Soviet Union, is back to centralized wealth and power, but the people in charge hold the occasional election to obfuscate the truth of their government.

In 1776 a few men, sadly handicapped by the absence of women, crafted a Constitution with the intention of avoiding the current state of affairs. What were they smoking?

More thoughts, no more money (12-19-2008)
I read an Alternet story that said the underlying force behind America's militarism and its support of Israel is the economic system we erroneously call capitalism. C demands rape and pillage to acquire "raw" materials and labor at as low a price as possible, it will do this in its homeland and offshore. It is a malignant cancer without a conscience. I wonder if my MBA class on conscience was misguided thinking that it was truly possible in a free-market capitalism. Little evidence to date.

The previous day's story was that the banks lied about a credit shortage, a credit crisis: Did America Get Punked?. There is a mortgage crisis (caused by overpriced mortgages, underqualified borrowers, and unemployed borrowers) that affects investors (thanks to securitized mortgages) and homeowners, but this is a different problem than the US Government was asked to help. It is not clear that widespread mortgage defaults could take down the investment banks, regardless if they suggest the possibility.

There seem to be several problems: too many investor thingies (like hedge funds and derivatives) that have proved worthless, dropping sales which leads to fewer jobs, and mortgage defaults.

I'll address these one by one.
(1) That investors may be losing what they thought was equity is (1) poor judgement on their part, (2) bad practices by investment banks, and (3) insufficient government regulation—you know, that thing that is meant to protect American citizens. The immediate action is to protect the mortgage holders who cannot pay. The long term action is to put in place a rigorous regulation system. What should not be done is make good investor losses or prop up bank assets, executive compensation, etc.
(2) Dropping sales that lead to layoffs are a natural result of an unsustainable economic model. It has been known to be finite a very long time ago, it just managed to drag on this long because the US Government has been supporting it. Enough is enough. Let's not throw any more money away on this model. Instead let's create a new model, one that is sustainable and that can provide Americans with solid middle class jobs and prosperity. We need leadership, and not necessarily the government, and absolutely not the corporations that are embedded in the current problems. Until a comprehensive program of economic re-development is well underway, we must increase and extend unemployment benefits—we must take care of the workers who are paying the price of economic failure.
(3) We must require the mortgage holders to (1) write down the mortgage to reflect a realistic current value, (2) lower the interest rate, (3) allow a grace period of no payments so the homeowners can re-establish their equilibrium, and (4) evaluate the homeowner's continued ability to make payments on the new lower mortgage. If the homeowner cannot make the payments after the first three actions, they then should be allowed to remain in the home as renters with a rent set at an affordable level.

Subsidies (12-18-2008)
I asked my Congresswoman how I could get a list of the subsidies granted by the federal government. I got no answer. I am beginning to think that the government's expenditures may be classified as: (1) salaries and office expenses, (2) asset purchases (such as vehicles and buildings), (3) grants, (4) loans, (5) gifts (like condition-free "baillouts"), (6) tax credits, (7) memberships. These may be given to individual US citizens, US organizations-businesses, foreign countries, foreign organizations-businesses.

I also believe that classes 3, 4, 5, and 6 constitute subsidies regardless of who the recipients are.

Hijacked (11-22-2008)
American corporations want to be left unregulated, which they defend with the words of economic theorists (men who gained fame through words that have been discredited by history) demanding loudly that unregulated capitalism is the purest and best form of capitalism.

And at the same time they demand, and get, tax breaks and outright subsidies. Tax loopholes are exploited as a matter of honor by corporations whose profits approach the obscene.

Corporations are probably the largest users of government-funded infrastructure: Their employees commute on public roads, their goods are shipped on public roads, their toilets flush with municipal water, their offices are powered by municipal electricity, their workers were educated by public schools, etc.

Too much money? (11-16-2008)
I read that the impetus for the creation of derivatives, those phoney investments that have recently gone up in flames and taken their investors down, was the great sums of money from billions of dollars of corporate profit and millions of dollars of individual executive compensation that were looking for a home, sugar jars being so passé.

Do you not see the irony? Corporate and executive hoarding caused bankruptcies and the evaporation of wealth. A better strategy, one that would have supported the (flawed) dependency on consumerism, is profit sharing. Think how the economy would have prospered if those billions had been distributed to employees?

Hoard not, want not. Share more, hoard less.

Support America! (11-16-2008)
It's clear we have quite a backlog of infrastructure projects which have become increasingly imperative, from roads to energy independence. These projects always falter on the issue of funding. Instead of relying on taxation or federal borrowing, let's ask the rich to contribute voluntarily. In addition to getting their name on a plaque at the opera house, let's offer them their name on a plaque at a solar power generating facility.
Greed is our economic model (11-14-2008)
The only economic model operating today in America is greed.

Many economics-savvy people have talked about the basis of our healthy economy being consumerism, especially individual consumerism. And the marketing budgets reinforce this. But . . . the corporations whose profits rest on said consumerism have forgotten that in order for people to shop they must have disposable income—a paycheck that provides more than subsistence living.

Other "experts" talk about the desirability of personal savings and little-to-no debt. There's nothing like a time of massive job layoffs and mortgage foreclosures to focus the attention of would-be-workers on paying off their debt and building up a savings nest egg. Both of which preclude the consumerism of just two years ago.

So, how many ways can we have it? Full employment? Well-paying jobs? Personal savings? Little debt? Affordable quality education? Affordable health care? Exorbitant executive salaries? Rising real estate values? Stockholder dividends? High carbon emissions? Foreign wars? Walls on international borders? Overflowing prisons?

Transparency (11-14-2008)
I read an article on Alternet by David Sirota titled "Four Reasons to Oppose the Bush-Obama Request for the Rest of the $700 Billion Bailout." Reason 3, Congress Still Abdicating Its Oversight Responsibilities, talks about the lack of bills that mandate "seriously better transparency." I am struck by the notion of grades of transparency. This seems more of a political reality than something from my life. However I can find an analogy in typography that features a continuum from fully opaque to fully transparent. Nevertheless . . . as long as the people are led to demand transparency and the political response is semi-transparency, then there is really no improvement. What the people want—and need—is a way to monitor government actions. As long as "transparency in government" in only partial, then the decision of what not to reveal is intact and effectively blocks public monitoring. So, partial transparency is no transparency.
Capitalism is dead (11-9-2008)
The theory of free market capitalism has proven itself false. America in 2008 embodies the many errors in that theory. To continue to consider it a desirable goal, even a necessary one, is pure idiocy.

One of America's greatest needs now is an economic model that is sustainable, one whose adoption benefits all citizens, workers and non-workers alike, from the outset and in the long run.

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Revision: 11-6-2009.