The Reagan Con, pt. I

¡Hola! Everybody…
Congrats to the socialist/ commie/ non-profit entity otherwise known as the Green Bay Packers (click here) on their Super Bowl win. Nothing more ironic than having the “enemy” (ACORN was also a non-profit) as Super Bowl champs!

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-=[ The Reagan Con, pt. I ]=-

I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.

-- Grover Norquist

No great democracy has ever existed without a strong middle class.

Period.

Conservatives have an irrational, almost religious belief that if economic and social policies are made by the market, we won’t need government -- that’s you and me, the voice of the people. Let me repeat this point, because it’s important: you and I, and everyone else, we’re the government (“we the people”). Or at least we’re supposed to be...

The conservative mantra of “smaller government” has long become a dominant thought virus (meme) and for a long time most of you fell for it. Essentially, “smaller government” means less government oversight and regulation, thereby, the “theory” follows, allowing the “free” market to decide our policies. If you pay attention to Voodoo Economics devotees, they will tell you that a middle class will magically spring into being if we would just free corporate power (and greed) from government restrictions. The way to create jobs, the superstition goes, is to “free” the market. When the Wall St. fat cats are allowed to romp freely wealth is created, goes the belief, that wealth, they assure us, will trickle down to the rest of us, in that way creating a middle class.

This conservative ideology has been at the core of this country’s economic decisions since Reagan. Today, we the people (the middle class) work longer hours for less real money in jobs that are highly unstable. In addition, major sectors of our economy have been outsourced to “emerging markets” (a euphemism for poor, Third World nations), essentially putting you in competition with horribly oppressed workers who work for literally pennies a day.

Yeah, in case you didn’t get it, this very same voodoo has driven our economy to the ground.

This is what you have fallen for and what you continue to fall for today. Recently, Obama and other conservatives extended the Bush Wealthfare tax giveaways for the rich. In case you missed it, this is the same economic policy that got us to the mess we’re in today. The.very.same.

What we have today, contrary to allegations of socialism/ Marxism/ fascism is Obama’s Voodoo Economics on steroids. I actually believed that a vote for vote for Obama would’ve been a vote for an economics that shifts the tax burden away from the middle class and forcing the richest percentile of the population to share a fair burden. I was wrong. Today we have socialism for the corporations, capitalism for the working stiff. The simple, American idea that believed the solution is to build an economy from the ground up has been supplanted by that superstition in building the economy from the top-down (trickle down).

As I have written in the past, there is no such thing as a free market. Markets are the creation of government (we the people). While Obama is desperately trying to channel the spirit of Reagan, he’s throwing the most vulnerable under the bus.

During the most prosperous times for the middle class, taxes were viewed as investments in a civil society and were routinely embraced by the majority of the middle class. In that way, we invested in new schools, better roads, higher pay for police and firefighters, and a multitude of public works that resulted in extended periods of unprecedented wealth and stability for all economic classes.

Ronald Reagan and the corporate PR machine were successful in convincing an American electorate that taxes and government (we the people) were bad. Reagan did two things that dramatically changed our government. First, he changed laws like the Fairness Doctrine so that propagandists like Rush Limbaugh, backed by heavy corporate funding, could help convince the “Joe Six packs” of the world that the government was the enemy. In fact, Reagan ran for re-election as an outsider. My question is, how do you run for re-election as an outsider?!!

::blank stare::

In any case, Reagan’s second major act was to stop enforcing the Sherman Antitrust Act, which had held corporate power at bay since 1881 (the law is still in the books, but rarely implemented). Subsequently, the media began forming huge monopolies resulting in fewer voices. Across America, two-three, and four-newspaper towns became one-newspaper towns, all shilling for the corporations that owned them. Today, about five corporations own almost all of the media. You can go literally for days getting your news from Time Warner, for example.

An entire generation has been indoctrinated into this trickle-down-smaller-government-is -better point of view. People began reacting positively to this viral thought-meme. Hoover-style conservative Clinton enacted global treaties (NAFTA, GATT) that further eroded the power of government (we the people) to regulate business and the media. The result was another explosion of mergers and takeovers (along with the downsizing that came with them), that has brought us to our current financial meltdown.

Today, the bottom line rules, it’s profits before people, and the working class be damned.

That’s what you will be deciding this coming election: more voodoo economics, or a vision of building the economy from the ground up.

My name is Eddie and I’m in recovery from civilization...

Class War

¡Hola! Everybody...
Trying to get some things done, like getting a haircut, etc. Then it’s off to see moms!
First, some Nuyorican music (played by a combination of Puerto Ricans, Dominicans, Panamanians, whites... etc):

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-=[ Excavating the Future: Class War ]=-

The only thing worse than a knee-jerk liberal is a knee-pad conservative.

-- Edward Paul Abbey (1927-1989)

Knee-pad conservatives love to spew the fave talking point that “liberals want to take money from some people and give it to others.” What they fails to understand is that the “some people” they’re referring to are the richest 1% who now own about 70% of the wealth (I’ll have to check for the exact number, but trust me, it’s not that far off).

This kind of wealth gap hasn’t been seen since the great Depression. Is it no wonder that we’re all struggling today? As billionaire, Warren Buffet has stated, there is a class war and the rich are winning it.

Let me roll back a little right now...

When I was a young child, my class went on a class trip to New York’s World’s Fair. What I saw there was the promise of a future in which technology would make our lives easier and the increase of leisure time would free all of us to pursue the lofty goals of the further reaches of human development. There were moving sidewalks, automated homes, skyways, and trams. There was modern architecture and a moonwalk on a roof. At that time, young president stood up and proclaimed to the entire world that we would set foot on the moon before the end of the decade. As a young child, I remember thinking this would be the world I would inherit.

It was a different time, a time of hope and optimism.

And why shouldn’t it have been so? Our country had overcome a major depression, won (and paid for) a global war, created the finest educational structure the world had ever seen, financed an advanced education for millions of GIs, and built a large number of innovative and effective corporations.

People then still remembered the sadistic excesses of the wealthy and powerful of earlier times and, through visionary politicians and legislation, created an economic system that was fair to both investors and workers. Not only did investors become wealthier and more numerous, but a typical working-class American -- working a 40-hour week -- could support a family of four.

The huge income gaps of the 1920s had been slightly reversed in the 40s and 50s, and were largely held at bay in the 60s and 70s. Except for people of color, this can be rightfully considered the greatest Golden Age for the middle class ever.

But that wasn’t all. In those days, corporations were more progressive in their thinking -- there was a moral force helping build a climate of fairness and openness. People took pride in and saw their organizations as part of their community. They saw closeness between their own interests and the interests of their companies. The implied promise of the corporate executive or business owner then was, “Work hard with me, grow with me, and you will share in my prosperity.”

Then in the 1980s, a new kind of political life form arrived with a vengeance. Apologists for the wealthy and the powerful sold a new set of values to the public that allowed pro-business, anti-worker politicians to get elected. They, in turn, changed our economy from one that benefitted both the investor and worker classes, to one that today benefits investors at the expense of workers.

Today, investors regularly plunder the workers, the professionals, and low-level managers that have produced over the decades and they invest those stolen assets outside our country -- purely for their own benefit -- with no regard for those who work hard or for our society.

It gets worse. No matter how much time and effort workers expend in improving equipment or increasing efficiency, they don’t share in the benefits. As a group becomes more effective, it increases the chances that some of the other workers will be fired, and those who remain will have to work harder than they did before, with incomes that don’t keep pace with inflation. The middle class is told that “competition demands it” -- despite record corporate profits and astronomical incomes for investors and golden parachutes for corporate executives.

Of course, the executives and stockholders exempt themselves from the cost-cutting competition and get filthy rich in the process. As a result, between 1979 and 2000, the stock market rose over 1,100%, but real wages for the middle class didn’t keep up with inflation. In terms of opportunity, the U.S. no longer leads in terms of upward mobility. Several advanced nations leave us in the dust (France being one).

This increase in the disparity in wealth and income between the ultra-rich and the poor-and-middle-class is not, as knee-pad conservatives and lower life forms will tell you, because the wealthy work harder or are more successful on a level playing field. It’s because corporations now have all the power, and they have conveniently shifted their values from fairness to survival of the fittest.

Love,

Eddie

Voodoo Economics

¡Hola! Everybody...
I wrote the following some time ago and thought it needed some dusting off.

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-=[ Of Laffer Curves, Cults & Crackpots]=-

What we might call, by way of eminence, the Dismal Science.

-- Thomas Carlyle (1795–1881) Scottish philosopher on economics

One day, spurred by a comment left on my blog, I called my friend who works on Wall St. My friend is a staunch conservative who majored in economics. His wife, bless her soul, doesn’t like me too much and thinks I should be excommunicated for my sexual views. LOL!

Anyway, I’m not very bright when it comes to economics and finances, I believe my ex-wife is correct in her observation that I should never be allowed to handle my own finances, let alone talk about them. Whenever I have a question on economics, I always call my Wall St. friend. Lately he hasn’t been returning my calls, but I was able to reach him yesterday and he agreed to talk to me on condition that I would never tell his wife we met and if I didn’t interrupt him with my “radical” views. I agreed and even offered to buy him lunch considering the market is right now more radical (anarchy!) than I could ever dream of being. LOL

We met at a popular eatery near Wall St and when we sat down, I immediately blurted out, “Laffer Curve! Tell me about it!” That prompted a hush over the mid afternoon crowd -- nervous glances from others in the restaurant. My friend begged me to lower my voice, “Eddie, things are pretty much volatile around here these days, please don’t start a stampede.”

I promised to be quiet and he began to tell me about this mysterious, all-knowing talisman -- the Laffer Curve.

Now, keep in kind my friend, though a conservative, believes supply-side economics to be the biggest con ever perpetrated on the American people. He’s an “old school” republican: republicans that concerned themselves mostly about such things as deficits, inflation, and excessive spending; republicans who didn’t care much about cutting taxes and were quite willing (like Eisenhower and Ford) to raise taxes in order to balance the budget.

I laugh and and my friend assures me that such men existed, but that they have become an endangered species (extinct?) as the GOP has essentially been hijacked by a cult.

“All sects have their founding myths,” my friend assured me, and the cult in question can trace its roots to a Holy Trio (like in Christianity!) that met in Washington, DC in late 1974. That trio consisted of Arthur Laffer, an economic consultant, Jude Wanniski, a high-strung Wall St. Journal editorial writer, and, yes, Dick Cheney, who was then Ford’s chief of staff.

Wanniski had no formal training in economics, but he had taken Laffer as his mentor. His choice of tutelage was curious. Laffer had been an economics professor at the University of Chicago since 1967. In 1970, a colleague brought him to Washington to serve as a staffer in the Office of Management and Budget (OMB). There he quickly distinguished himself by making a wildly unconventional calculation about the size of the 1971 Gross Domestic Product. President Nixon, ever the craven opportunist, jumped on Laffer’s number because it was far more optimistic than other estimates and suggested an economic boom under his watch. It was discovered that Laffer had used only four variables to arrive at his figure. My friend tells me that most economists used hundreds if not thousands of variables -- inputs.

When his calculations turned out to be horribly wrong, he became the laughingstock of Washington. He left government in disgrace facing the disdain of his academic colleagues. Still, he stayed in touch with Wanniski, the two having met in Washington, and continued to tutor him in economics.

At this point, I gave my friend a patented Eddie ::blank stare::

My friend shrugged as if to say that no one can ever understand the underpinnings of human motivation.

In 1972, Wanniski had an epiphany that led him to believe Laffer was a brilliant economist who had developed a blinding new insight that would turn the economic establishment on its head. Wanniski and Laffer believed that it was possible to simultaneously expand the economy and hold down inflation by cutting taxes, especially taxes for the wealthy. Respectable economists -- even conservative ones -- considered this laughable. Nevertheless, Wanniski was convinced of its truth. He promoted the doctrine through his high perch on the respected (and uber -conservative) Wall St. Journal Editorial page and in articles in the equally conservative Public Interest (published by the Godfather of the NeoConservative Movement, Irving Kristol). Both were highly influential media outlets.

Still, Wanniski’s new doctrine, later to be called supply-side economics, failed to catch on beyond a few loyal devotees.

Then came that fateful Holy Night. Wanniski and Laffer were working hard with little success to explain the “new” theory to Cheney. At this point, Laffer pulled out a cocktail napkin and drew a parabola-shaped curve on it. The premise of the curve was simple. If the government sets a tax rate of zero, there’s no revenue. And if the government sets the tax rate of 100 percent, the government will also receive zero tax revenue, since there will be no incentive for anyone to earn any income. Between these two points -- zero taxes and zero revenue, 100 percent taxes and zero revenue -- Laffer drew an arc (“The Laffer Curve”). The arc suggested that at higher levels of taxation, reducing the rate would produce more revenue for the government.

At this point, Cheney could have raised several questions. First, he could have noted that the Laffer Curve was not... ummm ... correct? Yes, a zero tax rate would obviously produce zero revenue, but the assumption that a 100 percent tax rate would produce zero revenue was categorically false. I mean, c’mon, I tell my friend, Cheney had to be familiar with communist Soviet Union, with its 100 percent tax rate.

My friend sighed, patiently trudging on. While he assures me he’s no socialist, the soviet revenue scheme may not have been the model of efficiency, but it still managed to collect enough revenue to maintain an enormous military, enslave half of Europe, fund ambitious projects like Sputnik, and so on. Second, Cheney could’ve pointed out that even if the Laffer Curve was correct in theory, there was no evidence that the U.S. income tax was on the downward slope of the curve. My confused look prompted my friend to explain: there was no proof that rates were then high enough that tax cuts would produce higher revenue.

But Cheney didn’t do any of these things. Perhaps, in looking back, like most conservatives, he likes theories that confirm his ideological stances. You can almost picture Donald Rumsfeld drawing a Laffer Curve showing that only a small number of troops would be needed to occupy Iraq.

I digress, but whatever the case, Cheney saw the light and became an immediate convert. For Cheney, the Laffer Curve provided an easy to understand frame for the messianic power of tax cuts. The significance of that Holy Night wasn’t that Cheney was converted, it was the creation of a powerful symbol with which to spread the gospel of supply-side economics. The mantra was irresistible:

Lower taxes! Higher revenues!

The Laffer Curve swept through the republican ranks like wildfire. Kristol would write later, in almost theological terms, of the conversion of Ronald Reagan. And in that way, the totally untested and utterly ideological notion that cutting taxes for the rich is always a good idea came to life. Call it an economic Immaculate Conception.

That is how what Bush the Elder rightfully called “Voodoo Economics” came to being and it would go on to dominate U.S. economic policy for the next 30 years.

So, my friends, the next time one of the goober zombies start blurting crap about the Laffer Curve, or how tax breaks for the rich is a good idea, please know it was something that was literally pulled out of a failed economics professor’s hairy anus.

There’s more to this story, but this is already too long, but I love stories -- especially myths. More to come...

Love,

Eddie

When Less is Less

¡Hola! Everybody…
You may have not noticed, but Paul Krugman, a professor at Princeton University and an Op-Ed page columnist for The New York Times and the International Herald Tribune, was awarded the Nobel Memorial Prize in Economic Science on Monday. You also may not think it’s a big thing, but on some level, it is. First, Krugman has been a severe critic of Voodoo Economics (aka Reaganomics, Trickle down economics), a form of economics that has never been vetted by academic rigor. In other words, it’s just something someone somewhere pulled out of his arse. It is exactly this sham economics that has driven economic policy in the US for almost 40 years.

Conservatives are having conniption fits over Krugman’s Nobel Prize! LOL

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-=[ The Smaller Government Con ]=-

“I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

-- Grover Norquist

No great democracy has ever existed without a strong middle class.

Period.

Conservatives have an almost religious belief that if economic and social policies are made by the market, we won’t need government -- that’s you and me, the voice of the people. Let me repeat this point, because it’s important: you and I, and everyone else, we’re the government (“we the people”).

“Smaller government” has become the thought virus (meme) of conservatives and for a long time most of you fell for it. Essentially, “smaller government” means less government oversight and regulation, thereby allowing the “free” market to decide our economic policy. If you pay attention to Voodoo Economics devotees, they will tell you that a middle class will magically spring into being if we would just free corporate power (and greed) from government restrictions. The way to create jobs, the superstition goes, is to “free” the market. When the Wall St. fat cats are allowed to romp freely, their mantra goes, it will create wealth, and that wealth, they assure us, will trickle down to the rest of us, in that way creating a middle class.

This conservative ideology has been at the core of this country’s economic decisions since Reagan. Today, we (the middle class) work longer hours for less real money in jobs that are highly unstable. In addition, major sectors of our economy have been outsourced to Third World nations, essentially putting you in competition with horribly oppressed workers who work for literally pennies a day.

Yeah, in case you didn’t get it, this very same voodoo has driven our economy to the ground.

This is what you have fallen for and what is at stake in this election is not the bullshit Red State/ Blue State dichotomy, but which ideology will guide us in one of the most crucial economic moments in our history. Vote for McCain and he will put Voodoo Economics on steroids -- you will be voting for the conservative ideology that has been in power for at least four decades. A vote for Obama will be a vote for an economics that shifts the tax burden away from the middle class and forcing the richest percentile of the population to share a fair burden. One ideology believes in building the economy from the top-down (trickle down), the other believes the solution is to build an economy from the ground up.

::in John McCain voice:: Those are stark differences, my friends.

As I have written in the past, there is no such thing as a free market. Markets are the creation of government (we the people).

During the most prosperous times for the middle class, taxes were viewed as investments in a civil society and were routinely embraced by the majority of the middle class. In that way, we invested in new schools, better roads, higher pay for police and firefighters, and a multitude of public works that resulted in extended periods of unprecedented wealth and stability for all economic classes.

Ronald Reagan and his multimillion PR machine were successful in convincing an American electorate that taxes and government (we the people) were bad. Reagan did two things that dramatically changed our government. First, he changed laws like the Fairness Doctrine so that propagandists like Rush Limbaugh, backed by heavy corporate funding, could help convince the “Joe Six packs” of the world that the government was the enemy. In fact, Reagan ran for re-election as an outsider (much like McCain is attempting today). My question is, how do you run for re-election as an outsider?!!

::blank stare::

In any case, Reagan’s second major act was to stop enforcing the Sherman Antitrust Act, which had held corporate power at bay since 1881 (the law is still in the books, but rarely implemented). Subsequently, the media began forming huge monopolies resulting in fewer voices. Across America, two-three, and four-newspaper towns became one-newspaper towns, all shilling for the corporations that owned them. Today, about five corporations own almost all of the media. You can go literally for days getting your news from Time Warner, for example.

An entire generation has been indoctrinated into this trickle-down-smaller-government-is -better point of view. People began reacting positively to this viral thought-meme. Hoover-style conservative Clinton enacted global treaties (NAFTA, GATT) that further eroded the power of government (we the people) to regulate business and the media. The result was another explosion of mergers and takeovers (along with the downsizing that came with them), that has brought us to our current financial meltdown.

Today, the bottom line rules, it’s profits before people, and the working class be damned.

That’s what you will be deciding this coming election: more voodoo economics, or a vision of building the economy from the ground up.

Eddie,

Eddie

Conning Kansas

¡Hola! Everybody…
Today is a sad day, a family member, a mere girl of 24, tragically passed away early this morning. She was too young, had too much life left… Her name was Renit (pronounced ray-NEET). Her flame flared brightly if too briefly…

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-=[ Conning Kansas ]=-

I’m sure we’ve all awakened to the dire news of a financial meltdown happening on Wall St. it will continue: we still have yet to face the debt collapse. The chickens have come home to roost and this is only the beginning. As I look at this mess, I wonder how we have allowed a small group of ideological right-wing extremists hijack the economy. For over thirty years, a radical faction of discredited economic players have tricked the masses – that’s you and I – into voting on the basis of social issues, and in that way ignoring our economic self interest.

Check this out: in 1979, the highest-earning one-tenth of 1 percent of all taxpayers – the richest of the rich – took home only 3 percent of the national income. Today they take home 10 percent – that’s more than three times. Over that same span, their average tax rate has dropped from 32 to 23 percent. The minimum wage has lost nearly half its purchasing power. Income inequality has reached proportions not seen in any other advanced democracy.

The weird thing is that during this time the Kansas of my title, meant to evoke mainstream America, has grown less conservative, not more. How can I say this, you ask? Well, for one thing, the National Election Survey has been asking voters for years whether they would prefer a larger government with more services or a smaller government with fewer services. In 1982, the first year of the poll, 32 percent favored smaller government, and 24 percent favored larger government (with the remainder flat in the middle or having no opinion). By 2004, it had completely reversed itself, with 43 percent preferring bigger government and just 20 percent wanting a smaller one. Other polls have shown that the public has turned away from the conservative movement’s anti-government stance and favor a more active government and more progressive taxes.

The same holds true for social issues. Since 1977, for example, the proportion of Americans believing gays should be allowed to teach in elementary school has doubled, from 27 to 54 percent. Those favoring gay adoption has risen from 11 to 49 percent (Bowman, 2006). Since 1976, the proportion of Americans who believe women deserve an equal role in business and political life has almost doubled, from 30 to 57 percent. The proportion who believes that a woman’s place is in the home has collapsed from 10 to 2 percent. ^[1]

The question remains then, if the public isn’t moving to the right on economic issues and if it is even moving right on social issues, then how can we explain the rise of right-wing economics? The only way we can understand it is by noting that right wing economics (once called “voodoo economics” by none other than Bush the Elder) has been embraced by the economic elites.

Beginning with the 1970s there was a rise of a cult of pseudo-economists known as supply-siders – a fanatical sect of tax cutters. Simply put, the thrust f their idea is that cutting taxes for the very rich is the best response to any and every circumstance. Additionally, they believe that it is perfectly appropriate to turn the most rapacious and greediest elements of the business lobbyists into essentially an arm of the federal government (Chait, 2007).

Despite having been proven wrong repeatedly, they have gained an iron grip on the ideological machinery of the conservative movement. Contrary to myth, the supply-siders were not maverick conservative economists; they were amateurs and cranks, convinced that they were able to reach conclusions that had escaped the analysis of professional economists. The supply-siders quickly teamed up with cynical corporate lobbyists, who far from being zany, were smart, cynical businessmen (and some like Jack Abramoff, downright crooks) who knew that this was a chance to rape, pillage, and plunder.

All cults have their founding myths. The supply-side cult got its start, in part, from a little-known economic consultant, Arthur Laffer, an editorial page writer for the wall Street Journal, Jude Wanniski, and, yes, Dick Cheney, then chief of staff to President Ford. Wanniski had no training in economics at all, but was tutored by Laffer, who had been an economics professor t the University of Chicago. Laffer’s first came to Washington to work in the Office of Management and Budget (OMB). He quickly gained infamy when he made a wildly unconventional calculation about the size of the 1971 Gross Domestic Product. President Nixon, astutely observing that Laffer’s number was very optimistic, seized on it because it caused the appearance of an economic boom. When it was discovered that Laffer had used just four variables to arrive at his figure (most economists used hundreds if no thousands of inputs) he became the laughingstock of Washington. In fact, he turned out to be horribly wrong. Laffer left government in disgrace and the scorn of his peers (Blumenthal, 1988).

There’s more to all this and I hope to shed some light because many of you have swallowed much of the supply-side Kool-Aid. Today’s Wall Street meltdown has its origins in supply-side “theory” and the dismantling of government.

Love,

Eddie

References

Blumenthal, S. (1988). The rise of the counter-establishment. New York: Harper & Row.

Bowman, K. (2006, Sunday, June 11). Gay pride and prejudice. Washington Post, p. B02.

Chait, J. (2007). The big con: The true story of how Washington got hoodwinked and hijacked by crackpot economics. Boston: Houghton Mifflin Company.