Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Class Warfare Page 25 of 36

The Musical Chairs Economy

By

On February 19, 2012

Comments

Ok, for some time, folks have been after me for a formal economics post.  What’s going to happen in the future in the US?

The answer, for around the next 5 to 6 years, maybe longer, is the musical chairs economy.  Let’s lay out the basics.

What has happened is that the general circle of prosperity has been reduced.  Less people now live in the “good” US economy.  When they drop out of that economy they also use a lot less oil and gas, and even electricity.

Since the US can no longer sell nearly as much paper in exchange for real resources and goods, the US now has to sell something the rest of the world wants.  One part of that is intellectual property, which is why you will continue to see stricter and stricter IP laws.  The other part of that is hydrocarbons.  The world is still hungry for oil.  And if Americans use less of it, and if the US moves massively to fracking of unconventional oil (which it is) then the US can, again, become an oil exporter.  (Remember, for much of the 20th century the US exported oil.)

This plan includes impoverishing large numbers of Americans, since the reduction in oil use is not primarily being produced by providing the same services with less energy, but that is not an issue to those who run America’s industry or politics, since they do not, despite rhetoric, care about the welfare of ordinary Americans.

This game, in a lesser form, has been going on for a long time.  In the older version, going on since at least 1980 or so) production was offshored or outsourced, workers laid off and they never found good jobs again.  Industries of the past were offshored, but industries of the future were mostly not created (the internet boom being the last large-scale industry creation episode).  When they were created, they “went to scale” in other countries–once how to produce was understood, the production was done overseas, where it was cheaper, not just in wages but in terms of regulations (for example, batteries are made in China by hand.  Batteries, of course, are mostly acid containers.)

The game has now moved into a more virulent stage.  During the 2000’s various economists and financial gurus used to laugh that the fools overseas were giving America real goods and resources in exchange for worthless paper.  They thought they had found a free lunch, and many of them were right, form themselves, individually (who cares about fellow Americans?  If they can’t make too bad for them.)

So what happens now is a recovery of sorts.  Life is not so bad for the upper middle class and the upper class (I don’t include the oligarchs in the upper class, they are the ruling class, the upper class are the lawyers, doctors, judges, county pols, mid-level real-estate developers and so on.)  Since the majority of the population who wants a job can find one, who cares if millions of Americans are unemployed?  They are not economically functional in this economy, it is better for them to just go away, so that oil can be sold overseas.

Bear in mind that the short history of American economics in the post-war period can be summed up as “suburbanization.”  Wave after wave of developments, and the money which were made from them.  Suburbanization, by its very nature, requires gasoline, because it requires cars.  Suburbs do not, and probably cannot, have rapid transit.  They are also not economically self-sufficient, generally deliberately (the horror of some one working from home causes vapors amongst developers and suburban homeowners, it seems.)

Peak oil may or may not be here, but it’s pretty clear that peak cheap-oil has passed.  The American lifestyle of the 20th century, which has not been fundamentally changed by the internet and assorted telecom gadgets, is oil based.

So, there will be recessions and non-recessions (amidst what is an ongoing long Depression).  And in each recession those who fail to grab a chair will be cast out into the dispossessed.  Those who keep their chairs will be allowed to keep some facsimile of the “American lifestyle”.

The people who run the American economy and political system will continue along these lines so long as it continues to bring them money or power.  As noted, they do not have fellow feeling for other Americans, they believe they earned everything they have, and that if someone else isn’t prosperous, it’s because they didn’t earn it.  Such useless eaters are a drag on society.

I emphasize the thought process, which some will find polemical, because it is at the heart of the problem.  It is the most important part of the post.  There are other options, from the managed decline favored by environmental purists through to various types of smart growth.  They are not being pursued and will not be pursued because they are more work with less certainty of who will reap the profits and power than simply managing the current decline, and culling the herd from time to time, as necessary.

“The powerful do as they will, the weak suffer what they must.”

As long as you, the people, believe you are weak, you will suffer what you must.

The blindingly obvious about the proposed fiscal union in Europe

By

On December 4, 2011

Comments

What it means is German control over other countries budgets.  What that means is semi-permanent austerity.  What that means is semi-permanent depression.

I somehow doubt that this will be accomplished, if it is accomplished, through referenda.  I doubt any major party will stand against it.  So, to add to the blindingly obvious, it is blindingly obviously undemocratic.

It is true that the Euro requires fiscal union.  It always did, shared currencies don’t work without union.  However, if fiscal union is to occur, then it should occur with each member state’s population voting for it, especially as this fiscal union’s purpose is to impose corporate friendly austerity measure’s on the populations of countries that would almost certainly vote against them.

I will note that this is not going to redound to Germany’s favor in the not-very long run.  Permanent European depression is not to Germany’s advantage.  Who, exactly, they think is going to buy their high-end goods is beyond me.  They shouldn’t expect India and China to play along, those countries are creating their own auto industries and do not intend to be dumping grounds for Western goods.

Franklin Delano Roosevelt’s words are applicable:

The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism — ownership of government by an individual, by a group, or by any other controlling private power.

The states in Europe are controlled by private interests.  We have seen this, clearly, in Greece and Italy in the past weeks.  If this fiscal union passes, the Rubicon will have been crossed for all states remaining in the Euro.  Ironically, Europeans will have given up real democracy in exchange for depression.  Lose/lose.

For them.

Public opinion is irrelevant

By

On November 30, 2011

Comments

When Occupy started, there were polls that showed the public supported it.  Later, polls showed that support had dropped and a majority no longer supported Occupy.  In the first case progressives were pleased, in the second upset.

I didn’t care either time.  Repeat after me:

Public opinion does not matter.

It is irrelevant.  A large majority of the population wanted a public option added to the healthcare bill.  A small majority wanted single payor.  Calls against TARP were running 100:1 to 1200:1 against.  There is no public option, there is no single payer, and TARP passed.

In Europe every government other than Iceland has been sure to never allow a referendum on austerity.  Members of the Euro-zone like Spain and Greece and Italy have not had referendums on whether to leave the Euro.  They have had elections in some cases, but both major parties are FOR austerity (it’s not clear that citizens entirely understand this, watching Spaniards talking about how they had voted against austerity in the recent election was pathetic.  They elected a government which will go even more hardcore on austerity.)

Most countries in the developed world do not have functioning democracies in any meaningful sense.  You can vote for party A, B, or C, but they will all do substantially the same things, differing only in how fast they do them and the degree of gratuitous cruelty they engage in.

Your opinion does not matter.  Politicians are almost entirely in the thrall of a neo-liberal ideology, and are almost entirely the bought and paid servants of the very rich.  If a politician does what the oligarchy wants, he or she will be taken care of, even if thrown out of office.  If they don’t, money and influence will be used against them, and once out of office they will be on their own.

Politicians do not work for you.  Neither, just to be clear, do the police.  Nothing is more pathetic than watching folks at Occupy who seem to genuinely believe the cops are on their side.

Our elites will do what they will do regardless of what public opinion is.

What matters is not “opinion”, but action.  So with regards to Occupy, all I cared about is how many people were being radicalized—whether a cadre was being formed; and how much of the population supported them in real terms.  People who would donate goods, would donate money, would spread the message actively, would go down during the day.

What I care about in general, is how many people are willing to impose costs on the oligarchy.  These can be financial costs (as when French protestors occupied a refinery), or they can be personal costs, such as heckling politicians and the rich, slashing the tires of their cars (the Argentines did that, by the way) or, if rioting, rioting where they live and work.

Understand, the true rich live in the bubble.  They fly on private jets, they travel by helicopter, if they stay in hotels they cost tens of thousands of dollars a night and have private entrances, check-ins, elevators and so on that you as a peon never see or use unless you are part of their direct servant class.  Being in the bubble means never having to deal with a human being who isn’t directly financially dependent.  These people do not care what you ‘think’, they only care if you can damage their interests.

Politicians live less in the bubble.  You can reach them, and let them know what you think.  Loudly and insistently.  At their homes.  Their restaurants.  Their fund raisers.  Everywhere they go.  Don’t “occupy Wall Street”.  Occupy Bloomberg.  Go everywhere he goes, and make his life living hell.  That’s a cost to him.

Until politicians fear you more than they fear the rich and covet the favors and money of the rich, they will continue to serve the rich first.  Their salaries are not that important to them, they do not work for you, and they don’t fear you enough.

But that won’t change because of “opinion”.  Opinions don’t matter in aristocracies or oligarchies, and that’s what we are creating, what we’re heading towards.  What matters isn’t what the public thinks, what matters is what the public does which has a tangible, real, cost to politicians or their masters.

So I no longer care about polls in almost all cases.  They don’t matter.  Likewise most elections: elect whoever you want, the policies will remain the same except on the margins as long as the politicians don’t work for you, but for the rich.

Your “opinion” is irrelevant.  The powerful do not care what you think.

What’s happening in Europe is what matters: rules of the financial rich

By

On November 18, 2011

Comments

The oligarchs have taken down two governments in the past two weeks – Italy and Greece.  The idea that the Mario Monti, the new PM of Italy, is something wonderful, is deranged.  Note that once again, neither an election nor a referendum was allowed.

If you want to save the Euro and some form of European prosperity, there is only one solution, the European Central Bank (ECB) must do what it keeps insisting it won’t do, it must buy Eurobonds from members.  And it must buy them at fixed prices.  Italian, Greek, French, German bonds will be issued at X price, and if insufficient investors want to buy at that price, tough, the ECB will buy.  If this causes inflation, great, Europe needs inflation right now.

Even France and to a lesser extent, Germany, are coming under attack.  However France is under significant attack, and Merkel and the ECB seem unwilling to really do anything about it.  France has the option to go off the Euro in a way that most other countries don’t.  The issue with going off the Euro is simple: oil prices.  You now have to buy oil with your lousy currency, which is even more worthless than the Euro.  But if you happen to control countries that have oil, like France does (for example, France is mostly in control of Libya right now, not the US), then hey, sign some long term contracts and voila.  It is not written in stone that prices must be set on open bid markets.

Which leads us to the sudden surge in the price of oil to $107 a barrel.  On the face of it, this is crazy.  Yes, the US has had a bit of a recovery, but Europe is going hard core austerity.  But this is the game the hot money is playing: they move out of bonds and into oil, out of oil and into bonds.  $107/barrel oil means the US recovery (such as it is, which isn’t much) isn’t going to last much longer.

Being rich is about being liquid when everyone else isn’t, so you can buy up assets on the cheap.  When the rich are properly under control (ie. when you keep them poor and terrified of government and the people, as they should be) they can’t create such buying opportunities, they have to wait for them, and the government makes it so that the rich can’t take too much advantage of them, because taking advantage of them means taking advantage of other people when they’re most vulnerable.

Right now the rich can and are crashing asset prices by forcing countries into austerity through attacks on their currencies and control of their elites.  They then buy up assets for fire-sale prices.  (The history of fire-sale is worth commenting on.  Crassus, the Roman Senator of the first triumvirate, had a fire fighting team.  When a fire broke out they’d go to the fire, fight off the other fire teams, then Crassus would buy the burning buildings from their owners, negotiating as they burned.  If they refused to sell, well, they lost everything.)

These attacks on currencies are deranged.  The countries are not in that much difficulty, certainly the idea that France is in enough difficulty to be under attack is crazy.  These attacks are about power: the global rich were bailed out after the crash, now they are using their hot money in attack after attack, demanding austerity, which will cause semi-permanent depression in those countries which accept it.  That allows them to buy up what they want, keeps their labor costs down, and lets them divert what money they spend on investment which creates actual real economic growth into developing countries which are cheaper for them.

But watching European leaders respond has also made clear that they are either compromised, ideologically neo-liberals or completely ineffective.  Watching the ECB insist that it won’t just buy bonds has been particularly amusing, because if the ECB won’t defend even France, the Euro is in great danger of not existing in a few years, and if the Euro doesn’t exist, neither does the ECB, which means all those central bankers will be out of jobs.  They won’t even act to save their own jobs.

All of this is crazy.  The financial elites are on a plundering spree, gleefully using their power to force entire nations into poverty, blackmailing governments into huge payouts.  Pay extra on bonds, or pay extra on oil, or hey, why not both!

The political elites are clearly either bought or completely ineffective at resisting.  If the ECB won’t buy bonds, then countries just need to leave the Euro so they can print money.  Yes, that might cause inflation and various other problems, but that is better than semi-permanent depression through austerity.

Now, what can the people do when the elites won’t allow direct referendums, and when there are elections you can only vote for parties which are all in favor of austerity?

Make them fear you.  Start as follows, which is what was done in Argentina: find their cars, those nice expensive cars, and trash them.  Every time you see someone in a suit coming from the airport, surround the car and slash the tires.

And if you’re going to riot, don’t do it in your own neighbourhoods.  Go to the parliament buildings, the bank HEADQUARTERS or to the neighbourhoods in which the rich live, and riot there.

If you insist on some form of pure nonviolence (which the European left and right don’t) then you must chain and twist tie yourselves around important areas.  Go to the headquarters and shut them down by tying yourself up to all the entrances.  Twist ties aren’t just the cop’s friends, they are yours.  Love them and learn how to use them.

The elites will only respond when they feel your pain.  And they will only feel it if you make them feel it.

From a historical point of view

By

On October 3, 2011

Comments

I’ll just note that Occupy Wall Street is necessary and insufficient.  That is, the revolt of the students and the young intellectuals is necessary. It must occur.  It is insufficient.  It’s nice that the unions are swooping in and out, but they are not committed to the idea in blood, and the working class and minorities are not showing in significant numbers (take a look at the pictures.  White, white, white.)

Likewise, as Stirling Newberry notes, now that Occupy Wall Street has demands, they are very mild.  They aren’t even as radical as FDR.  The view of what is wrong with the world isn’t wrong “Wall Street!”, but whenever specifics are mentioned, they are insufficient to fix America’s problems, or even the problems of the class of people who started the movement.

At this point in time only radical solutions will work.  That means radical: everything must go.  Every institution in American society has failed.  Every single one.  They must all be shut down and the purposes they were meant to serve must be assigned to new institutions.  You cannot save the Fed in its current form.  You cannot save the banks.  You cannot save the military or the police or the judiciary or the universities.  And, most importantly, you cannot trust or do business with the elites who currently run society.  They must be run out of power entirely, their riches taken away from them, and those who have committed crimes (virtually all of them) must be thrown in prison.

Radical.

The protestors are not radicals.

Fortunately, the NYPD has been instructed to provide the necessary education, by being brutal, breaking the law repeatedly, and by engaging in serial deception.  They are instructing the protestors that there is no rule of law in America, because laws applied unequally are always unjust.  They are instructing the protestors that even if they are good citizens who do everything the cops say, they cops will still brutalize and arrest them. And they are instructing them that the police’s masters will not negotiate.  They will concede nothing of importance.

These lessons are important, because they lead to radicalization.  When the Occupy movement is spent, one way or the other, some of its veterans will become radical cadres.  They will understand that negotiation with the current system, and the current elites is impossible, and understanding that, they will take the necessary steps.

They elites may, as in Egypt, at some point, decide to switch lead horses.  Dethrone one part of the elite and put another in place.  Rick Perry, were he President, for example, might be happy to get rid of the Fed and to engage in some purging of Wall Street.  This would not mean a return to a functioning liberal democracy, however.  (I know that the usual suspects are going to scream that Tahrir Square was a great success.  It was not.  It enabled a coup by one part of the elites against the other part.  That does not mean it was not, and is not laudable, it does not mean it was not and is not necessary, it means that it was only a step on a long road.  It is unlikely there is going to be a velvet revolution, and people need to stop thinking there will be.  Likewise people need to face facts, and those on the left are as bad at it as our elites are.)

None of the above is to disrespect the Occupy movement. I’m a big believer that they’re doing something important and that they deserve props for putting themselves on the line.  Their embrace of apparently leaderless leadership is a master stroke of organizing, and indicates they understand that any visible leadership will be destroyed, smeared or co-opted.  This is all good, but it is useful for those of us on the intellectual margins to disengage our emotions, keep our hopes in check, and look at the state of play dispassionately.

This is a step on the road.  It is necessary, but it is not the whole of the journey. This is also where we are, and anyone who wants to contribute to a better future should be supporting the Occupy movement.

Occupy Wall Street vs. “Save the Middle Class”

By

On October 3, 2011

Comments

Stirling Newberry weighs in.

The Fed 400 Billion “Twisting”

By

On September 22, 2011

Comments

program is designed to give money to banks.  It will succeed, just like prior Fed quantitative easing (QE) succeeded.  Some money will also slosh out to other parts of the financial system.  It will have no significant effect on the economy, because it is not designed to do so, any more than QE was.

Unbelievable disrespect to a black man in Britain

By

On August 15, 2011

Comments

Watch.  Seriously, watch it.

It’s hard to know what to say, because what I’m thinking is unprintable.  Yeah, what a surprise that the riots occurred.  What a surprise.  And cracking down will make it worse, not better.  This isn’t even close to over, and it will never be over while men or women like that interviewer are in any position of influence or power. (h/t Feminist Philosophers.)

Update: a friend points out the social reasons behind the insistence that any explanation is an excuse and that anyone who “excuses” the rioters must be immediately asked if they condone the riots as if explaining is the same thing as condoning.

The insistence on not allowing an explanation reminds me of Obama refusing to “play the blame game” with reference to the Bush administration and the shutting down of discourse around the 9/11 attacks.  Any attempt to actually understand why something happened threaten the official narrative, and might cast blame blame on those in power.  That can’t be allowed, so no explanation is allowed, only condemnation.  (Ian note: Remember all the nonsense about how the 9/11 hijackers were cowards?  They were many bad things, they weren’t cowards.)

Page 25 of 36

Previous

Next

Powered by WordPress & Theme by Anders Norén