Talking about the "Teabagg'n Partays" this clip from MSNBC's David Shuster is hilarious: http://www.youtube.com/watch?v=WOinq_IeCyY
We should all fear the Republicans' Dick Army, I mean . . . uh . . . Republican Dick Armey.
And on a serious note, here is a link to the transcript of the speech that President Obama gave at Georgetown University today (one of my alma maters): http://www.talkingpointsmemo.com/new...on_economy.php
Last edited by BrianC; April 14th, 2009 at 03:13 PM.
I'm all for you having your opinion and your say. You can hate them Republicans all you want.Originally Posted by KatG
And I do understand that the political dynamic in the US is incredibly varied and nuanced. But I hope you can appreciate that us Canucks get to watch all of the nuttiness happen as (somewhat) objective bystanders. Unlike most other parts of the world, we get to watch your news as it happens, not just in summary -- your 24/7 news networks (Fox included) come with our cable!
While perhaps I can't truly sympathize with your individual levels of involvement with the two major parties, I can tell you that they do seem to serve more as a distraction than as real, effective political agencies. Americans (as depicted by the news networks) are so caught up in self-identification with these parties that it's more like a religion. It's not whether or not you think the platform or policies of the party are good, it's whether or not your faith is in the party. And that is truly bizarre (though I admit it does happen here, too, but I don't think with quite the same severity or seriousness).
And just so I'm clear -- I don't want America to save us all. Not only is it impossible, but it's foolish anyway. What I want is for the American people to be exposed to the broad set of interconnected issues that exist for the rest of us. The implications of domestic changes in the US are international in scope. For my part, I think that of particular note to most of the planet is the nature of American currency. As the basis of international trade, it is in the world's interest that the American currency system be put on the table for review. Before regulation is even discussed. The regulation discussion should definitely come next though.
I don't hate Republicans. I hate the Republican party policy agenda. The dilemma of the two parties as faiths is a result of Reagan selling the Republican party to the far right base in the 1980's, which then required the Republicans to go ever more to the right to the point of ridiculousness. This required people who were Democrats to get more and more militant to try and get a wedge in there. (Except for the very far left, which went to the Green party and Nadar and lost Gore the election.)
So yeah, we sound like loons, especially today. But within the parties, there is a lot of variation. The Republicans have driven a lot of their more sensible, fiscally conservative but otherwise relatively sane members out into the Independents (which are the third un-united party,) but some of them are still in. We then have moderate conservatives who sometimes veer far right, like John McCain. We have opportunist strong conservative Republicans like Newt Gringrich, who has toned down his rhetoric. We have the neo-cons, the evangelicals and then the conspiracy nuts. We have every variety of Independent and the Libertarians.
On the Democratic side, we have far-lefters, black activists, garden variety liberals like myself, moderate Democrats, conspiracy nut Democrats, etc. (Speaking of which Jessie Jackson is working on aid on the student loans apparently. Not going to be something Republicans have any interest in.) Traditionally, it's much harder to round up the Democrats to work together than it is the Republicans, but the last few years, after the 2004 defeat, the Democrats have been trying to be more organized and Obama is the concert organizer.
Ever since the 2000 election, because of what happened in it, we've been rather polarized and media coverage has been polarized and sensationalistic. We have rural areas that are mostly white and depressed economically, with older demographics, and those are the red districts. The urban and suburban areas with larger, younger populations are turning solidly Democrat. But the truth is that a large segment of the population is Independent and doesn't see the point in voting. The recent election did get a lot of those people out and voting, but still a lot of the country is quite apathetic about all of this. But what the two parties do does effect their lives.
I know that Canada gets all the cable channels, but they aren't objective observers and they don't always get what's going on because there is a tendency to try and put all Americans as one type -- we're all loud, arrogant, commercial, etc. But everything is in America. We don't move as one.
There's going to be no American currency review. Obama politely answered China that of course we could talk about a global currency and the stock markets here dropped like a rock. The EU can't even get Britain to give up the pound. It's not going to happen. Resolve all the major violent conflicts, stop dictators like Mugabe from bankrupting their countries in pillage, try to get Russia from attempting to replicate a mini-Soviet Union, pull Africa out of epidemic, drought and disaster, eradicate several terrorist groups, solve the drought in Australia, save at least some of the ice in the polar caps and decrease ocean pollution, resolve Japan and Ireland's financial woes, and so on, and then maybe we can start talking about a global currency. Or switch the dollar for the yen, but I don't think China will get that until they fully shift into a socialist democracy and figure out how to deal with 30 million males who can't get girls. I'm not sure they even want the yen to rule.
I did say (somewhat)
Yes, you're rather like cats that wayand they don't always get what's going on because there is a tendency to try and put all Americans as one type -- we're all loud, arrogant, commercial, etc. But everything is in America. We don't move as one.
And while we don't always get what's going on, neither do y'all. If it's a question of degrees, I firmly maintain that anyone inside a situation will have a more difficult time considering it objectively than someone outside of it. By the same token, someone inside the situation will always be better at considering the situation subjectively, and that is entirely individual. It's the reason why there are therapists, priests, teachers, mediators... and even politicians. The impartial 3rd party is a valuable perspective. By no means am I suggesting it is the best or the most complete. But it can illuminate areas that might otherwise remain dark, and simultaneously point out the elements of a discussion that are the theatre of discourse, versus the actual discourse itself.
Now this one I simply don't get. Australia is a desert ecology. It's supposed to be dry as a bone. If you want more water, move to Canada. We gots tons.solve the drought in Australia
It's had ten years of drought directly brought on by global warming. Things that are going to happen to the rest of the planet in the next decades are happening right there now. Farmers are committing suicide, and arable land has been devastated by fire. Their economy is dying. You've got 20 million people there who indeed have to buy water from Canada and other countries. A global currency requires massive cooperation between disparate countries. To get it, you'd have to solve some of the big problems, such as how to deal with the drought in Australia that is destroying that country.
This is an issue pretty close to my heart. I lived in Australia for a year and a half, and in Brisbane specifically for the better part of a year under Level 4 water restrictions (2005-2006). I loved that place more than anywhere I've ever been. And while I recognize the issue, it's hard to have much sympathy. Aussies are your typical European descendants, and they use water with the same casual disregard that we do here in the land of plenty. The truth is, there's more than enough water for their current population -- they just use it terribly and wastefully.
Most environmentalists I encountered while I was down there, either in person or on the news, suggested that the absolute maximum occupancy of Australia, after accounting for their total water needs -- livestock and farm needs included -- is about 24-25 million. Australia has about 20 million citizens, and there are about 4 million tourists and seasonal residents rotating through there at any given time. In other words, they're already at max. So of course they're feeling the pinch.
Australia is a desert. It's over 90% desert ecology. The 10% that isn't desert ecology is the natural aquifer for the other 90%, and yet that where all the people and their toilets live.
Consider the example of Brisbane. Brisbane relies on a system of water reserves and artificial lakes. Natural water flow is diverted into these reservoir, which has sped up the evolution of the affected areas, turning them into deserts when they were once lush and green. Ironically, you have to have wet ground for rain to reliably fall on it (the rain falls mainly on the plain because its cool and humid). So the dry, desert ring around the reservoirs that didn't used to exist is reducing rainfall, and thus causing the reservoirs to evaporate more rapidly (because the relative humidity in the air is lower), while usage continues to go up. The water level gets lower year by year, and rainfall decreases still further, year by year.
None of that has anything to do with global warming -- it's just changes to the ground affecting the way weather happens over it. Sure, global warming may be having an effect, but it's probably minuscule by comparison to local ground warming.
They scoffed at legislation to recycle water, even though they were on Level 4 restrictions for the better part of year straight (buckets in your shower, no longer than 2 minutes for that shower, no watering your plants...). They actively voted against filtering and treating their waste water. Not for human consumption, but for use in fountains, watering the lawns in parks, for toilets... But the media spun it as: "Would you drink what used to be your own piss?" So they voted it down.
(The irony being that all water is realistically recycled piss by now.) Instead they're embarking on a costly and environmentally dangerous plan to desalinate ocean water (as if that's somehow cleaner -- as if whale's and fish don't piss in it, and Aussies don't pump their waste -- unfiltered -- directly into the ocean...). What water they do import largely comes in plastic bottles (which alone is raping the environment), and what's most hilariously is that bottled water is primarily used in human consumption which is then pissed into the toilet (which is full of nice, clean drinking water) and is then flushed directly into the ocean...
So they aren't even retaining the water they do get from outside. And they're still flushing what little water they have out into the ocean. You tell me if that makes any sense. Go cry wolf some more, Australia...
The global warming effect that is theorized to be changing the weather patterns over Australia may likewise be incorrect. The suggestion is that the weather patterns on Australia's west coast have shifted because of global warming. Like the above, the central of the country is the outback (and especially the western side). It accounts for 90% of the continent, and it used to be a broad grass land. That kept it cool. Now it's mostly dark, caked earth. It's a heat trap. So it kicks up a heat wall, creating a wind barrier between the ocean and the land. Weather now diverts around Australia instead of going over it. So no rain falls on the outback, which makes it drier and drier. Again, still not global warming -- just changes to the local ground quality.
And in the outback, like Vegas, they have oases in the middle of the desert with lush green grass (non-indigenous European grass, no less), enormous swimming pools... For example, the corporately owned "town" of Yulara (at Uluru): it's amongst the most disgusting displays of excess you could ever see (though it is pretty). And the entire water supply is tapped from the sub-bedrock aquifer -- which has never been mapped or assessed for its actual volume. It's the same aquifer that outback farms rely on, and for years they've been reporting that the water don't flow as easily as it used to, indicating that it's drying up. Yulara uses the equivalent of 3 farms annual usage per day. Aboriginal communities have been made dependent on this ground water and have become used to lush environments in the middle of the deserts they used to roam and care for.
The early settlers trampled the outback grasses with livestock and killed the aboriginals, who used to deliberately burn the outback down in huge swaths. Australia has a uniquely fire-based ecology. Like pine-cones in North American that will produce seeds faster when burned, most indigenous flora in the outback is dependent on fire to release its seed. Some only germinate when subjected to fire. But the government of Australia actively prevents the aboriginals from burning down the outback. So they broke the symbiosis.
When we were camping across Victoria, we camped at a rest stop outside of Bairnsdale and had a camp fire. We're smart Canucks used to camping, so we had dug an appropriate firepit and were being safe. But it was a smoky fire, and the resident of Victoria driving past on the highway, ever fearful of the massive bush fires that burned over 90% of Victoria's flora down in the late 80s/early 90s, called ALL the emergency services in the area on us. It was pretty hilarious to us, but they were dead serious. No word of a lie -- 6 firetrucks, the chiefs of 2 districts, 8 police cars, and a Ute full of volunteers showed up to fight the fire. All they found were two Canadian backpackers cooking potatoes in a small, contained fire. We ended up having a beer with one of the fire chiefs, who explained the history to us. Good bloke
And now, they've gone and burned down again. Not because there isn't enough water, but because Australia requires their citizens to manage the ecology and burn down their flora in a controlled fashion, or else it all burns at once like it just did again (boom and bust styles).
What's more, it has to be burned down so that it revegetates, and that vegetation is essential to the water being trapped, the soil being kept firm but not plated, and thus cool and able to trap and retain water, the animal life getting to eat and drink (the older Aussie plants get, the less edible they are).
So while I appreciate that people in Australia want water, they abuse the water they have and actively refuse to use what sensible solutions exist for them. They've made environmental management more-or-less illegal, and they pay for it over and over again.
Under no circumstances should water be tanked or lined to Australia from other parts of the world. That would totally upset ecologies not just in Australia and wherver they source it from, but over the whole world as the available supplies of fresh water shift, changing evaporation and rain cycles...
Sorry, but the Aussies have to clue in themselves. They have all the tools they need to fix their own problems. And fixing their own problem would solve much of what's wrong with their economy. They just refuse to accept what keeping Australia viable means -- it means a capped population, controlled immigration, recycling waste water, and ecological control through traditional aboriginal methods.
Anyway... that's my diatribe on Australia. I want it to still be there so I can move there as soon as possible, but if I can't because of the population, at least I'll know they're doing something right...
Heh. That recycled water spin was such a farce. Looks like purified recycled water might be introduced in SE Queensland at some point, but of course they're going to wait on combined dam levels to fall before they do anything.
There is definitely a lot of truth to what you're saying Fung Koo. We haven't exactly been the model manager of the land here in Australia and poor policy in Victoria is evidence of that, especially in light of this year's terrible fires. We produce crops in some areas which require high water irrigation and we wonder why towns are packing up down the Murray Darling because there is literally nothing to sustain them anymore. Our current government seems to be much more aware of this issue than it's predecessors but I remain pessimistic since legislation is being watered down to get key senate votes and they've already begun to downgrade any useful input from experts (such as Prof. Garnaut's recommendations). In Canberra, we're on level 3 water restrictions, dams are falling and with the Greens party having just gained enough electoral seats to challenge local policies, it'd be interesting to see what happens in regards to environmental programs from here on. Ultimately, our mismanagement of land and water needs to end and fast, since while our economy remains fairly strong and is weathering the financial crisis we have to be actively engaged in the international arena to make any major difference locally.
It's frustrating to say the least. I guess that explains why Aussies like to travel so much, to get away from the horror of this dry place from time to time.
It seems the discussion has moved on since I last saw the thread. Still since you wrote an elaborate response Fung Koo, I'd like to give a short reply.
You ask in your example using U-Bucks where the money to cover the interest comes from. Simple: the other 98 people who have U-Bucks and presumably have bought from the newly created venture.
Why is a fiat money simple preferable to a metal currency? One is flexibility when liquidity is urgently needed. For example during a war. Your country is at war and needs to defend itself. It would be easier for the government to simply buy its supplies rather than seize them. Another is during an economic collapse that would be helped by liquidity. Case in point The Great Depression. Countries that went off the gold standard saw quicker improvement than those that didn't and experienced less severe economic malaise. It is telling that after The Great Depression fiat money systems became the norm and countries went off the gold standard and haven't seriously looked back since.
Last edited by Bond; April 18th, 2009 at 10:21 AM.
I'm sure that the Australians are being wasteful and the government is not doing enough. Why should Australia be any different than the rest of the world? But the environmental scientists measuring data aren't in any doubt about the effect of global warming on an already harsh ecosystem. And that sort of thing is going to have to be addressed and international cooperation improved on it before you'd get anywhere near having an international currency. I think we're a long way from that, and I know that the financial industry based in the U.S. will fight it tooth and nail.
See a few posts later where HE pointed out the discrepancy. I was oversimplifying and missed a critical background step, namely: fractional reserve. Check back a page or two for that part
I suspect that we will, though, and soon. We are society of paper-pushers. Our national economies are primarily based on the illusory trade of money, and the average person sees none of it. It's really little more than a broad, elaborate gambling ring. We use inflation to create value in the financial economy, while actually changing almost nothing in terms of the quality of how people actually live. Now, we primarily work in offices for wages grossly divorced from the perceived importance of what we do, or we assemble things manufactured elsewhere for unbelievably insane wages (why an unskilled labourer on an assembly line makes $40+ an hour is totally beyond me -- especially when you consider the Mexican guy who actually built the part made more like $1.65 an hour).It is telling that after The Great Depression fiat money systems became the norm and countries went off the gold standard and haven't seriously looked back since.
I suspect that these bizarre schisms in how we value things will have to come to a head -- namely, a worldwide recession like this one. Unless, of course, we manage to make the slave robot class we need to sustain all this insanity...
Well, it's not entirely unskilled labor, here or in Mexico. And the U.S. worker makes $40 an hour so he can feed his family while living in the U.S. and working for a company able to afford fleets of private jets for its executives. We could go back to the robber baron days when the U.S. workers were paid $1.65 an hour, and if mangled in the machines allowed to simply die and their families starve, and went into debt to their employers for groceries and when they retired were turned out without a penny, but I'd rather just find a way to pay the Mexican laborer more instead. Unfortunately, that takes a lot of cooperation again -- of U.S. businesses, of the Mexican government (currently fighting for control of territory with drug lords,) and other countries' governments, of international organizations and trade alliances, and it also depends on tackling major problems of population and poverty in these countries, which again requires vast cooperation, aid, restructuring, etc.
It would greatly help if the U.S. didn't have to give Goldman Sachs more in bailout money than it does aid to Africa, but given the current mess we're trying to climb out of, I have little interest in dismantling labor unions and socking it unduly to the low income workers here under claims that this will help global poverty when it's the companies that hire the Mexican labor at their low, low prices that are causing a lot of the problem. (Of course, they're also paying better than the Mexican companies might.)
Last edited by KatG; April 21st, 2009 at 11:31 AM.
I do not pretend to understand everything there is to know about the U.S. financial system or the global financial system but here’s what makes sense to me:
(1) If I’m running a business, my goal is turn a profit. In order to turn a profit I have to be able to compete against all comers. Once upon a time, the competition may have been limited to other companies in the U.S. but after WWII that changed forever. Now, I must be able to compete with companies around the globe.
(2) The cost of my product depends upon the cost of the materials going into it and the cost of the labor to assemble it. Let’s say that I use steel in my product. The cost of steel is driven by the cost of mining and smelting and forming and that depends upon the cost of labor. Sometime in the 60s, I suddenly discovered that I could buy steel from outside the U.S. for less expense than I could buy it in the U.S. This situation rapidly expanded to many other commodities and products. For example, in the 70s I discovered I could manufacture circuit boards in Guadalajara for whole lot less than I could do the same in Phoenix. Then, in the Philippines and then in Malaya. Remembering point #1, what was I supposed to do?
(3) Point #2 led to the U.S. Government instituting a Buy American program for all its own acquisitions. Well, for most of its acquisitions. For example, in the early 90s, no U.S. company was capable of producing normally-black flat panel displays so the displays on the Space Shuttle came from Japan.
(4) Point #3 led to much higher cost weapons systems costs than necessary but it did keep the assembly lines in the U.S. which had some benefit for U.S. labor – and much more for U.S. businesses.
(5) As the English language became more and more common throughout the world, the opportunity to outsource services expanded and, once again, Step #2 becomes more and more necessary to remain competitive, not only globally but here in my home country. As soon as the first company outsourced overseas, the competitive advantage shifted to the outsourcer. Now, both material and services are being imported and more and more of our cash is going overseas. At all levels of my business, I became too expensive for our own good. I was paying myself way too much in comparison to my labor pool and my labor pool in the U.S. was costing way too much in comparison to available global resources.
(6) Meantime, in parallel, I discovered a new way to make money though it never occurred to me that that was I was doing. We bought our first house for $18,000. I was in the service at the time and moved around a lot. We sold that first house for a $3,000 profit enabling us to buy our next at $24,500. We sold that house for a $3,000 profit and bought our penultimate house for $50,000. When we finally built our retirement home for $90K, it was, in large part, on the basis of the profit of the sale of that $50K house. The retirement house, during the boom and before the bust, probably could have been sold for in excess of $250K. In microcosm, the complete history of our current real estate disaster.
(7) I draw retirement funds from 3 financial sources. The first, the U.S.Army, has kept my retirement pay escalating through periodic cost-of-living increases. The actuarial tables claim retired military folk live an average of 5 years into retirement. I have +30 years. The second, an aerospace firm, provides me a fixed income based on my salary and years of service to the company. I gave them 15+ years. The last is my Social Security based on my age at retirement and salary history. This latter source also experiences periodic cost-of-living increases.
(8) I know folk who are attempting to live solely on social security. When the price of gas goes up $1/gallon in a single year; that’s a killer. When school tax goes up $100/year; that’s a killer, too.
(9) I understand the U.S. government takes in money and then spends it. I understand when they spend more than they receive for a given year, this is known as a deficit. I understand that all the previous years’ deficits summed together makes up the national debt. I further understand that the Federal Reserve bank was established and chartered to ameliorate that deficit spending through interest rates for money lent to the banks in the U.S. I also understand this system worked adequately for a number of years until Step #6 accelerated beyond any reasonable explanation.
(10) I understand that the deficit and debt part of Step #9 means that we owe bunches of money to people around the globe and the amount we owe has put us, for the first time in our history, in a position where we may no longer be able to determine the value of our currency. When other people begin to tell us how much our currency is worth, we won’t
This is the argument you're making that I can't quite wrap my head around, Kat. Not because you're not clear, but because I can't buy it.
In any economic system, there is a theoretical limit to the total amount of money circulating at any given time. If you average out the total dollars circulating in the system evenly you'd have a flat distribution, communist styles, where everyone has the same money regardless of what they do or where they fall in the pile. In any "normal" capitalist economy, the actual distribution plots to a more-or-less normal distribution curve (you know, the Bell Curve). People who make tons of money bias toward the top end, but there are fewer of them. The middle group occupies the most space, and that reflects people like you and me (assuming you're not secretly a total Richie McRicherson or Tiny Tim at a public library). The poor then would loosely equal the rich side, making less but there are more of them.
In otherwords, your standard, pyramidal, normally distributed socio-economic arrangement.
The situation that we seem to be in is that the rich side has become over-rich, destabilizing the distribution of the curve, pushing the lower ends of the middle-class further toward the bottom. This is problematic because the truly poor have no credit, and the effectively poor middle and lower middle-class are shifting into an appallingly bad credit rating (after an unrealistically ramped-up lending market pushed unmanageable debt into their hands), basically handcuffing the credit market. Profit in the financial industry is now skewed toward only the upper-middle and upper middle-class, whose profits are dependent on those lower, who are now excepted from the credit market by bad credit rating or having no credit history at all in the case of the truly poor. The result is a recession until the distribution re-normalizes.
Your argument, from what I gather, is that we (re)introduce regulations, take from the bigwigs at the top, and redistribute that money down the pyramid toward the base, returning the curve to a more normal distribution. Put restrictions in place to keep the bigwigs from climbing so high that they get burnt and bring the rest of us crashing down with them. To keep them proportionate with the middle-class. Balanced, rather than top heavy. Furthermore, it's these bigwigs that hire the cheap labour in the first place, creating the schism... The Robin Hood ideal.
I get that argument, and I understand it. It's classically American, and classically polarizing. It's basically a Marxist argument for sanity and respect for those who are trod-upon in the capitalist marketplace -- aka, Soft Socialism. A return to the Status Quo. (If that's not at all like what you're arguing for, though, please... illuminate!) The rich are the supposed source of the plight of the poor. The middle-class, the innocent conduit through which it all flows. Classic dominant:dominated dichotomy.
But it's here where I run into an issue. The middle group -- the biggest portion of the pyramid, those of us who "have" to make $20-$40 an hour to live "freely" in our society, you and me types -- is a sort of capitalist falsehood.
We want to protect jobs in our local economies. Why? We need them to live. But it's not as simple as that.
People without jobs can't get loans, have no money, no security. To live in our society, and to have fun doing it while you're leveraged out your ears, you need a higher grade of pay. Now, the company needs to be able to pay you your nice wage so that you're happy and so that the consumerist credit economy chugs along. You get your mortgage and your car, raise your kids, get your insurance, buy your food, and away you go making payments, with a teeny bit extra left over for perks (the profit from which goes toward supporting some other sod in the same situation you're in). But in order to be able to pay you that wage, to meet the minimum needs of survival and survival of the broader consumer economy, the company needs to find ways to reduce costs in other areas. Rather than close up shop, in comes the cheap, out-sourced labour.
Any sane capitalist company would simply reduce the amount of over-priced workers, and/or shut down all their plants where they can't sustainably pay their workers that $40, and shift all the jobs to where they only have to pay $1.65 (which they try to do, frequently). Then they can greatly reduce their production costs, drive up profit, and expand again because the company is successful (ie -- the Walmart model). None of the workers are particularly well-off, bu there's more of them, and they make enough to scrape together the necessities of life, minus many of the extras. (Basic economic logic, however, dictates that the luxuries will wind up priced relative to the liquidity of the capital of the populace.)
So the part where I run into the problem with your argument is here -- it's the middle-class (via labour unions, for most part, and government after that) demanding that unsustainable job and wage retention that causes the bigwigs to hire the cheap labour and impact the domestic job market. So how is it the fault of the bigwigs that they employ the cheap labour?
Granted, there's no way that they're going to pay those cheap labourers better if we demanded lower wages in the name of equality and equity. But that's not the point.
It is largely these grossly inflated wages in the middle-class that make the product so expensive for all the other middle-class consumers caught in the payment cycle. To keep the cost down to allow the credit market to account for their product, the bigwigs have to find ways to reduce costs to keep the market viable. That's just business. You're beholden to the consumer's ability to pay for your product. So, how is it the bigwigs' fault? Sure, a lot of them make ridiculous amounts of money and siphon off the top, but isn't that their right?
It's the failure of the bail-out ideology that these guys get to exist in largess. If that luxury was unsustainable, the company would necessarily collapse or restructure -- because there ain't no profit in being out of business. Hence the reason why the bail-out was just about the stupidest idea ever. Capitalism without Bankruptcy. Genius.
To sustain the Canadian and American industrial base, it becomes necessary to hire that cheap, foreign labour at preposterously low wages. Paying all parts equitably is a systemic impossibility. Likewise, limiting a company's investment options as a means to leverage themselves against their costs reduces their ability to meet their collective agreements in the existing economy. It would result in the effective collapse of the business (which then snowballs to the credit market by way of layoffs, which ironically needs bankruptcy to balance its books, and we're trying to stop bankruptcy from happening through the Stimulus Plan for business, but not for the individual presumably because we're trying to keep them employed so they don't need it...).
Hence my problem with what you're suggesting -- it's the exact reverse of my sense of reality. It's not the rich creating/abusing the poor. It's the middle propagating both, supporting both, and resting semi-comfortably in the centre by creating an endless feedback loop.
We cannot restructure the existing system and make any fundamental change. There are simply too many vested interests, and too much leveraged against the system. The best we can hope for is a return to the normally distributed socio-economic hierarchy that we've been stuck in, and it will continue to boom and bust, going through periods of regulation modification (Reaganesque "deregulation" is really just modifying regulation, albeit toward the negative). In otherwords, Legalism. Unending cycles of Legalism, categorized only by degrees of severity.
SES takes the important things into account, like access to shelter and food. And we in the middle certainly have all that, plus many perks, so I'm not bemoaning our relative advantages (nor our comparative stability against the rich). But when you actually pull apart the financial realities of the middle class, we're pretty much maximally leveraged. On average, we start our first jobs with $23k in debt. We then acquire a car and a mortgage, and spend the rest of lives in essential servitude to that debt. $400,000 in debt over 25 years turns into about a million dollars owed. At an average salary of $40,000 a year, that's 25 years of servitude to your debt (assuming it doesn't change and you don't miss a payment). Less than 10% of people in the middle class ever get out of debt in their lifetimes. Our lives are based on floating over Zero, balancing income to debt. These stats are backed up by over 50 years of federally-accrued statistics in multiple nations, Canada and US included -- three full generations of near-total middle-class stagnation.
Buy this car to drive to work; drive to work to pay for this car.
The entire financial industry is inculcated in and dependent on this. Credit companies "farm" the middle-class for profit, employing the middle-class to do so. They even trade on speculation about our ability to meet our own debt (CDS), which performed by the upper-middle class. They absorb profits and they leverage them into still more debt for the population. The former bourgeois, as it were, are the effective proletariat of the modern working economy, if we're talking in Marxist terms. We're the cattle, they're the farmers. The poor, the so-called victims here, are by and large actually outside of this relationship. Having no credit means that you don't exist, as far as the modern economy is concerned. Relative freedom, perhaps?
And the funny thing about the relationship between man and cows is that while we eat them later on, we're wholly subservient to them while they're alive. It's a codependent relationship. The systemic abuse exists on both sides. We whine for more feed, they fatten us up to eat us. Repeat. But who is "they"? The bigwigs? Partly, but mostly it's ourselves.
Under the existing system, we need the rich. And we need them to live in excess, and we need that excess to result in bankruptcy. Likewise, taking from the poor is a contradiction in terms -- they have nothing to take. You can't loan 'em anything, and you can't tax 'em. The people you take from if you want to make money are the effectively poor. The leveraged middle-class, doomed to make payments to The Man the whole of their lives. Zero Float. Indebted Servitude. The backbone of modern society.
We have to stop and think outside of the Robin Hood narrative. We have to find a way to take the middle-class out of the Ponzi scheme, rather than continually appease them. Otherwise, it will only be a return to business as usual, over and over and over again. And as near as I can tell, no one really wants that except for those bigwigs who benefit from it, and the complacent middle-class who are too cowed to realize that there's always an alternative.
So I have to ask.... why? What's the goal?
I know that the middle-class bemoaning its station is cliched to the max. But in the broadest philosophical sense, don't we have to ask.... why? It's not like our cultures have any clearly defined goals that we are able to convince ourselves that we're putting our weight behind. It seems like all anyone is after is maintenance of a status quo that enriches few, is generally stagnant, anti-progressive/anti-change, and, well, boring. What constitutes "progress" in this system? What constitutes "wealth"? Or "freedom"?
People seem to think the middle-class are the innocents in all this, the rich to blame, and the poor the victims. But the poor have almost nothing to do with it (they're probably the lucky ones who will get to start over, unless those paths are blocked to them by regulations). And the rich are primarily a by-product of the middle. The modern economy starts and stops with the middle class. Stealing from the rich to give to the poor, in the modern economy, is effectively the same as taking from the left pocket to give to the right.
It's just redistribution, not change. I, for one, find that to be insufficient. The middle-class is the issue. They suck up more than the bail-out and the aid to Africa combined, and all the invisible problems they (we) cause that are almost impossible to calculate.
Well apparently I wasn't clear, because that's not my argument.
There are economic systems that are pyramids, in that you have a small group of rich at the top, a somewhat larger middle class, an even larger working class, and then a massive amount of poor that is the base. Brazil has a pyramid, and so does India, though they are certainly trying to change it. In contrast, North America has a shape that's more like a swollen snake. The small group of rich are the head, then the middle is the large middle class and working class groups, and then the poor are a very thick tail. This shape, while not full-proof as we've seen, is overall more stable and tends to be fairly prosperous when not in the middle of a global recession. In a swollen snake, the middle swollen part of middle and working class pay most of the taxes. The poor don't pay and the rich have numerous ways in the U.S. to get out of taxes -- tax cuts on investment income, capital gains, inheritance, tax shelters and off-shore accounts, etc.
The recession in the States was not caused by the manufacturing sector and the assembly line workers, which is one reason that China is bouncing back a little bit better than others, though the manufacturing sector was horribly hit by the changing economy and the lack of credit and the reduction of buying that came with that lack of credit. The cause of the recession were the real estate, finance and banking industries. Rapid de-regulation from 1980 onward produced a "wild west" sort of gambling fever. They are the spigot through which the money flows, and they were making massive loans -- many to each other -- that they couldn't cover and doing so by taking out massive loans, etc., the sort of things you were complaining about. So when enough loans became toxic and the real estate bubble began to leak, the spigot of imaginary pebbles got clogged and banks and finance stopped lending and ran into a cash crunch. Essentially, the finance and bank people were bad capitalists. They didn't make the most possible money for their companies, but instead made money for themselves at the expense of their company. They lost their companies' money with poor business choices.
The U.S. bailed out AIG because the company handled a majority of the country's insurance. If AIG went under, real estate would completely collapse, pensions would collapse, annuities, health care would have been a disaster, and so on. But Lehman's, which wasn't considered as essential, was allowed to die. Which led to massive lay-offs, massive panic in the financial sector, mortgage foreclosures, etc. So the government gave money to the rich companies to float their loans and agreed to take over toxic assets, so that the companies would unclog the spigot and make loans. The companies, which had begged for the money, took it, fought any attempt to have to account for it, spent part of it lobbying the government against anything they didn't like and most importantly, fired lower level employees when they'd said they wouldn't, and didn't do what they promised they'd do if they got the money -- open the spigot and make responsible loans and not toxic ones. They're welching on the deal.
So regulation is not about taking money from them to re-distribute. It's about getting them to live up to their agreements and do what the bailout money they got is for -- re-start the economy, re-start real estate, re-start credit for businesses, etc., and not be able to make risky, toxic loans. And it's sort of working in a way nobody expected, which is that the businesses are so scared of a return to slightly more regulation that they are frantically attempting to repay the government money as soon as possible. But they still aren't making loans, which puts businesses in distress, helps keep real estate crippled rather than just corrected, etc.
I don't think someone can be too rich. I have no interest in pitchforks and eating the rich. But these businesses essentially defrauded on a business contract with the government. And the populist anger was that they honored their retention bonuses for incompetent employees while firing other employees, and accepted government funds but refused businesses credit. They aren't making their companies money. In fact, they're basically showing they have brains of Swiss cheese. Everytime these businesses start talking about how they have to try to retain talent to stay competitive, I have to giggle. What talent? These people are the most untalented financial folk we've had in decades. Please don't keep them and your company may actually survive.
The new tax on the upper class is not a tax increase, but the corrective removal of a tax cut that Bush gave them that was totally unnecessary and largely a political favor. Obama would have been doing this even if the economy wasn't in the toilet. The 3% is essentially lunch money to them, and gave them no problems handling back in the 1990's. Nor is getting that tax back to what it should have been going to do much to fund the stimulus. We're still looking at a huge deficit and the constant drain of the two Middle East wars. What the stimulus may do, though, is keep some people employed and not draining the government coffers and keep businesses going until we can get the spigot turned back on. There's no Robin Hood redistribution of wealth going on from rich to poor, that's just conservative rhetoric. And I fail to see how making the main tax suppliers poorer, so that they are less able to pay tax, is a good idea.
I have no problem with businesses outsourcing labor to other countries. You're arguing that the assembly person in the U.S. getting $40 an hour is over-valued because the businesses can get labor cheaper in Mexico. But the labor in Mexico is under-valued because of cultural bias and criminal corruption, and the bottom of the base drags the whole system down with it. It makes no sense to turn the U.S. back into a pyramid structure. I'm arguing that I'd rather turn Mexico into a swollen snake with development and investment.
Right now, I have a relative who is in trouble, which means my whole family is too. She is holding on to working class by the skin of her teeth, through no fault of her own. She did not get a college education, although she has various skills. She is not free to start over or whatever it is you are talking about. She does not have a house, or a nice car, etc. Now, she could, in a pyramid system, live in a tent by a landfill, try to avoid getting beaten and raped while getting money as a prostitute, while her two kids search the garbage pile for food and things to sell by the side of the road. Excuse me that I don't want that for her and also would prefer not to have that for folks in Brazil.
You have been talking about doing away with credit and having a fee system that essentially is a form of credit but would be more protective? It hasn't been very clear how this would benefit businesses, banks, the middle class, the poor, the rich, etc. But let's say that it benefits. There's still no way you'd be able to institute it in the U.S. It would require a lot of initial regulation from the government. The banks and finance worlds are fighting any controls on credit, and are freaked out over having to live up to what they agreed to do with the government. There's no way, practically speaking, they'd ever accept your system. To do it, in fact, the U.S. would have to become a truly socialist government, well beyond Canada or Britain.
Now maybe that's the point, since you seem to be saying that the middle class are an economic disaster in some way. Maybe through draining the economy with useless credit? But business borrows a lot more than the middle class. So I guess I'm really not following what you are saying.
Last edited by KatG; April 23rd, 2009 at 07:48 PM.
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