Thursday, August 2, 2012
Robert Samuelson: Perpetual Neolib Hack - Scolds Us for Our "Fear"
"....the depth and persistence of poverty in America is unique among developed industrialized nations. The gap between the poor and the rich is bigger. Mobility--access to the American Dream--is less.
Born rich? You'll more likely to die rich in the U.S. than in other countries. Born poor? You're likelier to die poor."
-Blogger Ted Rall ('Our Suicidal Ruling Class')
It's a pity that WaPo columnist Robert Samuelson, he of the prime Neoliberal genes and memes, instead of regularly bloviating and spreading his economic crappola, doesn't read more material like Ted Rall's. The he would see why his daft, repetitive injunctions to "invest" ought to fall on deaf ears. But he doesn't so no surprise he's at it again ('Unprecedented Fear of Failure Is Still Controlling the Economy') scolding the rest of us for our "fear of failure" to trust our economic system to deliver. We ought to desist and part with these nascent fears (never mind derivatives such as credit default swaps are still unregulated and contaminating almost every financial instrument) and overcome our "shrunken confidence in the power of economics".
Question: WHY should we?
First, Samuelson doesn't remotely grasp the reasons for the laggard economy. He, typical of his Neoliberal, "free market" worshipping ilk, believe it all has to do with the rich top 1% hotshots. He believes they're all sitting on the sidelines - not creating jobs- because THEY are terrified of "uncertainty". No they are not! They are doing very well, living the high life on their 350' mega-luxury yachts, dining on caviar and whatnot as they ponder their hedge fund returns.
Counter that with the substantive take from a REAL economist, Joseph Stiglitz, who does get it but whose views don't occupy half the column space or air time of a Samuelson. As Stiglitz observes in his Sunday 'Perspective' Denver Post article ('Inequality Hurts Prosperity in the U.S.'):
"Any solution to today's problems requires addressing the economy's underlying weakness: a deficiency in aggregate demand. Firms won't invest if there is no demand for their products. And one of the key reasons for lack of demand is America's level of inequality - the highest in the world."
Indeed, in earlier blogs I referenced the measure for assessing this inequality is the Gini coefficient, and ours now ranks next to that of Mexico and the Phillippines. Stiglitz expatiates further:
"Since those at the top spend a much smaller portion of their income than those in the middle and bottom, when money moves from the bottom and middle to the top (as it has been happening the last dozen years) demand drops. the best way to promote employment today and sustained economic growth for the future, therefore, is to focus on the underlying problem of inequality. And this better economic performance in return will generate more tax revenue, improving the country's fiscal position."
Stiglitz then goes on to note that even tax cut crazy "supply siders" ought to comprehend that our inequality doesn't come explicitly from market forces. Instead, he pins the tail on "rent seeking" by those with the greatest resources and income leverage to game the rest of the system for THEIR benefit. In effect, their aim is to "increase the share of the pie THEY get, rather than increasing the pie itself".
Examples of rent-seeking include (ibid.):
- Corporate executives in the U.S. taking advantage of deficiencies in corporate governance laws to seize an increasing share of corporate revenue - enriching themselves at the expense of stake holders (and share holders!)
- Big PhrMA companies lobbying successfully to prevent the federal gov't (the largest buyer of prescription drugs) from bargaining for the lowest prices. Such a move for Medicare (like for the VA) would save over a hundred BILLION each year (Stiglitz estimates because of this comfy deal taxpayers overpaid by nearly a TRILLION dollars over the past decade)
- Mineral companies getting resources at below competitive prices
- Oil companies receiving billions in "gifts" each year through the continued Oil Depletion Tax Allowance (which JFK proposed terminating in June, 1963)
- Construction (by lawmakers - on the take via legalized bribery) of bankruptcy laws that give risky derivatives priority in bundling them in with innocuous financial instruments (to enable bailouts if the instruments and companies - liek AIG- hit the crapper later) but which deny bankruptcy protection for the discharging of accumulated student loan debts.
As Stiglitz observes, all such rent seeking distorts the economy and further makes a mockery of the Neoliberals' favorite line of pap: that the free market works in all participants' advantage if they only acquire enough knowledge. Horse manure! The fact is, with specialized advanced info tips going to large investors, for example, the small fry investor is always at a disadvantage- as he is because of computer flash trading.
In reality, the "free market" is total horse shit, and a primary Neoliberal myth which alas, too many of our citizens (who'd laugh if you told them you observed a little green man crawl out of a spaceship) accept without batting an eye. The truth is we have no "free market" and probably haven't since the 1910s, or earlier. What we have are coercive -control markets manipulated by the largest multinationals, Wall Street imperatives (i.e. cutting labor to enhance productivity), and of course, wealthy rent seeker -assholes.
The free market is thus a construct of the Neoliberal Media and PR establishment which invokes such nonsense to spread false consciousness, so that those left with no jobs (shipped off to China, compliments of Bain) and no prospects will tend to blame themselves as opposed to the rigged economic system. There you have the fundamental attribution error. And THIS is exactly what the Neoliberal twerp Robert Samuelson seeks to spread.
How to know if a market is free or coerced? Charles Reich provided the test ('Opposing the System’, 1995, p. 22):
"A free market produces results that favor the health of society as a whole, because an essential balance is maintained. But in a coercive market, the balance is destroyed, the earning power of work and the standard of living of workers declines, and society as a whole is devastated while those with economic power gain an ever more unbalanced share of the nation's economic wealth"
This is exactly what we have with the top 1% controlling 57% of the nation's wealth, and 400 billionaires with the same monetary resources as 150 million fellow citizens!
Meanwhile, what is Samuelson's pathetic excuse:
"There is a loss of faith in economic ideas - and government policies based on them - driven by most economists' failure to anticipate the financial crisis and many subsequent events".
And why, pray tell, was there this 'failure of anticipation'? This is Samuelson's and those "economists" blind spot! The failure to comprehend that at root the system we have is derelict and malfunctioning, since it serves only to expand the resources of the rent-seekers, gamers and others (big corporations and their lobbyists) by distorting the economic system via Pareto optimality. I am not going to go over that again but readers can access two earlier blogs which discuss this perverse system in detail:
Readers, on going through those, may also wish to see again the LIES built into our system which games millions of suckers each day.
Samuelson's role is imply to ratchet up those sucker numbers any way he can. My job is to try to stop that effect, and hope blog readers here will forward this info far and wide - to seed the counter memes.
This is after all, a memetic war, and it won't be over any time soon!