Don't Blame Immigrants For Slow - Or No- Wage Growth!

Graph showing average hourly earnings growth and  effect of one 'basket' of companies increase in labor costs since 2016, relative to a basket with high labor costs. (From The Wall Street Journal, yesterday, p. A1)

It is odd that the WSJ op-ed 'The Elites Feed Anti-Immigrant Bias' (July 10, p. A15) stands in stark contrast to the same day front page story ('Workers Welcome Wage Gains, But Companies Feel Squeeze').  In the op-ed we are asked to believe that it is hordes of Mexican immigrants getting hired and degrading white Americans' hourly wages.  In the second, we learn the real reason is that companies are simply reluctant to have shrinking profit margins via higher labor costs. (See graph)

The first piece gives an anecdote from a guy  whose fiancee earns $31 an hour and has worked at the same company for "21 years" while "Mexicans have been hired at $8 an hour".  The guy adds:

"I don't want to be racial but that's all they're hiring".

On which I call bollocks.  The fact is, no company or virtually none, is hiring Mexican immigrants at that quoted low wage rate to do quality work at a quality company. Where Mexican immigrants are working  now is where they're most needed, i.e. at landscaping jobs, construction, and agriculture - and even then not enough can be hired because of Dotard's immigration policies. Employers are having to partake in "lottos" to get the workers they need.

The anecdote above was preceded by this remark from the author (Prof. Joan C. Williams):

"Yet real wage growth for the working class has been abysmal for a generation, and for many native born blue collar workers the culprit seems obvious - immigration"   Adding:

"Today less than half of Americans born in the 1980s earn more than their parents did, according to a National Bureau of Economic Research study led by Harvard economist Raj Chetty'>

Yes, but WHY is this the case?  More to the point, why are the blue collars blaming immigrants instead of corporate America and the economic ideology that fuels its excesses?

As I first noted in my book, The Elements of the Corporatocracy, ordinary workers have suffered a 'death of thousand cuts' since Neoliberalism came into vogue during the Reagan years. Robert McChesney in his excellent book, The Problem of the Media, Monthly Review Press, 2004, p. 49, writes:

"With the election of Ronald Reagan, the neoliberal movement had commenced. Neoliberal ideology became hegemonic not only among Republicans but also in the Democratic Party of Bill Clinton, Al Gore, and Joseph Liebermann. Differences remained on timing and specifics, but on core issues both parties agreed that business was the rightful ruler over society"

The problem with the Neoliberal, pro -free market idiom is that it denies the most basic security for the majority of citizens. In this way it feeds economic inequality while it rewards the speculator and banker class. It also helps to corrupt the political class via unregulated campaign contributions.

Jay Bookman aptly noted('The New World Disorder Evident Here, Abroad', in The Baltimore Sun, December 15, 1997):

"The global economy has been constructed on the premise that government guarantees of security and protection must be avoided at all costs, because they discourage personal initiative.  In times of crisis, however, that premise cannot be sustained politically. In times of trouble it is human nature to seek security and protection and to be drawn toward those who promise to provide it. That is how men such as Adolf Hitler, and Vladimir Ilyich Lenin came to power, with disastrous consequences.""

In other words, the global Neoliberal dynamic inevitably paves the way for authoritarian populists like Trump and others to come to power.  Among the "thousand cut" insults sustained by U.S. workers compliments of corporations and the entrenched Neolib state:

(1) Cutting employee benefits, i.e. health plans - even after employees have retired with them.

(2) Eliminating defined benefits plans, such as provided standard corporate pensions - in favor or defined contribution plans (such as 401ks) in which workers are in it for themselves to accumulate adequate savings for retirement.

(3) Cutting wages - either de facto, or through eliminating the unions which protected them (much exacerbated after Reagan ascended to power)

(4) Firing/downsizing workers just before their retirement dates, so the company is free not to have to pay retirement plan benefits, or provide stock options, as per contract clauses.

(5) Re-engineering the workplace to increase its automation factor in order to dump workers, so increase profit margins by not having to pay benefits, etc.

(6) Shipping as many jobs as possible overseas, to places like Bangalore or Beijing, with labor costs barely 20% of what they are in the U.S. and no benefits to factor in.

(7) Firing - downsizing workers after mergers dictated by Wall Street interests, in order to enhance a company' profits through higher Wall Street share prices.

(8) Identifying older (over 50) workers as 'surplus' so that they can be replaced with younger workers for whom half the wages (or less) can be paid, with fewer benefits. (A recent 5-4 Supreme Court ruling a few years ago exacerbated this by asserting anyone claiming "age discrimination" could not file a suit in standing if that was the only charge)

(9) Eliminating nearly all permanent jobs which carry health and pension benefits, in favor of using 'temping', 'outsourcing' or some other device not requiring benefits. On the academic (university) front, using 'adjunct' professors, hired on a per hour, per course basis, without benefits., and with no possibility of 'tenure'.

(10) Tying health insurance to employment, so that when let go or fired, workers are waylaid again by having to do without critical protection

All of these in concert, have forced a massive marginalization of the workforce. It was so odious and extensive  - even by 1996-  that it prompted these powerful words of Charles Reich in his book, Opposing the System,p. 22:

"We have built a machine for dehumanization of such force and destructive power, thorough its accumulated assaults on human dignity, that we are creating kinds and degrees of damage to human beings beyond anything ever known, with totally unforeseeable consequences "


And as  Barbara Ehrenreich observed in her book, 'This Land is THEIR Land', p. 61:

"Market forces ensure that a volunteer army will necessarily be an army of the poor. The trouble is that enlistment doesn't do a lot to brighten one's economic future"

Probably no truer supporting statement ever appeared than barely 20 years ago, in an issue of Psychology Today  (July/August 1998, p. 10. Includes graph):

"Starting in the mid-1970s, the nation's quality of life parted company with its wealth, and the gap between social health, and GDP is now bigger than it's ever been."

A graph of 'quality life indices' vs. GDP (ibid.) shows the measured divergence. It also suggests that we devolved to a much sicker society than anyone imagined. The marginalization of the workforce, is surely one major barometer of that. The GINI coefficient, and research disclosing how it portends social and economic disintegration, is another. (The U.S. Gini coefficient is now at nearly 42.  Readers can track the Gini index increase at this St. Louis Federal Reserve site:

https://fred.stlouisfed.org/series/SIPOVGINIUSA


So how and when did the pre-eminence of market forces over human needs and welfare come about? It was actually brewing for dozens of years, perhaps since the collapse of LBJ's  "Great Society" in the mid to late 60s. From then on the real "elites" (which Prof. Douglas mentions) set out to render labor as cheap as feasible and hostage to Wall Street dictates and decisions.  Part of this was also based on twisted economic reasoning, e.g. as embodied in the Pareto distribution, e.g.


whereby the dollars from the affluent and the poor - or labor class - are treated differently.  This built in economic prejudice drives the Neoliberal machine and causes it to value affluent populations over ordinary workers, even as it tries to discourage the latter from enhancing their own welfare, say to do with health care.

Example:. Economist Marty Feldstein once suggested it makes more sense to give the ordinary worker with health insurance $1,499 NOT to get the colonoscopy, than to let her get the test and consume valuable specialist time and resources via a $2,000 "subsidy".  See also:

http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html


In other words, capital is opted for over labor, and  profit margins trump higher wages, this was the topic of The Judas Economy: The Triumph of Capital and the Betrayal of Work, by William Wolman and Anne Colamosca.

The point is then, that labor is devalued precisely because we live in a "Judas Economy" where capital is revered over it. One of the most disgusting aspects is that productivity in relation to GDP has increased more than 40% yet isn't registered because of the skewed way GDP is computed.

All of this is eminently proven by the front page WSJ story cited above,  with the graph) in which we learn:

"Rising wages are beginning to eat into the profits of some U.S. companies. Businesses from dollar stores to hotel operators to fast food chains have warned that higher labor costs have been a drag on their profits - a potential headwind for the nine year stock rally as it struggles for momentum ahead of the second quarter earnings season."

Adding:

"This is good news for U.S. workers ...but the higher costs pose a threat to some U.S. companies"

And we should also dispel the myth that this higher labor cost factor just impinges "some" companies. That's plain blarney and understatement because in fact all corporations have higher labor costs on their radar. I already noted (Jan. 10 post),

According to Paula Harvey, VP of Human Resources at Schulte Building Systems in Houston:

"Companies are really hesitant to give raises. When you give a raise, it's stuck in the pay system. It is something you're guaranteeing: it's becoming a fixed cost. "

She insisted it's much better for companies to preserve "flexibility" so instead companies enact "variable pay". This can come in the form of one off bonuses - say on a per year basis- or if you are a stellar performer you can get a "bigger bump". Say equal to a half year's wage increase of 3 percent. (If you are a super star performer you have the optimal chance of getting a permanent good raise.)

Of particular relevance was the question asked her: Why, if the labor market is so tight (such low unemployment), do wages remain stagnant?   She responded that  "You can blame a combination of factors including the globalization of the work force, job automation and the decline of unions.".

Meanwhile. managing director of Aspen Advisors, Andrew Gadomski (from a WSJ piece), admitted that when companies lament they can't find workers to fill key openings, that is code for: "I can find talent, I just don't want to pay them as much as they cost."

Nowhere are immigrants mentioned, nor should they have been, since they aren't grabbing good paying jobs nor are they the source of wage deterioration. Vastly bigger threats  include corporations too cheap to pay decent wages and AI robots.

In the realm of manual labor, columnist Jim  Hightower cites the example of "SAM" a robotic bricklayer that "lays three times as many bricks in a day as a human can". Hence, it has the potential to displace three times the number of human workers. Immigrants? Not a factor at all compared to 'SAM'.

What about higher level jobs? They're also at risk from bots, not immigrants.  Hightower points out the jobs of "accountants, bank loan officers, and insurance claims adjustors are "falling to the bots".   Why? Because they can calculate more rapidly and more accurately than humans- oh, and they don't require 401ks or health care plans!

It shouldn't take a rocket scientist or astrophysicist to figure out the ultimate goal of the Neoliberals and all economic "efficiency" (i.e. Pareto distribution)  fetishists is to eliminate human labor and its costs as far as possible. That includes immigrants, as well as homegrown American workers - of whatever class.

See also: 'Oil's Technology Spells End Of Roughneck Boom' - Artificial Intelligence and Automation Replace Oil Industry's Blue Collar Jobs'

https://www.wsj.com/articles/oils-new-technology-spells-end-of-boom-for-roughnecks-1531233085


Excerpt:

"Technology has already upended labor needs in most of the world's manufacturing. It's now upending the energy business  foretelling the end for one of the last sectors in America where blue collar workers could hold jobs paying six figure salaries. ....The energy sector has found it can use new technologies, to do the work better and cheaper and with few people. They have invested billions of dollars on what the industry calls 'digital oil fields', embracing artificial intelligence, automation and other technologies"

And:

http://www.smirkingchimp.com/thread/tim-koechlin/80098/imagining-an-economy-that-serves-the-99

Paul Ryan's Solution To Poverty Is Just More Of The Same Conservative Malarkey

Paul Ryan three years ago pushing his 'Path To Prosperity'

In his co-authored op-ed in the WSJ ('Republican Solutions for Liberal Failures on Poverty', Jan. 8, p. A10), Paul Ryan comes up with nothing new - only the same recycled, pedestrian mix of conservative codswallop he once offered us in his 'Path to Prosperity' back in 2012.  His main themes or "solutions" can be summarized thus:

-Redirect federal funding to parents of low income families so they can use that money to send their kids to private schools or charter schools. (In other words hollow out pubic education even more)

- Impose a greater work requirement in anti-poverty programs (in other words have all those poor people receiving any food stamps or Medicaid to go out and work at cleaning lavatories or picking up dog poop in parks for their daily bread)

- Scale down federal assistance in favor of much more charity (he cites the House of Help City of Hope in D.C. and Catholic Charities in Janesville, WIS).

 Let's take the last first: Ryan here is obviously looking  at the fact there are now 40 million on food stamps,  up 53%  from 2008 and 54 million on Medicaid, up 21% over the same interval. But what escapes him is that the amount of charity that would be needed to leave government out of the picture is actually some twenty five times more than the actual volume of charitable giving!

For example, to make charity ends meet and fill the gap in the absence of government assistance, those rich Catholic and other lobbyists in DC would need to give about 14.9% of their income, not the usually cited 7.7% Similarly, all the other alleged generous conservo states would need to at least double up on their giving. In the end, with a new recession, even that couldn't be sustained, and we saw how food pantries emptied  their stocks in weeks after the 2008 recession and stock market collapse - and were hard pressed to refill them. 

As for using federal funds for charter school education that has never worked in terms of sustaining success for the affected kids, and certainly not for the public schools from whose funds the "vouchers" are usually extracted.  (Every dollar extracted from taxpayers for vouchers means less to fund public schools.) Instead of pouring millions into voucher systems (which tactics I believe violate the separation of Church and state since most recipient schools are religious) that money could be going toward improvements in our public schools - including more pay for better qualified teachers. What a thought! Just think then, how much difference that $14 million could have made to D.C. public schools, had the money not been squandered for "the DC Opportunity Scholarship Program” which provided tuition vouchers of up to $7,500 per kid in 2011.

Ryan's "educational plan for job training" is also pseudo-nifty except there are simply not enough of the high quality, high paying jobs that would warrant the allocation of such federal money for that particular job training and education.

What most families need, such as here in Colo., is affordable housing and quality public education they can access. But since the gentrification of numerous communities, housing is beyond the reach of most working and even lower middle class people. (House prices in Denver are now up 18% over last year's and one needs a salary of at least $95,000/ year to afford a down payment. )

In most cases people are stretched thin paying more than 40 percent of their incomes on rent alone, which is too much. None of these problems are processed by Ryan who believes all the economic issues facing people in poverty are simply matters of not being educated enough or else not being hard working enough to keep noses to the grindstone.  Those misperceptions are what allows him to make such absurd proposals.

As anyone with more than air between the ears can see, on examining state by state budget deficits now exploding, in every case “re-balancing” is being done on the backs of the poor, the disabled, the elderly and the homeless. The results are predictable: loss of health care, loss of jobs and loss of overall security, as well as increase in drug use, violent criminality and prostitution.

His advocacy of work requirements for federal assistance - say in food stamps - is also daft, given most of those on food stamps are children, and the parents have jobs - just not well paying enough to afford rent, plus utilities and food.  In addition, Ryan would implement "consolidated block grants" not only for the SNAP food stamps program, but also housing vouchers (Sec. 8) and childcare vouchers  In other words, providing states a fixed amount to run all their programs. In the words of WaPo columnist Jared Bernstein:

"The main reason this idea is so destructive is that it undermines the essence of the safety net, or its countercyclical function"

The whole basis of his "solution" in fact, is that it is detached from reality, namely that poverty will always be endemic so long as we harbor vast inequality and the economic philosophy (Pareto distribution) that enables it.  Thus, any nation based on this perversion of economics, e.g.














Cannot escape poverty for more than half its people, for as its creator Vilfredo Pareto put it:

"Assume a collectivity made up of a wolf and a sheep. The happiness of the wolf consists in eating the sheep, that of the sheep in not being eaten. How is this collectivity to be made happy?"

So, if the poor are regarded as "sheep" and the Overclass as the wolf, the only objective is to make the wolf happy, by eating the sheep!

Thus, by Pareto's original example (in quotes): Allowing the wolf in the wolf-sheep combo to EAT the sheep expresses less overall "hurt" or pain on it than permitting the sheep to remain unscathed, merrily prancing away eating its grass while the poor wolf starves.

Yet when one digs beneath the academic veneer of Ryan's tracts that is the society he believes in. That is why he could offer (back in 2012) his "Ryan plan" for health care to replace Medicare. Just give the old guy a voucher for a year- maybe worth $10, 000 if he's lucky - and let him get what he needs with that: medications, operations, cancer treatments, regular physician visits etc. Just hope he doesn't need any more.

The same way a poor kid might get a $7,500 voucher for his charter education - at public school expense- but just hope he doesn't need any more!

No wonder Ryan can write with a straight face:

"Democrats want to take care of the poor. Republicans want to empower them".

Uh, no. Republicans want to empower the "wolf" of Vilfredo Pareto so it can more readily eat the poor!

Meanwhile, millions of citizens who can least afford it, are blowing hundreds of bucks trying to win a Powerball lottery in which the odds are about 292 million to one against them. As finance guru Melanie Hobson put it this morning, "they think with each draw they are getting nearer but in fact the odds against them are worse since more people are playing than when the total was smaller."

But in a way you can't blame them, since they see a Powerball win of $1.3 billion (About $520m after taxes and for a cash payout) as the only way for them to escape Pareto's and Ryan's "wolf"!

Economists: Xmas Gift Giving Is "Wasteful" and "Inefficient"

The Economists who've given us such things as the Pareto distribution, and tax cuts for the wealthy being more valuable than Social Security for the aged, have come in with a new twist: Christmas gifts are useless, wasteful and inefficient.

In yesterday's WSJ (p. A1, A8), we learn of one former Yale University economics specialist (Joel Waldfogel) who wrote a 1993 paper, 'The Deadweight Loss of Christmas', who actually calculated Yuletide waste by asking 86 students to assess the cost of presents they received, arriving at an average of $438. He then asked them how much they'd be willing to spend for the same gifts they got. The answer was an average of $313.  In other words, the recipients valued the actual gifts received at 71.5 cents on the dollar relative to what they'd have paid.

The prof concluded:

"Gifts leave the recipient worse off than if she had made her own consumption choice with an equal amount of cash"

The WSJ notes that "since then economists have enriched the Grinch school of economics."

Well, why be surprised? Remember this is the same lot that has argued that spending by the wealthiest is more "Pareto efficient" than spent say by an elderly guy on Social Security. Also, health dollars spent by the richest are more valuable than those spent by the hoi polloi, say on colonoscopies. In the same way, Pareto efficiency declares it  makes more sense to just give the unwealthy person say $134 NOT to visit the doctor and consume medical time and resources. Those resources are better left to the rich who can afford to pay the reservation price.   This is just the maximum price a person is willing to pay. Clearly these Xmas gift experiments disclose  the recipients are not prepared to pay the reservation price for the gifts received.

To fix ideas, a 2009 Journal of SocioEconomics paper actually measured the worth of gifts from books (which recipients valued at 74 % of the amount spent)  to footwear (92 % of amount spent) and kitchen gadgets (77 %).  Based on this the paper's authors concluded:

"We find  no evidence of significant welfare gains in any gift category. Hence, gifts represent a market failure"

But perhaps these geniuses were too focused on the recipients' assessments. We already know from elementary consumer psychology (see Benjamin Barber's book, 'Consumed' ) that economists have observed when people get things gratis they tend to undervalue them. (One reason why, when homeless are given new abodes to live in - say in Denver - they have to have jobs soon after moving in, to be able to keep paying rent)

Experiments conducted in the past have almost always shown that recipients undervalue social benefits, say even Medicare drugs or medical visits - mainly because they are getting them free or at vastly reduced cost to themselves. It turns out if they have to pay more for them - not outlandishly more,  obviously - they are more judicious in their uses or needs. This can well explain why Medicare is often overused by seniors, because they are getting "freebies" and hence tend to devalue the actual costs - which they'd see first hand if they had to pay themselves.

If people tend to undervalue social benefits perceived as "free", then it is logical to expect they'd do the same thing with Christmas gifts.

Again, please note this is not to necessarily make seniors pay much more (many of us already are, as we see premiums rise each year for Medicare supplements) but only make recipients more aware of the actual monetary value of the benefits.

I got a 'grade A' perception of the value of Medicare benefits after my (prostate) cancer treatment in 2012. While I had to pay some $1,300 that was vastly less than the total value (nearly $50,000 including labs, anesthesia, implant surgery, brachytherapy, CT scans and hospital stay until recovery)  Since then, I've been far more judicious in the use of medical services, and only reluctantly went to the orthopedic surgeon after fracturing a big toe.

I suspect a similar dynamic operates with these economic assessments of gift giving. Because the gifts are free and only assessed from the recipients' side, their value is bound to be lowballed, just as Medicare beneficiaries lowball the value of their medical benefits.

Indeed, one economist  - Sun Wong Sohn  - quoted in the WSJ piece, doesn't buy the economic inefficiency critique of Xmas gifts.  According to him:

"I don't think we should be analyzing this as an economic subject. We're talking about fun, holiday spirit".

Which is one way of looking at it. But still,  IF one did examine it from an economic perspective I believe the basis discussed above warrants consideration: that recipients will always tend to underestimate the value of gifts.

Not disconnected to this is the case of the numerous charity "free gifts" sent out yearly around this time. Already, I've received in the mail a calculator, a pen set, a pair of thermal gloves and numerous note pads, address labels and even calendars.

Whether I give a donation in return depends on a number of factors, including: the efficiency of the charity (how much is actually used for the defined purpose as opposed to purchasing these gifts, or administration) and how many other similar gifts I have received. I will always lowball the value of the latter, especially calendars - since given the oversupply of these freebies - the value is minimal. Hence, at the most I will acknowledge receipt with a $1 donation, especially if it's a charity I've never given to before.

In all such donations I've never given remotely what the items - e.g. pen set, gloves - might really be worth. Again, they gave it to me  "free" so I do not place as much value on the item as they might expect in donation - especially if it's a charity trying for the first time to 'lure' me in based on guilt. Their problem is I have no problem accepting all these gifts guilt- free and not giving a dime. They instigated the gift to me, I do not necessarily feel compelled to give a donation back of any value to reciprocate, particularly if I've never donated to that organization before.. That's life.

This also shows the tactic of many charities to send out "free gifts" to increase charitable donations from the recipients can often backfire.  They make the mistake of assuming everyone will react the same  way - feeling guilty at getting but not giving - but they don't.

Thus, just as one economist cited by the Journal agrees Xmas gift giving can be "wasteful" so also charities' tactical gift giving can be, if it doesn't translate into the donation benefit. (One analysis by givewell,org determined one charity - which shall go unnamed- spent 58 percent of its proceeds on 'gifts' to entice new donations. This is the epitome of a terribly inefficient charity)

Prof. Waldfogel, meanwhile, hasn't backed off from his assessment that gift giving is a losing proposition. The gift givers are"losers", and so are the recipients (since they will always undervalue the gifts). This - he estimates - will translate into a huge waste this Christmas when Americans are estimated to shell out about $830 each for gifts.

Waldfogel has published his take in his book: 'Scroogenomics - Why You Shouldn't Buy Presents for the Holidays'.  Interestingly "his phone rings every December with requests to explain his thesis"

Here's an easy explanation:

As long as people undervalue gifts or other freebies there is no point giving them if economic "efficiency" is the standard for giving.

If it isn't then people shouldn't be bothered. Heck, in the WSJ survey of the economists 51 of 54 admitted they 'broke down' and bought gifts for loved ones. The other three who at first declined to respond later admitted the same thing.

Who'd have thought?

Don't Get Suckered By the Happiness Racket!

WHY is it that happiness is so elusive and ephemeral? Why is it the least accessible attitude or emotion, say compared with anger, excitement and embarrassment?  A clue lies in the Declaration of Independence wherein the framers were wise enough to grant citizens the pursuit of happiness, but not the thing itself. They knew it would be folly to mislead later generations into believing happiness was a commodity to be granted when it was nothing of the sort.

Wiser philosophers, including the Buddhist Alan Watts and others, have exposed how even the pursuit of happiness is useless unless one can somehow form an authentic persona. The real problem was first unearthed by Watts in his masterpiece, ‘The Book on the Taboo Against Knowing Who You Are’, on pointing out that from the time most of us are tots we’re saddled with false egos, and false personas in order to fit more easily into a fucked up world. The end result is that on account of this process of maladjustment we end up fucked up and can’t accommodate to any prolonged period devoid of our little pet toys, devices, crutches or stimulants.  "Happiness" then is automatically tied to the never-ending consumption of such piffle or the consumption of simulated emotions akin to love - given a false persona is incapable of experiencing the real thing.


As Watts observes (p. 12):

“The lowdown on life is that our normal sensation of self is a hoax, or at best a temporary role that we are playing – or have been conned into playing – with our own tacit consent, just as every hypnotized person is basically willing to be hypnotized.”

He adds most tellingly (ibid.):

“The most strongly enforced of all known taboos is the taboo against knowing who or what you are behind the mask of your apparently separate, independent and isolated ego.”

Watts elaborates the dynamic of societal false self tomfoolery later, noting (p. 70):

“The very society from which the individual is inseparable, is using its whole irresistible force to persuade the individual he is indeed separate! Society as we know it is therefore playing a game with self-contradictory rules. Just because we do not exist apart from the community the community is able to convince us that we do- that each one of us is an independent source of action with a mind of its own. The more successfully the community implants this feeling, the more trouble it has in getting the individual to cooperate.”

He goes on to observe that society has “pulled this trick on every child from earliest infancy” and the child – because it lacks the power of reason at an early age – is unable to resist the social indoctrination.As a result of this indoctrination, of course, the seeds of toxic societal conditions are born and sustained. The unemployed beat up on themselves ceaselessly for not being “good enough” to support their families or get any kind of a decent job. Since the society has conditioned them to believe they alone are to blame for their situation, they willingly accept the onus as opposed to placing it on a dysfunctional society that gives all its best rewards to speculators.

Children in school may also beat up on themselves for failing a standardized test, despite the fact such tests for their own sake have nothing to do with genuine education and are in fact detrimental to real education (as Jiddu Krishnamurti has noted)

More generally, anyone who aspires to the pinnacle of his or her trade, profession or artistic talent and somehow falls short is condemned to believe he or she is a "loser". If one has not achieved the "mountain top" as it were, then it was all for naught. Via such an irrational narrative and other ways (see 'messages' below)  our own dysfunctional society sets us up to be deprived of even the pursuit of happiness - because it is itself incapable of recognizing the necessary and sufficient condition to attain it.

Thus, people – too many – have been bamboozled into thinking, believing they’re lonely, isolated centers of being. Worse, this superficial façade  is accepted as the real self – when it is  actually a false  one, a pretender. It is an artifact created, as Watts notes, to accommodate our laws, conventions and social institutions so that “we cannot experience selfhood except as something superficial in the scheme of the universe.’

The inherent problem is that a self constrained and operating under these conditions cannot experience anything like "happiness". This latter then becomes more of  cruel, macabre joke- a perverted "carrot" to be dangled at the end of the proverbial string to enforce compliance or delusion.

The irony of it all? While we are told it cannot be "for sale". the actual fact is that in our screwed up false society that's the only way it can be on offer - to artificial, false beings.  No better illustration of this has been found than in William Davies   “The Happiness Industry: How the Government and Big Business Sold Us Well-Being” 

Which describes how happiness has become a major preoccupation and commodity to be peddled by the powerful with corporations, politicians and their auxiliary therapeutic industry seeing concrete financial benefits to promoting this happiness facsimile among workers, voters, and ordinary citizens.

The message to workers: Think happy thoughts even if your job is pure  drudgery, i.e. merely working on an assembly line or flipping burgers

The message to voters: Don't demand or expect  'the world' on a plate when you vote, only what can be practically delivered by our bribery system

The message to citizens: Cease thinking or believing  in negative distractions like conspiracies or powerful networks arrayed against your interests. These will only lead to misery!

By resolutely imbibing these messages we cease to be authentic beings in our own right, but instead appendages to the false state or culture wherein the fake happiness is esteemed as a virtue that transcends all our divisions of culture and creed. The ultimate capitalist prize if you will. How so?

Well. because the "self- help" pabulum can then be peddled as the solution! This meshes perfectly with the Neoliberal market meme that the fake happiness is an "individual matter"  and hence, the larger market society can wash its hands of any individual responsibility. Never mind the society itself is toxic, as Watts points out, and seeks to pander the false self credo at every turn.

But see, the rise of self-help during an economic depression or recession is not new, and neither is pushing people to anti-depressants if they can't cope - instead of digging into the underlying societal toxicity. For example, not having a genuine universal health care system in place, as opposed to a pseudo-system based on for profit insurance companies. (Note to all: "Obamacare" is NOT a true socialized medical insurance program. It is actually a revamp of a program Nixon first advocated with the insurance axis involved. Thus, it is a REPUBLICAN health care program recycled!)

A genuine universal health care program or single payer program would more resemble what we now have for Medicare, so that program would be "Medicare for all".  Instead of people having to be shocked with sudden rate rises, denied coverage or going into bankruptcy over a medical issue (sure to make anyone unhappy!)  their essential needs would be taken care of, excepting dental and eye ware - as the case with Medicare. As for being "too expensive" - not at all! Merely redirect the 2.4% of 4.9% of GDP now going to the military and it's paid for.

In line with the above, it is clear austerity measures are also going to make many people unhappy, even miserable. Anything that undercuts a citizen's ability to make it or survive will engender dissatisfaction and mental stress. Even if defining happiness may be elusive, we know certain things can create unhappiness!   For instance, In their analysis of how recessions affect public health, David Stuckler and Sanjay Basu demonstrated the precise ways in which austerity policies lead to deteriorating mental and physical health, and unnecessary deaths. They also indicated alternatives whereby recessions can be an opportunity for improvements in public health. Which route is chosen is ultimately a societal question, determined by whether the society believes citizens are all "on their own" or part of a larger whole wherein localized pain, grievance or dysfunction compromises the whole

Sadly the entire Neoliberal market system, based on the Pareto distribution and economics, see e.g.

http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html

is such that citizens are only regarded in an atomistic sense, detached from considerations of societal welfare. Thus, Neoliberal economists and policy-makers focus exclusively on whether an individual has work or not, without considering the nature and purpose of an organization or company and its psychological and physiological effects on employees.

Overlooked for instance, are people who find work more fulfilling in not-for-profit organizations or, leading to lower stress levels. This bears out other criticisms made by Alan Watts, on the shortsightedness of modern society, i.e. viewing work as some contributor to economic well-being, as policy-makers now tend to do, without considering the purpose of work.

When an employee is unhappy at work one of two things must be at fault: the employee OR the work. The false happiness industry exonerates capitalism for engendering a largely mindless service sector which pays very little - and is based on repetitive tasks. Also, little chance in the society itself for advancement.  (Too many highly qualified people chasing too few quality jobs).

But never mind, it's not that the work is underpaid, the hours unreasonable or the product pointless. It's that the employee is just unhappy  - so maybe needs some Zoloft!    This is surely to fall into the behaviorist fallacy of viewing people as lab rats, just with slightly more developed ‘verbal behavior.’

All this suggest that any genuine change toward a mentally healthier society depends on altering social and economic structures - which will not be easy.

If one then cannot alter the current system, it is necessary to change the nexus, i.e. how that system interacts with us. Those underpaid, for example, can 'get back' at the system by saving more as opposed to blowing money on useless junk or diversions. Since the system depends so overwhelmingly on consumption, each saver who extends the national savings rate (now at 5.6%) will exert an impact - perhaps toward a day when a true livable wage will be on offer)

Our cognition of getting the best, or having the best also needs adjustment. Half a billion people on Twitter can all "tweet" all day so that the quality of tweets is debased by the sheer numbers of them.  Keeping "score" of followers or page views (for blogs) is also another introduction of conceivable angst over being "one-upped". Does 500 followers or 500,000 make one's blog better than one with 20? That depends! What is the content of the mass blogs? Is it showing a kitty on a stool punching out doggies? The point is that a mass-followed blog is not necessarily a quality content blog.  It is more likely evidence for too many pursuing the false happiness meme.

Then there are the "friend" numbers on one's Facebook page. How many use this index to measure their acceptance? Sadly, too many do which is why Facebook then becomes a millstone rather than a liberating means of connecting to family, REAL friends (who you've at least met and formed a real bond with).

In terms of academic research, there is also the inevitable "pecking order" of status, which supposedly confers some innate happiness. If one is therefore a prof at Harvard or Yale he's assumed to be "happier" in his work than someone at the University of South Florida or the University of Alaska.  But this makes assumptions which are themselves subjective. Perhaps the profs at USF opt for warmer weather, or those in Alaska. chose that venue because they love being near to the Brooks Range and having access to nature unseen in the lower 48.

Thus, if we want to live in a way that is socially and psychologically prosperous, and not simply highly competitive, isolated and materialistic, there is much evidence from clinical psychology, social epidemiology, occupational health, and sociology regarding what is currently obstructing this possibility. The problem is that, in the long history of analyzing the relationship between subjective feelings and external circumstances, there is always the tendency to see the former as more easily changeable than the latter. As many positive psychologists now enthusiastically encourage people to do, if you can’t change the cause of your distress, try and alter the way you react and feel instead.  In other words, if you have 20 FB friends as opposed to 2,000 for Joe Schmoe, celebrate it as "quality over quantity".  If a friend's instagram feed is depressing you with constant images of Paris, Rome, and Switzerland, maybe get off instagram.

In the end, all status -seeking based happiness is doomed to fail because it's predicated on artificial assumptions and one ironic truth: there will always be someone, somewhere who is superior in some way or form to you! Somebody with more money, a bigger home, a better blog, more Facebook friends, a seemingly superior academic pedigree , a better job .....or whatever.  Rather than cry and pout at that, the realistic option is to pursue your own well being in terms of fulfilling your own particular potential, whatever that may be. Indeed, a favorite Buddhist saying is that: "Happiness is being able to use one's abilities to the maximum".

That may be the closest we can get to any actual, practical definition usable in the here and now!
 

Senate Budget Committee Takes Aim At Social Security Again!

Well, we knew it couldn't last long. That is, before the scurvy lowlifes in congress reprised their attacks on Social Security - with the objective to "save It" by cutting it.  Next week, the Senate Budget Committee is holding its first hearing on Social Security benefits. Their plan is to declare a "crisis" and insist the only way out is to cut benefits now. Of course, this is all the most transparent BS to anyone who really understands Social Security and especially that its enemies have been gunning for it for over 80 years now. 

This invented myth of impending and catastrophic insolvency is well-worn and predictable, but still dangerous. The new Republican majorities are emboldened and anxious to show their Koch backers that they are serious.  

Of course, Social Security is not going broke. In fact, it has a $2.8 trillion surplus. Yet seniors who depend on the system they paid into find their benefits failing to keep up with their real expenses. Indeed, a valid economic argument can be made that given the persistent specter of  too low aggregate demand, Social Security benefits should be increased - not cut. Those benefits, after all, pay for billions of dollars in goods and services that otherwise might never be transacted - with the result that the GDP would contract even more.
 

Hence, any successful effort at cuts is assuredly going to send the economy into the clinker again - where only the richest 1 percent will benefit. But this is exactly what the likes of the Kochs and Pete G. Peterson and other austerity fetishists want.

Of course, the enemies of Social Security - and there are many - continually go back to the same old tool box to make attacks- hoping that some of the shit will stick, and alas, a lot of it has- including that the Trust Fund is full of useless IOUs. But this is why smart people need to do themselves a favor and inform themselves on the facts. No better book can be found right now than 'Social Security Works' by Nancy J. Altman and Eric R. Kingson, which in their Chapters 8, 10 totally demolishes this "IOU" nonsense, showing these bonds carry the same weight as those dispensed to other countries, including China. In other words, they carry "the full faith and credit of the U.S. government" and - if ever betrayed - will show this nation can't be trusted to pay its just debts.

As to the staying power and importance of Social Security, we read (p. 23):

"Social Security transformed the nation. It eradicated what was once a primary anxiety for the majority of Americans: the terror of growing old penniless,  dependent and vulnerable. It provided basic economic protection previously not available to most households."

This basic economic security is exactly what drives Social Security's opponents nuts. They hate to see anyone collecting a check just for breathing. At the very least, they insist, the money ought to be "privatized" - put into special investment accounts (with the costs of administration vastly greater than the 1 penny per dollar rate for S.S.) and subject to the vagaries of the stock market. Well, we saw how that worked out with 401ks back in 2008 with the financial meltdown didn't we?

In a previous blog post I explained much of the reasoning behind Neoliberal economic thinking  (based on the Pareto distribution) and why it is convinced Social Security is a bad idea, e.g.

http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html

For example, arguing that (as former Fed Chairman Alan Greenspan asserted in an appearance before congress in 2003): "Social Security benefits need to be cut to pay for Bush’s tax cuts."

The thinking being that tax cuts leading to re-investments are more critical than social insurance.

Then there have been the outright attacks on beneficiaries - among which the most vile have emanated from scumball former Reepo Senator Alan Simpson - who Obama (in some delirious haze- maybe a leftover from his "Choom gang" days) - actually appointed to be on his deficit commission. As the authors note (p. 39) Simpson referred to older recipients as:

"those greedy geezers...old cats 70 to 80, who live in gated communities who drive their Lexus to the Perkins restaurant to get the AARP discount"

Adding:

"They don't care a whit about their grandchildren...not a whit".

And believe it or not, this pig was taken seriously by many! Yet the facts of old age are not of glitz and luxury at all, as the authors also note (p.40):

"It is false that most older Americans are on "easy street". A very small percentage are, many more are poor or near poor, while some maintain a modest, middle class life style, often struggling to make ends meet."


In the graphic shown on page 47, the authors present the actual income distribution for the elderly which shows nearly three out of four senior households have incomes below $50,000 - which is not a princely sum. Not when a senior might be one bad fall from a nursing home stay  that will suck up $70k a year. Or,  one major medical catastrophe can savage  frugal savings. (Dunned by continuous zero interest rates for years.) These are problems the young don't have, and the young always have time to get back on their feet - most seniors do not  - say after a major medical calamity.

Anyway the income distributions are indicated a follows:

- 72.5% have less than $50,000 /yr.

- 18.5% have from $50,000 - 99,000

- 5.3% have $100,000 - 149,999

- 2.0 % have $150,000 - 199,999

- 1.9% have more than $200,000

In other words, barely 9 percent of elderly - or 1 in 11, has more than what is regarded as a middle class income.

Other objections to seniors' benefits as being "too much" I already skewered in this blog post, which I invite people to read:

http://brane-space.blogspot.com/2011/11/no-oldsters-are-not-gluttonous-uncaring.html

As the authors of 'Social Security Works' put it (p. 4), our politicos may have polarized us  on just about every issue - from immigration reform to taxes-  but on one we are fiercely united: we support Social Security. This unity forges our future security and is something the Neolibs and their conservo austerity cousins dare not mess with - as they learned back in 2005 when Bush tried his privatization scheme.  It is this unity we'd all do well to remember and also cultivate in gearing up for the next wave of attacks!
---------------------
  Further facts on Social Security:

1) Social Security's  Trust fund has historically taken in more money than it pays out in benefits. Currently it is at $2.76 trillion and continues to grow.

2) Without making any changes whatsoever, current projections show Social Security will be able to pay full benefits through 2033.

3) With just a minor tweak to the payroll tax cap - raising it to a mere $300,000, full benefits would be able to be paid through 2100.

4) The system could easily be rendered 100 percent secure, even with higher disability benefits paid out, if congress would cease raiding Social Security moneys for current expenses, including wars.

See also:

http://brane-space.blogspot.com/2012/08/of-fiscal-clifs-false-narratives-and.html

http://brane-space.blogspot.com/2014/03/social-security-medicare-unjustified.html

 

Walter Block - Another Libertarian Blockhead! ("Slavery wasn't so bad!")

Where in the hell do these economic blockheads come from? What regressive pit of offal breeds them and then disgorges them into the world to posture like madmen, confuse their students, and undermine polity in the name of some misbegotten theory?  I've already expounded on one branch of these cretins, the bunch that pushed Pareto-based economics, e.g.  http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html

This was the work of none other than Vilfredo Pareto, who invoked the example of a "collectivity" of a wolf and a sheep - with the wolf only happy unless he could eat the sheep. (Else, only the sheep remains happy grazing on its patch of grass - while poor Wolfie starves)  Thus was born modern economic theory which inverts everything sensible, such as Greenspan arguing back in 2003 that Bush tax cuts were preferable to Social Security benefits. The poor little rich folks would use the money saved from those cuts to invest and help the economy, while Social Security could be collected merely because a guy could breathe.

Pareto's model translated into the argument that the buck is worth more to the rich man, and hence, any transfer from the rich to the poor hurts the rich more than it helps the poor (especially as the 'utils' for the poor man is also rather smaller by comparison).  E.g.     












From this degraded bollocks, it became possible to argue - for example - that it makes more sense to give the prospective patient or person to be screened (say for colon cancer)  $1,499 NOT to get the colonoscopy, than to let her get the test and consume valuable specialist time and resources via $2,000 subsidy. (Bestowed by whatever insurance allows it, say Medicare or Obamacare, or even high flier private) .

In a similar vein, these dregs argued that having 1,000 - 10,000 average Joes and Janes die each year from climatic catastrophes  (or fouled water from pollutants) is more tolerable than having oil speculation losses for the rich, because then they will also pull back on their investments in ETFs (exchange traded funds), hedge funds, and all the rest ....ultimately ending in less investment banking profits and perhaps another financial collapse. 

By a similar line of perverse Pareto reasoning, it made more sense for the impoverished billions in the third world to breathe filthy, polluted air than clean air. The reason is obvious: it is inefficient because if they had to pay for it, they couldn't afford it. By the same token, it makes more sense to dump the toxic wastes from advanced nations in poor nations than vice versa, because the same reasons apply: the 3rd worlders would never be able to afford their own clean up costs, so what's an extra five million gigatonnes of waste in the overall scheme of things?

Hence, from this "Libertarian-ish" style of bunkum it is not surprising that a Prof named Walter Block could spring, though I'm amazed he's at Loyola- where I studied in the 1960s (before transferring to Univ. of South Florida, where I could do astronomy with some of the best names in the discipline - including Heinrich Eichhorn, Sabatino Sofia and James Hunter).

According to a  Jan. 26 New York Times Sunday Review article on the 'Rand Paul Political Brand', Block actually had stated that "slavery wasn't so bad" - taking up the long standing libbie trope that, after all, the blacks were cared for, got their 3 squares a day and some time off (Sundays) and so long as they behaved themselves they weren't flogged by the overseer. (Block ought to be forced like 'Alex' - the character of 'Clockwork Orange' - to be strapped to a seat with his eyelids fixed in place and forced to watch the whipping scenes from '12 Years a Slave' in an endless loop for at least a day)

That may cure him of his delusions, but maybe not. Most hard core libertarians are so detached from reality that they inhabit a land of delusion of their own. (In one argument some three years ago, one actually argued that the gov't had no business interfering to interject civil rights legislation, and if the blacks really wanted it they ought to have struggled on their own to achieve it.)

In a similar kind of vein, Block - in an interview response to the author of the Times piece (p.21) observed that in the 1960s:

"Woolworth's had lunchroom counters and no blacks were allowed. Did they have a right to do that? Yes, they did! No one is compelled to associate with people against their will."

But consider the consequences if this bat shit crazy meme was extended willy-nilly so that anyone could apply it. Pharmacies could refuse serving people they regarded as 'misfits'  - say denying birth control pills to young, single women or not even permitting blacks to cross the doorway.

Owners of football teams could decide that they want no Jews, blacks, or gays entering their stadiums and they might put that into place. Private hospitals -operating as businesses - might decide that they want no blacks, Jews or gays on their premises either. Restaurants would feel free to bar anyone they think is marginal, including those who look like 'thugs' - or  whoever doesn't fit flitty criteria like hair length, or quality of dress.

In other words, you'd invite a society bordering on chaos, and don't think for a moment that  the millions of excluded folk would just sit there and take it! It is no wonder that Block describes himself as an "anarcho-capitalist".    No surprise that Block's ideas were hatched from the "Austrian School" of Friedrich von Hayek. See below:


















Recall that von Hayek's austerity solutions led to the collapse of the Weimar Republic and the rise of Nazism.  The Wehrmacht soldiers I met in May, 1985, all agreed that Hitler would have had little chance to attain the Chancellorship had austerity measures not been implemented in the late 1920s - such that most people had to beg, borrow or steal just to get bread or feed their infants. Hitler offered a promise of plenty for all, via his concept of  Lebensraum - or expanded living space. Of course, these riches would come at the expense of other nations taken over by the Nazi expansion of the Third Reich!

Today, the seeds of this aberrant thinking remain, as voting rights laws are gutted state by state and even portions of the civil rights bill are placed in peril. Meanwhile, billionaires like Peter G. Peterson want to impose austerity via cuts to Social Security and Medicare, so he and his wealthy pals - like Tim Perkins -  can live high off the hog, buying up 18 giant yachts instead of 2 and fifty giant residences from Curacao to Monaco while homeless citizens have nada.

To the extent we let these fools succeed, we will all regret it, and the decline of our nation will be accelerated.

To read some of the reactions of the Loyola community to Block's bollocks, go to:
http://www.loyolamaroon.com/search-1.2265630?q=%22Walter+Block%22

Austerity Economics Is Triggering Unsustainable Economic Weakness

The news in today’s Washington Post that the middle class is barely keeping it’s head above water should come as no surprise to anyone paying attention. As the Post lead story (Middle Class Still Left Behind in U.S. Economic Recovery – Data Shows) notes:


“The economic recovery of summer 2013 is playing out in an all-too-familiar way for poor and middle-class Americans: Gas prices are up, growth is slowing, and there still aren’t nearly enough new jobs to employ the almost 12 million people seeking work.

An improving housing market and rising stock prices appear to have done little to increase the take-home pay of the typical U.S. worker. And while the economy continues to heal faster than that of almost any other Western nation, evidence remains strong that the recovery has done little to boost the fortunes of people in the vast economic middle.  The Labor Department reported this month that average earnings have barely grown faster than inflation over the past year. Data from spring show that median earnings — those of the worker smack in the middle of the middle class — have fallen 4 percent since the recession ended, after adjusting for inflation.”

Why is this? Basically, it’s because we have - or at least our political and media class have – accepted economic myths while allowing the government to become hamstrung by the GOP opposition via absurd filibuster rules. At the core of these myths is the mainline economists’ acceptance of the Pareto distribution,e .g.
http://brane-space.blogspot.com/2011/06/modern-economics-its-evil-basis-pareto.html


Let's bear in mind also, that the same (Neoliberal) political class has "bet the farm" that Pareto optimality delivers more if spent on "wars" (actually overlong occupations that inflame overseas passions) and massive surveillance than domestic needs. So no wonder that our domestic infrastructure is cratering at a rate while too many remain mesmerized by the numbers (on assorted tube  'crawlers') for the DOW. Can we use this to define national insanity? Yes, I believe we can!

Another sign is the yen to cut Social Security and Medicare! But as a recent Bulletin of the National Committee to Preserve Social Security and Medicare has pointed out ('Debunking Media Myths'):

"Contrary to what you might read in the headlines or hear on the evening news, Social Security and Medicare are not to blame for our nation's fiscal woes or our deficit."

Indeed! It is the unending wars and domestic spy state amassing of precious tax dollars to spy on all of us that is contributing most to deficits and woes!  Another important point for the pointy-headed Pareto-ists:

""Without these vital programs our economy would be in even worse shape and millions more American families would face economic security".

How so? Because we are in a low aggregate demand environment - since the recession (which many, including  economist Thea Lee believe is still going on). In this environment cuts to social insurance programs mean lower spending by recipients and FOR them (e.g. via insurance to cover procedures from Medicare) hence demand is lowered, adding to the woes. What we need then is MORE spending, not less! Less austerity (and an end to the absurd sequester) not more! 

But the political class and its favorite economic tools (fools?) don't want to hear it. As one former Fed economist put it two years ago ('Economists Win Nobel for Focus on Real World', WSJ, Oct. 11, p. A3) in regard to making substantial cuts to “entitlements”:


"If you made a credible committment to do this now and the markets saw that, this theory would predict that you have a much more positive impact on the economy today".

But that is bollocks, and those are the words of a delusional guy who tacitly accepts the Pareto. In other words, as standard for Pareto optimality BS, we must sacrifice citizens' security for a generic market benefit, available only to the elites, mainly the 1%. Incredibly, these economic shysters actually believed a ramping up stock market (pumped by Bernanke’s cheap money crack) would also feed the middle class – unaware that most of them are(wisely) not exposed to the equity markets, especially after the disastrous 2008 collapse.


But they still echo the refrain: “Let them eat stocks!” (Or mutual funds) as opposed to actually paying real livable wages that trump phantom money that expands or diminishes on any given day. Meanwhile, if Medicare and Social Security benefits are cut this would be "Pareto efficient", reinforcing the old Pareto Parable that if a sheep and a wolf form a collective, it is always preferable for the wolf to eat the sheep for the "collective" to be maximally optimal. In like manner, it is always preferable that the economy give preference to the dollars of the wealthy because they are worth more than dollars simply given to the elderly out of “entitlements”. After all, the latter are merely getting economic largesse for breathing every day!


Epitomizing this sort of deranged thinking is Thomas Sargent, an Econ Nobel winner from two years ago- who along with Christopher Sims, poured bollocks on Keynesian stimulus from governments, which - let's face it - has seen a rash of attacks in the wake of the onset of the austerity virus. Sargent's "rational expectations" model posited negative "rational" reactions of people to events like the Fed loosening the money supply, "a conclusion at odds with the Keynesian model". For example, he claimed that people woould adjust their "wage demands" higher if the Fed increased the money supply (as it has recently been doing by buying back hundreds of billions of treasury securities, under 'quantitative easing'). Then, by increasing the wage demands unemployment will increase, rather than decrease.

But in truth, as the WaPo released stats show, this is nonsense. The true fact is even though the Fed has poured hundreds of billions into quantitative easing it hasn’t made a dent in wages, or unemployment. But it has increased inflation (never mind the Federal Reserve’s bogus index) and merely enriched the speculators. But that is what it intended to do. All this crap about helping the vast Middle to regain its footing via stock returns is just that, crap.


Sargent also argued that people will "make decisions now" based on how they rationally believe the government will deal with Social Security and Medicare. Thus, according to the Pareto Distribution basis, if government were to act for cuts now (including Obama’s proposed Chained CPI) then people might invest more in the stock market (for higher returns) instead of depending on government. But again, this is nonsense as the WaPo piece shows. Since “rising stock prices appear to have done little to increase the take-home pay of the typical U.S. worker.”


The reason is a dirty little secret amongst the political –economic elites: corporations are still sitting on over $1.7 trillion stash and not using it to enhance wages or increase jobs. Instead they are mostly practicing economic equity incest and buying back their own shares at odd intervals. Meanwhile, unemployed college grads waste away in their parents’ basements with no future economic prospects and unable to repay their monumental student loans. Thus, stock values aren't increasing because more people are purchasing the goods companies have in their inventory (they can't afford to with their meager wages) but because the stock prices are being artificially inflated, via Bernanke's 'crack' and corporate buy backs.  Those few middle classers into stocks and especially equities are in for a very rude awakening when the rubber meets the road. Likely next year after the Fed pulles the QE plug.

Sargent's own bias in his development of his mathematical models to support his rational expectations "theory" confirms his pro-Pareto bona fides. For example, in one of his theoretical models Sargent arrives at a set of "competitive equilibria": C = {(x,y)! x = h(y)}, such as shown on the accompanying graph where "welfare" is plotted vs. "tax rate". Entering into the basis for generation of such equilibria is what is called a "utility function" framed for example as: U(L, c,g) where L denotes "leisure", c is the rate of consumption, and g is the per capita government expenditure. From this, Sargent purports to obtain some parameter 'alpha' spanning a range in a limited set from 0 to 1/2.


At some point later then, one also will find the tax rate τ, enter. Thus, he claims a government will in general balance its budget if: g = τ (1 - L). Meanwhile, he poses "welfare" within the constraints of competitive equilibria as defined by:


W(τ) = L(τ) + log {alpha + (1 - τ) [1 = L(τ)]} + log (alpha + τ[1 - L(τ)}


He argues that a "benevolent government" chooses L = 0, c = g = ½

while a "dictatorial" outcome yields: W = 2 log (alpha + ½)

This is nonsense, given that any true benevolent government would never ever require a leisure L = 0! However, a dictatorial "slave camp" government, such as under Chairman Mao in the 1960s, would! So what the hell is he getting at? The graph shown sets it in perspective assuming an alpha = 0.3 or just past midway in the set {0, ½}. Thus, he argues that the "government problem in a "Nash equilibrium" is defined by a limiting maximum tax rate, max(τ) such that: L = log [alpha + (1 - τ)(1 - L)] + log (alpha + τ(1 - L)]


Then, if L < 1, the option is τ = 0.5  However, as the tax rate moves beyond this limit, the welfare crashes! Well, by that I mean it reaches a Nash equilibrium lowest value of around -1.2.

Stripping away all the math and balderdash, what do we have? Well, a curve that fits perfectly within Pareto Distribution parameters of Pareto optimality or efficiency! (Notice the line marked "unconstrained optimum, which is really an optimum for maximal Pareto effciency). What we are being warned against here, is the use of too many government expenditures or resources for the common good, whether in Medicare, Social Security or even unemployment insurance. Any time one seeks to maximize a putative welfare within these limits, one ends up in a crash pile. The welfare drops and so does everything else.

Beware then of all those who wish to stimulate the economy by too high a tax rate?

 Hmmmm....wonder then why our unemployment was lowest during the 1950s when the marginal tax rate was 91%.?  Oh, these latter day anti-Keynesians will argue it was the aftermath of the war production, the lack of global competitors or some such rot, anything to deny any consistent Keynesian approach. But they ignore how solid the economy was with relatively low unemployment as JFK regularly used deficit spending! (See e.g. http://brane-space.blogspot.com/2012/07/thats-right-now-blame-60s-jfk-for.html  )

The conclusion the truly rational person must draw is both cynical and realistic: our political elites and their corporate media are using the Pareto narrative to protect massive military and surveillance spending as they wreck domestic security and infrastructure. In other words, these rats don't care about us little guys. They only care about propping up an "empire" and using that to justify minimal domestic security - REAL security!

To get a further handle on our misbegotten, military industrial complex fueled austerity economics check out Jeff Cohen's blog piece: "The Elephant in the Room: Militarism":

https://www.commondreams.org/view/2013/04/09-1