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Consumers are Irrelevant to Economics

OliverWright said: The law of supply and demand has a hidden sub-clause that Keynes (and Obama and Axelrod) miss or ignore: it involves the same people in both capacities (production and consumption). When that sub-clause is forgotten or evaded, you get the calamity of a  Trillion Dollar Stimulus with zero stimulus. The title of consumer must be earned by producing products or services that are then traded to meet earned demand. In other words, producers–not consumers–fuel our economy.  The engine of productive prosperity is the middle class family squeezing a few dollars into a savings account every month, the corporate jet owner risking a chunk of his fortune on a young upstart, and everyone in between who finance a better tomorrow and underwrite prosperity. Those who consume without producing are freeloaders in any form: lifelong welfare recipients, government bureaucrats, and trust fund kids alike. Obama’s team does not understand fundamental economics. This is sad but painfully and irrefutably true. Just look around. Notice those 300,000 jobs you tout were in December? There all gone now. Seasonal. Along with the 2,000,000 workers who have left the workforce forever, and give Obama perverse political cover from his own incompetence and a true unemployment rate north of 10%. The numbers from the bureaus are meaningless. Things aren’t better until they feel better. They won’t feel better until new policies are adopted. Obama is a nice guy who is trying his best. He’s just totally unequipped, like nothing we’ve ever seen before. At least prior presidents filled the gaps in their knowledge and abilities with brilliant people from the private sector. Obama did not, and this ship has no captain. Sorry.

Several things to address here: the first is that the ARRA is not the stimulus bill (passed in 2008 by GWB). The reason I highlight this difference is because the ARRA has much more infrastructure bolstering, healthcare funding, scientific research investment, etc. The Stimulus was money and tax breaks directed toward the real estate industry- we agree that it was ineffectual and misguided. 

You said that Obama’s team does not understand economics and should have (like previous presidents) ‘filled the gaps’ with private sector personnel. I think it’s extremely naive to think that additional bureaucrats from the private sector would help, but the idea that Obama has somehow been less willing to adopt the best and brightest from the private sector is absolute fiction that borders on dishonesty. Neal Wolin, Mark Patterson, Gene Sperling, Larry Summers, Rahm Emanuel, Herbert Allison, Kim Wallace, Karthik Ramanathan, Matthew Kabaker, Lewis Alexander, Adam Storch, Lee Sachs, Gary Gensler, and Michael Froman are all on Obama’s team, and all have lucrative pasts in the private sector (h/t: Mother Jones for the list). If you want more info, I can certainly give it to you- one of my largest gripes with Obama is that he is far too willing to incorporate the private sector (which is absolutely incapable of providing for the public good) into his team.

Another falsehood in your statement was that since December, the jobs have disappeared. Did you fail to read the rest of the link? Let me quote it for you:

It projects that in the current quarter (the first quarter of 2012), there are 200,000 to 1.5 million more people employed because of ARRA.

Your statement that the jobs have entirely disappeared is directly counter to the CBO’s most recent (and most thorough yet) report.

Finally, I strenuously object to the notion that our fiat currency properly represents production. I understand what you mean when you say, “producers–not consumers–fuel our economy,” but I fundamentally disagree that all necessary and important production is currently represented with appropriate funding (teachers, certain healthcare professionals, and almost all migrant laborers are drastically underpaid).  Similarly, we overcompensate certain individuals that don’t contribute much to society at all (certain members of the financial sector come to mind). 

The reason our fiat currency does not properly value production in our marketplace is because our marketplace was stacked by historical events that would never be allowed today, but are nevertheless and integral part of our societies structure. For instance, the average income for a white family is more than four times the average income of a non-white or Hispanic family- this isn’t because, on average, white people produce more, it’s because the US’ history of violent white supremacy inherently devalues production by people of color.

I will agree that Obama should radically and rapidly change his fiscal policies, but I would agree with the CBO that austerity is bad for a recovery and encourage the president to increase infrastructure, health, educational, and research funding (even if temporary) in order to bolster the economy.

Thanks for the submission! 

Filed under Obama Economy ARRA submission

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Occupy Foreclosures?

As people think a bit more critically about what it means to “occupy” contested spaces that blur the public and the private and the boundaries between the 99% and the 1%, and as they also think through what Occupy Wall Street might do next, I would humbly suggest they check out the activism model of Project: No One Leaves. It exists in many places, especially in Massachusetts — check out this Springfield version of it — and grows out of activism pioneered by City Life Vida Urbana. It is similar to activism done by the group New Bottom Line and other foreclosure fighters. Here is PBS NewsHour’s coverage of the movement.

The major goal of Project: No One Leaves is to mobilize as many resources as possible to protect those going through foreclosure and keep them in their homes as long as possible in order to give them maximum bargaining power against the banks. For those focused on “weapons of the weak,” this moment — with banks and creditors using state power to conduct massive amounts of foreclosures, thus impoverishing poor neighborhoods through a financialized rationality — is a crucial opportunity for resistance. From the webpage:

Post-Foreclosure Eviction Defense. We mobilize tenants and former homeowners living in recently or about to be foreclosed homes (bank tenants) to stop evictions, protect Springfield’s housing and communities, and mobilize bank tenants to fight back against major lending institutions and banks that are tearing our communities apart.

Their model, a two-step process known as the Sword and the Shield, works:

“The Sword”. Encouraging residents to stay in their homes, and to make their stories public, we organize blockades, vigils and other public actions to exert public pressure on the banks. The sword works together with:

“The Shield”:We inform bank tenants of their rights and work with legal services & progressive lawyers, to use aggressive post-foreclosure eviction defense to get eviction cases dismissed, win large move-out settlements (if it makes sense for that family/person), and force the banks to reconsider foreclosure evictions.

They use public action through blockades, protests, and marches, along with smart legal advice on how to maximize legal resistance to forced removal. Beyond the fact that this is a major space for resistance, it is also a great way to mobilize people. And as JW Mason notes, there is power in having a clear opponent as well as a special type of bargaining power people might not realize they have:

Homeowners who still have title have a lot to lose and are understandably anxious to meet whatever conditions the lender or servicer sets. But once the foreclosure has happened, the homeowner, paradoxically, is in a stronger negotiating position; if they’re going to have to leave anyway, they have nothing to lose by dragging the process out, while for the bank, delay and bad publicity can be costly. So the idea is to help people in this situation organize to put pressure — both in court and through protest or civil disobedience — on the banks to agree to let them stay on as tenants more or less permanently, at a market rent.

But there’s another important thing about No One Leaves: They’re angry. The focus isn’t just on the legal rights of people facing foreclosure, or their real chance to stay in their homes if they organize and stick together, it’s on fighting the banks. There’s a very clear sense that this is not just a problem to be solved, but that the banks are the enemy. I was especially struck by one middle-aged guy who’d lost the home he’d lived in for some 20 years to foreclosure. “At this point, I don’t even care if I get to stay,” he said. “Look, I know I’m probably going to have to leave eventually. I just want to make this as slow, and expensive, and painful, for Bank of America as I can.” Everyone in the room cheered.

This will make the banks extremely angry, prevent them from further profiting from the declining middle class, and will stall homelessness for some. It will also help bolster “house prices, residential investment, and durable consumption" by a significant margin. Still, it addresses a problem’s effects, not its cause.

Filed under occupy Wall Street foreclosures banks economy

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The point is, today everyone can see that the system is deeply unjust and careening out of control. Unfettered greed has trashed the global economy. And it is trashing the natural world as well. We are overfishing our oceans, polluting our water with fracking and deepwater drilling, turning to the dirtiest forms of energy on the planet, like the Alberta tar sands. And the atmosphere cannot absorb the amount of carbon we are putting into it, creating dangerous warming. The new normal is serial disasters: economic and ecological.
Naomi Klein - Occupy Wall Street: The Most Important Thing in the World Now (via wespeakfortheearth)

(Source: afro-dominicano, via jamessteiner)

Filed under occupy Wall Street Environment economy

434 notes

Once the Bush and Obama administrations decided that you couldn’t let these firms fail and they didn’t want the mess of nationalizing them, there was really only one way forward — and that way was to gift money onto these banks until they’re back on their feet and can function at the center of the economy again. But that, to any normal person who is outside the system, just looks ridiculously unfair. It looks like socialism for capitalists and capitalism for everybody else. So it’s no wonder people are marching in southern Manhattan.
On today’s Fresh Air, Michael Lewis talks about Occupy Wall Street, the debt crisis in Greece, the Euro, and why he feels like California is having ‘third world problems’ (via nprfreshair)

(via nprfreshair)

Filed under michael lewis economy occupywallstreet euro greece

92 notes

6 Ways the Rich Are Waging a Class War Against the American People


Denying the very existence of an entire class of citizens? That’s waging some very real warfare against them.

By Joshua Holland  - AlterNet

There hasn’t been any organized, explicitly class-based violence in this country for generations, so what, exactly, does “class warfare” really mean? Is it just an empty political catch-phrase?

The American Right has decided that returning the tax rate paid by the wealthiest Americans from what it was during the Bush years (which, incidentally, featured the slowest job growth under any president in our history, at 0.45 percent per year) to what they forked over during the Clinton years (when job growth happened to average 1.6 percent per year) is the epitome of class warfare. Sure, it would leave top earners with a tax rate 10 percentage points below what they were paying after Ronald Reagan’s tax cuts, but that’s the conservative definition of “eating the rich” these days.

I recently offered a less Orwellian definition, arguing that real class warfare is when those who have already achieved a good deal of prosperity pull the ladder up behind them by attacking the very things that once allowed working people to move up and join the ranks of the middle class.

But there’s another way of looking at “class war”: habitually vilifying the unfortunate; claiming that their plight is a manifestation of some personal flaw or cultural deficiency. Conservatives wage this form of class warfare virtually every day, consigning millions of people who are down on their luck to some subhuman underclass.

The six ways from The article

  • Registering the Poor to Vote is ‘UnAmerican’
  • Unemployment Benefits Have Created a ‘Nation of Slackers’
  • You Can’t Really Be Poor if You Have a Color TV!
  • Food-Stamps: ‘A Fossil That Repeats All the Errors of the War on Poverty’
  • ‘The Main Causes of Child Poverty Are Low Levels of Parental Work and the Absence of Fathers.’
  • Taxing Working People Less Than the Rich Is ‘Perverse’


(via abaldwin360-deactivated20130708)

Filed under class war politics tax economy US

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Senator Jon Kyl starts off the Super Committee talks by underscoring he will put party before country.

On the first day of work on Thursday for a “super committee” charged with finding $1.2 trillion in new government savings, a member of the panel threatened to quit if defense spending cuts are discussed, underscoring the difficulties ahead.

Despite Republican Senator Jon Kyl’s surprise disclosure after the panel’s inaugural meeting that “I’m off of the committee if we’re going to talk about further defense spending,” other Republicans worked to put comprehensive tax reform squarely on the agenda and urged bipartisanship.

"If we cut anything other than money going toward the poor, I’m out".

(Source: sarahlee310)

Filed under Jon Kyl defense spending Super Committee federal deficit politics economy

83 notes

1/3 of previously middle class Americans are now poor

The study focused on people who were middle-class teenagers in 1979 and who were between 39 and 44 years old in 2004 and 2006. It defines people as middle-class if they fall between the 30th and 70th percentiles in income distribution, which for a family of four is between $32,900 and $64,000 a year in 2010 dollars.

People were deemed downwardly mobile if they fell below the 30th percentile in income, if their income rank was 20 or more percentiles below their parents’ rank, or if they earn at least 20 percent less than their parents. The findings do not cover the difficult times that the nation has endured since 2007.

So, before the credit crunch, before the housing bubble broke, before the banks began to steal people’s houses with fraudulent paperwork and the government reneged on it’s guarantees to provide social services, 1/3 of Americans who grew up in middle class families are now impoverished. 

What would our demographics look like today? How many citizens have been forced into poverty by the deliberate theft of wealth from the middle class?

Filed under poverty economy

28 notes

Matt Taibbi on Obama and Jobs

I remember following Obama on the campaign trail and hearing all sorts of promises before union-heavy crowds. He said he would raise the minimum wage every year; he said he would fight free-trade agreements. He also talked about repealing the Bush tax cuts and ending tax breaks for companies that move jobs overseas.

It’s not just that he hasn’t done those things. The more important thing is that the people he’s surrounded himself with are not labor people, but stooges from Wall Street. Barack Obama has as his chief of staff a former top-ranking executive from one of the most grossly corrupt mega-companies on earth, JP Morgan Chase. He sees Bill Daley in his own office every day, yet when it comes time to talk abut labor issues, he has to go out and make selected visits twice a year or whatever to the Richard Trumkas of the world.

Listening to Obama talk about jobs and shared prosperity yesterday reminded me that we are back in campaign mode and Barack Obama has started doing again what he does best – play the part of a progressive. He’s good at it. It sounds like he has a natural affinity for union workers and ordinary people when he makes these speeches. But his policies are crafted by representatives of corporate/financial America, who happen to entirely make up his inner circle. 

Filed under Obama Economy Matt Taibbi