July 23, 2016

Ministry of Plenty

Live Long and Prosper

Heinrich Heine (1797–1856):
Money is the God of our time, and Rothschild is his prophet.
(March 1841)

Gary Becker (1930–2014):
All human behavior can be viewed as involving participants who:

  1. maximize their utility,
  2. form a stable set of preferences, and
  3. accumulate an optimal amount of information and other inputs in a variety of markets.

(Economic Approaches to Human Behavior, UCP, 1976, p 14)

John Quiggin [Professor of Economics, Queensland University]:
[In the 1970s, those economists] who wanted to restore the pre-Keynesian purity of classical macroeconomics … became known as the New Classical school.
Their key idea was what they called "rational expectations," which, in its strongest form, required all participants in an economy to have, in their minds, a complete and accurate model of that economy.
John Muth (1930–2005):
[Rational expectations are] those that agree with the predictions of the relevant economic model.
(p 94)

[New Classical economics] reproduces the classical conclusion:
  • that government intervention cannot improve macroeconomic performance and
  • that, in the absence of such intervention, the economy will rapidly adjust to economic shocks, returning quickly to its natural equilibrium position.
(Zombie Economics, Princeton University Press, 2012, p 96)

Alexander Hamilton (1756–1804):
Why has government been instituted at all?
Because the passions of men will not conform to the dictates of reason and justice without constraint.
(Federalist No 15 Papers, 17 September 1787)

Chuang Tzu:
What would become of business without a market of fools?
(4th century BCE)

P W Singer (1974):
For all the claims that “big government” can never match the private sector, [the Defence Advanced Research Projects Agency] is the ultimate rebuttal.
The Internet … e-mail, cell phones, computer graphics, weather satellites, fuel cells, lasers, night vision, and the Saturn V rockets [that first took man to the moon] all originated at DARPA. …
DARPA works by investing money in research ideas years before any other agency, university, or venture capitalists on Wall Street think they are fruitful enough to fund.
DARPA doesn’t focus on running its own secret labs, but instead spends 90% of its (official) budget of $3.1 billion on university and industry researchers …
(Wired for War, Penguin, 2009, p 140)

Niall Ferguson (1964):
The first era of financial globalization took at least a generation to achieve.
But it was blown apart in a matter of days.
And it would take more than two generations to repair the damage done by the guns of August 1914.
(The Ascent of Money, Penguin, 2008, p 304)

Andrew Carnegie (1835–1919):
  • Individualism,
  • Private Property,
  • the Law of Accumulation of Wealth, and
  • the Law of Competition
[are] the highest results of human experience [—] the best and most valuable of all that humanity has yet accomplished.

Peter Singer:
L Ron Hubbard [(1911– 1986),] the founder of the Church of Scientology, once wrote that the quickest way to make a million in America is to start a new religion.
(How Are We to Live?, 1993, p 94)

Simone Campbell [Catholic Nun]:
[We were] doing business roundtables [with] some entrepreneur, CEO types. …
A report had just come out that that the average CEO … got $10 million in salary a year, and [that] they were going for $11 million.
I got to ask them:
Is it that you're not getting by on $10 million that you need $11 million?
I don't get it.
And this one guy said: …
Oh, no Sister Simone. …
It's not about the money. …
It's that we want to win.
And money just happens to be the current measure of winning.
(Krista Tippett, Becoming Wise, Corsair, 2016, p 129)

PBS Frontline:
There was a phrase — "ripping someone's face off" — that was used on the trading floor to describe when you sold something to a client who didn't understand it and you were able to extract a massive fee because they didn't understand it.
[This was seen as] a good thing because [you were] making more money for the bank.
[That] sort of spirit, of [acting against the best interests of] your client … took on significant life on Wall Street.
(Money, Power and Wall Street, 2012)

Kid Power Conference, Disney World:
Kids love advertising: it's a gift — it's something they want.
There's something to said … about getting there first, and about branding children and owning them in that way. …
In boy's advertising, it is an aggressive pattern [—] antisocial behavior in pursuit of a product is a good thing.

Alexis Clérel (1805–1859) [Viscount de Tocqueville]:
The people may always be mentally divided into three distinct classes.
  • The first of these classes consists of the wealthy;
  • the second, of those who are in easy circumstances; and
  • the third is composed of those who have little or no property, and who subsist more especially by the work which they perform for the two superior orders.
(Democracy in America, 1835, Bantam, 2011, p 246)


Breakdown of the Top 1% by Income (2012)
Percentile% of Total Income% of Total Income Tax
P99-10021.938.1
  P99.999-1002.43.3
  P99.99-99.9993.18.3
  P99.90-99.995.510.3
  P99.0-99.910.919.5
P50-9967.059.1
P0-5011.12.8

The Anatomy of the One Percent


Adrian Dungan

For 2012, the [US Adjusted Gross Income (AGI)] threshold for:
  • [The] top 0.001% of tax returns [was] $62,068,187 or more [≈ $170,000 per day or 1700 times median income.]
    These taxpayers accounted for 2.4% of total AGI, and paid 3.3% of total income tax.
  • The top 0.01% of tax returns [was] $12,104,014 or more [≈ $33,000 per day or 330 times the median income.]
    These taxpayers accounted for 5.5% of total AGI, and paid 8.3% of total income tax.
  • [The top 0.1% of tax returns [was] $2,161,175 or more [≈ $6,000 per day or 60 times the median income.]
    These taxpayers accounted for 11% of total AGI, and paid 18.6% of total income tax.]
  • The top 1% of tax returns [was] $434,682 or more [≈ $1200 per day or 12 times median the income.]
    These taxpayers accounted for 21.9% of total AGI and paid 38.1% of total income tax.
  • [The] top 50% of all tax returns was $36,055 for the year [≈ $100 per day = median income.]
    These taxpayers accounted for 88.9% of total AGI and paid 97.2% of total income tax.

(Individual Income Tax Shares, 2012, IRS Statistics of Income Bulletin, Spring 2015)


peaceandlonglife

  • This is equivalent to the wealthiest individual in a group of 100 being paid twice as much as the poorest 50 combined.
  • The richest 1/100,000 part of the population captures a 1/40 share of aggregate income.
  • Each of the richest 1 in 100,000 accrues the lifetime median income (~ 50 years) every 10 days.
  • Conversely, a person (and their descendents) on the median income would need to work for 17 centuries (or 34 working lifetimes) to earn as much as the richest 1 in 100,000 get in a single year.
  • By definition, half the population earn less than the median income.
  • In 2005, 40% the global population (2.6 billion people) were living on less than $2 per day.


Bertrand Russell (1872-1970)

[Private economic] power within a State … can influence
  • [the] law by corruption and
  • public opinion by propaganda.
It can put politicians under obligations which interfere with their freedom.
It can threaten to cause a financial crisis.
But there are very definite limits to what it can achieve. …

[Where] the issue is simple and public opinion is definite, the plutocracy is powerless …
[Where] public opinion is undecided, or baffled by the complexity of the issue, the plutocracy can secure a desired political result. …

[The plutocracy has hitherto] been unable to
  • introduce Asiatic labour in California or Australia, except in [the] early days in small numbers. …
  • destroy trade unionism …
  • avoid heavy taxation of the rich [or]
  • prevent socialist propaganda. …

[The trade unions, for their part,] have failed … to keep in power governments which they liked but which a majority of the nation distrusted.

[The] power of economic organisations to influence political decisions in a democracy is limited by public opinion, which, on many important issues, refuses to be swayed even by very intensive propaganda.
Democracy, where it exists, has more reality than many opponents of capitalism are willing to admit.

(Power: A New Social Analysis, 1938, pp 85-6, emphasis added)


Ha Joon Chang

Reader in Political Economy and Development, Cambridge University

[Nineteenth century 'classical' liberals rejected] the conservative view that tradition and social hierarchy should have priority over individual rights.
[On the other hand, they] believed that not everyone was worthy of such rights.
They thought women lacked full mental faculties and thus did not deserve the right to vote.
They also insisted that poor people should not be given the right to vote, since they [feared that] the poor would vote in politicians who would [redistribute wealth. …]

[Twentieth century neo-liberals, by contrast,] do not oppose democracy [in principle.]
[In practice, however, many would be prepared, where necessary, to] sacrifice democracy [to defend] private property and the free market.

(Economics: The User's Guide: A Pelican Introduction, 2014, emphasis added)


Freedom Without Justice


Richard Tawney (1880–1962)

Freedom for the pike is death for the minnows.
(Equality, 3rd Ed, 1938)

It is not till it is discovered that high individual incomes will not purchase the mass of mankind immunity from cholera, typhus, and ignorance, still less secure them the positive advantages of educational opportunity and economic security, that slowly and reluctantly, amid prophecies of moral degeneration and economic disaster, society begins to make collective provision for needs no ordinary individual, even if he works overtime all his life, can provide himself.
(Equality, 4th Ed, Allen & Unwin, 1952, pp 134–5)


Isaiah Berlin (1909–1997)

[Total] liberty for wolves is death to [lambs.]
[Total] liberty of the powerful [and] the gifted, is not compatible with the rights to a decent existence of the weak and less gifted. …
Equality may demand the restraint of the liberty of those who wish to dominate … in order
  • to make room for social welfare,
  • to feed the hungry,
  • to clothe the naked,
  • to shelter the homeless,
  • to leave room for the liberty of others, [and]
  • to allow justice or fairness to exercised.

(The Pursuit of the Ideal, The Crooked Timber of Humanity: Chapters in the History of Ideas, 1990)


John Galbraith (1908–2006)

The values of a society totally preoccupied with making money are not altogether reassuring.
(p 101)

[From June 1929,] free at last from all threat of government reaction or retribution, the market sailed off into the wild blue yonder. …
Never before or since have so many become so wondrously, so effortlessly, and so quickly rich. …
Perhaps it was worth being poor for a long time to be so rich for just a little while.
(p 68)

Those who employed rational, objective, and scientific methods … failed to foretell the crash.
(p 109)

(The Great Crash 1929, Penguin, 1975)


A self-serving branch of moral philosophy has been devised to defend the right of the affluent to freedom of choice [which neglects to mention] the way bad public services (like the absence of income itself) abridge the freedom of the poor. …

On few matters over the centuries has the human conscience been more amenable and the human brain more resourceful than in finding reasons why the rich and the fortunate should live in comfortable coexistence with the poor.
(p xxiv)

[For] Herbert Spencer and his American disciples in the last century, the Social Darwinists, poverty is the socially therapeutic tendency that eliminates the unfit.
[This secular] instinct for Social Darwinism still lurks in our time [accompanied by a] fundamentalist theology that holds that property is God's natural reward for the worthy.
The poor, meanwhile, have the comfort of knowing they … will pass [more] easily into the next world to enjoy, along with the meek, full compensation for the miseries of this existence.
The relevant and supporting texts and sermons are amply available from the religious broadcasters and the Moral Majority.
(p xxvi)

The line which divides our area of wealth from our area of poverty is roughly that which divides privately produced and marketed goods and services from publicly rendered services.
[Our] wealth in privately produced goods is, to a marked degree, the cause of crisis in the supply of public services.
For we have failed to see the [the urgent need to] maintaining a balance between the two.
(p 190)

(The Affluent Society, 4th Ed, Penguin, 1984)


Thomas Jefferson (1743-1826)

Under pretence of governing, they have divided their nations into two classes:
  • wolves and
  • sheep.
Experience declares that Man is the only animal that devours its own kind.
For I can apply no milder term to the governments of Europe.
And to the general prey of the rich [upon] the poor.

(Letter to Colonel Edward Carrington, 16 January 1787)


Karl Popper (1902–1994)

[The] paradox of freedom, first discovered by Plato, … can be expressed by saying that unlimited freedom leads to its opposite, since without its protection and restriction by law, freedom must lead to a tyranny of the strong over the weak.
This paradox … was solved by Kant, who demanded that the freedom of each man should be restricted, but not beyond what is necessary to safeguard an equal degree of freedom for all.

(The Open Society and Its Enemies, 5th Ed, 1966, Routledge, pp 257-8)


CONTENTS


Simon Marginson: The Secibd Gilded Age

Robert Putnam: Freedom And Justice For All

William Goetzmann: Debt and Deficit in the 18th Century

George Megalogenis: Tax Cuts of the Rich, Spending Cuts for the Poor

Adrian Dugan: The Anatomy of the Top 1%

Paul Krugman: The Great Divergence

David Stuckler: Life, Death and Austerity

Mark Blyth: No Bailouts

Michael Lewis: High Frequency Theft

Koctopus: One Dollar, One Vote

Al Gore: The Robber Barons Ride Again

Robert Manne: After The (Neoliberal) Revolution

Paul Piff: Noblesse Oblige

Anne Manne: Producers vs Parasites

John Hewson: Budget of the Century

Alex Gibney: All I ask for is an unfair advantage

Choosing Inequality

Richard Wilkinson: Inequality and Progress

Robert Johnson: Heads I win — Tails you lose.

Satyajit Das: (LIBOR^2 x 1/LIBOR) – (LIBOR^4 x LIBOR^-3) = ?

A Culture of Greed

Paul Krugman: Gambling with Civilization

Mike Pottenger: Rich Man, Poor Man

The Economist: A True Progressivism

Michael Robinson: The Restoration of the Plutocracy

Charles Ferguson: Inside Job

Joseph Stiglitz: Financial Alchemy

July 13, 2016

Tom Switzer

Blue Army: Persons of Interest

Tom Switzer:
[Privatisation] would say to the ABC management:
You can put on as much Left wing ideological, tainted, journalism as you like — be frank about it — but just not at tax-payers expense. …
[And,] you'd be saving taxpayers up to more than million dollars every year …
Some programs, clearly, would not sell.
And others would continue to aggravate people like me.
But the point is, at least taxpayers would not be forced to pay for it. …

[Then] of course you've got this digital evolution … that's costing jobs … it's threatening the very viability of newspapers …
And let's be frank, when Rupert Murdoch goes, its highly unlikely that good quality flagship papers like the Australian will prevail.
In that environment, why should a tax-payer funded, free-to-the-consumer competitor, be allowed to expand on their turf?
There's something fundamentally unfair about that. …

My point is, that with the bias there and the changing media landscape, I don't think the ABC can be a public service broadcaster …

All things considered, the ABC News is more professional and it covers the big issues of the day in more detail than the commercial networks.
But my point is: [there's] a plethora of [digital] news and media [out there …]
[These] days, people … can read the New York Times or the Guardian newspaper online — we're well informed.
Do we need a publicly funded broadcaster to fill us in on those issues? …

[If, as the polls indicate, public broadcasting has 89% support in the community, why] would the marketplace let [such a] valuable franchise die?
If it were a commercially viable entity … how would privatising lead to diminishing the quality of it's product?
(Should the ABC be privatised?, Counterpoint, ABC Radio National, 10 June 2013)

Kim Robinson (1952):
A presidential transition was a major thing, and there were famous cases of failed transitions [and] the dire consequences that ineptitude in this area could have on the subsequent fates of the presidents involved.
It was important to make a good running start, to craft the kind of "first hundred days" that had energized the incoming administration of Franklin Delano Roosevelt in 1933, setting the model for that most presidents since to try to emulate.
Critical appointments had to be made, bold new programs turned into law.
(Sixty Days and Counting, Bantam, 2007, p 29)



(Adriana Bosch, Eisenhower, PBS American Experience, WGBH, 1993)


The Wrong Side History


Dwight Eisenhower (1890-1969):
Neither a wise man or a brave man lies down on the tracks of history to wait for the train of the future to run over him.
(6 October 1952)

Tom Switzer:
I'm joined by [Nigel Lawson] the chairman of The Global Warming Policy Foundation
[Nigel, do] you think there will come a time when historians will look back at the past decade or so and say that this climate hysteria reached its peak and rational debate was at its most restricted and politicians at their most gullible?

Nigel Lawson:
Yes, I think that this will be seen … as one of these outbreaks of collective madness which happen from time to time …
(New climate deal faces hurdles, Between The Lines, ABC Radio National, 21 May 2015)

Tom Switzer:
[Patricia Adams is the author of a recent report from] The Global Warming Policy Foundation in London. …
[Patricia, there are those that] insist that climate change represents such a grave threat to humanity … that the world has no choice but to … end fossil fuels entirely.
Is history on their side?

Patricia Adams:
No, it's not on their side.
Countries that have developed in the last 200 to 300 years have done so because of the use of fossil fuels.
Fossil fuels have empowered our economies:
  • to raise standards of living, [and]
  • to provide jobs for people.
The key … is to use fossil fuels cleanly. …
And when I say cleanly, I mean to get rid of the emissions that come out of them that kill people …
CO2 is not a killer. …
I don't think CO2 is as dangerous as some of the other forms of energy.
It may be a problem, we have to keep a watch on it, but I don't think that it solves any problem by saying we've got to eliminate fossil fuels:
  • [firstly, it's not] going to happen … certainly not in [the] foreseeable future [and]
  • [secondly,] what about the alternatives that are being proposed?
    They also cause environmental problems …
[The Paris climate change agreement is just] a cash-grab … by the developing countries. …
(Is China really showing 'leadership' on tackling climate change?, Counterpoint, 31 October 2016)

Freeman Dyson [Academic Advisor, Global Warming Policy Foundation]:
[The problems caused by global warming] are being grossly exaggerated.
They take away money and attention from other problems that are much more urgent and important.
Poverty, infectious diseases, public education and public health.
Not to mention the preservation of living creatures on land and in the oceans.
(Commencement Address, University of Michigan, Winter 2005)

[The] environmental movement [has been] hijacked by a bunch of climate fanatics, who have captured the attention of the public with scare stories. …
China and India have a simple choice to make.
Either they get rich [by burning prodigious quantities of coal and causing] a major increase of atmospheric carbon dioxide, or they stay poor.
I hope they choose to get rich. …
The good news is that the main effect of carbon dioxide … on the planet is to make [it] greener, [by] feeding the growth of green plants of all kinds [and] increasing the fertility of farms and fields and forests.
(Misunderstandings, questionable beliefs mar Paris climate talks, Boston Globe, 3 December 2015)

Miranda Devine:
Environmentalism is the powerful new secular religion and politically correct scientists are its high priests …
It used to be men in purple robes who controlled us; soon it will be men in white lab coats.
The geeks shall inherit the earth.
(John Quiggan, Innovation: the test is yet to come, Inside Story, 10 December 2015)

Peter Van Onselen [Associate Professor in Politics and Government, Edith Cowan University; Contributing Editor, The Australian]:
[According to Miranda Devine, the Delcons (Delusional Conservatives) believe] the Liberals should lose the election.
[That] it's better for the Liberals to lose to Labor.
And there is a candle being held to the possibility of a Tony Abbott comeback. …
Andrew Bolt decided he was one …
Nick Cater from the Menzies Research Centre …
[Tom Switzer's] definitely a Delcon.
(Gambling on Turnbull, Late Night Live, ABC Radio National, 7 September 2016)








(Michael Kirk, Trump's Divided States of America, Episode 2, PBS Frontline, WGBH, 2017)


The Scientific American: Ignorance is Strength


Donald Trump (1946):
I am your voice!

George Washington (1732—1799):
There is nothing which can better deserve our patronage than the promotion of science and literature.
Knowledge is, in every country, the surest basis of public happiness.
(Address to Congress, 8 January 1790)

John Kennedy (1917—1963):
We choose to go to the Moon.
We choose to go to the Moon in this decade and do the other things, not because they are easy, but because they are hard. …

We have vowed that we shall not see space filled with weapons of mass destruction, but with instruments of knowledge and understanding. …

And [so,] as we set sail, we ask God's blessing, on the most hazardous and dangerous and greatest adventure on which man has ever embarked.
(Rice University Address on the Nation's Space Effort, Houston, Texas, 2 September 1962)

Ronald Reagan (1911—2004):
Why should we subsidize intellectual curiosity?
(Campaign Speech, 1980)

Larry Marshall (CEO, CSIRO):
[We're making] a fundamental shift away from curiosity-led research …
(The inconvenient scientists, Background Briefing, ABC Radio National, 29 May 2016)

Donald Trump:
Science is science and facts are facts.


Grading the US Presidential Candidates on Science
(Christine Gorman & Ryan Mandelbaum, Scientific American, 26 September 2016)

HillaryDonald
Total Score64/957/95 (scored 0/5 for 12/19 questions)
Innovation4/51/5
Research2/51/5
Climate Climate4/50/5
Clinton acknowledges that "climate change is an urgent threat and a defining challenge of our time."
She outlines a [10 year plan:]
  • "to generate half of our electricity from clean sources,"
  • to cut "energy waste" [in homes, hospitals and schools] by a third and
  • to "reduce American oil consumption by a third" …
To achieve these goals she plans to "implement and build on" current "pollution and efficiency standards and clean energy tax incentives."
Clinton loses a point for not saying where she will find the money to pay for such initiatives.
Trump refers to "climate change" in quotation marks, apparently to signal that he still believes — as he has asserted in the past — that human-caused global warming is a hoax.
Then he suggests that "our limited financial resources" are best spent on things such as clean water and anti-malaria efforts, without acknowledging the argument that the success of such efforts could be largely influenced by how climate change is addressed.
Biodiversity3/50/5
Clinton says "climate change, pollution, habitat destruction," and other forces "pose serious threats to biodiversity and our way of life."
She mentions plans "to double the State and Tribal Wildlife Grants" to help communities and tribal nations conserve various types of wildlife "before they become threatened or endangered."
She also wants to "establish an American Parks Trust Fund" to "modernize how we protect and enhance our natural treasures."
Clinton loses points for not discussing the funding or execution of these plans.
Trump blames "agencies filled with unelected officials" for "writing rules and regulations" that "cater to special interests."
He says there should be a "shared governance of our public lands" and that "state and local governments" should be empowered to protect "wildlife and fisheries."
A healthy ecosystem—crucial to the survival of humans and other species—is not a "special interest."
The Internet3/51/5
Mental Health3/51/5
Energy5/50/5
Clinton "rejects the notion that we as a country are forced to choose between
  • our economy,
  • our environment, and
  • our security."
She hopes to … install "half a billion solar panels" by the end of her first term.
She plans to:
  • launch "a $60 billion clean energy challenge to partner with states, cities, and rural communities to cut carbon pollution and expand clean energy;"
  • invest "in clean energy infrastructure, innovation, manufacturing and workforce development;" …
  • [reform] "leasing and expand clean energy production on public lands and waters tenfold within a decade;"
  • [cut] "the billions of wasteful tax subsidies [handed out to] oil and gas companies;" [and]
  • "cut methane emissions."
Her detailed plan includes specific funds required and how she will work alongside climate change deniers.
Trump says Americans should "achieve energy independence as soon as possible," and that "a thriving market system" will allow for a consumers to pick "the best sources of energy for future consumption."
Scientific American has previously reported on why the free market alone cannot stop climate change and has characterized the goal of "energy independence" as a bipartisan pipe dream.
Trump fails to provide any details for his energy policy.
Education3/50/5
Clinton lists statistics including that "less than one in five high school students has ever taken a computer science course."
She supports President Barack Obama's existing "Computer Science for All" initiative, and hopes to "train an additional 50,000 [computer science] teachers in the next decade."
She mentions plans to support states that develop "innovative schools" and to support diverse institutions, including Historically Black Colleges and Universities.
More than one reader wrote to Scientific American criticizing her response for focusing too much on "computer science."
Trump says "there are a host of STEM programs already in existence," and wants to focus on "market influences to bring better, higher quality educational circumstances to more children."
Yet recent investigations of private education companies such as ITT — not to mention Trump University — for deceptive advertising practices, among other things, make clear that the for-profit education industry is no panacea.
Public Health4/50/5
Clinton argues that "we are not investing in public health preparedness and emergency response the way we should," and backs up her claim with evidence showing that "spending on public health had fallen more than 9% since 2008."
She says she plans to address the problem in part by creating a "Public Health Rapid Response Fund" that offers "consistent, year-to-year budgets, to better enable" public health officials "to quickly and aggressively respond to major public health crises and pandemics."
Clinton loses a point for not detailing how much money she thinks the rapid response budget should contain or how it will be funded.
Trump suggests that "in a time of limited resources," public health spending may not provide "the greatest bang for the buck."
In fact, studies show that public health efforts typically offer returns on investment of between 125% and 3,900%, depending on the program.
Trump offers no indication that he has grappled with the issue in any detail.
He also states that he will work with Congress to make sure that "adequate resources are assigned to achieve our goals" — not noting that Congress has still declined, as of press time, to approve money to deal with the Zika threat that has emerged in the southern US.
Water4/50/5
Clinton says she worries about our country's "chronic underinvestment" in drinking and wastewater systems, and is concerned with risks to humans, wildlife and ecosystems.
She hopes to "invest in infrastructure" to modernize water resources and that the federal government will be a "better partner" to "improve water security" on the local level.
She adds that she would like to create a "Western Water Partnership" to handle these issues in the west and to establish a "Water Innovation Lab" to bring farmers, engineers, entrepreneurs and others together to deal with water issues.
She does not outline a time schedule or monetary assessment of these plans.
Trump says water "may be the most important issue we face as a nation for the next generation," but offers no solutions other than "making desalinization more affordable."
But as one reader noted, we "cannot desalinate our way out of the problem."
Increasing supply without boosting conservation and reuse is not sustainable.
Meanwhile, Trump told a crowd at a rally in Fresno that "there is no drought" in California.
His inconsistencies earn him zero points.
Nuclear Power3/51/5
Food2/50/5
Clinton proposes to do more to "support family farms," which made up 97% of farm operations in the US in 2011.
She also plans to expand investment in the rural economy and health care.
Most of her answer is based on economic arguments and does not address using "objective knowledge from science," as described in the question.
Trump thinks that "the agriculture industry should be free to seek its best solutions through the market system," but offers no guidance on how to unravel the hundreds of millions of dollars invested in the industry via
  • federal subsidies,
  • government-funded agricultural research and
  • government-led international market development.
Global Challenges3/50/5
Clinton says she would like to "appoint our country's first Special Envoy for Climate Change" and make climate policy "a key part of our broader relationship with China" and others.
She plans to cut emissions by "at least 80 percent of 2005 levels by mid century" through "more clean energy investment in emerging economies" and other methods.
She would like to create a "dedicated Rapid Response Fund" and "comprehensive global health strategy" to help "shore up our defenses" against epidemics and pandemics.
Clinton loses points for offering plenty of facts but few specifics as to what multilateral partnerships or a comprehensive global health strategy will look like.
Trump believes that "a prosperous America is a much better partner in tackling global problems."
And yet, there is little evidence that wealth automatically translates into better decisions on a variety of issues.
The gross domestic product of the US is one of the highest of any country in the world according to the CIA's The World Factbook, but the US is also one of the top greenhouse gas emitters and ranks 31st in life expectancy, according to the World Health Organization.
Trump’s answer is built on an incorrect premise.
Regulations3/50/5
Clinton says "it is essential that environmental, health, and energy regulations, among other areas, use the best available science to guide decision-making."
She does not, however, address how to maintain a thriving business sector without compromising American health and the environment.
Trump says we must balance a "thriving economy" with resources and "protecting citizens from threats," and that "science will inform our decisions."
These assertions are inconsistent with previous false statements on climate change and vaccine safety rendered throughout his campaign.
Vaccination4/51/5
Space2/51/5
Opioids4/50/5
Clinton touches on a variety of concerns, which shows that she has thoroughly engaged in the issue.
Among other things, she wants to allow first responders to administer naloxone (an anti-overdose treatment).
Trump focuses on illicit drug smuggling, leaving out the arguably larger problem of addiction to prescription drugs.
He asserts that he can stop the flow of opioids into the US but offers no details on how he would change current drug enforcement policy, demonstrating a near-total lack of understanding of the issue.
Ocean Health4/50/5
Clinton promises to "oppose efforts in Congress that seek to weaken" current legislation against overfishing in US Waters.
She also promises to "act globally to address the fisheries crisis" as well as the negative impact of rising temperature and acidification of ocean water.
Trump does not mention the ocean, fish, fisheries, coral reefs or coastlines in his answer.
Scientific Integrity4/50/5
Clinton recognizes one of the largest issues in objective science: conflicts of interest that can lead to self-serving results.
(A prime example: the recent realization that some companies had suppressed or redirected scientific findings regarding sugar's effect on coronary heart disease.)
While her answer can use more detail, it demonstrates a willingness to fight for evidence-based knowledge rather than results that are politically or economically driven.
Trump says "science is science and facts are facts," and yet his campaign has repeatedly demonstrated an utter disregard for facts.
His PolitiFact scorecard shows more than two thirds of his statements to be "Mostly False," "False," or "Pants on Fire," which is unprecedented in its evaluation of politicians.
In an evaluation sent to us, a college instructor from Michigan characterized Trump's response to this question "as so simplistic that it made me concerned that he may not actually understand the scientific method or the government structures that support it."


Populism in America


Alexis Clérel (1805–1859): Viscount of Tocqueville

General Jackson, whom the Americans have twice elected to the head of their Government, is a man of a violent temper and mediocre talents; no one circumstance in the whole course of his career ever proved that he is qualified to govern a free people, and indeed the majority of the enlightened classes of the Union has always been opposed to him. …
(p 335)

We have been told that … he is an energetic man, prone by nature and by habit to the use of force, covetous of power, and a despot by taste.
(p 479)

It is by perpetually flattering [the passions of the people] that he maintains his station and his popularity.
General Jackson is the slave of the majority:
  • he yields to its wishes, its propensities, and its demands;
  • say rather, that he anticipates and forestalls them. …

General Jackson stoops to gain the favor of the majority, but when he feels that his popularity is secure, he overthrows all obstacles in the pursuit
  • of the objects which the community approves, or
  • of those which it does not look upon with a jealous eye.
(p 480)

He is supported by a power with which his predecessors were unacquainted; and he tramples on his personal enemies whenever they cross his path with a facility which no former President [has] ever enjoyed …
(p 481)

(Democracy in America, Vol I, 1835, Bantam, 2011)


In Trump We Trust: From Reality Television to Fantasy Government


Nicolas de Caritat (1743–1794) [Marquis de Condorcet]:
If we cannot find voters who are sufficiently enlightened, we must avoid making a bad choice by accepting as candidates, only those men in whose competence we can trust.
(1785)

William King (1874–1950) [Prime Minister of Canada, 1921-26, 1926-30, 1935-48):
The extreme man is always more or less dangerous, but nowhere more so than in politics.
(Margaret MacMillan, History's People, Text, 2015, p 51)

Don Watson:
Noble and creative as it has often been, provider of an essential thread in the best of the American ideal and source of a rare grace one encounters only in the United States, American Christianity also disguises fear and feeds ignorance, paranoia and prejudice, along with a readiness to smite enemies with weapons of unspeakable destructive force.
(Enemy Within: American Politics in the Time of Trump, Quarterly Essay, Issue 63, 2016, p 23)

Alice Miranda Ollstein [Political Reporter]:
According to a book written by [Argentinian President] Macri’s father Franco, Trump threw a tantrum after losing a round of golf to Mauricio Macri and broke his friend’s golf clubs — one by one.
(There is a lot more to the Trump Argentina story, ThinkProgress, 23 November 2016)

Ying Ma [Deputy Director of a Trump Super PAC, The Committee for American Sovereignty]:
[We] know that in state-craft, every now and then, to be unpredictable is not such a bad thing in negotiations. …
One of the reasons Donald Trump won is that … he is able to simplify a lot of issues that the GOP have not been able to simplify for voters …
(The Trump victory, Between The Lines, ABC Radio National, 10 November 2016)

John Quiggin:
[In the late 1990s, when debating about the Great Depression, Real Business Cycle advocates] downplayed the huge downturn in output between 1929 and 1933, focusing instead on the slowness of the subsequent recovery, which they blamed, unsurprisingly, on Franklin D Roosevelt and the New Deal.
(Zombie Economics, Princeton University Press, 2012, p 101)


Mary Kissel: Editorial Board Member, Wall Street Journal

The American people were discontented with the economic malaise that we have seen over the Obama presidency.
We have had the worst recovery since the Great Depression …
{[In] a normal recovery America would grow 4-5% a year and what President Obama did was tax and spend, and crush the private sector in red tape and so [we] didn't get the normal bounce-back recovery. …
So when you hear that there's some sort of new normal out there and we should just accept this kind of growth; well it isn't normal and Americans don't accept that level of growth …}

Voters repudiated government paternalism.
The Obama administration have injected … an enormous about of regulatory diktat on the American public.
They've inflicted:
  • their cultural mores in the forms of transgender bathrooms …
  • their law suits against Catholic nuns, and
  • their views on religion.
[This] is a very strong message to the Democratic party that the American people simply reject their big government, high tax liberalism.
They want to return to growth and they want to return to American leadership in the world …


2016Donald (1946)Hillary (1947)
Popular Vote45.95%48.04%
Electoral Vote56.50%42.20%

2000George WAl
Popular Vote47.87%48.38%
Electoral Vote50.4%49.4%

Edward Rosenthal:
Since 1824, three different presidential candidates have lost the popular vote but won the election:
  • Rutherford B Hayes in 1876,
  • Benjamin Harrison in 1888, and
  • George W Bush in 2000.
(The Complete Idiot's Guide To Game Theory, 2011, p 187)

[Hillary won the popular vote by 2,865,075 and lost the electoral vote by 77.]
Among the 24,537 respondents to the CNN exit poll, 47% voted for Donald (vs 50% for Hillary):]
  • 42% of women [and 53% of men (vs the 54% of women and 41% of men for Hillary) …]
  • a larger percentage of the black vote than Mitt Romney — 8%, [and]
  • 29% of latinos and asians …

peaceandlonglife:
53% of respondents approved of Barack Obama as president, of whom 84% (45% of all respondents) voted for Hillary.
Over 50% of respondents had a unfavorable opinion of each candidate:
  • Donald (60%)
  • Hillary (54%)
  • Both (18%)
69% were dissatisfied/angry with the federal government, of whom 58% (40% of all respondents) voted for Donald.
50% thought the government was doing too much, of whom 73% (36% of all respondents) voted for Donald.
45% thought the government was doing too little, of whom 74% (33% of all respondents) voted for Hillary.

62% thought the country was on the wrong track, of whom 69% (43% of all respondents) voted for Donald.
39% felt that being a change agent was what mattered most in a candidate, of whom 83% (32% of all respondents) voted for Donald.

66% of were from suburban or rural areas, of whom 53% (35% of all respondents) voted for Donald.
Of the 34% from urban areas, 59% (25% of all respondents) voted for Hillary.

64% reported earning $50,000 or more, of whom 49% (31% of all respondents) voted for Donald (vs 47% for Hillary).
Of the 36% who earned less than $50,000, 52% (19% of all respondents) voted for Hillary (vs 41% for Donald).

70% were white, of whom 58% (41% of all respondents) voted for Donald:
  • 63% (21% of all respondents) of white men, and
  • 53% (20% of all respondents) of white women.
50% had a college degree, of whom 52% voted for Hillary (vs 43% for Donald):
  • 49% (18% of all respondents) of whites with a degree voted for Donald (vs 45% for Hillary),
    • 54% (9% of all respondents) of white men with a degree voted for Donald, while
    • 51% (10% of all respondents) of white women with a degree voted for Hillary,
  • 71% (9% of all respondents) of non-whites with a degree voted for Hillary.
Of the 50% who did not have a degree, 52% voted for Donald (vs 44% for Hillary):
  • 67% (23% of all respondents) of whites without a degree voted for Donald, while
  • 75% (12% of all respondents) of non-whites without a degree voted for Hillary.

[I wouldn't] classify Colin Powell as a Republican.
[He backed] President Obama. …

[Foreign] policy is a concern with Donald Trump.
He doesn't seem to know much about the world. …
What isn't known is [whether what says about the alliance system and trade protectionism] is simply a negotiating ploy from the guy who wrote "The Art of the Deal'; [a guy] who takes an extreme [ambit position before moving to a] more reasonable stance when he's actually at the negotiating table — we just don't know.
The idea that Trump would abandon American alliances in Asia is absurd.

[The liberal] media often takes Trump literally, when he speaks … because that's how they've treated every other president, but … Donald Trump is [not] like any other president …
They've called him a fascist — I don't believe that he's that …
I believe [that] we have a system of checks and balances [in this country] and that it will function very well …
I caution against hearing his words and taking him literally, I don't think that's how we can hear him and understand him. …

Climate change, for the left, means imposing an enormous amount of regulation and cost on the American consumer, and it means favoring certain politically connected industries namely solar and wind, and that is probably going to go away with the Donald Trump presidency, and that's not a bad thing. …
The American people were [also] concerned that a Clinton presidency would usher in a Supreme Court that simply made up the law to suit the liberal progressive agenda; [and, they] voted resoundingly against Obamacare …

peaceandlonglife:
30% of respondents indicated supreme court appointments were not an important voting issue.
Of the 70% for whom it was important:
  • 50% (35% of all respondents) voted for Donald, while
  • 46% (32% of all respondents) supported Hillary.
75% were Christians, of whom 56% (42% of all respondents) voted for Donald, including:
  • 81% (21% of all respondents) of white born-again or evangelical Christians,
  • 52% (12% of all respondents) of Catholics, and
  • 61% (1% of all respondents) of Mormons.
47% thought Obamacare went "too far", of whom 83% (39% of all respondents) voted for Donald.

{In many respects Donald Trump is a leap of faith.
We know there is at least a potential upside with him on the economic growth front.
Whereas, [with Hillary Clinton, there was] zero economic upside [combined with a record of] many poor decisions [such as] the Iran deal and … the Russian reset with Putin.
So voters did have a clear choice, and now we're going to live with the consequences.}

(The Trump victory, Between The Lines, ABC Radio National, 10 November 2016)


Exit Poll 2016


CNN Politics

Each candidate was considered dishonest/untrustworthy by over 60% of 24,537 respondents:
  • Donald (63%)
  • Hillary (61%)
  • Both (29%)
63% thought Donald did not have the right temperament to be president (vs 43% for Hillary).
However, of these, 20% (13% of all respondents) voted for him anyway.
Of the 14% who thought neither candidate had the right temperament, 71% (10% of all respondents) voted for Donald.

49% had an unfavorable view of the Democratic Party, of whom 85% (42% of all respondents) voted for Donald.
55% had an unfavorable view of the Republican Party, of whom 73% (40% of all respondents) voted for Hillary.

63% felt the state of the national economy was poor, of whom 63% (40% of all respondents) voted for Donald.
31% thought the financial situation had improved in the last 4 years, while 27% thought it had worsened.
A greater proportion thought Donald (49%) would better handle the economy than Hillary (46%).
However, of the 52% who thought the economy was the most important issue facing the country:
  • 52% (27% of all respondents) voted for Hillary, while
  • 42% (22% of all respondents) voted for Donald.

45% were bothered "a lot" by Hillary's use of private email, of whom 87% (39% of all respondents) voted for Donald.
43% thought the US criminal justice system treated everyone fairly, of whom 74% (32% of all respondents) voted for Donald.
56% were aged 45 and older, of whom 53% (30% of all respondents) voted for Donald.
13% were veterans, of whom 61% (8% of all respondents) voted for Donald.

50% of native born Americans voted for Donald (vs 45% for Hillary).
70% of respondents thought illegal immigrants working in the US should be offered legal status, of whom 60% (42% of all respondents) voted for Hillary.
Of the 25% who thought they should be deported, 84% (21% of all respondents) voted for Donald.
41% supported a wall along the entire Mexican border, of whom 86% (35% of all respondents) voted for Donald.
13% thought that immigration was the most important issue facing the country, of whom 64% (8% of all respondents) voted for Donald.

65% were Liberal or Moderate in ideology, of whom 65% (42% of all respondents) voted for Hillary.
Of the 35% who were Conservative, 81% (28% of all respondents) voted for Donald.
48% of Independents voted for Donald (vs 42% for Hillary).

13% made their voting decision in the last week, of whom 47% (6% of all respondents) voted for Donald and 42% (5% of all respondents) for Hillary.


Government of the People, by the President, for the President (and his family)


No … person holding any office of profit or trust under [the United States,] shall, without the consent of the Congress, accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state.
(Emoluments Clause, Article I, Section 9, Clause 8, US Constitution)

Judd Legum: Editor-In-Chief

Donald Trump is leveraging his new position as president-elect to empower his business empire …
Instead of liquidating his assets and placing them in a Qualified Diversified Trust, as President Bush did, or investing in index funds and government bonds, as President Obama did, Trump has done nothing.

He’s waved away concerns about conflicts-of-interest, saying that he would just hand over control of his business interests to his children.
He called this a “blind trust” but it is actually the [complete] opposite.
A blind trust is when you hand marketable assets over to a neutral third party to control.
The contents of the trust, since they can be traded at any time by the administrator, are soon unknown to you.
Trump knows what his assets are and says he is handing them to his children.

Immediately after Trump’s election, he named three of his adult children — Ivanka, Eric, and Donald Jr — to his transition team.
This means the same people running the Trump Organization will also be choosing the top officials in the Trump administration. …
[And since] Trump will retain ownership in his businesses, [success of those businesses] will mean money in Trump’s pocket.

(This isn’t just a photo of Ivanka Trump. It’s a middle finger to democracy, ThinkProgress, 18 November, 2016)


Alice Miranda Ollstein: Politics Reporter

[There is mounting evidence that Donald] Trump and his adult children are leveraging the presidency to advance their business interests. …
[Felipe] Yaryura, the Argentinian investor working on building a Trump Tower in Buenos Aires, … breakfasted with Ivanka, Eric, and Don Jr the [morning after the election,] where they spoke about how Trump’s presidency would improve his company’s brand worldwide, and in Argentina in particular.

{Trump rejected the State Department’s help in fielding calls from around the world, and chose instead to wing it on unsecured phone lines.}

(There is a lot more to the Trump Argentina story, ThinkProgress, 23 November 2016)


The Global War on Political Correctness: Bring On The Culture Wars


Tom Switzer

[Malcolm Turnbull] needs a new model of governance that sidesteps an obstructionist and riff-raff Senate.
The side that picks the issues dominates the political debate, and the advantage lies with the Bully Pulpit if the Prime Minister will use it.
Why not call on the states to ditch the politically correct Safe Schools [anti-bullying] program?
Or encourage Muslim leaders to assimilate to Western cultural norms?
The culture-war list is endless, and it would resonate with what [John Howard] once called:
The decent conservative mainstream of Australia.
(PM must play the Right card, The Age, 11 July 2016 p 16)


Niall Ferguson

[Trump is,] in some measure, a reaction against [political correctness. …]
What was, to many people, deeply exhilarating about Trump's speeches was their completely unfiltered quality: that every single thing that was politically incorrect was there.
And I don't think it would have been as appealing, it would not have been as exciting, if these had not become taboos.
Now I can't condone the xenophobia, the misogyny — it all in there and its malignant — but the reason that it's popular, the reason that it resonates, is that we've created [a] stifling culture of self-censorship:
  • in our academies,
  • in our universities, [and]
  • in the media …

(Sydney Opera House Lecture, Centre for Independent Studies, 24 May 2016)


Laura Tingle

[When] John Howard came into office in 1996 [he] argued that a "political correctness" was at work in Australia which didn't allow ordinary Australians to express their disquiet over welfare recipients or Asian Immigration or Aboriginal people.
Australia was being run by "elites" whose opinions didn't reflect those of the "mainstream" or "silent majority." …
[His] push back against what he saw as self-censoring Australian political discussion had its own fallout.
It gave room for people like Pauline Hanson to emerge.
There was a new intolerance for those advocating for asylum seekers, or indigenous people, or the marginalised.
Such advocates were characterised as "bleeding hearts," or in more recent years the ultimate insult: "lefties."
It seems there is no one in the middle ground anymore.
You are either a "mainstream Australian" or a "leftie."
(p 13)

… John Howard launched a war on indigenous organisations, starting with [the Aboriginal and Torres Strait Islander Commission (ATSIC).]
The charge was financial mismanagement.
ATSIC certainly had its problems, but Howard not only brought down ATSIC but also systematically broke the institutional structures of black Australia by cutting funding to bodies such as the land councils and health and legal services.
Since then there have been the "interventions" and the embrace of the policies pursued on Cape York by Noel Pearson.
But the approach and delivery has become erratic and utterly non transparent.
(p 32)

[The] era when executive government and the bureaucracy still worked cooperatively … to get policy outcomes that were both politically and practically successful ended … when John Howard won government and sacked a raft of department heads in what became known as his "Night of the Long Knives."
This sent a shockwave through the public service and, in combination with a series of radical reforms to the public sector, accelerated a decline in its ability to make policy. …

Tony Abbott's sacking in 2013 of more public servants, including the head of Treasury, because of their association with policies on climate change and asylum seekers — to which the Coalition was hostile [— further] cowed much of the public service and helped build a toadying culture.
(p 22)

(Political Amnesia: How we forgot how to govern, Issue 60, December 2015)


Waleed Ali

The narrative — promulgated by both Howard and his devotees in the commentariat — was that Australian cultural institutions and the telling of Australian history had been captured by a leftist orthodoxy spreading a 'black armband' version of Australian history that emphasized, exaggerated and even distorted the atrocities of colonial violence against the indigenous population.
This in turn precipitated cultural relativism and an obsession with political correctness.
At fault were the proliferation of:
  • special-interest groups,
  • leftist academics and, …
  • a biased media.
On this last point, the ABC was particularly pilloried. …

Accordingly, Howard undertook the very project he so despised in his leftist foes, promoting what we might call, in the prevailing spirit of [ideological] trench warfare: a Right orthodoxy on history and culture.
Australia's history was 'heroic,' its 'blemishes' insufficient to negate its net positive [moral] 'balance sheet.'
Meanwhile he articulated a new Australian mythology centred on military history [—] Anzac Day, once a fading reference point, was reinvigorated to the point of national definition. …
(p 65)

Neo-conservatives … posit a clear, identifiable, [pure and] unproblematic national culture [—] a culture that was comparatively homogenous until the relativism of the Left tore at its fabric.
This is an ossified, nostalgic fiction. …
The history on which this nostalgia is based is … ideologically coloured.
So the diggers in Gallipoli were fighting for freedom (rather than the British Empire), just as those in Iraq were fighting for freedom.
Or similarly, ours is a culture that stems from the Judeo-Christian tradition, in spite of the fact that the Jewish tradition is very different from the Christian one, and very many Christians before World War II would probably have been repulsed at the connection being drawn.
These are new constructions, presented as history for the purpose of creating what masquerades as an old, established culture. …
(p 76)

(What's Right? The Future of Conservatism in Australia, Issue 37, March 2010)

Would you like to know more?

CONTENTS


Climate Hysteria

Privitizing the ABC

July 4, 2016

Mark Blyth

Green Army: Persons of Interest




(Terry Hillman, The Complete Idiot's Guide to Economics, Penguin, 2014, p 254)

Wall Street Journal [11 September 1929]:
[The] main body of stocks [continues] to display the characteristics of a major advance temporarily halted for technical readjustment.
(p 110)

Irving Fisher (1867–1947) [15 October 1929]:
Stock prices have reach what looks like a permanently high plateau. …
I expect to see the stock market a good deal higher than it is today within a few months.
(p 95)

Harvard Economic Society [November 1929]:
[A] severe depression like that of 1920-1 is outside the range of probability.
We are not facing protracted liquidation.
(John Galbraith, The Great Crash 1929, Penguin, 1975, p 96)

Robert Lucas (1937):
[The] central problem of depression-prevention has … for all practical purposes … been solved for many decades.
(Presidential Address, American Economic Association, 2003)

Gregory Clark (1957) [Professor of Economics, University of California, Davis]:
The debate about the bank bailout, and the stimulus package, has … been conducted in terms that would be quite familiar to economists in the 1920s and 1930s.
There has essentially been no advance in our knowledge in 80 years.
(Dismal scientists: how the crash is reshaping economics, The Atlantic, 16 February 2009)

George Megalogenis (1964):
[During the 1980's blue] collar workers had delivered their end of the bargain under the wages accord.
Yet their restraint in the boom, could not protect their jobs in the bust.
Ken Henry (1957) [Australian Treasury Secretary, 2001-2011]:
[More than half of the] people aged over 45 who lost their jobs in the early 1990's recession, [when unemployment peaked at 11.1%,] never worked a day again in their lives …
(Making Australia Great — Inside Our Longest Boom, Episode 2: Growing Pains, ABC Television, March 2015)

Frederic Mishkin (1951) [Former Federal Reserve Governor]:
[The] financial system [is] the brain of the economy …
It acts as a coordinating mechanism that allocates capital, the lifeblood of economic activity, to its most productive uses by businesses and households.
If capital goes to the wrong uses or does not flow at all, the economy will operate inefficiently, and ultimately economic growth will be low. …
(Weissman Center Distinguished Lecture, Baruch College, New York, 12 October 2006)

Joseph Stiglitz (1943):
In order to bail out the German banks [the Greeks have] had to accept [economic depression:
  • 25% unemployment (including 50% youth unemployment) and
  • a 25% decline in GDP. …]
[Historically,] Germany has been among the biggest defaulters and one of the biggest recipients of debt write downs after WWII and in other instances …
(Stiglitz on Greece and climate change, RN Drive, 10 July 2015)

Niall Ferguson (1964):
[Subprime mortgage refinancing deals] allowed borrowers to treat their [over-priced] homes as cash machines, converting their existing equity into cash. …
Between 1997 and 2006, US consumers withdrew an estimated $9 trillion in cash from the equity in their homes.
(p 265)

The final cost of the Savings and Loans crisis between 1986 and 1995 was $153 billion (around 3% of GDP), of which taxpayers had to pay $124 billion, making it the most expensive financial crisis since the Depression.
(The Ascent of Money, 2008, Penguin, p 259)

William Crawford [Commissioner, California Department of Savings and Loans]:
The best way to rob a bank is to own one.
(Henry Pontell and Kitty Calavita, 'White-Collar Crime in the Savings and Loan Scandal', Annals of the American Academy of Political and Social Science, 525, January 1993, p 37)

Mark Blyth:
[The 2007 global financial crisis has cost,] once lost output is included, as much as $13 trillion and, on average, a 40-50% increase in the debt of states hit by the crisis. …
(p 45)

Lost output from 2008 through 2011 alone [averaged] nearly 8% of GDP across the major economies.
(p 46)

Since the 2008 crisis, [US banks] have awarded themselves $2.2 trillion in compensation.
(p 50, emphasis added)

[When] those at the bottom are expected to pay disproportionately for a problem created by those at the top, and when those at the top actively eschew any responsibility or that problem by blaming the state for their mistakes, not only will squeezing the bottom not produce enough revenue to fix things, it will produce an even more polarized … society in which the conditions for sustainable politics of dealing with more debt and less growth are undermined. …
In such an unequal and austere world, those who start at the bottom of the income distribution will stay at the bottom, and without [hope of advancement,] the only possible movement is a violent one.
(p 15)

[The] true price of saving the banks [may not] just the end of the euro, but the end of the European political project itself, which would be perhaps the ultimate tragedy for Europe.
(Austerity, p 92)

Freeman Dyson (1923):
The gap between technology and needs is wide and growing wider.
If technology continues along its present course, ignoring the [basic] needs of the poor and showering benefits upon the rich, the poor will sooner or later rebel against the tyranny of technology and turn to irrational and violent remedies.
(Imagined Worlds, HUP, 1998, p 201)

Alexis Clérel (1805–1859) [Viscount of Tocqueville]:
Almost all the revolutions which have changed the aspect of nations have been made to consolidate, or to destroy, social inequality. …
Either the poor have attempted to plunder the rich, or the rich to enslave the poor.
(Democracy in America, 1835, Bantam, 2011, p 789)

Frederick Douglass (1818–1895):
  • Where justice is denied,
  • where poverty is enforced,
  • where ignorance prevails and
  • where any one class is made to feel that society is in an organized conspiracy to oppress, rob and degrade them:
neither persons nor property will be safe.
(1886)

Karl Marx (1818–1883)
William Wood, 9 years old, was 7 years and 10 months when he began to work …
He came to work every day in the week at 6 am, and left off about 9 pm …
Mary Anne Walkley had worked without pause 26½ hours, together with sixty other girls, thirty of them in one room …
[She] died of apoplexy, but there is reason to fear that her death had been accelerated by overwork in an overcrowded workroom.
(Capital, 1867, Vol 1 Ch 8)

Terry Hillman:
In the eighteenth century, factory owners chained children to the machines.
They fought the government's attempt to [make the] shackling children illegal.
(The Complete Idiot's Guide to Economics, 2014, pp 20 & 23)

The Mills and Factory Act (1833):
  • No child workers under nine years of age.
  • Children of 9 to 13 years to work no more than 9 hours a day.
  • Children of 13 to 18 years to work no more than 12 hours a day.
  • Children are not to work at night.
  • Two hours of schooling each day for children.

Milton Friedman (1912–2006):
[The workers of 19th century Britain] were not exploited.
The studies that have been done recently have shown over and over again that the 19th century was a period in which the ordinary English worker experienced a very rapid and very substantial rise in his standard of life. …
(The Tyranny of Control, Free to Choose, Episode 2, PBS, 1980)

John Rasko [Professor of Medicine, Sydney University]:
[Milton Freidman posited] the idea that the market is its own brain. …
[That the] market has a way of judging whether a drug is effective, and the test is if it's sold.
So if a drug's sold successfully on the market … it must be good.
(Doctors concerned over Trump pharmaceutical plan, Breakfast, ABC Radio National, 9 March 2017)

Adam Smith (1723–1790)


[Wherever] there is property there is great inequality [consequently,] the acquisition of valuable and extensive property … necessarily requires the establishment of civil government. …

In spite of their natural selfishness and rapacity, though they mean only their own convenience, though the sole end which they propose from the labours of all the thousands whom they employ be the gratification of their own vain and insatiable desires, the rich divide with the poor the produce of all their improvements.
They are led by an invisible hand to make nearly the same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus, without intending it, without knowing it, advance the interest of society, and afford means to the multiplication of the species. …

The man whose whole life is spent in performing a few simple operations … generally becomes as stupid and ignorant as it it is possible for a human creature to become.
The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment …
Of the great and extensive interests of his own country he is altogether incapable of judging …

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in conspiracy against the public, or in some contrivance to raise prices. …

The proposal of any new law or regulation of commerce which comes from [the business elite] ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.
[For it] comes from an order of men,
  • whose interest is never exactly the same with that of the public,
  • who have generally an interest to deceive and even to oppress the public, and
  • who accordingly have, upon many occasions, both deceived and oppressed it.

(The Wealth of Nations, 1779)


[The illusion that the accumulation of possessions brings real satisfaction is the] deception which rouses and keeps in continual motion the industry of mankind. …

The great source of both the misery and disorders and disorders of human life, seems to arise from over-rating the difference between one permanent situation and another …
Some of those situations may, no doubt, deserve to be preferred to others …
[But] none of them can deserve to be pursued with that passionate ardour which drives us
  • to violate the rules either
    • of prudence or
    • of justice; or
  • to corrupt the future tranquility of our minds, either
    • by shame from the remembrance of our own folly, or
    • by remorse from the horror of our own injustice.

(The Theory of Moral Sentiments, 1759)


Mark Blyth

  • Democracy is Asset Insurance for the Rich
  • Redistribution and Debt is Reinsurance for Democracy
  • Austerity is Anorexia for the Economy


The Liberal Antistatist Neuralgia

Can't live without the state

The problem is, when you allow markets do what markets do, they create incredible inequality. …
[So] you have to have a state that can police [those inequalities;] otherwise, the people who are on the bad end [of the income distribution are going to come] and burn your house down.


Can't live with it

So you have a problem right away, which is: the liberal distrust of the state.
[Since] any state powerful enough to defend your property rights might [itself] come after you — hence the second amendment


Don't want to pay for it

[Finally, any state strong enough to] defend your property rights, is going to be expensive …
Adam Smith [initially] comes out in [favor] of proportional taxation [but then] backs away from it because, of course, rich people would [end up paying] most of the taxes, and he's one of the rich people …
[So he] goes for a very modern solution, [one] which modern day Republicans are fond of: a consumption tax …

(Austerity: The history of a dangerous idea, Big Ideas, ABC Radio National, 14 May 2013)


[Democracy,] and the redistributions it makes possible, is a form of asset insurance for the rich, and yet, through austerity, we find that those with the most assets are skipping on the insurance payments.
(p 14)

[In Europe and in the United States} top marginal incomes are estimated to be no less than 20%age points below those that would maximize tax revenue to the government.

Peter Diamond of the Massachusetts Institute of Technology and Emanuel Saez of the University of California, Berkeley, [argue] that taxing the top 1% at [a marginal rate of] over 80% would raise, not lower, revenue. …
According to their calculations, raising the average income tax for the top income%ile to 43.5% from 22.4%, the level of 2007, would raise revenue by 3% of GDP. which is enough to close the US structural deficit while still leaving very high earners with more after-tax income than they would have had under Nixon.
(p 243)

[The] Tax Justice Network estimates that there is as much as 32 trillion dollars, which is over twice the entire US national debt, hidden away offshore not paying taxes …
(p 244)


A Fallacy of Composition

[What] is true of the parts … is not true of the [whole:] we cannot all be austere at once.
All that does is shrink the economy for everyone. …
[If everyone is saving (ie paying back debt) at the same time, then no one is spending; hence, no consumption to stimulate investment.
Likewise, every country cannot pursue export-led growth at the same time because there is no import demand to drive it.]
We cannot all cut our way to growth, just as we cannot all export without any concern for who is importing.
This fallacy of composition problem rather completely undermines the idea of austerity as growth enhancing. …

Austerity is a zombie economic idea because it has been disproven time and again, but it just keeps coming. …
[It] a dangerous idea for three reasons:
  • it doesn't work in practice,
  • it relies on the poor paying for the mistakes of the rich, and
  • it rests upon the absence of a rather large fallacy of composition that is all too present in the modern world.
(p 10)


No Bailouts

[We] may have impoverished a few million people to save an industry of dubious social utility that is now on its last legs. …

[Between] 1994 and 2007 Irish GDP grew much more rapidly than in the 1980s and 1990s.
During this boom period, when cheap money was abundant in global markets, Ireland's banking sector also grew rapidly, and on the back of the credit bubble grew a housing bubble.
When the bubble popped in 2008, the Irish government issued a blanket guarantee to its banks and soon after gave five and a half billion euros to three banks:
  • Anglo Irish bank,
  • Allied Irish Bank, and
  • Bank of Ireland.
Unfortunately, since the assets of these banks were little more than dead real-estate loans, this was just throwing good money after bad.
It kept the banks going [until January 2009] when Anglo-Irish was nationalized — at the same time that 2 billion euros in savings were chopped off the public budget.
[Eventually,] to stop the complete collapse of the economy, the government set up a bad bank, the National Asset Management Agency (NAMA), to take the toxic assets off the banks' books. …

Since then, over 70 billion euros have been injected into [the Irish] banking system [or almost €1,500 for every man, woman and child.]
Some 47 billion euros disappeared into Anglo-Irish alone, never to be seen again.
The cost of bailing out the banks amounts to 45% of GDP, and that figure does not include the cost of the NAMA program, which is over 70 billion euros.
(pp 234-5)

Irish debt to GDP was 32% in 2007.
Today it stands at 108.2% after three years of austerity. …
The Irish government, which has implemented 24 billion euros in cuts since 2008, plans another 8.3 billion in taxes and another 3.5 billion in cuts for 2013. …

[By contrast,] Iceland
  • let its banks go bankrupt,
  • devalued its currency,
  • put up capital controls, and
  • bolstered welfare measures. …
(p 237)

The [Icelandic] banks were to be allowed to go bankrupt and be taken into receivership.
Their debts were not socialized; instead bondholders and foreign creditors bore the brunt of adjustment.
(p 238)

Everyone tightened their belts as the cuts were accompanied by a shift to a more progressive tax code that included
  • substantial tax hikes for top earners and
  • measures to help low- and middle-income families. …

[In] 2011 growth returned at 3% [— compared to 0.71% in Ireland; and, by 2012 Iceland was] near the top of OECD growth performance.
With higher marginal rates of taxation, returning growth, capital control, and equal fiscal tightening, Iceland is on target to eliminate its budget deficit in 2014 and have a budget surplus of 5% in 2016.
[And, unlike in Ireland,] employment growth in Iceland has been strong.
Even at its height [9% in 2009,] unemployment in Iceland was lower than the European average …
Unemployment stands at just under 6% in October 2012 [— compared to 14.8% in Ireland.]
(p 239)

[Real] wages have been rising at a brisk pace.
This has helped reverse the trend of growing inequality witnessed between 1995 and 2007 … mostly because of the high incomes of top earners — a phenomenon seen in all highly financialized societies. …
Iceland not only survived letting its banks go bust, it became a healthier and more equal society in doing so.
(p 240)




(Charles Ferguson, Inside Job, 2010)


Thank You For Your Sacrifice

To: The [Citizens of Portugal, Italy, Ireland, Greece and Spain]

From: [The Political Classes of Europe]

We have been telling you for the past four years that the reason you are out of work and that the next decade will be miserable is that states have spent too much.
So now we all need to be austere and return to something called "sustainable public finances."
It is, however, time to tell the truth.
The explosion of sovereign debt is a symptom, not a cause, of the crisis we find ourselves in today.

What actually happened was that the biggest banks in the core countries of Europe bought lots of sovereign debt from their periphery neighbors, the PIIGS.
This flooded the PIIGS with cheap money to buy core country products, hence the current account imbalances in the Eurozone that we hear so much about and the consequent loss of competitiveness in these periphery economies.
After all, why make a car to compete with BMW if the French will lend you the money to buy one?
This was all going well until the markets panicked over Greece and figured out via our "kick the can down the road" responses that the institutions we designed to run the EU couldn't deal with any of this.
The money greasing the wheels suddenly stopped, and our bond payments went through the roof.

The problem was that we had given up our money presses and independent exchange rates — our economic shock absorbers — to adopt the euro.
Meanwhile, the European Central Bank, the institution that was supposed to stabilize the system, turned out to be a bit of fake central bank.
It exercises no real lender-of-last-resort function.
It exists to fight an inflation that died in 1923, regardless of actual economic conditions.
Whereas the Fed and the Bank of England can accept whatever assets they want in exchange for however much cash they want to give out, the ECB is both constitutionally and intellectually limited in what it can accept.
  • It cannot monetize or mutualize debt,
  • it cannot bail out countries,
  • it cannot lend directly to banks in sufficient quantity.
It's really good at fighting inflation, but when there is a banking crisis, it's kind of useless.
It's been developing new powers bit-by-bit throughout the crisis to help us survive, but its capacities are still quite limited.
(p 88)

Now, add to this the fact that the European banking system as a whole is three times the size and nearly twice as levered up as the US banking system; accept that it is filled with crappy assets the ECB can't take off its books, and you can see we have a problem.
We have had over twenty summits and countless more meetings, promised each other fiscal treaties and bailout mechanisms, and even replaced a democratically elected government or two to solve this crisis, and yet have not managed to do so.
It's time to come clean about why we have not succeeded.
The short answer is, we can't fix it.
All we can do is kick the can down the road, which takes the form of you suffering a lost decade of growth and employment.

You see, the banks we bailed in 2008 caused us to take on a whole load of new sovereign debt to pay for their losses and ensure their solvency.
But the banks never really recovered, and in 2010 and 2011 they began to run out of money.
So the ECB had to act against its instincts and flood the banks with a billion euros of very cheap money, the [Long Term Refinancing Operations,] when European banks were no longer able to borrow money in the United States.
The money that the ECB gave the banks was used to buy some short-term government debt (to get our bond yields down a little), but most of it stayed at the ECB as catastrophe insurance rather than circulate into the real economy and help you get back to work.
After all, we are in the middle of a recession that is being turbocharged by austerity policies.
Who would borrow and invest in the midst of that mess?
The entire economy is in recession, people are paying back debts, and no one is borrowing.
This causes prices to fall, thus making the banks ever more impaired and the economy ever more sclerotic.
There is literally nothing we can do about this.
We need to keep the banks solvent or they collapse, and they are so big and interconnected that even one of them going down could blow up the whole system.
As awful as austerity is, it's nothing compared to a general collapse of the financial system, really.

So
  • we can't inflate and pass the cost on to savers,
  • we can't devalue and pass the cost on to foreigners, and
  • we can't default without killing ourselves …
[All we can do is] deflate, for as long as it takes to get the balance sheets of these banks into some kind of sustainable shape.
(p 89, emphasis added)

This is why we can't let anyone out of the euro.
If the Greeks, for example, left the euro we might be able to weather it, since most banks have managed to sell on their Greek assets.
But you can't sell on Italy.
There's too much of it.
The contagion risk would destroy everyone's banks.
So the only policy tool we have to stabilize the system is for everyone to deflate against Germany, which is a really hard thing to do even in the best of times.
It's horrible, but there it is.
Your unemployment will save the banks, and in the process save the sovereigns who cannot save the banks themselves, and thus save the euro.
We, the political classes of Europe, would like to thank you for your sacrifice.
(p 89)


Austerity and the Fall of France

Although [the Bank of France] was the fiscal agent for the French Treasury, it was also a private institution with 40,000 shareholders whose 200 largest shareholders, often called "the 200 families," determined both personnel and policy.
They paid the governor's (large) salary in return for the usual diet of gold, cuts, and budget balance, all of which benefited the rentier class at the expense of everyone else.
(p 201)

[During the interwar years] the Bank of France continually vetoed budget increases that would have allowed the French military to modernize, and even mobilize, to meet the German threat.
As a result, French defense spending between 1934 and 1938 was one-tenth that of Germany.
(p 203)

[The] French financial elites were so afraid of inflation, and were so determined to maintain the value of the franc, that they paralyzed the French military's ability to mobilize against Hitler.
(p 204)

(Austerity, 2013)


An Epidemic of Laziness


John Quiggan

[Real Business Cycle Theory interprets] fluctuations in aggregate demand and employment [as the] socially optimal equilibrium response to exogenous shocks such as:
  • changes in productivity,
  • the terms of trade, or
  • workers' preference for leisure.
(p 99)

[This analysis implies that,] at the outset was the Great Depression, [either:]
  • the state of scientific knowledge had suddenly gone backward by 30%, or …
  • workers throughout the world had suddenly succumbed to an epidemic of laziness …
(p 100)

(Zombie Economics, Princeton University Press, 2012)


Mark Blyth

[Milton Friedman] assumed that unemployment was voluntary and was not due to a deficiency [in the demand for labor.]
People [voluntarily trade off leisure against labor according to] the prevailing wage.
There is no [such thing as Keynesian] demand-deficient unemployment in Milton's world.
In other words, the 25% of Spaniards who are presently without work [have simply made a rational decision not to] work at the prevailing wage [— opting, instead, to go] on vacation.
(p 153)

[By this logic, the Great Depression was] a giant, unexpected, and astonishingly long unpaid vacation for millions of people …
(p 159)

[Joseph Schumpeter also] argued that the Great Depression was neither great nor depressing.
Rather, it was just a particularly marked transitional period of technological and organizational change …
(p 129)

(Austerity, 2013)


Joseph Schumpeter (1883–1950)

[Recurrent] 'recessions' that are due to the disequilibrating impact of new products or methods. …
Economic progress, in capitalist society, means turmoil. …
[Capitalism's performance can, therefore, only be judged] over time, as it unfolds through decades and even centuries.

(Capitalism, Socialism and Democracy, 2nd Ed, 1942)


Crisis? What Crisis?


John Quiggin: Professor of Economics, Queensland University

The Efficient Markets Hypothesis implies that there can be no such thing as a bubble in the prices of assets such as stocks or houses.
(p 45)

The Efficient Markets Hypothesis, which enshrines the market price of assets as the summary of all relevant information, is inconsistent with any idea that managers should pursue the long-term interests of corporations, disregarding short-term fluctuations in share prices.
According to the Efficient Markets Hypothesis, the current share price is the best possible estimate of the long-term share price and therefore of the long-term value of the corporation to shareholders.

If the Efficient Markets Hypothesis is accepted, public investment decisions may be improved through the use of formal evaluation procedures like benefit-cost analysis, but the only really satisfactory solution is to turn [delivery of public services] over to the private sector. …
The Efficient Markets Hypothesis implies that governments can never outperform well-informed financial markets.
(p 49)

Privatization is bad for unions, which tend to be stronger and more effective in the public sector.
It is usually good for the incumbent senior managers of privatized firms, who move from being rather modestly paid public sector employees, constrained by bureaucratic rules and accountability, to doing much the same job but with greatly increased pay and privileges, and far fewer constraints.
(pp 185-6)

[In 2007 all] of the checks and balances in the system failed comprehensively.
The ratings agencies offered AAA ratings to assets that turned out to be worthless, on the basis of models that assumed that house prices could never fall. …
The entire ratings agency model, in which issuers pay for ratings, proved to be fundamentally unsound.
But, these very ratings were embedded in official systems of regulation.
Thanks to the Efficient Markets Hypothesis, crucial public policy decisions were, in effect, outsourced to for-profit firms that had a strong incentive to get the answers wrong.
(p 64)

The failure of the Efficient Markets Hypothesis does not imply the converse claim that governments will always do better.
Rather, the evidence suggests that markets will do
  • better than governments in planning investments in some cases (those where a good judgment of consumer demand is important, for example) and
  • worse in others (those requiring long-term planning, for example).
(p 76)

The experience of the twentieth century suggests that a mixed economy will outperform both
  • central planning and
  • laissez-faire.
(p 78)

The financial markets that were supposed to replace governments showed themselves incapable of managing their own businesses, let alone the world economy. …
[During the crisis everyone] in the financial sector was happy to be bailed out.
But of course, as soon as the crisis was over, they insisted that everything had been under control and that no rescue was necessary.
(p 225)

Throughout the [global financial] crisis, the economics profession carried on, for the most part, as if nothing had changed.
And now that the immediate crisis has passed, market liberals are trying to pretend … it never happened.
(p 231)

(Zombie Economics, Princeton University Press, 2012)


Milton Friedman (1912–2006)


Swedish National Bank's Prize in Economic Sciences in Memory of Alfred Nobel (1976)

The strongest argument for free enterprise is that it prevents anybody from having too much power …

I'm not in favor of no government intervention, I never have been. …
The question is, what kind of intervention?

I agree … that the more homogeneous a country, the less harm a government will do by intervening.
I don't believe it does positive good; I just simply believe it does less harm.

… I am in favor of the [antitrust] laws that make agreements and restraint of trade illegal.
[However, most] of the antitrust apparatus has promoted monopoly instead of hindered monopoly.
If you look are where there are monopolistic elements in the world … in almost every case [it] derives from a special grant by government.
And, therefore, the problem is not: how does government enforce competition, [but] how do you keep government from setting up monopolies? …
The responsibility [of government] is to set a system of laws … under which competition will flourish …

I don't know of any case, in history, in which monopolies have been able to maintain themselves for very long, without having government assistance directly come in on their side.
The trade union monopolies … would never have the kind of power they do now if it weren't for the special privileges which government has granted to them …
[Antitrust action by the government is really] pro-monopoly action — in the main.

(The Tyranny of Control, Free to Choose, Episode 2, PBS, 1980)


[Some stimulus] measures may have been useful, and indeed needed during the depression years …

Far from being a failure of free-market capitalism, the Depression was a failure of government.
Unfortunately that failure did not end with the Great Depression.
Ever since, government has been attempting to fine-tune the economy.
In practice, just as during the Depression, far from promoting stability, the government itself has been the major single source of instability.

(Anatomy of a Crisis, Free to Choose, Episode 3, PBS, 1980)


Consider a group of individuals who initially have equal endowments and who all agree voluntarily to enter a lottery with very unequal prizes.
The resultant inequality of income is surely required to permit the individuals in question to make the most of their initial equality.
Redistribution of the income after the event is equivalent to denying them the opportunity to enter the lottery. …
[By analogy, individuals] choose occupations, investments, and the like partly in accordance with their taste for uncertainty. …

[The] economic progress achieved in the capitalist societies has been accompanied by a drastic diminution in inequality. …

The methods that governments have used most widely to alter the distribution of income have been graduated income and inheritance taxation. …
My impression is that [the current high and highly graduated nominal tax rates (20-91%)] have had a relatively minor, though not negligible, effect in the direction of narrowing the [income] differences between the average position of groups of families …
[Though, if] present tax rates were made fully effective, the effect on incentives and the like might well be so serious as to cause a radical loss in the productivity of the society.
Tax avoidance may therefore have been essential for economic well-being. …

I find it hard, as a liberal, to see any justification for graduated taxation solely to redistribute income.
This seems a clear case of using coercion to take from some in order to give to others and thus to conflict head-on with individual freedom.

All things considered, the … tax structure that seems to me best is a flat-rate tax [eg 23.5% on total personal income (labor and capital); combined] with the abolition of the corporate income tax [coupled with a] requirement that corporations … attribute their income to stockholders …

[Such a flat rate] would yield a higher revenue because a larger amount of taxable income would be reported for three reasons:
  • there would be less incentive than now to adopt legal but costly schemes that reduce the amount of taxable income reported (so-called tax avoidance);
  • there would be less incentive to fail to report income that legally should be reported (tax evasion);
  • the removal of the disincentive effects of the present structure of rates would produce a more efficient use of present resources and a higher income. …

Much of the actual inequality derives from imperfections of the market.
Many of these have themselves been
  • created by government action or
  • could be removed by government action.
There is every reason to adjust the rules of the game so as to eliminate these sources of inequality.
For example, special monopoly privileges granted by government, tariffs, and other legal enactments benefiting particular groups, are a source of inequality.

(Capitalism and Freedom, 1962)


CONTENTS


The Mother Of All Moral Hazard Trades

Would you like to know more?