Monday, January 4, 2010

HERE'S several pertinent comments in response to Paul Krugman's "sky-will-fall" column in today's New York Times:

David
SF
January 4th, 2010
7:12 am
One persistent reason for the fall in the aggregate demand is the decrease in inflation adjusted wages despite the skyrocketing productivity of our workers. Most of this surplus value has been going to the top one or two percent of the population. In addition, the top marginal tax rates have fallen from 90% to less than 40%. This shameful transfer of wealth in our "democracy" has resulted in American workers going into debt to maintain the economy. Barring a well deserved increase in wages and a very large standard deduction for most Americans, balanced with a return to realistic top tax rates to keep the tax revenue neutral, the aggregate demand that Dr. Krugman so desperately wants is not coming back anytime soon.

When criticized for raising the wages for his factory workers, Henry Ford reportedly asked how else they would buy his cars. The systemic and deliberate impoverishment of the American workers in order to make the top one percent obscenely wealthy will lead to the parasites killing the host. Nobody will feed then.

Kate Madison
Depoe Bay, Oregon
January 4th, 2010
7:13 am
This will be a very depressing comment, because I have just finished reading Naomi Klein's "The Shock Doctrine: The Rise of Disaster Capitalism" (2007). This is a sobering book, and I should have read it sooner, but probably could not have taken in its implications as easily! I hope all of your readers will study it, if they have not already!

What is clear to me is that America's economic policies, under Milton Friedman and the "Chicago School" have been a disaster not only in America, but in many other countries as well — Latin America and South Africa being perhaps the saddest!

I have thought Obama would be different, that he saw the ruinous results of the Bush years and the so-called "free-market" philosophy through out the world--and in America as well! What I am realizing is that with the appointment of Larry Summers as his main economic advisor, Obama has "bought into" the Chicago School of delusion. He obviously has not read Naomi Klein, and has no real sense of the devastation we have wreaked not only in our own country--but in Russia, China, Latin America, South Africa Indonesia, Iraq, etc. We have been like King Midas--saying (believing?) that we are turning countries to gold, and instead mining that gold for our own rich entreprenneurs and those of the countries we "mine"--creating enormous social upheaval and poverty all along the way!

Larry Summers' comment will end my rant: "Spread the truth — the laws of economics are like the laws of engineering. One set of laws works everywhere!"
(Chief economist of the World Bank, 1991)

How much longer are we going to create more rich people AND poverty in our own country and "help" developing countries make their poverty so much worse? Larry Summers (and his protege, Timothy Geithner) have got to go — NOW!! And Milton Friedman should be circling in purgatory!!!

Bill Pieper
Taiwan
January 4th, 2010
9:54 am
“Will the Fed realize, before it’s too late, that the job of fighting the slump isn’t finished?”

Probably not, but I do not see how merely keeping low interest rates will help with employment at this point. Real rates have been at or near zero for several months and this has not increased demand or business investment by an appreciable amount. The cheap credit made available to the banks in a position to use it has merely improved the balance sheets of the wildly irresponsible money-center banks that are largely responsible for the mess we are in – to the great benefit of their share and bond holders. I guess it is a mixed blessing that, as far as I can tell, it has not yet been directed into the next bubble, whatever that will be. Attempts to “re-bubble” the economy will eventually only lead to greater misery for working Americans. Perhaps the Fed should consider other options. A good start would be to let us have a look at their books and begin publishing honest, undiluted statistics about the state of the economy and the health of the giant financial institutions that own the Federal Reserve.

“Will Congress do the same?”

Definitely not. Until a majority of incumbents themselves become unemployed, Congress will at best provide palliative measures. More likely they will make the long run situation worse. This is not a partisan issue; the bad actors in Congress are equally distributed among the Democrats and Republicans, most of whom have held their seats for far, far too long. The leadership of both major political parties are absurdly out of touch with the realities of the daily lives of the people they ostensibly represent. If Congress and the national government continue to propose and support policies that benefit the few at the expense of the many as they have done for three decades, there is a danger that the faux populist extreme right wing (read: teabaggers) could assert itself and only accelerate the decline.

But really the problem facing America today is so much larger that the question of whether the Fed should continue to move toxic securities off bank’s books, or whether Congress should approve a Stimulus Part II. America has had a leadership void in every realm of public life -government, media, business, religious, military, academic, etc. - for at least a decade or two. One can argue what the causes for this have been and what or who is to blame, but few would argue that our public institutions have been in capable, unselfish and responsible hands that have the best interests of their respective constituents in mind. We need leaders, especially political leaders, that are capable of telling us painful truths and helping us to understand the challenges and predicaments we face as a nation before we can begin to build a consensus on how we might go about dealing with these issues. I believe author James Howard Kunstler summed it up rather well when he recently stated: “The outstanding feature of our national life these days is this fantastic inability to form a coherent consensus about what is happening to us and what we are going to do.”