Why is the Obama Team Embracing Hooverism?

Chris Hayes had Gene Sperling, Director of the National Economic Council for President Obama, on while guest-hosting the Last Word with Lawrence O’Donnell last night.  Hayes played the clip that Krugman recently highlighted, where Obama said that the government’s budget is like a family’s budget that has to tighten in hard times and emphasized deficit reduction as a means to get confidence going to kick up the recovery, and asked Sperling to explain.  Hayes also brought up the historical-low interest rates on Treasuries as a counter-argument to these points.

You’ll be happy to know that Sperling brought up that the government is, in fact, kind of like a family, that trillions on corporate balance sheets are a little bit because of a lack of confidence, especially on the deficit, and, my favorite, this, in response to Hayes bringing up the interest rate as the most sophisticated pricing instrument we have on government debt:

“well I think there’s a lot of factors that go into the interest rates right now.  But there’s certain things you know that are just sound….any country anywhere that has its debt increasing as a percentage of its income creates doubts about its sustainability.  That’s gotta discourage some people from feeling as good as the long-term investments…”

Wow.  It is quite funny to watch Hayes’ jaw drop with a sense of horror when he realizes what he’s hearing from one of the key current architects of the Democratic economic platform:

I’m pretty up-to-date on the conservative arguments for expansionary austerity, from data to assumptions to talking points, and what Sperling is saying is more or less indistinguishable from the latest round of right-winger talking points.

It also appears, God bless ’em, that the administration is going to start rotating structural unemployment talking points in their discussion of the economy as well.  So, what gives? Why has the administration gone this route? This is different than the idea that they don’t want to be associated with the stimulus or further efforts at stimulus – this is running into the exact opposite arguments.

Krugman thinks it’s because the Very Serious People embrace this and Obama is wired to think that VSP know what the right course of action is. That sort of restates the question, which is why do VSP and Obama’s immediate economic team embrace this argument? I can think of a few guesses.

The 1980s

Richard Koo is an expert on the Japanese recession who calls for continued aggressive fiscal stimulus in the United States. In his recent book, The Holy Grail of Macroeconomics, he makes an early point to explain how he though there were serious structural problems in the late 1970s and early 1980s, and supported the “reforms” necessary to break it. Reading it, it is clear that he thinks making this point establishes his ability to call out a demand recession, because he is equally unapologetic in calling out a supply recession. He made this chart that explains what he saw in Japan versus the Reagan U.S., and also concludes that we look like the Japan scenario:

If you are someone who idolizes Reagan, or thinks the early 1980s gave us the answers that are everywhere and anywhere applicable (a phenomenon that now goes beyond tax cuts for everything), or sees severe debt-deflation and a minimum wage side-by-side and thinks the minimum wage is, far and away, the more ghastly thing you are seeing, if you are someone who never got over the 1980s or understood that there’s an alternative, it doesn’t surprise me that you would be find this logic convincing.

The 1990s

Felix Salmon noted the following about ideology and job creation when the whole stimulus as “sugar” debate happened:

Geithner cut his teeth in a world of bond vigilantes, an era when James Carville said that he would like to be reincarnated as the bond market, because then he could intimidate everybody. And after that, Geithner dealt with a series of international sovereign-debt crises where countries found themselves hammered by enormous bond spreads.

The people in the senior economic policy shop are primarily Wall Street people, who view the world in a much different frame that those looking at demand-side, deflationary consumer pressures. Similarly they are people who think that a solid Wall Street will be the driver of the economy, an argument we’ve seen going back to at least PPIP.

Also the 1990s is when neoliberals really took over the macroeconomic arguments (see this Galbraith argument).  Liberals abandoned demand-side arguments in order to try and win over a role for the government in the supply-side arguments – the liberal government can bring job training, relocation loans, tax credits, etc. to help with employment, leaving the demand side arguments to disappear.

Meritocracy, Rentiers

Keynes, General Theory:

The most stable, and the least easily shifted, element in our contemporary economy has been hitherto, and may prove to be in future, the minimum rate of interest acceptable to the generality of wealth-owners. If a tolerable level of employment requires a rate of interest much below the average rates which ruled in the nineteenth century, it is most doubtful whether it can be achieved merely by manipulating the quantity of money.

Certainly our housing policy is being run on the idea that homeowners should eat as much of the costs as they can potentially bear, even if it means keeping the economy depressed for years longer than it needs to be.  Stimulus, a short-round of inflation and bad-debt writedowns all would help the economy, but all hurt rentiers.  Right now Wall Street has a great deal milking the remains of the housing bubble’s bad debts.

When these are the smartest, most meritocratic guys in the room, it is perfectly designed for acceptance from Very Serious People, especially creations of the meritocracy like Obama.

These are all idle speculations. Your thoughts?

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58 Responses to Why is the Obama Team Embracing Hooverism?

  1. foosion says:

    My guess is that politics rather than economics is driving this.

    I happen to think it’s bad politics and bad economics. Summers, Roemer, Orszag and Jared Bernstein understand the economics. All of them left the administration

  2. Frank says:

    Mr. Sperling appears to be one of Goldman’s best investments:

    “Goldman Sachs paid Sperling $887,727 for his advice in 2008, according to Bloomberg News’s analysis of financial disclosure forms.”

    I highly recommend Janine Wedel’s book The Shadow Elite for more information on how the permeable boundaries between gov’t, business, academia and think-tanks create a homogenized power clique with very similar world views. See http://janinewedel.info/shadowelite.html

    I also applaud Matt Stoller for warning in mid-2008 how far right Obama can go.

    This move is basically destroying the Democratic brand, in hopes of burnishing the Obama brand (ala Naomi Klein) of bipartisan, “above it all,” sangfroid. All the Dem brand had going for it was resolute defense of the old social insurance programs. That’s gone now.

    Obama thinks this compromise will help him win over independents. But he doesn’t realize how much it will dishearten Dems. Elections are decided based on who turns out. Nobody’s turning out for this crew.

    • Dan Kervick says:

      It won’t help him with independents either. Independents are very down on him right now. And that’s because independents don’t know from theory and ideology. All they care about is results, and the economic results stink. If Obama wan’t to win over independents he should focus on creating a better economic policy.

    • rob_mkw says:

      I have to agree, this will dishearten Dems – like me – who saw this guy as having so much promise. The right turn he’s taken feels like a betrayal. Who else do we have who can fulfll the promise in 2012? I’m waiting-

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  4. Mike,
    Thank you for posing the question and putting forward some interesting answers. I think your answers give too much credit to the decisionmakers in this in understanding of the economic dilemmas of the past. I believe that Obama has inhaled deeply the social science culture of the University of Chicago, where I believe they have a highly “particulate” understanding of the social world: there are no social systems with emergent properties, only aggregations of individual actors that respond to incentives or disincentives.

    It is now considered to be radical to think in terms of systems. There are political reasons why thinking from the POV of government about systems would run a President like Obama into trouble with the oligarchs who now have overwhelming influence if not outright power in Washington. Obama hopes to arrive at an aggregate solution by harmonizing existing individual interests in proportion to their current power and influence.

    I view Obama’s ethics as almost purely a “virtue ethics”, seeing “the Good” as inhering in individuals (kind of like a meritocracy) or individual organizations. I think Obama team’s embrace of Hooverism is best explicable via reference to meta-ethical systems, which I wrote about a few months ago here: http://metaeconomics.wordpress.com/2010/08/27/paradoxthrift/

  5. Ed says:

    Frank is on the money. The only thing that will save us is if the Republicans self-destruct by putting up a fringer like Michelle Bachman. She won’t go down with the independents, not because she’s certifiable, but because she’s a woman.

    We’ll take what we can gets. But no thanks to Obama.

  6. denim says:

    So, if I understand Matt Miller’s account of Gene Sperling, Obama has an MBA dropout with a Yale law degree advising him on economic policy. ref http://www.mattmilleronline.com/gene_sperling.php

    And, of course, that makes him too smart to consult with Krugman, Stiglitz, DeLong, to name a few. Why he would not want to talk to Summers or Rubin who screwed up the economy starting with Clinton is understandable.

  7. Samuel Markes says:

    I think that Obama has let the GOP run the dialogue for so long that even he has bought into the myopic and imbecilic notions being regurgitated on every media outlet. We hear about reelection issues, we hear about deficit reduction, we hear about debt ceilings and medicare reductions and everything else that the GOP has been railing about. This is their prime opportunity to destroy the “Great Society” and restore us to the glory of 1880.

    We hear about all the things we can’t afford to do: rebuilding our infrastructure, shifting our energy economy, educating our children, caring for the elderly or infirm. We hear can’t cut taxes on people who can afford it.

    We don’t hear the real pain of the millions that remain unemployed or underemployed except as punchlines to the deficit reduction story. We don’t hear about the families that live in cars. We don’t hear about the families that go hungry because the austerity meausures mean cutting food services. We hear about the 40% of Americans that don’t pay taxes … but we don’t hear that those are false statistics and that we’re talking about people making $25,000 a year (ever try living on that as an adult?). We hear about how the Obama adminstration has “grown the government” but we don’t hear that the growth has been to support social safety nets because of the high unemployment.

    We hear only a sliver of the truth and it seems that sliver has lodged itself in Mr. Obama’s brain. Pity us.

  8. klhoughton says:

    I think it’s bad politics, too–bad GOTV, certainly, bad “if I want to vote for a Republican, Rick Perry is the obvious Heir-to-Buchanan” (sorry, couldn’t resist even though the history is wrong), and bad in the fundraising arena (“Sorry, Barry, you gave us the last few things you could; we need a REAL idiot to destroy Medicare, not just one who is trying to undermine his own policies.”).

    But I could be convinced that there is an argument otherwise if the data showed things improving in the states that are most likely to flip back in 2012. I assume Indiana is dead meat, and wouldn’t exactly spend much money in Charlotte if I were running the CReEP campaign. (Specific, timely historic reference: Obama is starting to do for health care what Nixon did for the environment.)

    But Virginia, Michigan, New Mexico, Illinois, Florida? Are things better there, on the ground? Will reducing their future benefits get them jobs now? Can we have an Elector College Map of dU3 (or even dU6) for when Michelle B. says, “Are you better off now than you will be four years from now?” in the first debate?

    • Tim says:

      Speaking from Northern Virginia, I can say that our employment prospects are better here because of government money in the defense industry south of DC. However, few people understand this, and while Fairfax and Loudoun (with their very large populations) tend to vote democratic, I believe it will be a very close race in 2012. The rural parts of the state (basically everything but northern, tidewater cities & richmond) will vote for whatever moron the republicans nominate.

  9. Prophecy of a bond man. I should foremost be a weather man, and give a weather report. The american government will default. The reason is simple. Noone gets elected with the policy of paying back the debt. So the best politicians can do is to balance the budget. Most likely the result will be an increase of the debt ratio to govermental incomes, such as tax. And this figure may never reach 100%, People would never pay taxes, just to pay off old debt. For the tax they expect production of services. So, all nations are looking onto a future of default, and the map says that USA will default soon. That is the weather report. But I can also be an active agent and tell the story of a future assembly. They will gather in a castle, just like Versailles 1787 and there will be a bond man there. They will know him as the man that says: “Bond” all the time. At first the assembled people will dwindle into a long discussion of inflation, and they will all try to fight it. The bond man just says “Bond”. But then the assembly will be dissolved by an angry mob, and they will take 4 hostages. One of them happens to be the bond man. The mob locks in the hostages into another castle while they will negotiate with the police. In the cellar of this other castle the hostages get to know eachother, and three of them will engage in a discussion on fiscal policy. The fourth, the bond man, just says bond. They will discuss winners and losers, and finally one of them says: “Why do we not invent a new global currency?”. “I can´t accept it, says the other. My purse would suffer. Because I would have to pay a fee to use that currency.” The third said. “So we have come to a standstill again” the third says. The fourth says: “Bond”. The first one refrains from personal attack on the greediness on the second, and says: “You know, that you will have to lay off people with the current status. You could gain in the long run, if you paid that fee. Look at it as an investment.” The second says: “I would, if you told me how I would gain on it.”. The first one said: “Simply since it is an investement on the increased interaction between people in the future, there will be more revenues for you to collect. You`ll cash in tomorrow, for the loss of today, like any investment.” The third says: “You could even win the property rights on the land of the Moon. I know it isn´t much, but I have never turned down a business proposal.”. Then the second says: “So, we need to find a way to pay that fee/investment without losing the current currencies.”
    The first says: “I know a way, but it requires consensus”. The second asks him what his solution is. He says: “In order to keep current currencies, and still add wealth in all countries, we need to sell those future profits.” The third says: “It´d be like a poker tournament, with a final table dividing the wins”. The second says: “That seems fair, so what we call the those future profits?” The first one says: “Our odd friend there will say it”. And the three awaits for the fourth hostage, and after a breath he says: “Bond”. And then the police will break in and free the hostages from the cellar, but they will not punish the mob, according to the agreement. Finally I can be a reviewer. Such was the vision of mine. The answer will be bonds, issued on various universal future profits. The price will be set on a daily basis. International cooperation will decide the rules of the realization of the bonds in the future.

  10. jamdox says:

    I found Krugman’s argument more interesting. He basically said he’d met with Obama, and Obama is just a conservative (K didn’t use that word, but it fits) person who doesn’t like the counterintuitive arguments suggested by sound economics.

    Krugman is suggesting, based on Obama’s words, actions and at least one face-to-face meeting, that Obama is just a conservative.

    Which, by the way, is what he ran as: a man of the center-right. That was clear if you ignored the soaring rhetoric and listened to what he was saying about policy.

    • whispersd says:

      “That was clear if you ignored the soaring rhetoric and listened to what he was saying about policy.”

      A lot of people say this. Always makes me wonder if there really is some magical divide between “rhetoric” and “what he was saying about policy” that I’m not aware of.

      Basically, we were supposed to ignore all the talk about hope and change, up to and including his logo and the name of his transition website, because of a few nuggets buried in a speech here and there. This kind of argument implies that Obama hasn’t in fact violated a number of his promises.
      But he has.

      • Seth Hurwitz says:

        Jamdox makes a claim that gets repeated endlessly. No, Obama ran as a progressive — out of Iraq in 2009, health insurance reform (without a public option, but still), financial reform, no more warrantless wiretaps, ending DADT, ending the Bush tax cuts, ending torture, supporting union workers. It’s a tidy story to say we all imagined him saying this stuff, that he was always center-right, but search YouTube or watch the free doc Lifting the Veil. The fact that he has bargained and equivocated and flat out thrown his progressive supporters under the bus doesn’t mean we didn’t hear what he actually promised us in 2007-2008.

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  12. bornagaindem says:

    Because Obama is an idiot and a wannabe republican -ANYONE who supports this man for re-election is insane. At least if we are going to get republican ideas and policies lets make sure that repugs are in charge when the country once again goes to hell.

  13. This is about the politics. Obama (rightly) sees that any Democrat as President is better than the Republican options. Look at the Supreme Court. Where at least three seats could be up in the next four years.
    The real political reality here that many seem to miss is that for most (80-90%) of Americans the “recession” is not highly visible. 90% employment (9 of 10). Most houses are not in default. The safety net worked. So, for Obama to engage in the rhetoric of Depression falls flat. In the Depression beginning in 1929 everyone in this country saw the homeless, the unemployed, gathering at soup kitchens and Hoovervilles. That led to a different political calculation.
    With those political constraints in place, what do you do to provide stimulus? I think this discussion would be far more useful if it was held under that constraint.

    • Darwin says:

      You are so wrong and very out of touch. Employed people are in stagnant jobs with no raises or movement up, huge numbers underwater on their houses, their kids schools are falling apart, and no sign of anything better in the future plus both parties want to continue ridiculous tax breaks, wars, and jabber about thing most people don’t care about. The mood in country is not good. Oh and if you think the real unemployment rare is 90% then I don’t even know where to start with how willfully ignorant that is.

    • whispersd says:

      Head in the sand argument.

      “Nobody cares about 9% unemployment!”
      Yeah, but they really care about the deficit.



      That’s the first poll I found.

    • Dan Kervick says:

      I have a job. But my income has gone down over the past three years, and I live in constant fear about losing my job. People were laid off all around me. Many of my company’s customers and sales were vaporized in the collapse, and nobody in Washington seems to be doing anything serious about bringing them back. I know one young man who committed suicide this year because of a serious economic setback he received . My son is in college, and a key source of financial support he was receiving was withdrawn. Our house and cars are falling apart, and we can’t find the budget room to fix them. I spend sleepless nights waiting for bombs to drop worrying about whether some further wave of setbacks will destroy what is left of my family’s dreams and way of life.

      And I believe my experience is replicated all across the country. So you are wrong Mr. Solomkin.

      Meanwhile, the President of the United Sates has his head up his ass, and is spending all his time arguing with Republicans about the size of the deficit in 2031 or thereabouts.

  14. Any Jurisdiction says:

    Obama needs to please the people that pay the bills for his re-election. Those people like Hooverism. It’s really not that complicated.

  15. joyfulalternative says:

    I was just reading about the illustrious history of Summers and Sperling in “How Monica Lewinsky Saved Social Security” at http://www.counterpunch.org/blackburn10302004.html. Not that I had much respect for them before.

  16. B405 says:

    “Krugman is suggesting, based on Obama’s words, actions and at least one face-to-face meeting, that Obama is just a conservative.”

    Obama does not believe gay Americans have the right to be married, for religious reasons. He does not believe drugs should be decriminalized, not even medical marijuana. He does not believe the government can create jobs. He is a conservative person.

    “But Virginia, Michigan, New Mexico, Illinois, Florida? Are things better there, on the ground?”

    Things are no better in Michigan than they were four years ago.

    • joyfulalternative says:

      Obama has no religious reasons for believing gay Americans should not have the right to marry. The only denomination he has been a member of, to my knowledge, is the United Church of Christ, which fully supports gay rights.

      • seedaddy says:

        One does not necessarily have to agree with every view of the church to which one belongs.

  17. The basic key to understanding this is that you have somewhere around 60-70% of the U.S. public who believe that government debt is too high. They also hated the Wall Street bailouts, they also think we should leave Social Security and Medicare alone, and they also think we should tax the rich more. Obama is trying to thread this needle, because that is the business that politicians are in. He is not in the business of instructing the populace in economics, and that would just get bogged down in endless intellectual arguments against hardened ideologues anyway.

    On the present course, however, there is the possibility of driving a wedge between the Tea Party and the Boehner leadership, which would be electorally quite useful, and perhaps driving another wedge between the entire Republican Party and the U.S. public.

    You also have to realize that insiders, both Democrat and Republican, think the whole thing is silly to begin with, because NOTHING is ever permanent: not tax rates, not spending. The next Congresses and Presidents can do whatever they want (one reason the Tea Party wants a Constitutional Amendment). If the Republicans propose something so ridiculous as to end the welfare state, it is because they think that this phony appearance of “fiscal rectitude” will garner them enough votes to regain control of the White House and both sides of Congress — whereupon you can bet your bottom dollar that they would reconstitute the welfare state, of course under some other name to sell it to the dunces. Because they will never truly risk Granny’s wrath.

    Both sides understand all of this stuff, and so there is a giant dance of one-upmanship going on. The Republicans may make tactical victories, but strategically they have a really weak hand, because (1) their economic ideology (roughly, Reaganomics) is on a collision course with economic reality, while (2) their only reliable voters (the Tea Party) actually believe in it. We are just seeing another version of this problem playing out right now.

  18. AlanDownunder says:

    Obama is too white to be a Democrat.

  19. Donna says:

    Obama is not leading me…

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  22. MichaelEdits says:

    I’m amazed at how many people have opinions, very strong opinions, about how to fix the economy despite having no training, no qualifications, and basically no clue. (For the record, I don’t think it can be fixed, but I’ll trust Obama’s people over anyone commenting on this blog post, myself included.)

    • Dan Kervick says:

      Humility is great. But why in the world would you trust Obama’s people. Don’t empirical results mean anything to you. Unemployment has stayed stuck at 9% and above, since he has been in office, and is now moving in the wrong direction again. Doesn’t that make you seriously consider the possibility that he really doesn’t know what he is doing?

    • Tim says:

      I guess you have no faith in empirical observation. Want to get together and practice some alchemy later?

    • Matt says:

      Please don’t troll Michael

  23. johndtp says:

    I have a different theory: Obama’s one concern, which overrides all others, is getting re-elected. I’m sure he has very good reasons for wanting this: being the first African-American president he may view re-election as historically important; he can then protect the achievements of his first 2 years, such as Obamacare; he can appoint more justices and maybe reverse what has become an increasingly pernicious majority of 5.

    I think he calculates that he can only lose if Republicans can make a strong economic or foreign policy argument for his removal from office. He negated the foreign policy argument by retaining Robert Gates and pursuing essentially identical policies as Bush. He is negating the economic issue by adopting language and policy so similar to Republicans that there is no room for a Republican alternative, no matter much Republicans struggle to find daylight to the right. He took heed from the House elections of 2010. If they make an argument or take a position that might seem to resonate with the electorate, he simply follows them there in the name of bipartisanship. I will bet that Republicans are astounded by what he will swallow in order to deny them an issue.

    I would argue that Obama will have done great injury to all the distressed families who might have been helped and to the long-term economic prospects of the nation. He has discarded and defamed Keynesian macro-economics. Liberals will have to decide if the that price was worth what is gained by Obama’s re-election. It seems clear to me that Obama and his people have few qualms about the trade-off. Is that principle or opportunism? I think it’s opportunism.

    • AlanDownunder says:

      I fail to understand how triangulation can work for Obama. Surely, where voting is not compulsory, you have to inspire your base to vote, not desert them. Didn’t the 2010 mid-terms teach us that the extra 2% he enticed to the polls in 2008 are not locked in?

      Nor do I understand how Obama can cover every GOP tack, negating issue after issue. He can sound like Reagan/Hoover but voters can tell a poseur from the real deal.

  24. When you find your best friend in bed with your wife, does it really matter if he loves her or not?

    I guess that’s my question – does it really matter *why* Obama is doing what he’s doing? Do you really care if the guy who just shot you is a good “family man” or not?

    In the end “it’s the policy stupid”, and his policy sucks. Whether at heart he believes something else, or is captured by X and Y, or is playing political games, or whatever doesn’t matter.

  25. Misaki says:

    The confidence fairy is whether rich people believe that poor people believe they will soon get jobs.

    If rich people feel that the rest of the nation is doing fine, they are more likely to spend money, as well more likely to feel comfortable increasing investment because if they don’t make a profit with that money, they won’t feel like “it’s their fault” but rather the fault of the newspapers and economists who predicted demand for the future production of those investments would materialize.

    Obviously a company will have greater products if it reduces production, that is the fundamental reason that monopolies and oligopolies are able to make a profit, because the supply of raw materials does not decrease in volume as the quantity of finished goods decreases, allowing the producers to make a profit on both lower raw materials costs, and higher final product prices. If every or most producers believe that it’s not worth making a higher profit by undercutting other competitors (but lowering total available profits for that tier of the market), the market will naturally refuse to stabilize.

    The solution to this “confidence fairy” is, for the nth time, to reduce supply of labour: http://pastebin.com/Q86Zhgs9

    Obviously both the structural explanation and the spending explanation ((splice in comment on Delong’s criticism of the same issue)) are, of course, true to a degree. You must closely examine why this drop in spending occurred, since the same amount of money exists in the economy. The first reason is that spending patterns changed so that any given dollar that changes owners is less likely to have been earned by someone with a low income who is the most likely to spend it. The second reason is that people with high incomes, who are receiving more of the money that is being spent now, do not and have never spent as much money as they earn.

    The key to fixing unemployment is not only ensuring that there is a demand for goods equal to the supply as the President suggests we plan for, but also that this is accomplished by altering spending patterns so more money flows towards low-income earners instead of high-income earners who do not spend it, as shown by your graph.

    High income earners are obviously represented by the cash holdings and lending of the banks and companies they own, not just their individual income.

    The way to change spending patterns is described here: http://pastebin.com/Q86Zhgs9 You are correct that the President’s description of new products is not likely to fix unemployment in the short-term, but this would. If you are truly interested in this outcome, please use that text as you wish.

    “Second, since Obama keeps talking nonsense about economics”

    Maybe if the economics profession agreed on the reason for unemployment, it would offer effective advice. However, there is no agreement on why unemployment persists at the level it is at.

    While it is probably not useful to point out the reason when many economists do not take the time to think logically about things that seem to contradict previously held ideas (such as “no compromise with the opposite political party, I must win this argument!”), I will mention yet again that income as a signal (http://zhongwe2.serverpros.com/cs/) of personal ability and willingness to contribute to national success, as well as the amount of time worked as a similar signal, distorts the labour market, and unemployment can be fixed as described here: http://pastebin.com/Q86Zhgs9

  26. Misaki says:

    >Obviously a company will have greater products if it reduces production

    Forgot to change this on copy/paste ;_; Ignore that sentence please, it makes no sense

  27. Matt says:

    The current status is: The USS Ship of State is presently on a heading towards the revolution horizon. Don’t know when it will get there, or if it will even get there, but now is no time to be smug.

    • Tommy Miles says:

      This is likely true, and even for an anti-capitalist such as me, it is frightening prophecy.
      Lets continue the metaphor and look beyond Obama and the next election. If this administration fails economically — as anyone who has taken college econ knows it will: what will the next two administrations look like?

      Because we have this duopoly, the next President would be a Republican. Is there any reason to think any Republican candidate could raise taxes and spending on a grand enough scale to get the economy pumping under its own power?

      Then assuming s/he fails also, and the nation has another four additional years of economic collapse, militarization, and xenophobia to live through, would the Democrat put an FDR figure up? Could, even after 8 years of recession/depression, such a figure win? Could they gain a legislative majority numerous and loyal enough to push through massive spending and taxation?

      While who knows what 8+ coming years of economic crisis will do to our political landscape, even money says a swing to very nasty bigotry or government re-regulation and intervention.

      And that is a bloody social revolution, nationalist pogroms, regional breakup, foreign peacekeeper intervention kin of scary.

  28. Greg says:

    Yes. This is all a ploy by out rentier masters. They have all the money, and by driving down the price of assets, by taking what money remains out of the real economy, they will be able to buy the rest of the country, what they don’t already own, cheap.

    And our government, especially the Republicans, (but more and more I think the Democrats are just playing their part,) is in on it.

    Look at Greece. They want to sell off its government’s assets, the public property of the people of Greece, to help pay off that country’s debt. One value put on the Greek government’s saleable assets is $60Billion, but they say they’re only going to get $15Billion, for that country’s heritage. And our masters want to do the same thing here.

    I think the Republicans, at least, believe they have a MORAL obligation to destroy the working and middle classes. They think it is the RIGHT thing to do.

    These are smart people. Maybe they KNOW what they are doing, and Krugman and others decrying their- ‘wrongheadedness’ totally missing what’s really going on.

  29. Taxed Man says:

    Isn’t Hooverism when the Fed cuts interest rates to almost zero; the govt runs up a massive deficit and tries to artificially keep prices high? If so, then just as Hooverism didn’t work for Hoover, it isn’t working for Obama. What is required is a good dose of Hardingism.

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