What is Occupy? According to the Occupy Wall Street Web site, "We are our demands. #OWS is conversation, organization, and action focused on ending the tyranny of the 1%. On Saturday we marched in solidarity against corrupt banking systems, against war, and against foreclosure." To Matt Taibbi of Rolling Stone, the protests transcend "left vs. right," despite the efforts of right-wing provocateurs: Instead, it is "a populist and wholly non-partisan protest against bailouts, theft, insider trading, self-dealing, regulatory capture and the market-perverting effect of the Too-Big-To-Fail banks." Justin Elliott of Salon writes that you can't understand the movement without also understanding its "radically decentralized structure."
OK.
One thing that's clear is that the various Occupy protests have showcased the militarization of law enforcement, something that has long troubled my older cop friends. Billions of your tax dollars have gone into equipping a nationwide paramilitary force to protect the "homeland" from terrorists — and conveniently from citizens who might be seeking to change the status quo, even through peaceful assembly. A friend emailed me an evocative photo (above, taken by Mauro Whiteman for the Downtown Devil) from Occupy Phoenix showing a phalanx of robocop-looking PPD officers confronting sitting demonstrators. Cal Lash, a distinguished retired officer and assistant to two chiefs of police, was among those deeply troubled. We all should be.
I have been skeptical of Occupy because I remember the march in Phoenix a few years back that attracted some 100,000 to protest draconian immigration laws. The bigots and haters on the right were afraid. Yet what was the outcome: SB 1070 and election after election of more ignorant extremists. Tens of thousands more demonstrated against the hypocritical law, really aimed at voter suppression, in 2010. The result? The defeat of Terry Goddard, who would have made the best governor in Arizona history.
Despite all the sentimentality about Occupy by smart, left-leaning people, the movement hasn't answered The Question. It is posed to Kevin Costner's Elliot Ness by Sean Connery's character, Malone, in The Untouchables:
Malone: You said you wanted to get Capone. Do you really wanna get him? You see what I'm saying is, what are you prepared to do?
Ness: Anything within the law.
Malone: And then what are you prepared to do? If you open the can on these worms you must be prepared to go all the way. Because they're not gonna give up the fight, until one of you is dead.
Ness: I want to get Capone! I don't know how to do it.
Malone: You wanna know how to get Capone? They pull a knife, you pull a gun. He sends one of yours to the hospital, you send one of his to the morgue. That's the Chicago way! And that's how you get Capone. Now do you want to do that? Are you ready to do that? I'm offering you a deal. Do you want this deal?
Are Occupy's protesters prepared to go the distance, something that didn't happen with Cindy Sheehan's movement or the large Wisconsin protests against Scott Walker? And more importantly, are Americans who are sympathetic but sitting aside willing?
What are you prepared to do? Are you prepared to fill up the jails, over and over, as the civil rights movement did? Are you prepared to suffer the rain of police batons and pepper spray, over and over, until you find a "Bull" Conner to make the whole world watch? Are you prepared to move your money from big banks? To patronize only locally owned small businesses? To give up your car? See, it starts to hurt. Are you prepared to vote and work hard on the ground to reverse the quiet coup that has taken away our government?
Most of all, I am skeptical of the romantic notion that Occupy can succeed without real leaders, who can find the language to shake Americans out of their torpor. The civil rights movement didn't just have Martin Luther King Jr. It had a host of such leaders, including Fred Shuttlesworth, who passed away at the same time as Steve Jobs, so that a new generation doesn't even know who he was. The American Revolution was blessed with Washington, Adams, Franklin, Jefferson, on and on. The usual grassroots are easily crushed under jackboots. Or, in the case today, under popular ignorance, short attention spans and Lindsay Lohan's latest arrest (watch that key word send my pageviews off the charts). We have Elizabeth Warren. That's a start. President Hoover is a lost cause (a product of the Honolulu, not the Chicago, way), and any of his tacks to "the left" are suspect. And Occupy will need a clear platform (Taibbi makes a good start).
Make no mistake: Occupy is a natural outgrowth of America's decline, rising inequality, loss of opportunity and fair play, lack of justice for all. It is part-and-parcel of the Great Disruption. And we will see more such events.
At some point, we may be in Abraham Lincoln territory: "Any people anywhere, being inclined and having the power, have the right to rise up, and shake off the existing government, and form a new one that suits them better. This is a most valuable — a most sacred right — a right, which we hope and believe, is to liberate the world."
It is dangerous terrain, for with the exception of the American experience, real revolutions rarely turn out well (the hopeful Western blather about the "Arab Spring" has been especially grating; for example, the military has always ruled post-British Empire Egypt — it did under Mubarak and it does now). Still, something is coming. Paul Krugman captured part of the motive force in one of his best columns:
Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.
I just gave a real good look at the list and photos of the 400 richest Americans. Here's what I saw.
1. there was a handful of ultra conservative trouble makers.
2. there was a handful of ulta liberal trouble makers.
3. There was more than a handful of plain heirs to fortunes.
4. There were more professional team owners than I cared to see, (especially, since they are the best at collecting public welfare).
What was missing was suspects who would be benefitting most from the misdeeds going on in DC and Wall Street.
You ask, what is the agenda and will of the Occupy folks?
I ask, who are the real bad guys? Where are they? Will we ever be able to locate them?
You can't gt rid of vermin if you can't find them.
Posted by: azrebel | October 19, 2011 at 03:03 PM
Thank you for this post, and I am not being patronizing when I say that I find it a fair and lucid assessment of this #Occupy phenomenon.
I just want to address your concerns about leadership, as this is my favorite aspect of the movement. To me, it is its most hopeful aspect.
The problem with revolutions in general is that at the end of it all, they have all resulted in a reconstituted hierarchical stratification - old boss meet the new boss. I think this organizational stasis is at the root of the relentless recurrence of the same old issues, repeated throughout the (mostly Western) history of about the last 8,000 years (and we are far older than that.)
These people are serious about *no leaders.* I think they know, or at least strongly sense, something. And it's global, which is *very* important for a truly radical change.
I have a strong belief that this is not the only available organizational model, and these "kids" are actualizing something that I have only dreamed of. I know how "Utopian" this dream seems, and I have often declaimed that I did not expect actualization anywhere within my lifetime - that it was a far off evolutionary, not merely revolutionary, probability. I say probability because I expect the human race to settle into an harmonious state if it doesn't kill itself off while in its adolescence. (e.g., Daddy just gave us the car keys, and his fingers are crossed...)
The General Assembly, and its progenitor, the "human mic" (which now being propogated worldwide, in spite of the fact that it was an ad hoc response to New York's provincial amplification ban) are creative responses to the challenge of organizing without leadership. And, in spite of attempts by media to claim otherwise, the movement is articulating a surprisingly clear agenda without a charismatic figure to rally around.
I leave aside the strategic success of being leaderless, which is so baffling to the "authorities," because I feel this is secondary, and because I care less about "winning" than I do about what happens afterward.
This may not be the (r)evolution of the mind that I hope it is, but I am willing to watch and learn from the "kids" who have exceeded my imagination thus far.
Posted by: Petro | October 19, 2011 at 03:04 PM
@azrebel - you know what they say about flipping on the light switch...
Posted by: Petro | October 19, 2011 at 03:41 PM
One of my favorite big words is "deracinated", which means uprooted. It describes us as American cosmopolitans, people who are sophisticated and cool, but not particularly rooted in any organic social reality. It's our blessing because we're free to look beyond our own tribal impulses to see other people as friends rather than enemies. And it's our curse because we can't locate the place, thing, or idea we're willing to kill and die for.
If you self-immolate, like that Tunisian street vendor, you know what it is. If you're a suicide bomber in Afghanistan, you know. If you ever met a gun nut with racist bumper stickers on his truck, you know someone who knows. We ourselves don't know and wouldn't want to.
I want to think the kids in OWS are willing but I doubt it. I see more of me, ironic losers who are paralyzed by the mere thought of cold-blooded action. We can self-romanticize but we can't self-immolate.
That cop who maliciously pepper-sprayed several peaceful OWS demonstrators, Anthony Bologna, got 10 vacation days taken away for his assault. That must be what they think of us. The power structure will probably make it up to him. Maybe they'll run him for Congress or give him a star turn at the next CPAC conference. They take care of each other because they understand the brute necessity of power.
Until we find out what it is that we're willing to give up everything for, we're not going to win anything. Until then, I recommend finding something, even if it's entirely theoretical, and taking it to the point it begins to make you queasy. You do this to see what your own limits are. At some point, you'll want to know.
Posted by: soleri | October 19, 2011 at 03:46 PM
Wait a minute here. Mr. Talton is fabulous, but the comparison to the protests against the anti-immigration law is completely wrong.
The pro-immigration crowd are Wall Street. Wall Street wants illegal immigrants, so that American workers can be fired and replaced with immigrants.
If the "Occupy" crowd had sense, and wanted to take a stand on immigration, then the "Occupy" crowd should be screaming IN SUPPORT of extremely draconian anti-immigration laws.
Here is what I want. I want illegal immigrants to be driven out of the United States en masse, and at the point of AK-47's if necessary. Why? There are no jobs. Americans **desperately** need the jobs held by illegal immigrants. In Florida, illegal immigrants work as electricians, truck drivers, plumbers, and just about everything else. They are not all just picking vegetables. I personally know of a cement plant that fired Americans and deliberately replaced them with illegals,claiming that "illegals don't ask for overtime pay."
These are jobs that Americans WILL DO, and DID DO until they were fired and replaced by immigrants.
Second - we need a temporary moratorium on ALL legal immigration. Why? We don't need them. We need jobs for our own people. We could make an exception for immigrants with unique and rare talents - we could allow employers to hire as many as they want, as long as they pay them at least $250,0000 each annually.
Posted by: Mick | October 19, 2011 at 04:24 PM
I am pleased with the Occupy Wall Street movement. Contrary to what the Republican (traitors) say, OWS are the real Americans.
I hope that the movement grows and grows. It would be wonderful if there were so many protesters in New York that it became impossible for business to be conducted.
It would be wonderful if we had huge nationwide protests and strikes. It would be great if everyone who works for minimum wage said "to hell with it" and quit, all at once. It would be fabulous if *everyone* who works for Wal-Mart walked off their (horrible, worthless) jobs (that guarantee impoverishment) and never went back. It would be great if every Wal-Mart in North American disappeared, and "outsourcing" because a crime.
How far are we willing to go? If the crowds grow enough, maybe people will be willing to go farther.
I dream of an United States that is paralyzed with massive protests and huge nationwide strikes. I dream of Wal-Mart stores burning across the nation. I dream of CEOs frantically going into hiding, in fear of their lives. I dream of crushing defeats of Republican candidates. I dream of a (despicable crud) mayor in New York driven out of office by mobs.
I dream of a decent job for every American.
Posted by: Mick | October 19, 2011 at 04:34 PM
The rednecks in Florida are starting to put it together.
They are unemployed, bored and angry.
They hate Obama but they have figured out that it was BUSH that really screwed them.
There are no jobs. These folks have a lot of weapons.
They are connecting the dots......
If we could get a few million angry unemployed people with AK-47's to act together, we might have something.
It beats starving to death, which is what the Republicans want to do with them.
Posted by: Mick | October 19, 2011 at 04:38 PM
You're right, Soleri - there are very few Francis of Assisis' & Solzhenitsyns' among us; and definitely not among the "occupiers".
Posted by: terese dudas | October 19, 2011 at 04:39 PM
Oops, I meant "if outsourcing became a crime."
It should be.
We need those jobs.
Posted by: Mick | October 19, 2011 at 04:40 PM
The problem, Mick, is that the majority of our 99% brethren are not Americans. This is a global movement, and the ridiculous mental lines that the ELITES have drawn on our world are worthy of nothing but ridicule.
Oh, and violence is just more of the same, and we're as sick of that as we are of theft.
This movement would have been over three weeks ago if violence was a tactic.
Posted by: Petro | October 19, 2011 at 04:55 PM
This is the final stanza from Yeats's great poem, Easter 1916.
Too long a sacrifice
Can make a stone of the heart.
O when may it suffice?
That is Heaven's part, our part
To murmur name upon name,
As a mother names her child
When sleep at last has come
On limbs that had run wild.
What is it but nightfall?
No, no, not night but death;
Was it needless death after all?
For England may keep faith
For all that is done and said.
We know their dream; enough
To know they dreamed and are dead;
And what if excess of love
Bewildered them till they died?
I write it out in a verse--
MacDonagh and MacBride
And Connolly and Pearse
Now and in time to be,
Wherever green is worn,
Are changed, changed utterly:
A terrible beauty is born.
Posted by: soleri | October 19, 2011 at 05:15 PM
Derancinated - a piece of bad cheese that has had the bad parts cut off. Isn't it amazing how one letter can change a word?
Is it OK if we go with AR-15s instead of AK-47's? Buy American!
I love the fact that "authorities" are looking for the leaders of the Occupy folks and since there aren't any, the "authorities" walk around bumping into walls saying "doesn't compute, doesn't compute, doesn't compute".
Petro, you are so correct. The Mega-cops are just itching for an excuse to unleash their firepower on the crowds. The no-leader, peaceful approach is the best way for now.
Posted by: azrebel | October 19, 2011 at 05:33 PM
Was there just a full moon? I'm reading a sort of supercharged mish-mosh of the scholarly, the pedantic plus the forward-thinking and the "Ain't It Awful" ruminations.
My mind has its limitations, so it functions in a different mode. What if we zeroed in on corporate boards of directors and how they function to perpetuate the compensation excesses? Perhaps a microcosm, but (to me) the pervasive corporate crony/insider governance is part of what's been driving the dysfunction.
Example: with Wal*Mart's poor performance, who is responsible for Tom Schoewe (CFO) and his mega million dollar compensation package? The BOARD! What if we zero in on them? They're based in Bentonville, ARK . . not Wall Street but they're at the core of what ails us. And I intend to try and learn more about how this works and share the sad story with those who may have a clue!
Posted by: morecleanair | October 19, 2011 at 06:24 PM
Here's an interesting breakdown of the recent pre-history of the OWS phenomenon (that schooled me quite a bit, actually - and I thought I've been rapt):
http://techpresident.com/blog-entry/ows-other-98-us-uncut-rebuild-dream-look-shoes-didnt-drop
Posted by: Petro | October 19, 2011 at 07:02 PM
morecleanair,
While board members are touted as "Stalwarts of the indursty in which they serve", in reality they are usually golf buddies of the CEO and are only on the board to rubber stamp everything the CEO tells them to do.
I know this first hand and I can say without exaggeration that of the three dozen board members I have known personally, every one of them was a class A dufus, who would do anything for their meeting stipend along with a bunch of free golf.
Don't be looking for any oversight from these yahoos.
Posted by: azrebel | October 19, 2011 at 07:18 PM
azreb: not looking for oversight as much as the spotlight on these "dufuses". From our national vantage point in the Hush Puppies and the barcalounger, there's not much awareness of WHO the enemy may be. Having belonged to one of the highly respected corporations, I also read Ken Dayton's treatieses on bad governance. He had it figured out 30 years ago!
Posted by: morecleanair | October 19, 2011 at 08:37 PM
I don't agree that OWS needs leaders. Humanity has had leaders forever, and look where they've led us. Any leader will just come across as a populist demagogue. The concept of leadership is cultivated from the moment we're born, and if you remember elementary and high school, you remember who the "leaders" were. Bullies, jocks, inherited wealth, kids whose parents had influence within the community and the local school board. The cream really doesn't rise to the top. Scum does.
Posted by: pbm | October 20, 2011 at 05:35 AM
Politics is a process, not an event. Occupy Wall Street demonstrations are part of the process. The Wisconsin protests, in fact, have had a significant effect on slowing Walker in Wisconsin. Since all politics are local, it is difficult at times for national media pundits to grasp local political nuances.
Occupy Wall Street in its present form will not directly challenge business as usual in DC. Its indirect effects are harder to predict.
Posted by: jmav | October 20, 2011 at 05:48 AM
Any Given Bloody Sunday
Posted by: Joar Pio | October 20, 2011 at 06:34 AM
Another bland exercise in futility:
https://azdem.org/contribute_ES31/
Is this the best they could do?! It's more embarrassing for the producers. It almost makes me wish for a pair of jack boots and a big, fat truncheon. At least the producers of this video have no cojones that could be crushed.
Posted by: Joar Pio | October 20, 2011 at 01:06 PM
Did anyone notice the bicycle joining the peaceful protestors? :)
Posted by: Rate Crimes | October 20, 2011 at 02:51 PM
Joe Ourpile
Joe Ourpiehole
No matter how you spell it, he's our sheriff until:
"2036 Re-elect Joe he's only age 104"
Posted by: azrebel | October 20, 2011 at 03:12 PM
I think the Occupy movement is great. I cheer it on. Whether or not it succeeds on its own terms, simply by drawing media attention to the economic problems of ordinary folks, it faciliates a public discussion of defects in the system.
For every columnist exaggerating the incoherence of the movement's agenda or painting its members as spoiled, clueless, or without a practical means of resolving the problems it complains about, there is another who recognizes that real issues underlie the protests and who sympathizes with those who, through no fault of their own, have suffered long-term unemployment, foreclosure, bankruptcy, or homelessness as a result of the status quo.
There are answers, and they can be accomplished. They are even politically palatable to the vast majority of Americans, if not to the financial interests whose lobbyists and campaign contributions have hijacked the democratic process.
The major problems at the core of this are easy to define: (1) high unemployment; (2) a large percentage of the population running to stand still, and many falling behind anyway, because they can't make ends meet. In other words, the post WW II "American Dream" is in peril.
These problems are related. For a long time, stagnant or declining real wages were masked by the ability of consumers to use their homes to obtain loans or to sell them for profit in an ever-inflating housing market, and easily obtained credit cards with low rates.
All of this points directly to a single problem: insufficient domestic consumer demand by those inclined to consume, because they lack sufficient disposable income. There is plenty of income, but not in the hands of those with unfulfilled consumer needs: instead in the hands of those with plenty of extra cash who use it for financial speculation.
Homes won't become cash cows for individual homeowners any time soon. Credit cards' average national rate is at a record high 15 percent and easy credit isn't likely to return for most consumers any time soon. Healthcare inflation continues with no end in sight. Baby Boomers are retiring, and as they switch from jobs with incomes to retirement, their fixed incomes, whether from Social Security, shrunken investment portfolios, or home sales, will not make up for the loss of their earnings. Healthcare problems (including the need for long-term care), for them and/or their relatives, will eat up some of this retirement income/wealth also, and prompt saving of much of the rest. Despite record numbers of foreclosures and bankruptcies, household debt is still about 114 percent of disposable income, and households are using some of their cash to pay down debt instead of spending that cash on goods and services. Unwilling to believe that the sluggish economy will improve any time soon, they are also saving more of their cash instead of spending it. None of this bodes well for the economy, 70 percent of which is consumer spending (and most of the rest is indirectly predicated upon consumer spending).
Commodity inflation, especially in gas and food prices, may also continue to take a bite out of U.S. disposable consumer incomes. I don't think many understand that when we and the Europeans switched production to China, we didn't just farm out jobs to those producing for our consumption: we also created an entirely new consumer class. The consumer class in China may be a small percentage at present, but the total population is so large that this percentage accounts for a large rise in world consumption; and the consumer class is growing there by leaps and bounds. China expects to more than double the number of autos on the road by 2020. When more consumers exist, demand for commodities rises: and in the short term at least, there can be little question that this drives prices upward. (Of course,at the moment China's growth is slowing.) Speculation compounds the problem because when economic growth is strong and demand for commodities is high, speculators jump on the bandwagon, further driving up demand (at least on paper) and thus bidding up prices. Down goes domestic disposable consumer income, since more must be spent on core items, thus slowing down economic growth further.
At present, we have a situation in which businesses won't hire and give raises until consumers spend more, and consumers won't spend more until businesses hire and give raises. Temporary stimulus only kicks the can down the road while adding to deficits and increasing the portion of federal budgets needed to service debt to the public; it is also unlikely to do much more than prevent things from getting significantly worse (though that isn't to be gainsaid) rather than its (rather misleadingly stated) goal of reducing unemployment to any substantial degree.
The only way out of the impasse is to increase consumer spending, not temporarily but long-term, and that can no longer be done using houses as cash cows or by the use of consumer credit cards. The only way to increase consumer spending is to increase disposable income. (Genuine healthcare reform could be one means to this end, but that is another subject for another time.)
More specifically, to increase disposable income for those with unfulfilled consumer needs. An increase in disposable income for those who already have excess cash will simply fuel financial speculation and bid up the price of paper assets without substantially increasing consumer spending. At present a state of concentration of income (and wealth) exists which hasn't been seen in post-WW II America until recently, and which compares only to that existing in the late 1920s before the Great Depression. As much as anything, consumption is low because those who have amassed record high shares of national income over the last decade or more don't use as much of their income for consumption as the working and middle classes would (if they had it).
The alternative, then, to a national future of chronic high unemployment (and all the associated fiscal costs) is to ameliorate income and wealth concentration; money must be taken from those with excess cash who use it for financial speculation, and given to working-class households who will use it to fulfill unmet consumer needs; say, the bottom third of the population, whose consumer needs are largely unfulfilled and who, provided with disposable income, would spend it on consumer products and services. I suggest that this income be distributed using an expanded Earned Income Tax Credit since the program already exists and because this would reward those who work rather than exist as an uncompensated social benefit.
Even to the extent that portions of this redistributed income were used to pay off debt, this itself would free up other disposable income (from wages and salaries) for consumerism, reducing consumer debt as a percentage of GDP by paying down a portion of it.
The increased demand would cause the business sector to increase output, requiring them to hire new workers and make more capital investments; and new businesses would be created, to get in on the gold rush. It would thaw credit to small business since, armed with the documentable prospect of an enlarged income stream, they could approach lenders for loans with greater plausibility. It would also stabilize the housing market by reducing foreclosures and increasing home purchases.
This would also maintain the classical feedback links between consumers and business since those receiving the redistributed funds, not the government, would decide how, when, and on what to spend it.
Additionally, in addition to stimulating job creation by employers to meet increased consumer demand, it would encourage welfare recipients to obtain gainful full-time employment (since qualification for the redistributed funds would be contingent upon full-time employment or the equivalent in multiple part-time jobs).
Best of all, it would not be a one-time blip in the economy, but a permanent structural change built into the tax system. The money could be metered out to ensure control over inflationary tendencies: businesses would need to receive the new spending at a rate which allowed them to respond by ramping up production to meet it rather than at a rate which simply encouraged them to increase prices in order to ration (and profiteer from) existing supplies.
Contrary to conservative criticisms, this would not take away investment funds. The taxed income would remain in the banking system the entire time: first in the bank accounts of those wealthy individuals or institutions which are taxed; then in the bank accounts of those to whom the funds were redistributed; then in the bank accounts of the businesses which received the funds spent by these beneficiaries of redistribution.
Nobody would be taking money out of the banking system and putting it under a mattress: businesses receiving the funds (a consumer decision) would make use of them, as would banks holding these business and consumer funds in newly enlarged personal and business checking accounts, loaning and investing as they see fit.
In essence, then, we would be moving a portion of the nation's private income from the portion of the economy devoted to speculation, to the portion devoted to productive activity.
The question remains how to fund this at the tax end. Well, who has the money? The answer has already been discovered by the Occupy protesters and others: Wall Street and the big investment banks, hedge funds, and other financial operators.
Simon Johnson, former Chief Economist of the International Monetary Fund noted in a 2009 piece for the Atlantic called The Quiet Coup that "from 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent." (Though it has fluctuated since then, it accounts for roughly a third of corporate profits in the U.S.)
As Jon Huntsman noted in a recent Wall Street Journal editorial, "More than three years after the crisis and the accompanying bailouts, the six largest American financial institutions are significantly bigger than they were before the crisis, having been encouraged to snap up Bear Stearns and other competitors at bargain prices. These banks now have assets worth over 66% of gross domestic product—at least $9.4 trillion, up from 20% of GDP in the 1990s. There is no evidence that institutions of this size add sufficient value to offset the systemic risk they pose."
Now we know who has the money. How do we get it?
Well, there are the usual channels (personal income tax, capital gains tax) but conservatives of both parties routinely stymie tax increases even on millionaires, claiming (contrary to evidence) that this would hurt small business and job creation.
What is needed is a targeted tax that avoids these objections while going where the money is.
A tax on financial transactions. This could be very, very small since both the volume and amount of such transactions is very, very large; unlike the other taxes, which are subject to underreporting and to tax shelters, it would be easy to collect since such at some point all such transactions take place at centralized brokerages and are computerized. A tax of just one percent would raise trillions per year. A smaller tax would still raise huge amounts for redistribution. The little guy who does a handful of stock trades each year would scarcely notice it. The hedge fund trader who makes tens of billions per year as personal income would, as would the derivatives trader.
Here is a simple way to solve the problems of high unemployment, of inadequate domestic consumer demand, of excessive concentration of income and wealth, and of an unhealthy overreliance on the financial sector for business profits. A way to restore the American dream for tens of millions of households. A way to accomplish these things by changing fundamental structural factors in the economy on a stable and permanent basis, without having to create any new social program or entitlements, using the existing skeleton of the Earned Income Tax Credit.
Only Big Finance would object. That's a problem in a political system where it has an outsized voice due to campaign finance and lobbying influence, but not an insurmountable one, given that ordinary households across the political spectrum could easily get behind such a tax.
What are we waiting for?
Posted by: Emil Pulsifer | October 20, 2011 at 05:56 PM
Pre-Occupied.
Posted by: Rate Crimes | October 21, 2011 at 06:51 AM
That was an excellent synopsis, Emil, and I was hoping the destination was a transaction tax. Are you aware of this:
http://www.adbusters.org/blogs/adbusters-blog/robinhood.html
Also, I have a question. Since what you have discussed is more-or-less returning our economic culture back to a relatively healthy condition, I wonder: Do you think that this can be re-constituted as a zero-growth economy? Because growth has been such a built-in pre-condition for a "healthy" economy, according to the practitioners of the dismal science.
Posted by: Petro | October 21, 2011 at 08:54 AM
Not really OT: I learned this morning that KJZZ will soon be ending the local "Here and Now" program. It was the only locally produced radio program on public affairs, hosted by the talented and always fair Steve Goldstein. This is a devastating loss to the community and the public square.
Now Phoenix is left to the right-wing talk-radio screamers. "Here and Now" took on all sorts of topics with all kinds of viewpoints and was fact-oriented. I was a guest many times, which probably did the program no good with the local oligarchs.
I can't think of another big city in such a situation. Seattle has multiple locally-produced public affairs shows on two different NPR stations.
Posted by: Rogue Columnist | October 21, 2011 at 10:23 AM
KJZZ ??
If a radio station you've never heard of falls in the forest, does it make a sound?
Emil, Petro and others: these are some outstanding ideas being offered up here. Since we are operating in a vacuum (as you know sound doesn't travel well in a vacuum), how do we get these ideas to be heard?
As they say in our 51st state, Iraq, it's like farting into a duststorm, when you try to get these ideas out in the middle of the LA/DC/NY media maelstrom.
Posted by: azrebel | October 21, 2011 at 10:52 AM
azrebel - well, since you asked, I did expand a bit on my first comment, so allow me to blog-whore once again:
http://deconstructingthemanifest.blogspot.com/2011/10/this-is-revolution-of-mind-ows-day-34.html
Vacuum? Jon gets hits... (I get some, too - he said defensively). :)
Posted by: Petro | October 21, 2011 at 12:42 PM
Petro, I hadn't seen the "Robin Hood Tax" link. Thanks for that!
"Since what you have discussed is more-or-less returning our economic culture back to a relatively healthy condition, I wonder: Do you think that this can be re-constituted as a zero-growth economy? Because growth has been such a built-in pre-condition for a "healthy" economy, according to the practitioners of the dismal science."
That's an interesting question and one of the issues I've been intending to examine more closely, simply because I want to understand how the current economic system works and, as you note, growth seems to be a fundamental aspect of it. I'll admit a substantial degree of ignorance at this point, but we can consider a few basic questions and see where they might leads us.
Zero growth as I understand the term means that the production of goods and services is fixed at a given level, or at least that total production is fixed at a given level, whether or not the quantities of individual goods and services produced grow or shrink. Presumably zero growth includes the replacement of existing systems as they require it.
If the population does not also have zero growth, then you have a situation where a larger and larger population has to make due with an unchanging amount of "stuff". Consider the economy as a pie: even if we give everybody the same sized slice, that slice will shrink over time because the size of the pie is the same (zero growth) whereas the number of slices that must be made (population) grows. So, zero growth seems to require zero population growth regardless of the economic system.
Unfortunately, the areas of the world with the least economic development and the worst living conditions, seem to be the ones with the highest rates of birth. Most of the growth in world population in the coming decades is expected from Africa. (Asia and Latin America had been high growth but that has been slowing and is projected to flatten out further.)
http://en.wikipedia.org/wiki/File:World_population_(UN).svg
Theoretically, if you could fix the population (how?), some system of zero growth could occur. I'm not sure that capitalism as we know it is consistent with that (this is one of the things I want to understand better). However, tentatively I've decided that capitalism is not consistent with zero growth scenarios.
My reasoning is as follows: under capitalism, goods and services are sold at a profit. Profit means selling something for more than you pay to produce it. To produce it, you pay workers labor costs. (You may also pay other businesses, but let's simplify this and assume a silly but easy to understand model economy wherein everything is produced by One Big Business which employs all workers. We'll also simplify by assuming a consumption society wherein workers spend all their wages on consumption rather than saving part of their incomes.)
Workers are also the consumers of what you are selling, so total workers' wages and salaries constitute total consumer income. (Yes, the owners also have an income, but not until the workers buy what they are selling at a profit, and we haven't gotten there yet; and note that the owners also buy some of what is produced.)
Now, it's easy to see that if total consumer income equals total labor costs, profit is impossible: worker-consumers can only spend what they are paid to produce, but by definition profit is this amount plus a margin added on.
This implies that capitalism requires something else to work. That something is credit. Credit is a loan with interest. Note that interest is itself a form of profit. (The One Big Business also offers financial services.) If worker-consumers are already spending all of their income, and borrowing also, how can they (in totality, not individually) possibly pay back a loan with (or even without) interest?
Well, credit is a way for owners to borrow too: except that they are borrowing from future earnings. That is, they expect the economy to grow, and as it does, there is more income, and they can recover the money they loan, with interest.
Under zero-growth, however, that isn't possible, because economic output is fixed and this implies a fixed money supply.
Remember, we're talking about the entire system, not just one or a few transactions: total production of goods and services, and total worker-consumer income; and the former must be larger than the latter in terms of value, in order for profit to be possible. The difference is made up by loans. But loans cannot be paid back if all consumer income is already applied toward current consumption each pay cycle. They can only be paid back if total income grows to allow both the current amount of consumption plus the repayment of the loans over time (with or without interest).
Objections?
Note that in the "real world" credit (and systemic profit) is only possible by the magic of the Federal Reserve. Credit can only increase if the money supply increases.
When the Fed makes an open-market purchase, it buys Treasury securities from private sellers. When it buys a million dollars of securities from someone, it not only wires a million dollars into the seller's bank account, it credit's the seller's bank with a million dollars in reserves with the Fed.
However, our banking system is what is known as a fractional reserve system: this means that banks only have to keep reserves equal to some fraction of their customers' deposits: these days I think it works out to about 10 percent though I might be wrong since things have changed a bit lately.
This means that the bank of the seller has about $900,000 of money to play with: if it does this by using it to make loans with interest, to lesser banks and to businesses and individuals, it is making a profit (interest) from those loans.
The bank NEVER has to pay this back to the Fed. And over time, outstanding systemic bank reserves only get bigger (transient blips notwithstanding) since the economy is growing and so, therefore, is the money supply.
So, the Federal Reserve is bankrolling the profits of the nation's largest banks. It's a kind of inverted socialism. There is nothing new about this: it has worked this way from the beginning.
(Almost out of online time -- gotta run.)
Posted by: Emil Pulsifer | October 21, 2011 at 04:53 PM
@Emil
"practitioners of the dismal science."
Here! Here! Emil.
When I took economics classes in college, the professor would always have an out if you questioned a theory. He would say, "you have to over-look the individual, human aspect". So, you're telling me the economic theories work well with robots, but human behavior screws them up. A dismal science indeed!!
"consider the economy as a pie" - can mine be Key Lime pie? I really like Key Lime Pie. You can have Key Lime pie in 50 different states and 50 different restaurants and no two will be the same. I like my Key Lime pies the way I like my women..................(you all can fill in your own ending).
If the FED had been a good idea, it would not have been spawned in darkness and secrecy in the swamps of Georgia.
Many, many kooks across the country thought of Obama as the Anti-Christ. Is there anyone better suited for the role than Bernanke??
Posted by: azrebel | October 21, 2011 at 06:46 PM
Oh, and by the way a philosophy of a zero growth economy will NEVER be acceptable in the US business community. NEVER.
NEVER.
Posted by: azrebel | October 21, 2011 at 09:01 PM
Here's a question for the smart ones in the room.
The $600 trillion derivatives time bomb:
If you start out with a product (the derivatives) which have no actual value, just a promise of future value, and through multiple trades you keep increasing the "value" of these derivatives. So you trade and you trade and you trade. And commissions flow like water.
Then the bubble on which the whole process began bursts.
Remember, there was no real value to begin with so that the math would go as follows: zero times numerous trades minus commissions and bonuses now equals a completely imaginary, made up gigantic number, $600 trillion.
Rather than crash the whole world economy or enslave the whole world population to pay back this imaginary amount, why not put the amount, $600 trillion into a calculator and hit the clear button. The battery in the calculator has more "real" value than the $600 trillion in derivatives.
Yes, the commissions and bonuses are gone, but that's an issue for another time, otherwise known as payback time.
Sorry for the long question, but could someone venture an answer for me.
Thanks
Posted by: azrebel | October 21, 2011 at 10:26 PM
@Emil
Rather than thinking about a zero-growth economy and pondering what happens when populations increase, think about a zero-surplus economy functioning in a society that understands what enough means.
That will NEVER, NEVER, NEVER, NEVER be acceptable to the US business community. In fact it wasn't when the business community arrived on this continent and pushed all the societies that had been functioning that way for several millennia out of the way.
Posted by: doYourMath | October 22, 2011 at 10:16 AM
azrebel wrote:
"Sorry for the long question, but could someone venture an answer for me."
Doing what you suggest means the oligarchs would no longer be oligarchs. Many would see their fortunes vanish instantly like physical matter when it is hit by a Star Trek phaser set to kill.
I noticed Ezra Klein, in that long piece that got so much attention recently, he touched on a truth few want to discuss:
"By saving the banking system, you end up with banks that are quietly holding on to toxic assets in the hope that one day they’ll be worth something."
If that "hope" Klein talks about were to disappear, many rich people would no longer be rich. And the first order of any government that has ever existed is to protect the assets of the rich. That's one thing communist China, the Soviet Union, the Confederacy, and modern America all have in common.
So the game is to pretend the rich are still rich until human beings fill the hole under the toxic assets with new wealth created from their work, and with savings derived from their obedience to "austerity measures". Once the economy "catches up" and backfills the rich man's debt, then and only then, will the oligarchs on the planet stop pushing the "austerity" meme. Until then don't dare ask for "more gruel".
I noticed Matt Taibbi on his blog yesterday delivered this bit of stunning news that totally supports my analysis up above:
~~~~
"Bank of America is shifting a huge collection of Merrill Lynch derivatives contracts onto its own federally-insured balance sheet. This move of risky instruments off the uninsured Merrill balance sheet onto the commercial bank's balance sheet was done to prevent Bank of America's creditors from attacking the firm with collateral calls and other sorties. Essentially, an irresponsible debtor, B of A, is keeping a loan shark from breaking his legs by getting his rich parents to co-sign his loan. The parents in this metaphor would be the FDIC.
The FDIC naturally is not pleased with this development, but the Fed, the supreme banking regulator, is apparently encouraging this move. Here's how Bloomberg characterized this move:
In short, the Fed's priorities seem to lie with protecting the bank-holding company from losses at Merrill, even if that means greater risks for the FDIC's insurance fund.
Again and again, the Fed proves it has no appetite for allowing Wall Street to eat its own pain, and continually encourages banks to stick the government with its losses and bad assets. This move will allow Bank of America to keep a Band-Aid over its disastrous financial situation far longer than it would be able to in a genuinely free market. People should be outraged at this development."
~~~~
What we have here is government by the rich for the rich and of the rich. Period. Period. Period.
http://www.rollingstone.com/politics/blogs/taibblog/occupy-wall-street-washington-still-doesnt-get-it-20111021?print=true
http://www.washingtonpost.com/blogs/ezra-klein/post/could-this-time-have-been-different/2011/08/25/gIQAiJo0VL_blog.html
Posted by: koreyel | October 22, 2011 at 11:52 AM
I didn't have time to finish explaining the Fed's "money mechanics" and stopping at the first step might leave a misleading impression.
I mentioned that when the Fed makes a $1 million purchase of Treasury securities from a private seller, they wire the money into that party's bank account but also credit his bank with $1 million in reserves. Because of fractional reserve requirements the bank only needs $100,000 to cover the million and can loan the $900,000.
All of that is true, but it doesn't stop there. Let's say that the Fed loans $900,000 to some business. The bank does this by creating a deposit account for the business and crediting that account with a $900,000 balance. That is as easy as punching a few keys on a computer: banks in fact can create money too (it's called deposit money) but only when reserves (in this case provided by the Fed in expanding the money supply) support this.
So, now there are two deposit accounts: the seller of the securities with $1 million, and the business that received a loan of $900,000. That's $1.9 million in deposit money, but the bank has $1 million in new reserves courtesy of the Fed. Again, because of a 10-1 fractional reserve requirement the bank needs only $190,000 in reserves to cover the $1.9 million in new deposit money. That leaves $810,000 in excess reserves, so the bank can repeat this process over and over, creating numerous loans, until the new deposit accounts total $10 million (the $1 million of the securities seller plus $9 million in new loans). At that point, the $1 million in new reserves provided by the Fed can't support any further loan expansion.
So, in essence the Fed provides a free gift (not a loan) to the bank equivalent to $9 million (the principal of the new loans); the bank then loans (not gives) this principal to private borrowers, and the interest paid on the loans is the bank's profit. Friedman was wrong: there IS such a thing as a free lunch.
It might seem as though the Fed is also providing income to the bank in the form of $9 million in creatable loan principal; after all, the principal will be repaid to the bank by private borrowers, along with the interest on it.
However, even though the bank gets the $9 million back it doesn't let it sit idle: it makes it work by loaning it out again. So, even though the individual loans are repaid with interest, the total of outstanding new loans never drops below $9 million. It's the interest on these loans that provides the bank with its profits, in perpetuity. In fact, as the economy grows, the money supply must grow, and thus the Fed's open-market purchases continue and grow, so that over time the bank has enough reserves to expand its portfolio of loans further than this $9 million. (And of course, "real world" amounts are much larger than this.)
Even if some of the bank's customers transfer money to other banks (paying bills with checks written on their deposit account, say) total systemwide bank deposits remain the same, as does the total reserves needed to support them. And of course, the reverse is also happening, as other banks have deposits transferred to this bank in the same fashion.
Posted by: Emil Pulsifer | October 22, 2011 at 01:31 PM
To azrebel,
Actually it was Petro who made the "dismal science" reference. According to Wiki the term was coined in the 19th century in response to Malthus' gloomy (and erroneous) theory that population growth would result in mass starvation.
I wouldn't call the Jekyll Island Club swampy. But according to Forbes founder Bertie Charles Forbes the plans were hatched in secrecy and the participants arrived "under cover of darkness". This was to stymie both reporters and the public.
http://en.wikipedia.org/wiki/Jekyll_Island_Club
There is nothing wrong with the idea of a central bank (which is what the Fed is). Alexander Hamilton proposed one very early on. It's all a question of how it's run and on whose behalf.
There had been a series of bank panics and recessions in large part because under the "free banking system" there was no central authority to regulate commercial banks, impose reserve requirements, and act as lender-of-last-resort if a bank runs low. There also didn't seem to be enough money to support the economic activity going on and the system wasn't flexible enough to respond to economic changes quickly.
A side point: most "gold bugs" or metallic standard advocates don't realize that by the time FDR ended the gold standard, most of the money supply consisted of deposit money. Again, it's because banks operated under a fractional reserve system. There wasn't anywhere near enough gold to pay everyone off if they had demanded hard currency for their bank balances.
Posted by: Emil Pulsifer | October 22, 2011 at 02:01 PM
"Again and again, the Fed proves it has no appetite for allowing Wall Street to eat its own pain, and continually encourages banks to stick the government with its losses and bad assets."
Well, would the nation's (and the world's) economy be better or worse off right now -- and remember I'm talking about for the ordinary household -- if the banks hadn't been bailed out?
The banks repaid nearly all of the bailout funds. As of March 3, 2011, the bipartisan Congressional Budget Office estimated that "the cost to the federal government of the TARP's transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not been made yet, will amount to $19 billion."
http://www.cbo.gov/doc.cfm?index=12118
The real problem is continuing to allow banks to BE too big to fail: the nations largest financial institutions are actually larger now than they were before the financial crises, because they bought out so many failed institutions at bargain basement prices.
The other real problem is, of course, failure to take adequate steps to alleviate the economic suffering of ordinary citizens: long-term unemployment, foreclosures, bankruptcies, and homelessness, as well as to alter the structural fundamentals of the economy to permit healthy growth. This can only be done by addressing the high concentration of income and wealth that exists.
Posted by: Emil Pulsifer | October 22, 2011 at 02:12 PM
Germany has been proposing a worldwide financial transactions tax, as well as stricter cross-border regulation of banks and investment funds:
[German Chancellor Angela] Merkel, addressing a congress of trade unionists, said, "It cannot be that nations outside the eurozone, who constantly urge us from outside to do something to fix the debt crisis, at the same time reject across the board any financial-markets transaction tax.
"I consider that's not right," she said. She said she was now pressing for such a tax within Europe at least, although it would be better to introduce it worldwide, in order to raise money from the financial-market big players to help fix the crisis.
http://www.moneynews.com/Economy/financial-tax-merkel-obama/2011/10/16/id/414627
Even though the transactions tax contemplated by the Europeans is fairly small, the Obama administration has been resisting it, and also resisting uniform international regulations on the finance industry that are stricter than now obtain in the United States. Hmmm... I wonder why? Oh! Now I remember:
"Obama has brought in more money from employees of banks, hedge funds and other financial-service companies than all the other GOP candidates combined, according to a Washington Post analysis of contribution data."
http://www.washingtonpost.com/politics/obama-has-more-cash-from-financial-sector-than-gop-hopefuls-combined-data-show/2011/10/18/gIQAX4rAyL_story.html
Posted by: Emil Pulsifer | October 22, 2011 at 02:25 PM
Transactions tax?
A fine idea that has been pitched since Keynes. But as Emil points out, the oligarchs that own our government will never allow it. You'd have a better chance pulling a loaded rifle away from a young Charelton Heston.
Perhaps if there was another Great Depression of equal pain. But then you'd need another FDR as opposed to an Obama, a McCain, or a Mitt Romulan. Another FDR? Fat chance. They are as rare as Octavians. (And just like Rome, we are running on the fumes of Augstus's/FDR's good policies.)
As for this question by Emil, it frames things in a false dichotomy that oligarchs just love:
--Well, would the nation's (and the world's) economy be better or worse off right now -- and remember I'm talking about for the ordinary household -- if the banks hadn't been bailed out?--
There is no question that the modern world needs banks and fiat currency and the Fed. But to phrase a question like that, serves no one but the banksters...
Lastly in regards to this (also from Emil):
--As of March 3, 2011, the bipartisan Congressional Budget Office estimated that "the cost to the federal government of the TARP's transactions (also referred to as the subsidy cost), including grants for mortgage programs that have not been made yet, will amount to $19 billion." --
I've heard so many different numbers that include some things and exclude others. Honestly, I don't know who or what to believe on how much "socialization of the player's losses" has been dumped on the American taxpayer (and as the Taibii quote shows, continues to be dumped on the taxpayer). What's the TRUE FULL accounting? And does your accounting includes super favorable interest rates to preferred players?
Will we ever even know?
It is a lot like asking: Where did all the Iraq money go?
Posted by: koreyel | October 22, 2011 at 03:53 PM
DoYourMath, I like your comments particularly one I think Vine Deloria Jr would have liked, “ In fact It wasn’t (acceptable) when the business community arrived on this continent and pushed all the societies that had been functioning that way for several millennia out of the way.”
Posted by: cal Lash | October 22, 2011 at 06:05 PM
Emil, azrebel, koreval, et. al:
I must say that I am levitating a bit over the response to the zero-growth question.
Regarding Malthus - I'm not so sure he was incorrect regarding the "mass starvation" bit. Considering the larger question of resource constriction, and the fact that such exponential food production has been fueled, literally, by petroleum...
Indeed, an afterthought to my question (after I hit the "Post" button) was to ponder if a zero-growth economy (which I agree cannot be solved by capitalist imperatives) could be enacted in order to forestall a Great Malthusian Cull-Off.
Are we intelligent enough to do this, or are we merely voracious bacterium in a Petri dish after all?
(This is all, of course, rhetorical.)
Posted by: Petro | October 22, 2011 at 07:46 PM
YES PETRO!!!!
Posted by: cal lash | October 22, 2011 at 08:18 PM
"Humans are a virus."
The Matrix.
Posted by: azrebel | October 22, 2011 at 08:24 PM
bacteria - it's late.
Posted by: Petro | October 22, 2011 at 08:34 PM
Thanks, Cal. I knew you would understand. "Custer Died ..." is next up on my reading list.
Posted by: doYourMath | October 23, 2011 at 12:44 PM
Actually, koreyel, I said there's a reasonable chance of getting a transactions tax passed: "Only Big Finance would object. That's a problem in a political system where it has an outsized voice due to campaign finance and lobbying influence, but not an insurmountable one, given that ordinary households across the political spectrum could easily get behind such a tax."
The CBO link explains what is included. Go and read the report! Different numbers have been released because estimates have been revised downward over time, as it became clear that less of the authorized funds would be actually disbursed than initially thought, and because they came to be paid back more quickly than expected.
How will you recognize a "full true accounting" unless you are willing to do your homework? You can't complain if all you are willing to do is shrug your shoulders and ask rhetorically what's included and excluded without bothering to check.
Posted by: Emil Pulsifer | October 23, 2011 at 03:13 PM
To azrebel,
The thing about derivatives is that, even if their value is somewhat notional or nominal, the value of a transaction tax levied on their trade is not: Uncle Sam's tax bill (for instance) is payable only in U.S. currency, not derivatives.
As for derivative bubbles, and what might cause them to pop, and when, I'm no expert. Nonetheless, a vast network of financial instruments of this sort, ballooning to a total notional value which is orders of magnitude larger than annual world GDP -- instruments with poorly understood interconnected linkages (with each other and with various economic conditions outside their control) -- strikes me as potentially disastrous.
A transactions tax, if sufficiently large, might also discourage or slow the growth of such a bubble. Adequate financial regulations, oversight, and enforcement are absolutely vital, also.
Posted by: Emil Pulsifer | October 23, 2011 at 03:18 PM
Azrebel and Koreyel, Per Edmund O Wilson"the pattern of human population growth" in the 20th century is "more bacterial than primate."
And DoYourMath because " God Is Red", they would never have ran out of phosphate.
Posted by: cal lash | October 23, 2011 at 03:19 PM
"doYourMath" suggested that I "think about a zero-surplus economy functioning in a society that understands what enough means".
I presume that by this you mean a non-profit system of production where maximum pay (or other compensation) is some fairly small multiple of median pay among all workers.
Obviously such a system must be born from the womb of contemporary (or future) capitalism, since there must be a transition (whether sudden or gradual) from the one to the other. How can one create a working society of this sort without first understanding how capitalism works? More to the point, what are the fundmental problems that ANY economic system must address? What methods are used to address them now? And what methods should replace them, consistent with these goals?
Allocation and control of resources is one such problem. Today, we have a division of resources that is the culmination of capitalism to date. If all companies were magically given over to their workers tomorrow, the uneven division of spoils implies nothing less than the creation of a new set of bourgeoisie: are the companies which control such essential economic concerns as energy (oil, coal), farming, banking, shipping, mining, and logging -- each of which is now dominated by a small number of very wealthy and powerful corporations -- equal in assets, power, and importance compared to, say, an Uncle Bob's Fish Nuggets franchise? What leverage do fish-fryers have over the titans of industry, even if they are run by workers instead of capitalists?
Even in a non-capitalist society there must be capital: there must be a way of allocating and rationing resources, because resources are finite and must not be wasted, lest there be insufficient resources to provide for the needs of society as a whole. What mechanism is to accomplish the rational allocation of resources?
On the other hand, if instead of competing groups of workers acting largely on their own behalf, the state is to organize and control economic activity on behalf of society at large, who is "the state"? It isn't the general population or even the workers: it's the administrators empowered to make such determinations, together with whatever mechanisms they have at their disposal to enforce these determinations. These administrators are a de facto bourgeoisie also.
Who are they? What is their expertise? What are the concrete means and methods by which they will run a national economy? From whom do they derive their authority? How can they be removed from power if the need should arise? What constitutes "the need" and who decides? These are all political as well as economic questions.
Unless society as a whole (or a subtantial majority) understands and agrees to a new economic order, there will inevitably be dissension, not merely intellectually but in practice -- strikes, civil disobedience, sabotage, or open rebellion -- especially since, unless you start from a flawless plan, there will be problems and setbacks, surprises and errors, recalculations and changes to plan, all of which are sure to make various parties unhappy. In the absence of an informed social compact, the only way to prevent the new system from being reversed or falling apart is to control the population by means of media manipulation and where necessary, physical oppression.
A system controlled by a minority of dogmatic zealots with absolute media control and enforced by police and paramilitary is not a democratic society. It breeds a class secure in its power, unresponsive to public complaint, and willing to lie to the people in the belief that this is necessary for the preservation of a system that will eventually work out for the best if only given the chance. Years stretch into decades and meanwhile this system, which needs hard men to enforce the envisioned order in the face of public reluctance and resistance, draws to itself power seekers for whom ideology is merely a stepping-stone to personal domination and privilege. This residue remains after the idealists have lost faith or been purged.
Given all this, it seems clear that a wholesale change to the economic system should be very well worked out, yet flexible; should transition as seamlessly as possible from its economic predecessor; and should not be attempted before the population is thoroughly educated and prepared, with consent sought and obtained explicitly from a substantial majority.
Meanwhile, achieving a more equitable distribution of the fruits of society and establishing fair terms of labor is a worthwhile effort, helps build networks and goodwill, and provides a great deal of experience in organizing, communicating with others in a compelling fashion, motivating others to action, navigating the political system, and finding the right mix of political activism and direct action for any given situation; and it would separate the wheat from the chaff: activists who are able, trustworthy, and dependable, from those who are at best casually motivated or easily discouraged. This would greatly aid any organization with aspirations toward the formation of a future movement or party.
I don't mean to suggest that these questions are unanswerable, much less unimportant. Norway has made an excellent start. The state owned bank, a powerhouse, is healthier than U.S. banks -- one of the strongest in the world. The state controls nearly a third of publicly listed companies. Productivity is excellent. Unemployment is much lower than in the U.S. (and was even before the recession), and so is poverty. Healthcare is free, universal, and of good quality. Though it has higher taxes, wages are higher also, and as a consequence Norway has one of the highest standards of living in the world. (This, not tax burden or nominal prices, is what determines real cost of living.) The government is one of the most transparent to public scrutiny, and least corrupt, in the world. Anyone interested in making strides toward a democratic economy should make a serious study of it. I intend to do so myself.
Meanwhile, I'm interested in understanding how capitalism really works, and in understanding the fundamental problems and dynamics that ANY economic system must deal with and which must, therefore, shape any conception of a new form of economy from the ground up. (See next comment for a case in point.)
Posted by: Emil Pulsifer | October 23, 2011 at 04:12 PM
Solar power is a case in point. Despite substantial decreases in cost, it's still not competitive with electricity provided by coal-powered plants.
Photoelectric solar has significant initial capital costs but very low maintanance costs and very low water usage, and it costs nothing to collect and convert sunlight to electricity once installed.
Part of the difference is that traditional power generation is established and makes use of economies of scale which solar does not yet enjoy.
A private solar energy company not only has to recover its initial capital costs, it has make enough of a profit on top of this to satisfy owners, shareholders, and other investors, which also means that it must recover costs and make sufficient profits over a fairly short time frame.
Furthermore, built into this company's initial costs are the profits of every other private company involved at any stage, since these are added to the ultimate price for goods and services paid for by each subsequent business in the chain.
For example, the mining company that digs the raw materials used not only in the final panels but by everything taking part in the intermediate efforts, must make a profit; the mineral refining companies must make a profit; the transportation companies must make a profit; the tool and die companies that produce the machines used in manufacturing must make a profit; construction companies must make a profit; materials companies and fabricators must make a profit; the vehicle manufacturers (for vehicles used in transport, shipping, etc.) must make a profit; the energy companies that provide fuel for all of this, diesel, gasoline, petrochemicals used in manufacturing, and electricity, lighting, cooling and heating must make a profit; and finance companies underwriting all of this activity must make a profit.
Now imagine that the state owned every aspect of this process from start to finish; that it was operated efficiently (very important!) and on a non-profit basis, with executive salaries capped at a 5-1 or 3-1 ratio to median wages; and also that it made full use of economies of scale. No need to recover its initial capital expenses over a timetable, much less to make a profit at any stage of the process. How inexpensive could solar power be under such circumstances?
Posted by: Emil Pulsifer | October 23, 2011 at 04:30 PM
To paraphrase something Teddy Roosevelt said in his autobiography, "I have no use for a man who is unwilling or unable to put action behind his words."
We, not only on this blog but throughout this country have many who express a strongly held opinion of how things should be done, (me included).
Hopefully, falling short of total anarchy, it will take persons with the stones to walk up to bankers, politicians, CEO's, board members, etc., grab them by their ties and say, "you need to cut this shit out otherwise it will end badly for you."
I would hate for things to go the way Mick predicts, but short of that it's time to get in their faces and stop this madness.
I truly don't know what would cause a politician, CEO, feel uncomfortable behind their guarded office and guarded homes, but there has to be something short of hollow words to get the message to them.
I've held a hope (unfullfilled, so far) that the American public would at some point in time rise up in a unified action to send a message that they were pissed and something better get fixed fast. (As an example, I've felt that a unified, strong, effective boycott of a product, could straighten out a bad corporate move in a few days.) Problem is, with the current American public, there is no such thing as a strong, unified anything.
Gas boycott, can't, I have to go somewhere.
Food boycott, can't, I'm hungry.
The only way we could ever get an American to self-immolate to make a statement, would be to place a sticker on a gas pump that said, "PUMPING GAS AND SMOKING IS ALLOWED AT THIS PUMP".
Less words, more action.
I"m going to start taking bottled water to the Occupy Phoenix folks. I can't do much else. Maybe that will help.
Posted by: azrebel | October 23, 2011 at 04:49 PM