Stuck

This is the 45th anniversary of Apollo 11, the first manned moon landing. It marked the greatest achievement yet of a burst of federal funding of science begun under President Dwight Eisenhower. The 50th year since college students from the north went to Mississippi for Freedom Summer. Fifty years ago the Civil Rights Act of 1964 was passed. President Lyndon Johnson fought a war in Vietnam, misbegotten though it was, while declaring war in poverty. Soon, we will mark the half century since passage of the Voting Rights Act. In 1963, the Clean Air Act was approved, followed in 1972 by the Clean Water Act. In 1970, President Richard Nixon established the Environmental Protection Agency to enforce these laws.

What was the nation that did these things?

A few things stand out. It was a nation with the greatest middle class in history, the greatest industrial base the world had ever known, which made things — often with union hands, and even when not benefiting from the advances for working people ensured by organized labor. That nation believed in science and progress. It was run by two mass political parties encompassing conservatives, liberals and centrists. Taxes were high on the rich and progressive. Productivity was widely shared.

That nation is gone.

Today, a large number of Americans don't believe in science and their wishes are being enacted by a reactionary Republican Party. Research funding is being smothered. This nation doesn't have a manned space program; we are dependent on Russia to send our astronauts to the International Space Station. As we face climate change, an existential challenge even greater than that of the Soviet Union at its worst, we are doing...nothing.

The middle class has been wrecked by more than thirty years of policy changes that destroyed unions, sent jobs overseas, chained us to bad "free trade" agreements. Inequality is the highest it has been since the Gilded Age, which is no coincidence as taxes have been repeatedly cut, especially on the rich, especially with loopholes and welfare for big corporations — the latter still complaining and threatening to move overseas. "Welfare as we know it" is gone for the poor. But jobs are more difficult to find than any recovery in modern history, and those that are available likely pay poorly. Unless one is in the elite.

Our infrastructure is falling apart, in some cases with lethal consequences. Although traffic is worse than ever, most of the country is dependent on single-occupancy car trips. Our passenger rail system in the dismal 1960s was more far-reaching and reliable than today. Even large, dense cities struggle to fund inadequate transit. And there's always an excuse for doing little or nothing. An obsession with the costs of Amtrak and the expense and disruption of light rail and streetcars. Yet nobody says a word about the costs and disruption of freeways, the opportunity costs of going all-in on cars, the continued pollution of the global commons called the atmosphere. Always an excuse. "Use buses instead" (but they will be stuck in the same traffic jams as cars). "Soon we'll have self-driving cars" (even though this has been a chimera since the late '50s and car-centric Americans love to drive — they don't want to be a computer's passenger).

Our first African-American president has endured the worst attacks and nihilistic policies of the "loyal opposition," with so much of it using the dog whistles of race. Barack Obama and the fears of a changing demography have sent the agents of white supremacy to the barricades. States across the New Confederacy are enacting laws to make it more difficult to vote. Reproductive rights are similarly under attack.

We're spending between $4 trillion and $6 trillion on military adventures in Iraq and Afghanistan — both wars lost. Funny, the anti-trains and transit crowd wasn't complaining about this wasted treasure. Just like they are conspicuously absent as the taxpayers are fleeced for billions of dollars on such boondoggles as the F-35 Joint Strike Fighter. Meanwhile, our Navy and nuclear forces are either degrading or facing major cuts.

"We're broke," the reactionaries tell us. We must cut "entitlements" — i.e. the earned benefits of Medicare and Social Security. In reality, we're not broke at all. A combination of returning to the old progressive tax system and adding taxes on carbon, Wall Street carried interest and transactions, and slicing back corporate welfare would allow us to make the investments to remain an advanced nation.

Similarly, a pro-worker stance on trade, card check for easier unionization, taxing companies that send jobs overseas, breaking up highly-concentrated industries, attacking tax shelters, raising the minimum wage and providing incentives for the rich to invest in job-creating enterprises rather than gamble — all this would go a long way to reversing the hollowing out of the middle class.

The reactionaries that set this nation's compass are opposed, always opposed  — "What about the debt we're leaving our grandchildren." Unions? "They're greedy!" They are not the least concerned about the planetary disaster we are leaving future generations through our greed, short-sightedness and corruption in failing to address climate change. They are pleased that the rule of law is not applied to the rich, the banks and the "persons" that are corporations.

A court has dealt a major blow to Obamacare, which, remember, was the conservative alternative originating in the Heritage Foundation and implemented in Massachusetts by the GOP's last presidential nominee. The right will never quit until it is dead. We are the only advanced nation without universal health care. The Republican message to the poor is: die. Yet a majority of poor whites vote Republican every time.

For you brightsiders who read this and feel depressed, I have laid out intelligent responses to many of our problems. But a polity outside of the reactionaries, duhs and ignos must engage and fight. Even then, the Constitution has been so corrupted, the courts, the Congress, the big money...I don't know if it can be turned around. How on earth could the Party That Wrecked America be in a position to take the Senate this year? A peaceful, orderly breakup of this nation might be the best outcome possible. Let the New Confederacy go.

I watch the Bourne movies as they show a Europe that is beautiful, prosperous and linked by high-speed trains. This is no Hollywood fantasy. It shows what happens when nations retain a sense of the commons and don't waste so much of their money on empire and arms. If I were 30, I would move to northern Europe. I am so tired of a fight where the best we can hope is to delay national suicide.

The me that watched Neil Armstrong step onto the moon couldn't have imagined that I would ever develop such a sentiment. But that was in another country.

 

Comments

[Petro]

Jon, I share this heartache. There has to be a rational explanation for the transformation - the ebullience of the post-WWII era bears witness to the optimism we are more than inclined to embrace - and so I make a humble effort to extract it.

(As an aside, it is also very personal. As I've mentioned in past threads, I was a full-on, explode-into-space, science-lovin' child of the fifties.)

I was thinking of the massively different psycho/sociological attitude of the days of my youth, and the days of today. Things certainly weren't perfect then (both in policy - civil rights & Vietnam - and in infrastructure,) but we knew the way forward was up, up, up!

Now we have a sporadic, if not downright desultory, relationship with the science of the future. What is different?

I'll bring in an old drum to beat... energy.

One thing about the fifties, sixties is very much the same as it is in the 21st Century, and that is that we folk are sleepwalking consumers of media and the stuff that media hawks. That has not changed. Our national character was no better in those good old days than it is now.

What is different? I'm proposing that the proverbial Powers That Be - the celebs, pols, journos, and "elites" that have always been before us - are losing their optimism because the energy party is obviously over. Sure, they're not too keen on catapulting that truth to the rest of us (though it is trickling through for sure,) but they know, as some the keener of the proletariat do, that they can't just "turn it up to 11" when needed anymore.

In a way, this is good. The whole reason the rulers ruled is because they had their fingers on the distribution of the manna (fossil fuels.) They're losing their leverage, and hence are getting dangerously erratic (and, conversely, irrelevant.)

I guess I'm saying that, while the old dreams die painfully, we should know that they were just dreams, and at the end of it all whatever unfolds will still be human. Perhaps our pride and our dreams should be happy to reconcile with just... human. Outer space was never, ever, human.

(Another aside: I'm sure I've said this before - but when I watch movies nowadays, I am distracted by the idea of viewers in a post-energy-abundance future being awed by full freeways and huge jetliners. Your mention of the Bourne movies is a case in point.)

[Emil Pulsifer]

Side-note: A new reply to both Ruben and Concern Troll re Arizona water supplies and agricultural water usage, has been posted, here:

http://www.roguecolumnist.com/rogue_columnist/2014/07/the-water-questions.html

[Emil Pulsifer]

"Stuck" is a trenchant analysis, together with a list of practical (and proven) solutions:

"A combination of returning to the old progressive tax system and adding taxes on carbon, Wall Street carried interest and transactions, and slicing back corporate welfare would allow us to make the investments to remain an advanced nation.

"Similarly, a pro-worker stance on trade, card check for easier unionization, taxing companies that send jobs overseas, breaking up highly-concentrated industries, attacking tax shelters, raising the minimum wage and providing incentives for the rich to invest in job-creating enterprises rather than gamble — all this would go a long way to reversing the hollowing out of the middle class."

No sackcloth and ashes here. No mad prophet crying in the wilderness. Just good sense.

First, admit the problems without gilding; second, ascribe the causes without flinching; third, assign practical solutions without dithering. The writer has done all of that. Bravo.

[cal Lash]

Emil a post for U on
http://www.roguecolumnist.com/rogue_columnist/2014/07/the-water-questions.html

[Trotsky]

Washington, Oregon, California and Nevada as a new country.
A second country would consist of New York and the Northeastern States.
The remaining states would make up the third country and continue down the current path of Christian theocratic right wing revolution.

No breakup and the the right wing extremists embodied in the Republican Party will take all of the United States down. These right wing revolutionaries have unlimited financial backing and do not possess an ounce of tolerance nor desire for political compromise.

Texan political extremists have frequently mentioned the Lone Star state 's right to leave the US. Now that others are starting to discuss breakup, the Texans have shut up. Texas and the South have sucked the life out of this country.

[Dawgzy]

People might check out Morris Berman's 3 books on the great decline- Twilight of American Culture, Dark Ages America and Why America Failed. The last time I checked, the latter was available only as a relatively expensive e-book, well worth it to me. Berman did not write them to move units and cash in. He's emigrated to Mexico.

[Keith]

If I had to sum it up, I could say "tea party" but it is more complicated than that. The tea party is just a right wing reaction to what is happening to our government. I would say nobody, left or right is reacting as they should. Instead of bashing government or asking for more money in government, it needs a lot of fixing. President Obama seems to be the only one in the public eye who is trying to do something about it. Hopefully others behind the scenes are too. The internet has contributed to everybody seeing every little bad comment, every emotional reaction, every food plate ready to eat. Add to that the ownership of congress by multi-national corporations who now bear no loyalty to Americans, just their bottom line.

[paul joseph brown]

Not to be glib, and it's possibly bad form to offer a blunt comment to such a well reasoned essay, but Isn't it obvious what happened? Ronald Reagan convinced a majority that government was the problem, and that supply side economics was superior to Keynes. Since then we've been fighting a losing battle. Corporate power, well-served by its well-paid allies in both parties, won. Yes, both parties. Which isn't to say that the Dems are AS guilty as the GOP. The GOP as presently configured is anti-intellectual, anti-science, and anti-American, the American Taliban.

[dave weiss]

americans believe in the short hustle, the quick con, something for nothing. the reason we 'were' great was our readily available cheap resources. land, water, timber, minerals; in the words of mulholland of los angeles water; 'there it is, take it'. the concepts of sustainable shared prosperity and a unified nation that would create opportunity for all are ideas that fell out of fashion.

the simple ideas of

1) you aren't the rich
2) tax them for all our benefit

are concepts that are easy to explain.

american exceptionalism has become exceptionally deluded. we need to recapture our nation's discourse to keep ourselves great...

[dave weiss]

"Not to be glib, and it's possibly bad form to offer a blunt comment to such a well reasoned essay.."

scotus---rinse repeat...

the lasting legacy of the bushies is a vastly less 'fair' nation.

both sides do it, yes, is it equivalence? no, No, NOOOOOO!

[100 Octane]

"I am so tired of a fight where the best we can hope is to delay national suicide."

At this point I am afraid that is all that is left.
Excellent but sad commentary.

[cal Lash]

"must learn to live life suppressed by the future."
Antonio Berni.

[Emil Pulsifer]

Side-note: a new reply for cal lash re Arizona dairy farming and water use, has been added here:

http://www.roguecolumnist.com/rogue_columnist/2014/07/the-water-questions.html

[Petro]

I've pulled an excerpt from The Archdruid's column today so as to tease some of you to give this great post a read. I could not resist, as it echoes the melancholia of my comment from yesterday, above.

...During the heyday of industrialism, [the myth of faith-in-progress] was devoutly believed by a great many people, at all points along the social spectrum, many of whom saw it as the best chance they had for positive change. Faith in progress was a social fact of vast importance, one that shaped the lives of individuals, communities, and nations. The hope of upward mobility that inspired the poor to tolerate the often grueling conditions of their lives, the dream of better living through technology that kept the middle classes laboring at the treadmill, the visions of human destiny that channeled creative minds into the service of existing institutions—these were real and powerful forces in their day, and drew on high hopes and noble ideals as well as less exalted motives.

The problem that we face now is precisely that those hopes and dreams and visions have passed their pull date...

[Emil Pulsifer]

The historical role of the United States in space exploration seems to have been motivated more by reactive Cold War considerations than visionary leadership:

"By the fall of 1960, the Eisenhower administration seemed unsympathetic to the space program and slashed the NASA budget for the next year. In a reversal of a previous directive, Eisenhower cut the second stage of the Saturn program. Without that, even if the United States had manned spacecraft, they would be relegated to low-orbit flights, without the thrust for moon landings."

. . .

"Kennedy wasn’t convinced that manned space flight should be a part of his New Frontier programs. At the time he seemed more of the opinion that rockets were a waste of money, and space navigation even worse."

But shortly after Yuri Gagarin's historic first manned space flight, Cold War considerations changed the equation:

"That Thursday the president called a meeting in the White House Cabinet Room with his space advisors, including Weisner, NASA head James Webb, and his deputy, Dr. Hugh Dryden. He wanted to know: What is the status of America’s space program, and was there any way to compete with the Soviets? ... The president ended the meeting saying that they had to figure a way to catch up. As he said, 'There’s nothing more important.'"

http://www.whitehousehistory.org/whha_classroom/classroom_9-12-visionary-kennedy.html

The Cold War also had a strong influence on federal support for the Civil Rights movement, though obviously other considerations were in play:

"For America to win the Cold War, Civil Rights was a necessity. Continuing domestic discrimination against non-white minorities would make it impossible to win over the newly-free Third World.

"Politicians at the time understood this very well, and it wasn’t as if they kept this fact secret. Presidents, such as Harry Truman, explicitly linked the Cold War to America’s race relationships. They put it in their speeches. They put it in their political advertisements.

"Take this rather amazing ad by Republican candidate Richard Nixon (see imbedded video at the link given below).

"This is Richard Nixon, of all people, endorsing Civil Rights in 1960. What is more, Mr. Nixon spends more than half the ad explicitly telling the American people how Civil Rights is necessary for the fight against communism:

* Why must we vigorously defend them (Civil Rights)? First, because it is right and just.

* And second, because we cannot compete successfully against communism if we fail to utilize completely the minds and energy of all our citizens.

* And third, the whole world is watching us. When we fail to grant equality to all, that makes news – bad news – for America all over the world.

"This is not the type of rhetoric the history books talk about when discussing the Civil Rights movement – and yet here it is, in front of our faces."

http://mypolitikal.com/2010/10/15/the-cold-war-and-the-civil-rights-movement/

[Emil Pulsifer]

Progressive income taxes were also related to Cold War considerations.

Don't forget, the top federal income tax rate from 1946 through 1963 was 91 percent. Then it went down to 70 percent in 1965, where it stayed until 1982, when it was cut to 50 percent. (It didn't go below 50 percent until 1987.)

http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets

Now, obviously, high tax rates funded the war effort during WW II. But why did they stay high after 1945? Social Security and Medicare outlays were comparatively small during the Baby Boom decades following WW II. The welfare programs ushered in by LBJ did not yet exist.

As for the national debt from WW II, a look at the actual debt figures in dollars shows that the war debt was NEVER PAID OFF: what happened was simply that the national debt was kept at roughly the same absolute level, and as the economy grew, the debt shrunk, not in absolute dollars, but as a percentage of GDP.

So, the only reason for high taxes from the end of WW II through the Kennedy administration, was to pay for the expenses of the national security state; and to compete with the Soviets it took substantial investments in military, scientific, and educational resources; in other words, the military-industrial complex plus the university educational complex that was tied into it for purposes of research & development and the training of an expanded base of scientific professionals. Many of the big infrastructure improvements (e.g., construction of the massive national Interstate Highway system) were meant to facilitate, not vacation travel by households in the family station wagon, but the movement of heavy military equipment.

True, Ronald Reagan ramped up Cold War spending yet cut federal income tax rates. Reagan was under the sway of what even George H.W. Bush (who was running against Reagan in the Republican national primary in 1980) called "Voodoo Economics", the theory that tax cuts would generate economic growth that would in turn generate tax revenues large enough to offset those lost through the tax cuts.

And when it became clear that this neo-conservative tax theory was wrong, Reagan reversed course by enacting new tax and fee increases; but these shifted the burden to ordinary workers through increased payroll taxes and through new telecommunications and other taxes and fees added to people's home telephone bills.

But Reagan's tax increases only partially offset his tax cuts. As a result of this and of his expanded military spending, his administration racked up huge deficits and grew the national debt in ways that conservatives like Eisenhower (who believed in a balanced federal budget) would never have allowed.

When Republicans briefly gained control of both houses of Congress (83rd Congress, 1953-55) during a time when a Republican president (Eisenhower) was in office, it looked like it was time for tax cuts which Congress could pass and the President would not veto. Such cuts were proposed by Eisenhower's own party in Congress, but he made it clear that he would not allow this because of his traditional, conservative support of the principle of balanced budgets.

[Emil Pulsifer]

Again, this is worth pointing out explicitly:

From 1933 through 2000 there was only a single, two year period when Republicans controlled both houses of Congress under a Republican president: the 83rd Congress (1953-55).

http://www.infoplease.com/ipa/A0774721.html

Despite all the talk of a moderate Republican Party of the past, I think the legislative history of the country, and the economic and social results, would have been vastly different had Republicans rather than Democrats controlled Congress for most of this period.

Democrats controlling Congress did not, of course, always have the power to push their agenda through, since they sometimes lacked the ability to override the veto of a Republican president. However, such presidents could not force through the legislation of their own party.

One commenter above wrote about Reagan's influence on both Democrats and Republicans. However, it's worth noting that for most of Reagan's time in office (1981 through 1987) Republicans controlled the Senate.

Furthermore, the Reagan presidency was an "imperial" presidency in that Reagan used his executive powers to implement his conservative agenda through Executive Branch control of regulatory agencies; first through the appointment of agency heads who were willing to "clean house" and implement his agenda; second by greatly expanding the powers of the Office of Management and Budget (OMB), which he used as an overseer to whip the wider federal bureaucracy into submission.

This forced congressional Democrats to compromise in order to have legislative influence. It was also something of a historic loss of power for congressional Democrats, and no doubt this, combined with Reagan's general popularity, encouraged them to shift to the right for political survival; the weakening of their traditional funding base, unions, also encouraged them to more aggressively seek other patrons (i.e., corporations).

When Democrats lost control of both houses of Congress in the second half of Bill Clinton's presidency, the shock encouraged further moves to the right. Clinton himself was forced to compromise with congressional Republicans in order to get anything from the Democratic agenda done, which is why "welfare reform" happened.

[Emil Pulsifer]

P.S. Not just "regulatory agencies"; obviously Reagan's control of the heads of Cabinet departments also allowed him to push through policy changes that Democrats in control of the House would not permit.

The appointment of political conservatives to head the Labor Department and the National Labor Relations Board no doubt hastened the demise of the unions.

"Reagan gave dedicated union foes direct control of the federal agencies that were originally designed to protect and further the rights of workers and their unions. Most important was Reagan's appointment of three management representatives to the five- member National Labor Relations Board (NLRB).

"The appointees included NLRB Chairman Donald Dotson, who declared that 'unionized labor relations have been the major contributors to the decline and failure of once healthy industries' and have caused 'destruction of individual freedom.'

"A House committee found that under Dotson, the NLRB abandoned its legal obligation to promote collective bargaining, in what amounted to 'a betrayal of American workers'.

. . .

"Reagan's Labor Department was as one-sided as the NLRB. It became an anti-Labor Department, virtually ignoring, for example, the union-busting consultants that many employers hired to help them fend off unionization."

For details on how this worked, see this:

http://truth-out.org/archive/component/k2/item/94231:ronald-reagan-enemy-of-the-american-worker

[Petro]

Emil, that was some great stuff you pulled out.

[Rogue Columnist]

Thanks for the excellent context and analysis, Emil.

[cal Lash]

Emil thanks for the update on the water blog. Makes me proud that I gave up meat (except an egg on my chilaquiles verdes or rojas.

[cal Lash]

Ruben, regarding your disparaging remarks about desert dry heat, it got to 114 at Sky Harbor today. It got to 120 where I was in the great Sonoran desert east of Phoenix. The good news, I did not sneeze once and my sinus are so clear I can smell the Sajuaro cactus. Hopefully there will be a mass exodus in the near future and I will be able to breathe the dry heat without the diesel fumes.

PS my bird buddies, the Quail, the Doves, the Cactus Wrens, the Curved Bill Thrashers, the Finches and the Sparrows were all here this AM getting a drink and some welfare socialist bird seed I bought with my food stamps.

[nutmeggah]

IMO, this is a good column, and it is well written. It points out the decimation of the industrial base of the US and some of its consequences.

I have something of a long winded reply to this, and it is somewhat quantitative, but sometimes that is necessary to explain one's way of seeing things. It seems to me a number of ideas in the article are related to how to restore a level of equality that resulted from having a solid industrial base, where the benefits of an industrial economy are widely shared among all income groups. This leads me to commenting on a limitation of the article that it does not address why the industrial base of the US has been collapsing and what will be necessary to prevent further collapse, and why that may put limits on future US policies.

To begin with. it helps to look at typical returns to investment, assuming that all of the returns go to capital and none to labor, distinguishing between the early fossil-fuel era, the 1960's era, and the era we are entering in which nearly all energy will be produced renewably:

Early Industrial Period.............1960's...................2040+................Vs. Pre-industrial Era

Energy
earned
on Energy
Spent 50x+..........................40x......................15x...........................8x

Ratio all capital
Required to
GDP 2XGDP.......................2.5xGDP...............5XGDP......................?

Durability
of capital
equipment
in years 15 years..................20 years..............50 years.....................?

Maximum annual return
on capital as a
percent of capital
30 percent..............25 percent............10 percent...................?

When you look at what has happened over the last 200 years, there was an industrial surge which lead to nations organizing vast education systems, vast transportation systems, etc. Some part of the surpluses of the returns on capital were tapped to ensure some degree of equality of opportunity, equality of income, etc. Most recently as fossil fuels have been exhausted the returns available to capital have been dropping due to energy price increases, and this has occurred as developed nations - due to higher inflation rates, etc. - have seen higher effective taxes on capital, and have meanwhile engaged in "free trade" leading to investment in manufacturing being transferred to nations with a lower cost of capital and higher savings rates (e.g. in Asia).

As an example of this if the Fed prints 15 percent more money each year and capital gains are taxed at a marginal federal and state capital gains rate of 40 percent, that leads to a 15 percent annual nominal price appreciation in assets (regardless of whether the real capital stock increases or decreases) and with an annual turnover of stocks and bonds of 100 percent leads to a 6 percent annual cap gains tax rate on wealth, which has to be added to other direct and indirect taxes on wealth (such as property taxes and inheritance taxes, dividend taxes, etc.) for a total tax on wealth in the US of around 10 percent per year.

In the 1960's the all-in maximum return on capital of around 25 percent per year was much greater than the total taxes on wealth at the time (which, despite high marginal rates at the time was only around 5 percent due to essentially ZERO MONEY printing by the Fed), and so allowed for about roughly 20 out of 25 or 80 PERCENT of all economic returns to be paid to labor (to the workers), and hence there was at the time a high degree of income equality.

Now however, the maximum return possible to capital due to declining resource availability is only around 20 percent of capital per year of the value of capital but nearly 10 percent of capital annually in the US is already being paid out in various indirect taxes on capital so that leaves an equilibrium share of income for labor of ONLY 10 out of 20 or roughly 50 percent of income which is why in recent years the share of labor in national US income has been converging steadily lower close to 50 percent of national income. These numbers are only crude and rough approximations, and I have not explained some adjustments and modeling assumptions which there is not space to detail but the overall approximations are sufficient you can get the gist of what I'm trying to say.

These numbers are simply the result of factoring and combining a simple and minimalist Joan Robinson (socialist) model of capital (wherein in inflation-adjusted terms capital has an income share sufficient only to pay for the taxes on capital) with another simple model of how a transition to a renewably driven economy occurs. In this renewable model, the total amount of capital must increase relative to income (to provide for equipment to gather the diffuse renewable energy), and the durability of capital must increase correspondingly to ensure its affordability, and the total economic return available from that capital must declines roughly in proportion to the ratio of capital required relative to income.

So while the potential annual return on US capital - due to gradually shifting to a renewably based economy - is dropping fairly fast you also see in recent decades that despite low nominal marginal tax rates on capital the actual burden of taxes on capital - due to Federal Reserve money printing and resulting asset inflation - has been rising fast and resulting in all kinds of unanticipated negative outcomes. One of these outcomes is less income equality in the US along with with accelerated outsourcing of production to Asian nations which have higher savings rates and hence the kind of economic surplus necessary to support higher investment in manufacturing, etc.

The bottom line is not to say that people are doomed or that governments are doomed. They are only doomed to a collapsing economy if they continue to tax capital and engage in free trade as they currently do, and if the central banks continue to to print large inflationary amounts of money which results in a surprisingly high effective rate of taxation on capital. In the extreme case, before the special interests in charge of national economic policies give ground and allow more realistic tax and trade policies to be implemented you may see taxes on capital equal or exceeding the total output of that capital and therefore the share of labor could drop as a percentage of national income to levels close to zero with countries approaching total economic collapse.

The way out of the economic paradox - since shifting to renewable economies in no way requires collapse - is to reform taxation so that it is based on consumption and not on investment, and to establish progressive taxes on consumption (e.g. progressive value added taxes rather than progressive income taxes) and further to establish sufficient trade barriers and sufficient tax offsets (e.g. tax offsets for value added taxes) that sustained trade deficits do not occur. And finally to prohibit subsidies to large banks such as by the central bank printing money (eliminating asset inflation, the biggest tax on saving and investment).

It should be no surprise that the countries which tax consumption and not investment which have low inflation rates consistent with this sort of approach (e.g. Germany and Singapore) are also leading economies with strong export engines and strong manufacturing sectors, and in these countries their ratios of labor income to national income is high (nearly 80 percent) and they a high level of national equality. There would be nothing wrong with the US adopting the financial practices and tax law of such countries, since it seems the US is no longer competent to devise its own economic policies.

[Ruben]

Interesting. No comments about nutmeggah's outstanding post.

How about this.

The thoughts and ideas stated shine in the pure, clear air of an academic environment.

However, once the ideas are put through the shit filter that is the cesspool of our country, the US congress, I fear how the ideas will come out at the other end.

It does an old grump's heart good to see such idealism.

In the end though, I am a grump because I've seen so much idealism die an early death at the crass behavior of the human animal.

[wkg in bham]

To get back to the original NASA theme: The manned space program, weather Apollo or the space shuttle were nothing but PR and propaganda.

NASA has done some great science stuff. But it all has been done by satellites.

I’ve got to hand this to NASA, it basically paid for my college education. I co-oped at Cape Canaveral for GE and my dad worked for NASA.

We need to discover a way to put shear mass into orbit. Whenever the topic of a substantial manned spaced mission (something beyond a short-time exploratory visit) comes up in conversation I respond: “Have you ever toured the USS Alabama in Mobile Harbor – it’s a WWII era battle ship – you’ve got to figure out how to put that into orbit.”

We simply do not have the technology for putting people into space. The 3D printer is a good example. You don’t need to have spare parts for everything.

[cal Lash]

Ruben maybe U can do a learning class for me on what nutmega posted. I will bring a black board and chalk.

[Ruben]

cal,

In a nutshell, there was a time in our history when the stock market was not a casino, the Fed was not the casino cage and banks acted like banks, not casino whales.

P.S. I have a dozen hummingbirds eating me out of house and home. The little welfare bastards won't go out and get a job.

[Ruben]

wkg,

If the only thing NASA ever gave us was Velcro, I would be OK with that.

[Emil Pulsifer]

nutmeggah wrote:

"To begin with. it helps to look at typical returns to investment, assuming that all of the returns go to capital and none to labor, distinguishing between the early fossil-fuel era, the 1960's era, and the era we are entering in which nearly all energy will be produced renewably."

I appreciate the thoughtful approach taken. But I have several important objections.

First, returns on investment are business income, and it is not true historically that all of it goes to capital and none to labor.

Specifically, labor's share of income has been declining for the last three decades, and capital's share (i.e., business's share) has been increasing, according to both NIPA and BLS data:

http://www.clevelandfed.org/research/commentary/2012/2012-13.cfm

Second, when you say that in the era we are entering nearly all energy will be renewable, you're assuming as a premise what needs to be proven as a conclusion.

Maybe it will, or maybe most of the energy used by the world at large will continue to come from coal, natural gas, oil, and their derivatives.

It all depends on when this "new era" starts, how quickly technological progress makes this possible, to what extent this technological progress is shared by developing nations (which are poised to overtake America and Europe in production output), and whether the governments in question have both the money and the political will to convert entire economies from petroleum products to renewables.

China, for example, is expected to rely primarily on dirty, coal-generated electrical plants for the foreseeable future, despite laudable investments in renewable energy. (Coal is cheap, especially when you don't require the kind of advanced "scrubber" technology which U.S. regulations impose.) China's less advanced little brothers on the development curve are even less able to make use of renewables, much less systematic use.

As for the rest of your arguments, I see a lot of conclusions but not much proof. You give statistics on things like "maximum return on capital" (which as far as I can see is not an economic concept at all), and skip from the 1960s to 2040 (perhaps so as to avoid the inconvenience of contrasting current figures with historical figures).

As for the Fed and monetary policy, I don't see any inflation right now despite considerable playing around. Interest rates, too, are at record lows. All of that may change, but obviously, these Fed manipulations alone are not sufficient to ignite inflation, since "quantitative easing" and other policies began years ago.

Consumption taxes are regressive. I don't see how you can levy "progressive" consumption taxes, because these taxes are build into the price of products. It isn't as though the cashier has a database to pull up the consumption record of the buyer, and levy a larger tax if he's purchased more that year.

Quite aside from this, consumption taxes deter consumption. Perhaps this is one reason why European economies which rely on VATs and similar consumption taxes have seen slower economic growth than the Unites States.

Lowered consumption means less demand for products and services, which means employers expand slower (if at all) and hire less (if at all). Economic growth declines and unemployment is higher, which is exactly what you see in Europe vis a vis the United States.

A much better idea is to tax income, then redistribute it directly from the top third to the bottom third via the Earned Income Tax Credit. This would take money that currently is not used for consumption, and give it to those whose consumption needs are not fully met because of a lack of income.

Unlike an increase in the minimum wage, which (arguably) might result in less hiring or in the conversion of some full-time jobs into part time jobs, as employers find that their payroll costs have increased and look for ways to offset this, direct redistribution bypasses business payrolls and thus does not figure into payroll calculations.

[cal Lash]

Tanks rube

[Emil Pulsifer]

cal lash wrote: "...maybe U can do a learning class for me on what nutmega posted. I will bring a black board and chalk."

Short course: the writer (nutmeggah) is a conservative who wants to replace income taxes (which disproportionately affect the wealthy) with consumption taxes (which are a kind of regressive, flat tax built into the price of goods, much like sales taxes). He also seems to want a return to the gold standard, or at least to a bimetallic standard (though I admit this is less clear and I am drawing an inference that may be unwarrented).

[cal Lash]

Thanks Emil

[Emil Pulsifer]

Mr. Talton wrote:

"Our passenger rail system in the dismal 1960s was more far-reaching and reliable than today. Even large, dense cities struggle to fund inadequate transit. . . Yet nobody says a word about the costs and disruption of freeways, the opportunity costs of going all-in on cars, the continued pollution of the global commons called the atmosphere. Always an excuse. "Use buses instead" (but they will be stuck in the same traffic jams as cars)."

There are really three different issues here: mass transit investment; traffic congestion; pollution. Obviously they are interrelated but it's worthwhile to disentangle them.

First, note that even in places like Germany that have good mass transit systems, the vast majority of the population relies on other means of transport:

"In small metro areas, Germans ride at 18 times the rate of Americans (a 7 percent share to .4 percent.) In major cities the difference remains high: transit use is nearly six times greater for Germans."

http://www.citylab.com/commute/2012/10/5-reasons-germans-ride-5-times-more-transit-americans/3510/

So, that's 7 percent, which is high by American standards, but still leaves 93 percent who don't use it; and even less use it in "major German cities".

Second, light rail is great for travel between major city centers or from the suburbs to the city center; but even a good light rail system doesn't begin to cover the city grid. That means most travel must rely on buses or streetcars, bicycles, walking, or cars. There's just no getting around it.

Walking isn't an option for universal travel, and neither is bicycling, even when good bicycle paths are available and weather is good (try fetching a household's worth of groceries, some perishable and all bulky and/or heavy, in hot/cold/rainy/snowy weather across miles by foot or by bicycle).

That leaves buses/streetcars, and private cars.

So, if you really want to support mass transit, for a start you need a very healthy bus fleet. Then, you need a fare structure that encourages mass transit use.

Even if you get these things, however, providing enough buses to accomodate even a quarter, much less a majority, of the population of a city of a million or more, is going to be a monumental undertaking. It also leaves the question of exactly how many citizens will actually make use of it, because private cars are more convenient, and often quicker and more pleasant than bus travel.

Electric power (or other non-polluting or less polluting propulsion systems) can be adapted not only to light rail, but to buses and private cars.

None of this is an argument against mass transit -- I'd like to see big improvement in Phoenix's bus system -- but it's not a panacea, even if a good system is built.

[Rogue Columnist]

All good points, Emil. I don't want a panacea. I'd simply like the choices that even this country once offered. But it won't happen.

[Emil Pulsifer]

It's ironic to see economic conservatives complain that progressive income taxes take away investment capital, at the same time they complain that the economy contains far too much available capital because of Federal Reserve "money printing".

But the idea that income taxes take capital away from business is itself bogus. When the government collects taxes, it doesn't bury the revenue in a sack in the backyard. It spends it on goods and services sold by the private sector (e.g., medical care); or it pays the salaries of government employees who also spend it on the private economy; or it gives it to aid recipients (e.g., Social Security recipients) who also spend it on goods and services sold by the private economy.

At most, one might argue that government changes spending patterns by determining the goods and services which tax revenues are spent on. But since money spent by the government continues to be circulated through the private economy, as the initial recipients in turn pay their employees and buy goods and services, even this argument is weakened.

It's important to note that at every step in the process, the capital remains in the banking system and is available for business loans. Those taxed keep their money in deposit accounts in private banks; so does the government which collects the tax revenues; so do the initial recipients of government spending; and so do the subsequent recipients.

The important thing is to get money in circulation in the consumer economy. Wealthy individuals have far more money than they use for consumption, so a lot of their income doesn't stimulate demand or grow the economy as a consequence of increased demand.

To the extent that taxation puts some of this money in the hands of working class persons and families who want to consume more but can't because their limited budgets won't permit it, the result is an increase in aggregate demand which actually benefits (non-financial) businesses who receive the money spent on their goods and services.

By contrast, money which is used to bid up the value of notional assets increases paper wealth but doesn't improve economic growth or increase hiring.

[cal Lash]

Seems to me there are a small number of Financial Nobility on this planet that would like to continue their nobility with little entry from commoners. They seem not to be interested in maintaining a middle class that might threaten their standing. They appear to have a preference for the very rich and powerful and a very poor and expendable peasant class.

Although it appears Putin has made forced entry into that financial world and seeks now to become Tsar of Mother Russia.

[Pat]

Ruben, unless you wanna keep the mosquitoes for yourself, the hummingbirds are doing some important work for you. And an extra benefit is that they're basically flying hypodermic needles, terrorizing passers-by!

[Ruben]

Thank you Pat. I did not know that. That's good news since our resident bat , Vlad, has been gone the past week.

[Jerry McKenzie]

Dang Emil, you're in fine fiddle. Great stuff.

[cal Lash]

Pat and Ruben, I suspect pound for pound Hummingbirds are the most vicious bird on the planet. I once watched a(flock, covey or herd)"charm" of Hummingbirds swarm and drive a raccoon down out of a tree where the birds were feeding on the flowers.

[Ruben]

Cal, I'll keep this on the NASA theme.

I never met a raccoon that didn't deserve being turned into a raccoon hat for an astronaut.

[Jerry McKenzie]

Singing Ralph's song:

http://www.salon.com/2014/07/27/my_party_has_lost_its_soul_bill_clinton_barack_obama_and_the_victory_of_wall_street_democrats/