Wednesday, July 22, 2015

Joe Weisenthal — The Untold Story Of How Clinton's Budget Destroyed The American Economy

Oldie but goodie, a propos the moment.  With HRC running, we are going to be hearing a lot about the prosperity that the Clinton surplus brought. NOT.

This kind of thinking base on gold standard mentality that is no longer appropriate on that the US is on a floating rate system instead of fixed rate is also a chief reason for the failure of the left, as Bill Mitchell explains today in his post, link to here.

This is not only a must-read but a must-share. Shout it from the rooftops.
In addition to being remembered for a strong economy, Bill Clinton is remembered as the last President to preside over balanced budgets.
Given the salience of the national debt issue in American politics today, the surpluses are a major mark of pride for the former President (and arguably the entire country). They shouldn't be.
"I think it is safe to say that we are still suffering the harmful effects of the Clinton budget surpluses," says Stephanie Kelton, an economics professor at the University of Missouri Kansas City.
To understand why, you first need to understand that the components of GDP looks like this….
Stephanie Kelton is now serving as the chief economist of the Senate Budget Committee for the minority at the behest of Sen. Bernie Sanders (D-VT), the ranking minority member of the Budget Committee.

Business Insider (Sep. 5, 2012)
The Untold Story Of How Clinton's Budget Destroyed The American Economy
Joe Weisenthal


Matt Franko said...

"a chief reason for the failure of the left, "

Tom its a failure of the left-libertarians...

ie the anti-authority people on the left, the people who cannot properly perceive and understand authority who are on the left...

They dont think that we of mankind, via our institution of civil govt, have been given up the direct authority to do these types of things wrt implementing economic justice or imposing economic judgements...

they dont look at the world that way.... its based on some sort of 'fear' they have imo...

Tom Hickey said...

The authoritarian left that manifested as totalitarian communism has been pretty well discredited and has no following to speak of in the West. The left in the West is chiefly on libertarian side of the political compass. The basic idea of Marx and Engels was to free workers of exploitation that amounts to slavery, since some of their labor is provided free and that is the basis of rent extraction that goes by the euphemism "profit."

Left libertarians are not opposed to institutional governance if it is abased on popular sovereignty and participatory democracy. They oppose government capture by a privileged class.

This is the difference between left and right libertarians. Right libertarians don't value democracy in that they view it as the tyranny of a majority that subverts individual liberty. They are fine with those who are successful based on merit being in control of institutions and the levers of power because they believe that there are no institutions in reality, just individuals rationally maximizing utility and spontaneous order takes care the arrangements. Left libertarians view that as either bonkers or a self-serving argument based in any case on false premises.

Roger Erickson said...

Untold story?

I've been hearing that story for 8 years, from Warren Mosler, Randy Wray, Scott Fullwiler, Pavlina Tcherneva, Eric Tymoigne, Matt Forstater, Bill Mitchell, Steve Keen, Art Patten .... and (well, the list's getting too long).

Will Joe Wiesenthal make a difference, with all the people whose job depends on them being wrong? :(

Visible evidence has been incredibly slow to change most of the world, for over 5000 years (Sumeria, Egypt, Greeks, Rome, Mongols, Incas, Aztecs, Brits, USA).

Tom Hickey said...

Addendum to above.

Right libertarians are bourgeois libertarians. Genuine left libertarians are populist libertarians, Pseudo-left libertarians are also bourgeois libertarians.

The founding fathers of the US were almost all bourgeois libertarian fighting against the authoritarian crown for the freedom of enterprise. Another way of putting is that they were John Locke-Adam Smith libertarians. About the only populist among them was Tom Paine. Populism was swept off the table at the establishing meetings.

So it is not surprising that there has been no strong genuinely libertarian left in the US. In fact, when it arose to the degree of threatening the bourgeois establishment it was put down as anti-capitalist, where capitalism > free enterprise > liberal democracy, so that bourgeois capitalism is considered to be a necessary condition for democracy, even though it leads to oligarchic "democracy" through institutional capture.

Law exists when there is a probability that an order will be upheld by a specific staff of men who will use physical or psychical compulsion with the intention of obtaining conformity with the order, or of inflicting sanctions for infringement of it. The structure of every legal order directly influences the distribution of power, economic or otherwise, within its respective community. This is true of all legal orders and not only that of the state. In general, we understand by "power" the chance of a man or of a number of men to realize their own will in a communal action even against the resistance of others who are participating in the action.

Max Weber
"Class, Status, Party"
Translated and Edited by H. H. Gerth and C. Wright Mills
Politics, October 1944, pp. 271

Schofield said...

From "The State and the Innovation Economy
An Interview with William Janeway"

"List has this wonderful line about how if the English had practiced laissez-faire economics, then England would still have been the sheep yard of the Hanseatic League selling wool to Flanders in return for manufacturing textiles. In other words, had Britain not had a national strategy for economic development there would never have been an industrial revolution."

Correct! Read “History of the Worsted Manufacture in England from the Earliest Times.” By John James FSA. Published 1857.

See Chapter III Page 46, Chapter IV pages 50 – 82. Especially pages 50, 51, 52, 53, 54, 55, 56*, 77, 78,

Roger Erickson said...

I've never understood the many ways the term "bourgeois" is used. From progressives to leftists to Marxists, it always sounds pejorative. Yet the dictionary definition of bourgeois is "Middle Class."

Please define how you mean to use the term in this comment stream?

Roger Erickson said...

All that you say is obvious to many. I'm more interested in what emerging characteristics, or luck, tilted the English to behave in this more coordinated way SOONER than competing European nations. It's just an expression of tribalism on a larger scale. No member of any older tribe (or ant species) would be surprised. They'd only ask why it took so long to repeat on a larger scale.

Roger Erickson said...

Was it something as simple as earlier emergence of stable travel & communication lines in the more enclosed environment of island Britain?

Tom Hickey said...

I generally use it the Marxian sense that begins with and updates Marxism, and includes the contemporary sense of "middle class" as in "middle calls mores" and "conventional" — status quo rather than radical.

Marxism And Class: Some Definitions

In Marx's time, class was chiefly determined by ownership and rent, who many pounds a person was worth a year. This includes the landlords and the owners of the industrial means of production. This constituted the haute bourgeoisie or capitalist class.

The petite bourgeoisie or middle class owned their means of production but use them themselves instead of hiring others and extracting rent from their work.

The lower classes,, or proletariat (proles) were the workers who owned nothing and lived by renting wage labor for the best wage they could negotiated given their limited bargaining power and pressing need for sustenance.

Those class lines have changed somewhat since but the principle remains the same. The people chiefly living off rent rather than work comprise the haute bourgeoisie. This includes the highly paid top managerial class that can extract rent, making them "capitalists" in actuality. Lloyd Blankfein, head of Goldman, just became a billionaire, for instance. He didn't get through working for it although he would like to think so and for the rest to think so. And many people that consider themselves middle class today are really in the upper rungs of the lower classes. They are now called "the precariat" because their status is precarious.

Most pseudo-leftists just want to alter the status quo a bit to make things more equitable in the existing system. For insteance, the precariat would just like to be more secure.

Genuine leftists realize that the existing system is the problem and it needs to be changed radically to eliminate rent extraction. "The rent is too damn high!"

Marx was very clear about the problem; it's rent extraction. Therefore the solution is obvious. Get rid of the rent. Capitalism is based on rent extraction in whatever version to the degree that profit on capital exceeds the real interest rate plus inflation premium and reasonable risk premium. Moreover, perks need to be considered extraction of rent, too. What is rent? Gains that are not earned through work.

Of course, all work is not equally valuable. But the differences must be within reason. CEO's receiving 300X (plus perks) what ordinary workers do on average is not reasonable.

Contemporary capitalism is about extracting as much rent as possible. A genuine left has to address that. The pseudo-left does not do that.

A lot of pseudo left doesn't really want to rock the boat all that much because they hope to move up the food chain themselves. Marx got that, too.

Matt Franko said...

Tom I said "authority" not 'authoritarian'....

Why you (and Bill) are NOT a left-libertarian is because you can perceive and understand 'authority' and true left-libertarians do not...

You and Bill think 'govt has authority to credit a bank account' they think 'no the govt does NOT have such authority'...

You should stop self-identifying as a left libertarian as you are not one...


Roger Erickson said...

Yet today, Tom, blanket pejorative use of "bourgeois" is usually confusing (to me), since I'm usually thinking of ways to save what we today think of as the Middle Class.

Bob said...

The bourgeoisie are not defined by their income. They are simply the ownership class, from the struggling small business owner to the Koch Brothers.

Romney wants to save the 53%. In theory that would include the working poor, along with all "producers" regardless of income. Sounds more inclusive than the Goldilockish 'middle' class.

Tom Hickey said...

Who is to say who is a true whatever? What is the criterion?

I have been involved with genuine left libertarians most of my life and they are not against authority and governance, since there has to be law and order even in relatively small groups, even in families. The debate is over the type of ordering principle and governance.

Left libertarians are for consensus and against hierarchy except wrt specific tasks but not a principle of governance based on the military model and its chain of command, division between officer corps and grunts, etc. Left libertarianism is based on popular sovereignty, absence of privilege, and participatory democracy. Authority in a group is the authority of the people acting together.

Where libertarians diverge to the left and right is over rights. The extreme right holds that the right of ownership (including of oneself) and sanctity of contract are basic. The left holds that there is a constellation of rights and some rights supervene over other rights depending on context, with a basic principle being that people and people's welfare always have top priority.

These views have been worked out in detail in the literature but there are a lot of immature people on both sides that have not thought things through. To identify the immature as the criterion of genuine would be to misunderstand the issues and debate, I think.

Tom Hickey said...

blanket pejorative use of "bourgeois" is usually confusing (to me), since I'm usually thinking of ways to save what we today think of as the Middle Class.

The way to save "the middle class," which Marx called the petite bourgeoisie, is to follow Marx's counsel and educate them, showing how they are working against their own interests in identifying with the rentier, privileged ownership class (haute bourgeoisie) instead of the working class with whom they have closer affiliation.

For almost all of the so-called middle class, the dream of joining the upper class is a just that, a dream. The actual direction in which they are moving is toward the precariat, if they are not in the precariat already. This is becoming more and more obvious in the US as more people recognize that their children are likely to be worse off than their parents instead of better off, which was until fairly recently a compelling component of the American dream. That seems to be over in the New Normal, where rent extraction prevails.

Why do I use Marx when I don't identify as either a Marxist or even a Marxian? It's to send a message that a radical solution is required and that the status quo cannot be fixed because capitalism is delivering what it is designed to do. The first step in capitalist countries is toward social democracy, which modifies capitalism, and down the road socialism defined as governance of the people, by the people and for the people. Reading Lincoln, it's pretty obvious he was a socialist.

Instead, the aim of TPTB is to extirpate social democracy and socialism, and create a neoliberal world. They are doing a pretty good job of it. Unless the rest of us dig in our heels, we are toast.

This could all be stated without reference or even allusion to Marx, since his basic ideas have been absorbed into social science excepting conventional economics. But, first, I like to give people their due, and Marx did originate a lot of these ideas.

Secondly, appealing to Marx sends a signal that radical thinking is required. The problem with the pseudo-left is that its approach is conventional. That's a trap to avoid, as Marx strongly emphasized.

Schofield said...

Was it something as simple as earlier emergence of stable travel & communication lines in the more enclosed environment of island Britain?"

I think it was something more basic, primate apes like ourselves like to dominate but hate being dominated (See Boehm's book "Hierarchy in the Forest"). Schmookler in his book "The Parable of the Tribes" riffs on this theme in that once one tribe or nation starts to use its power to dominate other tribes or nations there has to be a response to counter the domination. The Norman Conquest helped unify England so that there could be a response to technological development outside England that might ultimately result in greater wealth to pay soldiers/mercenaries to attack the England. The Domesday Book that the Norman's created should be viewed as a tax base that would put Norman rulers to better militarize against attack as well as engage in war-lordism against other countries.

Roger Erickson said...

Yes, but the domination story holds everywhere, whereas the Magna Carta was the first modern step to more organized national policy.

The underlying question was not what the post-Normans did (Magna Carta, 150 years after their invasion), but what factors drove them to be able to do it sooner/better than similar enclaves on the continent - and 600 years later to craft a coherent national development policy.

The Normans were gangsters looking to secure what they conquered. An island is both definable, vulnerable and partially secure.

From what you say, the next idea is that a obviously definable island with a history of invasion led warlords to ponder military-like brotherhood organization as a method to keep others from doing what they did (successfully invade).

Besides, the Magna Carta was supposedly originally formed to to "make peace between the unpopular King and a group of rebel barons". It's not entirely clear that the rebel barons were much worried about another invasion. They may have just been sticking up for honor among pirates.

The real question is why it took continental entities so much longer to craft national development policies. After all, such policies had been under experimentation since before Sumer, 5000 years earlier.

The alternate view, that cooperative organization on another scale is the most human trait, suggests that population growth rate may be the main obstacle to scaling up coorperative tribal cultural methods. From that perspective, isolation may be the contributing factor. Islands, peninsulas, pirate ships, or isolation in general seem to be good predictors of outbreaks of organizing on a larger scale.

Tribal cultures smashed together by ongoing population growth may be exposed to too much chaos unless stabilized by isolation.