Thursday, July 7, 2011

Brzezinski warns economic inequality can result in social unrest

Raw Story: Former National Security Advisor Dr. Zbigniew Brzezinski appeared on MSNBC’s Morning Joe Wednesday to discuss how income disparity in the United States could lead to civil unrest.

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Anonymous said...


Are you aware of your employer's admirable urge to cut the size of NYS government?

NEW YORK, NY--(Marketwire - Jul 5, 2011) - John Thomas Financial, an independent broker/dealer and investment-banking firm located in New York City's financial district is proud to announce today that CEO Thomas Belesis, has been named a Co-Chairman of the New York State Republican Finance Committee. Belesis was named Co-Chairman at the Finance Committee's formation meeting on Wednesday, June 29, 2011 at The Harvard Club in New York hosted by State GOP Chairman Ed Cox.

Belesis was a key backer of the State Party's efforts in the 2010 election and has also been an active supporter of the Republican National Committee over the last election cycle. He will be working alongside new State Finance Chairman Matthew Mellon of the Drexel and Mellon banking families, co-founder of Hanley Mellon, and co-developer of the famed Jimmy Choo shoe, clothing and accessories brand.

Together with the other members of the Finance Committee, Belesis has committed to help the State GOP drive government reforms that will help rebuild New York's powerful business engine and create jobs. He was recently honored for his efforts by the Queens County Republican Party and The New York Republican County Committee who named him as their 2011 Businessman of the Year. In 2009, Belesis was named Bronx GOP Man of the Year, an award presented to him by former New York City Mayor Rudy Giuliani.

"I am honored to be able to serve the New York State Republican Party in this way. I look forward to working with Chairman Cox, Mr. Mellon, and the rest of the Committee as we continue to fight for a smaller, more responsible and pro-growth government for all New Yorkers," stated Belesis.

"Thomas Belesis has been an important part of our efforts to rebuild the Republican Party in this state," stated Chairman Cox. "His efforts on the Finance Committee will help ensure fiscally conservative policies have a voice in our state and we can continue our work to restore New York's economy. I look forward to working with him to engage a new generation of Republican donors with our cause," said Ed Cox.

Tom Hickey said...

I don't think that Mr. Belesis, Paul Ryan, and many other folks advocating policies that are clearly detrimental from an MMT perspective are acting in bad faith. They sincerely believe that neoliberalism is the panacea and that "government is the problem."

The MMT sectoral balance approach shows why that is wrong thinking,when accounting identities rather than non-empirical assumptions are taken as the basis of argument. Neoliberals think erroneously that the government fiscal balance, the domestic balance and the external balance can be in surplus simultaneously. MMT shows this to be false.

Neoliberals may respond that the answer then that the solution is not to expand the contribution of government but to balance the equation with net exports. This is unreasonable in a world in which everyone cannot be a net exporter. Moreover, as long as the USD is the global reserve currency, there will be strong desire for the ROW to save in it by running trade surpluses with the US.

When saving funnels to the top due to neoliberal policy, along with a CAD, the middle and bottom fall behind and must either retrench, which results in economic contraction, or go ever deeper into debt, which is financially unsustainable. The economic problem with excessive saving at the top is that it inefficient and leads to a lower outcome for all. However, it is the middle and bottom that feel this most and historically this has lead to social unrest and political instability. We are already seeing this demonstrated around the world, and the US political situation is also an early symptom of it here.

Another economic crisis is inevitable, since little has been done to address the causes of the one from which we are still trying to recover. Crises are now occurring in 5-7 year cycles, with the cycle gap shortening. Supposing the US goes into the next crisis with 8-10 % U3 and nearly 20% U6? This crisis already mimics the Great Depression on many metrics. The next one?

Zbig along with SG and Grantham are warning that the coming reversal in global trend is going to lead to potentially wrenching changes that are going to make previous models obsolete and present challenges that the world has never before encountered. Is neoliberalism ready for that?

There is an interesting debate going on in the comments over at Gail the Actuary's site, Our Fining World, Owen, a former military officer, is predicting a global resource showdown as early as the this decade over resources and he concludes that strategically, the only way the US can maintain lifestyle is through military domination of global resources, which will lead to some pretty intense consequences. Link. The post and comment thread are worth reading. I even comment on MMT in an exchange with Gail.

I have been saying for some time (years) that there is a political contraint that neoliberal either ignores or assumes that a military/security solution can be imposed. Zbig is saying that the the scale of the problem that is developing makes continuation of the status quo less and less sustainable and a military solution more and more costly.

This is no surprise to anyone who has been following geopolitics and geostrategy. The approach is nationalistic and regional rather than global, and the problem demands a global approach that is so far insufficient. The US is either going to lead on this, or else it will be forced to rely on military might to effect a solution that will be unsatisfactory for everyone.

It's time to wake people up to this unfolding scenario before it engulfs us. Zbig is sounding the warning bell.

Matt Franko said...


Pat Buchanan (who I often see in agreement with Zbig on Zbig's analysis) rightfully points out that this is happening not just here in the US but all throughout the west right back over to Greece.

Major challenge to western civilization....


Tom Hickey said...

Not just in the West, Matt. Inequality was the underlying cause of the still ongoing revolt in MENA. The proximate cause was rising food prices in an area where food cost is a substantial portion of household expenditure. What this means is that real wage was falling below subsistence level for a lot of people. Having little to lose and everything to gain is a recipe for revolt. The is the implication of the SG report and Grantham's before it.

Anonymous said...

I think fascism and communism will return (even if with other names) if inequality continues to spread along the globe. Certainly class warfare is going to be resumed after the age of debt, bubbles and unsustainable growth has ended.

Also if consumerism model is proven to be unsustainable only authoritarian systems will be able to give enough stability and governability, because anarcho-capitalism won't be allowed by the impoverished masses.

Greece is going to be one of the first nations to go this way since long time ago, in more or less, developed nation.

Anonymous said...

With all due respect, Owen is off his rocker. That discussion in general is too alarmist, peak oil is shaping up to be a dome-shaped curve rather than a steep decline that was originally feared.

Tom Hickey said...

I certainly hope Owen is wrong, Laura, but his premise that oil is going to be increasingly in short supply as the emerging world comes on line is likely roughly correct — food and water, too, the way things are unfolding.

I don't think is really a point on contention that the entire world can't live the American lifestyle as it presently exists. The resources just aren't available and the process is not sustainalbe if they were. But this is the developmental model, and it's what the people of the developing world aspire to.

On the other hand, there are a lot of American who are willing to fight to defend "the American way," which means 5% of the world's population continuing to consume a quarter of the resources. I have heard many on the right say that this a right that America should defend by preventing others from encroaching on resources we need, militarily if necessary. I was quite shocked to hear someone admit that publicly the first time I heard it, but it is not uncommon.

I personally think that Owen's timeframe is likely off, but this is a trajectory that the Pentagon has figured into its contingency planning. This is no secret.

It is difficult to get a good fix on the timeframe for two big reasons. First, the data is not transparent, and secondly, asymmetry renders the system unstable and complexity makes the scenario virtually impossible to foresee. As James Lovelock warned about climate change, when a lot of subsystems are involved, studying them independently misses the complexity of causal interdependence.

Matt Franko said...


Something Ive observed is that MENA and Asia (sans India), well at least their "leadership", often today defines their "success" in terms of how well they work with the west.

At least the leadership they have been given zealously seeks to work with the west and acquire the prime western NFAs. (Flying your Astin Martin back to England for an oil change: SICK! ) "Egyptian Cotton" for the west to sleep and bathe in when there are food shortages in MENA: SICK! It is hard for me to understand why this is, in fact I do not fully understand it and may never.

But at least because of their leadership, MENA and most of Asia are "riding along" with the west, and how well we (the west) navigate these challenges will directly effect people in those areas as well as ourselves in the west in this era...

Because of their leadership, the ROW in effect "depends" on the west, how we go, they go, at this time. Not saying this is right.


Anonymous said...

Oil wars killing 5 to 7 billion people? He is out of his mind.

I don't see America going to war so you can continue to drive SUVs. It's not worth it. The world is running out of cheap oil - the increase in price will reduce its consumption and spur the development of alternatives. At worst you will have rationing - reserving fossil fuels for essential uses.

Adapting to a more energy efficient lifestyle isn't a horrible prospect. Needless consumption and energy wastage haven't made us happier.

Longer term, there is the prospect of technological advances in energy production and storage. Infrastructure to capture renewables will continue to grow.

From Wikipedia:
The total solar energy absorbed by Earth's atmosphere, oceans and land masses is approximately 3,850,000 exajoules (EJ) per year. In 2002, this was more energy in one hour than the world used in one year. Photosynthesis captures approximately 3,000 EJ per year in biomass. The amount of solar energy reaching the surface of the planet is so vast that in one year it is about twice as much as will ever be obtained from all of the Earth's non-renewable resources of coal, oil, natural gas, and mined uranium combined.

Add to that the possibility of deriving oil from algae, of extracting geothermal energy, of nuclear fusion, and a whole host of developments not yet widely known. The world isn't investing as much as it could in scientific research, yet progress is being made.

Predictions of natural catastrophe have invariably been wrong. Of course, when you have individuals like Owen who believe that we are doomed, then they may be more likely to consider a path of action that would be destructive, if not genocidal. They erroneously believe there is no alternative.

Matt Franko said...

I believe you are correct, there are somewhat economic alternatives to geo petroleum even if we in North America want to maintain our automobile centric lifestyles. (GM Volt owners reporting 1,000 miles between fillups: 12 fillups per year: could be ethanol)

But MENA is not ready for this.

We (the west) should be counseling them about what moves they can make to face a future without the gravy train (think the Biblical manna) provided to them by their petroleum.


Tom Hickey said...

I hope it never come to this, but he is thinking of massive thermonuclear war. China, for example, has concluded that it can "win" a thermonuclear total war with the US in that it will marginally survive and eventually recover, while the US will not.

There is thinking on the right that the US should not make the "mistake" it made after WWII by not taking out the USSR before it could arm itself. MacArthur was fired by Truman because he wanted to level China at the time of the Korean War. There is significant agitation now to take Iran and China out before that happens again. Iran is scheduled first, and the propaganda campaign is already building in that direction.

While Owen may sound like crazy-talk, this is how the military mind works. The idea is that the "great game" is always going on with the world as the chess board, and if a country doesn't act to be a winner, it risks becoming a loser in a zero-sum game. This is all these people think about at the level of geopolitics and geostrategy.

Owen is actually a dove. He is arguing that if the defense budget is cut in half, that leaves only the nuclear option for addressing conflicts, and it virtually guarantees nuclear war. He would prefer that this is not the sole practical option the president has.

Tom Hickey said...

BTW, WWI showed that whoever controls the petroleum supply controls the world, since a modern military runs on petroleum. Strategically, WWII was fought on this basis. It was not as crucial for the US, then, since the US was a net producer.

But that ended in ~1973. But things changed drastically for the US after that, as anyone living through the oil crisis remembers. I was driving around the US at the time, and it was station to station (with a lot stations out of gas), never letting the gauge drop very much if possible, and carrying an extra five gallon container. I only had to use mine once, but I was very glad I had it. Think it can't happen here?

Peak oil in America

Tom Hickey said...

"GM Volt owners reporting 1,000 miles between fillups: 12 fillups per year: could be ethanol"

Matt, some of my friends did the math at the time of gas crisis when luxury gas-guzzlers were being unloaded for fuel-efficient vehicles and they realized that they could drive a luxury car and still come out way ahead after factoring in the extra fuel expense. :)

Tom Hickey said...

"Longer term, there is the prospect of technological advances in energy production and storage. Infrastructure to capture renewables will continue to grow."

Agreed. The problem as I understand it is one of scale. The ability to created and deploy technology tapping and distributing alternative sustainable energy as the scale required by increasing global demand is not expected to take place before petroleum reserves are insufficient to meet needs. There is a projected gap of several decades according to present estimates, and that is the zone of extreme danger. This is not the only factor operative. Global warming and its consequences also play a key role in the mix, for example. There is also the process of capital allocation. As I said above, all this involves a degree of complexity that introduces a great deal of uncertainty.

Neoliberals say trust the market to take care or it. Others are not so sure that is a great idea given that the market is biased by vested interests more interested in short-term gain that long-term consequences. The market's track record is not looking so good right now other than for the super-rich it chiefly serves.

Matt Franko said...

"Think it can't happen here?"

Yes petroleum shortages could happen here, but the west will simply come up with an alternative given time: we LEAD the ROW in these economic matters. (not saying it is right).

Then MENA will implode on itself.

MENA should be getting our counsel now to prepare for this eventuality ie a post petroleum world, it's had it's run.

Instead we happily change the oil in their Astin Martins and Lambos flown in to the UK on their Boeings... and serve them take-away in the south of France to fly back to Algeria on the govt jet for a Friday nite meal. Return their Pan Am terrorists, etc...

Agree 100% with you: this wont end well.


Chaos said...

Technology as deus-ex-machina CAN fail. So don't get to confident over it.

Your should study the thermodynamics of our economic system and how it works, the problem of available exergy, current metastable state and possible low-equilibrium state etc. and how all this is tied with complexity and society, flow of information, etc.

It gives you a superior understanding of how the world (includin 'ours', the society) works in reality. How we reach a lower-energy equilibrium has to be seen but there may be a combination of increasing inequality and fall of consumption, wars, malthusian pressure around some places in the globe, change on political systems, etc. One thing is for certain: increase of unknowns unknowns (Knightian uncertainty), and how will this impact our societal structure and organisation to hedge against uncertainty.

We may overcome this with increasing investment and development, but Mr. Market will do it on time? I doubt it, Mr. Market is only worried about 'now' not about 'tomorrow'. So as Tom says, there will be a period of few decades where volatility will be sky-high and under this environment of perceived zero-sum state, ANYTHING could happen.

Hopefully the danger of mutual destruction and lethality of nowadays arsenals will dissuade any major conflict. BUT, then problems will have to be resolved by internal adaptation of the different nations, etc. which can mean again anything (lose of freedoms, authoritarian ruling, class warfare, etc.).

And I would like to be wrong, believe me.

Anonymous said...

Mr. Market and its actors don't do anything until price tells them to. Higher energy prices will lead to a decrease in consumption of energy. The level of disruption will be proportionate to how quickly prices rise. The longer they stay high, the more efficient our 'lifestyle' will become.

Do you believe government will step in with subsidies so we can continue our profligate ways?

Alberta's oil sands have proven reserves equal to those of Saudi Arabia. Would it not be preferable to purchase oil from friendly, neighborly Albertans?

Will it not be feasible to convert gasoline engines to natural gas once the price for oil reaches or remains at a certain level?

Mr. Market encourages people to exchange goods and services. It makes more sense to buy oil than to waste resources trying to control it. Sometimes it costs less to reduce energy consumption than to maintain supply. When resources are at a premium, conservation creates wealth.

The world will suffer because of a lack of contingency planning in energy/resource management. But it isn't as dire as some make it out to be.

Message to chess playing generals: don't blow up the world, it's not too late!!