Tuesday, September 27, 2011

David Graeber — With No Future Visible, Young Activists Have Few Options but to "Occupy Wall Street"

Is it really surprising that young protesters on Wall Street and around the world would like to have a word with the financial magnates who stole their future?


Shaun Hingston said...


why is deflation bad? Anyone have a answer that doesn't rely upon historical evidence ?

Tom Hickey said...

Deflation leads to an underperforming economy while inflation leads to an over-heated economy. Both are economically inefficient.

Economic underperformance, output gap, high unemployment, and idle resources.

When there is high private debt in a deflationary environment, there is also the danger of debt-deflation. As money becomes harder to come by, it is more difficult to service loan obligations and non-performing loans and defaults increase.

See Irving Fisher, The Debt-Deflation Theory of Depressions, and Hyman Minsky's financial instability hypothesis.

GLH said...

Tom Hickey:
Thanks for the two reports.

Chewitup said...

David Graeber's new book "Debt- The First 5000 Years" is a great read. History, philosophy, religion, and economics wrapped up together. I am half way through. Love it so far.

Matt Franko said...

Graeber: "When the history is finally written, though, it's likely all of this tumult – beginning with the Arab Spring – will be remembered as the opening salvo in a wave of negotiations over the dissolution of the American Empire. "

Tom, for an Anthropologist, he seems a bit myopic here with this "American Empire" concept. The west's center of power moves around over time, but the west has been operating this way, and the west's relationship with the non-west has been thus for over 2,000 years at least the way it looks to me.

And a basic departure from this relationship does not seem to be the goal of any current unrest in the non-west. In fact, it looks like the "Arab Spring" was a basic economic protest within these non-western societies to provide more access and equitable distribution of western economic systems.

I guess my question would be are the protests trying to foment real change or are they just complaining about distributional issues? ... to me just watching the news over here, it looks like the latter.

They are still "in love" with the west and want greater access to it.

Tom Hickey said...

Matt, I suspect that Graeber is thinking that politics is fundamental to economics since politics determines policy, including economic policy, and that geopolitics is national politics writ large. Economic policy revolves around distributional issues, and that is also true on the global level. I would agree that America's ability to dominate those decisions based on its being the world's sole superpower and largest economic won't last forever and is now being challenged. Other people want a piece of the pie, too, and that is beginning to happen.

beowulf said...

I think the Occupy Wall Street crowd would have done better to come up with a specific target, with a specific goal that would create allies across the political spectrum (tranpartisan reform as Jame Hamsher would call it).
For example, don't Occupy Wall Street, Occupy 55 Water Street (or at least the sidewalk in front of it), the home of both Standard & Poor's and DTCC.

And what praytell is DTCC? Let's consult the oracle of wikipedia:
"The Depository Trust & Clearing Corporation (DTCC), based primarily at 55 Water Street in New York City, is the world’s largest post-trade financial services company. DTCC was established in 1999 as a holding company to combine The Depository Trust Company (DTC) and National Securities Clearing Corporation (NSCC)... In 2007, DTCC settled the vast majority of securities transactions in the United States, more than $1.86 quadrillion in value..." [$1.66 quadrillion in 2010]
As it happens the Tea Party hates Wall Street (which they see, more as less accurately, as in bed with Obama). And I'd note that that even Grover Norquist's no new taxes pledge has an exception for new taxes used to lower existing tax rates on a revenue-neutral basis.

So, the goal should be this:
Tax financial economy to pay for tax relief of real economy.
A transaction tax on the $1.66 quadrillion or sthat clear through DTCC could be used cut existing tax rates dollar for dollar (obviously cutting the regressive FICA rates is better, but even across the board income tax cuts would be for the good).
Conservatively assuming that last year's volume would be cut in half, a .10% transaction fee on DTCC transactions would raise $833 billion a year (IRS collected $2.3 trillion last year) and it could be enacted without going to Congress. The Monetary Control Act of 1980 gives the Fed governors authority to levy transaction fees on anything that moves through Fed system... and we all know where the Fed's net earnings go. So Act II could be "Occupy the Eccles Building" (or abutting sidewalk thereof). After Fed governors revise their fee schedule, Congress would still have to vote to cut existing tax rates, I think they're up to it. :o)