Submitted by: Mike Spindell, Guest Blogger
When I started as a college student about 50 years ago I took the Sociology I course as a required subject. There is little I remember from that course and less I remember about the instructor, except for his introductory words on the first day of class. To paraphrase him he said: “You will be taking a lot of courses in what are called the Social Sciences. Approach them all, including mine, with skepticism because they really aren’t science courses like those you’ve learned as a high school student. They will spend a lot of lecture time though trying to prove they are truly scientific, don’t believe them”. His clear meaning was that although the Social Sciences try to operate as if they are using the scientific method of experiments/research to prove theories, most of the work done is skewed to prove the theory of choice by those doing the research. In the five decades since that lecture my own experience and reading has taught me how true the advice from that long forgotten Sociology instructor is.
The social science that has my attention at the moment is Economics. I’ve read many an economist, from all points on the political spectrum and frankly while I favor those such as Krugman and Baker, I take most of what they say as opinion, rather than scientifically determined truth. Yes I’ve even read “Freakonomics” by Levitt and Dubner and the follow-up “Superfreakonomics” and while they were good reads I see them as not only bad science, but a conflation of economics with other social sciences that is superficial at best. This is really the problem with many economists and their theories. They presume to divine human behavior via the prism of economic theory. In the end their proofs are merely retrofitting their pre-judgments. That brings me to the “Austerity” movement which has hampered the recovery from the economic “depression” brought on by the wars and tax reductions of the Bush years, while it has also caused a crisis worldwide through its imposition upon many nations. The foundation research that has justified this “Austerity” movement came from two Harvard Professors: Carmen Reinhart and Kenneth Rogoff. A University of Massachusetts student Thomas Herndon found that their work was filled with mathematical errors in their research spreadsheets. http://www.huffingtonpost.com/2013/04/16/reinhart-rogoff-austerity-research-errors_n_3094015.html Their spreadsheets were their “proofs” that economic austerity promotes economic recovery and this theory, long held by many economists, is the basis for the imposition of austerity onto so many Nation’s economies and is the source of bitter national debate in our own. Though I will present some overview and links amplifying “austerity’s” false assumptions, my interest is in presenting my view on why the powers that be have imposed this doctrine, whose effects fall squarely upon 99% of the people of these nations, leaving the wealthiest unscathed.
Thomas Herndon with others published a paper about Reinhart/Rogoff’s findings stating this:
“ The new paper, by Thomas Herndon, Michael Ash, and Robert Pollin of the University of Massachusetts, Amherst, set out to reconstruct the findings of an influential 2010 paper by Reinhart and Rogoff, called “Growth In A Time Of Debt.” Reinhart and Rogoff, both of Harvard, claimed that economic growth slowed fairly dramatically for countries whose public debt crossed a threshold of 90 percent of gross domestic product.
The problem is that other economists have been unable to recreate Reinhart and Rogoff’s findings. Herndon, Ash and Pollin now say they were able to do so — but only by leaving out big, important pieces of data.
Using the same spreadsheet that Reinhart and Rogoff used for their research, Herndon, Ash and Pollin found that “Growth In A Time Of Debt” was built around a handful of significant errors. Correcting for those errors changes the findings dramatically: Average GDP growth for high-debt countries jumps from negative 0.1 percent to 2.2 percent.”
What we see then is that calculation “errors” showed that GDP growth for high debt countries actual increased rather than decreased. Reinhart and Rogoff (R&R) have been arguing that debt decreases GDP as the rationale for austerity and their argument seems not only unproven, but wrong. It gets worse.
The Harvard economists have argued that mistakes and omissions in their influential research on debt and economic growth don’t change their ultimate austerity-justifying conclusion: That too much debt hurts growth.But even this claim has now been disproved by two new studies, which suggest the opposite might in fact be true: Slow growth leads to higher debt, not the other way around.
In a post at Quartz, University of Michigan economics professor Miles Kimball and University of Michigan undergraduate student Yichuan Wang write that they have crunched Reinhart and Rogoff’s data and found “not even a shred of evidence” that high debt levels lead to slower economic growth. And a new paper by University of Massachusetts professor Arindrajit Dube finds evidence that Reinhart and Rogoff had the relationship between growth and debt backwards: Slow growth appears to cause higher debt, if anything.
As you can see from the chart from Dube’s paper below, growth tends to be slower in the five years before countries have high debt levels. In the five years after they have high debt levels, there is no noticeable difference in growth at all, certainly not at the 90 percent debt-to-GDP level that Reinhart and Rogoff’s 2010 paper made infamous. Kimball and Wang present similar findings in their Quartz piece.
This contradicts the conclusion of Reinhart and Rogoff’s 2010 paper, “Growth in a Time of Debt,” which has been used to justify austerity programs around the world. In that paper, and in many other papers, op-ed pieces and congressional testimony over the years, Reinhart And Rogoff have warned that high debt slows down growth, making it a huge problem to be dealt with immediately. The human costs of this error have been enormous.
Even after University of Massachusetts graduate student Thomas Herndon found Reinhart and Rogoff’s work included errors and that their 2010 paper was missing important data, the researchers stood by their ultimate conclusion: that growth dropped off significantly after debt hit 90 percent of GDP. They claimed that austerity opponents like Paul Krugman have been so so rude to them for no good reason.” http://www.huffingtonpost.com/2013/05/30/reinhart-rogoff-debunked_n_3361299.html
What is so infuriating about R&R is the destruction that follows in the wake of there now debunked theories. The unemployment in Europe is has reached record high levels high levels, countries like Greece and Spain have rioting in the streets and a new neo Nazi movement is gaining popularity throughout Europe. http://www.huffingtonpost.com/2013/05/31/eurozone-unemployment-record-high_n_3364881.html The cost in human suffering is incalculable, but these fatuous academic asses are not concerned with people, they are concerned with their reputations and they are concerned with catering to wealth. Their theories, rather than being the result of real research and experiment, are in effect self-fulfilling prophecies. This is NOT science; it is overweening egotism in tandem with uncaring self interest. This tale, however, gets worse. Huffington Pos contributor: Mark Gongloff wrote this article on Friday: “Austerity Fanatics Won’t Let Mere Economics Stop Them From Thinking They’re Winning” in it he writes:
“Like Hiroo Onoda, the Japanese soldier who hid on an island in the Philippines for 30 years refusing to believe Japan had lost World War II, austerity fanatics are never going to admit their failure. Instead, they are going to keep pushing the policies that are making millions of people in Europe and the United States miserable.
The latest example of their denial is a piece by Michael Rosen of the American Enterprise Institute, a conservative think tank, entitled “Austerity And Its Discontents.” He declares that, far from being shamed by the recent discovery of errors in influential research by Harvard economists Carmen Reinhart and Kenneth Rogoff, austerity fans have recently gained “the upper hand” in the global argument over austerity.
Rosen argues that Reinhart and Rogoff’s many loud rebuttals to their critics helped give austerians the “intellectual high ground.” He ignores that, in fact, Reinhart and Rogoff’s rebuttals have only compounded their errors. He also ignores that further research has debunked Reinhart and Rogoff utterly, revealing that their biggest mistake was in confusing the cause-effect relationship between high debt and growth. It turns out, contra Reinhart and Rogoff, that there is no evidence that high debt causes slow growth — in fact, the opposite might be true.
But then the austerians have never really needed the intellectual high ground. Their phobia of government debt is based mainly on the idea that debt is just bad because of course it has to be. It is bad when people take on a lot of debt, ipso facto the same thing is bad for government. We must eat our spinach, not our dessert!
Rosen is absolutely right when he points out that Germany, and the American Enterprise Institute, and the Wall Street Journal editorial page, and Michael Kinsley, and the many, many other long-time fans of austerity have only redoubled their efforts to push austerity measures in the wake of the Reinhart-Rogoff debunking and re-debunking. http://www.huffingtonpost.com/2013/05/31/austerity-failure-fanatics_n_3367787.html?ref=topbar
Now that I’ve presented the situation to you at least from my side of the fence, you can make up your minds about austerity. While I agree with many of the conclusions delivered by the writers quoted above my slant on it all is somewhat different. I believe that all economic theories and political theories, despite their validity, mask what is truly going on in our world today. It is easy of course to compare the call for austerity by conservatives under Democrats and the out of control spending and debt run up in the Reagan, Bush I and Bush II administrations. This comparison would lead one to believe there is fiscal hypocrisy at the bottom of this and that is true. However, the fiscal hypocrisy exist as much among Democrats as Republican’s as Max Baucus proved in his terms as Senator. Bill Clinton cut government to balance the budget. He aided in the erasure of Smoot Hawley and he hurt American jobs by signing NAFTA and CAFTA. President Obama has likewise played the fiscal conservative card, while complaining it has been forced on him. He has even put cuts of Social Security and Medicare on the table, although neither is related to the national debt.
What is happening here is the result of the wealthiest people and the largest corporations becoming international entities. The rise of the multi-national could well herald the decline and fall of the nation state. From the perspective of the “Haves” it makes perfect sense. Why be bound by the laws of a particular nation, when you can break free and roam the world as you please? Truly, to these multi-nationals and the people behind them, the world is their oyster. The only problems they have are government regulation, taxes and those pesky workers who want more wages. The solution is to bring the 99% to a level slightly above starvation. This ensures that they will work for any amount that helps them put some food on the table. It necessitates that social assistance programs be destroyed so the peasants will have no choice but to seek shelter from devastation at some low paying job that keeps them little above subsistence.
Imagine yourself as one of the Super Rich, or as the CEO of a huge multinational corporation. My guess is that most of them see themselves as extraordinary people, chosen by fate or God to be in their exalted positions. They are able to go anywhere in the world on a whim. They don’t have one palatial home they have five, some in the world’s greatest Cities and others in the world’s most beautiful places. They don’t have one luxury car they have twenty collectibles and a fleet of limousines to take them place to place, flanked by bodyguards. While it’s true some wealthy eschew these outward signs, usually it is done as some sort of reverse snobbery, like the Kennedy penchant for driving Oldsmobiles, or J.B. Hunt driving to work every day in an old Chevy, with a paper bag lunch prepared by his wife.
The rich are not like your and me and moreover they know it. The truth is austerity is one more step on the road toward worldwide feudalism. Our wealthy class has helped to plot this out and they are served by people like Reinhart and Rogoff as courtiers and henchmen. They are leading us to a chaos they believe will result in solidifying their hold on the world and their eventual Nobility. However, when chaos descends on society through the discontent of so many, even wealth might not be protection against the violent psychopaths that gain control. That’s what I think about austerity, what do you think?
Mike Spindell:
who owns the bridges? Are they privately owned?
I would like to see a non-partisan study on medicare/medicaid, I dont believe those numbers.
“I would like to see a non-partisan study on medicare/medicaid, I dont believe those numbers.”
Bron,
My guess by non-partisan you mean conservatives that agree with you? Because seriously Bron your beliefs are fact based, only in the sense that you will only accept facts that meet your pre-judgments. Anyway, here goes:
http://pnhp.org/blog/2013/02/19/important-what-are-medicares-true-administrative-costs/
http://healthaffairs.org/blog/2011/09/20/medicare-is-more-efficient-than-private-insurance/
I suspect though you would prefer a report by the “pristinely”, non-partisan
Heritage Foundation. Never let the facts get in the way of your suppositions. 🙂
only problem with your shopping mall analogy is that most of us only get to use the roads for our taxes and the police, fire and military, the courts of course. But most of use never use the majority of what the government does.
And on top of that the shopping mall doesnt give money to stores which arent doing well. They get kicked out of the mall.
100% of the denizens of the mall are pulling their weight or they get kicked out of the mall. They pay the same square foot price [oh the larger stores may get some volume discount] so it is fair to all. The store with 10,000 sq. ft. pays much more than the store with 800 sq. ft. but the store with 800 sq. ft. pays something and is an important and constributing member of the mall community.
Americans Deserve the IRS
Individually, Americans do not deserve to be subservient to such a fear-mongering, intimidating and powerful agency as the Internal Revenue Service; but collectively, we do. Let’s look at it.
Since the 1791 ratification of our Constitution, until well into the 1920s, federal spending as a percentage of gross domestic product never exceeded 5 percent, except during war. Today federal spending is 25 percent of our GDP. State and local government spending is about 15 percent of the GDP. That means government spends more than 40 cents of each dollar we earn. If we add government’s regulatory burden, which is simply a disguised form of taxation, the government take is more than 50 percent of what we produce.
In order to squeeze out of us half of what we produce, a government tax collection agency must be ruthless and able to put the fear of God into its citizens. The IRS has mastered that task. Congress has given it powers that would be deemed criminal if used by others. For example, the Constitution’s Fifth Amendment protects Americans against self-incrimination and being forced to bear witness against oneself. That’s precisely what one does when he is compelled to sign his income tax form. However, a Fifth Amendment argument can’t be used as a defense in a court of law. The IRS will counter that you voluntarily provided the information on your tax return.
If you’re in debt to Bank of America, Wells Fargo or any other private creditor, in order for it to garnish your wages as a means of collecting debt, it must first get a court order. By contrast, the IRS can garnish your wages without having to get a court order first. If your employer doesn’t obey the IRS and send it a portion of your wages, he will be held accountable for what you owe. At the minimum, some IRS collection procedures violate one of the basic tenets of the rule of law — namely, the law of the land applies equally to individuals (and other private entities) and the government (and its officials and agents).
Our Founding Fathers feared the emergence of an agency such as the IRS and its potential for abuse. That’s why they gave us Article 1, Section 9 of the Constitution, which reads: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” A capitation is a tax placed directly on an individual. That’s what an income tax is. The founders feared the abuse and the government power inherent in a direct tax. In Section 8 of Article 1, they added, “But all Duties, Imposts and Excises shall be uniform throughout the United States.” These protections the founders gave us were undone by the Progressive era’s 16th Amendment, which reads, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
If federal spending were only 5 percent of our GDP ($750 billion) — instead of 25 percent ($3.8 trillion) — there would be no need for today’s oppressive and complicated tax system. You might ask, “How could we be a great nation without all the government spending?” When our Constitution was ratified in 1791, we were a weak and poor nation. One hundred forty years later, with federal spending a mere pittance of what it is today, we became the world’s richest and most powerful nation. No small part of this miracle was limited and unintrusive government.
The bottom line is that members of Congress need such a ruthless tax collection agency as the IRS because of the charge we Americans have given them. We want what the IRS does — namely, to take the earnings of one American so Congress can create a benefit for some other American. Don’t get angry with IRS agents. They are just following orders.
Walter Williams
“If federal spending were only 5 percent of our GDP ($750 billion) — instead of 25 percent ($3.8 trillion) — there would be no need for today’s oppressive and complicated tax system. You might ask, “How could we be a great nation without all the government spending?” When our Constitution was ratified in 1791, we were a weak and poor nation. One hundred forty years later, with federal spending a mere pittance of what it is today, we became the world’s richest and most powerful nation. No small part of this miracle was limited and unintrusive government.”
Bron,
Do you really call this a fact-based argument? If this is the best Mr. Williams has as an economist, the profession is as bereft of intellectual honesty as I suspect. His argument posits that there would be no need for the IRS if federal spending were only 5% of GDP and that is probably true. However, what services would be cut and in the process how would all the federal money that is supporting almost all the States be made up for on the State level? Now of course like many anti-government people, including yourself, you would privatize everything and let corporations do it on a pay as you go basis. Someone burglarizes your house, call the police but have your credit card ready.
That though because let us return to the “logic” of Mr. Williams presentation.
He stated that “140 years after the Constitution was ratified, with federal spending a mere pittance of what it is today, we became the world’s richest and most powerful nation”. Hmm…. I think 1791 plus 140 years would make that 1931, which was the height of the “great depression” in America. We were not exactly the richest and most powerful nation in the world. Coincidentally though Herbert Hoover was in office to be shortly followed by FDR. FDR raised government spending to not only save the people of this country, but also to keep it from going communist, thus saving the corporations of this country, which would actually have preferred the other alternative, fascism. However, forgetting that, the illogic is in his making the jump based on his assumptions about government spending. To make a logical argument one would need more than assumption and/or assertion one would need proof. don’t worry about the logic though Bron because Mr. Williams makes you feel all warm and fuzzy about the way you look at life..
Bron: Are you serious or just joking around? I hope you are just joking around . . .
I am quite serious. As I have told you before, the country is analogous to a Shopping Mall, we provide an environment in which you can thrive. You use our infrastructure, you use our cleaning services, you use our security forces and systems, you use our building. In the country, you use our court system, our national defense system, fire protection, police protection, our disaster relief, and our retirement and medical insurance for your employees (that would demand much more pay from you than just the current taxes if they had to provide for their own retirement in riskier investments; the current tax rate is all they need primarily because it is, for them, a 100% risk-free investment).
If you are the sole proprietor of a store in the Shopping Mall, then in the vast majority of such Malls in this country, the Mall is officially your partner. You owe them your rent, and mandatory fees for common area maintenance, garbage collection, security, and a share of the electric bill. On top of that, you probably owe them a share of the marketing bill (the content of which is not under your control) and a percentage of sales over some threshold.
Now in your business, you make sales and collect revenue. But not ALL of that revenue belongs to you, and in fact the first of it belongs to the Mall, not you, until your bills are paid. Because if you cannot pay those bills, they can shut down your store and eject you from the Mall. So before you pay yourself a penny, you first have to pay the Mall. If that means you starve, so be it. You do not give them their share out of compassion or your kind and sharing heart, they are entitled to their full share out of whatever revenue comes in. Not profit, mind you, revenue.
It was in your hands, true, but it does not belong to you. You are just holding it for the true owners. You cannot deny them their share because you want to spend it on some extravagance like food and shelter for your children. If you try to skip without paying, they may sue you for breach of contract and try to take their share by legal force.
The country is kinder than the Shopping Mall, we are better partners, because there is a level of income we do not tax at all, and we apply the reverse relationship: In the mall, you have to take your share out of the excess after the initial threshold composed of your rent and fees; in the country we put ourselves in your position: We take our share (taxes) from the excess over various thresholds of your earnings, so that those gaining the least from our infrastructure pay less than those gaining the most. That is the purpose of a progressive tax system.
Yet the dynamic is similar, what you get in revenue (like pay if you are an employee, or sales for a business) is NOT all yours, some of it is just in your possession until your rent and fees come due.
Michael Murry: Let me whisper it for YOU again: I don’t care what Sheldon Wolin asserts, or what you assert. Neither of you have any proof of the claim as to why money was spent on defense instead of welfare.
The motivation is NOT to “use up the wealth,” it is to extract an unfair share of the wealth created by labor.
Given a choice between increasing the financial distance between themselves and the masses, and just maintaining the financial distance between themselves and the masses, the exploitive rich will choose to increase the financial distance.
What is wrong with Orwell’s analysis and your blind acceptance of it and your misinterpretation of Wolin is that war does NOT just use up resources, it creates profits for those that provide those resources, and those people are the rich industrialists making everything from uniforms to fighter jets.
The labor of everybody in the country is typically taxed to pay for those resources consumed by war. Now, without war, that tax could go to welfare that helps everybody in the country; with infrastructure, with health care, with safety created by law enforcement, and so on. With a reasonably efficient government (say as efficient as the average multi-billion dollar corporation) that would be “fair on average,” meaning on average the value of the free infrastructure provided by government would be worth the cost of the taxes paid in; but there is added value due to the efficiencies and benefits of scale (e.g. not even Exxon could hope to build from scratch our interstate highway system, which creates the market for their product.)
WITH war and excessive military buildup in the picture, that tax is not spent on infrastructure, it is spent on the resources consumed by the military. But those resources are purchased by the military, and that is where your analysis goes wrong.
Because the providers profit from those purchases. They do not advocate for war because they have some petty desire to keep the rabble down, they advocate for war because it puts money in their pocket, and if the war or military buildup is unnecessary and they know it, then they are stealing that money from funds that should have been providing a benefit to the populace. Funds provided by the labor of the populace.
It is the labor of the populace that creates the wealth they divert into their pockets and away from the common good. They are taking an unfair share of the wealth created by labor. If you can’t get that, you can’t get anything.
I personally don’t see how the internet sales tax could possibly be held to be constitutional.
Given that the mechanics of this are going to throw small business completely out of the market or be subjected to contract with tax accounting services that may or may not be cost effective or workable, I know this is going to upset the market considerably.
Mike:
I know where you are coming from with regard to equality with taxes and how that you mentioned the reason pols are going for hidden taxes because they have been thwarted from taxing higher incomes by various political realities but for me I, and I feel there are others like me who believe as I do, but frankly I don’t trust politicians with tax legislation. I don’t trust them to spend wisely and not need extra taxation. I don’t trust their intentions on who they are pandering to in order to excahnge tax benefits in exchange for political favors. I don’t trust that any new tax that they claim is small and temporary will not later become large and permanent. And, most importantly I don’t trust them when they claim they know better than the American public what is best for the common good.
To me money is the life blood of politicians; be it either campaign contributions or taxation. Money provides them the energy to do things for their own personal benefit. If they want a new project to satisfy a constituency and further their political careers, they will tax people to obtain it. And with our federal gov’t the more they receive in revenue, it seems they spend 115%+ of it.
So for me I vote 100% of the time against any increases in taxation, and I have for the past 18 or so years. It is not that I don’t believe in public services or needed government operations. I am just sick and tired of the waste and corruption politicians engage in and if I can even in a symbolic way put the brakes on their theft of money from the lives of everyone in this country, be they wealthy, middle class, or unfortunate well that is what I am going to do.
“To me money is the life blood of politicians; be it either campaign contributions or taxation. Money provides them the energy to do things for their own personal benefit. If they want a new project to satisfy a constituency and further their political careers, they will tax people to obtain it. And with our federal gov’t the more they receive in revenue”
Darren,
Money IS the lifeblood of politicians in that it is used to control them by those with most of it. However, the anti-tax movement as devised by its champion Grover Norquist is really not about wasting taxpayers money, but about shrinking government by substituting corporations to do the services performed by government. It also has turned Social Security and Medicaid, two of the least wasteful and most beneficial services performed by government into that new curse word “entitlements”. It is a movement that in the end would privatize infrastructure, police, firemen and sanitation. It has already made great progress in privatizing prisons, with the result being a “prison lobby” that works against decriminalizing victimless crimes. The meme they us is that through competition prices will decrease.
The fact is that like cable, phone services, energy services, the prices keep rising despite competition. The simple fact is that to run a business one needs to add in profit. A private police force for instance has to be more expensive than one run by a government, simply because it has to profit. An even more
disgusting situation has been the use of “private contractors in war. These people earn more than $100,000 a year doing the same duties as our troops, yet they are not subject to the UCMJ and can choose to leave when they want.
Privatization can be made “cheaper” by low pay, but then the quality would suffer. The over-influence of Wall Street today demands those corporations listed to ever increase profit. Unlike smaller business models that are well run sometimes you need to take a lesser profit to reinvest into the business. CEO’s of major corporations can’t do that because their tenure is driven by profit alone and not building for the future.
So yes, I understand where you are coming from, but the solution is to take the money out of politics by ensuring that good people can run campaigns without needing to take handouts from the wealthy. In the meantime there are essential government services that need to be done and by making taxation
the issue politicians of all stripes must have the funds to perform them so they are inexorably drawn to hidden taxation and that taxation falls directly on the backs of people upon whom it is a burden.
As an example, in NYC The Bronx is separated by water from Queens County and Manhattan by water. The Triborough Bridge (now the RFK Bridge) was built many years ago with a toll of 25 cents, that was to end when the cost of the Bridge was paid off. The Bridge was paid off in the 50’s, but a toll remained. When I started driving in the 60’s the toll was still 25 cents. Last year the toll was $6.00, this year it is $7.50. Imagine if you are let’s say a carpenter who lives in Queens, but works in The Bronx. It is impossible to take public transportation to work, since the travel time by subway can be upwards of 1 1/2 hours and you couldn’t carry your tools. This means it would cost you $15 per day to go to work and back home, within the limits of your own City. This is the kind of hidden taxation that I’m talking about. With money the tolls are little problem.
Summers I stay in a bungalow in the mountains about 90 miles from NYC. On a recent day driving in to see my Mother-In-Law and then my children/grandchildren it cost me $25 alone in tolls. While I’m not poor by any standards I live on a fixed income from Social Security and pensions. An extra $25 in a day is an expense I have to notice. As I say though, I manage fairly decently compared to people who are younger, with families. This anti-tax movement not only hits them in their paying more money in income taxes than millionaires like Romney, they pay far more (as a percentage of income) into Social Security and Medicare taxes and they are affected greatly by these nuisance taxes that are used to hide tax increases. By the way, the administrative expenses for Social Security and Medicare are less than 3%, while they average more than 15% for private insurers and that doesn’t take profits into account.
Taxation is how Government operates. No one likes to have to pay it, but if we do, then we should expect that the burden will fall fairly on each of us. Today the burden falls squarely on middle income and lower income people, in a time when the gap between them and the wealthy is ever increasing.
Mike S,
I have no doubts about you.
I know you are as comfortable in your skin as I am in mine. We’re just attempting to be decent human beings the best we can & enjoy the short time that remains.
Meet Skidboot Professor Turley! 😉
(BTW: I really enjoy rising/training dogs.)
Oky1,
I accept what you say, I am by nature a very trusting person, who has learned through years of experience that I give trust too easily. My training as a gestalt therapist also has taught me that most of us so easily deceive ourselves that we see little wrong in deceiving others. This has made me a person who will accept others proffers at face value, until evidence proves otherwise.You made a long and thoughtful comment that I wanted to answer in depth, but lacked the time tonight so I responded in brief. The close of your comment to Bron seemed snarky to me.
Despite my ponderous prose in many respects I take my “wisdom” and myself less seriously than people suspect and I really don’t like to grade anyone, not seeing myself as the fount of knowledge and thus the arbiter of people. I’ve lived a strange and wondrous life, to the point that not having died three years ago was highly improbable. My writing here is with a passion and purpose to try to make a small contribbution because of my own good fortune that benefits the mass of people. But I’m really my own harshest critic in that I know my prose is often ponderous and ungrammatical thus limiting its appeal. Though I’m hardly an innocent I treat people that way by being as authentic as I can be. I believe it gives me good karma and good luck in the essentials, while protecting from those who would wish me ill.
MM,
Although the thought-terminating cliché is certainly part of the mechanic, I think even more to blame is people’s propensity for a lazy vocabulary. They read or hear a word similar to one they know but fail to recognize that although similar there is often a critical distinction. And yes. It is depressing that such “primitive word-magic” (lovely phrase) works as well as it does.
Mike S.,
No, I’m not yanking your chain. You my have cause to be sensitive but it’s not because of me.
I’ve read a small bit of your writings & generally I like them. You pour your guts, heart & soul into your work & I & others notice.
The piece here through, maybe Paul Krugman’s name mentioned, for whatever reason, kinda set my hair a fire & I’m glad you wrote the piece. I’ve been trying to spit some my own words out for a while & sometimes they don’t out easy for me.
Ya, I took a couple of easy jabs at your work on this piece but I felt it was only fair play I responded back with my own guts, heart & soul to give you a chance at noticing if there are flaws in my thinking & not yours.
Either way this kind of feedback should help you, I & the readers.
**
I like to try to “attempt” to use a bit of humor to lighten things up a bit 😉
Darlin
I think I have discovered a perfect example of “Austerity.”
Suppose, just for example, that I had a money market account at my credit union in the amount of $45,000, representing a goodly chunk of my life savings. Then just suppose that I got a statement at the end of last year informing me that my account had earned $45 in interest. Now, assume that I can do simple division, which tells me that my money has earned me a whopping 0.001 — or one-tenth-of-a-percent — rate of return.
Now suppose that I read where the Federal Reserve continues handing out millions (if not billions) of dollars of free money to its cartel-member banks (many of whom crashed the US and world economy by recklessly betting huge, hyper-leveraged sums of money on uncovered shorts and toxic paper trash (called “derivatives”) so that these same bank frauds can in turn lend that free money back to the US government for a 2-3% risk-free rate of return — so that the US government can continue squandering trillions of dollars of that borrowed money on ideological “wars” against terrifying, illiterate, barely armed Iraqi Arab tribes and poppy farmers in the remote valleys of the Hindu Kush.
Now suppose that the President of my country — who just can’t get enough of playing Commander-in-Brief in the graveyard of empires — starts publicly negotiating with himself over just how much of a cost of living adjustment I don’t need to my meager monthly Social Security check because the US government has a “deficit” but somehow can’t eliminate stupid and wasteful war spending and marginally raise the tax rate on the criminal 1% oligarchy to eliminate it, like former President Bill Clinton did early in his first administration.
Just suppose all this, and then tell me that I really don’t understand the “Austerity” that I seem to have gotten without having any choice whatsoever in the matter.
Gene H,
In my humble opinion, relabeling the War Department to the “Defense” department constitutes the greatest propaganda coup in the modern history of the United States.
As Alfred Korzybski truly said: “We are a symbol using class of life, and those who rule the symbols rule us.”
Until we take back our symbols for our own use, the corporate/military oligarchy will continue to rule us through abusing our naive identification of map and territory.
For example, President Obama claims to have brought President Bush’s “Crusade” a.k.a., “War on Terror” to a close, when in fact he has merely relabeled it “Overseas Contingency Operations.” I have to admit that I’ve seldom seen such a naked, “in your face, morons” exercise in primitive word-magic. I mean, a different name must indicate a different thing, right? But the thought-terminating cliché (in Robert Jay Lifton’s neat phrase) seems to have accomplished the desired intellectual anesthesia. How depressing.
“We are a symbol using class of life, and those who rule symbols rule us”
Michael M,
That is a brilliant statement in 15 words of what I’ve been trying to say here in thousands.Korzybski’s words describe how the oligarchs and despots throughout the years have retained power. We should, however, take it a step beyond the rule of society to comprehend that via symbol manipulation many of us spend our lives asleep in essence. The mythology and propaganda that perpetuates the cruel human hierarchy and lulls the masses into a sleeplike existence is nevertheless resistable by some who would awaken them. That is why they strive to put most into a state of supplicating poverty because a starving human will do anything for a crust of bread and tolerate anything they must do to feed their children.
Bron,
I agree with you. Where in the heck is our cut of the royalties from all that oil out of the Gulf of Mexico, Alaska, etc.
Wallst & DC can always come up with another scam to take it back, but I’d at least like to see our “We the People” fair share first.
A couple items I forgot to mention above as to why they, Wallst/DC won’t fix anything is 1st if they did decriminalize drugs Wallst/Buffet/Dimon would be out of their cut laundering the drug money. It’s a pile & a half.
And 2nd If we got rid of Federal Reserve & turn currency issuance back to the Treasury Dept we’d destroy Wallst/London’s precious lil Bond Market.
That would expose that mountain of counterfeit bonds they’ve sold to pension funds & other investors, plus that would cut off funds for DC polecats adventures of Empire building around the world.
I’m not expecting much positive change for the people until enough of us somehow force them to stop with the tyranny. We may be both long gone before that ever happens. We’ll see.
I just posted this stuff today to give Mike S a fair shot at giving me back a low scoring grade. 😉
another myth is biting the dust, it has to do with monopolies. They cannot exist because something will rise to take their place if the market is left alone. And low and behold:
“Warren Buffett’s BNSF railway is already testing the use of natural gas instead of diesel in its U.S. trains, while U.S. car manufacturers have tentative plans to test gas-fired engines for freight trucks.
Mr. Morse said the process would be encouraged by governments capping natural gas prices and by the environmental advantages of burning gas instead of oil.
“New trends, each building momentum and reinforcing one another, virtually guarantee that natural gas will make inroads into petroleum’s monopoly hold of the transportation fuel market,” Mr. Morse said in a research note released on Tuesday.”
Say it aint so Ludwig, oh thats right you probably already have and we Aynish have known this for a very long time.
Time to sell Exxon and find a natural gas supplier. Maybe even buy some oil futures at a lower price of course.
I can hear the nay saying, government mandated clean air and alternative fuels. OK a good long time ago. Better recovery technology is what caused this, not Washington, DC.
Just let it alone and it will happen.
“Laissez faire, telle devrait être la devise de toute puissance publique, depuis que le monde est civilisé … Détestable principe que celui de ne vouloir grandir que par l’abaissement de nos voisins! Il n’y a que la méchanceté et la malignité du coeur de satisfaites dans ce principe, et l’intérêt y est opposé. Laissez faire, morbleu! Laissez faire!! (Trans: “Leave it be, that should be the motto of all public powers, as the world is civilized … That we cannot grow except by lowering our neighbors is a detestable notion! Only malice and malignity of heart is satisfied with such a principle and our (national) interest is opposed to it. Leave it be, for heaven’s sake! Leave it be!)”
René de Voyer, Marquis d’Argenson
Bron,
If you think Exxon is going out of business soon it’s time to get a new financial adviser.
Oky1,
If as you seem to admit your aim was to yank my chain that’s fine with me, it just means I won’t have to take your comments seriously.
OKY-1:
the problem is that helping the poor and those who need help probably costs more than actually helping them.
I would like to know how much of every tax dollar used to help the poor actually gets to them. You have HHS, HUD, IRS, SSA, and now the ACA; is it like a good charity which typically gives 75% plus to those they help or does only 10% or 20% get there?
If only 20% is getting to the poor why cant we just set up a bank account for people who need help and put money in it? Many people are taking advantage of the system now, there are no real controls.
Get rid of most of the overhead, sell the public housing to the people living there for 20 bucks/month and let them take over the upkeep.
There are all kinds of things we could do that would help those in need while reducing the size of government and they would be better helped.
We ought to be USA, Inc. and each of us own stock in our country. Anytime a cow grazes on public land we ought to each get paid. Why should the government determine who gets money and who doesnt? We give them the sanction to govern us, they ought to what we tell them to do.
You guys are always saying We the People, well it seems to me you mean they the government.
And you will probably have some excuse as to why government cant be limited or everything will “fall” apart. Why it cannot even be reduced to levels of spending in 2008 or the country will go to h&ll and a handbasket.
MM,
A fine example of both value loaded language and the obscuring power of euphemisms in propaganda.
“Austerity” means that the principle cause of imperial economic malaise — permanent war — will not only remain unexamined (and therefore unrectified) but will receive secret, “off the books” amplification and entrenchment instead. As retired Army Colonel Andrew Bacevich explains things in Washington Rules: America’s Path to Permanent War
Since at least the end of WWII, those at the center of power in Washington D.C. have constructed a self-perpetuating permanent “war” in the interests of keeping themselves in power — and in possession of the keys to the Treasury. That this phony “war” consists of ideological crusades against a series of mythological monsters — Monolithic World Communism, Global Terrorism, etc. — only serves to validate Orwell’s point that permanent war does not have as its object any sort of victory over a real territorial enemy, and so the “war” doesn’t even have to exist or show any results one way or another. Permanent war exists for its own sake — “war” to have “war” — and for the sake of maintaining those in power who claim title to its high priesthood.
The words “War,” like “Austerity,” have become sacred, self-serving misnomers wielded as a religious semantic bludgeon by the self-serving corporate oligarchs who privately own and operate the government of the United States. Yet, as F.C.S. Schiller has truly said: “The word “sacred” generally means a fear that anything so denominated cannot withstand investigation.”
Those shouting “war” and “austerity” at us fully expect that we not subject these sacred misnomers to critical investigation, because they know that their phony euphemisms only mask a vast and venal emptiness. Anti-war means anti-corporate-oligarchy. Start speaking of “corporate war” spending instead of the ludicrous “defense” euphemism and see how quickly the conversation gets real.
** Mike Spindell 1, June 4, 2013 at 10:19 am
“This is why I’m incredibly concerned about the Internet sales tax that’s being debated in Washington.”
Bron,
It comes down again to whose Ox is being gored. With guys like you who hate income taxes, government in deference uses sales taxes that repressively affect lower income people, rather than share the burden equally among all levels proportionately. The fact is that while sales and other taxes come from both political parties, it is the aggressiveness of the anti-tax movement that has led to the use of these sales taxes etc. to pay for government. In NY for instance, which you would consider Liberal, the last Republican Governor doubled car registration fees as a hidden tax that would keep him on good terms with the party. The burden of those fees fell on those with the lower incomes.
Taxes should be proportional to income, w/o deductions. If they were fairly distributed there would be more than enough money to pay for the services we needed. I know though that you don’t believe in many of those services, but that is another argument, one that speaks to the entire austerity topic.
**
Mike,
I’m one of those that hate this current tax system & I agree with you that sales tax,car registration fees & other hidden tax & most of the flat tax systems proposed unfairly tax 99% of us.
Those tax systems help kill economic activity, but that’s why leaders put them in the 1st place.
I’m going back & start at the top of all these problems like taxation, austerity, etc.
1st up: Wallst/London Banks & insurance companies (B& I), are totally corrupt & out of control!
ie: Professor William K Black, put over a 1000 bankers in prison back during Savings Loans Frauds & offers proof of this current Wallst/Govt ponzi fraud. Paul Volcker,Neil Garfield, Matt Taibbi & millions of others of us have the proof of their ongoing frauds.
2nd: Wallst/London B&I created the Federal Reverse System & the IRS as a scam to create a currency/tax monopoly to redistribute wealth from us the 99.7% & our govt. to the say 0.03%.
ie: “Hypothecation” is just a fancy name for Wallst/London’s serial frauds & most of the pension plans, personals, etc. are stuff full of assets backed by collateral already pledged to 10s/100s of other investors. & that’s the reason why Bernanke has to keep pumping 85+ billion a month into the system is to keep it a float one day at a time yet it does fix the underlaying problem.
Currently there is estimated over 1.5 Quadrillion $$$ worth of these fraudulent OTC derivative instruments in our/world markets.
3rd: Rigged Electronic Voting Machines, Blackmail, Greed, Regulator Capture allows Wallst/London B&I to turn our politicians & govt bodies into their personal puppets.
ie: Bush vs Gore, etc…
4th: DC/State/Big City Local politicians & most Main Stream Media outlets, blackmailed/greed,ignorance,etc.., they have no interest in fixing any of the above problems because they have to maintain this corrupt system to keep their personal frauds going, their power & also their Wallst/London bosses demand these frauds continue to keep their for profit foreign wars/terror attacks going & their terror attacks against us here domestically.
5th: What their ultimate goal is I’m not sure, but we do know they are out to completely destroy the “We the People” concept of our govt in which the Nation/State/Local is for the sole propose of protecting/promoting individual freedom & liberty & completely replace it with this current system they’ve been building in which the individual is just a tool for the use of the State & Transnational Corporation’s goals.
Yes, I agree with you, they wish to make us all feudal serfs.
**MS: Beyond that I clearly stated my viewpoint that in this Austerity initiative I see an attempt at imposing a feudal society upon humanity fostered by people who see themselves as “above” the peasantry that is represented by the 99% of humans.**
6th: One method I & others think could work to start to correct this nation’s problems is to 1st get rid of the private Federal Reserve System (FRS) & return the power to create currency back to the US Treasury. That would allow our govt to create our currency with no interest owed to anyone.
ie: In 2007/08 govt reports claimed all home loans nationwide amounted to about 11 trillion. Estimated today is the the FRS has caused the creation since 2007/08 of at least 25-50 trillion$$$ to keep Wallst/London afloat. Had the US Treasury (UST) in 2007/08 issued no interest loans backed by UST issued currency could have paid off every interest bearing loan & those savings would have been spent back into the US economy, thus kick starting the economic activity.
Who knows better, the mother with cash in her hand, able to decide which of her kids needs a new pair of shoes or a govt committee running another stimulus packages handing out tax credits to cronies to decide which kid needs shoes?
Student Loans/Biz Loans, all could have ran through this type of one off crises program run through UST.
Then move immediately back towards something like the tax system the US had before 1913/FRS/IRS.
We buy fuel for our vehicles all the time, pay the govt taxes on it & drive off with ever having to fill out govt forms & forced to sign docs under threat of law.
Surely we can devise a better, less intrusive/abusive tax system then the one we have now.
7th: What services/activities should our Govt be engaged in? Like Ron Paul & others I favor the US govt getting out of the UN, NATO, closing most all of our non core foreign military bases. The key reason beyond the expense that’s aiding in BK’ing the US, is that by continue this path it is the greatest threat to our individual “Rights” & our national sovereignty.
Why can’t we change our direction before this crises gets even worst then it is? Let’s look domestically. Like many rural areas across the US the largest employers is almost always the govt.. One local town/county west of here they have basically bricks/mortar school & state prison, a few B & I that operated through a govt. monopoly, a few hamburg joints & a Wal Mart selling slave goods mostly made in Asia, govt subsidized Ag products & with their employees are subsidized by the govt. welfare programs.
A. The School Teachers & others local naturally oppose & resist change because if we went to a more home school computer/Internet teaching model we wouldn’t need all those buildings/superintendents, Yellow Buses/fuel, all those that service the facility or as many teachers. And it makes it harder for Wallst/London B& I, & DC polecats to brainwash & control the local people & maintain their current power/control monopoly.
B The prison system. Estimates current are 50 to 70% of prisoners are in on non-violent drug related offenses. Why in the heck would we continue paying 25-100K each to keep them locked up when they could still be monitored from the outside while they pay for their own expenses?
Well it’s crystal clear to me & many others when one looks at who loses if we change this current system & it will soon have to been changed regardless of others attempts to slow down the coming changes.
First the Prison Guards, they don’t won’t to lose one of the only jobs currently around, the town/county/local biz doesn’t want to lose the Prison Guards taxes, their purchases & they’ll lose local population & get less Fed funds because of declining pop.
And if it’s a private prison it’ll hurt Wallst/London’s bottom line.
So tomorrow, if the US/States made cannabis legal,which is non addictive, ya a couple states have, & decriminalized other drugs look at what would likely happen.
We’d likely see a drop of tobacco & alcohol sales/use. The Fed/State govt’s wouldn’t like seeing that tax base drop.
I’d hope we’d see a massive drop in the use of meth & other more dangerous drugs. Especially concerning to me is the current rise in this new synthetic drugs. (Charlie Sheen anyone) I’ve seen people on meth & that’s horrible, this new synthetic crap spooks the heck of me.
We have examples what things might look like in the US without a drug war, the pre US drug war, Netherlands & Portugal recent drug policies, etc..
So it destroys the profits from drug dealers, it reduces violence including gun violence, gun/ammo sales drop. (NRA would hate that)
It reduces the need for as many police, courts, prisons, CPS for many of the kids of these types offenders & thus a drop in the number of kids on Wallst/London’s Big Pharma’s dope.
UNICOR would hate it because they’d lose much of their cheap prison labor.
The Electric/energy industry wouldn’t like this because they’d lose the demand from those now reduced number of schools & prisons.
Then on top of the mix we’d have all those type people who had their voting rights taken away would now have the ability to vote. Even the rigged voting machine can only change the vote a few %, these newly eligible voters could upset the current apple cart depending on which way they’d swag.
Of course this piece is not an all inclusive list. But when I look at how pristine this country/North American was 300-400 yrs ago, clean rivers,air, food & the filth it has become & we observe the corruption & complete breakdown of every sector of the economy I don’t know if all these people/ groups with a vested interest in this current system can engage in helping to correct things short of a complete collapse of this system.
Many remind me of a monkey with his hand caught in the cookie jar. The could be free at any time, but they have to first let go of the cookie in their hand.
Currently I’m in another trap of this system, the Laffer Curve. If I engage in more work for profit most additional revenue goes to the govt & I’m just a bigger tax donkey with more red tape headaches & exposure to risk from the govt. My solution, do more works of charity & work for free on projects that interest me.
If you want & have the time MikeS/others feel free to correct me on any flaws you might see in my thoughts
.Oky1,
That is what I call a righteous rant. We do disagree on something’s, but we agree more than disagree. It’s family time for me now, so I’ll try to anseer you with specifics tomorrow. That we agree that they are trying to impose feudalism is a good start, but the devils is in the details. My take is that it’s not about politics, it’s abooit ego. Think of someone like Donsld Trump. He inherited his money, went bankrupt 4 times, lost money iin the casino business and now he earns his money playing a “Rich Man and business expert. He has made himself into a brand, rather than an actual businessman. Yet he runs seminars on how to get rich. It is all about ego to thses people and what drives that ego is a belief that they are better than everyone else. They really aren’t except for the money, but they will feel that way if we are all living in poverty
The American public, not to mention the American president, has no idea whatsoever how much of of America’s economic productivity gets “Hoovered” upwards to the corporate 1% and then privately squandered in conspicuously wasteful Seisure-Class pissing contests (i.e., Warfare Welfare and Make-work Militarism) just so those vast economic resources do not recirculate — economists call this “velocity” — within the civilian economy, thereby causing economic expansion, rising incomes, rising tax revenues and — when accompanied by the elimination of unproductive War spending and a slight increase in the top marginal tax rate — lead to successive balanced budgets and the elimination of the federal budget deficit. See the administration of President Bill Clinton for the historical validation of government fiscal policies that favor domestic versus war spending.
“Austerity” means, of course, just the opposite of responsible fiscal policy because it does not involve the elimination of wasteful war spending. Instead, and counter-intuitively, it means lowering taxes on the corporate oligarchy while increasing wasteful — but ego-gratifying — war spending that redirects public funds away from the productive economy and into the private pockets of corporate CEOs, their bankers and lawyers, their politicians, their judges, their university presidents, their generals and those legions of corporate camp followers and dogs-of-war mercenaries who keep the U.S. military basically in charge of the U.S. economy — for their own good and not the economy’s.
“Austerity.” A euphemism wrapped in moralistic-if-not-monastic-sounding jargon composed of a neologism resulting in Newspeak: i.e., language specifically designed to make critical thought impossible because no words any longer exist in which to express it.” Or, as I prefer to call this mumbo-jumbo gobbledegook: Manufactured Mendacity and Managed Mystification. Or, just plain lying.
The misnomer “austerity” in fact serves as a linguistic mask — misnomers do that — for naked top-down class warfare which in the US exhorts its ideologue believers to “starve the beast.” As Sheldon Wolin describes the actual phenomenon of interest:
Of course the military, cops, guards, and jails (but I repeat myself) will go away. We simply will not mention them. And if we do not mention them, they and their ruinous secret budgets do not exist, either. George Orwell, and a notorious Bush II official, have called this “reality control.”
The misnomer “austerity” means many things that corporate proponents of the policy do not dare publicly express in common-sense, everyday language. The corporate oligarchs will never say [you] “starve” when they mean for you to starve. They will recommend the considered and quite proper choice of [you Social Security recipients] eating more inexpensive cat food as the price of hamburger rises — viz., “chained CPI” — and other such “modest proposals” expressed in mumbled mealy mouth-fulls of mellifluously modulated mush — what George Orwell called Newspeak, or language specifically designed “to make critical thought impossible because no words will exist in which to express it.”
“Austerity.” Or, in the vernacular: “Starve, you undeserving peasants and proles.” Get it?