Posted on 02/06/2010 8:39:19 AM PST by 1rudeboy
Economic theory has been shattered because there is no longer any connection between the profits of American companies and the welfare of Americans. The profits of American companies are derived from the cheap labor in offshored locations and are at the expense of the American work force.
The failure to regulate financial markets has produced enormous losses to all Americans except the super-rich.
Former Federal Reserve chairman Alan Greenspan answered that he had placed his trust in a flawed theory when he was called before Congress to explain why he, Goldman Sachs Treasury Secretary Robert Rubin and Deputy Treasury Secretary Larry Summers, prevented Brooksley Born, head of the Commodity Futures Trading Corporation, a government regulatory agency, from doing her job of regulating over-the-counter derivatives.
The efficient markets theory is that unregulated markets are efficient and rational. According to this theory in which Greenspan placed his trust, unregulated markets produce the best possible result. Any regulatory interference worsens the outcome.
Greenspan blamed his own bad judgment on a theory. The theory, or Greenspan’s understanding of it, nevertheless still holds sway as Congress has proved impotent to re-regulate the gambling casino that is Wall Street. Clearly, the theory serves powerful interests.
But what is the truth?
The truth is that markets are a social institution. Their efficiency depends on the rules that govern the behavior of people in markets. When free market economists talk about markets deciding this or that, they are reifying a social institution and ascribing to it decision-making power. But, of course, markets do not act or make decisions. People act and make decisions, and markets reflect the decisions and actions of people.The entire debate over regulation is misconstrued. It is not the market, an efficient social institution, which is regulated. What is regulated is the behavior of people in markets.
If you want good results from markets, good regulation of human behavior is a requirement.
The market is like a computer. Garbage in, garbage out.
If people who use markets are not regulated, they issue fraudulent financial instruments. They leverage assets with absurd amounts of debt. They market their instruments with fraudulent investment grade ratings. They deal themselves aces.
Did Greenspan not know this? Was he a victim of a theory or an enabler of greed unleashed by the absence of regulation?
The failure to regulate financial markets has produced enormous losses to all Americans except the super-rich. But the U.S. government is guilty of an even greater failure. Washington has not only permitted but also encouraged the unemployment of its citizens by enabling greed-driven corporations to send American jobs abroad in order to maximize profits for CEOs’ bonuses, shareholders, and Wall Street.
As Ralph Gomory has made clear, economic theory has been shattered because there is no longer any connection between the profits of American companies and the welfare of Americans. The profits of American companies are derived from the cheap labor in offshored locations and are at the expense of the American work force.
This dispossession of American labor has been heralded by offshoring’s pimps in the major universities as "the New Economy."
The "New Economy" is a hoax like most everything else the bought-and-paid-for-media feeds to Americans. There is no new economy. There is an unemployed economy. The headlined unemployment rate is just over 10 per cent. The real unemployment rate, as measured by the current methodology is 17 per cent. The unemployment rate as measured by the methodology of 1980 is 22 per cent.
If jobs offshoring is a benefit to America, as the hired pimps of the transnational corporations claim, why is more than one-fifth of the U.S. work force unemployed? Why does the U.S. have the largest trade deficits in world history? Why is the U.S. dollar losing value over time to other tradable currencies?
Greed, and elected representatives who are toadies to special interests, are decimating the American economy.
Consider President Obama’s budgets for 2010 and 2011. The combined red ink is $2.9 trillion. No one anywhere in the world has this kind of money to lend to Washington. How will these massive deficits, never before experienced on earth, be financed? They can only be financed by the Federal Reserve destroying its own balance sheet by its purchase of toxic financial instruments from the banks thereby providing the banks with cash with which to buy the Treasury’s bonds, or by the Federal Reserve itself purchasing the Treasury’s bonds by creating new money, or by another collapse in equity values that sends investors fleeing into "safe" Treasury bonds.
American power is on the precipice, about to fall. Perhaps it is a good thing. The world will be rid of bullying, of invasions of innocent countries based on blatant lies, of torture and murder of woman and children, of redistribution of income from the poor to the rich.
The criminal record accumulated by the United States makes it the least indispensable country on earth.
Given that we need taxes from somewhere to make the government go, it might as well come from something that shields national security.
Got a liberal grudge against the States that obscures reason.
Ahh, GE, owner of MSNBC, a corporate giant whose chargers are practically communists and who’se incestuous relationship to the present administration reminds me of the Japanese Zaibatsu combines..
The point is that they know the way to reap (or rape or both) a cheap India and do it consummately, as well as offering tutorials to others.
First is the national security argument--the argument that a thriving domestic steel industry, for example, is needed for defense. Although that argument is more often a rationalization for particular tariffs than a valid reason for them, it cannot be denied that on occasion it might justify the maintenance of otherwise uneconomical productive facilities. To go beyond this statement of possibility and establish in a specific case that a tariff or other trade restriction is justified in order to promote national security, it would be necessary to compare the cost of achieving the specific security objective in alternative ways and establish at least a prima facie case that a tariff is the least costly way. Such cost comparisons are seldom made in practice.
--Milton Friedman
Milton Friedman was an economist but not a military planner.
Take a plant that manufactures bullets, for example: it might be cheaper, and cause less damage to the overall economy, for the government to run or subsidize it (if the determination is made that the plant is essential to national security), instead of applying some ill-defined and misdirected tariff on the bullet market in general.
Life will be great once everyone is a computer programmer. Anybody can do it just as well as the next guy.
Why exactly is the only next step a more technical-employment based economy? Why is it not a possibility that it’s going to be back to the farm for many of the people who once would have been employed moving windshield wipers blades from bin A to wiper motor assembly A all day long?
Oh, yeah, that guy’s future is in biomedical research. Maybe medical polymer molecular design.
Don’t be silly. It is more likely that someone who is employed moving windshield wipers blades from bin A to wiper motor assembly A all day long dreams of his children doing biomedical research, instead of vice versa.
Exactly.
The working man is not worse off because of Wall Street taking their money.
The working class is worse off because there is no place for them to work.
Why?
EPA shutting down or damaging entire industries here, thus forcing them to go overseas.
Unions, ditto.
Endangered species act, ditto.
Tax structure, ditto.
The list is long.
Every thing the government is doing today just adds to the list and makes the departments already on the list more onerous.
The only cure is to get rid of most of the names on the list.
No mention of business taxes, social security, oppressive regulation, and any number of other impediments that government sets up to people looking to start businesses in America.
Get the government out of the equation, break the unions and enact right-to work laws in the states, abolish the income tax, IRS, social security and other welfare state edifices and you’ll see America return to its former glory.
How many of those are really in demand? Not everyone can do technical jobs. Intelligence, ambition, desire, and other attributes play a part.
Well, maybe we can all go into finance and get jobs at Goldman-Sachs. We’ll sell the world derivatives.
Is that the objective? Providing stupid people with employment? If that’s the objective, then it doesn’t matter whether the stupid person is moving something from bin A to bin B, digging a ditch, or emptying trashcans.
No, I think the stupid should be unemployed and living on welfare. Or better yet, have them write the accelerator pedal software for new Toyotas.
Seriously, my point is to get the damn government out of the way and those people will be employed doing what they want to do or can do to feed and clothe themselves. My other point is that not everyone can do jobs on the cutting edge of science or technology. Hell, I still run into people who can't or won't learn to use a PC.
This is what I want:
“Do what you can with what you have and never be satisfied.”
~ Booker T. Washington
In what planet is the market not regulated? There is more regulation then ever on American business.
Underlying most arguments against the free market is a lack of belief in freedom itself.There was a time when I gave Roberts the benefit of the doubt, but it's become pretty darn clear that he's a statist. And one of the symptoms of his mental illness is his observation that our government has failed, therefore the government must act.
--Milton Friedman
Thanks for the Milton Friedman quote. I hadn’t run across that one.
I remember, as a very young man, commuting to work with an avowed communist, albeit not a militant one.
At the time. "offshore" meant a half mile off San Francisco beach, and "World economy" meant imported bananas and check Japanese toys made from recycled food cans.
Our heavy industries were beginning to feel the effects of unions determined to kill them and the business template was rushing headlong into a "service economy." I remember wondering how any country's economy could survive and flourish when everyone lives off "serving" everyone else, with no innovation, inventiveness, manufacturing and invention.
Well, now, many years later I know the answer to the question.
It can't.
A "service society" is a helpless dying society.
We now have SEIU, ACORN, Thugball and the Congressional Black Caucus to make sure that we continue sliding into irrelevance.
Oh, by the way, the U.S.A. grew and thrived for 150 years exactly because it developed a healthy mix of industry, mining, manufacturing and innovation, free of the oppressive hand of either socialism or fascism. The largest banks and institutions did not bend to ignorant fools serving in Congress demanding that they make trillions$ in bad loans; and remaining out of jail in the aftermath.
This common statement by the insane, aimed at the retarded, is my all time favorite.
It actually makes sense to them!
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