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.
Offshoring can make sense if you want 24/7 development with the onshore team working with an offshore team, but not when you replace the entire onshore team with the offshore team.
If you mean that one can trade a service economy for a manufacturing economy and claim it’s a plus, then yes, it is a faulty assumption. But one cannot have a manufacturing economy without a service economy, so I wouldn’t go as far as to claim that providing services is necessarily a subsidiary function of producing goods.
If being for American jobs and American workers is “leftist”, then “conservatives” as thus defined - those who are against American workers, will well and truly vanish from American politics.
The GOP should not. Must not. Be the party, of firing Americans!
That’s just stupid. It’s horrible politics, and it’s bad for America.
AMERICA FIRST.
Common sense. One needs not be an overeducated economist of a union activist to see that.
In the heyday of American excellence, there was a healthy mixture of both. No sane, aware person can argue that a service component of any economy is not necessary.
“Another idiot who would like americans to be less productive by keeping disfunctional manufacturing jobs here in the states just so corporations could “employ” people.”
I’m trying to figure out what is wrong with having jobs in this country so that people could be employed.
Isn’t this how most people pay the mortgage and put food on the table? What about you, are you a trust fund baby?
No problem having jobs, but do we want to keep making buggy whips? Labor intensive jobs have left for two factors. Competitive forces and human labor costs in the final product and a new generation that is averse to working in factories. The American labor force cannot be rigid to one job type. You must improvise and be able to be retrained for alternative jobs.There is no choice in that. Gone are the days when you could walk into the door of the Rambler auto company and expect to work there for 25 years. The names of companies that no longer are could fill a Manhattan phone book.
"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." - Article
I'm all for American jobs, but when you talk about America like he did in the above paragraph, he has clearly been drinking the lefist coolaid.
Apparently.
You are so right. We all steal from the poor b/c that’s where the money is.
Maybe they grew up in the same lead paint house?
Economic theory has been shattered because there is no longer any connection between the profits of American companies and the welfare of Americans.
Where are the profits of American companies going if not to the American's that own these companies. He takes nonsensery to new heights.
Local, state, and Federal governments have worked hard to generate the current level of unemployment. More government meddling is the problem, not the solution.
LOL! Pica twins separated at birth?
The criminal record accumulated by the United States makes it the least indispensable country on earth.
Yikes! Hey Rude, where do you find this stuff-- and he gets paid to for these rants?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.