Scared 3/4/2009

People close to me are saying they are scared. Should we be scared? I was scared when I saw the mad irrational and rigged rush to war. I was depressed when I saw the tanks rolling across Iraq. I was angry when I saw rational decision making thrown over the side as greedy stupid men wrapped themselves in flags and sent others off to die or be disfigured for life. I was livid when the people in power in our land chose to torture others for the ostensible reason of protecting freedom. I felt broken when a man who makes tens of millions of dollars a year was responsible for sacking me after giving his organization twenty-three years of my work, creativity, sweat and lost sleep to build the organization from which he sucks his ill-gotten gains. Oh, in the name of corporate capitalism it is OK to rape and pillage your brothers and sisters. The rich get richer and the poor get poorer.

Should we be scared now? We must not. Those who have the capabilities, wisdom, and strength must apply them to lead their family, tribe, community and nation through these times that seem to be spiralling into desperation. We must all put our shoulder to the task and never give up. Sing happy songs. There may have to be changes in life styles. There may need to be re-thought applications of economics. Oh, TV media, scare us by asking if we are heading toward European socialism. We can only hope.

I think that Obama and team understand what has to be done to keep the population employed and out of trouble. Give people jobs, it doesn't really matter doing what. More productive ones are better of course. Where it can be done the government should back out over time, absolutely. But get people busy now. Earmarks, my word. It doesn't matter if the government puts people back to work building pyramids. Put them back to work and give them a salary. And at the same time encourage the free market production of real goods and services so the things we need are grown and built in abundance. I don't believe that both can not be done. The free market is the best producer of wealth, agreed. But when the patient is comatose the patient needs that stimulus.

Stimulating the Economy 2/24/2009

Can the Economy be saved by Obama's programs? Well I do believe that the next few years can be much more prosperous than if nothing was done. Roosevelt's New Deal put people back to work and brought down the unemployment rate. In 1938 Roosevelt backed off of government stimulus programs and the unemployment rate got worse again. What put everybody back to work? You know the answer. A lot of people got work building guns and bombs and then a lot of other people got work using them to kill yet other people. I am not convinced it matters in the short run what people are put to work doing. I would rather see a program to build pyramids than no programs at all. Of course that would be foolish in the long run. If the government is going to stimulate the creation of jobs it best be toward the production of infrastructure and skills that will give us a return in the future.

The Republicans who want to do nothing are outrageous. I think I see a portion of their strategy. It is really sick. One governor, I can't remember which stated, and I paraphrase, that if Obama wants to know Roosevelt he will have to create a great Depression. They think they will pin this disaster on Obama. My lord. What short brained morons. Another brought up a question about Obama's birth certificate? Have fun next election guys. The people saying these things are either dumb as a rock or frighteningly malicious.

Who will pay for this? That is a valid question. How dare the Republicans, the rational thought-barren ones who provided us this misfortune, bring this up after what they did to the deficit. Well at least their friends made a lot, lot, lot of money. If we invest money wisely into infrastructure and skills that can build the economy of the future then our children will have a chance at least. New wealth, and new ideas on how to leverage that wealth, can hopefully resolve the deficit in the future. if we don't invest now we can expect a long dark descent into economic catastrophe. The depression could last a very long time without vigorous and consistent action to deal with it.

Unemployment 2/12/2009

I was surprised twice recently by friends of mine suggesting that the unemployment rate is not really as high or as dangerous as is stated in the media. The unemployment rate stands officially at 7.6% of the U.S. workforce. In one case the argument was that that the unemployment rate is not nearly that of the Great Depression with the implication that we are not really entering a disaster. The other argument I heard was that the unemployment rate includes people who just don't want to work. In both cases this is dangerous thinking. Let me address these perceptions one at a time.

The unemployment rate is increasing at a rapid rate, every day there is news on the television of a major company laying off many thousands of people, going bankrupt, or having other serious financial difficulties. Financial institutions (Da Banks) and individuals are holding on to the money they have left. No money being spent means no commerce. No commerce means businesses don't make money and have to let workers go. Fewer workers means there is now even less money in the economy. This is a downward spiral that, in the Great Depression, culminated is a disaster lasting an entire decade. In the present situation companies are failing in a systemic manner and huge numbers of people are losing their jobs every month. Six hundred thousand jobs were lost in January 2009. BBC World News America states; “More US workers lost jobs last year than in any year since World War II, with employers axing 2.6 million posts and 524,000 in December alone.” No, things are not as bad as they were in the Great Depression. However, if intelligent and vigorous actions are not taken by the one institution that has the power to do so, the probability is high that they will get that bad. And that it will get that bad soon.

Now let me address the official unemployment rate. The unemployment rate, presently at 7.6% is calculated by using the number of people who are on the government unemployment role. Once a person has used up their unemployment benefits they are no longer considered unemployed by the government! Also not included are people who never held a job, including those just coming out of school and looking for the first time. And if that is not bad enough the figure does not include people who are underemployed. Such as the person I know with three college degrees, teacher certification and with good performance reviews, who is being paid about $20,000 a year to teach disadvantaged children. Incidentally, I believe that age discrimination holds people in this situation back from full employment. I know people who have been in all of these categories. Good deal for big companies looking for cheap labor, huh?

The problem is severe and there is no reason that relative full employment could not be achieved. A World War pulled us out of the Great Depression seventy years ago by requiring men and woman to make weapons and use them against their fellow men and women. This was the great stimulus program of the time. Surely we can find a less destructive way to put everyone to work today.

A Stimulating Discussion with a Friend. 2/5/2009

I do not feel bad at all about being the cause of the downfall of Daschle. (Inside joke) Mind you, I actually liked the guy. Apparently he only ‘fessed up after he knew he was in line for the appointment. The implication is to me he during some period of time thought he would get away with it. It doesn't make any difference to me. Besides the ethical problem, there is a political problem. Daschle's appointment would only leave an opening for the opponents of those who wish to continue to redistribute the wealth to the new aristocracy and fuck the rest of us.

On our second point of discussion, the stimulus (jobs) program, I still agree with you, but wish to emphasize strongly some qualifications. The so-called “pork” projects, in my view, fall into a couple of categories. A few, accounting for an extremely small fraction of the total stimulus (jobs) program are blatantly offensive to the opposition, such as the condoms program. I would pull out (pun intended) on those immediately. Other items the Republicans have made contentious, such as reseeding the lawns in the capital or the Headstart program are from my view important, “shovel ready” projects that qualify in every way as a valid stimulus for the creation of jobs. Now I do agree that in order to get the stimulus program passed that a prudent portion of these should be cut out of the package, but the Democrats should come back at these issues with a vengeance and expose the blatant political maneuvering of the Republicans.

On another point; I certainly do believe that placing a significant amount of money into educational programs like Headstart would raise the money that Bonnie makes as a teacher in these kinds of schools. That is, unless the laws of supply and demand, have been repealed, which I am sure Wayne is worried Obama is trying to do (he is not). Bonnie, as I think you might know, is a highly qualified and credentialed teacher of younger children. As more money increases the demand for this kind of resource the price for the resource will go up. I could go on forever about this subject but will save it for a later time. The only potential downside is by overdoing the stimulus the larger paycheck won't be worth more, i.e. inflation.

Since I am copying Wayne on this I will expand the scope of this short epistle. There is no doubt that free markets are by far the most effective way to create wealth. So Wayne may be relieved that I am at least, in part, a believer in the market economy. I like wealth, a lot, so I believe the free markets must be nurtured carefully and diligently. However, there are severe dangers to unrestricted, unguided free markets. Concentration of wealth is one of them. Mind you, I don't have a thing against anyone who might be very wealthy for various legitimate reasons. But at some point the wealth concentration process becomes so accentuated as to be harmful to the general welfare. Another problem with unrestricted markets is corruption, one variant being the intentional distortion of market information for personal gain. Anybody seen that lately? Another problem is the effects of short term wealth production on long term resources. This includes soil depletion, oil depletion (whether it is 10 or 100 years away), pollution, etc.

Many of these problems, possibly in combination with questionable fiscal policies and certainly in combination with the normal boom bust cycle, have left the society on the verge of economic collapse. The contraction is inevitable and necessary, but a collapse, I still believe, is avoidable. The only entity in the society to have access to enough money to start moving it through the economy in a significant way is the government. They have the enviable right of being able to create it out of nothing (Wayne, we will talk about gold some other time). It may be sad but it is true. The patient is going into shock and needs to be stabilized intravenously - ergo the stimulant (jobs) program. 

Enough. I am going to paint a window and make some wealth.