One Stop Thought Shop

When it comes to how wealth is distributed in America, we probably hold radically different views depending on our political affiliation, age, income, and gender, right? …

Wrong.

So what about the bottom 120 million of us?

When both right and left Americans were surveyed, they said that ideally the bottom 40 percent oughta woulda coulda shoulda own about 20 to 25 percent of USA share of wealth. When asked to estimate the share of wealth actually owned, the collective guesses were between 8 and 10 percent. Reality: 0.3 percent. … We are United In Our Delusions.

Billionaires prodding tea parties to pimp for a birth certificate is the silliest electioneering of all time. Well? It’s not facts that matter. The right invents any ‘fact’ it chooses to bully voters away from reality.

Simon Johnson:

The United States stands out as quite different.  No one is yet seriously proposing to address our underlying budget issues.

There Are No Fiscal Conservatives In The United States

There are certainly people who claim to be “fiscal conservatives” – some of the right and some on the left – but none can yet be taken seriously.  The implications are very bad for our fiscal future.

The background, of course, is that the US budget was in relatively good shape at the end of the Clinton years (culminating in a 2.5% of GDP surplus in 2000) – but turned sharply into deficit during the George W. Bush era.  The headline 2% deficit in 2006, for example, perhaps did not look too bad – but it was remarkably poor performance given how well the economy was doing.

The notion that tax cuts would lead to productivity increases, thus boosting growth and in turn fixing the budget, turned out to be completely illusory.

In fact, the tax cuts encouraged consumption, leading to overspending at the national level (and reflected in a current account deficit that reached 6% of GDP – this represents a big increase borrowing from foreigners by both the private sector and the government.)

But what really bust the US budget and pushed up our debt-to-GDP ratio was the way the financial system amplified the housing-based boom and bust through 2008; there were some “feel good” effects through the end of 2007, but then we faced the worst recession since World War II.  Net government debt held by the private sector will increase from about 42 percent of GDP to around 80 percent as a direct result of the economic crisis – and the measures taken to prevent it from turning into another Great Depression.

Comment snippets:

• So we find ourselves in a position where the public at large believes ‘facts’ that are pure fiction in reality. In such a case, matters will get worse before they can improve.

• People will surrender their jobs, surrender their food, surrender their families, surrender their lives, before they surrender their prevailing belief system.

• We went from basic military spending of $371.0 in 2000 to $737.3 billion in 2008, to basic military spending that is running at $813.0 billion yearly as of April through June 2010. The increase in military spending along with the continual Bush tax cuts will produce a structural deficit even with a return to significant economic growth.

• Where we should have created 16.44 million jobs these last 117 months simply to keep up with population growth, we lost 2.28 million jobs. This leaves us short an astonishing 18.72 million jobs, and the coming revision will make the figure 19.08 million.

What’s the story?

To be fair, spending on safety-net programs, mainly unemployment insurance and Medicaid, has risen — because, in case you haven’t noticed, there has been a surge in the number of Americans without jobs and badly in need of help.

And there were also substantial outlays to rescue troubled financial institutions, although it appears that the government will get most of its money back. But when people denounce big government, they usually have in mind the creation of big bureaucracies and major new programs. And that just hasn’t taken place. …

This fact, however, raises two questions. First, we know that Congress enacted a stimulus bill in early 2009; why didn’t that translate into a big rise in government spending? Second, if the expansion never happened, why does everyone think it did?

Part of the answer to the first question is that the stimulus wasn’t actually all that big compared with the size of the economy.

Furthermore, it wasn’t mainly focused on increasing government spending. Of the roughly $600 billion cost of the Recovery Act in 2009 and 2010, more than 40 percent came from tax cuts, while another large chunk consisted of aid to state and local governments. Only the remainder involved direct federal spending.

And federal aid to state and local governments wasn’t enough to make up for plunging tax receipts in the face of the economic slump. So states and cities, which can’t run large deficits, were forced into drastic spending cuts, more than offsetting the modest increase at the federal level.

The answer to the second question — why there’s a widespread perception that government spending has surged, when it hasn’t — is that there has been a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers.

What happens living without a bank?

The nickel-and-diming never stopped.

The fees were constant: $28 to cash a paycheck. $1.50 for a money order. A dollar or more every time I swiped the prepaid cash card I bought at the drug store.

In all, I racked up $93 in fees in a monthlong experiment of living without a bank and making a go of it on the economic fringe. That works out to $1,100 a year just to spend my own money.

We’ve heard wingnuts blame the government for making money easy and that a tiny sliver of wobbly borrowers crashed the world economy. Geesh.

Sure, we’ve all heard the arguments that the Community Reinvestment Act went a long way toward causing the meltdown, but there are three problems with that.

• The first is that even if the CRA bore some responsibility, it was passed in 1977 – CRA or no CRA, there were years of tax cuts, cheap money coupled with low inflation, reduced regulation and a couple of semi-privatized wars. If the CRA was the problem and not lack of oversight, presumably the Great Recession would have happened during an administration that, say, did a less thorough job of deregulating and tax cutting.

• A second problem with blaming the CRA is that the economic mess is due to banks loaning money to people who shouldn’t have borrowed or been allowed to borrow, and there was no policy or law that forced a single organization to make loans it shouldn’t have or any entity to borrow money it shouldn’t have.

• A third problem is that the Great Recession struck many other countries as hard or harder than the US. One thing that was common about many of the worst hit countries is that they were high on the list of recent (say, in the past ten years or so) success stories as told by the same folks who like to blame the CRA for the mess.

All of which brings me back to where I started. The policies advocated by libertarians and economic conservatives not only tend to be accompanied by slower growth in general, but also tend to precede economic meltdowns.

Please let’s not forget “that although the deepest recession since the second world war has been blamed on the housing bubble and the financial problems of the American banking system, the problem was really global in nature, and it is not difficult to show the correlation with energy prices.”

You see, energy is an undertow. Speculative finance merely induces debt, selling money while extracting transaction margins, and that’s blood money any way you look at it.  If there’s a tax ahead, tax that.

And don’t worry about instability or threats of slow down or starved incentives. Brigands and pirates can easily bear the consequences of true growth and fairness.

Quit bias and belief for a moment. Try. Let this investigation assist.

Let’s say it’s within your powers to redistribute wealth in any way you choose.

Dan Ariely and Mike Norton asked Americans to guess at the distribution of wealth in the United States and then what they think would be the ideal distribution of wealth.

Americans rather badly estimate wealth disparity!

But whether left or right, they all offered an ideal wealth distribution that was more equal than the current state of affairs.

Beneath politics, Americans know justice and know what they want.

What does it mean that we’re not so different?

ASPO-USA. Association for the Study of Peak Oil and Gas. The world’s leading experts. The future of oil, energy and the economy. When these folks meet to worry about peak oil, what are they saying?

“The Earth is not a factory.”

There is no business as usual.

October 7 – The ASPO Conference – afternoon | ASPO Conference – evening

October 8 – ASPO Conference – second day before lunch

The neo-classical economists and those who advocated different political theories had found it easier to justify their claims in an environment where oil became increasingly available to support GDP growth.

However we are now entering a period of oil supply decline, when perhaps the “biophysical economics” theories will gain more credence.

October 13 – ASPO Conference- last day.

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