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Toward a sane economics

March 25, 2012

This TEDx video by Peter Joseph, creator of the Zeitgeist movies series, contrasts two opposing economic frameworks that need to be considered in transcending our present global predicament. He shows that the entire incentive structure of the dominant paradigm of political economy is all wrong, and outlines some of the necessary attributes of a sustainable earth-friendly economy.

The presentation does not get into the how-to-do-it, but provides a good starting point for working out the necessary transition to what I’ve been calling “The Butterfly Economy. My basic prescription for that involves radical sharing, collaboration, restructuring, and rebuilding our society from the bottom, on up, household to neighborhood, to community, to bioregion, including all of our non-geographic affinity groups. Begin with the people and businesses you already know and trust.

Please take ten minutes to view the video.

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Posted in Economics, Emerging paradigm, Politics, Prescriptions | Leave a Comment »

Another (more honest) take on the economy

February 5, 2012

In his recent article that appeared in Counterpunch, Paul Craig Roberts, tells the story of the American economy as it really is.–t.h.g.

February 01, 2012

The Emperor Has No Clothes.  Economics 101

by PAUL CRAIG ROBERTS

Last Friday (January 27) the US Bureau of Economic Analysis announced its advance estimate that in the last quarter of 2011 the economy grew at an annual rate of 2.8% in real inflation-adjusted terms, an increase from the annual rate of growth in the third quarter.

Good news, right?

Wrong.  If you want to know what is really happening, you must turn to John Williams at shadowstats.com.

What the presstitute media did not tell us is that almost the entire gain In GDP growth was due to “involuntary inventory build-up,” that is, more goods were produced than were sold.

Net of the unsold goods, the annualized real growth rate was eight-tenths of one percent.

And even that tiny growth rate is an exaggeration, because it is deflated with a measure of inflation that understates inflation. The US government’s measure of inflation no longer measures a constant standard of living.  Instead, the government’s inflation measure relies on substitution of cheaper goods for those that rise in price. In other words, the government holds the measure of inflation down by measuring a declining standard of living. This permits our rulers to divert cost-of-living-adjustments that should be paid to Social Security recipients to wars of aggression, police state, and banker bailouts.

When the methodology that measures a constant standard of living is used to deflate nominal GDP, the result is a shrinking US economy. It becomes clear that the US economy has had no recovery and has now been in deep recession for four years despite the proclamation by the National Bureau of Economic Research of a recovery based on the rigged official numbers.

A government can always produce the illusion of economic growth by underestimating the rate of inflation. There is no question that a substitution-based measure of inflation understates the inflation that people experience. More proof that there has been no economic recovery is available from those data series that are unaffected by inflation. If the economy were in fact recovering, these date series would be picking up. Instead, they are flat or declining, as John Williams demonstrates.

For example, according to the government’s own data, payroll employment in December 2011 is less than in 2001. Meanwhile, there has been a decade of population growth. The presstitute media calls the alleged economic recovery a “jobless recovery,” which is a contradiction in terms. There can be no recovery without a growth in employment and consumer income.

Real average weekly earnings (deflated by the government’s CPI-W) have never recovered their 1973 peak. Real median household income (deflated by the government’s CPI-U) has not recovered its 2001 peak and is below the 1969 level. If earnings were deflated by the original methodology instead of by the new substitution-based methodology, the picture would be bleaker.

Consumer confidence shows no recovery and is far below the level of a decade ago.

How does an economy recover without a recovery in consumer confidence?

Housing starts have remained flat since 2009 and are  below their previous peak.

Retail sales are  below the index level of January 2000.

Industrial production remains  below the index level of January 2000.

To repeat, the only indicator of economic recovery is the GDP deflated with an understated measure of inflation.

The US economy cannot recover, because the US economy depends on consumer expenditures for more than 70% of its activity. The offshoring of middle class jobs has stopped the rise in middle class income and caused a drop in consumer spending power.

The Federal Reserve under Alan Greenspan compensated for the absence of US consumer income growth with a policy of easy credit and a policy of driving up home prices with low interest rates. This policy allowed people to refinance their homes and to spend the inflated equity in their homes that Greenspan’s policy created.

In other words, an increase in consumer indebtedness and dissavings drove the economy in the place of the missing growth in consumer incomes.

Today, consumers are too indebted to borrow, and banks are too insolvent to lend. Therefore, there is no possibility of further debt expansion as a substitute for real income growth. An offshored economy is a dead and exhausted economy.

The consequences of a dead economy when the government is wasting trillions of dollars in wars of naked aggression and in bailouts of fraudulent financial institutions is a government budget that can only be financed by printing money.

The consequence of printing money when jobs have been moved offshore is an inflationary depression. This catastrophe could begin to unfold this year or in 2013. If Europe’s problems worsen, flight into dollars could delay sharp rises in US inflation until 2014.

The emperor has no clothes, and sooner or later this will be recognized.

PAUL CRAIG ROBERTS was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury.  His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press. He can be reached through his website

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Class War, the Oligarch’s conspiracy, and the Occupy movement

November 4, 2011

Here is a remarkable statement by Paul B. Farrell that tells the unvarnished truth about the class war that is being waged against Americans. It is remarkable for two reasons, first, because Farrell has a background as a financial establishment insider–he was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner. Secondly, because this article appeared in MarketWatch, a mainstream news source controlled by Rupert Murdoch.

According to Wikipedia, MarketWatch “is now a wholly owned subsidiary of Dow Jones, which in turn is owned by News Corporation. MarketWatch is part of Dow Jones’ Consumer Media Group, along with The Wall Street Journal, Barron’s, the WSJ.com and affiliated Internet properties. Through the Rupert Murdoch-controlled News Corp. ownership, MarketWatch is also affiliated with, among many other global media properties, the New York Post, The Times of London, Fox News Channel and multiple other 20th Century Fox spinoffs, and HarperCollins publishers.”

I urge everyone to read the entire article paying close attention to Farrell’s conclusion.—t.h.g.

Rich Class fighting 99%, winning big-time

Commentary: Reagan began class war in 1981, Buffett declared in 2006

By Paul B. Farrell, MarketWatch. Nov. 1, 2011, 10:22 a.m. EDT

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, “there is class warfare, all right,” declared Warren Buffett. “But it’s my class, the rich class, that’s making war, and we’re winning.”

Yes, the Rich Class is at war with you, with the 99%, a war against America. This class war actually started a generation ago, in 1981 when Ronald Reagan became president. Since then, the Rich Class has been winners. Big-time. And the 99% are the losers. Real big-time.

I am going to keep reminding you over and over of this Rich Class declaration of war and how they’re defeating America.

Why more reminders? Because, except for Buffett, the vast majority of the Rich Class really are engaged in a massive cover-up, a widespread conspiracy that includes the Super Rich, Forbes 400 billionaires, Wall Street bank CEOs, all their high-paid Washington lobbyists, all the Congressional puppets they keep in office by spending hundreds of millions on campaign payola and all the conservative presidential candidates praying the same Rich Class dogma.

Yes, Rich Class has been fighting a 30-year war to rule America

They’re fighting you, winning big-time, and you’re the loser. It’s just one generation since conservatives put Reagan in office: In those three short decades the income and wealth of the top 1% has tripled while the income of the bottom 99% of all Americans has stagnated or dropped.

Yes, they are at war with you, fighting to gain absolute power over America … and they will never stop their brutal attacks.

Buffett didn’t admit to this Declaration of Class War on America till five years ago. It happened in Omaha, Neb., in Buffett’s “unpretentious offices” back in 2006 during a New York Times interview with Ben Stein, a former Nixon speech writer. Here’s Ben describing the declaration of war:

”Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.

”It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all.

“He just pays as the Internal Revenue Code requires. ‘How can this be fair?’ he asked of how little he pays relative to his employees. ‘How can this be right?’ Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.”

And to that comment by Stein, Buffett made his famous declaration of war: “There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

In spite of that unequivocal declaration, Buffett’s Rich Class buddies still want you to believe that it’s the Occupiers, the lazy unemployed, the 99%, someone else, anyone other than their Rich Class that’s fomenting class warfare.

So you need occasional reminders, because the “Rich Class” has been spending mega-bucks for decades to shift responsibility. Fortunately today, folks like the Occupiers aren’t buying the con job.

Here’s a few:

Rich Class warriors: puppet-politicians in GOP-controlled Congress

We know the GOP is the Party of the Rich Class. But the Dems are co-conspirators fighting the class war as pawns of the wealthy. No wonder the Occupy Wall Street crowd focuses on the inequality gap between America’s top 1% and the 99% who’ve seen no income growth since the Reaganomics ideology took over American politics. Many are like House Budget Committee chairman Paul Ryan, clones of Ayn Rand’s narcissistic cult of selfish capitalism.

Listen, both parties are singing in harmony: “Yes, there’s class warfare. And yes, it’s our duty to fight for the richest class of capitalists who are making this war. We must help them win, get richer, squeeze more and more out of all Americans.”

Rich Class warriors: Federal Reserve-Wall Street bankers conspiracy

Yes, there are five banks in America that control about 90% of all the deposits … they control over 90% of America’s trading in the $650 trillion global derivatives casino … they control the Federal Reserve through directors and governors … their campaign payola and lobbyists virtually control the presidency, the Senate and Congress … they siphon huge bonuses from depositors, shareholders and pensioners alike:

“So yes, there is a class warfare running our banking system, every day. And yes, the CEOs in our rich class are leading that class war, and winning big. But more is never enough, so we want new ways to skim off profits, because we are invincible, too big and too greedy to fail.”

Rich Class warriors: Pentagon’s Perpetual War-Mongering Machine

The rich class loves war (war profiteering is a big business). Of course they often have to brainwash the 99% with fears like the mushroom-cloud lies Bush-Cheney used to get America into the $3 trillion Iraq War. Americans have a powerful love-hate relationship with war. Why else would we spend almost half our federal budget, several hundred billion dollars, on war every year?

“Yes, there’s class warfare, all right,” the former vice president might say as a one-time defense contractor CEO and oilman who continued profiting in office. He’d obviously admit: “Yes, we’re in a class war, and it’s my class, the rich class, that’s making war, and we proud that we kept winning that war while we was in office.”

Rich Class fighting to turn America back into Reagan’s ol’ Wild West

The list goes on: The Rich Class wants to time-travel America back to a lawless Old Wild West, back to a free-market Reaganomics anarchy where the top 1% trickle down leftovers to the 99% using this kind of self-destructive programs:

  • Privatize: Turn Social Security over to Wall Street bankers to run Main Street’s retirements into the dirt (worse than they did in 2008), a $20 trillion blunder that’s guaranteed to trigger total bankruptcy of the America economy.
  • Vouchers: Turn our educational and health-care systems into a voucher system so that private companies owned by the Rich Class can siphon off even bigger profits from every little trickle-down bone the wealthy toss to parents, the sick and elderly.
  • Regulations: They’ll also turn over environmental, drugs, food, banking and all other regulatory agencies back to be controlled by the very company executives they’re supposed to be regulating, just like Bush and Cheney did for eight years.
  • Tax-Free: Extend Bush tax cuts to Rich Class, eliminate estate taxes and give Corporate America another tax–free holiday to return huge foreign profits so they can deposit those profits direct into pockets of the Rich Class.

But, of course, there’s nothing new here. We just forget so easily, because it’s so bad. Which is why we’ll be reminding you often that the Rich Class has been fighting this war against you for 30 years, since Reagan.

And they’re so greedy they cannot stop fighting. So they will likely keep attacking the 99% for another decade, till the 2020 presidential elections, or more likely, till a catastrophic collapse of the economy coming soon.

Yes, folks, America really is under attack daily. We are fighting on the defense in an historic class warfare. Yes, the Rich Class really did start this war. And yes, they really are winning, big-time. And yes, they are addicted to winning at all costs, to get richer and richer just for the sake of getting richer and richer.

They have no conscience about the collateral damage done to the rest of Americans. They’ve lost their moral compass. In short, they will fight this war to the death, yours, theirs, even the death of America. Bet on it: Because more is never enough for America’s morally bankrupt Rich Class. [emphasis added-ed.]

Copyright © 2011 MarketWatch, Inc. All rights reserved.

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Posted in Economics, Emerging paradigm, Politics | 15 Comments »

Has the chrysalis stage begun?

August 4, 2011

Dave Gardner is director of the upcoming documentary GrowthBusters. Here is his recent article that appears on the website of the Center for the Advancement of the Steady State Economy (CASSE).

Gardner points out that there is good reason to celebrate the “bad” economic news being reported in the media. Hopefully, his upcoming film will include something about compound interest and the debt-money system that has been driving endless growth of production and consumption. Debt growth must cease if we are to make a smooth transition.-t.h.g.

Good News: Economic Recovery Stalls!

Posted By Dave Gardner On August 3, 2011

by Dave Gardner, director of the upcoming documentary GrowthBusters

Economic news last Friday was quite positive. Annualized U.S. GDP growth was less than one percent in the first half of 2011.

However, I would hazard a guess that, oh, some 99.9 percent of the world considered this bad news. It was characterized in the New York Times [1] as a “snail’s pace.” Journalists and commentators around the world are predictably typing out words like weak, anemic, malaise, gloomy, bleak, doldrums and stagnation.

So why would I celebrate? Do I get perverse, morbid pleasure at seeing my fellow humans unemployed, upside down in their mortgages, or dining at soup kitchens? I do not. The fallout of the recession is real, it’s painful, and it’s sad. But steady or declining GDP is not bad news. Nor is the drop in consumer spending [2] reported Tuesday.

While many impacts of the recession are tragic, these are the pains of adjusting to a new reality: the end of growth. They are a necessary part of a temporary phase. We might call it the cocoon phase, as we metamorphose into something more beautiful.

Consider these headlines from the past two years. Are they good news or bad?

  • Recession Puts Babies on Hold
  • Tiny House Movement Thrives Amid Real Estate Bust
  • Home Production Falls as Economy Languishes
  • Global Coal Use Stagnates Despite Growing Chinese and Indian Markets
  • Total Municipal Waste Generation Dropped
  • Home Depot Calls a Halt to Rapid Expansion
  • European Union Carbon Pollution Drops
  • GM to Close Hummer
  • Gasoline Spike Fuels Surge in U.S. Bicycle Sales
  • Bottled Water Consumption Growth Slows
  • 30-Year Growth Spurt Ends for Average American House Size
  • Ad Spending Down
  • Airlines Ground More Than 11% of Their Jets
  • Breast Implants are Deflating Along With the Economy
  • More Than 400 Meetings in Las Vegas Recently Cancelled
  • 2nd Home Market Declined 30%

Looking at these headlines through an archaic lens, last century’s worldview that growth is the Holy Grail, these stories seemed like bad news. But through a more modern, 21st century lens that values true sustainability, they herald a world slowing down toward a responsible level of human activity.

Think about it. Smaller houses mean less deforestation, less habitat converted to subdivisions, less concrete (production of which emits significant CO2), and less living space to heat or cool (again reducing CO2 emissions). Less coal use is also good news in the greenhouse gas department — as are grounded jets, no more Hummers and a switch to bicycles. Strangely we see no signs that politicians, pundits or journalists are thinking this deeply about the subjects.

I’m not the first to recognize this recession as an opportunity. Great minds like Gus Speth and David Korten are doing their best to turn this recession into a course correction. Korten’s Why This Crisis May Be Our Best Chance to Build a New Economy [3], and Speth’s Towards a New Economy and a New Politics [4] are good examples of this. Even Jay Leno got into the act, congratulating President George W. Bush in 2008 for doing more to fight climate change than Al Gore — by slowing the economy. Of course the impacts of economic growth reach far beyond the climate. Our increasing economic activity is causing habitat destruction, species extinction and pollution [5]; and it is liquidating critical resources like fertile soil.

I’m aware of no journalist who sought out Speth, Korten, Daly, Czech, Victor or Heinberg for an alternative view on Friday’s news. A story about ice melting would include comments from both real climate scientists and climate change deniers. But for this GDP story there was no discussion in the newsrooms about getting the other side — a quote about how terrific it is that gross domestic product may be settling toward a steady state. They assume GDP growth is good news and economic contraction is bad news — for everyone. It doesn’t even occur to them to question that assumption. Blind faith in the old worldview still has a tight grip on the reporters and editors. This needs to change.

I look forward to seeing the butterfly!

–

Dave Gardner is the filmmaker behind the documentary, GrowthBusters, which premieres in late October. The nonprofit film’s final fundraising campaign on Kickstarter [6] is in its last week. For more information about the film or to organize a screening, visit www.growthbusters.org [7]. Dave can be reached at dave@growthbusters.org [8].

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Posted in Economics, Finance and Economics, Global Economy, The Debt Imperative | 5 Comments »

Riegel explains the foundations of economic democracy

February 27, 2011

I have often referred to E. C. Riegel as a “master of monetary truth.” His insight is astounding, his logic impeccable, and his expression eloquent. In this essay on Economic Democracy, he shows the way out of our present predicament an into a new world of peace, justice and prosperity. I urge you to read the entire essay but I don’t want you to miss his bottom line:

“Once a monetary science develops, it will no more be localized or nationalized than mathematics is today. There opens before the mind, therefore, the prospect of a universal monetary unit and system that will operate without regard for political boundaries. It will have no nationality or politics. None will be coerced to participate. None will be barred. There will be but one monetary language for the world, and a democratic monetary system will unite people everywhere in the universal freedom of exchange.” [emphasis added]

ECONOMIC DEMOCRACY

The End of Monetary Nationalism

E.C. Riegel

Rising from tiny springs of rebellion in the consciousness of primitive men, democracy, like an ever expanding river, deepening and widening, has swept aside all the ancient forms of political government, and with them their pretenses of divine power and aristocratic preference. Its traditional service to humanity, however, has been only that of a negator of tyranny and presumption in the political sphere. In the future, it will be recognized and acclaimed for its more positive service in the economic sphere.

Under the constant challenge of democracy, the modern state has abandoned its former attitude of arrogance and now cloaks its undertakings in such flattering phrases as “democratic government,” “rule of the people,” “equality,” “welfare state,” and so on. These pretenses have been forced upon the state by the very failure of democracy as yet to assume a positive role in the affairs of mankind. The state is a positive organ and, as such, retains the initiative and leadership to which the people must turn for the “remedy” of this ill or that. Though the state is impotent to do more than change one economic ill for another, we cannot blame the demagogy of politicians for promising salvation from all the ills of mankind. This must continue, and the people must go on suffering under the delusion that they can resort to the political means of salvation, until an agency functioning through the economic means is supplied.

The ultimate accomplishment of democracy in the political sphere is the perfection of the rule of the majority. If this be all that democracy can deliver to society, the game is not worth the candle. It is little comfort to the individual, striving to express his personality, to know that democracy has wrested government from the hands of a few and placed it in the hands of a majority. Human aspirations for freedom can never be gratified as long as there is a veto power over self expression, whether imposed by a man on horseback or by means of the ballot box.

Yet the democratic state has no means of functioning other than by popular elections. That being so, the functions of the state must be limited to those public services which are desired by all. Consider the folly of undertaking to express the people’s will in all human affairs by an occasional election at which, in one confused shout, we sound our yeas and nays on a multitude of questions. At the same time, we select representatives to guess what it all means, and to divine from it how to execute our will on hundreds of issues that arise after we have given our confused “mandate.” Is not our boasted political equality but the equality of frustration? Can we have self-government, and at the same time delegate the power to govern? Are we indeed fit for self-government if we accept these delusive exercises as the processes of democracy? Can democracy offer nothing better?

Turn, now, from this sham democratic process offered by the state, with all its trappings of majesty, power, ritualism and futility, to a sphere in which real democratic expression obtains–so far as the state does not stultify it. This sphere of democracy has a true balloting system, whereunder every ballot is the clear and irrevocable mandate of the buyer through which he expresses his will, his aspirations, his freedom, and his personality. In this balloting system, elections are held every hour of ever day. Its voting booths are the market places of the world, its candidates, the goods and services offered by competing vendors. In this balloting system there is no tyranny by the majority. Every voter wins the elections. Whether he chooses the blue label, or the red, or the green, no one is denied his choice. Here every man is a king, and the economic constituency is made up of sovereigns in cooperation.

This voting system is the elective process over which the house of economic democracy must assert its exclusive sovereignty. It dispenses with the legislative process, for it is governed not by man-made laws but by a natural law that cannot be broken or biased by any man. This law, which provides absolute equity, is the natural law of competition, or, better, the law of cooperation, since it automatically rewards him who cooperates and withholds rewards from him who does not. The house of economic democracy requires no constitution and no executive or judicial mechanisms. These powers reside in the buyer, who exercises them by the simple criterion of self interest. As the whole consists of its parts, so the exercise of these powers by buyers in endless variety and circumstance compounds the social order in perfection.

Every power of the state must arise either by delegation from the citizen, or by usurpation. If we but give the matter a little independent thought, we can see that the money power can neither be delegated to the state as agent, nor exerted by it as principal. It can reside only in the same place where resides the productive power, and can be exerted only in association with the bargaining power. These powers belong not to the government, but to the individual; for he alone can produce wealth, and he alone can express selectivity and exercise the bargaining power in the market place. Professed money springing from any other source is pure counterfeit. It is a menace to the social order, which is utterly dependent upon the functioning of true money.

We all know that the rise in men’s living standards from primitive times to the present has come about through the specialization of labor, which is made possible by exchange, and that this in turn has been facilitated by the use of money. But do we realize that, without the guidance of the money-pricing system, we would lack all cue as to what products we should apply our specialized labors to? Production and exchange constitute a vast cooperative system wherein the cooperators are mostly strangers and usually remote from one another. Most of civilized man’s energies are devoted to the production of things for which he as an individual has no direct use. His only way of knowing that some other individuals have use for his product, is by the reaction of the market to his product in the form of a money price. The money-pricing system is the antenna of exchange, constantly keeping the cooperative mechanism responsive to demand and supply, by bringing together those buyers and sellers who at any given moment have mutual interests–and in the process regrouping and realigning those interests.

As we pass money from hand to hand, we give little thought to the delicate precision with which it preserves the equity of economic democracy and advances the social order. Every transfer of money registers an impulse on the market that changes the price of some commodity or commodities. These registered prices give the signal for more or less production of the commodities affected, thus keeping human energy, which is the generator of values, intelligently applied. This readjustment is in progress every moment of the day and night. This is the dynamics of social progress, constantly rewarding the efforts of those who conserve human energy and remain responsive to the buyer’s will, and punishing those who do not. If there can be omniscience on earth, here it abides, and it is this all-seeing eye that political planners would sacrifice for the blind directions of bureaucracies.

It is through the preservation and perfection of the monetary system that economic democracy will demonstrate its potential for human welfare. In this way it will avert the disaster that is now threatened by the attempt of the state to exercise a power it cannot command. The challenge is by no means difficult if we ignore the jumble of complexities that have been written about money. Let us forget the false premise of political money power. Let us endeavor neither to reconcile the irreconcilable, nor by some protective device to legitimize the illegitimate. The establishment of a nonpolitical monetary system is but an undertaking in accountancy.

In renouncing the political money idea, we abandon the idea of monetary nationalism. Trade is homogeneous; it knows no nationality, race, color, creed, or caste. Moreover, a truth is universal. Once a monetary science develops, it will no more be localized or nationalized than mathematics is today. There opens before the mind, therefore, the prospect of a universal monetary unit and system that will operate without regard for political boundaries. It will have no nationality or politics. None will be coerced to participate. None will be barred. There will be but one monetary language for the world, and a democratic monetary system will unite people everywhere in the universal freedom of exchange. [emphasis added]

Riegel’s books can be downloaded here. His Valun Mutual Money Plan can be found here on this site.–t.h.g.


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Posted in Economics, Prescriptions, The Political Money System | 9 Comments »

U.S. in an Inflationary Depression

January 1, 2011

This 2010 recap from the National Inflation Association makes it clear that we are in the midst of an inflationary depression.

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Posted in Economics, Inflation, The Political Money System | Leave a Comment »

Another investgative report by Matt Taibbi in Rolling Stone

November 14, 2010

This Rolling Stone article by Matt Taibbi tells how:  Courts Helping Banks Screw Over Homeowners

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Posted in Economics, The Political Money System | Leave a Comment »

Economics and the limits to growth

November 9, 2010

Here are some wise words from economist Herman Daly

Thermodynamic Roots of Economics

by Herman Daly

The first and second laws of thermodynamics should also be called the first and second laws of economics. Why? Because without them there would be no scarcity, and without scarcity, no economics. Consider the first law: if we could create useful energy and matter as we needed it, as well as destroy waste matter and energy as it got in our way, we would have superabundant sources and sinks, no depletion, no pollution, more of everything we want without having to find a place for stuff we don’t want. The first law rules out this direct abolition of scarcity. But consider the second law: even without creation and destruction of matter-energy, we might indirectly abolish scarcity if only we could use the same matter-energy over and over again for the same purposes — perfect recycling. But the second law rules that out. And if one thinks that time is the ultimate scarce resource, well, the entropy law is time’s irreversible arrow in the physical world. So it is that scarcity and economics have deep roots in the physical world, as well as deep psychic roots in our wants and desires.

Economists have paid much attention to the psychic roots of value (e.g., diminishing marginal utility), but not so much to the physical roots. Generally they have assumed that the biophysical world is so large relative to its economic subsystem that the physical constraints (the laws of thermodynamics and ecological interdependence) are not binding. But they are always binding to some degree and become very limiting as the scale of the economy becomes large relative to the containing biophysical system. Therefore attention to thermodynamic constraints on the economy, indeed to the entropic nature of the economic process, is now critical — as emphasized by Nicholas Georgescu-Roegen in his magisterial The Entropy Law and the Economic Process (1971).

Why has his profound contribution been so roundly ignored for forty years? Because as limits to economic growth become more binding, the economists who made their reputations by pushing economic growth as panacea become uncomfortable. Indeed, were basic growth limits recognized, very many very prestigious economists would be seen to have been very wrong about some very basic issues for a very long time. Important economists, like most people, resist being proved wrong. They even bolster their threatened prestige with such pretension as “the Sveriges Riksbank Prize in Economic Science in Memory of Alfred Nobel” — which by journalistic contraction becomes, “the Nobel Prize in Economics,” infringing on the prestige of a real science, like physics. Yet it is only by ignoring the most basic laws of physics that growth economics has endured. Honoring the worthy contributions of economists should not require such flummery.

I once asked Georgescu-Roegen why the “MIT-Harvard mafia” (his term) never cited his book. He replied with a Romanian proverb to the effect that, “in the house of the condemned one does not mention the prosecutor.”

Posted in Economics | 4 Comments »

Local farmers and school children benefit from government mandate

October 5, 2010

This story from NPR describes how government in Brazil, at no additional cost, has managed to assure the livelihood of local farmers while providing school children with nourishing lunches.

Posted in Economics, Emerging paradigm | Leave a Comment »

The Geography of a Recession-Unemployment by County

July 29, 2010

This animated map of the United States shows the growing unemployment levels since 2007.

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Posted in Economics | 1 Comment »

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