WHAT MAKES US DO IT?
Why do we continue to fight wars? Even when there is no reason, no threat, no purpose? Even when we can not afford them anymore? What makes our government spend three billion dollars every week in Afghanistan and Iraq? Why do we spend on guns and bullets when we are closing schools and libraries here at home and where the "cut the deficit" hawks are trimming away at the minimalist social saftey-net we have here in the USA? And as they argue in Washington over the deficit and what social service to cut next, we continue to be faced with the horror of the dead and mutilated which come home either in body bags, or as terribly hurt and deformed young men and women. What makes us do it?
When I would voice questions of this sort in the past, they were often addressed to my good old friend, Professor Mort Strassberg, who sat across from me in our office, his grey head just barely visible over a pile of dusty geology books, mineral samples, and a pile of blue-test-booklets waiting to be marked. My former Department Head, and respected colleague at Suffolk College, would often respond with his favorite answer, "Bob just follow the money. Some big shot, some elite, an oligarch is making good dough on the war. He has plenty of money and him and his big company have a host of "rabbis" in the Senate and Halls of Congress. The big shots get what they want from this government and us, the 'schlemiels', we pay for it in taxes and blood."
So now that old Mort is no longer here, and I can't muse with him about such things anymore, I often think of him and what his response would be.
I imagine his progressive spirit(he was not afraid to call himself a "liberal" ), wafting through his old haunts, the geology prep room, the mineral lab, and the physical science racks in the depths of the college-library basement, and possibly near that tree we planted in his name (a healthy sycamore, now a hefty six or eight inches across) uneasy with what is going on today in Washington. Mort abruptly left the political scene sometime in the George H. W. Bush era, (an administration which irked him greatly) and since then, political matters have deteriorated drastically moving rapidly alon a steep, right-hand slope.
Mort was a true progressive of the George McGovern era. I have to admit, at the time his brand was too strong for me. Perhaps I was too young or naive and it was early in my political development. Then I was a non-politcal scientist. My head was deep in sediment, both figuratively and literally. But time to read and study, and a political awakening occasioned by the GW Bush presidency changed my thinking drastically. Perhaps I can not quite take up Mort's mantle, but a bit of that cloth covers my shoulders now too. I think he would be happy to know that..in some way he did have an influence on my "erroneous" thinking. There would have been less hot air and lots more agreement over that pile of books and papers on our desks these days.
So asking that question again, why do we persist on fighting when it makes no security, political or monetary sense? Mort would have been sure to have underscored that it is certainly not to further democracy, or improve the lives of the poor. But mostly for the warmonger's profit, the general's pride, and the politicians glory. Those reasons were considered immoral ones by Mort, and today I must agree with him. I have had some experience with wars myself. I lived through World War II, the Korean "Conflict", the Vietnam War (I was fortunate to serve two years as a student ROTC cadet during that era), countless Reagan-Bush military actions around the hemisphere, in Lebanon the Middle East, Africa, and around the world, and more recently Geroge Bush's Deceit (Iraq War), Afghanistan War, the secret wars in Yemen, Ethiopia, and Pakistan, and now most recently Obama's illegal war in Libya (where he tries to suggest is not a 'hostility'. Where will it end?
Not having my old friend to puzzle over these matters with, I often resort to a variety of publications to seek answers to my queries. Today, I sought solace with (The Guardian) which ran this piece: Eisenhower's Worst Fears Came True by Simon Jenkins ( June 16, 2011) I excerpt part of it here. See below for the full site.
"It is not democracy that keeps western nations at war, but armies and the interests now massed behind them. The greatest speech about modern defence was made in 1961 by the US president Eisenhower. He was no leftwinger, but a former general and conservative Republican. Looking back over his time in office, his farewell message to America was a simple warning against the "disastrous rise of misplaced power" of a military-industrial complex with "unwarranted influence on government". A burgeoning defence establishment, backed by large corporate interests, would one day employ so many people as to corrupt the political system. (His original draft even referred to a "military-industrial-congressional complex".) This lobby, said Eisenhower, could become so huge as to "endanger our liberties and democratic processes".
I wonder what Eisenhower would make of today's US, with a military grown from 3.5 million people to 5 million. The western nations face less of a threat to their integrity and security than ever in history, yet their defence industries cry for ever more money and ever more things to do. The cold war strategist, George Kennan, wrote prophetically: "Were the Soviet Union to sink tomorrow under the waters of the ocean, the American military-industrial complex would have to remain, substantially unchanged, until some other adversary could be invented."
The devil makes work for idle hands, especially if they are well financed. Britain's former special envoy to Kabul, Sherard Cowper-Coles, echoed Kennan last week in claiming that the army's keenness to fight in Helmand was self-interested. "It's use them or lose them, Sherard," he was told by the then chief of the general staff, Sir Richard Dannatt. Cowper-Coles has now gone off to work for an arms manufacturer.
There is no strategic defence justification for the US spending 5.5% of its gross domestic product on defence or Britain 2.5%, or for the Nato "target" of 2%.
These figures merely formalise existing commitments and interests. At the end of the cold war soldiers assiduously invented new conflicts for themselves and their suppliers, variously wars on terror, drugs, piracy, internet espionage and man's general inhumanity to man. None yields victory, but all need equipment. The war on terror fulfilled all Eisenhower's fears, as America sank into a swamp of kidnapping, torture and imprisonment without trial.
The belligerent posture of the US and Britain towards the Muslim world has fostered antagonism and moderate threats in response. The bombing of extremist targets in Pakistan is an invitation for terrorists to attack us, and then a need for defence against such attack. Meanwhile, the opportunity cost of appeasing the complex is astronomical. Eisenhower remarked that "every gun that is made is a theft from those who hunger" – a bomber is two power stations and a hospital not built. Likewise, each Tomahawk Cameron drops on Tripoli destroys not just a Gaddafi bunker (are there any left?), but a hospital ward and a classroom in Britain.
As long as "big defence" exists it will entice glory-hungry politicians to use it. It is a return to the hundred years war, when militaristic barons and knights had a stranglehold on the monarch, and no other purpose in life than to fight. To deliver victory they demanded ever more taxes for weapons, and when they had ever more weapons they promised ever grander victories. This is exactly how Britain's defence ministry ran out of budgetary control under Labour.
There is one piece of good news. Nato has long outlived its purpose, now justifying its existence only by how much it induces its members to spend, and how many wars irrelevant to its purpose it finds to fight. Yet still it does not spend enough for the US defence secretary. In his anger, Gates threatened that "future US leaders … may not consider the return on America's investment in Nato worth the cost". Is that a threat or a promise? .
http://m.guardian.co.uk/ms/p/gnm/op/sNxtF6R1rdy0Q8zfHlow4wg/view.m?id=15&gid=commentisfree/2011/jun/16/eisenhower-fears-invent-enemies-buy-bombs&cat=commentisfree
Get the picture?
rjk
Friday, June 17, 2011
Monday, June 6, 2011
THE POSSIBILITY OF QE3
OF STOVE CLEANERS, CHEESE, AND MAKING MONEY EX NIHILO
On a recent tour of our local stores Mrs. K. has been annoyed to discover that one of her favorite house hold products, normally stocked on the “soap and cleaner’ shelves of several local stores is no longer available. The product--a stovetop cleaning agent-- was only recently easily procured and widely available, but not so now.
“Why can’t I find this items any longer?” she asked.
“Well that product may not have a lot of demand, so Green’s, Walmarts, CVS, True Value, etc. do not wish to have to replace the stock so quickly, when they are gone. They are reducing their stock of a product that they must pay for, but may not be able to sell so easily….”
“So this is just a response to the bad economy then?”
“Yes, it’s a sign of low demand.”
”Yes,” I agreed, “low demand may be the result of the fact that a good portion of the population is under employed or unemployed. Less money out there…less demand for stove-top cleaners and other stuff.”
Right now it is jobs, jobs, jobs that are on everyone’s mind. Today, I read in Portfolio.com, with some alarm that there are five applicants for every job that opens. Also, that there are some 15 million Americans out of work right now, and that nearly half a million have quit trying to find work. The formal joblessness rate is recorded as 9.6%, but that would be much worse were it not for the, nearly 500,000 who simply just quit looking.
Also the inflation rate has dropped down to 1.1% and has been holding steady at this rate for some months. That is well below the 2% rate that is considered desirable.
“That doesn’t sound too threatening. Why should I be concerned with the fact that prices are not rising much?”
“Well the problem is that such a low rate of inflation is and indicator of low consumer demand for goods and services.
“So that’s why I can’t find that “cook-top spray-cleaner, I like to use”?
“Exactly!“
“Some products which are not your big sellers are in lower demand anyway…are simply eliminated off the shelves, as a way to reduce costs and raise profits by the stores.“
“That’s one way to control expenses, but it makes me mad!“
“But more importantly, these circumstances of low demand may develop into what the economists call a “vicious deflationary cycle” in which low consumer demand causes product prices to fall, (or they may be simply eliminated as your cook top cleaner), this causes shoppers (like you and me) to retard purchases since they anticipate the continuing fall in prices (Why should you pay more for some product today when you can get some product cheaper tomorrow?). Then the store-owner, responding to low demand, may decrease prices further, while the products manufacturer or producer who is faced with less orders for his product, sells his stock at lower prices since he has too much of it, and, as well, may decide to slow production. These results exacerbate the problem and result in lower demand for labor in both the production end and in the sales end of the economy, resulting in lay offs, and firings. But job losses and reduced employment only tend to decrease money in circulation, and thus depress demand even further. The end result is a continual spiral downward of demand, as prices fall and employees are laid off. This deflationary spiral can be described as a classic “vicious cycle” or a process, which tends to exacerbate the cause or causes that generate it.
What can the Fed do? I read recently that Ben Bernanke is planning to decrease long-term interest rates (again) and stimulate growth by having the Fed purchase (“soak up”) Treasury Bonds. Treasury Bonds are safe, but they generally do not provide much interest on investment at maturity. So to encourage buyers, the government has to keep interest rates at a level high enough to encourage sales. But that impacts us down the line. So if the Fed were to buy up Treasury Bonds, that would put a cash-infusion into government coffers. It would save some dough too, by keeping interest rates lower. Since the government would have less urgency to sell bonds, they need not encourage buyers by raising interest rates. The down side is that this action would tend to decrease the value of the dollar. So we all have less buying power, particularly those on fixed incomes--like the elderly. That’s why the price of English Stilton cheese and Italian Parmigiana Reggiano have gone through the roof and the markets don’t stock them anymore.
There are times when just dropping the interest rate to zero, doesn’t help. Perhaps that might occur in those times when there is so little demand for stovetop cleaners and expensive cheese. Then there is the option of just printing more money. The government bankers don’t like to use those terms. They are too explicit and revealing. No matter that is what they are really doing. So they have developed the term “quatitative easing”, (QE). QE is a monetary policy used by central bankers to increase the supply of money. (they don’t simply dump the money on some corner on Main Street and let everyone come get it. Though that would be about what is happening. They simply write a check to themselves and drop that into their reserve account and voila! They have more money available created literally out of nothing (ex nihilo). They then use that account to buy government bonds, those awful mortgage-backed securities that no one really knows what they are getting or what they are worth, and corporate bonds or other financial instruments. That puts money into circulation, and hopefully stimulates the economy.
That takes care of the big shots and the bankers on Wall Street. Now if they could only find some way to get the unemployed back to work!
A few months later.....
Well here we are in June 6, 2011 and QE1 and QE2 have not done the trick. Oh the fat cats are doing fine…my neighbor...... who works on Wall Street and bought a home here at the height of the market FOR CASH is still tooling around with a 80G sports car. But some of his neighbors remain out of work. Others are scared silly about losing their jobs. And the latest data for last month (May 2011) shows that in May the US generated only 58,000 new jobs…not nearly enough to off set population growth (nearly 200,000 per month). So we are still going backward. The unemployed rate jumpped back up to 9.1 (from 9.0). Some are whispering about a new QE3! The plutocrats are happy with that idea, but what will it do for jobs for the average wage earner? It will only make the dollar cheaper and with cheap dollars to buy foreign oil we must shell out more dollars for each barrel—so that ploy is a punch in the eye for the common guy and gal. They will have to pay more for gasoline and that is the life blood of the economy our here on LI.
Get the picture?
On a recent tour of our local stores Mrs. K. has been annoyed to discover that one of her favorite house hold products, normally stocked on the “soap and cleaner’ shelves of several local stores is no longer available. The product--a stovetop cleaning agent-- was only recently easily procured and widely available, but not so now.
“Why can’t I find this items any longer?” she asked.
“Well that product may not have a lot of demand, so Green’s, Walmarts, CVS, True Value, etc. do not wish to have to replace the stock so quickly, when they are gone. They are reducing their stock of a product that they must pay for, but may not be able to sell so easily….”
“So this is just a response to the bad economy then?”
“Yes, it’s a sign of low demand.”
”Yes,” I agreed, “low demand may be the result of the fact that a good portion of the population is under employed or unemployed. Less money out there…less demand for stove-top cleaners and other stuff.”
Right now it is jobs, jobs, jobs that are on everyone’s mind. Today, I read in Portfolio.com, with some alarm that there are five applicants for every job that opens. Also, that there are some 15 million Americans out of work right now, and that nearly half a million have quit trying to find work. The formal joblessness rate is recorded as 9.6%, but that would be much worse were it not for the, nearly 500,000 who simply just quit looking.
Also the inflation rate has dropped down to 1.1% and has been holding steady at this rate for some months. That is well below the 2% rate that is considered desirable.
“That doesn’t sound too threatening. Why should I be concerned with the fact that prices are not rising much?”
“Well the problem is that such a low rate of inflation is and indicator of low consumer demand for goods and services.
“So that’s why I can’t find that “cook-top spray-cleaner, I like to use”?
“Exactly!“
“Some products which are not your big sellers are in lower demand anyway…are simply eliminated off the shelves, as a way to reduce costs and raise profits by the stores.“
“That’s one way to control expenses, but it makes me mad!“
“But more importantly, these circumstances of low demand may develop into what the economists call a “vicious deflationary cycle” in which low consumer demand causes product prices to fall, (or they may be simply eliminated as your cook top cleaner), this causes shoppers (like you and me) to retard purchases since they anticipate the continuing fall in prices (Why should you pay more for some product today when you can get some product cheaper tomorrow?). Then the store-owner, responding to low demand, may decrease prices further, while the products manufacturer or producer who is faced with less orders for his product, sells his stock at lower prices since he has too much of it, and, as well, may decide to slow production. These results exacerbate the problem and result in lower demand for labor in both the production end and in the sales end of the economy, resulting in lay offs, and firings. But job losses and reduced employment only tend to decrease money in circulation, and thus depress demand even further. The end result is a continual spiral downward of demand, as prices fall and employees are laid off. This deflationary spiral can be described as a classic “vicious cycle” or a process, which tends to exacerbate the cause or causes that generate it.
What can the Fed do? I read recently that Ben Bernanke is planning to decrease long-term interest rates (again) and stimulate growth by having the Fed purchase (“soak up”) Treasury Bonds. Treasury Bonds are safe, but they generally do not provide much interest on investment at maturity. So to encourage buyers, the government has to keep interest rates at a level high enough to encourage sales. But that impacts us down the line. So if the Fed were to buy up Treasury Bonds, that would put a cash-infusion into government coffers. It would save some dough too, by keeping interest rates lower. Since the government would have less urgency to sell bonds, they need not encourage buyers by raising interest rates. The down side is that this action would tend to decrease the value of the dollar. So we all have less buying power, particularly those on fixed incomes--like the elderly. That’s why the price of English Stilton cheese and Italian Parmigiana Reggiano have gone through the roof and the markets don’t stock them anymore.
There are times when just dropping the interest rate to zero, doesn’t help. Perhaps that might occur in those times when there is so little demand for stovetop cleaners and expensive cheese. Then there is the option of just printing more money. The government bankers don’t like to use those terms. They are too explicit and revealing. No matter that is what they are really doing. So they have developed the term “quatitative easing”, (QE). QE is a monetary policy used by central bankers to increase the supply of money. (they don’t simply dump the money on some corner on Main Street and let everyone come get it. Though that would be about what is happening. They simply write a check to themselves and drop that into their reserve account and voila! They have more money available created literally out of nothing (ex nihilo). They then use that account to buy government bonds, those awful mortgage-backed securities that no one really knows what they are getting or what they are worth, and corporate bonds or other financial instruments. That puts money into circulation, and hopefully stimulates the economy.
That takes care of the big shots and the bankers on Wall Street. Now if they could only find some way to get the unemployed back to work!
A few months later.....
Well here we are in June 6, 2011 and QE1 and QE2 have not done the trick. Oh the fat cats are doing fine…my neighbor...... who works on Wall Street and bought a home here at the height of the market FOR CASH is still tooling around with a 80G sports car. But some of his neighbors remain out of work. Others are scared silly about losing their jobs. And the latest data for last month (May 2011) shows that in May the US generated only 58,000 new jobs…not nearly enough to off set population growth (nearly 200,000 per month). So we are still going backward. The unemployed rate jumpped back up to 9.1 (from 9.0). Some are whispering about a new QE3! The plutocrats are happy with that idea, but what will it do for jobs for the average wage earner? It will only make the dollar cheaper and with cheap dollars to buy foreign oil we must shell out more dollars for each barrel—so that ploy is a punch in the eye for the common guy and gal. They will have to pay more for gasoline and that is the life blood of the economy our here on LI.
Get the picture?
Sunday, June 5, 2011
A WORKS PROGRAM TO INVEST IN AMERICA
I have been listening to the debate in Washington with an uneasy feeling. Both parties are simply arguing over how much of a deficit they favor. The Republicans favor draconian cuts in all of their favored budget targets, health care, child assistance, anything to do with the environment, in fact anything that might make life better for the vast majority of their co-countrymen and cost their clients, the super-wealthy, some small increase in taxes. While on the other hand, the Democrats parry these violent thrusts to the well being of the nation's poor and middle class with ineffective “feather-duster” parries which have as a goal not to defang and deflect the threat, but only to limit its effects or minimize the disaster which would envelop us all if these one-sided, mean-spirited, politically inspired and shortsighted proposals were ever to see the light of day.
Our Washington legislators are all too young to have experienced the effects of the Great Depression of the last century, as I am. But they should be familiar with our nation's history and the solutions that finally enabled this nation to raise itself out of economic stagnation. It was not deficit reduction that pulled the nation of my parents and grandparents out of the Great Depression, but the onset of WWII, which put the economy on a war-footing and provided full employment for nearly everyone. Money flowed into the hands of the poor and middleclass. That was the leavening which supported the economic revival. It only makes common sense. Would a farmer get a better crop if he concentrated his fertilizer on only a few plants in the center of his thirty-acre wheat field, or would he have a better crop by providing each plant with a tiny bit of that fertilizer? It seems plain that it is the multiplying effect of the money in the hands of the many, which will provide the most economic stimulus.
I'm not proposing here a new world war to boost the US economy. (Far from it, we are fighting two senseless and useless wars right now. In fact the billions spent on those wasteful enterprises could be invested here at home to do the economy some good.) But by placing the US on a war-footing, President Franklin Roosevelt, had reason to spend heavily. He did not cut expenditures. He increased the national debt, investing huge sums to start up industrial enterprises to support the war effort. Those works-projects were the direct stimulus which generated the economic rebound during and after the war.
Today, one need not look far to find things that need to be done here in the US, areas where our government could spend money to stimulate the economy now, and have a long-lasting effects on our over-all long-term competiveness and economic welfare. One need only to travel in western Europe to compare us to modern nations such as France or Germany to understand our weaknesses. Our infra-structure is outdated, decaying or inadequate for a modern nation. Our public buildings, sewer systems, water supply, roads, bridges, highways all need repair and or upgrading. Our train systems are antiquated, our wireless and broadband access is inadequate for a modern industrialized nation. There is little modern infrastructure such as smart-grid power, access to green energy sources or nation-wide universal broadband.
Today there are millions of Americans unemployed (the formal figure is 9.1% but estimates of the actual un-and under-employed or no-longer-looking put the figure at 15%. These individuals could be put to work here, were the American government to institute a massive works program. That would put money where it is needed in the hands of people.
Where can these funds come from? Let's begin by defunding the wasteful and counter-productive wars we are fighting abroad. No one in government of out has been able to explain what purposes the Afghanistan, Iraq and Libyan wars serve. They have cost us and continue to cost hundreds of billions of dollars annually in only direct costs. An additional source of funds could come from taxes on the upper echelons of the income brackets who now pay lower taxes than they ever did since the 1950s. At present the major tax burden falls onto the working middle class wage earners who pay 35% of their wages and have no loop-holes and deductions...while the oligarchs, elites, entrepreneurs all pay a small fraction of that amount --or none at all. Let us defund these worthless war expenditures increase taxes on the wealthy and use those funds to focus on rebuilding America. Improve our nation so that it will be able to compete with other modern nations in the long run and all of us can share in its affluence, not only a small minority at the top.
Our Washington legislators are all too young to have experienced the effects of the Great Depression of the last century, as I am. But they should be familiar with our nation's history and the solutions that finally enabled this nation to raise itself out of economic stagnation. It was not deficit reduction that pulled the nation of my parents and grandparents out of the Great Depression, but the onset of WWII, which put the economy on a war-footing and provided full employment for nearly everyone. Money flowed into the hands of the poor and middleclass. That was the leavening which supported the economic revival. It only makes common sense. Would a farmer get a better crop if he concentrated his fertilizer on only a few plants in the center of his thirty-acre wheat field, or would he have a better crop by providing each plant with a tiny bit of that fertilizer? It seems plain that it is the multiplying effect of the money in the hands of the many, which will provide the most economic stimulus.
I'm not proposing here a new world war to boost the US economy. (Far from it, we are fighting two senseless and useless wars right now. In fact the billions spent on those wasteful enterprises could be invested here at home to do the economy some good.) But by placing the US on a war-footing, President Franklin Roosevelt, had reason to spend heavily. He did not cut expenditures. He increased the national debt, investing huge sums to start up industrial enterprises to support the war effort. Those works-projects were the direct stimulus which generated the economic rebound during and after the war.
Today, one need not look far to find things that need to be done here in the US, areas where our government could spend money to stimulate the economy now, and have a long-lasting effects on our over-all long-term competiveness and economic welfare. One need only to travel in western Europe to compare us to modern nations such as France or Germany to understand our weaknesses. Our infra-structure is outdated, decaying or inadequate for a modern nation. Our public buildings, sewer systems, water supply, roads, bridges, highways all need repair and or upgrading. Our train systems are antiquated, our wireless and broadband access is inadequate for a modern industrialized nation. There is little modern infrastructure such as smart-grid power, access to green energy sources or nation-wide universal broadband.
Today there are millions of Americans unemployed (the formal figure is 9.1% but estimates of the actual un-and under-employed or no-longer-looking put the figure at 15%. These individuals could be put to work here, were the American government to institute a massive works program. That would put money where it is needed in the hands of people.
Where can these funds come from? Let's begin by defunding the wasteful and counter-productive wars we are fighting abroad. No one in government of out has been able to explain what purposes the Afghanistan, Iraq and Libyan wars serve. They have cost us and continue to cost hundreds of billions of dollars annually in only direct costs. An additional source of funds could come from taxes on the upper echelons of the income brackets who now pay lower taxes than they ever did since the 1950s. At present the major tax burden falls onto the working middle class wage earners who pay 35% of their wages and have no loop-holes and deductions...while the oligarchs, elites, entrepreneurs all pay a small fraction of that amount --or none at all. Let us defund these worthless war expenditures increase taxes on the wealthy and use those funds to focus on rebuilding America. Improve our nation so that it will be able to compete with other modern nations in the long run and all of us can share in its affluence, not only a small minority at the top.
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