Monday, October 10, 2011

Economics and the Meaning of Life.

Getting at the bottom of existence has been a question for thinkers for 2000 years! When the collapse of the financial system occurred in 2008 'existence' is sharply defined as a relationship between material things and survival. When the economy is stable and functioning, 'existence' is driven by popular notions of life mystified.

The United States had a brand of capitalism that Europe did not have. It was unique. America attracted people from all over the world because employers were paying higher wages. American employers had to grapple with the problem of constantly raising wages to keep workers on the payroll less they move to buy property and become new found rich people elsewhere. Immigration created a labor abundance. There was no shortage of labor for a period covering 1900 to 1978. Economic stability and life in America function very well while real wages rose that there is no evidence to suggest real wage increases could not restore prosperity. From this perspective it is easy to understand why Republicans have a punitive answer to immigration less it would cause a rise in real wages restoring the problem of worker retention and a return to worker prosperity in America should political power be captured by the Left and the working class.

Reversal of all the policies currently in place that favor the business community would mean grave consequences for the business community, is a life and death matter for the Right wing.

However, the essential question remains one of philosophical debate and that is what is the purpose and meaning of life on which to base a new economic paradigm?

The two things that changed the labor abundance was the advent of the computer and American corporations soon discovered it was profitable to move production out of the US on a scale as never before with the advent of the computer. Wall Street and Main Street stopped raising wages and salaries. An increase in the average real rate of wages was never a fact before, became a fact of life hitherto from 1978.

More work hours became the next best way to increase wage income for American workers. Labor hours worked on a per capita basis increased from 1978 to the present. Americans worked more hours of labor, 20% more or a week than any other labor force in all of the wealthy capitalist country in the world.

A binging spree substituted the flat wage rate, borrowing and overwork stressed Americans out and the debt became an object of speculative investments for the financial sector. The end of the line would be when the working class could no longer pay its debts.

Is it entrepreneurial genius that justifies the zoom of salaries and bonuses for CEO's from a prior 40 to 1 ratio to a whopping 400 to 1 ratio?

Robert Putnam, wrote "Bowling Alone" a book about American workers en mass withdrew from any social and political participation in life in society. They took their eye of the ball. Tired, worn out. While the Left and the working class withdrew from politics the Right and the business community got involved in politics. This social reaction happened at the same time as the advent of hedge funds were invented by the business community sitting on mountains of cash. They invented a kind of stock that paid a share on all the debts. The working class arose 30 years in reaction to the flat wage rate too late and the financial sector invented the debt hedge fund 30 years too late. Paying a percentage to the shareholder against mortgage debts was risky at the end of its cycle of activity and repayment ratio. Who would buy them with the risk of default so close to the edge? A solution came from Warren Buffet, who owns Moody's rating agency. Moody's assessed these new financial instrument with a triple A rating making them more attractive to buyers.

Problem solved but how can these shares be marketed? Speculative boom was a proven method, showing these bonds made money and to make it more attractive an insurance policy on these instruments removed the risk. World governments bought these instruments investing millions of pensions and personal savings made investment houses richer and CEO's responsible for their creation and wizardry that went into the money scheme justifies their higher compensation.

AIG did not want to call these instruments insurance policies as a business classification. AIG started as an insurance company and became an investment house. AIG called them; Credit Default Swaps. After the government threw an unspeakable amounts of money into financial markets and when banks stopped transacting with one another due to lack of trust. The Democrats and Republicans used the Federal Reserve to print money. The government bought and borrowed the worthless securities at their former price and with the new money printed it urged bankers to lend the money out to people. Bankers looked at the politicians and called them crazy! They had a point! The working class is busted and corporations don't have any customers anymore. It would be irresponsible to lend the bail out money out to anyone!

How the Democrats and the Republicans arrived at this measure to bail out the banks came from the insane notion that "Banks are too big to fail ', and had to be rescued because they were too big to fail! So the two parties agreed via Congressional approval to merge the banks making them bigger than before. Thinking it would fortify reserves in banks is indeed, an irrational policy.  But for the EU banks it is not an irrational policy for less cash rich governments in Europe and the IMF. To order banks increase their assets makes sense for Europe not for the US. The US government can afford to bail out banks whereas Europe's governments cannot afford it.

The US government became the insurer of bad securities and formed monopolies of banks permitted to survive when it should have printed more money after nationalizing the banks still standing from the crash of 2008 when millions could not pay their credit cards, mortgages, debts and the federal deficit ballooned. Nationalization of the financial sector would have left the politicians with the only choice to have paid down the deficit through a massive infusion and restructuring of the housing market and labor market.

Democrats pay the price for a down spiraling economy and the business community behind the Republicans ceaselessly work to control the political process as the only way in which to make permament a flat wage labor market. Their virulent political agenda with countless attacks on the working class is reflected in the political campaigning for president and right wing state's rights agendas that now confronts the working class itself as a verified 'class struggle'.

The movement of Occupy Wall Street, that is quintessentially multi-vocal represents the first time the Left and the working class carries the banner of popularism since the 1930's. For the period of rising wages from 1900 to the crash of 1929 the Democrats took the mantle of popularism and from FDR to now the Republicans took the mantle with the rise of the evangelical right wing.

The movement to occupy Wall Street provides a critique of the political system as a whole the other parties cannot do. The movement is multi-cultural and gives voice to many who form the working class, it can provide a new vision for a society that goes past electing the latest hot new politicians or accumulating money for the sake of accumulating money, a new economy as long as Democrats and Republicans do not get their hands on the movement it will remain unco-opted! As a movement it must provide answers to the age-old question of the meaning and purpose of life.

Tuesday, October 4, 2011


After reading an article on Yahoo on ‘stocks tumbling’’:, and reading the comments posted by American readers, I decided to  make a connection between that which is separating workers in America from workers in the EU system with a short history to help affirm the position for Wall Street protestors and their action.  The word ‘fear’ is pivotal in the media propaganda war against the people’s revolt against what is perceived as a ‘crude compromise’, or a ‘raw deal’  offered by the right wing in America. 

In real events on the ground in Europe, workers and students have taken an action against austerity with massive protests in several of the 71 EU member states, effectively willing to let the EU system collapse than to accept a bail out. From the point of view of the system, capitalists, bankers, the right wing and the fall in stocks in EU markets and on Wall Street, fear is synonymous with revolution.

The word’ revolution’ is never used in mainstream media. By definition this movement is not yet a revolution in the mode of production.

 This past week the struggle against austerity in the EU has taken a turn. The message sent to the Central Bank and their government ministers is a flat out rejection of a bail out. Naturally, the character of the struggle against austerity changes from country to country as workers and students battle their respective governments, they take on different issues that range from abuses in government, tax evasion, excesses and lavish lifestyles to oppressive legislation against labor market reforms, one-sided trade policies and the wars sided with the US in Afghanistan and Iraq.  Each country is different in the way and manner the workers and students are opposing austerity with different motives and reasons but the main fact remains that everywhere it is a true people’s movement.

 The fear generated among bondholders each day the Dow drops is an indicator of the growing pressure on the Central Bank and the EU to withdraw its demands on cutting the safety net and services relevant to the survival of the poor, unemployed, students and workers. They are refusing the Central Bank's offer of a bail out in exchange for austerity and are increasingly impatient with the right wing holding the economy hostage to force acceptance of this crude compromise.

Yahoo and other mainstream US media select to show American readers the widespread protests not as a movement for change but as ‘rabble’ or ‘rebels without a cause’  using  sensationalism to sway public opinion. In the propaganda war the goal is to cut off communication and unity between workers here in the US from imitating the actions of workers in Europe. They interview protesters on rare occasions when a celebrity appears such as Michael Moore and Josef Stiglitz. The talking head pundits discuss the action in a sanitized manner avoiding opinion. A few are radicalized, Dylan Ratigan, the Ed Show, Al Sharpton’s News Hour and explore the controversy in greater depth and empathy. For the most part the propaganda war of the far right is to presents the protesters as a bunch of slothful 'Welfare State' babies.

The end-result is this media campaign is to spread empathy for bankers and mass confusion among its readers in order to prevent the right wing from losing all credibility at the rate their counterparts are losing credibility in Europe.

The American right wing uses the euphemism; "Nanny State" to stereotype its poor, middle and working classes as little spoiled children while it plans to impose deep cuts in its government once in power. If the right seizes power the government they ideologically despise, that restricts and regulates any control over the free reign of Capital to be swept away, that all these obfuscations conceal their real motive to abolish government.

It is my opinion that the Right could succeed in swaying public opinion if this Wall Street action did not happen. Now I am confident with the spread of the action to other cities combined with other developments the Right will lose this titanic struggle. The question for this burgeoning movement is what happens next? What direction should it take to veer the country toward a viable economic alternative?

When the Right wing went after America's sacred cow and trampled on the elderly and poor women and children. This brought doubts into the minds of future workers and  retirees. If they can go after grandma they can do it to me prompted many to doubt their agenda.

Top Republicans refused to do business with Obama on health care. They perceived the Health Care Bill as an act of control over private enterprise of the medical establishment and it is a form of regulation and control. It ought to be! Health and education ought to be supported through a form of national taxation.

Republicans then refused to do business with Obama on the deficit not because they are stupid! To the contrary, negotiating with Obama would lose the deficit as a tool to sway public opinion against Obama. By threatening a worse situation of joblessness  Republicans could claim they were acting in the interests of the people.

Fortunately, for the Left in Washington apprehension and doubt among constituents forced Democrats to resist Republicans. Wall Street scored record profits while Main Street experienced foreclosures. Irene was a reminder of the Republican apathy of Katrina’s poor and black community victims of the disaster. To capitulate to their side and then at the ready swiftly enact bold measures through Congress that abolish the federal government's spending programs of the poor and elderly and the attacks on workers' rights through legislation against collective bargaining and unionization the Democrats would be guilty of abandonment of its working class base.

Then things backfired for the Republicans. They scurried to conceal true racists and sexists elements in their party never would have surfaced if it were not for an election year and presidential debates that required solid background vetting. Their next operation of attack on the middle class, the poor and working classes is to scramble out voting districts and create chaos and confusion and use the Supreme Court to settle the presidential election as tested in GW' Bush’s  coup de’tat against Gore the real victor of the election. America's right wing are effectually anarchists of the far right, believers that the nation-state must be abolished, in order for Capital/corporations/banks to have free reign over the society the federal government and its democratic institutions must go! Their agenda is clear and the workers in Europe are clear and the workers in America should be clear to reject a bail out of Wall Street and to resist Republican efforts for a restoration of the economic order as we know it.  The argument against a restoration is thirty years of failed policies and stagnant economic growth.

Unlike many EU member states America can afford to bail out the banks. In a situation like in Ireland debt and interests rates play a major role in its probable collapse. In America , the debt and de-industrialization, social inequities and social injustice, disparity of wealth on one side and poverty on another side, unfair trade policies, excesses and tax fraud and abuse. These present the challenges to be changed from below constitutes a major breakthrough on the question of emancipation as a ‘self-emancipation’ of the working class acting for itself.

Many on the message board talk about what would happen when a default happens and money is worthless. All kinds of illusory ideas are posted is no surprise and quite consistent with the mystery surrounding money and finances. In truth, money has little to do with the struggle to impose austerity. Bank re-structuring has little to do with currency and circulation. Gold and Silver as Money or as a Universal Equivalent in the exchange of commodities is a type of capitalism of an earlier stage of development; a consequence of a retreat to gold as a universal equivalent would open the way for the largest bearer of gold reserves to rule over all markets and nations. Gold as a commodity is not Money. As a commodity is a finite substance but again has nothing to do with a bail out in exchange for deep cuts toward the elimination of social democratic states in Europe.

An impending crash of Wall Street provides the conditions for a transformation of society. The question remains which road does America go; toward a socialism or a social democracy in reconstructing its industrial base? Banks are at their weakest position in a crash that this second time around government ought to nationalize the banks to be broken up into smaller institutions and heavily regulated by law to facilitate economic growth and employment a second bail out, based on experience, will not produce!