Tag: Economy

One of the Biggest Ideas of 2013: The End of Growth

pizzoStephen Pizzo, retired journalist and astute observer of politics and society, has decided to focus his writing energy in 2013 on the truth that unbridled growth is a sustainable economic principle.

Pizzo, in his first column of the new year, points out that none of the political machinations that have gone on the past few years in DC, make any sense when viewed in the context of the new era of limits into which capitalism entered many years ago.

“Capitalism was a wildly successful scheme. It worked extraordinarily well for a couple of hundred years. But now is not then, and never will be again,” Pizzo says. “Now we enter into the age of limits. A time when the key ingredient of free market capitalism will no longer function; constant, year-on-year, month-on-month, quarter-on-quarter growth.

 Western democracies, founded on capitalism, have taken completely unthinking advantage of finite resources and then used those resources not only to create materialist societies, but also to pollute the air, land, and water on which all species on earth depend.

environment_limitsThe result: a completely unsustainable economic model. I believe that the economic transformation which the Western world is currently experiencing is the natural outgrowth of those ill-advised practices. Furthermore, I believe that even though we may already have passed the point of no return on the environment, we can begin to mitigate some of its more dire effects by radical behavioral modifications. Of those changes, none outside environmental influences is nearly as important as adjusting our economic model to thrive within the limits imposed by nature.

While I personally find environmental issues to be more interesting and significant than economic modeling, I applaud Pizzo for his decision to focus on the limits on growth this year.

Hang on, folks! It’s going to be a bumpy, adventuresome ride.

Time to Let Stock Market Lose Influence on Policy?

I find it mostly amusing and only occasionally infuriating that any time there’s a shift in any direction politically, the well-trained media cock their collective ears toward Wall Street, breathlessly report the movement the change triggered, and wring their hands in doom and gloom over downturns.

It’s time to drag the stock market down from its lofty perch as a major influencer of U.S. policy and recognize it for what it primarily is: a plaything of the rich largely manipulated by automatic trades triggered by computers at huge institutions. Allowing its numbers to define a broad national reaction to political policy is just plain dumb.

Stock Exchange Indexes Don’t Tell Us Squat About How the Economy is Faring

The stock exchanges — and more particularly their “indexes” — are, we are told, accurate readings of the public’s confidence in the economy. That is pure unadulterated tommyrot. Each company’s share price on any given day is determined by how its current shareholders and active stock players view the company’s performance. That’s it. If you watch and listen carefully, on any given day the index results are different for each sector of the economy. Technology is up and manufacturing is down one day. The next, transportation stocks are hammered but manufacturing makes a big rebound. The overall index fluctuates very little if at all so the media report the market as stable. But that’s a macro view.

And that macro view is governed in large part by huge institutions — mutual funds, labor unions, state government pension funds and others who hold a massive percentage of the stocks sold each day on the market. These shareholders are not making any actual bets on any given company; they are interested in minute-by-minute fluctuations of fractions of a penny because they own gigantic blocks of stock in a given company and can make a small fortune by flipping the stock multiple times over a span of minutes.

The media’s obsession with the daily changes in the indexes is a knee-jerk response to a perception that “people” who invest in the market are hanging on every shift in the numbers. Savvy investors who are not institutions often share one common characteristic: patience. My former stockbroker (I’ve been out of the market for 3 years now) told me, “If you invest in a stock and you live or die by its daily fluctuations, you will not live to enjoy the fruits of your investment. Let things ride unless there’s a really compelling reason to do something.” This from a guy who only made money if I ordered a transaction.

So let’s stop publishing and paying attention to these ridiculous, artificial indexes. (Heck, these days you can even invest in the indexes, which clearly have zero intrinsic value. It’s insane!) If we need a daily indicator of how we’re doing — and I’m not at all sure that’s healthy — let’s find something that works more intelligently and relevantly than what a bunch of institutional computers think is going on in the economy.

How About a Temporary Tax Fix?

Amidst all the talk of compromise in Washington over the fiscal sequetration referred to by its deliberately scary and misleading name, the “Fiscal Cliff,” both sides are hardening their previous positions.

President Obama says he will not sign any deal that doesn’t include a tax increase for the rich and Republicans maintain they won’t pass a bill that includes such a provision. All the rest of the phony compromise is just that, phony.

So here’s a thought.

How about if the parties agree to a temporary surtax on incomes above some threshold, the expiration of which is tied to the reducing of the National Debt to some agreed-upon level? Combine that with deferred programmatic spending cuts on the categories of spending about to be sequestered, including Defense, with those cuts kicking in as certain milestone achievements are reached toward further debt reduction.

It’s sort of like putting  a big, soft, fluffy mattress at the bottom of the over-hyped Fiscal Cliff.

 

On Jobs, Let’s Compare Apples to Apples

This week's jobs report said the economy only gained 96,000 jobs last month. That seems pathetic and the media have consistently played it that way.

But there's another way of thinking about this, a more realistic way that needs to be kept in mind as we make our choice for President in less than 60 days and that's by comparing numbers rather than taking them in isolation.

In context, George W. Bush was losing 750,000 jobs/month. To be gaining any jobs now is a huge improvement. Is 96,000 new jobs worth celebrating? It sure is for that nearly 100,000. And it gives hope to many who remain unemployed — even long term — that the situation isn't getting any worse.

Ask yourself how many jobs per month would be lost if McCain had won in '08? Or how many will be lost if Romney-Ryan wins this time? Sure, the recovery is slow. But it's a recovery, not the double-dip recession widely feared before President Obama was elected.

The President was right Thursday night. The Republican message is, "We left Obama a much bigger mess than anyone knew. In four years, he hasn't completely fixed it. So put us back in power." Nonsense.

“Pension Reform”? Don’t You Mean “Breach of Contract”?

I remember very well the heavy-duty sales pitches made by local and state government agencies trying to hire top-of-the-line graduates back in the 60's and 70's. "Sure you can make more money in the civil sector," they'd say, "but look at the retirement package you can get with us." The most egregious offender of this "take your pay later" crowd was the U.S. military, which lets people retire after just 20 years of service, often at age 40 or so, and then go to work full time without affecting their pension. 

Now the economic reality of deferring income while not building up reserves so you can pay it when due comes up to haunt them and what's their answer? Screw the workers who took lesser pay and benefits, put up with bureaucratic bullpuckey day in and day out, and whose retirement is now on the chopping block. Why? Simply, as always, because these folks don't have an organized, well-funded, corporate-heeled lobby to argue their cause.

If you and I agree that I'll work for you at half the pay I could get elsewhere in return for a more comfortable retirement and I fulfill my end of the bargain, by what standard of sanity or law can you now come and reduce or eliminate my retirement benefits by arguing you need the money now to keep going? Does your crappy planning (and in many cases outright fraud) mean I should be punished? And if you choose to do so, isn't it a clear breach of our original contract?

What in the world has gotten into this country besides good old-fashioned unregulated and unmitigated greed?

Self-Made or Built-Together? Book Debunks Crucial Myth

Salon.com today has a review of a new book that explodes the myth of the "self-made person" and in the process brings the conservative house of cards it barely supports crashing to the playing field. Maybe some of the craters will level that field if enough people pay attention.

The book, The Self-Made Myth: The Truth About How Government Helps Individuals and Businesses Succeed, is the work of Brian Miller and Mike Lapham. Using the technique of interviewing a number of well-known business leaders and weaving their stories together, the duo make the case that nobody does it entirely on their own any more, if ever they did. My favorite pull-quote:

Saying you did it all yourself and therefore don’t owe anybody anything is about as absurd (and self-centered) as saying that you raised yourself from babyhood, without any input from your parents, and therefore don’t have any further obligations to your family.

The centrality of this myth — it's the basis for almost all of the disingenuousness of the conservative socio-economic policy positions in the United States — makes this book extremely important reading.

Kunstler’s Reality Check: A Lot of Truth Cloaked in Nakedness

I'm no big fan of James Howard Kunstler, though I do find him uncommonly insightful at some points and vaguely if somewhat insanely humorous at others. But his current Web post entitled "Reality Check" makes some keen observations that I agree point toward some of the possible scenarios lying in front of us now as a nation and a world. I do not buy into his pessimism; I believe that humanity will come to recognize the problem before its extinction and that it will be willing to transform into a sustainable model of living on this planet. At least, I believe that is as probable as Kunstler's negative views of the outcome.

Kunstler, who was uncannily accurate in predicting what the world and the United States would look like in 2010, is unflinching in his presentation of what lies immediately ahead for a national and world economy which are creating the illusion of "recovery". Here are my favorite pull quotes, with the occasional kibitzing from yours truly.

We've entered a contraction that will seem permanent until we reach an economic re-set point that comports with what the planet can actually provide for us.

Sustainability is a recurring theme in this short, pessimistic think piece and I think it is perhaps the central question of our time. When the fear-mongers talk about the end of the world, what they really mean is the end of humanity as we know it. And that end seems to me inevitable without a sudden and dramatic course change. Here, I agree with Kunstler at least in principle. The re-set point is the key; if we can all move with relative speed and consensus toward a point that is sustainable by the planet on which we travel through space, we can survive and perhaps even thrive. Failing that, we will…ahem…fail that.

[O]ne of the main themes in this presidential election – not even stated explicitly – is the defense of the entitlement to a suburban lifestyle; in other words, a campaign to sustain the unsustainable.

Though corporations and giant institutions seem to rule our lives these days, they will soon go extinct. Anything organized at the giant scale is going to wobble and fall: 

 
IOW, not only is nothing too big to fail, but it seems possible in Kunstler's view that all big things are destined to fail.

Eventually we'll have to face it: the fossil fuel age is ending and there are no miracle rescue remedies waiting to come on-stage.

 Some scientists think it is already too late to stave off the calamity of the end of fossil fuel's relatively free availability because we've dallied in the world of cars for too long.

We're not going to "tech" our way through the array of mega-problems we face… We're heading instead into a "time-out" from technological progress, duration unknown….

I'm not sure about this one. But it is certainly harder than it has ever been to see with any clarity a path by which tech innovation can begin to cope with the staggering scope and nature of the problems facing us as a race at a rapid enough pace to overtake the huge shift looming just over the horizon.

Our towns, counties, and states are all going broke and will not be able to keep the stupendous roadway system in repair. That's a major reason why we have to return to living in walkable towns instead of disaggregated suburbs, and why we desperately need to repair the regular (not high-speed) rail system.

Amen. We forget that the highway system in this country was built to make it possible for the automobile and its associated industries to succeed. At a time when so many of the raisons d'etre and merits of an automobile-based culture are fading rapidly in the side view mirror (where this problem, at least, is really closer than it appears), we are going to have ask ourselves the real value of maintaining the roadways for a population increasingly interested in creating sustained, walkable, self-contained communities.

For the moment, all leadership in America has drunk too much Kool-aid, all of it lacks conviction and competence, none of it wants to enter the actual future.

And the question is whether we will emerge from this moment focused on sustainability or on "restoring" a dream that is no longer sustainable and no longer viable even in the near term.

Maybe Stock Market Isn’t the Right Gauge?

Let me see if I get this.

The country is driven to the very brink of defaulting on its national debt because the government is unable to act on legislation that was purposely overly complicated by both sides.

We're told that if that logjam isn't dealt with on time, our bond rating could be affected and the stock market could tumble.

A "compromise" is reached. (Don't get me started.) The crisis is averted, at least in the main.

The next day, our bond rating is unchanged but the forecast for the bond rating is downgraded severely. Given that bonds are always trading on the future, this seems at least similar to a downgrade in the bond rating itself, just not of the same immediate effect.

And, oh, yeah. The stock market plummets anyway. This time, the excuse given for the drop is investor concern about the slowness of the recovery. A slowness that has just been greatly exacerbated by the passage of a "compromise" debt ceiling bill that both parties are guilty of mangling worse than anyone could have imagined a year ago. 

So Wall Street drops if we don't raise the debt ceiling. It encourages the irrational and almost unprecedented tying-together of the debt ceiling (which deals with debt already incurred) and upcoming budgets (which do not deal with debt already incurred, duh). Then when it gets what it wants, it plummets out of concern for the consequences of its actions.

Maybe we need to find a better barometer of our nation's economic state than the Stock Market, which has actually long ago stopped being a valid indicator of economic movement because of the day trading and automatic triggering brought to bear in the past 15-20 years.