I had one of those "A-ha!" moments recently.
I was engaged in an email dialogue with a moderately prominent individual active in America's international trade relations. He's a former high-ranking public official, important enough to matter but not a household name. You might recognize him if you follow trade politics closely. Democrat, left-of-center, but nothing radical.
Anyhow, what I realized, in the course of this discussion, was that we were, in fact, arguing at cross purposes.
I viewed the American economy as a thing whose purpose is to provide income and a living standard to Americans.
He viewed it as a thing whose purpose was to provide a platform for projecting power in the world.
I mean, he didn't say it quite so explicitly, but that was the bottom line of every train of argument we pursued. It was the only interpretation of his words under which they made any sense.
I can't give you any more details because of my need to respect confidentiality. But I think his attitude explains a lot about how we are governed, because I think this is how America's ruling elite really thinks.
I believe our ruling elite isn't merely greedy for money. I believe they're also greedy for something far worse. I believe they're also greedy for world power beyond any extent to which this either serves American national security -- or, for that matter, makes them richer.
I believe they privately view this country as their horse, upon which they ride in a global jousting tournament with rival elites. And they only really care about America, and the strength of its economy, insofar as it gives them a better horse to ride on.
The rest of the time, they're mainly thinking about how to keep the horse obedient, hard at work, cheaply fed, and docile. That's their goal as they pull the strings of both parties.
Why? Because power itself is a direct emotional stimulant, a tonic for the ego. So our foreign relations, including our trade relations, don't need to have any direct connection to economics.
So our economic policy isn't about economics.
Everyone has an ego, and the pleasures of the ego are just as real as the pleasures of driving a nice car, eating well, or living in an expensive house. So, once you've got plenty of money, why would money be more important than power?
It wouldn't.
Poor naïve old Karl Marx had no idea. He thought everything elites do is about money, albeit often money dressed up as something else. "Men's material life determines their consciousness," he used to say.
Wrong. People's emotions determine their consciousness, and they only care about money because of the emotional satisfactions it accords. So power politics can easily wind up in the driver's seat of economic policy.
All obvious enough, once baldly stated. But this isn't the standard assumption of our political discourse. The standard assumption is that economic policy, including trade policy, is about economics.
Nobody openly says, "We need economic policy X because it will enable us to throw our weight around, regardless of the economic consequences." But that's how our policymakers often think.
This disconnect explains why so much of our economic policy makes no sense. It's not even trying to make sense as economic policy.
Instead, our rulers have been running this country's trade relations with the rest of the world with the sophistication of a high-school clique in a lunchroom contest with rival cliques.
The new Trans-Pacific partnership, for example? This has less economic logic to it than the euro. It's all about showing China that we have more friends in that part of the world than they do.
The whole thing was actually dreamed up by the government of Singapore, which is culturally mostly Chinese but still feels the need to remind Beijing it's not their lapdog.
Think serious governments with trillions in GDP and nuclear weapons don't engage in childish contests over prestige and ego? Think again.
Of course, all the cool kids in the lunchroom have a shared identity as cool kids, and these rival cliques can get together in a flash when something unites them against the uncool. That's why they throw a party for themselves at Davos every year.
The uncool? That's you and me, friend: the populists, the mass citizenry, ordinary folk and the politicians -- they still exist, here and there -- who serve our interests.
We the Peasants.
We, in the elite's eyes, are the boring nobodies, the unsophisticated rubes watching television and eating corn dogs in places like Indiana where no member of the elite would dream of living.
They'd never admit it, but they positively enjoy our inferiority. They enjoy the sense of their own superiority that our own pathetic unhipness gives them.
They pretend to wrinkle their noses in disgust, but they actually find our existence reassuring. Because you can't be superior without being superior to somebody.
What the elite likes even more is the feeling of dominating us, the feeling of cracking the whip and digging their spurs into the side of the horse. I suspect they even enjoy a bit of pushback, as overcoming it makes them feel more powerful.
I also think they enjoy seeing a bit of pain. I think it's an unstated thrill for them to know that Detroit is in ruins because they decreed that it should be. It's like tossing the vodka glasses into the fireplace when you're finished with them.
Usually this thrill is deeply sublimated in technocratic blather about "shifting comparative advantage in industry" and "creative destruction being the basis of economic growth," but the underlying feeling is the same: the joy of watching the world be dominated by you and your friends.
Some readers probably think I'm nuts for saying all this. Surely serious economic decisions made on computer spreadsheets in shiny glass skyscrapers can't be about something so base? Isn't power something clean and technocratic, not some weird Freudian morass? Isn't this all just too subjective?
Well, no. I don't think power is cool and rational. I don't think economics is. And I'm not the first economist to realize this. Not to deflate my own bubble here, but every idea in this article is stolen straight from Thorstein Veblen.
He's the once-famous American economist (1857-1929) mainly remembered today for his book The Theory of the Leisure Class.
What's more incredible is that he was once elected president of the American Economic Association. If you're not an economist, that latter fact probably doesn't mean much to you. But it should. Because it means that economists once understood how base -- and uneconomic! -- are the impulses that drive economic reality.
Lost in their mathematical ice castles, they mostly don't anymore. It's economics as if people were robots.
Anyhow, this all suggests to an interpretation of what may be going on with Romney and Obama right now.
Romney, I increasingly suspect, represents a section of the establishment that is finally starting to fear that the hollowing out of the American economy, and our craven economic surrender to China, may have gone too far for the good of America's ruling elite.
So they're willing to cut the peasants -- you and me -- some slack, because they need to. That's why Romney may well genuinely mean what he says about cracking down on China's abusive trade relations with the United States. Which would go a long way towards solving the trade mess that has put a damper on everything we've tried to do to revive our economy.
In some sense, this is obviously good news. Our rulers have realized they can't starve the horse they're riding on. One might wish for better motivations, but at least they've gotten the point.
They've had a good run starving their obedient horse for profit, but the grown-ups among them know they can't take this too far, or they risk ending up riding a dead horse. Or -- less likely but still possible -- electing a genuinely populist government that would take a chunk of their money away and give it to the plebes.
My guess is that if Romney is elected, the strings will be pulled to create an economic recovery in fairly short order. Strings like choking imports to force our trade back into balance, which would redirect hundreds of billions dollars a year of demand back into our own economy, ending the leakage that has sabotaged Obama's Keynesian "pump priming" so far.
Then, when recovery comes (as it eventually would have anyway), Romney can pose as the new Ronald Reagan, coast to a second term, and leave Obama as discredited as Jimmy Carter. A whole new myth cycle of Democratic recession and Republican recovery will be created, and the Republican party will have bought itself another 20-year lease on life.
I don't traffic in conspiracy theory, but it's not beyond imagination that this same establishment helped Obama into power in 2008 precisely in order to discredit economic liberalism by handing an unready candidate a situation of which nobody could have made good. A poisoned chalice for an unready prince.
Tricky, huh? Well, don't forget that these guys are good.
After all, they rule the world. We don't.
 |
 |
|
| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
http://en.wikipedia.org/wiki/APEC_Russia_2012
This island was almost completely undeveloped, look at Google Earth.
54.00.50 N
51.20.00 E
But suddenly a university and the largest cable-stayed bridge in the world is being constructed to go to the Island with an original population of only 5 thousand. Why? Because the globalist elites are meeting there in 2012. Olympic sized spending for a bunch of globalist elites.
There is also talk of guest worker abuse. Slave labor and globalism.
http://www.themoscownews.com/news/20110902/188997959.html
This is the most fascinating part to me: to what extent conservatives and plutocrats intentionally use the threat layoffs and diminished job creation to control public policy. If the people vote for some economic or environmental policy they don't agree with, the "job creators" will tell us that they're losing confidence and will have to start firing people. And as we shred the safety net, again in response to job creator's diminished confidence, the tactic will become even more powerful: the majority of people will be more dependent than ever on the job creators' willingness to hire.
Better stated than I ever could. Exactly on the mark down to the choice-less election politics.
Our masters play an age-old game on a global scale. The sad part is that it always ends the same way. Pointless and wasteful.
Thanks for the great post.
Each of these principles generally affects each of the others, and each is very important.
These subjects need to be understood by the General Public.
Economics is not that complicated.
These economic principals are interlocked with simple and easily understandable cause and effect principals of various economic action options that can be totally understood by almost any High School Graduate, and/or most High School Drop outs.
Only a very low level of understanding of high school mathematics is needed to understand economics.
If the US product costs and price is many times the cost and price of a foreign made imported item, which item will the US consumer buy? How can the US factory stay in business if it has competition with another company using foreign labor.
It is unpatriotic and maybe treasonous for the last three Democrat and Republican Presidents, members of the US congress and members of the US Senate to create the "FREE TRADE AGREEMENT" laws that ECONOMICALLY REQUIRED our US businesses to move their US factories overseas and lay off all of the US employees in order to take advantage of lower labor and environmental costs available in foreign countries.
American workers and small business owners are the real victims of this brand of economics.Workers because they have to compete with slave labor around the world which is used to enrich the very few and small business owners which continue to see fewer and fewer customers coming through their doors. If we could somehow bring these two groups together in common cause to reshape our economic policy then we will have gone a long way in reshaping and improving our economic future.
The answer my friends is to fashion an American economic populism that will translate to political populism and by doing so empower American workers,American small businesses,and yes our government to provide a new American Dream to millions of our fellow citizens.
Another is the high school clique mentality, which I see often in policy makers. It is impossible for most policy-makers (and many economists) to defy prevailing wisdom, even when our cumulative trade deficit reaches 6 trillion dollars, and our economy is de-industrializing.
Joseph Stiglitz also makes one of Ian's arguments; he anticipates deTocqueville's "self-interest, properly understood." The wealthy and powerful need political stability and prosperous customers, so they will moderate their greed and short-termism.
Of course, if the wealthy and powerful are, in fact, addicted to wealth and power, then that hope is ill-placed. History is rich in examples of greed and pursuit of wealth overwhelming our sense of self-interest, properly understood.
Hope you post more often as we approach the election.
Our President Obama on June 08, 2012 said, "The U.S. economy is pulled by two mules, the government and the private sector. One mule, the private sector, may be a little thin, but it is actually doing some halfway decent pulling. The government mule, on the other hand, is dead and buzzing with flies. Relative to that mule, the private mule is indeed "fine.", and that statement is entirely untrue.
I say that the Government mule is actually pulling the US economy in the opposite direction that the private sector mule is pulling.
The” private sector" mule also has to give up some of his hard earned feed to feed the government mule.
The bureaucratic government employee’s payroll costs (wages, medical and retirement) at every level of government and other government activities (contracts, grants, loans) are NET CONSUMERS of the nation’s financial and economic resources, and they DO NOT CONTRIBUTE to the creating any new financial resources or NATIONAL WEALTH that might be available to be taxed to collect money to spend on various government activities.
These freshly printed paper US Dollars (and electronic credits) and the freshly printed paper US Treasury Bonds that the US government periodically prints and sells at public auction (to get back US Dollars that US citizens paid to foreigners to make the consumer products that US citizens consumed) to pay for US government activities have absolutely NO VALUE, except that the US government is allowing these Dollar denominated security items to be redeemed to purchase title to (corporations that own) privately owned businesses, movie houses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other privately owned NATIONAL WEALTH and other assets located in the USA (that were created by previous US generations prior to de-industrialization) instead of redeeming these freshly printed paper US Treasury Bonds with gold from Ft. Knox.
The PIIGS nations are just emulating the US economic practice model.
I believe that the US capitalist system provided the US citizens with the highest standard of living in the world until our US government created the FREE TRADE AGREEMENTS, MFN for China, H.1.b. visas, and other legislation that economically required that US businesses take advantage of less expensive foreign labor and less expensive environmental compliance costs of face bankruptcy if those businesses kept their manufacturing jobs in the USA.
PRIVATELY HELD NATIONAL WEALTH and NON-GOVERNMENT JOBS are only made, created, and/or acquired when the members of a family or the citizen businessmen of a nation, city-state, island, tribe, family, etc., performs one or more of the following tasks:
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct a building that is permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
6. collect payment for patent and copyright uses;
and if they then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family, then that family is enriched.
The USA needs a bigger economic pie, not a bigger piece of the remaining economic pie that is shrinking daily for each citizen.
The US government is allowing the sales of title to everything of value in our country to foreign manufacturers and their governments in order to pay for US imports, US government activities, and the US government is calling this "Investing in America".
This is "sort-of like" US citizens selling our body parts to keep from working to make the things that Americans consume!
The main political goal should be to re-industrialize the USA in order to create new NATIONAL WEALTH and NEW JOBS in the USA.
http://www.epi.org/publication/webfeatures_viewpoints_global_strat_labor/
A Global Strategy for Labor | Economic Policy Institute
"...In most cases, international agreements are negotiated by elites that have more in common with each other than with working people in the countries that they represent. As a retired U.S. State Department official put it to me bluntly a few years ago, “What you don’t understand,” he said, “is that when we negotiate economic agreements with these poorer countries, we are negotiating with people from the same class. That is, people whose interests are like ours — on the side of capital.”
Thus, the fundamental purpose of neo-liberal polices of the past 20 years has been to discipline labor in every country in order to free capital from having to bargain with workers over the gains from rising productivity. Such bargaining is the essence of a democratic market system. Although labor is obviously better served when it is organized into trade unions to bargain with a unified voice, the bargaining between labor and capital goes on even if workers are unorganized.
[snip]
Uncontrolled globalization, in one stroke, puts government’s domestic policies decisively on the side of capital. In an economy that is growing based on its domestic market, rising wages help everyone because they increase purchasing power and consumer demand — which is the major driver of economic growth in a modern economy..."
International agreements are negotiated by elites because all negotiations are for the purpose of retaining and strengthening the status quo. All capital and property is protected by contracts written by the current powers, and if power changes international elites work to affirm existing agreements.
It’s so interesting to watch labor riots in Africa. The nerve of mere natives wanting thinking they deserve more form the multinational owners of resources.
Both of these major political parties are in favor of creating more and more free trade legislation, which destroyed US industries and the industrial employment opportunities for the average US working person.
I am looking for another political party that will work for the re-industrialization of the USA.
Emphasis on friends. The key to global power-seeking is that it's usually a team sport. The elite individually may enjoy power in and of itself, but I think most are much more attracted to being part of the collective. They need groupthink to reaffirm each other's ideas and commitment to "doing good" - or else heaven forbid they reexamine the premises they are working from.
Using "sound economics" is perfect for those seeking to justify state interventions of any kind. Since the field of economics runs the full gamut of "correct" answers, there is always a school of thought that will support any policy choice. The policy choices are made entirely for political reasons, of course, but can always be claimed to have been formulated to provide solutions according to the - (fill in the blank) - school of thought.
Military spending is the great proving ground, of course. The GOP mocks Keynesians, but cries that military cuts will cut government jobs (you know, the kind of jobs they SAY should be cut). Dems say we must cut military spending, but at the same time say we must CREATE more government jobs to stimulate the economy.