America Swallowed Economic Poison in 1980

Londoner

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Jul 17, 2010
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Reagan told us to give corporations more power. He said that if we allowed them to keep more money and regulate themselves, the efficiency gains would lead to more jobs, more investments, more innovation, and cheaper prices.

Reagan told us that socialism was inefficient, not least because it destroys incentives and draws resources away from our most productive citizens. I think this is reasonable, but a funny thing happened on the way to privatization.

Which is to say...

The corporate consolidation of power over politics and the economy has been achieved by socializing cost (subsidies) and risk (bailouts). In many ways, the private sector has always been parasitic on government, i.e., not private at all. The Cold War Pentagon created most of the major technological advances in consumer electronics, communications, & aerospace technology. Corporations captured, privatized, and monopolized these public investments on behalf of a narrow group of shareholders- thus precluding the public from getting a return on that investment (-this is why cities and infrastructure rot as resources are pumped narrowly into a porky no-bid special interest machine. How do you think Eli Lilly crushed foreign drug competition, or Big Oil crushed the first electric car movement? Capital doesn't want competition. Capital doesn't want less government. To the contrary, it wants a dynamic, interventionist government to protect its special interests. What if the noble revolution in privatization since 1980 has been an Orwellian hoax? What if capital doesn't want privatization? What if it wants all the government help it can steal from the public?).

Giving capital lower labor costs benefits us all!
Not exactly. The war on labor and government-protected middle class living-standards has resulted in wages that cannot support consumption - thus, there is no incentive for capital to add jobs or innovate, that is, there is no demand to capture. Reagan never told us about this part.

(He also didn't tell us that...)

Underfunding consumption and overfunding capital leads to terrible consequences on both ends: 1) Consumption, no longer grounded by solid wages and benefits, is driven ex nihilo by debt (credit cards), and 2) capital, lacking genuine demand-based investment opportunities for their surplus, must invent phantom instruments ex nihilo to maintain high returns (see derivatives, hedges, as well as oil & currency speculation)

This is where the Bush tax cuts went: risky, phantom, ponzi derivative garbage. Why? - because there was no demand to warrant investment in the real economy. Reaganomics does not adequately account for the need to have an effective balance between capital and labor; it doesn't understand that the middle class is too big to fail. Meaning: without an effective wage, benefit, and entitlement base to make average consumers solvent, there is insufficient money for consumption... and the economy dies.

Again. Reaganomics created the perfect storm: consumers (having lost wages, benefits, and entitlements) turned increasingly to debt-based consumption ("death by Visa & crazy Mortgage"), while capital (having no demand to "invest" in) increasingly relied upon phantom, risky garbage to maintain high returns.

Welcome to it America. We have seen unprecedented profits in energy, health insurance, retail (e.g.,Walmart), biotechnology, pharmaceuticals, etc. Unprecedented profits. Reagan told us that these profits would trickle down into higher employment and greater benefits. He said it would make the middle class consumer stronger (as he, Bush & Clinton quietly handed consumers credit cards and ALT-A's to make up for the fact that the money stopped trickling down).

It is now apparent that Reagan's labor policies were designed not to make the middle class stronger, but to allow capital to bypass the American middle class in favor of 3rd world sweatshops. [Remember: ultra cheap labor is the goal of capital]. This is why we have seen capital flight to unstable regions, and an explosion of the Pentagon budget to protect 3rd world supply chains. Do you know where our imports come from? Do you know where oil comes from? Capital depends on evil "dictator controlled economies" which repress labor, paying them pennies an hour, making them live in holes. In order to extract resources and labor from these unstable places that wage war on their own people, capital requires massive military (public) assistance to keep their products and profits flowing. Capital depends on heavily repressed labor forces because this lowers costs and increases profits, especially when capital can move the military cost to the taxpayer (i.e., socialize the costs!).

This is the dirty little secret of capitalism: it depends on a highly interventionist government.

Therefore, since relaxing the tax, labors, and regulatory burden on capital, we have seen the opposite of what Reagan promised: the jobs have disappeared and the benefits have been cut. For 30 years, we have seen less and less investment in American jobs, and more capital flight to freedom hating, cheap labor countries. Capitalism has made our enemies stronger and the American middle class weaker. Only the profit (and not the jobs) remain in this country -- but that profit doesn't go to the public who pays the military costs of stabilizing 3rd world supply chains -- nope; it concentrates inside the pockets of the wealthy, who dole it out to politicians and media in order to create the legal, regulatory and disinformation to keep the ruse going.

What's the ruse? Republican voters believe that tax cuts go to American jobs. Wrong. Half the tax cuts get "invested" into Washington in order to acquire the legal, regulatory, and military conditions to access 3rd world labor. The other half gets invested into conservative media sources in order to convince people that the tax cuts are actually trickling down to American jobs. Brilliant!

Reaganomics destroyed all the legal, financial, and regulatory structures that grounded middle class demand. Then it tried to fix the demand problem with debt, and the investment problem with derivatives and over-leveraged garbage.

(and Republican voters still don't see it. They just keep parakeeting dogma about tax cuts, as if it were still 1970 and the problem was inflation)

America swallowed poison in 1980. The patient is almost dead.
 
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And the whole world fell for it.

Quite amazing that the healthiest economies now are in the communist countries, eh?
 
Reagan told us to give corporations more power. He said that if we allowed them to keep more money and regulate themselves, the efficiency gains would lead to more jobs, more investments, more innovation, and cheaper prices.

Reagan told us that socialism was inefficient, not least because it destroys incentives and draws resources away from our most productive citizens. I think this is reasonable, but a funny thing happened on the way to privatization.

Which is to say...

The corporate consolidation of power over politics and the economy has been achieved by socializing cost (subsidies) and risk (bailouts). In many ways, the private sector has always been parasitic on government, i.e., not private at all. The Cold War Pentagon created most of the major technological advances in consumer electronics, communications, & aerospace technology. Corporations captured, privatized, and monopolized these public investments on behalf of a narrow group of shareholders- thus precluding the public from getting a return on that investment (-this is why cities and infrastructure rot as resources are pumped narrowly into a porky no-bid special interest machine. How do you think Eli Lilly crushed foreign drug competition, or Big Oil crushed the first electric car movement? Capital doesn't want competition. Capital doesn't want less government. To the contrary, it wants a dynamic, interventionist government to protect its special interests. What is the noble revolution in privatization since 1980 has been an Orwellian hoax? What if capital doesn't want privatization? What if it wants all the government help they can steal from the public?).

Giving capital lower labor costs benefits us all!
Not exactly. The war on labor and government-protected middle class living-standards has resulted in wages that cannot support consumption - thus, there is no incentive for capital to add jobs or innovate, that is, there is no demand to capture. Reagan never told us about this part.

(He also didn't tell us that...)

Underfunding consumption and overfunding capital leads to terrible consequences on both ends: 1) Consumption, no longer grounded by solid wages and benefits, is driven ex nihilo by debt (credit cards), and 2) capital, lacking genuine demand-based investment opportunities for their surplus, must invent phantom instruments ex nihilo to maintain high returns (see derivatives, hedges, as well as oil & currency speculation)

This is where the Bush tax cuts went: risky, phantom, ponzi derivative garbage. Why? - because there was no demand to warrant investment in the real economy. Reaganomics does not adequately account for the need to have an effective balance between capital and labor; it doesn't understand that the middle class is too big to fail. Meaning: without an effective wage, benefit, and entitlement base to make average consumers solvent, there is insufficient money for consumption... and the economy dies.

Again. Reaganomics created the perfect storm: consumers (having lost wages, benefits, and entitlements) turned increasingly to debt-based consumption ("death by Visa & crazy Mortgage"), while capital (having no demand to "invest" in) increasingly relied upon phantom, risky garbage to maintain high returns.

Welcome to it America. We have seen unprecedented profits in energy, health insurance, retail (e.g.,Walmart), biotechnology, pharmaceuticals, etc. Unprecedented profits. Reagan told us that these profits would trickle down into higher employment and greater benefits. He said it would make the middle class consumer stronger (as he, Bush & Clinton quietly handed consumers credit cards and ALT-A's to make up for the fact that the money stopped trickling down).

It is now apparent that Reagan's labor policies were designed not to make the middle class stronger, but to allow capital to bypass the American middle class in favor of 3rd world sweatshops. [Remember: ultra cheap labor is the goal of capital]. This is why we have seen capital flight to unstable regions, and an explosion of the Pentagon budget to protect 3rd world supply chains. Do you know where our imports come from? Do you know where oil comes from? Capital depends on evil "dictator controlled economies" which repress labor, paying them pennies an hour, making them live in holes. In order to extract resources and labor from these unstable places that wage war on their own people, capital requires massive military (public) assistance to keep their products and profits flowing. Capital depends on heavily repressed labor forces because this lowers costs and increases profits, especially when capital can move the military cost to the taxpayer (i.e., socialize the costs!).

This is the dirty little secret of capitalism: it depends on a highly interventionist government.

Therefore, since relaxing the tax, labors, and regulatory burden on capital, we have seen the opposite of what Reagan promised: the jobs have disappeared and the benefits have been cut. For 30 years, we have seen less and less investment in American jobs, and more capital flight to freedom hating, cheap labor countries. Capitalism has made our enemies stronger and the American middle class weaker. Only the profit (and not the jobs) remain in this country -- but that profit doesn't go to the public who pays the military costs of stabilizing 3rd world supply chains -- nope; it concentrates inside the pockets of the wealthy, who dole it out to politicians and media in order to create the legal, regulatory and disinformation to keep the ruse going.

What's the ruse? Republican voters believe that tax cuts go to American jobs. Wrong. Half the tax cuts get "invested" into Washington in order to acquire the legal, regulatory, and military conditions to access 3rd world labor. The other half gets invested into conservative media sources in order to convince people that the tax cuts are actually trickling down to American jobs. Brilliant!

Reaganomics destroyed all the legal, financial, and regulatory structures that grounded middle class demand. Then it tried to fix the demand problem with debt, and the investment problem with derivatives and over-leveraged garbage.

(and Republican voters still don't see it. They just keep parakeeting dogma about tax cuts, as if it were still 1970 and the problem was inflation)

America swallowed poison in 1980. The patient is almost dead.

Are the Brits still pissed off about that little document from 1776?:lol:
 
Reagan told us to give corporations more power. He said that if we allowed them to keep more money and regulate themselves, the efficiency gains would lead to more jobs, more investments, more innovation, and cheaper prices.

Reagan told us that socialism was inefficient, not least because it destroys incentives and draws resources away from our most productive citizens. I think this is reasonable, but a funny thing happened on the way to privatization.

Which is to say...

The corporate consolidation of power over politics and the economy has been achieved by socializing cost (subsidies) and risk (bailouts). In many ways, the private sector has always been parasitic on government, i.e., not private at all. The Cold War Pentagon created most of the major technological advances in consumer electronics, communications, & aerospace technology. Corporations captured, privatized, and monopolized these public investments on behalf of a narrow group of shareholders- thus precluding the public from getting a return on that investment (-this is why cities and infrastructure rot as resources are pumped narrowly into a porky no-bid special interest machine. How do you think Eli Lilly crushed foreign drug competition, or Big Oil crushed the first electric car movement? Capital doesn't want competition. Capital doesn't want less government. To the contrary, it wants a dynamic, interventionist government to protect its special interests. What is the noble revolution in privatization since 1980 has been an Orwellian hoax? What if capital doesn't want privatization? What if it wants all the government help they can steal from the public?).

Giving capital lower labor costs benefits us all!
Not exactly. The war on labor and government-protected middle class living-standards has resulted in wages that cannot support consumption - thus, there is no incentive for capital to add jobs or innovate, that is, there is no demand to capture. Reagan never told us about this part.

(He also didn't tell us that...)

Underfunding consumption and overfunding capital leads to terrible consequences on both ends: 1) Consumption, no longer grounded by solid wages and benefits, is driven ex nihilo by debt (credit cards), and 2) capital, lacking genuine demand-based investment opportunities for their surplus, must invent phantom instruments ex nihilo to maintain high returns (see derivatives, hedges, as well as oil & currency speculation)

This is where the Bush tax cuts went: risky, phantom, ponzi derivative garbage. Why? - because there was no demand to warrant investment in the real economy. Reaganomics does not adequately account for the need to have an effective balance between capital and labor; it doesn't understand that the middle class is too big to fail. Meaning: without an effective wage, benefit, and entitlement base to make average consumers solvent, there is insufficient money for consumption... and the economy dies.

Again. Reaganomics created the perfect storm: consumers (having lost wages, benefits, and entitlements) turned increasingly to debt-based consumption ("death by Visa & crazy Mortgage"), while capital (having no demand to "invest" in) increasingly relied upon phantom, risky garbage to maintain high returns.

Welcome to it America. We have seen unprecedented profits in energy, health insurance, retail (e.g.,Walmart), biotechnology, pharmaceuticals, etc. Unprecedented profits. Reagan told us that these profits would trickle down into higher employment and greater benefits. He said it would make the middle class consumer stronger (as he, Bush & Clinton quietly handed consumers credit cards and ALT-A's to make up for the fact that the money stopped trickling down).

It is now apparent that Reagan's labor policies were designed not to make the middle class stronger, but to allow capital to bypass the American middle class in favor of 3rd world sweatshops. [Remember: ultra cheap labor is the goal of capital]. This is why we have seen capital flight to unstable regions, and an explosion of the Pentagon budget to protect 3rd world supply chains. Do you know where our imports come from? Do you know where oil comes from? Capital depends on evil "dictator controlled economies" which repress labor, paying them pennies an hour, making them live in holes. In order to extract resources and labor from these unstable places that wage war on their own people, capital requires massive military (public) assistance to keep their products and profits flowing. Capital depends on heavily repressed labor forces because this lowers costs and increases profits, especially when capital can move the military cost to the taxpayer (i.e., socialize the costs!).

This is the dirty little secret of capitalism: it depends on a highly interventionist government.

Therefore, since relaxing the tax, labors, and regulatory burden on capital, we have seen the opposite of what Reagan promised: the jobs have disappeared and the benefits have been cut. For 30 years, we have seen less and less investment in American jobs, and more capital flight to freedom hating, cheap labor countries. Capitalism has made our enemies stronger and the American middle class weaker. Only the profit (and not the jobs) remain in this country -- but that profit doesn't go to the public who pays the military costs of stabilizing 3rd world supply chains -- nope; it concentrates inside the pockets of the wealthy, who dole it out to politicians and media in order to create the legal, regulatory and disinformation to keep the ruse going.

What's the ruse? Republican voters believe that tax cuts go to American jobs. Wrong. Half the tax cuts get "invested" into Washington in order to acquire the legal, regulatory, and military conditions to access 3rd world labor. The other half gets invested into conservative media sources in order to convince people that the tax cuts are actually trickling down to American jobs. Brilliant!

Reaganomics destroyed all the legal, financial, and regulatory structures that grounded middle class demand. Then it tried to fix the demand problem with debt, and the investment problem with derivatives and over-leveraged garbage.

(and Republican voters still don't see it. They just keep parakeeting dogma about tax cuts, as if it were still 1970 and the problem was inflation)

America swallowed poison in 1980. The patient is almost dead.

I bet I know what you swallowed in 1980. And you continue to do so today...
 
"Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power."

Benito Mussolini, Fascist dictator of Italy
 
Good post and absolutely true. I wish more 'murkins would wake up... I won't hold my breath though... Idol's on and there might be a wedding of "the gay" that needs to be stopped somewhere. The corporations have us exactly where they want us, teetering on the verge of collapse and third world standards of living. They'll pick our corpse and move on to some other country. Look what the corporation backed IMF has done in the past to other countries with their horrific "shock therapy", and is now trying to do to Ireland. Sickening.
 
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This is the dirty little secret of capitalism: it depends on a highly interventionist government.

2000 Cochabamba protests - Wikipedia, the free encyclopedia

Protests and state of emergencyDemonstrations erupted when Aguas del Tunari imposed a large rate increase, reportedly to finance the Misicuni Dam project, a week after taking control of the Cochabamba water supply system. In a country where the minimum wage was less than US$70 per month, many dwellers were hit with monthly water bills of $20 or more.

Starting in early January 2000 massive protests in Cochabamba began with Oscar Olivera among the most outspoken leaders against the rate hikes and subsequent water cut-offs.[8][10] The demonstrators consisted of regantes (peasant irrigators) who entered the city either under village banners, or carrying the wiphala; they were joined by jubilados (retired unionized factory workers) under the direction of Olivera [1] and cholitas.[1] Young men began to try to take over the plaza and a barricade across incoming roadways was set up.[1] Soon they were joined by pieceworkers, sweatshop employees, and street vendors (a large segment of the economy since the closure of the state-owned tin mines).[1] Self-styled anarchists from the middle-classes came from the University of Cochabamba to denounce the World Bank and International Monetary Fund and neoliberalism.[1] The strongest supporters of the demonstration were drawn from the city's growing population of homeless street children.[1]

Protesters were able to halt Cochabamba's economy by holding a general strike that shut down the city for four straight days.[10] A ministerial delegation went to Cochabamba and agreed to roll back the water rates; still the demonstration continued.[1] On February 4, 2000, thousands marching in protest were met by troops and law enforcement from Oruro and La Paz.[1][10] Two days of clashes occurred with the police using teargas.[10] Almost 200 demonstrators were arrested; 70 protesters and 51 policemen were injured.[1]

Throughout March 2000 the Bolivian hierarchy of the Roman Catholic Church tried to mediate between the government and the demonstrators. In the meantime, the Coordinadora made their own referendum and declared that out of fifty thousand votes, 96% demanded the contract with Aguas del Tunari be cancelled.[1] The government's reply was that "There is nothing to negotiate."[1]

In April 2000, demonstrators again took over Cochabamba's central plaza. When the leaders of the Coordinadora (including Óscar Olivera) went to a meeting with the governor at his office they were arrested. Though they were released the following day, some, fearing further government action, fled into hiding. More demonstration leaders were arrested, with some being transferred to a jungle prison in San Joaquin, a remote town in the Amazon rainforest on the border with Brazil.[1][11] The demonstrations spread quickly to other areas including La Paz, Oruro, and Potosí as well as rural areas. The protesters also expanded their demands calling on the government to resolve unemployment and other economic problems.[8] Soon demonstrators had most of the major highways in Bolivia barricaded.[1] The protest even inspired officers in four La Paz police units to refuse to leave their barracks or obey superiors until a wage dispute was settled.[11]
 
reaganomics.jpg
 
We've had about 40 years of supply side policies advanced by both the Democratic and Republican parties.

How it working out for us?
 
well Editec, according to a former Reaganista....>

Reagan insider: GOP destroyed economy Paul B. Farrell - MarketWatch

How my G.O.P. destroyed the U.S. economy." Yes, that is exactly what David Stockman, President Ronald Reagan's director of the Office of Management and Budget, wrote in a recent New York Times op-ed piece, "Four Deformations of the Apocalypse."


Yes, Stockman is equally damning of the Democrats' Keynesian policies. But what this indictment by a party insider -- someone so close to the development of the Reaganomics ideology -- says about America, helps all of us better understand how America's toxic partisan-politics "holy war" is destroying not just the economy and capitalism, but the America dream. And unless this war stops soon, both parties will succeed in their collective death wish.

<snip>


In the past 40 years Republican ideology has gone from solid principles to hype and slogans. Stockman says: "Republicans used to believe that prosperity depended upon the regular balancing of accounts -- in government, in international trade, on the ledgers of central banks and in the financial affairs of private households and businesses too."

No more. Today there's a "new catechism" that's "little more than money printing and deficit finance, vulgar Keynesianism robed in the ideological vestments of the prosperous classes" making a mockery of GOP ideals. Worse, it has resulted in "serial financial bubbles and Wall Street depredations

<snip>


Remember Friedman: "Just let the free market set currency exchange rates, he said, and trade deficits will self-correct." Friedman was wrong by trillions. And unfortunately "once relieved of the discipline of defending a fixed value for their currencies, politicians the world over were free to cheapen their money and disregard their neighbors."

And without discipline America was also encouraging "global monetary chaos as foreign central banks run their own printing presses at ever faster speeds to sop up the tidal wave of dollars coming from the Federal Reserve." Yes, the road to the coming apocalypse began with a Republican president listening to a misguided Nobel economist's advice.


<snip>


OK, stop a minute. As you absorb Stockman's indictment of how his Republican party has "destroyed the U.S. economy," you're probably asking yourself why anyone should believe a traitor to the Reagan legacy. I believe party affiliation is irrelevant here. This is a crucial subject that must be explored because it further exposes a dangerous historical trend where politics is so partisan it's having huge negative consequences.



<snip


Stockman continues pounding away: "The third ominous change in the American economy has been the vast, unproductive expansion of our financial sector." He warns that "Republicans have been oblivious to the grave danger of flooding financial markets with freely printed money and, at the same time, removing traditional restrictions on leverage and speculation." Wrong, not oblivious. Self-interested Republican loyalists like Paulson, Bernanke and Geithner knew exactly what they were doing.

They wanted the economy, markets and the government to be under the absolute control of Wall Street's too-greedy-to-fail banks. They conned Congress and the Fed into bailing out an estimated $23.7 trillion debt. Worse, they have since destroyed meaningful financial reforms. So Wall Street is now back to business as usual blowing another bigger bubble/bust cycle that will culminate in the coming "American Apocalypse."

Stockman refers to Wall Street's surviving banks as "wards of the state." Wrong, the opposite is true. Wall Street now controls Washington, and its "unproductive" trading is "extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives." Wall Street banks like Goldman were virtually bankrupt, would have never survived without government-guaranteed deposits and "virtually free money from the Fed's discount window to cover their bad bets."


<snip>


As the apocalypse draws near, Stockman sees a class-rebellion, a new revolution, a war against greed and the wealthy. Soon. The trigger will be the growing gap between economic classes: No wonder "that during the last bubble (from 2002 to 2006) the top 1% of Americans -- paid mainly from the Wall Street casino -- received two-thirds of the gain in national income, while the bottom 90% -- mainly dependent on Main Street's shrinking economy -- got only 12%. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy."
 
It boogles the mind how these people still get some Americans to buy the trickledown crap
 

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