plutocracy

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Week Ending December 7th – Cliff Edition

This week we learned that nothing matters. Nothing. Not unless it’s about the Fiscal Cliff. Then it matters. Really, really matters.

Why?

Because serious people everywhere say so. And, as we all know or ought to know, serious people everywhere know what they’re talking about.

That the entire discussion is riven through with contradictions, errors, misconceptions, and lies, has no bearing. The Fiscal Cliff is all that matters. Unless we fix It the economy will plunge to its doom in a sea of red or black ink depending on which TV analyst you listen to.

Every aspect of other economic news is now interpreted through its impact on the Fiscal Cliff, or on how the Cliff affects it.

So the drop in consumer confidence is due to fears of the Cliff. The slowdown in hiring is because business fears the Cliff. Any hiccup on Wall Street is caused by market fears of … you know what. The entire universe is on deathwatch due to the great crisis about to engulf us.

Yes. The Cliff is a big deal.

Well not really. But that’s between you and me. Those of us who worry about the economy think the big issue remains how to jolt the economy from underutilization of resources back towards full utilization of those resources. We have an economy plugging along whilst leaving about 6% of its capacity idle. That’s a lot of wealth not being created. That’s a lot of lives going to waste. It’s an indecent and inhumane circumstance. It’s cruel. It is callous. But, since it doesn’t bear directly on the Cliff, no one cares.

The only reason we are talking at all about the Federal budget deficit and its impact on total government debt is because a few well financed right wing think tanks decided it was an issue. They created a campaign to get the attention of our nation’s elite, and succeeded beyond their wildest dreams. It was a brilliant marketing effort.

That the supposed crisis did not emerge from the state of our economy but from the imaginations of the think tanks is evidenced by the confusion that surrounds it.

Will going over the Cliff add or subtract from our debt? Both. It depends on the audience.

Will taxes go up? Or just tax revenues? What about tax rates? Will spending be cut? If so what? Does anyone have a plan to deal with the debt crisis anyway? A plan, that is, that doesn’t include anything that might hurt the elite. That seems to be important. Raising taxes on rich people or big business is a non starter. They generate jobs. It’s the  people who live off the job generators who ought to suffer. They add no value. Maybe they ought not be allowed to vote – that way they wouldn’t distort elections and the economy would be safe for job generators.

All of this has been discussed this week in one forum or another.

The muddle is such that no one now doubts the seriousness of the problem. Near panic is setting in. The situation calls for immediate action. And drastic action at that.

The Great Fiscal Cliff Caper, as I am sure historians will anoint it, is a shallow, venal, class motivated effort to prolong the hold of a few on the reins of our economy. There is no real basis for crisis. We do not have a debt problem and the majority of our deficit would fade away were we to address with any vigor the true problem: sluggish growth.

Greater growth would generate higher tax revenues. It would lower government spending by reducing crisis created transfer payments. And it would soak up our high level of underused resources. It would put in place a platform from which we could deal with whatever residual budgetary problems we imagine we have. Which apart from health care costs aren’t that many.

But, since our elite is largely unaffected by the lingering issues we have with slow growth, it is difficult for them to take it seriously. It is not, in their eyes, a serious issue at all. They immunized themselves during the crisis. They absolved themselves of blame. It wasn’t greed or shoddy banking. It wasn’t the accumulated effect of right wing economic policies. It wasn’t a market failure. It wasn’t a glitch in capitalism. It wasn’t deregulation. And it definitely wasn’t about inequality. No. It was about burgeoning government spending and reckless monetary policy.

They need to divert us from all this.

So they want to focus our energy on slaying mythical dragons. They whip up fear of hyperinflation caused by excessive money. Of – gasp – debt downgrades. Of excessive borrowing by poor people. Of – double gasp – the lack of affordability of entitlements. Yes. Those entitlements are the great satan. For if we are to afford to lug around all those dependent souls, that Romney 47%, we will have to tax the elite a little more. And that will cause such a ruckus at the polo club that we ought not do that. So let’s cut entitlements. The poor can afford it. The rich can’t.

But to do that we need to invent a crisis.

Let’s call it the Fiscal Cliff.

And the rest, as they say, is history.

It’s a lie, but if we all hold hands that lie can become a truth. No one must break ranks. The elite must discuss nothing else. Nothing else matters.

Not this week anyway.

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Update On The Economy

It’s been a long break occasioned by a string of visitors. What happened in the interim? Not a whole lot. Washington is now deeply immersed in the three ring circus known as the fiscal cliff, an event, we are told, so horrendous that we all ought to be prepared to sacrifice our preconceived notions of fairness in order to rush helter-skelter into a fudged ‘grand bargain’.

No thanks.

Meanwhile the economy muddles along.

It would be nice to see some of the energy being directed towards the entirely pointless fiscal cliff activities being diverted and put to better use. Like getting the economy onto a secure, sustainable growth path. In my dreams.

Still the economy is hobbling along by itself. Today we read the latest GDP numbers. This is the second estimate and represents quite a jump up from the first. According to the report GDP grew 2.7% during the third quarter, up from 1.3% in the second and 2.0% in the first. So on the face of things the economy appears to have picked up the pace.

The problem with this is that the first estimate of the third quarter had consumption considerably higher than the 1.4% in the current version. Likewise business investment, excluding inventories, actually declined rather than increasing as was reported before. These are signs of weakness not accelerating strength, so the top line numbers are somewhat deceiving.

Looking more deeply into the data it becomes obvious that much of the apparent strength during the third quarter came from inventory accumulation. This is an ambiguous source of growth. The question we need to ask is what caused businesses to build up their stocks. If it was anticipation of demand, then it might signal continued good growth. If it was an error created by a miscalculation of demand it may signal a retrenchment ahead and weakening growth. Nothing is ever simple. Looking through the lens of subsequent activity, especially reports of strong sales during the early part of this holiday season we can – for the moment – speculate that it is the former reason, not the latter. It looks as if businesses built stocks ahead of stronger sales, got the call right, and that activity will continue at a more rapid pace.

When we deconstruct the 2.7% overall growth we find it has the following components:

Personal consumption contributed +1.0%

Private investment contributed +0.1%

Inventory change contributed +0.8%

Net trade contributed +0.1%

Government spending contributed +0.7%

You can see clearly from this list the significance of inventories. Everything else looks a little weak.

Elsewhere today we heard about new claims for unemployment assistance. They fell dramatically, by 23,000, to 393,000 last week, and down from the 451,000 of a couple of weeks ago. Once again I urge caution. These numbers are highly skewed by the effects of hurricane Sandy and are not a reliable barometer of the economy. It will take a while for things to settle down, by which time we will be into the funny numbers of seasonal employment. Of course the data is seasonally adjusted, but there are always blips that obscure trends. So don’t go celebrating today’s report, it is simply part of a return to normality, rather than an indicator of a new, stronger, normality.

Looking further afield we also heard about pending home sales which rose 5.2% in October, the eighteenth straight month of gain. Pending sales are now 13.2% higher than a year ago and continue their long road to recovery. As a comparison: this level of activity is roughly the same as that in late 2001, which is decent, not great, and not frenzied. We can safely say that real estate is back on its feet, albeit at much lower levels of activity than those reached during the insanity of the bubble years. Let’s hope it stays that way.

Finally, let me return to the fiscal cliff.

It is a contrived problem designed to scare us. Of course we don’t want a dramatic tightening of fiscal policy next year. That would be awful. But we must not forget that we do not have a Federal debt problem. At least not now. The annual deficit as a percentage of GDP shot up exactly as we would expect during a deep recession. It went from an order of magnitude of about 1.2% to around 9.0% of GDP. This explosion was predictable and temporary. Once growth is re-established it will decline back to its former levels of its own accord. No significant policy changes are needed. Remember: non-health care transfer payments have been a fairly constant proportion of GDP for decades. They rise during recessions and then fall back subsequently. Absent health care, transfer payments are not a cause of our supposed debt problem. By the way: defense spending has been a reasonably steady proportion of GDP as well. This irks me and others who would like to build a case to cut it, but that case has to rest on non-budgetary reasoning, not on false debt crises.

So, if the fiscal cliff is a made up problem, who made it up? and, why?

The fiscal cliff is an artifact of class war. It arises from the longstanding attempt of the political right wing to defund and shrink government, deregulate, and boost business profits. Hacking away at the safety net is simply part of that long term plan. Likewise the horror stories on the left are all designed to fight a rearguard sufficient to protect the safety net from the predation of our plutocracy. We happen to be living through a moment when the right came close to winning. They were perilously close to ramming through more tax cuts for the wealthy to be paid for by stripping funding from social programs. The result of this would be the long term impoverishment of the middle class and the continued enrichment of the top tier of income earners. So these are tense times when compromise is dangerous and thus difficult.

In this sense the fiscal cliff is also the first battle in a war designed to tackle inequality. Hence the obsessive focus on raising taxes on the wealthy, even though such an increase is insufficient to make much of a dent in the long term deficit.

In other words, the fiscal cliff is a political construct that results from our deeply divided views on social policy. It has less economic significance other than the near term negative shock it would deliver were all its aspects to come to pass.

Ironically, as I have pointed out before, anyone who is alarmed at such a negative shock is, by definition, making the statement that they see benefit in stimulus. For if sudden contraction in fiscal policy is capable of sending the economy into recession, as they argue, then sudden expansion of fiscal policy will drive the economy out of recession. The fiscal cliff rhetoric thus hides a stunning level of agreement. Apparently, and perhaps unwittingly, our right wingers are now ardent Keynesians.

Similarly, anyone who has made a fuss of the damage to inflationary potential of large deficits and government spending should now be applauding the imminent slashing of spending incorporated within the fiscal cliff packages. Think of the rating agencies. They are an example of the confusion on the right. On the one hand they warn us that failure to resolve the fiscal cliff issues will force them to downgrade US bond ratings. On the other they claim that reduced spending is a criterion for getting a higher rating. But the fiscal cliff would produce exactly such reduced spending. Clearly they don’t mean reduced spending. They mean reduced social spending. They have declared their ideological colors.

So we hear no applause, nor do we see consistency.

Which is why I make my claim about class war. The fiscal cliff is artificial. It exists as a ploy by the right to hack away at social spending. The rational response is thus to drive off the cliff, and then to negotiate backwards. This would make the right the fall guy for a hike in taxes on the middle class and consequently provide a major incentive for them to bargain quickly to undo the damage.

All this is my way of saying: tune the fiscal cliff blather out and enjoy the upcoming holiday season!

But wouldn’t it be nice were Washington to tackle some of our real problems instead of the mad up ones? Oh well. Dream on.

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Week Ended Nov.16th, 2012

This was a week of election hangovers. Yes, although it’s hard to recall, we had an election just last week. And to remind you, especially those of a right wing bent: Obama won. Please don’t forget that. It looks as if many Republican politicians are trying too.

The election threw a mighty wrench into the plutocratic world. It seems they aren’t taking to the reality of uprising by the peons too kindly.

Mitt Romney – remember him? – came back from wherever he hid last week to give an interview. It was quite a rambling affair in which he gave us insight into the reasons he lost. It turns out he was overwhelmed by moochers. Yes, that’s right: Mitt lost because of all the goodies Obama handed out in order to buy votes. So it was the moochers what done it.

The extraordinary aspect of his interview and the opinion Romney expressed is that is in an exact reprise of the infamous 47% talk someone bootlegged a video of and which helped sink our fearless Republican candidate. Were is not for the flood of goodies handed out to those sundry moocher types the fine upright folk would have won the day.

Examples of moochers?

Single women who flooded out to vote upon the realization that ‘Obamacare’ makes contraception something covered by health care insurance. The plutocrats just are aghast that women would be concerned about such trivia as contraception. What does it have to do with protecting carried interest tax rates?

Then there’s young people. They swarmed to Obama too. Indeed one of the shocks of the election was that the Republicans were confident that the young – the silly dears – would stay home in a huff this time because Obama was thought to have betrayed them with all those unfulfilled siren calls of hope and change. Rats! They voted in greater numbers this time. And, horrors, seem to have been put off by the right’s obsession with abortion, gay marriage, and other extreme social issues. They also don’t seem to have been too worried by the threat to carried interest tax rates being raised. Personally I find this lack of interest in such a national crisis baffling. Don’t the young care about their portfolios? Anyway, the young were bought, it turns out, by Obama’s effort to make college tuition more affordable. Who knew the young borrowed money to go to college? Not Mitt, that’s for sure. And if they need a few thousand bucks, why not borrow from their parents? Whatever happened to family values?

Then there’s black people. Well not here. I mean they’re all in the cities. And they turned out to vote. Obama is black too, so you just know it was simple racism on their part. White people wouldn’t vote on such a tribal basis. They vote on the issues. Important stuff concerns them. Like carried interest tax rates for instance. Why aren’t black people worried about carried interest? Sometimes I just don’t get it. Americans are so easily swayed.

Enough.

The important part of this admission by Romney, apart from its total separation from reality, is that it represents a strong strand in contemporary Republican thought. It is a recurring theme on the right that America is infested with moochers, or ‘takers’, who live off hand outs. They are indolent and leech from the hard working folk who are called ‘givers’. Anyone who doesn’t pay income tax, in this taxonomy, is a ‘taker’. That they pay payroll, sales, property, and other taxes is of no consequence. Anyway it spoils the narrative. Eric Cantor, a far right heavyweight, bemoaned this ugly situation before the election. He calls for everyone to have some ‘skin in the game’, i.e. pay incomer tax no matter how little income they earn. One of the right wing’s goals is to convert all these ‘takers’ into ‘givers’. Even if it means throwing them into destitution. Naturally, were someone to fall into penury subsequent to their conversion into being a ‘giver’, it would be a reflection of their lassitude and lack of solid American moral fiber.

The Republicans with an interest in future elections – presumably Romney is finished – leapt to disavow his comments. Thus we heard Bobby Lindal from Louisiana decry the moocher notion. His interpretation of Romney’s loss is another common right wing theme this week: Romney wasn’t conservative enough, nor was he clear about Republican policy. Lindal is an interesting character. He is anti-science. Almost literally. He denies any truth in evolution for instance. He sees the GOP’s problems as stemming not from its nutty right wing ideas, but from its inability to sell those nutty right wing ideas to young people, women and minorities – especially Latinos. Apparently banning contraception, opposing gay rights, throwing people out of health care insurance systems, starting wars hither and yon, and generally preserving the privilege of the wealthy has enormous appeal to those kinds of people once explained properly.

Ah, I see. It was the messenger. Not the message.

Right.

Meanwhile.

Obama has started to press the Republicans to make a deal on taxes. He is adamant, so he says, that taxes on the wealthy must go up, and that such action is a non-negotiable part of any budget deal. Equally adamant, John Boehner has replied that raising tax rates is a distinct non-starter. An impasse looks likely. Well not quite. Note the language. They are both saying the same thing: revenues generated by taxes on the wealthy must rise. That’s not the same as raising tax rates. The Republicans hold out a slim hope that they can conjure increased revenues without raising tax rates. It’s not really possible without socking it to the middle class as well. But the Republicans aren’t worried about the middle class. Which is why, presumably, the words ‘middle class’ were tripping off Obama’s tongue so frequently at his first press conference yesterday.

So here we are.

One week into the new world and already it looks and feels just like the old world. I think it will take time for the new reality in washington to sink in. It will take the arrival of those new Democratic Senators who all look more liberal than their predecessors. It will take the realization by the right that their relentless four year effort to thwart Obama was a dismal failure. And, allow me to hope, it will take the realization y the Republicans that it wasn’t the messenger, nor the moochers. It was their nutty anti-socail policies.

Given the events of this week, that last one’s a long shot.

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The Answer Is: No

Huh?

No appeasement.

We have already moved on from the Democrats sweeping victory in Tuesday’s election. And have no doubt the win was indeed sweeping. The margins were small in some states, tiny in Florida, but that they existed at all is the fact to focus on. Obama ought never have won this election. The economy is weak and unemployment still lingers in a zone that, in the past, spells doom for incumbent presidents. But he won. Handily. Not only this, but in a year when the Democrats were expected to lose control of the Senate they actually added to their majority.

Something went horribly wrong for the Republicans. It wasn’t that Romney, despite his vaunted business and analytical acumen, ran an ineptly organized campaign. It was, to put it bluntly, a day of reckoning for the extreme right. Their wild eyed radical agenda, from their misogynistic views on social issues, to their emphasis on ever more defense spending, on through to their open desire for the wholesale destruction of entitlement spending, was rejected. It was rejected wherever is was explicit. It was rejected in toto.

Yet a legacy of Obama’s own inept management of his early years was that in 2010 Republicans surged into power at the state level. This allowed them to rig upcoming Congressional elections via the time honored tool of re-drawing the boundaries of Congressional districts in order to make them Republican friendly. This paid off handsomely on Tuesday. Despite being handily beaten at the polls in terms of numbers of votes cast, the Republicans kept hold of the House.

So we enter the next two years with a split government.

This has brought forth a rush of calls for Obama to make a deal with the Republicans on the so-called upcoming fiscal cliff. This is the self-inflicted budget crisis that is also a legacy of the deadlock we suffered through during the last four years and in particular is a result of the breakdown in negotiations over budget policy in 2010 and 2011. Basically the ‘cliff’ is a term describing a series of spending cut and tax increase measures that automatically come into law on in January 2013 unless alternative, and presumably more sensible, measures are agreed to beforehand. With beforehand meaning the next few weeks.

The danger of rushing to cut a deal in a few weeks – a deal that would re-define our tax and spending profile for the best part of a decade – is that there is no time for a considered discussion. A grand bargain of such importance surely needs to be the outcome of a few months not a few weeks of negotiations.

Worse, the psychology of such a compressed debate gives the upper hand to the extremists who can force concessions from their more moderate counterparts by waiting to the last moment to make a deal. Brinkmanship becomes the order of the day and undermines the likelihood of the ultimate bargain not containing some very bad deals.

This, of course, is less of a problem were Congress not infested with a phalanx of Tea Party extremists.

Therein lies the reason for no appeasement.

The central problem we all face as we seek to strike a deal on the budget is that the extreme right is not concerned about the deficit. Despite what they say publicly about burgeoning debt and other right wing red flags, they have never been worried about the level of debt or the size of the annual deficit. These issues are simply a veil over the real agenda: the destruction of the welfare state. In recent decades it has been the Republican Party responsible most for the emergence of a long term rise in the deficit. First under Reagan and then under George W. Bush they forced through massive reductions in government revenues  without tackling a concomitant cut in spending. Reagan oversaw a massive defense build up that was paid for, not through taxation, but through borrowing. Then, after Clinton had stabilized the budget and even produced a rather lucky surplus, Bush used the existence of that surplus to argue that the government was taking in too much revenue and thus could cut taxes. He cut taxes way beyond the level needed to balance the books. In a deliberate effort to defund government and thus produce a budget crisis he cut taxes drastically in two rounds. Each added to the deficit. Each was supported wholeheartedly by the entire Republican delegation in Congress.Some of those Republicans, in a stunning volte face, have become the most vocal champions of deficit reduction. So we know that the Republicans do not worry about deficits. Recall it was Dick Cheney who said that deficits don’t matter.

Creating a funding crisis was the goal. It was a strategy that succeeded and then some when the economy fell to pieces and the long term deficit was compounded by the normal short term deficit associated with a recession. The extremists had set the game up perfectly for themselves. The chatter amongst our elite became the burden represented by the entitlement programs whose cost now looked unbearable in the context of all that lost revenue. Social Security was quickly branded as being on the verge of bankruptcy. Medicare was declared impossibly costly. The handwringing began. Earnest and sober people began to regret the harsh reality that America could no longer afford the New Deal and New Society programs. Yes, we were told, we would like to protect the poor, the young, the elderly, and the sick, but we just can’t afford it anymore. Something has to give. Someone has to pay the price for America’s diminished fiscal capacity. Just not the wealthy job creators and their friends in Wall Street.

Thus the sick, the poor, and the elderly, and the children were singled out for punishment. They were to be sacrificed so that we could get our fiscal house in order.

All the pronouncements, reports, and analyses that have flooded Washington these past two years as we began the debate over the budget have had the same target. All have taken as a truth that we have a diminished revenue raising capacity. Yes they have all talked about raising revenues, but they all, ultimately, throw the burden on the same target: the weakest parts of our society.

In other words the enormity of the Republican Party’s cynical strategy has been overlooked. The radical agenda is perilously close to being fulfilled. Had Romney won on Tuesday victory for the far right would have been certain. The credit markets and the plutocrats would have protected their privilege and the rest would have been made to pay.

But democracy is a funny thing. It gives the weak a chance to express what they think.

And they thought poorly of the entire radical right’s enterprise. They realized that they were being sold a bill of goods. Only one in ten voters mentioned the deficit as an issue. Seven in ten thought job creation was the priority. In my mind that’s a fairly good indicator for what public policy ought to be doing.

Stimulus. Not austerity.

So. As we are rushed headlong into this unnecessary panic called the ‘fiscal cliff’ we ought to listen to the voters.

Say no to cuts in entitlements. No.

Do not allow this artificially and carefully crafted moment be the excuse for ending the welfare state.

No appeasement of extremists. It never works. They always want more.

If that means going over the cliff, so be it. There is nothing that cannot be undone later. Let taxes go up. Put the blame on the intransigence of the right. Then cut them back where needed and bask in the victory of handing a tax cut to the middle class. Raise capital gains tax to the same level as income tax. After all income is income so tax it all the same. Stretch the tax code out progressively. After all the research shows definitively that higher taxes on the wealthy has no effect on the economy. Fix the tax code to plug loopholes for big business. Use the revenue to lower tax rates if you want. Get rid of the cap on payroll taxes to juice revenues into Social Security, but extend last year’s payroll tax cut as a stimulative measure. The list goes on.

But never, ever, appease the extremists. This is their last chance to execute the Reagan/Bush agenda. This is our chance to end the entire Reagan era. The stakes extend way beyond the mere budget. This is the time to re-define the American social contract.

So start by resisting the temptation to rush into a hasty deal.

The answer is: no.

 

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Obama is Scared

Dean Baker goes overboard. Well he suggests that Obama is failing to defend Social Security because of his fear of retribution from the policy elite.

Baker is right.

This is an issue that extends beyond Social Security. Many of us have been saying for a while that Obama is too beholden to an elite whose view of the world is vastly different from that of the average voter. As a result he fails to provide a narrative for the majority. Instead he constantly trims to avoid conflict with the elite.

In the rarified air of the elite – which includes the media, big business, and academia as well as Washington policy circles – it is commonly understood that our entitlement programs need fixing. For decades the Republicans have hammered away at the imminent ‘bankruptcy’ of those programs is a thinly veiled attempt to get rid of them. It is also common for them to conflate Social Security and Medicare, two programs that have very different problems.

Also inside the bubble the Federal deficit looms as a massive problem – the talk is constantly of a ‘need’ to cut spending and    thus reduce the debt. Inflation also seems to exert a terrible pull on elitist thought. Deficit hawks often cite imminent rampant inflation as a reason we have to rein in our debt and  raise interest rates. Oh, and according to these same folks we need to get the Fed to behave responsibly and end its support of the economy.

Outside the bubble none of these things matter.

Indeed shoring up entitlements matters much more than reducing them. Average folks have ben slammed by the steady erosion of their earning power. They are steadily sinking beneath debt taken on in a false attempt to keep living standards rising. Recent students are swamped by student loans and will have to postpone home ownership for years if not decades. Health care and education costs cripple most middle class families. And the relentless pursuit of profit has siphoned off most of our productivity gains for capitalists who pay a reduced rate of tax on their gains because of the privileges bestowed on them.

The simple fact is that outside of the elitist bubble America’s decline is a very real phenomenon. It is not an arcane topic for Sunday morning talk shows or for long and unnecessary academic discussion.

It is palpable. It is obvious. And it is painful.

Yet it is ignored.

The reasons seem clear.

Inside the bubble, which consists of our highest paid citizenry, wages have risen. The stock market has recovered. Employers give more generous benefits in order to attract ‘talent’. Savings are more substantial. And prospects are decent if not downright rosy. These are the folks who brought us the financial crisis. They are the ones who abolished defined benefit retirement plans and gave us the defined contribution plans that are hopelessly inadequate, much more risky and expensive. These are the people who bemoan the common folk who don’t save enough and who berate those poor savings habits as being self-destructive. Yet they are also the ones who squeeze wages at every opportunity in order to meet reckless stock market profit targets and to meet bonus thresholds that support their own conspicuous consumption. They are the ones who ship jobs abroad in search of lower costs and then who complain about the inadequacy of our worker’s skills.

The delusion inside the bubble is that those outside are somehow dependent, and lazy. They see a person not paying income tax and complain, not about the lack of income on which to pay that tax, but about the lack of tax. They fret about the lack of incentives for themselves were tax rates to be raised, but not about the block on opportunity that the oppression of poverty brings.

In short they have no idea about how America has been driven off the cliff by the policies from which they benefit. Why would they? They simply focus on the issues that affect them.

Like inflation and it corrosion of credit. Like taxes that intrude on their capital accumulation. Like entitlements that are merely afterthoughts to them as they plan for retirement. Like welfare that transfers cash from their pockets into those of the poor and the ‘underserving’. Like the low interest rates that prevent them earning a ‘healthy’ return on their many investments. Like the tax laws that ‘force’ them to ship their savings abroad to tax havens. Like the regulations that prevent them from selling products for profit that have no social value. Like laws that prevent them from dumping pollution into the environment where taxpayers not shareholders carry the cost for clean up. And like the Federal budget that looms over the credit markets as what they perceive as a threat to the allocation of capital.

It is this group that leeches not the rest of us. They profit from rigging the rules. They pervert our democracy by swamping our elections with money. They divert and suborn legislation for their own advantage. And they resist any attempt to push back as being an attack on the manifest – to them – benefits of capitalism. They laud the American Dream while they crush it. And then they have the temerity to pretend to be concerned.

This is what Dean Baker meant to say.

It is this that makes Obama a disappointment. Instead of leading the people he indulges the paranoia of the wealthy. He dances to their tune and addresses their issues. This is why he can agree with Romney – as he did – that Social Security needs ‘fixing’, and that unless we do something to ‘fix’ it  it will go bankrupt.

This is preposterous and untrue. Yet he perpetuates the Republican narrative.

Why?

I think it’s because he is scared of the power of the plutocracy. Or, perhaps, it’s just that he lives inside the bubble.

Which do you think?

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