Monday, December 31, 2012
A post on one of the blogs I read daily, but failed to mention in my post on the subject, Zerohedge.com featured an article by Bruce Krasting entitled, On Krugman's Epiphany, in which he registers his incredulity that this Nobel-prize-winning, Princeton-educated, NYT-employed academic economist, known as such to more readers than any other economist on the planet, should have been all of a sudden awakened to the fact that machines have replaced humans as the largest productive component of modern economies.
Now, whereas I can well see why this could come as somewhat of a shock, it should not be anything we're unfamiliar, with, as it merely reflects the saying that Upton Sinclair made famous, that: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" And if there's one thing "The Conscience of a Liberal"'s salary depends upon, it's liberal ideology. But it's only with the size of profits made from a productive capitalist machinery paying its workers a generous wage that a State can afford the benefits Liberalism insists it should provide those workers.
That paradigm ended with Reagan, and it's death sealed with the construction of the "Information Superhighway" under the Clinton Administration. Yet all through the Bush era, the Krug kept insisting that all GW need to do was raise the taxes on the wealthy back to where they were and everything would be fine again. But it wasn't true then, and it isn't true now. But since his salary depended on it ...
Similarly, this paradigm works on the entire American electorate on the issue of War, and its place in the modern economics of Globalization and capitalist productivity. As we watch the effects of this new structure topple the old regime of money and replace it with something we've failed to come to terms with as yet, I like reading other people's thoughts on the matter who aren't, like the Krug, bent on continuing their political tirades based on a past that, not only isn't going to return, but that we shouldn't wish to return.
In doing so, I've been reading Thomas Greco's book, "The End of Money (and the Future of Civilization)", one of the themes of which is the claim that money is now more of an information system and so we need to separate it's use as an exchange mechanism from its use as a safe haven, or repository of value, such as gold seems to now be playing:
(per zerohedge.com): "For the past eight years-in-a-row, that worthless yellow barbarous relic that some call 'Gold' has outperformed the 'precious' Dow Jones Industrial Average (even with the constant DJIA re-indexing where the losers are quietly taken out back and shot). As we enter the last day of trading in 2012, Gold still holds a slight edge +6.3% on the year vs the Dow's +5.9%.".
Arguing that Gold not only imposes a measure of fiscal discipline, but can also serve as a store of value, since commodities in general can help to serve as a store of wealth in times of inflation and financial chaos, Greco explains that other commodity monies can also provide portability of wealth and can be useful when people are displaced by natural disasters, political strife, and War. And this is where I go over the deep end.
Because just as the Krug blinded himself to the ramifications of the effect automation would have on all the liberal dreams of providing social security and health care and financial security to an entire generation, the US as a whole has similarly blinded itself to the fact that a constant state of war is the new paradigm that is necessary for globalization and is discontents to continue to shower us with an unending downpour of cheap manufactures, draining the globe of its resources while accepting a battered and debauched dollar in exchange for the products the rapacity produces.
Whether, or for how long this should possibly continue is one question, but the basis upon which its sits is not. Because what Greco doesn't admit, despite the fact that it's staring him, and the rest of us, right in the face, is that War is now a constant. And it is accepted as such, albeit tacitly since, like rap music, it makes a noxious atmosphere not welcome amongst polite society.
Because, in his attempt to describe the new economic reality being denied by the politicians of all the OECD nation states, Greco starts his next sentence by saying, "But under more normal conditions... ", but what does that imply when the normal condition he speaks of is one in which the building and selling of weapons of mass destruction is the underlying basis of the peace we now know is based on constant war?
The very concept of world peace is now accepted as the aim of only crackpots and Miss America contestants, and is not only unacceptable but a positive danger, and not for the reasons claimed by War Hawks who maintain that without a strong peace, there's war, and that maintaining a standing army, navy, air force, Marines, Special Ops' intelligences services, NASA, etc, etc, and spending constantly escalating share of GNP on the Pentagon, are, from a military-preparedness basis, strategically necesssary.
No. That argument was made moot long ago. My argument is that the destruction to the economy that destroyed the first Bush Presidency, which he brought onto himself via his so-called 'peace dividend', is a calamity the economy never recovered from. Therefore any attempt to jigger with this arms-based economic dreadnaught will cause the global economy to not only shrivel, but collapse, bringing internal War right to the doorsteps of the OECD nations, who, up until now, have been successful in maintaining the new paradigm, reached at the end of WW2 of exporting conflict to lesser economies, ravaging them, and then providing them 'humanitarian support' which bolsters their own economies, giving their people higher standards of livings and crushing any possibility of their destroyed 'enemies' from recovering sufficiently enough to ever emerge as a viable threat.
This is unabashedly referred to as 'Full Spectrum Domination", and is not exactly a secret that it is the outspoken, and never rescinded, goal of the US as "The World's Sole Superpower". Which is, of course the main reason why Al Qaeda was named by Pres Obama as the greatest geo-political threat to the US. Because the idea of initiating an attack by sending guided missiles launched from within the borders of the great super power by its own commercial industries, left free to cut costs, no matter what the danger to its customers or, indeed, the country, back onto itself ... was a quite brillaint strategy, (the conception of which, I, for one, have no inclination whatsoever of attributing to him).
If this paradigm sounds familiar, it's because, of course, it's the one whose efficacy was demonstrated so tellingly to the world via the US's institiuion of the Marshall Plan following the exhilirating episode of rampant bombing and firestorming of one continent and the incineration of entire cities on another. WW2, and it's rebuilding of the Japanese and German economies, making the countries upon whom it inflicted the largest total destruction in the history of the world into its two largest customers, also made them, in the process, its fiercest competitors.
For once the loans stop, they need to be able to generate enough wealth to remain customers, and thus the paradigm of export platforms, where that excess productivity is sold to other countries. Thus it is that the chimera of Ricardo rises to replace the ghost of Adam Smith resulting in the brilliance of the China syndrome. Instead of serving as a competitor, a totalitarian government can keep the demands of its population suppressed. Because, as Upton Sinclair also said, "Fascism is capitalism plus murder."
So, while Neo-Liberals can sell the concept, such as it did with Nafta, of a rising middle class in the client country clamoring for the hi-tech products of our own, thereby talking the, let's call them Krug-liberals, into allowing the wholesale transfer of their own country's entire productive base, nevermind that it was stabbing its own working class in the back. But the promised benefits were never attained, for two reasons: the client country uses the power of repression to keep wages and demands for benefits, such as air that's not unbreathably befouled, down, so that the demand from those client countries' consumers never materializes, and secondly, those hi-tech jobs, ones thought to be so secure, once the infrastructure has been built to transfer the physical plant of lo-tech jobs, it's even easier to use it to transfer hi-tech jobs to the low-wage platform economy, thus leaving the host economy bereft of any productive capacity whatsoever, forcing its unionized laborers out of high-skill jobs into servile positions as waiters and latte makers.
One example of this was recently documented in the pages of the NYT as it ran a story about the accelerating growth of automobile sales in Russia, by plants built there with capital furnished by the American taxpayers' risked capital from labor's pension funds for the GM rescue, to build plants in Russia and China, serving those markets, and returning nothing to the population that risked its Capital, with all the rewards, in the form of dividends, going to the financiers and shareholders, and the jobs going to Russians and the resulting tax revenue, going, not to feed America's children, but Russia's. Pre WW2, this would be called treason, especially if done, as it's being done now, during times of war (remember, we are always at war).
One of the consequence of which, is that, whereas China has many sources of production and centers of economic vitality, the US has, year after year, decade after decade, chipped away everything from its industrial base until there is only one center: New York. Take out New York, and there's simply nothing left.
Yet the fact that the financial sector, having crowned itself the ruler of the world, than went on to inflict more damage to NYC, the economy, and the country than the attacks of Bin Laden, makes one stop momentarily, on those occasions when one has the time to contemplate the long-term impact of events, and realize that this matter is never mentioned. And the criminals responsible, far from being rabidly pursued by letting loose the demons of war onto them, are instead, exonerated, by the newly elected President Obama mit Biden, who urge us to look forward, ignore those men behind the black curtain, forget the perfidy done that produced a shimmering mirage of wealth in front of our eyes, and then, with a swirl of the cape and a puff of smoke, as entire countries went up in flames, swept it all away and simply shrugged at our stunned silence as they made everything evaporate right in front of our eyes. And then threatened utter ruination and despair if they were not given billions upon billions of dollars, demanding a blank check to finish the job of draining everything of value out of the economy.
Presto! Keep walking ... Nothing to look at here ... We're fixing everything.
As if to make my point for me, from zerohedge.com, again, I found, right before finishing this post an article re: the Fiscal Cliff's effect on Pentagon spending, one line of which read:
"Mandatory federal spending cuts designed to be prohibitively drastic will become a reality on Wednesday if negotiators remain unable to reach an agreement to avert the reductions. Illustrating the gravity of the cuts, the Pentagon plans to notify 800,000 civilian employees that they could be forced to take several weeks of unpaid leave in 2013 if a deal isn't struck".
Note that only civilian jobs are threatened.
This is the real physical cliff, the precipice upon which we stand as the productive capacity of our economy is entirely held hostage to military spending: not just GM, and McDonnell Douglas, Boeing, Raytheon,and Bechtel, Haliburton, Dow Chemical, and IBM, but Wal-Mart, Sears, Macdonald's and Burger King, Starbucks and Apple, are all heavily reliant on their big fat Federal Government contracts, and, now that all the CEO's are from the Aritocats which America , naturally, doesn't have, these companies are run only for the resource-stripping operations of its board, who all vote Republican to keep their own taxes down.
Cisco Systems is one example. It got rich building the internet, which, it isn't a secret, grew from a small Defense and Research Library Group network (RLG, which I worked at Stanford doing the physical installation of), which we all paid for, invested in, bore the risk of failure for, with our taxpayer money, siphoned through the defense department, as that's where you have the most latitude to spend enormous amounts of cash unaudited. Yet none of the internet companies feel any obligation to pay taxes, nor, now, even dividends. For ten of its most profitable years, I owned Cisco stock and as the cash rolled in they sat on it, reinvested it, who knows, but I never garnered one nickel in dividends despite owning one of the most successful internet stocks ever. John Chambers, however, is, I believe, one of the richest men in the country.
So, whether one agrees with this philosophically becomes unimportant, the Defense-controlled and dominated system now drains more and more cash from those left who still do pay taxes. Eventually, even those willing to do so, will no longer have the capacity to bear the fiscal responsibility the largest and most profitable entities are shirking. Basically, we're talking Greece, but with a population groaning under the weight of the hi-powered sophisticated weaponry in the hands of its citizens. One wonders who they'll blame it on the next time the match is lit.
Posted by Robert Lowrey at 4:42 PM