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View Diary: WHY WE’RE SCREWED (232 comments)

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  •  Economics is economics (2+ / 0-)
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    mcc777c2, left of center

    If it's right- or left-wing, then it's ideology. I hope what I had to say is more economics than ideology.

    Any gov't. can put up senior centers and schools—all it needs to do is to make expenditure meet income. But that often means raising taxes, and I take it as basic political common sense that neither the politicians nor the citizenry is anxious to do that. Instead, both sides love to finesse the tax issue via bonds, and they love to think that there are ways that they can borrow even more than would otherwise be possible—hence the ready market for more complex instruments, for selling off various revenue streams (Chicago parking meters, anyone?) and, in general, making the costs someone else's problem. When local citizens can't be bothered to take enough of an interest in their democratically-elected government to keep a keen watch on how the pols spend their money, then they share in the blame for the consequences, right along with the pols and bankers. Once again, none of this ought to have been a surprise.

    As for fraud and thievery (usury laws have mostly disappeared, I believe), I'm anxiously awaiting the indictments and prosecutions. Waiting... Still waiting. If I didn't mention that, it's only because the request was for a way forward, and prosecutions will only close barn doors following equine exits.

    Finally, yes, I think the only mechanism that will clear up the interminable slow-motion depression we're living through is a very basic kind of market, one that permits the losers to lose.  But I think that anyone would be hard-pressed to call anything about the banking or financial systems we have or have had in recent memory, free markets—more like "the fix is in" cartels. We were foolish to try to save the banks in the way that we did. IMO, ordinary textbook economics teaches that the only serious option at this point is to force them to swallow their poisonous loans and, in many cases, to die. Better to get it over with sooner than later.

    •  The attempt to de-couple economics from politics (3+ / 0-)

      is like trying to decouple psychology from human behavior. It doesn't fly.

      My use of psychology for my simile was not whimsical. Like psychology, economics is, to a large degree, a study of human behavior. Behavior manifest through political process. And while one would like to imagine economics a hard science, like physics, it is clearly not.

      That aside, what are we really taking about when we call something "right wing"? These labels are just codes of convenience. Their ascription to some fundamental, quantifiable reality is more often than not subjective and variable from one person to the next. And, indeed, from one generation to the next.

      My use of the term is, in the context of this website, intended as a vernacular reference to a commonly understood set of policies, along with an underlying philosophy, that most here, at least 30 years ago, would have recognized as belonging to those who self identify as right wing conservatives.

      This includes a hostility to "the state", the placing of individualism over the common interests, and a general disdain for government intervention.

      The term "right wing" used to be attributable to the ideological belief in the  powers of markets to self regulate, even govern. But unfortunately,  four decades and billions of dollars of propaganda dissemination have moved the Overton window sufficiently to where even people who frequent left-wing blogs subscribe to this bullshit.

      For example, you assert that we should have just allowed the losers to lose. But in doing so, you failed to clearly identify who exactly these losers are.

      Just the bankers? Or the millions of retired people who's 401k's were tied to those banks?

      Failure to articulate, or even demonstrate recognition of, the interdependency the broader economic system shares with too big to fail banks suggests a libertarian bent that I've seen before.

      Maybe I'm unjustly projecting. But  it seems to me you have an ideological bias that may have prevented you from thinking through the real ramification of just letting the FIRE sector collapse. And that is what you're prescribing. Because the collapse of any big bank at this point would be the collapse of all of them.

      Do not assume that I am defending the remedy of Obama, Geithner, and Bernanke, however. Their prescription merely kicked the can down the road while simultaneously wiping out the wealth of our entire country. It's unforgivable.

      But just letting the whole thing collapse was never an option. But, then again, the real solution was not an option either. Our entire system is far too corrupt to have taken the necessary action of monetary reform, banking reform, and, yes, nationalization of the commercial banking sector. They couldn't even undo the repeal of Glass–Steagall.

      The fix for our problem has to occur in stages, the first being a constitutional amendment to prohibit bribing politicians with money.

      Absolutely not a goddamn thing will matter until we first make it a crime to give politician's money.

      •  Science of economics (1+ / 0-)
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        left of center

        I suppose the larger question is, to what extent is economics like physics, and to what extent is it an ideologically constructed view of markets. If the latter is the case, then discussion remains confined to those who agree with each other, and there will only be things called socialist economics, liberal economics, conservative economics, but no such thing as "plain" economics and, in reality, literally nothing to discuss. IMO, that point of view needs a great deal of rethinking.

        On the specifics, if you read my posts, you should have seen that I did say who the losers would be—pretty much everyone. As I wrote, I presume that following my (unpalatable) suggestions would "accelerate foreclosures, decimate pensions, and throw the overall economy into a tailspin." It will be entirely awful. But what we have now is, as I believe, already disaster, merely a slow-moving one. I move that we pull the plug on a moribund economy in order to (somewhat like Iceland, I suppose) get the nastiest bits out of the way sooner rather than later.

        I am unconvinced that there is any way at this late date to provide a "soft landing." Is that right or just? Of course not. However, in my opinion, barring exceedingly unlikely events (e.g., the advent of world government and the abolition of private property) it is the inescapable consequence (and I mean that literally) of a great many really bad decisions over many years at every level of society. And no matter how desirable it might be to remove money from politics, even if enacted yesterday, such legislation would not change one whit our situation today.

        •  Have no clue what you're talking about concerning (0+ / 0-)

          Iceland.  And I live in Iceland.

        •  Economics is very ideological. So is sociology, (1+ / 0-)
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          left of center

          polisci, anthropology and every other social science. Examine the history of these discplines. And economics has become not a way of studying human behavior, but rather as a tool for policy makers. Free market ideology dictates a certain policy path, Marxism another policy path. Economics, no matter how much certain economists would like to believe otherwise, is not a hard science.

          Krugman and Stigletz both denounce the state of modern economic thinking as being too tied to the free market ideology. And very few economists have been as accurate as these two in forecasting the disaster we find ourselves in. Examine the role of the Black Scholes financial model on past disasters, like Long Term Capital Management. Lets face it, many economists suck at their jobs.

          •  If it's all ideology (0+ / 0-)

            there is no one who knows anything—which means that Krugman and Stigletz have to be ideologues as well. Too bad—ideologues are people who recast the facts to suit their beliefs.

            I don't really know what they forecast when, but I know for sure that the relatively conservative magazine, one that advocates for free markets and free trade, The Economist, spent most of a decade discussing the potential for disaster in derivatives trading among the unwary, the housing bubble, and why what goes up must come down. So if Krugman, Stigletz, and the Economist can get to similar conclusions, it suggests that there might actually be something called a general study of economics whose truths are independent of dissimilar ideologies. Here's hoping

            •  Well truth is not always objective in the social (0+ / 0-)

              sciences. There is a big difference between reading a thermometer and reading a statistical survey of human activity. And even physics has an understanding that not everything is observable. The best model we have in physics is blindingly complex and uncertain.

              There are a number of ways to study economics. One of them, a relatively new field, is to study the behavior of what people actually do. This is referred to as behavioral economics. It studies people's economic behavior with the understanding the people do not always make rational decisions.

              Market economics on the other hand studies market behavior. And assumes that humans make rational economic decisions. This describes most economists. And most economists work for banks, investment houses, government, think tanks, etc. They are not involved in academic research.

              Most social scientists work from a theoretical alignment that matches what they believe about the world. If you are interested in academia you have one perspective. If you are interested in making money you have another perspective.

              Many mathematically talented engineering, economics, and physics graduates in the eighties until quite recently went to work for investment houses and hedge funds. They were interested in making some money. And for a while it worked. But they were in great part responsible for the collapse of the financial market. Look up Black Scholes and LTCM fro a good example of what theories can do tp a market place.

              The first thing you learn in Anthropology 101 is that you have prejudices, you will never completely lose them, and you have to constantly question your prejudice as you do research. The same lessons are taught in most sociology and social psychology courses. It is called observer bias and can taint your results, Economics has the same problems but is often less inclined to recognize them.

    •  Bankers are going to jail.... (1+ / 0-)
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      left of center

      In Ireland. Do not hold your breathe waiting for this to happen here through.

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