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View Diary: Jack Lew and the premature descent from heaven: A tale of the American nomenklatura (89 comments)

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  •  Most likely, the President understands Keynes (3+ / 0-)

    Just fine.  As the leader of his class, he rejects it.  

    These are people who believe our only realistic course is to beggar the working class.  In short, the President is tasked as a member of, and leader of, the plutocracy to manage the current phase of the decline of the working class and the continuing consolidation of corporate rule.  His actions and associations are demonstrations of this principle.

    The President knows exactly what he's doing; I don't see how a person of such intelligence and education wouldn't know.  Like the rest of his class, he's convinced himself that his (and their) course is necessary and, however, painful for the rest of us, ultimately beneficial.

    The President's failure here is not one of understanding, but of morality and courage.

    Any significant cut to the social safety net ends my support for the Democratic party.

    by MrJayTee on Sun Jan 20, 2013 at 11:42:27 AM PST

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    •  Your hypothesis (0+ / 0-)
      Most likely, the President understands Keynes
      just fine.  As the leader of his class, he rejects it.
      is arguably correct.

      A more minimal assumption -- in line with some of the other comments here -- can be taken from the line I chose to  highlight in William Black's piece below, Jacob Lew: Another Brick in the Wall Street on the Potomac. (I include more here for consideration in the others. There's more there -- suggest a full read. But I want to focus on just that one line.)

      Lew's predecessor as chief of staff was William Daley. Daley is a lawyer. Daley was on the executive board of J.P. Morgan- Chase during the crisis and before that he was on Fannie Mae's board of directors. Daley is a member of "Third Way's" controlling board. Third Way is a Pete Peterson ally that lobbies in favor of austerity and cuts to the safety net. It pushes Wall Street's, and Pete Peterson's, greatest dream -- privatizing Social Security. Privatization would allow Wall Street to increase its profits by hundreds of billions of dollars in fees for managing our retirement savings.

      Daley's predecessor as Obama's chief of staff was Rahm Emanuel. Emanuel's degrees are in the liberal arts and communications. Clinton appointed him to Freddie Mac's board of directors during the period when the board was heavily criticized for its failure to prevent massive accounting abuses at Freddie Mac. Emanuel worked for Wasserstein Perella, the prominent investment banking firm.

      The obvious aspects of this pattern include: (1) Obama prefers to have Wall Street guys run finance (despite coming to power because Wall Street blew up the world), (2) the revolving door under Obama that connects Wall Street and the White House has been super-charged, and (3) even very short stints in Wall Street have made Obama's finance advisers wealthy.

      The unobvious aspects of the pattern compound these problems. First, Obama likes to surround himself with failures. Geithner set the pattern. He was supposed to be the principal regulator of most of the largest U.S. bank holding companies. He was an abject failure. His speeches and his statements at the Federal Reserve System's FOMC meetings during the crisis demonstrate that he remained clueless to the end. For reasons of brevity, I discuss only three of his failures as Treasury Secretary below.

      Lew has gone from failure to failure. He was one of the architects of both of the Clinton administration's disastrous statutory deregulatory actions that helped produce the epidemic of accounting control fraud that drove the Great Recession.

      The fourth non-obvious problem is that Obama chooses as his principal financial advisors people who have not been trained to have financial expertise. Geithner studied international politics. Emmanuel studied speech. Lew, Obama, and Daley studied law. Lew, Daley, Emanuel, and Geithner all worked in finance, but they did so because of politics and who they knew rather than what they knew. Competence was never the key.

      Given that, a way to state the more minimal hypothesis is
      Accepting that:

      1) Obama chooses as his principal financial advisors people who have not been trained to have financial expertise. (as highlighted above)

      2) The thoroughly discredited neoliberal school has dominated economics instruction for the past several decades

      3) Neither Obama, Lew, Geithner, nor Daley have been exposed -- in an academic context -- to a critique of neoliberalism sufficient to expose its mathematically perverse accounting.

      then Obama, Lew, Geithner, and Daley have simply been beguiled by the myths they (and the rest of us) have been exposed to and the propagators of those myths.

      The question is how should we direct our foci and resources given our assessments of likelihood of the two (minimal and maximal) hypotheses.

      e MMT unum United We Understand MMT

      by dorkenergy on Mon Jan 21, 2013 at 08:39:45 PM PST

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