Cross-posted from Real Economics.
In all the discussion of Tuesday’s election, two notable results have received too little attention. In Cincinnati, an admittedly slim majority of voters -- 51.5% -- rejected a ballot measure that would have banned the city from spending any money on building new passenger rail infrastructure and services. The referendum had been promoted by people opposed to Cincinnati’s current plans to reintroduce streetcars rail service to the Queen City. In Durham County, NC, 60.1% of voters approved a one-half cent sales tax increase to be dedicated to expanding bus service and beginning construction of a light rail transit and regional commuter rail passenger service in the Triangle metropolitan area.
More than the simple Democrat vs Republican sports scores, these results are a clear rejection of the usual conservative claptrap about taxes and the role of government.
In neighboring Orange County (where I live, and home of the University at Chapel Hill), 60.7% of voters approved a one quarter of one cent sales tax increase, half of which will go to county schools, and the other half to economic development.
I think these results are notable because they contradict the wrong-wing mantra that voters don’t want tax increases on themselves, and don’t want to fund any alternatives to the private automobile as a means of surface transportation.
In other words, the majority of Americans actually want government to do something. Like, build new infrastructure, to help move our society away from its dependence on burning fossil fuels. Completely opposite to what conservative Koch-suckers say Americans want.
(Here’s a sample of the usual wrong-wing claptrap opposing government spending on infrastructure, from the Heritage Foundation.).
This brings us to the issues raised by #OccupyWallStreet. What use is the financial and banking system if it’s not willing to help fund such projects?
Well, let me rephrase that question, because it’s painfully obvious that the banksters and usurers will happily provide funding so long as they can make a killing, as the case of Jefferson County, Alabama shows. This is another development we should be paying attention to: the commissioners of Jefferson County have decided to have the county file for bankruptcy protection, the largest municipal bankruptcy in U.S. history.
And what drove Jefferson County into bankruptcy? It was the $143 million in fees the county paid to JP Morgan Chase, Bear Stearns, Bank of America, and Lehman Brothers for buying interest rate swaps – financial derivatives – back in 2004 to fund court-ordered sewer construction (aaaaakk, those terrible trial lawyers again!), then having to “restructure” that financing arrangement when the interest rate swaps didn’t work out as advertised.
Most of the $100 million in fees Jefferson County agreed to pay for interest rate swaps are going to three banks: $57 million to JPMorgan Chase, $16.3 million to Bear Stearns and $13.4 million to Bank of America. The county paid about $60 million more in fees for refinancing sewer bonds, including $6 million in fees to politically connected consultants and advisers, including William Blount, a former chairman of the Alabama Democratic Party.
(Ooops, was that a Democrat that was involved in Wall Street's looting of the county? It's crap like this that allows the Rethuglican Party to cling to life, when by all rights it should be a minority regional party for the next few centuries.)
I think the juxtaposition of these events show us that the solutions to our problems are all relatively simple – except, of course, for the fact that the banksters have used their ginormous wealth to corrupt the republic and turn it into a oligarchy ruling over a de-industrialized plutonomy worked by tens of millions of serfs in debt peonage without the income needed to keep the consumer economy humming along.
Perhaps we should not used the word “de-industrialized”; de-capitalized better captures the process of financial looting and usurious parasitism that has wrecked the U.S. industrial economy since Saint Ronnie ascended to the Big White Pinnacle of America.
Then, of course, there’s the wrong-wing idea that the supposed “free market” is better at allocating economic and financial resources than the government is. If that’s the case, what use is a democratic vote in which the majority of people make known their desire to have street cars in their city? Seems to me that in a democratic republic, it’s the people, not the market, that should rule.
But I digress. Back to the point: the solution is simple: how do we change our laws and regulations so that the trillions of dollars the banksters pass amongst themselves each day actually starts getting invested in what we the people want? It's not really that we want to take away all their money. It's: How do we force all that money the rich have to be invested in a way that actually benefits society? Thanks to kos for pointing to the really amazing comment by one Morgan Housel, who writes for the investment advice website Motley Fool. Housel is one of those typical Americans who is really smart – they can do advanced algebra to figure out the rate of return of a credit default swap deal - but whose complete devotion to the theology of the free market makes them think and say truly idiotic things like this:
And then the banks are going to be better off because they are getting rid of their least-profitable or not profitable clients. It helps them stem this tsunami of cash that’s been flowing in that they don’t know what to do with.
Tsunami of cash they don’t know what to do with? Oh, and let's not forget that U.S. corporations are sitting on another $2 trillion plus in cash reserves they apparently don’t know what do do with, either. Well, here’s one idea for that stash of cash: Dean Baker opined we need to teach these idiots how to pay their employees more. Baker’s title suggests the we face a real cultural problem, decades in the making, among U.S. elites: A Generation of CEOs Who Don’t Know How to Raise Wages.
I think it’s even worse than Baker suggests. To see what I mean, I point you to Ian Welsh’s article last week, What passes for smart on the Greek Debt Crisis, in which he rips apart two prominent liberal bloggers for mindlessly parroting the neo-liberal shock doctrine economics of the oligarchy, namely that the Greeks must be responsible and pay back every cent they owe to the banksters, or we're all going to hell in a hand basket:
There is no actual democracy in any part of the world which is attached to the Wall Street centered financial system. Calls can run up to 1000:1 against TARP and it will pass. Strong majorities can be for or against particular policies and if the elite disagrees, that’s all that matters. There are no parties to vote for if you are against the current system.
Politicians compete for the money and favors of the rich, and what they sell is the ability to wrangle you: to pass the austerity bills, to cut the benefits, to privatize the jewels of the public system, to force through the multi-trillion dollar bailouts. They control government for the benefit of the rich.
And the rich pay all the way down the line. They control the media, right down to the bottom, to make sure that what is discussed is what they want discussed, in the terms they want it discussed. That default isn’t that bad: forbidden. That currency controls mitigate damage in these circumstances: forbidden. That lenders will lend to defaulting countries almost immediately: forbidden.
You see the same sort of elite mind-censorship in how the economic recovery of Argentina is being reported in the USA: it's not. Rather than honestly detailing how Argentina’s president, Cristina Fernández de Kirchner, has restored middle class prosperity, cut unemployment in half, and gotten poverty down to less than three percent of the population, the American corporate controlled media is warning of dark days ahead for Argentina, a day of financial reckoning. Why? Because Kirchner's policies are a direct and explicit repudiation of "neo-liberal" shock doctrine economics of budget cutting, privatization, and letting banksters do what ever the hell they want.
It’s a bald face lie when someone tells you there’s not enough money to fund schools, or build rail transit systems, or let the elderly retire in dignity or pay for their medical care. Wall Street trades some $5 trillion each and every day. And if we destroy the bankster oligarchy, we the people, acting through our sovereign government, can create all the money we want. So long as new money is used for increasing the nation’s wealth – such as by building rail transit systems (and we need over $3 trillion to do it), it will not be inflationary.