Thursday, February 19, 2009

Our Goal Now Should Be the Basic Necessities

As Dmitry Orlov puts it in his hilarious address to a San Francisco audience

"What should their (Congress and the Obama administration) realistic new objectives be? Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless."

Wednesday, February 18, 2009

The Anti-Keynesians

Many on the right are arguing for a "do nothing and let the economy fix itself" approach to the current situation. Ignoring for a moment the Bear Stearns rescue, the AIG bailout, the Fannie and Freddie bailouts, and the $750 billion bank bailout we could examine this argument solely on it's merits, without considering the fairness of helping Wall Street but not helping people who have lost their jobs. We could put aside thoughts of the political and social consequences of that unfairness.

Martin Hutchinson makes this case better than most

When he says, "the Mellon approach would have given us a pretty terrifying fourth quarter of 2008, but in the long run it would have been worth it," I probably agree, although I think it would have been more terrifying than what he is imagining. Henry Paulson and Ben Bernanke also saw a greater danger or they never would have acted so against their free-market principles. They wanted to avoid the destruction of the global economy, while I welcome this, at least in principle. We need to figure out how to live closer to reality and to the natural world, with much simpler lifestyles. Of course the chaos involved in such a calamity might bring great suffering, and so it would be better to figure out an orderly way to make this transition.

I don't think people who make the "do nothing" argument really know what sort of world they are asking for. They see this crisis as just another downturn in the business cycle.

Wanted: New Economic System

The folks at Europe2020 are predicting dire things ahead for the U.S. and world economy and society:

"According to LEAP/E2020, there is only one very small launch window left to prevent this scenario from shaping up: the next four months, before summer 2009. Practically speaking, the April 2009 G20 Summit is probably the last chance to put on the right tracks the forces at play, i.e. before the sequence of UK and then US defaults begin [2]. Failing which, they will lose their capacity to control events [3], including those in their own countries for many of them; and the world will enter this phase of geopolitical dislocation like a “drunken boat”. At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007."

They point out that President Obama and other world leaders are treating the current crisis as a problem to the system which can be fixed, rather than as a failure of the system, and that only a radical redesign will succeed.

Tuesday, February 17, 2009

We Don't Really Want Change

NPR ran a story on "All Things Considered" yesterday about the growing use of low-power constantly-operating devices in the home such as digital picture frames. It seems we have a problem because as these things get cheaper and cheaper more people use them and therefore we need to build more power plants to supply this increased need for electricity.

They never even raised the question about whether it might be a good idea to try to get people not to use them.

I think if you look at the available supply of energy and the current effect our lifestyle is having on the environment you have to conclude that we're already at the point where we need to cut back significantly on our power usage, not expand it.

The same thing is true for our dependence on cars for transportation. There are much more efficient ways to move people around: trains and public transit, if we only had them. This is what we should be spending stimulus dollars on, not the highway system.

These are examples of the sort of change we need, but no one is even talking about it. As James Kunstler said, there are less than 100 people in the country who agree with him. I think he's wrong, I think there's at least 1000. Pitiful, isn't it?

Thursday, February 5, 2009

A Simple Explanation of "the Economy"

George Ure keeps laying it on the line:

"Think about this...Where does interest come from in a sound money system? Say there is $20 in the whole world and you have it all. I am flat-ass broke. I borrow $10 at 20% interest all due in one year.

Spin the clock forward one year. You still have your other $10-spot. I have gotten back that $10 and am ready to pay you. But, since I also have to pay you $2 of interest, just where the hell do you suppose that comes from?

Answer: We 'make it up'. Someone off stage prints it up and throws it in.

Except, of course, the making up is incredibly convoluted in an abracadabra sort of way."

Wednesday, February 4, 2009

The Lazy Way to Save the Planet

From George Ure's blog today (

"If you want to solve most of the world's growing list of environmental issues, here's a dandy - simple solution: Have everyone start working 3-days a week. All of a sudden, greenhouse gases, energy depletion, and all kinds of other problems become manageable. Focus on the stuff that matters: gardening, reading, personal relationships...forget the dollar mania! Let crooked banks fail - the country made it through the crisis in the past, and we will again."

I think he's on to something, seriously.

Monday, February 2, 2009

Response to State Rep. Brian Boquist's Opinion Piece Against the Economic Stimulus

Note: I submitted this to the Salem Statesman-Journal as a guest opinion; they have published some of mine before but didn't take this one. Maybe they have too much of a backlog right now. Anyway, I'm posting it here.

"Brian Boquist Impressive, But Ignores Free Market's Recent Demise"

Sunday's Opinion by Brian Boquist showed him to be a thoughtful, reasonable person, at once making a strong case against expanding government debt while also advocating cooperation with some of President Obama's ideas. Boquist fears both the growing deficit and the negative side-effects of government intervention. He is correct in pointing out these dangers, but he fails to address the fact that it was the free-market Bush administration that started down this path with the Bear Stearns rescue, the AIG and Fannie/Freddie bailout and the $650 billion TARP bailout. In fact the economic collapse of the past few months has done much to discredit a pure free-market approach among thinkers and policy makers. As George Bush said, he put aside his economic principles when faced with what advisor's told him would be a collapse worse than the Great Depression. There is much political support for the sort of massive stimulus Obama and the Democrats are proposing precisely because there is little confidence that the system will fix itself. It so happens that there is another school of economic thought advanced by John Maynard Keynes advising the government to engage in massive spending in these sort of situations. This was tried during the Great Depression and critics say that it failed and that this proves the idea has no merit; supporters say that Roosevelt did not spend enough when he tried it, and that it was his eagerness to return to a balanced budget that kept the stimulus from working. A noted Keynesian is recent noble laureate Paul Krugman, who argues that the current $850 billion plan is also too small. Some may find fault with the details of the pending stimulus plan, rightly pointing out that it includes a lot of democrat pet projects and ideology. David Brooks' Sunday column warned that trying to do everything at once just weakens what could be good programs if they were done right with more thought and planning. He suggests that it would be better to just accomplish economic stimulus more directly by something like a payroll tax cut. I confess that I voted for Obama and don't see anything wrong with the winner of an election taking an opportunity to advance his agenda in this situation if it still accomplishes the overall objective. After all, the Bush approach to Hurricane Katrina relief had lots of small business and pro-business incentives. But we're talking about a lot of money here, and I too would like to see this debt used most efficiently. My choice would be to spend it on improving public transit and rebuilding passenger rail service. I think Brian Boquist's best advice was his humorously intended suggestion about planting a garden and learning to cook from scratch. In fact, "learning to cook from scratch" is a good analogy to how we all should begin to extricate ourselves from this economic system. It's very possible that the stimulus won't work and that the perils of greater national debt will come back to haunt us. We would be better off finding ways to live without money, since needing money requires us to depend on this system. This may sound like crazy talk, but if enough houses go into foreclosure it seems possible to me that people may be allowed to just stay in their houses. In this case the defaulting homeowners have become "too big to fail". If you have shelter and can raise your own food, you're pretty close to being able to live without money. This is how the people in the Soviet Union dealt with their economic collapse in the 1990's.