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At a rally in Dallas on the first day of early voting, congressional candidate Colin Allred said “We have two weeks to save democracy!”

allred-cwa-earlyvote

Soon afterward, the election in Brazil sharpened world concern for democracy’s future. Jair Bolsonaro openly welcomes a return to military dictatorship. He threatens all his political opponents with using the military and government sanctions militias to carry out “a cleansing never before seen.” Women, gays, landless peasants, and the homeless are targets named in a New York Times article.

Almost immediately after the election, military units began raiding student organizations to confiscate any “anti-fascist” or “pro-democracy” materials, according to @castriotar on Twitter.

It’s not just Brazil. The Week news service says, “Right-wing populist and nationalist governments are in power in Russia, Turkey, India, Israel, Hungary, Poland, and the United States, and they share power with left-wing populists in Italy. Established right-wing parties in Britain, Canada, and Australia are busily adapting to the populist trend. Japan’s Shinzo Abe has taken his conservative Liberal Party in a notably nationalist direction. And with Angela Merkel announcing her intention not to run for re-election, and her party anxiously watching the rise of the far-right Alternative for Germany, it’s likely her conservative coalition will also begin sounding right-wing populist themes.”

What’s “Populism?”

In American history, the populists were always considered the representatives of the downtrodden, primarily farmers and sharecroppers who were being squeezed out by urbanization. Populism was associated with being pro-democracy, according to Wikipedia.

Today, newspersons and pundits use the term to mean anybody who claims to oppose the status quo. They’ve invented the term “right-wing populism” to include politicians who are virulently against democracy. Others just call them fascists.

What’s “Left,” What’s “Right?”

On the democracy scale, “left” is usually associated with more democracy while “right” is associated with less. The meaning of both terms is so thoroughly distorted as to make them generally useless. “Pro-democratic” or “anti’” is more accurate.

President Trump’s recent claim that he can overturn the American constitution’s birthright guarantee by executive order is a good example of anti-democratic activity.

What’s “Democracy?”

Historically, we associate democracy with the ancient Greeks. The idea was government by the will of the people. Through the ages, we have never seen anything close to a complete democracy. The Greeks, of course, excluded their slaves. In America, democracy has grown a lot since slavery days but has never included the people’s control over basic economic nor foreign policy.

Of especial importance is the people’s lack of control over the machinery of elections. We may get to vote, but we have never controlled the elections.

During economic or military emergencies, democracy is always diminished. Wartime presidents Abraham Lincoln and Franklin Roosevelt were often called dictators.

Socialists have held out the promise of great extensions of democracy, but have never completely delivered because of the extreme tactics of capitalist opposition. The best that socialists have been able to deliver was “wartime democracy” similar to what Lincoln and Roosevelt practiced.

Who Is “Shifting to the Right?”

Commentators are scrambling to explain the anti-democratic global changes. They ask why people have been voting away their own democratic powers. The answer is that we aren’t.

Our democracy, even American democracy, is not complete and never was. The struggle between the poor and the rich, the 1% and the 99%, the employees and the employers, the workers and the owners, is being played out in elections that are ignored by many on our side. The elections are  being manipulated by the rich and distorted by incredible rivers of dark ugly money.

As a world crisis of international competition shrinks their opportunities, the wealthy are increasingly choosing to give up all pretense of government by the people. They are throwing their considerable wealth and power behind reactionary anti-democracy politicians who are willing to carry us all down an obvious path of total destruction.

Only our side can save democracy.

-Gene Lantz

I’m on KNON radio’s “Workers Beat” program 89.3FM in Dallas at 9 AM Central Time every Saturday. They podcast it on Itunes. If you want to know what I really think, check out my personal web site

Notes:

Ny times https://www.nytimes.com/2018/10/29/world/americas/jair-bolsonaro-brazil-profile.html

Brazil Election: How Jair Bolsonaro Turned Crisis Into Opportunity

Mr. Bolsonaro’s broadsides against women, gay people, Brazilians of color and even democracy — “Let’s go straight to the dictatorship,” he once said as a congressman — made him so polarizing that he struggled to find a running mate until early August. Traditional parties and politicians considered him too extreme.

President Trump called on Sunday to congratulate him on his victory, following up with a tweet on Monday morning that said, “Had a very good conversation with the newly elected President of Brazil, Jair Bolsonaro, who won the race by a substantial margin. We agreed that Brazil and the United States will work closely together on Trade, Military and everything else!”

In 1993, he delivered a fiery speech before the lower house of Congress urging its demise, calling the emerging version of democracy in Brazil a lost cause.

“I am in favor of a dictatorship,” Mr. Bolsonaro thundered. “We will never resolve serious national problems with this irresponsible democracy.”

rc‏ @castriotar Oct 26

rc Retweeted Folha de S.Paulo

More than 20 Brazilian universities were invaded by the military police in the past 2 days. They confiscated material on the history of fascism, interrupted classes due to ‘ideological content’, removed anti-fascist banners and posters claiming that it was electoral propaganda.

@castriotar

Many other student movements and organizations reported military police forces inside classrooms, student units, academic directories, confiscating any sort of materials with ‘anti-fascist’ or ‘pro-democracy’ content.

“It will be a cleansing never before seen in Brazilian history.” [referring directly to “reds,” to Workers Party leader Lula Da Silva, and to his present electoral opponent. He said they will “rot in jail.” He directly threatens to use the armed forces and civilian militias with legal sanction against enemies such as the landless peasants movement and the homeless movement.

April article From Independent about Hungary: https://www.independent.co.uk/news/world/europe/victor-orban-hungary-migrant-refugees-george-soros-ngo-far-right-a8297441.html

Viktor Orban’s right-wing populist party has vowed to would crack down on organisations helping migrants and refugees, in an announcement made just a day after it won an overwhelming election victory.

The autocratic prime minister portrayed himself as the saviour of Hungary’s Christian culture against Muslim migration into Europe, an image which resonated with more than 2.5 million voters.”

His Fidesz party won a two-thirds super majority in the country’s parliament, which would allow it and its small ally, the Christian democrats, to push through changes to constitutional laws.

**

From Washington Post: https://www.washingtonpost.com/news/monkey-cage/wp/2018/02/27/polands-right-wing-government-is-rewriting-history-with-itself-as-hero/?noredirect=on&utm_term=.2ef44090bd99

By Mateusz Mazzini February 27

Poland is in the midst of a pitched battle over its collective memory. The ruling party has recently stirred an international controversy by passing a bill criminalizing the use of the phrase “Polish death camps.” But in many ways, those international rifts are just collateral damage. The real battle is at home and is over what counts as legitimate political authority, and who can wield it.

Poland’s government is suggesting that the present-day cosmopolitan liberals who want to acknowledge Polish collaborators in crimes against Jews are traitors, like the Communists, willing to sell the nation to the highest international bidder. And such national mythmaking has more real-world power than many understand.

From The Atlantic: https://www.theatlantic.com/international/archive/2018/06/its-the-right-wings-italy-now/562256/  June 6

“A new populist government came to power in Italy this week, and the right is calling the shots. It swept in on a wave of anxiety about immigration and the economy. On the economy, certain European rules could prevent Italy from going totally off the rails. When it comes to immigration, things could get rough—at least in rhetoric. In 88 days of coalition talks, Salvini, known for his strident attacks on immigrants as a threat to Italian safety, grew emboldened by the League’s rising popularity in the polls, and in the 11th-hour negotiations to forge a government, he appears to have outmaneuvered Luigi di Maio, the head of the anti-establishment Five-Star Movement, which won twice as many votes as the League in Italy’s March 4 elections

From The Week: https://theweek.com/articles/804453/why-are-rightwing-populists-winning-everywhere

“Right-wing populist and nationalist governments are in power in Russia, Turkey, India, Israel, Hungary, Poland, and the United States, and they share power with left-wing populists in Italy. Established right-wing parties in Britain, Canada, and Australia are busily adapting to the populist trend. Japan’s Shinzo Abe has taken his conservative Liberal Party in a notably nationalist direction. And with Angela Merkel announcing her intention not to run for re-election, and her party anxiously watching the rise of the far-right Alternative for Germany, it’s likely her conservative coalition will also begin sounding right-wing populist themes.”

“What is the commonality in contemporary conditions, around the world, that has made people in so many countries susceptible to both emotional impulses at once, and powered the global rise of the populist right?

That’s the question that liberal democrats need to answer before they are completely swept away.”

I have never been sure whether Donald J Trump was restoring a world of hatred and nationalist paranoia because it’s just what he wants to do, or if he was simply reflecting a change in world relations whose time had come.

diplomacy-cartoon

Fraternalization among nations is ending.

One could say that international fraternalization started during World War II, or after it, or during the Nixon Administration when he visited China. One could say that it began with the fall of socialism in the USSR and Eastern Europe. Or one could say it began with the formation of the European Economic Community, or with the Organization of Petroleum Exporting Countries, or with the Organization of American States, or with all of that. However it started, it’s ending now. Nations are pulling apart.

Case in point: The European Union is strongly criticizing the governments of Italy and Poland. Even bigger case in point: Donald J Trump is pulling out of environmental accords and, lately, even out of nuclear proliferation accords. Plus, he seems intent on offending almost all traditional American allies. Nations are pulling apart.

Should we ask why?

Or should we look at it the other way around and ask why nations had been seeking cooperation with one another prior to the Trump election?

The period just ending, in which America dominated and forced every other nation to cooperate, is not new in history. In the centuries of British domination, roughly 1700 to 1900, they did the same thing. They even used the same rubric: “free trade.”

As British domination fell apart, the separate nations experienced their first World War. As that war began, V.I. Lenin wrote “Imperialism.” In it, he compared the world’s national leaders to gangs of criminals who might, for short periods, cooperate, but were likely to launch a new “turf war” almost any time. The inference from the pamphlet was that the capitalists running the largest industrialized nations would never cooperate for long. For economic reasons, it’s just not in their nature.

The United States dominated the world economically from World War II to the present, but that domination is being severely tested today. Our cars aren’t the only cars, our steel industry is about gone, even our electronics industry has disappeared. If other nations decided to stop using U.S. dollars as their reserve currency, our economy would fall to pieces. And that could happen. Almost any time. Trump is pushing them in that direction, too.

What we called “globalization,” or fraternalization among nations was really a set of circumstances in which the United States was unchallenged in its world domination. Every other nation actually had to cooperate, or to seem to cooperate. That seems to be ending now. I don’t think Trump caused it in 2016, just as I don’t think Hitler caused it in 1931, or if the heir to the Austro-Hungarian empire caused it by dying in 1914. It’s part of the system we live under. It had to end.

The question really is: what are we going  to do about it?

–Gene Lantz

I’m on KNON radio’s “Workers Beat” program 89.3 FM in Dallas at 9 AM Central Time every Saturday. If you are curious about what I really think, check out my personal web site

 

Book Review:

Piketty, Thomas, “Why Save the Bankers? And Other Essays on Our Economic and Political Crisis.” Houghton Mifflin Harcourt, Boston New York, 2016. Dallas Library 330.94 P636W 2016

economics-vague

Apparently, publishers were looking for anything by Piketty after his world-shaking 2014 (in French, 2015 in English) book “Capital in the 21st Century.” This is only a collection of his essays on contemporary developments in Europe 2010-2015. He has a monthly newspaper column.

These are short and readable and, if nothing else, give a short summary of major economic developments in the European Union during the period. They also encapsulate some of his major recommendations for solutions to the capitalist crisis:

  1. The worldwide wealth tax espoused in his major work
  2. Additional economic integration — he calls it ‘federation’ — within the European Union. He particularly wants the EU to be able to issue common bonds and have common debt. At other times, he mentions other economic aspects of closer federation.

“Federalism, the Only Solution,” is the title of one very central essay.

Piketty doesn’t believe that austerity will solve any particular country’s crisis, consequently, he sees no reason why some countries (Germany and France) would force it onto other countries (Greece). He opposes what he calls “tax competition” between nations. It consists of lowering business taxes in order to entice more economic activity away from countries with higher taxes. He mentions Luxembourg and Ireland particularly.

At the end of 2017, Republicans in Congress drastically lowered taxes for businesses and wealthy Americans. One of their excuses was that other nations had lowered theirs already. Race to the bottom!

In a very general sense, Piketty sees the European Union as having unnecessary crises because they only partly joined their economies. Fiscal and monetary policy simply don’t work when they aren’t coordinated among the nations. What hurts one helps another.

-Gene Lantz

I’m on KNON radio‘s “Workers Beat” program at 9 AM Central Time every Saturday. 89.3 FM in Dallas. They podcast them on Itunes. If you are curious about what I actually think, check out my personal web site.

The outlook for working families is far worse than usually noted.

inequality-europe-US

The graph above is one of those used in the best selling, world-shaking economics book “Capital in the 21st Century” by Thomas Piketty.

Like many graphs in the book, this one shows that income inequality dropped during the middle part of the 20th century. Then it began to rise again and continues to rise toward conditions that Monsieur Piketty and others describe as “intolerable.”

Popular economics books of today such as “Runaway Inequality,” a book broadly used in the American labor movement, only look at the later half of the graph – from 1945 to present. Most of the economic analysis used by the AFL-CIO is based on a “return to normal” which they define as 1945-1973. Most of us grew up in that period and consequently it is natural that we would think of it as “normal.”

In 1973, the United States and the world dropped the gold standard and began floating their currencies. After those great economic changes of the Nixon Administration, and even more so under the trickle-down “Reaganomics” of 1980, we say that really bad people distorted American economics to the detriment of working families. Since the bad people took power, inequality has continually grown much worse.

The world owes its gratitude to the Occupy Movement for having focused our attention on rising inequality. They saw that the 1% was growing in wealth and power to the detriment of the 99%, and they forced the rest of us to see it. The unfortunate inadequacy of their solution grew from the shortcomings of their analysis. They didn’t look deeply enough into the data.

Bernie Sanders took this growing consciousness much further. His analysis included the nuts and bolts of inequality, the ways that the 1% keeps the flow of wealth moving upward toward them. Sanders’ prescriptions for new nuts and bolts were much more useful than what the Occupy Movement had offered. Sanders and his followers are converging with the American labor movement today, and both are being strengthened. For that, too, the world must be grateful. I am grateful.

At the same time, during the fiery height of the Bernie Sanders campaign in 2016, even while I was campaigning for him, I often said, “Bernie Sanders will never live to see his program implemented. They would kill him first.”

The solution being put forward by almost everyone in the labor movement and by progressives at large, Bernie Sanders included, is to stop electing bad people and start electing good people who will return to the good policies that reduced inequality during 1914-1973. It’s a simple and seductive solution.

It Won’t Work

I would truly like to think that elections, elections in general and specifically the ones we’re about to have, will elect those good people, with those good solutions, and we will return to the policies that lowered instead of raising inequality in the United States and in the world. But they won’t.

I want to tell you why, even though I supported the Occupy Movement, and even though I support the Bernie Sanders socialists, and even though I am completely devoted to the AFL-CIO and the American labor movement, I want to tell you why I think their analysis is incomplete. Not only is their analysis incomplete, but their prescription, what to do about our situation, is inadequate. One cannot arrive at successful tactics without first understanding the present situation.

Look at the Whole Graph

The popular analysis, and the prescriptions that come from it, are wrong. Look at the whole graph. In fact, look at the entire history of capitalism. Piketty and his associates have accumulated data and anecdotal records going back to the early days of capitalism. Those data show incontrovertibly that increasing inequality is fundamental to capitalism. The 60-year drop in inequality, roughly from World War I until 1973, a small part of capitalism’s history, was never normal. It was completely abnormal and, in fact, antithetical to normal capitalism. What we had before 1914, and what we have now, rising inequality, is “normal.”

Didn’t Work in 2008, Won’t Work in 2018

If one realizes that we are now living in a “normal” period, then one should be able to see that there is no single simple solution. Even if we have great election victories in 2018, as we did in 2008 by the way, inequality is not going to diminish. We’re going to have to work a lot harder than that.

What we are living in now, and what we lived in before World War I, is normal. In an article titled “Who Will Be the Winners of the Crisis?”, Piketty himself explains: “Left to itself, capitalism, because it is profoundly unstable and inegalitarian, leads naturally to catastrophes.” “Inegalitarian” means what you think it does.

So the period of my youth was abnormal. What we are suffering under today is normal.

Why Did Inequality Diminish in the Abnormal Period?

Monsieur Piketty points out that the crises of the 20th century did not cause inequality to go down. As he says in the article I just quoted, “The historical data… shows unambiguously that that financial crises, as such, have no lasting effect on inequality; it all depends on the political response to them.”

So the political responses to the two world wars and to the great depression were what lowered inequality. It was the progressive taxation that lowered inequality. But why did these progressive policies get selected? Why not let the rich continue getting richer and the poor get poorer? Piketty says that the system received “shocks” with two world wars and a great depression.

Look At the Graph Again

Piketty is wrong about the “why” of diminished inequality 1914-1973. It wasn’t “shocks.” It was the success of the working class. We may not know much about the 23 countries that Piketty studied, but we do know what happened in the United States in the middle of the 20th century.

Workers Power Grew

In 1914, when Piketty says inequality began to get lower, the Socialist Party was riding high in America. Even out here, in Texas and in Oklahoma, many people were openly socialists. They voted socialist. There were socialists elected here and there and everywhere. There were socialists in Congress! The Industrial Workers of the World was terrifying employers from the textile mills of New England to the timber forests of Oregon. In 1917, socialists took power in the Russian empire! In 1919, Eugene Debs got a million votes for President while he was in prison!

The great depression hit hard in the capitalist countries, but the socialists were able to point to the Soviet Union and say “They aren’t having a depression!” Socialism, and the workers movement, was growing in popularity while inequality was falling. During World War II, it was the socialists who led the resistance movements. Many of them were so popular that they took power when the Germans and Japanese were finally defeated. Look at Marshall Tito in Yugoslavia, Enver Hoxha in Albania. Look at Mao Tse Tung in China and Ho Chi Minh in Vietnam!

In 1935 in America, the Committee for Industrial Organization took over where the Industrial Workers of the World left off. The progressive movement grew like crazy. By 1947, they had gone from a small part of the labor movement to approximately 1/3 of the American workforce! The actual numbers of people in unions continued to rise until the mid-1950s. Then it started to drop off. In that same period, socialists were red-baited into virtual obscurity.  The Soviet Union was probably at the height of its world popularity when it sent up Sputnik in 1957, but its popularity sagged after that. By the time Reagan declared war against the progressive movement, the steam had gone out of the workers’ movement, both internationally and here.

I saw one book, sold by the AFL-CIO, that says the American labor movement died in 1972 because they failed to support McGovern for President. We didn’t actually die, but we lost a lot of blood.

However one may analyze it, no matter what statistics one uses, one still has to conclude that the workers’ movement does not have the power that it enjoyed in the middle of the century, when inequality was at its lowest.

After 1980, the power of American employers waxed while ours waned. Inequality grew. Inequality is still growing.

While Employers Rule, Workers Can Make No Permanent Gains

The greatest person I ever knew personally was named George Meyers. He had been a leader of the CIO before he joined the army in World War II. George used to say, ‘There are no permanent gains for workers under capitalism.” No matter what you win, you will always have to fight for the same things again.

I had a personal experience with that. My union carried out an incredible fight in 1984-5, and we emerged with the best contract in the aerospace industry. Better than Boeing’s contract, and we were just little LTV in Grand Prairie, Texas. But nobody hangs on to those gains. You have to win them over again, the same things, win them over and over and over, every contract.

With Understanding, We Can Prescribe Solutions

The solution to the rising inequality caused today by normal capitalism is to fight with everything we can find. We have to fight to win these elections, of course, and we really need to win. But that’s not all. We need economic struggle as well as political struggle. We need boycotts, we need petitioning campaigns, we need militant contract fights, and above all we need to organize. We need to bring the entire progressive movement together and focus it on fighting the employers, the 1%.

It’s easy to say these things but not so easy to do. Contract fights are rare today, because the legalities have become so rigorous against us and our leaders have lost their edge while our members are confused. Even a simple idea like organizing is really really hard. Most union staffers and officers are far too busy to organize. There’s very little money for organizing, and there are very few unpaid volunteers in today’s labor movement.

But There’s Good News

We are in the biggest and most general progressive upsurge in American history. It isn’t focused, it isn’t united, but it’s big and it’s enthusiastic. The most exciting news of the 21st century came from the teachers of West Virginia and a few other states this year. They carried out victorious political strikes. Political strikes are common in Europe, but almost unheard of in America. That kind of planning, that kind of volunteering, and that kind of militancy is what we have to have.

I won’t say it’s easy to do what has to be done, but I will say that it has to be done. There is no other way.

–Gene Lantz

I’m on KNON radio 89.3FM in Dallas at 9 AM Central time every Saturday. They podcast it on Itunes. If you are curious about what I really think, see my personal web site. I intend to present the ideas in this article at 6:30PM Central Time on September 1 at Romo’s Restaurant, 7033 Greenville Av in Dallas. Come down and discuss it!

Book Review:

Galbraith, James K “The End of Normal. The Great Crisis and the Future of Growth.” Simon & Schuster, New York, 2014. Dallas library 330.90511 G148E 2014

Some economists, and certainly those dominating the thinking in the labor movement, believe that the period 1945-1973 was “normal” and that our subsequent problems came about because of bad policies. Most notably, we blame Reagan, Reaganomics, and “trickle down” economics. Our intentions are the best, but our economic analysis is way wrong according to the last few economics books I’ve read, especially this one.

The postwar boom was not normal. It was an extremely unusual period of capitalist history during which the United States dominated the economic world. Capitalists reluctantly shared some of their largesse with a powerful and demanding labor movement. By 1973, it was pretty well over. What happened before and what is now happening afterward is normal capitalism: slow growth, rising inequality, international competition, and inevitable crises.

Some economists treat their discipline like a religion. In religion, God has a purpose for everything. He/She tends to restore balance in a world that makes sense. When things seem to go terribly wrong, God is just moving a few things around with balance and purpose His/Her ultimate goal. Religious people think that the universe has some kind of stasis, and everything within it has a natural balance that we will understand someday after we’re dead. “Farther along, we’ll know all about it. Farther along, we’ll understand why” as the song says.

This religious commitment to balance and purpose is contradicted by everything that happens. The universe has no balance: some stars collide with others, planets come and go. Our lives have no balance: we may be growing cancer cells right alongside the healthy ones.

Things aren’t balanced and purposeful. In fact, things aren’t even whatever we think they are. Everything is changing from one type of thing to another. The only “normal” is change. That’s true of economic systems as well. It’s not a religion, and there is no balance and purpose to be “restored.”

galbraithquote

Galbraith seems to know that, and he lashes the many conventional economists whose conclusions are tailored to suit the desires of their employers. You really have to appreciate Galbraith for that.

The author teaches at UT Austin. He’s a wonderful writer. Whether or not he’s a great economist, I suppose, will be revealed over the next few years because, unlike most, he does not believe that America will ever return to the growth period from around 1945 to the 1970s. He recommends that we adjust our policies for an extended period of slow growth. His recommendations are a lot like those of Bernie Sanders.

I wonder what he said two weeks ago when President Trump announced that growth in the 2nd quarter of 2018 had exceeded 4%? If they are able to sustain that kind of growth, then Galbraith was simply wrong, but that one quarter could easily be a fluke. I wrote him an email to ask.

Some of his more contemporary remarks, from January 2018, are on-line:

https://www.marketwatch.com/story/economist-james-k-galbraith-isnt-celebrating-dow-25000-2018-01-08 He correctly predicted that corporations would not invest their ill-gotten gains from the December, 2017 tax giveaway. He says they will just buy back their own stock and drive up stock prices, and that is certainly what happened over the next 8 months.

This is a good book well worth reading.

OTHER REVIEWS:

https://marxandphilosophy.org.uk/reviews/7923_the-end-of-normal-review-by-hans-g-despain/

Reviewed by Hans G Despainent

View comments

James K Galbraith’s The End of Normal, recently published, is a spectacular achievement in political economy generally, as a philosophical critique of the practice of economics and public policy in particular, and for its comprehensive and totalizing explanation of global monopoly-finance capitalism.

…Galbraith contends that not only does financialization generate massive inequality and instability (see Galbraith 2012), but generates opportunities for colossal fraud. Galbraith contends we must “stipulate that the Great Financial Crisis was rooted in a vast scheme of financial fraud”

https://www.goodreads.com/book/show/18144111-the-end-of-normal

Today, four factors impede a return to normal. They are the rising costs of real resources, the now-evident futility of military power, the labor-saving consequences of the digital revolution, and the breakdown of law and ethics in the financial sector.

 

MY NOTES:

Pg10: That bastard Richard Fisher

17 He begins his tale in 1945

21 Effect of communism. At the last chapter, he gives an interesting summary of the economic collapse of the Soviet Union from being a great power to being a total bust

57 Financialization

64 Economists are like monks in a monastery. He handles metaphors very adeptly

67 Capitalism = perfection

68 Stochastic – it means “random”

99 Could this be an error? He says that no gain results from variable costs. Does he think profit comes from fixed costs?

100: Does he think surplus value is produced from energy? Business cycles are caused by technology. Tractors basically caused the great depression by supplanting all the farmers, mules, and horses. Anyway, he thinks resource costs are a big problem. He thinks technology is not going to save us.

164 Explaining the Great Recession: “…fraud took over the financial system because it was expedient to allow it.” The basis for growth ended in the 1970s.

Somewhere in here, he mentions that nobody cares if people move from California to Colorado. I think he’s pointing out that immigration within the Economic Union is a really big problem, but it’s easy within the United States.

222 Cutting Social Security would not help the economy, as they are just transfer payments redistributing wealth but not creating or destroying any

238 There are four obstacles to achieving high growth and full employment:

  1. Energy markets remain high cost and uncertain (this was 2014)
  2. World economy is no longer under the effective financial and military control of the United States and its allies.
  3. Digital technology replaces a lot more jobs than it creates
  4. The private financial sector has ceased to serve as a motor of growth

Pg 241: Why not live in a “no growth” world? He says that our store of capital would not get replenished so productivity would fall continuously

The Soviets were a great powerhouse by the 1960s, but they did not rebuild and replenish their productive abilities and, eventually, lost the technology race. Their production got more and more costly and less and less quality. After the government collapses, the economy really went to hell. GNP dropped by half, life expectancy dropped from 72 down to 58 (pg 259).

He doesn’t think cutting the working hours would be as good as just letting people retire earlier.

Book review:

Piketty, Thomas: Capital in the 21st Century, Belknap Press of Harvard University Press, Cambridge, Massachusetts, London, England, 2014. 332-041 P636C in Dallas Public Library

The library had to renew this book twice before I could finish its 577 pages. Like other books about economics, it is full of Greek symbols, formulas, graphs, and statistics.

inequality

Piketty claims to have accumulated more economic data than any work before him. His facts and numbers go back into the 18th century. His best data is from his home country, France, but he has a lot from U.S., Britain, Germany, Italy. A little data from other countries and a little data from other times going back to the Romans. This book shook the world. His information base is far more comprehensive than anything else I’ve seen or heard of.

It is difficult to argue against someone who has the data, so I won’t argue over facts. But I will argue against his interpretation of the data, and I will argue even more strongly against his suggestions for future action. First, a bit about what he says:

It was very gratifying to see that he doesn’t think that economics can stand as an independent science. It has to be combined with other disciplines, especially politics, to be of any use.

Piketty’s graphs show that the period from roughly 1914 to 1973 was very different from before or after. Inequality was rampant before, it’s rampant now, but it wasn’t so dire during 1914-1973. I’ll call that the abnormal period. Capitalism is now “normal,” that is, it is creating devastating inequality. Piketty asserts strongly that the best solution is a global tax on wealth, not for revenue, but to redistribute wealth and lessen inequality.

During the abnormal period, the author says, there were two world wars and a depression. Governments established strong central banks to deal with the world depression. To pay for their wars, they implemented progressive taxation, especially of income and inheritance. As for the cause of these developments and the subsequent lessening of inequality, Piketty just calls the wars and depression “shocks.”

Were “Shocks” the Cause?

That’s not how I interpret the abnormal period that Piketty revealed. Something else happened 1914-1973 besides a depression and two world wars.

I note that 1914 marked the upsurge of the workers movement worldwide, not just in Russia. In America, for example, socialists were being elected to office, including to the U.S. Congress. I also note that 1973 marked the Sino-Soviet split (Nixon’s trip to China) the beginning of the downturn for the USSR in particular and the worldwide workers’ movement in general. One book I read said that the American labor movement died during Nixon’s campaign for a second term (they didn’t support McGovern). At any rate, the American labor movement’s weakening was certainly visible by 1973.

Inequality was indeed lessened by progressive taxation during the abnormal period, but it wasn’t because of “shocks.” It was because the workers’ movement was waxing strong. During World War I, the Bolsheviks took power and inspired the world movement. During the depression, communists argued that the Soviet Union was the only untouched major economy in the world. After World War II, communists were politically strong because they had led the resistance movements in occupied territories such as France, China and Vietnam; not to mention that the USSR defeated Hitler.

Of course the big capitalist nations raised taxes and granted health care and retirement to workers during the abnormal period! In the face of the threatening workers’ movement, what else could they have done?

But by 1973, the workers’ movement was on the wane in the U.S. and elsewhere. At that point, capitalist nations began to take back what they had allowed, to further undermine the workers, and to drive the Soviets into insolvency.

What drives history?

To put it bluntly: the motor force of history is the class struggle, not various “shocks.”

Now, as for Piketty’s remedy for runaway inequality and eventual disaster: He knows, and says so several times, that his worldwide tax on wealth is not feasible. It would take far more transparency than capitalists will allow to even know who to tax and how much. To think that democracy can impose itself on the capitalist class is to assume that the workers’ democracy movement is strengthening and the capitalist power is diminishing, when Piketty knows the opposite is true.

As inequality increases, and it is increasing greatly, probably far more than Piketty could have predicted when he wrote this great book in 2014, then the power of the wealthy increases as well. They are not just piling up wealth; they are also piling up power. As long as they are in power, they will never allow Piketty’s pipe dream to come true. He knows that.

Disaster Lies Ahead

But Piketty’s assertion that inequality will continue to rise and will become intolerable is irresistible. He must be right. When this certainty becomes clear to everyone, that the rich are getting almost everything and the rest of us are moving close to starvation, the situation will indeed be intolerable. Only three outcomes are possible: devastating world war, fascism or revolution.

–Gene Lantz

I’m on KNON radio 89.3 in Dallas every Saturday at 9 AM Central Time. Podcasts are available through the “events” tab. What I really think is on my personal site.

NOTES:

Uses several Latin and French terms:

A priori – “from before” used to mean that no proof is necessary

“Cadastral” (of a map or survey) showing the extent, value, and ownership of land, especially for taxation.

“Belle Epoque” – Period ending 1914

“a fortiore” used to express a conclusion for which there is stronger evidence than for a previously accepted one.

Pg1 (bottom) He says we need to regain control over capitalism. He’s going to tell us how by the end of this book.

13 Kuznet’s curve says that capitalist growth will even out inequality without any need for anybody to do anything. The market and invisible hand will care for us.

50 Beta = capital/annual income. Usually 6

52 (top) Economics cannot stand alone. Must be combined with politics and other kinds of studies before it yields useful knowledge

52 First law of capitalism Theta = rate of growth times (Capital/annual income)

Theta is capital’s share of national income

r is rate of return on capital

52 Karl Marx quite wrong. My question: Not all capital is invested

Pg86: “They decided to work less” – He ignores class struggle altogether!

87 on consumption. Does he realize that older societies produced and consumed agreat deal that never reached a market? They made their own clothes, for example.

Pg166: Beta = s/g =The 2nd law of capitalism

203 Corporations invented circa 1850

222 Steady rise in Beta and Theta

250: Middle “class” – he means income

270: Measurement is “never neutral.”

275 War & rent control mentioned but not USSR

279 “Income from labor.” I think he is including CEO pay. It’s interesting that he doesn’t seem to know that CEO pay is skyrocketing because CEO’s command the corporate boards that set CEO pay. In other words, CEO pay isn’t “labor,” it’s income from capital.

332 (bottom) CEO Pay

355 Fiscal Competition – nothing so far on class struggle, but I think it explains the first half of 20th century even though he attributes it to “shock.”?

358 Inequality causes political reaction

409 (middle) In the 1970s, people thought that inequality was defeated

423 “rent is not an imperfection”

439 tax on capital

471 “…it was the wars of the twentieth century that, to a large extent, wiped away the past and transformed the structure of inequality.”

why not the class struggle?

471 war, disaster, or Piketty’s global tax on wealth?

473 “The crisis of 2008 was the first crisis of the globalized patrimonial capitalism of the twenty-first century. It is unlikely to be the last.”

474 New instruments needed

475 graph of social spending (class struggle again)

484 Social mobility lower in U.S.

488 Privatizing Social Security?

497 Taxes growing more regressive. Tax competition mentioned over and over. Too bad he wrote this before the Republican tax giveaway of 2017!

500 Bolsheviks. Progressive taxes

509 International competition

514 “No hypocrisy is too great”

518 Capital tax not for revenue but for wealth redistribution

519 Top centile’s growth goes on indefinitely.

Transparency needed

521 How could this be done without a world government? It couldn’t and he knows it

529 Italian was voted out for having invented a wealth tax

534 He is against protectionism and says it creates no value. All this before Trump!

539 “Temptations of defensive nationalism and identity politics…” sounds like he was anticipating Trumpism

541 Public debt solutions: taxes on capital, inflation, austerity

Pg 558 his solution to European public debt is for all the EU to pool their debts and make a common solution. Utopian!

Pg 560 “…the Eurozone cannot do without a genuine parliamentary chamber…” more utopia

560: “Tax competition” used throughout the book. Described here as the various nations lowering their corporate taxes in order to compete with one another. I’ve been calling this “inter-imperialist competition” for years.

His solutions throughout the book are worldwide inter-nation solutions, when he knows that won’t happen. Also, he wrote this before the Brexit vote began a chasm in the EU. He’s assuming more cooperation between nations, not less as we are already seeing.

562: “…without such a European political union, it is highly likely that tax competition will continue to wreak havoc. The race to the bottom continues in regard to corporate taxes…”

566: He agrees with me about bond elections: “…debt often becomes a backhanded form of redistribution of wealth from the poor to the rich…” The wealthy should be taxed instead of allowed to loan money and collect interest.

567 “…debt must be reduced as quickly as possible, ideally by means of a progressive one-time tax on private capital or, failing that, by inflation….”

569: his solution: Economic transparency and democratic control of capital. Neither one of which currently exists.

572: The right solution

574: “Political economy” is the term he prefers

577 (last page) “…economic and political changes are inextricably intertwined and must be studied together.” He prefers “political economy” to “scientific economics.”

The last line of the book: “Refusing to deal with numbers rarely serves the interests of the least well-off.”

OTHER REVIEWS:

Synopsis: https://www.newyorker.com/news/john-cassidy/pikettys-inequality-story-in-six-charts

Piketty’s Inequality Story in Six Charts

By John Cassidy

March 26, 2014

https://www.economist.com/the-economist-explains/2014/05/04/thomas-pikettys-capital-summarised-in-four-paragraphs

The Economist explains Thomas Piketty’s “Capital”, summarized in four paragraphs.

A very brief summary of “Capital in the Twenty-First Century”

http://www.nybooks.com/articles/2014/05/08/thomas-piketty-new-gilded-age/

Why We’re in a New Gilded Age

Paul Krugman

MAY 8, 2014 ISSUE

http://bostonreview.net/class-inequality/marshall-steinbaum-why-are-economists-giving-piketty-cold-shoulder

Boston Review: Why Are Economists Giving Piketty the Cold Shoulder?

MARSHALL STEINBAUM

May 12, 2017

“his work on inequality is an agenda-setting and generation-marking intellectual achievement, potentially as explosive (albeit with a longer fuse) in academia as it has been outside of it.”

Book Review:

Thomas Hartman, The Crash of 2016. Twelve, the Hachette Book Group, New York,  2013

us-economic-collpase

If there really had been a crash in 2016, Hartman would have been considered a great genius. As there wasn’t, he ends up with some egg on his face. Further unfortunately for Hartman, some of the problems he points out were already reversed by the Trump administration, specifically tariffs and China-bashing. So his argument for the crash of 2016 is further undermined.

However, a ‘great crash’ within the present time frame would nevertheless redeem him and people would only say that he missed it a few years. The book is a good, exciting, read, but I would have to put it into the category of well-written alarmist narrative rather than serious economic study. Like all of the books written before Piketty (2015 in English) that I have read, they consider 1945-1979 “normal” and everything subsequent as “abnormal.’ I consider this wrong, and so does Piketty. The abnormal period was 1945-1979. Before and after that short “American century,” what happened and is happening is just capitalism.

Hartman puts most of the fault for the disastrous 1979-to-present period on mental states and subjective attitudes rather than historical and economic developments. FDR was a good guy, the “economic royalists” were bad guys with questionable sanity. In fact he calls them psychopaths. The rest of us are guilty of mental lapses, too, as new generations go through a “great forgetting” that causes us to repeat previous economic errors.

As Hartman doesn’t understand the cause of the present economic problems, he doesn’t have a very good handle on solutions, either. Some of his hopes are presently being carried out by Donald J. Trump and are not likely to bring long-term economic benefit to the populace.  He also proposes things that aren’t likely to happen given current trends. After the “crash of 2016” that he predicts, he wants us to reinvigorate democracy through election reform. He wants the labor movement to be encouraged by government. Most of all, he seems to want worker cooperatives to replace the giant corporations as the main economic engines.

How any of that could happen, Hartman doesn’t say.

some notes:

Pg15: Good quote from Grover Cleveland in 1888: “The gulf between employers and the employed is constantly widening, and classes are rapidly forming, one comprising the very rich and powerful, while in another are found the toiling poor. As we view the achievements of aggregate capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.”

20: The Business plot: General Smedley Butler blew the whistle on a plot to bring an army of 500,000 men into DC to oust FDR. The front man for the businessmen and banksters was Gerald MacGuire.

26: Moyers quote on plutocracy on 2011: “Our democracy is dysfunctional…. We no longer have a government of, by, and for the people– representative democracy. We have government by plutocracy– the rule of the rich for the rich by the rich…. Plutocracy has one purpose, which is to protect wealth.”

Pg34: Powell memo outlined how Republicans could take over. Lewis F Powell Jr in 1971 went to Nixon. Nixon made him Supreme Court Justice. His memo, written to the United States Chamber of Commerce just before his nomination, recommended a militant political action program ranging from the courts to the campuses. He wanted to undo the New Deal.  Powell called on corporate leaders to launch an economic and ideological assault on college and high school campuses, the media, the courts, and Capitol Hill. The objective was simple: the revival of the Royalist-controlled so-called ‘free market’ system. (page 37)

pg40 Roger Ailes prepared the way for Fox news misrepresentation

pg43: lobbying mushroomed. ALEC formed

44: CATO and Heritage foundation come out of Koch Brothers

48: Supreme Court decisions such as Citizens United

52: “Trickle down” economist Milton Friedman advises the fascists in Chile. Terrible economic results

71: He credits FDR and “good “ politics for 1945-1979 good times. Unlike Piketty, who says it was the “shocks” of two world wars.

88: He is pro-tariffs. This is before Trump imposed them

93: Psychopaths. He says that banksters and other filthy rich are basically psychopaths. In fact, a lot of Hartman’s analysis has to do with mental states. He thinks that generations go through a “great forgetting,” for example, that causes us to repeat previous economic errors.

95: Getting sillier. He thinks madness is part of evolution.

96-7: Oligopoly

101: On China, he seems to be agreeing with Trump again. Lots of China bashing here

122: Tillman Act under Theodore Roosevelt stopped corporate electioneering

151: Corporations, especially Railroad Corporations, made many efforts to get legalization in Supreme Court decisions. They always lost until “Citizens United.”

207: He gives recommendations for after the crash of 2016. It’s all reformism of capitalism. He espouses value of co-operatives.

273: Author is described as a talk show host with several important books before this one.

–Gene Lantz

I’m on the “Workers Beat” talk show on radio KNON in Dallas at 9 AM Central Time every Saturday. Podcasts are available under the “events” tab. If you are curious about what I really think, check out my personal web site.