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Why No Inflation?

September 2, 2016
economy, politics
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Why has inflation been so low in the past few years?

money

If interest rates are near zero, and they have been for some years, doesn’t that mean that corporations can borrow pretty much all the money they want? Since the lenders only keep a small “reserve” of what they lend, wouldn’t all this borrowing result in a big increase in the total supply of money?

If we have more or less the same things to buy, and there’s a lot more money floating around, wouldn’t that mean high inflation?

The Money Supply Is Increasing

The Federal Reserve publishes their estimate of the total amount of money in the U.S. They call it “M2” and it includes everything, bank accounts as  well as currency. In July of 2011 it was $9,232.6 trillion, or $9,232,600,000,000. At the end of June 2013, it was $10598.4 trillion. That’s an increase of $1,365.8 trillion in 2 years. I didn’t pick the years, they were just the first ones I found. Probably, the money supply increased a lot more in the 2007-2009 recession period, so the change would be even more dramatic than this recent 15% increase.

That’s Monetary Policy

The operations of the federal reserve are usually made to sound pretty dark and unfathomable, but essentially all they do is increase the money supply in hard times. They have a number of ways to do it, but it’s still just about all they do. I don’t think they can even constrict the money supply — they can just make it grow faster or slower.

Fiscal policy is actually a lot more important. That’s government spending. If the people running the American government had really wanted to get out of the 2006 recession quickly, they would have turned on the spigots of government spending. They didn’t because they didn’t want to. That left the entire problem up to the Federal Reserve and the expansion of the money supply. They fell to their task mightily.

They lowered interest rates to near zero so that businesses could basically get all the money they might want. They started “buying” treasury bonds with money they basically manufactured. Trillions of dollars went into the economy and the goods and services didn’t actually change that much. If something was worth $10 when there were $5 trillion in the economy, it makes sense that its price would inflate to $20 when the money supply doubled. But it didn’t.

So, why no inflation?

Money Has to Move

The velocity of money is how fast it moves through the economy. If it doesn’t move through the economy, it has practically no effect on prices. If the government gives trillions of dollars to fat cats who just sit on it, store it in overseas accounts, or just use it to buy back their own stock, which is what they did, prices don’t change much.

If the government had fought the recession with fiscal policy, inflation would likely have been more of a problem. If the government had hired some of the many unemployed to fix some of the infrastructure, teach the children, or prepare for the future, the new money would have gone into wages — and those wages would have been quickly spent. More money and more velocity at the same time would have resolved the recession more quickly, but there would have been more inflation.

So, the short answer to “why no inflation?” is that the new trillions of dollars went to very wealthy people who just kept it.

Why is Economics so Dark and Illogical?

In olden days, a “philosopher” was someone who generalized from a great deal of knowledge. Today, we divide up all knowledge into various “disciplines” with geniuses in one field completely ignorant of any other field. We divided politics from economics for Heaven knows what reason, and neither one of them makes any sense without the other. The Polysci grads don’t know beans about economics and the Econ grads don’t know politics.

The Polysci profs snow everybody with statistics because they don’t really want anybody to know their arcane secrets. The Econ profs do the same thing. My friend Jorge Rieger compared them to the secretive priests of old, and it’s a pretty good comparison. If you’re interested in a simpler explanation of economics, click here for the Little School.

–Gene Lantz

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Pick Your Path to Change

September 1, 2016
economy, elections, history, politics, strategy, unions
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I’m completely optimistic in believing that fundamental change will come to world societies. Further, I believe it will happen before the present rulers destroy us and the planet. It’s because I realize that I’m not any smarter than others, and I’m not stupid. So they’re not stupid either, so we’ll get together and win some day.

Once I was sure that we will be victorious, I began to speculate as to how our victory might come about.

I think there are basically three versions:

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  1. People will gather their torches and pitchforks and force the misleaders out
  2. We’ll elect better and better candidates until we actually have a set of good ones
  3. We’ll carry out a worldwide general strike

Torches and Pitchforks

Probably the idea of some kind of violent overthrow of the existing powers is the oldest scenario. It sounds the easiest and the fastest. It’s also the most dangerous, because it’s easy to start thinking that the rest of the world’s villagers only need some kind of a “spark,” — one heroic act of an individual or small group — and then they’ll grab their weapons.

So they try one ultraleftist act of terrorism after another, hoping to get the right “spark.” But it never happens and they just get a lot of people killed or jailed.

Electing Our Way to Power

When President Obama was elected, some people thought we had done all we had to do. He would take care of the rest. Other people thought electing Obama was good and that he could take us part way, then we’d elect somebody even better the next time. In the course of a few elections, we would end up with Judges, Legislators, and Administrators who would save us.

I imagine they felt the same way in 1931 when they elected Franklin Roosevelt. Maybe also in 1859 when Abraham Lincoln took the White House. George Washington?

I think it’s the most popular idea because one doesn’t really have to do much besides vote and a little bit, maybe, of phone banking or neighborhood canvassing. No risk in any of that, and it’s not too hard. If it doesn’t work, then they’ve still earned the right to gripe about everything until the next election.

Stopping the Economy Until We Get What We Want

The idea of a worldwide general strike isn’t as un-historical as it might sound. Workers actually tried it, with considerable success, in 1886. Railroad workers practically shut the nation down in 1877. They might have won their strike if the soldiers hadn’t started killing them. There have been successful city-wide general strikes in several cities, including Seattle and even Houston!

The Industrial Workers of the World was once a big organization that terrified the bosses. Their idea was to organize all workers at their worksites — in every industry — and then shut down the economy. Hundreds of them were deported, arrested, or killed in the bosses’ backlash.

I don’t want to pretend to know more than they did, but they might have done better if they had gone in for organizing communities, civil rights organizations, church groups, and other kinds of affinity groups instead of just workers at worksites. They might also have done better if they hadn’t been so hell-bent on not participating in politics and not forming alliances with other progressives.

The downside of this “stop the economy” idea is that a substantial number of workers and working families would have to be organized. There would have to be unions in critical work places, plus community groups and a lot of other kinds of organizations. And they’d have to work toward co-ordination with the others. It would take political work as well as organizing. That’s a tremendous amount of hard work.

The upside to all that hard work is that leadership would develop. Leadership would also be tested along the way, and we’d end up with the kind of leaders who could actually run a new, better society. Neither of the other two scenarios has that advantage.

What’s the Catch?

There are players on the other side.

It’s easy to think that everybody wants social progress just because we do and almost everybody we know does. But we don’t hang around with the Koch brothers, do we? We don’t hold memberships in the National Chamber of Commerce or the National Association of Manufacturers or the National Right to Work Committee. We’re not listed in the Forbes 500, but other people are, and they don’t want change just as much as we do want it.

If we were to grab our pitchforks, they’d grab their bombs and drones.

If we were to elect good candidates, they’d pour billions into electing bad ones.

The wealthy people clinging to the status quo know what they’re doing. Do we?

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Where Labor Went Wrong

August 19, 2016
civil rights, economy, history, politics, strategy, unions
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Everybody should read “Runaway Inequality” by Les Leopold. Don’t wait for somebody from the Communications Workers of America to invite you to one of their classes on it.

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Some of the best stuff is in the beginning. The forward is by Chris Shelton, President of the CWA. The middle parts of the book are mostly statistics about how inequality rose after America selected a new business friendly government policy in 1980. The other really great stuff is near the end

I particularly like Chapter 22: “When unions decline, inequality soars and we all lose.” On page 288 Leopold says, “Wealth inequality and unionization levels are intertwined.” You probably knew that but it’s good to see it in print.

What happened?

Then he goes into the reasons for the great union decline from its heady power of 1946, when Americans won strikes more than ever before or since. Leopold apparently doesn’t have the nerve to say it outright, but he lists, in a dispassionate way, several “theories” about how union leadership could have done better. I’ll shorten them and make them more blunt:

  • The decline started in 1947 when unions cooperated with the anti-communist witch hunt and expelled some of their best leaders.
  • Unions shouldn’t have worked closely with the CIA
  • The merger of the AFL and the CIO didn’t work out for the members
  • Unions shouldn’t have supported the War in Vietnam
  • Unions became bureaucratic and undemocratic
  • All unions haven’t learned community organizing techniques
  • Unions aren’t linking up with unions in other countries

Even though Leopold didn’t really commit to it, I thought it was a pretty good list. It probably should have included something about how unions largely ignored and still ignore the civil rights movement, but it’s still a pretty good list.

Right after the list, the author gives the underlying reason for all the problems: “Unions and the rest of us are on the losing side of a gigantic class war — a war that we have to recognize, discuss and address if unions are to grow again.”

In other words, we can list the things union leaders did wrong all we want, but the underlying reason for the decline was aggressive anti-worker policies of the boss class. Even if we’d had the best leadership in the world 1947-1995, it would have been very very hard to withstand the combination of government/boss aggression and the post war “good time” prosperity that allowed opportunist labor leaders to get pretty good contracts for their members — while slowly sinking into isolation from everybody else.

By 1979, unionized American workers were the envy of the world, even though our numbers were dwindling fast. In 1980, the party was over. I don’t think many union leaders figured it out, and some of them still haven’t. They still expect the bosses to act “reasonably.”

The essence of the problem

What it boils down to is this: From 1947 to 1995, the bosses were able to isolate the organized sector of the American working class from the rest of us. I picked this up from an earlier book by a prof in California named Lipschitz, “Rainbow at Midnight,” and from talking to people who lived through it. The new book, with CWA backing, will force unionists to look at the problem and see what we did wrong. Even if it did nothing else, the book would be worth the $20.

But Les Leopold actually does a lot more in “Runaway Inequality.” He makes serious suggestions as to how we can turn the situation around and return to the kind of militant union progressivism that succeeded for the CIO 1935-1947. The progressive leadership of the AFL-CIO, 1995 to present, can and probably will implement these ideas.

I can’t wait!

–Gene Lantz

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Trade Deals Remain Unfair

August 16, 2016
economy, environment, politics, strategy
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During the fight against NAFTA and every trade deal ever created, we like to say, “We’re not against ‘free trade,’ but we want ‘fair trade.'” It’s true, too, but there are good reasons why our government will never negotiate a fair trade treaty.

tpp-TARA

The current unfair trade proposal is the “Trans Pacific Partnership” — TPP

It’s fairly easy to see why a certain amount of confusion would be generated. Xenophobia, a paranoid fear of people in other countries, characterizes a lot of our campaigns. Xenophobia disguises itself as patriotism. Racism isn’t far behind it.

It’s confusing because we characterize the people negotiating the treaties as misguided rather than malevolent. It’s hard to believe that big corporations could be as rotten and crazy mean as they really are.

It’s confusing because some of our not-so-bad political leaders support these rotten trade deals. NAFTA could never have been passed without President Bill Clinton, and good old President Obama is currently pushing hard for TPP.

THE TRADE SITUATION IS ACTUALLY QUITE CLEAR

A fair treaty would be one that gives decent treatment to the workers in all the signing countries. But all of the trade treaties so far have been negotiated in secret by a few political representatives from the different countries and an absolute horde of corporate lobbyists.

Corporations don’t want fair treatment for workers. It would cost them money. Corporations don’t want to preserve the environment. It would cost them money. NAFTA, TPP, and all the treaties in between were bad news for workers and for the environment. Corporations have virtually all of the money, way more than enough to buy out the political representatives, up to and including the President.

CORPORATIONS MUST CUT EXPENSES ON WAGES AND THE ENVIRONMENT

Globalization (I call it “gobblelization”) today is characterized by intense competition between major capitalist countries. One of the main purposes of the TPP, mentioned often by President Obama, is to give U.S. corporations advantages over the growing Chinese economy. The companies compete primarily by holding down labor costs and not spending any money on environmental protection.

As long as we live under a system dominated by big corporations, as ours is now, every trade deal will be bad for workers and the environment. There is not and there will not be a “fair trade” deal!

–Gene Lantz

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Strategies for the Other Side

August 6, 2016
civil rights, economy, elections, environment, politics, strategy
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The whole point of this blog is to help people work out our strategies for a better world. In any battle against any enemy, it’s wise to try to figure out how things look from their point of view.

me-realjobsrealwages

Suppose you were a wealthy capitalist intent on hanging on to your vast wealth and adding to it.What problems would you see and how would you over come them?

Here are some problems for big capital:

  • Other nations are under-selling our products and pushing us out of markets
  • Some of the under-developed countries are slipping out from under our domination
  • Environmentalists are gaining the initiative in proposals that might cost us money
  • Another financial crisis would really undermine people’s confidence in us
  • More and more, people seem eager to organize, and they are finding new ways to do it
  • There’s a growing level of activism among the people
  • The internet has improve communications among individual people & groups
  • There is a trend toward growing international solidarity
  • A number of our secret methods are being exposed to the people
  • There’s a real danger that our political system could be reformed

Whatever shall we rich people do?

Our biggest problem, new since the 1970s, is that other industrial nations are competing with us more and more successfully. More of our “free trade” agreements would put us in a better competitive position. Also, they would help us tighten the screws on the underdeveloped world. We can spare no resources to make sure that these bills get through Congress.

Print money

Being able to print money and make sure it stays in our own hands is a big help. The people are starting to catch on, but so far they haven’t figured out anything they can do about it. Most of them still think that some of the wealth is going to trickle down to them, and we have to do everything we can to keep them thinking that way.

Stop the unions

Unionization is not compatible with good business practices. We have to keep up the pressure on all political and legal entities under our control to discredit and ruin American unions before they cause us some real damage!

Tame the internet

We have to extend our grip over the internet. “Net neutrality” has to be overcome with a strong campaign claiming that it’s un-American. Maybe we can get some of our religious spokespersons to come out against it.

Invade, baby, invade!

The only sure thing that works when our underdeveloped markets begin to rebel against us is invasion. We overcame a lot of the domestic opposition to our wars by switching to a professional army with maximum use of substitute soldiers and deadly machinery, but more and more propaganda is needed to convince the people to allow us to continue. We already have troops on extended missions in three countries, but there will likely be need for more in the near future.

Control information

We can continue beating the environmentalists with our control over the information sources. We can continue characterizing them as kooks and malcontents as long as we keep the “high ground” with our purchased army of intellectuals and professional spin doctors. Even at that, it may be necessary before long to take the gloves off and start some serious repression.

Divide and conquer

Our biggest domestic problem is the minorities. They won’t stay sidelined and they won’t remain isolated. Isolating them and discrediting them is our best defense, only we need a lot more of it. Our efforts to undermine democracy have only had modest success, and a backlash is already underway. Unfettered police and military forces may be needed.

–Gene Lantz

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Union Studying for Real Progress

August 5, 2016
economy, elections, environment, politics, strategy
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The Communications Workers of America is doing what unions almost never do — studying the actual mechanics of American capitalism and figuring out how to fight it! They are distributing and studying a book by Les Leopold of the Labor Institute.

runawayinequalitybook

Leopold, Les: Runaway Inequality. An Activists Guide to Economic Justice, Labor Institute Press, New York, 2015. (click for a review)

The foreword by CWA President Chris Shelton urges all union members to read the book. Shelton is also quite specific in recommending an electoral strategy: “…we need to build our own, independent, anti-corporate, pro-union, political organizations! Wall Street has two parties. We need one of our own.”

He recommends the Working Families Party, (click here) which already exists in 10 states. Could this be the labor party that American progressives have been begging for since forever?

The fact that one of America’s largest, best distributed geographically, and most vibrantly active unions is putting this body of information out is significant. It’s also a timely prescription for the national illness. The negative images of Donald Trump and Hillary Clinton are moving people away from the traditional two-pronged capitalist political system while the hopes aroused by the Bernie campaign are still not settled on a program and course of action.

It’s the Economy

Most of the book consists of graphs and explanations of the wealth gap and income gap that have become deep chasms since around 1980. Most of us have seen some of this striking data before, but nowhere is it presented so thoroughly and connected so well to an underlying cause. Around 1980, when Reagan was elected, America’s ruling elite adopted an extreme anti-worker and pro-corporate program that included deregulation, tax cuts for the wealthy, service cuts for the poor, and attacks on unions and democracy in general.

We have all felt parts of this ugly program firsthand, but Leopold’s book connects the parts into a whole, then begins an optimistic discussion on what we can do about it.

Let’s Get Behind It!

One could make an intellectual discussion about the better or worse aspects of Leopold’s book, but doing so would be frittering away an opportunity that the Communications Workers are giving us. Here’s a chance to join in an educational process that can give immediate direction to the progressive movement. We can’t afford to miss it!

–Gene Lantz

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How Could a French Socialist Pass Laws Against Workers?

July 29, 2016
economy, elections, politics, strategy
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People were shocked recently when French President Francois Hollande, head of the Socialist Party, forced legislation through that would make it easier for bosses to lay people off, make them work longer hours, cut their pay and cut into some of their special leaves — such as maternity leave. Click here for BBC version. Protests were very large. I read that 70% of the people were against the new labor rules. But they passed!

lincolnlabor

How could that be?

The simple answer is that Hollande is a SINO — Socialist in Name Only. But simple name calling doesn’t really provide any answers. Undoubtedly, France is a capitalist nation with a president who calls himself a socialist and leads a party that calls itself socialist. They got elected, but they didn’t overcome the bosses and, probably, never intended to.

As long as the bosses are in power, workers will never win any permanent gains. Everything we can win, even the 35-hour week that they enjoy(ed) in France, can still be taken away.

France is a capitalist nation and subject to the same economic laws that govern all the capitalist nations. All of them function in competition with one another. When the competition gets rough, as it is worldwide right now, the employers turn like vicious cannibals against their own people in order to drive down costs. Most costs are labor costs, so capitalist governments, including ours, are in the process of competing with one another by chopping away our standards of living.

Even nations that actually have overcome the employers have to compete with other nations within a world capitalist system. Did the Soviet workers ever win a 35-hour week? I don’t think so.

It doesn’t matter much what the government calls itself as long as it is still capitalist and still operating under the capitalist rules.

–Gene Lantz

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Our Side Can Win in 2016

July 28, 2016
economy, elections, history, politics, strategy
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I sometimes think of politics as a football game where each side pushes for yardage.  The goalpost ahead of us is a decent democratic society. The one behind us is slavery and want. In all of American history, we have struggled for yardage between those goal posts. The little upright yard markers are the court decisions and legislation that show progress or setbacks.

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The 2016 elections will not result in a perfect society. Neither did the 2008 elections, even though, to listen to the complaints, that’s what some voters expected. All things considered, the Obama Administration has been a whole lot better than what might have happened in 2008, and what will happen after 2016 can be a whole lot better than the Republican alternative.

Lesser evil?

That’s not “Lesser Evil” politics. It’s just an honest assessment of where we are and what the possibilities are in the current election.

The Outlook for Seniors is Promising

Nowadays, I mostly work with the retiree movement. Over the years, my speeches have been long, whiney complaints about all the attacks against the right to retire. There was a lot to whine about. Since Reagan was elected, most pension plans have been lost. Employer-sponsored health care plans have disappeared or been shamefully altered to the advantage of management. Social Security, so far, has not suffered a fatal blow, although several have been fired at it, but it’s been hit hard around the edges. The budget for administering Social Security has been cut so severely that there are empty buildings all over the nation where seniors used to be able to get help, but are gathering dust now. The Republicans in the House of Representatives just voted to cut another $1.2 billion!

Thanks mostly to the Bernie campaign, things are looking up for retirees in 2016. The Democratic Party platform and presidential nominee are publicly committed, not to “saving” the right to retire, but to extending and improving it!

But Seniors Have to Organize and Fight

Older Americans are going to have to do a whole lot more than hope for the best to make the Democratic Party promises come true. Fortunately, the AFL-CIO has made that possible by creating the Alliance for Retired Americans and a bunch of state affiliates.

Over the month from July 26 to August 25, the Texas affiliate scheduled nine separate actions in 6 different cities. Click here for list. The period includes the anniversaries of Medicare/Medicaid and Social Security.

At the July 26 event, State Rep Chris Turner read the words of ex-president Harry Truman on July 30, 1965, when Lyndon Johnson signed the Medicare/Medicaid amendment:

“No longer will older Americans be denied the healing miracle of modern medicine. No longer will illness crush and destroy the savings that they have so carefully put away over a lifetime so that they might enjoy dignity in their later years. No longer will young families see their own incomes, and their own hopes, eaten away simply because they are carrying out their deep moral obligations to their parents, and to their uncles, and their aunts. And no longer will this Nation refuse the hand of justice to those who have given a lifetime of service and wisdom and labor to the progress of this progressive country.”

That was progress. In 1965, we moved the football and the yard markers in the right direction. We’re moving them now!

–Gene Lantz

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Opportunism: The Judas Error

July 24, 2016
civil rights, economy, elections, politics, strategy
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Watching the Republican convention may have convinced America that never have so many white people gathered for such malevolent purposes. But, every now and then, the TV cameras pick up a dark face and zoom in. A handful of African Americans took the podium, as did a handful of Latinos, women, and a tiny handful of gays. This for a party whose avowed platform reeks of racism, misogyny, homophobia, and hatred. It’s legitimate to ask “Why?”

judasiscariot

Long before the mafia started using the kiss of death, Judas laid it on Jesus

It’s also a good time to expound on the common political phenomenon known as “opportunism.” My glossary of political terms says opportunism is “Sacrificing higher ideals for personal gain. Specifically, someone within the progressive movement who profits by selling out the interests of others.” Judas Iscariot, who turned Jesus in to the Roman authorities for thirty pieces of silver, is a classic example.

In other words, some of those few African American spokespersons for racists are getting paid, as are some of those women and gays. Did you ever wonder if Clarence Thomas is on the Supreme Court because he’s a reactionary, or if he was a reactionary because he is on the Supreme Court?

Closer to home, you can see opportunism every day in your workplace. Almost all of us feel some solidarity with our co-workers, because they’re in the same boat we’re in. Yet, almost all of us would take a promotion into a management job if we got the chance. Once in management, solidarity is gone — even though nobody will admit that. Managers always claim to feel exactly like their employees, but their every action proves otherwise.

When somebody moves from worker to management, he/she is taking advantage of an opportunity. From the point of view of worker solidarity, he/she has also committed an error of opportunism. It’s common. Almost everybody does it or would do it if they had the chance. It’s just the way our economic system works. It turns us against one another.

American politics is filled through and through with opportunists. It’s tempting to say that almost all the politicians in our economic system are opportunists. All of them aren’t. But some of them would sell out their own mothers.

The more you observe politics, the more you’ve got to admit that each party is worse than the other. –Will Rodgers

–Gene Lantz

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