Great Video About Socialism

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated October 24:

This is a video of a lecture by Richard D Wolff, Professor of Economics at the University of Massachusetts Amherst, on the latest economic chaos and recession in sweeping the world.

Wolff is a Marxist, and the lecture is from a Marxist POV. However, it is interesting in many ways.

One thing that is clear to most sensible folks with an understanding of economics is that Marx's analysis of capitalism is one of the greatest ever done by anyone. For a long time, it was taught in all economics departments. With the advent of crazy Friedmanite neoliberalism in the past 30 years or so, Marx may not be being taught so much, but that's a mistake.

It's sometimes said that Marx is great for analyzing either what capitalism does well or poorly, but not the opposite. Not true. Marx is great for analyzing capitalism both when it is doing well and when it is doing poorly.

In my opinion, where Marx has problems is in proposing alternatives to capitalism, and history has born this out to some extent. Capitalism, with all of its chaos and problems and horrors and deaths, may just be the only way forward for the time being. Like death, disease and taxes, it may be a necessary evil.

Wolff describes how US workers saw 150 straight years of growth and improvement in their living standards, from 1820 to 1970. This is correct. He doesn't lay out how this happened, but there are many explanations for this. He also says that this scenario was rare to unheard of in the rest of the capitalist world.

After 1970, things changed. Productivity kept going up, but wages went flat or even went down. A US worker in the late 1970's made more per hour than a worker working today. As productivity rose and wages went flat, capitalists began raking in incredible profits.

This is what has happened to the US economy over the past 35 years, as neoliberalism took hold and 80% of the population saw its wages stagnate or go down. The top 20% of the population, and especially the top 1%, saw its income explode. But the vast majority of workers of every race got screwed.

As workers got more and more screwed and the capitalists, the owners, those who lived off the labor of others, saw their incomes skyrocket, confused workers began advancing all sorts of explanations about why this was happening. Anti-Semites, as usual, blamed the Jews. White nationalists and White Supremacists blamed Blacks and Browns. Lots of middle class and working class Whites blamed Big Government.

The truth was that the culprits were the business owners who were reeling in superprofits while workers got the shaft.

As this process continued, capitalists found more ways to keep the cost of labor down. They began importing massive amounts of legal and especially illegal immigrants as labor to drive labor costs down even further. They began moving many enterprises offshore and later, began offshoring work via the Internet.

Confused workers scrambled to keep up their standard of living. Others in the family, often the wife, began taking a job, bringing in a second income. Then one or more persons in the household began to work second and third jobs. Americans worked more and more hours, setting new records for workers in the West.

The despicable US media extolled this fact, and praised US workers for working themselves nearly to death, taking pains to point out how tough and hard and slaving-away Americans are compared to pampered, wussy, "soft" Europeans kicking back under socialism.

It's true - part of the US war against European social democracy has been to declare that Europeans are soft, wimpy, sissified and woosy. How did they get this way? Socialism turned hard self-reliant European men into soft, pampered girlymen. Americans were hard, tough and macho. They didn't need no nanny state to help them out. They could do it on their own. The American worker as Marlboro Man.

Wolff points out that that extra workers did not necessarily fix matters, as when the wife started working, it turned out that she needed many things, for instance a vehicle to get to work in.

Working more than one job didn't seem to work very well, nor did having others in the household go out and work, but it did the trick for a while.

After some time, Americans would have to turn to some new tricks to try to keep up their standard of living. They turned to loans. At first they ran up their credit cards. Americans were setting records for going into debt on credit cards and were among the Western world's poorest when it came to saving money.

This isn't really very good personal economics, but the vile media cheered it on nonetheless. Silly, wimpy Europeans and Japanese saved their money for a rainy day, presumably because they were too neurotic to enjoy life. Americans went for the gusto! They spent ever nickel they earned and then went in debt up to their waders! Cheers, cheers, cheers!

After the credit cards were maxed out, there was an explosion in US housing prices. Call it a housing bubble. This came at a propitious moment, for it enabled Americans to use as collateral the biggest asset they owned, their homes. Americans borrowed on their homes, refinancing them, taking out second mortgages and using the money like a credit card to continue to pursue the standard of living to which they had become used.

The capitalists continued to reel in the dough from the leveling of wages, now via outsourcing and use of immigrant labor, and now the capitalists found a new tool - debt.

They loaned money to their own workers! It was like the old days when you lived in a company town, bought at the company store and ate at the company diner, all deducted from your check. Not only will we pay you a crap wage, we will snag every dollar you spend on food, rent and shopping too.

These same capitalists were now swimming in ultraprofits with the money they were making off loaning money to workers and home mortgages (just another type of loan). They had so much money they did not know what to do with it. They threw it into the stock market, and the market for high-end goods of all sorts went through the roof.

Conspicuous consumption came back with a vengeance, and the scummy media once again sang and danced the praises of the most idiotic and obscene ways the rich chose to blow their unneeded and often unearned cash.

A whole new financial industry, a parasitic industry on the economic body of the nation, sprung up, an industry that created no products and no real wealth. It was nothing but a gigantic casino on Wall Street.

All sorts of funky instruments that no one understood were dreamed up - derivatives, CDO's, mortgage securities and all sorts of other stuff that probably shouldn't even be legal. Almost no one understood these things and no one seemed to understand what they were worth.

The inevitable bubble came and the party crashed, as it always does when capitalist bubbles go bust.

The root causes were the destruction of the regulations put in in the 1930's, during the Depression, in order to prevent another Depression. As soon as these regulations were put in, the capitalists began plotting and working to get rid of them.

Over the next 80 years, the capitalists created a Gramscian cultural hegemony that attacked socialism, government and regulation and exalted free market capitalism. Socialism, government and regulation were described as possibly good ideas, but doomed to failure. The only way to avoid the inevitable failures of socialism, government and regulation was to completely deregulate the economy. Anything less was the road to ruin.

With their money, the capitalist interests bought up all the media and most of the politicians. They used this to get rid of the Depression-era regulations and create the manipulate US culture to where your average worker thought that was a great idea, if he understood it at all.

There are various proposals for how to deal with this economic mess. As discussed in a previous post, conservatives, reeling and increasingly discredited, have tried to blame the catastrophe on too much regulation, not too little. Even the slimy media that normally goes along with this crap is finding this too much to buy.

White racists are promoting the racist notion that liberals (via affirmative action and anti-discrimination laws), niggers* and beaners* are the ones that destroyed the US economy. The Republican Party has to some extent bought into this, as has the business press, their amen corner in the mass media, and their academic hacks, but the argument is too slimy and racist for most decent people, plus there isn't an ounce of truth to it.

Steve Sailer, an excellent writer who is widely read, is the latest to promote this racist travesty, much to his shame. Sailer is looking more and more like a Republican Party hack than a really deep-thinking, independent and empirical author.

Furthermore, Sailer has been skating on the edges of racism for some time now without really going over. More often, he seemed to be giving the racists lots of nice talking points. Now he's finally pushing an explicitly racist discourse, and it's not even true. Too bad.

Rate of subprime mortgage defaults by race:

Whites       19%
Blacks       19%
Hispanics    19% 

End of discussion!

Liberals, Leftists and social democrats have proposed re-regulation, but the problem here is that we are probably going to re-do the 1930's experience all over again. We will put in a bunch of great regulations and as soon as we put them in, the capitalists and their mass media machines will start plotting to get rid of them.

Then the capitalists and their media machines will launch a jihad, for as many decades as it takes, to reverse all these regulations and get back to total deregulation again. In time, workers will forget why they put the regulations in in the first place, and they will go along with it.

The capitalists will buy most of the politicians all over again, and the politicians will vote to deregulate again. The capitalists will work to recreate their Gramscian cultural hegemony, and the average worker will once again think deregulation is the smart thing to do. The economy will blow up again and we will be right back to 1929 and 2008.

Wolff suggests that there is a third alternative. He describes a paper done by a colleague that describes Silicon Valley workers who hated their jobs. They had to dress up, sit in a cubicle and take orders and crap all day from a bunch of assholes. Can they pay anyone enough to put up with that? With the destruction of the Silicon Valley workforce, these workers were laid off.

A number of them got together and formed IT worker-run cooperatives, a non-capitalist form of ownership along the lines of anarcho-syndicalism. The study found that these workers said that they had never been happier. They were manufacturing software, selling it to buyers and dividing up the profits among themselves. The workers themselves were the new owners.

Wolff said that as a condition of the bailouts to the financial industry, we should mandate that they staff their board of directors with workers, not management, as a first step towards workers democracy.

Wolff also said that he had been giving speeches like this for 25 years now and he has had more interest in the past five weeks than in the previous 25 years.

That's ending on a hopeful note for now. Enjoy the video.

*Used sardonically

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A Primer on Mark to Market

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Updated October 24:

Some conservatives, of course, are blaming the current economic chaos on too much regulation instead of the obvious cause of it that any moron can figure out, lack of regulation. This is especially popular on White Nationalist websites, where the line is that all regulation of business is evil for White people.

I would like to point that although the conservatives are reeling from this latest economic meltdown and their philosophy is in tatters (rejected by the media elite who used to support them to the hilt more than anyone else), some conservatives are starting to fight back.

The market meltdown was not caused by the lack of regulation that everyone knows caused it; instead, it was caused by the conservative bogeyman of too much regulation. But this is not going over very well. Outside of the Fanatics' Bullpen and the Republican Party, no one is buying. Even the US rightwing media is not so stupid as to buy into this one.

The "mark to market rule"* controversy is an interesting one.

But nevertheless, mark to market is being put forward as one of the stupider regulations that supposedly either helped bring this mess on or is making it worse. So says Paul Craig Roberts (unapologetic Reaganite incredibly featured on Counterpunch) here, here and here, and Fareed Zakaria, Newsweek columnist and apologist for neoliberal globalism and US imperialism disguised as reasonable and thoughtful analyst.

Mark to market was put in to keep these corporate rats from lying about their assets and their bottom lines. Amid the catastrophes caused by the rampant accounting fraud and crime accompanying Enron and the other messes, the mark to market rule was instituted. What it means is simple: corporations have to list assets and debts as they really are, not as they think they are in their fairy tale fantasies.

What corporations were doing was this: Suppose I have assets that are worth $10X. That looks pretty bad for my bottom line, so I "re-evaluate them" with the help of some friendly local accountant firm criminals, and now automagically they are actually worth $100X. Why?

Because my accountant criminal buddies and I decided that my assets are actually undervalued, and are worth much more than the market says they are worth. So I get to fool investors, inflate my bottom line and pretend that my insolvent company is actually rolling in it.

Seems like an obvious abuse, no? Seems like a reasonable regulation, no?

Turns out after all that mark to market is sheer government evil. Evil big government is forcing angelic corporations to tell the truth about their net worth instead of lying as they always do, even in their sleep, and this harming the glorified US economy.

Nowadays, banksters and other financial criminals are holding all sorts of assets that are said to be worth, say, $100X. In truth, no one even knows what they are worth, and there is no way to figure it out. Their true value is so low that the banksters act like these assets are toxic waste.

Mark to market means they have to mark them at $30X or $2X or whatever the market says this crap is worth. But what they really want to do is lie and pretend that it's worth $100X.

Why? Because if the corporations tell the truth about how much their assets are really worth, instead of how much they lie and inflate their worth at, investors will pound their two-bit penny stocks into the ground where they deserve to be pounded.

But that's bad for the economy. We can't afford to have the stocks of insolvent companies pounded into the dirt on the basis of honest accounting of assets and debits. Instead, it is necessary to lie, paint a turd to look like a Michelangelo, and keep the sucker/investors marching in the door and laying out the cash. To tell the truth will wreck the economy. To save the economy, we must legalize lying once again.

Does any of this make sense in any rational world? Of course not.

These are the rarefied debates that occupy our ruling elites in these trying times.

*I am not an economist, and I may not have correctly characterized the mark to market rule or the arguments for or against it. If you think I have this wrong, head to the comments or email and let me know.

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The Decline of Modern Capitalism's Traditional Advantages

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated October 24:

Modern capitalism seems to be losing a lot of the advantages that it had over Soviet style Communism, and the Net and computers seem to be at the root of this decay.

It's as if the capitalists don't care anymore. They don't care if their product works or not, they don't care if they rip you off or not, they won't give you a refund, they sometimes won't even give you the product after you buy it, they have eliminated customer service, and, most insane of all, sometimes they even make it almost impossible to even buy their product.

They said the Net and computers were going to make our lives better, but I don't see how they have. If it has anything to do with the Net, it seems like it sucks. What has the Net done for workers? Nothing. It's allowed people in India, the Philippines and Eastern Europe to compete with Americans by outsourcing work. Great!

Some examples:

There's plenty of work out there writing junk copy for websites that only exist to somehow make money (not sure how). You're just writing filler. A lot of it is in porn. I got approached by someone the other day about writing this junk copy, but the pay was $10/hour, so I said forget it. That's junk for writing prose on the Net. I told him to walk.

Turned out I was competing with writers of "English" from Eastern Europe, India and the Philippines. They were mostly working for $5/hour or even less. So even writers now are getting screwed down in a race for the bottom. Who's next?

There's a lot more ways the Net has helped create World O' Crap. Look at how many ways a brick and mortar store is better than e-commerce. The main problem with e-commerce is that it sucks.

E-commerce merchants have a right to bitch about it, but they have created this Shitworld of e-commerce. In their mad insistence that the Net not be regulated, the world of e-commerce is full of more sleazeballs and slimers than you could count for the rest of your life.

It's so easy to rip people off over the Net. I have purchased several things off the Net, including website memberships, that were total ripoffs. Quite a few software programs sold over the Net are absolute crap.

There are more problems. In a good number of cases, you try to buy something off the Net and the e-commerce site fucks it up. It will only let you order 3 packages, not 10. After you order, it gives you a database failure page implying the transaction failed, then sends you a mail congratulating you on the sale.

I bought a spyware killer program that it turned out I did not even need from a ripoff website. They quickly took my $30, but then they tried to bill it to my address as my name - for instance, "Thank you for your purchase, Mr. 35889 West Jones Street." There was no way to go back and change my name from my street address to Robert Lindsay. No way would that happen in a brick and mortar.

Then I could not even download the program. I kept trying over and over for two days, and they kept sending me links that didn't work.

Can you imagine that happening in a brick and mortar? First they take your money, then they tell you to come back in an hour to pick up the product. You come back in an hour and it's not there. They give you a new address to pick it up at. You go there and it's not there. This goes on for two days, you running all over town to pick up your product, but it's never there.

One great thing about brick and mortars is I can always get a refund. And I can always speak to a human being. Try getting a refund off the Net via e-commerce. Almost impossible. The worst thing about e-commerce is that they have managed to get rid of human beings altogether.

A lot of times, online stores do let you order by phone, but when you dial the number, no one is ever there. When you can't deal with humans via phone, it's hard to get anything done. They do often end up emailing you back and forth, but that doesn't work very well.

I bought a software program from a large company that refused to install on my system. I'm so discouraged by this Shit E-Commerce World that I haven't even bothered to call the company up to complain. I just wasted the $30. At a brick and mortar, if something doesn't work or its a rip-off, you just take it back. I've never had a problem yet.

Customer service is just one more thing that has been destroyed by the Internet and computers.

A lot of website memberships are just ripoffs. Quite a few software programs just don't work. One more thing wrecked by computers and the Net - product quality.

Capitalists at least used to be able to say that customer service was pretty good under their system. Customer service was often bad under Soviet style Communism. You went into a restaurant in Russia, and the help was rude. If you complained, you got a shrugging shoulder. There was no way to fire anyone.

Now capitalism, along with all its other disadvantages, increasingly has customer service as shitty or nonexistent as it was under Communism.

One more thing you could always say about capitalism was that product quality was often good. If not, if you had the money, you could buy something worthwhile. There was cheap crap, but for a bit more money, you could get something decent.

Under Soviet style Communism, it is true that there were often crappy products. Now it seems that capitalism is even losing this advantage. Product quality is declining under capitalism to where we cannot anymore say that capitalism at least produces good products.

Another advantage of capitalism is that the products are always available. No lines, no shortages, plenty of stuff on the shelves. Shortages and lines have long been the bane of Soviet-style Communism. But under capitalism now, at least on the Internet, there are quite a few e-commerce sites whose stores are so broken it is almost impossible to buy their product. I never thought that I would see that under capitalism.

As we can see, in addition to all of the negatives that capitalism has in relation to socialism (read any socialist critique of capitalism to learn what those are), modern capitalism is even starting to lose some systemic advantages that it has often had recently.

And computers and the Net are at the core of a lot of this system decay in the quality of the modern capitalist system.

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Price of Oil Related to Supply and Demand?

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

We have been over this and over this on this blog, but I thought I would toss this out.

The price of oil has collapsed recently from over $120/barrel to around $80/barrel. Wow!

Did that have anything to do with supply and demand? Are you kidding? Of course not. What happened? Speculative money poured out of commodities such as oil and back into ultra-safe investments like money markets and bonds. Supply didn't go up by one barrel. Demand hardly decreased at all. Supply and demand hardly has jack to do with oil and gas prices anymore.

It's important to note this because McPalin's whole agenda is Drill drill drill! Why? It's all based on the appealing lie that oil and gas prices anymore have the remotest relationship to either supply or demand. Since the prices of most other items are supply-demand related, and your average American idiocrat has figured that out., this argument has a logical intellectual appeal.

If we drill more oil, oil and gas prices will go down!

Says who? Says no one with any brains.

McCain tonite just said that if we start offshore drilling all up and down the coast of the US, this will lower oil prices, because "it will show 'them' that we are able to produce our own oil." I'm not sure what he means, but I assume he recognizes that all world oil prices are set on two oil bourses, one in the US and one in London. I guess that is the "them" he is referring to.

This implies that oil speculators see the slightest increase in oil supplies anywhere on Earth and start bidding down oil prices on the bourses the next morning.

GMAB!

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Worst Day in a Century For US Financial Markets

Well, Merrill Lynch, one of the biggest, if not the biggest stock brokerages in the US, has gone under. Bank of America bought them out for $50 billion, but if they would not have, Merrill Lynch would have had to file for bankruptcy. At the same time, the huge, 158 year old Lehman Brothers financial firm, the fourth largest in America, has filed for bankruptcy. This venerable firm is apparently history.

30,000 have been laid off around the world and the company has $600 billion (WTH!?) in outstanding debt. There were negotiations between Lehman and Barclays and Bank of America to buy out Lehman, but without guarantees of the US government (taxpayers) taking responsibility for the soaring peaks of bad debt on Lehman's books, no one wants to touch this bad apple with a ten foot pole and an eleven foot extension.

Some are calling the crash of Lehman Brothers the worst day in a century for global financial markets. That was what Alan Greenspan called it.

At the same time, AIG, one of the nation's largest insurance firms and at one point the largest insurance company in the world, is in serious trouble, and its stock is being pounded into the ground. I am not sure what it is up, but apparently they are caught up in the subprime bad housing loans catastrophe.

The Bank of England injected $5 billion into markets to keep them going, and the EU Central Bank pitched in $30 billion for its share.

Some call AIG, Lehman Brothers and Merrill Lynch thetop three names on Wall Street.

If these three go under, billions in pension funds will be zeroed out and banks and financial firms all over the world will be hammered. Washington Mutual, one of the US' largest banks, is also seeing its stock beat up badly, and it is in danger of going under.

Wall Street hemorrhaged an unbelievable 500 points on Monday, September 15. I'm amazed they didn't stop trading. I'm terrified at what tomorrow holds.

The Bush Administration seems to be taking a hands off approach and saying to let these huge firms go under. This is the classic free market evangelical fundamentalist approach and it is one that John McCain is advocating.

McCain is taking the apparently completely insane position that the cure to this chaos and Hell caused by deregulation is even less government. He proposes more tax cuts for wealthy persons and corporations, and this is going to fix the mess up just fine. Even Ayn Randist objectivist and ultra-reactionary Alan Greenspan says that's nuts. Obama promises more socialist regulatory measures as a nostrum, which is what this crisis needs.

McCain also seems to edge towards calling for privatizing Fannie Mae and Freddie Mac. He and Palin wrote an editorial a week ago that called for "downsizing" the two institutions. That's probably a completely disastrous notion. It was wild privatization of everything in sight, including oversight, that caused this whole mess. The Bush Administration's takeover of Fannie Mae and Freddie Mac was a socialist move, but it was right and proper.

It arguably should have been done long ago. The reason the two institutions got into too much trouble was because it was too private and not public enough, and in the process of becoming more and more private and less and less public.

Both Obama and McCain oppose a bailout of Lehman Brothers. I don't know enough to comment on that. However, Paul Krugman, whom I deeply respect, says that the US government is playing Russian roulette with the financial system.

After Bear Stearns went down six months ago, socialist regulations should have been put in immediately to try to stem the hemorrhage. Instead, the Bush Administration did nothing at all. At the time, Krugman called that move foolhardy. He is looking more and more right, and I don't want him to be.

McCain opposed the Bush Administration's socialist bailout of Bear Stearns. It was painful, but arguably necessary, and inaction would have been much worse. It certainly slowed this crisis down and bought it some time.

At the time, McCain called for less regulation of financial institutions, not more. McCain and Palin both seem to be resolutely and reflexively opposed to more regulation of the financial sector, or even of regulation period. In this way, they are even further to the right of ultra-reactionary George Bush.

McCain-Palin's economic plan, what little we learn of it, sounds really frightening. They would continue the insanity and idiocy of Bush economics and have vowed to actually make things even worse.

I'm no economist, but I'm not sure that's such a good idea. Government bailouts are nasty, but the alternative may well be worse. Anyway, I'm a socialist, and bailouts can be seen as a kind of socialist intervention.

The Bush Administration, and frankly, Republicans for the past 30 years, have created this whole mess. I must admit sadly that "free market Democrats" like Jimmy "Atari Democrat" Carter and Bill "Eisenhower Republican" Clinton had their mitts in this mess too. This is because Democrats have increasingly been adopting radical neoliberalism over the past 30 years, with the predictable results.

But the biggest players have always been Republicans and one of the biggest culprits of all is one of George Bush's and John McCain's best buddies, Phil Gramm of Texas.

Now retired, Gramm is probably responsible more than anyone else for dismantling regulations set up in the wake of the Stock Market Crash of 1929 in order to prevent it from happening again. Many reforms were enacted during the Depression and afterward. It's best to call these socialist reforms because that is what they were.

These socialist reforms tamper the insanities of the free market like lithium smooths the moods of a psychotic bipolar patient. Or another analogy could be a fog layer and an ocean along a seacoast that moderates the weather and produces a nice Mediterranean climate for much of the year.

True, if you love wild swings, you can go inland to the deserts where there is no moderating weather and it's 120 in the daytime and 30 at night.

This is what the capitalists want. Capitalists are basically sick people - they behave like the mentally ill or sex or drug addicts. They are like untreated psychotic bipolar patients who live for the wild manic rides. Capitalists are like a pathological gambler in a casino with a no-limit credit card blazed on coke and downing cocktails. There's no limit to the runs.

The capitalist wants the ability to run up huge profits in crash and burn, live fast die young, boom and bust economics. Neoliberal free market economics is just great for the boom and bust crazies. Like the wasted gambler with the stolen credit card in the casino, the capitalist thinks there's no limits to the run-ups. He keeps going to new tables and doubling down.

You tell him his manic episode is going to crash hard at some point and he turns around to punch you in the face and charges at you like a buffalo as you race out of the building for your life.

With capitalism, as with boys on a playground, adult supervision is necessary. Capitalists need to be supervised by adults called government and socialism. Even Adam Smith himself acknowledged that the unregulated free market was one of the worst evils known to man. He said the free market had to be regulated by the state to prevent total economic chaos. The heirs to Smith's throne seem to have forgotten his books.

They got rid of almost all of the progressive socialist legislation we put in that prevents wild run-ups and Gold Rush style booms but at the same time also dampens down the inevitable free-fall busts that always follow the booms, like day follows night.

It used to be, you went to get a mortgage and if your income was about 1/3 of the mortgage and your credit was good, you got the loan. The bank wanted to make dead sure you were going to pay back the loan so they vetted you carefully. Those days are gone.

In recent years you could get a loan for 7 times your income, and the lenders assumed you would not be able to pay it back. But they didn't care anymore because you weren't even going to pay it back to them.

They took your bullshit loans and packaged them into some bullshit thingies called CDO's, which were some weird investment vehicles made up of thousands of home mortgages, many of which were known to be bad loans. Then they got crooked accountants to mark these crap securities with AAA ratings when all they were were turds with fancy paint all over them.

They then hocked this ripoff fraudulent packages to suckers in the financial world, while claiming they were worth their weight in gold. The deregulations had gotten rid of the notion that investment banks should be separated from consumer banks. There was supposed to be a solid wall between the two, so if one went down, it would not take down the other.

If a financial bank went down, it would not take down consumer banks. When banks were allowed to be both financial and consumer banks, they failed in 1929, causing the Great Depression. This wall, called Glass-Steagall, has been progressively whittled away for many years now to the point where it is about gone.

Republicans, especially Mr. Gramm and his diabolical Dragon Lady Korean wife, were the worst offenders. The destruction of Glass-Steagall is an important reason why we are seeing these financial meltdowns right now. Another reason was the whittling away of standards for home loans. The lending industry has always hated regulations making it so that those who took out loans to buy homes could pay back their loans.

By the 1960's, regulations were in pace that enabled banks to make vast numbers of home loans, very few of which went bad. As the banks itself ate it when the loan went bad, applicants were vetted religiously. This was progressively gutted over the years to the point where loans were given out gleefully to folks who in no sane world should have gotten a loan.

White nationalists have posited a theory (and now pro-business freemarketeers havejumped in) that the subprimes and other bad loans were ordered by the US government eager to get Hispanics and Blacks into home ownership, hence the niggers* and the Mexicans are responsible for the devastation of our economy! Wow, what a breathtakingly audacious theory.

There appears to be little evidence to back this up. For many years, banks had different standards for Whites versus non-Whites and many Blacks found it almost impossible to get a home loan no matter how good their credit was. The Feds started cracking down on this under Clinton 10-15 years ago, and there was no housing crisis then.

The notion that PC Feds pushed poor, innocent, mortgage banker criminals into making bogus loans to irresponsible non-Whites appears false.

The mortgage bankers made lots of money on every loan, so they would practically sign up a German shepherd if one walked in and asked for a loan. The criminals quickly sold the loans in fraudulent packages to poor suckers in financial institutions, so it was out of their hands they didn't care whether it was paid back or not.

True, people took out loans they could not afford, but in a sane society, those loans never get made in the first place. Loan officers criminals were con artists who slickly pitched the loans to ignorant people who had no business being there. They got them in at very low teaser rates and didn't really explain well that the rate was going to go up later on.

The lenders were as low as Nigerian email scammers.

But it's not up to the borrower to determine if he qualifies for a loan, and a borrower is not irresponsible for taking out any loan.

The burden of responsibility in a sane society lies on lenders. If lenders eat it when loans go bad, then they are unlikely to loan to the undeserving, who are shown the door. Blaming Blacks and Browns for this housing collapse is an appalling exercise in White racism.

When the loans went bad, as any idiot knew they would, they pounded financial institutions all over who had bought huge quantities of these crazy things without really knowing what they were getting into. Financial houses poured billions into fools gold securities that disintegrated in front of their eyes to pennies on the dollar.

Soon they were out billions with bills coming in continuously and frankly no money in the drawer to pay any of them. You can only go on for a while like that.

John McCain has had his mitts in this bullshit for about 30 years. He's supported just about every crazy deregulation package that came down the pike. If he ever opposed one, let me know.

Furthermore, McCain was in very, very deep in the same horrible Savings and Loan collapse. He spent much of the 1980's, while prophets were screaming in the wilderness about the doomsday looming S&L mess, barking about the need for fewer and fewer regulations on S&L's. Look what happened.

McCain hasn't learned a Goddamned thing. Here it is, 20 years later, and he's back doing it all over again. He's like a sociopath impervious to punishment.

McCain, the Bush Administration and Republicans in general are overwhelmingly responsible for the collapse of the housing market and the resulting failures and collapses in the financial market, banks and insurance companies. Democrats are also responsible, but much less so, and hardcore liberals like Obama probably have little dirt on them.

John McCain now says he's coming in as a "maverick" and he's going to flip and change 30 years of deregulation mania as he becomes some kind of born-again reformer. Just as Bush ran as a "compassionate conservative in 2000, when he had many years in office proving the opposite, McCain's record speaks for itself. McCain the socialist big government regulator? Get real.

*used sardonically

Bush Administration Adopts Socialism

The government just seized control of Freddie Mac and Fannie Mae. I guess some on the Left might be complaining about this. Surely there will be squeals on the Libertarian Right, but that's to be expected.

I'm not that good at economics, so I don't know what this precisely bails down to, but my understanding is that this is actually a good idea. It should have been done a while back, but the Bushies dawdled and kept on speaking in free market tongues and handling free market snakes like the cultists most conservatives are these days.

What is it with this "market" crap anyway? It reminds of a some Doomsday Koolaid cult. That's right, it's called capitalism.

"The pure, free market is one of the most evil systems ever designed by mankind." Adam Smith, The Wealth of Nations, 1776.

Smith was actually a very strong advocate of strict state control and regulation of the market in order to prevent this "most evil system". Bet you never knew that, did you? Learn something new here every day.

Is Semco Socialism?

The latest death toll figures from Hurricane Katrina can be seen on this website here. The famous Russian neo-Nazi video is on this blog here.

Updated September 2:

Is this socialism?

A Brazilian company, Semco, has adopted an anarcho-syndicalist style of organization and has been growing for decades. Workers hire and fire management and agree on management's salaries. Workers set their own salaries and hours. 25% of profits go back to workers. Workers hire and fire their own. There are no job titles. Every worker gets to see the company's books.

It's supposed to be anarcho-syndicalist style of management, but I'm not even sure what anarcho-syndicalism is, even after reading this article.

Even if it's not socialism, it sounds like it's a heck of a lot better than what we have.

From Monday Memo, a management website. Hat tip Entitled To An Opinion. TGGP, at ETAO, asks if this works so great, why don't profit-maximizing corporations adopt it.

In the comments, Kevin Carson says the corporations are not really profit-maximizing, they are out for short-term profits and care nothing about the long term health of the company. The company may as well be sold off to some junk bond guy who strips the assets, fires everyone and pockets the cash. Or it's going to get bought out by someone else down the road.

You have to wonder if capitalism is such a wonder machine, why do capitalists wreck their own companies for short-term profits and Wall Street gains while ruining the long-term profits of the enterprise?

Why do they seem to care nothing about the long term interests of the company such that they would just as soon sell it to someone else to do God knows what with, or auction it off in an LBO to some junk-bond guy who specializes in cannibalizing companies and leaving piles of bones? What's so great about this "magic hand of the market" crap anyway? It's good for making money. So? So's slinging crack on the corner.

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Unions and Wage - Productivity Increases

James Schipper's comments in the comments section suggest that productivity naturally leads to increased wages in capitalism due to the laws of capital and labor. I argue that productivity increases during conditions of labor surplus normal in most capitalist states probably come mostly due to the militant actions of Organized Labor.

James does aver that the replacement of American workers with illegal alien labor did have an effect on the destruction of wages in the construction industry. I argue that there were two stages to the process.

First they broke the unions, then they hired the illegals. Those were the two stages. The exact same thing occurred in many manufacturing plants, especially meat processing. Slaughterhouses, poultry-processing and seafood processing plants all used to be good union jobs with high wages as recently as the 1980's.

First they took out the unions, then they brought in illegals or other immigrants to the work. Many other fields besides construction have been taken out by illegals, including painting and landscaping. My White friends did all of these jobs and made good or decent money doing it. Having your own landscaping business is still a good way for young White men to earn some decent money. So much for Americans won't mow lawns. This is all gone now as most of this has gone straight on over to illegals.

James' argument operates only in the cases of a labor shortage. With a vast surplus of labor, an "army of labor" as the capitalists call the teeming hordes of unemployed, there is not much need to raise wages to compete with other businesses for top employees, as there are 5 guys waiting to take the place of the guy who quits.

The notion that unions are not necessary for workers to have good working conditions is unique to union busters. If unions are superfluous, do nothing but harm workers, and don't even raise wages or improve conditions, why would anyone join one? Better yet, why would capitalists oppose them so ferociously?

The record all over the West seems to be that the more unionized a labor force is or was, the higher wages were. Economic growth used to be spread out among all income classes in the US back in the 1950's and 1960's. In the 1970's, this started to decline to the point now where, from 1980-1992, only the top 20% gained money and the entire bottom 80% of the population lost money.

I would argue that this is exactly how the capitalists wanted it. This occurred during the pro-business Reagan and Bush Administrations. Furthermore, the decline in US wages and the lack of filtering down of productivity dovetails perfectly with the devastation of US unions. Not only that, but the war on US unions, along with the theft of workers' productivity growth, was all part of a project by US business.

To say that in the US, the businessman is the worker's friend stretches reality. Unless the worker organizes to get a good wage, a share of economic and especially productivity growth and better conditions, thing look quite bleak.

James argues that it is better to work for a big business than a small one in Canada. This is probably true, but I would argue that workers are often treated better by very small businesses, who, around here anyway, often treat workers as if they are part of a family.

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More on Laissez Faire Economics

In the comments section, James Schipper makes some interesting comments about laissez faire economics and libertarianism in general. His comments are in italics, mine are follow in normal font.

JS: Laissez-faire usually means short-term gain for a small minority and short-term pain for a large majority, medium-term gain for a larger minority and medium-term pain for a smaller majority and only long-term gain for the majority.

RL: I don't agree with this at all. The case of neoliberalism seems to show us that the gains never do filter down to anyone below the top 20%. This is what the neoliberal advocates keep saying - "Give it time, give it time." But no matter how much time you give it, it never seems to work. We are now 28 years into a neoliberal revolution in the US, and have things gotten any better for any larger majority?

Of course not. Things just seem to get worse and worse. Neoliberalism only accomplishes massive wealth transfers from the bottom 80% to the top 20%. It's designed to do that in perpetuity, since class war never ends in capitalism, even in fascism.

JS: The Chicago boys are actually right in that speculative bubbles are only possible if the government engages in massive monetary expansion or allows the banks to do so. This means that the most essential part of government regulation in a modern economy is the regulation of credit and the currency. Too much money and credit = inflation and speculation.

RL: The problem here is that these Chicago Boys characters have been cheering on every single speculative bubble that ever existed, and they created quite a few of them themselves. Their libertarian project in Chile ended in massive failure such that even Pinochet had to step in with major government intervention to save the economy. Huge intervention by the state was the only thing that saved the economy.

In Russia, the Boys succeeded in looting the nation, transferring the money out of the country, engineering a Depression 3.5 times worse than the US Depression and killing 15 million Russians. The Chicago Boys and their acolytes were behind the Asian Flu crashes in the late 1990's too.

The only way to prevent speculative bubbles is through government regulation of an economy, and the Chicago Boys apparently oppose all such. The business sector, whom the Chicago Boys represent, always supports a loose money policy during the good times in order to facilitate the cheap money necessary for economic expansion and of course speculation.

Furthermore, the US capitalist class, nor any other capitalist class, would never support the Chicago Boys' apparent prescription here - getting rid of the Fed's regulation of the money supply. Business loves and needs the Fed, despite all of its rants against socialism. Anyway, the role of a central bank is overestimated. Even in a state without a strong central bank regulating money, you can still get massive speculative inflows. This was the case with the nations harmed by the Asian Flu.

The Fed itself is run by economists who are themselves working hand in hand with Big Business and are generally followers of Chicago School Economics. The only thing the rich care about is inflation, and business everywhere on Earth has cheered on every speculative bubble that ever existed. They can't get enough of them.

To blame these bubbles on a reactionary government institution called the Fed, implying the Fed is some kind of socialist institution (though its recent actions have indeed been socialist) is beyond perverse.

What's deadly to business and the rich is inflation. The rich hate inflation because it cuts into their incomes. Most rich people don't even work at all. They just kick back and live off rents and equities. Nothing cuts into their lazy money more than inflation. Further, inflation engenders demands for wage increases, which is why business hates it so much. It also increases costs for supplies, which they may or may not be able to pass on.

In order to stop inflation from hurting the rich and business, the Fed fights inflation by throwing millions of Americans out of work, since inflation and unemployment are two ends of a scale. As unemployment gets "too low", workers start getting "uppity" and demanding wage increases. This is deadly to capitalism, so the Fed responds by deliberately increasing unemployment and throwing millions out of work.

If you take a university course in capitalist economics, they will tell you that capitalism operates on the premise of "the benefits of mass unemployment". The benefits lie in the disciplining of the worker. The notion that mass unemployment has any benefits at all is enough to turn my stomach against capitalism.

Further, I'm not enamored of any Austrian economist.

JS: Too much money and credit = inflation and speculation.

RL: Problem here probably being that the Fed cares little about speculation (although it does worry about it a bit - witness Alan Greenspan's famous "irrational exuberance" comments a while back) but cares a lot about inflation.

Speculation does not necessarily lead to increases in core inflation, but it surely runs up some prices. Housing market, oil and dot com stock speculation surely created bubbles in those sectors, but in the case of housing and dot com's, did not effect core inflation.

JS: As to the New Deal, it was a colossal failure.

RL: I can't comment on this. The general analysis here in the US is that the New Deal saved US capitalism from Revolution, hence it was painful but worth it. This analysis comes from the more enlightened among capitalist sectors themselves.

Of course Western Europe and the Asian Tigers were not built on laissez faire. Even today that Japan, Singapore and Korea have extreme government intervention in the economy in terms of state planning of the economy. That's often termed corporatism.

It's not like Gosplan where the social economy is planned down to the # of eggs you will eat in a year. Instead this sort of economic guidance actually works. Government works with firms to help them compete against foreign sectors, goosing some sectors while letting others wilt.

No country with a mostly private education system and a poor public education system has ever produced any kind of an educated population.

Up here in the Sierra Nevada Mountains, we have many roads that are private. The country never got around to making them county roads. Without exception, they are horrible. In many cases, there are expensive homes and properties lining these roads. The homes sell for about ~$300,000+ now. Most people living there have some money and they are not poor at all.

Thing is, everyone would have to get together to pitch in to fix the road and maintain it. People, even well to do folks, can never seem to get together to do that, so you have a horrific road. It's really strange to try to drive down a nightmarish road while looking at very nice, fancy houses with new cars on either side.

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The "Benefits" of Deregulated Capitalism

Lack of regulation in capitalism leads to the ability to roll up huge gains in wealth for those at the top of the food chain, and also leads to huge economic disasters on a national scale such as we are experiencing now in the US.

The italicized portion of the previous sentence is precisely why business, the rich, the media and the plutocratic political parties in the US (originally the Republican Party, but now both parties), support the deregulation of the capitalist system in the US and all over the world.

The verdict is in on the deregulation of capitalism that has been the rage all over the world for the past 30 years. Almost everywhere it has been tried, it has caused massive discrepancies in wealth distribution. The top 20% of the income earners everywhere on Earth have benefited, and the bottom 80% have lost out.

That's why Latin America has been voting in leaders who have campaigned on platforms that can be roughly translated as, "The Hell with neoliberalism". Far from being Leftists or Communists, most of the new Latin American Left is simply objecting to the observable failure of 20-30 years of neoliberalism in Latin America and trying to fashion some sort of social democratic alternative.

Even honest proponents of neoliberalism in the US media like Fareed Zakaria have admitted that neoliberalism in Latin America has failed. The usual lie has been, "It hasn't had enough time to work yet."

This is a lie.

Neoliberalism in Latin America is working exactly as planned.

It was designed to enrich the top 20% and impoverish just about everyone else. Everyone on Earth, neoliberalism has devastated the public sector, wages, working conditions, schools, health care, etc. It has probably killed millions of people. In fact, there is good evidence that it is killing millions of people all over the world every single year.

Read about the history of the US economy in the late 1800's as it lurched from one panic to another, with wild run-ups in wealth for the rich in between.

Unregulated capitalism is like a cocaine addict with a trust fund. He can have a real wild blast as long as the money lasts, get high as a damned kite and soar to the skies. There's almost no limit to how high he can get. When the crash comes, he's going to be pounded physically and psychologically, and his trust will be drained. Freemarketeers argue that it's worth it for the fun of the run.

Regulated capitalism is like a middle-aged man who drinks a couple of glasses of wine a night. He's not able to get rip-roaring drunk like he did in his youth, nor is he able to drink his troubles away, but the hangovers are nonexistent, and he's not committing slow suicide anymore either.

Regulation is like a fog layer on the coast in a Mediterranean climate. It takes the extreme heat and cold out of a climate and leaves it at a moderate, some would say boring, middle.

During the Roaring 20's, people forget 80% of the US population actually lost money. It was only "roaring" for the top 20%. Nevertheless, most Americans think of this as a time unlimited prosperity. As we can see, not only is America governed and reported on exclusively by the Rich, but even our very history is the History of the Rich.

The Great Depression was directly caused by unregulated capitalism in the US, despite the desperate efforts of rightwing economist Chicago School professional liars to lie their way out of the facts. In the 1930's, a huge regulatory structure was put into place in part to prevent a second Great Depression from occurring.

It's worked well, but now a lot of the regulations that were put in post-Depression have been whittled away, such as the Glass-Seagall Act, that attempted to build a wall between commercial and investment banking. That way, if high-risk investment banking goes under (as it is prone to) it doesn't take down the commercial banking sector (where Mrs. Jones has her nest egg) with it.

Deregulated capitalism quickly leads to a state of affairs where you have wild economic growth and bubbles followed by bubble deflations and panics.

It's no way to run an economy, but this is the way every capitalist on Earth wants it.

Every capitalist on Earth is like a gambler in a casino with a credit card with no limits. Sensible nations do not listen to what the capitalists want - they never want anything good for the nation in the long run. The capitalist perennial children need to be continuously regulated on a short leash by regulatory adults in government in order to have any semblance of a decent society under capitalism.

Since 1980 and the beginnings of massive deregulation, the wages of 80% of the US population (nonsupervisory workers) have declined by 1% in constant dollars. They should have been going up in tandem with productivity increases, and productivity has gone up a lot in 28 years. 100% of the productivity increases in the last 28 years went to the top 20%, and 0% to the bottom 80%.

Before anyone screams race, this is the way unregulated capitalism works in any society - even an all-White one. The bottom 80% of the US population that got screwed massively in the Roaring 20's and resulting capitalist hangover called the Great Depression was overwhelmingly White.

A regulated capitalism would look a lot like what we had in the US in the 1950's and especially 1960's and 1970's. It works pretty well for a capitalist system. It's true that it tends to stifle massive wealth run-ups and bubbles (almost always caused by massive fraud anyway) but it also makes for a smoother ride and much fewer crashes, panics, recessions and depressions.

The Taoists discuss the Middle Way. So it is in capitalist economics as in the rest of life. "Live fast, die young and leave a pretty corpse," sounds romantic at 18, but a 50-yr-old who makes such a statement is a moron. Our economy has been run by 18-yr-olds for decades now. As long as we have a capitalist economy, it's time for some adult supervision.

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Why US Business Loves Mass Immigration

...And why every American who is not a businessmen should not.

This post will show how immigration is great for US business, but it's bad for everyone else in the country. That includes everyone who doesn't run a business, all of you, "What's good for my boss is good for" worker-fools.

James Schipper has been laying out some excellent reasons in the comments threads about why immigration does not appear to make much sense for economics or society as a whole. In fact, mass immigration seems to be detrimental to your average person. His arguments seemed logical, but I had hardly heard them before.

But then I wondered, if it's so obvious that mass immigration is bad for society and even for average income, why would business and the elites support it?

Turns out that business has no interest at all in the average income of workers. In the Third World, they are perfectly content to have millions starving or living in the streets every year, as in India. Or to have 90% of the population in poverty as Guatemala was for years and Haiti is now.

As long as the rich stay rich and business stays profitable, they don't really give a flying fuck about anyone else and whether they are in poverty or not.

In Haiti, the elite has a monopoly on food sales, which they mostly import and mark up at very high rates. Since the poor have to eat or starve, they have no choice but to pay the high prices. So even a 90% poor country can still generate high profits for business. Fewer poor people would mean rising wages or more of returns going to wages than to owners. Of course, business always opposes rising wages and increased shares to workers.

Let's let James show us just how supporting mass immigration is logical for businessmen:

The reason why the business community tends to support immigration is that more immigrants means more workers, more customers and more real estate users.

The essential question is not whether immigrants work for less than natives but whether the presence of immigrants makes labor cheaper than it otherwise would be.

I think that mass immigration has a depressing effect on wages, or else its prevents wages from rising as fast as they would rise without immigration. Lower wages do not necessarily translate into fatter profits because, by lowering production costs, immigration may lead to lower prices.

Slavery also lowered production costs, so the ultimate beneficiaries of slavery may have been the consumers of goods produced with slave labor.

More immigrants likely means that there will be economic growth, and that can mean increased sales. What matters to business is not per capita sales but total sales. Let's illustrate this. We have a town with 500 people and a restaurant. Let's assume that on average each town resident consumes 6 restaurant meals per month, so the restaurant sells 3000 meals per month.

Now 200 immigrants enter the town. They lower average income, so that each town resident now consumes 5 meals instead of 6. The restaurant still benefits from the population increase because it now can sell 3500 meals per month instead of 3000. if you are in the business of selling widgets, you are better-off selling 1200 widgets to 150 people than 1000 widgets to 100 people.

Suppose that no immigrants had entered the US in the last 50 years, would average real estate prices be as high today as they are? I doubt it. The more people you put in a given space, the more property is likely to be worth in that space. Immigrants have to live somewhere. Since business owns a lot of real estate, they benefit from population growth.

For business, the important thing is usually total economic growth, not per capita economic growth, let alone per capita consumption. For ordinary people, the important thing is per capita income growth and its distribution.

Let me illustrate demographic investment once more. We have a country with 400,000 high school students and there are 400 high schools. Schools last 100 years, so each year the country has to build 4 schools. Let's assume that a school costs 50 million dollars. That means 200 million in building costs per year.

In addition, the country spends 5,000 per year on each student. Adding the building costs to that amount, the cost of each high school student is 5,500 per year if the student population remains the same.

Now we make the assumption that the student population increases by 4000 each year. Since there are 1000 students per school, the country has to build 4 more schools to accommodate the new arrivals. Instead of building 4 schools, the country now has to build 8.

In the first year after the growth in the student population, the costs per student are (404,000 x 5,000) + 8 x 50 million = 2,420,000,000/404,000 = 5,990. In other words, the cost per student has increased from 5,500 to 5,990.

The increment of 490 can't be used for consumption. That is the effect of demographic investments. It reduces consumption. Education is an investment.

The establishment can also believe in a lot nonsense. Many members of the elite may believe in immigration because it makes them look cosmopolitan, tolerant and sophisticated, so unlike the unwashed who don't like immigrants because they are unenlightened and bigoted. It is a coalition of plutocrats and political correcties that keep the flow of immigrants going in Canada and the US.

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