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By: BajaArizona Sun, 22 May 2011 04:39:41 +0000 There’s a brutally simple reason Americans don’t have much of a social safety net: Racism. People hate the idea of their tax money going to support “welfare queens” who inevitably in their imaginations are people with dark skin. In a country with a homogenous (sp?) population it is easier to be generous towards people who look something like your family members. Very few health care opponents will openly admit this, perhaps not even to themselves.

Humans evolved over millions of years in groups no larger than 100 individuals and generally much smaller. We are evolved to make instant judgments whether a stranger is “Us” or “Them”. These categories are somewhat plastic as proven by the example of sport team affiliations, but this instinct is deeply rooted in our biology. America is an idea as much as a country, testing the boundaries of how far people can expand the definition of “Us”. We’ve done relatively well in proving that racial differences can be ignored, but the hurdle remains and is very real.

On a total side note: I dislike the very word racism. There are no separate races. There isn’t even a human race. “Race” is a folkloric taxonomy with utterly no scientific value. People try to substitute the word ethnicity but it’s a poor fit. Even the word “species” is a bit fuzzy, since according to accepted taxonomy the Neanderthals are of the same species as us since it has now been proven that interbreeding occurred some 35,000 years ago and most non-Africans today have a small percentage of Neanderthal ancestry. (One of the most shocking and exciting discoveries ever IMHO.) The most accurate term to differentiate what we are trying to describe when we use words like race and ethnicity is probably haplogroups. I’m not holding my breath waiting for that usage to catch on, however.

Personally, I’m hoping I live long enough to be here whenever Singularity (the merging of humans and machines) happens. My guess is it will occur in about fifty years. The human model is hopelessly flawed. Our greatest achievement will be to design the sentient life forms that will replace us. Hopefully we’ll remember to give them a sense of compassion and moral compass, but that’s probably hoping for too much.

Ok, now that I’ve revealed my quasi-religious belief system, you probably think I’m a crazy person. Hehe.

By: bmcgin2 Sat, 21 May 2011 22:57:52 +0000 The baby-boomer politicians ran the county into the ground by borrowing from every source possible (like the SS trust fund). During strong time, the borrowing continued. And new tax revenue sources become collateral for more borrowing.

Raising taxes fixes nothing, this makes it worse.

Look how congress comprises: Party A wants to spend on B and cut from C. Party X wants to spend on Y and cut Z. A comprise is reached only when the agreement is to cut C and Z.

By: bmcgin2 Sat, 21 May 2011 22:57:01 +0000 The baby-boomer politicians ran the county into the ground by borrowing from every source possible (like the SS trust fund). During strong time, the borrowing continued. And new tax revenue sources become collateral for more borrowing.

Raising taxes fixes nothing, this makes it worse.

Look how congress comprises: Party A wants to spend on B and cut from C. Party X wants to spend on Y and cut Z. A comprise is reached only when the agreement is to cut C and Z.

By: FBreughel1 Sat, 21 May 2011 22:08:20 +0000 @BajaArizona: Yes, we have the US much to thank about and the author of the article Mr. Saft missed that point. I agree to many of the other points in your posts as well and thank you for giving me more insight into your thinking as well. It does seem we look upon many things the same way.

As for the Euro: I think I speak for many when I say that the EU committee is not popular but the Euro is. That is because we trust the ECB but not the EU politicians who are far away from the voters and just doing whatever the hell they like. Planning for a strong centralised EU government will (with luck) stay decades away off the agenda. The Euro will stay but maybe not every country, such as Greece, will be allowed in the Eurozone. If a country like France would default however, you are absolutely right this could mean the end of the Euro currency.

Concerning the income taxes in the US, I was of the impression that they have not been low historically but have been declining since WWII. (wasn’t it even around 80 %?) At present day, income distribution has been polarised (10 % owning the major part) and this seems to me a bit worrying and particular unstable situation.

But anyhow, it is again how one perceives the world. Two Americans we spoke in Chile last year were truly horrified by Obama’s “Medicare for all” whereas we Europeans know nothing else then that everybody can step into a hospital when they are sick and helped for free. Insurance is simply regulated (there you go) by law. Costs: 120 Euro p.m. When we heard the costs in the US we understood why they were so horrified :-)

By: BajaArizona Sat, 21 May 2011 14:39:18 +0000 One last point:

In assigning blame for the current crisis and looking to solve future ones, I failed to mention the role of de-regulation, an almost religious concept to many free market true believers. It wasn’t just the destruction of regulations, it was the zealous belief that any regulations are somehow evil. Even if we manage to push through proper regulations, (a big if, the moment seems to have passed and people have already forgotten) if the belief that any regulation is bad persists then the people who are entrusted to enforce regulations simply won’t. The concept of regulations isn’t about good or evil. Ask a mechanic, any engine needs an actual regulator to prevent overheating. Take out the regulator and you may travel 100 yards very fast but then you’ll have an expensive pile of molten metal where your car once was.

Regulations for economic engines need to be engineered the same way that regulators on combustion engines are built…the goal is the same. Deregulation in the 90s was undertaken by laissez-faire devotees all over the world, and even those who where charged with enforcing regulations were cowed to the point that they no longer did their jobs. Like mechanics constantly tinkering to get the most efficiency from their race cars, we should be using regulations to improve economic performance. Instead we’re locked in a theological debate.

Goes back to that rational thinking problem once again…

By: BajaArizona Sat, 21 May 2011 14:15:10 +0000 As I said, reasonable people can disagree on Keynes. I do not think he said any stimulus is good. He said that when an economy is in the tank, a smartly targeted short term stimulus is vital to bring an economy out of a downward spiral. Once the economy is growing again, then it is time to raise taxes/cut spending. Doing so when an economic recovery is either fragile or non-existent merely burdens the chances of recovery further.

The United States currently has historically low taxes. Eventually it is inevitable that we will have to both raise taxes and cut spending. An enormous amount of our spending is non-discretionary. Unless we walk away from our legal commitments we can’t touch Social Security or Medicare or paying interest on our debt. Other programs are a tiny percentage of our overall spending. The sacred cow that must be sacrificed is our military, on which we spend more than the rest of the world combined. However, knuckle dragging conservatives who want limited government will for some reason happily shell out hundreds of billions on boondoggle projects (I’m looking at you, Osprey helicopter) making it political suicide to suggest. Oddly, they’re quite happy to cut medical benefits to wounded soldiers…go figure.

As for the Euro, being strong and stable isn’t much help to Greece, Portugal, Ireland, and whichever domino is next. Point is, sharing a currency across many different governments is bound to create problems. The actions of one government affects the value of the currency in other countries. If the Euro zone had a true central government, then this would be fine. Until it does, the one (or three) failed policies of member countries will negatively affect the economies of countries without failed policies far more than if those failing countries had their own currencies.

Americans (or many of us, see previous post) would love to see a united Europe which would be capable of effective economic and foreign policy. Europe and America share many of the same values and a weak Europe is not in anyone’s interest who cares about basic human rights, democracy, and rule of law. (Yes I know we’ve been increasingly viewed as hypocrites on these issues. Newsflash: anyone who proclaims lofty ideals will fall short. Our ideals are a destination to work towards, not a statement of where we’ve been. Honestly compare our efforts to promote these ideals with any country past or present with similar powers/responsibilities and suddenly we don’t look so bad. Remember, I said “honestly”.)

With all this, the biggest problem in the US is not the fundamentals. We can easily fix our problems by cutting defense spending (I believe hundreds of billions of dollars a year could be shaved without compromising effectiveness) and raising taxes on corporations, eliminating insane subsidies to industries like agriculture and oi. The obstacle which has us stopped is not structural, rather it is psychological. Our political system is riven with polarizing ideologies, drowning in special interest corruption, and paralyzed by winner-take-all stalemate. And the trends indicate this will only continue to get worse.

Economic theories of the past were built on the presumption that people act rationally in their best interest. Now we know from psychologists and brain scientists that people act primarily from irrational emotional decisions. Logic rarely plays a role. And that is far scarier than any horror movie ever made.

By: FBreughel1 Sat, 21 May 2011 13:29:44 +0000 @BajaArizona: Every country or group of countries needs a mechanism to avoid free rider and corruption. In the US this should have been the voters but they are really to polite. Something need to change.
In the EU this is the Stability Pact. Either a country sobers up its deficit below 3 %, or it has to pay penalties. That why the Euro is so stable and trading 40 % higher then the dollar since it’s introduction.
I guess it all depends how you look at the world. If you believe in Keynes, any stimulus is good. Unfortunately I think that in the case of Greece it would end up in maintaining a corrupt government system. This will not lead to long term benefits. The ECB is of the same opinion and so they are a bit harder on Greece. This will last the next ten years, I guess. Will the Euro disappear if Greece leaves the eurozone ? Hardly, it will around 2 % less GDP. Not very impressive and most people I speak about it have no worries about or sympathy for Greece. For Portugal yes, Greece no.
Thanks for the interesting info on the (U)S.One thing on Keynes: he also said you have to save money in the good times to spend it in the bad times. Not to pile up high debts and print excessive amounts of money. Please check it.

By: BajaArizona Fri, 20 May 2011 21:05:18 +0000 FBreughel1

I apologize for my comment appearing on this article.

It was the article about the Nazi camp guard being convicted and immediately set free that inspired my emotional outburst; however, the comments for that article were closed and I had no time to find a better place for it. I was also reminded of the Libyan who served 11 days for each death of the passengers of the pan am flight filled with my fellow countrymen before being released for humanitarian reasons, where he was greeted with a hero’s welcome and a glorious retirement (until this spring, presumably).

The problem with painting whole populations with epithets is that you (I in this case) prove your argument wrong before you even begin. Obviously many many many Europeans are not feckless in the slightest. All of us have faults, and those faults tend to be magnified when applied to nations/continents. I’m ashamed I fell into playing that game. I guess I read one too many comments by supercilious European commenter/trolls. One thing the internet has taught me is that trolls are real and they live in all countries and sometimes I am a troll too.

As an American, let me help you understand what is happening here. This country is NOT united. They purposely put the word “United” in the name of our country as a constant reminder, and one which is usually ignored by it’s citizens. This is a sharply divided country along every fault line imaginable. But the deepest fault line today is money. The rich (many of them) are killing our democracy by deliberately pandering to the most base instincts of our most ignorant citizens.

Back to the topic of this column: I happen to be a Keynesian who agrees wholeheartedly with Krugman. We need short term stimulus and long term austerity plus higher taxes. The economy must get back on its feet first or austerity will be meaningless. I understand how reasonable people can disagree on this.

Finally, the fault for the current crisis is not with the United States, or China, or the EU, or BRIC, but with greedy short sighted corporatists in the governments of all these countries. Everyone thought the good times would just keep on going, paid no attention to fundamentals, and shoved as much cash into their own pockets as fast as they could. This is just human nature and was entirely too predictable.

A last note: The euro is a failure, sadly. Without a central bank to make adjustments, the euro has become one of the most punishing catastrophes in the world economy today. If Greece had it’s own currency, it could have taken actions such as raising/lowering interest rates and devaluing its currency to help lessen the shock. The sooner the euro is abandoned the better, because this inflexibility has the power to damage the economies of every country on the continent, and the effects could be a global depression.

By: FBreughel1 Thu, 19 May 2011 17:38:24 +0000 By the way Mr. Saft, if the dollar goes down (which is already happening), this is not great for the pound, yen and euro as well.