Opinion

Lawrence Summers

The economics of austerity

By Lawrence Summers
June 3, 2013

Paced by housing and energy, the U.S. recovery is likely to accelerate this year and budget deficit projections have declined as well.  Unfortunately the European economy remains stagnant though there is some evidence that stimulative policies are gaining traction in Japan.  Around the world the idea of “austerity” is fiercely debated.  This all makes a reconsideration of the principles that should guide fiscal policy opportune. This requires recognizing that policies need to be set in light of economic circumstances.

A prudent government must over time seek to balance spending and revenue collection in a way that assures the sustainability of debts. To do otherwise leads to instability and needlessly slow growth and courts default and economic catastrophe. Equally, however, responsible fiscal policy requires recognizing that when economies are weak and movements in interest rates are constrained ‑ as has been the case in much of the industrial world in recent years ‑ changes in fiscal policy will have significant effects on economic activity that in turn will affect revenue collections and social support expenditures. In such circumstances, aggressive efforts to rapidly reduce budget deficits may actually backfire, as a contracting economy offsets any direct benefits.

It is a truism that deficit finance of government activity is not an alternative to tax finance or to supporting one form of spending by cutting back on another. It is only a means of deferring payment for government spending and, of course, because of interest on the debt, increasing the burden on taxpayers. A household or business cannot indefinitely increase its debt relative to its income without becoming insolvent, and neither can a government. There is no viable permanent option of spending without raising commensurate revenue.

It follows that in normal times there is no advantage to deficit policies. Public borrowing does not reduce ultimate tax burdens. It tends to crowd out private borrowing to finance growth and job-creating investment and foster international borrowing, which means an excess of imports over exports. Or the expectation of future tax increases may discourage private spending. While government spending or tax cutting financed by borrowing creates increased demand in the economy, the Federal Reserve can in normal times achieve this objective by adjusting base interest rates.

It was essentially this logic that drove the measures taken in the late 1980s and in the 1990s, usually on a bipartisan basis, to balance the budget. As a consequence of policy steps taken in 1990, 1993 and 1997, it was possible by the year 2000 for the Treasury to use surplus revenue to retire federal debt. Deficit reduction and the associated reduction in capital costs and increase in investment were important contributors to the nation’s strong economic performance during the 1990s, when productivity growth soared and the unemployment rate fell below 4 percent. Essentially, we enjoyed a virtuous circle in which reduced deficits led to lower capital costs and increased confidence, which led to more rapid growth, which further reduced deficits, which reinforced the cycle.

In recent years circumstances have been anything but normal in the United States and most of the industrial world. High levels of unemployment, low levels of job vacancies and deflationary pressures all indicate that the level of output is not constrained by what the economy is capable of producing but by the level of demand. Moreover, with base interest rates at or close to zero, the efficacy of monetary policy is circumscribed. In the United States, gross domestic product has been as much as $1 trillion a year ‑ or more than $10,000 per family ‑ below its potential.

Under these circumstances, there is every reason to expect that changes in deficit policies will have direct effects on employment and output in ways that are not normal. Borrowing to support spending either by the government or the private sector raises demand and therefore increases output and employment above the levels they otherwise would have reached. Unlike in normal times, these gains will not be offset by reduced private spending because there is substantial excess capacity in the economy, and cannot easily be achieved via monetary policies because base interest rates have already been reduced to zero. Multiplier effects operate far more strongly during financial crisis economic downturns than in other times.

In a study published last year in the Brookings Papers in Economic Activity, Brad DeLong and I made estimates suggesting that the effect of contractionary fiscal policies might well be to increase rather than reduce future debt burdens because of their negative economic effects. These estimates remain the subject of substantial debate among economists, and I would never want to suggest that policy be driven by the results of a single study. I do think it is a fair conclusion that in the current context, once account is taken of the direct impact of budget policies on economic performance, the impact of such policies on debt burdens is greatly attenuated. 

What follows from this analysis of the impact of fiscal policies? First, the United States and other countries will not benefit from further measures directed at rapid deficit reduction. Not only will output and jobs suffer, but a weaker economy means our children may inherit more debt and less capacity to bear the burden it imposes. Already premature deficit reduction has taken a toll on economic performance in much of the industrial world.

Second, while continued deficits are a necessary economic expedient, they do not constitute a viable permanent strategy, and measures that reduce future deficits can increase confidence. Such measures could involve commitments to reduce spending or raise revenue. But there is an even better way. Pulling forward necessary future expenditures, like those to replenish military supplies, repair infrastructure or rehabilitate government facilities, reduces future budget burdens and increases demand today. It is the right way forward, but getting there will require moving beyond the slogans either in support of or in opposition to austerity and instead focusing on what measures can best support sustained economic growth.

PHOTO: A protester holding a cut-out of scissors signifying cuts, takes part in a demonstration against the government’s cost-cutting reform plans in education as part of austerity measures, during a nationwide general strike called by the education sector in Madrid May 9, 2013. REUTERS/Paul Hanna

Comments
36 comments so far | RSS Comments RSS

ARE YOU SERIOUS?

If you are, it is shocking to me to see how disconnected the elite class who are running things are from the real world of “Main Street”.

THIS is not a revelation to anyone who has had to deal with the real world on a daily basis.

I am shocked that people like you simply do not understand what the real world is like.

THAT scares the hell out of me.

But it does answer a lot of questions in my mind as to how things can get so bad.

Posted by EconCassandra | Report as abusive
 

The answer lies neither in money printing or austerity. It is the system that is broken. It is the banking system that needs to be fixed at its foundations and this article talks nothing of this.

Posted by BidnisMan | Report as abusive
 

@ BidnisMan –

Unfortunately, the banking system is only the tip of the iceberg.

It is the enabling legislation passed by Congress — not only for banking, but free trade and taxes that benefit only the wealthy class — that is the underlying problem.

Posted by EconCassandra | Report as abusive
 

Summers is right; austerity doesn’t work and is detrimental to the world’s economy. I don’t think he’s suggesting that it’s the ONLY problem confronting the world’s economy, but it’s his contribution to the ongoing debate about whether to employ austerity measures or stimulative measures. I think the debate is about over, but I, for one, welcome Mr. Summers’ contribution.

I can’t speak for Europe, but here in the US conservatives are trying to neuter the effectiveness of the federal government and austerity is one of their tactics. The plutocrats who have replaced democracy with their form of aristocratic rule are fully focused on using every means within their considerable reach to fine-tune our economic system to maximize their profits. One of the most effective ways of doing that is to buy out the federal government and then weaken it into fecklessness, effectively quieting the voices of the American people down to an impotent murmur. Then the plutocrats will have free reign. We’re already almost there. This is the reason why the US has the most expensive, asinine, inefficient healthcare system in the world; It’s why we spend more on our military than the next 10 countries combined; It’s why the wealthy and corporations get away with paying so little in taxes while our infrastructure deteriorates into third world status.

Things in the US will continue to get worse until we the people wake up and decide we’ve have enough. We need to start by ending the corrupting way we fund our government’s political campaigns. We can’t keep allowing millionaires and corporations to buy off the favors of our elected government officials. It’s the #1 threat to this nation.

Posted by flashrooster | Report as abusive
 

Absolutely agree. EconCassandra knows nothing about economics. Another asinine know-nothing claiming government operates at the level of a household. Yes, the banking system is crooked, as are other institutions. For the reasons flashrooster gives. (By the way he’s one of the few non-redneck bigot commentors who post on yahoo regularly.)
Thank God the austerity debate is largely over, although the Birchers will keep ranting about lowering taxes for another cycle or two. Roster is absolutely correct. Plutocracy and subversive corporate behavior are a far more dangerous threat to the survival of our democracy than current deficit spending.
But I see no movement on campaign finance reform happening. Agree it’s the place to start but how do you get the ball rolling when corporations are people? We’re passed the Rubicon. Having witnessed over 30 years of “democracy” I have no hope for this country and don’t want to raise kids here. Greed is seeping into every aspect of life I can fathom. Need a break, a new culture, possibly for good.

Posted by Mac20nine | Report as abusive
 

“It is a truism that deficit finance of government activity is not an alternative to tax finance or to supporting one form of spending by cutting back on another. It is only a means of deferring payment for government spending and, of course, because of interest on the debt, increasing the burden on taxpayers. A household or business cannot indefinitely increase its debt relative to its income.”

Truism or not, politicians and bureaucrats NEVER seem to “get it”. They are ALWAYS the “enemy of reason and logic”, and it has been from them that the mindless unrestrained printing of more and more American dollars with NOTHING “behind them” may someday reduce the value of a dollar to Monopoly money.

In the physical sense America’s land mass is not growing, nor are our natural resources, nor is the value of what we produce, therefore the value of each existing dollar is reduced proportionally by every one added to the supply of them in circulation. The single saving grace has been that so many are held by governments as the “least worst” fiat currency and yet the day this is no longer true is actually advanced by our persistent “devaluation by printing press”. No nation or people remain “top dog” forever, and denial is no substitution for preparation in reasonable anticipation of an inevitable “day of reckoning”.

“Deficit reduction and the associated reduction in capital costs and increase in investment were important contributors to the nation’s strong economic performance during the 1990s, when productivity growth soared and the unemployment rate fell below 4 percent.”

So when times are good, this works. Actually, when times are good, EVERYTHING seems to work.

“In recent years circumstances have been anything but normal in the United States and most of the industrial world. High levels of unemployment, low levels of job vacancies and deflationary pressures all indicate that the level of output is not constrained by what the economy is capable of producing but by the level of demand.”

And there we have it. A great majority don’t comprehend that “high levels of unemployment [and] low levels of job vacancies” are the “new normal in a world in which fewer and fewer human beings are required to produce the products and services required.

Not only are these trends not going away, they will continue downward until a balance is reached with the increasing productive capability of the man/computer/machine combination and consumer demand. The structural problem implicit is that ever fewer people working in positions above minimum wage inevitably translates to ever decreasing consumer demand. As this process intensifies there will be increasing disharmony as our societies must define and separate “needs” and “wants” and actually prioritize that which sustainable government revenue can provide and to whom.

“Pulling forward necessary future expenditures, like those to replenish military supplies, repair infrastructure or rehabilitate government facilities, reduces future budget burdens and increases demand today…” may well be “…the right way forward…”. The devil, as always, is in the details.

The “anticipated curve of prosperity” must be achievable under “the new normal” in the near future, however I fear those drawing the curve will substitute aspiration for anything remotely consistent with reality. The habit of “kicking the can down the road”, or deferring problems another decade to be dealt with another generation, has “worked” for so long it will be hard to kick.

Posted by OneOfTheSheep | Report as abusive
 

It’s not that F-ING complicated…

TAX THE RICH!!!!!! Tax them at 75% income and eliminate ALL loopholes.

Corporations PAY TAX! Money off-shore? Use it or lose it, long arm of the IRS! Bring it home, pay tax or we take it out of your arse.

Put people to work, rebuilding, building and paying off debt.

Increased wealth in the middle-class means more tax revenue for the government, a reduced deficit, then cut, cut, cut…the MILITARY, the MILITARY, the MILITARY by at least 2/3rd’s present level.

Projects to improve efficiency include (but are NOT limited to):
1) Smart Electric Grid – owned by the government
2) High Speed Rail – real high speed rail like they have in Japan and Europe NO MORE Acela BS!
3) Wind Farms (everywhere, off the coast, in the fields, in hills wherever…)
4) Bio-remediation (brownfields made green)
5) Hydrogen based economy – elimination of gasoline powered cars!
6) Carbon Market (Cap N’ Trade)
7) National Internet 3.0 T-1-Billion or whatever…
8) National Water Control System (end floods & droughts)
9) Improved Border Security (Build the Dam Fence)
10)National Healthcare System – Medicare for ALL!
11)Free Education based on merit system * need based/ability to pay.
12)Means test for Social Security, made too much? FU!
13)Equal treatment under the law, when the RICH break the law, they now go to JAIL too.

…please feel free to add-on at your leisure.

Posted by Foxdrake_360 | Report as abusive
 

Mr. Summers is basically correct on every point made here. I particularly like this observation:

“Pulling forward necessary future expenditures, like those to replenish military supplies, repair infrastructure or rehabilitate government facilities, reduces future budget burdens and increases demand today.”

I would only qualify that suggesting that replenishing military supplies should not be used as cover for expanding the size of the military establishment but, to the contrary, it is best done in the context of a program to reduce military expenditures over the longer term.

Posted by Adam_Smith | Report as abusive
 

I am disappointed that the article does not mention that the work of Rogoff and Reinhart on which austerity proponents have relied heavily has been found to be just plain wrong. Perhaps because a prejudice or bias, perhaps out of some other motive, Rogoff and Reinhart published work with severe flaws. Herdon, Ash and Pollin have used the same data and corrected substantial errors in the calculations to obtain completely different results about the effects of large national debt. Unfortunately, this is still be treated as an academic debate, Rogoff and Reinhart’s results are provably wrong.

However, I do appreciate the article for what it does say.

Posted by QuietThinker | Report as abusive
 

A lot of good comments on a good op-ed. Makes sense. What doesn’t make sense is that we have a government, or roughly half the government, that flat out rejects what Larry Summers and the vast majority of economists have been saying about the most effective ways of dealing with the world’s stuttering economy going forward. And we’re the world’s biggest economy! That’s seriously troubling. We seem to be at an impasse that we can’t get beyond.

On the surface it seems like pure stubborn ignorance: rejection of scientific study; rejection of the majority weight of history and empirical evidence; even the rejection of a democratic majority of opinions. But we go astray if we simply chalk it up to ignorance, because there are some very intelligent people who are instrumental in obstructing progress toward embracing the best solutions available to us.

The real problem can be found in a flaw in our government, specifically, how we elect our government officials and the way special interests can influence those officials. With wealth comes influence and over the last several decades increasing numbers of wealthy individuals and organizations have relied on buying government influence to increase their profits and reduce their tax burdens to the point where they’ve crowded out all of our government’s time and energy that should be spent representing this nation’s best interests and ALL of its citizens.

This country has so far managed to stumble forward out of sheer momentum from being the most wealthy nation on earth for a relatively long time now. But we seem intent on losing that status, and those behind it have enough money to where their lifestyles will suffer very little. There’s so much we could do to improve on how we move forward, but these special interests are obstructing that progress. THAT is the single biggest threat to the United States and if all the bright minds like Mr. Summers and others, in this country and around the world, don’t come together to find a solution for THIS problem, then we WILL succumb to a future of unraveling loss.

Posted by flashrooster | Report as abusive
 

I really get tired of all this stupid bullshit from the wealthy class:

Here is a comment I just posted on this article in Reuters that has a great deal of bearing on this “discussion”.

HOW MANY TIMES DO WE HAVE TO ENDURE THE SAME PATHETIC BULLSHIT FROM THE WEALTHY CLASS BEFORE WE REALIZE WE A BEING SUCKERED BY THEM AGAIN?

NOTHING MR. SUMMERS IS SAYING IS NEW, OR HAS ANY MERIT SINCE IT IS ALL AFTER THE FACT. WHERE THE HELL WAS HIS “IDEALISM” WHEN IT MATTERED TO THE AMERICAN PEOPLE?

HIS HANDS ARE JUST AS BLOODY AS THE REST OF THEM!

READ THIS AND GET SOME PERSPECTIVE ON WHAT MR. SUMMERS IS SAYING.

WE’VE HEARD IT ALL BEFORE.

IN FACT, BEEN THERE, DONE THAT, MULTIPLE TIMES.

AND MR. SUMMERS KNOWS THAT FACT VERY WELL, YET HE PLEADS “IGNORANCE”.

HE SURE SEEMS TO HAVE FOUND A LOT OF NEW SUCKERS TO THINK HE IS REALLY SINCERE!

THIS IS A REALITY CHECK ON HIS CRAP.

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http://blogs.reuters.com/john-lloyd/2013  /06/03/reviving-a-european-democracy/

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Let’s see, democracy is a concept whereby individuals have equal say in their government. Or, an oft quoted “substitute”, since a pure democracy is really not feasible in our society for a whole lot of good reasons, we are supposed to be a “representative democracy”. You know, we elect people locally to represent us in our national government, for example, the US Congress.

What we really have in the US is a “plutocracy”, which means:

1. the rule or control of society by the wealthy
2. a state or government characterized by the rule of the wealthy
3. a class that exercises power by virtue of its wealth

Notice the repeated use of the words rule, control and wealthy (or wealth).

If you think the wealthy elite are not affecting your lives negatively on a daily basis, think again.

Here is an article to reinforce my point.

———————-

Price-gouging cable companies are our latter-day robber barons

Monopolistic cable providers make internet access an unaffordable luxury for tens of millions of Americans

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Heidi Moore (updated)
Heidi Moore
guardian.co.uk, Tuesday 4 June 2013 13.47 EDT
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One percent of American households cancels internet service every year – largely because of its artificially high cost. Photograph: Sipa Press/Rex Features

Last year, about 1% of American households cut off their internet service. That’s not as surprising as experts may suggest.

The internet – which promised to connect all Americans with everything from educational opportunities to Facebook status updates – has become, unfortunately, a luxury even for the middle class. Cable companies that have functioned as oligopolies have made it that way.

Naturally, more Americans would cut off internet service considering how absurdly expensive it has become to pay to stay connected. The median income for a household in the United States is just over $50,000, which has to support a family with basics like food, mortgage or rent, a car and gas. Inflation has steadily driven up the price of food and gas, which has meant that American wages have actually dropped since the recession. School costs, healthcare and other costs mean many families depend on credit cards on occasion. That doesn’t leave a lot of room for splashy purchases.

Yet, strangely, internet access – which is a necessity in homes where children get their homework online and parents may telecommute – has become the splashiest purchase of all. In many big cities, internet access can easily become a budgetary sinkhole for families. Think of $100 a month for cable and internet, another $50 a month for a smartphone, $40 a month for an iPad or a similar device; if you travel, add $70 a month for some kind of wireless hotspot like Verizon’s Mi-Fi.

Competition drives down prices, and the world of cable and internet access has largely done away with the threat of competition. At home, if you don’t like Time Warner’s prices, you can’t turn around and get Comcast; you’ll have to spring for satellite service or hope Verizon FiOS serves your area. And once you have those, there’s no guarantee they’ll suit you or that their billing will be any better.

The result is that Americans are being willingly pick-pocketed. Internet service is costly because internet providers refuse to compete with each other, ensuring they can charge high prices. They rationalize it like this: even though the cable companies have a gross profit margin of around 97% – meaning 97 cents of every dollar they make is pure profit – they still have to pay to service cell towers and invest in broadband. They have expensive equipment to maintain, see? That’s not monopoly pricing power. That’s just basic subsistence.

Unfortunately, their arguments fail for two reasons: the first is that those companies are not actually investing in equipment as much as they would like you to think. There is a cable graveyard littered with “overbuilders” that tried to create fast, wide internet access networks to compete with the giant incumbents like Time Warner and Comcast. Those overbuilders failed.

Another problem with the argument is that “recovering fixed costs” is not a problem; the cable companies’ networks are already bought and paid for, many times over. The cable companies have such incredibly high profit margins – “comically high” in the words of one Sanford C Bernstein analyst – that they don’t have any problem covering their costs. The Open Technology Institute noted in a recent report, “cable companies invested over $185bn in capital expenditures between 1996 and 2011. But these networks generated close to $1tn in revenue in the same time period.”

The lack of either existent or upcoming competition taught the larger cable companies that it pays, literally, to get lazy and complacent: not only would they refuse to compete with each other, but there was also nothing to fear from any aggressive startups.

The lack of any pressure to improve means Americans are forced to keep overpaying for internet service or give it up altogether. There are estimates that 100 million people in the US – or roughly a third of the population – do not have internet access at home.

It’s not unusual for middle-class families to spent more than $2,100 a year just to get online; poorer families can’t even bother. The price of internet access has also risen faster than wages ever could; since 2006, the price of telephone and internet access has risen by 21%, according to the Wall Street Journal. This is not something that single mothers and struggling families can afford; kids in urban neighborhoods cluster inside and around the local McDonald’s to do their homework by grabbing a ride on the stores’ free Wi-Fi. Imagine four years of doing that every night just to keep up with your peers, much less scoring the kind of grades that are good enough for college.

Income inequality is also internet inequality.

Americans can make do, of course. The irony of expensive internet service is that cheaper service is everywhere. Wi-Fi is widely available everywhere from most Starbucks to public libraries if you don’t mind giving up your mobility; the prevalence of smartphones like the iPhone and Samsung Galaxy require expensive data plans for internet access. And then, of course, people use the internet at work and can easily rationalize that 8 hours or more a day of access is quite enough. (Though that is no help to kids.)

How did we get to this place?

Susan Crawford, a professor at the Cardozo School of Law in New York, has argued for years that cable companies are a monopoly. One of her favorite statistics is that there’s not much “competition when 94% of new wired high-speed customers bought service from their local cable distributors” at the end of 2012. In other words, cable companies are internet companies and they have locked down what looks like an oligopoly for their services. In an opinion piece in January, she summed up the problem:

“At the heart of the problem lie a few powerful [cable] companies with enormous influence over policy making. Both the wireless and wired markets for high-speed internet access have become heavily concentrated, and neither is subject to substantial competition nor oversight. Companies like Time Warner Cable routinely get their way when they seek to prevent local officials from encouraging competition. At the federal level, Verizon Wireless is keeping the FCC in court arguing over the scope of its regulatory powers – a move that has undermined the agency’s authority. As a result, prices are too high and speeds too slow. A third of Americans opt not to buy high-speed internet access at home, often because they can’t afford it.”

Crawford’s argument is that cable companies are not only monopolistic, but also exercise their considerable power in Washington to squeeze regulators. They walk like a monopoly and talk like a monopoly, trying to block rivals from getting a foothold. Even local governments trying to improve local service feel the lash.

The idea of an oligopoly is a powerful one, which has tended to kick government regulators into gear to defend consumer interests. Naturally, there are those who believe the cable companies are not bad.

“About 89% of US residents have a choice of five or more broadband providers, counting mobile and satellite, and 85% have a choice of two or more wireline broadband providers,” ComputerWorld summarized a recent Information Technology and Innovation Foundation report. Of course, if you’ve ever had internet access in the US any time your life, the one thing you have not found is choice. Satellite service is an expensive and implausible option for many families. If you’re like many Americans, you hit a point of frustration with your cable and internet provider and looked for alternatives – only to find none.

There is, of course, no impetus in Washington to repair this. Market forces have only encouraged cable companies to keep raising prices with impunity. There is a strong argument to be made that cable companies have abused their pricing power and should submit to regulation in pricing – but there is likely no one in Washington ready to hear it.

These are times when a person can yearn for the old moustache-twirling, chortling monopolies of the Gilded Age robber barons – the open maneuvering of a vindictive John D Rockefeller, as detailed by Ron Chernow, or an Andrew Mellon (pdf) thundering with retro-Calvinist disdain for the moral weakness of the poor. It would be great to see monopolistic ambition with such clarity.

Alas, in our day, we are left with the milquetoast version that rules our outrageously expensive cable, internet and phone services. These robber barons in rimless glasses and Rockports pick the pockets of recession-hit families as gleefully as any old Carnegie – but they need never fear government interference.

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http://www.guardian.co.uk/commentisfree/ 2013/jun/04/price-gouging-cable-companie s#start-of-comments

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When are you people going to realize what is really wrong with this nation?

Our government has been bought — lock, stock and barrel — by the wealthy elite, who are busily destroying our lives, just so they can get wealthier.

Maybe you think that is ok, but it tends to make me angry that I am being cheated each and every day by these people, all of which is fully sanctioned by “their” government.
Posted by EconCassandra | Report as abusive

Jun 4, 2013
11:09 pm UTC

Again, is THIS the kind of society you want your children to inherit?
Posted by EconCassandra | Report as abusive

Jun 5, 2013
2:17 am UTC

@EconCassandra/PseudoTurtle,

From your UK article: “It’s not unusual for middle-class families to spent more than $2,100 a year just to get online; poorer families can’t even bother.” That just goes to show that John Kerry was right when he said: “Americans have a right to be stupid.”

I pay approximately $35 a month, or $420/yr. for 3GB of data per month from Verizon. Service is via a MiFi portable device that I can take with me anywhere in the country (no hotel/motel extra fees).

Now, granted, I can’t stay on UTube or Vimeo all day or subscribe to Netflix, etc. like some people’s kids, but this arrangement has proven quite workable for my wife and I for over two years.

“This is not something that single mothers and struggling families can afford…”. Maybe simple economics suggest single mothers live with other single mothers and share expenses?

“Income inequality is also internet inequality.” Equality is an aspiration, not a reality. If you make the same as someone else and you get cancer and they don’t, there’s inequality again. Not going away, ever! Get used to it!
Posted by OneOfTheSheep | Report as abusive

Jun 5, 2013
3:26 pm UTC

@ OneOftheSheep –

As you say, “Americans have a right to be stupid,” and you exercise that “right” vigorously with every single one of your comments, which are uniformly short-sighted and ignorant beyond belied.

The point of the UK article, which you seem to have missed entirely, is that the government and corporations are now in league together to the detriment of this nation.

Yet, you choose to fasten on one single facet, that of single mothers whom you apparently despise as a group, never mind their individual circumstances, for whatever twisted moralistic slant on reality you happen to have.

Thus, according to you, we should allow corporate American to use monopolistic pricing to steal the American people blind. Apparently, that is just fine by your set of “moral standards”.

You need to understand these “single mother” and the poorer parts of this society have CHILDREN who have a right to education on a par with everyone else. You would condemn these children to a life of poverty and crime for lack of a proper education.

But, hey, as you say, “equality is an aspiration, not a reality”, which is the wealthy class’ interpretation of the US Constitution.

THAT is a very slippery slope that leads ultimately to forced labor camps and debtor’s prisons.

Perhaps, according to you, that is where ALL the undersireables really belong.

Why stop at single mothers, who live off of government welfare checks and pump out babies to get more free money from those “hard-working, decent citizens who deserve the money far more than they do?

There are a lot of others in our society that are not pulling their weight either.

For example, “Joe Sixpack” slackers who won’t work, even though there are plenty of jobs available just for the asking. Because these people are so lazy we have to import illegal aliens to keep our country going.

Or, how about all those people on Social Security, none of whom contribute anything to this society any more and should be cut off to fend for themselves! Besides their Social Security (i.e. “entitlements”) are nothing more than welfare payments that could be spent more profitably elsewhere, instead of wasting it (and health care) on people who have obviously outlived their usefulness to society, but stubbornly refuse to die and get out of the way for others. And speaking of entitlements, how about those on Medicare and Medicaid, who are an even worse drain on this economy.

As you state, “Maybe simple economics suggest single mothers live with other single mothers and share expenses?” Since they refuse to herd togther to share expenses, how about the government rounding them up and forcing them into communal housing?

Are you aware that the UK government is actively attempting to do the same thing with ANYONE who is single and living alone? But, hey, the English have always been known for their great humanitarian beliefs throughout their history.

Think of the height of English society (i.e. the Dickensian Era) when they generously created workhouses to employ the poor, debtors prisons for those who needed encouragement to pay their bills on time, and last but not least a mental health facility that was right on the cutting edge of mental health care for centuries, which we now affectionately know in the popular vocabulary as “belam”.

http://en.wikipedia.org/wiki/Bethlem_Roy al_Hospital

THIS IS WHAT YOU WANT FOR THIS NATION?

AS WE MOVE CLOSER TO THE UK “IDEAL” OF GOVERNMENT — As Mr. Lloyd himself PROUDLY POINTS OUT “The millionaire population in the UK – the fourth-largest in the world (NO DOUBT THIS STATISTIC HAS SLIPPED SOMEWHAT SINCE THEY TOOK A SEVERE HIT AFTER THE ECONOMIC COLLAPSE) – stands at over half a million households — WE WILL NO DOUBT REGRESS TO WHAT THE BRITISH CONSIDER “NORMAL”, WHICH IS A LANDED GENTRY, AND ENTRENCHED WEALTH THAT WEILDS SUPREME POWER IN THAT NATION.

I REPEAT MY QUESTION, IS THIS THE KIND OF NATION WE WANT TO PASS ONTO OUR CHILDREN?

YOU PEOPLE WORRY ABOUT YOUR CHILDRENS’ EDUCATION (WHICH IS SOME OF THE WORST OF ANY OECD COUNTRY) AND ABOUT THEIR “SAFETY” (FROM MASS SCHOOL SHOOTINGS), BUT CONCERN FOR THEIR REAL “SAFETY”, WHICH IS GIVING THEM A NATION TO GROW UP IN WHERE THEY AND THEIR CHILDREN HAVE A CHANCE AT A DECENT LIFE, INSTEAD OF A LIFE OF POVERTY AND ILLNESS, THAT ALLOWING THE WEALTHY ELITE TO RULE WILL GUARANTEE FOR THEM.

WITHOUT A STABLE AND REASONABLY SECURE ECONOMY WITH OPPORTUNITY TO ADVANCE THEMSELVES, YOUR CHILDREN WILL GROW UP IN A SOCIETY THAT RESEMBLES MEXICO, WHICH IS WHERE THE WEALTHY ELITE WANT TO TAKE US.

DO YOU WANT TO LOOK IN YOUR CHILD’S FACE AND TELL THEM THAT, BECAUSE YOU LACKED TO INTELLIGENCE AND MORAL COURAGE TO STOP THE SLIDE OF THIS NATION TO THAT OF A THIRD WORLD ECONOMY, YOU HAVE CONDEMNED THEM (AND THEIR CHILDREN) TO A WORLD OF IGNORANCE, POVERTY AND SERVITUDE TO THE WEALHTY ELITE?

THE CHOICE IS YOURS, BUT ONLY FOR A MOMENT BEFORE THE OPPORTUNITY TO TURN THIS NATION AROUND IS GONE.
Posted by EconCassandra | Report as abusive

Jun 5, 2013
4:19 pm UTC

@ OneOfTheSheep –

You state ”

It should be obvious that the “new normal” is going to be greater and greater efficiencies in all commercial enterprise. We are seeing more and more production from fewer and fewer people due to the more and more effective use of computer capabilities and coordination as well as greater and greater efficiencies from using fewer people with more automation.

The inevitable result is that more and more of the lesser skilled people cannot find a job and those of skills becoming obsolete are finding it harder and harder to hold onto the one they have. Until and unless present tax incentives are revised these trends can only get worse, and yes, it hits the young and inexperienced as well as the older pre-retirement worker quite disproportionately.”

————————-

Increasing health and welfare bills in the United States are also unsustainable, and yet “our politicians” seem bound and determined to add some twenty million or so useless illegal alien invaders from south of the Rio Grand to obligations to present citizens that cannot be financially met. The short sightedness and utter stupidity of such people is nothing less s than frightening.”

———————

“I do not see an orderly way forward even were a desirable path clear. Politicians and bureaucrats are ALWAYS “behind the curve”, turning the wheel long after a collision with the iceberg ahead is unavoidable.

The difference today is that there is NO path “ahead” free of icebergs and so economies are slowing down and stopping because there is simply no other rational choice. On the other hand, it is time for those trained in the “dismal science” of economics to begin examining the pieces of our present puzzle and how they can be otherwise assembled. We must use what we have, where we are, now.

We can no longer march to the beat of the old drums of “growth, “recovery”, and “creating jobs”. But march we must. There must be some incentives more seductive than fear to induce those “sitting on cash” to invest in building a workable future for productive societies. “Circling the wagons” to protect assets that inflation and consumption taxes will inevitably reduce in time is not a long term strategy.”

================

The “NEW NORMAL” — give me a break! How many times do we need to suffer through another new normal, before we realize this is the same bullshit, wrapped in different packaging.

I AM trained in the “dismal science”, which obviously you are not. Instead you beat your chest with “woe is me, what are we to do” except to accept what the wealthy elite want to allow to “trickle down” to us in the form of “yellow rain”.

What the wealthy elite are doing to this world is not new, but the same old tired scenario of unrestrained greed.

That this is a “normal” phenomenon is no excuse for allowing it to continue. To let it run its course again, means ultimately to allow society to be destroyed by these people, all due to their insatiable greed and belief that they are somehow better than everyone else. Thus, they treat us no better than draft animals and become enraged when we want to assert our rights as a human being, not an animal. History is replete with examples of what they have done — for example, the US economy has crashed into a major recession or depression at least 47 times since the founding of this country. THAT IS A FACT.

————–

http://en.wikipedia.org/wiki/List_of_rec essions_in_the_United_States

————-

Clearly, there is something radically wrong with our economy, no matter what the wealthy class tells you.

And, unless you people can muster the courage to do something about it, they are about to do it again, but this time much worse than at any time in history.

THERE IS A SOLUTION, AS I POINTED OUT ABOVE:

@ theAntagonist –

The solution, as I have pointed out many times previously, is very simple.

To cure the disease, you must return to when the first sign of serious infection began for this current bout of the illness.

(1) We must reverse what has been done for the past 30+ years in terms of tax laws, free trade and banking “nonregulation” that the wealthy class has managed to implement over that period of time.

(2) Since ALL of their wealth has been obtained by fraud — mainly through manipulation and bribery of government officials — there must be an immediate clawback of their ill-gotten wealth.

The reason for this is straightforward. ONLY the wealthy class has the money to get the global economy back on its feet again, and functioning properly.

(3) Present government officials should be removed and replaced. The laws governing their conduct should be strengthened significantly, including at a minimum, term limits and the elimination of lobbying (i.e. legalized bribery) that has been one of the major reasons why we now have a totally corrupt government.

The Rx must be repeated when necessary to prevent reinfection.

Rather than an empty solution, I see this as quite an effective cure for what ails this economy before the disease progresses to the point where it becomes terminal.

———————-

All we need is the intelligence and courage to stand up to the wealthy-controlled government and say “hell no, we won’t go there again”.

One of the major problems I see with the present population is that you grew up during one of the most peaceful and productive times in American history.

During this time, both the nation and the middle class prospered for a whole lot of reasons that NO LONGER EXIST.

All you have seen is the “kinder, gentler face” of our government, mainly because the wealthy power had been severely diminished during the 1930s.

Now, however, things have changed. The wealthy class is back in their full power mode and they see you as a threat to their continued way of life, which is a return to their peak of wealth and power, known as the “Gilded Age” from about the 1870s to the turn of the century.

—————-

http://en.wikipedia.org/wiki/Gilded_Age

—————-

PURE AND SIMPLE, WHAT THEY WANT IS A RETURN TO THEIR “GILDED AGE”, WHICH WAS A TIME WHEN WEALTHY EXCESS AND POWER GREW EXPONENTIALLY, AS DID IMMIGRATION, AND THE STANDARDS OF LIVING FOR THE VAST MAJORITY OF AMERICANS DECREASED SIGNIFICANTLY.

IT WAS ALSO A PERIOD OF PHENOMINAL GROWTH IN TERMS OF PARADIGM SHIFTS IN TECHNOLOGY THAT BEGAN TO TRANSFORM THIS NATION, JUST LIKE NOW.

WE ARE, TODAY, RELIVING EXACTLY THE SAME PERIOD, COMPLETE WITH THE COMPETITION BETWEEN BETWEEN THE DEMOCRATS AND REPUBLICANS, WHO WERE VYING FOR POWER, WITH THE RESULT THAT OUR GOVERNMENT SUFFERED A SEVERE BOUT OF CORRUPTION NEVER SEEN BEFORE. THIS WAS DRIVEN BY THE MASSIVE CAPITAL INVESTMENTS BEING MADE AND “SOLD” TO THE PARTY FAVORITES AS A REWARD FOR THEIR SERVICES.

“Gilded Age politics, called the Third Party System, was characterized by intense competition between the two parties, with minor parties coming and going, especially on issues of concern to prohibitionists, labor unions and farmers. The Democrats and Republicans fought over control of offices, which were the rewards for party activists, as well as major economic issues. Turnout was very high and often exceeded 80% or even 90% in some states as the parties drilled their loyal members much as an army drills its soldiers. Competition was intense and elections were very close. In the southern states, lingering resentment over the Civil War was still present and meant that much of the south would vote Democrat. After the end of Reconstruction in 1877, competition in the south took place mainly inside the Democratic Party. Nationwide, turnout fell sharply after 1900.[21]

The major metropolitan centers underwent rapid population growth and as a result, had many lucrative contracts and jobs to award. To take advantage of the new economic opportunity, both parties built so-called “political machines” to manage elections, reward supporters and pay off potential opponents. Financed by the “spoils system,” the winning party distributed most local, state and national government jobs, and many government contracts, to its loyal supporters. Large cities became dominated by political machines in which constituents supported a candidate in exchange for anticipated patronage. These votes would be repaid with favors back from the government once that candidate was elected; and very often candidates were selected based on their willingness to play along with the spoils system. Perhaps the largest example of a political machine from this time period is Tammany Hall in New York City, led by Boss Tweed.[22]

WE ARE RELIVING THAT SAME PERIOD TODAY, WHICH THE SAME PROBABLY RESULTS OF FINANCIAL TURMOIL AND SOCIETAL CHAOS.

“the work of Charles Darwin became popular. Following Darwin’s idea of natural selection, English philosopher Herbert Spencer proposed the idea of social Darwinism. This new concept justified the stratification of the wealthy and poor and coined the term “survival of the fittest”. Joining Spencer was Yale University professor William Graham Sumner whose book What Social Classes Owe to Each Other (1884) argued that assistance to the poor actually weakens their ability to survive in society. Sumner argued for a laissez-faire and free-market economy. Few people agreed with the social Darwinists, because they ridiculed religion and denounced philanthropy. Henry George proposed a “single tax” in his book Progress and Poverty. The tax would be leveled on the rich and poor alike, with the excess money collected used to equalize wealth and level out society. Norwegian American economist Thorstein Veblen argued in The Theory of the Leisure Class (1899) that the “conspicuous consumption and conspicuous leisure” of the wealthy had become the basis of social status in America.”

IF YOU DON’T UNDERSTAND HISTORY, YOU ARE CONDEMNED TO REPEAT IT, WHICH IS EXACTLY WHAT WE ARE DOING TODAY.

IT WILL END BADLY!!!!!!!!!!!!
Posted by EconCassandra | Report as abusive

Posted by EconCassandra | Report as abusive
 

DOES THE PERIOD OF THEIR “GILDED AGE” SOUND FAMILIAR?

IT SHOULD, SINCE IT IS EXACTLY THE SAME TIRED BULLSHIT THE WEALTHY CLASS HANDED OUT THEN.

ONLY THE NAMES OF PLAYERS HAVE CHANGED, BUT THE MESSAGE REMAINS THE SAME.

WE ARE BETTER THAN YOU BECAUSE — SIMPLY “FILL IN THE BLANKS” WITH THEIR LATEST ABOUT WHO THEY ARE AND WHY THEY ARE SO BLESSED WHILE YOU ARE NOT — WHICH PROVES BEYOND A DOUBT THEY HAVE NO RESPONSIBILITY FOR YOU WHATSOEVER.

BASICALLY, THEY HAVE TAKEN IDEAS WHICH ORIGINATED OVER A HUNDRED YEARS AGO TO JUSTIFY WHAT THEY ARE DOING, BUT FOR WHICH THERE IS NO JUSTIFICATION.

THESE AREN’T EVEN NEW IDEAS, SIMPLY RECYCLED BULLSHIT THAT THEY AND THEIR FOREBEARS CAME TO BELIEVE BECAUSE IT WORKED TO JUSTIFY WHAT THEY DID, THEN AND NOW!

IT IS ALL SO PATHETIC!!!!

IF YOU BELIEVE THEIR BULLSHIT, SO ARE YOU!!!!

Posted by EconCassandra | Report as abusive
 

Aside from the obvious connection between our supposedly deadlocked Congress (of the Democrats and Republicans) during “Gilded Age”, which led directly to arguably the worst period of political corruption in the US to date. In fact, I think today’s political corruption makes the Boss Tweed era look like taking candy from a baby, meaning of course you people collectively are the baby involved in having its candy taken away by the current crop of wealthy elite.

It is this section, which may need some explaining — granted it should not even you people were as educated and savvy as you think you are — so I will try to make some quick connections, but you will actually have to do some thinking on your own.

I know that sucks, but then so does this situation that you people are largely responsible for in the first place.

—————

“the work of Charles Darwin became popular. Following Darwin’s idea of natural selection, English philosopher Herbert Spencer proposed the idea of social Darwinism.

This new concept justified the stratification of the wealthy and poor and coined the term “survival of the fittest”.

Joining Spencer was Yale University professor William Graham Sumner whose book What Social Classes Owe to Each Other (1884) argued that assistance to the poor actually weakens their ability to survive in society.

Sumner argued for a laissez-faire and free-market economy.

Few people agreed with the social Darwinists, because they ridiculed religion and denounced philanthropy.

Henry George proposed a “single tax” in his book Progress and Poverty. The tax would be leveled on the rich and poor alike, with the excess money collected used to equalize wealth and level out society.

————————

The similarities are wealthy elite are using the same subsequently discredited ideas of Social Darwinism, but knowing they are on shady ground with that type of argument — mainly because of a guy named Adolph Hitler who managed to put the princples of Social Darwinism into practice.

HOWEVER, the wealthy still use the less “loaded” phrase “survival of the fittest”, which doesn’t have the same negative connotations.

Basicaly, if it walks like a duck, quacks like a duck, its really Social Darwinism.

And, yes, the potential for “Social Disaster” (i.e. genocide) on a grand scale is still a reasonable outcome, if this “philosophy” is followed to its logical conclusion.

Since these people already do not see anyone who is not wealthy as not quite human, this is not a stretch. Before embarking on genocide, for whatever “justifiable reason” (e.g. your enemy during wartime, or a group of people you would like to enslave for your economic advantage), you must first “dehumanize” them.

Declaring an official position of “survival of the fittest” is the first step on that short road to get rid of those people whom you consider impediments to your way of life.

That is a fact of human nature that has repeated iself throughout history and is very alive and well in today’s world in many of the “social unrest” scenarios that are still unfolding.

Increasing the power of life or death over others — as the wealthy class of any society eventually attains — is the first step towards that ultimate result.

History is my proof.

During the “Gilded Age” must of this “new” philosophical take on an old subject of man’s inhumanity to man, the idea of Social Darwinism really didn’t take hold in American society for two major reasons. “Few people agreed with the social Darwinists, because they ridiculed religion and denounced philanthropy.”

However, the wealthy class has overcome this reluctance by the masses to accept their radical bullshit in two ways:

(1) They have since “cozied up” to mainstream religion, in order to sell their version of Reverend Jim Jones” popular brand of Kool Aid to his followers. It is amazing how a bit of sugar can sweeten that particular brand of poison.

—————————–

“Drinking the Kool-Aid” refers to the 1978 Jonestown Massacre; the phrase suggests that one has mindlessly adopted the dogma of a group or leader without fully understanding the ramifications or implications.

——————————

(2) Instead of denouncing philanthropy, they have embraced it wholeheartedly, making the wealthy class seem to care about the common man when indeed they do not.

This also “strokes their egos”, while at the same time gives them a reason not to pay taxes like the herd must do to keep them in the chips.

———————-

Of course, last but certainly not leaast, since it is the hardest to connect with modern wealthy swindles of the American people, is their proposal for a “flat tax”, which is not at all flat but hits the lower income groups much harder than the wealthy class who end up paying far less as a percentage of their income.

This is a scam that is working quite well on the uneducated and gullible, because it sounds “fair” when it is anything but.

This also originnated over a hundered years ago, and is so popular with the wealthy class they have attempted to employ this scam a number of times in the past.

“Henry George proposed a “single tax” in his book Progress and Poverty. The tax would be leveled on the rich and poor alike, with the excess money collected used to equalize wealth and level out society.”

This is a bold-faced lie, since the economic and financial effects would actually increase the wealth discrepancy between rich and poor.

————————–

Oh, I nearly forgot:

I absolutely LOVE the “logic” behind this “Joining Spencer was Yale University professor William Graham Sumner whose book What Social Classes Owe to Each Other (1884) argued that assistance to the poor actually weakens their ability to survive in society.”

WOW! WHAT UTTER BULLSHIT!!

———————–

Unfortunately, Reuters doesn’t provide any sort of “feed back” mechanism like the UK Guardian does — yes, in spite of the overwhelming influence of their wealthy class, their news media has FAR MORE FREEDOM OF SPEECH THAN THE GOOD OL’ US OF A.

As I result, when I attempt to provide a reasonable commentary to fight all the wealthy bullshit and propaganday — especially on Reuters which has a system of preventing any dissenting opinion that China would envy — I am tired of “pissing in the wind” to a nonexistent audience that clearly (obviously) could care less about what I am saying, except of course the few cranks who for their own reasons refuse to listen to the truth.

So I will endeavor to make this my final comment, since you people are not worth my time nor effort.

As I have said before, you people richly deserve what the wealthy elite are about to dish out to you again.

Posted by EconCassandra | Report as abusive
 

I feel the need to write a comment on Larry Summers post to hopefully offset what I wrote before.

First of all, I have to rescind some of my criticism against the financial industry. While it is true that a huge portion of financial activities produce next to zero if even negative real value to society, we still need to have them. Similarly, with the ‘goofy energy’ of the tech world. Think about it as those football players still have to run on treadmill on the sideline. Constant stimulation helps creating the positive ‘animating spirits’ as Zachary Bell put nicely in a post recently. Larry Summers also said it helped keep the young from ‘getting addicted to not working’. The complexity of these activities help workers maintain mental sharpness and execution skills, so when actual value generating new ideas come forth, they can easily be patched in and materialized into something good.

So now I believe that money printing and constant stimulation are necessary, at least in the current situation. The problem now is, since they often lead to economic activities that have very minimum value while consuming REAL resources of the society, how much to pay for these ‘economics stimulus activities’ need some changes. My reasoning is that if paid too much, they take away talents that would otherwise be very productive. Think about it as, what if Von Neumann, Gauss, Newton, Einstein, etc had worked on Wall St instead to make lot of money for themselves and their family? Not to mentioned that the REAL resources have to be taken from someone else who rightfully generate values, to give to them.

Some might argue that, but there might be the limit (like the speed of light), and it’s hard/impossible to get better. Even in that case, we still have to be careful about how not to get ‘worse’. That is a scary topic that I prefer not to talk about.

Now, down to the second thing, assuming that we agree to reject absolute austerity. We still have to better educate people, (self-aware is key) so they realize their own value to society before we give them a ‘stimulus/treadmill’ job. I would prefer not to go into details with this since it would create a lot of enemies for me.

Finally, assuming that lack of demand is the problem. We need to figure out in details what the unemployed are capable of supplying and stimulate demand for that specific type of labor (I don’t have access to official data to know the details, but I ‘think’ a have a good, anecdotal understanding and intuition for this).

In short, I admit that Summers and others have been right. Absolute austerity is not good, now the question is whose resources are we going to take away to give to stimulus effort? I think we need some volunteers.

Taxing rich is not as easy as you think. Remember, many of the rich are extremely smart or insidious or even both. Whatever you do from grouping, lying, cheating, spying, scamming, manipulating, etc.. it’s likely that they can do even better. Most often, it’s the innocent bystanders that suffer.

Posted by trevorh | Report as abusive
 

@EconCassandra/PseudoTurtle,

Why do you evade the subject of this thread and go off-topic again raving against your mythical “wealthy class”? I consider your class warfare expectations unreasonable and unhealthy.

My wife and I make do on Social Security plus a bit, in total less than $40,000/yr. We’re NOT “wealthy”, nor do we envy the “wealthy”. We are content, if still striving to enjoy greater economic choices and “security” in our future years. What we “really have” in America is what it is. It’s really quite good.

You claim to be “trained” in the “dismal science” of Economics with multiple ancillary degrees. The perspective revealed over time by your comments here strongly suggest that your cranium must be thicker than most and the cavity within smaller because what information was absorbed in the process of your higher education seems to have concurrently forced out that common sense most of us are born with and rely upon to separate the “wheat from the chaff” of life.

You purport to respond to TheAntagonist (who did not post in this thread) and stated: “The laws governing [the] conduct [of present government officials] should be strengthened significantly, including at a minimum, term limits and the elimination of lobbying (i.e. legalized bribery). On this single point I agree with you.

You said (again): “English philosopher Herbert Spencer proposed the idea of social Darwinism. This new concept justified the stratification of the wealthy and poor and coined the term “survival of the fittest”.” It is as good as any in terms of describing those above and below the “median standard of living” in a given capitalistic society.

In such context, I see no problem whatsoever using the term “social Darwinism” to describe the economic stratification observable in “real life”. That’s not ever going to go away.

You seem oblivious to the fact that even those substantially below that median in America still consider themselves “middle class”. A majority of these people send (some?) children to higher education, own their own cars, boats, “deer leases”, play golf, and, in general, live better than about 95% of the rest of the world’s “citizens”.

Accordingly, when it comes to winners” and “losers”, in America that separation is NOT at the “median income”. It is, in fact, much closer to that percentage of the population traditionally measured and counted as “the unemployed”.

In a land of such wealth and opportunity as we have today, it is everyone above that looks at everyone below this LOWER “separation” and wonders just how hard they are trying to EARN their rightful part of the “American dream”. The latter question is ALWAYS appropriate to ask so long as ANY subsist entirely on the bounty created by OTHERS.

As to the rest of your lengthy posts and re-posts are as the Chihuahua annoying one and all with your meaningless, incessant yapping.

Posted by OneOfTheSheep | Report as abusive
 

EconCassandra
Yikes!! Get a hobby or something. Are you an OWS supporter that is “highly educated” and shall we say jobless? Just a guess. Keep on hating the “Rich” that’ll solve it all!!

Posted by Crash866 | Report as abusive
 

@trevoth,

“I admit that Summers and others have been right. Absolute austerity is not good, now the question is whose resources are we going to take away to give to stimulus effort? I think we need some volunteers.”

Won’t work. EconCassandra/PseudoTurtle, flashrooster, and Foxdrake_360 are all mouth and no cash. They want society’s “powers of persuasion” employed to take from the producers and give to the takers for the “good of all”.

Notice, they don’t put their own cash or comfort “on the line”. They prefer EVERYONE pay the price to finance THEIR illusion(s) of Utopia.

Like so many today, they can’t wait for things to improve over time. They WANT IT ALL, NOW!

Posted by OneOfTheSheep | Report as abusive
 

Spoken like a true liberal. Wasn’t this guy in the cabinet that has yet to “fix it” and now this is idea? Ain’t that rich? No pun.

Posted by Crash866 | Report as abusive
 

OneOfTheSheep: “Won’t work. EconCassandra/PseudoTurtle, flashrooster, and Foxdrake_360 are all mouth and no cash. They want society’s “powers of persuasion” employed to take from the producers and give to the takers for the “good of all”.

Notice, they don’t put their own cash or comfort “on the line”. They prefer EVERYONE pay the price to finance THEIR illusion(s) of Utopia.

Like so many today, they can’t wait for things to improve over time. They WANT IT ALL, NOW!”

You really shouldn’t make claims without backing them up with evidence. I’ve stated that to you many times over, yet this unprincipled habit of yours persists. It’s particularly ignoble when you take swipes at someone’s character and don’t even explain why with anything verifiable to back it up. It shows a lacking in your intellectual and ethical constitution.

For example, one shouldn’t accuse a person of extremism, implicitly or explicitly, especially publicly, unless you’re prepared to back it up with specific examples and quotes. Otherwise, not only do you demonstrate a gross lack of class, but also that you possess no credibility.

Such is the case here. You have no idea, none, regarding what I do with my cash or how I contribute to society with my time. If you do, let’s see it. Otherwise, don’t make the claim. I don’t want everyone to pay for my anything. It’s not about me. That, too, I’ve told you over and over again. It’s about my country and its citizens. What do you mean I can’t wait for things to improve over time, that I want it all now? Quote me where I’ve said that. Just because someone advocates for change doesn’t mean they “want it all now.” Most people recognizes that our country needs change. I’m no different. You’re constantly accusing me of extremism, but you’ve never been able to quote me to confirm your reckless, unfounded charges. Why is it so hard for you to simply carry on a civil discussion about the issues? Why do you always insist on turning any discussion into a pissing contest?

If you insist in referencing me in your posts, or anyone else for that matter, don’t do it without backing up your charges. Better yet, why not just leave out the personal attacks and focus on the issues?

Posted by flashrooster | Report as abusive
 

Well, he says nothing here that anyone who’s taken Economics 101 hasn’t heard. Can’t help but agree, but no Nobel prizes for this.

European “economists”, including those who’ve been running the IMF, apparently haven’t taken Economics 101 and/or have forgotten the huge lessons learned during the Great Depression.

The IMF has just formally admitted what any decent economist has known for years: they bled Greece dry as a sacrificial lamb by imposing measures that the economy could not reasonably have supported.

What nobody seems to be getting is that the Euro zone is inflicting this same poison on a number of its own economies and the ultimate effect is that growth has been and will continue to be stymied throughout the Euro zone.

Posted by LoveJoyOne | Report as abusive
 

EconCassandra,

When you make a post which is rambling and at least 3 times as long as the original article, you are basically censuring yourself.

Nobody will read it, even if what you say may be right (don’t know myself, didn’t read it).

Posted by LoveJoyOne | Report as abusive
 

Sorry, censoring… not censuring…

Posted by LoveJoyOne | Report as abusive
 

The one thing I hate is the constant rambling about the need for increased equality. “turning back everything that changed over the past 30 years”. I don’t believe that would solve anything.

The thing we have been seeing over the last 30 years is globalisation. Borders have faded, the world has become smaller and economies of scale have been build.
These economies of scale have become increasingly more powerful, obtaining lobbying power and becoming huge players on international scenes.

However, turning back everything and disallowing large companies, or any company in particular to operate within the boundaries of a free economie is not going to solve the pain of the middle-class. You see, we constantly forget the enormous benefits that come with size. Things have become increasingly available and affordable for the middle-class that has been suffering so much and our quality of life has increased significantly.

Yes, I understand that some businesses have been becoming too big too fail, businesses have been becoming unproportionally powerfull and some people have become criminally rich.
Leveling economies of scale will only reduce incentive though. What do you think will happen if you disallow the tax construction Apple has? They’ll leave for Ireland, for good. Leaving NO tax income for the US.
I understand you need for change, but change has to be gradually and top-down. Start with transparancy and politics. Inform the middle-class and then see how wealth is gradually redistributed in a free economy.

Posted by theAntagonist | Report as abusive
 

@ OneOfTheSheep –

@ flashrooster –

@ LoveJoyOne –

OneOfTheSheep,

Both flashrooster and LoveJoyOne have a point. Your comments are literally nothing more than a personal attack on whomever you choose to “bait” with your verbal assaults, none of which have any meaningful content whatsover.

For example, when you finally goad me into an angry response, it loses all sense of proportion and integrity, so no one in their right mind would read it.

What you are doing is denying others THEIR right to free speech for reasons you alone seem to understand.

You forced me to change my login in an effort to avoid your incessant attacks, but you pursue me anyhow, now using both my old and new login.

I don’t know why you insist on making personal attacks when you clearly have no other rational motive for doing so, nor do I care.

Your constant heckling in this venue is nothing more or less than shouting fire in a crowded theater, and it needs to stop.

I will grant you what I have never granted anyone before in hopes you will discontinue your personal attacks on me.

I suggest we simply “agree to disagree”, since you seem to place such a high value on that prize.

Please, take your “victory” as my concession to you, and leave me alone.

Can you confirm you have read this and agree?

Otherwise, I will have to keep repeating it until you acknowledge.

Posted by EconCassandra | Report as abusive
 

@ theAntagonist –

You are mistaken that “turning back everything and disallowing large companies, or any company in particular to operate within the boundaries of a free economie is not going to solve the pain of the middle-class. You see, we constantly forget the enormous benefits that come with size. Things have become increasingly available and affordable for the middle-class that has been suffering so much and our quality of life has increased significantly.”

What “enormous benefits” are you talking about — exactly?

Globalization IS the problem, with its attendant lack of any rules or regulation over international trade.

The “enormous benefits” in the US, from what I can observe, are a declining standard of living for the middle class as jobs are continually being outsourced (it is a fact that US wages have been declining for decades), capital investment is no longer being made due to strict US regulations on corporate activities (e.g. environmental issues) and the lack of the enormous profits that third world countries afford versus the US, PLUS the ability to hide a large percentage of those profits from the US government.

Yes, the American consumer is presumably paying lower prices (though the quality of that merchandise is not comparable to when it was US made), but those lower prices are being subsidized by massive trade imbalances that the consumer is not aware of, which means the true cost is much higher on a national basis that those lower prices would indicate.

The lower prices are also not nearly as low as they should be if the international corporations were taking the same profit levels as when they were operating in the US, subject to US trade and tax laws.

The lower prices also come at the price of lower wages for the American worker, which tends to offset any lower consumer prices.

However, the real crux of the problem with the laissez faire global economy is the ugly truth never admitted about “free trade”, which is that the vast bulk of it is absorbed by investors as profits, and that is why the US stock markets had been increasing so rapidly before they crashed in 2008.

The facts are that the profits from foreign capital investments were generating so much profit for the stockholders that it induced the US banks and brokerage houses to turn to “creative financing” to sell to ever-increasing stockholder demands for more investment.

It also substantially contributed to the 2008 crash, because it addded huge amounts of liquidity to the massive investment bubble that had been growing for the previous 30 years, mainly through “slice and dice” tactics of selling the same asset multiple times to muliple buyers, who simply did not question the validity of what the financial markets were doing.

The globalization of the US economy, from the early 1980s on, was the primary factor in the collapse of the global economy.

THAT is why we must return to a point PRIOR TO when the global economy began its speculative climb to where it is now.

Granted, much/most of the damage can never be reversedf, but to “stay the course” means an even worse economic crash will happen again. Given that the markets are now higher than when they crahsed in 2008 with no reasonable basis for it except the Bernanke QE, it is likely to happen quite soon. The one guarantee is that the longer we wait to curb the excess of global trade as they are now structured the more uncontrolled and severe will be the final result.

You state “I understand you need for change, but change has to be gradually and top-down. Start with transparancy and politics. Inform the middle-class and then see how wealth is gradually redistributed in a free economy.”

Unfortunately, we have run out of time for any gradual change — these last few years of Bernanke-driven QE permanently closed that door for us — and the problems originate at the top. Thus, a top-down approach is not feasible, because the wealthy-driven government will never allow a gradual redistribution of any kind.

Nor is informing the US middle class, who is barely aware there is a problem, never mind how serious it really is.

The reality is that I can only tell you what must be done, not how it can be done.

Posted by EconCassandra | Report as abusive
 

@ OneOfTheSheep –

Actually, on second thought, I withdraw the offer.

I refuse to make concessions to a person like you who has no idea what he is talking about, lacks any education or personal experience that would allow him to meaningfully contribute to ANY conversation, and whose only “claim to fame” is a twisted need for recognition at the expense of someone else.

Posted by EconCassandra | Report as abusive
 

@ LoveJoyOne –

You state “When you make a post which is rambling and at least 3 times as long as the original article, you are basically censuring yourself.

Nobody will read it, even if what you say may be right (don’t know myself, didn’t read it).

Posted by LoveJoyOne

—————

Considering your great contribution to this article, why bother to post it at all?

If you choose not to read what I post, it is your loss, not mine.

If the most information you can take in at any one time has to be contained on a “bumper sticker”, it wasn’t written for you in the first place.

Before you lecture me on lessons on how to write or present data, you should gain some education and experience yourself, instead of simply parroting back what the wealthy class wants you to know, like most of the other morons who reply to this website.

Posted by EconCassandra | Report as abusive
 

@flashrooster,

Observations obvious to anyone with an open, discriminating mind need few, if any, “facts to support them”. You toss out multiple unrelated and inconsistent positions and opinions, which is your right. No, I’m not going to take my time to prepare you a specific list. When I do, you do not meaningfully respond but ignore it.

“…not only do you demonstrate a gross lack of class, but also that you possess no credibility.” No facts here, just your personal opinion (to which you are certainly entitled). “You have no idea, none, regarding what I do with my cash or how I contribute to society with my time”. Absolutely true. As usual, you miss the point.

I said what I said so you might look in the mirror and judge whether what you SAY and what you DO are consistent. Complaining without doing SOMETHING to improve a given situation is a waste of everyone’s time.

I take personal offense to your relentless inferences that America is hopelessly broken today, and the only to avoid some form of revolution is to act swiftly and boldly. When you’re on the wrong road, going faster is NOT good.

If you open your eyes to the many strengths and successes of America today, the perspective you put forth is nothing less than ridiculous. No one says America is perfect, but most Americans understand what we have to be far, far ahead of any proven alternative. Dreams and illusions are not choices.

Yes, America needs change. It always has, and it always will. It’s a “work in progress”. That’s NOT bad. In such context, ANY change should be carefully considered and implemented at a rate to assure that results are consistent with intent and expectation, given that time favors anything that works well as long as it does.

You say “This country has so far managed to stumble forward out of sheer momentum from being the most wealthy nation on earth for a relatively long time now.” “stumble forward” to WHERE? “But we seem intent on losing that status…”. WHEN did America consciously set out to become “… the most wealthy nation on earth…”? Silly me, I was just happy it “worked out” that way for the last “great nation” left standing at the end of WW II.

“…those behind [losing that status] have enough money to where their lifestyles will suffer very little.” WHO, precisely are these unidentified entities or people that are “responsible” for WHAT? Globalization?

“There’s so much we could do to improve on how we move forward, but these special interests are obstructing that progress.” WHAT “special interests”? WHAT “progress”?

You frequently say “corporations” when the correct term would be “business”, or “businesses”. But you can’t use the correct term without having to accept that your views are decidedly anti-business.

So “we” (America?) are doomed to a “future of unraveling loss” (things will get worse?) if we (“this country and around the world”) “…don’t come together to find a solution for THIS problem…”? Meaningless nonsense.

Globalization is here, Get used to it. Not going away. Eventually some kind of American consensus is necessary. Eventually some kind of global consensus should be possible, once all societies have become stable and responsibly sustainable. But the path to consensus goes through many, many unmarked but deadly mine fields.

The days are gone when our “prosperous domestic market” inside the borders of the continental United States were a “private pond”, with all the fish reserved to us an us alone. While that was inevitable, there remain those today who call for a return to the way things were.

Nostalgia is one thing, denial quite another. The world has forever changed. That was then. This is now.

I, for one, would much rather have China making things we (and the rest of the world) need that sell at reasonable price. They thus can more sustainably grow economically and honorably feed their many, many mouths instead of in the early 1950s being an aggressor nation whose gross domestic output was more and more soldiers and weapons of war.

The bargain is a good one, as was letting Japan, then Korea and now Singapore and Malaysia, etc. make TVs instead of America, and then economical cars (which our manufacturers refused to do for so long). I see no problem that Asia makes our clothes and India and Israel our pharmaceuticals.

For the first time in the history of man economic common interest and interdependency are almost certainly going to make warfare obsolete. Yes, the United States has to “reinvent” what it does to maintain a high standard of living, and that standard of living may well be less now that the “world economic pie” is being sliced more ways.

Nonetheless, I remain confident that of all peoples America can “show the way” to a better WORLD future if other nations can learn how to live and act responsibly. The Marshall Plan rebuilt Europe after WW II, and MacArthur administered the successful introduction of democracy in Japan.

No country can maintain such privileges status forever, and it is always less expensive to retreat AS NECESSARY AND ONLY AS NECESSARY than deny reality and be suddenly and utterly vanquished. To live inseparably from dreams of past glories is to become as the France, Italy or Iran of today.

There may be a fundamental incompatibility between Islam and democracy. We’ll see. So long as the two “systems” remain at loggerheads, Islam is NOT going to “win”. SOME sort of compromise would seem preferable to annhilation.

It was inevitable as the difference between “medians of income” between America and the rest of the world that “ours” must fall. It is simply no longer true that each succeeding American generation will have it “better” as a matter of birthright. If our “middle class” has to live in houses smaller than McMansions, is that so bad a price to pay if world peace be possible at the end of such road?

Posted by OneOfTheSheep | Report as abusive
 

@EconCassandra/PseudoTurtle,

“You forced me to change my login in an effort to avoid your incessant attacks, but you pursue me anyhow, now using both my old and new login.” Nonsense. I am not the coyote chasing the rabbit seeking sustenance.

When responding directly to the author (or someone or something the author quotes) here on Reuters I am no less aggressive. I respond only to comments I deem misleading or “lacking meaningful content”.

That’s why your change of “pen name” proved futile. Indeed it is when posts conspicuously lack credulity, “…all sense of proportion and integrity…”, that initiate a comment from me.

Heckling ridiculous presumptions, such as your perennial loathing of successful Americans, is not a “personal attack”. It is a legitimate way to draw a reader’s attention to obvious and continuing lapses in the observations or logic (or lack thereof) of another.

When perspectives conflict, my goal is always to have mine appear the more credible to the unbiased reader. To sway the opinion(s) of others is the very purpose of “free speech”.

In this context I could not, in good conscience, agree to leave your WORDS alone. No “victory” is sought.
You have made it quite plain you do not respect me as a person or what I say. No skin off my nose. I really couldn’t care less. I am an advocate, no more, no less.

Many of your imperious comments here on Reuters are unworthy of respect. In the past your bubbling anger and frustration has erupted in verbal temper tantrums, calling Reuters’ readers “you people” (those NOT of your opinion”) and “morons”.

Accordingly, there are times I find ridicule both appropriate and effective. In every case it is your words or perspective that is my target, not you. Honest debate is never about the participants, but the subject(s). Best!

Posted by OneOfTheSheep | Report as abusive
 

OneOfTheSheep: Just to be clear, here is your response to my insistence that you support your accusations with evidence:
“Observations obvious to anyone with an open, discriminating mind need few, if any, “facts to support them”.

You go on to claim “You toss out multiple unrelated and inconsistent positions and opinions.” If there’s one thing I am it’s consistent. Of course, if it were true you have a ton of posts to prove it with. Naturally, you do not. It’s easier for you to remain intellectually slothful and just claim that your opinion is as good as fact. Just give us one example of where I give contradicting positions. And, no, saying I want change and that I’m not an extremist are not contradictory positions.

That’s as far as I read determined that there’s no sense in reading any further since you have deluded yourself into believing that you can substitute your opinion for verifiable facts and still think that your post is credible. I assure you it is not. And I doubt that few, if any, readers with “an open, discriminating mind” would agree with you. Just insisting your right doesn’t cut in in a grownup discussion. Your opinion, OneOfTheSheep, is no substitute for fact. But you have full freedom to lose yourself in your grand delusion.

And learn how to properly use quotations. They should be used only for direct quotes or to suggest that a word or phrase is being used ironically. Like most of your ramblings, your quotations don’t makes sense. But feel free to tell yourself that everyone, or at least “anyone with an open, discriminating mind” knows why your using them.

Posted by flashrooster | Report as abusive
 

I like that comment Are you serious? I felt the same.
“No, we don’t need austerity while I am alive. Wait
until my day is done,then worry about the debt.”

The UK is the ONLY country that is going to make it
in Europe. Do you know why? They are worrying about it now.

The USA? Already China wants to rule over us with interest rates. We are dependent on oil. We are dependent on China cash. We are dependent, dependent, and more dependent.
We are getting so-o-o-o-o dependent, we will totally lose our country.

Posted by elpea123 | Report as abusive
 
 

Foreign investment accelerated the economic crisis, yet did not cause it. The Reagan-era delegislation of the financial markets that allowed the stock market to operate so freely in combination with the corruption caused by overwhelming incentive for profits caused by the increased possibilities in our current post-industrial era caused the financial crisis. Resizing our markets would be counterproductive, legislating our markets would be productive. This is already happening on a national and supranational basis is Europe. However, imposing such legislation too rapidly would cause a reflex in the already feeble markets that could provide the initial push into another stock market crisis. I’m not sure what you would prefer? But I’m for sustainable and long-term growth.

Posted by theAntagonist | Report as abusive
 

Austerity is cascading failure. Once in motion, chain corrections are hard to stop.

Posted by satori23 | Report as abusive
 

@OneoftheSheep

You’re a joke.

You really think you’re above it all. That’s your problem, the rich are insane and don’t know they are in this like the rest of us.

Posted by Foxdrake_360 | Report as abusive
 

Dr. Summers’ position is precisely what I want to hear from the next Chairman of the Federal Reserve.

I don’t agree with EconoCassandra but I will miss the screeds, IF, in fact, this is his/her last post. Not all unsuccessful or damaged Americans end up on the street or in mental hospitals. Some post here. They bring a lifetime of delusion and frustration, and frame their fury in terms of class warfare – that convenient old anthem that requires neither facts nor an understanding of events. Still, it’s a consistent and significant voice in the choir. It needs to be heard, because it isn’t going to be shouted down and it isn’t going away.

Posted by billbradbrooke | Report as abusive
 

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