Friday, May 4, 2012

America in decline? If so, why?

In a forum on Facebook called, The Federalist Papers, a question was asked on a particular entry: "Yesterday, on this page, the question was asked if America is in decline or if America's best years are still ahead. The vast majority of you believe our country is in decline.

If so, how can we best turn things around? What, in your opinion are our biggest challenges and what's the solution?"   


One particular response of several that I found interesting was the following one from someone named Scott Gray. His response is immediately below, and mine follows.  I thought the discussion was worthwhile enough to post here.

From Scott Gray:   "America is in decline because the two party system and the spin machines which support and profit from the partisan divide, are driving the American people to further and further extremes, away from pragmatic principles of decision making and political behavior, in favor of ideologically driven extremes.

The system will only be fixed if the spin machines are shut down, political rhetoric is removed from the equation, and our elected leaders come back to find pragmatically derived solutions designed to serve the needs of the whole of the nation, instead of the few at the top or the masses at the bottom.

As long as the parties put their financing and their own interests above the American People as a whole, our system will continue grinding into a deeper and deeper rut.

The thinking which has brought us into this mess will not be the thinking which will pull us out of this mess."


 . . . . . .  (And my reply was:




@Scott Gray, nicely said. I agree pretty much with what you've stated. I'll add two comments, one being new, and the longer second one is the same response I had to the original post about "Do you believe America is in decline".

So, . . . #1.

It's money that is polluting our political system. The Citizens United decision was the icing on the cake of allowing too much private money into the political system. Money is both the cause of and funding for all the spin to which you so adroitly spoke of in your comment. A relatively very few, extremely wealthy interests (corporate and individual) are controlling our politicians. This is short-circuiting democracy.

Here is a question: If - as most polls suggest, Americans only have a 10% favorable rating on Congress, will there be a 90% turnover of incumbents? Probably not. In fact, I doubt that even 25% of incumbents will be voted out.

So the important follow up question is, why will Americans continue to vote for people they claim to despise? Because it's the result when you have polarization of extreme politics. It's due to the kind of political ads that metaphorically say "don't vote for my opponent; he beats his grandmother in the basement". . . kind of thing. You know what I'm talking about; negative ads that tell you nothing about why you should vote for the person who is running the ads. All scare tactics. There is no accountability this way. And ultimately folks, it's our fault for allowing this to happen. Take responsibility and vote out your incumbent local politicians, no matter who they are! Will you?

Now, ,, #2, a repeat of my previous comment in the previous post.

Too many old people here who, on the one hand - think that there is too much government, but on the other hand - want the government to keep its hands off of their medicare. Hypocrisy at its finest.

You should put your money where your mouths are, and drop your medicare and your social security. That request is no different than conservatives asking people like Warren Buffet to voluntarily pay more taxes when he says his tax rate is too low. He wouldn't and he shouldn't - voluntarily that is, and you will not drop your government benefits either. So until you are willing to give them up, please stop being hypocrites.

It's impossible to go back to the "days of yore". Things change. Technology and productivity have changed the economic landscape. People live much longer than in previous decades. It takes far fewer labor hours to build, design, dig, create, service - just about everything. Natural resources like oil are harder to find - and thus more expensive to develop, and there are now over 7 billion people on the planet competing for these resources.

But at the same time, there is a greater abundance of choice of various products than ever. No one can buy all of this stuff. And the fast majority of that stuff is created over seas, primarily because the cost of labor is WAY cheaper - and that situation costs jobs here, jobs that used to pay a lot of Americans a living wage. (Look up the phrase: "Asia, automation, and abundance".) Those jobs are gone, and yet conservatives turn around and blame these same people because they can't find a job. Yikes!

These evolutionary developments have added up to create a revolution in how it effects our lives - particularly economically. All claims to the contrary are only about furthering the political agendas of wealthy corporate interests. If we truly want to address our problems, we first need to be honest about what the problems really are.

Many years ago, Victor Kiam (you can look him up) said that, if we lost the manufacturing base in this country, we'd be sitting across the table from each other trying to sell each other insurance for a living. (That is not the exact quote as I recall it, but it's very close). Our economy right now, is in that situation.

You wanted competition, you've got it. We are competing against labor from all over the world, and for the vast majority of jobs, they work for much less overseas, , with the apparent exception of American Corporate CEOs and hedge fund managers, who are, with few exceptions, the highest paid people on the planet. Riddle me that, Batman!   

( . .. finally, I posted another comment later on in the long list of comments, in reply to someone who believed that government was the cause of the financial crisis, and not Wall Street.)  





There some very good comments here, and some not so good ones. I focus my comment here as a reply to Michael Sage.

Michael - I have done a lot of research into the current financial crisis. Wall Street chicanery is absolutely the primary cause of the financial crisis. No doubt! Read up on it. Read "All The Devils Are Here". Read "The Big Short". Watch the documentary film "Inside Job". Read "It Takes A Pillage". It was a the lack of ( and removal of former ) regulations on top of lack of enforcement of existing regulations that allowed certain financial institutions to go wild and fleece the American pubic. Absolutely no question. The facts bear it out.

But you have to realize what actually happened, and stop believing only in the dogma that "government is the problem". That is a a misdirection perpetuated by corporate interests that are gaming the system. The amount of money involved in debt instruments created by Wall Street was many times more than the actual dollars involved in the sub-prime mortgages on which that debt was built. Read up on it.

I'm not saying all of Wall Street is evil. It's not an all or nothing proposition. Again, extremism in politics obfuscates the heart of the matter.


61 comments:

  1. Lou Nice new piece.

    I can only offer my latest piece from my own site ( May entry) as to how I see the Fix for our Global malaise and of course that would apply doubly so for the largest economy on the planet......... Th key issue being "GOOD" Government. This may require a much clearer and more altruistic definition.

    ................
    The Fix is Clear!
    Posted: 02 May 2012 01:01 PM PDT

    As one analyzes the current and near results of the financial catastrophe, which has befallen western society mostly, but has also in essence proven that a healthy future for Global economics, will depend greatly upon finding adequate solutions to avoid repeating those same errors going forward. One outstanding issue has become eminently obvious, like a bomb crater left in the earth after a conflict, and yet seems to be causing a furor of disagreement, especially at the political tables, and is powerfully influencing the debate going forward. And that is the issue of the "ever growing inequality gap".

    Let me be clear as to what I see as the most obvious issue arising from this debate and that cannot be denied, if we are to make any progress domestically or Globally!

    It is and has been an economic reality, almost from the beginning of Capitalism! "That without a strong and functioning healthy middle class majority, stable sustainable growth is impossible." Of that there can never be any doubt!

    Without steady demand from middle class consumers, growth and therefore wealth expansion for all, as well as the "businessman", becomes impossible! The richer class therefore, must surely at some point begin to understand, that they are just as equally dependent, upon all of the aforesaid factors, that make for a healthy environment, in order to hope to sustain their own wealth? Nothing occurs in capitalism "without there first be a demand" Eliminate demand and you kill enterprise! History teaches this in almost every generation. America as a growing nation, was never so vibrant and successful economically, across all classes, as it was from the 50's through the 70's!
    Demand for everything possible was high. Employment was therefore high, innovation was accelerated, education was essential and Unions, rather than being seen as an enemy of growth, strengthened the fabric of goodwill between the employer and their full work forces! Prosperity was assured and all benefited proportionately! Up until the end of the cold war, America prospered at almost every level, with the exception of the poor and the needy. An agreed small % of the overall populace.
    That poor population however, is also an expanding issue at an unsustainable rate, as the trickle down "laissez faire" economic idiocy of the last 25-30 years, added volumes to the dysfunctionality of this sector also!...... continued;

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  2. continued............What is already happening, and it does not take genius to understand it, is that America and Canada, as well as other nation states across the globe, are in an ever increasing 'death spiral! Which highlights the single most important factor, that must be reversed, if we are to avoid a complete dissembling of a once vibrant Global financial system. That is the factor of the decline of the entire middle classes, who can no longer afford to consume at previous levels, nor pay taxes at previous levels, nor carry the level of burden for the necessities of a successful community? Such as health and education! Nor can they afford the level of tax burden, which reduces the states ability to function efficiently, starved as it is of essential taxation revenues! Education suffers, innovation is stymied, infrastructure deteriorates etc etc . The classic catch 22 paradigm! America and Europe in 2012 in other words!

    The political ' left and the right' must both understand what really is meant by success, and that it requires this interconnectedness of a truly mixed and interdependent economic society, to be strong and healthy enough to truly lift all boats!, And not as it is presently!

    It is a system of economic dysfunction, which currently allows for only one segment of our community, to benefit to a greater and indeed excessive degree, than is healthy for a modern economy to grow! Those that would defend this segment, argue stridently that they are the "job creators" and therefore deserve the benefits of lower taxation? This is simply not true! The real job creators, in any capitalist equation are the middle class, from which the highest degree of demand arises! This present spiral of death if not halted, will become the dominant feature in American and eventually Canadian economic realities. It also cannot simply be stopped by 'brutal austerity' measures, that deny this obvious reality!...............continued;

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  3. .continued..................That belts need to be tightened may be true, but it must be a genuine fiscal effort, so that all of the beneficiaries of the past era of 'excessive exuberance' (to quote Alan Greenspan), pay equal mea culpa for their sins and those of the society! Equally the need for stimulus to reenergize the seeds of growth within the economy, must come from the state. The only entity capable of meeting such a massive challenge, as the reinvigoration of an entire society. Think Hoover dam, Eisenhower and the highway system, Kennedy and the moon! If this means increasing deficits then it must be done! Not as a replacement for private innovation in any way, but to pave the way for a renewed private sector entrepreneurship and bring confidence back and open the access to vibrant reenergized capital markets!

    The 'widening gap' as it is referred to, is nothing more than a symptom of a system of economics that has, against all indications of common sense, blessed this rigid objectivist dysfunctionality , and has allowed for the resulting disparity between the extreme symptom of excessive wealth and the financial progress of the few, at the cost of impoverishment and the stagnation of the many! The dissembling of entire communities and the human resource. The lifeblood of all nations!

    The only real signs of interconnectedness we have today, is that the top 50 most interconnected corporations Globally, are mostly within the financial services industry. Not exactly a great job creating dynamic? Where are the great industrial giants and engines of growth of yesteryear? reference: (http://www.jamesconvey.com/1/post/2011/11/revealed-the-capitalist-network-that-runs-the-world.html)

    This is one of the most important reasons for a constructive debate between those parties that divine our plans for the future of our societies. The ideological folly of this divisive left right rhetoric must stop and cooperative methodologies must be found and adopted, that reintroduce some forced compromise upon all parties! Otherwise the American "union" and the European "union" will be considered oxymoronic, as will the political structures of nearly all of the western nations battling this phenomenon, with one hand tied behind their backs by the power lobby of great wealth! it is time to tell the truth!

    Together again a society can rise and grow, but stay divided, or force one segment of a community to carry all of the burden of the fiscal penance, and failure and anarchy and civil commotion will ensue! The streets in many nations are already filling with those disenchanted, with what they see as the blind implementation of fiscal restraints, that do nothing to cure the overriding widening gap between the ordinary citizen and a new elite. A new elite that appear untouched in this new order that is seemingly arising? They themselves seem unaware of their own folly and pending self destruction should conditions continue as they are? A new Edwardian era for the 21st century, prophesying as that era did for the British empire, the end of another society?

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  4. Lou the above article along with others on the same theme, can be accessed at;

    http://www.jamesconvey.com/1/post/2012/05/the-fix-is-clear.html

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  5. Lou:

    I have a spiritual analogy for those looking for some divine inspiration for a solution:

    If one accepts that the planet we occupy is indeed the "Temple of the lord" one can see that it will take someone with the divinely inspired courage of a "Jesus Christ" to expel our current model of "the money changers".
    For sure, as I have pointed out before, they are again in control of the "Temples of the lord"..........:-)

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  6. Lou,

    In reading thru the Facebook page that you posted I was struck by something that Van said. I would like to think about it a little more. He said something to the effect that corporations would not be corrupting the system if there was not a mechanism to corrupt. My immediate thought was have we created a system that allows corporations to corrupt it. In our zeal to set up a system that is “fair” have we created a system that offers incentives for corruption? Interesting…

    As a side comment, are you giving an over under on 25% of the incumbents being voted out? I will almost guarantee that much much less than 25% of the incumbents will be voted out. This also begs the question if less democrats are voted out than republicans what does that say about corporate and wealthy individual money influence?

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  7. Lou,

    On the topic. Please forgive me if this sounds somewhat on the sarcastic side. I do however, believe that most Americans would benefit greatly from leaving their country for a short while. And learning a little more about other societies around the Globe, that do work extremely well and in many cases better than the old sod!
    Perhaps then they would have a more healthy ability and have a better comparative attitude toward the deficiencies at home.
    Then vote in order to make things 'right' as regards practical reality. Rather than voting on the basis of some moneyed ideologues ideas about issues! like their father did etc etc etc ......

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  8. Good comments from both of you. I will comment on them in a day or two. But I came across an article from one of my favorite commentators, Robert Reich, which I think has nailed it better in one article than anything I've read recently. It encompasses much of what he's written and talked about previously for some time, but this article articulates them very well. I'd like to see your comments on this:

    http://readersupportednews.org/opinion2/279-82/11318-focus-socialism-and-the-productivity-revolution

    As I type this, I am about to go to my step-son's graduation ceremony at Temple University. Time flies.

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  9. Lou,
    Saw Reichs article and his interview with Democracy now! As usual he is impressive with his honesty and integrity!

    Here is a current issue that shows that thing shave not changed on Wall street as i posited some time ago!

    (Todays headlines May 10th 2012.)

    How did JPMorgan lose $2-billion in six weeks?

    Easy by gambling on long odds! Jack Bogle from Vanguard securities inc and probably the father of modern secure trading methods in the 70's, once called the market as it is now "FIXED" and nothing more than a casino!

    Seems Dimon continues, along with his peers on Wall street, to believe that quants and their calculus based logarithmic equations, are infallible? Seems also he expected blackjack in his favor, every time the cards are dealt! Welcome to the real results of casino gambling Mr Dimon.

    I would think that most of us learn early in life, the old adage "once bitten, twice shy". Not so Dimon! He is not the only one however, and the mania on Wall street continues. Nothing has changed!

    Good luck to your son on his grad..... james

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  10. P.P.S Lou< Re Dimon

    This has a lot to do with why America may be in decline. If these hedonistic cretins are not removed, or at least held to account for their idiocies and from the growth equations of our democracies, we are all lost!

    I am sure he will still earn 20 times more than you or I this year? Maybe even more?

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  11. Lou and James,

    My comments on the Reich article – for what it is worth.

    In the last article that I read from Mr. Reich he was advocating that we implement depression era WPA and CCC programs to stimulate the economy – paid for by the rich. This article seems to be a vast departure from that idea. How you guys can idealize a man with such inconsistent ideas baffles me. But I digress.

    I think the article does a good job of summarizing the current situation and I agree with most of it. I have a little trouble with him correlating the 2 biggest downturns of the century solely with inequality. I imagine that inequality had quite a bit to do with it but there were many many many other factors involved.

    After the line “This is, quite simply, nuts”, I have two major issues.

    The first is that he indicates that he does not favor “redistributing” from rich to poor but in the next paragraph advocates a larger Earned Income Tax Credit. If you are not familiar with the Earned Income Credit it is one of the most blatant “redistribution” mechanisms in the USA. It is the main reason that more than 50% of Americans pay no income tax. He suggests this to move people to a to a 35 hr work week. How silly!

    The second is that he implies that Medicare for all would be less costly that the current healthcare system. This is purely conjecture. Granted the costs in the system we have now are out of control but there is no way of know whether or not we can transition to a less costly system under single payer. This seems to be a random comment.

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  12. John,

    I do not 'idealize' Reich. I "Admire his honesty and integrity". I idealize only God by the way..:-) I do however, appreciate his always "consistent approach" to social needs for an equal society? I may differ from him on economic solutions on occasion and have said so before!

    That the rich have a clear duty to share in the leveling of the inequities of the past, is surely clear to all now, even you? As well as to anyone who understands the term "inequality"? My own writings have for years been hammering on the dangers of this dynamic for us all, even the rich? Obviously I, (along with so many others) including historical facts, have not been able to influence you to any great degree in this regard?
    I know that the GOP line in the U.S is still adamant that inequality does not exist.... "but if it does, it is the "lesser" people's own fault for not being successful enough to avoid the downturns ?"....... Speaking of silly!

    You seem equally hung up on "redistribution" which is again based in an ideological argument, when what Reich really advocates simply, is a leveling of the tax burden in a "fair and equitable" manner? Which it currently and clearly is not!

    Think loopholes John, that are only available to the higher earners in your tax code! I have mentioned this to you before......... (one example being the deductibility of "mortgages") There are many more examples, where the lower earner is selectively eliminated from any tax benefit. A selection system by the way, that keeps many of the wealthy secure from a tax burden that is certainly paid by the average working stiff, one way or the other!

    Reich's position on healthcare for me, has also been eminently sensible and "consistent" for years? He believes in a 'single payer' system and your medicare program is the closest thing to that, currently and economically effective, that is at work in your country? I cannot understand your 'hairsplitting' comments in this regard? His faith in the cost elements are not "conjecture" as you posit, but are backed up by the mountains of real economic evidence from other similar systems, all around the "Free" world, that function better and at the very least, are half as costly as your current debacle! Do I need to list the nations?
    Again the GOP propaganda machine refuses to validate the truth of this evidence. Even though Canada is right next door as a reference? Again........ speaking of silly!...... (Oh I forgot we are a socialist country...:-)

    You also have bought into the idea somehow that 50 % of your people pay no income tax? This is a red herring argument and as regards actual total taxation across your populace, is totally inaccurate, painfully cruel and simply wrong!

    For heavens sake John why would Mssrs Buffett and Gates along with so many others in the upper echelon of earners in the U.S, now admit to the inequities in your tax system, and you appear to still question Reich's position on this point? For me you seem to be still in somewhat of a bubble and believing misinformation, as to the true facts prevalent in your own country?

    Perhaps it is simply that you don 't like Reich..? :-)

    Also could you please provide links when you refer to prior articles or commentary just for reference sake.

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  13. Here is the reference I believe you were looking for:

    http://www.marketplace.org/topics/economy/commentary/extend-payroll-tax-cut


    And to help you get thru the night here are many many more commentaries by “the chosen one”.

    http://www.marketplace.org/people/robert-reich


    I don’t base my opinions on whether I like someone or not. In the case of Robert Reich he is a wealth of information about labor issues which recently he has melded into the “inequality” issue. He is a political animal and carries rhetoric too far. He is useful if you need a quote or two on inequality but as far as other matters I don’t consider him much of an authority. His solutions are not well thought out.

    If you would care to re-read my comment above I indicated that I agreed with most all of Reich’s commentary that Lou posted. It was only three specific things that I did not agree with and I told you why. And for this you imply I am a GOP Stooge?

    Mr Reich is smart enough to use the term “fair and equitable” instead of “redistribution” if that is what he means. I don’t think that it is fair for you to redefine what he wrote. He may not appreciate that.

    I will forgive your lack of knowledge of the US tax code but expanding the Earned Income Credit is not a “fair and equitable” approach. I also do not believe you are sufficiently versed in the tax code to make the statement that lower earners are selectively eliminated from any tax benefit. Virtually all tax deductions phase out above certain income levels and a significant amount of government assistance goes to lower income people.

    The entire tax code need to discarded and “tax expenditures” like mortgage deduction need to be eliminated – fully eliminated. After this is done then we need to settle on the types of services the various federal, local and state governments should provide, the cost of those service, what we are going to do if the costs increase beyond our estimates, the size of the deficits and total debt we are willing to run, and then decide on a tax rate for the various income levels. Continuing to try to plug holes in the current tax systems is not going to work.

    I ran a lot of thoughts together so let me explain what I think is the “silly’ part of Mr Reich commentary. I think it is silly to tax the rich and reduce taxes on the lower income for the purpose of reducing their work week. As a capitalist you surely must not agree with this? Where is the economic growth in this concept? Why not just make a law that all employers must give a 35 hour work week and forget about the "redistribution". BTW this is a rhetorical comment unless you really want to comment on it. ;-)

    The comment that 50% of the American people pay no income tax is accurate. Your comment that the lower income people pay a much higher % of their income in overall taxes is equally accurate. So is the answer to increase the earned income credit to give more fodder to 50% argument or do we just fix the tax code?

    I am not going to address the healthcare issue because an issue as important does not deserve to be included as a one sentence paragraph in the Reich commentary. It deserves at least several paragraphs (like you gave it) if not a full commentary.

    James, I also have a question for you. You seem to favor large deficits to stimulate the economy. I believe that this is Reich’s thesis as well but he never really seems to elaborate on it. I also favor stimulus in emergency situations. Now that you have decided that the US is on a slow steady growth path is the time to start reducing the deficit? If not, do you have a criteria for when this should happen? Just curious.

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  14. To John and James,

    I'll make an attempt to address some of the points you've both made in your last few comments.

    John - earlier you said that your problem with unions is really specific to public unions. I understand the difference and agree that there can be a conflict of interest where public unions are concerned, a conflict that does not exist per say (at the same level) with private unions.

    Back in the heyday of union participation, corruption was seemingly rampant. Okay, that was a problem. But is it any different in essence than what is going on now with respect to the buying off of government officials by corporate lobbyists?

    The difference in effect between now and then, as I see it, is this: in the 40's to the 60's, that corruption enabled higher wages for the average working person and helped create the greatest middle class the world has ever seen - even as it made $millions for organize crime; but now, the middle class that had been the beneficiary of that corruption - is being dismantled (in various ways as we've discussed many times) while a very small group of people at the top of the corporate/political pyramid are getting incredibly wealthy - much more so relatively speaking compared to the criminal element from the previous century. (That's not to say there are no "criminal elements" today, i.e., drug rings, etc., but I think there is no comparison in power and wealth.)

    John, in your comment regarding Reich's previous articles, you said that Reich seems to be inconsistent. I honestly don't see an inconsistency in anything I've read from Reich over the past two years. But I know you are an educated and intelligent person, so I ask you to articulate this inconsistency with more details - and references if you can find them.

    You also said in reference to the most recent Reich article, that you agreed with most of it. That position seems inconsistent from your previous comments - at least that's my impression; however, I'm glad to see you say it. :) It shows that continued dialog can bring people together somewhat - at least enough to work out compromise solutions; as opposed to extreme rhetoric that only leads to stalemate and potentially to conflict.

    For the moment, I'm going ignore the tax issue; but instead, focus on one of the other primary points Reich made (and has been making for some time) that doesn't seem politicized at all, but is just a logical conclusion based on observation: technology and efficiency have created an imbalance in the workforce and a related imbalance in wealth distribution. It's not an evil conspiracy by anyone; an unemployment problem is just the result of what happens when machines take the place of people and other efficient methods/processes reduce the number of people required to output a unit of work.

    Add in the additional factors of low wage workers overseas, and you have a stew of discontented American people cooking on the range.

    . . . continued

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  15. . . continued . .

    There seems to be this belief in the magic of the free market, that the imbalance will somehow work itself out. I don't think that is necessarily true. (The "free market will fix all problems" myth is another example of planting ideas in people's heads without the idea being based on fact - i.e. "An Idea Is Like a Virus".)

    Here is the reason why I do not believe the free market will magically fix all problems: Because there is no such thing as a completely free market. That is an idea which I had brought up briefly (I think) in a previous thread here on this forum. It's an idea that probably deserves a further discussion at length in a separate thread.

    James - I agree with your comment that "50% of your people pay no income tax . . is a red herring argument". However; we both need to do a more thorough job of documenting and articulating this concept.

    . . . . . . Thanks to both of you for the continued discussions. I wish your respective better halves a Happy Mother's Day. (I hope that is an appropriate wish for both of you).

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  16. Lou,
    I posted a reply to James which it seems went into the junk bin that you have talked about. It contained links to references you and James asked for among other things. If you cannot find it it will try to reconstruct

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  17. John, thanks for pointing out that one of your comments was not published. It was indeed in the "spam" folder. Weird. Anyway, your reply to James is now published.

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  18. This comment has been removed by the author.

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  19. Lou,

    I seems to me that this blog does not like the way I post web links. This is usually when my post get thrown into the junk file.

    Thank you for acknowledging the difference between public and private unions and the potential conflict inherent in public unions.

    I am not quite certain the point of your discussion on union and corporate/political corruption. Surely you are not trying to suggest that corruption done by unions is justified because of the current corruption by corporations. Maybe we can agree that corruption is not acceptable under any circumstances regardless of the outcome.

    It would be helpful to explain what you find inconsistent about my comments on Mr. Reich. When I agree with what he says I will say so. When I disagree I say so also. When I find myself agreeing with him it is usually on his analysis of current labor (aka inequality) issues but most often find myself disagreeing with his solutions. I did post one of his solution articles that I agree with in tise forum as follows:

    http://marketplace.publicradio.org/display/web/2011/03/23/pm-getting-serious-about-regulation/

    Which brings me to your discussion on free markets. The subject of free markets is way larger than I can handle but here are a few of my thoughts:

    I think that free markets do fix most (if not all) economic problems. I think the problem is that the fix is not socially acceptable in the extreme cases. For example, we don’t mind when the market crashes the price of natural gas (as is currently occurring) but we do when the price of gasoline goes over $4.50. We love it when we can by cheap goods at Wal Mart because of cheap overseas labor, but we don’t like that it costs American jobs.

    Regulating free markets is tricky more often than not you have to be careful what you wish for.

    To properly control the markets you need extremely competent leadership and political system that is incentivized to do the right thing for the country not the right thing to get themselves reelected. There is a difference.

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  20. John, I see that you tried to post a reply twice, and both times (for whatever weird and unexplainable reason) they ended up in the "spam" folder. I took the earlier of the two - since it contained a URL, and published it. Your second one did not contain the URL but it still ended up in spam.

    So, I want to reply to your statement/question regarding my comment on union vs. corporate corruption. I did not mean to suggest that union corruption is okay, and yes - we can agree that all forms of corruption are bad and unacceptable.

    In my original statement, I attempted to draw a comparison between the effect of unions vs corporate influence. I'm suggesting that for whatever corruption was occurring in the heyday of unions, the union movement itself still had a positive effect because it resulted in the middle class being created. I'm not sure if the corruption helped, hurt or was irrelevant to that result. Perhaps without the corruption, the unions would not have flourished to the degree that they did? I'm not sure if that's true, but if it is correct, then the middle class was aided by corruption.

    Whereas now, corporate influence/corruption is resulting in declining wages, lost jobs and a skewing of wealth distribution to the very highest income earners. In both cases, there is corruption (in some form). One case potentially helped the middle class, and the other definitely is hurting the middle class.

    I will create a new thread to discuss the issue of free markets, because - as you said, it's a larger topic with lots of room for ideas and comments.

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  21. I came across an article today for the first time, but the article was written in 2010. It comes as close to anything I have read that uses phraseology along the lines of "an idea is like a virus" in a political context. It seems I'm not the only person to think along those lines. :)

    It's a very good article, well worth reading.

    http://www.motherjones.com/politics/2010/01/wall-street-big-finance-lobbyists


    But well beyond the fact that it came close to using the same phrase in the way I did (and before I did), the article is relevant to the ideas I've been expressing regarding corporate influence. In this case, the article is specifically talking about the finance/banking lobby.

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  22. This comment has been removed by the author.

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  23. Later on other issues I just wanted to share this with your both>

    "...........It was revealed last week that Facebook co-founder Eduardo Saverin renounced his US citizenship in order to avoid paying a significant chunk of the taxes on the windfall coming his way with the impending Facebook IPO. Ilyse Hogue explains how this move has made Saverin the poster child for the callous 1%--all too happy to use national resources to enrich themselves, until asked to pay their fair share......"

    Add this to the Dimon @ J.P morgan issue and things don't look too good for the !%...:-)

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  24. JohnC.

    Where exactly did I imply you where a GOP stooge?.........:-) Equally I did not attempt to rewrite Reichs words......... refer to my exact comment please. "Redistribution" in a fair and equitable manner is my point. Again you split some hairs here? Also I clearly said, I at times do not agree with Reich on economic issues! (About 5 times I think?)

    Please also don't parse my comments. I said about your tax codes the following:
    "..........There are many more examples, where the lower earner is selectively eliminated from any tax benefit. A selection system by the way, that keeps many of the wealthy secure from a tax burden, that is certainly paid by the average working stiff, one way or the other!........"
    Where exactly am I wrong in this comment? Does the average worker have an offshore account? Can the average worker deduct his expenses to the same degree as a person with a corporate mantra? etc etc etc . This is my exact meaning about the inequity that exists. One does not need to be expert on the US tax code to know when a simple mathematic model is out of whack? We suffer some of the same insanity in Canada believe me!

    The problem is that the top earners cry about tax they pay, when the truth is that with deductions and loopholes, available only to their level of earnings, they do in fact pay a much lesser % of their overall incomes in tax, than the average middle class employee who is locked into a "fixed" bracket as a result of his employment reality. Neither are to "blame" for these vagaries in the system. It is however totally unfair and unbalanced!

    My most favored solution for the U.S., would be to eliminate the entire personal tax code as is, and reconstruct an equitable and balanced fairer system. Which formulae applies equally across the board. This should be modeled on an underlying VAT system, which utilizes a user tax methodology. Equally I would eliminate any and all special subsidy tax benefits currently, at various levels within the structure of this user model. An 'escalating by income' scaled model, would be instituted and flat tax rates per level would be implemented accordingly. Further deductions would be only and simply tied to social demands. Child tax credits, special education etc etc etc.

    I could however foresee incentive, term limited tax benefits, being introduced from time to time, but only as stimulus for growth or to restrict overheating. The mortgage deduction is a perfect example of this type of personal tax benefit, that if not monitored properly can threaten the stability of the overall economy. It should be eliminated as with any such threatening device. There were times when this was a good tax benefit. Postwar incentives for revitalizing the domestic markets etc . But not for ever!......... I have many ideas around other tax structures but this is the basic idea i wpuld use to remodel one sector to begin with.
    I will answer your query re deficits and growth in my next post John... I would point out for you to consider though, that economies that are going through what I call generational changes (Lou touches on this somewhat in his posting) or transitions, resulting from evolutionary progresses, must be adjusted to meet the needs of the nations human resource. They (People)simply cannot be dumped on the garbage heap, because they are no longer employable or useful in some new and more competitive dynamic. What has befallen the American and western worker for that matter is easily definable but not so easily responded to. The resultant deficits of this transition are now upon us and to knee jerk react by simply "blaming" the human resource and impoverishing them and what has taken several generations to achieve makes no sense!
    Later...... james

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  25. Based on yet another discussion on Facebook, :), I modified my previous comment slightly, and I think this newer version - while very similar to my previous comment here, better articulates what I was trying to say. I may So I've deleted my previous comment and replaced it with the following text. (I may also use this text as a basis for my next full thread.)
    ---------------------------------------------------------

    There is nothing "natural" about the modern economy. It is reliant upon human created constructs. Even money (currency) is taken for granted. We always hear the claim that "it's my money". Without governmental monetary policies, taxes, and a vast legal infrastructure to enforce it, there would be no money.

    Money is nothing more than a mechanism to put a value on productivity and be able to distribute that value. The claim "it's my money" really means, "it's the value of my productivity". But the rules that determine the distribution of that value is based on whomever has the most influence on the political policy - which defines the tax and legal infrastructure.

    Debt has been created as a way to "steal" value from the future and bring it into the present. For example, owning a house you cannot afford to pay cash for today - means you have to borrow value (in effect, from the future) to get the house now. In order for that value to be created as "additional value", so that you are not actually "stealing" from the future and thus avoid a zero-sum game scenario, productivity needs to increase. Increased productivity fuels a higher standard of living.

    One of the problem we have today is that the value of modern productivity increases are not being distributed equitably.


    . . . . continued . . . .

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  26. . . . continued . . .

    An example for this is manufacturing, which has always been a productivity engine. It creates value based on sales of whatever it creates and distributes the value, first to the owners and then down through the employees. The concept of "economies of scale" is a mathematically sound principle. As manufacturing processes become more automated and sophisticated, employees are replaced by machines (robots, computers, etc.). Machines don't get paid, they don't buy houses, they don't spend to keep the velocity of money going. (Machines do consume energy - but that is a separate topic.) The machine replaces far more people than it takes to build it and keep it running, otherwise, it wouldn't be worth the cost. This creates a relative imbalance (comparable to the days of slaves) in terms of the distribution of the value of productivity. As an aside, if you want to become wealthy, run a plantation with free labor - like many of the "founding fathers" did. It's the equivalent of running a modern manufacturing facility with mostly robotic labor.

    Over the past couple of decades, the value of the productivity increase has been going to the relatively fewer number of people involved in the overall production process, and an increasing share of what value is being distributed - is going to the owners. This leaves a greater number of people either with a smaller share or left out of the loop completely; i.e., it creates an unemployment and under-employment problem.

    The statistics on U.S. wealth inequality is proof of this trend. A much greater share of total national income is going to a relatively smaller group of people. Debt is part of this problem, based on how the finance industry currently does business. Debt has become a vehicle for taking a theoretically equal share of future productivity value and distributing it unequally. At least, that is the way it seems to be working out.

    "A basic principle of modern state capitalism is that costs and risks are socialized to the extent possible, while profit is privatized". Noam Chomsky.

    I offer the following article as a reference to my point about the modern debt finance industry:

    http://www.philly.com/philly/business/20120516_JPMorgan_s_big_loss__Was_it_hedging_or_betting_.html

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  27. Seems my posting from yesterday to John has been deleted? it was lengthy and I frankly don;t wan to have to remember it all again........:-)
    Here is my comment on why I don't believe Romney is the right man>

    "...Lets be honest here. Romney and his cohorts at Bain were not operating from any altruistic motives at Bain capital? Purely profit motivated! And I can appreciate that reality!

    But what is clearly an outstanding ignorance on his part and that of his supporters, is to believe that a "capitalist raider" or "vulture capitalist" as they were known in those days, should now be allowed to bring their brand of thievery to the highest office in the land?
    It is Amazing that they would think people will actually admire them for this activity, which was part and parcel of the "trickle down" (never did) dynamic that ultimately led to the destruction of American Industry and punched holes like swiss cheese in the great American dream for the American middle class?

    It is also what amazes me particularly about the American right wing today? That they would continue to fight, to entrench and support a model of "socialist" economic corporatism, ignoring the obvious evidence of it's underlying failings, and which failed economic principles, leaves over 90% of their own community, in such a highly vulnerable financial place?
    They are after all the party, that "historically' stood for the values that originated the "Republic", and the rights of the individual to the pursuit of health, wealth and happiness etc? What happened?

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  28. James, I think the following transcript is related to your prior comment (and actually to many of the things both you and I are saying).

    This is a transcript of an excellent speech by wealthy venture capitalist Nick Hanauer. "He's screaming to anyone who will listen that he, and other wealthy innovators like him, doesn't create jobs. The middle class does - and its decline threatens everyone in America, from the innovators on down."

    http://roundtable.nationaljournal.com/2012/05/the-inequality-speech-that-ted-wont-show-you.php

    Some of the more prescient parts of his speech, IMHO:

    "Anyone who's ever run a business knows that hiring more people is a capitalists course of last resort, something we do only when increasing customer demand requires it. In this sense, calling ourselves job creators isn't just inaccurate, it's disingenuous.

    That's why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.

    Since 1980 the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%.

    If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. And yet unemployment and under-employment is at record highs."

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  29. James - in case you didn't notice, I found your comment (that you said was deleted) in the spam folder - which has been an ongoing anomaly with the software, as I've mentioned to John. So, I published it. It's all good. :)

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  30. Thanks Lou... I see it has been posted.

    I posted the following to the washington post blog today

    ......So many Americans believe their nation has been practicing "Capitalism".................?

    It has however not been a bastion of capitalism, since the end of the cold war, when it became a completely different nation. The single stand alone world power! The U.S. banking sector alone was given free reign to impose unregulated standards of trade and dictated new definitions for liquidity and asset valuations.
    Together with the London banking fraternity, who were fully on board with this new dynamic, thanks to Thatcherism. They forcibly exported this modeling, which in retrospect, landed like bombs on the economies of some impractical less advanced and inexperienced democracies such as Greece, italy, Spain, etc etc.

    These were completely foreign to what had been the accepted norms. Certainly for an Adam Smiths form of capitalism, and for nearly the entirety of economic scholars to that juncture in history! Which was as a tool to be the conduit for the spreading of opportunity and societal wealth, in an equitable manner across the entirety of the social strata!

    This new American form became known as "trickle down" an unproven model which has since shown that it is a catastrophe, except for a very small segment of the community! It has effectively eliminated almost 90% of humanity from ever achieving any semblance of stable personal value.

    That is where Romney grew up career wise and I cannot see how his "experiences" at Bain capital can possibly aid the nation going forward?

    Jack Bogle from vanguard expresses it even more clearly;\.... paraphrased

    "......... What we have today is not functioning capitalism. What we have is a form of socialist corporatism, whereby a few mediocre men, meeting behind closed doors, set the rules of the game purely for the benefit of the few, lucky enough to have the wealth to participate in their casino rules games. The market is effectively a "fixed" enterprise............"

    This would make debt ceiling and deficit reduction debates from the right, as nothing more than a bogus distraction from the reality that trickle down, as a concept for global economics." .......... Has not worked, Is not working and Will never work!..............."

    I hope this is true to the topic as I see it as another reason that 'America is in decline' to a degree!

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  31. John:\

    re your query as to deficit reduction etc. I recall mentioning a long time ago that to focus upon the debt ceiling was a waste of time! I believe that the U.S survived this debate and all that resulted was an ill timed loss of financial credibility* in the Global economy. It was in essence a non issue when all is said and done! (Downgrade*)

    In my essay "The Fix is Clear" which I posted at the beginning of this blog. I comment upon the 'belt tightening' aspect of the Global challenge, to right the ships of economic trade so to speak. My essay as such was a general comment focused on Global matters.

    Specifically to do with the U.S. I have, via other articles, chastised the U.S corporate sector for their intransigence and lack of faith in the economy of their own nation. Their excuses have now morphed into the flavor of the month in the 'corpus politica', as somehow the leading emergency in need of immediate measures? Again distracting from the very real need to focus upon growth to maintain the underpinnings of a healthy economy. That growth, as I point out, must come from the middle class, as the majority of job producers and payers of taxes and salaries in the nation!

    Instead the state, controlling the single most important advanced economy on the planet at the moment, has been handcuffed by an ideological debate about borrowing against the future! What a horror to contemplate that we might increase the nations debt load? Even though this has been the chosen method for the nation at many other more serious periods during it's existence. Think the end of WW2?
    Even stranger when one contemplates that the U.S is still the holder of the currency of trade, and can manipulate somewhat the value dynamics of trade to its own benefit, during this period in Global economic realities?

    Lets instead of moving confidently toward renewal, just destroy the entire middle class by eliminating any and all state stimulus and erasing the heart and soul of this great nations entire engines of growth, it's human resource! lets just cave in to the pressures of the rising competition from abroad, China, India etc etc etc. After all we can't possibly compete? ......... I am becoming facetious in my criticism......!!! Basically the GOP have a lot to answer for in my book!

    Let me just add John, that the deficit can only be eliminated by growth. Employed people pay taxes. More taxes equals more revenue and a better ability to reduce the deficit. Simple math. It is also obvious that the private corporate sector is suffering from confidence loss, or 'post traumatic stress syndrome' as a result of the trickle down mania that crashed the economy into a wall. This is the time for the state to step in to the gap and to stimulate the economy to it's maximum ability!

    I would not necessarily say this for every other nation. The American economy however, is unique in its inate ability to respond, as it has done in the past. For the life of me I cannot understand why the right side of your ideological equation (the pro business side) has allowed itself to buy into the notion that America needs to become even more restrictive of growth than Greece or Ireland?

    I repeat my opinion therefore, that the deficit is simply another ploy for the GOP to use to abandon common sense, simply to garner political power! I see no other answer for this debate of insanity that continues in your halls of government. The deficit can be attacked as revenues rise from well targeted stimulus and even with private and public partnerships that will protect their precious "free market" and enhance their ability to make even bigger and more risk free profits.

    John here is a reference link for further comment on this matter. Sept 2010, http://www.jamesconvey.com/uploads/3/3/8/3/3383644/corporatecrybabies.pdf

    also:April 13th, 2010 .http://www.jamesconvey.com/uploads/3/3/8/3/3383644/afterthecrash.pdf

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  32. FYI:

    from tomorrows Financial times:


    JPMorgan unit has $100bn of risky bonds

    The unit at the centre of JPMorgan Chase’s $2bn trading loss has built up positions totalling more than $100bn in asset-backed securities and structured products – the complex, risky bonds at the centre of the financial crisis in 2008.
    These holdings are "in addition" to those in credit derivatives which led to the losses and have mired the bank in regulatory investigations and criticism.

    http://link.ft.com/r/UXDMSS/7AU8RA/PINJ2/NJG760/VLE2JH/4O/h?a1=2012&a2=5&a3=17

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  33. Lou another lengthy commentary to John re deficits has evaporated.....? Spam again I guess?

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  34. James,
    It appears that I misinterpreted your comments. My apologies.

    Your thoughts on revamping the tax system are very interesting. I need some help with your terminology. You favor a VAT system with a users tax methodology. What do you mean by "users tax methodology". I was listing to a CATO podcast this morning with the thesis that the traditional gas tax is outdated. The suggestion was to go to a mileage tax as a more equitable system. It was an interesting thesis. The link is

    http://www.cato.org/multimedia/daily-podcast/replace-gas-taxes

    I also think your point about "term limited tax incentives" is a good one. I think that one of the problems with the current tax code is that tax expenditures/incentives start out beneficial but outlive their usefulness. We tend to not be able to repeal them when they are not useful anymore. I will be real interested to see how long the current payroll tax reduction sticks around.

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  35. Lou,

    I have been reading your comments on debt. I don't fully grasp your concept yet but I will enjoying exploring it further as time permits.

    If I am interpreting your thoughts correctly you seem to be concerned about private debt. I am thinking about how this compares to public debt.

    You say (or maybe you were quoting) that ....Debt has become a vehicle for taking a theoretically equal share of future productivity value and distributing it unequally....

    Do you think that this apply to public debt as well?

    Just so you are aware I am firmly against most debt.

    Finally, a comment on the recent JP Morgan incident. BTW did you know that Jamie Dimon is a director at the New York Fed? How bizarre. What sort of a democracy allows this?

    Anyway, this incident could be a blessing but my fear is that it will just highlight the "best government money can buy" concept. There is some question whether or not this would have been prohibited under the "Volker Rule" currently being considered. Apparently, all you need to do to make a transaction exempt is to call it a "hedge". We need to break up these banks immediately if not sooner.

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  36. Hi John,

    I posted quite a lengthy essay on the austerity and the deficit issue as promised but it has gone missing it seem?.

    "Users tax methodology" also known as a "transactional tax". Every commercial action attracts a minimal tax charge. This way, when one reads the GDP numbers as to an economies overall capital production (cash flow) one can easily calculate (within reason)what the expected revenue statement from the CBO should be. A mileage tax is a good example and is in essence the principle of a transactional tax.
    Given Americas penchant for freedom of choice ideologically, it should be a no brainer as if you don't want to pay the tax don't buy the item? ...........:-) Oversimplification, but I am sure you get the idea?
    The tax code needs refreshing on an annual basis given the speed of our economies of scale today. Transactional taxation can then be more easily adjusted to balance the tax burden or the revenue burden equally using this method! It also can be a competition balancing tool across the global trade dynamic as well. Job protections etc etc. The benefits are obvious. The political will in your nation of "trickle downers"however, not so obvious....:-).

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  37. John;

    Your comment on the JPMorgan incident. For sure the activity would have been criminal under the Glass Steagal act. The volker proposition is not yet the law.

    Your remark as to "breaking up these banks". Should have been done in 2010. It is not however too late. At least we need to redefine the concept of liquidity and handcuff this horror called "hedge". Simply an excuse for taking "excessive" risk. Again a small group of mediocre people endangering the financial health of the nations institutions.

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  38. John and LOU:
    Perhaps my comments re Austerity and debt have disappeared for good In any case I pose a question, more so to John who seems more afraid of the debt issue;

    The mathematics surrounding Americas climbing debt load of the last 12 years indicate clearly that the "average" borrowing costs during that period (interest rates) were at an all time high?

    My logic tells me that:

    (a) We need stimulus to lubricate the engines of growth. And as the private capital market is frozen, the only way is to increase the nations debt load via sovereign credibility and by borrowing against the future earnings, of this current more dynamic growth pattern. This solution also makes sense, since the pattern of collapse has been reversed and the nation is slowly gaining momentum in all important sectors.

    (b) That this solution is obvious to most, given the catastrophic effects of austerity and job loss here at home. What better time to borrow the needed capital than at a time when inflation is non existent and interest rates are terminally flat? Cheap money will never be more easily available?

    (c) Why would a nation choose to further suffocate their slowly improving economy, by instituting punitive and unnecessary austerity measures, (Ryan plan) When they can opt for a 'pedal to the metal' approach using cheap and easily accessible capital sitting idly in the coffers of the nations corporations and banks?
    The "moonshot" era is once again before us and it won't ever be any cheaper.....

    I look forward to your comments..... regards James
    P.S. Can we not somehow expand this site and invite others to participate in this important debate?

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  39. James,

    I will have to more fully research transactional tax. My immediate concern is that it seems to be a consumption tax which I understand to be regressive and more punitive on the people of lower income. Is this the case or will further research modify this understanding?

    In case you are interested I came across a rather lengthy paper on tax expenditures. I did not read much of it but the was a table that listed the top 20 in the USA(which make up 90% of the tax expenditures) and it was very interesting. I wonder if Canada has a similar system and/or similar type tax deductions. This is the link if you are interested.

    http://www.washingtonpost.com/wp-srv/business/documents/crstaxreform.pdf

    I am not trying to defend austerity but with regard to your "pedal to the metal" approach the thing that scares me is that eventually the debt overwhelms the sovereign that creates it. I think there are cases in history that show this and it seems that this is what is happening in Europe and states like California currently. There has to be a plan and criteria to take the foot off the gas and "repay" the debt that is created. We have never shown the ability do this. I don't think that an economy can rely on constant government "priming" which is what we have been doing for the last 30 years. Also, won't interest rates turn much quicker than the ability to withdraw the debt. I don't see that as a good reason to justify the "pedal to the metal" approach.

    If Lou cannot find your previous comments on austerity and debt that will be too bad. I am sure that we would have learned from them. Just for your information I have taken to writing my comments in a word document and copying them to the forum. I don't know if it will wokr for you but it works for me.

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  40. Hey James and John, I think I found everyone's comments that had gone to the spam folder and published them. I didn't see any comments in there this morning when I checked. Are any of your comments still missing? Let me know. Thanks.

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  41. Lou and Johnc>

    Financial times today: For me this signals the end of "Thatcherism" or more commonly the end of "trickle down". Thank God sanity is beginning to pop up around the Globe. One hopes that the largest and most wounded economy on the planet (US) finally gets the message?

    "................Clegg sounds new economic tone.................
    The ruling UK coalition is preparing a “massive” increase in state-backed investment in housing and infrastructure, as Nick Clegg signalled a shift from lurid warnings by ministers about the debt crisis to a fresh emphasis on growth.............."

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  42. JohnC.

    Some points to ponder and in response to your queries.

    "User taxation, transactional taxation or VAT" can indeed be punitive to the poorer earning segment if not properly modified by allowances, whereby the essentials for a minimal standard of living are exempted.e;g Food is the first of these of course. (That would not mean food used in commercial enterprises however.) In any event you can see how it can be adjusted more easily than current models and I hope this answers your main concerns. Some may even scream that benefits are unfairly distributed, and that may be true in some instances, but the tax should always be a matter of affordability! To quote Adam Smith:

    Wealth of nations: ".......... The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life however occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house or rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion........."

    (remember he was referring to Victorian England. But you can modernize the comment to apply to current societal dynamics in the U.S.)

    As regards your concerns about Austerity etc. I regret, (please forgive me), having used the phrase "pedal to the metal". It was an amateurish attempt at being somehow cute from a literary sense:-).
    I hope you note in my text elsewhere, the use of the comment as to "directed stimulus"and the need equally, for a deficit reduction plan in concert with that stimulus.

    To highlight for you that this can be done, one must harken back to the first GW Bush term circa 2000, and his immediate "refunding of the peoples money" by instituting those now infamous Tax cuts.
    The simple lesson is that any politician must never again be permitted to take such an action and to eliminate the sensible reserves of a surplus, in one fell swoop! And then to be faced with the horrors of an unexpected event (911) etc.etc etc . Reserves/surpluses are indeed the peoples money, but to replace it with a spiraling debt burden, adds to the cost of money precipitously and unnecessarily! continued.....

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  43. continued:

    Truthfully your nation could conceivably return to surplus rapidly, with properly directed stimulus and some appropriate "haircutting" such as eliminating or modifying the tax cuts aforementioned? The ideological nonsense notwithstanding and as I have said before, the GOP have exaggerated these budgetary issues to scare the "bejasus" out of the populace.
    The only nation on earth totally capable of fixing it's problems with ease, appears instead frightened beyond reason and is frozen in congress and on the stump, in some horrible vitriolic divisiveness, that is not very American?

    I say this as an outsider looking in! In most camps economists agree that the 2 wars and their ongoing support, and the "Bush tax cuts" represent very close to the total of the nations current deficit curve line, being plotted even as it goes forward a couple of years.

    It is time to act and I am sure this GOP ploy of wedge issue mania and forced filibustering will soon come to an end, as people begin to realize the damage they are doing to the future health of the nation! At least I hope so? Elections being seemingly and unaccountably such unpredictable things in your country? I remain amazed at the resilience of those in your nation that still support the mania of trickle down economics in the guise of capitalism. They seem to feel that no other nation on earth really understands capitalism? "American capitalism" has become ideological and it is "trickle down" and frighteningly has become almost a religious belief for them?

    Personally I am horrified by this nonsense that Obama and his cabinet somehow are anti American, because they want to change this one dynamic that almost destroyed the entire Global financial system? The polls indicate that Obama and Romney are tied 50/50 as of today? Crazy is it not?

    regards James

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  44. JohnC:

    I notice that LOU found my posting on the deficit issue. May 17th 7:26 PM PST

    Thank you Lou.

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  45. small item worthy of note. For all thos that doubt that inequality is becoming an issue!

    Financial Times London...todays date;

    Breaking News

    Luxury market set to hit $1.5tn
    The market for luxury, such as yachts, frocks and safaris, is set to hit $1.5tn this year, roughly matching the entire economic output of Spain or Australia, as the income inequality gap widens across the globe.
    Luxury goods and services have proved a rare bright spot in consumer goods, as the ranks of the wealthy grow – especially in markets like China and Brazil – and seek the status symbols to go with it.
    However, money is increasingly going on luxury experiences, from spas to safaris, rather than tangible products. Spending on experiences grew 50 per cent faster than on goods last year, according to Boston Consulting Group.

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  46. One reads so much about the unfair advantage that public sector workers have over their private sector colleagues? Pitting two sectors of workers against each other, is precisely the tactic that has been used since the Reagan/Thatcher era, to somehow make it appear as if the "public" workers 'en masse', have been dodging real work and somehow living lazily off the wealth of the private sector? What a load of nonsense!

    This is nothing more than a play on envy and jealousy and to take advantage of the gullibility of the unthinking masses! Wisconsin is now a good example of the success of this divisive strategy!
    Municipalities may well be under financial stress, but it is certainly more to do with the revenue side of the debate than the affordability side? We are talking miniscule % of tax increases! The question remains what kind of a society do you want to live in? If you want the services of public works, then employees in that service, must be assured of living wages and security, should they not?

    That the private sector has effectively and systematically scaled real time wage levels backwards, since the Reagan era, is not the fault of the workers or the unions in the public sector, but a failure of the private sector and a very good example as to why UNIONS are actually more essential!

    One should be more concerned that the gap between 'good fair wage and compensation packages' and bad declining wage parallels for private sector employees, appears more to be the case? And why is it that the private sector blue collar worker, is not compensated in any reasonably comparative manner, to his bosses or corporate executives in todays industry and corporate reality?

    Global factors no doubt play a large part, as workers in emerging economies now suffer under the same labor dynamics, that American workers once faced in the early years of the birth of the nation! The comparisons are striking at times.

    I venture that these private sector non union workers today, work harder than those that take home these massive salaries and bonus packets? And yet they cheerfully rant in jealous angst, against their fellows in the public sector as if they had horns and are somehow agents of the devil?

    Working People of all stripes, look to your backs, as the enemy is not your fellow workers, but the well planned machinations of the corporate oligarchy, which is now so prevalent as never before in American politics,.........thanks to the ignominy and scar on the body of the state, that is "citizens united"

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  47. sorry LOU and JohnC:
    My last posting is my opinion comment to a WAPO blogsite.

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  48. LOU;

    I meant to post this before as it goes to the heart of the title of this blog as to the question of America in decline.
    It was published quite some time ago,for a canadian audience as are my comments but again perhaps you and JohnC will appreciate the content and the outsiders view: Apologies if you find it in any way overly critical. James

    http://www.jamesconvey.com/uploads/3/3/8/3/3383644/americaindecline24stats.pdf

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  49. LOU:

    If the above link should fail, just go to my website and from the drop down menu (politics) access the article from the archive. Sept 2010

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  50. Regards the discussion on public employee unions I post the attached article not so much for the information on Wisconsin but for the information on the elections in San Jose and San Diego. Voters (most I presume are taxpayers), by an overwhelming margin at least 60% - 40% voted to shift the way they spend their tax dollars. San Diego and San Jose are in very bad fiscal situations and voters have informed the city how they expect tax dollars to be spent. Instead of their tax dollars paying for pensions and healthcare for city employees they are asking the employees to pay more of their wage to their benefits so that the city can spend the tax dollars on the services that cities should be providing them.

    I think that you have to respect this outcome, particularly when it occurs in a city like San Jose. San Jose leans very democratic. It is incorrect to portray it as big money influencing an election particularly when the results are so clear cut. It is not a matter of people hating public employees, it is a matter of priorities in allocating a fixed resource.

    I believe this is a trend that will be with us at the local and state level for a while. The extremely generous benefits that have been negotiated over the last ten to twenty years are starting to affect city budgets and voters are saying a collective “what the hell”. I’m paying for someone to retire at 62 at close full pay while I watch my city deteriorate?? It is a simple matter of finances.

    I realize that my opinion conflicts with both of you but I feel very strongly that there is a inherant conflict in allowing them to exist in the same form as unions in the private sector.

    http://www.csmonitor.com/USA/Latest-News-Wires/2012/0609/Public-employee-pensions-face-a-rollback-in-Calif.

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  51. JohnC:

    There is no reason why change to any existing matter cannot be achieved? I have always believed that. The democratic way is always the best way. What becomes the issue, is when change is forced upon a group in a dictatorial way and without explanation or proper representation? Or by use of intrigue and disingenuous debate before the electorate. Governor Walker clearly had not outlined his devious intentions, during his bid to become governor?

    What the facts are in San Jose or anywhere else for that matter, should never permit such 'shock' troop attacks on rights as those employed in Wisconsin. In Wisconsin it would certainly appear that the tactics that were used by Walker et al, were just such non democratic methods.

    It is a matter of record I understand, that the public union workers involved had already agreed in good faith to major changes to their salary and pension structures, to assist in the efforts to control the budgetary shortfalls. It was only after this was achieved, that they were then notified that they would also be required to surrender their rights to collective bargaining!

    That became the divisive issue, that led to a recall effort from a very angry and large portion of the public. Divisive tactics again causing unnecessary strife! This naivete' or perhaps deliberate misstep by the governor of the state, was for me unforgivable and I fully understood the rancorous effort to recall him. His manner of dictatorial administration is not an acceptable tenet, for any person believing in democracy and the rights of workers.

    I repeat my comments from my piece above, which goes to the general economic traits that have brought us to this time. Where sadly one set of workers are able to be persuaded that another set of workers have somehow suddenly been given some "unearned" advantage? And that they need to be stripped of that for no other reason than the "mood of the time"and that none should ever be allowed to be better off than any other? Makes one wonder why the rich and the super earners are able to continue to earn 20 to 30 times more than anyone else and yet they are not subject it seems to the same rule? Also I repeat that this whole issue surrounds the lack of revenues and not the affordability of essential workers incomes?

    ".....Municipalities may well be under financial stress, but it is certainly more to do with the revenue side of the debate than the affordability side? We are talking miniscule % of tax increases! The question remains what kind of a society do you want to live in? If you want the services of public works, then employees in that service, must be assured of living wages and security, should they not?

    That the private sector has effectively and systematically scaled real time wage levels backwards, since the Reagan era, is not the fault of the workers or the unions in the public sector, but a failure of the private sector and a very good example as to why UNIONS are actually more essential!

    One should be more concerned that the gap between 'good fair wage and compensation packages' and bad declining wage parallels for private sector employees, appears more to be the case? And why is it that the private sector blue collar worker, is not compensated in any reasonably comparative manner, to his bosses or corporate executives in todays industry and corporate reality?.............."

    It is a sadness to see one sector of the populace turned against their own fellows by disingenuous men, simply because they have the solidarity of a union membership? To think that a simple redo of the tax code to a more equitable system, could have avoided this matter of social upheaval in almost every jurisdiction? Again so sad!

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  52. I have one question John:

    Now that you have managed to convince yourself that the public workers are to blame for the budgetary problems.

    When are you going to start getting angry that your friends and neighbors are still continuing to see a decline in their living standards, pension benefits, salaries, and quality of life, while the incomes of those that rule continue to escalate?
    Is it really about the public union workers? Robbing them of their benefits and bargaining rights. Will that fix the municipal budget shortfalls and if so, for how long? What next? meanwhile:

    Luxury market set to hit $1.5tn
    The market for luxury, such as yachts, frocks and safaris, is set to hit $1.5tn this year, roughly matching the entire economic output of Spain or Australia, as the income inequality gap widens across the globe.
    Luxury goods and services have proved a rare bright spot in consumer goods, as the ranks of the wealthy grow – especially in markets like China and Brazil – and seek the status symbols to go with it.
    However, money is increasingly going on luxury experiences, from spas to safaris, rather than tangible products. Spending on experiences grew 50 per cent faster than on goods last year, according to Boston Consulting Group......... London Financial times.

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  53. Steven Tyler's new toy. I imagine this part of the $1.5tn

    http://www.cbsnews.com/8301-31749_162-57444875-10391698/steven-tyler-drops-$1.1-million-on-worlds-fastest-car/

    Posted in case either of you are car buffs

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  54. JohnC

    Not a bad example of hedonism gone wild? How he go it up to $1.1million from it's base of 350,000.00 might be an interesting tale.
    Between guys like this and soccer stars and basketball and baseball etc etc etc.... It adds up to the fact that the world is going crazy with this nonsense........... don't you think?
    I am all for freedom and free will etc....... but really? Does a guy ever deserve this much of an "overage" from the rest of us?......-)

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  55. Lou and JohnC:

    I came across this quite by accident when I hit the old stream "ideas are like a virus": Worth a revisit given current news and the prophetic nature of it's content...:-)Blowing my own horn again. Consulting fees should come rolling in anytime now????

    April 21, 2012 6:06 PM
    Hi John.

    I agree that the economy is bigger than any one official, but given the efforts to discredit your president, as an observer from afar, I think he deserves more credit for his leadership, as I outlined. The US economy is not disengaged from the Global realities and this is the main driver of the slow steady growth. But it would not have happened without presidential leadership and a sense of international statehood. For that Obama should be recognized.
    But certainly that will not be the case come Nov? My view is that as the leader he has accomplished quite a bit, that seems to be forgotten in the toxic rhetoric flying about? Conveniently so for some of course.
    Your congress is indeed a nightmare and I do think "money" is the issue. Also that segment (Tea Party) that refuses to give an inch on many issues that appear simple common sense, is another cause for the deadlock! Hopefully they will be whittled down in November.....:-)
    With the advancement of the Yuan and the combined efforts by the IMF and the G20 to finance what I believe will be a successful Eurozone recovery, the US cannot afford to play this silly ideological tug of war for too much longer! Otherwise economic disaster could befall the US dollar! Have a nice day John..... james

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  56. Lou JohnC:

    Also I will be posting an older essay on my own site in the near future. Here is the link for your kind preview and comments as you wish.
    http://www.jamesconvey.com/1/post/2010/07/trade-marketing-methods-for-all-commodities.html
    (Originally written April 2009)

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  57. LOU:From my comment on the WAPO blog today.

    For most of my business career over the last 35 years, I have been witness to the horrors, (via the folly of trickle down economics), of the transfer of Global wealth to an exclusive minority, through the dissolution of socially protective laws, and the endorsement of the 'greed is good' philosophies of anti social and morally bankrupt ideologues.

    This in effect eroded any real ability to accumulate wealth for the entire community, on an equal opportunity basis to become, the now current dynamic of the massive control of wealth, in the hands of a relatively few corporate oligarchs.

    With this obviously ultra conservative supreme court in America, I am now witness to the dissembling of what was once American representative democracy?

    The Arizona ruling, together with the dissolving of a 100 year old law in Montana! Which law was originally enacted historically, to protect the citizens of that state, from just such an actual existing corrupt dynamic at that time? Their version of 'Tamany hall' if you like!

    This corrupt practice, experienced by the people of Montana way back then, is now recognized as a legal activity as a result of what is now the law of the land federally, and known as " the citizens united law".

    The extreme danger has now become that the American state, once the envy of the peoples of the world that held democracy as sacred, will now advance rapidly toward a society dominated solely by wealth and privilege, and which may well quickly mirror the past dynasties of elitist controlled servile systems, which ultimately destroyed societies and benevolent democracies throughout history .
    God help America

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  58. Lou and JohnC: On the topic of the decline of America.

    Just a reference from a great American and much admired historical figure:

    ".......I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. ... corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.........'

    — U.S. President Abraham Lincoln, Nov. 21, 1864 (letter to Col. William F. Elkins) Ref: “The Lincoln Encyclopedia”, Archer H. Shaw (Macmillan, 1950, NY)

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  59. John C and LOU. Re the healthcare ruling. My comments to the WAPO blogsite:

    Finally America is dragged, regardless of the minority kicking and screaming, into the 21st century. Next will be an amendment for single payer in President Obama's second term. For those who would attack the socialist healthcare programs of the likes of Canada etc :

    "............An Ipsos Reid poll this week; ..... People where asked if given a choice between a not for profit and a for profit model, 80% of Canadians said they preferred a not for profit model of healthcare. That is up 9 percentage points from 2006..."

    The health care fight is not over and amendments and improvements to the law will come in the presidents second term. The fight has just begun! If you think in a narrow minded way and push to abandon it now, you are giving in to the corporate lackeys that forced the maintaining of the for profit model in the first place!

    Which is not what the president and most members of the democratic party want and what is needed for the people of the nation! A single payer not for profit system! This is only a partial success in the fight for real healthcare reform!

    The healthcare debate will never be solved, until people accept that certain things are essentials and separate from the need for profit, for the good of a society and for its ability to flourish. Healthcare under this dynamic would be considered just such an essential right for the populace.

    Adam smith's:..... Practical truth about capitalism from "The wealth of nations"... Economics 101.

    “the interest of the dealers (profit makers) however, in any particular branch of trade or manufacture, (Healthcare) is always in some respects different from and even opposite to, that of the public good and therefore to that of the social structure itself.”

    Healthcare is a prime example of this capitalist conundrum wouldn't you say? The GOP seem to want to ignore these realities, that go back to the very foundations of the capitalist catechism? circa 18th century

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  60. James, very interesting comments. I'm searching for a reference to the Ipsos healthcare poll you mentioned. I can't fine it (yet). Do you happen to have a link for that one?

    Also, the Adam Smith passage your listed is prescient. Do you happen to either have a link for the source of that specific passage, or a page number from the book?

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  61. http://www.ipsos.ca/en/news-polls/

    Adam Smith......... The piece above was parsed from the following section of Smiths work. The genral opinion covers the broader spectrum of commerce and interests of dealers vs society...Enjoy well worth the read.....

    B.I, Ch.11, Of the Rent of Land
    I.11.264
    His employers constitute the third order, that of those who live by profit. It is the stock that is employed for the sake of profit, which puts into motion the greater part of the useful labour of every society. The plans and projects of the employers of stock regulate and direct all the most important operations of labour, and profit is the end proposed by all those plans and projects. But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin. The interest of this third order, therefore, has not the same connection with the general interest of the society as that of the other two.
    " Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

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