THE STORY SO FAR: PART 210

ONE OF MY HOBBIES IS COLLECTING ECONOMISTS—AND ONE OF MY FAVORITES IS BEING ATTACKED

I’M IN SHOCK!

“Collecting economists” sounds rather as if I have a bunch of them, stuffed and mounted, in my trophy room.

While the concept is not without appeal as far as some economists are concerned, my approach is rather more benign.

Instead, I list and track economists (I include economic commentators) who seem to get it right much of the time—or who present arguments which seem worth exploring even if they are not yet proven. I do this because I’m interested in discovering an economic system which works for the benefit of an entire population—such as this one—not merely a privileged elite. Here, I’m not looking for perfection, but more for one that is good enough. I expect it will have to be assembled from the carcasses of other economic systems so I guess you could regard my goal as ‘Frankenstein Capitalism.’ Not sure a more appealing title might not be an idea.

But the U.S. economic system, based on free market capitalism, is the best in the world, I hear you cry.

I respectfully disagree. Aspects of it work brilliantly, but others do not. Let me list a few of its flaws:

• Massive debt from personal to federal.
• A decline in the earning power of the majority of the population.
• An economy which favors only the few.
• Where children are concerned, hunger (food insufficiency) on a massive scale.
• An alarming number of people withdrawing from the workforce because they can’t find jobs.
• Pervasive unemployment.

But this not the time to debate this particular argument. Instead, I’m in shock—in the manner of the movie, CASABLANCA—because  economist Paul Krugman, who mostly seems to get it right (or has for the period I have been reading him) is being attacked by a social commentator, William Greider, whom I hold in high regard.

Woe is me! My loyalties are divided.

The focus of Greider’s attack is that Krugman was an unquestioning advocate of globalization while refusing to address the issues of the dark side (which were, and are, many—and include massive job losses, the destruction of communities, the exporting of expertise, and the depression of wage rates. One might also add the exploitation of foreign labor, and massive tax avoidance under frequently dubious circumstances).

The trouble with labels like “Free Trade” is that they disguise all kinds of deals made on behalf of corporate interests—and which never see the light of day because who reads all the fine print in a trade treaty. Should the media do this? Of course they should, but such research is hard work and time consuming, so they seldom do. Beyond that, editors frown on such work because it may result in criticism of specific corporations—and corporate advertising is what pays for the media.

Here, one might ask the question: Do we have a free press? If media owners self-censor as much as they do—just look at the Wall street Journal under Rupert Murdoch—no, we do not.

But, I digress. Back to Greider versus Krugman. Frankly, I haven’t read enough of Krugman on globalization to have an informed opinion, but I guess the moral of the story is to read much from a variety of sources, to read critically, and—above all—to form your own opinions.

You know, “Frankenstein Capitalism” has a certain ring to it.

 

 

 

THE STORY SO FAR: PART 185

HOW IS IT THAT THE GERMANS DO WHAT THEY DO—SO WELL—AND SO CONSISTENTLY?

The Germans hide their expertise in plain sight, yet for some reason we seem incapable of learning from it.

Decades pass, the evidence piles up, and still we seem incapable of learning from what—based on the evidence—is self evident. Their economic system works better than ours. If you don’t accept that argument, let me compromise: Aspects of their economic system deliver measurably superior results.

When I worked in the UK, I couldn’t understand why the British were so reluctant to copy the German economic system, and now it seems that the U.S. has similar reservations.

It is quite baffling because the German business model—which is not that complicated—is quite remarkably successful—and has been so since the end of WW II (and it did rather well before that). In addition, the Germans absorbed East Germany which was, for many years, a huge economic burden in its own right.

Dan Rather has written an excellent piece which appears in the Huffington Post of March 4 2013. The following is an extract from it.

We had just returned from our own tour of Germany's schools and factories and can report that the German model does in fact provide a viable and popular pathway to get young people employed immediately after high school in good paying jobs. Jobs that can turn into careers.

We found a culture where "vocational training" is not a taboo word, where companies invest billions of dollars annually in training young people who have completed tenth grade for apprenticeships in healthcare, information technology, and above all, manufacturing.

The results are hard to dispute: Germany's high school drop-out rate is around 7 percent (compared to the U.S.' dismal 23 percent.) And while 8 percent of Germany's youth population (ages 16-24) is unemployed, our youth unemployment is at 16 percent (for African-American youth, it's a bleaker 38 percent, according to the Department of Labor.)

Germany's highly-skilled workforce helps it create high-end products that the world is hungry for. As a result, Germany exports more products than anywhere else except China, and the country has been a lone beacon of good news while the rest of Europe has been laid low by the financial crisis.

Well, it is not true the rest of Europe has been “laid low” but the countries which are doing well—or well enough—are all really following variations of the German economic model, and are mainly clustered in Northern Europe. Of course, it can be argued that what works in relatively small countries like Sweden cannot work in the U.S., but if you add up the populations and GDPs of Germany, Austria, Switzerland and Scandinavia—all high wage, high added-value economies--the total adds up to a significant percentage of the size of the U.S. economy—and is doing vastly better in terms of the wellbeing of the average citizen.

It would seem no more than good sense to take a closer look.

 

 

THE STORY SO FAR: PART 181

NOT ONLY DO WE SPEND TOO MUCH ON DEFENSE, BUT IN MANY CASES, WE SPEND IT BADLY

FEW HAVE THE GUTS TO SPEAK OUT ABOUT THIS. ONE WHO DID—AND DOES—IS CHUCK SPINNEY

Thirty years ago a story appeared in Time magazine which rocked the Pentagon—and, in particular—the world of the MICC—the Military Industrial Congressional Complex which President Eisenhower warned us about with such vigor and prescience just before leaving office.

His worst fears were more than justified. We have created a permanent cabal of the military, defense contractors and Congress which has been feeding at the public trough since World War II—while mostly either drawing or losing wars we shouldn’t have been involved in the first place.

Meanwhile, the earning power of most Americans has increased but little since the Seventies—and is now in decline. On important reason is that we have spent truly extraordinary amounts of money on the wrong things—the most recent being an entirely unnecessary war in Iraq. But, even more to the point, whether there be war or peace, we have allowed the MICC to frighten us into spending trillions of dollars for no good reason. Certainly, we need a strong military, but there is a difference between strength and extravagance—between prudence and greed. Currently, greed is in the ascendant to the point where our entire National Security budget—of which the defense budget is only a part—exceeds $1 trillion dollars. In effect, we spend more on defense than the rest of the world put together.

Find the 1983 Time Magazine article here:

http://www.time.com/time/magazine/article/0,9171,953733,00.html

It is well worth reading.

Franklin C. "Chuck" Spinney (born May 2, 1945) is an American former military analyst for the Pentagon who became famous in the early 1980s for what became known as the "Spinney Report", criticizing what he described as the reckless pursuit of costly complex weapon systems by the Pentagon, with disregard to budgetary consequences. Despite attempts by his superiors to bury the controversial report, it eventually was exposed during a United States Senate Budget Committee on Defense hearing, which though scheduled to go unnoticed, made the cover of Time Magazine March 7, 1983.

This is what Time Magazine said about that famous story:

The cover story was written by Walter Isaacson, who has since gone on to write acclaimed biographies of Henry Kissinger, Ben Franklin, Albert Einstein and Steve Jobs. Presidential photographer David Hume Kennerly took the photos of Spinney that graced the cover package. The cover itself was an illustration of Spinney by Burt Silverman, who also [Bizarre Connection Alert!] did the cover art for Jethro Tull’s Aqualung album (you can see the resemblance here).

We don’t always agree with Mr. Spinney, and he hasn’t always been right, but we always find his thinking relevant and intriguing. We’re pleased that he continues to grace Battleland with it regularly, a decade after leaving the Pentagon, when he’s not out sailing.

Read more: http://nation.time.com/2013/02/28/it-was-30-years-ago-today/#ixzz2MJsMddwD

Chuck’s courageous action in giving testimony before Congress—at the risk of his career—did not solve the problem—but it almost certainly had some effect; and sometimes all you can do is slow down a bad situation rather than stop it. That is still well worth doing. If nothing else, you have set change in motion.

Was he fired? Surprisingly, he was not, largely because the powers that be in the Pentagon were terrified of Congressional retribution. Instead—incredibly—he was shunned by the system and left to work on whatever he chose for the rest of his career. He put his time to good use—and any Spinney piece is well worth reading.

I met Chuck in the mid Nineties through a mutual friend and have remained in touch ever since. He is a genuine American hero—with the moral courage to do the right thing—and I’m honored to know him.

We need more like him.

 

THE STORY SO FAR: PART 168

BACK IN 1966, I WAS 22 AND THE U.S. WAS A VERY DIFFERENT PLACE

ONE TENDS TO FORGET JUST HOW DIFFERENT

I first visited the U.S. in the early Seventies. At the time I was the founder and Managing Director of the UK subsidiary of the Addmaster Corporation of California (the latter still exists, and is thriving, I’m proud to say). The subsidiary was called Addmaster UK—and despite great odds, we were very successful.

At that time, though I am Irish—albeit Anglo-Irish—I lived in London. Many Irish still do. That is where the work was—and still is.

Back to the Seventies: In that era, the main commercial threat came from the Japanese, flying was still enjoyable, there was no accepted terrorist threat in the U.S., and the American Middle Class was still in good shape (though the Vietnam War had exacted a heavy toll in American lives and treasure—and, most crucially, on American self-confidence).

Just about everything, from the American diet to the cost of Healthcare, was to change over the next 40 years—and mostly not for the better as far as most Americans were concerned. Perhaps the most disturbing development was that rising American prosperity, stemming from significant increases in productivity, ceased being shared. Previously, since the end of WW II in 1945, all the stakeholders—shareholders, management and workers—benefited, more or less proportionately. That ended around that time.

Subsequently, after the early Seventies, the Rich got ever richer, but the bulk of the population—the Middle Class—saw virtually no increase in earnings at all. And now Middle Class earnings are in decline; and unions have been virtually crushed—at least in the private sector. The Rich have won—and some have stated quite publicly that they are unhappy with that fact.

I’m far from sure this is the way the U.S. is meant to be; needs to be; or should be. It is not the American way to want to pull down those who are successful, but neither is a low wage economy, combined with a steady downward pressure on earnings, acceptable—especially because costs are going up. Sinking wages combined with rising costs does not happiness make; nor does it make for a healthy democracy.

It kills the American Dream.

I have written about all this in my book, TITANIC NATION: How To Avoid Icebergs.