Where are the Jobs?

Robert Reich's recent post, "Why We're Falling Into a Double-Dip Recession" gives the short-term reason, but doesn't give the long-term explanation. The end of the stimulus spending is partly to blame for the impending double-dip, which Paul Krugman predicted at the beginning of the year. The real question is why is it taking so long for the economy to create sustained job growth? I think the main reason jobs are not returning is because for the past 10 years neither our industries nor our universities nor our government agencies (like NASA) have generated enough significant innovation or new technology to create the kind of growth that allows jobs to keep up with population growth.

This happened partly because investors were gun-shy after the tech bubble burst, but mostly it happened because the elimination of Glass-Steagall in 1999 opened the flood gates for the creation of new financial products like credit default swaps and rampant derivatives markets. So, instead of our nation’s best and brightest creating alternative energy or new software or biomedical breakthroughs, they were busy creating toxic assets and new hedge funds. And instead of the government investing in science and education, it was busy spending the country into trillion dollar deficits while playing Elmer Fudd chasing those wascally terrorists all over Iraq and Afghanistan. Creating the world's largest prison population didn't help either.

In addition to a new stimulus that puts people to work on short-term repair projects, the US needs to scale back its prison and military expenditures and invest in people and industries in ways that create long-term economic growth and jobs. We need a new New Deal. Lets bring home most of the troops and put them in the Army Corps of Engineers building wind farms and solar fields. Energy security not only means environmental security, but also lessens the need for overseas military adventures. That is true national security. It will make Japan happy, too. Their Prime Minister had to resign last week, largely because he could not fulfill his campaign promise to move a US military base out of Okinawa. We also need a new New Deal to correct for the past 30 years of conservative neglect. In the business world we call it human capital. And in his speech on the economy last week, Obama called it "A new foundation":

"It’s a foundation based on investments in our people and their future; investments in the skills and education we need to compete; investments in a 21st century infrastructure for America, from high-speed railroads to high-speed Internet; investments in research and technology, like clean energy, that can lead to new jobs and new exports and new industries."

The New Value

Michael Hiltzik hits the nail on the head in his LA Times column today. "Pointless deals line Wall St. pockets" illustrates what Chris Hayes at The Nation was talking about a few weeks ago when he described all the money sloshing around in the upper echelons -- but none of it is trickling down. Shows how hedge fund managers and investment bankers have been getting rich because they make good bets for their wealthy clients, but their activity does not add any value to the economy, and in the case of Goldman Sachs, one particular hedge actually helped make the damage for average consumers worse. They are professional gamblers helping the rich get richer, while the ....well, you know how it goes.

It shows that the free market has no values and simply lets the rich and powerful swoop in and game the system. When the government used to try and do big things - think NASA or fuel efficiency standards - those programs actually spurred innovation and technology that led to enormous growth in the private sector. But during the Bush years, de-regulation and small government policies ruled the day and instead of the economy creating growth and wealth based on innovation and technology, it created a housing bubble and "financial instruments" that have created vast wealth for small numbers of people without creating value or making life better for the average consumer. The wonderful free market of the past decade lured thousands of our best and brightest students and math minds away from inventing alternative energy or smarter computers and instead they have become stewards of vast empires of wealth.

"The Road to Serfdom"

One of the best examples of how Glenn Beck and Fox News mangle and distort their facts and why they are so dangerous is in this quote from one of Mr. Beck's recent shows:

"We will resist the total transformation of our country but we will do it peacefully. Yes. People did it under [Woodrow Wilson] and people did that here. Well, not so much because the people who are in [President Obama's] administration hated [Richard Nixon] and they didn't resist peacefully; they were setting bombs off. But we will resist peacefully."

How is giving the private insurance industry 30 million new customers, somehow a total transformation of our country? Where is the socialism? Where is the communism? There is none. The health care bill was really a health insurance bill that imposed much needed regulation on an industry that makes money by denying coverage to as many people as possible. And in the name of free-markets, that industry has made our country less competitive while our citizens have worse health outcomes than nearly every country with socialized medicine.

Beck uses the fear of Communism in exactly the same way Senator McCarthy did -- as a way to implement conformity and control -- and ultimately to incite people to violence, despite his non-violent rhetoric. Here's another quote from Mr. Beck's 4/8/10 show:

"Is it a coincidence that all of the above are or were advisers to the president? By the way, [Van Jones] was an adviser to the president and now he's with George Soros' group. Is it possible that maybe, by pointing out every night that there are radicals, Marxists and communists in the White House, maybe that struck a nerve?"

Sounds like something straight out of a House Committee on Un-American Activities meeting from 1950. Beck and his viewers are the shoeshine boys of the ruling elite and they don't even know it. By reducing every argument to a battle between Libertarianism and Communism, they eliminate the possibility of having a discussion that includes complexity or the reality of our hybrid government that combines democracy with a primarily capitalist, market-based economy and adds in a few social programs like Medicaid, Medicare and Social Security. This is hardly a centrally planned economy now that the health insurance reform bill has passed. Mr. Beck, please tell me: where is there a movement by Democrats or any other group to impose a centrally planned economy in the U.S.? Where is there an attempt by the current administration to roll-back constitutional rights?

George Orwell perhaps summarized it best in his critique of Friedrich Hayek's 1944 best-seller, The Road to Serfdom:

"in the negative part of Professor Hayek's thesis there is a great deal of truth. It cannot be said too often — at any rate, it is not being said nearly often enough — that collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamt of". Yet he also warned, "[A] return to 'free' competition means for the great mass of people a tyranny probably worse, because more irresponsible, than that of the state."

Hayek believed central planning and state control would inevitably lead to tyranny and totalitarianism, like it had in the Soviet Union. And that is what Beck and the Tea Partiers are worried is going to happen under Obama. Yet, the past 30 years of conservative dominance of U.S. politics and the stripping out of most New Deal financial regulation has led to exactly the kind of tyranny that Orwell warned against. And that was the tyranny against truth, justice and fairness in our governance and in our markets, which reached its pinnacle under the administration of George W. Bush and Dick Cheney. And it is that tyranny, which Mr. Beck continues and enables through his Tea Party movement.

Top Lies about the Health Insurance Reform Bill

MSNBC.com recently posted an article, "True or false? Top 7 health care fears" in which they do a good job debunking some of the Fox News and Tea Partier hysteria about health care. However, they somehow managed to not include these two fears, which seem like the top two:

1. My taxes will go up!
2. It's Socialism in America!

Of course, neither of things are true, unless you are in the 1.5% of American households that make more than $250k per year -- then your investment income will be taxed at a higher rate.

With no new government run health system being put in place and no pubic option, there isn't much in this bill that could be considered socialist, except for a slight expansion of Medicaid. Mostly, this bill is the opposite of Socialism, funneling 30 million new customers into the private insurance industry.

It will be interesting to see if this bill helps expand coverage and lower costs. Certainly, it seems like we have a much better chance with this bill than letting the previous status quo of continually rising costs and decreasing coverage continue. Not sure how the Republicans think they can win in November by trying to repeal the expanded benefits and the bill's tough new regulations on the insurance industry!

The Slippery Slope to Socialism, Again....

It seems that many independents and right-wingers are convinced the health care bill is part of a vast conspiracy to implement socialism in the USA. Here's a recent post from the Left, Right & Center blog on the KCRW website by an author called Florida_Independent:

“I cannot believe how anyone who calls themselves an American can get behind legislation that places a mandate on individuals to buy health insurance. It is a travesty and for the first time in my life I plan on getting involved in politics. I will work to defeat any Rep. or Sen. who voted in favor of this monstrosity. Capitalism is not perfect, but it is the best system out there and this bill is designed to push the nation toward socalism. I don't see how you can look at it any other way. Your beloved Obama ran his campaign promising that he would not seek a mandate because it was wrong. Guess what, it is still wrong and he is proving that he has the intenstinal fortitude of a fruit fly. I can only hope that the courts will overturn this before it takes effect.”

Why does this author have to attack anyone who supports the health care bill as un-American? It’s law that you have to have insurance if you want to drive. I think this makes sense in the same way. If you want a more affordable health care system, support this legislation. The current version of the health care bill does not have a public option, so there is little in it you could call socialism. The current bill has non-profit insurance exchanges that may be able to provide more affordable care to the uninsured , unemployed and the underinsured. It makes sense that you should have to pay a penalty if you don’t buy a plan, because when you get healthcare by showing up at the emergency room, you are transferring the costs to the hospital and thus raising the rates for everyone else who pays into the system. So, we might as well mandate that everyone has to buy it, which should help drive costs down. Without a public option or single-payer system, the mandate to buy is one of the best levers left to control costs. Although I would vastly prefer a government run single-payer system to the bill that is about to get passed, I think this bill is a step in the right direction and better than the status quo.

We are the only industrialized country in the world that has neither national health care nor a public option and it is costing us dearly. The fear of socialism has become so entrenched among independents and the right that we have become incapable of accepting even a public option. How is it that we have managed to have Social Security and Medicare for so long and still remain a Capitalist country? It is because it is possible to have strong markets and strong government programs that co-exist and support each another. If you really want Capitalism without any social programs, take the economic disaster of the past year and intensify it by orders of magnitude equal to the next great depression and that will be the natural end-product of the return to laissez faire economics that most independents and Republicans seem to advocate.

The extent to which the rich and powerful have increasingly exploited and manipulated the poor and middle class is the direct result of the past 30 years of increasingly more conservative legislation that has slashed taxes to unsusustainable levels while removing appropriate oversight and government intervention from banking, energy, education and the environment.

The world view of the author above, Florida_Independent, will only lead to a more entrenched oligarchy, massive underemployment, sickness, exploitation and global flooding, while those of us in favor of national health care or a public option want fairness, democracy, decency and even strong markets for most goods and services to prevail….not totalitarian socialism.

Recent Comments on Socialism

Here's a comment I posted to the Seeking Alpha Blog, in response to another author's comment that appears to conflate Socialism with Fascism:

"I like most of your ideas, Oldfoxbob, and ironically most of your ideas like making the rich pay more in taxes, giving welfare to the poor, extending unemployment benefits and creating jobs with government projects are things Democrats want and they are all things the right calls Socialism, and many of these ideas are present in Socialist countries. 

The problem is that Fox News and the GOP have succeeded in brainwashing average Americans into equating ANY government project with Socialism and making you think that Fascism = Socialism, when in fact they are not equal. What we have had in the US since the mid-19th century is a mixed economy that combines public and private enterprise.

Just as we have for 150 years, the US has a market-based economy, we enjoy all our democratic freedoms AND we have strong government programs. But, as long as the Republicans and Fox News continue to perpetuate the myth that sensible, Keynesian economic policies like you advocate are part of a slippery slope to "Socialism" (meaning fascism with no democratic freedom as opposed to the real meaning, which is a government that protects the poor from being exploited by the rich) then we will never get the change that most average Americans including you and me actually want. 

Your fear of immigrants and demand for "English-only" is an important part of the problem. Who wants to pay their fair-share of taxes if you are also afraid that your money is going to help people like "welfare queens" even though they represent an incredibly small percentage of users of our safety nets?"

If "Oldfoxbob" is indicative of many Americans, it confirms Michael Moore's hypothesis that the vast majority of American's want the policies of Democrats, but are afraid to vote for them....in the case of "Oldfoxbob", apparently because they are also afraid of a diverse America.

The Kucinich Amendment

State-backed (ie California, not Federal) single-payer is not Totalitarian Socialist health care, much as Fox News would have you believe. Evidence is mounting that even with a public option, there will be little pressure on insurance companies to lower rates.

I support the Kucinich Amendment. State-backed single-payer initiatives like they have in Massachusetts appear to be the best way to bring costs under control. Private insurance companies can still offer their plans and supplemental services. You can opt-out and buy the "private option," (much as we have single-payer public education and you can opt-out for private schools), which disproves fear-mongering right-wingers' assertions that private industry will disappear from America as liberal, well-educated elites attempt to implement a state-controlled, Marxist economic system via Emperor Obama's iron-fisted rule!