after noting that there was a bubble and the real risks that such a bubble posed, after recognizing that he had the tools with which to at least dampen it, he did nothing about it, other than to join the analysts and others on Wall Street in egging the bubble on. And then, when he should have helped a clearly inexperienced administration craft an economic policy to quickly get the economy out of its downturn, he endorsed a tax cut that was clearly not designed to stimulate the economy and it did not do so. As an economist, he surely knew it was doomed to failure. His position was even more curious given his longstanding concern about deficits. Yet the policies that he recommended had the predictable consequences of a return of the huge deficits that he had so roundly urged Clinton to eliminate a short decade earlier. The passage of a year has only made clearer the magnitude of Greenspan’s misjudgments.
Stiglitz laat zien hoe in de jaren negentig, na een decennium neoliberalisme, het politieke beleid van Washington, ingefluisterd door de financiële macht op Wall Street, rampzalige vormen aannam voor het merendeel van de wereldbevolking, inclusief de Amerikaanse arbeiders- en middenklasse. Over Greenspan stelt hij:
Worse still, when he finally tried to come to terms with the mounting deficits, he urges not a repeal of the tax cuts for the rich but further expenditure cuts — cuts that, given the war in Iraq and the war against terrorism, would inevitably cut back the very investments in research and education that underlay sustained growth. This was particularly peculiar, since he had based his cheerleading of the bubble on what has come to be called techno-optimism, that the seeming sudden burst in the increase in productivity experienced by the economy in the latter half of the nineties would continue into the future. How would that be possible without these investments?
Similarly, while in the original support for the first tax cuts, in 2001, he provided reassurances to those who were worried that funds put Medicare and Social Security on a sound basis might be compromised, now, as the budgetary situation has worsened, as was predictable — and predicted — he has again changed course. There are but two ways that the budget shortfall can be addressed: raising taxes cutting expenditures. While investments in education and tech will be compromised, so will these social programs. (With military expenditures increasing, given the limited size of all the other programs put together, there is no alternative.) By coming out against reversing the tax cuts, he has put Social Security and Medicare in jeopardy.
Of course, as an individual, the chairman of the Fed is entitled to his opinion, whether supported by economic theory or evidence. But his stances have made clear that he has used, and continues to use, his position of authority and the independence of the Fed, to advance partisan policies and policies which reflect a particular set of values. They are not just the views of an experienced technocrat.
As Piketty notes, people like Milton Friedman, an academic economist, were doing rather well in the economy, likely sitting in the top 10 percent income level, and to them, the economy appeared to be doing just fine and rewarding talents and merits very nicely. But the Friedmans weren’t paying enough attention to how the folks on the rungs above them, particularly the one percent and even more so the .01 percent, were beginning to climb into the stratosphere. The people doing that climbing were mostly not academic economists, or lawyers, or doctors. They were managers of large firms who had begun to award themselves very prodigious salaries.
This phenomenon really got going after 1980, when wealth started flowing in vast quantities from the bottom 90 percent of the population to the top 10 percent. By 1987, Ayn Rand acolyte Alan Greenspan had taken over as head of the Federal Reserve, and free market fever was unleashed upon America. People in U.S. business schools started reading Ayn Rand’s kooky (maffe. svh) novels as if they were serious economic treatises and hailing the free market as the only path to progress. John Galt, the hero of Atlas Shrugged(1957), captured the imaginations of young students like Paul Ryan, who worshipped Galt as a superman who could rise to the top through his vision, merit and heroic efforts. Galt became the prototype of the kind of ‘supermanager’ these business schools were supposed to crank out.
Since the ‘80s, the top salaries and pay packages awarded to executives of the largest companies and financial firms in the U.S. have reached spectacular heights. This, coupled with low growth and stagnation of wages for the vast majority of workers, has meant growing inequality. As income from labor gets more and more unequal, income from capital starts to play a bigger role. By the time you get to the .01 percent, virtually all your income comes from capital — stuff like dividends and capital gains. That’s when wealth (what you have) starts to matter more than income (what you earn).
Wealth gathering at the top creates all sorts of problems. Some of these elites will hoard their wealth and fail to do anything productive with it. Others channel it into harmful activities like speculation, which can throw the economy out of whack. Some increase their wealth by preying on the less well-off. As inequality grows, regular people lose their purchasing power. They go into debt. The economy gets destabilized. (Piketty, and many other economists, count the increase in inequality as one of the reasons the economy blew up in 2007-’08.)
By the time you get to 2010, U.S. inequality, according to Piketty’s data, is quantitavely as extreme as in old Europe in the first decade of the 20th century. He predicts that inherited property is going to start to matter more and more in the U.S. as the supermanagers, the Jamie Dimons (American business executive. He is Chairman and Chief Executive Officer of JPMorgan Chase, the largest of the big four American banks svh) and so on, bequeath their gigantic hordes of money to their children.
Kenmerkend voor een mainstream-opiniemaker als Ian Buruma is dat hij bovenstaande- en onderstaande informatie angstvallig verzwijgt wanneer hij een ‘populist’ als Trump ervan beschuldigt ‘de rancune in de lagere klassen tegen de elite’ te mobiliseren. Daarentegen probeert ook de prominente Amerikaanse econoom en ‘researcher at the Levy Economics Institute at Bard College, former Wall Street analyst, political consultant, commentator,’ professor Michael Hudson serieus in te gaan op de achterliggende oorzaken van de woede op de neoliberale Democraten en Republikeinen die op zijn minst de indruk wekken in dienst van Wall Street te staan. Tijdens een lezing begin mei 2018 in Peking verklaarde Hudson:
Following this ideology, Alan Greenspan aborted economic regulation and decriminalized financial fraud. He believed that in principle, the massive bank fraud, junk-mortgage lending and corporate raiding that led up to the 2008 crisis was more efficient than regulating such activities or prosecuting fraudsters.
This is the neoliberal ideology taught in U.S. and European business schools. It assumes that whatever increases financial wealth most quickly is the most efficient for society as a whole. It also assumes that bankers will find honest dealing to be more in their economic self-interest than fraud, because customers would shun fraudulent bankers. But along with the mathematics of compound interest, the inherent dynamic of finance capitalism is to establish a monopoly and capture government regulatory agencies, the justice system, central bank and Treasury to prevent any alternative policy and the prosecution of fraud.
The aim is to get rich by purely financial means — by increasing stock-market prices, not by tangible capital formation. That is the opposite of the industrial logic of expanding the economy and its markets. Instead of creating a more productive economy and raising living standards, finance capitalism is imposing austerity by diverting wage income and also corporate income to pay rising debt service, health insurance and payments to privatized monopolies. Progressive income and wealth taxation has been reversed, siphoning off wages to subsidize privatization by the rentier class.
This combination of debt overgrowth and regressive fiscal policy has produced two results. First, combining debt deflation with fiscal deflation leaves only about a third of wage income available to be spent on the products of labor. Paying interest, rents and taxes – and monopoly prices – shrinks the domestic market for goods and services.
Second, adding debt service, monopoly prices and a tax shift to the cost of living and doing business renders neo-rentier economies high-cost. That is why the U.S. economy has been deindustrialized and its Midwest turned into a Rust Belt.
https://www.unz.com/mhudson/creating-wealth-through-debt/
is responsible for today's economic polarization (the 1% vs. the 99%) via favored tax status that inflates real estate prices while deflating the ‘real’ economy of labor and production. The Great 2008 Bailout saved the banks but not the economy, and plunged the U.S., Irish, Latvian and Greek economies into debt deflation and austerity.
Hudson bewijst:
how the phenomenon of debt deflation imposes austerity on the U.S. and European economies, siphoning wealth and income upward to the financial sector while impoverishing the middle class.
Tijdens de bijeenkomst aan de Universiteit van Peking zette hij uiteen dat:
Debt grows exponentially, burdening the economy and finally bringing its expansion to an end with a financial crash. That descent into bankruptcy, foreclosure and the transfer of property from debtors to creditors is the dynamic of Western finance capitalism. Subjecting economies to austerity, economic shrinkage, emigration, shorter life spans and hence depopulation, it is at the root of the 2008 debt legacy and the fate of the Baltic states, Ireland, Greece and the rest of southern Europe, as it was earlier the financial dynamic of Third World countries in the 1960s through 1990s under IMF austerity programs. When public policy is turned over to creditors, they use their power for is asset stripping, insisting that all debts must be paid without regard for how this destroys the economy at large.
China has managed to avoid this dynamic. But to the extent that it sends its students to study in U.S. and European business schools, they are taught the tactics of asset stripping instead of capital formation — how to be extractive, not productive. They are taught that privatization is more desirable than public ownership, and that financialization creates wealth faster than it creates a debt burden. The product of such education therefore is not knowledge but ignorance and a distortion of good policy analysis. Baltic austerity is applauded as the ‘Baltic Miracle,’ not as demographic collapse and economic shrinkage.
The experience of post-Soviet economies when neoliberals were given a free hand after 1991 provides an object lesson. Much the same fate has befallen Greece, along with the rising indebtedness of other economies to foreign bondholders and to their own rentier class operating out of capital-flight centers. Economies are obliged to suspend democratic government policy in favor of emergency creditor control.
The slow economic crash and debt deflation of these economies is depicted as a result of ‘market choice.’ It turns out to be a ‘choice' for economic stagnation. All this is rationalized by the economic theory taught in Western economics departments and business schools. Such education is an indoctrination in stupidity,
en gezien het feit dat professor Hudson net als Ian Buruma verbonden is aan het Bard College in het gehucht Annandale-on-Hudson, niet ver van New York, kennelijk nooit iets heeft gelezen van deze wereldberoemde Amerikaanse econoom, voormalig Wall Street analist, politiek consultant en commentator. En toch is Hudson in staat uiterst helder uiteen te zetten hoe juist het parasitaire neoliberalisme de gastheer dood, te weten de westerse samenleving.
https://michael-hudson.com/2018/05/creating-wealth-through-debt-the-wests-finance-capitalist-road/
Het getuigt dan ook van een grote mate van doortraptheid dat Buruma, nog voordat Trump tot president was gekozen, de Republikeinse presidentskandidaat de schuld gaf een opruier te zijn van ‘disaffected white Americans who feel that they are being left behind,’ terwijl Buruma tegelijkertijd moest toegeven dat ‘a broken education system leaves too many people at a disadvantage,’ en dat in ‘the past, there were enough industrial jobs for less-educated voters to make a decent living. Now that those jobs are vanishing in post-industrial societies, too many people feel that they have nothing more to lose,’ en dat deze ontwikkeling weliswaar voor ‘many countries’ geldt, maar dat ‘it matters more in the US, where putting a bigoted demagogue in charge would do great damage not only to that country, but also to all countries trying to hold onto their freedoms in an increasingly perilous world.’ Hier is sprake van het aloude ‘blaming the victim,’ te weten de slachtoffers van het parasitaire neoliberale beleid dat de westerse samenlevingen uitholt en de democratie vernietigt. Op zijn eigen wijze weet Buruma oorzaak en gevolg om te draaien, want een stem op Trump is het gevolg van onrecht, en juist dit onrecht is de oorzaak van het feit dat in 2020 meer dan 70 miljoen Amerikanen op hem stemden. Het is niet de ‘onverdraagzame demagoog’ Trump die het onrecht op gang heeft gebracht, maar het Amerikaanse Congres dat, in samenwerking met de Republikeinse- en Democratische presidenten, de arbeiders- en middenklasse in de steek hebben gelaten.
https://www.project-syndicate.org/commentary/americans-who-support-trump-by-ian-buruma-2016-10
Mijn oude vriend weet dit zelf maar al te goed, aangezien hij zich eerder genoodzaakt voelde te bekennen dat de Democraten zich al langere tijd hebben ‘toegelegd op zaken,’ waarmee ‘de lager opgeleide mensen meestal niet zoveel voeling mee hebben,’ omdat zij ‘hun banen zijn kwijtgeraakt.’ Desondanks blijven de Buruma’s van de westerse commerciële pers fulmineren tegen wat zij afdoen als ordinaire ‘populisten,’ en verzwijgen zij de oorzaken die tot hun opkomst hebben geleid, want dan zouden de broodschrijvers de belangen van hun broodheren in gevaar brengen. In de introductie van zijn opzienbarende boek The People, No. A Brief History of Anti-Populism (2020) — volgens The Financial Times een ‘call to arms against the plutocratic elites of both America’s main parties’ — herinnert de Amerikaanse auteur Thomas Frank zijn lezers eraan dat:
Now we stand chastened, humiliated, bewildered. Democracy? We tremble to think of what it might do next.
‘Government of the people’? When we open the door to ordinary people — let them actually influence what goes on — they will insist we make bigotry and persecution into our great national causes.
‘Government by the people’? When we let the people have their say — unmanaged, uncurated (ongecensureerd. svh) — some large part of them will choose the biggest blowhard (pompeuze opschepper. svh) on TV to be our leader. And then they will cheer for him as he destroys the environment and cracks down on migrant families. Heed the voice of the plain people and all the levees of taste and learning will immediately be swamped. Half of them will demand that minorities be consigned to the back of the bus; the other half will try to confiscate the hard-won wealth of society’s greatest innovators.
SO GOES THE wail of the American leadership class as they endure another year of panic over where our system is dragging them. They know on some level that what has happened in Washington isn’t due to majority rule at all, but to money and gerrymandering (valse voorstelling van zaken. svh) and the electoral college and decades of TV programming decisions. But the anxiety cannot be dislodged (verdreven. svh); it is beyond the reach of reason: the people are out of control. ‘Populism’ is the word that comes to the lips of the respectable and the highly educated when they perceive the global system going haywire (verstoord wordt. svh) like this. Populism is the name they give to the avalanche crashing over the Alpine wonderland of Davos. Populism is what they call the mutiny that may well turn the supercarrier America into a foundering (zinkend. svh)wreck. Populism, for them, is a one-word evocation of the logic of the mob; it is the people as a great rampaging beast. What has happened, the thinkers of the Beltway and the C-Suite (de politieke en bureaucratische elite. svh) tell us, is that the common folk have declared independence from experts and along the way from reality itself. And so they have come together to rescue civilization: political scientists, policy advisers, economists, technologists, CEOs, joining as one to save our social order. To save it from populism.
This imagined struggle of expert versus populist has a fundamental, almost biblical flavor to it. It is a battle of order against chaos, education against ignorance, mind against appetite, enlightenment against bigotry, health against disease. From TED talk and red carpet, the call rings forth: democracy must be controlled… before it ruins our democratic way of life.
In attacking populism, the object is not merely to resist President Donald Trump, the nation’s thinkers say. Nor is the conflict of our times some grand showdown of Left and Right. Questions like that, they tell us, were settled long ago when the Soviet Union collapsed. No, the political face-off of today is something different: it pits the center against the periphery, the competent insider against the disgruntled sorehead (ontevreden zeurkous. svh). In this conflict, the side of right is supposed to be obvious. Ordinary people are agitated, everyone knows this, but the ones whose well-being must concern us most are the elites whom the people threaten to topple.
This is the core assumption of what I call the Democracy Scare. If the people have lost faith in the ones in charge, it can only be because something has gone wrong with the people themselves. As Jonathan Rauch, a senior fellow at Brookings and a contributing editor to the Atlantic, put it in the summer of 2016: ‘Our most pressing political problem today is that the country abandoned the establishment, not the other way around.’
Een betere portrettering van de opiniemakers van de corrupte ‘corporate press’ heb ik tot nu toe niet gelezen. Het is een perfecte beschrijving van een broodschrijver als Ian Buruma. Volgende keer meer daarover.
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