July 31, 2009

Happy Days Are Here Again

It's good that the recession is over. I don't know how much more we could have taken. Things should shortly return to normal, the Dow should move back up to 14,000, unemployment will move below 5%, and housing prices will regain their 2006 levels. It was a close call but effective and timely government intervention saved the day.

With housing prices restored, equity borrowing and refinancing can resume and the consumer economy will become again the dynamo of world commerce. Chinese manufacturers will have a reliable market for their goods, the Big 3 automakers in the USA will rehire their laid off assembly line workers, oil prices will stabilize, and inflation will remain under control.

The war in Afghanistan, thanks to the Obama surge, will at last be won and added to the victory column next to Iraq.

State and local governments will balance their budgets, tax revenue will increase, Social Security will remain solvent and Medicare will continue to provide health care to the aged.

The very land will flow with milk and honey, a heavenly choir will sing at sunrise, and a lamp will appear at your feet to light your way at night.

It was a near thing. I hope we've learned our lesson.

July 30, 2009

Chalmers Strikes Back at the Empire

I remember Chalmers Johnson as a preternaturally dynamic professor with a delivery and a voice timbre somewhere between John Cameron Swayze and Jack Benny, if that does anything for you. He was teaching politics of the Far East those days, and he seemed to stop by the class in Wheeler Auditorium on his way to doing something much more important. Such as counseling the government or reading top secret reports from the Rand Corporation. Anyway, he was intellectually intimidating, to say the least, as he addressed us in that staccato, metallic voice.

He was conservative in those days and always seemed faintly disgusted by the radical hijinks going on outside on the Berkeley campus, an impression of him which turns out to be the case, I learn by reading his late writings. Which makes his current position on the American Empire, and his Nemesis trilogy, both surprising and more credible. He's out today with a new post (which can be found on both the Smirking Chimp http://smirkingchimp.com/thread/23038 and Huffington blogsites) where he discusses the 800 pound gorilla that no one ever wants to disturb as they discuss health care reform, or American solvency or our impending bankruptcy. Namely, what to do about those 700 to 800 bases, forts and other military installations the United States maintains around the world, with their huge expense, or what to do about those two ruinously expensive and completely superfluous wars we keep fighting - all against a backdrop of a federal deficit this year of $1.8 trillion dollars.

Chalmers sticks to the official Pentagon number this time around, about $664 billion, which does not count, of course, the "supplementals" for Iraq and Afghanistan; but elsewhere, he does a pretty convincing case of demonstrating that the total outlay for defense and security, honestly counted, approaches $1 trillion per year. I see in the health care debates that Congress and the White House are fighting for the high ground on whose plan will be "deficit neutral." This is such a bad joke. The Republicans chortle that the plan, which, after all, is only concerned with the health and wellbeing of the American people, would cost $1 trillion over ten years, and the Democrats fight mightily to demonstrate this is not the case, that it could all be paid for by "taxing the rich," or employer mandates, or some other conjurer's trick. Suppose it did cost $1 trillion over ten years; gee, where could we get the money?

No one, including our Change Agent new President, ever even brings up the idea of slashing our insanely-too-expensive military budget. Johnson quotes all of Obama's recent speeches to the National Defense University and to the graduates of Annapolis that no matter what happens, America will continue to dominate the world militarily, that we will have unchallenged supremacy. He's so very good at knowing exactly what his audience wants to hear. Of course, in Washington this is simply what almost everyone says. Nothing else is even vaguely admissible.

Other countries don't maintain an archipelago of foreign forts and bases. Only we see the need. We spend just about half of everything spent in the world on defense, but it's never quite enough, because Obama's budget, half of which represents borrowed money, increases the defense budget over Bush's last budget. If we don't figure out how to rein in this spending, nothing else is really possible. The tax base of our sinking economy is not going to produce excess revenue to fund vital domestic needs. $250 billion could be saved annually simply by dismantling the foreign empire of military installations, and another $100 billion could be saved by ceasing the inanity of these pointless conflicts in Iraq and Afghanistan. That's about half of the official Pentagon budget including the supplementals.

Some measure of fiscal rationality could therefore break the surface. But it never even gets discussed, which is one sure way of telling that the august solons and executives in Washington D.C. are not at all serious about responsibility or "change" or anything else that would really help. And until they do come around to that realization (which, as Chalmers sadly notes, will probably not happen until events force them to confront the spectre of bankruptcy), there is really almost no point in following the health care debate, cap & trade, or Barack's keggers with cops and profs.

July 29, 2009

The Parallax of Nostalgia

I consider it one of my minor contributions to public discourse: coining phrases. This is much easier than research, after all, which is painstaking and time consuming. The parallax of nostalgia is the term I have settled on to explain that nagging problem which hinders so much in the way of progress in the United States: the belief in American Exceptionalism. Clinging to this delusion makes it very difficult to come to terms with what actually has to be done to rejoin the First World, instead of sinking into the debt-ridden obsolescence of a banana republic or Soviet-style collapse.

We can recall the parallax phenomenon from our geometry or astronomy classes, or we could if American schools still taught geometry or astronomy or if there were still American schools. Leaving such caveats aside - broadly speaking the parallax error is introduced by looking at a phenomenon from a different angle; for example, if you have a needle type speedometer, a passenger in the front seat may complain that you're going too slowly (particularly if he is an older Jewish person from New Haven now living in Florida). This error in perception is because the needle appears to be slightly to the left of the numeral which it is actually above because of the different angle of perception.

I borrow the parallax idea to explain the misperception about America so common to my generation and those older. In my case, for example, my mental matrix or "trance" concerning my Homeland (which we never called the Homeland then) was formed during the heyday of American dominance, the 1950s. At that time America stood astride the world like a Colossus. About 67% of everything manufactured in the world was made here, "Made in America" was a guarantee of quality, General Motors was not only the largest car manufacturer in the world but the largest company, period. Chevrolet, all by itself, was bigger than Toyota, Mercedes, Volvo, Fiat, et cetera. Militarily, no one could touch us, despite the hysterical ranting of the Right Wing and their lies about a "missile gap" with the Soviet Union.

Things have changed just a little bit. It's true that militarily we still stand alone, the result of concentrating almost all of our public resources on this one enterprise. For day to day living, however, there is a limit to the utility of a large store of hydrogen bombs. For many people who have never thought it through, the gross slippage in the quality of American life has been masked by this "parallax of nostalgia," the distortions caused by the attempt of a consciousness formed in another era to see the present.

A modest example. A few summers ago, I was in Germany with my daughter for a few weeks. Having 3 or 4 days on our hands at the end of the trip (she had spent most of her time with the exchange student from Ulm who had lived with us for a year and attended our local "high school," although her academics were hamstrung by the inability of the school's math or science departments to offer any course she hadn't already covered by the eighth grade), my daughter and I decided to take a train trip up the Rhine to see the cathedral in Cologne, as well as the superb modern art museum in that fair city. So we did. Our flight was scheduled out of Frankfurt on the third day, so rising at a reasonable hour that morning we boarded the Neubaustrecke - Koln/Rhein-Main Inter-City Express at the Cologne main train station. Color-coded squares along the platform told you exactly where to stand so you could easily board your car and take your reserved seats. These seats were leather recliners with reading lights, and everything in the car was scrupulously clean. The train covered the 177 kilometers (110 miles) in about 70 minutes. The ride was so smooth you were barely aware of motion. The train went directly to the Frankfurt Airport, arriving downstairs an escalator ride away from the check-in lobby.

This line was rebuilt between 1995 and 2002 at a cost of about 6 billion Euros, which in those days was about the same amount as in dollars. The engines had to be very powerful to maintain speed over some stretches where the train pulled a 4% grade, and of course the railbed needs to be buttressed to ensure safety at high speeds. $6 billion is about what the United States spent every three weeks in Iraq during the height of the war ($2 billion per week being the most often quoted figure). If you look to the clock on the right, you'll note we're inching up on $670 billion for Iraq at this point, and this is the simplest calculation of the cost - money out the door so far. Using my 1950s math skills, I conclude that the United States could have built about 112 Neubaustrecken of its own with the same money during the same time period, or about 12,320 miles of high speed track. This is enough to connect many of America's main metropolitan areas with German-quality Inter-City Expresses.

Everyone more or less concedes now that the Iraq war was simply an act of political idiocy. I don't think we often stop to consider how much our stupidity costs us. I could quit right there, but I noted recently that Tom Friedman, the "porn-'stached" columnist for the New York Times (Matt Taiibi came up with that absolutely priceless image), and a major cheerleader for the Iraq war, was writing one of his usual pugnacious columns about our "competition" with China where he noted:

"Eventually, I decided that the only way to respond was with some variation of the following: “You’re right. It’s your turn [to use dirty energy]. Grow as dirty as you want. Take your time. Because I think America just needs five years to invent all the clean-power technologies you Chinese are going to need as you choke to death on pollution. Then we’re going to come over here and sell them all to you, and we are going to clean your clock — how do you say ‘clean your clock’ in Chinese? — in the next great global industry: clean power technologies. So if you all want to give us a five-year lead, that would be great. I’d prefer 10. So take your time. Grow as dirty as you want.”

Clearly, Friedman has an advanced case of Parallax Nostalgia, yet he is the kind of "opinion-maker" who dominates our national conversation about such things. Earth to Friedman: the technologies have already been invented. Israel, Germany, Denmark and China lead the world in wind turbines, Germany and Japan have a huge headstart in photovoltaics, and China is already manufacturing all of this stuff. You're dreaming. That huge military establishment you're so fond of, enabling you to travel to all of America's "theaters of war," ensures that we're not going to clean anyone's clock, except maybe literally, as one of the "service industries" we specialize in.

July 27, 2009

My anger issues

I'm not actually angry at anyone or anything. I'm a little too dispassionate and philosophical for that. I keep my "thought diary" as Orwell suggested, which records the evolving American scene, and since I'm not (a) a religious zealot or (b) an uber-capitalist, I find it dismaying and depressing at times, but it's still possible in this country to live a satisfying life. Mostly, things still work, after all. The police and fire departments still respond, there are groceries at the store, gasoline at the pump. The emergency rooms are open for business. I can indulge myself in my pursuits of interest. This state of affairs is likely to persist for the foreseeable future.

I think it's wise to conduct one's life in light of reality, that reality which is likely to (a) "interface" with yours and (b) which magical thinking will not dispel. For example, financial commentators keep reporting on the latest outrages to emanate from the New York Stock Exchange. Now it's that Goldman Sachs (and undoubtedly others) have gamed the system by anticipatory computer programs which use algorithms to detect the direction of trades by the general public and other Suckers and use the milliseconds of delay built, conveniently enough, into the Exchange's computer systems to extract tiny advantages, multiplied millions of times over until it becomes real money. Such as the huge profits which Goldman mysteriously continues to pile up in a depressed economy. This HTF scandal (High Frequency Trading) takes its place in the queue with the old scandals involving preferential treatment of insiders by mutual funds; "laddering" of IPOs by the investment bank underwriters; the sale of fraudulent derivatives and corruption of the ratings agencies; and general insider trading, all of which were attacked by the Sheriff of Wall Street, Eliot Spitzer. So of course he had to go.

In some sense I suppose it's still possible to make money as a general-public investor, in the same sense that "liberal" slots in Reno will also allow you to make money. You simply have to recognize the game is rigged and accept those gains which the Big Boyz leave on the table for you. Their return is guaranteed, because they cheat. Yours is subject to the whims and vagaries of the market. Any reform of these outrages, we know going in, will be tepid and ineffectual.

Does pointing that out make me an Angry Person? I don't think so. It just makes me someone without a dime invested in the stock market (see rules above). If I had a high speed computer located a few feet from the NASDAQ mainframe, like Goldman Sachs, and could use algos to guarantee my returns, and I had no conscience whatsoever as the Gnomes of Wall Street do not, then - bonanza! But that's not the way it works.

Similarly, the corruption of Congress is now so complete that it's become one of the "factors" that everyone openly considers in adjudging the outcome of legislative battles. Think about that one. When Greg Palast wrote The Best Congress Money Could Buy he was considered something of a crank and conspiracy theorist. Simply a prophet not honored in his prime, that's all. Now we have websites such as Opensecrets.org, which tell you to the dollar who's on the take. It's a bipartisan game, to say the least. Some of these pols, such as Chuck Schumer and Dick Durbin, have enormous war chests overflowing at any given moment, and as pointed out here too many times, it seems unlikely that Schumer's advocacy for the hedge fund manager's exemption from ordinary income tax rates (they're allowed to use capital gains rates) is coincidental. Wall Street is his home turf.

American commoners can compete with Big Money at the presidential level; Barack Obama raised more than $650 million from individual donors. But at the less glamorous level of Congressional races, we don't have a chance mixing it up with the lobbyists. And Congress is where the laws are written (or where the lobbyists write the laws). The influence of Big Money tends to ossify Congress by keeping old, malleable and corrupt members permanently in power, and the ongoing process of concentration of wealth in this country means that Big Money is in fewer and fewer hands (a process accelerated by Congressional passage of tax reduction laws at the high margins). So they can dictate the parameters of allowed "reform," which is why Congressional enactments tend to look like votes of confidence for the status quo. The Bankruptcy "Reform" Act (improving the position of credit card companies versus the individual bankrupt), the anemic "cap and trade" bill for global warming, the tiny little "victory" in voting down a completely unnecessary piece of military hardware (the F-22 - although, Senator Boxer, don't think I didn't notice that you voted to keep building them.) And on and on.

The McCain-Feingold Act on campaign finance reform set limits on "soft money" and on the maximum amount of money that any individual can contribute to a candidate, but when they pass the hat at Goldman Sachs they come up with a lot more money than you do. The systemic corruption of Congress (Washington generally) means that responses to crises will always look like grudging accommodations, and more often simply token gestures. This is why we do not have a real public transportation system in this country, nor socialized medicine, nor a progressive energy policy, nor fuel efficiency standards, nor an FDA which actually protects public health, nor...And why we do have a massive military establishment and armaments industry, and why we fight wars all the time which are not only unnecessary, but counterproductive.

If you're not outraged, you're not paying attention. Still, I'm not angry. It's all very interesting in a macabre way. The energy flowing through a system defines the system, as the engineers say, and the energy in American government life comes from concentrated wealth flowing through public media (where advertising is done) to the election of corporate bag men who keep things profitable for their bosses. As to health care reform, this is more the exception that proves the rule. It must be a measure of how absolutely dire the problem has become; the situation is so desperate that even Congress has been backed into such a corner that assisting the general public is the only way out. Otherwise, Congress would do nothing.

Wow -- I had no idea the health care system had gotten that bad.