The end of Rome is coming, in my listening of the fabulous History of Rome podcast, after countless episodes (~161). The capital of the Western Empire has been transferred to Ravenna, surrounded by impassable marshes and defensively superior to Milan or to Rome, the prior capitals. It is a stark admission that the Roman game from here out is defensive, not offensive. But where did the Roman empire reside? In the hearts and minds of people, not on a map. And when its rationale turned incoherent or sour, it died.
One has to consider the conversion of the Roman empire to Christianity as part of this story. While Christianity and empire coexisted quite well for another millenium in the Byzantine empire, there is an inescapable correlation between conversion and decline in the Western Empire. Perhaps decline came first, and conversion was a symptom, as the old gods fell off their pedestals, disbelieved. In any case, for the West, Christianity seemed incompatible with the traditional Roman empire. Emperors spent their time dickering about the consubstantiality of Jesus, rather than worshipping power, war and violence in frank terms, as they had done in times gone by. It would all have been to the good if what came after Rome was an improvement, but it is another lesson that virtually any governance is better than none. Darkness and anarchy were the dividends. It took a very long time for the Goths, Franks, Vandals, et al. to assume the mantle of cultural renaissance.
Today, we are in a loosely similar moment. The free market god was, up until just yesterday, globally ascendent and hardly contested. Even the last major holdouts in the pagan bloc, China and Russia, converted with some enthusiasm, and now brandish the cross of mercantalism and international trade as cudgels.
But lo, the financial crisis has exposed Milton Friedman's God as less than regal and perfect. The magic of unfettered markets has a dark side: a license to defraud and destroy the livelihoods and savings of millions of people, as well as institutions of long standing. The bull of greed charged through the china shop of our communities and public institutions, and remains on the loose.
Only a few decades ago, the US was far less doctronaire. It had strong government that had learned many lessons from the Depression and world war, which taught that the public good takes precedence over private markets. Markets are great tools, fostering freedom, efficiency, and (some) innovation, but they are fully dependent on the state and have various defects and dysfunctions which mean that we should never imagine that they replace the need for a state or substitute for it to any great degree. Quite the opposite- they depend on the services of the state, and the rest of us depend on state to protect us from them. The health insurance & care industry is a prime example. The pending obamacare program is going to save the private system from itself, making it more efficient and usable than it has managed to be on its own.
Additionally, we have always harbored socialist planning in the very heart of the free market temple- the firm. Which runs internally like some soviet factory with its bosses, its shirkers, its senseless bureaucracy, and the ability of the top brass to skim off the cream .. just because they can. Internally, it is a fundamentally political organization rather than an economic one.
Unfortunately, the current crisis has given us the worst of both worlds. A crisis not severe enough to impair free market fanticism among its most faithful flock, (who continue to throw fundamentalist tantrums, even taking hostages), but severe enough to selectively disempower the poor and weak. There was an edge of revolution in the Occupy movement, but the dominant faith was too strong, and the alternative insufficiently clear. We are now on a longer road ... hopefully to recover our strength through a lengthy deconversion process, changing the basic ideology of the US back to a mixed and well-regulated system (polytheism, one might even call it) that we already know from our own example, and many others around the world, has the capacity to be prosperous, equitable, and durable.
- Surowiecki on inequality.
- Stiglitz on inequality. "The gross domestic product of the United States has more than quadrupled in the last 40 years and nearly doubled in the last 25, but as is now well known, the benefits have gone to the top — and increasingly to the very, very top."
- The GOP has cost us $700 billion, and counting. And that isn't counting the latest week of antics from the clown posse.
- Annals of the easily led: Republicans wilt before faux-populist lobbyists.
- Annals of religious brainwashing, cont.
- Yet another Christian delusion.
- Some basic / applied principles from MMT.
- Bill Mitchell deconstructs one nobel prize winner.
- Even the Fed finds that QE is useless. "Currently the U.S. real GDP is about 10% below its long-run trend (see Figure 2) and total asset purchases stand at $3.7 trillion (or less than 25% of GDP). Our model predicts that this level of asset purchases (even if permanent) would have little effect on aggregate output and employment even though it could reduce the real interest rate significantly by 2 to 3 percentage points."
- Quote of the week: Andrew Fieldhouse on why inequality is getting worse, much worse:
"Meanwhile, the U.S. labor market is only about one-fifth the way to a full recovery; and as long as the jobs crisis festers, inflation-adjusted wages will stagnate or fall for the vast majority of workers."
"Recent U.S. income inequality data published by economists Emmanuel Saez and Thomas Piketty show that the top 1 percent of households by income has captured a staggering 95 percent of total income gains between 2009 and 2012, compared with 68 percent of gains between 1993 and 2012."
- And, Bill Mitchell on job creation:
"I have been to many meeting where policy makers, usually very well adorned in the latest clothing, plenty of nice watches and rings, and all the latest gadgets (phones, tablets etc), wax lyrical about how complex the poverty problem is. I usually respond at some point (trying my hardest to disguise disdain) by suggesting the problem is relatively simple. The federal government can always create enough work any time it chooses at a decent wage to ensure that no-one needs to live below the poverty line. Read: always!"
- And, Bill Black spells out the nitty gritty of lending fraud:
"It was lenders and their agents who overwhelmingly put the lies in “liar’s” loans."
"The fundamental point is that by 2006, fraudulent lenders were originating over two million fraudulent liar’s loans annually and that the only way to sell such loans to the secondary market was to compound the loan origination fraud with fraudulent “reps and warranties” about the quality of the loans."
- And, Yves Smith, on the next fixation of the right, not entirely without merit:
"So now you can see how the assault on public sector workers fits in. When I was young, teachers and government employees were modestly paid, but they did have job security and decent pensions. Now that the wages of well and even merely adequately paid private sector workers have been beaten down, suddenly these not all that terrific compensation levels arouse jealousy among the newly disenfranchised, who now demand that public sector workers join them in the race to the bottom. Once this sort of beggar thy neighbor attitude is institutionalized, and it has been in many circles, it’s hard to reverse. But if we are going to restore the standing of the middle class, it’s time to reject the notion of competitive pay levels which can be used to justify class warfare, and return to the older, successful model of sharing the benefits of productivity gains between workers and management, rather than having it all go to the rentiers."