The core dilemma of our economics

Let's dive into some of the most fundamental aspects of the economics you rely upon. And this won't be dry! We'll get to the very heart of it.

First though, a couple of political riffs. Like could Amy McGrath unseat Mitch McConnell?  Look, I touted her to the sky. But like Beto, she did not win her intermediate goal. Still, I am inclined to say – you go grl. Love then money.

This guts a core confederate incantation. States that voted Democrat in 2016 generally rely less on federal funding than Republican states. Thirteen out of the top 15 states found to be most dependent on the federal government voted for President Donald Trump in the 2016 presidential election. Ten out of the 15 least dependent states voted Democratic.

Yes, poverty-wracked New Mexico and Mormon Utah are outliers, with Mormons giving serious thought to dropping their loyalty to a party of mafiosi, sexual perverts and traitors. Kansas doubled down on Supply Side insanity and crashed every part of their state’s health.

We'll add a few more political riffs at the end. But for sure you really must read this from the LA Times, listing all the many ways the GOP is trying to crush the power of voters in red and purple states, openly defying citizen rebellions against gerrymandering and concocting truly blatant cheats to prevent citizen empowerment. Seriously, you won't believe the long list of outrages. 

Their justification? Suppression of "mob rule." As opposed to their agenda. Rule by the Mob.

== The core dilemma of our economics ==

Probably the most clear and cogent explainer of economics issues is Robert Reich. This video shows clearly what's happened to wealth disparity in America.* Watch it, if you do nothing else. 

Joseph Stiglitz - Nobel laureate in economics - shows how "capitalism" can be defined the way the Greatest Generation did, under the FDR era social contract, as entrepreneurship where genuine wealth rewards come from delivery of ever-better goods/services under flat-fair-competitive-open conditions while a regulatory system prevents most cheating or evasion of externalities (like labor conditions or environmental impact), while society invests in children and justice and infrastructure to maximize (as F.Hayek recommended) the number of skilled, eager, creative competitors. 

This capitalism of Adam Smith thrived during the Greatest Generation, achieving unequaled rates of growth and opportunity and justice. It was hated by (guess who?) the oligarchy.

Or else capitalism can be defined the way Milton Friedman, Ronald Reagan and (ironically) Karl Marx and today's youths do - a system of unregulated rapacious feeding off the commonwealth and the future, with secret connivings, self-dealings and unbridled cheating leading to devastation of the middle class and wild market swings in which the predatory consolidate into a new, feudal oligarchy of the kind Smith denounced, while Marx rubs his hands, predicting inevitable (and it is) revolution.

These two experiments, 1935-1980 and 1981-2019 -- were both "capitalist." One showed steady rises in every metric of societal health and social justice and middle class strength. 

The other featured endless demands for experiments in handing over wealth to be managed by aristocrats. Supply Side tax gushers into their maws... and Federal Reserve policies that encouraged binges of unprecedented borrowing. Both were meant to spur the rich to invest in factories, productive capacity ("supply"), jobs, workers and R&D, resulting in ever-higher growth and deficit-erasing tax revenues.

None of that happened. Ever. Even once. At all. (In science that record refutes a theory.) 

Instead, the gushers were spent as Adam Smith said they'd be - on passive, rentier asset bubble inflation and on cheating -- electoral, financial, monopolistic and propaganda. With intermittent bubble-pops and a skyrocketing accumulation of debt. And yes, Adam Smith predicted all of those, and every predicted outcome happened.

One RASR (Residually Adult-Sane Republican) economist I know sees all this, but blames the Fed and only the Fed for low interest rates. But no one held a gun to the oligarchy, demanding they borrow, then put none of it to real economic work. 

Let's put it in terms even a RASR can understand. When it comes to skyrocketing debt there are three parties to this crime:

- the Fed, who offered easy borrowing.

- Republican Congresses who gave the rich gift-gushers of Supply Side voodoo rape.

- the Rentier-CEO-oligarchy recipients of all this, who bribed to twist policy and reaped both rewards.

Today's RASR conservatives blame just one of the three. Arguably the least-guilty. Let's paraphrase the excuse:

“Oh, no! The Fed made money so cheap I just HAD to borrow it to pump trillions into rentier asset bubbles and never productive capital or R&D! It’s not my fault! Those Fed whores wore short skirts and plunging necklines and seemed cheap! It’s all her fault for tempting me‼ Tempting me into.... borrowing! And gambling it all.”

Stiglitz puts it differently than my stark portrayal of looming class warfare. His prescription "begins by recognizing the vital role that the state plays in making markets serve society. We need regulations that ensure strong competition without abusive exploitation, realigning the relationship between corporations and the workers they employ and the customers they are supposed to serve. We must be as resolute in combating market power as the corporate sector is in increasing it."

In contrast I say it as "regulations are needed to reduce the natural human tendency to cheat, plus raising up the max number of competitors, both of them entirely justifiable under Smithian capitalism."

But read his missive. It overlaps with my summary, though without my own (patented) referrals to historical seers like Smith & Marx.

== Politics Redux ==

Lest you run out of examples of Two Scoops’ pettiness and mafia tendencies (as if you ever could; where do you think I got his nickname?) Remember former Deputy FBI Director Andrew McCabe? He spent his adult life chasing badguys for us, but Fox calls him — and hundreds of thousands of other skilled professionals — “Deep State” villains, because they dare to notice today’s cesspool. A consummate pro.

And Trump fired McCabe from the FBI just 26 hours before his retirement was set to take effect, denying him his full pension. And Fox & Foxzoids chortled with glee over this, as when they deny aid to disaster victims in blue states. These may be our countrymen (and we should not behave likewise toward such jerks). But they are not ‘citizens.’ 

Consider the members of Trump's circle who apparently ignored his orders - according to the Mueller Report. Again and again I despair over any Democrat realizing what a political judo-jugular strike can be. In this case, setting aside the details of any particular case, anyone from Biden to AOC could say: 

Across all of U.S. history, no twenty presidents were ever "betrayed" by so many former "great guys." Whatever your politics, one truth shines through -- Donald Trump is a terrible judge of character.

== lagniappes ==

First: Watch 19 vivid seconds as the puppet enters behind them... Remind your RASRs this happened right after MBS and Putin each ordered enemies whacked on the soil of NATO allies.

Amid our Putin obsession remember that the Bush family is a cadet branch of the Saudi Royal House and did their bidding as much as Trump does Russia's. 

This round of the civil war, the confederacy finally got its 1860s dream -- foreign help... and masters. And lest we forget who has benefitted from the deliberate destruction of our alliances... recall this image of Trump greeting Putin.  Good doggy.

Wiley Miller's April 18 Non-Sequitur comic nailed the problem of 60,000 years and the fundamental flaw of capitalism... or feudalism or communism. Those who reach the top - even if they competed fairly to get there - will tend to cheat in order to stay there, and give their sons unearned power over the children of others. 

This - along with our human propensity for delusion - explains nearly all of the horrid litany called "history." It is why geniuses finally innovated methods to divide power enough to force elites to keep competing fairly. Constitutional division. Breaking up monopolies. scientific debate, etc. 

Kings, lords, chieftains and commissars never accomplished what this new method has... and so, all those varied types of mafiosi are now ganging up against the new way. If they win, they won't let it be tried again. And we'll lose the stars.

Wiley's cogent cartoon efficiently make a second point. That it's easy to convince romantics to love their tyrants. In 1861 a million poor white southerners fought and died for their plantation slave-lord class oppressors. As other confederates did in 1778, 1830, 1852 and other phases of the US Civil War. And as they do today, hating (at Fox-behest) the "elites" of fact and brains who gave them everything. Because smart people are the one force standing in the way of a return to feudalism.

And because we keep "stealing" their brightest children.

=====

* And this is one reason why I've already decided on one aspect of the race for the Democratic Party nomination in 2020. I have various ranked opinions about the top of the ticket. I'm hoping to learn more about Inslee, for example. And I am SO aboard for Buttigieg 2028!  But the one thing I've decided to be passionate about is Elizabeth Warren for Vice President! She would be unleashed to take that town with unconstrained ferocity... while getting the executive experience she now totally lacks. 

==== Housekeeping note! ====

I have been amazed for years how this blog, one of the oldest on the Web and a comment community that's among the best, has been able to maintain a mostly open comment policy, in an era rife with loonies and anonymous trolls. Every few years I am forced to shut down anonymous postings, when some obsessive jerk decides he has nothing better to do than poop where he's not wanted. You all can still post via your google accounts. If necessary, I will go to moderated posting. Tnaks for remaining among the brightest.