Friday, May 29, 2009

My Therapeutic Rant on the Current Economic Madness

During the Vietnam War, a U.S. soldier seems to have anticipated the spirit of the current economic policy, explaining: "we had to destroy the village in order to save it." The difference today is that while the government destroys villages of the working classes, it is devoting enormous to improve the castles of the rich.

Anyone can see the care and feeding of bankers and financiers, while treating much of the rest of the economy with an iron fist.

The problem is compounded because alongside the federal stimulus, funding for state and local government is falling off the cliff, in effect, neutralizing much of the stimulus. This contradiction in economic policy is nothing new. A half century ago, E. Cary Brown showed him austerity in state and local governments undid much of the New Deal.

Brown, E. Cary. 1956. "Fiscal Policy in the 'Thirties: A Reappraisal." The American Economic Review, Vol. 46, no. 5 (December): pp. 863-66.

Nowhere is that policy divergence clearer than in California. A Republican minority blocks all tax increases. The budget deficit seems to increase by a few billions every few weeks. The answer is to eliminate welfare, slash payment to home healthcare workers, and decimate education.

I have been looking at papers by Greg Duncan showing the devastating effect of child poverty on children's productive capacity as they mature. In my forthcoming book, The Invisible Handcuffs, I discuss literature that compares the consequences of child poverty on brain development, an effect that resembles the impact of a stroke.

Conservatives worry about future tax costs, but what if the losses in the capacity to pay costs exceeds the presumed future burdens of public debt.


Daro said...

"we had to destroy the village in order to save it."

Irony is at its most delicious when it's unintentional. Like Bush's stumbling over "Fool me once.."

Dick Durata said...

The country is broken. No one in power has the courage to say it, so how can it be fixed?

TheTrucker said...

It may be that the middle class of California will not be able to stay in California long enough to vote in the next election. That is about 17 months and it is looking like all the middle class people may have to leave the state. There is no one left to remove the Republicans from office. The land owners love them and the illegals can't vote.

Unknown said...

LBJ reportedly demanded to know the name of the soldier who publicly equated saving the village with its destruction. It seems LBJ wanted to take revenge on the fellow!

Anonymous said...

So blame the republican minority for blocking taxes in California. i thought they had a vote and all of the tax increases were voted down. Ah that dam middle class trying to protect themselves.Other than your obvious bias a good post.

patrick neid said...

As a thirty year resident of San Francisco, California is getting what it fiscally deserves.

The comment about obstructionist Repubs is laughable. The problem is there are not enough of them. This is a one party state and has been for decades. The Governor is irrelevant--they simply speed up or slow down the train wreck of one party rule.

Like all one party states/countries unchecked excess leads to collapse. Welcome to spending gone amok, hello California. And in typical Stockholm syndrome the inmates think the guards don't have enough power!

"The beatings shall continue until morale improves"


Jack said...

"Welcome to spending gone amok, hello California." Patrick

I've got several siblings who have lived in Ca. for a long time now. One, like you, seems to always complain about how much money the state government pisses away. To listen to him Ca. is providing care and maintenance for every vagrant in the country. The other has been a civil servant for more than twenty years and never seems to think that the government is too generous. So what's the up shot of all the talk?

I've been to Ca. multiple times and I'm always on the look out for all those ne'er do wells who are living off the wealthy tax payers. Can't find them. There is a fantastic highway system that is always under repair or being expanded. You Canians do seem to drive long distances to do anything. To an outsider it is hard to see where all the waste in government spending is going. It certainly isn't obvious that the poor are enjoying any of it.

On the other hand Ahhnuld has found the only way to raise taxes that is allowed to him by you geniouses who vote on those state-wide propositions. Every one who works for the government is being "furloughed." That's the new and nicer way to say that their taxes have been raised. No, it's not actually a tax increase. That would have effected every one. It's a loss of pay instead for a select portion of the population. Are they people on the dole? No, they're working for a limited living. You don't get rich working for the government. So why are they bearing the brunt of Ca's assinine approach to state finances? Screw your employees, but don't raise your taxes.

Myrtle Blackwood said...

Speaking of one party. Here's last month's news on Obama (elected for change).

Obama Demands Right to Recruit Minors for Military
Atheo News ~ April 27, 2009

" 18% of Iraq war veterans return with traumatic brain injuries and 20% with diagnosed post traumatic stress disorder. "

TheTrucker said...

The solution is probably the same at all levels and it is to have a "sane" government. And a "sane" government does not alter the constitution with a 51% vote while requiring a 2/3rds majority to create a budget.

The next observation is that the people of California are very much underrepresented in their state government. The land owners and the special interests have far too much power because of the huge legislative districts and too few actual representatives.

It may be that the "direct democracy" of the "state initiative" has created this lack of attention to proper state governance. At present the people have no other voice in their state government in that the larger districts are gerrymandered to the hilt and all campaign funds are then spent to protect those members not already "locked in" by the gerrymander. Larger electoral districts are more easily gerrymandered even as more power is gained by money and the less power is held by local citizen action groups even without the gerrymandering. Mass media wins in large districts where a good "ground game" and local familiarity will win in smaller districts.

Unknown said...

“As a thirty year resident of San Francisco, California is getting what it fiscally deserves.”

Your belief that California deserves this fiscal crisis is consistent with the belief that Californians caused this fiscal crisis by creating high barriers to raising taxes to cover for revenue shortfalls.

I wonder if the state will have enough money for the jails, work camps, paramilitary forces, etc. needed to manage effectively the growing surplus population? I’d expect that the money will be found for these things.

TheTrucker said...

Dick Durata said...

"The country is broken. No one in power has the courage to say it, so how can it be fixed?"

I think that I must convince the people that will actually listen and think about the problem to appreciate my own analysis of the situation such that they will be "apostles" or "messiahs" in their own right acting to spread the word and creating the demand for real change.

Some of us are just not the "sign carrying, marching type" though we are the sort that will stand on a soap box and try to gather a crowd. Right now I am still in the stage of developing my case in a way that will absolutely convince people of the efficacy of better representation of the producer segment of the society in our government. I had thought that this would be easy and it is not. It is difficult to prove that water is wet and people have "beliefs" that are not easily shaken.

The folks at have recently created a forum for discussion concerning the lack of proper representation in our current government. The forum is at and all are invited to participate in the LIMITED discussion. There are essentially two strategies: Legal and political. In the political strategy it is necessary for people to understand WHY it is broken and also how to force the current owners of the government (the two major political parties) to change it. My own inclination is that ONLY the Democrats can be so compelled.

patrick neid said...

My general comment about California deserving its fate is based on our voting record every two years and in some cases more than that.

Every ballot measure in the state comes with a explanation from both sides. Every spending proposal came in very clear language what the long range cost would be. Year in year out the warnings were in very clear print.

The problem was/is that the opponents are almost always repubs or libertarians. That alone assured passage for the most part. It was guilt trip legislating, babies with flies on their faces by the Dems.

In my thirty years I cannot remember a major spending bill failing to pass either on the ballot or later through executive or court order, all financed with bonds. Combine this with a draconian overlap of regulations, territorial fiefdoms and a state government that relentlessly has grown faster than the population/incomes, never having been restrained and we finally find ourselves bankrupt. The miracle, massaged by immigration and bubbles, is that it did not happen sooner.

That is why I say we deserve it. Sooner or later this will all play out on the Federal level.

Anonymous said...

"...the consequences of child poverty on brain development, an effect that resembles the impact of a stroke."

Keep the ranting and the information and the analysis coming on this one, please.


Anonymous said...

I've switched from beer to malt liquor.

hapa said...

y'all know what a "filk song" is, maybe? a folk song from the science fiction future, or thereabouts?

i'm writing one about my descendants' lives 100 yeara from now...

it starts,

"i was born in
the dust bowl of

Michael Perelman said...

I quoted this in The Confiscation of American Prosperity:

Almost a century
ago, Supreme Court Justice Oliver Wendell Holmes wrote in a dissenting
opinion, “Taxes are what we pay for civilized society” (Holmes 1927)—but
Holmes’s decision represented a minority view both on the court and among
the rich.