This might be called, “practical economics.” It is a response to economic history and social commentary specialist Niall Fergeson’s article in NEWSWEEK and the somewhat intellectually spotty DAILY BEAST. The DAILY BEAST unfortunately is the kind of publication that would ask Michael Jordan to comment on golf and Tiger Woods to comment on basketball. Such is the state of our undisciplined and popular-gossip, derivative, Internet “journalism.”
So let’s have some fun attacking this Brit who wants to tell Americans…even our President…how to run the U.S. economy. And let’s give him a sound political-education thrashing while we’re at it. We will assume that it will make Dr. Joseph Stiglitz, Nobel Laureate in economics, smile again, as he does at the thought of Niall Ferguson asking barnyard economist, Paul Ryan, for economic advice. Which Ferguson has said he would do were he President. “The first thing I would do…” said Dr Ferguson, elite historian, is run right down to Congess to seek Ryan’s counsel.
Let’s start out with the basic theme of Niall Ferguson’s argument. The President should not be re-elected because he is certainly responsible for the poor economy and the “political mistakes” of the last four years. No one could say that this is an outrageous statement, but it is patently wrong and show a serious lack of understanding of American politics and cultural conditions. It is safe to say, however, that Ferguson is not only wrong, but he struck out on three straight pitches right down the middle.
We have no confidence in Dr. Ferguson’s numbers for one simple reason. We have checked them and they are wrong. Furthermore, given his numerous gaps in political knowledge…257 Republican filibusters of jobs bills since 2009…and the real fact of many economists willing to align with politicians on the Right in exchange for astronomical sums of money, we simply cannot trust him.
And finally, his approach in the DAILY BEAST is not even one that one would expect from an historian of his stature, let alone an economist. It is what one would expect from the kind of half-gossip, half-fact editorial policy of The DAILY BEAST that will also sell its jounalistic integrity to the highest bidder.
Ferguson starts off by making anecdotal comments using some third-party anecdote from a book rather than with some strong factual economic assertion. He tries to rig the jury immediately. You see, Ferguson says, someone apparently told someone that someone said that the President….? Huh?
Wow, that is a challenging economic argument. Was this the New York Times or was it PEOPLE? Or US magazine? Or THE NATIONAL INQUIRER? Just as bad…it was The DAILY BEAST. Check your credulity at the door.
I think anyone could take from that approach–not the kind of approach economists like Stiglitz, Reich, Blinder, Krugman, Galbraith, Rogoff, Rinehart, Greenspan, Bernanke or even a Milton Friedman—would use to start a discussion of economic principles—that Niall Ferguson chose the right venue for the level of thought he uses to attack the subject.
When he finally gets around to economics, he immediately gets it wrong. He shows a chart that shows that President Obama predicted an 8% unemployment figure in 2009 and then one going down from there to under 6% in 2012. We don’t know if his numbers would have been right. All of his proposals were denied first in the Senate and then, after 2010 denied both in the Senate and in the Republican House of Representatives. None of us knew in 2009, that the President and the American people were faced with an immutable, totalitarian-leaning, Neo-Fascist Party. That was new, but conclusive.
In 2009, when the Republicans controlled neither the House nor the Senate, they simply blocked passage of any legislation in the Senate that would create jobs. After the stimulus bill, even though woefully inadequate, ended the horrific loss of hundreds of thousands of jobs per month, the Republicans shut down all efforts to revive te economy.
The stimulus halted job losses at about 10% of the workforce, but that was a gigantic loss for Middle Class families. Remember that college educated individuals were averaging only about 5% unemployment. So high school graduates were obviously averaging much more than 10% rates of unemployment. Minority areas were even higher. And last time anyone looked, those individuals were also taxpayers. And most of them did not have George Bush Sr. to get them into Andover and Yale and the Harvard Business School.
People in their mid-fifties in the Middle Class were not expected to have a college education when they graduated from high school in order to get a job. They could become any one of a thousand different kinds of workers who would be trained on the job or in specialized apprentice programs. No one told them that their jobs would be shipped to China by the “loyal” employers who were looking for loyal workers.
Is it deliberate? Did corporations secretly conspire with the Republican Party to create conditions where American workers would lose the power and influence they had as a well-paid, consuming Middle Class? Was WalMart the best thing ever to happen to the large international manufacturing corporations headquartered here in the U.S?
After all, corporations could make things abroad. They could then cut wages here or outsource or off-shore jobs by saying that things are better because products for consumers are cheaper. Even then they pitted U.S. workers against consumers.
Was the rise of the $2 billion union-busting consulting firms a coincidence or planned, do you think? Is the fact that the “King of Outsourcing to China”…Mitt Romney, former head of the vulture capital firm Bain…is now the Republican Presidential candidate a coincidence do you think? Or has it been planned for a long time?
Was the secret organization, ALEC, the organization of global-corporations that insinuated itself quietly, like Communist organizers, into all 50 state legislatures…to introduce anti-pollution measures, anti-consumer, liability-limit legislation, private prison legislation, anti-union, right-to-work legislation, and voter suppression legislation a coincidence?
Or could it be possible…just possible…that corporations are trying to dominate society, eliminate the Middle Class, and pay lower wages for longer hours and fewer, if any, benefits? Possible? Their paid Republican state legislators are initiating the legislation as you read this.
So…does British journalist and sometime economic historian Niall Ferguson know all this? Oh, there is more, of course. and there is more of course. But does he know even this much about the transition in the American economy? Does he know that half a dozen large media organizations own all media communication in this country?
Does Dr. Ferguson realize that major media are primarily owned by Conservatives and are Right Wing in their approach or that they deliberately do not respond to Right Wing political lies? Does he know that they consciously use the news and commentary as a means of making obscene profits, while ignoring their social obligations, as was the original idea of licensing use of the airwaves?
Does Ferguson realize that 90% of the political commentary that goes out over the radio is controlled by and messages delivered by paid-propagandists for the Right Wing, like Rush Limbaugh, who is paid $40 million a year to deliver such messages? And who benefits enough to pay him $40 million when there is scarcely that much in profit…if any at all…from his programs after costs of delivering them?
So, given those political conditions, Ferguson says that “Nancy Pelosi and her cohorts” stuffed the stimulus bill with pork. Well, it was…after all—genius–a jobs bill! What should they have stuffed it with…rice and chop suey? It wasn’t a send-jobs-to-China program. But it was also, unfortunately, a corporate tax payoff. While again not supporting any revenues to pay for them, the Republicans insisted that one-third be tax cuts. So it was about $500 billion in stimulus, and $250 billion in worthless (except to the rich—tax cuts.)
Now pay attention. The Republicans insisted, per Grover Norquist, that the stimulus, a jobs bill to save the people from a disastrous continuation of the Bush-caused job losses, in the hundreds of thousands each month, would require a tax cut for the very people who caused the Great Bush Stock Market Collapse and Depression! (Which, by the way, is what we are in. Thanks to Republican obstruction…a Depression. The fourth year of it.) No taxes to help pay for it. Instead, tax cuts for the rich, the bankers and the Wall Streeters who caused the problem.
Ferguson also blames the President presumably for signing the Dodd-Frank bill to rein in the Wall Street criminal element. While still not fully implemented, because the Republicans now control the House and still obstruct anything positive that reaches the Senate, this bill would put wraps on some of the most serious abuses of speculative banking. And these risks were taken with your money. Banks do not take deposits and use them to build something any longer.
Banks take your money, or corporate money, or pension money or government deposits…and gamble with them. That is how we lost $7.5 trillion in assets…you lost…$7.5 trillion in assets in the Great Bush Stock Market Collapse and Depression. You lost money in your 401K, in your stocks or on the equity in your house…or you had a cut in pay or lost your job…and therefore, even with unemployment, your savings. It was financial ruin for American citizens, caused by Wall Street and rich Republicans who did it deliberately.
So Ferguson is wrong about the effects of the stimulus and even the size of the stimulus. Some Republican governors, like Scott Walker of Wisconsin, took stimulus money and used it to pay down debt or give tax breaks to corporations. They don’t care about the unemployed. Their idea is that if you are unemployed, you deserve it. And why the low job numbers…high unemployment? How about 600,000 public workers cut off since 2010 by Republican governors.
You should have gotten a college education, say the Republicans, like Scott Walker did. Only there is some dispute now over whether he cheated to graduate or even whether he did graduate. He is always involved in something involving the word “cheating.” Apparently most Wisconsin voters now approve of cheating because they elected him not once but twice.
Here’s a quote from Ferguson:
“Today a mere 10 too-big-to-fail financial institutions are responsible for three quarters of total financial assets under management in the United States. Yet the country’s largest banks are at least $50 billion short of meeting new capital requirements under the new “Basel III” accords governing bank capital adequacy.”
Well, this may be right. And who is behind it? Not President Obama. Both John Boehner and Mitch McConnell went to Wall Street and said to bankers that if Wall Street supports the Republican Party, they would…as they have…support big banks and freewheeling fiscal gambling again, and make Dodd-Franks impotent…as they are trying to do here by having Ferguson attribute these things to President Obama.
Let’s apply a little bit of logic here. You cannot accuse someone of being lazy and of working too hard at the same time. It is either one or the other. Similarly, you cannot hang the complicated and regulatory Dodd-Frank bill around President Obama’s neck and then say at the same time that he is doing nothing to try to control the gambling instincts of the typical Wall Street Banker.
And as far as capital requirements are concerned, Dodd-Frank would solve the shortfall in leverage requirements that Ferguson points to…if Republicans would stop holding up the implementation of Dodd-Frank! The Republicans are like the child who murders his parents and then asks for sympathy because he is an orphan. Simple: enact the legislation and implement it…or shut the hell up.
Ferguson apparently wants to be a creative director at an ad agency rather than a serious economist. He comes up with an entirely new name for the Affordable Care Act—Pelosicare. Sophomoric? Maybe. But the point is that it merely directs our attention to how lightweight he is as a thinker.
He says that ACA did nothing to address the core defects of the system, long-term. He is not only wrong, but catastrophically wrong. Here’s why. The costs of medical care for the baby-boomers will not explode any more under ACA than it will without it. In fact, if we don’t try to create real markets and real competition—as ACA does—then prices will go up faster than they are today.
And here is the other area that Niall Ferguson, Brit, does not understand. Unlike Europe, we have 50 million people uninsured and a million bankruptcies every year because of our private health care system. Europe, because of a universal system that is controlled by legislation and by a common effort to keep costs down, has health care costs of 6% of GDP We have health care costs under our private health insurance company systems of 18%.
If we had 6% each family would be paying about $500 a month rather than $1500 a month for health care. ( To be specific, this would be for private individual or family health care plans. Of course corporate-subsidized health care for the employed would also be less expensive. ) In Massachusetts, a man offered a better job, or dropping out of the workforce to retrain for a better job or simply laid off can simply find health care on the open market exchanges, without using expensive COBRA, with no pre-existing conditions and no exorbitant rates. This is the plan Romney now says he dislikes and would repeal on the national level…because this is a part, but only a part, of the much better, health care reform act.
Not only has the Massachusetts system reduced costs for individual insurance policies dramatically but also over 90% of people polled in Massachusetts, like those in Canada where there is universal health care, say that they are extremely happy with it and would not change it for another system.
It should be noted by the Brit Ferguson that during the opening ceremonies of the Olympics, the British (Conservative) government used the British universal health care system as one of the key features of British life, history and culture of which they are most proud. The Canadians voted the man who led the fight and accomplished the Canadian health care system as the Man of the Century in Canada for the 20th Century.
So, while we will not accuse Ferguson of shilling for the American health insurance industry, we must point out that his positions are unlearned and he is not said to be an unlearned man. Which means, that he is either lacking in knowledge about this subject, or not confident in free markets (unlikely for a true Conservative) or is lying, and most probably—if lying—lying for money. So those are the options and you can take your pick.
It is not as if we have not heard people lying about universal health care on behalf of the health insurance industry. Remember the Right-Wing comment that we would have “death panels?” Even from Senator “Chuck” Grassley of Iowa. Enough said. Grace Marie Turner, cited elsewhere on this blog…is a rabid advocate for private health insurance
He says that “…only a minority of the public liked the ACA…” Well, only a minority of Americans wanted to support the Allies before we were attacked by Japan. But if we had not entered the war, those of us not Jewish or Black or Brown would now grow up speaking German and possibly also Japanese. The former would all be dead or in concentration camps.
The whole idea that we will not have enough money to support either Medicare or Social Security is a bright red herring. Social Security can be fixed for 75 years by simply making those up to $200,000 a year pay the same FICA taxes that we all pay now up to $107,000 per year.
Universal health care, particularly single-payer health care, will end the problems with the high costs of medical delivery systems, only a part of which involves those over 65. But the ACA (Obamacare or Pelosicare…take your pick) will reduce costs dramatically and it will reduce incomes for CEOs of health insurance companies to those of normal people from the $14 million a year that they now average.
Every calculation made by people like Ferguson is based on one thing. These calculations never take into consideration what we would do if we had mid-20th Century tax rates and employment levels at work. The higher rates from the mid-20th Century would increase revenues…no matter what anyone tells you…by well over a trillion dollars a year.
If the top rates were increased to 50% and everyone over $20,000 a year paid some tax…because you can barely live on $20,000…and we cut defense by a mere 20%…we would have surpluses as far as the eye could see, reductions in the deficit on the order of over $300 billion a year, and will some serious cuts…perhaps $500 billion a year. And we would still have a strong health care reform program, Medicare, Medicaid, and Social Security virtually forever.
We never take into consideration the fact that we have military not only in Afghanistan, but still in Iraq and non-military contractors making more money, costing taxpayers more money than the military, in both places. No one mentions the 700 bases around the world or the fact that our military budget is greater than the sum total of expenditures by Russia, China, North Korea, NATO, Australia and the rest of the world combined! We could cut 30% from our budget and still be spending twice as much as Russia, China and North Korea combined.
But this is not Ferguson the Brit’s area of expertise. That is, it is not his area to be surprised at how quickly the country can turn to electing the opposite party once they are brought face-to-face with the truth.
We must be clear. This is not about abortion or contraception or gay marriage. No matter how you feel about those items…they can be changed by the will of the majority. What cannot be changed…if it should happen…is the change from a totalitarian state, like Nazi Germany 1933…to a Democracy, however, tenuous and ruled by billionaires it is right now.
When Hitler took over, many people thought that their day had arrived. Ten years later a huge number were dead, millions, including millions of non-Jews, had been sent to concentration camps from which they never emerged. Fritz Thyssen and his wife, hugely wealthy industrialists, owners of the steel industry in Germany…ended up in Dachau…only barely surviving death.
What we are saying is that Germany was not a bunch of lunatics. Some of the greatest scientists, architects, artists, and musicians lived in Germany when Hitler took over. Very few suspected that within months they would be one wrong comment from a concentration camp. That can happen here. Already, anyone who disagrees with Romney is ushered quickly out of his political rallies. A Republican congressman wants to put physicians in jail for trying to save a woman’s life, if it will save a fetus, even one without a brain that will die within minutes of being born.
Those are the things that Niall Ferguson does not calculate when he skews the facts against the President for political purposes. Niall Ferguson is not a Nazi or a Neo-Fascist like Rush Limbaugh or Rep. Todd Akin or Senator Mitch McConnell. He is merely a dupe. People can be duped. Many American intellectuals followed the Communist Party line until it was clear that complete 100% equal sharing does not work and those who advocate it were often doing so merely for political gain, not out of honest conviction.
Let’s go back to Ferguson’s numbers. He complains that the President predicted between 3% to 4% growth in the economy and the actual numbers average around 2%. Once again, it is necessary to remind Dr. Ferguson that the economic recovery has been not only philosophically argued against but factually obstructed by a Republican Congress.
It might also be worth mentioning to Dr. Ferguson that the very people he supports, who espouse the Republican point of view are as different from the Europe where he comes from as he, an atheist, is from the large segment of Republicans who either believe Christ will come back on a cloud to take them through the stratosphere to “Heaven” or believe that Adam and Eve shared Eden with dinosaurs.
Certainly Oxford-educated Dr. Ferguson could dance rings around us with his knowledge of past recessions and depressions. But his long view of history neglect the fact that what saved us in the late 1930s, even after the first four years of suffering had been absorbed by the Hoover administration, (and President Obama took that hit—solving the last Bush budget deficit of one-point four trillion dollars) was the New Deal and ultimately the immense stimulus of the buildup and the armaments business for World War II.
If you compare the more recent Obama stimulus, in the context of an economy that dropped almost exactly as did that of 1930 and beyond, it is at least…at a minimum…$5 trillion short of what was poured into the economy from 1933 to 1945. So Dr. Ferguson, while an accomplished historian—no one should deny that—has clouded his judgment with too great a familiarity with bought-and-paid-for Cato economists, and others, like Holtz-Eakin who would sell out their mothers for an appointment or a paid project by the Heritage Foundation.
What history teaches us is that a country called the United States spent the equivalent in today’s dollars of about $10 trillion dollars, or the equivalent of two thirds of our annual GDP to restore the economy. It did not do it to restore the economy. No Republican Congressman nor probably any Republican or Democratic Senator in those days would ever have approved that kind of stimulus. When you subtract the tax cuts…worthless…we spent about one-half a trillion dollars. And it took us in six months from hundreds of thousands of job losses a month to no job losses but job gains…small though they were.
Dr. Ferguson blames President Obama for the fact that half the country pays no taxes but receives some kind of government benefit. This is where we know what kind of person Dr. Ferguson really is. He knows…he is too bright and informed not to know the simple facts.
When tax rates are lowered for the top income earners, they are also lowered commensurately for all taxpayers. That started when Ronald Reagan lowered the top taxable rate from 74% down to 50% , then to 28%. So that’s a tax cut of 46%. So if you lower one person’s taxes by 46 percentage points, how do you handle someone who is paying 30%? Well, you have to be fair or a very large number of people (there are hugely more at 30% than at 74%, more average citizens than multi-millionaires) will be upset if the top 1% get not only a tax break but a much bigger tax break than they get.
So the example group, the 30 percenters, get a 62% lowering of their taxes and it comes out to something like 11.4%. So that would mean that it goes down from there. The next reason…there are more than one reasons…is that while the upper income classes have seen their incomes grow, the middle and lower income groups have earned less or stayed the same, which means that they automatically earned less because of average inflation…which even in these bad times does not go down, but up, only more slowly. (Which is really a bone of contention right now, given, for example, $4.00 a gallon gasoline in some states.)
So it is very simple. If you want the lower classes to pay more, simply raise taxes. Dr. Ferguson and his Fundamentalist-Grover Norquist friends would never consider that, even during two wars and the Bush Second Great Depression. And as far as people taking advantage of “benefits?” Does a person who pays into Medicare deserve a benefit? Does someone who paid in from the time they were 16 until age 65 deserve the “benefit” that they paid for?
We don’t have the money? George W. Bush and the Republicans in the Congrss right now squandered $8 trillion dollars in 8 years and left us with an economy that they refuse to fix that is costing us another trillion a year. Their idea is to bankrupt the country and then stop paying Social Security, Medicare and Medicaid. You may think that this is conspiratorial. No one cares what you think.
Does anyone care what you think about a tidal wave or a freight train coming at you at 65 miles an hour? You can’t get out of the way and you are going to die. You are going to die. So what difference does it matter to someone else who sees the freight train and you don’t…what you think? No one case who knows the truth. They would like to save you but you just don’t see it coming.
Dr. Niall Ferguson sees the freight train coming. He sees you in the way but he tells you to stay where you are. It is the President’s fault he says. Once we change from the President things will be OK.
Guess what? All the people running that train, including Dr. Niall Ferguson are going to run you over. They know it. And they don’t care what you think. They want to cut taxes for their rich friends and for the corporations who now legally pay them bribes to do their bidding.
America is gone. We have Brits here telling us that it is our own fault for hiring a man who is trying to help us. What we need, they say, is a train conductor like Mitt Romney who ran over tens of thousands of American citizens on his way to breaking them and sending their jobs to China. And he is a nominee for President of the United States. Just as a governor of a state with the largest percentage of its population on Medicare elected a governor whose company…he was President…was fined $1.7 billion for…cheating Medicare. He is the governor of Florida.
Ignorance is not bliss. Ignorance is poverty, financial ruin and death.