Just in case there was a doubt, Robert Scheer connects the dots in his column 'How about tough love for the bankers?' [http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/16/EDEP11PPMN.DTL&hw=scheer&sn=002&sc=571]
Phil Gramm advises McCain on economic policy. Phil Gramm was the moving force behind the banking deregulation that gave us the housing melt down and the Enron debacle, so far.
With McCain in the Oval Office, we will see more Enron's and Indy Mac's.
BTW: recent reports suggest that more than 100 US banks are in trouble. As economists know, the banking system is a critical part of the domestic money supply and, by implication, the entire US and world economy.
It is time for the FED to get off its chair and act to secure our money supply from stupid and or crooked bankers.
It is in our national interest.
Thursday, July 17, 2008
Wednesday, July 16, 2008
Oil Shock Inflation
Seems what we have is a classic cost-push inflation.
Trouble is that monetary policy does not work well to contain cost-push inflation.
Resolution is simple: the FED should let the oil shock work through the economy and not raise interest rates to control price increases.
Seems to me that the Fed is a tad overly concerned about inflation and a great deal under concerned about jobs. A little inflation can result in more jobs.
C'mon Ben, give us some jobs. Prices are going up anyway; at least with a job we can buy food.
Trouble is that monetary policy does not work well to contain cost-push inflation.
Resolution is simple: the FED should let the oil shock work through the economy and not raise interest rates to control price increases.
Seems to me that the Fed is a tad overly concerned about inflation and a great deal under concerned about jobs. A little inflation can result in more jobs.
C'mon Ben, give us some jobs. Prices are going up anyway; at least with a job we can buy food.
Friday, July 4, 2008
Mini-Bush McCain
McCain's recent hiring of Bush's campaign manager creates a need and an opportunity to tie him closely to Bush in the strongest language.
The need is because we can expect Bush-like campaign tactics and policies from McCain in the future - unethical, negative, untrue and perhaps effective.
It is an opportunity because a large part of the voting public really wants no more of Bush.
For example - McCain is a fine American and a genuine hero. But, he wants to win so badly that he has made a deal with the Bush/Rove campaign organization. We can expect more swiftboat tactics; and, a possible repeat against Obama of a similar accusation against McCain that he fathered a black child.
Because McCain is doing poorly in the polls he will probably seek the most divisive form of campaigning possible. He will also studiously disavow any questionable tactics while directing and approving them.
Part of his deal will probably be a sell out to corporate interests. So, with a president McCain we will get more of the Enron/Halliburton forces who have ruined the country.
Instead of peace, with a president McCain we will get more torture and more death - all in the name of national security.
Instead of cooperation with nations we will see our country continue to be the international pariah instead of the beacon of hope that it can be.
We will see more free trade agreements that have killed millions of American jobs and created vast overseas slums where people work on starvation wages.
We will continue reliance on oil as our primary energy source. And, we will continue to send US armed forces to act as handmaidens for the oil companies wherever there may be oil reserves.
The list is endless. But, Obama's campaign must make the links explicit and direct. The voting public has a limited attention span - they need to be reminded every day of the disaster that awaits a Bush/McCain presidency.
For example: 'There is a mortgage crisis and people are hurting. A McCain administration will make it worse because he will sell out to the banking interests instead of helping homeowners.'
It would be wonderful to take the high road, but McCain has chosen the low road by his choice of staff.
Reminds me of a misquote that may have some application: 'Yea, though I walk through the shadow of the Valley of Death, I have no fear because I am the meanest SOB in the valley.'
The need is because we can expect Bush-like campaign tactics and policies from McCain in the future - unethical, negative, untrue and perhaps effective.
It is an opportunity because a large part of the voting public really wants no more of Bush.
For example - McCain is a fine American and a genuine hero. But, he wants to win so badly that he has made a deal with the Bush/Rove campaign organization. We can expect more swiftboat tactics; and, a possible repeat against Obama of a similar accusation against McCain that he fathered a black child.
Because McCain is doing poorly in the polls he will probably seek the most divisive form of campaigning possible. He will also studiously disavow any questionable tactics while directing and approving them.
Part of his deal will probably be a sell out to corporate interests. So, with a president McCain we will get more of the Enron/Halliburton forces who have ruined the country.
Instead of peace, with a president McCain we will get more torture and more death - all in the name of national security.
Instead of cooperation with nations we will see our country continue to be the international pariah instead of the beacon of hope that it can be.
We will see more free trade agreements that have killed millions of American jobs and created vast overseas slums where people work on starvation wages.
We will continue reliance on oil as our primary energy source. And, we will continue to send US armed forces to act as handmaidens for the oil companies wherever there may be oil reserves.
The list is endless. But, Obama's campaign must make the links explicit and direct. The voting public has a limited attention span - they need to be reminded every day of the disaster that awaits a Bush/McCain presidency.
For example: 'There is a mortgage crisis and people are hurting. A McCain administration will make it worse because he will sell out to the banking interests instead of helping homeowners.'
It would be wonderful to take the high road, but McCain has chosen the low road by his choice of staff.
Reminds me of a misquote that may have some application: 'Yea, though I walk through the shadow of the Valley of Death, I have no fear because I am the meanest SOB in the valley.'
Monday, June 16, 2008
Obama Anti-Business?
There is a fear - with some justification - among the business community that an Obama presidency with a Democratic Congress will result in more regulation and anti-business laws.
Business interests should ABSOLUTELY NOT be concerned about Obama's business stance.
Here's why: Businesses create jobs and we need more jobs in our country. That means that we need businesses to do well.
In order for businesses to do well markets must function effectively and fairly. To function effectively, markets require stability, transparency and fairness. And, to get better levels of those qualities, markets require effective regulation.
It is no secret that the past eight years has seen a tilting of markets in favor of established interests, away from effective regulation and toward harming the less powerful.
The USA needs to restore a more fair balance of interests in markets. After all, if consumers and investors do not trust businesses - and the polls show that is the case today - then businesses will do less well.
Bottom line is this: businesses need consumers who can afford to buy products.
Business interests should applaud and support any Obama initiatives which level the playing field and provide more stable market environments. It is in their self-interest to do so.
Business interests should ABSOLUTELY NOT be concerned about Obama's business stance.
Here's why: Businesses create jobs and we need more jobs in our country. That means that we need businesses to do well.
In order for businesses to do well markets must function effectively and fairly. To function effectively, markets require stability, transparency and fairness. And, to get better levels of those qualities, markets require effective regulation.
It is no secret that the past eight years has seen a tilting of markets in favor of established interests, away from effective regulation and toward harming the less powerful.
The USA needs to restore a more fair balance of interests in markets. After all, if consumers and investors do not trust businesses - and the polls show that is the case today - then businesses will do less well.
Bottom line is this: businesses need consumers who can afford to buy products.
Business interests should applaud and support any Obama initiatives which level the playing field and provide more stable market environments. It is in their self-interest to do so.
Wednesday, June 11, 2008
Economic Claptrap from McCain
McCain says he does not understand economics.
When you're right, you're right................
Here is a political response to Cainomics.
The McCain campaign fills the air with pretentious nonsense about economics and they do so very aggressively. Obama's best response is to be even more aggressive, but with logic and compassion.
Here are some examples:
1. Cainomics suggests that businesses need more profits to create more jobs. So, taxes on business must be cut or we will lose jobs.
Response: Confusing claptrap. Businesses hire more people only when they expect more sales. If profits go up with no expectation of sales increases, business owners take a vacation or buy a boat. Cutting taxes on business encourages more consumption by business owners - it does not create jobs.
What it really does is to transfer wealth from working people to business owners.
2. Cainomics states that business tax rates are about the highest in the world.
Response: That's true, but only if you consider corporations. If you consider small, unincorporated businesses, US tax rates are about average.
Also, since most jobs come from small businesses, the corporate tax rate has little or nothing to do with job creation.
Here's a proposal - let's cut the corporate, federal tax rate by 5% [to 30%] but in exchange, corporations agree to give up tax treatment that encourages job outsourcing and transferring assets to shell corporation in the Cayman Islands and Vanuatu.
3. Cainomics states that Obama will raise taxes on all people.
Response: This is a flat lie and an embarrassment from a national hero. Come on John - you're better than that.
4. Cainomics states that the economy is fine and that the Bush policies of tax cuts for the rich are working.
Response: They are working to make the rich richer and the poor poorer. The average family is in trouble and Bush tax cuts are making them worse off, not better.
75 million people in this country have no health insurance or inadequate health insurance. They don't dare get sick - they are an illness away from financial disaster. That's 42% of the population between the ages of 30 and 65.
5. Cainomics states that regulating business is a failed policy that we have tried before and that did not work.
Response: Wrong.
Fact: Most high growth economies, including the USA, have extensive business regulation.
Fact: Unregulated markets were tried until 1932 when the lack of regulation created the Great Depression. Since then, every country, including the USA, has regulated markets extensively.
Fact: Unregulated free markets always create monopolies and greater income disparities - the rich get richer and the poor get poorer.
6. Cainomics states that since savings creates the pool of capital businesses need to invest, any tax increase will reduce savings and reduce job creation.
Response: Pure claptrap.
Fact: Most capital creation occurs in corporations today, not from individual savings.
Fact: The capital pool is growing and readily available to sound business expansion.
Fact: Businesses get capital from a world wide pool of banks, venture capitalists, and wealthy individuals. Changing laws in the USA does not affect the world's capital markets significantly.
When you're right, you're right................
Here is a political response to Cainomics.
The McCain campaign fills the air with pretentious nonsense about economics and they do so very aggressively. Obama's best response is to be even more aggressive, but with logic and compassion.
Here are some examples:
1. Cainomics suggests that businesses need more profits to create more jobs. So, taxes on business must be cut or we will lose jobs.
Response: Confusing claptrap. Businesses hire more people only when they expect more sales. If profits go up with no expectation of sales increases, business owners take a vacation or buy a boat. Cutting taxes on business encourages more consumption by business owners - it does not create jobs.
What it really does is to transfer wealth from working people to business owners.
2. Cainomics states that business tax rates are about the highest in the world.
Response: That's true, but only if you consider corporations. If you consider small, unincorporated businesses, US tax rates are about average.
Also, since most jobs come from small businesses, the corporate tax rate has little or nothing to do with job creation.
Here's a proposal - let's cut the corporate, federal tax rate by 5% [to 30%] but in exchange, corporations agree to give up tax treatment that encourages job outsourcing and transferring assets to shell corporation in the Cayman Islands and Vanuatu.
3. Cainomics states that Obama will raise taxes on all people.
Response: This is a flat lie and an embarrassment from a national hero. Come on John - you're better than that.
4. Cainomics states that the economy is fine and that the Bush policies of tax cuts for the rich are working.
Response: They are working to make the rich richer and the poor poorer. The average family is in trouble and Bush tax cuts are making them worse off, not better.
75 million people in this country have no health insurance or inadequate health insurance. They don't dare get sick - they are an illness away from financial disaster. That's 42% of the population between the ages of 30 and 65.
5. Cainomics states that regulating business is a failed policy that we have tried before and that did not work.
Response: Wrong.
Fact: Most high growth economies, including the USA, have extensive business regulation.
Fact: Unregulated markets were tried until 1932 when the lack of regulation created the Great Depression. Since then, every country, including the USA, has regulated markets extensively.
Fact: Unregulated free markets always create monopolies and greater income disparities - the rich get richer and the poor get poorer.
6. Cainomics states that since savings creates the pool of capital businesses need to invest, any tax increase will reduce savings and reduce job creation.
Response: Pure claptrap.
Fact: Most capital creation occurs in corporations today, not from individual savings.
Fact: The capital pool is growing and readily available to sound business expansion.
Fact: Businesses get capital from a world wide pool of banks, venture capitalists, and wealthy individuals. Changing laws in the USA does not affect the world's capital markets significantly.
Thursday, June 5, 2008
Class Act
I wanted you to be one of the first to know: on Saturday, I will hold an event in Washington D.C. to thank everyone who has supported my campaign. Over the course of the last 16 months, I have been privileged and touched to witness the incredible dedication and sacrifice of so many people working for our campaign. Every minute you put into helping us win, every dollar you gave to keep up the fight meant more to me than I can ever possibly tell you.
On Saturday, I will extend my congratulations to Senator Obama and my support for his candidacy. This has been a long and hard-fought campaign, but as I have always said, my differences with Senator Obama are small compared to the differences we have with Senator McCain and the Republicans.
I have said throughout the campaign that I would strongly support Senator Obama if he were the Democratic Party's nominee, and I intend to deliver on that promise.
When I decided to run for president, I knew exactly why I was getting into this race: to work hard every day for the millions of Americans who need a voice in the White House.
I made you -- and everyone who supported me -- a promise: to stand up for our shared values and to never back down. I'm going to keep that promise today, tomorrow, and for the rest of my life.
I will be speaking on Saturday about how together we can rally the party behind Senator Obama. The stakes are too high and the task before us too important to do otherwise.
I know as I continue my lifelong work for a stronger America and a better world, I will turn to you for the support, the strength, and the commitment that you have shown me in the past 16 months. And I will always keep faith with the issues and causes that are important to you.
In the past few days, you have shown that support once again with hundreds of thousands of messages to the campaign, and again, I am touched by your thoughtfulness and kindness.
I can never possibly express my gratitude, so let me say simply, thank you.
Sincerely,
Hillary Clinton
On Saturday, I will extend my congratulations to Senator Obama and my support for his candidacy. This has been a long and hard-fought campaign, but as I have always said, my differences with Senator Obama are small compared to the differences we have with Senator McCain and the Republicans.
I have said throughout the campaign that I would strongly support Senator Obama if he were the Democratic Party's nominee, and I intend to deliver on that promise.
When I decided to run for president, I knew exactly why I was getting into this race: to work hard every day for the millions of Americans who need a voice in the White House.
I made you -- and everyone who supported me -- a promise: to stand up for our shared values and to never back down. I'm going to keep that promise today, tomorrow, and for the rest of my life.
I will be speaking on Saturday about how together we can rally the party behind Senator Obama. The stakes are too high and the task before us too important to do otherwise.
I know as I continue my lifelong work for a stronger America and a better world, I will turn to you for the support, the strength, and the commitment that you have shown me in the past 16 months. And I will always keep faith with the issues and causes that are important to you.
In the past few days, you have shown that support once again with hundreds of thousands of messages to the campaign, and again, I am touched by your thoughtfulness and kindness.
I can never possibly express my gratitude, so let me say simply, thank you.
Sincerely,
Hillary Clinton
Tuesday, June 3, 2008
What Should Hillary Do?
Hillary asks: What should I do?
OK, I am game - here goes.
1. The country needs a Dem as President and it will be Obama.
2. McCain will not be easy - Obama needs all the help you can give.
3. Yes, you received 18 million votes, but they were for the country more than for you.
4. Do NOT cause a floor fight in Denver.
5. DO - get a say in policy - the country needs that from you.
6. VP - not VP - makes no difference - serve your country by vetting ALL Obama's policies.
7. Do - bring your core to the party: older voters, hispanics, working whites, etc. Make Obama's case to them and win the election. Obama cannot do it without you.
8. May God save the United States of America.
OK, I am game - here goes.
1. The country needs a Dem as President and it will be Obama.
2. McCain will not be easy - Obama needs all the help you can give.
3. Yes, you received 18 million votes, but they were for the country more than for you.
4. Do NOT cause a floor fight in Denver.
5. DO - get a say in policy - the country needs that from you.
6. VP - not VP - makes no difference - serve your country by vetting ALL Obama's policies.
7. Do - bring your core to the party: older voters, hispanics, working whites, etc. Make Obama's case to them and win the election. Obama cannot do it without you.
8. May God save the United States of America.
Monday, June 2, 2008
Let's All Be Adequate
What do we all need?
After election - and perhaps as part of the general election campaign - the country needs competence in government.
The Bush legacy is incompetent cronies who systematically encourage law evasion.
The new administration really needs to restore simple competence in governing. As a citizen and taxpayer. I expect at least that from my government.
Let's have a holiday from new laws and just get everything working again.
Markets do a lot of things well, but markets require effective regulation to function best.
The mortgage meltdown is a regulation/Bush failure and not a market malfunction.
Let's fix the problems.
After election - and perhaps as part of the general election campaign - the country needs competence in government.
The Bush legacy is incompetent cronies who systematically encourage law evasion.
The new administration really needs to restore simple competence in governing. As a citizen and taxpayer. I expect at least that from my government.
Let's have a holiday from new laws and just get everything working again.
Markets do a lot of things well, but markets require effective regulation to function best.
The mortgage meltdown is a regulation/Bush failure and not a market malfunction.
Let's fix the problems.
Wednesday, May 21, 2008
Hillary: Policy Attorney
Assuming Obama's nomination, what's best for the country?
We need a tighter campaign from Obama. He needs to go after Hispanics, women, working whites and the Ozarks aggressively and he needs all our help. He should not write them off, or many may vote for McCain.
Second, he needs some guidance on policy matters. He has demonstrated a tendency to shoot from the hip on critical questions.
If he is elected, then the policy guidance will be central to our country's future.
Hillary is great in policy questions.
Here's an idea: make Hillary Clinton the policy attorney in an Obama campaign and administration. Maybe V.P., maybe not.
Good entrepreneurs never ask an attorney what to do, but they do ask an attorney to make sure that their actions are mostly legal.
Don't know about you, but I would sleep better with that in place.
We need a tighter campaign from Obama. He needs to go after Hispanics, women, working whites and the Ozarks aggressively and he needs all our help. He should not write them off, or many may vote for McCain.
Second, he needs some guidance on policy matters. He has demonstrated a tendency to shoot from the hip on critical questions.
If he is elected, then the policy guidance will be central to our country's future.
Hillary is great in policy questions.
Here's an idea: make Hillary Clinton the policy attorney in an Obama campaign and administration. Maybe V.P., maybe not.
Good entrepreneurs never ask an attorney what to do, but they do ask an attorney to make sure that their actions are mostly legal.
Don't know about you, but I would sleep better with that in place.
Thursday, May 8, 2008
Wednesday, May 7, 2008
Takin' It To The Streets
In North Carolina the senator gives a speech that connects with most Americans. He reaches beyond his base to go after McCain.
See transcript here: http://www.washingtonpost.com/wp-dyn/content/article/2008/05/06/AR2008050603099.html
Please keep it up.
See transcript here: http://www.washingtonpost.com/wp-dyn/content/article/2008/05/06/AR2008050603099.html
Please keep it up.
Tuesday, April 29, 2008
The (W)Right Race
With friends like these, who needs enemies??
Here is the problem for us all: McCain is a political idiot who will carry forward the Shrub's policy disasters. This is despite his strong personal integrity.
To Obama: you are probably the Dem nominee, but you have a fatal flaw: you seem unable to connect with most real Americans. Race, elite education, apparent discomfort around average people - whatever the cause, you need to correct the impression so McCain does not win.
Here's how: you are a constitutional scholar, so talk about how great the Constitution is, what geniuses were the framers. Piece of cake.
Talk about how you love the country - at every forum. Swallow the criticisms for a time and kiss the Statue of Liberty metaphorically.
Treat your reverend like a deep pile of sewage - there may be something at the bottom, but you don't want to find out.
Play one-on-one with a Chicago Bull. Laugh while you lose your shorts.
Go to Cubs games, sit in the bleachers and drink a beer. Boo the umpires.
Enjoy the perks, for God's sake.
Talk about who is better: Jefferson/Adams/Washington or Lincoln/FDR/Teddy R.
Talk about the American idea and what it means to you - just like a friggin' middle school essay. Won't kill you.
You can NOT rely on policy to get you out of this.
We all need you to get this, or we are in deep.
Here is the problem for us all: McCain is a political idiot who will carry forward the Shrub's policy disasters. This is despite his strong personal integrity.
To Obama: you are probably the Dem nominee, but you have a fatal flaw: you seem unable to connect with most real Americans. Race, elite education, apparent discomfort around average people - whatever the cause, you need to correct the impression so McCain does not win.
Here's how: you are a constitutional scholar, so talk about how great the Constitution is, what geniuses were the framers. Piece of cake.
Talk about how you love the country - at every forum. Swallow the criticisms for a time and kiss the Statue of Liberty metaphorically.
Treat your reverend like a deep pile of sewage - there may be something at the bottom, but you don't want to find out.
Play one-on-one with a Chicago Bull. Laugh while you lose your shorts.
Go to Cubs games, sit in the bleachers and drink a beer. Boo the umpires.
Enjoy the perks, for God's sake.
Talk about who is better: Jefferson/Adams/Washington or Lincoln/FDR/Teddy R.
Talk about the American idea and what it means to you - just like a friggin' middle school essay. Won't kill you.
You can NOT rely on policy to get you out of this.
We all need you to get this, or we are in deep.
Tuesday, April 22, 2008
Pennsylvania
At this writing Hillary is declared the winner by somewhere between 5% and 10% and the baby wild bunny we call Baby is outside in a gentle rain shower, confused that his favorite spot is wet.
Good for Hillary, but what will the Supers do?
So far Obama can't deliver the win. He outspent her at least 2 to 1 and lost. Hillary has won all the big states we need to take the White House.
He seems unable to connect with the rank and file and older women and he will have to do that to beat McCain. Hillary already does both. But, it looks like he will be the nominee.
Let us hope that Dem chiefs figure out how to tighten up the Obama campaign before Mccain wins.
How do we make him appeal to the Dem base??
Anyone...................
Good for Hillary, but what will the Supers do?
So far Obama can't deliver the win. He outspent her at least 2 to 1 and lost. Hillary has won all the big states we need to take the White House.
He seems unable to connect with the rank and file and older women and he will have to do that to beat McCain. Hillary already does both. But, it looks like he will be the nominee.
Let us hope that Dem chiefs figure out how to tighten up the Obama campaign before Mccain wins.
How do we make him appeal to the Dem base??
Anyone...................
Thursday, April 17, 2008
Democratic Convention
Last Sunday I ran for election as a delegate to the national Democratic convention.
I lost, but was truly impressed with all the candidates. There were 25 or 26 people vying for 3 spots. Any of them will do a great job.
It's good news.
I lost, but was truly impressed with all the candidates. There were 25 or 26 people vying for 3 spots. Any of them will do a great job.
It's good news.
Wednesday, April 16, 2008
Fixing NAFTA
Trade has raised its lovely head. So, what is the fuss all about anyway, you ask??
An objective observer who looks at trade deals will see some obvious things.
First, while some merchants who can take advantage of foreign markets are making a fortune, many of us are losing jobs to foreign companies which can make things cheaper than we can.
Second, our standard of living is going down as the costs of everything go up while our wages stay the same or go down.
Third, the same thing is happening everywhere, not just here.
Fourth, our politicians seem to be so completely mesmerized by the potential positive effects of foreign trade that they ignore what is happening to us every day.
What should we do about it?
We should ask our politicians to look out for us first. If an agreement will help the world's markets but will hurt workers in our country, then it is a bad deal and should be rejected.
It is that simple.
Look at NAFTA this way, then decide whether to keep it, change it or scrap it based on the net positive job gain to the US.
For any new trade agreements, the trade agreement proponents should be asked to calculate how many jobs will be lost and gained in the home economy from the new trade deal. If there is a positive job gain, then it's a good deal.
Can we put labor standards and environmental safeguards into trade deals so we won't be hurt?
No, we can't.
If an agreement hurts workers in our country, then it is a bad deal.
What about consumers who are able to buy cheaper goods from foreign countries than they can buy from our own companies? Won't they be hurt?
In the short run prices will go up a little. But in the not so distant future, we will all be better off because we will have more jobs and be able to afford more things.
Besides, prices are going up anyway because of the world oil crisis. Protecting jobs at home will hardly be noticed.
This is especially true in the USA because trade is still a small part of our economy. Despite what we think, products from China are only about 2% of our economy.
Why is it that so many politicians sell these deals so hard if there will be negative effects on our economy?
To fully understand the trade debate about NAFTA and the other trade agreements, we need to look at two things: Economic theory and economic reality, or the dollars lost and gained by vested interests.
Looking directly at the bottom line of economic theory we see some theories about markets and trade. These theories provide the base rationalizations for the Free Trade Agreements the US and other nations enter.
The first theory we see is called Comparative Advantage. This theory was written in about 1776 by David Ricardo. Basically it says that merchants in any country can make a profit from trading with merchants in other countries even if their costs are higher in the home country. Home country merchants will buy products made in the home country which are comparatively cheaper than other products made in the home country even though these products are more expensive than world prices; then the merchants will sell the home country products at world prices taking a loss and use the money to buy world products at world prices which they can sell in the home country at a huge profit.
So, the reasoning goes, all the merchants in the home country will specialize in making products which have the relative, comparative advantage in the home market and sell those products in world markets.
When every country's merchants do this, the consumers in all countries will be better off because the merchants in all countries who specialize will create more goods in total.
This is a really wonderful idea even if it doesn't work. It is such a wonderful idea, and also so difficult to understand, that merchants who benefit from trade use this idea to argue against any interference with their trading rights. After all, any taxes on trade (which are called tariffs) will interfere with specialization and reduce the total amount of goods and services produced in the world.
Here is an argument which promises the best of all possible worlds for everyone and is very hard to understand. Is it any wonder that people who gain from agreements based on this idea will defend them tooth and nail?
Second, the twin ideas of Free Markets and Free Trade sound so very good, they must be essentially American. Who can argue with the idea that a free market economy with free trade will bring us the best possible world? And indeed, it has already, hasn't it?
In fact, the USA does not actually have Free Markets or Free Trade. Most markets are regulated very highly today. Most of our complaints about markets happens when government regulators do a bad job, not when a market fails.
The reason for the mortgage crisis we are in now is that we loosened banking regulation on commercial banks and did not regulate the mortgage markets at all. Our crisis today is a failure of regulation, not a failure of markets.
Is there a way out of this mess?
Yes, there is. The federal government needs to manage trade so the harmful effects of trade agreements are minimized. To see how to do that, go to my essay on Balanced Trade here: http://www.mkeever.com/essay.html
For further background see: GLOBAL TRADE AND CONFLICTING NATIONAL INTEREST, Ralph E. Gomory and William J. Baumol, MIT Press, Cambridge, Mass. 2000 ISBN -10: 0-262-07209-2
Copyright, 2008 by Mike P. McKeever, Santa Rosa, CA. This text can be posted in any electronic forum or quoted with attribution in any printed media. For publication in printed form please request permission from the author: email: mpmckeever@earthlink.net.
An objective observer who looks at trade deals will see some obvious things.
First, while some merchants who can take advantage of foreign markets are making a fortune, many of us are losing jobs to foreign companies which can make things cheaper than we can.
Second, our standard of living is going down as the costs of everything go up while our wages stay the same or go down.
Third, the same thing is happening everywhere, not just here.
Fourth, our politicians seem to be so completely mesmerized by the potential positive effects of foreign trade that they ignore what is happening to us every day.
What should we do about it?
We should ask our politicians to look out for us first. If an agreement will help the world's markets but will hurt workers in our country, then it is a bad deal and should be rejected.
It is that simple.
Look at NAFTA this way, then decide whether to keep it, change it or scrap it based on the net positive job gain to the US.
For any new trade agreements, the trade agreement proponents should be asked to calculate how many jobs will be lost and gained in the home economy from the new trade deal. If there is a positive job gain, then it's a good deal.
Can we put labor standards and environmental safeguards into trade deals so we won't be hurt?
No, we can't.
If an agreement hurts workers in our country, then it is a bad deal.
What about consumers who are able to buy cheaper goods from foreign countries than they can buy from our own companies? Won't they be hurt?
In the short run prices will go up a little. But in the not so distant future, we will all be better off because we will have more jobs and be able to afford more things.
Besides, prices are going up anyway because of the world oil crisis. Protecting jobs at home will hardly be noticed.
This is especially true in the USA because trade is still a small part of our economy. Despite what we think, products from China are only about 2% of our economy.
Why is it that so many politicians sell these deals so hard if there will be negative effects on our economy?
To fully understand the trade debate about NAFTA and the other trade agreements, we need to look at two things: Economic theory and economic reality, or the dollars lost and gained by vested interests.
Looking directly at the bottom line of economic theory we see some theories about markets and trade. These theories provide the base rationalizations for the Free Trade Agreements the US and other nations enter.
The first theory we see is called Comparative Advantage. This theory was written in about 1776 by David Ricardo. Basically it says that merchants in any country can make a profit from trading with merchants in other countries even if their costs are higher in the home country. Home country merchants will buy products made in the home country which are comparatively cheaper than other products made in the home country even though these products are more expensive than world prices; then the merchants will sell the home country products at world prices taking a loss and use the money to buy world products at world prices which they can sell in the home country at a huge profit.
So, the reasoning goes, all the merchants in the home country will specialize in making products which have the relative, comparative advantage in the home market and sell those products in world markets.
When every country's merchants do this, the consumers in all countries will be better off because the merchants in all countries who specialize will create more goods in total.
This is a really wonderful idea even if it doesn't work. It is such a wonderful idea, and also so difficult to understand, that merchants who benefit from trade use this idea to argue against any interference with their trading rights. After all, any taxes on trade (which are called tariffs) will interfere with specialization and reduce the total amount of goods and services produced in the world.
Here is an argument which promises the best of all possible worlds for everyone and is very hard to understand. Is it any wonder that people who gain from agreements based on this idea will defend them tooth and nail?
Second, the twin ideas of Free Markets and Free Trade sound so very good, they must be essentially American. Who can argue with the idea that a free market economy with free trade will bring us the best possible world? And indeed, it has already, hasn't it?
In fact, the USA does not actually have Free Markets or Free Trade. Most markets are regulated very highly today. Most of our complaints about markets happens when government regulators do a bad job, not when a market fails.
The reason for the mortgage crisis we are in now is that we loosened banking regulation on commercial banks and did not regulate the mortgage markets at all. Our crisis today is a failure of regulation, not a failure of markets.
Is there a way out of this mess?
Yes, there is. The federal government needs to manage trade so the harmful effects of trade agreements are minimized. To see how to do that, go to my essay on Balanced Trade here: http://www.mkeever.com/essay.html
For further background see: GLOBAL TRADE AND CONFLICTING NATIONAL INTEREST, Ralph E. Gomory and William J. Baumol, MIT Press, Cambridge, Mass. 2000 ISBN -10: 0-262-07209-2
Copyright, 2008 by Mike P. McKeever, Santa Rosa, CA. This text can be posted in any electronic forum or quoted with attribution in any printed media. For publication in printed form please request permission from the author: email: mpmckeever@earthlink.net.
Wednesday, April 2, 2008
Pelosi: Vote Your Conscience
WASHINGTON (AP) — House Speaker Nancy Pelosi said the superdelegates who may ultimately decide the Democratic party's presidential nominee have a right to vote as they wish.
See article on link above
See article on link above
Sunday, March 23, 2008
Obama's Iraq Plan
Senator Obama obliges us with a speech March 19 about the war. Read the prepared transcript at the link above.
Sadly, I am underwhelmed and concerned for the future of the country.
Are there any experienced adults who vet the speeches at all?
Some of the material is just embarrassing.
Do you really want to send foreign service officers and USAID staffers to posts where they may be killed?
Has NATO consulted with you about their positions before you chastised them for inadequate action?
Memo the the Senator: We get that you opposed the war in a 2002 speech; you do not have to make an issue of it every time you address the war.
What do we do now?
Sadly, I am underwhelmed and concerned for the future of the country.
Are there any experienced adults who vet the speeches at all?
Some of the material is just embarrassing.
Do you really want to send foreign service officers and USAID staffers to posts where they may be killed?
Has NATO consulted with you about their positions before you chastised them for inadequate action?
Memo the the Senator: We get that you opposed the war in a 2002 speech; you do not have to make an issue of it every time you address the war.
What do we do now?
Wednesday, March 19, 2008
Reflections about Race
So, it's good that Obama talks about race.
But, IMHO, the real question is class.
He missed a great opportunity to talk about race and class.
He chose to talk about race only.
Too bad for the USA.
But, IMHO, the real question is class.
He missed a great opportunity to talk about race and class.
He chose to talk about race only.
Too bad for the USA.
Tuesday, March 18, 2008
Thursday, March 13, 2008
Snake Oil
Some may ask: what is the problem with Obama anyway?
Good question. Especially in the light of the race issue raised recently. As an old white guy, I am really afraid to even mention the issue. I don't say that lightly.
Watching Chris Matthews' Hard Ball discussion of Obama the other night, I was disheartened to hear the following statement from Chris, to the best of my memory:"If you don't like Obama you are racially prejudiced." I turned off the show at that point.
Here's my problem: his campaign is run at the lowest common denominator of politics. His web site asks you to believe in him on its home page. Then his campaign, very cynically in my view, promises people that he will solve all their problems without mentioning any specifics. It's a religion, not a political campaign.
Reminds me of the frontier years: 'This oil is made from genuine snake skins and is available only today - it will cure your colds, fix your cancer, stop the gout and plow the back 40. You have my personal guarantee. Only one measly dollar a bottle. Who will be the first among you?'
Senator Obama: as a nation we are at a crossroads. Either we will go down the road of increasing divisions between the government and the people or we will reverse the trends and move toward restoring the American Dream.
But, we can't move in the right direction based on hope and trust. We are Americans. We deserve answers, not platitudes.
Senator Obama: I don't care if you are black or purple with yellow stripes. I do care that you insult my intelligence and patriotism with vague promises.
Show us your concrete plans and talk about them. Your website has lots of policy proposals. Now is the time to flesh them out and name some people who will accomplish the specific tasks we need accomplished in a competent fashion.
Good question. Especially in the light of the race issue raised recently. As an old white guy, I am really afraid to even mention the issue. I don't say that lightly.
Watching Chris Matthews' Hard Ball discussion of Obama the other night, I was disheartened to hear the following statement from Chris, to the best of my memory:"If you don't like Obama you are racially prejudiced." I turned off the show at that point.
Here's my problem: his campaign is run at the lowest common denominator of politics. His web site asks you to believe in him on its home page. Then his campaign, very cynically in my view, promises people that he will solve all their problems without mentioning any specifics. It's a religion, not a political campaign.
Reminds me of the frontier years: 'This oil is made from genuine snake skins and is available only today - it will cure your colds, fix your cancer, stop the gout and plow the back 40. You have my personal guarantee. Only one measly dollar a bottle. Who will be the first among you?'
Senator Obama: as a nation we are at a crossroads. Either we will go down the road of increasing divisions between the government and the people or we will reverse the trends and move toward restoring the American Dream.
But, we can't move in the right direction based on hope and trust. We are Americans. We deserve answers, not platitudes.
Senator Obama: I don't care if you are black or purple with yellow stripes. I do care that you insult my intelligence and patriotism with vague promises.
Show us your concrete plans and talk about them. Your website has lots of policy proposals. Now is the time to flesh them out and name some people who will accomplish the specific tasks we need accomplished in a competent fashion.
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