Mitt Romney - Psychopathic Behavior ?

Barry, My Liege :

Some of Mitt Romney's campaign behavior raises troubling questions.

Consistently, he appears unable to connect with people and/or keep a constant position.

Additionally, he has profited from creating financial misery for others.

One possible explanation - but by no means the only explanation - is that he may be one of the 1 to 3% of the population with unusual brain wiring such that he has predilections toward psychopathic behavior.

However, he also displays some counter-indicating behaviors.

To establish whether there is a possibility of psychopathic behavior in an individual, there is a well known questionnaire which is used to determine whether an individual may have such tendencies. It is called the Hare Psychopathy Checklist-Revised (PCL-R).

While it is impossible to make any conclusion about Mr. Romney from a superficial test and limited exposure to his speeches and actions, the questions on the test appear to raise concerns about the National Security of the United States, should Mr. Romney be elected.

Here is a link to a thoughtful discussion of that test : http://bjp.rcpsych.org/content/190/49/s39.full

And, below is a discussion about the test itself including a 20 question self-administered test. [While this appears a valid presentation, the author is anonymous and provides no references. However, the test is discussed in Wikipedia - http://en.wikipedia.org/wiki/Psychopathy_Checklist-Revised_%28PCL-R%29]

"The Hare Psychopathy Checklist-Revised (PCL-R) is a diagnostic tool used to rate a person's psychopathic or antisocial tendencies. Originally designed to assess people accused or convicted of crimes, the PCL-R consists of a 20-item symptom rating scale that allows qualified examiners to compare a subject's degree of psychopathy with that of a prototypical psychopath. It is accepted by many in the field as the best method for determining the presence and extent of psychopathy in a person.

Precautions

Obviously, diagnosing someone as a psychopath is a very serious step. It has important implications for a person and for his or her associates in family, clinical and forensic settings. Therefore, the test must be administered by professionals who have been specifically trained in its use and who have a wide-ranging and up-to-date familiarity with studies of psychopathy.

Scoring and Result

The PCL-R provides a total score that indicates how closely the test subject matches the "perfect" score that a classic or prototypical psychopath would rate. Each of the twenty items is given a score of 0, 1, or 2 based on how well it applies to the subject being tested. A prototypical psychopath would receive a maximum score of 40, while someone with absolutely no psychopathic traits or tendencies would receive a score of zero. A score of 30 or above qualifies a person for a diagnosis of psychopathy. People with no criminal backgrounds normally score around 5. Many non-psychopathic criminal offenders score around 22.


The twenty traits assessed by the PCL-R score are:

Score 0 if it does not apply to you, score 1 if it somewhat applies, score 2 if it fully applies to you.

1. Glibness and superficial charm
– smooth-talking, engaging and slick.

2. Grandiose self-worth
– greatly inflated idea of one’s abilities and self-esteem, arrogance and a sense of superiority.

3. Pathological lying
– shrewd, crafty, sly and clever when moderate; deceptive, deceitful, underhanded and unscrupulous when high.

4. Cunning/manipulative
– uses deceit and deception to cheat others for personal gain.

5. Lack of remorse or guilt
- no feelings or concern for losses, pain and suffering of others, coldhearted and unempathic.

6. Shallow affect / emotional poverty
– limited range or depth of feelings; interpersonal coldness.

7. Callous/lack of empathy
– a lack of feelings toward others; cold, contemptuous and inconsiderate.

8. Fails to accept responsibility for own actions
– denial of responsibility and an attempt to manipulate others through this.

9. Needs stimulation/prone to boredom
– an excessive need for new, exciting stimulation and risk-taking.

10. Parasitic lifestyle
– Intentional, manipulative, selfish and exploitative financial dependence on others.

11. Poor behavioral controls
– expressions of negative feelings, verbal abuse and inappropriate expressions of anger.

12. No realistic long-term goals
– inability or constant failure to develop and accomplish long-term plans.

13. Impulsiveness
– behaviors lacking reflection or planning and done without considering consequences.

14. Irresponsible
– repeated failure to fulfill or honor commitments and obligations.

15. Juvenile delinquency
– criminal behavioral problems between the ages of 13-18.

16. Early behavior problems
– a variety of dysfunctional and unacceptable behaviors before age thirteen.

17. Revocation of Conditional Release
– Violating probation or other conditional release because of technicalities.

18. Promiscuity
– brief, superficial relations, numerous affairs and an indiscriminate choice of sexual partners.

19. Many short-term marital relationships
– lack of commitment to a long-term relationship.

20. Criminal versatility
– diversity of criminal offenses, whether or not the individual has been arrested or convicted."

Perhaps it is worthy of serious consideration.

Your faithful servant,

Why, Mitt, Why ?

Barry, My Liege :

Keep up the good fight, My Liege, your aggression seems to discombobulate the Reps and we are loving it.

But a broader question is trying to figure out exactly what drives Mitt Romney.

Here's one idea about what makes Mitt tick : He thinks he is a Royal. After all, he was born into a Royal family and made a lot of money on his own, so that means that he is simply better than the rest of us.

Besides, we would not understand him if he did explain because we just don't know how the world really works.

And, if he is just better than us, then he does not have to explain anything. Here's his wife on releasing his tax returns : "we've given all that people need to know" about the family's finances.

He answers to a higher power embodied in the form of really, stinkingly rich people who want to stay in the shadows.

If he can win an election by saying nothing, then he is free to do what he and his betters want him to do.

That may be the real reason he changes positions so often - we would not understand him if he told the real truth, so he can just say what the moment demands.

Just about the most ridiculous thing I have heard in years is the statement that he 'retired retroactively' from Bain.

Only addled Royalty thinks like that.

My Liege, it is a little discouraging to think that he might actually win the election.

Your faithful servant,

Corralling Bankers ?

Barry, My Liege :

American bankers' recent egregious and criminal behavior has damaged the Economic National Security of the United States. As a result, there have been some attempts at rectification through consumer protection legislation.

At the national level, the federal Consumer Financial Protection Bureau has been working diligently to propose new rules and to investigate and prepare prosecutions.

Some new rules and some news stories will appear soon from this agency. Details are here :

http://www.sfgate.com/business/networth/article/Consumer-bureau-poised-to-unleash-rules-3707333.php

In California, the California Homeowners Bill of Rights is a step toward fairness for homeowners ; here is the background :

http://www.sfgate.com/business/bottomline/article/Noe-Valley-faces-evictions-and-denial-3707324.php

But, Barry, My Liege, bankers are clever and will find ways to circumvent the new rules.

The intentions are good, My Liege, but the results will be inadequate. The Economic National Security of the United States will continue to be harmed by banks - unless the more stringent regulations discussed in the space previously are enacted.

There is some effort at the Justice Department toward criminal prosecutions ; see it here :

http://www.sfgate.com/nation/article/Criminal-cases-being-built-against-banks-3707662.php

Your faithful servant,

ELECTION UPDATE NOVEMBER 8 City College of San Francisco Spared Ax

Barry, My Liege :

UPDATE NOVEMBER 8, 2012 : GOOD NEWS

In Tuesday's election California voters passed Prop 30, which raises taxes on wealthy folks and gives money to education, and San Francisco voters passed Prop A, a special tax for CCSF.

It is very good news for City College in the short term. But, there are still reactionary forces looking to defund public education in the State and the Country.

**********************

The CCSF Board is meeting daily with the public, WASC, students, faculty and administrators to devise a plan to keep the College's accreditation. All have committed to keeping the college open.

Community support is high and sentiment propels the necessary efforts. I am hoping it will happen ; details here : http://www.sfgate.com/default/article/S-F-City-College-trustees-try-to-calm-fears-3697865.php

As background, CCSF is in danger of losing its accreditation. If it loses that status, then its credits will not transfer to four year colleges and, most likely, it will shut down.

The college enrolls about 90,000 students. That means that 10% of the population of San Francisco is currently taking classes.

It is a civic jewel and part of the heart of San Francisco.

If you emigrate to San Francisco from Moscow and don't speak English, you can take English classes at CCSF.

If you want to change careers and don't know what to do, you can explore options at CCSF for a modest fee.

If you have athletic talent but are not so good at academics, you may get a second chance on a CCSF national championship team.

If you are LGBT, you can join a support group at CCSF.

CCSF problems are manageable, but the current governing structure and personnel do not have the ability to solve the problems in the time required, IMHO. [While I am employed at CCSF, I do not speak for the college and this is my personal opinion only.]

With my business and planning background, the problems and solutions are readily apparent to me, as are the difficulties in implementation.

There is an urgent need to solve the immediate problems and create structures and systems which will manage the issues into the future.

This is a call to the Northern California community for help. The Board and Administration will benefit from a blue-ribbon, politically connected and effective team to guide them over this problem. Without that help, there is a real probability that CCSF will close.

Here is the background including a link to the report :
http://www.sfgate.com/education/article/City-College-of-San-Francisco-on-brink-of-closure-3682955.php

Your faithful servant,

Billionaires Giving Back

Barry, My Liege :

There may be some really rich folk who would like to give back to the Economic National Security of the United States of America, but who don't know what to do.

I will grant you that it is unlikely, but who knows?

Here is the proposal :

Let us create a list of critical projects at the national, state and local levels where there is an immediate need and the need is critical. These will be projects that have more immediate importance than mining gold on Mars or creating a privately owned space program - fun though each of those may be.

With decreasing tax revenues, it should be easy to write a list of deserving projects.

Let elected officials at each level decide which projects will be on the list and in which priority; then ask them to provide a description of the project, the amount of money needed and, most importantly, where to send the check.

Then we can publicize the list and track publicly which projects are funded and which do not receive any interest.

My Liege, this space will be delighted to administer such a list in the event there are no government resources available.

By all means, it should be said by all the billionaires that 'Well, at least I know where to send my money.'

Your faithful servant,

CFTC Proposed Rules - Offshore Trading In Derivatives

Barry, My Liege :

The CFTC has proposed some rules to regulate derivatives in offshore trading.

The rules [seen here : http://in.reuters.com/article/2012/06/30/cftc-cross-border-idINL2E8HTFR620120630] make some sense.

My Liege, here is the question : Do we have the ability to place and enforce sensible rules, or will the bank lobbyists succeed in watering them down ?

It is a big question.

Your faithful servant,

Primer : Profit Motive and Public Institutions

Barry, My Liege :

There appears to be a trend of appointing successful business people to the governing boards of public bodies. The University of Virginia created headlines recently with its attempt to introduce business methodology into a publicly supported University.

It is no secret that public funding at State and local government levels for the support of public education is in danger due largely to lower tax collections. Additionally, there does exist a political philosophy which encourages the demise of public education for some reason.

In response, some institutions are downsizing in order to meet the lower level of tax support available today, while others are applying business models in an attempt to increase revenues.

However, My Liege, there is a fundamental contradiction between a business model and a public model.

As we go forward, it will be well to remember this contradiction.

In a business model, the objective is to reduce costs in order to increase profits. In some cases, costs can be reduced for the business by having other entities pay the costs. The economic term for this is 'externalized costs'.

For example, automobile manufacturers are not required to pay all the costs which their products incur ; costs such as air pollution, road construction and maintenance and costs associated with accidents are all borne by the society at large.

If automobile manufacturers were required to pay all the costs they create, the price of an automobile would be so high that the companies would sell very few cars.

But, public institutions have different objectives. In most cases, public institutions attempt to provide services which have 'externalized benefits' ; in other words, the benefits which public institutions create accrue to society at large and not to the institution.

For example, consider a public water delivery agency which charges very low prices and attempts to provide all people with clean water. Society at large will benefit from its operations even though the fees the agency charges its customers will barely cover its out of pocket costs.

Were we to privatize that water agency, the profit seeking managers would logically raise rates, cut off customers who are slow to pay, defer maintenance on its system and skimp on water quality testing and treatment.

Clearly, society as a whole is better off with a public agency than with a private company delivering water.

We will be wise to remember this contradiction as we seek to work our way out of the current recession.

For more on the growing trend to finance public works with private funds, see this article :

http://www.sfgate.com/news/article/More-mega-projects-turning-to-private-investors-3690367.php

Your faithful servant,

Recovery : Cost, Benefit Analysis

Barry, My Liege :

It is time to summarize the costs and benefits to the Economic National Security of the United States of all of the 13 specific proposals made in this space to remedy economic maladies facing the United States today.

1. Strengthen Unions

Costs - Some companies will face higher wage and benefit costs.

Benefits - Middle class wages and benefits will rise thereby increasing aggregate demand and GDP.

2. Stop Union Busting

Costs - Some companies will face higher wage and benefit costs.

Benefits - Middle class wages and benefits will rise thereby increasing aggregate demand and GDP.

3. Destroy Monopolies

Costs - Some monopolies and oligopolistic firms will lose monopoly profits.

Benefits - Consumer surplus and economic welfare will increase thereby increasing aggregate demand and job creation.

4. End Free Trade

Costs - Tariffs and protections will raise retail prices of some goods, slightly reducing consumer surplus.

Benefits - GDP will increase by about $ 1 trillion per year by eliminating Balance of Payments deficit, domestic employment will increase.

5. Tax Away Great Fortunes, Great Incomes

Costs - Taxing away great fortunes and incomes will harm the rich.

Benefits - Wealth redistribution will increase aggregate demand and job creation.

6. Create National Industrial Policy

Costs - Some companies which are not chosen as worthy of protection will face increased competition and may fail.

Benefits - By targeting growth industries, our economic future will be more secure.

7. Extend Utility Regulation

Costs - Some companies will no longer enjoy monopoly profits.

Benefits - Consumer costs will decrease, thereby raising aggregate demand and GDP.

8. Install Punitive Bank Regulation

Costs - Some banks will be harmed although depositors will not.

Benefits - Consumers and the economy will benefit from a stable financial system.

9. Keep Social Security and Medicare as they are

Costs - Some additional borrowing may result and some formulae may be adjusted.

Benefits - Keep aggregate demand at current levels; provide secure future for elderly and infirm.

10. Single Payer Health Care

Costs - Some insurance companies will fail.

Benefits - We will provide health care to all and save about 9% of $ 2 trillion per year, or $200 billion, compared to what we spend now on total health care.

11. Follow Keynesian Fiscal Policy

Costs - We will borrow more in a recession.

Benefits - We will have less drastic recessions and lower unemployment rates.

12. Require Media Provide Free Political Ads

Costs - Some media companies will receive less income.

Benefits - Reduce amount political candidates raise, reduce corruption.

13. Encourage Occupy Movement Protests

Costs - Several deaths may result from protest over-reaction by authorities, costs for policing demonstrations will be high.

Benefits - If peaceful political actions fail to provide leadership, it will be the last chance to save the political future of the United States of America.

There you are, My Liege.

That is the list of economic maladies together with proposed remedies and the costs and benefits of each.

We pray you choose your actions wisely.

Your faithful servant,

Recovery : Occupy Movement

Barry, My Liege :

The previous several postings in this space have discussed various economic maladies which afflict currently the Economic National Security of the United States.

Those postings have included suggested economic remedies and estimates of the costs of each malady which remains un-remedied.

My concern, My Liege, is that the political process in the United States is both too corrupt and too gridlocked to install any of the remedies suggested.

This situation constitutes a vacuum of national political leadership.

It is an old truism that 'Nature abhors a vacuum.'

That is the reason for specifying the Occupy movement as a Recovery issue.

As you know, the United States has a long history of political demonstrations, strikes, riots and general unrest beginning in 1619 with a strike by Polish craftsmen in the Jamestown colony for voting rights and continuing through today with the Occupy movement.

My father served in the National Guard that was called to San Francisco from Los Angeles in the International Longshoremans and Warehouse union strike of 1934. Two longshoremen, Nick Bordoise and Howard Sperry, were shot to death by the San Francisco Police. May 1934.

Should you, Barack H. Obama, fail to remedy or ameliorate some of the maladies listed here through government action, then the last remaining hope for the Exceptional Experiment that was the United States is the Occupy movement.

We can hope that the movement will continue with its protests and that there will be real reform as a result.

The danger is that the Occupy Movement will be co-opted by a violent group and that the recently militarized police and Homeland Security will overreact, killing some protestors.

We also hope that the Movement stays on its current non-violent course and lobbies peacefully for economic change.

Just about every country in the world contains a privileged class of people who abuse and exploit the average and the poor.

If we fail to redress our current situation, we may become just another country where the privileged exploit the underprivileged.

Your faithful servant,

Recovery : Media and Campaign Finance

Barry, My Liege :

It is time to consider requiring that the media which receive its frequency allocations from the Federal Government provide free campaign ads to political campaigns.

Since the public owns the frequencies, the public has the right and duty to ensure that they are used in the public interest. It is the responsibility of the Federal Communications Commission to ensure that the public interest is protected.

The FCC is failing its duty.

At the moment, media receives billions of dollars in revenues from political campaigns. One estimate is that the 2012 election will cost $ 8 Billion ; much of that will go directly to media outlets to buy political ads.

Using a very rough guess of 75% of campaign finance going to media buys, which means media will receive $ 6 billion this year alone.

It is bad enough that the media receives an indirect subsidy from the government through political ads, but the bigger problem is that the politicians who write our laws must raise that money from campaign donors in order to be elected.

Politicians who receive campaign contributions are naturally disposed to consider the interests of their campaign contributors when writing legislation.

The question then becomes this : What exactly do donors want that is contrary to the public interest?

There are at least three things that moneyed interests can obtain through campaign contributions that damage the public interest.

First - Monopoly.

Campaign donors seek laws and regulations which enable them to obtain or expand a monopoly or oligopoly. The deleterious effects of monopoly profits were discussed earlier in this space. Monopolies and oligopolies harm the public interest simply because they exist.

Second - Favorable treatment from legislators and regulators.

Jamie Dimon of J. P. Morgan recently testified before Senate and House committees about a large loss made by his bank. The questions were embarrassing for the country. There were no questions which reflected the public interest, only questions which allowed Mr. Dimon to gloss over any potential dangers to the public from his bank's incompetence.

My Liege, you will not be surprised to learn that Mr. Dimon and his family have given $400,000 to Congressional campaigns since 1998. Some of those contributions went to the very Congress persons who questioned Mr. Dimon. Some of the questioners had received $2,000 from the Dimon family.

Now, we can only imagine what happens to the public interest when legislators and Presidential candidates must raise $ 8 Billion in one campaign.

Third - Writing Legislation.

The American Legislative Exchange Council [ALEC] is a group composed of legislators at State and Federal levels and corporate lobbyists who convene and propose laws for State and Federal governments. Some of the laws proposed by ALEC have been adopted word for word by various States.

Fortunately, public pressure has encouraged some corporations to withdraw from ALEC and its influence is waning. But, we can expect that another similar effort will be launched in the near future.

Proposed Solution

The above argues for overall campaign finance reform, and it is well needed.

This space suggests an alternative method to achieve positive public interest results : namely, requiring the media to provide free political as part of their licensing.

It is not expected that this will be easy inasmuch as it will be very effective.

Your faithful servant,

Governments can help companies work with nature

Barry, My Liege :

Below is the entire text of a copyrighted column by Jon Rogers that appeared in the San Francisco Chronicle about how governments can help with environmental problems.

His approach appears grounded in reality and is worth further investigation.

Jon B. Rogers

The United Nations' Rio +20 Summit arrives at a critical time in the perceived conflict between economic expansion and preservation of natural resources.

The challenge: How to balance myriad interests to produce a win-win for all - people, land, plants and animals?

Our family's coffee company - which works directly with coffee farms from Central America to Africa to Indonesia - knows firsthand that sustainable development can lift people out of poverty and preserve nature.

We've also witnessed shortsighted socioeconomic models.

In the 1980s, on some farms barefoot children - some wheezing from chronic respiratory problems - huddled or played in filthy, three-walled shacks with dirt floors. Some picked coffee. Breakfast was sometimes sugar water.

One elementary classroom was an old fertilizer shed where fumes from toxic chemicals stuck to clothing.

Untreated waste and pollutants flowed from farms into rivers where fish labored for oxygen. Poaching occurred in forests also used as a firewood source.

We've learned that making a difference requires investment - providing modern housing, medical and educational facilities and paying the farmer enough to stay in business for example - but the payoff is enormous.

Technology plays a role. But nature itself offers solutions.

In Central America, a "biodigester" system prevents coffee bean waste from contaminating rivers, reduces greenhouse gases and helps power organic farms.

A "green army" - billions of worms - digest and transform coffee pulp into organic mulch that's given to farmers to help promote organic production in Africa and Central America.

The coffee farms support a tremendous range of bird and animal species as well as jobs performed around native vegetation and forest - proof the economy and environment can coexist.

The past may also hold some promise for the future of sustainable agriculture.

We discovered an ancient Amazonian agricultural technique - terra preta - that mixes charcoal, microorganisms and other waste to create a "super soil" that also retains carbon.

The increased yield - up to 300 percent - could reduce the destruction of forests for farming and greenhouse gases.

Here's what governments can do to help promote such efforts:

-- Provide tax breaks or other incentives for companies to become "carbon negative," undertake "green" measures or create sustainable jobs.

-- Strengthen the economic and environmental standards required for a company to claim its product is "sustainable" or "fair."

-- Offer unused or surplus land at a good price to companies engaged in sustainable development.

-- Encourage the private sector to offer financial incentives to individuals who devise programs that further a "green economy."

-- Encourage organic production and preservation of natural resources.

Sustainable development can involve simple, inexpensive measures or require significant capital.

In the end, the cost of not investing is much greater than the cost to invest in sustainable development for future generations.

Jon B. Rogers is co-founder/president of the Rogers Family Co., Lincoln, CA (rogersfamilyco.com).

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/06/22/EDQ81P51B0.DTL

© 2012 Hearst Communications Inc.

Recovery : Keynesian Fiscal Policy

Barry, My Liege :

After World War II, most industrialized countries adopted a Keynesian philosophy of fiscal policy. The United States of America has followed this philosophy consistently since before the War.

In its essence, a Keynesian fiscal policy is counter cyclical. That is, the national government should take expansionary measures to raise consumption spending when the economy is in recession and should take contractionary measures to reduce consumption spending when the economy has inflationary pressures.

While these expansionary or contractionary measures may include borrowing to expand spending in a deficit position or paying down debt in an expansion, fiscal measures are not limited to debt management.

Keynesian measures may include tax policy as well as spending and borrowing policy.

Clearly, the difficulty with this approach in a democracy is that political considerations may trump economic policies.

Nowhere is this more evident than in the Republican Party's position on additional borrowing and stimulus in 2012.

So far, they have refused to allow adoption of additional Keynesian fiscal policies in the United States beyond the stimulus of 2008 and 2009.

Nevertheless, that stimulus has resulted in an amelioration of the recession and has made the United States one of the stronger economies in the world.

But we need additional stimulus to reduce our unemployment and to create additional consumption spending.

We see, my Liege, the effects of a non-Keynesian fiscal policy in some European countries today; the results include increasing recession and unemployment.

The economics is clear and convincing.

We pray you success, My Liege, with the politics.

Your faithful servant,

Recovery : Single Payer Health Care

Barry, My Liege :

Our current health care system does not make sense. It will be a little better if the Supremes validate the current Affordable Care Act [ACA] system.

But even if the ACA program is upheld, the system will cost too much, deliver too little care and leave too much money in private insurance companies.

By moving to a single payer system, we can deliver better care to all citizens at a lower cost.

In a study of the Minnesota Health Care system, the Lewin Group forecasts that a single payer system will reduce total health care spending in the State by 8.8% as compared to a fully implemented ACA[http://growthandjustice.org/sites/2d9abd3a-10a9-47bf-ba1a-e315d55be04/uploads/LEWIN.Final_Report_FINAL_DRAFT.pdf].

The current and proposed ACA systems create market failures which leave significant numbers of people without health care.

Those market failures reduce our Economic National Security since sick people are unable to contribute economically and since the sick and uninsured are directed to the emergency system.

Your faithful servant,

T P P Bad for the USA

Barry, My Liege :

The Trans Pacific Partnership trade agreement is bad policy for the Economic National Security of the United States.

We pray you not sign this bill if it reaches your desk.

We pray also that it will be tabled or voided in Congress.

Your faithful servant,

Angelides : Break 'Em Up

Barry, My Liege :

The man who wrote the book on bank failure, Phil Angelides, has called for breaking up the big banks.

'If the largest banks can only be run so recklessly that they harm the economy as well as themselves, they should be broken up, Angelides said in a talk at the Center for National Policy, an independent Washington D.C. think tank.“By 2011, the top 10 banks in this country held 77 percent of the nation’s banking assets. The top five banks – JPMorgan, Citi, Bank of America, Goldman [Sachs] and Morgan Stanley – held $7.9 trillion in assets and 95 percent of the $304 billion in [OTC] derivatives held by U.S. bank holding companies,” Angelides said.

“These banks are too big to fail. They’re too big to manage. They’re too big to regulate. They’re too complex to understand and they’re too risky to exist. And the bottom line is they offer very little benefit,” Angelides added.'[Reuters, June 12]

He then called for breaking them up into smaller banks that would not pose a risk to the economy.

Here's my take, My Liege:

Banks should be allowed to fail. Make the depositors whole through the FDIC and then let the shareholders go through bankruptcy.

When Jamie Dimon says the Volcker Rule would have prevented the risky trade at his bank as he did in Congressional testimony, then we know the Volcker Rule is fatally flawed, and that is only because Jamie Dimon supports it.

Big banks are a danger to the economic national security of the United States.

Your faithful servant,

Recovery : Social Security, Medicare

Barry, My Liege :

Social Security and Medicare are the most successful government programs of all time. And, we cannot cut these programs and expect economic recovery and job growth at the same time.

They have achieved the goals of making old age for United States citizens a happy time instead of a time for terror.

Not only that, but the economic impact of the programs is considerable ; any reduction in these programs will have a dramatic and immediate impact on GDP and job creation.

Here are a few facts about Social Security from Roberto Gallardo and Al Myles in Daily Yonder [http://www.dailyyonder.com/economic-impact-social-security/2011/12/18/3649] :

Social Security supports 8.4 million jobs and makes annual payments to recipients of about $1.2 trillion. 51 million people receive checks from Social Security - that's about 15.7% of the of the total population.

Gallardo and Myles have calculated that a 5% reduction in Social Security payments will reduce GDP by $63 billion, reduce employment by 419,000 jobs and reduce federal tax collections by $7.8 billion.

While there may be an argument in favor of adjusting the formulae used in the programs, it is clear that significant reductions must be prevented in order to secure recovery and growth.

Your faithful servant,

"Those who cannot remember the past, are condemned to repeat it." Geo. Santayana.

Barry, My Liege :

Perhaps the reign of English King Henry VIII can offer some parallels to today.

The King was a very human man; he was the King who founded the Church of England by cutting ties with the Roman Catholic Church in 1534.

But, the interesting parallel to today does not rest in his treatment of his wives or the Catholic Church, instead it rests in his actions to finance his Kingdom.

English Kings were reluctant to tax the population because the House of Commons had to approve a tax ; Kings would rather finance their own than beggar themselves before Parliament for a tax.

In the early 16th Century the Roman Catholic Church still owned a network of monasteries and churches across England. Henry thought he could finance his government by sacking those properties. And, if a few clerics lost their lives, well nobody really cared about those Romans anyway.

But, Henry decided to let some of his palace friends undertake the sacking on a sort of 'outsourced, private contract' basis instead of doing it with government troops.

Naturally enough, some of his friends grew quite rich from the project and were his happy supporters as a result. Eventually, however, all the prosperous monasteries and churches had been sacked and that revenue stream dried up.

But government expenses continued, so Henry took the next logical step : he debased the coinage.

As a result, there was a general inflation throughout the land.

" 'The proportionate value of meat today is nearly three times the old rates, that of corn nearly two and a half times, that of dairy produce two and a half times. But the rise in wages is little more than one and a half times,'
[Thorold Rogers in THE HISTORY OF BRITISH CIVILIZATION] In other words, the poor man .......emerged from the Reformation and Counter-Reformation with less food and less clothes and less command over the good things in life than before.... The ring of nouveaux riche who had grown fat on the profits of the monasteries were impatient for another share out, and the straits of government were desperate. Accordingly the next objects to be singled out were 'colleges, free chapels, chantries, hospitals, fraternities, brotherhoods, gilds and stipendiary priests.'"
[THE HISTORY OF BRITISH CIVILIZATION, Wingfield-Stratford, Routledge & Kegan Paul, London, 1928]

My Liege, perhaps that may sound familiar to you.

After all, are the rapacious not coming today for the colleges, the pensions, the police, the teachers and the firemen?

It did not end well for England and the King ; and, it will not end well for us.

Your faithful servant,

Recovery : Punitive Bank Regulation and Glass-Steagall

Barry, My Liege :

The United States of America in which most of the population lives has learned a lesson. We have learnt this clearly and absolutely ; we know it as well as we know our names.

The lesson is this : Bankers will not consider the effects of their actions on other parties. They have proven repeatedly that they act as if they are in a vacuum. They take no responsibility for any harm they cause.

Banks caused the recent economic meltdown ; they will cause future recessions and depressions unless they are restrained.

From that lesson it follows that the government of the United States has the responsibility to protect the population from bank practices.

However, My Liege, we have the distinct impression that the bank lobby has corrupted the political and regulatory processes thoroughly.

This is the source of our discontent.

Once in our history after great misery and social malaise, we created a bank regulation process that protected the population.

This group of laws was passed in the 1930's. These laws were based on the assumption that banks cannot be trusted to act in the public interest.

These laws were successful in providing a stable financial system for half a century. During this stable period, we enjoyed great prosperity. The laws were extensive and punitive.

The basis of the system was the Glass-Steagall act which prohibited a commercial bank from buying or selling stocks or insurance. Commercial banks are banks which take deposits and make loans.

Some of the other laws are listed below.

The Federal Deposit Insurance Corporation [FDIC] was created to insure the safety of commercial bank depositor's accounts. When a bank failed, the FDIC paid off the depositors, but allowed bank owners to lose their investment.

Investment banks were created to make investments in stocks and other instruments. They were allowed to fail and there was no insurance to protect the owners or investors.

The Securities and Exchange Commission [SEC] was created to protect investors from criminal stock promoters.

All companies which took deposits and/or made loans were regulated ; there were no unregulated financial institutions.

Savings and thrift institutions were regulated so that they could take deposits, but were allowed to make loans on residential real estate only. They were not allowed to issue checking accounts.

Insurance companies could not trade in stocks, make loans or take demand deposits.

The Federal Reserve Bank established limits on interest rates that could be charged to borrowers and paid to depositors by banks. The FED also examined banks carefully to ensure their loan portfolios were sound and the managers were capable. And, the FED established and enforced capitalization ratios to ensure that banks would stay sound during hard times.

My Liege, this is only an introduction to the concept of ensuring the financial stability of the United States of America.

You will note that all the listed laws, and the array of acts, laws and statutes not covered here, have as their common foundation a simple idea.

That common foundation is this : banks cannot be trusted.

We pray you will adopt that foundation, for we fear we are doomed unless you do.

The article in this link provides evidence of criminal bank behavior : http://www.rollingstone.com/politics/news/the-scam-wall-street-learned-from-the-mafia-20120620

Your faithful servant,

What Would President Mitt Do?

Barry, My Liege :

It is appropriate to forecast what would be the effects of a Romney Presidency on our economy, even though such an exercise approaches politics. Nevertheless.................

Since he states that he would follow the economic policies of G W Bush, it is a simple matter to see what key indicators were when Bush took office in 2001 and compare them to when he left office in 2009. Then we can apply the percentage changes to our key indicators today and forecast where we would be after 8 years of a Romney Presidency.


DOW JONES AVERAGE

The DJ was about 10800 when Bush took office and finished at 10600.

But, there was a large drop to about 8000 and recovery back to 10600. Now it is about 12100.

We can forecast a Dow ending in similar range as the beginning, but a huge panic at some point in the Romney Presidency.

UNEMPLOYMENT RATE

Bush inherited a 5.0% unemployment rate and finished with a 9.9% rate.

We can forecast a doubling of the unemployment rate during a Romney Presidency.

TOTAL NON-FARM EMPLOYMENT

Total non-farm jobs were about 132 million when Bush took office and were about 130 million when he left - a drop of 2 million jobs or about 2%.

This masks the fact that total jobs grew to about 138 million by 2008, but fell back to 130 million by 2009. Total jobs now are about 139 million.

A Romney Presidency would bring little or no long term job growth.

MEDIAN HOME PRICE

The median home price was about $162,000 when Bush took office. It rose to about $230,000 in 2008 and is now about $170,000.

A Romney Presidency would lower home prices further.

TOTAL DEBT OF THE UNITED STATES

Our national debt was about $5.6 trillion when Bush took office and it rose to $11.9 trillion when he left.

We can forecast a doubling of the debt under a Romney Presidency.

BANK REGULATION AND PANICS

Bush fostered a climate of non-regulation for banks with a resulting panic and economic meltdown.

We will see the same under Romney.

SOCIAL SECURITY

Bush made an attempt to privatize Social Security - Romney will do the same. If successful, life for senior citizens will deteriorate rapidly.


Your faithful servant,

Recovery : Regulating Utilities

Barry, My Liege :


'A public utility, or utility, is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies.' [wikipedia]

Public services regulated as monopolies in the United States have included water, sewer, electricity, natural gas, highways and roads, telephone and telegraph, airlines and railroads.

Often the service provided by the utility is a monopoly or oligopoly for a variety of reasons. One reason can be capital requirements : Perhaps the provision of the service requires huge capital investments such that the service provider could not attract the capital required to provide the service without a guarantee of returns to the capital providers. The guarantee is usually in the form that the provider will be insulated from competition.

Regardless of the reason for achieving or granting such monopolies or oligopolies, the effect is that the providers have such enormous power over customers that there is a great temptation to achieve monopoly profits by pricing the product or service at a higher price than would obtain in a competitive marketplace.

Monopoly profits can occur whether the industry is a monopoly or not. The test is whether the firm faces a sloping demand curve and can achieve monopoly-style profits by raising the price above and reducing the quantity sold below a competitive equilibrium.

If monopolies and oligopolies are allowed to earn monopoly style profits, the result will be greater inefficiencies in the market place and a transfer of significant portions of consumer surplus to monopoly profits; the effect would be to reduce middle class incomes further.

A common solution to this problem is to regulate the utility carefully so that it has the ability to earn a sufficient return to attract capital but is prevented from usurping consumer surplus into monopoly profits.

For example, many communities have Public Utility Commissions which regulate the pricing and practices of utilities. These are elected bodies which have the power to approve or reject rate changes and capital investments. This concept has been recognized in the United States for more than 100 years; for example, a Public Utility Commission was established as part of the Colorado Constitution adopted in 1876 as 2.26 ARTICLE XXV. Public Utilities.

When left to function in the public interest, these commissions frequently succeed in pricing the service close to what a competitive market might establish.

When that occurs, the public interest is served since the Utility is prevented from achieving monopoly profits.

In today's economy there are numerous examples of monopolies and oligopolies which do secure monopoly profits but are not regulated to prevent that occurrence.

My Liege, I think it is time to expand the number of industries subject to Public Utility Commission style regulation. Such an extension would reduce the accumulation of monopoly profits and the consequent reduction of middle class purchasing power. By that mechanism, we would see additional economic growth springing from an increase in middle class buying power.

And, I suggest we extend the candidates for such Public Utility Commission style regulation to include industrial products as well.

Utilities should include industries in which the final product or service is used by more than one third of the households AND in which the four firm concentration ratio exceeds 60%. Such a calculation will be allowed for city, county, and state as well as national public utility designations.

When considering industrial products which are not sold directly to households but are raw materials or components of other products, then we should consider only the concentration ratio. Whenever the revenues of the top four firms in such an industry exceeds say 70% of the total industry revenues, then the industry should be deemed a utility and a Public Utility Commission should be assigned to regulate it.

By adopting such a course, the United States of America will strengthen its Economic National Security by reducing the power of some monopolies and oligopolies to accumulate capital and by transfering some of that capital to consumers in the form of lower prices and greater access to products and services.

Your faithful servant,

Spring Country Studies

Barry, My Liege :

The McKeever Institute of Economic Policy Analysis [MIEPA] is pleased to announce the publication on its website [www.mkeever.com] of detailed studies of the economic policies of the United States of America, Colombia, Mexico, Korea, Hong Kong, China, Iran, Romania, Czech Republic, India and Japan.

Three countries which have not been previously analyzed by Specialists are submitted :

Colombia is analyzed by Specialist Daniel Guasca - http://www.mkeever.com/colombia.html

The Czech Republic is analyzed by Specialist Lucie Wittichovia - http://www.mkeever.com/czech.html

Romania is analyzed by Specialist Iulian Georgescu - http://www.mkeever.com/romania.html

Additionally, eight countries have been newly analyzed by Specialists:

China is analyzed by three Specialists : Junfeng Li, Michael H. and Amanda Z. - http://www.mkeever.com/china.doc

Hong Kong is analyzed by three Specialists : Waihong Wong, Kam Tung Wong and Lewis Chan - http://www.mkeever.com/hongkong.html

India is analyzed by Specialist Tasha Agarwal - http://www.mkeever.com/india.html

Iran is analyzed by Specialist Arash Sarabi - http://www.mkeever.com/iran.html

Japan is analyzed by Specialist Nanako Fuku - http://www.mkeever.com/japan.html

Korea is analyzed by Specialist Sung A. Park - http://www.mkeever.com/korea.html

Mexico is analyzed by Specialist Damaris Ortiz - http://www.mkeever.com/mexico.html

The United States is analyzed by six specialists : Sophia Gee, Kelley Carroll, Christopher Baldonado, Christian Daria, Noel Acasio and Edna Lin - http://www.mkeever.com/usa.html

Best regards,

Mike P. McKeever
MIEPA
www.mkeever.com

Recovery : National Industrial Policy

Barry, My Liege :

An economic policy is any law, regulation or practice through which citizens and companies can find profit opportunities or can be taxed or harmed. Considered as such, policies can be national, state or local, but usually attention is paid to policies at the national level because they have the greatest impact.

When considered in this fashion, it is clear that we already have a national industrial policy.

But, our existing national policy has been developed in a haphazard manner and does not protect our Economic National Security adequately.

For example, it can be argued that our existing industrial policy calls for exporting manufacturing jobs, sustaining a large trade deficit, transferring technology to foreign companies regardless of the effect on our domestic economy and allowing a privileged class of bankers to speculate in a variety of markets while under the protection of government sponsored insurance against failure.

My Liege, that does not make sense.

Other countries like Japan, China, Korea and Germany have created a conscious industrial policy with some effect in creating a better economy for their citizens.

It is time that we emulated those successful countries. Our future Economic National Security requires it.

It will be a serious undertaking, however, since it will involve changing some powerful economic sectors. We can predict that any industry or influence which seems threatened by economic change will mount a strong campaign against change.

And yet, our future depends on it.

As an example of how such a policy might appear, here is a description of the Japanese policy from POLITICS AND PRODUCTIVITY : HOW JAPAN'S DEVELOPMENT STRATEGY WORKS, Chalmers Johnson, Laura D'Andrea Tyson, and John Zysman, Harpercollins (January 1991) :

'The allocation of resources among industries and activities can be evaluated not only according to its Ricardian efficiency but also according to two other performance criteria:

1. Its growth efficiency or its effects on long-term rates of growth of economic activity

2. Its Schumpeterian efficiency or its effects on the pace and direction of technological change.

These two criteria clearly dominated Japanese economic policymaking in a self-conscious way. Japanese industrial policy targeted industries and activities that appeared to the Japanese planners to have the greatest future growth potential and the greatest technological potential over the long run.

As Freeman argues in his insightful book on Japanese technology policy, "MITI saw as one of its key functions the promotion of the most advanced technologies with the widest world market potential in the long run ."

Under conditions of imperfect competition and technological change, an allocation of resources that is Ricardian efficient-in other words, efficient by current market indicators-may not be efficient in the growth or Schumpeterian sense.'


When we think about an Industrial policy for the United States, we recognize that it will be a huge undertaking because we have such a large and diversified economy.

Here are some things to consider:

** Encouraging oil replacement technologies to reduce dependence on foreign oil supplies is a natural

** Auto manufacturing industry is a great job creator and a success for Federal intervention

** Reducing or eliminating our BOP deficit will save many jobs in the USA

** We should not do obvious acts which can harm our military strength or increase the military strength of our potential adversaries - we should not sell missiles to Iran, for example

Mostly, let us recognize that mistakes will be made as we move forward, but the biggest mistake is to do nothing.

As the sage Yogi Berra said : 'You've got to be very careful if you don't know where you're going because you might not get there.'


Your faithful servant,

Pre-Publication : IRAN

Barry, My Liege :

MIEPA is proud to announce that the detailed economic analysis of IRAN has been updated by native Iranian Arash Sarabi and is now available for viewing at this link: http://www.mkeever.com/iran.html

While several other country economic analyses are in preparation and will be published shortly, MIEPA is providing this unusual preview because of the sensitive nature of relations with Iran at this time.

Your faithful servant,

NSA - Inadmissible, But.....

Barry, My Liege :

As little as I know about the law, one thing seems clear : evidence gathered from illegal search and seizure is inadmissible in a court of law.

So, my conclusion is that all the information our spooks steal from us cannot be used against us in the courts.

It has the same standing as a conversation with a stool pigeon who won't testify in open court.

It means the police have to prove it before they can use it.

Unfortunately, My Liege, those protections have been seriously weakened by your executive extra-judicial powers.

The courts are powerless to protect me from you or your subordinates.

I am not secure from those who control the United States government ; and, I do not think that voters control the government.

Your faithful servant,

Recovery : Great Fortunes, Great Incomes

Barry, My Liege :

The accumulation of great fortunes and large incomes in the United States has a deleterious effect on economic growth and job creation.

Economic growth and job creation comes from people who invest in businesses. It is well known that business investing is risky.

'Of all the new business startups, 1/3 eventually turn a profit, 1/3 break even, and 1/3 never leave a negative earnings scenario. According to a study by the U.S. Small Business Association, only 2/3 of all small business startups survive the first two years and less than half make it to four years', [http://www.gaebler.com]

And, since most jobs are created in small businesses, then it follows that economic growth and job creation requires risky investments.

People who create large fortunes are mostly interested in preserving their capital. They become risk averse as their fortunes become larger. They do not want to invest in risky businesses.

This was first recognized by Keynes in his description of the Marginal Efficiency of Capital. In Keynes' graph, the Marginal Efficiency of Capital is a negatively sloped cuve where higher returns are associated with lower capital amounts and lower returns are associated with higher capital amounts. In the graph the vertical axis represents percentage returns, the horizontal axis represents the dollar amount of capital and the MEC line represents the downward to the right sloping, negatively sloped curve of actual investments made.

We can see this demonstrated through classifying some investments as low risk and some as high risk in the United States today.

HIGH RISK INVESTMENTS ARE COMPARATIVELY SMALL - The total amount invested annually in venture capital business start ups and expansions, which are high risk, high profit investments is about $250 billion per year.

SAFE INVESTMENTS HAVE HIGHER DOLLAR TOTALS - At the other extreme, the value of United States Treasury bills is now about $15 trillion with some one or two trillion added each year. T-Bills are widely regarded as the safest investment in the world and are now paying about 2%.

All the gold mined in the world by 2009 was about 165,000 tons with a value of about 10 trillion dollars at $1,900 per ounce. Of that, some 19% is held by central banks as currency reserves.

The total valuation of homes in the United States is about $ 9 trillion after the price meltdown of the last few years. Residential real estate is usually considered a safe investment.

Commercial real estate is also considered a safe investment although somewhat more risky than houses. It is also worth about $ 9 trillion.

Although somewhat more risky than T-Bills, the NYSE is considered a safer investment than new business start ups for a number of reasons. The total valuation of all the companies on the NYSE is about $ 15 trillion.

In conclusion, My Liege, it is clear both theoretically and practically that people with large incomes and fortunes do not wish to invest in busines start-ups. Any activity that increases already large fortunes will take money away from people wishing to start new businesses, thus reducing economic growth and the Economic National Security of the United States.

Your faithful servant,

UPDATE - TRAPWIRE , NSA Records, Keeps All US Calls, Emails

Barry, My Liege:

The NSA collects and saves every telephone call and email made by every United States citizen and does so without a warrant and in direct violation of the US Constitution.

The operation is called TRAPWIRE, and you can read about it here :

http://rt.com/usa/news/trapwire-abraxas-cubic-surveillance-251/


And here : http://www.nytimes.com/2012/08/23/opinion/the-national-security-agencys-domestic-spying-program.html

The people who reported this have been deemed 'enemies of the state'. These American heroes are William Binney, Kirk Wiebe and Thomas Drake.

See a video of their discussion here: http://current.com/shows/viewpoint/videos/nsa-whistleblowers-warn-of-secret-spying-programs-that-can-target-anyone/

The 'data' remains available for any law enforcement official to request at any time in the future. That is the purpose of the Colorado data center - to warehouse our calls and emails so they will be available in case we become an 'enemy of the state' someday.

England is proposing the same thing: http://www.huffingtonpost.com/2012/05/18/uk-surveillance-law_n_1527145.html

Your faithful servant,

Recovery : Free Trade

Barry, My Liege :

The structure of these few remarks is to provide some of the evidence supporting each of my specific suggestions for improving the Economic National Security of the United States that were listed in the posting of April 27, 2012 titled : 'Presidential Elections and Economic National Security'.

Each such remark is fronted in the title by the word 'Recovery'.

This posting is 'Recovery : Free Trade'

Free Trade Doesn't Work ; it's a fact and it's also the title of a book by Ian Fletcher [http://www.freetradedoesntwork.com/].

Trade policy in the United States of America has been wedded to the idea of Free Trade since the 1950's.

One of the justifications for Free Trade and low tariffs for the USA was that we could promote industry in other countries by opening our consumer and industrial markets to the world.

Since the USA emerged from World War 2 as the world's major industrial power, we could afford to, we had an obligation to and our security was made stronger by raising living standards in other countries.

Since then many countries have developed strong economies by protecting their domestic companies and exporting products to the USA : China, Korea, Japan, etc., etc.

Due to their success, our relative economic strength has declined significantly to the point where our economy is now the first among equals instead of the acknowledged leader ; further, we are tied together with the other industrialized countries in an electronic embrace that we cannot break.

The time has come to abandon that policy and conduct our trade policy with attention to the real world and not to the theoretical world constructed in the 1700's.

Make no mistake, trade with other countries can promote our Economic National Security if it is managed carefully. Equally it can damage our security if it is left to market forces.

I will be more than happy to debate any economist or politician on the theory of the subject, but this is not the forum for that technical debate. You can read my short discussion of trade theory and the theory of Comparative Advantage here : http://www.mkeever.com/compad.doc

It is sufficient here to offer an estimate of the harm done to our economy by our recent and overwhelmingly negative trade balances.

By the term 'negative trade balances' I refer to the monthly and annual difference in current dollars between the exports of goods and services from the USA to other countries and the imports of goods and services to the USA from other countries as published by the US Census Bureau, Foreign Trade Division. This number is known as the Balance of Payments or BOP.

The BOP for the United States was either a small positive number - meaning the total dollar value of our exports exceeded the dollar value of our imports - or a small negative number until the mid 1980's.

In 1984, the BOP of the United States exceeded a NEGATIVE $100 BILLION for the first time. That means that in 1984 we bought $109.1 BILLION more of stuff from other countries than we sold to them.

In monetary policy terms that means that our money supply was REDUCED by $109.1 BILLION in that year.

BUT, with the deposit money multiplier, it means that our GDP was reduced by about ONE TRILLION DOLLARS in 1984 alone. In that year, the GDP in current dollars was about Four Trillion Dollars.

SO, our GDP could have been reduced by about 20% in 1984 alone.

While there is some debate as to whether all that money was taken permanently from our domestic money supply and GDP or whether some of it was returned to the USA and used to buy T-bills, there is no doubt that the GDP reduction is significant.

Barry, My Liege, that is just 1984.

We have consistently run a negative BOP ever since then.

Between 1984 and 2009, our cumulative NEGATIVE BOP was 7.3 TRILLION DOLLARS.

Using a conservative money multiplier of 10, that means our GDP was REDUCED by about SEVENTY TRILLION DOLLARS during the period.

In simple terms, My Liege : We are not so rich we can afford to lose such substantial GDP every year to foreign trade.

Unless this problem is corrected, it will bankrupt the United States of America.

Your faithful servant,

Recovery : Monopoly, Revised with 2002 data

Barry, My Liege :

Monopolies and oligopolies are bad for the country simply because they exist.

These firms face a downward sloping demand curve for their products as opposed to a horizontal demand curve faced by a firm in competition.

This gives monopolies and oligopolistic firms the ability to change the price of the products. And, because all firms normally want to maximize profits, these firms will charge higher prices and sell a lower quantity than would all the firms in a competitive market.

Economists call the economic activity lost from this decision a 'Deadweight Loss' ; in other words it is economic activity lost forever from the economy.

Even worse is the ability and the practice of these firms to increase their profits at the expense of consumers.

In the graph below which shows the cost and revenue curves and decisions faced by a monopoly, the 'Deadweight Loss' is the pink area to the left of the intersection of the MC, AC and AR curves intersect. The point where those three curves intersect represents the point where there would be a competitive equilibrium or efficient price and production quantity.

Since the actual monopoly point of price is where the line labelled Pm intersects the AR line and the monopoly quantity is where the Qm line intersects the AR line, the loss of production and higher price represents the 'deadweight Loss.'

Further, the green area represents the area of consumer benefit that is transferred from consumers to the firm as 'Monopoly Profit'.

Thus, monopolies and oligopolies which act as monopolies increase their profits at the expense of the economy as a whole ; they are inefficient.

Would that it were just a graph, My Liege, but these actions take large amounts of income from consumers and transfer it to these companies.

Here is a list of industries in which companies earn these abnormal profits [the numbers after the name of the industry refer to the percentage share of total revenues for the industry earned by the four {4} largest firms] in 2002 :


Cigarettes 97.8
Guided Missiles 94.8
Aircraft 81.3
Breakfast cereal 80.4
Electric Lamps, Light Bulbs 75.4
Tires 77.6
Automobiles 67.6
Cookies, Crackers 69.3
Tortillas 57.4
Men's and Boy's Shirts 56.4
Dolls, Stuffed Toys 56.9
Fluid Milk 46.0
Ships, Boat Building 44.0

As a comparison, here are the industries and concentration ratios in 1997 :

Cigarettes 99
Cane Sugar Refining 99
Primary Copper 95
Glass Containers 91
Beer 90
Small-arms Ammunition 90
Electric Light Bulbs 89
Aircraft 85
Breakfast Cereals 83
Motor Vehicles 82
Household Refrigerators 82
Photo Equipment and Supplies 81
Turbines and Generators 78
Flat Glass 77
Fiber-Optic Cable 71
Men's Slacks 69
Tires 69
Motorcycles and Bicycles 68
Gypsum Products 68
Soap and Detergents 66
Lawn, Garden Equipment 64

Our economic recovery will be made more difficult until the concentration of monopoly profits is reduced or eliminated.

Your faithful servant,

Recovery : Union Busting

Barry, My Liege :

Although possibly tarnished as a reputed canard, but it is true nonetheless that laws which remain unenforced do not change behavior.

If unions which organize workers and then press for higher wages are critical to our Economic National Security, then it follows that the laws which permit organizing should be enforced.

Those laws are not enforced.

We will fail to create an economic recovery until we enforce those laws.

Here are some facts from a recent survey : 'In 91% of the union recognition petitions filed with the National Labor Relations Board (NLRB) in the survey, a majority of workers indicated they wanted a union before the process began. In several cases, workers demonstrated more than 80% support. However, unions were victorious in only 31% of the campaign in which they filed a petition.'

The full report is here: http://www.americanrightsatwork.org/publications/general/undermining-the-right-to-organize-employer-behavior-during-union-representation-campaigns.html

My Liege, this situation is both unacceptable and easily fixable.

We pray you for relief.

Your faithful servant.

FBI : in Your Facebook

Barry, My Liege :

The FBI wants backdoors to all social media.

It wants to catch 'terrorists'.

Read it here : http://www.tomsguide.com/us/FBI-Backdoor-CALEA-Facebook-Obama,news-15090.html

Words fail.

Your faithful servant.

Recovery : Unions

Barry, My Liege :

As an economist I am aware that statements about policy don't carry weight unless they are supported by statistics.

Below I provide some statistics courtesy of infoplease.com and data360.com about the impact of declining wages on our GDP with a consequent need for increased union activity to raise wages, but first we look briefly at two competing economic philosophies.

My Liege, by themselves, numbers don't carry any weight. The interpretation of the statistics provides the weight. But, numbers can be interpreted differently by folks with different viewpoints.

One likely interpretation of any statistic is the Classical Economic philosophy which encompasses Free Market doctrine. An interpretation from an observer with this focus will suggest that any statistic which implies any interference in free markets is bad for the economy.

To such Classical Economists, the very idea of unions is an anathema because unions try to organize workers so they can bargain collectively.

A Keynesian focus is another pssible interpretation ; this focus will suggest that Free Markets are useful but occasionally create such huge social misery that the government must intervene in order to secure the best result for society.

RE Wages, Unions : the hypothesis is that wages and consumer incomes have declined proportionally and as a share of GDP coincidentally with a decline in union membership in the United States since the 1950's. We might expect this decline to show up as a reduction in the share of GDP accounted for by personal consumption expenditures ; we assume that most of any change in personal consumption expenditures is due to changes in disposable incomes, except for occasional borrowing binges such as occurred in 2005 to 2007.

Comparing the percentage share of GDP accounted for by personal consumption expenditures and also by Gross private domestic investment does indeed show that significant changes have occurred.

For example, in 1960 and 1970, consumption accounted for 63.0% and 62.4% of GDP respectively while investment accounted for 15.0% and 14.7% respectively.

We can take those as a desirable base relationship since the United States enjoyed good economic times in those years.

Looking forward to the current situation, we find that consumption expenditures have INCREASED their share of GDP to 70% or more consistently from 2002 to today.

BUT, we see that investment has DECLINED from a range of 15.0% of GDP to a low of 11.7% in the 2009, Q3.

Although this is the opposite of what the hypothesis above suggests, the relationship of consumption and investment does in fact support the concept that wages should be increased in order to support economic growth and increasing Aggregate Demand.

Here's why : Keynesian theory predicts that businesses increase investment when they expect a rising GDP in the future and decrease investment when they expect the opposite.

Business investment of 15% to 18% of GDP - which was the case between 1960 and 1980 - coincided with good economic times in our recent past.

Business investment of less than 12% of GDP coincided with a severe recession, regardless of the share of GDP accounted for by consumption.

Good economic times are accompanied by high business investment and bad economic times are accompanied by low investment.

Keynes theory suggests that businesses increase investments when they predict good economic times ahead. With high union wages - such as we had in the 1960's and 1970's - businesses are optimistic about the future and make investments.

Classical theory, on the other hand predicts that businesses will increase investment when interest rates are low. This theory is clearly inadequate to explain why business investment was at historically low levels of GDP in 2009 even though interest rates were at zero. One of the last times that business investment was that low was in 1930 when it was at 11.8%.

The policy implication of this is also clear : good economic times require that businesses expect high consumer demand in the future before they commit to investing in new plants and equipment.

Stronger unions will raise wages, create optimism about future demand and will result in increased business investment and Aggregate Demand.

Your faithful servant,

Presidential Elections and Economic National Security

Barry, My Liege:

It is no secret that Presidential election campaigns are well-renowned for ignoring most of the critical issues facing the country. We expect to see passionate debate about irrelevant trivia as we go into the silly season.

However, we cannot discount the process. After all, it is the only method we have to judge the character of you and your opponent. So, even though any individual subject may affect only a few people, the real debate is about your inner make up.

My Liege, this is a critical time for our country. We face numerous decisions which will affect the National Security of the United States in the next few years. The following somewhat lengthy posting will examine some of those issues ; the hope is that this list will serve as a reminder of those questions as you go forward.

The foundation of the National Security of the United States lies in our economic soundness : if we have a good economy, we will have a secure future.

We have seen that we prosper as a country when our middle class has income sufficient to enable them to act as consumers of some products beyond basic needs.

That has been the source of American exceptionalism and of American security since before the Revolutionary War. But, middle class prosperity has eroded severely since the 1970's.

If we can reverse the current trend of increasing income and wealth polarization, then we may be able to go forward as a prosperous and secure country. If we fail to reverse those trends we will inevitably decline in both prosperity and security.

And, My Liege, let us be clear headed : reversing those trends will be exceeding difficult.

There are powerful and influential interests who wish current trends to continue. They will fight tooth and nail to prevent any change in direction.

It is my opinion that any Republican Party member will consistently make exactly the wrong choices about our future and will thus greatly harm our National Economic Security.

However, there is no guarantee that you as a Democratic Party Member will make the correct choices. Your administration has not achieved a course reversal of some negative economic trends as of this writing. We pray, my Liege, you will be elected and will make the correct choices in the coming years.

My list of Federal government actions required to reverse current trends is a long one, My Liege. The list's length can't be helped inasmuch as we face many serious issues :

1. STRENGTHEN UNIONS - Union organizing and negotiating rights are created by Federal labor laws. When unions can organize and press for higher wages, the country benefits from higher incomes going to the middle class. It is true that unions can be messy organizations, but overall they succeed in raising middle class incomes when they can function freely. This will increase middle class purchasing power and help restore Aggregate Demand.

An inevitable result of raising wages through union activity will be that businesses have to raise prices to survive - that will require some adjustments to our trade policies as discussed below.

2. ENHANCE LABOR LAW ENFORCEMENT - Some business owners think they have an economic incentive to interfere with union actions ; they will have to pay higher wages if unions are successful. In our history, blood has been shed in labor disputes.

Henry Ford knew that true national prosperity lies with workers receiving wages high enough to buy the cars he made, but many business owners are not so enlightened.

When there is little labor law enforcement or penalties for labor law violations, then labor law has little effect.

The United States should enforce labor laws vigorously.

3. ESTABLISH ANTI-MONOPOLY LAWS - Monopolies are bad for the country, per se. Such firms have economic incentives to charge higher prices and sell fewer products than firms in competition. Their actions create a deadweight loss from economic activity not undertaken and further transfer some consumer surplus to monopoly profit. This results in less economic welfare for the country and thereby damages our National Security.

The United States should strengthen existing anti-monopoly laws, increase enforcement activity and write additional anti-monopoly laws.

The concept that monopoly is a reward for efficient firms is a false concept which serves to undermine National Security.

4. CANCEL FREE TRADE AGREEMENTS - United States trade policy does not work. We adhere to a low tariff concept that undermines our National Security. It does so by transferring jobs to foreign countries and by facilitating huge trade imbalances which serve to transfer wealth created in the United States to our trade partners.

It is time to change trade policies so that we import only as much as we export.

Our trade partners do not reciprocate our trade encouraging practices and in fact use their trade laws and national customs to protect their domestic industries. It is time to recognize reality in trade.

5. TAX AWAY GREAT FORTUNES AND GREAT INCOMES - Huge concentrations of wealth and annual income harm our economy by diverting money away from risky investments in economic growth and into safety seeking investments.

It is well known that the primary criterion of investing is safety of principal. People with large amounts of money are risk averse and do NOT wish to risk that money in new ventures, preferring to find safer investments.

Our economy will grow faster and we will be more secure when we do not have extraordinarily large income and wealth concentrations. Then will capital have greater incentives to take risks and create growth.

6. CREATE NATIONAL INDUSTRIAL POLICY - The United States should create a blueprint for our future economic growth. We should establish industries in which we wish to participate and then establish policies which encourage and protect companies in those industries.

Industries should be chosen on the basis of the likelihood that they will create good jobs in the future.

Critics argue that the government is unable to make sound predictions in this area since even private companies have difficulty doing so.

While that may be, there are countries which use this practice with great success and many more countries which are beginning to establish this process. The government of South Korea established this practice in the 1950's and was able to convert a nation of rice farmers and fishermen into an industrial powerhouse.

7. EXPAND PUBLIC UTILITY INDUSTRY DESIGNATIONS AND REGULATE EACH DESIGNATED INDUSTRY WITH AN ELECTED COMMISSION - There are some businesses which require a government protected monopoly for some reason ; for example, some industries like electricity generation and distribution require such huge capital investments that investors will not make that investment unless assured of freedom from future competition.

In these cases it makes economic and national security sense to regulate the prices charged to the public so that the company earns a normal profit, which allows a return to investors sufficient to ensure survival and uninterrupted service provision, but does not allow for monopoly profits.

Any industry whose products or services are regularly used by more than one third of the population and in which there are few suppliers is a candidate for public utility designation.

8. ENSURE FINANCIAL SYSTEM STABILITY BY RESTORING GLASS-STEAGALL - Stability in our financial system is required for our national security.

We know absolutely that the financial system cannot regulate itself without great harm to our economy.

Under Glass-Steagall we had stability for 50 years.

Restore it.

It is the only choice.

9. KEEP SOCIAL SECURITY AND MEDICARE - Not only do these programs provide dignity to people who have worked all their lives, they provide significant income to help support Aggregate Demand.

There are pressures to reduce or destroy these programs. The stated reason is the budget deficit, but the real reason is simple greed from the financial system.

Countries which have chosen to reduce pensions and healthcare because of a fiscal deficit problem are now experiencing recessions and high unemployment.

No country in history has been able to cut its way to prosperity. Many countries have found prosperity by borrowing in bad times to sustain employment.

10. INSTALL SINGLE PAYER HEALTH CARE - Regardless of the outcome of the Supreme Court's decision, there is no place for profit in the healthcare system. If we can eliminate insurance company profits, we can pay for our healthcare with current expenditures.

11. MANAGE DEBT TO BORROW IN BAD TIMES, PAY BACK IN GOOD TIMES - With a properly functioning national government, we can use fiscal policy wisely to keep full employment and growth achievable.

The Federal Budget is the flywheel of the economy - it prevents stalls when the engine's speed declines.

12. REDUCE MONEY REQUIRED FOR NATIONAL ELECTIONS BY REQUIRING BROADCASTERS TO PROVIDE FREE POLITICAL ADS - One of the reasons for our corrupt political system is that elections are very expensive.

But, most of the money goes to running political ads on broadcast media. Since broadcast media receives a license from the FCC to use their frequencies, we can require them to run free ads as a condition of their licenses.

This would reduce the cost of running for office and, consequently reduce the opportunities for political corruption.

Other election financing reforms should be pursued as well.

13. RESPECT BUT DO NOT FEAR OCCUPY PROTESTORS - Occupy protestors are about 20% of our people who have been harmed by market failures in our system. They are exercising their Constitutional rights to seek redress of their grievances.

Creating a rigid, militaristic response to a peaceful protest is the opposite of our founding principles.

If they follow our past history of peaceful protest, they may well be the force that helps correct our imbalances.

In conclusion Barry, My Liege, we pray that you will remember these issues after you finish discussing any limited election issues such as gay marriage and student loan costs.

Your faithful servant,

Pentagon Going Rogue

Barry, My Liege:

Some elements in the United States military and security establishments appear to have lost their bearings. There are some Federal government programs which appear to cross the boundaries of proper civilian and military jurisdictions.

All these actions harm the National Security of the United States by violating our laws and customs.

While these actions may have sprung from the best of intentions, your responsibility as Commander-in-Chief is to ensure there is a proper and effective delineation between civilian authority and military or security authorities.

As background, this space outlined some United States government actions which appear to cross the line into violating the Constitution on January 19th of this year in a message titled ' U S Constitution Dead '.

The purpose of this message is to point out some additional actions which pose similar Constitutional questions.

Military Conducting Propaganda Against US Citizens

On April 20th of this year, USA Today reported that some members of the United States military conducted a propagangda campaign against two of its reporters who had questioned a military action.

This conduct is simply unacceptable.

My Liege, I pray you punish severely the individuals who authorized this operation.

Pentagon Requests Authority to Establish Businesses

The Pentagon has requested that it be allowed to conduct revenue generating operations with military personnel out of unifiorm in various countries around the world.

“Expansion of this authority is necessary to permit DoD to conduct revenue-generating commercial activities to protect such operations and would provide an important safeguard for U.S. military forces conducting hazardous operations abroad.”

Also unacceptable. The military is prohibited from conducting business operations by its role as subordinate to civilian power. If the military can generate its own revenues, then the civilian ' power of the purse ' will disappear.

This request should be denied forthwith and the personnel who proposed it should be re-assigned to a location where they cannot further jeopardize our national security.

ICE Conducts Mandatory and Indefinite Detention

With disregard for the Consitutional protections for citizens and for immigrants, ICE has established some 961 detention facilities as of the end of 2007.

Within these centers, ICE imprisons many immigrants indefinitely if they are refused readmission to their home country. Even if they are deemed to not pose a national security risk to the United States, many are put in mandatory detention and are not allowed any custody review.

They will be put into mandatory detention if suspected of being a threat to national security or charged with two crimes of “moral turpitude,” an “aggravated felony,” a firearms offense, or a controlled substance violation.

Crimes that did not assign jail time to the individual may subject them to mandatory detention.

Barry, my Liege, these actions are not acceptable under any definition of civilized behavior or under the United States Constitution.

We pray you address these questions.

Your faithful servant,

USA Existential Crises: New Prince Class, National Security

Barry, My Liege:

You have both the privilege and the curse of being President when the country faces at least two existential crises, each of which is equal to the crisis Lincoln faced when the South seceded and we entered the Civil War.

These crises are existential in that each questions our 'existence in an unfathomable universe [where] the plight of the individual who must assume ultimate responsibility for his acts of free will [is] without any certain knowledge of what is right or wrong or good or bad.' [Webster's Ninth New Collegiate Dictionary, 1984]

The first existential crisis is the creation of a New Prince Class of super rich Princes and the simultaneous destruction of the Middle Class.

The second existential crisis is the enlargement of the National Security establishment and the consequent abrogation of the Constitution.

The New Prince Class creates an existential crisis for two reasons.

First, the economic interests of this Class dictate that its retainers work to remove any governmental impediments to further increasing its wealth and influence. As it grows in wealth so does the New Prince Class grow in influence over the legislative and regulatory processes. At this writing, the only check on its power may lie in the election of a majority of legislators in State and national government who are dedicated to reducing its influence.

Such an event happened only once before in our history - during the 1930's and the Great Depression. Prior to that event and its horrible social effects, Americans of all backgrounds cooperated in creating the common good of the country. Sometimes that cooperation was forced, but it was real nevertheless.

The crisis of this time is that the New Prince Class has no perceived interest in cooperating for the good of the country.

Second, it is an existential crisis for the United States inasmuch as our prosperity and greatness as a nation has always lay with a prosperous middle class. The New Prince Class is rising at a time the Middle Class is sinking. An argument can be made that the New Prince Class actively supports the destruction of the Middle Class, but that is for another place and time.

The National Security establishment, NSA, CIA, FBI, Homeland Security, Justice Department, etc., etc., creates an existential crisis by actively abrogating several key provisions of the Constitution.

In its zeal to defend our country from the real and perceived threats of suicide bombers and mass attacks similar to 9.11, this establishment routinely subverts key Constitutional protections against arbitrary power.

This space has iterated those actions previously in this post : Thursday, January 19, 2012, titled 'US Constitution Dead'.

Barry, My Liege, I believe it is correct to say that the Constitution is the single thing that has created the United States as a unique place in the world. It gives us the ability to restrain arbitrary power and the ability to check the excesses of a moneyed Class.

When the Constitution is destroyed - whether by those seeking to protect it or by others - the country is in crisis.

Of course it is a difficult task to balance the Constitutional protections of citizens against an arbitrary government with the duty to protect the country from attacks. It appears that the scales are out of balance and tipping toward a repressive establishment at this writing.

We support all the actions you take to solve these crises, My Liege, and we pray you success.

Your faithful servant,

Feudalism - Are We There Yet?

Barry, My Liege:

It would seem appropriate to examine life under feudalism since we seem to be taking on some of its characteristics.

I would rather live in the United States of America and I hope we can go back to that happy time.

But, just in case we fail to stop the slide toward barbarism and feudalism, let's see what life was like in that time.

The feudal landlord thought he was a man of great importance; he thought he was superior to those around him. He was chief and master of the family as well as master of the slaves in his house. In his house his word was law, there was no force outside the house or inside the house to check him.

He had no common bonds to family or servants; he defended his property as a part of himself. Some writers thought the relation between him and lesser people was of unmixed hatred, especially when the lesser folk began to gain liberty from their slave-like state of serfdom. Kindness might exist until the law inspired serfs with a notion of freedom, then there was insolence on one side and cruelty on the other.

Feudal lords had the right to wage war privately for gain or for revenge. Since the government was too weak to protect, barons relied on their own force to secure their property and person. This constant war between lords drove poor people to join with a lord on the estate and exchange labor and arms bearing for protection from roving bands of thugs.

In England, the barons and lords established their own courts, which ruled supreme over other courts including the distant King's. Often disputes were decided by God - that is, in a trial by fire or combat the winner was innocent and the loser was guilty. Sometimes, parties nominated stand-ins to do judicial battle for their cause. In 11th century Spain, two armored knights decided a question of theology this way.

Further, in court the testimony was judged more truthful if the person giving testimony had a high rank. Persons of high rank could buy their way out of charges with a defined set of payments: '....the life of every man had a value affixed to it, which was called his weregild, .e.g, king's weregild in England was 30,000 thrismas, a Prince's 15,000 thrismas, bishop's 8,000, sheriff's 4,000, a clergyman 2,000, a ceorl 266.'

Nobles lived in circular towers of thick walls with no light for lower rooms except for opening above. For poor people, the wind whistled through the house.

Barry, My Liege, we pray that you can bring us into the 19th or 20th Century because the 21st Century is looking pretty grim right now.

Excerpts above from 'A digest of the laws, customs, manners, and institutions of the ancient and modern nations', By Thomas Roderick Dew, 1854.

Your faithful servant,

Succeed by Fixing Obvious Problems

Barry, My Liege

One of the world's most popular politicians is Brazil's former President Lula [Luiz Inácio Lula da Silva].

He is popular because Brazil is enjoying economic growth and a rising middle class which are results of the policies and programs he created.

When asked how could a man of such humble origins be so successful, he replied to the effect that he just did the obvious things that everyone knew needed doing. He also suggested that others did not fix those things because of economic interests [read 'greed'] or myopia.

Barry, My Liege, there are many obvious thing that need fixing in the United States of America ; but, economic interests interfere with any changes. If you gain a legislative majority, we pray you will fix our obvious problems.

Here is a preliminary list of obvious problems caused by government policies :

1. Wealth and income inequality - cure it by installing an estate tax that prevents huge fortunes from passing through generations and cure income inequality with a radically progressive income tax system.

2. Union Busting - cure it with better laws allowing unions to organize and better prosecutions of companies which break laws against interfering with unions.

3. Monopolies - they are bad for the country ; install effective anti-monopoly legislation and pursue violators aggressively. Also, make some industries into public utilities.

4. Political corruption - change campaign finance laws and enforce the new laws aggressively.

5. Banks - restore Glass-Steagall ; that will solve the problem - nothing else will solve it.

6. Political inaction - keep Social Security and Medicare effective by solving political gridlock with a legislative majority.

7. Security establishment - they are a problem because they trample our Constitution ; rein them in.

8. Trade Deficits - we cannot survive with huge trade deficits ; please fix them.

Barry, My Liege, as you have said, the country has one more chance to change its course of action and return to the path laid out by the Founders.

We all know that. From the Tea Party to the Progressive Caucus, we all get it.

Only the Kock brothers and the super rich are fighting against the good fight.

We will help you win the fight, My Liege. Do not give up.