California Free Press

Off the Top of My Head

Joe Biden's Green Deal

by John Lawrence, September 18, 2020

Just as soon as progressives come up with something called a Green New Deal, Republicans set out to demonize it, the name that is. They don't even bother to argue the merits; they just demonize the name. That's their MO. So Joe Biden, not being a dummy, doesn't say that he's for a Green New Deal. He says he's for Biden's Green Deal. That phraseology is not as easily demonizable, but it amounts to the same thing. Here's the thing (as Biden would say): the jobs created by revolutionizing the US infrastructure in such a way that we reach net zero carbon emissions by 2050 is not only a Green New Deal, it's a big deal for job creation. The "full employment" economy pre-pandemic, which Trump likes to tout as being so great, was like a house built upon sand. 40% of the population could not cover an emergency expense of $400. It was an economy in which there were a few good jobs, but the rest of the jobs were service sector jobs like baristas, tattoo artists, bartenders, servers, nail salon artists and uber drivers. All these jobs didn't even exist when there was a full employment economy consisting of manufacturing jobs in the 1950s, 1960s and 1970s.

Now Joe wants to recreate the equivalent of those manufacturing jobs, good paying union jobs recreating American infrastructure in such a way that reduces greenhouse gas emissions to zero by 2050. One of his signature pet projects is the installation of electric car recharging stations on a massive scale. Joe has also committed to carbon free electricity generating plants by 2035. Right now many of these plants are powered by fossil fuels which emit tons of greenhouse gasses into the atmosphere. Putting electric vehicles on the roads and building pollution free power generating plants will go a long way toward America becoming free of greenhouse gas emissions by 2050. So call it what you want - a Green New Deal or Joe Biden's Green Deal, it amounts to the same thing. In reality it's a Big Fucking Deal, as Biden himself once so famously said.

Another BFD is student loan debt forgiveness. Joe is committed to Elizabeth Warren's plan for student loan debt forgiveness. Right now there is over $1.5 trillion in student loan debt. This means that so many young people cannot afford to get married, start a family and get a mortgage on a house. They have to move back home and live in their parents' basement or sleep on their parent's couch (in my case). A lot of this money is money owed to the government which the government is even making a profit on. It's not right. Senators Schumer and Warren have called on President Trump to forgive student loans. He won't do it. Biden will. You can see the proposed legislation here.

There are so many new technologies that can be developed that will not only create solid American jobs (not gig work and tattoo artists), but will also create industries that will stay right here on American soil and not be sent to China like US corporations did with their outsourcing spree starting in the 1990s. Keep those industries here. Keep the jobs here. Keep the manufacturing here. This is what Joe Biden is all about. If this is socialism, so be it.

Off the Top of My Head

According to Trump Rebuilding Infrastructure is Socialism

by John Lawrence, August 29, 2020

Unless that is you use taxpayer money to pay a private corporation to do it. Public private partnerships mean that the government shovels money to a private corporation, and they do the work after taking much of the money off the top for profits, CEO salaries and overhead. Then that private corporation hires a bunch of people to do the actual work paying them minimum wage. Thus income and wealth inequality is maintained. If a government department did the work, there wouldn't be profits siphoned off, and the workers could be paid a living wage. But Republicans call this socialism. They'd call anything socialism in which an elite class didn't make a profit. A Green New Deal is nothing more than a rebuilding of infrastructure using workers who would be paid a living wage. Also they would be building and rebuilding infrastructure based on the paradigm of renewable energy. Energy from fossil fuels would be minimized. But according to Republicans, any endeavor which seeks to build renewable energy capacity is socialism. Why? Because it doesn't profit existing corporations. They care nothing about the future habitability of the planet, only short term profits.

Does Trump have a plan to rebuild infrastructure? I don't think so. He thinks our crumbling third world infrastructure is still OK. Joe Biden does have a plan to build green infrastructure. He just doesn't call it a 'Green New Deal'. So what approach would make better use of taxpayer money (although taxpayers would probably never be asked to pay for it because the debt would just be swallowed by the Federal Reserve)? So the real question is what approach would do the most to diminish economic inequality and help disadvantaged communities? Perhaps a Department of Infrastructure would do that. That would amount to a Green New Deal without calling it that. Private corporations are not interested in a Green New Deal because they are profiting off the use of fossil fuels and want to continue doing so. In the meantime how much infrastructure has Trump rebuilt in 4 years? Answer: none.

Trump has been intent on destroying every government department from the Environmental Protection Agency to the Post Office. Any department or agency that was devoted to the health and welfare of the American people or the environment in which they live is on the Republican hit list to be sacrificed to the maximization of profits. Sure it maximizes profits if a corporation doesn't have to clean up after itself. If it can pollute freely, it saves all that money that would be needed to clean up thus maximizing profits. So the idea that the government should protect the environment or should be concerned about clean drinking water or the health of the American people, that is called socialism by Republicans. To be fair it is not only Trump that should be blamed. Long before Trump acceded to the highest office in the land, the Republican agenda was to destroy every public institution including replacing the public school system with private schools which they renamed 'charter schools.' Their modus operandi was to replace every public institution with private corporations which would funnel all monies to the top while using the cheapest possible labor. This only exacerbates economic and financial inequality.

The Republican MO is actually to destroy social security and Medicare because they are public institutions created by Democrats that benefit or help the American people. They want the government to only fund the military-industrial complex and the vast military apparatus that supports military bases in practically every country of the world. Pax Americana. Only problem is it's not working. Bullying other countries and nations only works for a relatively short time until those being bullied figure out a strategy to get out from under it. While the US was looked at by other countries as a defender of a moral vision for the world, they were supportive of Pax Americana. Now not so much after a series of disastrous immoral wars and an obvious unconcern about what Frantz Fanon called "the wretched of the earth." 60 million refugees languish in camps. Is Trump concerned about them?

Trump will say whatever suits his interests even though it might be the exact opposite of the reality he has sought to create. Example: he says he supports veterans yet his first budget as President proposed to end a benefit for disabled veterans once they reached the minimum age for Social Security benefits. These veterans would see their income plunge from about $35,000 annually to about $13,000. The Trump budget also called for reducing housing vouchers for veterans. The number of homeless veterans had been falling for ears, but Trump's budget would reverse that trend. As always you can't just listen to what Trump says. You have to look behind the curtain to see the manipulator who has no qualms about saying one thing and then doing the exact opposite.

Off the Top of My Head

A Better Way for the US to Compete with China

by John Lawrence, August 12, 2020

Instead of trying to throw roadblocks in the way of Chinese tech corporations and bad mouthing China, the US would be better off to first acknowledge China's great accomplishments like bringing 800,000 people out of poverty in 40 years and building infrastructure in many countries all over the world instead of whining about China's internal problems in Hong Kong and Xinjiang. A better way would be for the US to compete by solving some of the major problems in the world. 40% of the world's population do not have adequate sanitation or clean water systems. If the US set out to solve these problems, it would effectively complement China's emphasis on big project infrastructure, and win some of the hearts and minds that China is in the process of winning.

Every year, 1.5 million children die due to diarrhea caused by the combined effects of inadequate sanitation, unsafe water supply, and poor personal hygiene. The population with access to improved facilities is particularly low in Sub-Saharan Africa, but the largest share of population without access is in South Asia. Now with a Democratic vice Presidential nominee, Kamala Harris, who is of African and Asian descent, perhaps the emphasis on solving these problems can be front and center on a new Democratic administration's to do list. This could go hand in hand with the Bill and Melinda Gates Foundation's initiative on public health in the developing world. These initiatives are super important in light of what is happening in the developing world as a result of global warming. These efforts would go hand in hand with a Green New Deal in the US and effectively be a Green New Deal worldwide. They are of paramount importance in combating global warming and improving public health.

The World Bank broke it down this way:

17 per cent of [the world's population] practiced open defecation – the most risky sanitation practice of all; 11 per cent used an unimproved sanitation facility – one that does not ensure hygienic separation of excreta from human contact; Another 11 percent used otherwise acceptable sanitation facilities but shared a facility between two or more households, or used a public toilet facility.

The prophet Isaiah said it best about beating swords into plowshares. Swords to plowshares, is a concept in which military weapons or technologies are converted for peaceful civilian applications. This is from the book of Isaiah,  Isaiah 2:3–4:

Many peoples shall come and say, “Come, let us go up to the mountain of the LORD, to the house of the God of Jacob; that he may teach us his ways and that we may walk in his paths.” For out of Zion shall go forth instruction, and the word of the Lord from Jerusalem. He shall judge between the nations, and shall arbitrate for many peoples; they shall beat their swords into plowshares, and their spears into pruning hooks; nation shall not lift up sword against nation, neither shall they learn war any more.

We should not be learning war any more. The US military budget is about a trillion dollars a year. Yet the US military has been totally impotent to prevent over 160,000 deaths from COBID-19. Putting that money towards public health would have been a better bet for protecting the American people. The pandemic has claimed 3 times as many American lives as were lost in the Vietnam war. 407,000 American lives were lost in World War II. The coronavirus is on track, according to some experts, of taking 700,000 lives. 620,000 Americans died in the Civil War. So COBID-19 is on track to claiming more American lives than any war in American history. It didn't have to be this way. These dire totals are the result of the Trump administration's screw-ups.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Off the Top of My Head

How Ya Gonna Pay For It?

by John Lawrence, July 27, 2020

This is the question they often asked Bernie Sanders when he talked about the various programs that he would seek to implement as President. Programs like a Green New Deal, Medicare for All, forgiveness of all student loan debt, free college, free pre-school etc. Bernie never really had a good answer except for taxing the rich. Well, that was a pretty good answer, but it is not even necessary to raise taxes on the rich to implement all of Bernie's programs. Modern Monetary Theory maintains that the US, as a currency issuer, can just issue the money into the economy. The US dollar, actually a Federal Reserve Note, is issued by the Federal Reserve bank. The Fed has created or "printed" trillions of dollars bailing out the banks in 2008, with its quantitative easing programs since then and now to fund the response to the coronavirus pandemic. It's obvious that the Fed can just print money and add it to the economy. It can buy up the national deficit and debt. There is no need to worry that the US, which has a sovereign currency can ever run out of money. While you and I, states and countries which do not have a sovereign currency or which have loans in other currencies do have to pay them off, any nation like the UK, Japan, the European Union and China do not have to worry about running deficits.

Republicans have traditionally run on the mantra that Democrats will raise your taxes. Remember George H W Bush's pledge: "Read my lips. No New Taxes." Then he did go ahead and raise taxes after he got elected. Well now it is becoming obvious that Americans don't have to worry about new taxes. Social programs as well as the military can be funded by the Fed just printing the money. Of course it would not be a good idea simply to flood the economy with money for which there is no good purpose. That would lead to inflation and to a loss of trust in the dollar. Under current conditions, however, the dollar is the world's reserve currency and that is not going to change any time soon. So prudent and responsible spending is still necessary. It's just that the US does not have to worry about deficit spending. Other central banks like Japan's are doing the same. In fact Japan has a greater deficit to GDP ratio than the US does.

Which brings us to social security. The conventional wisdom is that the Social Security Trust Fund is in deficit and will be exhausted by 2035. Modern Monetary Theory says that this is rubbish. The US as a sovereign currency issuer can never run out of money. Al Gore used to talk about putting social security in a lockbox. Not necessary. It is not even necessary to debit everyone's paycheck to provide revenues for social security. This is not a program that people who have worked all their lives have "earned." It is a social welfare safety net program pure and simple. To apply basic accounting to social security as if people's payroll tax contributions were necessary to fund it is not necessary or desirable. To argue over whether or not the payroll tax needs to be increased or whether the cap (the payroll tax is just taken on the first $137,700 of a person's earnings) needs to be lifted is pointless. There was an old saw about you can't have both "guns and butter." Well, you can have both and tax relief too! We just have to determine the prudent balance between guns and butter based on other criteria. It is not true that there is only a finite amount of money based on tax revenues that determines total expenditures.

Look at reality. The US has been running deficits for years. Now we're running trillion dollar deficits. Is any creditor coming after us? I don't think so. And there is no inflation. So we don't have to limit our thinking to the Federal government's just spending what it takes in in taxes. In fact we haven't done this in years since Clinton balanced the budget when he was President.

Joe Biden has some good benefits proposed for older retirees. From his website:

"The Biden Plan will provide the oldest beneficiaries – those who have been receiving retirement benefits for at least 20 years – with a higher monthly check to help protect retirees from the pain of dwindling retirement savings."

and

"Under the Biden Plan, workers who spent 30 years working will get a benefit of at least 125% of the poverty level"

The poverty level for a single individual is $12, 760. 125% of that is $15,950. So a minimum monthly payment would be $1329. This is over twice what I am now receiving so I would be very happy if Joe is able to implement this plank of his platform. There is no way a person can live on $641 a month. Fortunately, I don't have to. Currently, the minimum monthly payout for a single individual is $510 a month. That amount is approximately $2,000 less than the annual poverty threshold for an aged individual. Bringing monthly payments for the elderly up to snuff is something Republicans have resisted for years. Then, they have tried to defund all social and welfare programs. However, funding for the military-industrial complex has been relentlessly increased come hell or high water. For that expenditure, deficits don't matter. They shouldn't for infrastructure development and social safety net programs either.

Off the Top of My Head

Reparations and Universal Basic Income

by John Lawrence, July 14, 2020

Old Chinese proverb: Give someone a fish, and they will eat for a day. Teach them how to fish, and they will eat for the rest of their life. This is how I feel about cash payouts for both reparations and Universal Basic Incomes (UBI). I am for reparations in the sense of guaranteeing a living wage job for people who are able bodied. If not the social safety net should provide food, housing and medical care free of charge. In kind welfare is always better than cash payouts which can be squandered, gambled away, spent on drugs and alcohol or other foolish items. Besides billionaires and millionaires, black or white, don't need reparations or UBI.

I am for reparations in the sense of affirmative action for minorities and poor people in the sense of providing jobs either in the private sector or by the government as a last resort. I believe government should be the employer of last resort. In Sweden they have a national employment database which tracks every job opening in the whole country. They will do their best to hook you up with one of those jobs. This is not a bad idea. Then if no matches can be found, the government should be employer of last resort. There sure is a lot of work that needs to be done that can only be done by government like infrastructure repair and development, not only in this country but around the world.

China has exported its expertise and workers to the rest of the world to build infrastructure. This creates future trading opportunities for China, but it also guarantees that there will not be an unemployed class in China. China by virtue of its Belt and Road Initiative is a full employment society. The US could do the same. There is much to be done in terms of sanitation, health, education and job development to bring the rest of the world up to even a minimally acceptable standard of living. At the same time everyone, in both developed and developing societies needs to adopt a sustainable standard of living. The New American Dream should encompass not unlimited consumption but reasonable and sustainable consumption. Otherwise, the planet's resources will be rapidly, at least in geological terms, exhausted, and the result will be resource wars, poverty of the majority and over consumption of the few.

There is much work that needs to be done, but the private economy is not concerned with necessary work. It is only concerned with encouraging consumption that produces the most profits. It is not concerned with what is good for the environment. It is only concerned with exhausting resources if that is what produces the most profit in the shortest period of time. We need to be concerned with husbanding the earth's resources so that they are there for future generations. Renewable energy is a must instead of exhausting earth's fossil fuels. The same can be said for agriculture and other consumable items. They need to be harvested in a sustainable way. Forests need to be maintained instead of being clear cut. The environment needs to be protected. Food needs to be grown without being sprayed with chemicals. There are good practices which will sustain, maintain and renew earth's resources in such a way that everyone can be employed and everyone can benefit including future generations.

In the meantime there is much necessary and essential work to be done here at home and around the world in eliminating poverty, building housing along the Habitat for Humanity model, growing organic food, eliminating factory food operations, providing health care. China is building infrastructure, but it is not directly eliminating poverty around the world. That's a niche the US could fill. A good step would be converting the 800 military bases in various countries to hospitals, schools and affordable housing for local and indigenous people, defunding the military and reallocating resources to helping poor countries become developed in a sustainable way rather than exploiting their resources.

Off the Top of My Head

The Essential Economy Should Replace an Economy Based on Consumerism

by John Lawrence, July 7, 2020

The economy is never going back to what it was before the coronavirus pandemic. Brick and mortar stores were already failing. Now their fate is being sealed. J Crew, JCPenney, Brooks Brothers, Neiman Marcus, Chesapeake Oil, Gold's Gym, Hertz, Tuesday Morning, Diamond Offshore, Whiting Petroleum, Sur La Table, 24 Hour Fitness, GNC, Chuck E Cheese, Lucky Brand, Men's Wearhouse, Pier 1 - the list goes on and on. Many of these businesses were carrying huge amounts of debt even before the virus hit. This huge number of bankruptcies is going to slam the economy, and the economy will be restructured as a result. Brick and mortar stores will never be the same as more people are going online to order goods. More schools and businesses will also be going online and staying online. This is good as it will slow the greenhouse gas emissions from commuter vehicles.

The economy needs to be restructured even if we never had the pandemic. Maybe the pandemic is a blessing in disguise if it forces a restructuring which reduces the market for fossil fuels. There needs to be massive restructuring in this regard in the next 10 years if we are to have a prayer to escape runaway global warming. This restructuring will also allow the next President if it's Joe Biden to address economic inequality and uplift the lower half of family incomes. Joe Biden is calling for a $15.00 minimum wage with no exception for tipped workers. This is a step in the right direction. There needs to be massive hiring in fields which will rebuild American infrastructure in a way that uses renewable energy. Fossil fuel companies that are carrying huge amounts of debt should be left to go bankrupt instead of being propped up by interest free loans from the Federal Reserve.

Medicare for All needs to be implemented and updated to allow Medicare to negotiate drug prices. Both Medicare and Obamacare are currently prohibited by law from negotiating with drug companies to get lower drug prices. Whether Biden calls it Medicare for All or enhanced Obamacare, the health care system needs to be radically overhauled and updated so that the poor and middle class get the same level of care as the rich. This is all predicated on both Houses of Congress being controlled by Democrats. Otherwise, nothing will get done, and the US will continue to go down the path of degeneration.

The current American economy is predicated on 70% consumption. It is predicated on private enterprise and very limited government. The result is immense economic inequality and lack of investment in public health, which the pandemic has made evident, and also lack of investment in infrastructure. Instead, the only government investment has been in a ginormous military establishment which has been used in disastrous wars, the only result of which has been to create millions of refugees. It has done nothing to help the 40% of the world's population that does not even have access to clean water or proper sanitation. This situation has only been made worse by the current President whose only goal has been to make the world safe for white people. He has used economic sanctions with the result that the world has turned away from using the US dollar and turned toward China as an ally. Case in point: China has been helping Iran economically as the US policy of trying to trash Iran's economy has left it no alternative.

Instead of making America Great Again, Trump has absolutely trashed the nation including his response to the pandemic. While other countries have mounted a credible response, Trump has only further trashed the American economy by insisting that opening the economy was the only thing that mattered. "So I said to my people, slow down the testing, please." Exactly the wrong response. Trump said to his people (the Supreme Court) "Slow down the legal process, please." He got his wish there. His tax returns will not become public until after the election if ever. The Supreme Court said it has to go back to a lower court. From there it will probably go to a court of appeals and from there back to the Supreme Court in a neverending circular process that only rich people can afford. Lawyers will make a fortune though. That's why rich people get justice. Poor people can't afford it.

The political system needs to be restructured so that the Senate can never again be captured  by one political party which then stymies any initiatives put forward by the other party. Democrats in the House can put forward progressive legislation, but, as long as Mitch McConnell is leader of the Senate, it will never see the light of day or be implemented. It becomes a joke. The result is that the political process is only spinning its wheels and has been for 40 years. Let's hope a Democratic President and a Congress in which both Houses are controlled by Democrats can implement, instead of just talking about, progressive policies starting in 2021.

Off the Top of My Head

Infrastructure Projects Built by China Outside China

by John Lawrence, July 6, 2020

Here are a few of them:

Temburong Bridge in Brunei.
Peljesac Bridge in Croatia.
Punta Sierra wind farm in Chile.
Yamal liquefied natural gas project in Russia.
Isimba hydroelectric power station in Uganda.
Jakarta-Bandung high-speed railway in Indonesia.
Abuja-Kaduna railway in Nigeria.
Colombo Port City and Hambantota Port in Sri Lanka.
Piraeus Port in Greece.
Doraleh Multipurpose Port in Djibouti.
Muara Port in Brunei.
Gwadar Port in Pakistan.

China is building ports, high speed railroads, power plants and more all over the world. Meanwhile, the US has not built one infrastructure project outside the US since the Panama Canal in 1914. The US has not even been able to build infrastructure projects within the US. America's infrastructure is desperately in need of investment, according to the American Society of Civil Engineers. The ASCE estimates the US needs to spend some $4.5 trillion by 2025 to fix the country's roads, bridges, dams, and other infrastructure.

Seven dams that generate almost half of Cambodia’s electricity were built and paid for by China. Sri Lanka borrowed more than $1 billion from China for a strategic deep water port, but couldn’t repay the money. The port is now controlled by China, which is leasing it for the next 99 years. South Africa turned to China for $1.5 billion for a coal-fired power plant. It is one of at least 63 such plants financed by China around the world, which collectively pollute more than Spain. Zambia tapped China for $94 million to build a soccer stadium of over 50,000 seats. These are among the more than 600 projects around the world that China has financed to win new friends and develop new markets.

China has built 203 bridges, roads and railways to create new ways for China to move its goods around the world. China brings in Chinese workers for many of these projects but also uses and trains local workers contributing to their economic development. China has built 199 power plants — for nuclear, natural gas, coal and renewables — which creates new markets for its construction and equipment companies.

After years of honing its construction skills at home, China is now deploying them abroad, including a series of hydroelectric dams. Some of them exceed in power output the size of Hoover Dam in the US. Countries include Colombia, Angola, Argentina, Ecuador, Laos and Sudan.

The contrast between China's approach to its foreign policy and the US' is stark. The US seeks to control the world with its vast extended footprint of military bases.The United States maintains nearly 800 military bases in more than 70 countries and territories abroad. In fact the only infrastructure the US builds in the world consists of military bases. The US threatens other nations with its superior military on which it spends about a trillion dollars a year and even threatens its allies with economic sanctions. China is spending about a trillion dollars a year building infrastructure projects in other countries. The US cannot even find the money to build much needed infrastructure projects inside the US.

Off the Top of My Head

#GreenNewDeal + #BlackLivesMatter = #TheWayForward

Affirmative Action for Blacks, Latinx and Native Americans in a Green New Deal

by John Lawrence, June 29, 2020

Living with the COBID pandemic could be the new normal. Assurances of a vaccine by the end of the year might be meaningless. Here's why: for many viruses including HIV, Ebola, malaria and tuberculosis there are no vaccines available despite years of study and years of effort to develop one. It took 100 years from the first polio epidemic in the US until a vaccine wiped out polio. Just as the Trump administration misled the American people in minimizing the effects of COBID including that things would normalize after we "flattened the curve" and giving dates by which we could "open up", they misled us by raising expectations that a vaccine would be available by the end of the year. Read the book, "Spillover", if you want authoritative scientific information about viruses and how long vaccine development takes if ever.

So, if the pandemic is something we have to live with indefinitely which could well be the case, the economy, in the way it existed before the pandemic, would never be coming back. So how do we create a new economy which works for the American people which, arguably, it was not working before the pandemic despite quasi full employment. Number 1: we refund the CDC and WHO which are the major institutions dealing with viruses and pandemics. Trump tried to defund CDC, and he did defund WHO in the midst of the pandemic. Politifact reported: "As for funding, there’s no question that the Trump administration sought to cut key CDC budget categories. But thanks to Congress, that funding was restored and even increased in bills that Trump ultimately signed." He had better luck and actually did defund WHO.

The biggest thing that could be done to minimize the bad outcomes for this and future pandemics is to get rid of Donald Trump as President of the US. A Democratic President would refund the CDC and WHO. The second thing would be to take a page out of FDR's book by reinstituting the Reconstruction Finance Corporation (RFC) which financed the New Deal including many infrastructure projects. In fact the Federal Reserve could finance a #GreenNewDeal without even tweaking the law. With the Special Purpose Vehicles (SPVs) it is now resorting to, it is financing debt relief not only for banks but for hedge funds, private equity funds, bankrupt corporations and even rich individuals. It is taking trillions on its balance sheet with quantitative easing. The SPVs require deal making with the Treasury Department. It would be a very small step for the Fed using a SPV to fund a Green New Deal. The US is about $4 trillion in arrears on infrastructure rebuilding and development. Instead of just bailing out bankrupt institutions the Fed could take a more positive role and actually fund productive development. By the way the RFC actually made money on repayment of loans and user fees as opposed to the Fed which just swallows US debt.

If no vaccine is found for COBID in a timely manner, the whole economy should be restructured because many businesses are not coming back. Many including Herz, J. Crew, Neiman Marcus and Chesapeake Oil have already filed for bankruptcy. A Green New Deal could take up the slack reducing the GDP from 70% consumerism to 50% which would be in line with the EU consumption component of GDP while increasing government investment by 20%. That would represent a full employment economy but it would be reoriented from consumption to building green infrastructure.

Minority hiring for a Green New Deal could be along the lines of affirmative action with African Americans, Latinx and Native Americans being hired first. This would go a long way to reduce inequality in America while being a form of reparations in light of the fact that slave labor built much of this country and Jim Crow redlining was responsible for the fact that black families have not been able to accumulate wealth at the same rate as white families. #BlackLivesMatter plus a #GreenNewDeal could help to restore the balance while at the same time creating a full employment economy.

Off the Top of My Head

A House Built Upon Sand: the US Economy

by John Lawrence, June 26, 2020

The wise man built his house on rock, and it withstood the rains and the floods and the wind. The foolish man built his house on sand and it collapsed. An apt metaphor for the US economy in the midst of a pandemic that is only getting worse. Before the pandemic hit, it was a full employment economy in which half the people couldn't survive a $400. emergency. It was an economy built on consumerism. Consumerism was 70% of GDP. About half the economy was small business, but these jobs and this economic activity was vulnerable. Much of it was non-essential. It was bars (by the way you can drink at home); it was restaurants (by the way you can eat at home). It was travel and hospitality (by the way you can sleep at home if you're willing to make your own bed).

The essential parts of the economy continued to operate even when the pandemic hit. It isn't fair that minimum wage workers were more exposed to the coronavirus, but, be that as it may, with some exceptions these workers did not get sick in higher ratios than anyone else. If more of the jobs were essential, productive and less frivolous, there would have been fewer jobs lost and much less unemployment. The economic house was built on sand and when the pandemic hit, it collapsed. At the same time the fault line of black racism and inequality was fully exposed. It's as if the hurricane of the pandemic cut away the underbrush and exposed this situation for what it is thanks to #BlackLivesMatter.

The Homestead Act signed by President Abraham Lincoln which gave free land to white people allowed whites to build equity and wealth while blacks who were promised 40 acres and a mule after slavery were denied even that. They ended up in many cases working the same land as sharecroppers and living in worse poverty than when they were slaves. After World War II the G.I. Bill aimed to help American veterans adjust to civilian life by providing them with benefits including low-cost mortgages, low-interest loans and financial support. African Americans did not benefit nearly as much as White Americans. Historian Ira Katznelson argues that "the law was deliberately designed to accommodate Jim Crow". In the New York and northern New Jersey suburbs 67,000 mortgages were insured by the G.I. Bill, but fewer than 100 were taken out by non-whites.

Additionally, banks and mortgage agencies refused loans to blacks, making the G.I. Bill even less effective for blacks. Once they returned from the war, blacks faced discrimination and poverty, which represented a barrier to harnessing the benefits of the G.I. Bill. So whites were able to build wealth through home ownership while blacks were denied that opportunity. Wealth from home ownership is the difference between the middle class and the poor. Home ownership became the means for the intergenerational transfer of wealth for white people. Each generation of black people started out from zero. There was an intergenerational transfer of poverty instead.

Blacks who were able to get manufacturing jobs after the Second World War did fairly well, but those jobs have by and large fled the country. In the financial crisis of 2008, the Great Recession, blacks were screwed as well. While the Federal Reserve bailed out the banks and mortgage companies hundred cents on the dollar, blacks who needed help paying their mortgages did not get it and were foreclosed on. The government could have bailed them out instead, but it didn't.

So now the country is faced with not only a public health crisis but also an economic, financial and racial crisis which would be much less severe if those manufacturing jobs still existed. The economy is not coming back as it was constructed pre-pandemic. There is no way that small business based on 100% occupancy is going to survive based on 50% occupancy. Many of the businesses like professional sports, cruises and even churches are predicated on high occupancy. People will not be comfortable with high occupancy unless a vaccine is found for COBID, but finding a vaccine is not a foregone conclusion. There are some viruses for which a vaccine has never been found including HIV, malaria and tuberculosis.

It takes a lot of money to develop a vaccine, and that money has been lacking from US budgets. There are two obstacles to faster progress, said Dr. Gregory A. Poland, director of the vaccine research group at the Mayo Clinic. “One is scientific, and one is embarrassing,” he said. The embarrassing part is the lack of investment. It takes 10 years and more than $1 billion to develop a vaccine — a small fortune for a medical advance but a pittance for a weapons system. While defense research is driven by one mega-customer, the Pentagon, vaccine researchers face a confusing hodgepodge of potential backers. In short the US has spent its money on weapons of war instead of protecting its people from pandemics which are far more deadly than terrorist attacks. 405,000 Americans died in WW II. Over half that amount have already died in this pandemic, and it's getting worse due to American foolishness at the top levels.

There is a chance now for America to start out on a new path, and that path would be more or less what Bernie Sanders and other progressives have identified as their agenda: a Green New Deal would create good jobs for millions of unemployed Americans and it could give priority to black people so that they could get started on wealth building. Low cost housing loans and subsidies could give black people the same advantages they didn't get with the Homestead Act and the G.I. bill. At the same time a Green New Deal would be converting the country to renewable energy and rebuilding infrastructure, both of which are necessary if earth is to remain habitable for the human race. Medicare for All would only bring the US up to the level of most other civilized countries.

We have to reset our priorities, reduce the military-industrial complex and make peace and have cooperation with our so-called enemies. We can quibble about Russia's and China's internal affairs or we can cooperate with them as peers to forestall global warming and create a planet worth inhabiting. We can spend our money on war or we can spend it forestalling future pandemics. The solution to many of our myriad problems is clear, and it doesn't require a revolution necessarily. Reform is all that's necessary to implement Medicare for All. Reform is all that's necessary to implement a Green New Deal. But countries that do not do what's necessary and obvious to meet the needs of the people create a situation in which violence may ensue. It's no longer a question of capitalism vs socialism. Most countries of the earth including Russia and China are a combination of both. I started with a Biblical reference so I will end with one: "Blind guides! You strain your water so you won’t accidentally swallow a gnat, but you swallow a camel!" God bless the USA.

Off the Top of My Head

Instead of Helping American Workers, the Fed Prints Money and Swallows US Debt

by John Lawrence, June 25, 2020

The Federal Reserve is printing trillions of dollars and buying US government debt. The market for US Treasury bonds is a hard sell these days because they pay so little interest: 1.37% for a 30 year bond, less than the inflation rate. China is dumping its Treasuries. It will probably accelerate the rate of dumping if tensions between the 2 countries continue. China was the US' largest creditor till recently when Japan took over that role. While the Federal Reserve has set interest rates effectively at zero, credit card companies are still charging as much as 30% interest which creates a huge number of Americans debtors especially when you throw in student loan debt which stands at $1.5 trillion. In fact, revolving consumer credit card debt reached nearly $1.1 trillion at the end of February 2020, according to the Federal Reserve G19 Report. Americans were paying as much as $121 billion in interest and fees combined by the end of 2019. That's no surprise since the Federal Reserve reported in February 2020 that the average interest rate on credit cards reached an astronomical 16.61%. While billionaires can borrow money at zero percent interest, average Americans pay 16% and up.

The effect of zero interest rates on savings accounts and Treasury bonds is to force everyone into the stock market which, although we're in a recession bordering on depression, continues to go up. It is totally divorced from reality; it wouldn't go down even in a depression like it did during the Great Depression. The Fed is keeping it artificially pumped up because so much American wealth is at stake there.

The Fed is buying Treasuries and mortgage backed securities (MBSs) to the tune of trillions of dollars. Wolf Street reported:

In March (2020) and April combined, the Fed monetized 100% of the additional Federal debt. Over the two-month period of March and April, the US government increased its debt by $1.56 trillion (most of it in April); and over the same two-month period, the Fed bought $1.56 trillion in Treasury securities (most of it in March) and thereby monetized 100% of the additional pile of debt during the two-month period.

The Fed is just swallowing all kinds of debt which is enriching the richest Americans and foreign banks even more. Problem is this forced feeding of cash by the Fed is not trickling down to the American people. It is not creating jobs. Now the Fed is creating even more ways to monetize debt by creating Special Purpose Vehicles (SPVs). These SPVs can buy assets the Fed is not allowed to buy, and they can lend to entities and rich individuals to buy certain assets. Under the arcane Federal Reserve Act, these SPVs require taxpayer backing from the Treasury Department to protect the Fed from losses. The SPVs can buy asset backed securities (ABSs) on a non-recourse basis which means that, if there are any problems, taxpayers take the losses. Indirectly via its Special Purpose Vehicles and its Primary Dealers, the Fed can buy even old bicycles, as long as taxpayers take the losses.

Wolf Street reported:

These ABS can be backed by credit card loans, auto loans, student loans, equipment loans, floor plan loans, insurance premium finance loans, some loans guaranteed by the Small Business Administration (SBA), and eligible loans on receivables. The loan amounts will be “equal to the market value of the ABS less a haircut and will be secured at all times by the ABS,” the Fed says.

A little history on Term Asset-Backed Securities Loan Facility (TALF) : At the end of 2010, under orders from Congress, the Fed released data on over 21,000 transactions it performed during the Financial Crisis, which revealed among many other outrageous acts, that the Fed lent to well-connected individuals and all kinds of hedge funds and others under its TALF program so that they would buy certain assets, such as these consumer loan ABS, drive up their prices, sell them to pension funds and others later for a huge profit, and pay back the loans to the Fed.

These well-connected individuals included John A. Paulson, Michael Dell, Christy K. Mack (wife of former Morgan Stanley CEO John Mack), Kendrick R. Wilson III (former Goldman executive and top aide to Hank Paulson Jr.), H. Wayne Huizenga (founder of AutoNation and Waste Management), Jonathan S. Sobel (head of Goldman’s mortgage department), etc. Some very wealthy people made a lot of money off the Fed’s bailout programs even as workers and the economy was in deep trouble.

So the Fed is paying John Paulson money by means of an SPV. Paulson is the guy who bet against the subprime mortgage market in 2007 and made one billion dollars in one day. Goldman Sachs had to pay him off, but eventually due to all the legerdemain in the financial markets, it was French and German taxpayers that paid him for his astute bet. That's casino capitalism at its best. Now he has direct access to the Federal Reserve's money printing press. Why? When there are so many poor and unemployed people in the US, why is the Fed intent on only bailing out financial markets, meaning rich people? Suffice it to say that the Fed is able to buy most anything from rich people and monetize their debt. Because of this and the fact that the rich can borrow at zero percent interest, they engage in risky bets. If they win, they pocket the money. If they lose, the Fed bails them out at zero percent interest.

Compare this with how the situation was dealt with during the Great Depression. Instead of force feeding wealthy people with interest free cash and adding trillions to the US National debt, FDR created the Reconstruction Finance Corporation (RFC). The original legislation establishing the RFC did not limit it to lending to financial institutions; it was also authorized to provide loans for railroad construction and crop lands. In other words it created jobs for average Americans. An amendment passed in July 1932 allowed the RFC to provide loans to state and municipal governments. The purpose of these loans was to finance projects like dams and bridges, and the money would be repaid by charging fees to use these structures. To help with unemployment, a relief program was created that would be repaid by tax receipts. Under the New Deal, the powers of the RFC were greatly expanded. The agency now purchased bank stock and extended loans for agriculture, housing, exports, businesses, governments, and disaster relief. The RFC actually made money on these loans.

So the RFC could actually create jobs for average working people (and not just for hedge fund managers) doing constructive things like building houses and infrastructure. Part of the New Deal was the Works Progress Administration (WPA) relief program which made the federal government by far the largest employer in the nation. A Green New Deal would create money much as the Fed does with a few keystrokes on a computer, but, instead of just providing liquidity to banks, hedge funds and rich people, it would provide money for productive jobs paid for by the government. The government needs to be employer of last resort in order to recreate a full employment economy.

A Green New Deal would convert the American economy from a fossil fuel dependent economy to one fueled by renewable energy. In so doing it would provide good paying jobs for those in American society who have been left out or left behind. The Fed should monetize the $3 trillion backlog in American infrastructure repair and rebuilding. Making the Fed a public bank instead of a bank whose main purpose is to swallow US government debt and give money to rich people in order to provide "liquidity" would go a long way to reducing inequality and bringing the American poor including minorities into the middle class. IMHO the COBID pandemic will insure that the old economy based on 70% consumerism is not coming back. The new normal will be based on government spending to create a Green New Deal or will sputter along at about half its former level.

Off the Top of My Head

Defund the Police ... Defund the Military

by John Lawrence, June 11, 2020

Police have been given jobs social workers should be doing. They've criminalized everything from homelessness to mental illness to drug addiction. That's what defunding the police is all about. They should hire more social workers and less police. The police are asked to do a lot more than what police work should be all about. So has the military. Every problem overseas, many of which could be solved by teachers, social workers and doctors has been looked at as a problem for the military to solve. Many of these problems derive from the fact that people are in dire poverty. They need help building schools, houses, sanitation systems. Instead we send the military in to bomb them just as we send the police in at home to take them to jail by any means necessary.

We glorify police work with all kinds of TV shows just as we glorify the military. No one ever glorifies the Peace Corps though, and, if they were sent in more often, there would be more positive results. Instead of helping people, the first thought of American leaders is to send in the police or the military. The Washington Post reported:

To fix policing, we must first recognize how much we have come to over-rely on law enforcement. We turn to the police in situations where years of experience and common sense tell us that their involvement is unnecessary, and can make things worse. We ask police to take accident reports, respond to people who have overdosed and arrest, rather than cite, people who might have intentionally or not passed a counterfeit $20 bill. We call police to roust homeless people from corners and doorsteps, resolve verbal squabbles between family members and strangers alike, and arrest children for behavior that once would have been handled as a school disciplinary issue.

Police themselves often complain about having to “do too much,” including handling social problems for which they are ill-equipped. Some have been vocal about the need to decriminalize social problems and take police out of the equation. It is clear that we must reimagine the role they play in public safety.

Everything that could be said about the police could be said about the military. Instead of helping people overseas to escape from the poverty they experience, we police them instead. What a novel idea to spend less on the military and more on the Peace Corps. Let's reimagine the role they play in public safety. Policing has been the primary vehicle for using violence to perpetuate the unjustified white control over the bodies and lives of black people that has been with us since slavery. The military has been the primary vehicle to perpetuate American control over black and brown bodies in other parts of the world.

The Peace Corps budget is $410.5 million. The military budget is $934 billion. The military budget covers the DoD, overseas contingency operations, the VA, Homeland Security, the State Department, and many others that involve national security. By contrast in 2003, the military budget was less than half that - $437.4 billion. The US spends more on its military than the next 10 countries combined. If the Soviet Union collapsed because of overspending on the Cold War, the US is in danger of collapse from overspending on its military when it is not even engaged in a major war. Overspending on the military is just a jobs program that Congress will not curtail. Trump for all his bluster about wanting our NATO allies to spend more on defense, nevertheless, authorized a $34 billion increase in military spending for 2020. Meanwhile, China, the world's second largest spender on its military is spending $178.2 billion in 2020 while Russia spends a mere $70 billion.

The U.S. spends some $100 billion annually on policing — most of it coming from local budgets — and an additional $80 billion on incarceration, according to a detailed 2017 report by the Center for Popular Democracy. In cities across the country, policing alone can take up anything between a third and 60 percent of the entire annual budget. Many major cities spend as much as 40 percent of their municipal budgets on policing, leaving a dwindling pool of resources for poverty prevention, infrastructure and everything else. The coronavirus pandemic exacerbated this dynamic: Cities facing steep revenue declines are trying to decide which services to cut to remain solvent, and mayors are often hesitant to cut law and order spending. Welfare spending has been on a long, uneven decline, while law and order spending ballooned almost unabated until about 2010, when it amounted to nearly 2.5 percent of national income. Since then, law and order spending has fallen to a hair under 2 percent, while welfare spending stands at about 0.8 percent of national income less than half what we spend on police.

The US domestic Peace Corps called AmeriCorps has a budget of $560 million. So the US spends a paltry $1 billion on its foreign and domestic Peace Corps while spending $180 billion on police and almost a trillion on its military. Without this spending the economy would surely collapse. Military and police jobs are jobs of last resort for non college educated youth. However, this could be turned around. This money could be spent on other pursuits like housing the homeless (Habitat for Humanity), social workers, teachers, sanitation systems in foreign countries lacking them, building green infrastructure (Green New Deal), eradicating poverty, education (giving "The Talk" as part of public school curriculum), sustainable agriculture, clean water, cleaning the oceans, cleaning the rivers and more.

While the US spends a huge amount of its budgets on police and military work, China is spending its budget building infrastructure all over the world with its Belt and Road initiative (BRI). Whatever you want to say about it, it represents peaceful development of countries outside of China while the US does nothing of the sort, preferring instead to police the world with its 800 military bases in more than 70 countries. So while the US presence outside the US is mainly military in nature, China's presence outside China is basically peaceful development. This development will also lead to economic advantages for China through increased trade.

China’s overall ambition for the BRI is staggering. To date, more than sixty countries—accounting for two-thirds of the world’s population—have signed on to projects or indicated an interest in doing so. Analysts estimate the largest so far to be the $68 billion China-Pakistan Economic Corridor, a collection of projects connecting China to Pakistan’s Gwadar Port on the Arabian Sea. In total, China has already spent an estimated $200 billion on such efforts. Morgan Stanley has predicted China’s overall expenses over the life of the BRI could reach $1.2–1.3 trillion by 2027, though estimates on total investments vary.

The US has sought to demonize China's BRI and to create a second Cold War to justify its military expenditures. Throw Russia into the mix as well. The US wants to line up its group of allies in a potential contest versus China and its allies. However, many US purported allies are jumping ship as they read the tea leaves and realize that the US sees its role in the world and at home as mainly police work. Poverty alleviation is something the US doesn't do. This needs to change if we are ever to combat our common enemy, the coronavirus and climate change, and forget about creating a Second Cold War which will only drain US resources while China goes ahead building infrastructure and increasing trade.

 

Off the Top of My Head

Is Police Reform Enough?

by John Lawrence, June 10, 2020

The people in power, the status quo, thinks they can contain the Black Lives Matter movement to just police reform. They just don't want any profound changes to the system that go beyond police reform. So let black football players kneel all they want, but they just need to keep playing so the profits keep coming. Remove a few Confederate statues, rename a few military bases, but don't challenge the trillion dollars a year spent on the military. Defund the police, but, whatever you do, don't defund the military. Don't remove any of the US military bases that exist in almost every country of the world. The United States maintains nearly 800 military bases in more than 70 countries and territories abroad. Do we really need military bases in Germany and Japan?

So pass a few laws about police reform, but don't threaten the power structure in this country. Throw black people a few bones, and maybe the whole BLM movement will quiet down and just go away. Then we can get back to business as usual and rich people can get on with the job of getting insanely richer. Inequality will remain the same. Those in power will stay in power. Legal bribery in terms of lobbying will remain in effect. That's the way business is done in this country. Needless to say poor people can't afford to hire lobbyists. Political reform will be off the table as will economic reform.

The American version of capitalism will continue to reap rewards for the billionaires while the Chinese version of capitalism will continue to bring people out of poverty and build infrastructure in many parts of the world. While the US polices and sanctions, the Chinese are winning friends and influencing people, much as Dale Carnegie suggested. It's no longer a question of capitalism vs communism. Every country in the world, including the US is some combination of both. Some countries just implement their version more effectively. The US implements its economic system in such a way that it favors the rich and condones the rest to debt servitude including middle class people strapped with student loan debt which they don't have a prayer of paying off. Don't worry payday lenders are only reaping 400% interest.

So will the BLM movement just die away satisfied with the result of police reform - no more chokeholds, no more no knock warrants, a few other things if Republicans go along which they probably won't at the Federal level. The Democrats can pass all the legislation they want. It is meaningless if it never passes the Senate and gets enacted into law. It is just spinning their wheels. It's gridlock; it's not democracy. It's democracy hamstrung; it's democracy rendered impotent. It's a political system which will patronize the BLM movement and give it a few ineffectual reforms, more lip service than anything. The real profit making infrastructure will not change. Perhaps they will absorb a few black people into the power structure by giving them a few more positions on corporate boards, but the power structure itself will not change. Poor and homeless people will stay poor and homeless. even if a few escape their dire situations. The media will highlight some black person who escaped poverty and made a million dollars. See you too could do it if you only had the gumption. This is the message they will send. Just pull yourself up by your own bootstraps as so many others have done. Systemic inequality will still remain even if systemic racism doesn't. The only mistake the recent looters made was not forming a hedge fund before they started looting.

Off the Top of My Head

Racist Economics

by John Lawrence, June 8, 2020

Is it racism when the schools in predominantly black neighborhoods are worse than schools in predominantly white neighborhoods? Schools in many parts of the country are funded with local property taxes. It stands to reason that property values in poor neighborhoods are less than property values in rich neighborhoods, and, therefore, property tax revenues and hence school funding is less. So the worse schools are found in poor "predominantly black" neighborhoods. A word you hear often these days is "predominantly". Nothing is totally black and white, but, when black people are affected in a way that is greater than their percentage of the population, one could say it is a "predominantly black" situation. When police arrest black people at a greater rate than they do white people, we could say that the police are a racist institution.

It has been said that the only mistake that the looters at the current protests made was that they didn't form a hedge fund first before they started looting. Martin Luther King said, “The black revolution is much more than a struggle for the rights of Negroes. It is forcing America to face all its interrelated flaws—racism, poverty, militarism, and materialism. It is exposing the evils that are rooted deeply in the whole structure of our society. It reveals systemic rather than superficial flaws and suggests that radical reconstruction of society itself is the real issue to be faced.” Republicans have breathed a sigh of relief that so far the Black Lives Matter movement has had little to say about poverty, economic inequality, militarism and materialism. Some though are getting to the heart of the problems in our society that affect us all but affect black people "disproportionately."

Writing in the New Yorker Keeanga-Yamahtta Taylor said:

The [1992] uprising in L.A. shared with the rebellions of the nineteen-sixties an igniting spark of police abuse, widespread violence, and the fury of the rebels. But, in the nineteen-sixties, the flush economy and the still-intact notion of the social contract meant that President Lyndon B. Johnson could attempt to drown the civil-rights movement and the Black Power radicalization with enormous social spending and government-program expansion, including the passage of the Housing and Urban Development Act of 1968, which produced the first government-backed, low-income homeownership opportunities directed at African-Americans.

By the late nineteen-eighties and early nineties, the economy was in recession and the social contract had been ripped to shreds. The rebellions of the nineteen-sixties and the enormous social spending intended to bring them under control were wielded by the right to generate a backlash against the expanded welfare state. Political conservatives argued that the market, not government intervention, could create efficiencies and innovation in the delivery of public services. This rhetoric was coupled with virulent racist characterizations of African-Americans, who relied disproportionately on welfare programs. Ronald Reagan mastered the art of color-blind racism in the post-civil-rights era with his invocations of “welfare queens.” Not only did these distortions pave the way for undermining the welfare state, they reinforced racist delusions about the state of black America that legitimized deprivation and marginalization.

The 1990s saw Democrats agreeing with Republicans that problems in the black community were largely caused by overly generous social programs. President Bill Clinton promised to "end welfare as we know it." Senator Joe Biden jumped right on board the push to reduce welfare programs by saying, "“the culture of welfare must be replaced with the culture of work. The culture of dependence must be replaced with the culture of self-sufficiency and personal responsibility. And the culture of permanence must no longer be a way of life.” Biden championed the 1994 “crime bill” that pledged to put a hundred thousand more police on the street, called for mandatory prison sentences for certain crimes, increased funding for policing and prisons, and expanded the use of the death penalty. By the 1980s Ronald Reagan decried "welfare queens."

Taylor continues:

So, though Biden desperately wants us to believe that he is a harbinger of change, his long record of public service says otherwise. He has claimed that Barack Obama’s selection of him as his running mate was a kind of absolution for Biden’s dealings in the Democrats’ race-baiting politics of the nineteen-nineties. But, from the excesses of the criminal-justice system and the absence of a welfare state to the inequality rooted in an unbridled, rapacious market economy, Biden has shaped much of the world that this generation has inherited and is revolting against.

More important, the ideas honed in the nineteen-eighties and nineties continue to beat at the center of Biden’s political agenda. His campaign advisers include Larry Summers, who, as Clinton’s Treasury Secretary, was an enthusiastic supporter of deregulation, and, as Obama’s chief economic adviser during the recession, endorsed the Wall Street bailout while allowing millions of Americans to default on their mortgages.

Biden was chiefly responsible for the 2005 bill that took away bankruptcy protection from student load debtors (presumably disproportionately black). Credit card companies, many of whom are headquartered in Biden's state of Delaware, have been major Biden campaign contributors. Biden was known as the Senator from MBNA. Biden should just turn over the Democratic nomination to Bernie Sanders who has been on the right side of issues which are now coming to the forefront in American life.

Taylor continues:

In 1968, King, in the weeks before he was assassinated, said, “In a sense, I guess you could say, we are engaged in the class struggle.” He was speaking to the costs of the programs that would be necessary to lift black people out of poverty and inequality, which were, in and of themselves, emblems of racist subjugation. Ending segregation in the South, then, was cheap compared with the huge costs necessary to end the kinds of discrimination that kept blacks locked out of the advantages of U.S. society, from well-paying jobs to well-resourced schools, good housing, and a comfortable retirement. The price of the ticket is quite steep, but, if we are to have a real conversation about how we change America, it must begin with an honest assessment of the scope of the deprivation involved. Racist and corrupt policing is the tip of the iceberg.

We have to make space for new politics, new ideas, new formations, and new people. The election of Biden may stop the misery of another Trump term, but it won’t stop the underlying issues that have brought about more than a hundred thousand COVID-19 deaths or continuous protests against police abuse and violence. Will the federal government intervene to stop the looming crisis of evictions that will disproportionately impact black women? Will it use its power and authority to punish police, and to empty prisons and jails, which not only bring about social death but are now also sites of rampant COVID-19 infection? Will it end the war on food stamps and allow African-Americans and other residents of this country to eat in the midst of the worst economic crisis since the Great Depression? Will it finance the health-care needs of tens of millions of African-Americans who have become susceptible to the worst effects of the coronavirus, and are dying as a result? Will it provide the resources to depleted public schools, allowing black children the opportunity to learn in peace? Will it redistribute the hundreds of billions of dollars necessary to rebuild devastated working-class communities? Will there be free day care and transportation?

In short we need good paying union jobs (Green New Deal) that will deal with the issue of climate change (Green New Deal), forgiveness of student loan debt (the least Biden can do since he was largely responsible for creating the situation), Medicare for All (since hospitals in black neighborhoods compare unfavorably with those in white neighborhoods), public housing (to end homelessness and guarantee everyone the right to have a roof over their head). If we want to solve the problem of institutional racism in this country, we need to address the fundamental problems of economic inequality. Where do we get the money? Not only by defunding the police which claim the lion's share of local budgets, but by demilitarizing the bloated military-industrial complex and taxing the rich at 1955 levels (91%). The Federal Reserve can always take a few more trillion on its balance sheet; it has taken trillions on its balance sheet already and given the money to the big banks. How about Quantitative Easing for the people? Economic inequality is a problem which affects black people disproportionately (there's that word again), but the solution of which will contribute to the benefit of white people as well.

Off the Top of My Head

Black Lives Matter: Police Reforms Benefit Whites as Well

by John Lawrence, June 7, 2020

No more "carotid restraints" or chokeholds is a police reform caused by the Black Lives Matter movement, but obviously it applies to whites as well. We don't know how many of the 237 times Minnesota police used chokeholds, blacks were targeted, but probably like all police violence it was disproportionate. Police reforms such as ending "no knock warrants" also obviously apply to whites as well as blacks. The point is that what black people are demanding in terms of police reform doesn't just affect black lives. It affect all lives.

So why stop with just police reform? How about prison reform.Though African Americans and Hispanics make up approximately 32% of the US population, they comprised 56% of all incarcerated people in 2015. African Americans are incarcerated at more than 5 times the rate of whites. The imprisonment rate for African American women is twice that of white women. Although only a small percentage are in prison for minor drug offenses, marijuana possession in small quantities should be made legal on a national basis. Many are in jail awaiting trial. Every day, 465,000 people are held in local jails even though they have not been convicted; legally, they are presumed innocent. Many are there because they cannot afford bail.

Let's not stop at prison reform. How about political reform? Mail-in ballots should be legalized and encouraged in every state. How many poor people can afford to take time off from work to go and vote? These people are probably disproportionately black, but it would help poor people who are white as well. Let's make the election of President be based on popular vote and not the electoral college. Let's do away with the filibuster which prevents legislation from being passed democratically. Let's limit the power of the leader of the Senate to even stop legislation from being introduced. Make it mandatory that legislation created in the House be debated and voted upon in the Senate. Let's outlaw lobbying which lets the richest and most powerful individuals and corporations determine the political agenda.

How about economic justice? That was basically Bernie Sanders' agenda. Let's eliminate poverty and homelessness in the US. Blacks are disproportionately poor and homeless, but there are plenty of poor and homeless whites as well. Instead of spending a trillion dollars a year on the military and military-industrial complex, instead of wasting money on fruitless wars, let's have a Green New Deal and rebuild American infrastructure while at the same time creating hundreds of thousands of good paying jobs. Let's cancel student loan debt which disproportionately affects blacks, but whites will benefit too. Let's have Medicare for All instead of an outrageously expensive health care system which is twice as expensive as any other country's while producing only half as good results.

You get the picture? All the reforms which could come from the Black Lives Matter movement will also bring those same reforms for whites, browns and any other colors. Let's protest to change the course of this whole country for all citizens. Then we have to help the rest of the world with a Green New Deal if we want to create a habitable planet for our children and grandchildren. Black people are leading the way for social justice, for political and economic justice, justice which will turn this country around and help turn this planet around. Let's keep on going.

Off the Top of My Head

The Fed Will Have Given About a Trillion Dollars a Year to Rich People Since 2008 by the End of 2020

by John Lawrence

The Federal Reserve prints money and gives it to rich people. According to CNBC, it will have printed about $10 trillion by the end of 2020. This policy is called quantitative easing. It represents a Universal Basic Income (UBI) for rich people, but so far, despite Andrew Yang's proposal and the Second Great Depression we find ourselves in due to the coronavirus, there is no UBI in the works for the rest of us. In addition the Fed has lowered interest rates to zero for rich people, but credit card rates for poor people still top 30%. So the rich can borrow unlimited amounts of money to buy up all the foreclosures and failing businesses caused by the Second Great Depression.

The economy is not going to bounce back to where it was which was an economy in which consumerism was 70% of GDP. There just is no way when large scale venues and bars operating at 25% capacity will be the norm for the foreseeable future. There is also the possibility of multiple waves or spikes in the number of cases as states and cities try to open too much too soon. Plus people are just not going to feel comfortable going on cruises and going to professional sports venues until there is a vaccine which is not a foregone conclusion that one can even be developed. The economy as it existed pre pandemic was one in which we were entertaining ourselvesr to death. It was an economy built on entertainment, an economy predicated on selling each other lattes. Even though we can still be entertained at home via TV and via the internet, there is still a substantial enough loss of revenues and jobs that the economy will stumble along at half or three quarters speed unless a fundamental change is made in how the economy functions.

Government investment in the economy similar to FDR's New Deal is not only necessary to get the economy working again, it is essential to change an economy of entertainment and titillation to an economy where real and essential work will once again be the norm. We have a multi trillion dollar deficit in infrastructure in the US. This can be addressed by forgetting the defunct economy consisting of selling each other lattes and putting people to work doing real and essential jobs. This will also contribute to a revitalization of the American spirit. America was built by people doing real work whether that was in agriculture or manufacturing and not by people entertaining us to death.

The book, "Amusing Ourselves to Death: Public Discourse in the Age of Show Business," by Neil Postman made the argument very cogently. According to Wikipedia,

The essential premise of the book, which Postman extends to the rest of his argument(s), is that "form excludes the content", that is, a particular medium can only sustain a particular level of ideas. Thus rational argument, integral to print typography, is militated against by the medium of television for this reason. Owing to this shortcoming, politics and religion are diluted, and "news of the day" becomes a packaged commodity. Television de-emphasises the quality of information in favour of satisfying the far-reaching needs of entertainment, by which information is encumbered and to which it is subordinate.

Postman was on to something. Entertainment and not religion is the opium of the masses. When people like the Kardashians can make their living by just advocating consumerism and indolence, America has lost its work ethic. A UBI which just allows the consumer economy to reinvent itself would to a certain extent be a missed opportunity for government to create meaningful jobs that the private sector can't create to build a better, more meaningful society, a society built on helping people here and around the world. FDR was on to something. His New Deal can be emulated in a Green New Deal which at one and the same time can address the global warming crisis, build  a stronger and more resilient infrastructure and create meaningful jobs for every American.

Off the Top of My Head

America's Ingenious Solution to the Creation of a Full Employment Economy

by John Lawrence, May 19, 2020

People have been decrying the loss of jobs to automation and offshoring of manufacturing jobs for years. This is behind a call for a Universal Basic Income (UBI). So why was America a full employment economy before the pandemic hit? The answer lies in the fact that, instead of manufacturing jobs, large numbers of people were employed in the leisure and hospitality industry as bartenders, servers, baronistas, tattoo artists, nail salon workers, barbers and beauticians, uber drivers etc. Ten million of them are now unemployed. These inessential jobs took the place of essential jobs that went offshore or were replaced by robots. Old fashioned union jobs were replaced with nonunion jobs. Nevertheless, they all comprised a full employment economy. In that sense Trump was right. It was a beautiful economy ... until you looked a bit deeper into the nature of the employment.

Most of the people employed in these inessential jobs were living paycheck to paycheck. They are the ones who had less than $400 in the bank to cover an emergency. They are burdened by a ton of student loan debt which they have no hope of paying off in a lifetime and, thanks to Joe Biden and like minded Congressmen, they can't discharge this debt in bankruptcy. But they take up the slack caused by the loss of good paying unionized manufacturing jobs, that's for sure. Some of those jobs will come back when the economy "opens up," but too many people have been deceived by the Gaussian curve, the one that they keep talking about "flattening" and "bending." The authorities were wrong to suggest that, when we were on the downhill side of the curve, it would be safe to open up. It's not. Flattening the curve was all about having enough ICU beds, ventilators and PPE. It was about having the hospitals not get overwhelmed. They shouldn't have implied that, once the curve was flattened, it would be safe to "open the economy."

One or two people entering the US in February or March caused 90,000 deaths in April and May. Now there is a 5% to 10% infection rate still in many parts of the country. That's a lot more than one or two people. The number of COBID cases could spike if people aren't careful opening up. On the other hand if people take reasonable precautions, the economy could partially open up under different conditions without spiking the number of new cases. That remains to be seen. July and August should tell the tale of whether Americans used proper and reasonable precautions or said 'to hell with it, we're going back to business as usual.' That's why I'm staying in for the next two months.

Getting back to all those inessential workers who have become unemployed. A better use of their talents might be found in a rearrangement of the economy which created more manufacturing jobs in a new green economy. There is much work that should be being done, that's not being done. Let's call it infrastructure in general. In particular green infrastructure. That would entail massive Federal programs and massive amounts of government provided money. The deficit for this year alone will be around $4 trillion. Where will all this money come from? It would come from a variety of places. Downsizing the military and military-industrial complex would be a good place to start. America's enemies are first the pandemic, second global warming. They are not the enemies created to satisfy the needs of the military-industrial complex for more money. Secondly, taxing the wealth and income of the super wealthy. Thirdly, the Federal Reserve can print an unlimited amount of money. The only consideration is inflation and a diminution in the value of the dollar. Those things are not imminent threats. Strengthening the US by reinventing a manufacturing economy, putting people to work at good paying jobs doing something constructive, rather than serving each other lattes, will tend to strengthen the overall economy in the long run and get America back on a solid footing where it can again be a moral world leader.

Off the Top of My Head

10 Million Jobs Lost in Leisure and Hospitality Sector

by John Lawrence, May 17, 2020

It seems like there have been huge job losses in inessential industries like leisure and hospitality. These are jobs in which the lower half of America economically serves the upper half. They are bartenders, waiters, servers, baristas, casino workers. They are service workers for the upper middle class. They are the bottom half of Americans who are living paycheck to paycheck and can't cover a $400 emergency. Nevertheless, they contributed to a full employment economy and added considerably to GDP. It seems that perhaps 25% of American workers prior to the pandemic worked in areas that weren't really essential. So what is essential and what is inessential? If you pay me $10 to tell you jokes for an hour, I'm an employed worker, and that $10. adds to GDP. However, it's not what I would call an essential job.

Wouldn't be better if all those bartenders, servers, baristas and casino workers were rebuilding  infrastructure or doing something more constructive? Aren't there essential jobs which aren't being done? Maybe necessary would be a better word for it. Necessary work is not being done because there is a market demand for inessential, unnecessary workers in a full employment society in which the top 50% have money to spend on bars and restaurants, cruises, concerts, spectator sports and casinos. Perhaps all the unemployed bartenders could be trained to do real jobs involving the rebuilding and expansion of much needed infrastructure. The problem is that these jobs would be public sector jobs. The private sector left to itself will provide unnecessary, in essential jobs catering to those who have money to spend in the private economy. They constitute the leisure class.

"The Theory of the Leisure Class" by Thorstein Veblen written in 1899, is a treatise on economics and a detailed, social critique of conspicuous consumption, as a function of social class and of consumerism, derived from the social stratification of people and the division of labor, which are social institutions of the feudal period  that have continued to the modern era. Today the neo-feudal working class services the needs for amusement and conspicuous consumption of the upper middle and upper classes.

Left to itself the private economy will just think of more and more ways for people to spend money amusing ourselves rather than doing necessary work which will replace bridges, roads, levees and dams that are falling apart. The public economy is that economy which is concerned with public health, public infrastructure, converting from a fossil fuel to a green economy fueled by renewable energy among other things.  Left to itself the private economy will continue on its merry way belching smoke and contributing to global warming. Left to itself the private economy will continue shipping jobs to wherever the workers are cheapest and reimporting cheap consumer goods into the US. That leaves jobs in the leisure and hospitality sector. You might also include tattoo parlors which provide employment for many people. It's a question of what types of jobs are available and how important is it that those jobs get done. Is it important that, when you drive over a bridge, you can know that it hasn't exceeded its "replace by" date?

The fact that the food supply chain had to convert from selling agricultural products to restaurants to selling them to grocery stores when the lockdown went into effect, and this is what caused the bottleneck at grocery stores because over half of food products were sold to restaurants before the pandemic hit tells you something. This in itself is somewhat amazing. When I was a kid, people rarely went out to eat. Most meals were consumed at home. Mother made them. Today mothers hold down full time jobs outside the home in order that the family can afford mortgage payments on a home and car payments for two cars. Not that long ago most families had only one car. Mother didn't need one because she stayed home and raised the kids, prepared the meals and did the housework. Perhaps she even tended a garden and canned or froze vegetables to save on the grocery bill.Today the kids have to be cared for by child care workers, a whole relatively new category of jobs that didn't used to be necessary.

Would America be better off if many of the inessential workers in the leisure and hospitality industry were employed instead in industries which actually made America a better place and in jobs which paid a decent wage? Today many local economies are hurting because tourism has gone down the tubes. An economy based on tourism is an economy based on inessential and unnecessary work to a large extent. There is much more important, essential and necessary work that should be getting done instead of basing an economy on amusement and stuff that in many cases does not contribute to the health and welfare of people or society. Voltaire said we'd all be better off if we tended our gardens. A full employment economy based on unnecessary work is not necessarily a healthy economy.

Off the Top of My Head

A Jobs Program for Inessential Workers
by John Lawrence, April 30, 2020

Turn inessential workers into essential workers by putting them to work building green infrastructure. This is essential work that is not getting done. Much of the previous inessential work they did is better left undone even in a recovery. It is still inessential. It'll always be inessential compared to what needs to be done in creating and building green infrastructure. Building out solar and wind renewable energy could employ thousands if not millions of people. Repairing roads, bridges, waterways, clean water systems, airports, railroads and all other infrastructure could employ millions. This is essential work that has remained undone despite the fact that the American Society of Civil Engineers has given the US a D rating for infrastructure. High speed rail needs to be built. The widespread adoption of electric cars has to be mandated, and construction of a national electric vehicle charging network to power them has to be built.

Unemployed people still need jobs. Mark Cuban said on CNN this morning that there should be a jobs program similar to that of the New Deal. He is exactly right although he didn't make the necessary connection about the essential work that's still being left undone and the inessential work that doesn't need to be done even in a recovery. Forget Cuban's sports and entertainment enterprises. I hate to tell you that they are basically inessential. What is essential is greatly expanding the public health undertakings of the Federal  government which has been totally behind the curve in this pandemic.

We must ask ourselves what is essential and not go back to a new normal in which all the inessential businesses of the past are brought back just in order to provide employment to the millions who have lost their jobs. The pre-pandemic economy was 70% consumerism. The economy post epidemic should be much less a consumerist economy and much more an investment economy. The four components of gross domestic product are personal consumption, business investment, government spending, and net exports. Of these government spending must be ramped up to provide the essential jobs in infrastructure building as well as in the areas that the pandemic has made clear are indeed essential: health care, education, transportation, agriculture.

Government spending must go up; personal consumption must go down. It's as simple as that. As for business investment, it's a lost cause as business will only do what's profitable for itself as has been made abundantly clear. Investment in fossil fuels and plastics which the big oil companies are making is only destructive to a green economy, not constructive. As far as exports are concerned, the dollar has already been weakened as much as it could possibly be by zero interest rates, so increased exports, although desirable, are not likely to happen any time soon.

Private enterprise knows only one thing in terms of the economy "reopening": get back to consumer spending. It ain't going to happen. People are still afraid of the virus. The pandemic is not over. They will use their money to pay off debts instead of going in debt to the hilt like they are used to. People will save their money instead of entertaining themselves to death. Why? Maybe they have learned their lesson that a high employment economy predicated on the fact that people will always have a job and always have a prepensity to consume is just a chimera. Rather than living paycheck to paycheck, I hope people will understand that there may come a rainy day, and they need to save for that. That lesson has really been brought home by the coronavirus pandemic.

The true heroes are essential workers not the military. The military itself was brought to its knees by COBID-19. There is a lesson there. It's more important to spend our collective money on preparing for the coming pandemic of global warming than on a bloated military. It is more important to house the homeless and guarantee the economic rights of shelter and health care to all Americans as in the 1948 UN Declaration of Human Rights. It is more important to help people all over the world escape from extreme poverty because poverty breeds health crises which then can spread all over the world. It's more important to make peace with our rivals rather than try to control them with military threats and sanctions.

May the next President (and I hope to heaven that it's not Donald Trump) see the light of a more rational, compassionate and humane world, one more concerned about the health and welfare of all the world's peoples. I hope Governor Cuomo's values of being tough, smart, disciplined and most importantly loving spread to every corner of US and world society, and we get on with essential business instead of the inessential business of amusing, entertaining and consuming ourselves to death.

Off the Top of My Head

How the World Could Change When the Current Crisis is Over

by John Lawrence, April 26, 2020

Perhaps we will rethink what is essential and what is inessential. Here's my list of what is essential: 1) Health care; 2) Food; 3) Water; 4) Sanitation (Waste water and trash collection); 5) Education; 6) Transportation; 7) Electricity; 8) The Internet; 9) Grocery stores. 10) Elder care.11) Police, Fire and Paramedic services. Here are some things that are considered inessential now: 1) Spectator sports; 2) Spectator music events; 3) Parades; 4) Conventions; 5) Bars; 6) Restaurants; 7) Barber and beauty parlors; 8) Tattoo parlors; 9) Political campaign events; 10) Large parties like wedding receptions.

Everyone can come up with their own list of what they consider to be essential and what they consider to be inessential. In my opinion the least essential of inessential services are tattoo artists. There are a lot of products and services in our mass consumer culture which are also frivolous and have nothing to do with what is essential or beneficial to human well being.. It seems that the most essential workers are the least paid while the least essential are well paid indeed. Is advertising really essential? You can look up everything you might want or need online using google or amazon. Why do you have to have some irrelevant product or service pounded into you by TV advertising? It's a historical relic. I record most programs so that I can fast forward through the commercials. If I watch a live program, I put it on pause while I do something else for awhile, and then I fast forward through the commercials. In my opinion everything advertised on TV, especially pharmaceuticals, is inessential. They should be prescribed by a doctor. It's the doctor's business to know which pharmaceuticals you need, not yours.

Are hedge funds essential? Is jewelry essential? Are the products of the wedding-industrial complex essential? Many people are having weddings during the pandemic without paying the tens of thousands of dollars that current weddings fashioned by the wedding-industrial complex demand. There are many frivolous consumer items which advertising insists that people need that they don't really need, that are completely inessential. Some are nice to have, but inessential, and some are downright destructive to peoples' health and welfare.

The most essential activity at this time in history is saving the planet from global warming. Production of renewable energy alternatives is absolutely essential. The provision of green infrastructure is absolutely essential. Fossil fuels need to be left in the ground. Getting rid of plastics which pollute the oceans and other waste products that aren't biodegradable is absolutely essential. Rethinking payscales for essential workers like agricultural workers and grocery store workers is essential. If these are the most essential workers, they should be paid more. The same goes for doctors, nurses, certified nursing assistants, the CNAs who do most of the caregiving at nursing homes. CNAs make little more than minimum wage and yet they are exposed to the coronavirus. What this means is that so much that is really essential now is either being ignored or very little money is being allocated to it while huge amounts of money are being allocated to fruitless and frivolous activities.

The most fruitless activity is war and the provoking of war. The trillion dollar annual budget of the military-industrial complex has been shown to be fruitless and meaningless when the real war is against a virus. Unhealthy conditions in poverty stricken areas of the world including refugee camps can breed disease which affects the whole world including "privileged" people in the more advanced nations. Poverty and disease need to be eradicated in all parts of the world. The military cannot do that. Oh, they can be repurposed a little bit to help out with a pandemic, but they can not really do the job that needs to be done. In particular they are vulnerable to the pandemic themselves and all of the weapons of war cannot protect them. The real war needs to be against poverty and disease which are the breeders of war and pandemics. The real war needs to be against global warming. The real essential workers are construction workers who need to be constructing advanced green infrastructure.

What is clear is that real essential workers need to be paid more which argues for a lessening of economic inequality. So much of the wealth is held by people who are absolutely inessential to the health, welfare and betterment of people all around the world. A Green New Deal needs to be prioritized. Wealth needs to be taxed to pay for it. New York state needs to tax Wall Street to make up for its budget deficit. Priorities, priorities. The helping professionals and care workers need to be given more respect and money. Taxing inessential workers like hedge fund managers is what needs to pay for it.

Off the Top of My Head

Explainer: Quantitative Easing for the People

by John Lawrence, April 19, 2020

Let's say a Wall Street bank has a mortgage that's been defaulted on. That qualifies as a "toxic asset" meaning the guy isn't paying his mortgage. The bank then pleads with the Federal Reserve to take it off its hands because the bank is running low on money that it thought would be coming in if the guy had made his monthly payments. So the Fed adds "liquidity" by saying to the bank, "Give me that mortgage. I will take it off your hands and pay you the full value of the amount borrowed, and then I will be the mortgage holder for the "toxic asset." So the bank is made whole, and the Fed is now the holder of the toxic mortgage. The Fed has "taken it on its balance sheet" and taken it off the balance sheet of the Wall Street bank. This is what happened during the Great Recession of 2008. It's what Quantitative Easing is all about. Theoretically, some day the Fed will sell this mortgage in the marketplace, but who wants to buy a mortgage that no one is paying either interest or principal on especially if the mortgagee is long gone. Instead the toxic asset disappears in what amounts to the Fed's black hole.

Although the Fed will do this for a bank especially for those banks that are too big too fail, they will not do this for Joe Blow. Joe blow, for instance, may have a toxic asset of $30,000 in credit card debt or $100,000 in student loan debt. Why couldn't Joe Blow approach the Federal Reserve and say please will you take this toxic asset off my hands? That would mean adding "liquidity" to Joe Blow's bank account by taking the credit card debt or student loan debt onto the Fed's balance sheet and paying off Joe's creditors. This would make the Fed Joe's creditor. Perhaps some day, when Joe is better off, the Fed might be able to move Joe's debt off its balance sheet and put it back on Joe's account. At least theoretically that could happen.

What is happening today with the coronavirus relief package and the stimulus checks is a variation on QE which amounts to QE for the people. Where is all the money coming from you say? Will it just be added to the deficit and the national debt, God forbid? Right now interest on the national debt is $479 billion. The more money the nation borrows, the more interest on the debt crowds out other items in the Federal budget like social security, Medicare and the military. But there is a neat little trick that is played between the Treasury department which issues the bonds that comprise national debt and the Federal reserve which has the aforementioned capacity to make debts disappear down a black hole.

Those toxic assets that the Fed took off of banks' balance sheets? Some of them were Treasury bonds. Now more than ever the Fed will be taking Treasury bonds off the big banks balance sheet for two reasons: 1) they can't be all sold in the open market because there are no buyers and 2) the US taxpayers will not have to pay interest on these bonds because although the government pays interest to the Fed on these bonds all profits the Fed makes are returned to the Treasury after deducting minimal expenses at the end of the year. So one hand really does wash the other or, if you prefer, the Federal government is playing a shill game with the Federal Reserve. The Federal Reserve monetizes the debt which is the same as saying that it disappears down a black hole on the Fed's balance sheet. The middleman in this whole operation is Wall Street since the Fed by law cannot buy Treasury bonds directly from the Treasury Department. So by monetizing the debt, the Fed is doing two things: 1) it is taking the pressure off of interest paid in the Federal budget and 2) it is guaranteeing that the Federal government will have whatever amount of money it needs to pay its bills without having to increase taxes.

Now this is good news for pandemic relief. Deficit hawks are muted because they know how this shill game is played, and it's no skin off their backs. The Fed essentially prints money (although it's doe with a couple of keystrokes on a computer) and bails out the whole economy. There is no inflation since unions which drove up the price of labor were essentially muted during the Reagan administration which saw most manufacturing jobs transferred to China. So then Fed can print away giving everyone a taste of a Universal Basic Income (UBI). (See Ellen Brown's accompanying article.) Since the cat is out of the bag there is no reason why this same game couldn't be played to relieve American consumers of student loan debt and credit card debt although you can get rid of credit card debt in bankruptcy. Not so for student loan debt.

Also money for infrastructure could be obtained this same way by having the Fed monetize the debt. This would create good union jobs according to Bernie Sanders. But this is exactly what the bond market and the Fed doesn't want - good union jobs - because that would create wage inflation. When wages go up prices go up, and the bond market would not be pleased because inflation eats up the yields on their bonds. What the Fed and the monied interest want is an economy in which workers are deeply indebted because that means a ton of interest going to the banks which are totally in cahoots with the privately owned Fed. If your a worker, the Fed is not really your friend. They are the banker's friend. The Fed was set up in the first place to bail out banks not American consumers. Now it is giving American consumers a taste of a bail out because the coronavirus presents a unique situation with everybody being out of work. When things get back to normal, the Fed will go back to just bailing out banks, and relieving pressure on the national debt.

Off the Top of My Head

In the Age of Pandemic Has War Become a Luxury?

by John Lawrence, April 12, 2020

Saudi Arabia and Yemen have declared a cease fire. Sailors are becoming infected on aircraft carriers. War planning requires groupings of military people. So has war become a luxury we can no longer afford? Are we really "all in this together"? Does the pandemic require cooperation among all nations since the pandemic doesn't respect national borders? Will the pandemic, when it's over, have changed the way human beings conduct their affairs in the world or will we get back to business as usual. If the pandemic engenders cooperation instead of rivalry among the nations of the world, does this mean that we will all be socialists or communists? Does it even matter?

If the pandemic makes us realize that war is a useless exercise with few benefits, will the US military-industrial complex be defunded. Will the money then go to health care workers, to Peace Corps and AmeriCorps workers who will attempt to bring clean water and modern sanitary systems to developing countries? Will there be a push to create more sanitary conditions in the world so that pandemics don't get started? Plagues and pandemics before have motivated people to build modern sanitary systems in places like London and New York in the 19th century where urban populations in close proximity created the conditions of cholera and bubonic plague. Is homelessness a social situation we can no longer afford?

Will the meaning of 'essential services' become normalized in the economy post corinavirus? What then will be considered essential and what could we live without? As long as there is no vaccine for coronavirus, new cases will continue to crop up even after the economy has "reopened." The flu epidemic of 1918 lasted 10 months and had several spikes. We can expect more spikes in the current pandemic until there are widespread vaccinations available. So what is essential? Sports events? Cruises? Rock concerts? Movie theaters? Now with Netflix and Amazon prime we can watch movies at home. Any movie we want to see. I'm catching up on all the great movies I've missed over the years. Last night I watched "To Catch a Thief" with Cary Grant and Grace Kelly. Free on Amazon Prime. The fidelity  both video and audio was excellent on my smart TV. I have no need to go to a movie theater where I can't control the volume. Hint: they are too loud.

Perhaps now we can grasp the concept that cooperation among peoples and nations is more important than manufactured rivalries over some nation's form of government. Perhaps now we can grasp the concept that diplomacy is more important, getting along is more important and winning isn't everything. Maybe now public health and human rights can be seen as more important than having everyone pull themselves up only by their own bootstraps. Maybe we can get on with the business of cooperating to combat the real enemy - climate change and even future pandemics. Maybe we will bring the US infrastructure into the modern world with a Green New Deal. Maybe we can finally grow up and have a consensus about what is really important, what really matters. Maybe doctors, nurses, caregivers, and social workers will come to be seen as more important that Wall Street brokers, the Peace Corps and AmeriCorps as more important than the War Corps. As Governor Cuomo says, "Love will conquer all." Happy Easter.

Off the Top of My Head

One of the Reasons Ventilators Weren't Available: They're Not Manufactured in the U.S.

by John Lawrence. April 6, 2020

The two major manufacturers of ventilators Medtronic and Hamilton Medical have their manufacturing facilities in Galway, Ireland and the idyllic Swiss Alps town of Bonaduz, respectively. In addition to the US, 100 other countries have placed orders with them. If the US had in country manufacturing capabilities, these could have been ramped up instead of asking GM and Ford, which know nothing about ventilators, manufacture them. As it is the US has to compete with hundreds of other countries for critical products.

Finally, President Trump is getting around to talking about infrastructure. Is that going to be included in the next round of stimulus? Worud't be a bad idea. The US is far behind many other countries in terms of infrastructure. The American Society of Civil Engineers gives the US a D+ grade in infrastructure. Meanwhile, China is not only building infrastructure in its own country. It is building infrastructure all over the world. The US has cautioned other countries not to cooperate with China in this initiative, but its allure is too great. The latest country to sign up with China is Italy. China is making friends and influencing people.

The Atlantic reported:

All these geopolitical complexities are tied up in this week’s [April 2019] Belt and Road Forum. The initiative, also known as One Belt, One Road, is the brainchild of Chinese President Xi Jinping, and aims to build railways, port facilities, power systems, and other infrastructure across the globe. Xi has sold it all as a model of peaceful development. “We should foster a new type of international relations featuring win-win cooperation,” he once said when discussing the initiative. Washington has painted a very different picture, of a self-serving scheme designed to extend Chinese strategic and economic influence. U.S. Secretary of State Mike Pompeo recently charged that the Belt and Road plan was “a non-economic offer,” and said Washington was “working diligently to make sure everyone in the world understands that threat.”

Of course China is extending its influence to other countries. It is offering other countries goodies whereas all the US is offering is military protection. However, the rest of the world does not see things in terms of a bipolar world of "us vs them" any more. Trade is too interconnected. Even the US which tries to downgrade China has most US manufacturing done there. If the US was really worried about its security vis a vis China, why would it let its manufacturing companies manufacture critical items there? Most of the ingredients for pharmaceuticals that Americans ingest are manufactured in China where the FDA can't even guarantee their purity. Recently, Zantac was taken off the market due to the fact that it contained contaminants.

The lousy state of US infrastructure is one reason global manufacturing corporations don't want to locate in the US. If the US wants companies to manufacture here, it needs to upgrade its infrastructure instead of discouraging other countries not to cooperate with China in upgrading theirs. The Trump administration has done its best to demonize Huawei, the Chinese company that is rolling out 5G. It has even told its European allies not to buy Huawei products, but they are buying them anyway. However, this did not stop the UK in January from approving limited use of Huawei’s gear in its forthcoming 5G networks. This move may portend well for Huawei in Europe, its second-most lucrative market after China, if the rest of Europe follows the UK’s lead. If so, it's sour grapes for the US which has done everything it can to stand in the way of this technology giant.

Off the Top of My Head

Maybe the Shut Down of Non-Essential Businesses Should Be Made Permanent

by John Lawrence, March 27, 2020

As long as we have electricity, the internet, clean water, waste water disposal, full grocery markets, pharmacies, excellent health care, gas stations, trash collection and other essential businesses, perhaps the shut down of non-essential businesses is a good thing. Already it has cleaned up the environment and significantly reduced the emission of greenhouse gasses. What about all those unemployed people, you say? Put them to work in the Green New Deal building and repairing infrastructure throughout the country. If this COVID-19 thing lasts till January 20, 2021, I'm hoping President Joe Biden will do just that. And we should help build essential businesses in other parts of the world instead of engaging in military adventurism. Billions of people don't even have clean water, adequate sanitation, the internet, full grocery markets and other essential businesses.

Once these essential needs are taken care of for the entire world's population in such a way that GHG emissions are reduced to zero, then maybe some non-essential businesses could be reestablished. The pandemic goes to show that much of the US economy is based on non-essential businesses and the provision of non-essential goods and services. In fact not only are many of them non-essential, they are downright deleterious. Consider the gambling industry: downright deleterious. The movie and TV industry: about 70% deleterious. The fast food industry: 90% deleterious creating obesity and diabetes. Why isn't the school system educating people about nutrition? Many people have essentially a fast food diet. The food is cheap and ubiquitous, and people don't have time to create nutritious meals any more the way Moms used to when they didn't have to work to pay the mortgage and car payments.

The American way of life including may non-essential businesses is sickness producing. The profit oriented health care industry makes money off of sick people, not keeping people healthy. If everyone were healthy or were encouraged to lead healthy lifestyles, there would be far less sickness. But the stress induced by both spouses having to work leads to unhealthy lifestyles. Some families need 2 or 3 jobs just to make ends meet. The children are also subjected to a competitively oriented style of learning in which they are forced to compete with other children to get good grades so they can get into the best colleges. Instead maybe they should be encouraged to think in terms of what they want to do in their lives which would be a service to society in addition to affording a comfortable living for themselves.

More businesses considered to be non-essential:

Theaters, Salons and Spas, Racetracks, Shopping malls, Bowling alleys, Sporting and Concert Venues, Liquor stores, Bars, Cruises, Golf Courses, Resorts, Hair and Nail Salons.

Highly polluting industries and activities which are non-essential:

Most airline travel, the cruise industry, the travel and tourism industry, most automobile travel (use mass transit instead), most of the trucking industry (use rail instead), the beef industry, the hog industry, agribusiness (encourage small organic farms instead), most military and military-industrial complex, the plastic industry, the fossil fuel industry.

In Coronavirus Will Change the World Permanently. Here’s How. Mark Lawrence Schrad writes:

America has long equated patriotism with the armed forces. But you can’t shoot a virus. Those on the frontlines against coronavirus aren’t conscripts, mercenaries or enlisted men; they are our doctors, nurses, pharmacists, teachers, caregivers, store clerks, utility workers, small-business owners and employees. Like Li Wenliang and the doctors of Wuhan, many are suddenly saddled with unfathomable tasks, compounded by an increased risk of contamination and death they never signed up for.

When all is said and done, perhaps we will recognize their sacrifice as true patriotism, saluting our doctors and nurses, genuflecting and saying, “Thank you for your service,” as we now do for military veterans. We will give them guaranteed health benefits and corporate discounts, and build statues and have holidays for this new class of people who sacrifice their health and their lives for ours. Perhaps, too, we will finally start to understand patriotism more as cultivating the health and life of your community, rather than blowing up someone else’s community. Maybe the de-militarization of American patriotism and love of community will be one of the benefits to come out of this whole awful mess.

The same sentiments hold true for teachers and other caregivers. People that take care of people and encourage people to have better lives are the true heroes. The Peace Corps and AmeriCorps should be the preeminent national services not the Army, Navy, Air Force, Coast Guard and Marines. We need to spread good will in the world by spades instead of bullying the rest of the world with US sanctions. We should develop the equivalent of China's Belt and Road initiative and start building clean water plants, sanitation plants, industries which decrease pollution and plastic trash in the ocean. We need to clean the environment around the world not contribute to dirtying it. We need to help bring home all the refugees in refugee camps and guarantee the safety and security of Latin Americans so they don't become migrants and refugees.

Off the Top of My Head

Dumb Move: Trump Closed the Pandemic Office in 2018

by John Lawrence, April 26, 2020

The Idiot-in-Chief has done a lot of dumb things, but closing the National Security Council Directorate for Global Health Security and Biodefense takes the cake. In addition he has attempted to cut the budget of the Center for Disease Control (CDC) each year for the last 3 years only to be prevented from doing that by Democrats in Congress. Perhaps COVID-19 is divine retribution for a man who has been so focused on basing his reelection on the economy that he has abandoned every other principle of government. I'm sure Dante would have an appropriate place in Hell for him. The experts tell us that this pandemic will last well into the campaign season for the 2020 election, but Trump keeps talking about getting back to normal in a few weeks. Ironically, if he hadn't done away with the NSC Global Health Security Office, we might have had a better handle on the virus. But now, thanks to Trump, the US is the epicenter of the pandemic. It makes a travesty out of "America First."

AP News reported:

Trump’s elimination of the office suggested, along with his proposed budget cuts for the CDC, that he did not see the threat of pandemics in the same way that many experts in the field did.

“One year later I was mystified when the White House dissolved the office, leaving the country less prepared for pandemics like COVID-19,” Beth Cameron, the first director of the unit, wrote in an op-ed Friday in The Washington Post.

She said the directorate was set up to be the “smoke alarm” and get ahead of emergencies and sound a warning at the earliest sign of fire — “all with the goal of avoiding a six-alarm fire.”

Now Trump wants to "get back to normal" by Easter. Imagine the churches packed with worshippers! They better stay home and utter a prayer for him. Dr. Fauci says that the deadline of Easter for reopening the economy is "aspirational" which is a euphemism for "this is the dumbest thing we ever heard of." It's clear that during the campaign season the economy will be in the tank and Trump is going down. He totally deserves it for the way he hasn't risen to the occasion of the pandemic. He continues to put his own self-interest above the welfare of the rest of the country. It should be obvious to most people by now. He has behaved abominably his whole Presidency, but this pandemic is bringing out the worst in him.

Trump: "Governor Cuomo and others that say, you know, we want 30,000 of them [ventilators]. 30,000! Think of this. You know, you go to hospitals, they'll have one in a hospital." Yes, and think of this. you can't see anything coming out of a tailpipe of a car. Why we've been driving cars for 100 years, and nothing bad has happened. Greenhouse Gasses? We never had greenhouse gasses in New York City. We have the subway. The people ride in a hole in the ground. Think of that!

If the coronavirus pandemic accomplishes nothing else, it will be the end of Trump, thankfully. The Democrats could run Winnie the Pooh and Trump would lose. The American people may be dumb, but they're not that dumb. His response to the pandemic has shown on a daily basis what a deplorable, small minded nincompoop he is. All the people who voted for him must feel ridiculous. Well enough of that.

Let's move on to a more positive scenario, post-Trump and post COVID-19. The NSC office of Global Health will reopen; the CDC will be fully funded. The billionaire class will be heavily taxed including a wealth tax. So far the only wealth tax has affected the middle class - the property tax. It's time to tax billlionaire's wealth and put the money to good use rebuilding infrastructure and greening America and the world, ending endless wars, putting all the money going to the military-industrial complex to better use providing universal health care as a human right as Bernie says. Banning fracking. Building out renewable energy fueled power plants. Building a national power grid. High speed rail. Either we make this country a leader again or America will become a backwater and China will lead the world. Countries will emulate them instead of the antiquated US political and economic system.

Instead of making America great again, Trump has made America a basket case like it never was before. That's what happens when you elect an idiot as President.

Off the Top of My Head

China Out Capitalizes Capitalist Nations

by John Lawrence, March 23, 2020

Who would have thunk it? China has taken capitalist financial methods to the next level with the result that it is progressing more rapidly in material abundance and a consumer society than the proto-capitalist nations of the world: the US and Europe. Sure, politically, they are an authoritarian nation. But that expedites their development since all institutions are on the same wavelength. In particular their central bank, the People's Bank of China (PBC) funds infrastructure projects all over the world. This keeps China a full employment society. They put all the Chinese people to work building infrastructure which expands the money supply in a very widespread way. Essentially the PBC provides loans for all these projects which means it creates the money just as US banks do when they create loans or the Federal Reserve does when it provides "liquidity" to the markets through quantitative easing (QE).

The Federal Reserve has actually expanded the range of market interventions it can do. It used to be that the Fed could only set interest rates. That was it. Now it can buy corporate bonds, state and local bonds and give money directly to corporations to keep them afloat. In fact it can act more like the PBC which interacts directly in the Chinese economy. The Fed can take debts directly onto its balance sheet where they may remain forever. This is exactly what it did in the 2008 financial crash. It provided cash directly to banks in return for mortgage backed securities and Treasury bonds thus providing liquidity to the banks so that they would not go under. Now the banks are well capitalized, and, since they know that the Fed stands ready to bail them out again, they have no worries. In fact the term "bail them out" is actually a misnomer at this point. It can be replaced with "provide them with cash" as necessary.

There was an interesting interview on 60 Minutes with Neel Kashkari, Obama's Assistant Secretary of the Treasury, who was in charge of the Troubled Assets Relief Program (TARP) during the Great Recession. He noted that TARP, which was supposed to help out actual people with their mortgages did not go far enough. They were too stingy with it, and not very many people got helped. He says that this prolonged the recession. Instead of being stingy as they were, they should have been "overly generous." That is the lesson he learned. So now in the coronavirus recession, his advice is that the Fed should be overly generous in providing relief to actual everyday people and not just to banks. At this time the banks are doing very well, thank you.

It is well known that money is created by the banks themselves when they create a loan which they do with a couple of keystrokes on a computer. Why is this possible? Because money has no relationship to gold or any other precious metal any more. That's why it's called "fiat money." So what bankers and economists are realizing (which has been the secret of China's success all along resulting in their bringing 800 million people out of poverty in 40 years) is that the US central bank, the Federal Reserve can do the exact same thing. It can create fiat money just like the banks do, like Wall Street does. The only concern is that money so created would lead to inflation, but, as Kashkari noted, there was no inflation even after the Fed created trillions of dollars in 2008 most of which went directly to bankers, hedge funds and rich individuals and not to the average American. Now Kashkari, who is President of the Minneapolis branch of the Federal Reserve, is saying that the Fed could provide liquidity to the American people and not just to the banks. How this will probably happen is by Congress passing a bill on the "fiscal side" as they say. Then they will sell more Treasury bonds to cover the increased deficit. Wall Street banks will buy them since other countries are decreasing their purchase of US debt, and then the Fed will provide liquidity (cash) to Wall Street taking the Treasury bonds onto its balance sheet where they will reside forever probably. This is why the national deficits and debt are no problem because the Fed can print money to cover them ad infinitum. It's as if the Fed provided money directly to the US economy, but, by law, they have to do so indirectly.

Ellen Brown understood this possibility long before Neel Kaskari had his "awakening."

America’s chief competitor in the trade war is obviously China, which subsidizes not just worker costs but the costs of its businesses. The government owns 80% of the banks, which make loans on favorable terms to domestic businesses, especially state-owned businesses. Typically, if the businesses cannot repay the loans, neither the banks nor the businesses are put into bankruptcy, since that would mean losing jobs and factories. The non-performing loans are just carried on the books or written off. No private creditors are hurt, since the creditor is the government, and the loans were created on the banks’ books in the first place (following standard banking practice globally).

Precisely! So no need to worry about another Great Recession or Depression. The US could effectively provide a Universal Basic Income (UBI) to its citizens indefinitely as Andrew Yang proposed.

As observed by Jeff Spross in a May 2018 Reuters article titled “China’s Banks Are Big. Too Big?”:

[B]ecause the Chinese government owns most of the banks, and it prints the currency, it can technically keep those banks alive and lending forever.…

It may sound weird to say that China’s banks will never collapse, no matter how absurd their lending positions get. But banking systems are just about the flow of money.

Spross quoted former bank CEO Richard Vague, chair of The Governor’s Woods Foundation, who explained, “China has committed itself to a high level of growth. And growth, very simply, is contingent on financing. Beijing will come in and fix the profitability, fix the capital, fix the bad debt, of the state-owned banks … by any number of means that you and I would not see happen in the United States.”

There is no reason why the US could not emulate China. From an economic point of view QE or a UBI would not be inflationary as long as the dollars provided to the system were either invested in new plants and equipment, infrastructure or consumption. What is needed now is about $10 trillion worth of Green Infrastructure, a Green New Deal funded indirectly by the Fed. This money can be provided to the American people and not only rich billionaires as was done in 2008 and as China is providing directly to its workers who are kept busy building infrastructure in the Belt and Road initiative. It would also ease economic inequality and not induce inflation as long as the money is widely distributed.

Off the Top of My Head

Joe Biden's Approach to a Carbon Free Infrastructure

by John Lawrence

I guess you could say Joe Biden is a railfan. I remember that he always rode the Amtrak from Washington to his home in Delaware. Now at joebiden.com I read about some of his innovative ideas for revolutionizing the transportation system in this country starting with a national network of recharging stations for electric cars. He'll also invest in a national high speed rail network for moving people and goods. These are good ideas. We need to completely electrify transportation in the next few years as automobile emissions are the greatest contributor to greenhouse gasses right now. The transportation system is much in need of revitalizing including roads and bridges. Research in carbon neutral propulsion systems for ships and planes also needs to be part of it. The more that goods and people can be moved by train, the more the streets and roads will be made available for car traffic cutting down on the need to build more and more freeways or toll roads.

Power generating plants need to be converted to 100% renewable energy ASAP. Joe is intending to do that too. Good news! "As president, Biden will partner with utilities and regulators around the country to build a 21st-century power grid, able to distribute clean energy reliably and safely to households and businesses across the United States. Specifically, he will appoint commissioners to the Federal Energy Regulatory Commission who will drive market reforms, like expanding regional electric markets, integrating renewables, building in demand-response, and promoting long-term infrastructure planning to achieve a 100% clean energy economy and net-zero emissions by 2050. " Well, Joe, we need this long before 2050 when we'll both be pushing up daisies.

Biden's plans to have community colleges launch new Apprenticeship Readiness Programs is a great idea. Not everyone needs to attend university per se. Programs that enable people to do actual work rather than sitting behind a computer screen all day will give incentives to people to train for more meaningful jobs. Those who want to become true professionals like doctors, lawyers, professors etc. need to go to college. There should be no stigma attached to those who want to work with their hands, not sit at a desk all day, and actually build something.

Joe's plans for infrastructure development are excellent. More money needs to be put behind them though and they need to be accelerated time wise. Joe has also said he would support Elizabeth Warren's plan to allow student loan debtors to discharge their debt in bankruptcy court. This is a major step for Joe since he was instrumental in changing the law in 2006 which prevented students from discharging their student loan debt in bankruptcy. Let's hope that Joe Biden will now be the former Senator from MBNA.

Off the Top of My Head

During WW II, Cars and Gas Were Rationed. Would the American People Accept Such Sacrifices in the War on Global Warming?

by John Lawrence, March 10, 2020

Evidently not. Despite warnings that we have less than 10 years to do something before there is runaway global warming, nothing much has been done. Yet the coronavirus has set the world's consciousness on fire in just a few short weeks. Why hasn't global warming gotten the world so up in arms? During WW II everybody had a job; everybody worked, yet there were government mandated limits on consumption. All kinds of things were rationed especially cars and gas. Yet economic activity expanded due to ramping up the war effort. Today the economy is going into a tailspin because large crowds have been proscribed. All the money that has been added to GDP by music events and professional athletics has gone bye-bye. This is not necessarily a bad thing because people might be better off staying home and reading a good book rather than being out at a sporting event. I know. I know this is a very unpopular opinion.

The point is that, during WW II people had the basic necessities, and everyone was employed. They just couldn't have the icing on the cake until after the war when rationing was lifted. Then the economy boomed. Perhaps there is a lesson here for how to mobilize a society to get a handle on global warming.  In the few short weeks that government spokesmen have decried cruise ship and airplane travel, green house gas emissions (GHGs) have actually decreased. If the government proscribed these and other activities such as automobile travel (think gas rationing), GHGs would decrease even more rapidly. Then, if the government went on an investment spree in terms of renewable energy the way it did on planes and battleships during WWII, there would be full employment. People would just be limited temporarily until this war is won in how they could actually spend their money just like in WWII.

Then after a totally green economy is achieved fueled by green renewable energy, the barriers on spending money would be lifted. Could this even work? Some authors don't think so. William Greider writes in "Secrets of the Temple":

World War II was a model of the possible. In theory, if a national consensus of purpose developed, if people would accept temporary limits on their economic choices as well as regulatory controls on wages and prices, the nation could literally rebuild itself, almost overnight. With the right choices, America could practically double the productive capacity of its economy and advance innovation and dramatically multiply new wealth and incomes. These economic choices, however, were really political questions: who would take the sacrifices and who would take the rewards? Whose consumption would be restrained and whose production would be encouraged. All this consigned extraordinary powers to government, perhaps tolerable only in war. No one, including the most ardent Keynesian planners, has ever figured out how to recreate a comparable combination of creative sacrifices in peacetime or how to sell it to a free society.

And that, dear reader is the crux of the matter. How do you sell the necessary war time effort to combat global warming to a free society? Sure the coronavirus has had the salutary effect of decreasing cruise ship and airplane travel with the concomitant decrease in GHG emissions. At the same time the stock market has gone into a tailspin. If the same kind of effort were made in behalf of global warming, we could expect the stock market to go into the mother of all tailspins. Is it worth it or should we consign future generations to the fate of runaway global warming and an uninhabitable planet?

Abraham Maslow wrote a book, "Towards a Psychology of Being" in which he identified a pyramid of needs starting with D-needs. D-needs are the basic needs of food, air, water, housing and clothing. You might throw in medical care.Then, as you ascend the pyramid, higher order needs are revealed once the lower order needs are met. At the top he identified B-needs or self-actualization which might mean developing all your latent higher order capacities such as becoming a great musician. What seems to me to have happened though is that society has intervened in this process to impose superfluous needs on people. Let's call them S-needs. These needs have to do with all the materialistic consumption that a commercial society imposes or tries to impose on people through advertising so that Maslow's higher order needs are really short-circuited. That's why I say that staying home and reading a good book might be more beneficial in and of itself than attending  a professional sporting event in addition to protecting one from the coronavirus.

What an enlightened society would do to combat global warming is exactly what America did during WW II. D-needs were well satisfied due to a full employment society in which certain kinds of consumption were discouraged while making sure that everyone was fed, clothed, housed and had adequate medical treatment. Could in Greider's words a " national consensus of purpose develop" in which people felt it was more important to delay certain kinds of consumption in order to develop the green infrastructure needed to get global warming under control? The world needs America's leadership on this because America is largely responsible for the GHGs already in the atmosphere, and, if America will not have a sense of urgency, why should any other nation which is just starting to develop a consumer culture?

Off the Top of My Head

The Changes Needed in the Composition of GDP

by John Lawrence

The four components of GDP are personal consumption, business investment, government spending, and net exports. Right now personal consumption is 70% of GDP in the US. Business investment is 18%. Most businesses are buying back their stock rather than investing in manufacturing or R&D. Government spending is 17%. More than 60% is military spending. Net exports were -5% since imports (18%) were greater than exports (13%). This represents an oil based economy heavy on fossil fuel pollution. What needs to happen to fend off global warming is a reduction in personal consumption especially in those aspects that are high in greenhouse gas (GHG) emissions such as automobile, airplane and cruise ship travel. Government needs to increase its spending in areas of infrastructure rebuilding and spending on renewable energy systems while reducing military spending which is highly GHG contributing as well.

Businesses need to be encouraged to manufacture here in the US instead of importing everything from China and elsewhere because cargo ships are highly polluting. Businesses which help solve the climate change dilemma need to be encouraged while high polluters need to be reined in. We need to become more like Europe where personal consumption is only 54% of GDP. In Europe government spending is 46.5% of GDP. Of this spending on defense amounted to 1.2 % of GDP in 2018. Contrast this with the 60% that the US spends on defense, and you see the difference between a highly militarized nation that has no money to spend on infrastructure much less a Green New Deal and a group of countries that spends more of its money on the welfare of its citizens. Trump has been agitating to get European countries to spend 2% on defense. This would still mean that the US would be spending 30 times as much.

If Bernie Sanders wins the election for President of the US, we can expect radical changes in the current composition of GDP. Certain items of personal consumption need to be reduced, namely combustion engine car travel. The infrastructure for electric automobiles needs to be built out. Government subsidies need to be given to electric car purchasers. Mass transit needs to be built out and encouraged. Military expenditures need to be reduced both to promote peace in the world and so that the money can be freed up for more constructive purposes. Coal fired electric power generating plants need to be replaced with renewable energy electric power generating plants. Frivolous personal consumption needs to be discouraged while consumption based on human needs for all people should be encouraged especially affordable housing, nutritious non-industrialized food production which is affordable for all and universal health care like Europe has.

In short we need to become more like Europe with a reduced military empire and an increased build out of green infrastructure based on renewable energy. Bernie Sanders represents this kind of change for America - a government which invests in its people and takes radical steps to mitigate global warming.

Off the Top of My Head

Bernie Socks It To Them

by John Lawrence, February 25, 2020

The critics have piled on Bernie about how he's going to pay for his proposals for Medicare for All, a Green New Deal, forgiving student loan debt and free college tuition. Now Bernie has come out with a detailed plan about how to do it. The obvious answer is how do other countries do it? Most other advanced countries have free universal health care and free college tuition. They take it for granted. I had some passengers from Calgary, Alberta whom I asked 'how do you like the Canadian health care system?'. He replied, "It's free." I said, "Yeah, but don't you have to pay for it in your taxes?" He said, "I guess so." So he wasn't really concerned that he was paying taxes through the nose to pay for "free" health care. He didn't even know what percentage of his taxes went to health care. I suspect that once the tax structure changes here so that rich people pay more and poor people pay less that everything will be like that too.

It will cost $2.2 trillion to make public colleges, universities and trade schools tuition-free and to cancel all student debt over the next decade. It is fully paid for by a modest tax on Wall Street speculation that will raise an estimated $2.4 trillion over ten years. A Financial Transaction Tax has been talked about for years. Bernie is the only one bold enough to actually make it part of his campaign platform. It needs to be done. The financialization of the economy is what led to the 2008 economic debacle in which the banks were bailed out by the American people to the tune of trillions of dollars. So now even though it's years later, let them pay to bail out the American people. It's a good thing.

Bernie’s bill to expand Social Security will increase benefits for low-income senior citizens and people with disabilities by more than $1,300 a year. It is fully paid for by making the wealthiest 1.8 percent of Americans – those with incomes over $250,000 a year – pay the same rate into Social Security as working families. I like that a lot. Right now even though I'm still working and paying into social security, I'm receiving less than $700. a month in social security. Another $1300. a month would bring my social security up to $2000. a month. Why it's even enough to rent an apartment!

Bernie’s proposal to guarantee housing as a human right and to eliminate homelessness will cost $2.5 trillion over the next decade. It is fully paid for by a wealth tax on the top one-tenth of one percent – those who have a net worth of at least $32 million. (Bernie’s wealth tax will raise a total of $4.35 trillion.) A wealth tax on the rich! I love it. Eliminating homelessness and finally implementing the 1948 UN Declaration of Human Rights - priceless! It's time the millionaires and billionaires paid to eliminate poverty in this country. The wealth tax will also pay for universal child care and pre-school. By the way maybe the Congress should get on board and finally ratify the 1948 Declaration.

The Green New Deal will transform this country and be the first step in saving the planet from ultimate destruction. It needs to be extended to the rest of the world eventually as well. We need to cooperate with other countries to implement it and share renewable energy technology. This means joining China's Belt and Road initiative in terms of making sure everything under development is based on renewable energy and is non-polluting. It goes without saying that the US should rejoin the Paris Accords on climate change, but extend it even further.

All in all Bernie's plans are a wonderful and refreshing change of pace for the US of A and the rest of the world. If they come to pass, i will be proud of my country again for implementing both humanitarian policies and policies which will save the earth from a global warming catastrophe.

Off the Top of My Head

It Must Be Done: Full On Renewable Electrification of the World

by John Lawrence, February 12, 2020

The next President has to mandate the full scale replacement of the current infrastructure with infrastructure supplied with renewable electricity. That means only plug-in cars and trucks allowed on the road. All rail transit is electrified. Planes to be grounded until they figure out how to supply them with renewable energy. All ships must be mandated to use only wind or electric energy supplied by renewables. Mass public electrified transit built out. Only this type of extreme effort is going to save earth from a global warming catastrophe. Forget self driving cars and trucks. The energy and inventiveness has to go into full electric vehicles driven by actual human beings.

Fossil fuels have to be eliminated overnight. How's that for a Brave New World - one which will actually save the planet from a horrible denouement. The next President and Congress have to put the economy at a lower priority than the full scale rejuvenation and renewable electrification of the economy. Economic growth has to take second place to investment in a green economy. Zero fossil fuel emissions have to be accomplished literally overnight as if someone had a gun to our head because, quite literally, a gun is at the head of every human living today and who will be born in the next 10 years - a gun placed there by the greed and ambition of the human race.

But doing this full on attack on global warming in the US is not enough. It must be carried out in the rest of the world in association with global partners. Instead of the militarization of the world by US forces and unending wars, which is the kind of scenario the US has perpetrated on the rest of the world in the recent past, the fight in cooperation with the rest of the world must be on global warming. We must renewably electricfy the rest of the world getting coal fired power plants offline and replacing them with renewable energy resources. This must be mandated, dictated if you will. The future of life on earth is at stake.

If there is an economic slump while this transformation takes place, so be it. At least there will be plenty of jobs. Robots can't do it all. There will be plenty of pick and shovel work. Trinkets and gadgets may be in short supply while this work gets done, but so be it. The US may have to go from a 70% consumption economy to a 70% investment economy - an investment in a renewably electrified future. At the same time clean water and sanitation should be guaranteed as a human right to every person in the world. Instead of reigning destruction on the world community, which is the US' wont, the world community must be salvaged from dirty water and lack of sanitation. A clean non-industrialized food supply must be guaranteed to all. Adequate housing supplied with renewable energy must be guaranteed to all as a human right.

You think there is a lot of work that needs tom be done? You're right. There won't be any unemployment. This Globalized Green New Deal for the world should be all encompassing. There was a well driller from my home town whose motto was "It Must Be Dunn" and that should be the motto for the green electrification of the whole world: It Must Be Done.

Off the Top of My Head

Why We Need to Help China Build Renewable Energy Systems in Africa

by John Lawrence, February 8, 2020

China is helping underdeveloped African countries to develop. They are building railroads, ports, infrastructure in general. They are loaning these countries the money and putting Chinese workers to work. It's called the Belt and Road initiative. For the most part this effort is laudable. It represents peaceful development as opposed to military control, monetary sanctions or corporate exploitation which is what most African countries had been used to in the past. However, there is at least one negative consequence of these developments. China is building hundreds of coal-fired power plants in these countries? This is at a time when the world must be reducing its use of fossil fuels to forestall global warming.

Recently, President Xi Jinping hosted the Belt and Road Forum in Beijing, promoting his signature foreign policy of building massive infrastructure and trade links across several continents. China, as the world's biggest polluter, has also been taking dramatic steps to clean up and fight climate change in China. The forum, attended by leaders and delegates of nearly 40 countries, came amid growing criticism of China's projects, including their effect on the environment. The UN estimates the world needs to reduce its coal-fired electricity by two-thirds in the next decade to meet our climate goals. So what's wrong with this picture and what can be done about it?

First, instead of treating China as an adversary and a rival, the US could partner with China in building power generating plants, but, instead of coal powered ones, plants that generate electricity from renewable sources such as solar, wind and geothermal. This would be a win-win-win for Africa, China and the US. Some of the Democratic candidates have pledged to do just that. According to Bernie Sanders we should "Commit to reducing emissions throughout the world, including providing $200 billion to the Green Climate Fund, rejoining the Paris Agreement, and reasserting the United States’ leadership in the global fight against climate change." That's right. Instead of using our high polluting military to fight everywhere in the world, we should establish a Belt and Road initiative of our own not in rivalry with China, but instead in cooperation with China. Combined the efforts of these two great nations could make a huge difference both in the development of underdeveloped parts of the world but also in terms of reducing the effects of climate change by making sure that that development is not based on energy derived from fossil fuels like coal and oil.

At present China is building or planning more than 300 coal plants in places as widely spread as Turkey, Vietnam, Indonesia, Bangladesh, Egypt and the Philippines. I'm sure these countries welcome these investments, but these power plants need to be built so that they generate power from renewable sources and not coal. "China has done a very good job of emphasizing the target of greening the Belt and Road," said Courtney Weatherby, a Southeast Asia analyst at the Stimson Center in Washington, D.C. "But it's not clear when you look at the actual projects that China is funding that they are truly green."

The NPR article went on:

In neighboring Vietnam — a country highly dependent on coal — China is a major investor in the energy sector. China is involved in 15 coal power plants in operation, six under construction and at least two in the planning stages, according to Nguyen Thi Hang with Hanoi-based environmental group Green Innovation and Development Centre. "China's investments in Vietnam is both good and bad but it is also coupled with negative impacts on people's health and livelihoods," Nguyen said.

There is still a question of how to supply energy sustainably. If China falls short, Chinese officials at least know they can expect scant criticism on coal investments from the U.S. government. President Trump's administration has also been promoting coal.

The US needs to partner with China in green development projects that can benefit the entire world while promoting the growth of renewable energy projects and eliminating fossil fuel projects. This would do a lot to bring peaceful cooperation to the world as well as reducing greenhouse gas emissions and saving the planet from global warming. This means a Green New Deal as part and parcel of our foreign policy instead of a foreign policy based on militarism and weaponizing the dollar by the use of sanctions. There is a great potential for bringing genuine peace to the world by cooperating with other countries in a world wide Green New Deal. This would save the planet not only from climate change but from militaristic rivalry and destruction not to mention the waste of resources. There is the potential for peace among all the earth's nations and peoples if all are working together on a worldwide Green New Deal.

Off the Top of My Head

San Diego: America's Finest Pothole City

by John Lawrence, December 27, 2019

As an Uber and Lyft driver, I try and remember where the potholes are. Otherwise, I am wrecking the heck out of my car. I scan the road in front of me and swerve to avoid them. The route from downtown to the airport along Harbor Drive and back is particularly hazardous, and, since I drive it a lot, I know where they all are at. The other day I hit an egregiously bad one at Sassafras and Kettner. Since it's a route I'm navigated through a lot, I made a special point to go back there and see exactly where the it was located because I never want to hit that pothole again. One of my riders said he hit one and knocked his car out of alignment in one fell swoop.

So why doesn't the city do anything about them especially on roads that all Uber and Lyft drivers and taxis navigate over on a daily basis? It's all about infrastructure, and this city as well as the US as a whole could care less about infrastructure. As far as the city is concerned, they probably care more about adding to the private economy of automobile dealerships in repair bills than to public expenditures of funds. My poor car is in the position of some poor person in India who can't afford his insulin rather than someone who has good medical insurance. Come to think of it, many Americans can't afford their insulin either. That's why the life span is decreasing and people are dying younger as time goes on.

The US ranks 13th in quality of infrastructure according to the World Economic Forum behind such countries as Singapore, Hong Kong, the Netherlands, U.K. France,  Germany, Japan, Korea and Spain. America's infrastructure is desperately in need of investment, according to the American Society of Civil Engineers. They estimate that the US needs to spend some $4.5 trillion by 2025 to fix the country's roads, bridges, dams, and other infrastructure. They gave the nation's overall infrastructure a grade of D+ in their 2017 "infrastructure report card".

Its the American way: let every public institution go to hell while privatizing as much as possible. Schools, drinking water, sewage systems are all underfunded largely to give private corporations the biggest tax breaks possible. Having given those who have largely funded public infrastructure in the past huge tax breaks means that there is little money left over to repair aging infrastructure much less build more modern and up to date, state of the art infrastructure. Far from building infrastructure, the Trump administration is hell bent on deregulating every protection of the environment in order to make corporations more profitable. With regulations in place corporations would have to clean up after themselves and this would decrease corporate profits. We can't have that. Better to let corporations dump their waste products in America's rivers and streams. This is the way you maximize profits.

Instead of eliminating coal and oil as energy sources in order to reduce global warming, Trump and his associates positively salivate over all the money to be made from fossil fuels. Other nations, namely Russia, are doing the same thing because they have enormous natural resources of coal, natural gas and oil. However, those resources need to go untapped if the earth is to be spared runaway global warning and become like its sister planet, Venus, which has a surface temperature of 900 degrees.

We have to keep 80 percent of the fossil-fuel reserves that we know about underground. If we don’t—if we dig up the coal and oil and gas and burn them—we will overwhelm the planet’s physical systems, heating the Earth far past the red lines drawn by scientists and governments. It’s not “we should do this,” or “we’d be wise to do this.” Instead it’s simpler: “We have to do this.” However, the American government is spending billions of dollars a year subsidizing the fossil fuel industries. We're going in the wrong direction.

So are we as residents of planet earth willing to forego digging up or extracting what is estimated to amount to $20 trillion worth of fossil fuels still underground? Or will we maximize short term profits and say to hell with future generations?

Off the Top of My Head

Why a Market Based Economy Will Never Solve the Global Warming Problem

by John Lawrence, December12, 2019

Because a market based economy is based on short term profits and greed, it is only good for creating gadgets to be sold to individuals not solving overarching systemic world based problems. The emphasis is on what is profitable now not on what needs to be done to save the planet for future generations. Last year more greenhouse gasses were emitted into the atmosphere than were emitted the year before, and this year more greenhouse gasses will be emitted into the atmosphere than last year. This situation can only be reversed by a massive government commitment in collaboration with other governments of the world. This means that the government basically has to take control of the economy instead of letting the economy be in the hands of the private marketplace. This will only happen if the likes of Bernie Sanders or Elizabeth Warren gets elected in 2020 and the House and Senate are both controlled by Democrats.

The military-industrial complex has to be greatly reduced with the efforts of the US going into cooperation with other nations to fight climate change rather than into war and the prevention of war. The best war prevention technique is collaboration and cooperation with other nations and bringing the poorest people up to par with middle class American consumers. China has taken on the mantle of massive creation of infrastructure around the world with its Belt and Road initiative. The US has to assume the mantle of massive intervention in the world economy to prevent climate change. This includes cleaning up the environment and the oceans. This should be the modus operandi and mission of the US, to make the world a less polluting and cleaner place both in terms of fossil fuel emissions, plastic free oceans and breathable air. This means intervention in other nations' affairs in a benign way as China has sought to do in partnerships around the world to build infrastructure. However, there is a certain type of infrastructure that is needed, and that is renewable energy and non-polluting infrastructure. Infrastructure of the type that still is polluting will only make matters worse.

The US could cooperate with China as well as with the huge landmasses of Europe and Russia to bring about development in the world's poorest and most violence prone nations, development that is pollution free. Smokestack industry development is not needed. So it's a particular kind of development, development that is fossil fuel free and non-polluting that needs to be undertaken. Any other kind of development is only setting earth back in terms of climate change. Massive renewable energy development can only be undertaken by governments in cooperation around the world.

There are excellent ideas out there. We are at no loss for great ideas. What we lack is the ability for massive undertakings unless governments are involved. The Green New Deal needs to apply not just to America but also to the rest of the world - a Green New Deal for the Earth. What is not needed is military intervention. The US needs to turn its trillion dollar per year war time economy into a Green economy which benefits the whole world instead of trying to control it. Climate change needs to be addressed at that level or it's in vain. One non-polluting country will not save the earth from global warming. Resources must be allocated on a global level. After all we are all in this together if future generations are to be born into a habitable planet.

Democratic Candidates Should Focus On Critical Societal Problems

by Frank Thomas

I may also go for Michael Bloomberg if he gets a high poll rating by October 2020.

Otherwise, I’ll being choosing between Warren and Sanders. Like many people, I'm getting more taken in by the urgent priority to defeat Trump. Besides climate change, there are also other extremely significant societal problems noted below that for some time have been tearing our country apart socially and economically. If these aren’t addressed convincingly by Bloomberg, I don't think Democrats will go for him in the nomination process. Things don't have to be revolutionarily ‘torn down,’ but major constructive changes are a necessity. Such an approach calls for a timely phasing in of well-targeted structural improvements in following areas: healthcare, income/wealth gap, infrastructure, poor quality pre-college education and burdensome college tuition costs that are adding to impoverishment millions of families caused by decades of stagnant wages.        

Right now, it's obvious the general public doesn't have a clue what Bloomberg's constituency is beyond the well-to-do, socially liberal and fiscally conservative types.

On the positive side, he doesn't need their money. Past issues he has focused most on are climate change, gun control and fighting the fiscal policies of the more liberal wing of the Democratic Party. But I doubt Bloomberg can win the nomination if he fails to address clearly his approach and solutions to following severely ingrained societal problems areas. They will only get much worse and complex, perhaps even become unsolvable, as a result of years of government reliance on incremental band aid improvements to Big structural problems. Political polarization and money interests have caused an absolutely deplorable ineffectiveness in bottom-up and top-down governance that meets societal wants, needs fairly and pragmatically for all.   

• HEALTHCARE: Quality healthcare for the average family has reached the insane cost level of $16,000-$19,000 annually in premiums, deductibles, copays for mediocre medical coverage. Extremely high healthcare and college costs combined with almost stagnant wage growth the past 40 years for over 80% of U.S. households is an 'economic high risk recipe' for an eventual  societal implosion. If EU countries can deliver universal healthcare plans for 10 to 80 million populations at half the household cost with better medical coverage, why can't we do the same - say, by developing a Medicare Plan For ALL Option (that incorporates Obamacare) for +-120 million households that are currently self-insured? Prove its superior benefits first with a smaller step that will eventually attract others.
• INCOME/WEALTH GAP: Since 1979, an incredibly huge income/wealth Gap has been taking place between the top 10% and bottom 90%. (see reference). The average yearly wage of the Bottom 90% was $29,608 in 1979 vs. $36,182 in 2017, a rise of  22.2%. The average yearly wage incomes of the Top 9% and 1% were $152,476 and $718,766 in 2017, an increase since 1979 of 57.4% and 157.3%, respectively. And the wage of the Top 0.1% since 1979 has been out of sight increasing from $622,018 to $2,756,865 in 2017, an increase of 343.2%. These wage figures exclude income from stocks, bonds, other investments. They reflect fact we have the lowest progressive tax rates and highest income (wealth) disparities of all world countries except perhaps China and India. U.S. highest progressive tax rate is 37% on incomes above $500,000 per year versus 51.75% in the Netherlands on incomes above $75,000 (euro 68,500).

Here’s a stark summary of U.S. average wage thresholds of the Top 10% and Bottom 90% wage earner groups.

WAGE GROUP SHARES Of TOTAL WAGES – 1979-2017

EARNER GROUP	WAGE THRESHOLD	% Of TOTAL WAGES
Top 0.1%	$2,756,900	5.2%
Top 1%	$718,766	13.4%
Top 5%	$299,810	28.0%
Top 10%	$118,400	39.1%
Bottom 90%	$ 36,182	60.9%

     

The Economic Policy Institute reports: “The Bottom 90% earned 69.8% of all wages in 1979 but just 60.9% in 2017. In contrast, the Top 1% increased its share of wages from 7.3% to 13.4% in 2017, a near doubling. The growth of wages for the Top 0.1% drives the Top 1`% share of wages which tripled Top 0.1%’s share of total wages from 1.6% in 1979 to 5.2% in 2017.”

Around 140 million of 168 million U.S. workers have been living on a near survival wage growth trend for a long time. A wage of less than $25,000 is earned by 42% of U.S. workers or ±70 million workers. The Top 1% of Americans own 40% of our nation's wealth. Several billionaires including JP Morgan Chase CEO Jamie Dimon, Bridgewater Associates, founder Ray Dalio, Warren Buffet of Berkshire Hathaway have said that current levels of income and wealth inequality are unsustainable.

It is well proven that savings and investments of ultra-wealthy Americans do not necessarily  "trickle down" in ways that grow the economy or benefit most Americans. Investments of the wealthy including billionaires are planted all over the world in exotic tax shelters, real estate, stocks, bonds, yachts and works of art. 

INFRASTRUCTURE & SCHOOLS: According to the American Society of Civil Engineers (ASCE), it will cost $4.6 trillion to bring America’s infrastructure to a good state of repair. But only 55% has been committed leaving a $2.1 funding gap. Improving roads and bridges alone would require $1.1 trillion more than the states, localities, and federal government have allocated. Schools need another $380 billion beyond what's invested. Waterways, ports, levees, dams need another $150 billion. (see reference). Other studies show that another $473 billion of investments is needed in drinking water treatment and distributions. These needs vary sharply by state due to differences in size, congestion, condition, and age of existing infrastructure.

• State dollars and borrowing pay for 72% of Infrastructure projects; the federal government pays just 28% for a very low 0.5% of GDP. State and local spending is now way down from 2.4% of GDP in the early 2000s to 1.87% in 2017 and now is at its lowest level since 1950. Investments in Public Infrastructure stirs economic growth, private productivity, jobs, and can improve a state's quality of life, opportunity, and the environment. Why aren't the private sector investments being made is the BIG question?  Is it lack of federal funding because of massive  federal deficits, debt and interest cost? Trump's tax cuts went largely to the Top 10% and corporations. These cuts are now contributing to our annual $1 trillion federal deficits.
• BUT, if our nation can raise ± $9 trillion in federal funds as we did to save our economy from collapsing during the Great Recession, why can't we come up with ± $3 trillion for critically needed infrastructure/education improvements? These and other societal investments needed can be funded in a major part by raising current maximum federal tax rate of 37% on incomes above $500,000 to 40% on incomes above $1 million – plus eliminating tax avoidance, tax deductions or special tax structures for real estate, loss carry forwards provisions, corporate earnings held abroad in tax havens. The aim should be to introduce fiscally economically constructive tax funding changes that are relatively easy to calculate and oversee, and deter steep rises in federal/state debt levels and interest cost

Frank Thomas The Netherlands November 30, 2019

References :

(1) Economic Policy Institute - Top 1.0% Reaches Highest Wages Ever - Up 157% Since 1979, Oct. 18, 2018

(2)  https://www.cbpp.org/research/state-budget-and-tax/its-time-for-states-to-invest-in-infrastructure

Off the Top of My Head

Which is Better: Government So Small You Can Drown It in a Bathtub or Government so Large It Can Build a Silk Road Linking Most Countries in Europe and Asia?

by John Lawrence, October 27, 2019

The US has staked its claims on minimizing the role of government except for the military of course. China, on the other hand, has invested in infrastructure all over the world in addition to bringing 850 million of its own people out of poverty in 40 years. So Grover Norquist's dream of making government so small you can drown it in a bathtub, sadly, has about come true, but the result is that the once greatest country in the world has ceded that role to China. China now owns a 51% interest in the Greek port of Piraeus, one of the largest ports in Europe. They build railroads in Kenya, hydropower dams in Argentina and in March 2019, Italy became the first G7 nation to join China's Belt and Road Initiative.

Meanwhile, the US under President Trump has removed all its troops from Syria ("They're coming home, folks.), abandoned its friends and allies the Kurds by so doing, and then sent the troops back to Syria not to help the Kurds but to protect some oil fields. Yes, oil fields are so much more important that people, folks. The US under Trump has pretty much lost all credibility in the world community, and Grover Norquist has got his wish come true. The free market system has been enshrined and government has been dethroned ... but not in China.

Remember when America was great? We sent a man to the moon, but that was not because of the free market system. That was because of John F. Kennedy's government led effort. Remember when we helped win WW II. That was because of government. Remember how we got out of the Great Depression which was caused by the free market system. Again, government. Now China is proving again that government has a role in peacefully rebuilding the world, a world that has been largely destroyed by the US in the Middle East. As Kurds flee their homes, the US is right there once again not to protect them but to protect oil fields.

American foreign policy has been run by a bunch of dolts ever since George W Bush "liberated" Iraq so it could be run by the majority of the people (democracy is majority rule, right?) who just happened to be Shiites aligned with our enemy Iran. Now Trump has more or less turned Syria over to Putin and al-Assad who are aligned with Iran. American foreign policy has turned the whole Middle East over to our supposed enemies at great cost to American taxpayers and much misery to the 60 million refugees in the world. Our only friend there is Saudi Arabia which murders journalists like Kashoggi and murders women and children with American arms in Yemen. And then Trump brags about how much money we made selling arms to Saudi Arabia. According to ABC news, "During his first visit to a foreign nation as president, President Trump announced a massive deal: $110 billion in arms sales to Saudi Arabia. He called the agreement "tremendous" and bragged about the billions of dollars in investments and jobs that would be brought to the United States as a result." China is creating jobs not be selling arms but by building bridges.

If all you have is a hammer, the solution to every problem involves hammering. Similarly, the US sees every problem in the world as having a military solution. The response to China's gaining ground, winning friends and influencing people in the rest of the world is, not to compete with China in building infrastructure or in building 5G, but to try and hinder China so it doesn't gain ground quite so fast. So it has sanctioned COSCO, the largest shipping company in the world which owns the Greek port of Piraeus, because it is helping Iran to ship its oil which the US has sanctioned. We will tell you with whom you can and with whom you cannot trade with, thank you very much. The US can't compete in 5G with Huawei so it arrests its executive. So pitiful that a once great nation elects a dolt as President, ruins the Middle East with its foreign policy and can't compete with China except to say ... whoa there, not so fast.

China is investing in infrastructure, building wealth and providing jobs all over the world. A new report from Credit Suisse (CS) shows that wealth in China is ticking up, and the country now accounts for 100 million of the richest 10% of people in the world. There are 99 million Americans in the same category. Who ever thought that communism could provide more wealth than capitalism? Hey Grover Norquist, you better refill that bathtub.

Off the Top of My Head

Federal Reserve Policies Lead Directly to Increased Global Warming

by John Lawrence, September 21, 2019

An expanding economy means more greenhouse gasses will go into the atmosphere increasing global warming. It means more energy consumption which means more fossil fuel utilization. What we really need is a contracting economy to forestall climate change. That means less consumption, less cars on the road, lower GDP. But every economist wants to grow the economy which means exacerbating climate change. The Federal Reserve is trying its best to to expand the economy using its tools of lower interest rates, but this isn't working so well any more.

In a recent article Ellen Brown said:

Bargain-basement interest rates are supposed to stimulate the economy by encouraging borrowers to borrow (since rates are so low) and savers to spend (since they aren’t making any interest on their deposits and may have to pay to store them). But over $15 trillion in bonds are now trading globally at negative interest rates, yet this radical maneuver has not been shown to measurably improve economic performance. In fact  new research shows that negative interest rates from central banks, rather than increasing spending, stopping deflation, and stimulating the economy as they were expected to do, may be having the opposite effects. They are being blamed for squeezing banks, punishing savers, keeping dying companies on life support, and fueling a potentially unsustainable surge in asset prices.

The Fed is punishing savers with these low interest rates. Many people outside the US are having to pay banks to store their money. That's what negative interest rates are all about. And savers are being discouraged from saving. They are being incentivized to take on more debt in order to keep the wheels humming in the economy. Just the opposite is needed. People need to save and pay down their debts, not be encouraged to go into more debt and not save. Asset prices, meaning home prices and the stock market, are at record levels. Because of the Fed's policies, housing is becoming unaffordable for more and more people. That's why there are so many homeless in the US, mainly in California but actually all over. They are basically economic refugees who can't afford to pay rent even if they have a job.

So what to do about the Fed's failing policies? Some central bankers want to go “direct with money to consumers and companies in order to enliven consumption,” putting spending money directly into consumers’ pockets. They want to expand the economy at all costs, but getting consumers to consume more (consumption is 70% of GDP) will only increase global warming. What the world really needs is for consumers, at least in America where consumption is already sky high compared to other countries, to consume less.

The four components of gross domestic product (GDP) are personal consumption, business investment, government spending, and net exports. Rather than increasing personal consumption which adds to GDP, what needs to be done to decrease global warming is to decrease consumption and increase government spending. Government spending needs to be increased in the following areas: infrastructure which is 4 trillion dollars behind what needs to be repaired and improved, conversion to solar, wind and other forms of renewable energy which can be undertaken by government directly or subsidized. Conversion of electricity generation plants to renewable energy, conversion of transportation systems to renewable energy in the form of electric cars and trucks or high speed rail. High speed rail would decrease air travel which is a major polluter. Encouragement of public transportation would decrease emission of GHGs.

So keeping GDP up by not doing what the Fed is doing - lowering interest rates and encouraging people to consume more and to go into debt more - but actually by a Green New Deal would actually accomplish the twin goals of higher GDP and lower greenhouse gas emission which would reduce climate change. The Fed's policies shortsightedly are only leading to increasing climate change.

Bernie Sanders Calls To Seize the Means of Electricity Production

The presidential candidate’s new climate plan includes moving toward 100% public ownership of power.

BY JOHANNA BOZUWA, In These Times, August 22, 2019

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) speaks during a town hall meeting about climate change on August 22 in Chico, Calif. (Justin Sullivan/Getty Images)

A year after a neglected Pacific Gas & Electric (PG&E) power line sparked a wildfire that tore through northern California, presidential candidate Sen. Bernie Sanders on Thursday visited Chico, Calif., where many who fled the fire made a new home. He held a town hall the same day he released a new climate plan, in which he declared that the days of investor-owned utilities—with their profit incentives to underinvest in the electric grid and double down on fossil fuels—have to end.

He’s right: It is time for a massive public takeover of the nation’s electric grid.

The for-profit companies that reign over our energy system now have shown no meaningful sign of being willing to transform our energy system; they are much more interested in shareholder gains and business as usual. Together, for-profit utilities and fossil fuel companies have created powerful political-economic machines across the country to solidify the status quo of extraction and extortion. In contrast, democratic public ownership of our energy system could prioritize community benefit over profit, paving the way for a just and equitable energy system.

“We will end greed in our energy system,” says Sanders’ climate plan. “The renewable energy generated by the Green New Deal will be publicly owned.”

His plan comes as public power ownership campaigns mobilize across the country. California’s movement took off after the state’s largest for-profit utility, PG&E, requested a bailout after the fire forced the utility to declare bankruptcy under the weight of liability claims. Communities across the state are now demanding public ownership, and the company’s hometown of San Francisco has begun looking into municipalization.

In New York, in the midst of a July heat wave, Con Edison sacrificed low-income communities of color in Brooklyn by cutting their power to avoid a larger blackout. Residents responded with outrage, and Mayor Bill de Blasio, another presidential contender, called for kicking out the utility in favor of public ownership.

The birthplace of the monopoly for-profit utility, Chicago, just introduced an order to study the feasibility of taking over Commonwealth Edison after years of rate hikes and inaction on climate change. Alderman Carlos Ramirez-Rosa said that “through municipalization, Chicago could accelerate decarbonization, and implement a progressive rate structure that ensures better rates for working-class Chicagoans.”

Over the past months, multiple Democratic presidential candidates have come out in favor of democratizing our energy system. Washington Gov. Jay Inslee (who this week dropped out to run again for governor) centered much of his plan for a clean energy economy on community-owned and community-led renewables. And Julian Castro—the former mayor of San Antonio, where one of the more progressive public utilities is located—has voiced support for policies that empower the public to set up democratic utilities not only for electricity but also internet services and water.

But Sanders has voiced the most direct support for 100% public power, and this demand is fundamental to his climate plan. Unlike other proposals to date, Sanders’ plan explicitly commits to using public dollars for everything, refusing to leave the transition to corporate investors who so far have failed the public. By doing so, the Green New Deal proposal also ensures that the benefits of the plan don’t disappear into the pockets of billionaires like Elon Musk but are directed toward a more equitable society. Publicly funded projects, when structured so communities have a say in the types of projects and jobs they create, also have the potential to be more accountable, and can prioritize marginalized communities’ access to high-paying, unionized public jobs and respect the rights of the communities where this new infrastructure is built.

Sanders’ plan envisions harnessing and expanding the four already-operating federal Power Marketing Administrations (PMAs) and the Tennessee Valley Authority (TVA), as well as creating a fifth PMA, to build out renewable energy. It would inject $1.52 trillion into renewable energy expansion and $852 billion into energy storage, working particularly with publicly or cooperatively owned utilities. By 2035, this plan would essentially decommodify energy generation through the federal authorities. Unlike the TVA of the past, designed largely for the benefit of white men in search of work in the South, the entire plan is based on the Jemez Principles of environmental justice that focus on bottom-up organizing and including all people in decision-making.

At the municipal, district and state levels, Sanders explicitly commits to supporting the growth of public and co-op utilities. Already, public and cooperatively owned utilities serve 49 million people in the United States, atlower costs and with generally more reliable service. In fact, the entire state of Nebraska runs fully off of public power after the state expelled the for-profit utility in the 1940s because of its extortionist rates. Unlike their for-profit counterparts, these entities are ultimately beholden to the public and any profits are reinvested into the community’s schools, parks and public services. This plan would help this sector expand its reach and invest more in renewable energy, energy efficiency, and much more.

It also provides express assistance to states and municipalities so they could start their own democratically owned utilities—ones driven by the public interest and a climate-resilient future. This could be key for places like New York or Chicago that are starting the process of taking over their utility, seeking guidance and expertise throughout the process. By taking energy utilities into public ownership, we can catalyze renewable energy deployment at the same time we redistribute wealth and power.

Elements of Sanders’ proposal are similar to a proposal for a Community Ownership of Power Administration that was co-created by The Democracy Collaborative (where I work) and grassroots energy groups.

Sanders’ plans for public ownership don’t stop at electricity. He would also allocate funds to massively increase public broadband projects to give people access to a new and necessary public good: the internet. An estimated 19 million people, largely located in rural America, still do not have access to broadband. He offers a vision for integrated and effective local public transportation systems with high-speed rail connections. He stresses the importance of building high-quality, low-carbon-footprint public housing, as well as weatherizing already-standing homes to end energy poverty. The plan reinstates the federal Civilian Conservation Corps jobs program to restore our public lands. It invests dramatically more in public regional development agencies like the Appalachian Regional Commission. It even creates spaces for cooperatively owned grocery stores to facilitate local agriculture not held hostage by monopolies like Monsanto.

Sanders is not alone in his call for more public ownership. Sen. Elizabeth Warren has similarly audacious plans for services like broadband, and both Warren and Sen. Cory Booker have invoked the Civilian Conservation Corps as a model. However, Sanders’ Green New Deal proposal stands alone in its comprehensive commitment to public funding and programs.

The future is public. It is accountable to the principles of environmental justice. It is democratic. It is decommodified. Sanders’ plan is the latest to set the bar for a new economy shepherded in by the green energy transition. We learned long ago that private interests won’t solve for climate and justice at the same time—that change will have to come from united and empowered people. Now, this realization is firmly on the presidential political agenda. 

 

Jobs, the Environment, and a Planet in Crisis

Published on Tuesday, August 06, 2019

by TomDispatch

Unions vs. Environmentalists or Unions and Environmentalists?

by Aviva Chomsky

 

3 Comments

Despite challenges from parts of both the labor and the environmental movements, which its sponsors had undoubtedly hoped would be among its strongest supporters, Markey and Ocasio-Cortez's Green New Deal resolution has gone a remarkably long way toward putting a genuine discussion of what an effective and just climate policy might look like in the public arena for the first time. (Photo: Emelia Gold)

When it comes to heat, extreme weather, wildfires, and melting glaciers, the planet is now in what the media increasingly refers to as "record" territory, as climate change's momentum outpaces predictions. In such a situation, in a country whose president and administration seem hell-bent on doing everything they conceivably can to make matters worse, the Green New Deal (GND) seems to offer at least a modest opening to a path forward.

You know, the resolution introduced this February in the House of Representatives by Alexandria Ocasio-Cortez (D-NY) and Edward Markey (D-MA). Unsurprisingly, the proposal has been roundly attacked by the right. But it's stirred up some controversy on the left as well. You might imagine that labor unions and environmental organizations would be wholeheartedly for a massive federal investment in good jobs and a just transition away from fossil fuels. But does organized labor actually support or oppose the Green New Deal? What about environmental organizations? If you're not even sure how to answer such questions, you're not alone.

That 14-page resolution calls for "a new national, social, industrial, and economic mobilization on a scale not seen since World War II and the New Deal era." Its purpose: to reduce U.S. carbon emissions to net zero within a decade, while guaranteeing significant numbers of new jobs and social welfare to American workers. Read it and you'll find that it actually attempts to overcome historical divisions between the American labor and environmental movements by linking a call for good jobs and worker protection to obvious and much-needed environmental goals.

In the process, the GND proposal goes impressively far beyond the modest goals of the Paris Climate Accords and other international agreements. It supports specific, enforceable targets for bringing climate change under control, while drawing clear connections between social, labor, and environmental rights. Acknowledging in blunt terms the urgency of making systemic change on a rapidly warming planet, it calls for the kind of national mobilization Americans haven't experienced since the end of the Second World War. Described that way, it sounds like something both the labor and environmental movements would naturally support without a second thought. There is, however, both a history of mistrust and real disagreement over issues, which both movements are now grappling with. And the media is doing its part by exaggerating labor's opposition to the proposal, while ignoring what environmental organizations have to say.

One Green New Deal controversy focuses on the future role of fossil fuels in that plan. A number of environmental organizations believe that such energy sources have no place in our future, that they need to stay in the ground, period. They cite climate science and the urgent need to move rapidly and drastically to eliminate carbon emissions as the basis for such a conclusion. As it happens, the Green New Deal avoids directly challenging the fossil-fuel industry. In fact, it doesn't even use the term "fossil fuels."

From another perspective, some unions hope that new technologies like carbon capture, utilization, and storage (CCUS) will make those fuels more efficient and far cleaner. If the addition of carbon to the atmosphere could be reduced significantly or offset in some fashion, while humanity still burned natural gas, oil, or even coal, they say, jobs in those sectors could be preserved. And the unions have other concerns as well. They tend, for instance, to look skeptically on the GND's promises of a "just transition" for displaced fossil-fuel workers like coal miners, given the devastation that has fallen on workers and their communities when industries have shut down in the past. They also fear that, without accompanying trade protections, polluting industries will simply export their emissions rather than reduce them.

Being more of a statement of purpose than an elaborated plan, the Green New Deal is short on both detail and answers when it comes to such issues. The actual roadmap to achieving its goals, the proposal states, "must be developed through transparent and inclusive consultation, collaboration, and partnership with frontline and vulnerable communities, labor unions, worker cooperatives, civil society groups, academia, and businesses." Both unions and environmental organizations are already mobilizing to make sure their voices are part of the process.

The right wing was quick to mockingly publicize the Green New Deal not just as thoroughly unrealistic but as utterly un-American. Under the circumstances, perhaps it's not surprising that a recent poll found 69% of Republicans but only 36% of Democrats had heard "a lot" about it. Similarly, 80% of Republicans already "strongly opposed" it, while only 46% of Democrats strongly supported it. And 40% of those polled said that they had heard "mostly negative" things about it, while only 14% had heard "mostly positive" things. One reason for this disparity: Fox News has devoted more time to the topic than any other television news outlet. And President Trump naturally pitched in, tweeting that the GND would eliminate "Planes, Cars, Cows, Oil, Gas & the Military." Such claims, however fantastical, have already spread widely. But even the mainstream media has tended to play up the negative.

Both right-wing and mainstream media outlets have promoted the idea that unions are in firm opposition to the Green New Deal, frequently exaggerating and distorting the nature of what opposition there is. As for the concerns of environmentalists, readers would largely have to follow radical online publications or search out the websites of green organizations.

Off the Top of My Head

China and the US: Cohesiveness VS Divisiveness

by John Lawrence, August 7, 2019

Obama famously said, "We are not the blue states of America and the red states of America. We are the United States of America." I'm sorry Mr. Obama, but you are wrong, wrong, wrong. We are the Disunited States of America. China, on the other hand, moves forward seemingly with one unified agenda and with one voice. Maybe that's because they're a one party state. Maybe that's because they've cultivated and nurtured a unified people. Maybe because they're followers of Confucius. Maybe it's because they don't tolerate any dissension. I don't know. All I know is whatever they're doing, it's working. Meanwhile, the US political system is in gridlock.

Many of the problems inherent in the US today are solvable if the country and its leaders spoke with one mind. But the two party system has created a broad chasm and has led to gridlock. Take immigration policy for example. There is just no agreement because each party has its own agenda. There is no unification. There is such a thing as a rational immigration party on which a majority of the people could agree. But the leaders of the Republican party don't want a rational immigration policy. They want to leave the whole subject of immigration up in the air so they can make political hay out of it. It serves their interests not to solve the problem of immigration.

As one element of immigration policy that both parties could agree upon, let's take border security. Most people would agree that a secure border is desirable. A secure border is certainly possible with not even state of the art technology. The border could be secured with the technology found in most present day cars - radars and cameras. So why aren't they doing it? Answer is simple: there's no money in it. It would seem that the primary responsibility of the military would be to protect the nation's borders. However, the Posse Comitatus Act is a United States federal law signed on June 18, 1878, by President Rutherford B. Hayes. The purpose of the act – in concert with the Insurrection Act of 1807 – is to limit the powers of the federal government in using federal military personnel to enforce domestic policies within the United States. It has been interpreted as removing the Army and Air Force from any responsibility of protecting US borders, but my interpretation is that this was not the original intent of the act.

The military doesn't want to be involved with protecting the borders because it could be done so cheaply and with a very limited (but substantially increased) number of personnel. No the military is about multibillion dollar aircraft carriers and multibillion dollar airplanes. The USS Gerald Ford aircraft carrier costs more than $13 billion and that's just to build it, not to maintain it. Here's an example of how the US and China do business. Each has developed an advanced aircraft with similar capabilities. The American F-22 production was axed because of its high cost - US$62 billion for the whole project, which equates to US $339 million per aircraft. The Chinese J-20's research and development cost was estimated to be more than 30 billion yuan (US$4.4 billion), with a cost per aircraft of US$100-110 million. So the US accomplished its goal of spending multiples of billions of dollars and then scrapping the airplane. China's costs were much cheaper and they actually have an advanced airplane at their disposal.

So border security would be a trivially expensive problem to solve if the military actually did their job and protected the borders but .. it's not their job, man. Their job is to spend billions and billions of dollars on advanced weaponry whether or not it is ever fully functional. Meanwhile, Republicans have a political football they can toss around and work up the racists. Solving the immigration problem would deprive them of that.

So freedom has produced gridlock and Chinese philosophy has produced a society that moves forward with more or less one voice and one agenda. One of Confucius' teachings was a variant of the Golden Rule, sometimes called the "Silver Rule" owing to its negative form: "What you do not wish for yourself, do not do to others." Confucius's moral system was based upon empathy and understanding others, rather than divinely ordained rules. Confucius asserts that virtue is a mean between extremes. For example, the properly generous person gives the right amount—not too much and not too little. While the Chinese have adopted a superior variant of capitalism, they remain politically a one party system, a one philosophy system. They have free elections at the local level, and then those leaders select the leaders at the next higher level and so on. The US political system had gotten us to the point where no problem is solvable not because it's inherently unsolvable but because our political leaders in one party, namely the Republican party, are in a position to block any solutions, and it is in their political interests to do so.

Freedom has culminated in gridlock, and an unlimited Second Amendment has culminated in mass shootings. I don't think China would tolerate these outcomes. Instead they are moving ahead with their Belt and Road Initiative peacefully building infrastructure throughout the world at the same time that the US is trying to control the world with its outsized military and the threat of sanctions. The US threatens a country's economic development by the use of sanctions; China is ameliorating economic development by building infrastructure around the world. Which country has the more humane policies?

Off the Top of My Head

China Alleviating Poverty at Greatest Rate

by John Lawrence, July 30, 2019

Between 1981 and 2008, the proportion of China's population living on less than $1.25/day is estimated to have fallen from 85% to 13.1%, meaning that roughly 600 million people were taken out of poverty. According to Wikipedia:

Since the start of far-reaching economic reforms in the late 1970s, growth has fueled a remarkable increase in per-capita income, helping to lift more people out of poverty than anywhere else in the world: China's per capita income has increased fivefold between 1990 and 2000, from $200 to $1,000. Between 2000 and 2010, per capita income also rose by the same rate, from $1,000 to $5,000, moving China into the ranks of middle-income countries. Between 1990 and 2005, China's progress accounted for more than three-quarters of global poverty reduction and a big factor in why the world reached the UN millennium development of dividing extreme poverty by two. This incredible success was delivered by a combination of a rapidly expanding labour market, driven by a protracted period of economic growth, and a series of government transfers such as an urban subsidy, and the introduction of a rural pension.

China must be doing something right. Its infrastructure is far superior to that of the US. China’s “Belt and Road Initiative” (BRI)is famous as an extension of their domestic infrastructure investments, but Russia is also investing heavily in infrastructure. Both countries need to do it in order to improve the future for their respective populations, and both Governments have avoided the Western development model of going heavily into debt in order to pay for creating and maintaining infrastructure. Both are, in fact, exceptionally low-debt Governments.

According to the “Global Debt Clock” at Economist, China has a public debt/GDP of 17.7%, and Russia’s is 8.0%. For comparison, America’s is 93.6%. The United States isn’t going into public debt in order to finance building or maintenance of infrastructure, but instead to finance expansions of its military, which is already (and by far) the world’s largest (in terms of its costs, but not of its numbers of troops).

While the US spends money on its military, some of which is sinking under the seas (see article by Chris Hedges "The Great Flood"), China is eradicating poverty in its own country and helping with its BRI all over the world, in Africa in particular. China’s most significant railway projects in East Africa are the diesel-powered Mombasa-Nairobi Standard Gauge Railway built in Kenya, and the Addis Ababa-Djibouti Railway, which is the first electrified railway of its kind in Africa. Both railway projects, costing $3.4 billion for Ethiopia and $3.2 billion for Kenya, are standard gauge railway projects paid for by Chinese loans. The two-year-old light-rail system in Addis Ababa, the Ethiopian capital, was financed by China as well to the tune of $475 million. 

While the US tries to control the world and to reshape it in its own image by means of its gargantuan military and weaponized dollar, the rest of the world led by China is concentrating on infrastructure development and eradicating poverty. In America poverty and homelessness are increasing as the rich get richer and the poor poorer. The idea that many Americans might be living on less than $2 a day once sounded almost impossible; that was supposed to be what poverty meant in the developing world, not a rich nation like the United States. But in a wildly influential 2013 study, two sociologists upended that assumption: Kathryn Edin and Luke Shaefer showed that by 2011, there were 1.6 million U.S. households with children that, for at least part of the year, had cash incomes that put them below the $2 per person mark. The number had risen from 636,000 in 1996—a 152.9 percent increase.

The US is spending enormous sums on its military while China is peacefully engaged in the economic development of the rest of the world. What's wrong with this picture? Is the American empire headed for the scrapheap of history just as many empires of the past including the Roman empire have been? If the US gets involved in a Green New Deal even a World Wide Green New Deal, maybe it can pull itself out of the present morass, forestall climate change and reduce homelessness in its empire. Then it could peacefully compete with China not in terms of advanced weapons systems but in terms of how much economic development and eradication of poverty it can bring to its own country and the rest of the world. Otherwise, China will be the world's preeminent empire by 2050.

Off the Top of My Head

How to Counter China's BRI Initiative: A Worldwide Green New Deal

by John Lawrence, July 24, 2019

The American political establishment is all worried about China's Belt and Road Initiative (BRI) because it forges alliances with many countries especially, but not limited to, those of the Eurasian land mass including Russia. They do this by partnering to build infrastructure in those countries thereby increasing trade with China primarily. The Chinese approach is basically the equivalent of Dale Carnegie's book, "How to Win Friends and Influence People." The American approach is to threaten other countries with its military might or its weaponized dollar. These are the only things in the American playbook. Other American interactions with third parties have been left to the private sector because the American government has been hollowed out to the point that all activities with the exception of the military and the use of sanctions have been left to the private sector. America cannot even repair its own infrastructure much less build infrastructure in the rest of the world like China is doing. China can do this because it has a government capable of launching huge initiatives. Unless those initiatives are of a military nature, the US can do nothing of the sort.

Therefore, I have a great idea (I think). The Democrats should think big and their agenda should be (in addition to universal health care which I will discuss later) a Worldwide Green New Deal (WWGND). Climate change will not be ameliorated that much by just greening America. Most of the greenhouse gasses are being emitted elsewhere. So a Green Marshall Plan or a Worldwide Green New Deal is in order, and it will counter China, not militarily like the Washington Republican establishment is trying to do (after all if all you possess is a hammer every problem must be solved by hammering), but by peaceful green development exactly like China is trying to do although I don't know how much the emphasis with the BRI is on green.

Some quibbles with the Green New Deal as presently constituted: it guarantees a government job for anyone who needs a job. No, leave this part out, because the Republicans will slaughter you over this. A Worldwide Green New Deal is necessary not only to save the planet, but to counter China's growing influence in the world. This would be a peaceful competition instead of the military one that has borne no fruit over the last years since WW II. The wars since then have been a waste and a tragedy that have only destroyed infrastructure and alienated major parts of the world's population. A WWGND will also be a change in foreign policy vis a vis the rest of the world. It will say we are not here just to try and control you militarily or to destroy your economies with sanctions if you don't obey our orders. It would be saying to the world "let's have a peaceful competition with China and save the world from the worst effects of climate change at the same time."

The US political establishment is apprehensive about China. It is getting defensive about China. That's why it is taking the attitude towards Huawei which is outdcompeting American companies. The US is trying to use sanctions to block Huawei's progress since it is on the losing end of the competition. But America has no industrial policy; China does and this makes all the difference. America can only react defensively using threats both military and dollarized.

Now regarding universal health care, as much as I like Bernie Sanders, I think Medicare for All as a plank in the platform has to go. The Republicans will slaughter us over that. Hickenlooper and others have a better idea: Medicare for All Who Want It. The rest can stay with their private insurance. Evidently, 180 million Americans are covered by employer based insurance, and, evidently, they like it. This would be similar to restoring the public option that was lobbied out of Obamacare. Let people opt in to Medicare, but don't force them to. This is the winning agenda item. Over the years as more and more people become disenchanted with private insurance, they will start opting in until the point will be reached that effectively Medicare For All will be realized. This is the way to make universal health care evolutionary instead of revolutionary.

The American Republican poltitical establishment is taking a defensive, fearful attitude towards China's BRI. They are trying to control the world not by military supremacy but by peaceful development in conjunction with their neighbors. How dare they! The US has invested the whole ball of wax into military domination of the world to put America first. After all we beat communism leaving America as the world's dominant empire. But if America doesn't change course it will be left in the position of trying to hold back China's peaceful initiatives with its threats of military action and sanctions.

One last note: the US will have to replace the privately owned Federal Reserve with a public central bank in order to fund a WWGND. Ellen Brown has discussed this in detail. Lincoln essentially did this with his issuance of greenbacks to fight the Civil War and build the transcontinental railroad. It worked for him and us.

How to Pay for It All: An Option the Candidates Missed

Posted on July 10, 2019 by Ellen Brown, Web of Debt blog

The Democratic Party has clearly swung to the progressive left, with candidates in the first round of presidential debates coming up with one program after another to help the poor, the disadvantaged and the struggling middle class. Proposals ranged from a Universal Basic Income to Medicare for All to a Green New Deal to student debt forgiveness and free college tuition. The problem, as Stuart Varney observed on FOX Business, was that no one had a viable way to pay for it all without raising taxes or taking from other programs, a hard sell to voters. If robbing Peter to pay Paul is the only alternative, the proposals will go the way of Trump’s trillion dollar infrastructure bill for lack of funding.

Fortunately there is another alternative, one that no one seems to be talking about – at least no one on the presidential candidates’ stage. In Japan, it is a hot topic; and in China, it is evidently taken for granted: the government can generate the money it needs simply by creating it on the books of its own banks. Leaders in China and Japan recognize that stimulating the economy is not a zero-sum game in which funds are just shuffled from one pot to another. To grow the economy and increase GDP, demand (money) must go up along with supply. New money needs to be added to the system; and that is what China and Japan have been doing, very successfully.

Before the 2008-09 global banking crisis, China’s GDP increased by an average of 10% per year for 30 years. The money supply increased right along with it, created on the books of its state-owned banks. Japan under Prime Minister Shinzo Abe has been following suit, with massive economic stimulus funded by correspondingly massive purchases of the government’s debt by its central bank, using money simply created with computer keystrokes.

All of this has occurred without driving up prices, the dire result predicted by US economists who subscribe to classical monetarist theory. In the 20 years from 1998 to 2018, China’s M2 money supply grew from just over 10 trillion yuan to 180 trillion yuan ($26T), an 18-fold increase. Yet it closed 2018 with a consumer inflation rate that was under 2%. Price stability has been maintained because China’s Gross Domestic Product has grown at nearly the same fast clip, by a factor of 13 over 20 years.

In Japan, the massive stimulus programs called “Abenomics” have been funded through its central bank. The Bank of Japan has now “monetized” nearly 50% of the government’s debt, turning it into new money by purchasing it with yen created on the bank’s books. If the US Fed did that, it would own $11 trillion in US government bonds, four times what it holds now. Yet Japan’s M2 money supply has not even doubled in 20 years, while the US money supply has grown by 300%; and Japan’s inflation rate remains stubbornly below the BOJ’s 2% target. Abe’s stimulus programs have not driven up prices. In fact deflation remains a greater concern than inflation in Japan, despite unprecedented debt monetization by its central bank.     

China’s Economy: A Giant Ponzi Scheme or a New Economic Model? 

Critics have long called China’s economy a Ponzi scheme, doomed to collapse in the end; and for 40 years China has continued to prove the critics wrong. According to a June 2019 report by the Congressional Research Service:

Since opening up to foreign trade and investment and implementing free-market reforms in 1979, China has been among the world’s fastest-growing economies, with real annual gross domestic product (GDP) growth averaging 9.5% through 2018, a pace described by the World Bank as “the fastest sustained expansion by a major economy in history.” Such growth has enabled China, on average, to double its GDP every eight years and helped raise an estimated 800 million people out of poverty. China has become the world’s largest economy (on a purchasing power parity basis), manufacturer, merchandise trader, and holder of foreign exchange reserves.

This massive growth has been funded with credit created on the books of China’s banks, most of which are state-owned. Even in the US, course, most money today is created on the books of banks. That is what our money supply is – bank credit. What is different about the Chinese model is that the Chinese government can and does intervene to direct where the credit goes. In a July 2018 article titled “China Invents a Different Way to Run an Economy,” Noah Smith suggests that China’s novel approach to macroeconomic stabilization by regulating bank credit represents a new economic model, one that may hold valuable lessons for developed economies. He writes:

Many economists would see this approach as hopelessly ad hoc, haphazard, and interventionist — not the kind of thing any developed country would want to rely on. And yet, it seems to have carried China successfully through several crises, while always averting the catastrophic financial crash that outside observers have been warning about for years.

Abenomics, Helicopter Money and Modern Monetary Theory

Noah Smith has also written about Japan’s unique model. After Prime Minister Abe crushed his opponents in October 2017, Smith wrote on Bloomberg News, “Japan’s long-ruling Liberal Democratic Party has figured out a novel and interesting way to stay in power—govern pragmatically, focus on the economy and give people what they want.” He said everyone who wanted a job had one; small and midsize businesses were doing well; and the BOJ’s unprecedented program of monetary easing had provided easy credit for corporate restructuring without generating inflation. Abe had also vowed to make both preschool and college free.

Like China’s economic model, Abenomics has been called a Ponzi scheme, funded by central bank-created “free” money. But whatever it is called, the strategy has been working for the economy. Even the once-dubious International Monetary Fund has declaredAbenomics a success.

The Bank of Japan’s massive bond-buying program has also been called “helicopter money” — a policy in which the central bank directly finances government spending by underwriting bonds – and it has been compared to Modern Monetary Theory, which similarly posits that the government can spend money into existence with central bank funding. As Nathan Lewis wrote in Forbes in February 2019:

In practice, something like “MMT” has reached a new level of sophistication these days, exemplified by Japan. . . . The Bank of Japan now holds government bonds amounting to more than 100% of GDP. In other words, the government has managed to finance itself “with the printing press” to the amount of about 100% of GDP, with no inflationary consequences. [Emphasis added.]

Japanese officials have resisted comparisons with both helicopter money and MMT, arguing that Japanese law does not allow the government to sell its bonds directly to the central bank. As in the US, the government’s bonds must be sold on the open market, a limitation that also prevents the US government from directly monetizing its debt. But as Bank of Japan Deputy Governor Kikuo Iwata observed in a 2013 Reuters article, where the bonds are sold does not matter. What is important is that the central bank has agreed to buy them, and it is here that US banking law diverges from the laws of both Japan and China.

Central Banking Asia-style

When the US Treasury sells bonds on the open market, it can only hope the Fed will buy them. Any attempt by the president or the legislature to influence Fed policy is considered a gross interference with the sacrosanct independence of the central bank.

In theory, the central banks of China and Japan are also independent. Both are members of the Bank for International Settlements, which stresses the importance of maintaining the stability of the currency and the independence of the central bank; and both countries revised their banking laws in the 1990s to better reflect those policies. But their banking laws still differ in significant ways from those of the US.

In Japan, the Bank of Japan is legally free to set interest rates, but it must cooperate closely with the Ministry of Finance in setting policy. Article 4 of the 1997 Bank of Japan Act says:

The Bank of Japan shall, taking into account the fact that currency and monetary control is a component of overall economic policy, always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government’s economic policy shall be mutually compatible.

Unlike in the US, Prime Minister Abe can negotiate with the head of the central bank to buy the government’s bonds, ensuring that the debt is in fact turned into new money that will stimulate domestic economic growth; and he is completely within his legal rights in doing it.

The leverage of China’s central government over its central bank is even stronger than the Japanese prime minister’s. The 1995 Law of the People’s Republic of China on the People’s Bank of China states:

The People’s Bank of China shall, under the leadership of the State Council, formulate and implement monetary policies, guard against and eliminate financial risks, and maintain financial stability.

The State Council has final decision-making power on such things as the annual money supply, interest rates and exchange rates; and it has used this power to stabilize the economy by directing and regulating the issuance of bank credit, the new Chinese macroeconomic model that Noah Smith says holds important lessons for us.

The successful six-year run of Abenomics, along with China’s decades of unprecedented economic growth, have proven that governments can indeed monetize their debts, expanding the money supply and stimulating the economy, without driving up consumer prices. The monetarist theories of US policymakers are obsolete and need to be discarded.

“Kyouryoku,” the Japanese word for cooperation, is composed of characters that mean “together strength” – “stronger by working together.” This is a recognized principle in Asian culture and it is an approach we would do well to adopt. What US presidential candidates from both parties should talk about is how to modify the law so that Congress, the Administration and the central bank can work together in setting monetary policy, following the approaches successfully modeled in China and Japan.

________________________________________

First posted under another title at TruthDig.com. Ellen Brown is an attorney, founder and chair of the Public Banking Institute, and author of thirteen books, including Banking on the People: Democratizing Money in the Digital Age (June 2019), Web of Debt, and The Public Bank Solution.  She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com.

Off the Top of My Head

Neither Shall They Learn War Anymore

by John Lawrence, July 5, 2019

The Prophet Isaiah urged people to “beat their swords into plowshares” and learn war no more. Here's the full quote:

"And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up sword against nation, neither shall they learn war any more. (Isaiah 2:4)."

Well, I didn't see too many plowshares at the Trumpistan 4th of July parade yesterday. It seems as the US has taken the opposite course: beating plowshares into swords. Its military might is nonpareil, its dollar diplomacy turned to dollar militarism. Whoever thought that the good ol US would turn around and change the dollar from a safe haven into a weapon?

The US has its priorities and militarism is first. The U.S. outpaces all other nations in military expenditures. World military spending totaled more than $1.6 trillion in 2015. The U.S. accounted for 37 percent of the total. U.S. military expenditures are roughly the size of the next eight largest military budgets combined. Meanwhile, while US infrastructure crumbles, China is spending on infrastrutrure instead of weaponry. China does not do infrastructure by half measures. It has the world’s longest networks of motorway and high-speed rail. It has the tallest bridge as well as the longest. It is building nearly ten airports a year, more than any other country. It has the most powerful hydroelectric dam, the biggest wind farm and as much coal power as the rest of the world combined.

The official US budget for the Department of Defense in 2019 is $649 billion. But this doesn't include development and maintenance of nuclear weapons which is housed in the Department of Energy: $25 billion or the Department of Veterans Affairs spending: $216 billion. Or the Homeland Security budget: $69 billion. Or the money spent on 17 intelligence agencies: $80 billion. A billion here, a billion there. Pretty soon you're talking about real money. When you add it all up, the US spends over a trillion dollars a year on militarism. China spends $250 billion.

On infrastructure spending China far surpasses the US. The White House Fiscal Year 2018 Budget proposes spending $200 billion in new federal spending over 10 years or $20 billion a year. China’s total fixed asset investment in transport infrastructure alone hit $327.77 billion in 2018. Quite a sizable difference. In addition China is spending on infrastructure in other countries with its Belt and Road initiative. Already it has spent $200 billion on infrastructure development in other countries!

The Council on Foreign Relations reports:

In 2013, Chinese President Xi Jinping announced the launch of both the Silk Road Economic Belt and the 21st Century Maritime Silk Road, infrastructure development and investment initiatives that would stretch from East Asia to Europe. The project, eventually termed the Belt and Road Initiative (BRI) but sometimes known as the New Silk Road, is one of the most ambitious infrastructure projects ever conceived. It harkens back to the original Silk Road, which connected Europe to Asia centuries ago, enriching traders from the Atlantic to the Pacific. ...

Xi’s vision included creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, to Pakistan, India, and the rest of Southeast Asia. Such a network would expand the international use of Chinese currency, the renminbi, while new infrastructure could “break the bottleneck in Asian connectivity,” according to Xi. (The Asian Development Bank estimates that the region faces a yearly infrastructure financing shortfall of nearly $800 billion.) In addition to physical infrastructure, China plans to build fifty special economic zones, modeled after the Shenzhen Special Economic Zone, which China launched in 1980 during its economic reforms under leader Deng Xiaoping. ...

China’s overall ambition for the BRI is staggering. To date, more than sixty countries—accounting for two-thirds of the world’s population—have signed on to projects or indicated an interest in doing so. Analysts estimate the largest so far to be the $68 billion China-Pakistan Economic Corridor, a collection of projects connecting China to Pakistan’s Gwadar Port on the Arabian Sea. In total, China has already spent an estimated $200 billion on such efforts. Morgan Stanley has predicted China’s overall expenses over the life of the BRI could reach $1.2–1.3 trillion by 2027, though estimates on total investments vary.

The US is getting alarmed over China's spending on infrastructure development both at home and around the world. The US has an economy in which the Federal government only spends on its military and military-industrial complex. There is little money left over for anything else. It also by the way is spending almost a trillion dollars a year on interest on the national debt. So much for priorities. While the US is attempting to bully the rest of the world with its military might and economic sanctions, the rest of the world is passing the US by. They are developing alternative banking institutions in order to bypass the use of the US dollar and escape sanctions. China in particular is winning friends and influencing nations by the peaceful pursuit of helping them to develop economically.

Was the prophet Isaiah right when he prophesied that nations would "beat their swords into plowshares", and was he really prophesying that about China and not the US?

Warren's New $2 Trillion Green Manufacturing Plan Welcomed as 'Win-Win' for Climate and Workers

Published on Tuesday, June 04, 2019 by Common Dreams

"With this plan, Elizabeth Warren is seizing the enormous opportunity that transitioning to 100 percent clean energy represents for people across the country."

by Jessica Corbett, staff writer

 

31 Comments

Sen. Elizabeth Warren (D-Mass.), a 2020 presidential candidate, unveiled her broad "agenda of economic patriotism" in a post on Medium Tuesday. (Photo: Elizabeth Warren/Facebook)

As new polling showed Tuesday that public support for Sen. Elizabeth Warren's presidential campaign has continued to rise as she's introduced a series of ambitious policy proposals, the Democratic candidate unveiled a $2 trillion renewable energy and green manufacturing plan welcomed by climate campaigners as a boon for both the planet and U.S. workers.

"With this plan, Elizabeth Warren is seizing the enormous opportunity that transitioning to 100 percent clean energy represents for people across the country," Greenpeace USA senior climate campaigner Jack Shapiro said in a statement. "The renewable energy economy is a win-win for our climate and communities, and should be at the core of any plan to create jobs and spur innovation."

In a Medium post published Tuesday, Warren detailed her green manufacturing plan, which she described as "part of how I'll implement my commitment to a Green New Deal" and just the first of several proposals under her new economic patriotism agenda.

This is not a question of more or less government: It’s about who the government works for. And in the weeks ahead, I’ll be releasing more plans on how this vision of economic patriotism should shape our economy, from trade policy to Wall Street. Here's my first proposal:

— Elizabeth Warren (@ewarren) June 4, 2019

Noting that "over the next decade, the expected market for clean energy technology in emerging economies alone is $23 trillion," Warren wrote that she hopes to enable the United States to dominate that market by developing, manufacturing, and exporting "the technology the world needs to confront the existential threat of climate change."

To achieve market dominance, she explained, the U.S. government would use revenue from her proposed Real Corporate Profits Tax to "invest $2 trillion over the next 10 years in green research, manufacturing, and exporting — linking American innovation directly to American jobs, and helping achieve the ambitious targets of the Green New Deal."

My green manufacturing plan rewards American companies who invest at home. It's funded by my Real Corporate Profits Tax on giant companies who try to dodge their fair share in taxes. It'll create 1M new jobs & make the U.S. the leader in the global fight against climate change.

— Elizabeth Warren (@ewarren) June 4, 2019

Warren's green manufacturing plan has three parts:

• The Green Apollo Program would commit "$400 billion in funding over the next 10 years for clean energy research and development — more than 10 times what we invested in the last 10 years."
• The Green Industrial Mobilization would involve "a $1.5 trillion federal procurement commitment over the next 10 years to purchase American-made clean, renewable, and emission-free energy products for federal, state, and local use, and for export."
• The Green Marshall Plan would include the creation of "a new federal office dedicated to selling American-made clean, renewable, and emission-free energy technology abroad and a $100 billion commitment to assisting countries to purchase and deploy this technology."

"The climate crisis demands immediate and bold action," Warren wrote, reiterating her support for a fair and just transition that's called for in the Green New Deal resolution introduced in Congress earlier this year.

Referencing the World War II era, she added, "Like we have before, we should bank on American ingenuity and American workers to lead the global effort to face down this threat — and create more than a million good jobs here at home."

The youth-led Sunrise Movement, in a series of tweets, said Warren's plan "shows clearly that she understands the frame of the #GreenNewDeal, the lessons from our history it draws upon, and that she is committed to mobilizing the federal government towards the scale of its ambition if elected."

A MAJOR 🔑of @ewarren's Green Manufacturing Plan is that she commits to equitable investment & a "fair and just transition for all communities & workers" including "financial security,  job training, union protections, & benefits...& wage and benefit parity for affected workers."

— Sunrise Movement 🌅 (@sunrisemvmt) June 4, 2019

In a statement, Tamara Toles O'Laughlin, the North America director for 350 Action, praised "the international focus of her plan, the acknowledgement of the United States's disproportionate pollution, and the commitment to aiding underinvested countries that are already suffering from the climate crisis as a critical part of America's responsibility to the world."

The green manufacturing plan, according to Warren, is the first of many plans she intends to unveil in the coming weeks that fall under her broader "agenda of economic patriotism," which she described as "using new and existing tools to defend and create quality American jobs and promote American industry."

One of the other ways Warren would pursue this agenda is by creating a new federal agency, the Department of Economic Development, which would "replace the Commerce Department, subsume other agencies like the Small Business Administration and the Patent and Trademark Office, and include research and development programs, worker training programs, and export and trade authorities like the Office of the U.S. Trade Representative."

Warren outlined her vision of economic patriotism in a video posted on social media Tuesday:

Some big, “American” companies will ship jobs overseas and hollow out our cities if it'll save them a nickel. And many already have. I've got a plan to make sure a Warren administration will defend and create good American jobs. pic.twitter.com/mztmtUHwGW

— Elizabeth Warren (@ewarren) June 4, 2019

Zach Carter, in a piece for HuffPost Tuesday, pointed out that Warren's broad economic platform follows a series of "ambitious, meticulously detailed" plans on everything from breaking up big tech giants like Amazon and Google to forgiving student debt and establishing universal childcare. However, he argued, the economic platform that she discussed in Detroit Tuesday "is a little different."

The Massachusetts Democrat's economic agenda for the nation "retains Warren's wonk-flair," Carter wrote, "but the heart of her proposal is ideological rather than technical. Warren is making a crystal-clear statement of principles, and an equally plain break with the past 30 years of American trade policy―up to and including the presidency of Donald Trump."

The presidential hopeful's "astonishing plan for economic patriotism" was celebrated by Robert Kuttner, co-founder and co-editor of The American Prospect, as "in a class by itself, even for Warren."

"Warren's proposal does nothing less than turn inside out the globalist assumptions pursued by the past several administrations, Democrat and Republican alike," Kuttner wrote Tuesday. "With this plan, Warren has begun an overdue debate that she deserves to win, both intellectually and politically. And she has demonstrated once again her potential as a powerful force against Donald Trump."

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Off the Top of My Head

What the Hell Does Socialism Have to Do With It at This Point?

by John Lawrence, June 5, 2019

The Repubs are determined to castigate socialism as their strategy to defeat the next Democratic Presidential hopeful. Socialism is totally irrelevant both as a party and as a philosophy at this point. What is important is Medicare for All and a Green New Deal. In the American political system third parties only damage the party they are ideologically closes to. That's just the way the American system is set up by the Constitution. So membership in a socialist party is a waste of time. In Europe where they have a parliamentary system, multiple parties have some meaning because they can gain representation in Parliament proportional to their numbers. So trying to tag a Green New Deal as socialist has little meaning. Americans by and large vote their self-interest whatever that may be regardless of political affiliation. However, even the Democrats and Republicans are irrelevant to the extent that there are now two tribes in America rather than two parties - the Southern White Tribe and the Left and Right Coast Tribe. Some people will vote with their tribe even when it's not in their self-interest. The Southern White Tribe, for example, has been largely co-opted by rich Republican interests.

Regardless of tribes or parties, there is not much time left to do something about climate change. We have maybe a decade to turn it around so that the planet earth isn't visited with the most devastating effects thereof. If joining practically every other nation on earth (except Zimbabwe) with a rational, effective national health care system which Medicare for All represents is socialist, well I guess pretty much all nations of earth have decided to be socialist. The US and in particular Trump's America has totally abandoned any pretext as far as any concern for the American people is concerned in terms of the environment, protection from predatory lenders, safety of consumer products etc. Their theme song is "Buyer Beware", Caveat Emptor! Trump promised to put America First, but he's just putting America behind the eight ball and doing a pretty good job of fucking up the whole world.

Here are the relevant issues which Bernie Sanders, Elizabeth Warren, Alexandra Ocasio-Cortez and other mainly progressive Democrats are talking about which will not be discussed much in the mainstream American media: universal health care, a World War II type effort to forestall climate change and  convert to renewable energy, rebuilding and improving American infrastructure, diminishing the economic divide between the ultra rich and the rest of us, diminishing the ridiculously high military budget, reining in the national debt which will soon cost the American people $1 trillion per year just in interest alone, providing housing for the homeless. There's a lot more, but these issues will do for now. Republicans are not interested in doing anything about these issues. They love the status quo because it's making them rich. Any Republican elected to Congress can easily become a millionaire. It's a no brainer.

Joe Biden is an amiable guy, and probably the one who can get down and dirty in the mud with Trump and take him out the best, but there are more important issues on the table, namely the ones mentioned above. It's not just a question of taking down Trump. It's a question of solving major problems that Trump and other Republicans, mainly, have created. Dems need to go for broke on this one. Middle of the Road Joe is just not the man or woman for the job. Major changes have to occur and Dems cannot afford to have some middeof the road, go slow, restore the status quo ante type of guy as their Presidential candidate. Bernie and either Kamala or Elizabeth Warren should be the ticket. I prefer Kamala over Elizabeth only because we only need one, not two, policy wonks on the ballot. Kamala adds more in terms of beauty and ethnicity to balance Bernie's wonkiness.

The Secret to Funding a Green New Deal

by Ellen Brown from truthdig

MAR 19, 2019,  OPINION|TD ORIGINALS

 

COMMENTS

 

Environmental activists occupy the office of then incoming Democratic majority leader Rep. Steny Hoyer, D-Md. (J. Scott Applewhite / AP)

As alarm bells sound over the advancing destruction of the environment, a variety of Green New Deal proposals have appeared in the U.S. and Europe, along with some interesting academic debates about how to fund them. Monetary policy, normally relegated to obscure academic tomes and bureaucratic meetings behind closed doors, has suddenly taken center stage.

The 14-page proposal for a Green New Deal submitted to the U.S. House of Representatives by Rep. Alexandria Ocasio-Cortez, D-N.Y., does not actually mention Modern Monetary Theory (MMT), but that is the approach currently capturing the attention of the media—and taking most of the heat. The concept is good: Abundance can be ours without worrying about taxes or debt, at least until we hit full productive capacity. But, as with most theories, the devil is in the details.

MMT advocates say the government does not need to collect taxes before it spends. It actually creates new money in the process of spending it; and there is plenty of room in the economy for public spending before demand outstrips supply, driving up prices.

Critics, however, insist this is not true. The government is not allowed to spend before it has the money in its account, and the money must come from tax revenues or bond sales.

In a 2013 treatise called “Modern Monetary Theory 101: A Reply to Critics,” MMT academics concede this point. But they write, “These constraints do not change the end result.” And here the argument gets a bit technical. Their reasoning is that “the Fed is the monopoly supplier of CB currency [central bank reserves], Treasury spends by using CB currency, and since the Treasury obtained CB currency by taxing and issuing treasuries, CB currency must be injected before taxes and bond offerings can occur.”

The counterargument, made by American Monetary Institute (AMI) researchers, among others, is that the central bank is not the monopoly supplier of dollars. The vast majority of the dollars circulating in the United States are created, not by the government, but by private banks when they make loans. The Fed accommodates this process by supplying central bank currency (bank reserves) as needed, and this bank-created money can be taxed or borrowed by the Treasury before a single dollar is spent by Congress. The AMI researchers contend, “All bank reserves are originally created by the Fed for banks. Government expenditure merely transfers (previous) bank reserves back to banks.” As the Federal Reserve Bank of St. Louis puts it, “federal deficits do not require that the Federal Reserve purchase more government securities; therefore, federal deficits, per se, need not lead to increases in bank reserves or the money supply.”

What federal deficits do increase is the federal debt; and while the debt itself can be rolled over from year to year (as it virtually always is), the exponentially growing interest tab is one of those mandatory budget items that taxpayers must pay. Predictions are that in the next decade, interest alone could add $1 trillion to the annual bill, an unsustainable tax burden.

To fund a project as massive as the Green New Deal, we need a mechanism that involves neither raising taxes nor adding to the federal debt; and such a mechanism is proposed in the U.S. Green New Deal itself—a network of public banks. While little discussed in the U.S. media, that alternative is being debated in Europe, where Green New Deal proposals have been on the table since 2008. European economists have had more time to think these initiatives through, and they are less hampered by labels like “socialist” and “capitalist,” which have long been integrated into their multi-party systems.

A Decade of Gestation in Europe

The first Green New Deal proposal was published in 2008 by the New Economics Foundation on behalf of the Green New Deal Group in the U.K. The latest debate is between proponents of the Democracy in Europe Movement 2025 (DiEM25), led by former Greek finance minister Yanis Varoufakis, and French economist Thomas Piketty, author of the best-selling “Capital in the 21st Century.” Piketty recommends funding a European Green New Deal by raising taxes, while Varoufakis favors a system of public green banks.

Varoufakis explains that Europe needs a new source of investment money that does not involve higher taxes or government deficits. For this purpose, DiEM25 proposes “an investment-led recovery, or New Deal, program … to be financed via public bonds issued by Europe’s public investment banks (e.g., the new investment vehicle foreshadowed in countries like Britain, the European Investment Bank and the European Investment Fund in the European Union, etc.).”

To ensure that these bonds do not lose their value, the central banks would stand ready to buy them above a certain yield. “In summary, DiEM25 is proposing a re-calibrated real-green investment version of Quantitative Easing that utilizes the central bank.”

Public development banks already have a successful track record in Europe, and their debts are not considered government debts. They are financed not through taxes but by the borrowers when they repay the loans. Like other banks, development banks are money-making institutions that not only don’t cost the government money but actually generate a profit for it. DiEM25 collaborator Stuart Holland observes:

While Piketty is concerned to highlight differences between his proposals and those for a Green New Deal, the real difference between them is that his—however well-intentioned—are a wish list for a new treaty, a new institution and taxation of wealth and income. A Green New Deal needs neither treaty revisions nor new institutions and would generate both income and direct and indirect taxation from a recovery of employment. It is grounded in the precedent of the success of the bond-funded, Roosevelt New Deal which, from 1933 to 1941, reduced unemployment from over a fifth to less than a tenth, with an average annual fiscal deficit of only 3 percent.

Roosevelt’s New Deal was largely funded through the Reconstruction Finance Corporation (RFC), a public financial institution set up earlier by President Hoover. Its funding source was the sale of bonds, but proceeds from the loans repaid the bonds, leaving the RFC with a net profit. The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more; and it funded all this while generating income for the government.

A System of Public Banks and “Green QE”

The U.S. Green New Deal envisions funding with “a combination of the Federal Reserve [and] a new public bank or system of regional and specialized public banks,” which could include banks owned locally by cities and states. As Sylvia Chi, chair of the legislative committee of the California Public Banking Alliance, explains:

The Green New Deal relies on a network of public banks — like a decentralized version of the RFC — as part of the plan to help finance the contemplated public investments. This approach has worked in Germany, where public banks have been integral in financing renewable energy installations and energy efficiency retrofits.

Local or regional public banks, Chi says, could help pay for the Green New Deal by making “low-interest loans for building and upgrading infrastructure, deploying clean energy resources, transforming our food and transportation systems to be more sustainable and accessible, and other projects. The federal government can help by, for example, capitalizing public banks, setting environmental or social responsibility standards for loan programs, or tying tax incentives to participating in public bank loans.”

U.K. professor Richard Murphy adds another role for the central bank—as the issuer of new money in the form of “Green Infrastructure Quantitative Easing.” Murphy, who was a member of the original 2008 U.K. Green New Deal Group, explains:

All QE works by the [central bank] buying debt issued by the government or other bodies using money that it, quite literally, creates out of thin air. … [T]his money creation process is … what happens every time a bank makes a loan. All that is unusual is that we are suggesting that the funds created by the [central bank] using this process be used to buy back debt that is due by the government in one of its many forms, meaning that it is effectively canceled.

The invariable objection to that solution is that it would act as an inflationary force driving up prices, but as argued in an earlier articleof mine, this need not be the case. There is a chronic gap between debt and the money available to repay it that needs to be filled with new money every year to avoid a “balance sheet recession.” As U.K. professor Mary Mellor formulates the problem in her book “Debt or Democracy” (2016):

A major contradiction of tying money supply to debt is that the creators of the money always want more money back than they have issued. Debt-based money must be continually repaid with interest. As money is continually being repaid, new debt must be being generated if the money supply is to be maintained. … This builds a growth dynamic into the money supply that would frustrate the aims of those who seek to achieve a more socially and ecologically sustainable economy.

In addition to interest, says Mellor, there is the problem that bankers and other rich people generally do not return their profits to local economies. Unlike public banks, which must use their profits for local needs, the wealthy mostly hoard their money, invest it in the speculative markets, hide it in offshore tax havens or send it abroad.

To avoid the cyclical booms and busts that have routinely devastated the U.S. economy, this missing money needs to be replaced; and if the new money is used to pay down debt, it will be extinguished along with the debt, leaving the overall money supply and the inflation rate unchanged. If too much money is added to the economy, it can always be taxed back; but as MMTers note, we are a long way from the full productive capacity that would “overheat” the economy today.

Murphy writes of his Green QE proposal:

The QE program that was put in place between 2009 and 2012 had just one central purpose, which was to refinance the City of London and its banks. … What we are suggesting is a smaller programme … to kickstart the UK economy by investing in all those things that we would wish our children to inherit whilst creating the opportunities for everyone in every city, town, village and hamlet in the UK to undertake meaningful and appropriately paid work.

A network of public banks, including a central bank operated as a public utility, could similarly fund a U.S. Green New Deal—without raising taxes, driving up the federal debt or inflating prices.

Ellen Brown

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including "Web of Debt" and "The Public Bank Solution."

IN THIS ARTICLE:

alexandria ocasio-cortez debt or democracy europe federal reservegreen new deal modern monetary theory thomas picketty united kingdomyanis varoufakis

A Long War of Attrition With China

Published on

Monday, February 18, 2019

 by

TomDispatch

by Michael Klare

 6 Comments

Behind the scenes, however, most senior military and foreign policy officials in Washington view China, not Russia, as the country’s principal adversary. (Photo: Thomas Peter-Pool/Getty Images)

In his highly acclaimed 2017 book, Destined for War, Harvard professor Graham Allison assessed the likelihood that the United States and China would one day find themselves at war. Comparing the U.S.-Chinese relationship to great-power rivalries all the way back to the Peloponnesian War of the fifth century BC, he concluded that the future risk of a conflagration was substantial. Like much current analysis of U.S.-Chinese relations, however, he missed a crucial point: for all intents and purposes, the United States and China are already at war with one another. Even if their present slow-burn conflict may not produce the immediate devastation of a conventional hot war, its long-term consequences could prove no less dire.

To suggest this means reassessing our understanding of what constitutes war. From Allison’s perspective (and that of so many others in Washington and elsewhere), “peace” and “war” stand as polar opposites. One day, our soldiers are in their garrisons being trained and cleaning their weapons; the next, they are called into action and sent onto a battlefield. War, in this model, begins when the first shots are fired.

Well, think again in this new era of growing great-power struggle and competition. Today, war means so much more than military combat and can take place even as the leaders of the warring powers meet to negotiate and share dry-aged steak and whipped potatoes (as Donald Trump and Xi Jinping did at Mar-a-Lago in 2017). That is exactly where we are when it comes to Sino-American relations. Consider it war by another name, or perhaps, to bring back a long-retired term, a burning new version of a cold war.

Even before Donald Trump entered the Oval Office, the U.S. military and other branches of government were already gearing up for a long-term quasi-war, involving both growing economic and diplomatic pressure on China and a buildup of military forces along that country’s periphery. Since his arrival, such initiatives have escalated into Cold War-style combat by another name, with his administration committed to defeating China in a struggle for global economic, technological, and military supremacy.

This includes the president’s much-publicized “trade war” with China, aimed at hobbling that country’s future growth; a techno-war designed to prevent it from overtaking the U.S. in key breakthrough areas of technology; a diplomatic war intended to isolate Beijing and frustrate its grandiose plans for global outreach; a cyber war (largely hidden from public scrutiny); and a range of military measures as well. This may not be war in the traditional sense of the term, but for leaders on both sides, it has the feel of one.

Why China?

The media and many politicians continue to focus on U.S.-Russian relations, in large part because of revelations of Moscow’s meddling in the 2016 American presidential election and the ongoing Mueller investigation. Behind the scenes, however, most senior military and foreign policy officials in Washington view China, not Russia, as the country’s principal adversary. In eastern Ukraine, the Balkans, Syria, cyberspace, and in the area of nuclear weaponry, Russia does indeed pose a variety of threats to Washington’s goals and desires. Still, as an economically hobbled petro-state, it lacks the kind of might that would allow it to truly challenge this country’s status as the world’s dominant power. China is another story altogether. With its vast economy, growing technological prowess, intercontinental “Belt and Road” infrastructure project, and rapidly modernizing military, an emboldened China could someday match or even exceed U.S. power on a global scale, an outcome American elites are determined to prevent at any cost.

Washington’s fears of a rising China were on full display in January with the release of the 2019 Worldwide Threat Assessment of the U.S. Intelligence Community, a synthesis of the views of the Central Intelligence Agency and other members of that “community.” Its conclusion: “We assess that China’s leaders will try to extend the country’s global economic, political, and military reach while using China’s military capabilities and overseas infrastructure and energy investments under the Belt and Road Initiative to diminish U.S. influence.”

To counter such efforts, every branch of government is now expected to mobilize its capabilities to bolster American -- and diminish Chinese -- power. In Pentagon documents, this stance is summed up by the term “overmatch,” which translates asthe eternal preservation of American global superiority vis-à-vis China (and all other potential rivals). “The United States must retain overmatch,” the administration’s National Security Strategy insists, and preserve a “combination of capabilities in sufficient scale to prevent enemy success,” while continuing to “shape the international environment to protect our interests.”

In other words, there can never be parity between the two countries. The only acceptable status for China is as a distinctly lesser power. To ensure such an outcome, administration officials insist, the U.S. must take action on a daily basis to contain or impede its rise.

In previous epochs, as Allison makes clear in his book, this equation -- a prevailing power seeking to retain its dominant status and a rising power seeking to overcome its subordinate one -- has almost always resulted in conventional conflict. In today’s world, however, where great-power armed combat could possibly end in a nuclear exchange and mutual annihilation, direct military conflict is a distinctly unappealing option for all parties. Instead, governing elites have developed other means of warfare -- economic, technological, and covert -- to achieve such strategic objectives. Viewed this way, the United States is already in close to full combat mode with respect to China.

Off the Top of My Head

The US is Attempting to Thwart China's Progress

by John Lawrence, February 19, 2019

To put it bluntly, if China gets ahead, the US will fall behind relative to their progress. The US  is adopting a Beggar Thy Neighbor policy. In other words the US is like a person who, if they can't be successful themself, at least can see to it that no one else can succeed either. While the US has been dropping bombs, destroying real estate, families and businesses in the Middle East and elsewhere, China has been investing all over the world using Chinese workers and capital with its Belt and Road initiative. Putting workers and capital to work building infrastructure is something the US has failed to do either at home or abroad.

This arrangement is keeping China's work force fully employed while at the same time creating friends instead of enemies and making China rich by means of the return on investment from countries to whom China is loaning money. Just like banks get rich by loaning money and gathering in the interest and returns on investment, and thereby growing the economy, China is growing the world economy and making sure that all roads lead to China as they did in the old days of the Silk Road.

The US, however, is having nothing of China's Belt and Road initiative. The US, especially neocons like John Bolton, see all this economic activity fostered by China as a dire threat to the US. Who are the world's countries going to be friends with - a country that drops bombs on them and orders them around or a country that builds infrastructure and strikes up trade deals, a country which is perpetually at war or a country which is trying to build the peace, a country whose offer of friendship is strictly top down or a country which approaches other countries as equals and with respect, a country which orders other countries not to have business relationships with certain other countries or a country which is open to trade relationships all over the world?

In an accompanying article Michael Klare declares:

In his highly acclaimed 2017 book, Destined for War, Harvard professor Graham Allison assessed the likelihood that the United States and China would one day find themselves at war. Comparing the U.S.-Chinese relationship to great-power rivalries all the way back to the Peloponnesian War of the fifth century BC, he concluded that the future risk of a conflagration was substantial. Like much current analysis of U.S.-Chinese relations, however, he missed a crucial point: for all intents and purposes, the United States and China are already at war with one another. Even if their present slow-burn conflict may not produce the immediate devastation of a conventional hot war, its long-term consequences could prove no less dire.

The US is in a struggle for global economic, technological, and military supremacy because it cannot fathom living in a world where the US is not top dog and China is an underdog. The US military mindset cannot think any other way. The 2019 Worldwide Threat Assessment of the U.S. Intelligence Community concluded: “We assess that China’s leaders will try to extend the country’s global economic, political, and military reach while using China’s military capabilities and overseas infrastructure and energy investments under the Belt and Road Initiative to diminish U.S. influence.” Yes, US influence will diminish not only because of China's peace initiatives but also because of the US's ordering its allies not to do business with other countries like Iran and Russia. Through the use of sanctions the US has effectively made colonies out of countries once considered as allies, and those countries don't like it one bit.

The article continues:

To counter such efforts, every branch of government is now expected to mobilize its capabilities to bolster American -- and diminish Chinese -- power. In Pentagon documents, this stance is summed up by the term “overmatch,” which translates as the eternal preservation of American global superiority vis-à-vis China (and all other potential rivals). “The United States must retain overmatch,” the administration’s National Security Strategy insists, and preserve a “combination of capabilities in sufficient scale to prevent enemy success,” while continuing to “shape the international environment to protect our interests.”

In other words, there can never be parity between the two countries. The only acceptable status for China is as a distinctly lesser power. To ensure such an outcome, administration officials insist, the U.S. must take action on a daily basis to contain or impede its rise. ...

Second only to Apple as the world’s supplier of smartphones and a major producer of telecommunications equipment, Huawei has sought to take the lead in the race for 5G adaptation around the world. Fearing that this might give China an enormous advantage in the coming decades, the Trump administration has tried to prevent that. In what is widely described as a “tech Cold War,” it has put enormous pressure on both its Asian and European allies to bar the company from conducting business in their countries, even as it sought the arrest in Canada of Huawei’s chief financial officer, Meng Wanzhou, and her extradition to the U.S. on charges of tricking American banks into aiding Iranian firms (in violation of Washington’s sanctions on that country). Other attacks on Huawei are in the works, including a potential ban on the sales of its products in this country. Such moves are regularly described as focused on boosting the security of both the United States and its allies by preventing the Chinese government from using Huawei’s telecom networks to steal military secrets. The real reason -- barely disguised -- is simply to block China from gaining technological parity with the United States.

The US cannot conceive of any other world than a world in which one country, namely the US, is on top and all other countries are subservient to it. Just as a male chauvinist cannot conceive of any other kind of human relationship than the one in which he is unequivocally the decider and his partner must assume an inferior position with respect to him, the US cannot conceive of any other world order than the one in which it is unequivocally superior. As Nietzsche said: "The family is the smallest unit of domination." Well then, the world must be the largest unit of domination. As marriage vows used to state: the wife shall, love, honor and obey the husband." This is why wars are fought - to see who is best, who is superior, who is the world's leader, who the other countries must bow down to. Until the world's leaders redefine peace in another way, there is little hope for human civilization. As Klare states in his article, "The only way to save civilization is for the U.S. and China to declare peace and focus together on human salvation."

The Financial Secret Behind Germany’s Green Energy Revolution

by Ellen Brown, from truthdig

JAN 24, 2019|TD ORIGINALS

Wind farmer Jan Marrink poses by his wind turbines in Nordhorn, Germany. (Martin Meissner / AP)

The “Green New Deal” endorsed by Rep. Alexandria Ocasio-Cortez, D.-N.Y., and more than 40 other House members has been criticized as imposing a too-heavy burden on the rich and upper-middle-class taxpayers who will have to pay for it. However, taxing the rich is not what the Green New Deal resolution proposes. It says funding would come primarily from certain public agencies, including the U.S. Federal Reserve and “a new public bank or system of regional and specialized public banks.”

Funding through the Federal Reserve may be controversial, but establishing a national public infrastructure and development bank should be a no-brainer. The real question is why we don’t already have one, as do China, Germany and other countries that are running circles around us in infrastructure development. Many European, Asian and Latin American countries have their own national development banks, as well as belong to bilateral or multinational development institutions that are jointly owned by multiple governments. Unlike the U.S. Federal Reserve, which considers itself “independent” of government, national development banks are wholly owned by their governments and carry out public development policies.

China not only has its own China Infrastructure Bank but has established the Asian Infrastructure Investment Bank, which counts many Asian and Middle Eastern countries in its membership, including Australia, New Zealand and Saudi Arabia. Both banks are helping to fund China’s trillion-dollar “One Belt One Road” infrastructure initiative. China is so far ahead of the United States in building infrastructure that Dan Slane, a former adviser on President Donald Trump’s transition team, has warned, “If we don’t get our act together very soon, we should all be brushing up on our Mandarin.”

The leader in renewable energy, however, is Germany, called “the world’s first major renewable energy economy.” Germany has a public sector development bank called KfW (Kreditanstalt für Wiederaufbauor “Reconstruction Credit Institute”), which is even larger than the World Bank. Along with Germany’s nonprofit Sparkassen banks, KfW has largely funded the country’s green energy revolution.

Unlike private commercial banks, KfW does not have to focus on maximizing short-term profits for its shareholders while turning a blind eye to external costs, including those imposed on the environment. The bank has been free to support the energy revolution by funding major investments in renewable energy and energy efficiency. Its fossil fuel investments are close to zero. One of the key features of KfW, as with other development banks, is that much of its lending is driven in a strategic direction determined by the national government. Its key role in the green energy revolution has been played within a public policy framework under Germany’s renewable energy legislation, including policy measures that have made investment in renewables commercially attractive.

KfW is one of the world’s largest development banks, with assetstotaling $566.5 billion as of December 2017. Ironically, the initial funding for its capitalization came from the United States, through the Marshall Plan in 1948. Why didn’t we fund a similar bank for ourselves? Simply because powerful Wall Street interests did not want the competition from a government-owned bank that could make below-market loans for infrastructure and development. Major U.S. investors today prefer funding infrastructure through public-private partnerships, in which private partners can reap the profits while losses are imposed on local governments.

KfW and Germany’s Energy Revolution

Renewable energy in Germany is mainly based on wind, solar and biomass. Renewables generated 41 percent of the country’s electricity in 2017, up from just 6 percent in 2000; and public banks provided over 72 percent of the financing for this transition. In 2007-09, KfW funded all of Germany’s investment in Solar Photovoltaic. After that, Solar PV was introduced nationwide on a major scale. This is the sort of catalytic role that development banks can play—kickstarting a major structural transformation by funding and showcasing new technologies and sectors.

KfW is not only one of the biggest financial institutions but has been ranked one of the two safest banks in the world. (The other, Switzerland’s Zurich Cantonal Bank, is also publicly owned.) KfW sports triple-A ratings from all three major rating agencies—Fitch, Standard and Poor’s, and Moody’s. The bank benefits from these top ratings and the statutory guarantee of the German government, which allow it to issue bonds on very favorable terms and therefore to lend on favorable terms, backing its loans with the bonds.

KfW does not work through public-private partnerships, and it does not trade in derivatives and other complex financial products. It relies on traditional lending and grants. The borrower is responsible for loan repayment. Private investors can participate, but not as shareholders or public-private partners. Rather, they can invest in “Green Bonds,” which are as safe and liquid as other government bonds and are prized for their green earmarking. The first “Green Bond—Made by KfW” was issued in 2014 with a volume of $1.7 billion and a maturity of five years. It was the largest Green Bond ever at the time of issuance and generated so much interest that the order book rapidly grew to $3.02 billion, although the bonds paid an annual coupon of only 0.375 percent. By 2017, the issue volume of KfW Green Bonds reached $4.21 billion.

Investors benefit from the high credit and sustainability ratings of KfW, the liquidity of its bonds, and the opportunity to support climate and environmental protection. For large institutional investors with funds that exceed the government deposit insurance limit, Green Bonds are the equivalent of savings accounts—a safe place to park their money that provides a modest interest. Green Bonds also appeal to “socially responsible” investors, who have the assurance with these simple and transparent bonds that their money is going where they want it to. The bonds are financed by KfW from the proceeds of its loans, which are also in high demand due to their low interest rates, which the bank can offer because its high ratings allow it to cheaply mobilize funds from capital markets and its public policy-oriented loans qualify it for targeted subsidies.

Roosevelt’s Development Bank: The Reconstruction Finance Corporation

KfW’s role in implementing government policy parallels that of the Reconstruction Finance Corporation (RFC) in funding the New Deal in the 1930s. At that time, U.S. banks were bankrupt and incapable of financing the country’s recovery. President Franklin D. Roosevelt attempted to set up a system of 12 public “industrial banks” through the Federal Reserve, but the measure failed. Roosevelt then made an end run around his opponents by using the RFC that had been set up earlier by President Herbert Hoover, expanding it to address the nation’s financing needs.

The RFC Act of 1932 provided the RFC with capital stock of $500 million and the authority to extend credit up to $1.5 billion (subsequently increased several times). With those resources, from 1932 to 1957 the RFC loaned or invested more than $40 billion. As with KfW’s loans, its funding source was the sale of bonds, mostly to the Treasury itself. Proceeds from the loans repaid the bonds, leaving the RFC with a net profit. The RFC financed roads, bridges, dams, post offices, universities, electrical power, mortgages, farms and much more; it funded all of this while generating income for the government.

The RFC was so successful that it became America’s largest corporation and the world’s largest banking organization. Its success, however, may have been its nemesis. Without the emergencies of depression and war, it was a too-powerful competitor of the private banking establishment; and in 1957, it was disbanded under President Dwight D. Eisenhower. That’s how the  United States was left without a development bank at the same time Germany and other countries were hitting the ground running with theirs.

Today some U.S. states have infrastructure and development banks, including California, but their reach is very small. One way they could be expanded to meet state infrastructure needs would be to turn them into depositories for state and municipal revenue. Rather than lending their capital directly in a revolving fund, this would allow them to leverage their capital into 10 times that sum in loans, as all depository banks are able to do, as I’ve previously explained.

The most profitable and efficient way for national and local governments to finance public infrastructure and development is with their own banks, as the impressive track records of KfW and other national development banks have shown. The RFC showed what could be done even by a country that was technically bankrupt, simply by mobilizing its own resources through a publicly owned financial institution. We need to resurrect that public funding engine today, not only to address the national and global crises we are facing now but for the ongoing development the country needs in order to manifest its true potential.

---

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including "Web of Debt" and "The Public Bank Solution." A thirteenth book titled "The Coming Revolution in Banking" is due out soon. She also co-hosts a radio program on PRN.FM called “It’s Our Money.” Her 300+ blog articles are posted at EllenBrown.com.

Off the Top of My Head

Strong on Defense or Strong on Peace?

by John Lawrence, January 2, 2018

Republicans pride themselves on being strong on defense. Even Hillary thought she had to prove her cred by being a hawk on defense. It all backfired in Libya and other places. Instead of being strong on war, let's start out this New Year by being strong on peace. Peace is not just the absence of war. It is much more. It is building bridges, repairing bombed out walls, opting to make the world a better place for those yet born. Peace is diplomatic treaties instead of creating more instruments of war, beating the swords of the future into the plowshares of a better life for all now. Peace is creating as many allies as possible. Peace is creating a good life for everybody instead of letting the majority of the world's population, including in the US, live in poverty.

If peace were just the absence of war, that would be pretty boring. We'd be waiting for the next good war to come along so we could have some excitement. We have to get over the mindset that war and destruction is exciting but peace and peaceful endeavors are not. We should be constructive instead of destructive. There is a lot of building to do to create a better world. We need to leave fossil fuels in the ground and switch to renewables ASAP if we don't want more extreme weather - more ferocious hurricanes, more horrendous wildfires, more thousand years floods that come now every year. Rich enclaves like Miami and Fisher Island will be underwater in a few years as sea levels rise and the arctic ice sheets melt. The $250,000 admission fee to own a house on Fisher Island will make America's richest zip code a worthless undersea Atlantis.

Plastics are polluting our oceans. Sea life is ingesting them and then we eat the fish. Industrialists and corporate agriculture are spraying crops with copious amounts of pesticides and herbicides. They are putting profits ahead of people. GMOs are creating frankenfoods that won't be killed by Monsanto's weedkillers which then kill everything around them getting on the plants that we then eat.

More than 40 million Americans live in poverty according to the US census. Philip Alston, a New York University law and human rights professor, led a UN study traveling across US. The group went to Puerto Rico and Washington, D.C. Alabama, California, Georgia, West Virginia were among the states they visited. "Most Americans don't care about it. They have bought the line peddled by conservative groups that poor people deserve what they are getting," Alston, the UN special rapporteur on extreme poverty and human rights, told CNN. The US, unlike the rest of the developed world, doesn't believe in human rights when it comes to lifting people out of poverty.

The report notes that the US has highest child mortality rate of 20 rich countries (OPEC comparison). It also has among the highest child poverty rates in the developed world, at 21%. It also considered obesity rates, income inequality and incarceration rates. The US is a leading example of all the above.