“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Sunday, February 08, 2009

And I got an A + in Macro and Onanism!

The attack on the stimulus plan is unsurprising, coming as it does from the usual redoubts of the gated community wealthy – the NYT business page, Rush Limbaugh, the Democratic and Republican parties.

The plan is one wing of the Obama schizophrenia. On the one hand, we are given a stimulus supposedly big enough to combat a recession that will last at least the year. On the other hand, we are given a bank plan tacitly premised on the idea that the financial section will be returning to its old glory any day now, thanks to the splendor of the self-adjusting market.

The little thread that ties these things together is the housing market. It is as if the media sphere decided to throw Marx a surprise party: in his honor, they are demonstrating just what commodity fetishism means. The housing market has been curiously disembedded it real location in the world of social labor, and transported into the never land of econospeak and graphs. In the never land, there is never and there will never be any mention of the one overriding fact about the housing market, which is that houses are actually bought by people.

As I have pointed out again and again, like an erotomaniac compulsively returning to the habit of masturbating in public when released from his straight jacket, this is what happens when inequality reaches a tipping point. The half baked neo-liberal theory upon which the American economy has stood for three decades supposes that certain social goods (retirement, healthcare, education, etc.) can be ultimately provided for in the private sphere. How is this accomplished? By making the average household not only a unit of production, but also a source of investment. Thus, X and Y, the double wage-earners in the household, will enjoy a progressively better lifestyle even if their combined earnings stagnate or advance slowly, because they will have socked away money in their 401(k)s and IRAs and they will have invested in an asset, a house, that will bring them a healthy return even as they live in it. It is a bubble gum vision of the good life, worthy less of the American Economic Journal than Teen Beat magazine.

The flaw, of course, is that income counts. It counts so much that if you freeze it or slow down its increase in order to feed the wealthy (who, after all, are investors like all of us! It is the solidarity of capital, here, one for all, or – getting real, heh heh heh – all for one), who, pray tell, are X and Y going to sell their asset to? Another X and Y, in basically the same circumstances? Any child can tell you that no matter how often two poor shits sells a commodity back and forth to each other at higher and higher prices, which they borrow, the end result is not going to be that each gets infocommercial wealthy – it is going to be that each gets financially broken. The commodity didn’t do that. What did that has been doing that for a long time. It is called your Government. Plus your private sector. Check it out. Open your eyes. The Fed has openly tried to batter the bargaining position of labor for years. The commerce department, for decades, has held seminars for businesses about how they can move to labor cheap locales. The industrial policy of the U.S. government – which claims it has no industrial policy – has been directed, for years, at keeping incomes down and credit lines at high interest open.

The houses are just the cargo in the zona.

This story is not complex. Any junkie can rehearse that narrative arc.

Thus, it rather breaks my heart to see how the debate on the stimulus, among the liberal bloggers and pundits, so quickly turned into a debate about who could make smarter references to the economist’s abracadabra. This is what happens when your liberal pundicrats were brought up on debating and going to a good college. Matters of fact get entangled with the meritocrats favorite thing: taking a test. Having been malformed by an educational system that identifies thinking with test scores, the meritocrats, in Pavlovian synch, all salivated when the right attacked with “economics”, and they are busy having fun chasing fallacies off the cliff in some distant part of the world. Nothing, absolutely nothing, will be gained by showing that Krugman is right and Fama is wrong. Or rather, much will be lost. For instance, the opportunity to point out that the “economist’s” standard model of the U.S. economy is a fantasy that hasn’t been true since 1929. That, in fact, if full employment really meant full employment by the private sector, the Great Depression never ended – for the private sector can not and will not and will never employ even 85 percent of the employable population in any developed state, and in the U.S. in particular, is doing good when it employs 80 percent of the population. “Fiscal policy” isn’t some newfangled government toy, but the structure that has held up the American economy for seventy years. It is crazy to talk about “crowding out”, or “Ricardian equivalence”, before understanding the composition of the target economy. An economic theory that technically disallows the economic reality all around us for the last sixty years is, well, did I mention public masturbation already?

What needs to be done will be done too late. Cut the juice to the banks. Capitalize a national back for reindustrialization, and one to extend consumer credit at @ 7 points higher than the Fed loans money to banks. Pump money into the states. Massive command and control interventions by the government to coordinate at least two major changes in the national economy – the energy sector and transportation. Politics, in other words – politics should play the major role in our economy at the moment. Not “the market”, god help us.

16 comments:

Anonymous said...

Great post. No comment about the sensation over Jessica Simpson's (and Rihanna) "mom jeans"? ;)

roger said...

Hey, this is the Britneyology site. For Jessica, you have to go to a Jessicasimpsonology site. Don't be mislead by simpsonology sites, which are dedicated to Bart, Lisa and Homer.

P.M.Lawrence said...

"...the private sector can not and will not and will never employ even 85 percent of the employable population in any developed state..."

Maybe you didn't notice, but I already pointed out the fallacy in that assertion when you made it in an earlier post - unless, of course, that qualification "developed" actually means with all the damaging processes I described.

roger said...

Mr.Lawrence, you outlined a scenario which, in fact, has never been instantiated. Now, who knows, maybe your model will work. But a model is not a historical fact - Verne could describe a journey to the moon, but that doesn't mean that Parisians of 1870 were advised to buy their tickets.

In fact, the few experiments in radical privatization have ended disastrously. We already know what happened in Pinochet's Chile, which is being eerily reproduced by the U.S. Here's a nice litle article about New Zealand, re its eighties thatcherism.
http://www.commondreams.org/views/081500-106.htm

P.M.Lawrence said...

Roger, your criticism would be entirely valid if you had only written "...the private sector has never employed even 85 percent of the employable population in any developed state..." - but you did not, you made a blanket assertion about the entire range of possibilities. That is, historical facts were not at issue, but a superset, the range of possibilities. And to explore those, we must look further. This is not to assert that the models necessarily would work out, that they are proven facts, but that there simply is not sufficient evidence for that blunt assertion you made. Essentially, that too relies on a model - the model that says tomorrow's weather will be like today's.

roger said...

Fair enough, mr. L.

Anonymous said...

LI, and Mr. PML, I have a question. Please pardon if it is clueless, and go ahead and set me straight.
This past Saturday I was reading Krugman's column in the NYT, and couldn't help but be struck by a line he wrote about how people are are not spending but rather saving, which is a good thing. My question is not about the validity or economic truth to this statement or to castigate Krugman.

But in that very same issue of the NYT, they had a banner headline about horrific unemployment figures. I'm no economic Nobel Prize winner nor can I come up with economic models that would somehow resolve it all, I rather wonder about the mind-set that comes up with such models, while ignoring the news on their own newspaper.
It is hard to save when you are out of work and starving, living hand to mouth. Economic truism?
But perhaps that is not important in the economic models with their faith in the private sector, a model for which the inequality - the mangle of inequality - does not really count, it doesn't exist or is just a part of a model.
What model walks down those runways, dressed in what designer clothes?

Amie

northanger said...

did i mention einstein's eclipse was on cable recently? so i was surprised, clicking through Mr Lawrence's link & tracking down Whitehead's quote about tragedy & "remorseless working of things", to read:

The effect of Greek dramatic literature was many-sided so far as concerns the various ways in which it indirectly affected medieval thought. The pilgrim fathers of the scientific imagination as it exists today are the great tragedians of ancient Athens, Aeschylus, Sophocles, Euripides. Their vision of fate, remorseless and indifferent, urging a tragic incident to its inevitable issue, is the vision possessed by science. Fate in Greek Tragedy becomes the order of nature in modern thought. The absorbing interest in the particular heroic incidents, as an example and a verification of the workings of fate, reappears in our epoch as concentration of interest on the crucial experiments. It was my good fortune to be present at the meeting of the Royal Society in London when the Astronomer Royal for England announced that the photographic plates of the famous eclipse, as measured by his colleagues in Greenwich Observatory, had verified the prediction of Einstein that rays of light are bent as they pass in the neighbourhood of the sun. The whole atmosphere of tense interest was exactly that of the Greek drama: we were the chorus commenting on the decree of destiny as disclosed in the development of a supreme incident. There was dramatic quality in the very staging:—the traditional ceremonial, and in the background the picture of Newton to remind us that the greatest of scientific generalisations was now, after more than two centuries, to receive its first modification. Nor was the personal interest wanting: a great adventure in thought had at length come safe to shore.

Let me here remind you that the essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things. This inevitableness of destiny can only be illustrated in terms of human life by incidents which in fact involve unhappiness. For it is only by them that the futility of escape can be made evident in the drama. This remorseless inevitableness is what pervades scientific thought. The laws of physics are the decrees of fate.

The conception of the moral order in the Greek plays was certainly not a discovery of the dramatists. It must have passed into the literary tradition from the general serious opinion of the times. But in finding this magnificent expression, it thereby deepened the stream of thought from which it arose. The spectacle of a moral order was impressed upon the imagination of classical civilisation.


AQ 529 = REBUTTAL TO THE INVISIBLE HAND (AQ-457 THE TRAGEDY OF THE COMMONS {via}) = THE AIR OR SONG, UNDER THE TEXT (AQ-398 THE PORTABLE KRISTEVA, AQ-488 LE MYSTÈRE DANS LES LETTRES, AQ-398 THE PORTABLE KRISTEVA).

AQ 298 = A FAREWELL TO ALMS = LINGUISTIC SIGN (AQ-315 THE SEMIOTIC CHORA, AQ-398 THE PORTABLE KRISTEVA).

AQ 1355 = TODAY'S UNEMPLOYMENT AND SOME OF THE CRACKS RATIONAL ECONOMICS FALLS THROUGH (AQ-457 THE TRAGEDY OF THE COMMONS) = DAILY MONOTONY OF BREAD, LEAVENED BY MODEST AMOUNTS OF BEEF, MUTTON, CHEESE AND BEER (Gregory Clark, 2007, AQ-935 A FAREWELL TO ALMS: A BRIEF ECONOMIC HISTORY OF THE WORLD; AQ-397 MONEY-MAKING MUTANTS, AQ-1196 INDUSTRIAL REVOLUTION: SURVIVAL OF THE RICHEST, NOT THE FITTEST) = HOLY TEARS, HOLY BLOOD: WOMEN, CATHOLICISM, AND THE CULTURE OF SUFFERING IN FRANCE (Burton; AQ-393 HOLY TEARS, HOLY BLOOD) = ROBERTO CALASSO, IN THE RUINS OF KASCH, ALLUDES TO A MARVELOUS WORD - INTERSIGNE (AQ-557 THE POINT OUTSIDE THE PAINTING).

northanger said...

AQ 577 = REMORSELESS WORKING OF THINGS = THE POSSIBILITY OF ENUNCIATION = THE SUBALTERN IN BOLAND'S POETRY.

AQ 242 = ERZEUGUNGEN = APODICTICITY = SUBJECT-EFFECT (AQ-238 SUBJECT-AFFECT, AQ-238 SPLINE OBJECT).

AQ 284 = EINSATZPUNKT = LA PETITE FADETTE (AQ-232 DE S ENSAUVER, AQ-232 AU PIED DU MUR) = MAKING A DIFFERENCE = WONDERFUL YEAR.

AQ 409 = URSPRUNGSSETZUNG = THE CENTER OF MODERNISM = THE MASTER AND MARGERITA.

roger said...

Amie, it is all aggregate-land to them. Which is why I found the arguments about the stimulus so sickening – fought on a plane that is pitched, supposedly, high above us by the economists. We are just the economy. Amateurs.

Well, I think that is bull shit. Aux armes, amateurs!

And speaking of aggregate savers, the NYT has a nice article about being in the maw of the beast this morning, Peanut Case Shows Holes in Safety Net.”
The beast has peanut-y breath:

But its yellow-brick walls hid the array of poor work conditions and safety flaws, said employees, who lost their jobs when the plant closed on Jan. 16.
Many of the hourly workers earned only minimum wage and had gone years without a raise. Frederic McClendon, 31, a shift supervisor, reached $12 an hour last year but still could not afford health insurance for his two boys, who live in a weather-beaten trailer. “If you pay your workers, you get the best out of them,” Mr. McClendon said. “If you don’t, you don’t.”
Using temporary workers also saved money, said Mr. Hardrick, the assistant manager, “but there was a lot of retraining going on.”
After Canadian officials in April found metal shavings in peanuts produced by the plant, a new manager handed out raises, stepped up cleaning and imposed tighter safety controls.”

Anonymous said...

"The housing market has been curiously disembedded it real location in the world of social labor, and transported into the never land of econospeak and graphs. In the never land, there is never and there will never be any mention of the one overriding fact about the housing market, which is that houses are actually bought by people. " Sort of the same flaw as in the arguments about 'transgession.'

Chuckie K

roger said...

Mr. K, you'll have to be a little less esoteric, man. Hey, I do the esoterism on this site! I don't really see any analogy whatsoever.

P.M.Lawrence said...

Amie, I can only suggest that the mind set comes from the process of abstraction, discarding what is inessential for (what is thought to be) the problem at hand so as to highlight the essential and make it easier to handle. It is like the captain of a ship in a storm confining his attention to the helm and the pumps and the rocks before him, while leaving the crewmen to hang on for themselves while the lieutenant attends to getting them to their posts and the engineer deals with the engines. From sheer concentration they may each forget to change their priorities once the ship is actually foundering or being wrecked.

Anonymous said...

The analogy would be Concrete housing:'economy'::specific actions aginst 'X':'transgression.' The generalized category of 'transgression' does not exist any more than the generalized category of 'economy' does. They both transfer attention from the concrete needs and activities of people to irrelevant self-contained 'structures' and 'systems.'

Totally unconected this just published piece of Britneyology, pardon me, Bernhardology: the book about his literary prizes, "zeigt Bernhard nicht als verbitterten, Galle spuckenden Schriftsteller, es zeigt ihn auch ohne seine oft unerträglich penetrant zur Schau gestellte Eitelkeit und Überheblichkeit, sondern – und das macht das Buch lesenswert – als erstaunlich selbstironischen Menschen und launigen Erzähler." I suppose now someone is going to hav to read it just to see if either take has any textaul basis.

Chuckie K

roger said...

Mr. CK, Interesting argument, but - I would argue - a misplaced focus. Housing prices exist - but they exist as symptoms of a deeper level in the economy, the disposable wealth of the producers. In the same way, transgression, as a strategy, has an ontological status like, uh, the Capablanca endgame. Now, if you were to chase me around the block with a meat cleaver, forcing me to declare for an ontology, I'd probably opt for Quine's idea of event zones and have done with it, but I'm a polite guy and and am fine with the notion that transgression insists - it doesn't exist. It is a strategy that refers to certain prevelant sanctions, and those things are discovered empirically - Sade, for instance, could call upon the empirical evidence of the prison cell he inhabited, or the lettre de cachet that put him there. But its social meaning - like revolution, another insistent term - is doxic - that is, you cannot decompose it into a list of properties that you then add together.

Anonymous said...

I wouldn't say that there are properties to decompose and recompose. I would say there are no properties.

for me the question is who does what with and to whom for what purposes and with what outcomes.

If I had to pursue the reasoning, I suppose 'prices' belong to the level of 'economy.' Just as the 'economy' provides someone a reason to take his job away from the guy who lives behind me, 'prices' are a reason for them to take his home away from him.

Rather than attempt to reason, I'll just digress. I thought de Sade was just fictionalizing astyle of aristcratic life well-known and widespread over the preceding millenium. More nostalgic than transgressive.

Chuckie K