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.