January 10, 2015

Weekend Economists Hail to the King January 9-11, 2015

IN MEMORY ON THE 80TH ANNIVERSARY OF HIS BIRTH, WEE DEDICATES THIS WEEKEND TO REMEMBERING AND CELEBRATING ELVIS PRESLEY.

January 9, 2015

Great Lakes Ice Coverage Update

Last year (winter 2013-2014) the Great Lakes were 92% frozen over...the greatest coverage since 1979...normal coverage is 33%...

Icebreaking operations begin on Great Lakes

Ice cover steadily expands on Great Lakes, with 14.2% coverage, up from 5.65% coverage on Jan. 1

January 4, 2015

Speaker of the House Election January 6: Procedure

WHO SENT ME THIS INFORMATION? MY FUNDIE-RELIGIOUS-WHACKO TEA PARTY AUNT.

HAVE YOU EVER HAD SUCH INFORMATION FROM THE DEMOCRATIC PARTY? WHY NOT?

THINK ABOUT IT. WE HAVE TO DO BETTER. FOLLOWING THE TEA PARTY'S LEAD IN MASTERING THE LEVERS OF POWER WOULD BE A GOOD PLACE TO START.

THE SECOND STEP WOULD BE FORMING STRATEGIC ALLIANCES WITH THE TEA PARTY ON ISSUES WE BOTH SUPPORT: SOCIAL SECURITY, MEDICARE, ETC.

January 4, 2015

Speaker of the House Election January 6: Procedure

The Election of the Speaker: The Procedural Facts



Timing.

By law (2 USC Sec. 25), the Speaker must be sworn prior to any other business. As a result, the election takes place at the start of each new Congress, as soon as a quorum has been established. For the upcoming 114th Congress, it is scheduled to occur on Tuesday, January 6, 2015.

Process.

The Clerk of the House accepts nominations from the floor. A member of each Leadership—the respective conference and caucus chairmen—nominates one candidate from each party.

Reps. John Boehner (R-OH) and Nancy Pelosi (D-CA) will receive these party nominations in the 114th Congress. The Clerk then asks the rest of the House whether there are any further nominations. Once the slate of nominees is set, the Clerk begins the roll call vote which proceeds in alphabetic order by surname. When called upon, members respond orally with their vote (viva voce).

Required Vote Threshold.

According to the precedents of the House, an absolute majority of “the total number of votes cast for a person by name” is required to elect a Speaker.

Abstentions, “present” votes, and of course, missed votes are not counted towards the total number of votes cast for a person.

For example, voting present lowers the total number of votes needed for a nominee to achieve a majority. If the full House is sworn in and voting, a majority of the full membership is 218. (Rep. Michael Grimm (R-NY) will not be sworn in for the 114th Congress as a result of his resignation, but a majority of the full members is still 218.)

Again, a plurality is not sufficient to be chosen Speaker. If a majority is not obtained on the first ballot, there are subsequent ballots until a winner receives enough votes.

No Voting Restrictions. There are no restrictions for whom Members may vote. They do not have to vote for the nominees or even a Member of the House of Representatives (the Constitution does not require the Speaker to be a Member, although it always has).

For instance, in 2013, Rep. Boehner received 220 votes, Rep. Pelosi received 192 votes, while Reps. Justin Amash (R-MI), Eric Cantor (R-VA), Jim Cooper (D-TN), John Dingell (D-MI), Jim Jordan (R-OH), Raul Labrador (R-ID), Rep. John Lewis (D-GA), and non-Members Colin Powell, David Walker, and former Rep. Allen West all received votes.

Potential Impact of Democrats.

Since they comprise the Majority party, as long as Republicans vote for some candidate by name (i.e., not missing the vote or voting present), the Democrat nominee cannot be elected without GOP votes simply because there are multiple candidates receiving votes.

And in the unlikely event that a large group of Republicans missed the vote or voted present, the result would be quickly reversed by the full Republican Majority by vacating the Speaker chair and starting anew. There is no way that Rep. Pelosi will be the Speaker in the 114th Congress without Republican votes.

Potential Impact of Republican Dissenters.

A sufficiently large block of Republicans—29 Members with the current political composition of the House (246 GOP-188 Democrats)—can prevent their party’s nominee from achieving the necessary majority to be elected Speaker.

For instance, in 1923, the progressive wing of the Republican Party blocked a Republican from being Speaker until some of their procedural demands were adopted. This occurred over three days and nine different ballots. Similarly the House has seen lengthier delays in electing the Speaker. In 1849, the House required over 59 ballots and 19 days to elect a Speaker. In 1856, more than 129 ballots were required.


WHO SENT ME THIS INFORMATION? MY FUNDIE-RELIGIOUS-WHACKO TEA PARTY AUNT.

HAVE YOU EVER HAD SUCH INFORMATION FROM THE DEMOCRATIC PARTY? WHY NOT?

THINK ABOUT IT. WE HAVE TO DO BETTER. FOLLOWING THE TEA PARTY'S LEAD IN MASTERING THE LEVERS OF POWER WOULD BE A GOOD PLACE TO START.

THE SECOND STEP WOULD BE FORMING STRATEGIC ALLIANCES WITH THE TEA PARTY ON ISSUES WE BOTH SUPPORT: SOCIAL SECURITY, MEDICARE, ETC.

January 4, 2015

Island Community in Maine Creates Worker-Owned Cooperative to Retain Local Businesses and Jobs

http://www.cdi.coop/forming-of-iec-in-maine/

6/17/2014

Contact:

Rob Brown, Director, Cooperative Development Institute’s Business Ownership Solutions program, 207-233-2987, rbrown@cdi.coop

Island Community in Maine Creates Worker-Owned Cooperative to Retain Local Businesses and Jobs

Deer Isle and Stonington, ME, June 17, 2014–Employees of three rural Maine businesses–Burnt Cove Market, V&S Variety and Pharmacy, and The Galley–are now the owners. All of them.

By forming the Island Employee Cooperative, Inc. (IEC), the largest worker cooperative in Maine and one of the larger worker co-ops in the United States, the employees were able to purchase the businesses from retiring owners Vern and Sandra Seile. Combined, the three businesses are one of the island’s largest employers and provide the community with a full array of groceries, hardware, prescription drugs, pharmacy items, craft supplies, and other goods and services.

The employees were concerned when word first circulated that the Seile’s were thinking about selling the stores and retiring. Potential buyers who were not part of the community would doubtfully have maintained the same level of jobs and services, and other employment options on the island are limited.

As a result, last summer, the Seile’s and the employees began meeting with the Independent Retailers Shared Services Cooperative (IRSSC), a purchasing cooperative of independent grocers in New England, and the Cooperative Development Institute (CDI), a nonprofit group that provides technical assistance to all types of cooperative businesses. These conversations explored the idea of transferring ownership of the companies over to the workers.

All agreed this was a win-win option. The employees began to work with IRSSC, CDI, Specialized Accounting Services and other advisors for nearly a year to create the worker cooperative, secure financing, purchase the stores, and ensure their livelihood while keeping ownership and profits local.

Vern Seile said he and his wife, Sandra, “were pleased that we were able to help the employees purchase the stores that Sandra and I have built over the last 43 years. It’s our way of saying thank you to them and our customers for their support.”

Now that they own their jobs, IEC president Alan White said, “This is a once in a lifetime opportunity. Many of us have worked in these stores for decades and never imagined this possibility. We know we have a lot to learn and a lot of work to do to be successful, but success means we will really achieve the American dream – economic security and building wealth through ownership, both for our families and our community.”

In a worker co-op, each worker-owner has one (and only one) share in the corporation and one vote in its governance. Co-ops typically get their start when workers band together to launch a new business. Conversions from conventional corporations are much less common, especially ones of the size and scope of the IEC.

“The IRSSC serves smaller, independent grocers and retailers around New England,” says Mark Sprackland, IRSSC Executive Director, “and we hope that this is only the first of many locally-owned and operated co-ops that we can help form in communities focused on sustainable growth.”

People across the country have been trying to figure out the best way to assist business owners who want to consider conversion to employee ownership, either as a growth strategy or as a retirement strategy,” said Rob Brown, Director of CDI’s Business Ownership Solutions program. “In many ways this deal provides the model, and we look forward to working with the IEC into the future to ensure their success.”

Maine-based CEI and the Cooperative Fund of New England, two Community Development Finance Institutions (CDFIs), organized the financing to buy the businesses. Without these funds, the workers’ dreams of buying the stores and keeping them local would have remained just that.

“This financial transaction represents the best kind of collaboration to build wealth in Maine’s rural communities,” said CEI Loan and Investment Officer, Cole Palmer. “CEI was tremendously excited to help the IEC realize its goal to purchase these three businesses.

“CFNE has worked with cooperatives since 1975 and was able to contribute expertise to the lending process. “We’re proud to commit to this very important worker-cooperative conversion, which preserves local ownership of these businesses and retains 62 essential jobs in the communities,” said Gloria LaBrecque, Northeast Loan and Outreach Officer with CFNE. “We congratulate the worker-owners of the IEC on this milestone achievement.”

Now that the employees own the businesses, they are excited to have a say in how they are run and a share in the profits they generate. As Mr. Seile said, “Now it’s their turn build on and improve what we have done.”

Independent Retailers Shared Services Cooperative
Contact: Mark Sprackland, Executive Director
ms51@comcast.net, 603-642-6911 office, 603-706-0868 cell

Cooperative Development Institute
We make democratic ownership work for everyone.
Contact: Rob Brown, Program Director, Business Ownership Solutions
www.cdi.coop, rbrown@cdi.coop, 207-233-2987, Northport ME

CEI
Promoting sustainable economic growth in rural communities since 1977.
1-207-882-7552 www.ceimaine.org
Contact: Liz Rogers, SVP, Marketing & Communications
erogers@ceimaine.org 207-632-7693, Portland, ME

Cooperative Fund of New England
A socially responsible lending organization and investment option, supporting cooperatives since 1975.
1-800-818-7833 www.cooperativefund.org
Contact: Gloria J. LaBrecque, Northeast Loan and Outreach Officer
gloria@coopfund.coop 207-272-2296, Portland, ME
This entry was posted in Business Ownership Solutions News, CDI News and tagged business, business solutions, buy-outs, CEI, CFNE, co-ops, cooperatives, ISRCC, maine, worker co-ops, worker cooperatives, worker ownership, worker-owners, workers. Bookmark the permalink.

January 3, 2015

Tell no-one: A century of secret deals between the NSA and the telecom industry

http://media.ccc.de/browse/congress/2014/31c3_-_6600_-_en_-_saal_2_-_201412281245_-_tell_no-one_-_james_bamford.html#video&t=3758

http://ccc2.mirror.xt0.org/congress/2014/h264-hd-web/31c3-6600-en-Tell_no-one_hd.mp4



REVELATIONS ON HOW THE NSA DOESN'T PROTECT US FROM ANYTHING...

January 3, 2015

Political Aspects of Full Employment1 by Michal Kalecki

http://mrzine.monthlyreview.org/2010/kalecki220510.html

PART 1

1. A solid majority of economists is now of the opinion that, even in a capitalist system, full employment may be secured by a government spending programme, provided there is in existence adequate plan to employ all existing labour power, and provided adequate supplies of necessary foreign raw-materials may be obtained in exchange for exports.

If the government undertakes public investment (e.g. builds schools, hospitals, and highways) or subsidizes mass consumption (by family allowances, reduction of indirect taxation, or subsidies to keep down the prices of necessities), and if, moreover, this expenditure is financed by borrowing and not by taxation (which could affect adversely private investment and consumption), the effective demand for goods and services may be increased up to a point where full employment is achieved. Such government expenditure increases employment, be it noted, not only directly but indirectly as well, since the higher incomes caused by it result in a secondary increase in demand for consumer and investment goods.

2. It may be asked where the public will get the money to lend to the government if they do not curtail their investment and consumption. To understand this process it is best, I think, to imagine for a moment that the government pays its suppliers in government securities. The suppliers will, in general, not retain these securities but put them into circulation while buying other goods and services, and so on, until finally these securities will reach persons or firms which retain them as interest-yielding assets. In any period of time the total increase in government securities in the possession (transitory or final) of persons and firms will be equal to the goods and services sold to the government. Thus what the economy lends to the government are goods and services whose production is 'financed' by government securities. In reality the government pays for the services, not in securities, but in cash, but it simultaneously issues securities and so drains the cash off; and this is equivalent to the imaginary process described above.

What happens, however, if the public is unwilling to absorb all the increase in government securities? It will offer them finally to banks to get cash (notes or deposits) in exchange. If the banks accept these offers, the rate of interest will be maintained. If not, the prices of securities will fall, which means a rise in the rate of interest, and this will encourage the public to hold more securities in relation to deposits. It follows that the rate of interest depends on banking policy, in particular on that of the central bank. If this policy aims at maintaining the rate of interest at a certain level, that may be easily achieved, however large the amount of government borrowing. Such was and is the position in the present war. In spite of astronomical budget deficits, the rate of interest has shown no rise since the beginning of 1940.

3. It may be objected that government expenditure financed by borrowing will cause inflation. To this it may be replied that the effective demand created by the government acts like any other increase in demand. If labour, plants, and foreign raw materials are in ample supply, the increase in demand is met by an increase in production. But if the point of full employment of resources is reached and effective demand continues to increase, prices will rise so as to equilibrate the demand for and the supply of goods and services. (In the state of over-employment of resources such as we witness at present in the war economy, an inflationary rise in prices has been avoided only to the extent to which effective demand for consumer goods has been curtailed by rationing and direct taxation.) It follows that if the government intervention aims at achieving full employment but stops short of increasing effective demand over the full employment mark, there is no need to be afraid of inflation

PART 2

1. The above is a very crude and incomplete statement of the economic doctrine of full employment. But it is, I think, sufficient to acquaint the reader with the essence of the doctrine and so enable him to follow the subsequent discussion of the political problems involved in the achievement of full employment.

In should be first stated that, although most economists are now agreed that full employment may be achieved by government spending, this was by no means the case even in the recent past. Among the opposers of this doctrine there were (and still are) prominent so-called 'economic experts' closely connected with banking and industry. This suggests that there is a political background in the opposition to the full employment doctrine, even though the arguments advanced are economic. That is not to say that people who advance them do not believe in their economics, poor though this is. But obstinate ignorance is usually a manifestation of underlying political motives.

There are, however, even more direct indications that a first-class political issue is at stake here. In the great depression in the 1930s, big business consistently opposed experiments for increasing employment by government spending in all countries, except Nazi Germany. This was to be clearly seen in the USA (opposition to the New Deal), in France (the Blum experiment), and in Germany before Hitler. The attitude is not easy to explain. Clearly, higher output and employment benefit not only workers but entrepreneurs as well, because the latter's profits rise. And the policy of full employment outlined above does not encroach upon profits because it does not involve any additional taxation. The entrepreneurs in the slump are longing for a boom; why do they not gladly accept the synthetic boom which the government is able to offer them? It is this difficult and fascinating question with which we intend to deal in this article.

The reasons for the opposition of the 'industrial leaders' to full employment achieved by government spending may be subdivided into three categories: (i) dislike of government interference in the problem of employment as such; (ii) dislike of the direction of government spending (public investment and subsidizing consumption); (iii) dislike of the social and political changes resulting from the maintenance of full employment. We shall examine each of these three categories of objections to the government expansion policy in detail.

2. We shall deal first with the reluctance of the 'captains of industry' to accept government intervention in the matter of employment. Every widening of state activity is looked upon by business with suspicion, but the creation of employment by government spending has a special aspect which makes the opposition particularly intense. Under a laissez-faire system the level of employment depends to a great extent on the so-called state of confidence. If this deteriorates, private investment declines, which results in a fall of output and employment (both directly and through the secondary effect of the fall in incomes upon consumption and investment). This gives the capitalists a powerful indirect control over government policy: everything which may shake the state of confidence must be carefully avoided because it would cause an economic crisis. But once the government learns the trick of increasing employment by its own purchases, this powerful controlling device loses its effectiveness. Hence budget deficits necessary to carry out government intervention must be regarded as perilous. The social function of the doctrine of 'sound finance' is to make the level of employment dependent on the state of confidence.

3. The dislike of business leaders for a government spending policy grows even more acute when they come to consider the objects on which the money would be spent: public investment and subsidizing mass consumption.

The economic principles of government intervention require that public investment should be confined to objects which do not compete with the equipment of private business (e.g. hospitals, schools, highways). Otherwise the profitability of private investment might be impaired, and the positive effect of public investment upon employment offset, by the negative effect of the decline in private investment. This conception suits the businessmen very well. But the scope for public investment of this type is rather narrow, and there is a danger that the government, in pursuing this policy, may eventually be tempted to nationalize transport or public utilities so as to gain a new sphere for investment.3

One might therefore expect business leaders and their experts to be more in favour of subsidising mass consumption (by means of family allowances, subsidies to keep down the prices of necessities, etc.) than of public investment; for by subsidizing consumption the government would not be embarking on any sort of enterprise. In practice, however, this is not the case. Indeed, subsidizing mass consumption is much more violently opposed by these experts than public investment. For here a moral principle of the highest importance is at stake. The fundamentals of capitalist ethics require that 'you shall earn your bread in sweat' -- unless you happen to have private means.

4. We have considered the political reasons for the opposition to the policy of creating employment by government spending. But even if this opposition were overcome -- as it may well be under the pressure of the masses -- the maintenance of full employment would cause social and political changes which would give a new impetus to the opposition of the business leaders. Indeed, under a regime of permanent full employment, the 'sack' would cease to play its role as a 'disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire, and even the rise in wage rates resulting from the stronger bargaining power of the workers is less likely to reduce profits than to increase prices, and thus adversely affects only the rentier interests. But 'discipline in the factories' and 'political stability' are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the 'normal' capitalist system.

PART 3

1. One of the important functions of fascism, as typified by the Nazi system, was to remove capitalist objections to full employment.

The dislike of government spending policy as such is overcome under fascism by the fact that the state machinery is under the direct control of a partnership of big business with fascism. The necessity for the myth of 'sound finance', which served to prevent the government from offsetting a confidence crisis by spending, is removed. In a democracy, one does not know what the next government will be like. Under fascism there is no next government.

The dislike of government spending, whether on public investment or consumption, is overcome by concentrating government expenditure on armaments. Finally, 'discipline in the factories' and 'political stability' under full employment are maintained by the 'new order', which ranges from suppression of the trade unions to the concentration camp. Political pressure replaces the economic pressure of unemployment.

2. The fact that armaments are the backbone of the policy of fascist full employment has a profound influence upon that policy's economic character. Large-scale armaments are inseparable from the expansion of the armed forces and the preparation of plans for a war of conquest. They also induce competitive rearmament of other countries. This causes the main aim of spending to shift gradually from full employment to securing the maximum effect of rearmament. As a result, employment becomes 'over-full'. Not only is unemployment abolished, but an acute scarcity of labour prevails. Bottlenecks arise in every sphere, and these must be dealt with by the creation of a number of controls. Such an economy has many features of a planned economy, and is sometimes compared, rather ignorantly, with socialism. However, this type of planning is bound to appear whenever an economy sets itself a certain high target of production in a particular sphere, when it becomes a target economy of which the armament economy is a special case. An armament economy involves in particular the curtailment of consumption as compared with that which it could have been under full employment.

The fascist system starts from the overcoming of unemployment, develops into an armament economy of scarcity, and ends inevitably in war.

PART IV

1. What will be the practical outcome of the opposition to a policy of full employment by government spending in a capitalist democracy? We shall try to answer this question on the basis of the analysis of the reasons for this opposition given in section II. We argued there that we may expect the opposition of the leaders of industry on three planes: (i) opposition on principle to government spending based on a budget deficit; (ii) opposition to this spending being directed either towards public investment -- which may foreshadow the intrusion of the state into the new spheres of economic activity -- or towards subsidizing mass consumption; (iii) opposition to maintaining full employment and not merely preventing deep and prolonged slumps.

Now it must be recognized that the stage at which 'business leaders' could afford to be opposed to any kind of government intervention to alleviate a slump is more or less past. Three factors have contributed to this: (i) very full employment during the present war; (ii) development of the economic doctrine of full employment; (iii) partly as a result of these two factors, the slogan 'Unemployment never again' is now deeply rooted in the consciousness of the masses. This position is reflected in the recent pronouncements of the 'captains of industry' and their experts. The necessity that 'something must be done in the slump' is agreed; but the fight continues, firstly, as to what should be done in the slump (i.e. what should be the direction of government intervention) and secondly, that it should be done only in the slump (i.e. merely to alleviate slumps rather than to secure permanent full employment).

2. In current discussions of these problems there emerges time and again the conception of counteracting the slump by stimulating private investment. This may be done by lowering the rate of interest, by the reduction of income tax, or by subsidizing private investment directly in this or another form. That such a scheme should be attractive to business is not surprising. The entrepreneur remains the medium through which the intervention is conducted. If he does not feel confidence in the political situation, he will not be bribed into investment. And the intervention does not involve the government either in 'playing with' (public) investment or 'wasting money' on subsidizing consumption.

It may be shown, however, that the stimulation of private investment does not provide an adequate method for preventing mass unemployment. There are two alternatives to be considered here. (i) The rate of interest or income tax (or both) is reduced sharply in the slump and increased in the boom. In this case, both the period and the amplitude of the business cycle will be reduced, but employment not only in the slump but even in the boom may be far from full, i.e. the average unemployment may be considerable, although its fluctuations will be less marked. (ii) The rate of interest or income tax is reduced in a slump but not increased in the subsequent boom. In this case the boom will last longer, but it must end in a new slump: one reduction in the rate of interest or income tax does not, of course, eliminate the forces which cause cyclical fluctuations in a capitalist economy. In the new slump it will be necessary to reduce the rate of interest or income tax again and so on. Thus in the not too remote future, the rate of interest would have to be negative and income tax would have to be replaced by an income subsidy. The same would arise if it were attempted to maintain full employment by stimulating private investment: the rate of interest and income tax would have to be reduced continuously.4

In addition to this fundamental weakness of combating unemployment by stimulating private investment, there is a practical difficulty. The reaction of the entrepreneurs to the measures described is uncertain. If the downswing is sharp, they may take a very pessimistic view of the future, and the reduction of the rate of interest or income tax may then for a long time have little or no effect upon investment, and thus upon the level of output and employment.

3. Even those who advocate stimulating private investment to counteract the slump frequently do not rely on it exclusively, but envisage that it should be associated with public investment. It looks at present as if business leaders and their experts (at least some of them) would tend to accept as a pis aller public investment financed by borrowing as a means of alleviating slumps. They seem, however, still to be consistently opposed to creating employment by subsidizing consumption and to maintaining full employment.

This state of affairs is perhaps symptomatic of the future economic regime of capitalist democracies. In the slump, either under the pressure of the masses, or even without it, public investment financed by borrowing will be undertaken to prevent large-scale unemployment. But if attempts are made to apply this method in order to maintain the high level of employment reached in the subsequent boom, strong opposition by business leaders is likely to be encountered. As has already been argued, lasting full employment is not at all to their liking. The workers would 'get out of hand' and the 'captains of industry' would be anxious to 'teach them a lesson. Moreover, the price increase in the upswing is to the disadvantage of small and big rentiers, and makes them 'boom-tired.'

In this situation a powerful alliance is likely to be formed between big business and rentier interests, and they would probably find more than one economist to declare that the situation was manifestly unsound. The pressure of all these forces, and in particular of big business -- as a rule influential in government departments -- would most probably induce the government to return to the orthodox policy of cutting down the budget deficit. A slump would follow in which government spending policy would again come into its own.

This pattern of a political business cycle is not entirely conjectural; something very similar happened in the USA in 1937-8. The breakdown of the boom in the second half of 1937 was actually due to the drastic reduction of the budget deficit. On the other hand, in the acute slump that followed the government promptly reverted to a spending policy.

The regime of the political business cycle would be an artificial restoration of the position as it existed in nineteenth-century capitalism. Full employment would be reached only at the top of the boom, but slumps would be relatively mild and short-lived.

PART V

1. Should a progressive be satisfied with a regime of the political business cycle as described in the preceding section? I think he should oppose it on two grounds: (i) that it does not assure lasting full employment; (ii) that government intervention is tied to public investment and does not embrace subsidizing consumption. What the masses now ask for is not the mitigation of slumps but their total abolition. Nor should the resulting fuller utilization of resources be applied to unwanted public investment merely in order to provide work. The government spending programme should be devoted to public investment only to the extent to which such investment is actually needed. The rest of government spending necessary to maintain full employment should be used to subsidize consumption (through family allowances, old-age pensions, reduction in indirect taxation, and subsidizing necessities). Opponents of such government spending say that the government will then have nothing to show for their money. The reply is that the counterpart of this spending will be the higher standard of living of the masses. Is not this the purpose of all economic activity?

2. 'Full employment capitalism' will, of course, have to develop new social and political institutions which will reflect the increased power of the working class. If capitalism can adjust itself to full employment, a fundamental reform will have been incorporated in it. If not, it will show itself an outmoded system which must be scrapped.

But perhaps the fight for full employment may lead to fascism? Perhaps capitalism will adjust itself to full employment in this way? This seems extremely unlikely. Fascism sprang up in Germany against a background of tremendous unemployment, and maintained itself in power through securing full employment while capitalist democracy failed to do so. The fight of the progressive forces for all employment is at the same time a way of preventing the recurrence of fascism.

NOTES

1 This article corresponds roughly to a lecture given to the Marshall Society in Cambridge in the spring of 1942.

2 Another problem of a more technical nature is that of the national debt. If full employment is maintained by government spending financed by borrowing, the national debt will continuously increase. This need not, however, involve any disturbances in output and employment, if interest on the debt is financed by an annual capital tax. The current income, after payment of capital tax, of some capitalists will be lower and of some higher than if the national debt had not increased, but their aggregate income will remain unaltered and their aggregate consumption will not be likely to change significantly. Further, the inducement to invest in fixed capital is not affected by a capital tax because it is paid on any type of wealth. Whether an amount is held in cash or government securities or invested in building a factory, the same capital tax is paid on it and thus the comparative advantage is unchanged. And if investment is financed by loans it is clearly not affected by a capital tax because if does not mean an increase in wealth of the investing entrepreneur. Thus neither capitalist consumption nor investment is affected by the rise in the national debt if interest on it is financed by an annual capital tax. See 'A Theory of Commodity, Income, and Capital Taxation'

3 It should be noted here that investment in a nationalized industry can contribute to the solution of the problem of unemployment only if it is undertaken on principles different return than private enterprise, or it must deliberately time its investment so as to mitigate from those of private enterprise. The government must be satisfied with a lower net rate of slumps.

4 A rigorous demonstration of this is given in my article to be published in Oxford Economic Papers. See 'Full Employment by Stimulating Private Investment?'


Michal Kalecki (22 June 1899 - 18 April 1970) was a Polish Marxist economist. This essay was first published in Political Quarterly in 1943; it is reproduced here for non-profit educational purposes. A shorter version of this essay was published in The Last Phase in the Transformation of Capitalism (Monthly Review Press, 1972).

January 3, 2015

The Outlook for the New Year by PAUL CRAIG ROBERTS

http://www.counterpunch.org/2014/12/31/the-outlook-for-the-new-year/


Washington has shaped 2015 to be a year of conflict. The conflict could be intense.
Washington is the cause of the conflict, which has been brewing for some time. Russia was too weak to do anything about it when the Clinton regime pushed NATO to Russia’s borders and illegally attacked Yugoslavia, breaking the country into small easily controlled pieces. Russia was also too weak to do anything about it when the George W. Bush regime withdrew from the ABM treaty and undertook to locate anti-ballistic missile bases on Russia’s borders. Washington lied to Moscow that the purpose of the ABM bases is to protect Europe from non-existent Iranian nuclear ICBMs. However, Moscow understood that the purpose of the ABM bases was to degrade Russia’s nuclear deterrent, thereby enhancing Washington’s ability to coerce Russia into agreements that compromise Russian sovereignty.

By summer 2008 Russian power had returned. On Washington’s orders, the US and Israeli trained and equipped Georgian army attacked the breakaway republic of South Ossetia during the early hours of August 8, killing Russian peacekeepers and civilian population. Units of the Russian military instantly responded and within a few hours the American trained and equipped Georgian army was routed and defeated. Georgia was in Russia’s hands again, where the province had resided during the 19th and 20th centuries. Putin should have hung Mikheil Saakashvili, the American puppet installed as president of Georgia by the Washington-instigated “Rose Revolution”, and reincorporated Georgia into the Russian Federation. Instead, in a strategic error, Russia withdrew its forces, leaving Washington’s puppet regime in place to cause future trouble for Russia. Washington is pushing hard to incorporate Georgia into NATO, thus adding more US military bases on Russia’s border. However, at the time, Moscow thought Europe to be more independent of Washington than it is and relied on good relations with Europe to keep American bases out of Georgia.

Today the Russian government no longer has any illusion that Europe is capable of an independent foreign policy. Russian President Vladimir Putin has stated publicly that Russia has learned that diplomacy with Europe is pointless, because European politicians represent Washington’s interest, not Europe’s. Foreign Minister Sergei Lavrov recently acknowledged that Europe’s Captive Nation status has made it clear to Russia that Russian goodwill gestures are unable to produce diplomatic results. With Moscow’s delusion shattered that diplomacy with the West can produce peaceful solutions, reality has set in, reinforced by the demonization of Vladimir Putin by Washington and its vassal states. Hillary Clinton called Putin the new Hitler. While Washington incorporates former constituent parts of the Russian and Soviet empires into its own empire and bombs seven countries, Washington claims that Putin is militarily aggressive and intends to reconstitute the Soviet empire. Washington arms the neo-nazi regime Obama established in Ukraine, while erroneously claiming that Putin has invaded and annexed Ukrainian provinces. All of these blatant lies are echoed repeatedly by the Western presstitutes. Not even Hitler had such a compliant media as Washington has.

Every diplomatic effort by Russia has been blocked by Washington and has come to naught. So now Russia has been forced by reality to update its military doctrine. The new doctrine approved on December 26 states that the US and NATO comprise a major military threat to the existence of Russia as a sovereign independent country. The Russian document cites Washington’s war doctrine of pre-emptive nuclear attack, deployment of anti-ballistic missiles, buildup of NATO forces, and intent to deploy weapons in space as clear indications that Washington is preparing to attack Russia. Washington is also conducting economic and political warfare against Russia, attempting to destabilize the economy with economic sanctions and attacks on the ruble. The Russian document acknowledges that Russia faces Western threats of regime change achieved through “actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, and disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia.” Foreign financed NGOs and foreign owned Russian media are tools in Washington’s hands for destabilizing Russia.

Washington’s reckless aggressive policy against Russia has resurrected the nuclear arms race. Russia is developing two new ICBM systems and in 2016 will deploy a weapons system designed to negate the US anti-ballistic missile system. In short, the evil warmongers that rule in Washington have set the world on the path to nuclear armageddon.

The Russian and Chinese governments both understand that their existence is threatened by Washington’s hegemonic ambitions. Larchmonter reports that in order to defeat Washington’s plans to marginalize both countries, the Russian and Chinese governments have decided to unify their economies into one and to conjoin their military commands. Henceforth, Russia and China move together on the economic and military fronts. The unity of the Bear and the Dragon reduces the crazed neoconservatives’ dream of “an American century” to dangerous nonsense. As Larchmonter puts it, “The US and NATO would need Michael the Archangel to defeat China-Russia, and from all signs Michael the Archangel is aligned with the Bear and its Orthodox culture. There is no weapon, no strategy, no tactic conceivable in the near future to damage either of these rising economies now that they are ‘base pairs.’”

Larchmonter sees hope in the new geopolitics created by the conjoining of Russia and China. I don’t dispute this, but if the arrogant neoconservatives realize that their hegemonic policy has created a foe over which Washington cannot prevail, they will push for a pre-emptive nuclear strike before the Russian-Chinese unified command is fully operational. To forestall a sneak attack, Russia and China should operate on full nuclear alert.

The US economy–indeed the entire Western orientated economy from Japan to Europe–is a house of cards. Since the economic downturn began seven years ago, the entirety of Western economic policy has been diverted to the support of a few over-sized banks, sovereign debt, and the US dollar. Consequently, the economies themselves and the ability of populations to cope have deteriorated. The financial markets are based on manipulation, not on fundamentals. The manipulation is untenable. With debt exploding, negative real interest rates make no sense. With real consumer incomes, real consumer credit, and real retail sales stagnant or falling, the stock market is a bubble. With Russia, China, and other countries moving away from the use of the dollar to settle international accounts, with Russia developing an alternative to the SWIFT financial network, the BRICS developing alternatives to the IMF and World Bank, and with other parts of the world developing their own credit card and Internet systems, the US dollar, along with the Japanese and European currencies that are being printed in order to support the dollar’s exchange value, could experience a dramatic drop in exchange value, which would make the import-dependent Western world dysfunctional.

In my opinion, it took the Russians and Chinese too long to comprehend the evil that has control in Washington. Therefore, both countries risk nuclear attack prior to the full operational capability of their conjoined defense. As the Western economy is a house of cards, Russia and China could collapse the Western economy before the neoconservatives can drive the world to war. As Washington’s aggression against both countries is crystal clear, Russia and China have every right to the following defensive measures. As the US and EU are conducting economic warfare against Russia, Russia could claim that by wrecking the Russian economy the West has deprived Russia of the ability to repay loans to the European banks. If this does not bring down the thinly capitalized EU banks, Russia can announce that as NATO countries are now officially recognized by Russian war doctrine as an enemy of the Russian state, Russia can no longer support NATO’s aggression against Russia by selling natural gas to NATO members. If the shutdown of much of European industry, rapidly rising rates of unemployment, and bank failures do not result in the dissolution of NATO and thus the end of the threat, the Chinese can act. The Chinese hold a very large amount of dollar-denominated financial assets. Just as the Federal Reserve’s agents, the bullion banks, dump massive shorts onto the bullion futures markets during periods of little activity in order to drive down the bullion price, China can dump the equivalent in US Treasuries of years of Quantitative Easing in a few minutes. If the Federal Reserve quickly creates dollars with which to purchase the enormous quantity of Treasuries so that the financial house of cards does not implode, the Chinese can then dump the dollars that they are paid for the bonds in the currency market. Whereas the Federal Reserve can print dollars with which to purchase the Treasuries, the Fed cannot print foreign currencies with which to buy the dollars.

The dollar would collapse, and with it the power of the Hegemon. The war would be over without a shot or missile fired.

In my view, Russia and China owe it to the world to prevent the nuclear war intended by the neoconservatives simply by replying in kind to Washington’s economic warfare. Russia and China hold all the cards. Not Washington. Russia and China should give no warning. They should just act. Indeed, instead of step by step, Russia and China could simultaneously use the counter-measures. With four US banks holding derivatives totaling many times world GDP, the financial explosion would be the equivalent to a nuclear one. The US and Europe would be finished, and the world would be saved.

Larchmonter possibly is correct. 2015 could be a very good year, but pre-emptive economic moves by Moscow and Beijing could be required. Putin’s current plan seems to be to turn away from the West, ignore the provocations, and mesh Russia’s strategic and economic interests with those of Asia. This is a humane and reasonable course of action, but it leaves the West untroubled and undistracted by its economic vulnerabilities. An untroubled West remains a grave danger not only to Russia and China but also to Americans and the entire world.



Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is How America Was Lost.

January 2, 2015

Weekend Economists Have an Epiphany! January 2-4, 2015!

I typed the right year, without mistake! I even got the month right! I've been having one of those reading jags where I read until my eyes hurt, so not screwing up simple tasks becomes a real effort.



ahem....

The 12 Days of Christmas (do you need a refresher?) run from Dec. 25th to January 5th, or 12th Night. Jan. 6 is Epiphany, also known as Three Kings Day, a holy day in the Catholic calendar:

If I am not mistaken, it is at this point that the Flight into Egypt, to escape Herod's hunt and the slaughter of all the children, is taken by Joseph's family....

January 2, 2015

Global Capitalism: December 2014 Monthly Update GOOD NEWS! Richard D Wolff

In 1.5 hours, all you need to know about economics, politics, history, to understand TODAY and tomorrow's events.

A college-level lecture, free!