Category Archives: Economy

David Brooks Pimps Rubio and Ryan

After his brief foray into the land of intellectual honesty, David Brooks, is back to pimping toxic Republican policies and politicians who espouse them.

Voters don’t have to know the details of their nominee’s agenda, but they have to know that the candidate is capable of having an agenda.

Don’t worry your pretty little head about Marco’s agenda just know that he has one and chose him, just like I have, says Brooks. He is pretty for a politician and has R after his what more can a columnist/ Republican shill want? Then he says this about Jeb:

He would probably be a very effective president. And he would have been a very effective candidate — but in 1956.

Is Brooks calling Jeb, Eisenhower? What is the evidence for this hyperbole. Apart from fixing the election in Florida in his brother’s favor what exactly are Jeb Bush’s accomplishments.

Ted Cruz looks likely to emerge as the candidate of the disaffected white working class — the noncollege-educated voters who are now registering their alienation and distrust with Trump.

A Harvard and Princeton alumnus is now the tribune for the disaffected according to Brooks. His own newspaper however says otherwise, far from being the voice of the working class, Cruz is the darling of hedge fund managers, who have donated generously to his campaign.

Coming back to Rubio, who has been hailed as the fresh face to look out for by the Beltway types for over year, has nothing to offer but stale ideas where policy is concerned.

His policy on taxes is the same as other Republicans.

He would simplify the tax code, reduce rates and move us toward a consumption-based system by reducing taxes on investment.

His bold new initiative according to Brooks

He adds a big $2,500 child tax credit that is controversial among conservative economists, but that would make life easier for working families.

In what world is $2500 tax credit, a big credit? That’s probably less than what Brooks gets paid per column. Also what if you don’t have any children?

Rubio is also trying to sell other warmed over stale Republican ideas like wage subsidies i.e. paying employers to hire people and flex funds that the states would administer instead of the Federal government. Giving power to the states may sound good on paper, but in reality, it has meant giving power to the states to screw over their most vulnerable members, usually minorities and women.  A look at the map of uninsured Americans is a telling example of what happens when the administration of social welfare policies are left up to the states

According Brooks, Rubio is an apostle of the new so called reform conservatism, which is nothing but old snake oil in new bottle. Reform conservative nostrums for the ailing economy are like telling a person who is a bleeding from a head wound, that it would be good if they also lost some weight. Yes, losing weight would be good in the long term, but you need to stanch the bleeding right now.

In economic terms, job losses and rising inequality are mainly the result of the demand shock following the financial crash, not some structural weakness In the economy. While fixing the structural problems is a good idea, a patient suffering from heavy blood loss needs a transfusion not lectures on how to improve his overall health by healthy eating and exercise. When the economy needed a stimulus, the equivalent of a blood transfusion, to make up for the private sector entrenchment, most Republican legislators voted against it.

If Ryan and Rubio do emerge as the party’s two leaders, it will be the wonkiest leadership team in our lifetime. That’s a good thing.

Rubio and Ryan are not wonks, they are smooth snake oil salesmen, of whom the beltway media approves, since they are easy on the eyes and better at peddling the economics that favors the media types and their friends than your average Republican legislator.

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The Honourable East India Company

Post Citizens-United many worry about the undue influence of corporations on the democratic process. It has happen before, in the late eighteenth and the early nineteenth centuries. The shareholders of a joint stock company once decided the fate of millions and had many lawmakers in their back pocket.

Before  British Raj* there was Company Raj. The East India Company made its first territorial gains in India in 1757.  Its territorial conquest of most of India was complete by the 1820s. It passed on the torch to the British Crown in 1858, after the bruising First of battle of Independence or the Indian Mutiny (depending on whom you ask) of 1857.

East India Company was a joint-stock company  granted a charter for monopoly trade rights by Queen Elizabeth I in 1600. It made its first Indian foray in 1610. So for almost 150 years the Company was content to operate  various factories  dotting the long Indian coast line. Three of these factory towns grew to become the cities of Bombay (now Mumbai), Calcutta (now Kolkata) and Madras(now Chennai). These factories were   fortified garrisons where factors or merchants met and carried out their business.

Neither were the British the only ones who had established these factories in India, they had competition from the Dutch, the Portuguese, the French and even the Danes. So eat your heart out Tom Friedman, the world was flat and globalized not only before you were born but long before Britain’s thirteen former colonies declared independence from their original motherland.

The first age of globalization turned exploitative and ugly real fast, especially so after the advent of the  industrial revolution. The East India Company was the prime example of these excesses and egregious practices. Adam Smith, Karl Marx and Edmund Burke,  were all prominent critics of the East India Company.

So just how did a joint stock company come to rule all of  India? Its something I want to figure out as a part of my exploration of British rule in India. My initial interest in this topic was sparked by Shashi Tharoor’s impassioned and witty performance at the Oxford Union debate.

*Raj is the Anglicized version of the Sanskrit Rajya, which means rule.

Concerned Capitalist is Concerned

Continuing the tradition of trolling for clicks, NYT has an op-ed piece by a worried heir to Marie Antoinette, Peter Georgescu, Chairman emeritus of Young and Rubicam. He is worried along with some of his other billionaire friends about ending up like the Sun King’s daughter-in-law. The reason:  the yawning gap in income between the 0.1% and everyone else.

Business has the most to gain from a healthy America, and the most to lose by social unrest or punitive taxation.

His analysis of the problem is spot on, mainly that business is not investing in either research or its employees.

The fact that real wages have been flat for about four decades, while productivity has increased by 80 percent, shows that has not been happening. Before the early 1970s, wages and productivity were both rising. Now most gains from productivity go to shareholders, not employees.

And how does Marie’s heir want to address this problem? By asking taxpayers to foot the bill, so that businesses can pay their employees a fair wage.

There is a way to start. Government can provide tax incentives to business to pay more to employees making $80,000 or less. The program would exist for three to five years and then be evaluated for effectiveness.

How does one pay for these tax incentives?  Not by increasing taxes, since that would be punitive according Mr. Concerned Capitalist.

If inequality is not addressed, the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes, such as the 80 percent tax rate on income over $500,000 suggested by Thomas Piketty,

The top most marginal rate currently is way less than 80%. In fact it is nearly half of that, 39.6%. What does Mr. Concerned Capitalist think is a fair, not punitive tax rates on his fellow one percenters? Gotta love this new capitalism, where you can socialize the risk and privatize the rewards. Win-win, for Georgescu and friends.

By two_kittehs ( Picture by: dorothyfrancesgoldstein)

Reparations for the Jewel in the Crown

Shashi Tharoor makes the case for reparations for India from Britain, at an Oxford Union debate. He makes a lot of good points, about India’s contributions to Britain’s war efforts in both the World Wars, the economic depredations that were India’s lot, including the infamous famines. He does not mention the hasty handover of power in 1947 and the ensuing bloodbath. If anything, he is too gentle with his criticisms. Watch it, it is only about fifteen minutes long.

Remember this when you are watching Downton Abbey, that the fabulous wealth of Victorian and Edwardian England was built on the backs of starving millions in India.

Sashi Tharoor argues for Reparations for India

The ninety years of direct Crown rule and of the East India Company before that saw a tremendous transfer of wealth from India to Britain. As far as rapacious corporations go, present day mega corporations like WalMart and the like have nothing on the East India Company.

It should be of no great surprise to anyone that Bengal  (West Bengal + Bangladesh) the part of India, ruled by the British for the longest time is one of the poorest regions of the subcontinent. Once known for its riches it is now famous for its sweatshops and grinding poverty. Coincidence? I think not.

Your thoughts?

Greek Cat Has An Answer For the Troika

The Saga of the Greek Cat and Austerity Cat

By two_kittehs

Greek Tragedy

Greek Cat

Greek Cat

By two_kittehs

Troika’s Solution For Greek Cat

By two_kittehs

It seemed like the austerity cat had met his match when the Syriza government came to power in Greece. Not so fast, says the austerity cat.

For  Greece, there are no easy options, they are damned if they do and damned if they don’t. Although in my opinion, accepting a deal with more austerity just kicks the reckoning down the road. Without its own currency and with it the ability to set its own monetary policy, it is hard to see how Greece can get out of its debt trap. Five years of punishing austerity have shrunk the economy, increased unemployment. It is hard to see how this policy is good for the creditors either if they want their loans to be paid off. Or do they want to make an example of Greece so that the other indebted nations in the Eurozone like Italy  don’t dare follow Greece’s example.

We Don’t Need No Education

Education “reformers” in the MSM have set their sights higher. Their next target, higher education. There were two columns in the NYT in the last week, on this topic. One by a think tank guy, who I had never heard of before and the another one by the Times columnist, Joe Nocera, praising the aforementioned think tank dude, Kevin Carey.

The gist of the both the columns in one sentence; since college has grown too expensive, the solution is  online degrees for the masses. I am sure NYT columnists and their think tank buddies will still go to college, preferably Harvard or Yale or the other Ivies.

Some of the grievances that Nocera brings up seem legitimate,  but both Carey and Nocera are also complaining about the money universities spend on research? Really? Who should we leave the research too? Think tanks?

Over time, the mission that came to matter most within the university culture was research. Great research institutions derived the most status.

Its not that the universities have no problems, but I fail to see how online degrees are going to change anything.  As far as I know, universities charge the  same  per credit hour whether it is online or in person.  If Carey wants to do away with universities altogether.   I wonder what exactly is going to replace a traditional university?

Free online courses won’t revolutionize education until there is a parallel system of free or low-fee credentials, not controlled by traditional colleges, that leads to jobs. Now technological innovators are working on that, too.

Yes that’s exactly what higher education needs, an Uber!  Has Tom Friedman aka Mustache of Understanding weighed in on this? This is my solution.

Your solution to the Rising Cost of Tuition; Only one nip mouse per credit hour

By two_kittehs

Has the Austerity Cat met his Match?

Greek Kitteh stands up to the Austerity Cat

LoL by: two_kittehs

Austerity Cat is looking out for you

Austerity Cat is looking out for you

LoL by: two_kittehs (Picture by: Deebrio)

Austerity policies during a recession make matters worse, not better.  A lesson that the world learnt in  the aftermath of the Great Depression but seems to have forgotten in this century. What ails the global economy is the lack of demand, which the austerity policies have only exacerbated, take it away,Prof. Stiglitz.

With the recent elections in Greece, finally, someone with real political power is standing up to the conventional wisdom that austerity is good for the economy. You can keep  track of their progress, on the Greek finance minister’s blog.  I wish the new the Greek government all the luck, they are going to need it while navigating the shoals of the economy, including the debt and massive unemployment. 

Joe Nocera Is Concerned

The story is depressingly familiar, a business that has been bleeding red ink for years, changes hands.   The new owner brings in new management to run the shop.  Management buzzwords are thrown around.  A major round of cost cutting follows.  Usually that involves firing old employees, assigning the remaining ones more duties, without any raises for the rank and file but a big fat bonus for the new CEO and upper management.
Hardly newsworthy material, one would think? Especially when the said business, has a consumer base of less than 50,000. However you would be wrong.

When the business in question is a magazine with a storied past, it is the subject of numerous opinion columns  in many national news outlets of repute.  The opinion writers who regularly write columns extolling the virtues of cut throat capitalism are not so sanguine when it affects them at a personal level.

Joe Nocera of the NYT devoted an entire column yesterday, to discuss this storm in a tea cup, details here. How dare some tech guy tell esteemed Beltway Pundits how to do their job? I mean, they are hardly  public school teachers, who Joe Nocera and every other Pundit worth his salt has no problem lecturing on about the same. After all TNR, performs the  vital job of introducing ugly right racist memes to polite discourse.
Good old Joe, is appalled that his esteemed colleagues at the TNR have to become click whores now, oh the humanity!

The New Republic’s business executives were trying to get the editors to do things that would attract more clicks. One executive suggested that Michael Kinsley — a former New Republic editor himself — come up with a listicle, à la BuzzFeed. (“10 reasons why health care isn’t a free market.”)

 

I wonder what NYT’s financials are like? Are they ripe for takeover by some tech Moghul?

Since I am not a TNR writer, obligatory click bait, Kitteh!

And filed away under I could care less

By two_kittehs

Should the Fed tackle Income Inequality?

That is the question, the daily NYT trollfest, also known as Room for Debate, addressed yesterday. The Fed has two mandates, keeping the inflation in check and decreasing unemployment. Unfortunately for us, since the late 70s the Fed has taken its inflation mandate far more seriously than the unemployment one. Since inflation has not been a serious problem since the 70s, it is high time that the Fed addressed its neglected mandate. Doing so would go a long way in addressing the income inequality issue.

Our economy is consumer driven, so rising income equality shrinks the economy, because people have to  spend most of their income on necessities, leaving little for anything else.  Fed’s investor driven policies haven’t been particularly beneficial to the wellbeing  of the average consumer.  The rising tide hasn’t lifted all the boats, as promised.

Of all the respondents, I found Joseph Stiglitz’s answer most pertinent while Michael Strain,strained my credulity.  According to Strain, Fed should not address inequality because it is a partisan issue.  At least, he is honest, one party does not want to address issues that concern the 99%.

Well, who are you going to believe, a Nobel Laureate in economics or the resident scholar, at the American Enterprise Institute? One who David Brooks approvingly quotes and  has zero publications or citations in Google Scholar, that I could find.

Your thoughts?

You has questions; Econ Cat has answers

You has questions Econ Cat has answers

By two_kittehs