According to the New York Times, "The Consumer Price Index, which measures prices of a batch of common household products, rose 1.1 percent in June, the Labor Department said. That increases caps a year where inflation has surged to proportions seen by some as threatening the stability of the American economy. In the last 12 months, the price index has risen 5 percent, the biggest annual jump since May 1991."
If you multiply the 1.1% rate in June, it comes out to 13.2%, a rate big enough to remind me of the post-Vietnam years of the late 1970s. This augurs ill for the stock market because the inflationary monetary expansion in which the Republicans have engaged since '82 is coming home to roost. These cycles take 25 years and perhaps more, to complete, hence generalizations about good or bad economic results over a 1-24 year period are impossible to make.
If the Fed takes action to slow inflation by reducing interest rates it will take several years, there will be unemployment, New York City is going to hell in hand basket (if you recall the near-bankruptcy in the mid 1970s during a similar correction you know what I'm talking about), and the stock market is in for a rough ride that makes this year's look like a ride on Mary Poppins's umbrella.
The country's planning elite, the Wall Street crew and the captains of industry, Jim Cramer, Alan Greenspan and the Fed have brought the coming recession to you courtesy of their inability to run the monetary system.
Gold is down today probably related to the correction in the oil market and to the realization that the Fed is going to correct. Hence the dollar is stronger. Our economy has had so much loose cash that has been created by the Fed and diverted into immoral and incompetent hands that there are all kinds of crazy things going on, and the public will pay while the hedge fund managers who have extracted billions from the 25 years of inflation will sit back on their verandas and enjoy the show.
Wednesday, July 16, 2008
Social Mythology and Public Dismay
In his 1972 article "Myth of the New Deal"* "New Left" historian Ronald Radosh writes:
"The New Deal reforms were not mere 'incremental gestures'. They were solidly based, carefully worked out pieces of legislation. They were of such a character that they would be able to create a long-lasting mythology about the existence of a pluralistic American democracy, in which big labor supposedly exerts its countering influence to the domination that would be otherwise undertaken by big industry.
"One cannot explain the success of the New Deal by pointing to its rhetoric. The populace responded to FDR's radical rhetoric only because it mirrored their own deeply held illusions. They could not comprehend how the reforms that changed their lives only worked to bolster the existing political economy, and they did not realize that many sponsors of the reforms came from the corporation community themselves. The integration of seemingly disparate elements into the system was successful. Labor did not get its share and it did benefit from the development of a permanent war economy and the military-industrial complex. Many of those who lived through and benefited from the New Deal most likely view its accomplishments in much the same way as Schlesinger or Carl Degler. One can never be sure whether they reflect the explanations offered by the 'vital center' historians or whether these historians merely reflect the false consciousness of their own epoch."
Radosh wrote this in the early 1970s, just as Richard Nixon changed the monetary regime by abolishing the international gold standard and just as employers were about to shift their supportive stance toward labor unions, which Radosh documents in his article, to a more anti-labor stance. I have previously blogged that there was a major shift in the pattern of stock returns as related to real wages around 1971. Between 1932 and 1971, net of cumulative inflation, stock returns were about 5.9% compounded, and between 1971 and 2008 they were also around 5.9% compounded. However, from 1932 to 1971 real wages increased 2.6% compounded, while from 1971 to 2008 real wages declined -1.1% compounded. The 1971-2008 period was characterized by high inflation (the highest 40-year period of inflation in America's history) but real stock returns were held constant at 5.9% net of inflation. As well, the post-1971 period was characterized by manufacturing's exiting the country, a decline in the quality of education, and declining unionization. The one variable that the Progressive and New Deal policies have ultimately held constant is corporate stock returns net of inflation. Real wages, unemployment, inflation rates and public welfare gyrate, but in the end real stock returns find their way back to the baseline real 5.9% level.
At the time Ronald Radosh wrote his article in New History of Leviathan it could still be argued that the statist Progressive and New Deal ideologies integrated social justice concerns. This is no longer the case. Rather, it is apparent from my earlier blog that Radosh's argument is actually understated. The New Deal labor union edifice was easily overturned because of declining manufacturing presence, globalization, declining scale in post-modern American industry and employer resistance to unions. Hence, unions' ability to represent workers has diminished just as inflation escalated. Unions lack the resources to organize small shops, and it is more profitable for them to concentrate on government workers who enjoy monopolistic privileges and can impose costs on taxpayers. The one variable that has been fairly steady since Franklin D. Roosevelt's election in 1932 has been returns on the Dow Jones Industrial Average, net of inflation. Since 1971 workers' real wages have declined, but returns on the Dow have remained strong even in spite the past eight years' stagnation, a period characterized by relentlessly increasing inflation as the mismanagement and incompetence characterized by the Progressive and New Deal regimes has become evident in corporate scandals, inept real estate investment and taxpayer-financed subsidies to millionaire investment bankers through the Fed's low interest rate regime and through direct subsidies to incompetently run firms like Bear Stearns.
*Ronald Radosh, "Myth of the New Deal" in Ronald Radosh and Murray N. Rothbard, editors, A New History of Leviathan: Essays on the Rise of the American Corporate State, New York: EP Dutton, 1972, p. 186
"The New Deal reforms were not mere 'incremental gestures'. They were solidly based, carefully worked out pieces of legislation. They were of such a character that they would be able to create a long-lasting mythology about the existence of a pluralistic American democracy, in which big labor supposedly exerts its countering influence to the domination that would be otherwise undertaken by big industry.
"One cannot explain the success of the New Deal by pointing to its rhetoric. The populace responded to FDR's radical rhetoric only because it mirrored their own deeply held illusions. They could not comprehend how the reforms that changed their lives only worked to bolster the existing political economy, and they did not realize that many sponsors of the reforms came from the corporation community themselves. The integration of seemingly disparate elements into the system was successful. Labor did not get its share and it did benefit from the development of a permanent war economy and the military-industrial complex. Many of those who lived through and benefited from the New Deal most likely view its accomplishments in much the same way as Schlesinger or Carl Degler. One can never be sure whether they reflect the explanations offered by the 'vital center' historians or whether these historians merely reflect the false consciousness of their own epoch."
Radosh wrote this in the early 1970s, just as Richard Nixon changed the monetary regime by abolishing the international gold standard and just as employers were about to shift their supportive stance toward labor unions, which Radosh documents in his article, to a more anti-labor stance. I have previously blogged that there was a major shift in the pattern of stock returns as related to real wages around 1971. Between 1932 and 1971, net of cumulative inflation, stock returns were about 5.9% compounded, and between 1971 and 2008 they were also around 5.9% compounded. However, from 1932 to 1971 real wages increased 2.6% compounded, while from 1971 to 2008 real wages declined -1.1% compounded. The 1971-2008 period was characterized by high inflation (the highest 40-year period of inflation in America's history) but real stock returns were held constant at 5.9% net of inflation. As well, the post-1971 period was characterized by manufacturing's exiting the country, a decline in the quality of education, and declining unionization. The one variable that the Progressive and New Deal policies have ultimately held constant is corporate stock returns net of inflation. Real wages, unemployment, inflation rates and public welfare gyrate, but in the end real stock returns find their way back to the baseline real 5.9% level.
At the time Ronald Radosh wrote his article in New History of Leviathan it could still be argued that the statist Progressive and New Deal ideologies integrated social justice concerns. This is no longer the case. Rather, it is apparent from my earlier blog that Radosh's argument is actually understated. The New Deal labor union edifice was easily overturned because of declining manufacturing presence, globalization, declining scale in post-modern American industry and employer resistance to unions. Hence, unions' ability to represent workers has diminished just as inflation escalated. Unions lack the resources to organize small shops, and it is more profitable for them to concentrate on government workers who enjoy monopolistic privileges and can impose costs on taxpayers. The one variable that has been fairly steady since Franklin D. Roosevelt's election in 1932 has been returns on the Dow Jones Industrial Average, net of inflation. Since 1971 workers' real wages have declined, but returns on the Dow have remained strong even in spite the past eight years' stagnation, a period characterized by relentlessly increasing inflation as the mismanagement and incompetence characterized by the Progressive and New Deal regimes has become evident in corporate scandals, inept real estate investment and taxpayer-financed subsidies to millionaire investment bankers through the Fed's low interest rate regime and through direct subsidies to incompetently run firms like Bear Stearns.
*Ronald Radosh, "Myth of the New Deal" in Ronald Radosh and Murray N. Rothbard, editors, A New History of Leviathan: Essays on the Rise of the American Corporate State, New York: EP Dutton, 1972, p. 186
Monday, July 14, 2008
Government Is the Problem: Phil Orenstein on Immigration Reform
Over at Democracy Project Phil Orenstein chronicles the inability of a highly skilled mechanical engineer in his high-tech manufacturing firm to obtain a visa to stay in the US. Instead, Gianluca Mattaroccia, the Italian techie, is returning to Italy with a six figure salary offer. Phil notes that while legitimate immigrants with unique skills that are in demand globally cannot obtain a visa, those willing to come to the USA illegally but who lack skills and wish to mooch off welfare are welcomed with open arms. Phil's article points out that combined with America's bad educational system, dominated by progressive educationists who fail to provide the basics, our immigration laws do not work because they are ineptly administered:
"While American schools have succumbed to progressive pedagogies that focus more on social justice education and feel good outcomes than on competency, there is certifiable proof that Chinese schools have left us far behind, according to Andrew Wolf in the New York Sun. As we keep dumbing down proficiency tests year after year to make the results appear better and Mayor Bloomberg and Chancellor Klein look like heroes, our children and businesses suffer. Thus our own students graduate with less proficiency compared to foreign students who possess more competence with 21st century skills. The answer isn’t to kick out the smarter, more proficient foreign workers and students, so we can go on fooling ourselves that our schools aren’t failing.."
Phil suggests an argument against immigration restrictions, not because of the pros or cons of limiting low-wage immigration in order to protect low-wage American workers, but because the US government lacks the competence to administer an immigration program intelligently. I think that there is much merit in this idea. What scares me is that these bozos want to control what goes on on the operating table, your refrigerator, and your living room.
Isn't it time to roll back government bureaucracy?
"While American schools have succumbed to progressive pedagogies that focus more on social justice education and feel good outcomes than on competency, there is certifiable proof that Chinese schools have left us far behind, according to Andrew Wolf in the New York Sun. As we keep dumbing down proficiency tests year after year to make the results appear better and Mayor Bloomberg and Chancellor Klein look like heroes, our children and businesses suffer. Thus our own students graduate with less proficiency compared to foreign students who possess more competence with 21st century skills. The answer isn’t to kick out the smarter, more proficient foreign workers and students, so we can go on fooling ourselves that our schools aren’t failing.."
Phil suggests an argument against immigration restrictions, not because of the pros or cons of limiting low-wage immigration in order to protect low-wage American workers, but because the US government lacks the competence to administer an immigration program intelligently. I think that there is much merit in this idea. What scares me is that these bozos want to control what goes on on the operating table, your refrigerator, and your living room.
Isn't it time to roll back government bureaucracy?
Additional Correspondence Re Obama Birth Certificate
Drake suggests the following approach. We will see if it works.
PO Box 130
West Shokan, New York 12494
July 14, 2008
Dr. Chiyome L. Fukino, MD
Director of Public Health
State of Hawaii Department of Health
Honolulu, Hawaii 98601-3378
Dear Ms. Fukino:
This is an additional request for information under the Hawaii Open Records Law. As my other letter indicates, your department has broken § 338-18 by refusing to provide, as the law requires, Barack Obama’s birth certificate to every American because every American has a direct and tangible interest in seeing the information first hand.
As a result, I will request some alternative information:
1. What is the proper format of the "CERTIFICATE NO."? One certificate I have seen is formatted "### ####-######" Are all formatted this way? Are the certificate numbers ordered chronologically as certificates are issued? If so, what would be the number range for a child born in 1961
2.What is the complete list of categories under the "RACE" fields?
3.How many different formats for the certificate has the department used since 1961? Are the certificates printed on pre-formated paper (with borders and coloration already printed) or is the entire certificate (background, borders, and text) printed all at once.
4.Would the department please supply a blank template for each of the different formats it has employed since 1961? If necessary it may also note "VOID" on each such template to ensure against fraudulent use.
5.What is meant by the field label "DATE ACCEPTED BY REGISTRAR"? Has the department ever used the label "DATE ACCEPTED BY STATE REGISTRAR"? What is the difference?
6.What is the significance of the text "OHSM 1.1 (Rev.11/01) LASER" at the bottom of the form? It it the technical designation for a particular type of format/template used? If so, would the department please supply a list of all such technical designations that have been used since 1961 and indicate the templates to which they correspond?
7.How are birth certificates embossed with the state seal. Are they always embossed on the back of the certificate? Ever on the front? Are they always signed to designate official status?
8. Would the department please send a copy of the currently governing intra-departmental manual for the production and recordation of birth certificates as well as the manual in effect during 1961 if they are free of charge? If not, please advise as to the cost.
Sincerely,
Mitchell Langbert, Ph.D.
Cc: Janice Okubo, Governor Linda Lingle
PO Box 130
West Shokan, New York 12494
July 14, 2008
Dr. Chiyome L. Fukino, MD
Director of Public Health
State of Hawaii Department of Health
Honolulu, Hawaii 98601-3378
Dear Ms. Fukino:
This is an additional request for information under the Hawaii Open Records Law. As my other letter indicates, your department has broken § 338-18 by refusing to provide, as the law requires, Barack Obama’s birth certificate to every American because every American has a direct and tangible interest in seeing the information first hand.
As a result, I will request some alternative information:
1. What is the proper format of the "CERTIFICATE NO."? One certificate I have seen is formatted "### ####-######" Are all formatted this way? Are the certificate numbers ordered chronologically as certificates are issued? If so, what would be the number range for a child born in 1961
2.What is the complete list of categories under the "RACE" fields?
3.How many different formats for the certificate has the department used since 1961? Are the certificates printed on pre-formated paper (with borders and coloration already printed) or is the entire certificate (background, borders, and text) printed all at once.
4.Would the department please supply a blank template for each of the different formats it has employed since 1961? If necessary it may also note "VOID" on each such template to ensure against fraudulent use.
5.What is meant by the field label "DATE ACCEPTED BY REGISTRAR"? Has the department ever used the label "DATE ACCEPTED BY STATE REGISTRAR"? What is the difference?
6.What is the significance of the text "OHSM 1.1 (Rev.11/01) LASER" at the bottom of the form? It it the technical designation for a particular type of format/template used? If so, would the department please supply a list of all such technical designations that have been used since 1961 and indicate the templates to which they correspond?
7.How are birth certificates embossed with the state seal. Are they always embossed on the back of the certificate? Ever on the front? Are they always signed to designate official status?
8. Would the department please send a copy of the currently governing intra-departmental manual for the production and recordation of birth certificates as well as the manual in effect during 1961 if they are free of charge? If not, please advise as to the cost.
Sincerely,
Mitchell Langbert, Ph.D.
Cc: Janice Okubo, Governor Linda Lingle
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