Thursday, September 30, 2010

Tea and Crackers


Matt Taibbi
Sep 28, 2010 7:01 AM EDT

This is an article from the October 15, 2010 issue of Rolling Stone.

It's taken three trips to Kentucky, but I'm finally getting my Tea Party epiphany exactly where you'd expect: at a Sarah Palin rally. The red-hot mama of American exceptionalism has flown in to speak at something called the National Quartet Convention in Louisville, a gospel-music hoedown in a giant convention center filled with thousands of elderly white Southerners. Palin — who earlier this morning held a closed-door fundraiser for Rand Paul, the Tea Party champion running for the U.S. Senate — is railing against a GOP establishment that has just seen Tea Partiers oust entrenched Republican hacks in Delaware and New York. The dingbat revolution, it seems, is nigh.

"We're shaking up the good ol' boys," Palin chortles, to the best applause her aging crowd can muster. She then issues an oft-repeated warning (her speeches are usually a tired succession of half-coherent one-liners dumped on ravenous audiences like chum to sharks) to Republican insiders who underestimated the power of the Tea Party Death Star. "Buck up," she says, "or stay in the truck."

Stay in what truck? I wonder. What the hell does that even mean?

Scanning the thousands of hopped-up faces in the crowd, I am immediately struck by two things. One is that there isn't a single black person here. The other is the truly awesome quantity of medical hardware: Seemingly every third person in the place is sucking oxygen from a tank or propping their giant atrophied glutes on motorized wheelchair-scooters. As Palin launches into her Ronald Reagan impression — "Government's not the solution! Government's the problem!" — the person sitting next to me leans over and explains.

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"The scooters are because of Medicare," he whispers helpfully. "They have these commercials down here: 'You won't even have to pay for your scooter! Medicare will pay!' Practically everyone in Kentucky has one."

A hall full of elderly white people in Medicare-paid scooters, railing against government spending and imagining themselves revolutionaries as they cheer on the vice-presidential puppet hand-picked by the GOP establishment. If there exists a better snapshot of everything the Tea Party represents, I can't imagine it.

After Palin wraps up, I race to the parking lot in search of departing Medicare-motor-scooter conservatives. I come upon an elderly couple, Janice and David Wheelock, who are fairly itching to share their views.

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"I'm anti-spending and anti-government," crows David, as scooter-bound Janice looks on. "The welfare state is out of control."

"OK," I say. "And what do you do for a living?"

"Me?" he says proudly. "Oh, I'm a property appraiser. Have been my whole life."

I frown. "Are either of you on Medicare?"

Silence: Then Janice, a nice enough woman, it seems, slowly raises her hand, offering a faint smile, as if to say, You got me!

"Let me get this straight," I say to David. "You've been picking up a check from the government for decades, as a tax assessor, and your wife is on Medicare. How can you complain about the welfare state?"

"Well," he says, "there's a lot of people on welfare who don't deserve it. Too many people are living off the government."

"But," I protest, "you live off the government. And have been your whole life!"

"Yeah," he says, "but I don't make very much." Vast forests have already been sacrificed to the public debate about the Tea Party: what it is, what it means, where it's going. But after lengthy study of the phenomenon, I've concluded that the whole miserable narrative boils down to one stark fact: They're full of shit. All of them. At the voter level, the Tea Party is a movement that purports to be furious about government spending — only the reality is that the vast majority of its members are former Bush supporters who yawned through two terms of record deficits and spent the past two electoral cycles frothing not about spending but about John Kerry's medals and Barack Obama's Sixties associations. The average Tea Partier is sincerely against government spending — with the exception of the money spent on them. In fact, their lack of embarrassment when it comes to collecting government largesse is key to understanding what this movement is all about — and nowhere do we see that dynamic as clearly as here in Kentucky, where Rand Paul is barreling toward the Senate with the aid of conservative icons like Palin.

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Early in his campaign, Dr. Paul, the son of the uncompromising libertarian hero Ron Paul, denounced Medicare as "socialized medicine." But this spring, when confronted with the idea of reducing Medicare payments to doctors like himself — half of his patients are on Medicare — he balked. This candidate, a man ostensibly so against government power in all its forms that he wants to gut the Americans With Disabilities Act and abolish the departments of Education and Energy, was unwilling to reduce his own government compensation, for a very logical reason. "Physicians," he said, "should be allowed to make a comfortable living."

Those of us who might have expected Paul's purist followers to abandon him in droves have been disappointed; Paul is now the clear favorite to win in November. Ha, ha, you thought we actually gave a shit about spending, joke's on you. That's because the Tea Party doesn't really care about issues — it's about something deep down and psychological, something that can't be answered by political compromise or fundamental changes in policy. At root, the Tea Party is nothing more than a them-versus-us thing. They know who they are, and they know who we are ("radical leftists" is the term they prefer), and they're coming for us on Election Day, no matter what we do — and, it would seem, no matter what their own leaders like Rand Paul do.

In the Tea Party narrative, victory at the polls means a new American revolution, one that will "take our country back" from everyone they disapprove of. But what they don't realize is, there's a catch: This is America, and we have an entrenched oligarchical system in place that insulates us all from any meaningful political change. The Tea Party today is being pitched in the media as this great threat to the GOP; in reality, the Tea Party is the GOP. What few elements of the movement aren't yet under the control of the Republican Party soon will be, and even if a few genuine Tea Party candidates sneak through, it's only a matter of time before the uprising as a whole gets castrated, just like every grass-roots movement does in this country. Its leaders will be bought off and sucked into the two-party bureaucracy, where its platform will be whittled down until the only things left are those that the GOP's campaign contributors want anyway: top-bracket tax breaks, free trade and financial deregulation.

The rest of it — the sweeping cuts to federal spending, the clampdown on bailouts, the rollback of Roe v. Wade — will die on the vine as one Tea Party leader after another gets seduced by the Republican Party and retrained for the revolutionary cause of voting down taxes for Goldman Sachs executives. It's all on display here in Kentucky, the unofficial capital of the Tea Party movement, where, ha, ha, the joke turns out to be on them: Rand Paul, their hero, is a fake.

The original Tea Party was launched by a real opponent of the political establishment — Rand Paul's father, Ron, whose grass-roots rallies for his 2008 presidential run were called by that name. The elder Paul will object to this characterization, but what he represents is something of a sacred role in American culture: the principled crackpot. He's a libertarian, but he means it. Sure, he takes typical, if exaggerated, Republican stances against taxes and regulation, but he also opposes federal drug laws ("The War on Drugs is totally out of control" and "All drugs should be decriminalized"), Bush's interventionist wars in the Middle East ("We cannot spread our greatness and our goodness through the barrel of a gun") and the Patriot Act; he even called for legalized prostitution and online gambling.

Paul had a surprisingly good showing as a fringe candidate in 2008, and he may run again, but he'll never get any further than the million primary votes he got last time for one simple reason, which happens to be the same reason many campaign-trail reporters like me liked him: He's honest. An anti- war, pro-legalization Republican won't ever play in Peoria, which is why in 2008 Paul's supporters were literally outside the tent at most GOP events, their candidate pissed on by a party hierarchy that preferred Wall Street-friendly phonies like Mitt Romney and John McCain. Paul returned the favor, blasting both parties as indistinguishable "Republicrats" in his presciently titled book, The Revolution. The pre-Obama "Tea Parties" were therefore peopled by young anti-war types and libertarian intellectuals who were as turned off by George W. Bush and Karl Rove as they were by liberals and Democrats.

The failure of the Republican Party to invite the elder Paul into the tent of power did not mean, however, that it didn't see the utility of borrowing his insurgent rhetoric and parts of his platform for Tea Party 2.0. This second-generation Tea Party came into being a month after Barack Obama moved into the Oval Office, when CNBC windbag Rick Santelli went on the air to denounce one of Obama's bailout programs and called for "tea parties" to protest. The impetus for Santelli's rant wasn't the billions in taxpayer money being spent to prop up the bad mortgage debts and unsecured derivatives losses of irresponsible investors like Goldman Sachs and AIG — massive government bailouts supported, incidentally, by Sarah Palin and many other prominent Republicans. No, what had Santelli all worked up was Obama's "Homeowner Affordability and Stability Plan," a $75 billion program less than a hundredth the size of all the bank bailouts. This was one of the few bailout programs designed to directly benefit individual victims of the financial crisis; the money went to homeowners, many of whom were minorities, who were close to foreclosure. While the big bank bailouts may have been incomprehensible to ordinary voters, here was something that Middle America had no problem grasping: The financial crisis was caused by those lazy minorities next door who bought houses they couldn't afford — and now the government was going to bail them out.

"How many of you people want to pay your neighbor's mortgage that has an extra bathroom and can't pay their bills? Raise your hand!" Santelli roared in a broadcast from the floor of the Chicago Board of Trade. Why, he later asked, doesn't America reward people who "carry the water instead of drink the water?"

Suddenly, tens of thousands of Republicans who had been conspicuously silent during George Bush's gargantuan spending on behalf of defense contractors and hedge-fund gazillionaires showed up at Tea Party rallies across the nation, declaring themselves fed up with wasteful government spending. From the outset, the events were organized and financed by the conservative wing of the Republican Party, which was quietly working to co-opt the new movement and deploy it to the GOP's advantage. Taking the lead was former House majority leader Dick Armey, who as chair of a group called FreedomWorks helped coordinate Tea Party rallies across the country. A succession of Republican Party insiders and money guys make up the guts of FreedomWorks: Its key members include billionaire turd Steve Forbes and former Republican National Committee senior economist Matt Kibbe.

Prior to the Tea Party phenomenon, FreedomWorks was basically just an AstroTurfing-lobbying outfit whose earlier work included taking money from Verizon to oppose telecommunications regulation. Now the organization's sights were set much higher: In the wake of a monstrous economic crash caused by grotesque abuses in unregulated areas of the financial-services industry, FreedomWorks — which took money from companies like mortgage lender MetLife — had the opportunity to persuade millions of ordinary Americans to take up arms against, among other things, Wall Street reform.

Joining them in the fight was another group, Americans for Prosperity, which was funded in part by the billionaire David Koch, whose Koch Industries is the second-largest privately held company in America. In addition to dealing in plastics, chemicals and petroleum, Koch has direct interests in commodities trading and financial services. He also has a major stake in pushing for deregulation, as his companies have been fined multiple times by the government, including a 1999 case in which Koch Industries was held to have stolen oil from federal lands, lying about oil purchases some 24,000 times.

So how does a group of billionaire businessmen and corporations get a bunch of broke Middle American white people to lobby for lower taxes for the rich and deregulation of Wall Street? That turns out to be easy. Beneath the surface, the Tea Party is little more than a weird and disorderly mob, a federation of distinct and often competing strains of conservatism that have been unable to coalesce around a leader of their own choosing. Its rallies include not only hardcore libertarians left over from the original Ron Paul "Tea Parties," but gun-rights advocates, fundamentalist Christians, pseudomilitia types like the Oath Keepers (a group of law- enforcement and military professionals who have vowed to disobey "unconstitutional" orders) and mainstream Republicans who have simply lost faith in their party. It's a mistake to cast the Tea Party as anything like a unified, cohesive movement — which makes them easy prey for the very people they should be aiming their pitchforks at. A loose definition of the Tea Party might be millions of pissed-off white people sent chasing after Mexicans on Medicaid by the handful of banks and investment firms who advertise on Fox and CNBC.

The individuals in the Tea Party may come from very different walks of life, but most of them have a few things in common. After nearly a year of talking with Tea Party members from Nevada to New Jersey, I can count on one hand the key elements I expect to hear in nearly every interview. One: Every single one of them was that exceptional Republican who did protest the spending in the Bush years, and not one of them is the hypocrite who only took to the streets when a black Democratic president launched an emergency stimulus program. ("Not me — I was protesting!" is a common exclamation.) Two: Each and every one of them is the only person in America who has ever read the Constitution or watched Schoolhouse Rock. (Here they have guidance from Armey, who explains that the problem with "people who do not cherish America the way we do" is that "they did not read the Federalist Papers.") Three: They are all furious at the implication that race is a factor in their political views — despite the fact that they blame the financial crisis on poor black homeowners, spend months on end engrossed by reports about how the New Black Panthers want to kill "cracker babies," support politicians who think the Civil Rights Act of 1964 was an overreach of government power, tried to enact South African-style immigration laws in Arizona and obsess over Charlie Rangel, ACORN and Barack Obama's birth certificate. Four: In fact, some of their best friends are black! (Reporters in Kentucky invented a game called "White Male Liberty Patriot Bingo," checking off a box every time a Tea Partier mentions a black friend.) And five: Everyone who disagrees with them is a radical leftist who hates America.

It would be inaccurate to say the Tea Partiers are racists. What they are, in truth, are narcissists. They're completely blind to how offensive the very nature of their rhetoric is to the rest of the country. I'm an ordinary middle-aged guy who pays taxes and lives in the suburbs with his wife and dog — and I'm a radical communist? I don't love my country? I'm a redcoat? Fuck you! These are the kinds of thoughts that go through your head as you listen to Tea Partiers expound at awesome length upon their cultural victimhood, surrounded as they are by America-haters like you and me or, in the case of foreign-born president Barack Obama, people who are literally not Americans in the way they are.

It's not like the Tea Partiers hate black people. It's just that they're shockingly willing to believe the appalling horseshit fantasy about how white people in the age of Obama are some kind of oppressed minority. That may not be racism, but it is incredibly, earth-shatteringly stupid. I hear this theme over and over — as I do on a recent trip to northern Kentucky, where I decide to stick on a Rand Paul button and sit in on a Tea Party event at a local amusement park. Before long, a group of about a half-dozen Tea Partiers begin speculating about how Obamacare will force emergency-room doctors to consult "death panels" that will evaluate your worth as a human being before deciding to treat you.

"They're going to look at your age, your vocation in life, your health, your income. . . ." says a guy active in the Northern Kentucky Tea Party.

"Your race?" I ask.

"Probably," he says.

"White males need not apply," says another Tea Partier.

"Like everything else, the best thing you can do is be an illegal alien," says a third. "Then they won't ask you any questions."

An amazing number of Tea Partiers actually believe this stuff, and in the past year or so a host of little-known politicians have scored electoral upsets riding this kind of yahoo paranoia. Some are career Republican politicians like Sharron Angle, the former Nevada assemblywoman who seized on the Tea Party to win the GOP nomination to challenge Harry Reid this fall. Others are opportunistic incumbents like Jan Brewer, the Arizona governor who reversed a dip in the polls by greenlighting laws to allow police to stop anyone in a Cypress Hill T-shirt. And a few are newcomers like Joe Miller, the Alaska lawyer and Sarah Palin favorite who whipped Republican lifer Lisa Murkowski in the state's Senate primary. But the champion of champions has always been Rand Paul, who as the son of the movement's would-be ideological founder was poised to become the George W. Bush figure in the Tea Party narrative, the inheritor of the divine calling.

Since Paul won the GOP Primary in Kentucky, the Tea Party has entered a whole new phase of self-deception. Now that a few of these so-called "outsider" politicians have ridden voter anger to victories over entrenched incumbents, they are being courted and turned by the very party insiders they once campaigned against. It hasn't happened everywhere yet, and in some states it may not happen at all; a few rogue politicians, like Christine O'Donnell in Delaware, might still squeak into office over the protests of the Republican establishment. But in Kentucky, home of the Chosen One, the sellout came fast and hard.

Paul was transformed from insurgent outsider to establishment stooge in the space of almost exactly one year, making a journey that with eerie cinematic precision began and ended in the same place: The Rachel Maddow Show. When he first appeared on the air with the MSNBC leading lady and noted Bible Belt Antichrist to announce his Senate candidacy in May 2009, Paul came out blazing with an inclusive narrative that seemingly offered a realistic alternative for political malcontents on both sides of the aisle. He talked with pride about how his father's anti-war stance attracted young voters (mentioning one Paul supporter in New Hampshire who had "long hair and a lip ring"). Even the choice of Maddow as a forum was clearly intended to signal that his campaign was an anti-establishment, crossover effort. "Bringing our message to those who do not yet align themselves as Republicans is precisely how we grow as a party," Paul said, explaining the choice.

In the early days of his campaign, by virtually all accounts, Paul was the real thing — expansive, willing to talk openly to anyone and everyone, and totally unapologetic about his political views, which ranged from bold and nuanced to flat-out batshit crazy. But he wasn't going to change for anyone: For young Dr. Paul, as for his father, this was more about message than victory; actually winning wasn't even on his radar. "He used to talk about how he'd be lucky if he got 10 percent," recalls Josh Koch, a former campaign volunteer for Paul who has broken with the candidate.

Before he entered the campaign, Paul had an extensive record of loony comments, often made at his father's rallies, which, to put it generously, were a haven for people gifted at the art of mining the Internet for alternate theories of reality. In a faint echo of the racially charged anti-immigrant paranoia that has become a trademark of the Tea Party, both Paul and his father preached about the apocalyptic arrival of a "10-lane colossus" NAFTA superhighway between the U.S. and Mexico, which the elder Paul said would be the width of several football fields and come complete with fiber-optic cable, railroads, and oil and gas pipelines, all with the goal of forging a single American-Mexican state. Young Paul stood with Dad on that one — after all, he had seen Mexico's former president on YouTube talking about the Amero, a proposed North American currency. "I guarantee you," he warned, "it's one of their long-term goals to have one sort of borderless, mass continent." And Paul's anti-interventionist, anti-war stance was so far out, it made MoveOn look like a detachment of the Third Marines. "Our national security," he declared in 2007, "is not threatened by Iran having one nuclear weapon."

With views like these, Paul spent the early days of his campaign looking for publicity anywhere he could get it. One of his early appearances was on the online talk show of noted 9/11 Truth buffoon and conspiracy theorist Alex Jones. The two men spent the broadcast exchanging lunatic fantasies about shadowy government forces, with Paul at one point insisting that should Obama's climate bill pass, "we will have an army of armed EPA agents — thousands of them" who would raid private homes to enforce energy-efficiency standards. Paul presented himself as an ally to Jones in the fringe crusade against establishment forces at the top of society, saying the leaders of the two parties "don't believe in anything" and "get pushed around by the New World Order types."

Unsurprisingly, the GOP froze Paul out, attempting to exclude him from key party gatherings in Kentucky like the Fayette County Republican Party Picnic and the Boone County Republican Party Christmas Gala. "We had the entire Republican establishment of the state and the nation against us," says David Adams, who mobilized the first Tea Party meetings in Kentucky before serving as Paul's campaign manager during the primaries.

The state's Republican establishment, it must be said, is among the most odious in the nation. Its two senators — party kingmaker and Senate minority leader Mitch McConnell and mentally disappearing ex-jock Jim Bunning — collectively represent everything that most sane people despise about the modern GOP. McConnell is the ultimate D.C. insider, the kind of Republican even Republicans should wonder about, a man who ranks among the top 10 senators when it comes to loading up on pork spending. With his needle nose, pursed lips and prim reading glasses, he's a proud wearer of the "I'm an intellectual, but I'm also a narrow-minded prick" look made famous by George Will; politically his great passion is whoring for Wall Street, his most recent triumph coming when he convinced Republican voters that a proposed $50 billion fund to be collected from big banks was actually a bailout of those same banks. Bunning, meanwhile, goes with the "dumb and unashamed" style; in more than a decade of service, his sole newsworthy accomplishment came when he said his Italian-American opponent looked like one of Saddam's sons.

Paul's animus toward the state's Republican overlords never seemed greater than in August 2009, when McConnell decided to throw a fancy fundraiser in Washington for the national GOP's preferred candidate, Trey Grayson. Attended by 17 Republican senators who voted for the TARP bailout, the event was dubbed the "Bailout Ball" by Paul's people. Paul went a step further, pledging not to accept contributions from any senator who voted to hand taxpayer money over to Wall Street. "A primary focus of my campaign is that we need Republicans in office who will have the courage to say no to federal bailouts of big business," he declared.

The anti-establishment rhetoric was a big hit. Excluded from local campaign events by the GOP, Paul took his act to the airwaves, doing national TV appearances that sent his campaign soaring with Tea Party voters. "We were being shut out of a lot of opportunities in the state, so you go with what is available to you," says Adams. "And what was available was television."

In the primary almost a year later, Paul stomped Grayson, sending shock waves through the national party. The Republican candidate backed by the party's Senate minority leader had just received an ass-whipping by a Tea Party kook, a man who tried to excuse BP's greed-crazed fuck-up in the Gulf on the grounds that "sometimes accidents happen." Paul celebrated his big win by going back to where he'd begun his campaign, The Rachel Maddow Show, where he made a big show of joyously tearing off his pseudolibertarian underpants for the whole world to see — and that's where everything changed for him.

In their first interview, Maddow had softballed Paul and played nice, treating him like what he was at the time — an interesting fringe candidate with the potential to put a burr in Mitch McConnell's ass. But now, Paul was a real threat to seize a seat in the U.S. Senate, so Maddow took the gloves off and forced him to explain some of his nuttier positions. Most memorably, she hounded him about his belief that the Civil Rights Act of 1964 was an overreach of government power. The money exchange:

Maddow: Do you think that a private business has the right to say we don't serve black people?

Paul: Yeah. I'm not in favor of any discrimination of any form. But what about freedom of speech? Should we limit speech from people we find abhorrent? Should we limit racists from speaking?

Paul was pilloried as a racist in the national press. Within a day he was completely reversing himself, telling CNN, "I think that there was an overriding problem in the South so big that it did require federal intervention in the Sixties." Meanwhile, he was sticking his foot in his mouth on other issues, blasting the Americans With Disabilities Act and denouncing Barack Obama's criticism of British disaster merchant BP as "un-American."

Paul's libertarian coming-out party was such a catastrophe — the three gaffes came within days of each other — that he immediately jumped into the protective arms of Mitch McConnell and the Republican Party. "I think he's said quite enough for the time being in terms of national press coverage," McConnell said, explaining why Paul had been prevailed upon by the party to cancel an appearance on Meet the Press. Some news outlets reported that Paul canceled the appearance after a call from Karl Rove to Adams, who concedes that he did speak with Rove around that time.

Soon after, McConnell threw yet another "Bailout Ball" fundraiser in Washington — only this time it was for Rand Paul. The candidate who just a year before had pledged not to accept money from TARP supporters was now romping in bed with those same politicians. When pressed for an explanation of Paul's about-face on the bailouts, Adams offers an incredibly frank admission. "When he said he would not take money from people who voted for the bank bailout, he also said, in the same breath, that our first phone call after the primary would be to Senator Mitch McConnell," says Adams. "Making fun of the Bailout Ball was just for the primary."

With all the "just for the primary" stuff out of the way, Paul's platform began to rapidly "evolve." Previously opposed to erecting a fence on the Mexican border, Paul suddenly came out in favor of one. He had been flatly opposed to all farm subsidies; faced with having to win a general election in a state that receives more than $265 million a year in subsidies, Paul reversed himself and explained that he was only against subsidies to "dead farmers" and those earning more than $2 million. Paul also went on the air with Fox News reptile Sean Hannity and insisted that he differed significantly from the Libertarian Party, now speaking more favorably about, among other things, judicious troop deployments overseas.

Beyond that, Paul just flat-out stopped talking about his views — particularly the ones that don't jibe with right-wing and Christian crowds, like curtailing the federal prohibition on drugs. Who knows if that had anything to do with hawkish Christian icon Sarah Palin agreeing to headline fundraisers for Paul, but a huge chunk of the candidate's libertarian ideals have taken a long vacation.

"When he was pulling no punches, when he was reciting his best stuff, I felt like I knew him," says Koch, the former campaign volunteer who now works with the Libertarian Party in Kentucky. "But now, with Mitch McConnell and Karl Rove calling the shots, I feel like I don't know him anymore."

Hardcore young libertarians like Koch — the kind of people who were outside the tent during the elder Paul's presidential run in 2008 — cared enough about the issues to jump off the younger Paul's bandwagon when he cozied up to the Republican Party establishment. But it isn't young intellectuals like Koch who will usher Paul into the U.S. Senate in the general election; it's those huge crowds of pissed-off old people who dig Sarah Palin and Fox News and call themselves Tea Partiers. And those people really don't pay attention to specifics too much. Like dogs, they listen to tone of voice and emotional attitude.

Outside the Palin rally in September, I ask an elderly Rand supporter named Blanche Phelps if she's concerned that her candidate is now sucking up to the same Republican Party hacks he once campaigned against. Is she bothered that he has changed his mind on bailouts and abortion and American interventionism and a host of other issues?

Blanche shrugs. "Maybe," she suggests helpfully, "he got saved."

Buried deep in the anus of the Bible Belt, in a little place called Petersburg, Kentucky, is one of the world's most extraordinary tourist attractions: the Creation Museum, a kind of natural-history museum for people who believe the Earth is 6,000 years old. When you visit this impressively massive monument to fundamentalist Christian thought, you get a mind-blowing glimpse into the modern conservative worldview. One exhibit depicts a half-naked Adam and Eve sitting in the bush, cheerfully keeping house next to dinosaurs — which, according to creationist myth, not only lived alongside humans but were peaceful vegetarians until Adam partook of the forbidden fruit. It's hard to imagine a more telling demonstration of this particular demographic's unmatched ability to believe just about anything.

Even more disturbing is an exhibit designed to show how the world has changed since the Scopes trial eradicated religion from popular culture. Visitors to the museum enter a darkened urban scene full of graffiti and garbage, and through a series of windows view video scenes of families in a state of collapse. A teenager, rolling a giant doobie as his God-fearing little brother looks on in horror, surfs porn on the Web instead of reading the Bible. ("A Wide World of Women!" the older brother chuckles.) A girl stares at her home pregnancy test and says into the telephone, "My parents are not going to know!" As you go farther into the exhibit, you find a wooden door, into which an eerie inscription has been carved: "The World's Not Safe Anymore."

Staff members tell me Rand Paul recently visited the museum after-hours. This means nothing in itself, of course, but it serves as an interesting metaphor to explain Paul's success in Kentucky. The Tea Party is many things at once, but one way or another, it almost always comes back to a campaign against that unsafe urban hellscape of godless liberalism we call our modern world. Paul's platform is ultimately about turning back the clock, returning America to the moment of her constitutional creation, when the federal bureaucracy was nonexistent and men were free to roam the Midwestern plains strip-mining coal and erecting office buildings without wheelchair access. Some people pick on Paul for his humorously extreme back-to-Hobbesian-nature platform (a Louisville teachers' union worker named Bill Allison follows Paul around in a "NeanderPaul" cave-man costume shouting things like "Abolish all laws!" and "BP just made mistakes!"), but it's clear when you talk to Paul supporters that what they dig most is his implicit promise to turn back time, an idea that in Kentucky has some fairly obvious implications.

At a Paul fundraiser in northern Kentucky, I strike up a conversation with one Lloyd Rogers, a retired judge in his 70s who is introducing the candidate at the event. The old man is dressed in a baseball cap and shirtsleeves. Personalitywise, he's what you might call a pistol; one of the first things he says to me is that people are always telling him to keep his mouth shut, but he just can't. I ask him what he thinks about Paul's position on the Civil Rights Act.

"Well, hell, if it's your restaurant, you're putting up the money, you should be able to do what you want," says Rogers. "I tell you, every time he says something like that, in Kentucky he goes up 20 points in the polls. With Kentucky voters, it's not a problem."

In Lexington, I pose the same question to Mica Sims, a local Tea Party organizer. "You as a private-property owner have the right to refuse service for whatever reason you feel will better your business," she says, comparing the Civil Rights Act to onerous anti-smoking laws. "If you're for small government, you're for small government."

You look into the eyes of these people when you talk to them and they genuinely don't see what the problem is. It's no use explaining that while nobody likes the idea of having to get the government to tell restaurant owners how to act, the Civil Rights Act of 1964 was the tool Americans were forced to use to end a monstrous system of apartheid that for 100 years was the shame of the entire Western world. But all that history is not real to Tea Partiers; what's real to them is the implication in your question that they're racists, and to them that is the outrage, and it's an outrage that binds them together. They want desperately to believe in the one-size-fits-all, no-government theology of Rand Paul because it's so easy to understand. At times, their desire to withdraw from the brutally complex global economic system that is an irrevocable fact of our modern life and get back to a simpler world that no longer exists is so intense, it breaks your heart.

At a restaurant in Lexington, I sit down with a Tea Party activist named Frank Harris, with the aim of asking him what he thinks of Wall Street reform. Harris is a bit of an unusual Tea Partier; he's a pro-hemp, anti-war activist who supported Dennis Kucinich. Though he admits he doesn't know very much about the causes of the crash, he insists that financial reform isn't necessary because people like him can always choose not to use banks, take out mortgages, have pensions or even consume everyday products like gas and oil, whose prices are set by the market.

"Really?" I ask. "You can choose not to use gas and oil?" My awesomely fattening cheese-and-turkey dish called a "Hot Brown" is beginning to congeal.

"You can if you want to," Harris says. "And you don't have to take out loans. You can save money and pay for things in cash."

"So instead of regulating banks," I ask, "your solution is saving money in cash?"

He shrugs. "I'm trying to avoid banks at every turn."

My head is starting to hurt. Arguments with Tea Partiers always end up like football games in the year 1900 — everything on the ground, one yard at a time.

My problem, Frank explains, is that I think I can prevent crime by making things illegal. "You want a policeman standing over here so someone doesn't come in here and mug you?" he says. "Because you're going to have to pay for that policeman!"

"But," I say, confused, "we do pay for police."

"You're trying to make every situation 100 percent safe!" he shouts.

This, then, is the future of the Republican Party: Angry white voters hovering over their cash-stuffed mattresses with their kerosene lanterns, peering through the blinds at the oncoming hordes of suburban soccer moms they've mistaken for death-panel bureaucrats bent on exterminating anyone who isn't an illegal alien or a Kenyan anti-colonialist.

The world is changing all around the Tea Party. The country is becoming more black and more Hispanic by the day. The economy is becoming more and more complex, access to capital for ordinary individuals more and more remote, the ability to live simply and own a business without worrying about Chinese labor or the depreciating dollar vanished more or less for good. They want to pick up their ball and go home, but they can't; thus, the difficulties and the rancor with those of us who are resigned to life on this planet.

Of course, the fact that we're even sitting here two years after Bush talking about a GOP comeback is a profound testament to two things: One, the American voter's unmatched ability to forget what happened to him 10 seconds ago, and two, the Republican Party's incredible recuperative skill and bureaucratic ingenuity. This is a party that in 2008 was not just beaten but obliterated, with nearly every one of its recognizable leaders reduced to historical-footnote status and pinned with blame for some ghastly political catastrophe. There were literally no healthy bodies left on the bench, but the Republicans managed to get back in the game anyway by plucking an assortment of nativist freaks, village idiots and Internet Hitlers out of thin air and training them into a giant ball of incoherent resentment just in time for the 2010 midterms. They returned to prominence by outdoing Barack Obama at his own game: turning out masses of energized and disciplined supporters on the streets and overwhelming the ballot box with sheer enthusiasm.

The bad news is that the Tea Party's political outrage is being appropriated, with thanks, by the Goldmans and the BPs of the world. The good news, if you want to look at it that way, is that those interests mostly have us by the balls anyway, no matter who wins on Election Day. That's the reality; the rest of this is just noise. It's just that it's a lot of noise, and there's no telling when it's ever going to end.

This was an article from the October 15, 2010 issue of Rolling Stone, available on newsstands on October 1, 2010.

Sunday, September 26, 2010

Isle of Mann TTvideo


Here's a video with commentary taken on a motorcycle actually racing in the Isle of Mann Tourist Trophy. Have a look:


Isle of Mann TT video

Tuesday, September 21, 2010

One and a Half Cheers for American Decline


One and a Half Cheers for American Decline

The Future’s Not Ours -- and That’s Good News

by Tom Engelhardt

Compare two assessments of the American future:

In the latest NBC News/Wall Street Journal poll in which 61% of Americans interviewed considered “things in the nation” to be “on the wrong track,” 66% did “not feel confident that life for our children’s generation will be better than it has been for us.” (Seven percent were “not sure,” and only 27% “felt confident.”) But here was the polling question you’re least likely to see discussed in your local newspaper or by Washington-based pundits: “Do you think America is in a state of decline, or do you feel that this is not the case?” Sixty-five percent of respondents chose as their answer: “in a state of decline.”

Meanwhile, Afghan war commander General David Petraeus was interviewed last week by Martha Raddatz of ABC News. Asked whether the American war in Afghanistan, almost a decade old, was finally on the right counterinsurgency track and could go on for another nine or ten years, Petraeus agreed that we were just at the beginning of the process, that the “clock” was only now ticking, and that we needed “realistic expectations” about what could happen and how fast. “Progress” in Afghanistan, he commented, was often so slow that it could feel like “watching grass grow or paint dry.”

Now, I’m not a betting man, but I’d head for Vegas tomorrow and put my money down against the general and on Americans generally when it comes to assessing the future. I’d put money on the fact that the United States is indeed “in a state of decline” and I’d make a wager at odds that U.S. troops won’t be in Afghanistan in nine or ten years. And I’d venture to suggest as well that the two bets would be intimately connected, and that the American people understand at a visceral level far more than Washington cares to know about our real situation in the world. And I’d put my money on one more thing: however lousy it may feel, it’s not all bad news, not by a long shot.

Decline Today, Not Tomorrow

Let’s start with Afghanistan. Yes, we’ve been “in,” or intimately involved with, Afghanistan not just for almost a decade, but for a significant chunk of the last 30 years. And for much of that time we’ve poured our wealth into creating chaos and mayhem there in the name of “freedom,” “liberation,” “reconstruction,” and “nation-building.” We started in the distant days of the Reagan administration with the CIA funneling vast sums of money and advanced weaponry into the anti-Soviet jihad. At that time, we happily supported outright terror tactics, including car-bomb and even camel-bomb attacks on the Soviets in Afghan cities and bomb attacks on movie theaters as well. These acts were committed by Islamic fundamentalists of the most extreme sort, and our officials, labeling them “freedom fighters,” couldn’t say enough nice things about them.

That was our expensive first decade in Afghanistan. In 1989, when the Russians withdrew in defeat, we departed in triumph. You know the next round well enough: we returned in 2001, armed and eager, carrying suitcases full of cash, and ready to fight many of the same fundamentalists we (or our allies the Pakistanis) had set loose, funded, and armed in the previous two decades.

If, back in 1979, you had told a polling group of Americans that their country would soon embark on a never-ending war that would involve spending hundreds of billions of dollars, building staggering numbers of military bases, squandering startling sums (including at least $27 billion to train Afghan military and police forces whose most striking trait is desertion), losing significant numbers of American lives (and huge numbers of Afghan ones), and launching the first robot air war in history, and then asked them to pick the likely country, not one in a million would have chosen Afghani-where(?). And yet, today, our leading general (“perhaps the greatest general of his generation”) doesn’t blink at the mention of another 9 or 10 years doing more of the same.

After 30 years, it might almost seem logical. Why not 10 more? The answer is that you have to be the Washington equivalent of blind, deaf, and dumb not to know why not, and Americans aren’t any of those. They know what Washington is in denial about, because they’re living American decline in the flesh, even if Washington isn’t. Not yet anyway. And they know they’re living it not in some distant future, but right now.

Here’s a simple reality: the U.S. is an imperial power in decline -- and not just the sort of decline which is going to affect your children or grandchildren someday. We’re talking about massive unemployment that’s going nowhere and an economy which shows no sign of ever returning good jobs to this country on a significant scale, even if “good times” do come back sooner or later. We’re talking about an aging, fraying infrastructure -- with its collapsing bridges and exploding gas pipelines -- that a little cosmetic surgery isn’t going to help.

And whatever the underlying historical trends, George W. Bush, Dick Cheney, and company accelerated this process immeasurably. You can thank their two mad wars, their all-planet-all-the-time Global War on Terror, their dumping of almost unlimited taxpayer dollars into the Pentagon and war planning for the distant future, and their scheme to privatize the military and mind-meld it with a small group of crony capitalist privateers, not to speak of ramping up an already impressively over-muscled national security state into a national state of fear, while leaving the financial community to turn the country into a giant, mortgaged Ponzi scheme. It was the equivalent of driving a car in need of a major tune-up directly off the nearest cliff -- and the rest, including the economic meltdown of 2008, is, as they say, history, which we’re all now experiencing in real time. Then, thank the Obama administration for not having the nerve to reverse course while it might still have mattered.

Public Opinion and Elite Opinion

The problem in all this isn’t the American people. They already know the score. The problem is Afghan war commander Petraeus. It’s Secretary of Defense Robert Gates. It’s Secretary of State Hillary Clinton. It’s National Security Adviser James Jones. It’s all those sober official types, military and civilian, who pass for “realists,” and are now managing “America’s global military presence,” its vast garrisons, its wars and alarums. All of them are living in Cloud Cuckoo Land.

Ordinary Americans aren’t. They know what's going down, and to judge by polls, they have a perfectly realistic assessment of what needs to be done. Jim Lobe of Inter Press Service recently reported on the release of a major biennial survey, "Constrained Internationalism: Adapting to New Realities," by the Chicago Council on Global Affairs (CCGA). Here’s the heart of it, as Lobe describes it:

“The survey’s main message, however, was that the U.S. public is looking increasingly toward reducing Washington’s role in world affairs, especially in conflicts that do not directly concern it. While two-thirds of citizens believe Washington should take an ‘active part in world affairs,’ 49% -- by far the highest percentage since the CCGA first started asking the question in the mid-1970s -- agreed with the proposition that the U.S. should ‘mind its own business internationally and let other countries get along the best they can on their own.’

“Moreover, 91% of respondents agreed that it was ‘more important at this time for the [U.S.] to fix problems at home’ than to address challenges to the (U.S.) abroad -- up from 82% who responded to that question in CCGA’s last survey in 2008.”

That striking 49% figure is no isolated outlier. As Charles Kupchan and Peter Trubowitz point out in an article in the journal International Security, a December 2009 Pew poll got the same 49% response to the same “mind its own business” question. It was, they comment, “the highest response ever recorded, far surpassing the 32% expressing that attitude in 1972, during the height of opposition to the Vietnam War.”

Along the same lines, the CCGA survey found significant majorities expressing an urge for their government to cooperate with China, but not actively work to limit the growth of its power, and not to support Israel if it were to attack Iran. Similarly, they opted for a “lighter military footprint” and a lessening in the U.S. role as “world policeman.” When it comes to the Afghan War specifically, the latest polls and reporting indicate that skepticism about it continues to rise. All of this adds up not to traditional “isolationism,” but to a realistic foreign policy, one appropriate to a nation not garrisoning the planet or dreaming of global hegemony.

This may simply reflect a visceral sense of imperial decline under the pressure of two unpopular wars. Explain it as you will, it’s exactly what Washington is incapable of facing. A CCGA survey of elite, inside-the-Beltway opinion would undoubtedly find much of America’s leadership class still trapped inside an older global paradigm and so willing to continue pouring hundreds of billions of dollars into Afghanistan and elsewhere rather than consider altering the American posture on the planet.

Imperial Denial Won’t Stop Decline

Despite much planning during and after World War II for a future role as the planet’s preeminent power, Washington used to act as if its “responsibilities” as the “leader of the Free World” had been thrust upon it. That, of course, was before the Soviet Union collapsed. After 1991, it became commonplace for pundits and officials alike to refer to the U.S. as the only “sheriff” in town, the “global policeman,” or the planet’s “sole superpower.”

Whatever the American people might then have thought a post-Cold War “peace dividend” would mean, elites in Washington already knew, and acted accordingly. As in any casino when you’re on a roll, they doubled down their bets, investing the fruits of victory in more of the same -- especially in the garrisoning and control of the oil-rich Persian Gulf region. And when the good fortune only seemed to continue and the sole enemies left in military terms proved to be a few regional “rogue states” of no great importance and small non-state groups, it went to their heads in a big way.

In the wake of 9/11, that “twenty-first century Pearl Harbor,” the new crew in Washington and the pundits and think-tankers surrounding them saw a planet ripe for the taking. Having already fallen in love with the U.S. military, they made the mistake of believing that military power and global power were the same thing and that the U.S. had all it needed of both. They were convinced that a Pax Americana in the Greater Middle East was within their grasp if only they acted boldly, and they didn’t doubt for a moment that they could roll back Russia -- they were, after all, former Cold Warriors -- and put China in its place at the same time. Their language was memorable. They spoke of “cakewalks” and a “military lite,” of “shock and awe” aerial blitzes and missions accomplished. When they joked around, a typical line went: “Everyone wants to go to Baghdad. Real men want to go to Tehran.”

And they meant it. They were ready to walk the walk -- or so they thought. This was the remarkably brief period when the idea of “empire” or “empire lite” was proudly embraced and friendly pundits started comparing the United States to the Roman or British empires. It’s hard to believe how recently that was and how relatively silent the present crew in Washington has fallen when it comes to the glories of American power.

Now, they just hope to get by, in itself a sign of decline. That’s why we’ve entered a period when, except for inanely repetitious, overblown references to the threat of al-Qaeda, no one in Washington cares to offer Americans an explanation -- any explanation -- of why we’re fighting globally. They prefer to manage the pain, while holding the line. They prefer to leak the news, for example, that in Afghanistan no policy changes are in the offing any time soon. As the Washington Post reported recently, “The White House calculus is that the strategy retains enough public and political support to weather any near-term objections. Officials do not expect real pressure for progress and a more precise definition of goals to build until next year…”

It’s not that they don’t see decline at all, but that they prefer to think of it as a mild, decades-long process, the sort of thing that might lead to a diminution of American power by 2025. At the edges, however, you can feel other assessments creeping up -- in, for instance, former Condoleezza Rice National Security Council deputy Robert Blackwill’s recent call for the U.S. to pull back its troops to northern Afghanistan, ceding the Pashtun south to the Taliban.

Sooner or later -- and I doubt it will take as long as many imagine -- you’ll hear far more voices, ever closer to the heartlands of American power, rising in anxiety or even fear. Don’t think nine or ten years either. This won’t be a matter of choice. Our leadership may be delusional, but there will be nothing more to double down with, and so “America’s global military presence” will begin to crumble. And whether they want it or not, whether there’s even an antiwar movement or not, those troops will start coming home, not to a happy nation or to an upbeat situation, but home in any case.

It may sound terrible, and in Afghanistan and elsewhere, terrible things will indeed happen in the interim, while at home the economy will, at best, limp along, the infrastructure will continue to deteriorate, more jobs will march south, and American finances will worsen. If we’re not quite heading for what Arianna Huffington, in her provocative new book, calls “Third World America,” we’re not heading for further fame and fortune either.

But cheer up. The news isn’t all bad. Truly. We’ve just gotten way too used to the idea that the United States must be the planet’s preeminent nation, the global hegemon, the sole superpower, numero uno. We’ve convinced ourselves that neither we nor the world can exist without our special management.

So here’s the good news: it’s actually going to feel better to be just another nation, one more country, even if a large and powerful one, on this overcrowded planet, rather than the nation. It’s going to feel better to only arm ourselves to defend our actual borders, rather than constantly fighting distant wars or skirmishes and endlessly preparing for more of the same. It’s going to feel better not to be engaged in an arms race of one or playing the role of the globe’s major arms dealer. It’s going to feel better to focus on American problems, maybe experiment a little at home, and offer the world some real models for a difficult future, instead of talking incessantly about what a model we are while we bomb and torture and assassinate abroad with impunity.

So take some pleasure in this: our troops are coming home and you’re going to see it happen. And in the not so very distant future it won’t be our job to “police” the world or be the “global sheriff.” And won’t that be a relief? We can form actual coalitions of equals to do things worth doing globally and never have to organize another “coalition of the billing,” twisting arms and bribing others to do our military bidding.

Since by the time we get anywhere near such a world, our leaders will have run this country into the ground, it’s hard to offer the traditional three cheers for such a future. But how about at least one-and-a-half prospective cheers for the possible return of perspective to our American world, for a significant lessening, even if not the decisive ending, of an American imperial role and of the massive military “footprint” that goes with it.

It’s going to happen. Put your money on it.

And thank you, George W. Bush (though I never thought I’d say that), you’ve given an old guy a shot at seeing the fruits of American decline myself. I’m looking forward.

[Note: To view the NBC News/Wall Street Journal poll mentioned in paragraph two of this piece, click here (pdf file). My thanks go to two friends, Jim Peck and Jim Lobe, for conversations that made a difference in writing this essay, and to Christopher Holmes and Andy Kroll for keeping me honest. To read more of Lobe’s work, check out his blog, Lobelog, filled with energetic pieces by him and especially his young associates and also his archive of articles. Thanks as well go to Antiwar.com (as well as Jason Ditz’s daily summaries at that site), Juan Cole’s Informed Comment website, and Paul Woodward’s the War in Context website, all invaluable to me when it comes to gathering information daily on our various wars. (While you’re at it, check out this provocative little piece by Woodward on the way weapons outlive the empires that peddle them.)]

Tom Engelhardt, co-founder of the American Empire Project, runs the Nation Institute's TomDispatch.com. He is the author of The End of Victory Culture: a History of the Cold War and Beyond, as well as of a novel, The Last Days of Publishing. His most recent book is The American Way of War: How Bush's Wars Became Obama's (Haymarket Books).

Tuesday, September 7, 2010

The Fallacies of Equilibrium Thinking.



The Fallacies of Equilibrium Thinking.

Francis P. Ferguson PhD.

Economics is all about equilibrium. Equilibrium is, generally, a balancing of countervailing forces such that a position of stability and repose is achieved. The first economist, Adam Smith, saw economic activity as a balancing (an equilibrium) between greed and competition. Where businessmen might want to produce inferior products, or command prices in the market, their efforts would be foiled by competitors who would produce excellent products and who would undercut the prices of one attempting to control the market. No one producer would get too big, because there would always be competitors to whittle away their advantages.

In product and service markets, current prices reflect a balancing of supply with demand. In Adam Smith’s view, each good or service had a “value” toward which market price would inevitably move. This “value” reflected the product’s “cost of production”, with a bit of profit for the producer as well. If the product were scarce, market price would rise above value, and both increased supplies drawn by the lure of higher prices and demand diminished by the same forces, would lead to a price that would gradually fall to the natural “value” of the product. Since price would gravitate to the natural “value” price, excursions about the value price were not of great interest to Classical economists. These market price excursion were mere epiphenomena, of passing interest at best when compared to the inevitable equilibrium at the natural price, the value of the object at hand.

Karl Marx, also a Classical economist, had his own theory of value. For Marx, the value of a product was the socially necessary labor time needed to produce it. Marx’s theory of value formed the basis of his argument for Capitalism’s inevitable collapse.

The Capitalist’s profit, Marx argued, arose because the worker was not paid the entire value of what he produced. The natural wage for labor, Marx suggested, was the socially necessary amount of labor time needed to produce labor. Wages were naturally subsistence wages because there was an “army” of unemployed who kept wages at subsistence levels—the amount needed to produce (sustain) labor.[i]

With wages pressed to subsistence levels, capitalists were able to pay only the amount needed to sustain labor, and keep the remaining value of what workers produced. Let’s say a worker toiled for 12 hours. In that time, he would produce 12 hours of value. The hours of value needed to support him might be only 4 hours, so the capitalist takes 8 hours of value and pays the worker 4 hours. The 8 hours are the source of profit. Marx called this surplus value. It was the capitalist’s only source of profit. Well almost. New machines (ones that other capitalists generally didn’t yet have) could reduce the amount of labor time embedded in your product. Since the market price reflected the labor time required by less efficient producers, the early adopting capitalist would be paid at the current price reaping, in process, a short term “rent”. Still, since price would eventually drop to the new equilibrium level when all capitalists (or most of them) adopted the new machinery, Marx wasn’t ready to pay much attention to this interim source of additional profit. Things went to equilibrium, and equilibrium (not the epiphenomena of moving from one to the other) was the normal and interesting state of affairs.

The problem with this sort of thinking is that these movements from one target equilibrium to another are the very stuff and fabric of economic life. The simple fact is we rarely, if ever, achieve an equilibrium as defined by economists. By the time we approach one, other factors have changed and we’re directed to a different outcome in an endlessly repeating cycle. This is why Marx’s prediction of the collapse of capitalism was so completely wrong.

Marx was so fixated on the long run equilibrium outcomes where profits fall for capitalists, capital costs rise and fewer workers remain to exploit that he failed to consider that the reality of capitalism wasn’t these long run equilibriums where profit ended and revolution arose, but rather was the ongoing process of capitalism’s adapting to an endless stream of new technologies, processes and products the pursuit of which sustained profitability to the present. These innovations and the activities they generate should have interested Marx. They’re the actual source of capitalism’s long run profitability, and they would have allowed Marx to deal with the central paradox his long run equilibrium model presented. How can the capitalists’ profitability fall, and the wages of labor fall when the total output is getting larger and larger. Why is everyone “starving” while the “pie” grows ever larger. The answer is that, during these inter-equilibrium flutterings, innovation flourishes, total output rises and everyone gets a larger share of the pie—even if the proportions going to each class remain the same.

Economists have long, though not universally, championed free trade. The argument, put deceptively simply, is that if each country produced what it had a comparative advantage[ii] at (was better at), and traded for what it was not better at, then global output would be maximized. The iron logic of the proposition is hard to refute. Still, global output won’t be instantly maximized. That will take time. The equilibrium outcome is global maximization of production. That’s what economists fixate on. There will be “dislocations” they admit. Some people will lose jobs and find it necessary to move to newer jobs in industries where the country has a comparative advantage. But these dislocations are “epiphenomena” of secondary interest to the maximizing equilibrium. Modern economists would be well advised to focus on these dislocations. They have much to tell us and form the very fabric of our economic lives.

The theory of comparative advantage is actually quite old. It originated in the early 19th century, and was formulated by economist David Ricardo. Ricardo built his argument using England and France as examples of trading partners. In his example, France has a comparative advantage in wine, and England in wool clothing. Ricardo argues that France should produce wine, and England should make wool clothing and the two countries trade to get the wine and wool they need. Ricardo could afford to ignore the “dislocations” suffered by French woolen workers and English wine makers. These were very similar economies, with similar wage levels and technology. The movement to woolen manufacture in England and wine making in France would probably be accomplished quickly without much pain. In the modern world, things are very different.

The movement toward free trade in the post WWII era has involved moving manufacturing away from Europe and the US, toward very low wage economies such as China. The comparative advantage the China possesses is not a superior terroir for wine making, of a better climate for woolen production, or even superior technology of any sort. It’s “comparative advantage” is cheap—and one means very cheap—labor. For economists to talk about the emerging equilibria where all will be better off, while ignoring the trajectory of wages and living standards in the west, it to miss the point that these dislocations are very nearly permanent.

The only way for these “dislocations” of American workers to stabilize is for Americans to produce as cheaply as the Chinese. Since in many cases, the Chinese use the same technology we use to produce goods, we cannot argue that our “superior” technology will provide is work and wealth. Only a wage level commensurate with China’s will do the job. That’s what this “inter-equilibrium” adjustment process entails. The average Americana will become much, much poorer. Those who run the companies who have moved production off shore shall become much richer.

Once again, we don’t actually get to the equilibrium of maximum output that captivates the economic mind. We live in an ongoing flow where we head hither and yon based on changing factors that buffet us. Economists have cast us into open and unfettered competition with ancient and sophisticated cultures whose people are clever and resourceful and willing to work for a tiny fraction of what Americans have come to expect. These economists have fallen for the illusion of the long run equilibrium without more than a glance at the economic horror that faces workers in Europe and the USA. In the short run, we become ever poorer. In the long run, as John Maynard Keynes allowed, we’re all dead



[i] Wages might rise above the ”value” of labor (amount of socially necessary labor needed to sustain labor). Certain occupations might become relatively scarce. In this case wages would rise and capitalists would tend to substitute machinery for those workers as rapidly as possible. Eventually, wages would fall to subsistence as more workers trained for that occupation, and machines reduced the number of available openings. Like all classical economists, this “bouncing about” in prices (wages) didn’t interest Marx much since things would return to the equilibrium

[ii] [ii] The explanation of comparative advantage is a bit more complex. It has to do with the rate at which a country can transform resources into various products. If, for example, Oregon can transform it’s resources into timber at a lesser sacrifice other products than, say, California; and if California can transform resources into citrus fruit at less sacrifice of other products than can Oregon, then Oregon has a comparative advantage in timber, and California’s comparative advantage is citrus.

Happy Fuckin' Labor Day!




Happy Fuckin' Labor Day!

By Michael Moore

September 07, 2010 "Michael Moore" -- September 06, 2010 -- Dear Rahm Emanuel:


Happy Fuckin' Labor Day! I read this week that — according to a new book by Steven Rattner, your administration's former "Car Czar" — during White House meetings about how to save the tens of thousands of jobs that would be lost if GM and Chrysler collapsed, your response was, "Fuck the UAW!"

Now, I can't believe you actually said that. Maybe Rattner got confused because you drop a lot of F-bombs, or maybe your assistant was trying to order lunch and you said (to Rattner) "Fuck you" and then to your assistant "A&W, no fries."

Or maybe you did mean Fuck the UAW. If so, let me give you a little fucking lesson (a lesson I happen to know because my fucking uncle was in the sit-down strike that founded the fucking UAW).

Before there were unions, there was no middle class. Working people didn't get to send their kids to college, few were able to own their own fucking home, nobody could take a fucking day off for a funeral or a sick day or they might lose their fucking job.

Then working people organized themselves into unions. The bosses and the companies fucking hated that. In fact, they were often overheard to say, "Fuck the UAW!!!" That's because the UAW had beaten one of the world's biggest industrial corporations when they won their battle on February 11, 1937, 44 days after they'd taken over the GM factories in Flint. Inspired by their victory, workers struck almost every other fucking industry, and union after union was born. Had World War II not begun and had FDR not died, there would have been an economic revolution that would have given everyone — everyone — a fucking decent life.

Nonetheless labor unions did create a middle class for the majority (even companies that didn't have unions were forced to pay at or near union wages in order to attract a workforce) and that middle class built a great country and a good life. You see, Rahm, when people earn a fucking good wage, they spend it on stuff, which then creates more good paying jobs, and then the middle class grows fucking big. Did you know that back when I was a kid if you had a parent making a union wage, only one parent had to work?! And they were home by 3 or 4pm, 5:30 at the latest! We had dinner together! Dad had four weeks paid vacation. We all had free health and dental care. And anyone with decent grades went to college and it didn't fucking bankrupt them. (And if you ever used the F-word, the nuns would straighten you out in ways that even you couldn't bear to hear about).

Then a Republican fired all the air traffic controllers, a Democrat gave us NAFTA and millions of jobs were moved overseas (hey, didn't you work in that White House, too? "Fuck the UAW, baby!"). Unions got scared and beaten down, a frat boy became president and, like a drunk out of control, spent all our fucking money and our children's money, too. Fuck.

And now your assistant's grandma has to work at fucking McDonald's. Ask her for pictures of what the middle class life used to look like. It was effing cool! I'll bet grandma doesn't say "Fuck the UAW!"

Hey, don't get me wrong, Rahm. I fucking like you. You single-handedly got the House returned to the Dems in 2006. But you and your boss better do something fucking quick to put people back to work. How 'bout making it a crime to take an American job and move it out of the country? In other words, treat it as if It were a fucking national treasure like you would if someone stole the Declaration of Independence out of the National Archives or some poacher stole eggs out of the nest of an America bald eagle.

Or how 'bout arresting some of those Wall Street guys who fucking stole our money, the money that ran the American economy. Now that would take some fucking guts.

And maybe, just maybe, that one act of real guts might save your ass come November 2nd.

Oh, I can just hear you now: "Fuck Michael Moore!" No problem. But Fuck the UAW? How 'bout if I just leave off the ‘A’ and the ‘W’?

Yours,
Michael Moore

P.S. I'd like to pass on something that Rep. Alan Grayson wrote today:

Here is what Robert Kennedy had to say on Labor Day, 42 years ago:

"Too much and too long, we seem to have surrendered community excellence and community values in the mere accumulation of material things. Our gross national product ... if we should judge America by that - counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage.

"It counts special locks for our doors and the jails for those who break them. It counts the destruction of our redwoods and the loss of our natural wonder in chaotic sprawl. It counts napalm and the cost of a nuclear warhead, and armored cars for police who fight riots in our streets. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children.

"Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans."

When Robert Kennedy said these words, the unemployment rate in America was 3.7%. Today, it is almost three times as high. Too many of our working brothers and sisters are out of work, thanks to over a decade of economic mismanagement. 10% of us are unemployed, and the other 90% work like dogs to try to avoid joining them. Which is just what the bosses want.

But it doesn't have to be that way. I look forward to a Labor Day where every worker has a job, every worker has a pension, every worker has paid vacations, and every worker has the health care to enjoy life. Our Republican opponents call that France. I call it America, an America that is Number One.

Not #1 in wasted military expenditures.

Not #1 in number of foreign countries occupied.

Number One in jobs. Number One in health. Number One in education. Number One in happiness.

As Robert Kennedy famously said, "I dream of things that never were, and ask 'why not?'" Why not? Let's make it happen.

And then all of us who are Americans, including the ones today who are jobless, homeless, sick and suffering, we all can then say, "I am proud to be an American."

Monday, September 6, 2010

The Real Economy is Jobs and Paychecks


The Real Economy is Jobs and Paychecks

The Economy Is the Number on Your Paycheck, Not the Stockmarket's Ups and Downs

By Robert Reich

September 04, 2010 - Robert Reich's Blog - What
passes for business reporting in the United States is too often a series of breathless reports about the stock market. When the Dow rises precipitously, as it did today (Wednesday), the business press predicts an end to the Great Recession. When the stock market plummets, as it did last week, the Great Recession is said to be worsening.

Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there's no relationship at all. Over time, weather and geology interact but the results aren't evident for many years. The biggest impact of the weather is on peoples' moods, as are the daily ups and downs of the market.

The real economy is jobs and paychecks, what people buy and what they sell. And the real economy -- even viewed from a worldwide perspective -- is as precarious as ever, perhaps more so.

Today's rally was triggered by news that one of China's official measures of its growth -- its Purchasing Managers Index -- rose. The index had been in decline for three straight months.

Why should an obscure measurement on the other side of the world cause stock markets in New York, London, and Frankfurt to rally? Because China is so large and its needs seemingly limitless that its growth has been about the only reliable source of global demand.

Many big American companies have been showing profits because they're doing ever more business in China while cutting payrolls at home. American consumers aren't buying much of anything because they've lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load (the latest figures show more consumer debt delinquent now than last year and a surge in personal bankruptcies). The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell.

Europe is in almost as much a mess. The problem there isn't just or even mainly that Greece and other nations on the "periphery" have too much public debt. A bigger problem is European consumers aren't buying nearly enough to generate more jobs. Unemployment remains high, and the trend is bad. Manufacturing growth there has slowed to its weakest pace in six months. Yet bizarrely, Europe's large economies -- Britain, Germany, and France -- are paring back their public budgets. It's exactly the wrong time, and a recipe for disaster.

Germany's so-called "job miracle" (as Chancellor Angela Merkel calls it) is more mirage than miracle. Most of the gains in employment there have come from part-time jobs, often at low pay. Average annual net income per German employee continues to drop. This explains why domestic demand there is so sluggish and why Germany is desperately dependent on its exports of machinery and manufacturing components to Asia, especially China.

Meanwhile, Japan, now the world's third-largest economy, is a basket case. Japanese consumers aren't buying much of anything, and why would they? The country is still in the grip of a deflationary cycle that shows no end. Japanese consumers reason if they can buy it cheaper next week there's no reason to buy now. Basically the only thing keeping Japan's economy going are its exports of cars and electronic components to China.

Australia is booming, but look closely and you see the same buyer. Australia is making a boatload of money selling its minerals and raw materials to China (Australia is fast becoming one big Chinese mine shaft). The Brazilian economy is soaring. Why? Exports of wheat and cattle to China. Middle East oil producers are getting richer. Why? China's insatiable thirst for oil.

Elsewhere around the globe the picture is as uncertain. Much of Pakistan is under water. Much of the rest of the Middle East is under tyrannical or corrupt regimes. Russia has suffered such a dry spell it's hoarding wheat. Despite its wealthy few, India's masses are still terribly poor.

The stock market could plunge tomorrow or the next day because the world's economic fundamentals are so precarious.

The global economy cannot be sustained by one big, voracious nation -- especially one that's suffering bouts of civil unrest, actively repressing dissent, suffocating under a blanket of pollution and coping with other environmental hazards, and whose biggest companies are run by the state.

Robert B. Reich has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He also served on President Obama's transition advisory board. His latest book is Supercapitalism.