RSN Fundraising Banner
FB Share
Email This Page
add comment

Black writes: "A little bit of economics can be a truly terrible thing, for the introductory classes in micro and macro-economics are the most dogmatic and myth-filled part of the neoliberal curriculum."

William K. Black; lawyer, author and professor at the University of Missouri Kansas City. (photo: unknown)
William K. Black; lawyer, author and professor at the University of Missouri Kansas City. (photo: unknown)

Deprogramming Progressives

By William K. Black, Reader Supported News

28 December 12


little bit of economics can be a truly terrible thing, for the introductory classes in micro and macro-economics are the most dogmatic and myth-filled part of the neoliberal curriculum. Dogmas that have been falsified for 75 years (such as austerity) are taught as revealed truth. The poor indoctrinated student is then launched into the world "knowing" that austerity is the answer and that mass unemployment and prolonged recessions are small prices to be paid (by others) to achieve the holy grail of a balanced budget. Students are taught that national budgets are really just like household budgets.

These dogmas are not simply false, they are self-destructive and cruel. Neoliberal economics is so bad and has gone downhill at such a rapid rate that it now worships the economic analog to bleeding patients -- austerity -- as a response to a Great Recession. Millions of people are indoctrinated annually into believing this long-falsified nonsense, and that includes people who consider themselves progressives.

The remarkable aspect of neoliberal economics is that the power of its myth has survived for many progressives even after its failed dogmas caused massive economic destruction, massive elite fraud with impunity, and crony capitalism so corrupt that it cripples democracy. Indeed, the brainwashing they received is so effective that even after the eurozone ran a massive experiment with austerity that proved (again) to be a catastrophic failure they remain neo-liberal acolytes. This column discusses three examples that exemplify the problem.

The Guardian (U.K.)

The Guardian is the U.K.'s most famous paper of the left, but its finance editor's embrace of the neoliberal austerity myth is passionate and inane. Consider this remarkably incoherent discussion of the "fiscal cliff" by the paper's finance editor.

"The fiscal cliff explained: what to know about the biggest story in Washington

Is America really heading off a cliff? Why can't Congress and the president strike a deal? Get the lowdown with our handy primer."

I chose the Guardian's coverage as the first example because it begins with the most basic and common neoliberal myth supporting austerity: a nation with a sovereign currency is really just like a household.

"So let's start at the beginning: what is the fiscal cliff?

It's not one cliff, but two things: a group of spending cuts and tax hikes that will come into effect on January 2.

Why now?

The US has about $2.3tn of money coming in, and it spends about $3.6tn. So imagine you were making $23,000 a year and spending $36,000. What would happen? You'd be in debt, and you'd have to cut your spending. The US is in the same pickle. Except, instead of a few thousand, it has to cut $1.3tn."

The U.K. did not adopt the euro, so it retains a sovereign currency. The U.K. allows the value of the Pound to float freely and it borrows overwhelmingly in its own currency. The Guardian, therefore, has no excuse for failing to understand a national economy like the U.S. that also has a sovereign currency. A nation that borrows in its own freely-floating sovereign currency is not a target for bond vigilantes. It can and should spend considerably more than it brings in through tax revenues in response to a recession. That is what "automatic stabilizers" do. Automatic stabilizers greatly reduce the severity and length of recessions. Austerity does the opposite. Nations with sovereign currencies can create money directly through key strokes on the central bank's computer or by borrowing at exceptionally low interest rates during a recession. The U.S., the U.K., and Japan all borrow long-term (10 years) at interest rates below two percent because they have sovereign currencies. Nations with sovereign currencies typically run budget deficits in most years. The U.S. has run a budget deficit over the great bulk of its history.

If a household reduces its spending because its income falls during a recession there is a negligible effect on the Nation's economy. If a national government cuts spending because a recession reduces its income it directly reduces public sector demand and indirectly reduces private sector demand. A recession occurs when demand is seriously inadequate. Governmental austerity inflicts a far more severe recession on the nation by further reducing demand. A household and a Nation should follow the opposite strategy when their incomes fall sharply. The Guardian's claim that they should follow the same strategy shows their indoctrination into one of neoliberalism's most destructive myths. The fact that the Guardian is making this claim in December 2012, after seeing the recession that austerity inflicted on the eurozone, proves that the problem is dogma, for only dogma is impervious to facts that repeatedly falsify its predictions.

The Guardian, of course, knows that the eurozone has been forced back into recession by the "troika's" policies, but it reverses the causality. Here is a related piece by the same finance editor about the world's reaction to the failure to reach a deal on the "fiscal cliff."

"Q: What does the rest of the world think of this?

They think we're ridiculous, and that we're playing fast and loose with not just our own economy, but that of the world. IMF chief Christine Lagarde said the US is becoming its own worst enemy by delaying a decision. Still, this is a case of pots and kettles. It's not like Europe can really look down on us: they've been delaying the same hard decisions on spending cuts for over three years and have been on the brink of a meltdown many times since. Should we be smart enough to look at their example and avoid the same troubles? Yes, technically. But this is the nature of negotiations: they go down to the wire."

The Guardian's remarkable explanation of why the eurozone has been forced back into recession is: insufficient and delayed austerity! If only the eurozone had made promptly made deeper "spending cuts" things would have been much better. That "logic" comes from assuming that nations are just like households. The Guardian's answer to the fact that bleeding the patient makes the patient weaker is to bleed them more, and faster.

Note that the Guardian's finance editor also seems to believe that sovereign monetary systems like the U.S. and the U.K. suffer the same risk of "meltdown" that nations that abandoned their sovereign currencies because they adopted the euro experienced "many times." The "meltdowns" that the eurozone nations have suffered "many times" because of the deadly vulnerability of nations that lack a sovereign currency to the toxic mix of recession, austerity, and the debt vigilantes. The Guardian's finance expert's failure to understand such fundamental and critically important features of the financial system is a testament to the danger of dogma.

The U.S. has "avoid[ed] the same troubles" as the eurozone following the Great Recession. It has not suffered financial "meltdowns" "many times." It has not been thrown back into recession and it does not suffer Great Depression levels of unemployment. The U.S. budgetary deficit has been reduced at a record rate over the last three years. The U.S. has been able to "avoid the same troubles" as the eurozone because it has not embraced the austerity dogma and it has not given up its sovereign currency. The U.S. did not provide remotely adequate stimulus of the kind recommended by competent economists, but the modest stimulus has been sufficient to produce a modest, sustained recovery. The Guardian, however, implies that we have failed to avoid the eurozone's troubles after the onset of the Great Recession.

Governor Howard Dean

Governor Dean served as Chairman of the Democratic National Committee from 2005-2009. He was an early opponent of the invasion of Iraq. His self-description is "progressive Democrat." He is a physician. Dean is a frequent guest on MSNBC's evening programs. Dean takes the position that the U.S. should go off the "fiscal cliff" because austerity is desirable. He claims that a "balanced budget" is essential and that "everybody" should pay higher taxes to balance the budget. He thinks, contrary to the history of the U.S., that no nation can continue to run deficits.

On CNBC, Dean cheered for the austerity that the "fiscal cliff" would inflict on the nation. He did so even though he believed it would cause a recession for at least six months. He predicted that the recession would be short and mild and a small cost to reduce the deficit. He assumed that austerity would reduce the deficit even though he conceded it would cause a recession.

Dean, a self-described progressive, and one of the nation's most prominent Democrats, is more dogmatic than Speaker Boehner on austerity.

Andrew Stern (former head of SEIU)

Andrew Stern headed one of the largest unions in America. He made it a growing union and a political force devoted to progressive causes. He was a member of the Bowles-Simpson (BS) deficit reduction commission appointed by President Obama. Obama appointed co-chairs he knew were zealous supporters of austerity and unraveling and privatizing the safety net. Erskine Bowles is a leader of the Wall Street wing of the Democratic Party and Alan Simpson is a very conservative Republican. Stern declined to vote in favor of the BS austerity recommendations, but his vote was not based on any rejection of austerity.

"Why I Voted No On Simpson-Bowles

On December 3, 2010, I voted "no" on the Simpson-Bowles report presented to the National Commission on Fiscal Responsibility and Reform. Here is what I had to say about it at the time:

This Commission report also challenges our President to offer his plan for economic growth, and fiscal responsibility no later than his State of the Union, and challenges Congress to adopt a plan no later than Election Day 2012.

I voted no, despite my admiration for the effort, because any plan, I feel strongly, must tackle both our fiscal and investment deficit needed to create jobs and a dynamic economy. No family would willfully balance its budget by not sending their child to college. No business can successfully compete with outdated equipment. And no nation can simply cut its way into prosperity. I felt the plan should better balance revenues and spending cuts, could balance Social Security while preserving more benefits, made too many short term cuts in health care before full reform was implemented in 2018, and did not have shared corporate responsibility."

Stern now says that he regrets voting against the BS recommendations.

He pushed for the "Super Committee" to "go big" and adopt massive austerity before it statutory deadline in November 2011.

Stern's co-panelists at the conference, organized by one of Pete Peterson's groups, whose participants unanimously urged the "go big" super-austerity plan included the former CEO of the AARP, Bill Novelli. Novelli's support for austerity is particularly noteworthy given the BS plan's proposals to cut and begin to privatize Social Security -- Wall Street's unholy Grail.


Neoliberal economics has devastated the global economy and produced all of the predictive failures and evil consequences that progressives have long attributed to its micro-economic myths. Far too many progressives, however, continue to believe the similarly mythical and self-destructive macro-economic myths about deficits, debt, and austerity. It is hard enough countering Pete Peterson's billion dollar campaign to inflict austerity and unravel and privatize the safety net. Peterson funds myriad front groups. We also have to counter the Wall Street wing of the Democratic Party, which dominates Treasury, OMB, the Justice Department, and the office of the Chief of Staff and favors austerity and unraveling the safety net. We should not have to deprogram progressives indoctrinated into repeating neoliberal economic dogmas.

Progressives should be able to observe that the neoliberal macro-economic predictions have been consistently falsified by reality. They should have seen documentaries like Inside Job and Capitalism: A Love Story about the catastrophic failure of neoliberal economics and economists. They should read sites like New Economic Perspectives and Paul Krugman's columns that explain why austerity is self-destructive and why the safety net need not, and should not, be attacked. Progressives need to say "no" to anyone who wants to "bleed" the economy through austerity or cutting the safety net. your social media marketing partner


A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

+87 # zornorff 2012-12-28 14:06
If our elected fools listened to this man, a lot of our current problems would not be as thorny as they are now.
+68 # sj-ias 2012-12-28 15:01
William K. Black makes a good point. Let's push further. Economics is a curious "discipline." Its role in society is undefined. If we are to reform economics, we should start by rethinking its role. Is it a theory-first discipline that begins with theory and then casts about for evidence that may have something to say about theory? Or is it an evidence-first discipline with the task of describing what is, as accurately as possible, and then using facts to build its theories? None of my economics profs posed this question when I was in college.

Moreover, let's also ask ourselves: "What's the purpose of the economy?" Does the American economy exist primarily to enrich the very strong? Or does the American economy have a broader set of purposes - production, consumption, widespread prosperity, national well-being, proper rewards for all participants, environmental stewardship, and the like?

And who decides? Is it up to the very rich to decide for everyone that the purpose of the economy is to enrich the very strong? Is it for the nation's economists to tell us the purpose of the economy? Or is it up to the American people to choose the nation's broad economic goals?

Most of us would probably say - it's really up to the American people. This shapes the proper role of Economics: To accept the goals as defined by the American people, and to help the nation figure out how best to realize those goals.

There's a lot of clarification work ahead.
+19 # Granny Weatherwax 2012-12-28 15:48
Can't remember what classic economist (Keynes?) said that economics was excellent at predicating growth but that how the proceeds were shared was a purely political issue.
+1 # NAVYVET 2012-12-29 15:30
I LOVE your user name! THE TURTLE MOVES!
-27 # jhainaut 2012-12-28 15:15
Typical of republican comments. The use of the term "progressives" is a smokescreen. Progressives in this country are not the same as neoliberals in Britain - quite the opposite. So the title gives the incorrect impression that this article is a criticism of american liberal thinking when it is not. When are we going to begin demanding accuracy? We don't have to agree. I'm very disappointed in Reader Supported News for promoting this type of lying.
+40 # Granny Weatherwax 2012-12-28 15:51
Actually "progressive" as in the title has the same meaning on both sides of the pond.
It's "liberal" and "neoliberal" that have different meaning: on the old continent (not just the UK) it means laissez-faire therefore some form of right-wing economic deregulation dogma.

The title of the article is very proper and conveys what the author meant.
And I agree with him.
-7 # engelbach 2012-12-28 16:03
I disagree. The author is aiming his article at those who call themselves progressive and generally are.

The Guardian is a progressive newspaper. Howard Dean is a progressive politician. Andrew Stern is a progressive union leader.

They all fit the description as it is understood in the United States; none is politically neoliberal.
+2 # RLF 2012-12-29 14:34
I agree it is confusing. On an economics site this academic lingo may have a place but on a political site it is only confusing.
+45 # wrknight 2012-12-28 16:27
And you need to understand that neoliberal in this article applies to a branch of economic theorists and has nothing to do with social liberalism or progressivism in the U.S. Mr. Black is absolutely correct as is Paul Krugman on the topic.
+16 # alanvance 2012-12-28 16:45
+8 # mim 2012-12-28 21:48
Why are you shouting?
+6 # Junius 2012-12-28 17:41
"do you know of a party that is not a progressive party? I don’t.
Do you know of any man or woman in this country who will confess himself or herself a reactionary? I don’t. Rockefeller is a progressive. So is Morgan. So are all the rest of them progressive," observed Gene Debs.
"Now, what does it mean? Absolutely nothing.
+2 # paul.baer 2012-12-28 19:27
I'm sorry, what type of "lying" are you alleging? Yes, he started with the Guardian, but Howard Dean and Andy Stern are definitely American liberals/progre ssives.
+3 # Smokey 2012-12-28 19:36
[quote name="jhainaut" ] "Progressives in this country are not the same as neoliberals in Britain - quite the opposite. So the title gives the incorrect impression that this article is a criticism of American liberal thinking when it is not. When are we going to begin demanding accuracy? We don't have to agree. I'm very disappointed in Reader Supported News..."

Hmmmmm..... The Americans and the British are, indeed, one people "divided by a common language." Some things are hard to translate and explain. The two political cultures are different in some significant ways.

EXAMPLES: The role of organized labor in politics is very different in the two nations.... In Europe, environmental protection concerns have developed in a socialistic context - during the last sixty years or so - and mainstream environmentalis ts in the United Kingdom are more focused on economic justice concerns than their American cousins.... Although this may be changing.

"Religion" often has a distinctive meaning in Europe, because of the tradition of government support for some churches. ("The church" is part of government, in some European nations.)

"Liberal" and "neoliberal" can be confusing terms.

I don't blame RNS for the confusion. However, RNS needs to be wary.

Terms like "liberal" and "neoliberal" have different meanings in America and in the United Kingdom.
-27 # Martintfre 2012-12-28 16:17
That is sooo great - austarity is crazy

so the good news is born out by history that government can spend and borrow its way out of any economic problem - no government has ever gone bankrupt from over spending YEEE HAWW !!

Why Id bet my 50,000,000,000, 000 Zambi on it!!
+8 # tapelt 2012-12-28 18:17
Our government can't spend and borrow its way out of any economic problem, but we can do so for this problem. If the problem was an overheating economy headed for inflation, the cure would be to run a budget surplus. The point is what you do in response to a problem depends on what the problem is. There is no one course of action that always works.
-4 # Martintfre 2012-12-29 15:13
//Our government can't spend and borrow its way out of any economic problem, but we can do so for this problem. //

If that were true then we would not be 16.3 trillion in the hole now.

this notion is like a drunk who is going to drink him self sober -- he may just be drunk enough to believe it, but that won't make it true.
+6 # tishado 2012-12-29 01:09
Quoting Martintfre:

so the good news is born out by history that government can spend and borrow its way out of any economic problem - no government has ever gone bankrupt from over spending YEEE HAWW !!

The US had levels of debt well in excess of current debt during and after WWII and it worked out. The US currently borrows money at such a low rate that it effectively makes money after accounting for inflation.

In an economic crisis where there are so low costs to borrowing, it is unconscionable to have high levels of unemployment while trying to pay off debt.

Spending does not always equal investment. In this case, spending on infrastructure, unemployment compensation, human services, and healthcare will all go a long way towards helping out.

After the crisis is over, there will be a need to pay down some of the debt while/before inflation increases. Now is not that time.
-5 # anarchteacher 2012-12-28 17:20
William K. Black is correct. We must "deprogram progressives." But the "deprograming" must be from the destructive and fallacious notions of military Keynesianism of the neocons and the corrupt crony corporatism and paternalistic welfarism of the Keynesian-blind ed liberals. We must attack, head on, the original rationalization s and deceptive lies of power and empire, and make a dramatic radical departure from the imperial presidency of administrations of the past century, regimes who reigned over an ever-growing and bloated welfare-warfare state at home and abroad.

Thousands of key American academics received their graduate training in Germany during the rise of Bismarck's original welfare-warfare state. They returned home imbued with these ideas, which their apt pupils such as Theodore Roosevelt and Woodrow Wilson transformed into hard reality. This worship of the newly-discovere d wonders of statism, combined with the influx of "social imperialism” and Fabian socialism imported from Great Britain, the increasing secularization of postmillennial evangelical intellectuals, provided the breeding ground for the incubus that emerged as progressivism — complete with its elite notions of centralized political/econo mic planning, aggressive nationalism, and eugenics and the idea of "race suicide."

Most importantly, this was the period of the creation of the plutocratic Federal Reserve, the great enabler of the welfare-warfare state.
-2 # anarchteacher 2012-12-28 17:56
Those curious RSN readers seeking an intellectual exploration of how the American constitutional republic became a fascistic welfare-warfare state should Google - theological canon of the welfare-warfare state - which lists 40 critical texts describing and outlining this process of subversion and duplicity.
+5 # tishado 2012-12-29 01:14
Quoting anarchteacher:

But the "deprograming" must be from the destructive and fallacious notions of military Keynesianism of the neocons and the corrupt crony corporatism and paternalistic welfarism of the Keynesian-blinded liberals.

The embrace of war stimulation is exactly how we can end up with a Democratic president who expands war. The critique of welfare capitalism is well-taken but liberal/social democratic forces are currently so weak that welfare capitalism is effectively the progressive alternative on the table, at least until we take charge, organize, and forge our own alternatives.
-1 # Martintfre 2012-12-29 15:16
//Most importantly, this was the period of the creation of the plutocratic Federal Reserve, the great enabler of the welfare-warfare state.//

Yup -- once they had exclusive license to print money the end game was put in play.
+2 # NAVYVET 2012-12-29 15:48
I was born in 1936 and grew up in the Keynesian era. I was a student of Murray Bookchin, the left-anarchist historian. Murray, my husband and I dropped away from anarchism in the 70s to tackle Big Energy and embrace renewables. Like Murray, I'm a historian, although my specialty is Medieval economic, political, social and religious dissent. The 9th through much of the 15th century (up to the Renaissance, when the 1% took over) were great era for activists when liberty and justice, fighting great odds, nevertheless made enormous gains. Back to Keynesianism. The Bloomsbury Group, not Bismarck, were the originators, and their boldest concept has finally been understood by a few economists, thanks to chaos theory: THAT THERE IS NO POSSIBILITY OF AN ECONOMIST-PUNDI T PREDICTING THE FUTURE OF AN ECONOMY BEYOND THE FIRST BIFURCATION! When Keynesianism's planning grew rigid, as all good ideas do, especially when it began to use the dogma that prosperity required war, it needed a lot of re-work. But it worked better than any economic ideology in human history--becaus e it taught flexibility. I know. I lived through more than half a lifetime of prosperity, and give the credit to people in government who really understood the principles of Keynesian. Anarchism doesn't work nearly as well, despite all our winsome hopes, because a lot of people are downright crooks who require regulation.
-2 # Martintfre 2012-12-29 23:56
// But it worked better than any economic ideology in human history--becaus e it taught flexibility.//

actually there is a better model that thrives on the flexibility of every person making the best decisions that can for them selves -- one nation founded upon that rose above the stagnant millennia old dynasties and the hierarchical monarchies to raise from a wilderness into a global economic power that provided wealth for the common man greater then untold to prior centuries of even the greatest of kings -- but like a fish how has little concept of the water they swim in -- ya don't see it all around you.

But lets ignore America for a moment and look at Hong Kong - tiny little spec of land with no natural resources but freedom of the human mind and imagination - before it was turned back over to the communist it was 1/8 the economy of its mindbogglingly rigid giant communist neighbor China.

Anarchy is just as much of a fail as top down authoritarianis m -- I am a minarchist - the least amount of government necessary.
+20 # cmp 2012-12-28 18:29
William K Black wrote, "The Best Way to Rob A Bank is to Own One." He wrote it in 2005 when every other idiot & corrupt monkey was gleefully cheering on, "The Greatest Crime of our lifetimes."

I would put William K. Black, right up there with, Ferdinand Pecora.

In 1939 Ferdinand Pecora published a memoir that recounted details of his investigations of the Great Depression Banking Failures called, "Wall Street Under Oath." Pecora wrote: "Bitterly hostile was Wall Street to the enactment of the regulatory legislation." As to any disclosure rules, Pecora stated that "Had there been full disclosure of what was being done in furtherance of these schemes, they could not long have survived the fierce light of publicity and criticism. Legal chicanery and pitch darkness were the banker's stoutest allies."
+7 # BeaDeeBunker 2012-12-29 00:45
Thank you Mike for introducing me to Ferdinand Pecora. Frankly, I'm a bit ashamed of myself for not knowing more about him. I do now. He was eerily prescient. Here is an excerpt from his Wikipedia page:

"Pecora's investigation unearthed evidence of irregular practices in the financial markets that benefited the rich at the expense of ordinary investors, including exposure of Morgan’s “preferred list” by which the bank’s influential friends (including Calvin Coolidge, the former president, and Owen J. Roberts, a justice of Supreme Court of the United States) participated in stock offerings at steeply discounted rates. He also revealed that National City sold off bad loans to Latin American countries by packing them into securities and selling them to unsuspecting investors, that Wiggin had shorted Chase shares during the crash, profiting from falling prices, and that Mitchell and top officers at National City had received $2.4 million in interest-free loans from the bank’s coffers.

Spurred by these revelations, the United States Congress enacted the Glass–Steagall Act, the Securities Act of 1933 and the Securities Exchange Act of 1934."

Change a few of the names, and you have a description of Wall Street circa 2008/09, especially the line about selling bundles of bad loans to unsuspecting investors!
Can you say, "credit swaps?"

Amazing, the moral bankruptcy of America's financial 'elite.'
+6 # RLF 2012-12-29 14:41
Thanks to Bill Clinton, a demigod to many on these pages for his illusory surplus, we no longer are protected by Glass/Steagal. Obama, being one of those acolytes of Clinton, refuses to attempt to reinstate it. With friends like these...
-3 # anarchteacher 2012-12-29 14:34

"The Myth of Ferdinand Pecora"
+23 # Helen 2012-12-28 18:33
I just read that Ireland is mending its economy by taxing carbon. Why can't we do that too? It would mitigate global warming at the same time. A petition suggesting this is at /tax-carbon-now
+4 # candida 2012-12-28 19:07
Quoting Helen:
I just read that Ireland is mending its economy by taxing carbon. Why can't we do that too? It would mitigate global warming at the same time. A petition suggesting this is at

Sorry, Helen. I mean to hit thumbs up and accidentally hit thumbs down on your post. It's a good one! And I agree. I tried going to the URL you left but it says the page isn't here any more.
+4 # tabonsell 2012-12-28 19:40
I gave her a thumbs up for you. Might do it again tomorrow.
+6 # Smokey 2012-12-28 19:13
[quote name="Helen"] "I just read that Ireland is mending its economy by taxing carbon. Why can't we do that too? It would mitigate global warming at the same time."

Progressives in Ireland are enraged by the energy tax. It's included in a conservative package that raises taxes, reduces human services programs, and embraces an "austerity budget." The rich are protected and the poor are expected to suffer.

In America, this is the kind of arrangement that the Wall Street crowd may advance. Possibly as a "compromise" with Obama. If the big corporations can protect their position, and reduce entitlements, they may be willing to accept a "carbon tax."
Some of the "liberals" will cheer. The poor folks will pay the big costs.
+1 # RLF 2012-12-29 14:43
Big banks can trade with terrorist and drug czars and are never prosecuted...ju st shows that it is not if you are a criminal but how rich of a criminal you are...and that is not just in the US...the Brits are famous for protecting their blood polluted aristocrats.
+1 # barbaratodish 2012-12-28 18:37
Slavoj Zizek may help us to "de-program" ourselves too: see where he says " People are forced to work, compelled to assume responsibilty for their marginalization where structural necessity produces systematic unemployment... " And we wonder why there is an underground, grey or black "economy? What is even more apocolyptic is how most of us, FETISHIZE the poor, as "THE OTHER" as the CAUSE of our fear and insecurity. Re Austerity: Could the UN support/accepta nce etc., of what is really a Palestinian (AUSTERITY-war- lord) AUTHORITY be a trend where in the future all kinds of AUSTERITY AUTHORITIES will BREAK OUT as boilerplate for the NWO? Imagine if The Port Authority of NY/NJ (PATH) and Bay Area Rapid Transit (BART) secede from the USA and get UN, etc., support/accepta nce. We could be on our way, (or perhaps we are already there already?) to having failed states, become takeover targets! The future strategy to resist such an apocalyse might be to turn the strategy against them by adopting the asame strategy PERSONALLY, so that we all, ala thoreau, become self validating governments, i.e., AUTHORITIES, austere, or otherwise, TO OURSELF! Maybe we need to become aware as Zizek says that society is a sham and that the social contract is symbolic, if not actual tortutre, and find a way, as Stefan Molineux says to DE-FOO (leave our "F"amily "O"f "O"Origin [FOO] the "family of man! Maybe we all need to DE-SOO, namely leave our SOCIETY OF ORIGiN!
+2 # RLF 2012-12-29 14:46
The world gets richer and richer and the average person works longer and longer hours for it...certainly seems like something is terribly wrong!
-2 # barbaratodish 2012-12-30 16:10
"RLF":The world gets richer& richer&the average person works longer &longer hours for it...certainly seems like something is terribly wrong!"
"People are forced to work,compelled to assume responsibilty for their marginalization where structural necessity produces systematic unemployment... "(Zizek) Wonder why there's an under the table,grey,blac k economy?Most of us,FETISHIZE the poor,as "THE OTHER",as the CAUSE of fear & insecurity.Re Austerity:The UN supports/accept s what's really a Palestinian AUSTERITY(war-l ord/lady)"AUTHO RITY"!Is it a trend?In the future will all kinds of AUSTERITY AUTHORITIES "BREAK OUT" as boilerplate for the NWO?Imagine:Por t Authority(PATH) &Bay Area Rapid Transit(BART)"s ecede"from the USA&get UN,etc.,support as nation(authorit y)"states"!We could be on our way(are we VIRTUALLY there?)to having failed states,(NJ,CA) become takeover targets for such authorities!Str ategy to resist,such an apocalypse:turn the strategy against the "authority" by adopting the strategy PERSONALLY,so that we all,a la Thoreau, became self validating governments, AUTHORITIES, austere,or otherwise,2 OURSELVES!We need 2 become aware (per Zizek)that society is a sham&that the social contract is symbolic,if not actual torture,&find a way, to transcend even "sovereign law"!Stefan Molineux says 2 DE-FOO(leave a toxic family) "F"amily "O"f "O"Origin[FOO]M aybe we need to DE-FOO the toxic "family of man"!Maybe we all even need 2 DE-SOO, de re-settle away from our TOXIC SOCIETY OF ORIGiN!
+15 # tabonsell 2012-12-28 19:07
The author is correct.

Cutting government spending never cures economic woes.

Let's look at four spending cuts and their aftermaths; there are several other examples but we needn't go into them.

After rebuilding the military following WWI, spending was slashed about 60%. The result was the depression of 1920-21. The cure was millions of Americans, unable to buy much during the war, were loaded with cash they they used on a spending spree.

After rebuilding the military following WWII, spending was cut about 60%. The result was a massive recession in 1948-9. The cure: because there was little to buy during the war except basic necessities of life, Americans were flush with cash they used to buy automobiles and accessories, houses, furniture, appliances, clothing, electronic products and other commodities.

If we cut spending drastically now and go into a recession we can't get out so easily because the American public is not flush with cash for a spending spree.

Hoover cut spending in 1932 to address a falling economy. The result was a normal depression became the Great Depression. The cure: FDR started spending when he took office.

In 1937 FDR cut spending to balance the budget, as conservative wanted. The result: four years of recover were lost. The cure: in 1938 FDR restarted spending.

We should expect someone to notice.
+5 # tishado 2012-12-29 01:17
Quoting tabonsell:
The author is correct.

Absolutely. The time to cut spending is to slow an economy that is overheating and in danger of collapsing demand.

We are currently suffering a crisis of demand. If the economy does not generate it, the government must-hopefully through green energy conversion and other socially-useful projects.
+1 # RLF 2012-12-29 14:50
But come on...if we totally collapse the economy and more unemployed people lose their houses...the wealthy will own the whole country...what do you think they want in this government...De m. or Rep.?
+3 # RLF 2012-12-29 14:48
Spending on infrastructure that makes us better off for what ever reason could help the economy but military spending which is really just an excuse for a few really rich corporations to rip off the tax payers and put megabux in the 1% pocket won't do us a lot of good.
-4 # Martintfre 2012-12-29 15:19
//Cutting government spending never cures economic woes.//

Bovine excrement.

When WW I was ended the Federal government reduced spending from 18 billion to 6 billion - within a year the economy rebounded nicely. The roaring 20's brought about huge advances for the common man
+16 # guodr 2012-12-28 19:29
The only reason we continue to pursue austerity and kitchen table economics is that this it is carefully constructed propaganda by well funded right wing power brokers that has been developed over the past thirty years. They are protecting their fortunes and, with that, their immense political power.
We have to insist on returning to the progressive tax system where billionaires paid 90% of their earnings in tax. The average joe, the middle class guy, has been carefully taught that this is unfair. It is not. Too much wealth in the hands of a few destroys Democracy and produces plutocracy. Louis Brandeis said, “we can have a democracy or we can have great wealth in the hands of a comparative few, but we cannot have both.”
What the middle class guy, the average joe, needs to find out is that he is the job producer not the fabulously wealthy. His taxes are too high! His benefits are too low! He needs to vote for himself. Only then will this mediocre recovery stop and the economic engine start running at new peaks.
+8 # The Saint 2012-12-28 19:52
Economics is to the power hierarchy what Thomist theology was to the Catholic Church. One can fiddle around the edges but at the center and as the basis for the structure is dogma.Its unquestioned dogmas enshrine absolute values such as "growth" (for whom? at whose expense?) and "progress" (an ill-defined symbol of the newest in human-centered ecological destruction). Its a house of cards that can't stand the critical winds of scrutiny and so is defended even by progressives who simultaneously lament climate change and biodiversity destruction. Wake up folks!
+7 # lisamoskow 2012-12-28 20:07
None of these arguments on any side are very convincing, or let's say, have enough detail to be convincing.

There are facts: we seem to able to support !000 military bases around the world. The middle class has been increasingly falling apart. The rich are getting richer, very much richer. The corporate monopolies we are increasingly forced to deal with only serve the interests of their shareholders--w e the public wait hours and days for basic service--we cannot even call back the person we are talking to about a problem, so there is no continuity of service. I have no landline service for a week now--this is about the 3rd or 4th time this has happened to me this year. My internet service has been problematic from day one. Everyone here hates Home Depot--they bought out the best hardware store here, boarded it up, and pay the rent so that no one else can establish business there. The last time I went to the Home Depot, the salesman said I would have to wait to get my question answered.
How long? 40 minutes just to ask a question. I could go on and on. People like me just don't shop because we are being sold mostly garbage for high prices.
We get the best things at thrift stores.
Our children are suffering the most with outrageous education costs that cripple them for life--WITHOUT any guarantee of a decent job after getting a degree. I suffer in my life by not having access to good help in any number of areas.
+8 # Johnyboy 2012-12-28 21:58
Sorry. No the corporations do not even care about the shareholders. Only the managment and fund managers matter. The shares have been a terrible investment as of late. The fund managers of the 401ks vote on boards in public corporations that only exist to enrich themselves at the expense of others.
+3 # brux 2012-12-29 15:20
Yeah, I agree, the supposed bias on profits is really a cover for promoting a global fascist agenda to create oligarchs all over the world and enslave the people to be "productive" for them.

We are not ready for one world government at this point, because any one world government does not serve the people, they are like the big superpowers, china, russia, and now the US.

It's no wonder that Americans do not save anymore, first of all they can't, but secondly if they do over a long time sooner or later they will have their money "TAXED" by the criminals in power in one of these scams ... and the sad part is that we would be better off paying taxes to the government and building infrastructure and investing back in people to build a better country.

We might as well be run by the Mafia, if we are not already.
+2 # Majikman 2012-12-28 22:59
I love Home Depot...for dog training. It's a fabulous place to practice sit, down, stay, leave it, visit, etc. with the perfect amount of distractions. I never buy a thing, preferring to patronize my local small biz where the service is great, the prices comparable and I can even find made in the USA.
+11 # meyelecco 2012-12-28 20:38
Thank you Mr. Black for your work in helping to connect the dots between what is best desribed as economic propaganda vs reality. It is not an option to cut spending during times of national economic hardship, unless annihilation is the goal. But I would add that even in the case of household budgets it is possible to see the consequences of austerity during a crisis. For example imagine that the roof in your house was leaking and caused so much damage that all of your possessions were gone. If only you had borrowed the funds needed to fix the roof, then your possessions would have survived, and you would then have had time to keep working and pay off the cost of fixing the roof. But in your "austerity" you decided to postpone fixing the roof, and now have lost all of your possessions from the ensuing flood. As you begin trying to clean up the mess you created you realize what you have lost. All of what you valued is gone. Never confuse frugality with austerity. Saving for a "rainy day" is only of value if you fixed the roof before irreperable damage happened, even if you had to borrow some to get it done before too late. Debt to resolve crisis is not the same as debt to please oneself.
+2 # BeaDeeBunker 2012-12-29 00:07
Prof. Black, where do I sign up for your course, even though I got the whole gist of your argument in your short, concise article? In fact let's sign up the whole congress & the White House; SCOTUS can audit the course since they have 'jobs for life.'
I especially like the analogy (I love analogies) of bleeding the sick to get them well again. The myth there is that there are only 4 Cardinal Humors (blood, phlegm, choler and melancholy) in the human body. One bleeds the patient to rid the body of the Humor that has gone bad as a result of bad thinking or bad feeling or inappropriate behavior or some demon that has escaped the bonds of Hell and attached the body!

The only problem with this long established medical procedure was that it was popular before Lister and Pasteur came on the scene, and debunked the whole Humors scenario; obviously not for good, since the idea of austerity (bleeding the once healthy body in order to cure it) follows the same logic.

Down through the ages, human kind has been able to come up with pithy sayings that, with common sense logic, point in the correct direction. I offer a few for your consideration:

"A stitch in time saves nine."

"An ounce of prevention is worth a pound of cure."

"Penny wise & pound foolish."

"Cutting off your nose to spite your face."

Please contribute your own favorites, & let's keep this list going & growing, like a good economy should.
+4 # AMLLLLL 2012-12-29 08:53
If you did compare the national debt to household debt, the last thing you would do is tell your household 'We're not going to eat this month in order to pay down our debt.'
+6 # brux 2012-12-29 15:14
William K. Black ... one of the few people with the heart and mind and intellect that has the guts and brains to express things to the public that they need to know, and gets it right every time.

There are a lot of good people in the left, but many of them are not trained in rigorous logic or science or technology, so while their hearts are in the right place they do not know what to do about it. William K. Black is helpful in this regard, and is sorely needed when like he says many students are brainwashed with what are right wing ideas in school, at a time when the right wing itself blames schools for left-wing brainwashing ... Orwellian, black is white, good is evil ... we need a solution on how to overcome a right-wing oligarchy that has more power than any government that has existed since time began ticking.
+2 # hd70642 2012-12-29 15:25
The idea of disposalable people are one of the most backwards ideas that ultimately destroys any society foolish enough to embrace it and the idea that money and social hierarchy are the measure of all things only indicates just how intellectually and morally bankrupt that society happens to be.
No society that is unfortunate enough to be stricken with a power elite that evades accountability can be defined as civilized and is ultimately on the road to tyranny .One need look only to look at the corrosive effect a caste system has had on any nation who was unfortunate enough to be cursed with such an abomination.
-3 # Martintfre 2012-12-29 15:33
This article aside from being a fascist big bro propaganda piece reminds me of a drunk who is convinced that he can drink himself sober -- and he just may be drunk enough to believe it.

I suggest examining how Iceland is solving their fiscal crisis.
0 # zrokeach 2012-12-31 23:12
Just a quick rant:

Economics students are being churned out with degrees in economics after being indoctrinated for 4 years by neo-liberal economics. Therefore it's hard to argue with someone with this kind of background because they don't know any better.

What I don't understand, is how I could have taken just one single economics class, and seen through all of the bullshit and contradictions. How do more people not see the same bullshit that I saw? Neo-liberal economics is really very frail, you just have to look between the lines for 5 minutes to see it.

I managed to understand their bullshit by not taking everything i was told as the god-given truth. Whenever I was presented with something that seemed fishy, I looked into it and often found that it truly was indeed a large spoiled fish. Why don't more students do this -- the very same "brilliant" students that go to Harvard and MIT and Yale are the main proponents of this dogmatic neo-liberal economics. I don't see how they're so brilliant -- they've got to be pretty dumb to not notice the discrepancies. Or maybe they just don't care?

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.