The past week or two, I have been involved in a number of DailyKos discussions that involved some discussion of economics, in which I have ranted against the acceptance of the idea of a post-industrial society and economy. Someone will come along and interject the usual economic arguments about why the U.S. does not need to produce as much as it once did, or how increased productivity allows the U.S. to get along with a lot fewer manufacturing workers. I swear by God, I am SICK of such regurgitated examples of standard economic theories -- economic theories that ANY PROGRESSIVE should immediately recognize are UTTER AND COMPLETE FAILURES. If the human race survives another century or two, I am certain that future progressives will look back at the economic hokum we accept as common wisdom today and shake their heads in bewilderment: "How could they have ever accepted, even believe, such nonsense?"
Forget about monetary aggregates, supply-demand curves, laws of diminishing returns, comparative advantage, and all the other economic so-called truths that have been crammed into your cranium. Let me strip economics down to the barest essentials for you.
In basic wilderness survival, they teach you the rule of threes. Most people, when stranded and lost in the wild, make a basic mistake of looking for food first. The proper order of your priorities must be dictated by what you physically need to survive.
Your average human being in decent health can survive
three weeks without food;
three days without water;
three hours without shelter.
(In the typical outdoors environment, it is NOT 72 degrees 24 hours a day. You would be amazed at the number of people who die of exposure during the late spring and early autumn, and even during the summer, if they are in water.)
So, if you find yourself stuck in the wild, awaiting rescue, the first thing you should worry about is getting yourself some shelter for the evening. If you are not going to move from the area you are in, build some shelter, or if you’ve lost all or most of your clothes, something to protect your naked body against the elements. Strip the bark off of a tree. Or sit down and weave some long grass. Stitch together some big leaves. Tear the upholstery and rug out of a car or plane if you were wrecked in one. Come nightfall, you are going to get cold, and you don’t have to turn into a giant slab of frozen meat to die of hyperthermia. The simple fact is, you will only live for three hours naked in the wilderness in normal weather and climates.
Second, locate and secure a source of water.
Third, now you can start worrying about the growl in the pit of your stomach.
This is economics stripped down to its absolutely barest essentials. Economics is all about how we provide clothing, shelter, food, and water for basic human survival. Since we want to be civilized, we should also include among the essentials providing medical care, and education. And in a modern society, transportation also becomes an essential, because you have to move vast amounts of material from sources to, through processing, to points of consumption.
So, economics, at its most basic level, is fundamentally about morals, about good versus evil, because economics is about supporting and nurturing LIFE. And if you don’t agree that LIFE (leaving aside the questions of WHEN life begins or ends) is good and should be supported and nurtured, then I really have to wonder just how and why you stumbled into DailyKos. Why are we so adamantly insistent that if we as a nation are to be taken to war, it must be only, ONLY after every other option has been explored and exhausted? Because war is evil, and the reason why war is evil is because war destroys life. And anyone who tells you that "economics is not about morals" is either an dolt, a degenerate, or a supremely selfish person. Probably all three. And they probably got straight "A"s in their college economics classes.
Now, if real economics is concerned with the basics of creating and organizing the means by which human life is reproduced and supported -- supplying FOOD, WATER, CLOTHING, SHELTER, transportation, medical care, and education for a population that is characterized by increasing health and longevity, and increasing levels of cultural and intellectual achievement -- then any competent student of economics should always be looking at the real economy. Do we grow enough food to feed ourselves? What is the state of our housing stock? Is our medical care adequate for everyone? Do we produce enough -- and good enough -- machinery needed to grow food, build houses and transportation infrastructure, etc.? What about the raw materials we need to produce all these things?
Back in the 1960s, the world’s population was around three billion people, and over half of them did not have access to safe, clean, drinkable water. Today, the world’s population is around 6.5 billion and over half of them do not have access to safe, clean, drinkable water.
You call that progress? George Bush and most of the economics profession does.
From 1960 to 2000, the size of U.S. financial markets has grown from 1.5 times larger than gross domestic product to over 50 times larger than gross domestic product.
http://www.dailykos.com/...
You call that progress? George Bush and most of the economics profession does.
Back in the 1960s, about half the world’s population lacked adequate nutrition. Today, about half the world’s population lacks adequate nutrition.
You call that progress? George Bush and most of the economics profession does.
Back in the 1960s, about a quarter of all Americans lacked access to adequate and timely medical care. Today, about a quarter of all Americans lack access to adequate and timely medical care.
You call that progress? George Bush and most of the economics profession does.
From 1960 to 2000, the dollar amount of U.S. government securities traded went from $478 billion a year to $67 trillion (yes, trillion) a year, an increase of over 13 percent per annum.
You call that progress? George Bush and most of the economics profession does.
Back in the 1960s, the United States was awarding advanced degrees in engineering and hard science to 1.5 people for every 1,000 in total population. Today, the we are rewarding advanced degrees in engineering and hard science to 1.4 people for every 1,000 in total population.
You call that progress? George Bush and most of the economics profession does.
From 1960 to 2000, the dollar amount of foreign currencies traded each year in the U.S. went from $47 billion to $61 trillion, (yes, trillion), an increase of over 19 percent per annum.
You call that progress? George Bush and most of the economics profession does.
At the end of the 1960s, we managed to hurl three men out of earth’s atmosphere, land two of them on the Moon, and return all three safely to earth. At the beginning of the new millennium, we were unable to build a flying replica of the Wright brothers’ first airplane.
You call that progress? George Bush and most of the economics profession does.
Back in 1960, over 95 percent of all the shoes, boots, and other footwear used in the United States was produced here – 600.5 million pairs were produced in the U.S. in 1960, for a population of 180.6 million. In 2004, U.S footwear production was 35.2 million pairs, for a population of 290 million. Today, over 98% of the footwear we wear in the U.S. is imported.
https://www.apparelandfootwear.org/...
So, we’ve gone in 40 years from producing over three pairs of shoes for every man and woman and child in America, to producing one pair for every nine people, and you want me to believe that’s progress?
Stop a minute, look down at your feet, and think about that -- 98% of the footwear we wear in the U.S. is imported -- and what it means. The world’s supposedly richest economy can NOT provide its own damn shoes.
Either that economy is so incompetent that it can’t make footwear productively and efficiently enough anymore,
or
that economy cannot AFFORD to buy its own products,
or
that economy is simply more interested in exploiting the cheap labor of foreigners.
I suggest that reality lies in a combination of all three possibilities, but George Bush and most of the economics profession will insist that it is just evidence of comparative advantage, and the gains made in international trade. I’ve even heard Robert Reich, Clinton’s Secretary of Labor, argue in favor of free trade. Or, as some well-meaning person added to one of my recent comments:
The percentage of the population who are engaged in manufacturing has likewise dropped dramatically.
Snip
To the extent that this is based on increased productivity (certainly the case with agriculture -- the U.S. is close to even in its ag good trade balance), this is a great thing.
To the extent that this is based on imports, this is still not a problem, so long as it is sustainable. No country, even one as large as the U.S., is going to be the best place in the world to make everything. This is why trade is good.
The point I want to drive home like a stake through a vampire’s heart is that the economic theories such as these, laboriously learnt and dutifully repeated by otherwise well-intended people are
LIES, nothing but
FUCKING LIES THAT WORK TO THE EFFECT OF KEEPING US FROM SEEING REALITY FOR WHAT IT IS.
The economic policies that been implemented in accordance with these theories have wrecked the real economy of the United States, have allowed a massive expansion of speculative financial activity, have failed to lift most of the world’s population out of poverty and failed to provide even the basic necessities of life for countless billions people who have perished and are perishing for want of them.
And you have the temerity to call that progress?
Please, spare me any more defenses of or apologies for a supposed post-industrial society or post-industrial economy, or information society, or whatever term you pull out of your hind end to dress up and disguise the economic disaster of the past four decades. All you have to do is look at consumption (production minus export plus imports) of things like steel, aluminum, copper, construction equipment, agricultural equipment, and so on) to see that for all the talk of a post-industrial society, we still use as much products of industrial activity as we did 40 years ago. The difference now is that we allow more of the stuff to be produced overseas, and we tolerate people who produce it getting paid less and receiving less benefits, including people overseas who do things like weld without using protective goggles or helmets.
We’re progressives, so why do we hew slavishly to economic theories that have demonstrably failed to produce economic progress? These economic theories are the very same as those espoused by the people we love to hate and loathe, the elites and the conservatives, the CEOs and neo-cons, the corporate kleptocracy and the Bush family. Why do I keep seeing THEIR economic theories repeated over and over again here at DailyKos?
The accepted economic theories of today, and the idea of a post-industrial society, are effective only as opiates the Money Party
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uses to prevent our getting too riled up about the looting and destruction of the real economy. And until we realize that, we may rise to power with periodic surges of popular discontent, but we will never truly address the real causes of the problems we face.
And especially don’t try and tell me about the great good that "free markets" and "free enterprise" has done. "But what about computers?" someone will whine. Yeah, well, those were created by a team of people during World War Two, as part of a code-breaking project for the U.S. Navy. Some Navy brass, thank God, were not as stupid as most managers and economists today, and after the war they worked out a way to continue funding and supporting that team. One member of that team was a fellow named Seymour Cray, and, my friend, if you don’t know who he is, then you really don’t know much about the history of computers and information technology.
http://www.amazon.com/...
The internet? Geez, don’t you know about the Arpanet in the 1960s? Guess where the people who started Cisco were originally working?
http://www.dei.isep.ipp.pt/...
The first TCP/IP wide area network was operational by 1 January 1983, when the United States National Science Foundation (NSF) constructed a university network backbone that would later become the NSFNet.
http://en.wikipedia.org/...
If you look at the real economy of the United States, all the conservative / Bushite pablum about how great the economy is doing is crushed – just unmercifully crushed – under the weight of a shocking reality. Our real economy -- the manufacturing base that supplies us with the essentials as well as the comforts of life -- has been wrecked. And the fact that even liberal and progressive economists overlook this obvious reality is maddening. I think it reflects the extent to which the entire profession has been infected with an infatuation with monetary aggregates and all the bullshit theories accepted as common wisdom for far too long.
By the way, the Department of Commerce used to do a fair job tracking the real economy back in the 1950s through 1980s, when it put out an annual publication called The U.S. Industrial Outlook. This service was privatized during the regime of Bush the First. Now, many of the sectors of the manufacturing economy are not even followed. Just go through this list and see how many Current Industrial Reports have been discontinued – and for which industries.
http://www.census.gov/...
Now, about the closest you can get to it are the Industry Surveys conducted by the Industrial College of the Armed Forces.
http://www.ndu.edu/...
I highly recommend you spend about an hour one day skimming through some of these ICAF Industry Surveys, even though most of these reports tend to pull their punches.
So, why do we keep learning and repeating the economic theories that are accepted as common wisdom today? They have failed miserably to achieve anything that looks like progress to me. And they certainly were not the theories that guided the building of the one thing that has been built in the past 40 years -- the internet -- that we can legitimately boast about.
In fact, the building of the United States, in its infancy and its puberty, up until the time of the Robber Barons, was guided by economic theories that were known as -- can you imagine this? -- the American School.
http://en.wikipedia.org/...
The American School of political economy, as competently summarized by the Wikipedia entry
includes three cardinal policy points:
- Support industry: The advocacy of protectionism, and opposition to free trade - particularly for the protection of "infant industries" and those facing import competition from abroad. Examples: Tariff of 1816 and Morrill Tariff
- Create physical infrastructure: Government finance of Internal improvements to speed commerce and develop industry. This involved the regulation of privately held infrastructure, to ensure that it meets the nation's needs. Examples: Cumberland Road and Union Pacific Railroad
- Create financial infrastructure: A government sponsored National Bank to issue currency and encourage commerce. This involved the use of sovereign powers for the regulation of credit to encourage the development of the economy, and to deter speculation. Examples: First Bank of the United States, Second Bank of the United States, and National Banking Act.
Henry C. Carey, a leading American economist and adviser to Abraham Lincoln, in his book Harmony of Interests displays two additional points of this American School economic philosophy that distinguishes it from the systems of Adam Smith or Karl Marx:
- Government support for the development of science and public education through a public 'common' school system and investments in creative research through grants and subsidies.
- Rejection of class struggle, in favor of the "Harmony of Interests" between: owners and workers, farmer and manufacturers, the wealthy class and the working class.
I was going to explain how adherents of the American School of political economy created the City of Chicago,
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but this rant has already grown too long, and I suspect you may have little patience left to keep reading. I will diary that story in a few more days. Let me leave you a few large excerpts from Henry Carey’s 1851 Harmony of Interests:
http://odur.let.rug.nl/...
A great error exists in the impression now very commonly entertained in regard to national division of labour, and which owes its origin to the English school of political economists, whose system is throughout based upon the idea of making England ``the workshop of the world,'' than which nothing could be less natural. By that school it is taught that some nations are fitted for manufactures and others for the labours of agriculture, and that the latter are largely benefited by being compelled to employ themselves in the one pursuit, making all their exchanges at a distance, thus contributing their share to the maintenance of the system of "ships, colonies, and commerce." The whole basis of their system is and , and not production, yet neither makes any addition to the amount of things to be exchanged. It is the great boast of their system that the exchangers are so numerous and the producers so few, and the more rapid the increase in the proportion which the former bear to the latter, the more rapid is supposed to be the advance toward perfect prosperity. Converters and exchangers, however, must live, and they must live out of the labour of others: and if three, five, or ten persons are to live on the product of one, it must follow that all will obtain but a small allowance of the necessaries or comforts of life.... (p. 46)
...The whole system [of British free trade] has for its object an increase in the number of persons that are to intervene between the producer and the consumer -- living on the product of the land and labour of others, diminishing the power of the first, and increasing the number of the last; and thus it is that Ireland is compelled to waste more labour annually than would be required to produce, thrice over, all the iron, and convert into cloth all the cotton and wool manufactured in England. The poverty of producers exists nearly in the ratio in which they are compelled to make their exchanges in the market of Great Britain....
The manufacturers of India have been ruined, and that great country is gradually and certainly deteriorating and becoming depopulated, to the surprise of those people of England who are familiar with its vast advantages, and who do not understand the destructive character of their own system. (p. 61)
The impoverishing effects of the system were early obvious, and to the endeavour to account for the increasing difficulty of obtaining food where the whole action of the laws tended to increase the number of consumers of food and to diminish the number of producers, was due the invention of the Malthusian theory of population, now half a century old. That was followed by the Ricardo doctrine of Rent, which accounted for the scarcity of food by asserting, as a fact, that men always commenced the work of cultivation on rich soils, and that as population increased they were obliged to resort to poorer ones, yielding a constantly diminishing return to labour, and producing a constant necessity for separating from each other, if they would obtain a sufficiency of food. Upon this theory is based the whole English politico-economical system. Population is first supposed to be superabundant, when in scarcely any part of the earth could the labour of the same number of persons that now constitute the population of England obtain even one-half the same return. Next, it is supposed that men who fly from England go always to the cultivation of rich soils, and therefore everything is done to expel population. Lastly, it is held that their true policy when abroad is to devote all their labour to the cultivation of those rich soils, sending the produce to England that it may be converted into cloth and iron, and they are cautioned against any interference with perfect freedom of trade as ``a war upon labour and capital.''
We thus have here, first, a system that is unsound and unnatural, and second, a theory invented for the purpose of accounting for the poverty and wretchedness which are its necessary results. The miseries of Ireland are charged to over-population, although millions of acres of the richest soils of the kingdom are waiting drainage to take their place among the most productive in the world, and although the Irish are compelled to waste more labour than would pay, many times over, for all the cloth and iron they consume. The wretchedness of Scotland is charged to over-population when a large portion of the land is so tied up by entails as to forbid improvement, and almost forbid cultivation. The difficulty of obtaining food in England is ascribed to over-population, when throughout the kingdom a large portion of the land is occupied as pleasure grounds, by men whose fortunes are due to the system which has ruined Ireland and India. Over-population is the ready excuse for all the evils of a vicious system, and so will it continue to be until that system shall see its end... (pp. 64-65)
Two systems are before the world; the one looks to increasing the proportion of persons and of capital engaged in trade and transportation, and therefore to diminishing the proportion engaged in producing commodities with which to trade, with necessarily diminished return to the labour of all; while the other looks to increasing the proportion engaged in the work of production, and diminishing that engaged in trade and transportation, with increased return to all, giving the labourer good wages, and to the owner of capital good profits. One looks to increasing the quantity of raw materials to be exported, and diminishing the inducements to imports of men, thus impoverishing both farmer and planter by throwing on them the burden of freight; while the other looks to increasing the import of men, and diminishing the export of raw materials, thereby enriching both planter and farmer by relieving them from payment of freight. One looks to giving the products of millions of acres of land and of the labour of millions of men for the services of hundreds of thousands of distant men; the other to bringing the distant men to consume on the land the products of the land, exchanging day's labour for day's labour. One looks to compelling the farmers and planters of the Union to continue their contributions for the support of the fleets and the armies, the paupers, the nobles, and the sovereigns of Europe; the other to enabling ourselves to apply the same means to the moral and intellectual improvement of the sovereigns of America. One looks to the continuance of that bastard freedom of trade which denies the principle of protection, yet doles it out as revenue duties; the other by extending the area of legitimate free trade by the establishment of perfect protection, followed by the annexation of individuals and communities, and ultimately by the abolition of customs-houses.
One looks to exporting men to occupy desert tracts, the sovereignty of which is obtained by aid of diplomacy or war; the other to increasing the value of an immense extent of vacant land by importing men by millions for their occupation. One looks to the centralization of wealth and power in a great commercial city that shall rival the great cities of modern times, which have been and are being supported by aid of contributions which have exhausted every nation subjected to them; the other to concentration, by aid of which a market shall be made upon the land for the products of the land, and the farmer and planter be enriched. One looks to increasing the necessity of commerce; the other to increasing the power to maintain it. One looks to underworking the Hindoo, and sinking the rest of the world to his level; the other to raising the standard of man throughout the world to our level.
One looks to pauperism, ignorance, depopulation, and barbarism; the other to increasing wealth, comfort, intelligence, combination of action, and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American system, for it is the only one ever devised the tendency of which was that of ELEVATING while EQUALIZING the condition of man throughout the world. (pp.228-29)
http://odur.let.rug.nl/...
I think we should all be ashamed at the woeful amount of economic ignorance that is often displayed here on DailyKos. Milton Friedman, I am reasonably sure, is in hell, though probably laughing uproariously at how he has left economics severely crippled.