Stephen King: Tax Me, for F@%&’s Sake!

Tags: Romney, Warren Buffet, Koch brothers, Stephen King, Chris Christie

How can we improve public education for our children?

The answers to this question--and the perspectives on the current quality of public education in the United States--are as varied and individualized as the 55 million students who attend public school in this country. Recently, legislators in Louisiana, like their counterparts in many other states, have sought to improve their state’s educational climate. They have good reason for doing so--in its annual Kids COUNT ratings, meant to evaluate quality of life for children in each state and based on measurements that include educational indices, the Annie E. Casey Foundation consistently ranks Louisiana as 49th (thank you, Mississippi).

As a public-school teacher in Louisiana, I can think of many ways to improve public schools here, and I heard the same sentiments voiced by fellow teachers during a rally outside the Capitol in Baton Rouge as the legislation was being debated last week (April 4). It seems self-evident that one of the best ways to improve public education would be to allocate more resources for public schools--to improve technology, to expand professional-development opportunities for teachers, to buy classroom supplies, up-to-date textbooks and all the other materials that come with a good education. Perhaps one of the best ways to improve public education would be to loosen the strictures that tie student and school evaluations to test preparation and instead to allow teachers to instruct students in the sort of project-based units supported by educational research and the sort of critical-thinking skills that cannot be measured by filling in bubbles--the sort of academic freedom that is praised in charter schools but restricted in traditional public schools.

Tags: Charter schools

Lesson to be learned: If something is featured prominently in the media, it is a very rare event. Otherwise, it would not be news. To illustrate: if shootings were an everyday occurrence in most schools, individual shootings would never make the papers, except in the obituaries. Rare events, particularly heart-wrenching ones, are the most newsworthy.

The School of Education of the University of Virginia has an informative website on myths about schools. Some of the statistics on the site are a few years out-of-date, but the overall national statistics pretty conclusively demonstrate that school violence and crime have declined by roughly 50% in the last 20 years, in striking contrast to the hype that has pervaded the media—particularly the right-wing media.

http://youthviolence.edschool.virginia.edu

There is also a page that points out the idiocy of zero tolerance policies in the schools. The JP long ago decried the stupidity of these policies, but such Draconian measures are unfortunately all too prevalent in Mississippi schools today.

Tags: violence in schools

Tags: Alternet, Stan Goff, Gardening, municipal

As lenders are discovering, however, the elimination of exchange rate risk does not automatically eliminate other forms of risk, the most obvious one being that of default.

Default is now a real possibility, if not a certainty, in the case of Greece. The incorporation into the Eurozone of nations with very different economic structures and very different levels of efficiency almost guaranteed unequal trade balances between the member countries, and led to continually increasing debt on the part of those nations that experienced a negative balance of trade. One of the prerogatives of sovereignty is the power to create money. A sovereign that gives up the power to create money has lost much of its power.

A new article at the Levy economics Institute of Bard College discusses these problems in non–technical terms that a lay person can understand with minimal training in economics.

Fiddling in Euroland as the Global Meltdown Nears

The nations of the Eurozone are, to a great extent, in the position of American states without Washington. Since American states cannot create their own money, they are users, rather than creators of currency. If they need more money than they receive in taxes and fees, they must borrow money in a currency they do not create. As the article points out, the federal government for this reason has assumed responsibility for many expenditures that would be problematic if undertaken by the individual states: Social Security, Medicare, Medicaid, unemployment insurance, aid in natural disasters, and the bailout of financial institutions. My own state, Mississippi, would rapidly become a basket case under a system like the Eurozone. As it stands now, Mississippi receives more than $2 from the rest of the nation through the federal government for every $1 it pays to the rest of the nation in the form of federal taxes.

The Eurozone simply has no mechanism for resolving the imbalances that have resulted from the introduction of a common currency without a common fiscal policy. The European Central Bank is forbidden by law to purchase bonds of its member states. Europe has no equivalent of our Department of the Treasury or the Federal Reserve system. It is clear at this point that the Germans have insufficiently contemplated the simple fact that when one nation runs a trade surplus in a closed economic community, it must be balanced by a deficit in the remainder of the community.

We have been told by people that almost certainly know better that governments are like families, where a deficit ultimately leads to bankruptcy. Likewise, the idea of a trade surplus is considered morally good and a deficit morally reprehensible. The Germans, models of thrift and efficiency, are reluctant to bail out the countries of the periphery who have been running deficits so that Germany can enjoy the economic benefits of the surplus. It is a matter of virtue and vice, and they see the southern European nations as addicted to borrowing to finance their balance of payments deficits.

Governments, however, are not like families. For a family to be like a government would require that the family be able to make its purchases solely with IOUs and have the power to satisfy the debt represented by the IOUs simply by exchanging them for more IOUs. Our hypothetical family would also have to possess the legal power to tax its neighbors, accepting only its IOUs in payment, thus creating a demand for them.

Sovereign currencies, with all their inefficiencies, automatically compensate for inequalities in the balance of payments with changes in the exchange rates. If Italy is spending more on German goods than Germany is spending on Italian goods, then ultimately the mark must appreciate against the Italian lira.

When the lira depreciates, Italian goods become cheaper in Germany and German goods become more expensive in Italy, and thus Germans buy more Italian goods and Italians purchase fewer German goods. The balance of payments is thus automatically equalized by the exchange rate adjustment. Because this automatic mechanism was blocked by the Maastricht Treaty, an imbalance in currency flows must be balanced by borrowing or by investment. The treaty also imposes one more blockage in conjunction with the common currency, and that is that individual nations are not allowed to accumulate excessive debt as a percentage of national GDP. This limit has been observed in the breach more than in the keeping, but the Greek debt has finally reached such extreme proportions that it is unlikely to ever be paid. As every second-semester economics student is aware, the austerity measures imposed upon Greece as a method of bringing its balance of payments into balance will only serve to depress its economy and make it even more unable to pay its debts when due.

The field of economics, in spite of its claims to scientific validity, is still a strange amalgam of political philosophy and group psychology. The mathematical side of economics consists of very precise calculations based upon nebulous data and highly questionable assumptions about the way human beings perceive reality and make decisions. Historically, mainstream economists have chosen assumptions that virtually guaranteed outcomes that favored elites currently in power. It was therefore a foregone conclusion when Ronald Reagan was elected president that neoclassical economics (Milton Friedman) directed the economic policy of the United States and favored the very wealthy at the expense of the remainder of the population. Income statistics compiled by the Bureau of the Census show an immediate surge in inequality beginning almost immediately with Reagan's inauguration and proceeding apace to the present, with only a few setbacks in the late 1990s.

It should not be surprising, therefore, that the Germans have become attached to an economic system that has enabled them to run a surplus and thereby maintain low unemployment and a high standard of living. Any solution to the debt crisis whose epicenter is Greece but which also encompasses Italy, Spain, and Ireland, must either reduce that surplus or provide a means for recycling euros from north to south by a mechanism other than borrowing from private banks, which has been the principal recourse up to today. The Germans feel that they have earned their power and prosperity and understandably are resisting any solution that would diminish what they now have.

Since Germany is the economic powerhouse of the European economic community, and France is going along with Germany, there are few avenues leading to a mutually satisfactory arrangement that takes into account the reality of currency flows, differences in national economies, and national sovereignty.

It is clear that the members of the EEC are not ready to form a United States of Europe, with the equivalent of national treasury and a true central bank, and thus it is hard to see how the Eurozone can survive. My prediction is that Greece will leave or be expelled from the Eurozone within the next year. Italy, Spain, and Ireland will remain longer, but their departure is almost foreordained. This will lead to severe hardship and instability, both social and financial, and the United States will not remain unscathed, since our banks possess quite a large quantity of European bank debt. If those banks become insolvent, then our domestic banks will suffer serious losses. The future of our financial system will thus be strongly influenced by the solvency of the European banking system—not a reassuring prospect.

Tags: euro

Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.

The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU, ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.

Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks. Yet the planning privilege of credit creation and allocation turns out to be even more centralized than that of elected public officials. And to make matters worse, the financial time frame is short-term hit-and-run, ending up as asset stripping. By seeking their own gains, the banks tend to destroy the economy. The surplus ends up being consumed by interest and other financial charges, leaving no revenue for new capital investment or basic social spending.

This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history. Debts mount up exponentially, absorbing the surplus and reducing much of the population to the equivalent of debt peonage. To restore economic balance, antiquity’s cry for debt cancellation sought what the Bronze Age Near East achieved by royal fiat: to cancel the overgrowth of debts.

Tags: Debt, banking, democracy, Peonage, Roman Empire, tyrants, Aristotle

Dean Baker has an excellent column on fixing the budget deficit.

I believe, however, that he needs to address the balance-of-payments problem, as well. Other nations—China being the most obvious—are maintaining their employment level by running positive balance-of-payments levels. This has also vastly enriched American corporations, who, with the assistance of low foreign wages and a high dollar, are able to manufacture goods overseas cheaply and sell them to Americans extremely profitably. That policy, however, is destroying our middle class and impoverishing almost all of us not in the top 1%.

Baker has written about the overpriced dollar and the so-called “free trade agreements” as part of the problem, but I haven’t read any discussion about how it relates to the domestic budget deficit. If the current account (balance-of-payments) were perfectly balanced, that is, if we were selling goods overseas equal in value to the ones we purchase from overseas, we would have literally millions of additional jobs in this country, many of them in manufacturing, where wages tend to be decent.

With millions more employed, tax revenues would increase and the budget deficit would not seem so overwhelming.

The foreign trade deficit may seem abstract next to the budget deficit, but its effect on Americans is far greater. One of the reasons that stimulative measures have limited value is the tendency of so much of the stimulus to go overseas, since so much of what we buy comes from overseas.

The only reason that the current account deficit hasn’t already been fixed, I suspect, is due to the fact that corporations and individuals who are profiting the most from the current arrangement possess the political power to squelch any ameliorative actions in Congress or the executive branch. Wall Street depends upon a strong dollar to draw investments from overseas. Virtually all major manufacturers have moved their manufacturing facilities overseas, a process that began in the ‘70s, and accelerated when the Reagan administration actively encouraged offshoring.

Michael Moore, in his latest book, “Here Comes Trouble: Stories from My Life” tells of a meeting of manufacturing executives he attended in Acupulco, while posing as a small auto parts maker from Michigan. With the not-so-tacit blessings of Reagan’s Department of Commerce, he heard them planning to move their factories wholesale overseas to avoid paying decent wages and to escape environmental regulation. The executives were assured that the exportation of manufacturing and the jobs they represented had the full support of the Reagan administration.

That process has continued with a vengeance under NAFTA and other trade agreements that make it profitable to export jobs, rather than goods. No president or Congress has attempted to change any of this, which makes me believe that they are actually comfortable with it. Obama has made little noise about the current account deficit. The Republicans seem to have a pathological obsession with the budget deficit, the reduction of which would bring about a sharp recession (as it did in 1937 under Roosevelt), which would, of course, make the deficit even worse.

It’s hard to be hopeful in the middle of such craziness.

I came across this story while cleaning out some folders on my hard drive. it’s a bit anachronistic, in that Governor Kirk Fordice passed away quite a while ago, but it also addresses current affairs. I’m publishing it on the Jackson Progressive site, since it belongs with that collection. Close the tab or window to return.

Tags: Fordice

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

Tags: Krugman

Tags: Perry, Red States, blue states