Sunday, January 27. 2008
Rob Harvilla: Jay-Z vs. Jay-Z. On the decline of rap in 2007:
Chalmers Johnson: How to Sink America. More like: how far has America sunk? Johnson reviews how much the American military juggernaut costs, and how paltry the returns are for all that expenditure. Johnson is clear enough, but there are even simpler ways of looking at this. If, say, the US had no Army, Navy, Air Force, Marines, no Defense Department, no CIA, no NSA, just a modest Coast Guard, would any other country take advantage of our weakness and attack or invade the continental US, Alaska or Hawaii? For a lot of mostly obvious reasons, the answer is clearly no. So all that "defense" expenditure doesn't buy us any defense. Rather, it buys us foreign presence, the ability to project power abroad, to interfere with and possibly dominate other countries. So what's our return on those costs? The simplest short-term measure would be to look at our current accounts surplus, to see if we're taking in more money from abroad than we are spending projecting all that power out there. The problem isn't that the surplus doesn't cover the costs. The problem is that the surplus is actually a deficit, and not just a marginal deficit, but far and away the largest deficit that any country runs. That's hardly the only problem, but it's enough for a sanity test. As Johnson points out, sometimes it's argued that the US can afford a little extravagance, but that fails simple sanity tests as well. If we really could afford such waste, you wouldn't find us neglecting things we really do need, like infrastructure, education, health, welfare, the environment. You'd also find us managing our debt, protecting the value of our money. QED.
Paul Krugman: Stimulus Gone Bad. On what's wrong with the Washington stimulus deal. Krugman doesn't mention this, but proof enough would be to point to Bush crowing about how this is the kind of bipartisanship nobody thought could happen in Washington these days. The real problem with bipartisan anything these days is that the Republicans are one of the parties. By constraining the deal to tax rebates, Bush maintains his record of opposing any kind of relief except from taxes, while preventing the government from doing anything for the poor (or the increasingly poor majority) while assuming ever more debilitating levels of debt. Meanwhile, the Democrats remain suckers for any kind of government spending. Personally, I'm not sure that a stimulus is even a good idea. It seems to me that the economy has been stimulated to death over the last 6-7 years in order to cover up much deeper structural problems. In particular, the most conspicuous feature of the last 6-7 years is that consumer spending has artifically propped up at levels don't reflect real wealth, mostly by the extension of debt. The present recession is partly the exhaustion of that overspending and partly the collapse of illusory wealth based on holding that overextended debt. Both are signs that the game is coming to a close. Putting a bit more spending money into the economy isn't going to change a thing. The only thing that's going to bolster consumer confidence is when people other than the superrich start seeing their real stake in the economy improving.
One thing I haven't seen much comment on is the significance of stock market levels as an indicator of economic health. Maybe it is if the only thing you're interested in is profits, but that's about all it tracks, and the focus is very short term at that. However, the NYSE numbers are published every day and deemed important enough to get notice on the nightly news, so they're unusually prominent in people's minds. With markets falling all over the world, the Fed panicked and dropped its interest rate 3/4 of a point, a preemptive attack if ever there was one. It's rare to see anyone in Washington hustle that fast.
Robert J Samuelson: Capitalism's Enemies Within. Starts promising: "Amid the mayhem on world financial markets, it is becoming clear that capitalism's most dangerous enemies are capitalists." He then concentrates on one small aspect of that insight: the extraordinary compensation acquired by the people who built the subprime mortgage crisis. They're certainly high on the list of suspects, but all sorts of capitalists are getting into similar trouble. A simple explanation is that capitalists are so competitive they don't know when to let up, especially now that they've managed to knock down most of the checks and balances that previously limited their excesses. They have accrued so much power that no one else can stop them, at least short of their own complete collapse. On the other hand, their greed has become so mindless that they're the last people likely to lift a finger. It's hard to see how that combination can play out to any sort of soft landing.