The Language of Looting (how the word free market became twisted)

blatantninja said:

The definition of a recession (at least for the US) was changed during Bush I's term to 2 quarters of GDP decline from three. The '91 recession would not have been a recession under the previous description.

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Huh? The NBER never used either of these definitions to date recessions. Who uses them?

Prior to the oil crisis, you'd see typically expansion for about 3 years followed by 3-4 quarters of contraction, though some times mild contraction. Often these flowed from one year to the next, so looking at a specific year isn't always useful.

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True, though that's not what's puzzling me. You seem to make a distinction between "true" recessions and just plain recessions, with, apparently, the relatively mild and short post-WW2 contractions being "true" recessions, as well as the very short 1982 one, but the 2001 one not being one.

Any evidence of that. That's the first I've ever heard of anything like that. I could see if you had a situation like in Russia before the revolution that a recession or worse could be caused since no one had any money, but that's not ever been the case in the US.

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I didn't come up with the idea. There's a fairly strong statistical correlation between the two -- spiking income differentials are a statistical leading indicator of deep recessions. Correlation doesn't imply causation, of course, and it's certainly difficult to prove either way. But the correlation is there. I'm afraid I don't have my references to hand right now, but Google "income inequality correlation unemployment" and you'll come up with a fair bit of stuff. (As I'm sure you're aware, unemployment is a very good proxy for recessions.)

Maybe not right now, and at least certainly not as bad as now, but we would have had more recessions in the period since 1983. Continuous economic expansion is simply not a natural phenomenon.

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Nothing about the economy is "natural." The economy is an artifact of social engineering.

In theory they are not natural or inevitable perhaps, but in reality they are. Human nature will always create bubbles of some nature that will pop and create recessions.

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But human nature can also create controls that oversee and attempt to control them. They may not be entirely successful, of course, but they can be partly successful. Even including the recessions we have had, the period since 1945 has been much stabler (for the advanced capitalist economies, both of the Nazi-leaning and socialist-leaning variety) than just about any period since. We have learned a good deal about recessions, how to avoid them, how to get out of them, and how to mitigate their effects. I see no reason to believe that we're suddenly going to stop learning, unless we just throw our hands up in the air like you're doing and declare the market a natural force beyond our understanding and control.

blatantninja said:

I didn't say that it's the basis of a national economy. I asked if it, by itself, would qualify as a socialist program.

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And I say, "no, no more than publicly owned highways or bridges." Calling public health care socialist is just as inaccurate (and malicious) as calling Bush's "pro-business" policies Nazi.

We've been pretty tied to China for a long time, and it's not because they have the same system we do (though they have been moving that direction).

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Really? How many Chinese corporations are traded on the NYSE? How easy is it for a Chinese to get a visa, let alone a work permit in the US, or vice versa, compared to a European? Which military alliances do China and the US both participate in? How many international arrest warrants are honored between the US and China, and how many between the EU and China? Sure, you're tied to China, but the tie is much, much more superficial than the deeply integrated polities and economies of the US and Europe -- integration that is only possible because we're so very, very similar.

Here's one more reason to withdraw from the "class war" discussion -- somebody with more energy to do his homework than I have explains it much better right here.

Prime Junta said:

Huh? The NBER never used either of these definitions to date recessions. Who uses them?

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The NBER defines it as "a significant decline in [the] economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales."

However, Julius Shiskin defined it in 1974 as two or more consecutive quarters in which GDp growth contracted. In practice by politicians and in business, 3 quarters was used until 1990, when two quarters was adopted. Any time a recession is quoted in news publications, they are referring to this 'rule of thumb.'

Now for determining the precise beginning and end of a recession, most people defer to the NBER.

True, though that's not what's puzzling me. You seem to make a distinction between "true" recessions and just plain recessions, with, apparently, the relatively mild and short post-WW2 contractions being "true" recessions, as well as the very short 1982 one, but the 2001 one not being one.

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The reason is that most recessions, like our current one, are fairly wide spread and effect nearly every industry in the economy. Neither the '91 or '01 recession qualified. They were 'isolated' recessions, for lack of a better term, that only really affect a handful of industries. Additionally, neither recession last more than two full quarters.

But human nature can also create controls that oversee and attempt to control them. They may not be entirely successful, of course, but they can be partly successful.

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But we will still fail at times. Recessions are going to happen.

Even including the recessions we have had, the period since 1945 has been much stabler (for the advanced capitalist economies, both of the Nazi-leaning and socialist-leaning variety) than just about any period since.

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No disagreement there.

We have learned a good deal about recessions, how to avoid them, how to get out of them, and how to mitigate their effects. I see no reason to believe that we're suddenly going to stop learning, unless we just throw our hands up in the air like you're doing and declare the market a natural force beyond our understanding and control.

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I didn't say that we are going to stop learning, but the methods we have used to avoid recessions since 1983 have essentially been to force consumer spending, which is not long term sustainable, through low interest rates and continuing expansion of credit.

I'm not throwing my hands up, we can do better than we've done, but I recognize that we will never have a perfect economic model that allows steady year in and year out economic growth.

Prime Junta said:

And I say, "no, no more than publicly owned highways or bridges." Calling public health care socialist is just as inaccurate (and malicious) as calling Bush's "pro-business" policies Nazi.

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But highways and bridges are not a specific industry. Health care is.

Really? How many Chinese corporations are traded on the NYSE? How easy is it for a Chinese to get a visa, let alone a work permit in the US, or vice versa, compared to a European? Which military alliances do China and the US both participate in? How many international arrest warrants are honored between the US and China, and how many between the EU and China? Sure, you're tied to China, but the tie is much, much more superficial than the deeply integrated polities and economies of the US and Europe -- integration that is only possible because we're so very, very similar.

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Well I was speaking about economically tied. There is a reason that China is completely in the shitter at the same time we are.

From your article PJ,

Second, this return to 2001's tax rates was actually part of the Bush tax plan. The Republicans who controlled the White House and the Republicans who controlled the Congress earlier this decade decreed that all the tax cuts they passed would sunset in 2010.

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That's funny. He's either being intentionally dishonest or he's ignorant of how policy works in Washington. They didn't sunset them in 2010 because they wanted them to return to previous rates. They sunseted them so that when the opposition came out about how much these cuts would cost the government, they only have 9 years of data, not a perpetual number (which would swell up by about 10 fold). Additionally, just like when they annually get rid of the AMT for many Americans, but never get rid of it permanently so they can look good each year, they fully expected that their brethren in 2010 would renew the tax cuts rather than be branded as tax increasers during the following election.

That said, I do agree that anyone saying they will work less due to these raises is either stupid or a drama queen.

Hmmmm, maybe a bit closer to "Nazi" that you have ever though possible BN? http://voices.washingtonpost.com/white-house-watch/2009/03/bushs_secret_dictatorship.html

You're talking out both sides of your mouth, PJ. You're lauding the "progressive policies" of France and Germany as better than ours, while at the same time claiming there's no difference between them. Actual "ranking" is irrelevant-- they can't be fundamentally different (end of post #34) and have "no qualititative difference" (end of post #38) at the same time.

blatantninja said:

But highways and bridges are not a specific industry. Health care is.

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Of course they are. It's called the "transportation industry."

zahratustra said:

Hmmmm, maybe a bit closer to "Nazi" that you have ever though possible BN? http://voices.washingtonpost.com/white-house-watch/2009/03/bushs_secret_dictatorship.html

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Long way to go before that! But certainly disturbing a lot of what this country was willing to tolerate after 9/11.

Prime Junta said:

Of course they are. It's called the "transportation industry."

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But they aren't the whole industry by any stretch. Just a part of it.

dteowner said:

You're talking out both sides of your mouth, PJ. You're lauding the "progressive policies" of France and Germany as better than ours, while at the same time claiming there's no difference between them. Actual "ranking" is irrelevant-- they can't be fundamentally different (end of post #34) and have "no qualititative difference" (end of post #38) at the same time.

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Oh come on, dte -- surely you can tell that I was playing the devil's advocate in post #34: as I *explained* to BN earlier, I used the terms Nazi and Socialist precisely to underline the absurdity of creating the "fundamental difference" to which you're referring. If you're unable to understand such subtleties -- which I don't for a moment believe, by the way; I believe you're being intentionally obtuse in order to score rhetorical points in a discussion -- here's the same thought restated in plain language:

"I believe that advanced capitalism is the best economic-political system we have yet discovered. However, there's a lot of room for variety within that same framework, for example regarding taxation and provision of public goods. I would not want to see America become France any more than I would like to see France become America."

The crucial thing is that it's a continuum of choices within the same basic framework -- a market economy regulated and moderated by government power, with public good provided through redistributive taxation. It's not a matter of two qualitatively different systems -- the Nazi system here, the Socialist system there.

PS. But I do believe that you broke your system, and one symptom of breaking it is out-of-control income inequality. Either you fix that, or it stays broken -- no matter how you do it. And no, not all the solutions involve heavy tax progression and comprehensive public goods.

blatantninja said:

But they aren't the whole industry by any stretch. Just a part of it.

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Just like public health care -- in most advanced capitalist countries anyway. There may be a few where there are no private clinics, I suppose, but not a great many; I certainly can't think of any off the bat. Generally speaking it works more or less as Benedict described -- the public system provides a basic but more or less sufficient standard of care that's available to everyone, and private clinics provide fancier stuff for people who are able and willing to pay for them. The details vary; in Britain the NHS is known for its rude doctors and crowded wards, which means that there's more demand for private clinics than in France, which is known for excellent doctors making house calls for free. But in either country, if you get seriously ill or have an accident, you won't be bankrupted by the medical fees, whatever your circumstances. That's the thing that really matters.

And finally: I tried dipping a toe back in here, but it's making me as irritated as ever, so I'm back out until it stops having this effect on me. I trust mags and Benedict to hold the fort against you Huns until then. Ta.

Prime Junta said:

Just like public health care -- in most advanced capitalist countries anyway. There may be a few where there are no private clinics, I suppose, but not a great many; I certainly can't think of any off the bat. Generally speaking it works more or less as Benedict described -- the public system provides a basic but more or less sufficient standard of care that's available to everyone, and private clinics provide fancier stuff for people who are able and willing to pay for them. The details vary; in Britain the NHS is known for its rude doctors and crowded wards, which means that there's more demand for private clinics than in France, which is known for excellent doctors making house calls for free. But in either country, if you get seriously ill or have an accident, you won't be bankrupted by the medical fees, whatever your circumstances. That's the thing that really matters.

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Like I've said before, we NEED healthcare reform. And I even think a basic (not full) national health system is doable.

Prime Junta said:

And finally: I tried dipping a toe back in here, but it's making me as irritated as ever, so I'm back out until it stops having this effect on me. I trust mags and Benedict to hold the fort against you Huns until then. Ta.

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Well, as frustrating as it may be for you, I enjoy what you bring to the conversation. I may not agree with your beliefs or conclusions, but you generally back up your position with real data or credited opinions.

I'm out soon too, so have a good weekend!

blatantninja said:

Like I've said before, we NEED healthcare reform. And I even think a basic (not full) national health system is doable.

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If you caught any of the press coverage on the health care forum they had in Washington yesterday, it really looked like the ideas were going to come from all sides of the table--they had doctor's and nurses' associations, all the senate and house, insurance company reps and everybody there. Obama even said if the best ideas represented a full market based reform, he would go there.

Prime Junta said:

Here's one more reason to withdraw from the "class war" discussion -- somebody with more energy to do his homework than I have explains it much better right here.

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Thanks for posting this--now I can just dredge it up every time those two evil words appear (and that's about all I'll be able to do to hold down the fort, but I have better hopes of Benedict.)

I do have a question about this part:

Obama's proposals don't mean the government would steal every penny you make above the $250,000 threshold, or that making more than $250,000 would somehow subject all of your income to higher taxes. Rather, you'd pay 36 cents to the government in income taxes on every dollar over the threshold, rather than 33 cents.

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So, is the first $250,000. not being taxed any higher then? ( If so, this is even crazier.)

I'm sure there's more to it than that, and I know bn has said it's mostly the principal of one group being taxed while another gets a break, but to those of us whose combined income for their whole lives is unlikely to go above a quarter mil, you have to realize all this uproar seems like such an...over-reaction?

And just wait til I get around to you and all your links dte.

magerette said:

So, is the first $250,000. not being taxed any higher then? ( If so, this is even crazier.)

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That's correct. That's how the progressive tax system works (generally). Each successive tax rate increase is only on dollars earned over that threshold.

I'm sure there's more to it than that, and I know bn has said it's mostly the principal of one group being taxed while another gets a break, but to those of us whose combined income for their whole lives is unlikely to go above a quarter mil, you have to realize all this uproar seems like such an...over-reaction?

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Of course it does. But that's sort of the point. It's very easy for someone that makes very little to say "Well look how much that person makes, they should be taxed more!" And obviously money is tighter for that person than it is for the person making a lot more.

But that doesn't necessarily make it fair. That's one reason I am such a huge proponent of a flat tax with very minimal deductions, and it shouldn't matter if it is earned or 'unearned' income. Essentially, say it's 20%, you make a dollar, whether from working, dividends, capital gains, etc., you send 20 cents to the feds. Doesn't matter if it is dollar 1 or dollar 1 million. It's fair, it's easy (so less cheating on taxes and less work for the IRS), and it treats every dollar earned the same. The only way to claim it is unfair is to say that our society is fundamentally unfair.

The bigger issue is, where does it stop? Sure if you make $350k, you are looking at about an additional $3k or so in taxes. But that's this year, if the recession deepens (and IMO it will), where will it come from next? And healthcare expenses will continue to go up, hopefully not at the rates that they have the last decade, but they will increase, so who is going to pay for that? Probably that top 5% again.

And all the while, the deficit is becoming astronomical (along with the debt), and at BEST, according to Obama's plan, he'll get it back to a level that is as bad as any of the Bush deficits outside the first one in 2001! (and that depends on essentially a full exit from Iraq without a corresponding escalation of Afghanistan) What people see in those income brackets is that spending isn't coming down, it's going up, and they're being told "you get to pay for it, and most of what we are spending it on isn't going to benefit you directly." That's a pretty raw deal.

okay, dte, your turn--(not that I'm entirely through with blatantninja, but he needs to have a few Friday night cocktails and unwind.)

dteowner said:

http://voices.washingtonpost.com/channel-08/2008/08/obama_paints_mccain_as_wealthy.html
Aims at division

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Campaign ad--we could war with those all night. Here's a good mashup of both sides, both equally guilty:

http://www.youtube.com/watch?v=IEehKNNMq_4

http://www.iht.com/articles/2008/07/30/america/campaign.php
Calling out "the wealthy"

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You must have this stuff archived--I can't find my old campaign digs about what McCain had to say about his pet issues--like Ayers, Victory in Iraq and Joe the Plumber, but they wouldn't be exactly pertinent to the discussion anyway.

http://www.breitbart.com/article.php?id=D9374EMO0&show_article=1
Gotta have 2 sides if he's gonna be on "ours"

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Polspeak. I defy you to find a politician in America who doesn't want you to think he's on "your" side, whoever you may be.

You actually have made a good point with these links, above and beyond the one you intended, and that is that a lot of people are still fighting the election over and over. You're quoting stump speeches and stuff that should make anyone's BS meter go off (and I agree, a lot of this is simply crowd pleasing BS) and making it into a set-in-concrete agenda that I don't think is there. IOW, I don't think that this is deliberate,dedicated class warfare as much as it's playing on the sympathies of the crowd with the issue of the moment--George Bush's unpopularity, and economic unrest, mainly--in order to get elected. Just like John McCain and especially Sarah Palin played on the issues that excited their base and that they thought would get them elected.

It's smart politicking, but it's going to take more than this to convince me Obama is foolish enough to think his party can actually get along without the wealthy and influential, and they should be abolished or even neutered.

http://www.ontheissues.org/2008/Barack_Obama_Tax_Reform.htm
Not much question of the target there

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Not much question of the accuracy, either.

Warren Buffet is the one that originally made the point about his secretary paying more in taxes than he did,( i.e. "Those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries...")

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent.

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I don't think anyone in their right mind questions that people who have wealth, influence and power have opportunities to acquire and increase wealth that those without those things do not. Is that fair? Perhaps not but it's the way things are. Taxes are a way to level the playing field a bit.

http://blogs.abcnews.com/politicalpunch/2008/11/obama-calls-hig.html
Irrefutable proof of the direct linkage between a penalty for one class of Americans to give to another class Americans. If that doesn't define "class warfare", I don't know what does.

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I don't agree(as you've no doubt realized by now )--but I'm not disagreeing with your sincerity of belief. And I appreciate you and bn taking the time to explain yourselves, because it does help me to understand and look at my own positions. I do see how these items you've posted could make you feel that the rich are being singled out as the bad guys.

The only point I would make, because we've really beaten this horse senseless if not actually dead, is that almost all of the stuff above is well within the lines of normal political word-wrangling. It's pretty much normal Dem-speak. There's a similar line that's pushed by the Republicans to appeal to their voters, and it's every bit as geared to cranking up the differences between 'us and them.'

Both parties do it. While I wouldn't trust Obama any more than any other politician to never disappoint his supporters or aggravate his opponents, he seems to be in the position of being both demonized if he does anything typically political, and held to an impossibly high standard of purity when he tries to fight for what he wants to get done.