This is why the corruptcrats are so keen on the Chain the People Index or whatever they’re calling their chained cpi scam that is designed to steal billions from the taxpayer without them ever understanding what happened. It’s both a huge cut in potential benefits and potentially raises income taxes most on those making the least.

What set me to ranting back in 2002 was the bipartisan lying about WMD in Iraq. I was just floored utterly that they would deliberately send naive young men and women to die for lie.

So, yes, it is ignorance, but mainly it is deliberate lying in the fine print. We’re governed by the bankster mentality. The guy who can cheat the customer the most wins.

I am not totally resistent to argument. You might even talk me into cuts in entitlements were you to authentically spread the sacrifice with your focus always squarely on what is good for the average American — but no, not that, instead they are out to TRICK Americans into cutting their Social Security and Medicare without them understanding what they are doing.

It is rotten to the core. I have total contempt for what they are trying to do and I have no trust in the Obama administration at all.

A very important story, should go into every teachers lesson plan…but it won’t. The average secondary schoolteacher in this country is innocent of the way our economic/political system works, as are those who educate them. And those teachers who do manage to put it together on their own, risk being branded un american or worse.
As a student teacher a thousand years ago I tried to explain how life insurance works to my classes. Even as a student teacher I was puzzled by the reaction(or lack of)by the students, found out eventually the teacher whose class I was assigned to was a local insurance agent. The books examining insurance had all been stolen even out of my college library. But the insurance industry had provided mucho ‘lesson’ marerial.

A seat at the table would help. Without mega bucks the citizens has n access to the discussion. As O negotiated the public option out of the health care bill he brags about…done behind closed doors. It is the “good ol boy system” from the bottom up.
The defense industry and Bushco made back room deals to get the Iraq war going and are still making trillions. Every shock doctrine moment is negotiated in secret and implemented without the USA publics input. State and local budgets are also handled by committees. The system is opaque.

I have taken the pledge to not vote for any critter who does not stand up against ss or midicare cuts. Having said that, in my ten plus years on medicare I have witnessed first and second hand much egregious waste and fraud in the system. One example; having been diagnosed with type 2 diabetes I was told by the ‘diabetes educator’ in the BIG CLINIC that medicare entitled me to 10 hours of one to one education. She almost begged me to keep making appointments which I refused after two when I figured out what was going on.
Seems to me it would not hurt our efforts to protect medicare if we, progressives, got behind some real honest attempts at reforming the incentives.

But you have to admit, it is easy to say that government, just like you and me, have to tighten their belts. Such BS but it is what it is.

To me, the point of the story is that people didn’t think about how the tax change would affect them. All of the homeowners and many of the renters were so focused on the idea of raising taxes on those soldiers and lowering their own, that they couldn’t see that they were being screwed for the benefit of the rich.

One of the key ways we’re manipulated into supporting policies that harm us is by seeing that some other guy is going to be hurt too, preferably sold to us as only hurting the hated other.

In this case it was sold as those soldiers will be paying and you will get a break in taxes with no decrease in services. In truth everyone except large property owners paid more, and I wouldn’t be surprised if the tax base increased with money going to things like sewer construction that helped the property owners (infrastructure helps everyone, but the property owner sees a capital gain in addition to the public benefit).

The only time it gets called out is when we ask for higher taxes on the wealthy. That gets framed as some of us wanting to stick it to the rich guy.

“The only people who profited were large landowners, the owner of the local lumberyard, who was on the city council, the owner of a bunch of dry cleaners and laundries, who was on the city council, owners of apartment complexes, one of whom was on the city council, and the mayor, who owned a couple of retail stores and a movie theater. I asked the host why anyone would vote for that? She told me that no one had explained it that way. That isn’t a surprise. The owner of the local paper, and the owners of the local broadcast channels had a large amount of real estate.”; is a story STILL played out all over the U.S. Currently where I live.

And it still points out how money has corrupted the experiment in democracy that is the U.S..

A sales tax is about the most regressive form of taxation, yet here in OKC the voters continue to vote approvingly for a penny sales tax for the latest MAPS incarnation. I wrote about the original MAPS project here at fdl. The thinking among blue collar is that there is no loop hole for the rich to dodge it and it seems fair to them, other than buying your stuff in Norman, or Moore or Edmond.

It is worse than people not understanding economics. They also do not understand math. For instance, did they know that an innocent sounding increase of one percent sales tax, if sales tax went from five to six percent, actually represented a twenty percent increase, in that everyone would pay twenty percent more than they were before? But the fact that the increase was only one percent somehow made it sound better.

Sure, but there will always be gaming of the incentives. Even my 90 year old mother and her friends figured out that it was strange that every single person who went to have their eyes checked by a certain MD was told they needed surgery.

But I do not trust a bunch of bean counting neo-lib Congress critters to “reform” them.

It also works the other way already with disincentives. The same 90 year old mother broke her arm at the shoulder requiring surgery and they wanted to kick her out of the hospital after 48 hours so she wouldn’t qualify for the 3 weeks of rehab you can qualify for after a 3 day admission. She broke the arm because she fell being unsteady with her cane so it was totally absurd to think she’d be self-sufficient with her cane arm broken and woozy on pain meds after 2 days.

So the more they crack down on providers and hospitals the more that elderly person too woozy from pain meds to make a rational decision gets literally thrown out the door.

The thing is you cannot trust them anymore unless you know all the fine print and these back room deals at the 11th hour are designed to make totally sure that no citizen knows in advance how they are going to be screwed.

The problem with honest attempts at reform is it requires honest brokers. With Obama giving Pharma major bucks under his program, and the AARP supporting the Medicaid Part D ripoff under Bush with Congress bending over for a reach around, where do we find an honest broker. We’re on our own; we’re disenfranchised, unorganized and too many of us are unapologetically ignorant on cause/effect.

Damn good stuff, Mac. Don’t stop now, I’m gettin’ to where I like it.

Thanks. :o)

The only people who profited were large landowners, the owner of the local lumberyard, who was on the city council, the owner of a bunch of dry cleaners and laundries, who was on the city council, owners of apartment complexes, one of whom was on the city council, and the mayor, who owned a couple of retail stores and a movie theater. I asked the host why anyone would vote for that? She told me that no one had explained it that way. That isn’t a surprise. The owner of the local paper, and the owners of the local broadcast channels had a large amount of real estate.

To me, the point of the story is that people didn’t think about how the tax change would affect them. All of the homeowners and many of the renters were so focused on the idea of raising taxes on those soldiers and lowering their own, that they couldn’t see that they were being screwed for the benefit of the rich.

Two things spring to my mind:

1) Substitute “Blacks and Latinos” for “soldiers” and you have the basic mechanism of the Southern Strategy: Selling tax cuts (or, as in this case, shifting from progressive to regressive taxation) that benefit the rich at everyone else’s expense as a way to hurt various groups that the targeted electorate doesn’t like.

2) Note the reason why the people running local media outlets weren’t eager to dispel the common ignorance on this issue: Because they themselves were among the rich pricks and prickettes who would benefit most from screwing over their own readers, listeners and viewers.

There has been sixty-five years of propaganda devoted to convincing ordinary people that the interest of the the wealthy is their interest. Demonization of communism, conflation of communism, socialism, and government spending. Scaring people that the government wants to take away their property. (As my conservative US history teacher in SC put, “the socialists want to take away your red Thunderbird convertible”). Demonizing public employees. And funding and defunding academic chairs and think tanks.

There has been one heck of a lot of money devoted to making the public (and its representatives) economically ignorant. And the popular movements that deconstructed that rhetoric from 1900 to 1950 hunkered down, sat on their hands, sold out or just got complacent. Or moved to areas like Fayetteville NC and went native.

Thanks to all the smart people here at the Lake, I’ve learned a great deal about economics . . . and I can’t begin to thank them all. I actually wrote my first and only diary several months ago which precedes Masaccio’s offering today–from the simplistic perspective of a non-economist. http://my.firedoglake.com/otchmoson/

(Perhaps we’re not supposed to plug our own contributions????)

Paul Krugman, among others, has pointed out that academic economists haven’t learned and don’t teach the lessons painfully learned in the Great Depression.

i’m not so sure paul krugman is among the academic economists who did learn what the great depression had to teach. if he had, then why was he among the economists who got “it so wrong” (to use his own words) in the run up to our current financial crisis? (serious question, i’m trying to figure some of this basic stuff out too)

anyway, here’s james galbraith pointing out how paul krugman, among others, didn’t see it coming and apparently hasn’t yet learned the lessons of our current financial crisis.

krugman: How Did Economists Get It So Wrong?

galbraith: Who Are These Economists, Anyway?

I agree with this article until the last sentence. The Democrats in the White House and the Congress are not ignorant. They understand whom this will hurt and whom this will benefit. They just don’t care about those whom it will hurt. They are carrying the water for those whom it will benefit.

Wake up! These people aren’t good hearted and clear thinking but weak willed and lousy negotiators. Now we have the next level of defense of them, that they are good hearted but not clear thinking but ignorant. No. They are NOT good hearted. They are NOT on our side.

The best thing would be single payer and stop fee for services but per capita.

This post works well with the corruption post. They go together almost as a series.

One of the key ways we’re manipulated into supporting policies that harm us is by seeing that some other guy is going to be hurt too, preferably sold to us as only hurting the hated other.

That’s the key. It is amazing how much people will vote against their own interest in order to punish a dark skinned single woman or perceived cheater.

Here’s what The Economist has to say.

Now, however, the Republicans are pushing things too far. Talks with the administration ground to a halt last month, despite an offer from the Democrats to cut at least $2 trillion and possibly much more out of the budget over the next ten years. Assuming that the recovery continues, that would be enough to get the deficit back to a prudent level. As The Economist went to press, Mr Obama seemed set to restart the talks.

The sticking-point is not on the spending side. It is because the vast majority of Republicans, driven on by the wilder-eyed members of their party and the cacophony of conservative media, are clinging to the position that not a single cent of deficit reduction must come from a higher tax take. This is economically illiterate and disgracefully cynical.

How is it out there in privatized land? I went to school in OKC. My ancestor planned the parkway with the oil derricks and other layouts of the city. I miss being able to go there easily.

But that is OT. You are on target with how vulnerable these people are to the notion of sales and user taxes as being fair. They are as you point out the most regressive. The swells want to offset that by lowering property and income taxes. Those who must spend most of their income pay the highest rate as percentage of income in taxes. Add in first dollar for SS payroll tax and most are already paying near 20% and the rich landowners who do not spend all their income get another lowering of percentage of income liable for taxes.

And The Business Insider is even stronger.

The Republicans, the Economist points out, would rather disrupt the US economy and put the country into default than compromise on a long-term deficit and debt reduction plan.

This behavior is an abdication of the Republicans’ responsibilities as elected officials. It puts the Republicans’ self-interest ahead of the country’s.

The Republicans’ stance on the debt-ceiling has now gone so far, in fact, that the Republicans appear to be trying to disrupt the economy in order to improve their chances in the next elections, rather than address an economic crisis that threatens to affect millions of Americans.

This is not practical or responsible. It’s also not patriotic. It’s traitorous.

The Economist, it must be noted, is a pro-private-sector, anti-big-government publication. For more than a century, the paper has extolled the virtues of free enterprise and free-market capitalism and railed against government bureaucracy, fiscal irresponsibility, and stifling regulation. The Economist should be the Republican Party’s closest ally when it comes to getting the US back on track. And yet, thanks to the Republicans’ extreme stance with respect to tax increases and their recklessness and self-interest with respect to the debt-ceiling, the paper has turned against them.

Indeed. A big part of the economic ignorance of US citizens is the result of an unrealistic education on the subject.

For those without the experience of joelmael, don’t take our word for it. Check out the secondary education Social Studies textbooks that are in your local schools. The stories they tell about how economics, history and the US government work are largely nonsense, fairy tales.

Why? Partly because their is a perspective among business, and many teachers, principals, parents, school boards, and others involved in education that students should be taught a patriotic, authoritarian version of Social Studies so as to inculcate in them an admiration for our system, faith in experts and “leaders,” and “good behavior” (i.e. obedience and conformity). (Tom Englehardt has written some good stuff on how textbooks get written and approved.)

And it gets no better at the college level. The prof who teaches economic history at the university where I work spins the same moral lessons and meta-narrative as you find in 8th grade Civics class. A buddy of mine working on a post grad degree in Finance at the same university had an economic prof who could not accurately explain the collapse of the housing bubble. There is a tremendous impetus in US education for ideological conformity, not rocking the boat (think tenure at the college level), and the intellectual laziness whereby teachers just repeat the same old public myths because it is easier–hell, it’s what they learned.

Think about how training takes place in a typical classroom. It is authoritarian, knowledge flows passively from the “expert” to the student, and their is a tremendous imbalance of power with the teacher, prof, principal, dean, etc. enjoying the lion’s share of it. And folks are supposed to learn to think, question and practice democratic behavior from such an arrangement?

Of course democracy does not function without a decently-educated citizenry. And that’s the point.

I have always believed that a “home economics” class or two in which a person learns about the economics of home and community (managing money, nutrition and food safety, and other “basics” of life) should be “required” for high school graduation.

As to ignorance on economics, it always comes back to messaging. Unfortunately, the wrong people have provided a bad message for far too long.

I don’t mean to impugn our teachers, most are I am sure doing great work in often difficult circumstances and I am sure things are much better than they were in 1961. (and I have no experience since then) I was very pleased to learn the other day that a “A Peoples History of the United States” is on at least one american history class reading list in a small city in conservative South Dakota.

Krugman knew what the right answers were. He even said them on occasion. But he gave Obama lots of slack early on, slack he’s not cutting him now.

Really, there is not much “wrong” with the economy.
The only crisis here is the one the Republicans are making

The only thing the ‘pubs won’t even think about, the only option so odious they’ll walk out of the room rather than talk about it, is precisely the only thing that would actually help.

If we allow the Bush tax cuts to expire as scheduled — all of the cuts — the deficit will dry up and the nation will return to sound fiscal standing in short order

You are so right. Here’s another example from economcs. Some of you who attended state schools back in the 1960s may have come into an economics textbook by a Prof from Nebraska named McConnell. It was a slightly dumbed down version of Samuelson’s Economics, which was taught at the elite schools. Fast forwared 40 years. I was asked to review a new edition of this book (McConnell died long ago, but they retained the ‘brand’) by the publisher. I couldn’t believe what unadulterated crap and propaganda it had become. Tables supplied by the Heritage Foundation were the least of it. The economics was completely incoherent, and this was a textbook that originally did a pretty good job of going through the basics of micro and macroeconomics. Page after page was propaganda that students would be asked to memorize to get through their exam. Nobody could possibly learn any economics from it. I said pretty much what I say here, took my $500 fee and dumped the MS in the trash compactor.

It’s pretty bad out there. This is what your average undergrad is getting exposed to. Some of the profs are no better (including my colleagues). They know a lot of math, but when it comes to economics they don’t know, if you’ll pardon the expression, shit.

A lot of us gave him slack at first. We live in hope. He was dead to me when he did the tax-cut extension deal back in November. Still dead, and not likely to rise on the third or anly other day.

Good story and good points.

krugman knew what the right answers were.

phoenix woman, do you have any evidence of that? because i haven’t seen it, krugman says he didn’t. and what his after-the-fact essay makes clear, which you can see for yourself if you read the james galbraith link… and even better if after that you randy wray’s recent post here (who, btw did see it coming) is that krugman still doesn’t.

That was the last straw for me too. It was unnecessary, and a violent breach of a campaign promise.

Excellent, excellent article!!! Many thanks.

No Democrat, and certainly not the President, spoke up to explain why that was a good idea.

One of my long-time rants has been that if Obama had gotten up at the beginning of his term, which coincided with the financial “crisis,” and laid things out for folks [this way, remember, before the Tea Party existed] — enumerated the problems, the causes and the proposed solutions; in short educated people — he could have cut off at the pass all of the anger and irrationality that begot the Tea Party.

All he had to do was say, “of course people are angry. They’re angry because of [no] jobs, of foreclosures, of weak regulations, of banks & hedge funds ripping us off. Here’s what we’re going to do.”

I used to think it was because he was just too stupid and inexperienced. Now i believe it’s because he knew it was “his pals” who were the problem, and there was no way he was going to get into their “club” if he called them out.

I don’t know of economists ( or actuaries(!) ) that Obama listens to.

He started out with Bob Rubin acolytes like Tim Geithner, who urged the president to move toward the Tea Party and take up the “austerity” mantle, rather go for a stimulus of the size that Krugman suggested.

Now his economic adviser Gene Sperling is not an economist but is a lawyer that does compromises with the GOP real, real, well.

Adolph Reed Jr. nailed him in 1996:

“In Chicago, for instance, we’ve gotten a foretaste of the new breed of foundation-hatched black communitarian voices: one of them, a smooth Harvard lawyer with impeccable credentials and vacuous-to-repressive neoliberal politics, has won a state senate seat on a base mainly in the liberal foundation and development worlds. His fundamentally bootstrap line was softened by a patina of the rhetoric of authentic community, talk about meeting in kitchens, small-scale solutions to social problems, and the predictable elevation of process over program—the point where identity politics converges with old-fashioned middle class reform in favoring form over substance. I suspect that his ilk is the wave of the future in U.S. black politics here, as in Haiti and wherever the International Monetary Fund has sway.”

Bootstrap = Reagan talk

How the heck did he get the nomination- did no one notice that an anti-war speech from a position of minimal state power is not enough to overcome the lack of economic and social Democratic Party thinking? Most Blue Dogs are more “Democratic” than Obama.

Krugman called for a stimulus of $2 trillion and no tax cuts – but that was in Krugman’s nice guy period – that just ended last week – so there were weasel words that said sure why not a bit of tax cuts.

But he never came out for a stimulus lower than 1.4 trillion, even after all the nice guy talk.

It was not as simple as helping out “neighbor” homeowners with their mortgage to indirectly benefit themselves by keeping their property values high. Home prices were bloated to double or more of their reasonable value in a short period of time by the excesses of the housing BOOM. The securitization of home loans encouraged loan originators to make high-risk loans because to collect big upfront fees without any default risk, passed on to investors who are fooled by the rating agencies, who were fooled by the Goldman Sachs and their cohorts. Compare the rise in average income (essentially flat) to the rise in home prices (to the moon Alice). Attempts to prop up prices would have been at best a short-term illusion that would be DOOMed to fail. The govt should have tried to recoup ill-gotten funds from the perpetrators. Their ignorance of what they were doing to the economy, blinded by their own self interests, should be no excuse. Onetermer failed by not holding anyone accountable and then fixing the system.

I love Dr Wray’s post, but as always I don’t see to how one gets to project “no savings” because of Clinton surplus since the equations do not allow for the effect of economic growth (if they did allow for growth then by definition total NET world government deficit/debt to date would equal total privately held free of debt assets – called savings – and it doesn’t – or at least I can’t get the numbers to work). Granted trade surplus has an effect – but that does not seem to help to make the equations work (I just tried to get one year to work – 1996 – as I pointed out in the post yo you where I used the gov numbers to test the “savings change” prediction).

Likewise the “dot.com” bubble burst in 98 – but the data shows Clinton growth in 99 and 2000 – as indeed it should given the very small – in economic size – the dot.com hiring and activity really were. I know it is important for some folks to put down the jobs growth, the GDP growth, etc of the Clinton years. But the analysis has all been that the growth was very much real

Likewise the “dot.com” bubble burst in 98 – but the data shows Clinton growth in 99 and 2000 – as indeed it should given the very small – in economic size – the dot.com hiring and activity really were.

Dot com bust was in 2000 (At least 2000 was NASDAQ all time high, and that’s usually the measure of the dot-com bubble).

I started work for a dot-com supplier in 1999. We were hiring like crazy – 50-100 people starting work per week in just the bay area. Sales went from $8B to $17B annually. After the bust sales went to about $12B, with no layoffs for a couple of years, then about 1500/year.

True, but if you recall the “if we take them at their words” caveat at the beginning of the article, then you might believe as I do that calling them ignorant was meant tongue in cheek.

And The Economist is a right-wing publication, though only moderately right-wing.

Another good link and excerpt. Thanks.

I had been gently trying to convince a friend that Obama was not the guy he thought he was. When Obama made that deal to extend all the tax cuts, my friend sent me an email saying, “Okay. You were right. I’m done with Obama.”

If only it could have been that simple. I remember the vitriol and acrimony that greeted Bill Clinton’s presidency because he was a Democrat who had the audacity to win the election. I think Obama was due for the same treatment–not because he was black or didn’t state his case well enough–but because he was a Democrat.

I am really trying to wrap my old brain around MMT but am having difficulty.
Definitions are key for the trade gap, consumption, investment corporate versus household expenditures, and that hi fi cloud that floats above the real economy.

In discussions is is building a house a productive investment in the way building a factory is ? Are funds flowing into and out of the hi fi cloud above the real economy similar to what? – are they a “socially productive investment? Were the Clinton years surplus a simple result of that hi fi cloud raining taxes from capital gains? We all understand that our accounts for pure financial transacting do not go into GDP accounting – does this matter?
when you buy an existing “real” assets is that a social investment – is the inflation gain in value a savings? Does the cloud sector flows get explicitly accounted for by someone, the way foreign and domestic flows of funds and products must be explicitly accounted for in our “open macro ” models? Can we use the same logic to say that The rising total of loans meant higher spending and higher economic activity in the short run, and the economy will adjust with lower loan interest rates so there is no falling economic activity due to a rising debt burden? Jan Hatzius at Goldman Sachs uses “MMT” definitional relationships to make his award winning predictions and it is in the Baumol and Blinder US edition of Principles of Macro, and of course our own Dr. Wray and Billy’s blog, the blog of Bill Mitchell in Australia tout it – so it is now “real world” – but I find it hard to extrapolate policy from it as massive public debt implies massive taxes just to pay interest.

It is the demand side stupid!