Home > political-economy > The case for bitch-slapping Saint Paul until he wets his panties: Dog whistle economics…

The case for bitch-slapping Saint Paul until he wets his panties: Dog whistle economics…

February 18, 2010 Leave a comment Go to comments

When politicians want to say something about “those people” yet wish to remain within the bounds of civil conversation, they will often employ certain code words that allow them to express their actual position while remaining open to ambiguous interpretation. The Wiki defines the dog whistle this way:

Dog-whistle politics, also known as the use of code words, is a term for a type of political campaigning or speechmaking which employs coded language that appears to mean one thing to the general population but has a different or more specific meaning for a targeted subgroup of the audience. The term is invariably pejorative, and is used to refer both to messages with an intentional subtext, and those where the existence or intent of a secondary meaning is disputed.

In economics right now there is a dog whistle conversation being carried behind your back. The expressed subject of this conversation is whether the Federal Reserve should explicitly set a higher target for inflation and attempt to achieve this higher target as a matter of policy. The conversation is dry, technical, and purposely so, since it is designed to discourage you from joining in or even noticing it.

The conversation, however, is really about how far to go in breaking you with the threat of starvation.

We covered one side of this conversation in the post, The case for bitch-slapping Saint Paul until he wets his panties…, in which we focused on Paul Krugman’s argument that increasing the target for inflation would make it easier for Washington to collapse your wages, and increase corporate profits: You are less likely to notice the deterioration of your standard of living if your wages stay the same while the prices of everything you buy goes up. And, inflating away your income is preferable to a company-wide announcement that everybody has to take a 10 percent pay cut – except, of course, the CEO, his/her gang of bandits, and the company’s bond, and shareholders.

We also showed why Krugman’s argument is likely to fall on deaf ears:

No one of significance in this debate thinks you have the capacity or the will to fight back, since you can’t take your eyes off American Idol long enough to notice that the handful of American families who compose the leaders of industry and finance are taking turns with your hindparts. You have no unions, no idea of the power you possess to overturn this state of affairs, and are deeply demoralized.

For instance, as we write the words, a report is coming across the media that states are facing a $1 trillion pension gap for your retirement. This could be fixed with a couple of key strokes at the Treasury Department but it won’t, because you are too stupid to understand the implications for you, your family, and your declining years – which will be spent standing at the entrance to Wal-Mart greeting the next generations of idiots who are as clueless as you.

And, don’t say to yourself, “This doesn’t affect me – I am not a public employee,” because we all know that even if you aren’t a public employee, you still will end up penniless and dependent on those scarce greeting jobs.

Speaking of inflation, you will notice that when Washington releases its figures it conveniently strips out the very things you buy most often – food and gasoline. Do you think that is an accident? They strip it out because you spend a lot of your money on these items, and the entire point of the exercise is that you should be spending more on them. When economists discuss inflation among themselves, therefore, they refer to core inflation – inflation minus the shit you buy.

Inflation is weird, frankly. No economist has a satisfactory explanation for why it occurs. At one time economists tried to argue that  inflation resulted from demands for higher wages – but the stagnation of your wages over the past thirty years pretty much disproved that argument. There is an explanation now widely popular among economists that inflation results from too much money being printed in Washington. As a result, these economists pretend to spend a lot of time tracking the supply of money and credit in the economy trying to detect the first hints of inflation.

As usual, economists are wrong – not just wrong, but WRONG. PERIOD. FULL STOP.

Wrong, as in Congress was wrong to authorize the invasion of Iraq, because they KNEW AT THE TIME there were no weapons of mass destruction in the country. Wrong, as in the Messiah made promises to you that he KNEW AT THE TIME were lies. Wrong, as in beating little Willie Corgan as the teacher stood there with his free hand in his pocket playing with his self is wrong.

The false prosperity

Economists know that their explanation for inflation is wrong, because none other than Dwight David Eisenhower himself, hero of World War II, told them 60 years ago just how inflation resulted directly from Washington’s policies:

“The inflation we suffer is not an accident; it is a policy. It is not, as the [Truman] Administration would have us believe some queer and deadly kind of economic bacteria breathed into the atmosphere by Soviet communism.

“This is the way a recent edi­torial in a great metropolitan newspaper put it: ‘Inflation is the calculated policy of the White House on the labor front, the fiscal front, the agricultural front.’ The point and purpose of this policy I have already in­dicated: to fool the people with a deceptive prosperity. The method is very simple: to give more people more money that is worth less….

“There is in certain quarters the view that national prosperity depends on the production of armaments and that any reduc­tion in arms output might bring on another recession. Does this mean, then that the continued failure of our foreign policy is the only way to pay for the failure of our fiscal policy? According to this way of thinking, the success of our foreign policy would mean a depression.”

(Our thanks go to Tom Walker who rediscovered this speech.)

What we call inflation is actually something much more complex than the simple increase in the prices for everything. It is the deliberate squandering of the productive capacity of the country – indeed, of the entire global market – for purposes serving Washington alone.

Inflation can be expressed in any of four forms (perhaps, more):

  1. The constant increase of prices of all goods you buy
  2. Increased unemployment
  3. Shortages of goods
  4. Trade deficits, leading to disinvestment, speculation and deindustiralization.

The Soviet Union suffered terribly from inflation without ever seeing most of the above problems. Why? Because, as a matter of policy, investment was controlled by the government, prices were administered by it, trade was forbidden and tightly controlled by it, and no one was allowed to be unemployed.

So, in the Soviet Union, inflation took a peculiar form: Chronic shortages of goods, and the massive waste of labor by government owned companies. As soon as the economy was no longer under the control of a central plan, unemployment, prices, and company bankruptcies exploded – in a few months the economy contracted by 40 percent or more. The trade deficit yawned, gangsters took control of the nation’s infrastructure and began dismantling it, and more efficient western companies rushed in to fill the vacuum.

The misery of the population was devastating.

We are now reenacting that catastrophe – and the source of the problem is the same as it was in the Soviet Union.

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