Home > political-economy > The case for bitch-slapping Saint Paul until he wets his panties: When Harry met Josef

The case for bitch-slapping Saint Paul until he wets his panties: When Harry met Josef

February 20, 2010 Leave a comment Go to comments

Harry S. Truman and Josef Stalin

As we stated in The case for bitch-slapping Saint Paul until he wets his panties: Dog whistle economics…, Paul Krugman’s support of a higher inflation target by the Federal Reserve is nothing more than a call to reduce still further your standard of living – to break you with starvation in order to fluff up the profits of American corporations. His reputation aside, the support of this policy results in just the consequences we stated.

That the left continues to tolerate him in their midst is a damning admission of their intellectual poverty.

In support of this view we have introduced the case of the Soviet Union, and no doubt this confused you: Wasn’t the Soviet Union a command economy? Did they not declare themselves socialists – or, still worse, communists – and avowed enemies of all things capitalist? What possible parallels can there be in the economies of the two countries?

In the Messiah’s 2010 Economic Report of the President, we find these words:

Chapter 4 examines the transition from consumption-driven growth to a greater emphasis on investment and exports. It discusses the likelihood that consumers will return to saving rates closer to the postwar average than to the very low rates of the early 2000s. It also describes the Administration’s initiatives to encourage household saving. Greater personal saving will tend to encourage investment by helping to maintain low real interest rates. The increased investment will help to fill some of the gap in demand left by reduced consumption.

The report highlights the “Administration policies, such as investment tax incentives, designed to promote private investment.

It’s a hoot, and if you by chance are in need to a sleeping aid, you just might want to crack it open and feel your eyelids slam shut within fifteen minutes – mouth open, plaster cracking, full-bore snoring, baby! It is the stuff of which boiler-plate is made – the kind of crap that passes for economic policy on the campaign trail, and in town meetings staged for television, with some portion of the audience employed as a prop behind the speaker. Politicians are for investment, in much the same way they are for national security, the flag, and family values.

For politicians, every economic problem afflicting society can be fixed if we just encourage more investment.

Really! We promise – just a little more work

And, not just American politicians – here’s Josef Stalin emphasizing the need for investment in the Soviet Union, written in his 1952 blockbuster number one bestseller, Economic Problems of Socialism:

It is necessary, in the first place, to ensure … a continuous expansion of all social production, with a relatively higher rate of expansion of the production of means of production. The relatively higher rate of expansion of production of means of production is necessary not only because it has to provide the equipment both for its own plants and for all the other branches of the national economy, but also because reproduction on an extended scale becomes altogether impossible without it.

For Stalin, emphasis on investment was necessary in order for the Soviet Union to pass from the phase of socialism to the economically superior phase of communism. (What must be stated here: We are NOT alleging the Messiah is a socialist, or a communist – in fact, we are not alleging that Stalin was, either. We are merely trying to show the essential similarities in the approach to the two economies by their respective administrations. Bear with us.) What is really weird about this is not that the Messiah and Stalin are on the same page with regards to this stupid preoccupation with investment; the really weird thing is that about the same time Stalin was penning the above words, a red-blooded American – who no one has accused of socialist sympathies, or being a Kenyan – Harry S. Truman – was delivering his own message to the American people on the same subject of investment:

The third part of the job is to increase our basic industrial strength–to build up our facilities for the production of steel, aluminum, power, and other basic commodities and services. This ability should be brought to a level where it can carry the present defense burden without the necessity for irksome controls extending over a long period. This will also increase our ability to meet any requirements for a greater military effort.

Truman warned that there would have to be sacrifices for the national effort:

Workers should serve, by helping to improve productivity. They should seek out jobs which are essential to the defense effort. They should cooperate by working longer hours wherever it will help the defense effort. More people should seek work than in normal times.

Millions of others, in addition to businessmen, industrial workers, and farmers, are now called upon to do their jobs more efficiently, and to readjust their efforts to the needs of national defense.

For all to serve in full measure, it must be in a common cause and not primarily for personal gain. This does not mean that we should undermine the incentives which lead to more production. But the rewards for increased production cannot be as great under a defense program as they are in normal peacetime. This is because most of the increased production must go into national defense, and consequently cannot be used to improve incomes or lift standards of living. (emphasis ours)

Finally, Truman acknowledges that his economic policies HAD to result in inflation:

Although we can increase production, we cannot do it quickly enough to expand the defense program, and at the same time still have as much left over for other purposes. We must put heavy restraints upon nonessential business activity. During the past few years, nearly 70 percent of our growing national output has gone into consumption. This has led to higher standards of living, which is the ultimate purpose of a peacetime economy. But the total supply of consumer goods cannot be increased this year, and many types of goods must be sharply curtailed. Yet the population will continue to grow; new families will continue to be formed; and more incomes for practically all groups will be generated by more production, more employment, and longer hours. The excess of consumer demand over available goods will rise by many billions of dollars. This will cause intense and mounting inflationary pressures, which must be counteracted. (emphasis ours)

The amazing imploding Soviet economy

Stalin argued, that the Soviet Union’s period of investment and rapid expansion of the productive capacity of Soviet society would eventually come to an end, and would lead to the doubling of worker’s income, a fall in prices for consumer goods, expanded education, and, of all things, shorter hours of work:

It would be wrong to think that such a substantial advance in the cultural standard of the members of society can be brought about without substantial changes in the present status of labour. For this, it is necessary, first of all, to shorten the working day at least to six, and subsequently to five hours. This is needed in order that the members of society might have the necessary free time to receive an all-round education. It is necessary, further, to introduce universal compulsory polytechnical education, which is required in order that the members of society might be able freely to choose their occupations and not be tied to some one occupation all their lives. It is likewise necessary that housing conditions should be radically improved, and that real wages of workers and employees should be at least doubled, if not more, both by means of direct increases of wages and salaries, and, more especially, by further systematic reductions of prices for consumer goods.

Nice right? The only problem with this bright cheerful prediction: In 1987, just months before the Soviet economy imploded, one writer described what happened to the Soviet Union this way:

…[T]he rate of growth of the main economic indicators has steadily declined, with national income growing only 16.5 per cent in the last five-year plan period which is less than one half of the growth in 1966-70. Similarly , industrial production grew by only 20 per cent in 1981-85 compared with 50 per cent in 1966-70, agricultural output by 6 per cent compared with 21 per cent, and real income per capita, by barely 12 per cent in 1981-85 compared with one-third in 1966-70. Towards the end of 1970s the rate of economic growth fell close to a stagnation level . The country began to lose one economic position after another. The technological gap separating it from the advanced Western nations started to grow again. This had not happened since the late 1920s.

This tremendous waste of resources and economic opportunities probably would not have happened if the country were not so enormously rich in natural resources, export of which enabled the USSR to cover current needs and new technology imports – imports which should not have been necessary given the country’s large domestic technological capacity. This reliance on exports of oil and other commodities concealed, for a time, the need for the adaptation of the economic mechanism to the changed conditions. But such a need was a clear historical necessity.

Far too late, the Soviet leadership realized that its decades long military build up had been a terrible mistake:

In the past, the priority given to the development of industry and infrastructure meant that social expenditure was essentially a “residual” – what was left over after productive investment spending had taken its share. Quite often new factories were given priority over housing, kindergartens, schools, services and recreation facilities.

How similar does this sound to what Truman predicted in 1950, as he sacrificed universal health care, education and the social safety net to war preparations:

First, we cannot afford in the immediate future to devote as large a part of our resources to the improvement of health services and facilities as we had planned to do in normal peacetime…

Second, we cannot in the immediate future find the materials and manpower to build as many new schools and provide as many new teachers as we had planned to do in prosperous peacetime…

Third, we cannot expect in the immediate future to achieve all of the expansion of social security which we had planned for in prosperous peacetime…

Thus we stand here – six decades later – without medical insurance for all, with a decaying public education system, and working more hours than ever, while unemployment and prices continue to skyrocket.

And, all that bitch Paul Krugman can do is make The Case For Higher Inflation.

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