Sorry progressives, the Bush tax cuts did not kill the economy

United States Gross Domestic Product (Gold) 1929-2009

A quick note to slap down the standard progressive interpretation of the impact of the Bush tax cuts on the economy. Sorry folks, there is no real empirical support for your position.

Progressives who praise the Clinton era job creation performance versus Bush era job creation performance, and link this to Clinton tax increases versus Bush tax cuts, overlook two things that lead to the wrong conclusion: First, the Clinton job performance came during a time of a general economic expansion, Bush’s performance came during a general contraction. This fact is lost in the data because the data employs dollars as measure of economic activity and so masks the depression that began in 2001. If you discount the dollar denominated economic data using the price of gold, the contraction clearly shows up beginning in late 2000.

The second thing overlooked with this comparison is that Clinton era job creation (not “Clinton job creation” or “Bush job creation” — the two men created nothing) was exactly the wrong policy. The Clinton era succeeded in creating jobs, true. But it was creating jobs into the face of rising imports from China and other low wage nations and a general glut of capital on the world market. The depression did not appear suddenly because of the Bush tax cuts, but resulted in a too long social work day leading into the Bush era. To put this another way, the Bush era’s poor legacy creating jobs was a legacy of the Clinton era’s success at creating too much superfluous work.

The Bush tax cuts came in response to this, which was already evident as he began his term, and was his justification for the tax cuts. Progressives don’t want us to remember why Bush demanded the tax cuts, but some of us do not have such a short memory. This is not a whitewash of the Bush tax cuts; clearly they failed entirely to stop the depression from emerging and gaining steam — but they did not create the depression. Nor, were they responsible for poor job creation during the Bush and Obama years. It was already baked into the cake by overaccumulation of capital.

For those who are interested, as proof of my argument, I include the chart above showing GDP as measured by gold between 1929-2009. In the chart you can see clearly the three depressions that occurred over those years: 1929-1934, 1970-1981, and 2001-present.

The problem is not, and has never been, Republican anti-tax policies versus Democrat social spending policies — both are a sideshow to chronic overaccumulation of capital. Tax policy cannot fix this.

What help for the 99ers? (Part four: It’s not personal)

I did not mean to go on this long on the dire future of the 99ers. I wanted only to show the connection between their demand for assistance and the demand for the abolition of the State — and, of Washington, which is the headquarters of the machinery of State, its coercive machinery of repression and imperialist adventures. Nevertheless, I am drawn to extend this thread by things which occur to me in the course of considering the 99ers, who are our family and friends, neighbors and buddies, and who, without some bold step by us all, will become the fulcrum to impose a devastating austerity on us all.

“The law, in its majestic equality,” says, Anatole France, “forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread.” In this elegant sentence, France encapsulates the entirety of the relation between the individual and modern society: the State exists as an immediate totality; ideally, its laws are meant to apply to all equally without regard to the circumstances of any particular individual. Seen in the most favorable light, all we can hope to achieve under the conditions of modern society is the equal application of State laws over a society composed of individuals who are anything but equal in their actual circumstances, wants, needs or desires. To actually function as the representative of a society gripped by such vast inequality as our own, Washington essentially must be indifferent to that inequality, to presume no more than the typical circumstances. Only by being indifferent to the manifold miseries of its citizens can Washington truly represent them.

And, this is also true for unemployment: insofar as Washington is concerned, the unemployed worker is a devastating insult to the Puritan Ethic — it is the tool of Satan’s workshop, a potential source of civil unrest and Bolshevik militancy, an existential threat to the existing order. But, this worker as constituted by capital are not the actual living breathing individual workers as they really exist. but only the collective mass of these immediately social laborers, which mass exists as a totality and only within this totality. This collective worker is, of course, composed of individuals of varying demographic characteristics which are to each, on the one hand, advantages — such as education, skills, and social, familial, ethnic relationships, etc. — and, on the other hand, disadvantages — skin color, national origin, sexual orientation, language, etc. Position within this hierarchy of the collective laborer, thus, appear altogether arbitrary and at once the result of certain fixed prejudices within the society or the result of certain “objective” qualities — education, skills, etc.

The State, for its own purpose, as representative of society, may enforce laws preventing discrimination against certain individual characteristics, or promote the development of certain skill sets or level of education, but, to the extent it pursues these goals, it does not do so because of its desire to improve the lot of the individual worker, but to perfect the collective worker as a collective worker — that is, as a body capable of producing surplus value.

Washington’s indifference to the fate of the 99ers should not be confused with an indifference toward unemployment in general; Washington is keen that the collective worker should work as many hours as can be squeezed into a single social workday and seeks to maximize those hours through its fiscal and monetary policies. Its goal, whether unemployment be high or low, always is to work this collective body to the legal limit of the workday. It is, by contrast, only indifferent to which individuals composing this collective body actually work and which starve. Washington’s indifference to the 99ers, to quote Tom Hagen, “is business not personal.”

The indifference of Washington to the fate of the 99ers is only a reflexive expression of its hostility to reducing the legally mandated limit on hours of labor. Since the aim of the State is always and under all circumstances to maximize its enlargement, it must, of necessity seek to extend the work day not merely beyond the time needed to produce the commodities required by the collective body of workers, but also beyond that required to the collective body of capitalists to expand the scale of production. Since, capital’s hunger for profit knows no bounds, the State knows no limit to its own enlargement. Thus, the State’s ceaseless stimulation of profitable economic activity results in the ceaseless expansion of the State itself. Washington decries unemployment, but only to the extent that employment reaches what it calls “full employment” — a euphemism for that level of employment where additional State action produces no additional surplus value. It is the task of a vast army of economist functionaries, public, private and academic, to determine by any number of measures where precisely this level is — and, it is the subject of much controversy, which, to the uninitiated, can be confused with an actual interest in the conditions of the working class as individuals, but, in fact, it is just business.

Even if we assume, as does the progressive or vulgar Marxist, that the expansion of the State is necessary for the general improvement of the population of workers who are under increasing financial distress, and suffering misery, it cannot be denied that this expansion must come at the expense of the workers themselves. Their polite demands for laws to be passed to improve the lot of working families amounts — although the progressive would be horrified at the suggestion — to a demand for confiscation of the property of “the rich”, and the assumption by the State of the role of social capitalist. Indeed, it is the self-evident implications of their own demands that cause progressives to pull back from this implicit logic and submit themselves to meekly following in the wake of the Party of Washington — being entirely satisfied with whatever meager realization of their demands against the existing order can be achieved in the cloakroom of Congress. They are reduced to a mere lobby, another one of the special interests with their hands in the pockets of the taxpayer fishing through them for spare change.

On the other hand, their craven cowardice when facing the implications of their own demands, leads them to turn on the workers themselves and chastise them for over-consumption, gluttony and spoiling the planet. The worker is now transformed from a vulnerable victim needing the protection of the State into a greedy malevolent hedonist caring only for his own satisfaction and the world be damned. The logic of the demands require the State erect protection of the working class at their own expense, hence, consumption must be curtailed and taxes raised so that the State, having impoverished the worker, can now rescue him from his impoverishment. In this regard we see a slew of new and increased taxes on the substances commonly consumed by the population of workers that can be labeled as “sinful” — taxes on cigarettes, alcohol, gasoline, etc. — to fill the ever widening black hole that is government’s need for new sources of revenue.

Progressives completely miss the point here: for government expenditures to have an economic effect, i.e., a stimulative effect on employment, they must be entirely superfluous both to the consumption of the working class, and to the requirements of capital as such; that is, to the productive employment of labor and the expansion of the means to productively employ labor. But, the phrase, “the consumption of the working class”, includes the consumption of both those workers who are productively employed and those workers who are unproductively employed, as well as those who are altogether unemployed and living on government assistance. Simply put: to render “aid” to the 99ers by political means, the State must be indifferent to them and their daily increasing misery; it must do precisely those things which offer no assistance to them, impoverish them still further, and meet no human need, whatsoever.

It’s not personal; it is just the way the mode of production operates.

What help for the 99ers? (Part three)

Why is Washington so implacably hostile to a reduction of hours of work as the solution to unemployment? And, why has it abandoned the 99ers to their fate?

The answer to these questions is simple: Washington depends on the unpaid hours of labor wrung from the working population as much as capital itself. Washington is not a neutral party when it comes to hours of labor; it is, without exception, the largest single consumer of surplus labor time in society. The entirety of its revenues amount to the unpaid labor of society either directly, in the form of taxes, or indirectly, in the resources it controls through debt or money printing.

This fact is never admitted by progressives, nor even by vulgar proponents of Marx’s theory. The argument made by the Marxists against the current State amounts not to a recognition that the machinery of state shares with capital the total pot of surplus labor time, and, as a result, must be interested in the longest possible duration of unpaid labor, but only that this machinery is under the control of capital and should instead be controlled by the working class. The progressive critique of the State amounts to a demand that this unpaid labor time be devoted to the “improvement of society”; the typical vulgar proponent of Marx differs from this only in that he proposes this be under the direction of a working class party. Neither raises the demand for the abolition of all unnecessary labor, and with it, the state in its entirety.

When the Great Depression erupted Washington suddenly had access to billions of hours of unpaid social labor which it, along with the other great powers, immediately set about throwing into preparation for World War II. Government, already the largest single consumer of unpaid labor time in society, expanded monstrously – consuming perhaps as much as 40 percent of national output. But, in the aftermath of that horrible conflict, we really see its voracious hunger, and insatiable lust for surplus as the Truman administration conceived of and implemented a policy of a permanent war footing: The Cold War.

In his annual message to the Congress, delivered January 12, 1951, Truman opened with these words announcing the birth of the national security state:

We face enormously greater economic problems, as I transmit this fifth annual Economic Report, than at any time since the end of World War II. Although our economic strength is now greater than ever before, very large new burdens of long duration are now being imposed upon it.

The United States is pledged and determined, along with other free peoples, to cheek [sic] aggression and to advance freedom. Arrayed against the free world are large and menacing forces. The great manpower under the control of Soviet communism is being driven with fanatic zeal to build up military and industrial strength. We invite disaster if we underestimate the forces working against us.

The economic strength of the free peoples of the world is, however, superior to that of their enemies. If the free nations mobilize and direct their strength properly, they can support whatever military effort may be necessary to avert a general war or to win such a war if it comes. The resources are on our side. The only question is whether they will be used with speed and determination. The answer will depend upon unity of purpose and of action–unity among the free nations, unity here in the United States.

Unity is imperative on the economic front. On this front, under the American system, everybody is involved–every businessman, worker and farmer; every banker and scientist and housewife; every man and woman. We can win our way through to ultimate triumph if we all pull together. Decisive action, essential to our safety, should not be halted by controversy now.

Truman, in his report, explains the implications of a conflict with the Soviet Union of a very long duration:

These manpower needs will call both for increasing our labor force by reducing unemployment and drawing in women and older workers, and for lengthening hours of work in essential industries. These manpower requirements can be met. There will be manpower shortages, but they can be solved.

For those readers whose critical facilities have been dulled by countless hours of exposure to American Idol, what we have here are the words of a craven hustler — a two-bit con artist trying to sell you something you don’t need. Washington is in the business of selling security and its sales methodology is the practice of sowing fear of chaos, terror, and the unspeakable strange unknown. This sales strategy required the creation of an adversary to the “American system”, as well as its domestic avatar buried deep within the populace, to create a pervasive sense of vulnerability and distress among the population. It doesn’t matter that this adversary is Soviet communism or “Islamofascism”, nor that its domestic avatar appear in the form of a devout Muslim citizen or communist trade union activist; what matters is that the threat be, at the same time, pervasive and discrete, universal and particular, potentially life-threatening and merely strange.

This impeccably crafted direct appeal to the collective lizard brain of society, which paralyzes critical thought as our painfully slow brain tries to calculate the odds that the Sikh gentleman sitting in front of us on the bus might be strapped with explosives — renders critical thinking useless, and, therefore, a mere impediment to the apprehension of our empirical circumstances, reduces each of us to a suggestible sheeple, and set us up for acquiescence to the burden of providing Washington with ever greater hours of unpaid labor.

On the one hand, this “service” provided by Washington is very profitable to capital in its own right, since it requires enormous amounts of otherwise unprofitable output in the form of every imaginable thing from paperclips to the most advanced spy satellites, and launchers to put them in orbit. On the other hand, the demand for these products are the very kinds of superfluous expenditures that become increasingly necessary for the continuation of this social form of production.

Once the identity of interest between capital and the State in the longest possible extension of hours of labor is established, it is possible to understand not only Washington’s hostility to work time reduction as the means to end unemployment, but also its imposition of the regime of global competition on the American economy, its facilitation of companies moving industrial facilities and service jobs off-shore, and its hypocritical promotion of amnesty for undocumented immigrants: the capitalist state is a state that must operate according the laws of capital because it is founded entirely on the consumption of the surplus labor created by capital.

It also helps us explain the abandonment of the 99ers to their fate, the impending evisceration of the social safety net and the brutality of the austerity regime now being prepared by Washington. Far from merely falling under the control of Wall Street, Washington itself wants and needs this brutal assault on the living standards of Americans because all other methods of increasing the extraction of surplus value have failed.

What help for the 99ers? (Part two)

In my rant yesterday, What help for the 99ers?, I made an argument why folks who support the 99ers should nevertheless oppose extension of unemployment compensation beyond 99 weeks. That argument made what might be considered an obscure connection between the unemployed and the large body of “public servants” who compose the state machinery of repression, totalitarian control and imperial expansion.

Let me add a few remarks to clarify how I see this connection.

To do this, we have to look at Karl Marx — not the infamous icon of Marxism, but the real guy, the writer and, to some extent, anthropologist of capitalist society — Often the two get conflated, so that, for instance, the utterances of any knucklehead running around with a copy of the Communist Manifesto sometimes is mistaken for the actual words written down on paper by the original person.

In Marx’s model of capitalist society, the unemployed worker is not an accidental occurrence and should not be treated apart from the labor force itself. The unemployed worker is a reserve force available to capital for those periods where new profitable opportunities or requirements for additional labor suddenly open up. The idled worker makes it possible for these new areas to be exploited by providing the additional labor capacity necessary to take advantage of them. This reserve also serves a function of depressing wages during times of depressions, when capital rationalizes its operation to resume profitable expansion by pressing wages below their cyclical average.

Thus, unlike economists, who treat unemployment as an aberration, a defect, or failure of the market, Marx believed a relative surplus population of workers was essential to the functioning of the capitalist system of production itself. The constant expansion and contraction of the labor reserve is consistent with his comprehensive model of capital in which, for example, the price of a good had to fluctuate according to the laws of supply and demand, and only reflected the value of the good through the moving average of these fluctuations. Capitalism is a social system of production carried on by millions of individuals acting privately — unless the system itself had flexibility to adjust to billions of differing and even contradictory decisions each day it would soon break apart.

In times of unusually vigorous expansion, and even for war, the great mass of this population of unemployed would be “called up” (both metaphorically and actually in the case of the military draft) to fill needed positions in industry or on the battlefield. Thus, the “liquidity” of the reserve source of labor power is not simply a matter of business concern, but also a matter of state. So, for example, it is not a surprise to see a statement by White House in the debate over the DREAM Act explaining why the act would be useful for its ongoing military operations:

Secretary of Defense Gates has written to DREAM Act sponsors citing the rich precedent of non-citizens serving in the U.S. military and stating that “the DREAM Act represents an opportunity to expand [the recruiting] pool, to the advantage of military recruiting and readiness.

The size of the reserve labor force is not determined by the means available to expand the scale of productive activity, but to expand activity that creates profit and for purposes of State. But, this purely cyclical movement in unemployment is not of the least concern to us, because it merely masks a longer term trend identified by Marx: the conversion of this reserve labor force from a relative oversupply of labor into an absolute oversupply of labor.

Over time the improvement in the productive capacity of labor — by augmentation with new types of machinery, new methods of organizing work, application of new scientific knowledge, and technology — is increased to such an extent that the relative proportion of workers who can be employed productively shrinks and a permanently unemployable reserve of labor emerges. (Today, this unemployable reserve consists not only of the 99ers, but also a massive hidden population of young people who have never entered the labor force and who, in addition,  compose the largest part of the swollen prison population.) This permanently unemployable reserve — a growing stratum of the labor force rendered entirely superfluous by the advance of industry — loses its opportunity to engage in productive labor and is reduced to serving only as a market for the output of the productively employed labor force.

Along with the emergence of a permanently displaced population of workers we find the emergence of the fascist state — a peculiar type of state organism combining both a permanent war footing with an extensive social safety network of state provided services. Although this state is typically identified with German Nazism and Italian Fascism it is not limited to them, but emerges in all the industrialized nations during the Great Depression, and is the essential feature of Franklin Roosevelt’s New Deal. The social basis of these fascistic entities is the general clamor among all classes in capitalist society for state action to preserve the conditions of existence of the society; namely, the purchase and sale of labor power. It is for this reason the fascist state appears on the scene as the embodiment of the national interest and asserts the populist idea of a national rebirth through a pan-class coalition.

The charge of this state, as imposed by general social demand on it, is to employ the unemployable, and hence, to provide the demand for the output of industry. From this point, political-economy becomes concerned with the problem of consumption of the massive and ever growing output of industry. The fact that the emergence of an absolute oversupply of labor implies the possibility of a drastic reduction in hours of labor for all in society, and, therefore, the awareness of the possibility that society might be entirely freed from labor and the system of domination inherent in the division of labor is, from this point, not only ignored, but actively suppressed. Thus, we see, from the end of World War II, that discussion of the idea improving productivity would lead to the abolition of labor disappears from economic textbooks — to be replaced by the phrase, “the lump of labor fallacy”.

The erasure from economic textbooks of the idea that a reduction and ultimate abolition of labor was the probable outcome of improving productivity foreshadowed last night’s news that the House of Representatives had abandoned the 99ers to their fate. As we showed in the case of the Obama administration, Washington is not merely unaware that unemployment can be wiped out by drastically reducing hours of work, it is hostile to the idea.

Why is Washington ignoring the 99ers, and why is it hostile to the great question of work time reduction? We will answer this in the next post.

What help for the 99ers?

I am having a “marxist moment” today. The Obama tax deal, in addition to its other flaws, has completely excluded mention of those who first lost their jobs in 2008 and early 2009, when the worst of the layoffs hit the economy. Millions have already exhausted their benefits, and perhaps 4 million more will join them in the next few months.

So what is to be done for them?

Think about a situation where an unemployment check is fifty, seventy or even ninety percent of the income in your household. And, now, that income is approaching imminent termination. You have probably run through your savings, stopped paying credit card debt and the mortgage; you may even be parking the car away from home to avoid repossession. The crisis was not your fault. You never made sub-prime loans, nor was your own home purchase financed by the deliberate fraud of a liar’s loan. You weren’t the one who bundled those loans and sold them to Iceland and pension funds. You probably never missed a payment on your mortgage, auto or credit card loans until that day the company announced it was shutting down your entire division and began handing out severance checks.

At the risk of personalizing this discussion, I know people like this — one is a neighbor, another is a friend and former co-worker at a debt mill run by a large financial company. The debt manufacturer has a seat on the Federal Reserve Bank, and when its debt creating operation ran into the difficulty, it ran to Uncle Sam to bail it out — just another welfare queen in an Armani suit.

I DVR’d the CEO of Motorola talking on PBS Newshour yesterday, because I couldn’t believe what I had heard — I had to record it, so I could look at it today and confirm that, yes, he is that much a self-absorbed bastard. The CEO had just exited a gathering with President Obama of corporate bosses discussing what it would take for the nation’s largest companies to start hiring again. He opined that the administration was moving in the right direction and that President Obama had made a good deal with the Republicans in congress for across the board extension of President Bush’s 2001 tax cuts, which are heavily weighted toward the income of the top one percent of the population. The CEO praised the agreement for its effect in ending much of the uncertainty surrounding the administration’s tax policy.

Now, he said, we had to get serious about the deficit and deal with entitlements.

This morning I am trying really hard to avoid playing the class war card. Playing the class war card in these circumstances doesn’t require any creativity or thoughtful response. It is the political equivalent of yanking back your hand from a hot stove. Yes, corporate CEOs are ruthless narcissistic bastards, who have stripped the nation of its productive assets, moved them offshore, and left us with a hollowed out economy devoted to imperial adventures. And, the situation of the 99ers is pitiable. In conversation with my friend and with my neighbor, I have survivor’s guilt — and this, when I just might be the next dead hostage.

Yes, President Obama is a shameless whore who sold out his sacred pact with his supporters at the first opportunity!

Yes, the 99ers are at the point of extreme financial duress and tilting dangerously on the edge of physical existence!

Yes, our corporate masters are little more than Caligula’s court!

Yet, for all of this the move by the Congressional Black Caucus to introduce an amendment to President Obama’s and the GOP’s tax cut deal by extending unemployment benefits beyond 99 weeks must be opposed. That, this deal is an ugly filthy thing from the progressive perspective is obvious. But, no amount of sweetner will make horse urine taste like champagne. No more than will allowing gays to serve openly change the fact that they are now allowed to be openly gay while carrying out the military policy of an empire.

But, my opposition goes beyond simply “rejecting the good for the perfect” — a child-like refusal to accept compromise: The CBC’s proposal is itself to be condemned because it extends the dependence of the 99ers on state handouts and does not call on both those who are working and those who are unemployed to put an end to this dependence, and the larger dependence on selling themselves into slavery to survive. I think we should be sickened by the recent AFL-CIO internet commercial which portrays the 99ers as helpless, vulnerable victims of economic forces over which they have no control. A depression is not a natural disaster; we are not helpless victims of some financial force of nature beyond our control.

It is a matter of demonstrable fact that the Obama administration knows that all it takes to eliminate unemployment in this society forever is a large reduction in hours of work. His former economic adviser, Larry Summers, former president of Harvard University, and former Treasury Secretary in the Clinton administration, stated this directly:

“I think we got the Recovery Act right,” Larry Summers, the president’s chief economic adviser, said in an interview. “The primary objective of our policy is having more work done, more product produced and more people earning more income. It may be desirable to have a given amount of work shared among more people. But that’s not as desirable as expanding the total amount of work.”

Preferable for whom? For the state, of course, which now has ample excess resources it can put to work expanding the empire. Resources that, having no possible productive employment opportunity, can be employed for whatever unproductive purpose Washington demands. Beyond simply holding down the wages of those who work, the unemployed are the cannon fodder of empire, the TSA gropers, the bureaucrats ceaselessly promulgating new directives that other bureaucrats enforce. They are the drug enforcement agents, the cultivators of every new would-be “muslim terrorist”, the operators of a vast systematic destruction of young minds in the guise of public education. They are the operator of the largest prison population on the planet — a filthy, vile, unspeakable chamber of horrors that excels only in spreading disease and moral breakdown.

The CBC’s proposal not only does not address these concerns, it reinforces them and promises only to extend them indefinitely. A consistent anti-statist position has to call for the end of all unemployment compensation and its replacement by a large reduction in hours of labor.

The vegetative State

If anyone was wondering if the economy is completely brain-dead and continuing to function solely on Washington’s extraordinary intervention, just have a look at these charts provided by The Global Macro Monitor blog, via Barry Ritholtz. According to the research of Steve Keen and others, employment growth has a .67 correlation with the rate of debt expansion. Private employment growth is unlikely unless we see clear signs of private debt expansion, but the source of debt expansion at present is that of the wholly unproductive national government sector.

The author of the post writes,

If, as the President says, ‘the flow of credit is the lifeblood of our economy”, the country would have died in 2009 had not the policymakers taken the extraordinary measures they did. These charts illustrate how close we were to the abyss and should give a clearer perspective on what Bernanke & Co. were/are up against. They are heroes, in our book, for stabilizing the situation and pulling us back from the abyss. The jury is still out, however, on long-term structural adjustment and preventing a global sovereign debt crisis.

We disagree with the author’s characterization of the 2009 intervention by Ben Bernanke and the Federal Reserve Bank — and the intervention by Washington generally. Of course, this disagreement stems from our differences over whether stabilization and “long-term structural adjustment” is preferable to the “abyss”. The only card Washington has in its hands right now is the constant, coordinated, relentless repetition from every “credible” source that the collapse of the bloated financial sector must lead to chaos and social breakdown.

Make no mistake, Washington and its supporters and paid hacks want you to believe that the economic security of the nation rests on these action, but the Too Big To Fail are being rescued in order to buy time for them to pass the “structural adjustment” of this crisis on to you. All the actions of Washington thus far has been aimed at this effort and none other.

This effort to spread panic and terror among the population — to cut off discussion and dissent — is no different than that which has you taking off your shoes and submitting to the impersonal gropes of would-be employees of McDonald’s just to board a plane — as well as that designed to make you acquiesce to the murder of thousands of Iraqi civilians and Afghanistan villagers.

The Democrats’ meltdown moment — what will progressives do?

Permit me to offer a prediction. Despite the temper tantrum in the House yesterday, it will pass something similar to the agreement made between President Obama and the Party of Wall Street.

Let’s look at the ugly reality in cold hard terms: The House Democrats are split, the Senate Democrats are incapable of passing any legislation that does not have the support, or at least acquiescence, of several Republicans, and the President is moving to make a separate accommodation with the GOP — because he has to. Add to this: passing something now that is capable of also passing the Senate is the only option House Democrats have to put their stamp on this legislation, since, come January, they will have no leverage and Senate Democrats will be even weaker and more disorganized.

Do I have all of this right?

That leaves progressives out in the cold, in the middle of what is likely to be a harsh winter for the 99ers, the public unions, and just about everyone without a private island in the Caribbean.

If progressives refused to see the writing on the Wall Street during the health insurance reform debate, a sober assessment of their prospects now is absolutely necessary: You were always the enemy!

Nobody in Washington wanted Obama’s supporters to come rolling into Washington, hopped up on that “hopey-changey stuff”, to dismantle the unholy intersection between Washington policy and Wall Street bankster mafia interests.

As the organizers of the December 16 rally state, the Obama administration and the Democrat mainstream:

… has advanced repeated assaults on the New Deal safety net (including the previously sacrosanct Social Security trust fund), jettisoned any hope for substantive health care reform, attacked civil rights and environmental protections, and expanded a massive bailout further enriching an already bloated financial services and insurance industry. It has continued the occupation of Iraq and expanded the war in Afghanistan as well as our government’s covert and overt wars in South Asia and around the globe.

Along the way, the Obama administration, which referred to its left detractors as “f***ing retarded” individuals that required “drug testing,” stepped up the prosecution of federal war crime whistleblowers, and unleashed the FBI on those protesting the escalation of an insane war.

Obama’s recent announcement of a federal worker pay freeze is cynical, mean-spirited “deficit-reduction theater”. Slashing Bush’s plutocratic tax cuts would have made a much more significant contribution to deficit reduction but all signs are that the “progressive” president will cave to Republican demands for the preservation of George W. Bush’s tax breaks for the wealthy Few. Instead Obama’s tax cut plan would raise taxes for the poorest people in our country.

The election of Obama has not galvanized protest movements. To the contrary, it has depressed and undermined them, with the White House playing an active role in the discouragement and suppression of dissent – with disastrous consequences. The almost complete absence of protest from the left has emboldened the most right-wing elements inside and outside of the Obama administration to pursue and act on an ever more extreme agenda.

You went to Washington to dismantle an empire, and ended up fighting for deliberately crafted Trojan Horse wedge issues like whether gays qualified to expand it, or whether foreign born youth could join in its bloody imposition. You went to Washington to dismantle the unholy intersection, but were offered entertaining sound bites ridiculing Sarah Palin until you found yourself politically kettled and isolated.

Quite frankly, you were played.

If you are going to stop being played, you’re going to need some issue to address this crisis that does not end up being a compromise between giving the unemployed 300 dollars a week in return for a second private island for billionaires.

I urge you, once again, to stand for real change — reducing hours of work to 32 hours to start — so we can bring the unemployed back into the economy and rescue millions of youth from their endless confinement to the purgatory of having never held a job and no prospects for one.

When you go to the December 16 rally — and, we think you should — you should be raising the single issue that will get Wall Street’s attention:

32 Hours of Work and no more!

Tax cuts for the rich?: the endless debate

There is an ongoing argument between the Left and the Right which can be summed up thus:

Tax Cuts Do Not Work

and, its opposite:

Tax Increases Do Not Work

Tony Wikrent makes a powerful argument for the Left in his post, The Obama tax deal with Republicans is insane:

The central premise of U.S. economic policy since the election of Ronald Reagan in 1980 has been that the people in the private sector who know how to invest – the rich – do a much better job allocating society’s financial resources than the federal government. In fact, Reagan told us in his first inaugural address, “government is the problem.”

In order to get as much of society’s financial resources into the hands of the rich – the people in the private sector who supposedly would do a better job investing it – Reagan, the Republican Party, and American conservatives in general developed a simple-minded faith in tax cuts, especially in reducing taxes on the highest incomes.

What are the results of this thirty year experiment low taxes? The Reagan / Republican / conservative theory DOES NOT WORK. For the first time in American history, we now have a generation that has less education and worse economic prospects than their parents did thirty years ago.

In all the hub-bub and brou-hah-hah of the tax debate the past few days, weeks, and months, hardly anyone has put forward the clear and unambiguous information that

TAX

CUTS

DO

NOT

WORK.

The definition of “work” is, of course, subtly redefined by each side in the debate, as would be expected, since the object of the debate is to obscure rather than enlighten. By the same token, measurement of “work” requires some consistent standard, but this is an ideological debate, not a scientific one, so each side also has its own set of measures by which it judges “work”.

However, both sides agree that they are talking about The Economy, which is to say, both sides are talking about capital – a distinct set of social and material relations among the members of society that are established between these members through their activity. So, in some sense, by “work” we can deduce each side is asking the question:

“Which policy makes capital work better as capital: tax cuts or tax increases?”

As with any argument of this sort, the answer is undefined. Under certain circumstances, tax cuts will make capital work better as capital. And, there are certain circumstances where tax cuts will make capital work less well as capital. There are also circumstances where tax increases will make capital work better as capital, as well as the reverse.

Finally, there is a circumstance where neither cuts nor increases will have an effect on capital. We are in that circumstance now.

Since capital is a very complex social organism with its own historical trajectory there is no hard and fast rule on what will be most conducive to its operation at any given time. It is not possible, for instance, to draw any hard or fast rule about the usefulness of tax cuts for the very wealthy by examining the economic policy of the Reagan or Clinton Presidencies. The Reagan Presidency began just as the nation was emerging from the severe depression of the 1970s, while the Clinton Presidency covered the peak period of that same expansion.

The Bush II Presidency began just as the peak expansion came to an end, resulting in a depression that, so far, has lasted from 2001 to the present. By the time Barack Obama took office, not only was the world market firmly gripped by this depression, but the very mechanisms of economic management — fiscal and monetary policy — had broken down in the ruin of the Great Financial Crisis.

The GFC is a rather unprecedented set of circumstances precisely because the entire structure of modern society now rests on the capacity of the State to counter the capitalist breakdown by managing the continuous expansion of superfluous labor. This superfluous labor is most familiar and obvious to us when it takes the form of Minsky’s Ponzi debt growth, but that is only its monetary expression.

Suppose, we zeroed out taxes for the entire top five percent of society, federal, state, and local (we might argue, as the Right do,  that they already perform an incalculable service to society by employing the bottom 95 percent), would this make capital work better as capital? I would argue, “No.” Capital would continue to operate pretty much as it does. Likewise, were we to zero out the taxes of the bottom 95 percent (we might argue, as the Left do,  that those who make more should pay more), and levy taxes solely against the top five percent, capital working as capital would be unchanged.

The reason for my conclusion is that capital working as capital is no more than a tiny slice of the wealth in society — it is only that portion that is actually put into circulation as self-expanding value — that is, productively employed labor. The reason why government economic policy became so important to the economy was not to increase the productive employment of labor, but to manage and grow the massive expenditure of superfluous, or unproductive labor.

The severe damage to government management of the economy using fiscal tools like tax cuts or increases, which was caused by the Great Financial Crisis, has hurt the productive employment of labor (capital) only because the constant expansion of unproductive employment of labor is the fundamental condition for capital’s operation.

To put this another way: it take so little productive employment to produce everything we need, that only by employing the vast majority of people unproductively can they acquire the wages to buy it.

And tax policy won’t fix this.

What progressives need to do about unemployment

What you think is a progressive program for change was only an attempt to head off real change during the Great Depression.

After the stunning insult by the Messiah, no doubt progressives are feeling a bit bewildered and frustrated. There is an easy answer for this: Admit you are wrong and get it right this time. You are still immersed in the make-believe world of the 1930s, but life has moved on.

The GOP and the Democratic Party mainstream are kicking your butt because they have dumped all their baggage from that period.

For the GOP in particular, their insistence on a balanced budget has gone the way of the Model A. The Party of Wall Street now knows there is nothing wrong with deficits: their base — the very wealthy — need a place to hide their vast holdings that cannot be invested productively, and what better place to put it than in Washington’s AAA rated debt instruments.

Moreover, they know buying US debt allows them to convert an ever increasing portion of the federal, state and local tax revenue stream into handsome fictitious profits even as American education collapses into the debris of a rusting and increasingly decrepit infrastructure.

They have learned, but you are still trying to revive FDR’s Second Bill of Rights — reimagining those rights in almost exactly the very form he did, with an updated version of the WPA.

It is not going to work. The nation and the world have long since passed from the industrial age, when a third of the population farmed, national economies were mostly insulated from external economic pressures, and governments jealously guarded their domestic industries.

We are now in a globalized world economy where agriculture labor is insignificant, national barriers to trade are rapidly falling, and industrial employment is quickly going the way of farming as a vocation.

You need to be there with the rest of the world.

The digital revolution and globalization is making it very difficult to rely on government economic policy to sustain full employment. It is costly to an extent that even working class families (what you call the “middle class”) question it.

Small measure of the change between the 1930s and now: The rightward drift in this country has been so pronounced that FDR’s WPA model seems like quite a progressive response to the unemployment crisis. In fact, it was the conservative response to the Great Depression, as Paul Krugman will attest, backed by Wall Street and business associations to head off the really radical idea — in the 1930s, mind you — of reducing the work week to 30 hours.

That’s right, in the 1930s the idea of a 25 percent reduction in hours of work was not only popular, but actually passed the senate in the form of legislation sponsored by the American Federation of Labor, and introduced by future Supreme Court Justice Hugo Black (then senator from Alabama) and Representative William Connery of Massachusetts.

Wall Street and industrial fatcats intervened to kill it — FDR pulled an Obama and “compromised” by spending public money to create make-work projects instead under the WPA.

Millions of working families lost the opportunity to spend precious hours free from labor to care for their families, their communities and their own intellectual development.

And, to keep up this unnecessarily long work week, trillions have been spent in wasted government programs — not to mention an increasingly Ponzi debt shell game — in a desperate attempt to create more unnecessary work.

The nation is looking for a way to drastically reduce unemployment, and to do it in a way that doesn’t require massive new government spending.

Join the digital age, where labor is rapidly being shed by improvements in productivity, and demand jobs be created the 21st Century way: by reducing hours of work for everyone.

“Class War”, “Deficit Hawks” and the feeding tube recovery

So, this is the takeaway from the Messiah’s tax deal with the Party of Wall Street: there wasn’t any tax deal. The agreement between the Messiah and the Party of Wall Street is an admission that the economy is officially brain dead and on complete life support. There is no recovery, there is only the false appearance of recovery produce by the expansion of federal debt.

Unemployment shows no signs of improving, job creation is negligible, the bankster mafia cartel’s quantitative easing money printing scheme has already failed and will fail again to generate inflation in the world market.

Of course, there was no recovery during the period 2003 to 2007, when the economy appeared to expand because of the increasing debt slavery of working families. The collapse of your income put an end to that Ponzi scheme, and the only thing keeping the entire global economic system from imploding is the judicious application of Washington debt manufactures to sustain the illusion of economic growth.

As the O’stimulus version 1.0 petered out, so did the recovery. And, it will likely be the same for version 2.0.

While the Party of Washington mobilized its useful idiots among the progressives to engage in a blatant class war against “the rich”, and as the Party of Wall Street deployed fear of US bankruptcy to drive its base to meet them, the Washington-Wall Street Axis negotiated a separate peace: to continue propping up an essentially brain dead economy with a feeding tube of unlimited public debt.

Progressives should have been warned in advanced: the Party of  Washington does not engage in the language of class warfare unless they are trying to cover up their shameless and blatant treason against working families. The more insidious the betrayal, the louder the call to arms against the “rich”. “billionaires”, and “wealthy fat-cats”. Each new enslavement of the working stiff to Wall Street is always accompanied by a party announcement of a new era of freedom from bondage.

As for the Party of Wall Street: who are we kidding here? Look at the history of American public debt. The continuous stream of steady debt service oozing from the orifices of every government body — local, state and federal — is the mother’s milk of Ponzi economics. Public revenue and the power of money creation converted into an endless stream of safe Wall Street “investments” is the entire foundation of the fictitious economic activity and the ever lengthening social work week.

Once again, you have been played. But, you will never learn, will you? Even now you are angry at some imagined betrayal by the Party of Wall Street, or the Party of Washington — depending entirely on your personal ideological delusion.

Unfortunately, the joke is on you — you’re a pawn and the chessmasters move you where they see fit because you have not acquired the capacity to decide where your interest lie, and, hence, what must be your next move.

Today, Europe is deciding their next move: a bank run. Will they be any more successful than you. Perhaps not, but at least they are trying.

You can’t be in the game until you realize there is one.