Zombie ideas that won't die

At least when you shoot a zombie in the brain it finally stops coming at you. Not so with RW economics.

Alternet has a fun little article on Krugman's Friday Column: http://www.alternet.org/economy/paul-krugman-demolishes-zombie-ideas-have-eaten-republican-brains. I'd cite the column directly but I used up my freebie quota at the NY Times and am too broke to pay them.

And besides Janet Allon does a better job of contextualizing his comments anyway. Krugman is too polite to take the argument where it needs to go. These are Zombie ideas that never die. The notion of Zombie came from lurid stories of Voodoo and New Orleans Witch Doctors, so calling these ideas Zombie economics follows from years of economists (even sometimes former hucksters) calling them "Voodoo Economics." They were voodoo when they were new ideas. But they won't die!

Many Kinds of Privateering

I'm using the word privateering in lieu of privatization, and other terms, for a specific reason. First of all the behavior is not new, is traditional, and while George Lakoff brought the term back the original word had the same meaning:

privateer (n.) Look up privateer at Dictionary.com

1660s, "private man of war," from private (adj.), probably on model of volunteer, buccaneer.

Lakoff's revival from wikipedia:

"From a blend of privatization +‎ profiteer. Coined by George Lakoff in his book, The Political Mind. It describes a widespread and corrupt practice that has not previously had a name and, being nameless, has not been publicly aired or even notices as a single practice. The word previously existed with a related meaning, but has mostly gone out of use."

Lakoff is brilliant, but he didn't invent the word. He revived it. To be precise it originally meant a person, ship or company with a license to do private warfare. However, this older meaning, is what privateering was from the beginning -- private - warfare/ private government. For most of the same thing they were the same thing. Filibustering and freebooting were also privatized warfare, fought with private armies. And all these were privatizations of warfare originally. Privateers were pirates who had permission to steal (take prizes) from an enemy fleet of merchant ships. Privatized warfare (privateering) was once the only kind of warfare, so the only difference between a pirate and a privateer was whether the sponsoring government was considered legitimate by the victims. So Lakoff's revival of the term is consistent with it's etymology.

This becomes even more clear when one realizes that the predatory activities of early private pirate companies like the East India Company involved privateering of government functions. When Thomas Roe reached the court of the Moghul Emperor, the way that he and his successors were able to manage to loot most of India, involved convincing the Moghuls to give away privileges to the East India company, including formerly government functions. The term for that could be called "privatization" -- but the general term is privateering. [see Origins of the East India Company]

This post is part of a series. I'll update it with more information as I get it. Privateers are pirates. The main difference is that most pirate ships were completely outlaws from the Point of View of Official aristocracy. They had to share the loot fairly with the crew. Privateers get a letter from government that says that their looting is perfectly legal. So the only pirates privateers have to share loot with -- are fellow privateers. Lakoff didn't invent a new word. He revived the meaning of one that had been eclipsed by other euphemisms.

An examination of the connection between land pirates and aristocracy; and between sea pirates (Sea Dogs) and modern Corporations quickly confirms the diagnosis. We are fighting piracy. Okay, it may be all "legal like" -- but the rules are the same as any other mafia. "It's just business." AND We made them an offer they couldn't refuse.

Bad Business AND BAD Government = Privateering. Indeed, I believe that privateers and privateering are barely legalized rent seeking, grifting, theft; in other words barely legal piracy.

More on Pirates and Privateering

The Pirates Dilemma

Some references and further readings on Lakoff:

http://the-wawg-blog.org/the-distruction-of-american-democracy-privateering-is-hard-at-work/

https://www.youtube.com/watch?v=PYJcn6656O4

https://en.wikipedia.org/wiki/Filibuster_(military)

The Assassination of Yitzhak Rabin and of Mideast Peace

I remember when Yitzhak Rabin was assassinated. He was one of my heroes. He was assassinated by one of his own people. It was an amazing thing to observe and it occured even as he was trying to negotiate a peace treaty the the Palestinians. Turns out we have more to fear from our own than outside terrorists. Or rather we have more to fear from fear itself.

The New Yorker has this article on the subject:

Books OCTOBER 26, 2015 ISSUE, Shot in the Heart When Yitzhak Rabin was killed, did the prospects for peace perish, too? BY DEXTER FILKINS [http://www.newyorker.com/magazine/2015/10/26/shot-in-the-heart]

The Author notes that that assassination was one of the most effective coups in modern history:

"Two years earlier, Rabin, setting aside a lifetime of enmity, appeared on the White House lawn with Yasir Arafat, the leader of the Palestine Liberation Organization and a former terrorist, to agree to a framework for limited Palestinian self-rule in the occupied territories; the next year, somewhat less painfully, he returned to the White House, with Jordan’s King Hussein, to officially end a forty-six-year state of war. Within months of Rabin’s death, Benjamin Netanyahu was the new Prime Minister and the prospects for a wider-ranging peace in the Middle East, which had seemed in Rabin’s grasp, were dead, too. Twenty years later, Netanyahu is into his fourth term, and the kind of peace that Rabin envisaged seems more distant than ever."

The Holocaust Sacrifice

This was a man whose life was cut short

Disappeared for no crime

Punished by a lawless court

Where the torturer was judge, jury and executioner

And there are no appeals.

The motto was;

"You must have done something."

He was offered as a sacrifice to Wall Street Baalim;

A burnt offering to the false gods of commerce

While the world looked the other way

And sad dancers danced a tango.

Christopher H. Holte, 12/4/2015

Reference:

From Raquel:

Daniel Horacio Partnoy, nuestro hijo
4 diciembre1957/ 8 agosto1983
Cómo olvidar, cómo perdonar
"La meta del terrorismo de estado durante la dictadura militar no sólo fue eliminar la vida de los jóvenes más brillantes de esa generación y de personalidades destacadas sino también causar un daño emocional, psíquico y social a sus familiares. My hijo Daniel fue una víctima más de aquel tremendo horror. Hoy diciembre 4 sería su cumpleaños."

She writes (translation):

"Daniel Horacio Partnoy, our son December 4, 1957 / August 8, 1983 How can we forget, how to forgive.
The goal of state terrorism during the military dictatorship was not only to eliminate the life of the brightest young people of this generation and outstanding personalities but also to cause emotional, psychological and social harm to their families. My son Daniel was a victim of that terrible horror. Today would be his birthday December 4th."

For more: https://www.facebook.com/RaquelPartnoy, she has some wonderful, if sad art.

And my poem in Spanish:

Este era un hombre cuya vida era puesto fin

Desaparecidos de ningún delito

Castigado por un tribunal sin ley

Cuando el torturador era juez, jurado y verdugo

Y no hay apelaciones.

El lema era;

"Usted debe haber hecho algo."

Se le ofreció como sacrificio a Wall Street Baales;

Un holocausto a los dioses falsos de comercio

Mientras que el mundo miró hacia otro lado

Y bailarines tristes bailaron un tango.

Rotten Boroughs, Poor laws

Mankind has always done better collectively, when worker and employer, city and countryside, rich and poor, looked out for each other. When John Locke used the word "commonwealth as a translation of "civitas" [see Commonwealth according to locke], he was creating a terminology for a world where "e pluribus unum" [Out of many Unity] could be reality. This concept of commonwealth predates Christianity, and the notion that one should protect those who can't help themselves is more Christian than not. One can think of Queen Elizabeth as expressing a progressive mood in England.

British Poor laws date to 1601:

"In 1601, England was experiencing a severe economic depression, with large scale unemployment and widespread famine. Queen Elizabeth proclaimed a set of laws designed to maintain order and contribute to the general good of the kingdom: the English Poor Laws. These laws remained in force for more than 250 years with only minor changes." [SocialHistory]

"Essentially, the laws distinguished three major categories of dependents:

1. the vagrant,
2. the involuntary unemployed, and
3. the helpless."

Paul Simon Tells us how to win elections

The problem is all inside your head

She said to me

The answer is easy if you

Take it logically

I'd like to help you in your struggle

To be free

There must be fifty ways

To win an election

 

[CHORUS:]

You Just slip out the back, Jack

Make a new plan, Stan

You don't need to be coy, Roy

Just get yourself free

Hop on the bus, Gus

Call all your friends, Sen

You don't need to discuss much

Just chop off the RW BS, Lee!

Tell them to serve US, or else!

And get yourself free

 

She said it's really not my habit

To intrude

Furthermore, I hope my meaning

Won't be lost or misconstrued

But I'll repeat myself

At the risk of being crude

There must be fifty ways

To beat the cons

 

Chorus

 

She said "it grieves me to see you in such pain;

Let me explain to you how we can win elections again;

You don't need to be someone else or even a jerk.

You can do it, but it takes a lot of work

So I'll repeat myself

At the risk of being crude

There must be fifty ways

To beat the cons

 

Chorus

 

She said we all have problems with Politicians who are jerks,

and their bad decisions are what it is that really hurts.

But you don't have to vote for them!

You don't have to vote for them at all!

So I'll remind you at the risk of being crude:

There must be Fifty ways to beat the cons!

 

Chorus

 

Reference:http://www.azlyrics.com/lyrics/paulsimon/50waystoleaveyourlover.html

Pseudo Wealth -- or how the Wealthy fleece the rest of us

One of the means by which people are fleeced by our financial system is through misrepresentation of wealth. Some of this misrepresentation is deliberate. There are entire segments of the financial system that depend on "asymmetric information" and deliberate deception to make money. Much of this is perfectly legal. But some of this is the result of bad guesses, speculation. Both kinds of misrepresentation lead to cases where the apparent value of an economy is greater than it's actual value. This is literally what is known as a "bubble." I call them swindle bubbles, because often the effect is deliberate. As Stiglitz explains when explaining why economies are unable to borrow the money needed to reflate after a swindle bubble pops. The reason they can't borrow is that the bubble itself resulted from, contributed to and was eventually destroyed because of speculation. Indeed a kind of speculation that results in Pseudo wealth. Pseudo-wealth results from a kind of speculation where the aggregate perception of wealth is greater than true wealth. As Stiglitz explains:

"before the crisis" there are "differences in views, e.g. about the likelihood of the housing bubble breaking, gave rise to bets (speculation), which led to the creation of pseudo‐wealth — with both sides to the bet believing that they were going to win, both believed that they were wealthy, or more precisely, the aggregate perception of wealth was greater than true wealth. After the crisis, pseudo‐wealth got destroyed. Indeed, there was even negative pseudo‐wealth: borrowers may have believed that what they would pay, in expected value terms, to the lenders was greater than the leaders believed that they would receive." [Earlier Post]

Or more precisely, the system transferred wealth to those who "won" the bets, successfully swindled their marks, rigged the system, or had the greater economic power to enforce collection on the now bad debts, or the underlying assets that secured them. In good times people are induced to 'bet the farm'. In bad times, the farm gets taken by the house that made the loan.

Schrödinger's Cat Meets Creative Destruction

In essence pseudo-wealth is sort of the Economic equivalent of Schrödinger's "Schrödinger's cat" theory. People make bets, and nobody knows who is going to win the bet until the conditions the bet refers to materialize or fail. It's as if they bought a lottery ticket and acted like they'd won the lottery. Until the drawing everyone thinks they have something that it later turns out most of them don't have. Most people wind up realizing they've been wearing invisible cloth and owe a home or other security to pay for it. And since the folks who run the casino also manage most of the bets. The "Casino" or banks wind up with the real cloth and the homes given as security to buy the "fine cloth that only a fool can't see."

Pseudo-wealth and Rent Seeking

I refer to pseudo-wealth a lot so I wanted to highlight the idea. And it turns out that Schumpeter's "Creative Destruction" is simply the combination of the constant power of wealth to seize property from producers using pseudo wealth -- and bubbles -- and the operation of entropy (which makes all wealth perishable except the kind of pseudo-wealth that money represents) and inertia.

This is because there is another kind of pseudo-wealth. That wealth is the possession of notes with interest based on ownership of abstract entities like Banks, Securities, Corporations or any entity whose measurement is subjective, but where the notes are "on paper" or in "electronic form." Without the ability to con people, much of that wealth vanishes for the cons rather than the conned -- who usually are the ones who actually produced it. It's their dirty little secret, without constant refreshment of value, via transfers from production, for these entities they degrade and vanish on their own. Financial Capitalism only exists by swindling people. Without the ability to extract rents, the rent seeking fails.

Sources and Further Reading

Earlier Post "Joseph Stiglitz Slams Bad Economic Models

http://holtesthoughts.blogspot.com/2015/09/joseph-stiglitz-slams-bad-economic.html

"Towards a General Theory of Deep Downturns Joseph E. Stiglitz"

https://www0.gsb.columbia.edu/faculty/jstiglitz/download/papers/2015%20Towards%20a%20General%20Theory%20of%20Deep%20Downturns.pdf

Related Guzman Article:

http://www.ridge.uy/wp-content/uploads/2014/12/Guzman.pdf