Three Underlying Systemic Defects in our Political Economy that Must be Dealt with

Why Paul Krugman Is Worried

by Doug Page / January 26th, 2009

Our political economy has imploded due to its systemic defects. So far Obama seeks only to restart this existing political economy. Obama seeks to feed a dead horse. Paul Krugman in his January 22, 2009 NYT Op-Ed, cautiously and diplomatically expressed his concern that Obama was being too “centrist.” Here are some important underlying reasons why Krugman and all of us should be concerned.

THE COMPOUNDING DISPARITY OF WEALTH AND POWER

1% of the very rich own as much wealth and power as all the rest of us and the imbalance is compounding as we read. We are nearing the place where the top 1% has ALL the wealth and power, and we have NONE. The system has stalled, destroyed itself. Obama is vainly trying to restart this dead economic engine.

THE THREE SYSTEMIC DEFECTS THAT HAVE STALLED OUR POLITICAL ECONOMY AND SIPHON OUR WEALTH AWAY

  • Henry Ford’s Truth: The system does not give ordinary citizens and employees enough purchasing power to keep the system going. Too much goes to the very rich. It is not a question of insufficient credit. We do not need to borrow more. We need a much larger share of our earned production pie, if not all of it.

If Republicans do not like the current stimulus package because it will not work (they are right) then Obama should propose only one thing: Nixon’s negative income tax where the people at or below the poverty level would be given money directly. Only this emergency measure will create the necessary purchasing power and prevent starvation on a temporary basis until the three defects can be dealt with. If that is unpalatable, we need temporary emergency relief, expansion of the amount and duration of Unemployment Compensation and long term projects to improve the infrastructure.

  • Our system of private banking that allows very wealthy private individuals to control and hugely profit from the creation of money and control how it shall be spent must be nationalized.

This is the basic reason Obama cannot act effectively. The private banks will not let him. He has been selected and financed by the banks. They will defeat him one way or the other if he opposes them. Do you really believe Obama can persuade the very rich and their private banks to change their ways because “we are all Americans” and because they have a common interest with the poor to save our civilization? This would involve abolishing the system of private banking, and seriously regulating and controlling capitalism. However, that is exactly what we must do. A sovereign nation can and must issue its own public money, regulate its value, make it legal tender in satisfaction of debts. It is idiotic for us to allow private bankers to create our money, and then lend it to us and to the government at a great profit for them. “Money is the mother’s milk of politics.” Any profit from banking should go into the public treasury. Although vigorously ridiculed by the spokesmen for the very rich, the concept of a nation issuing and controlling its money was successfully used by the State of Pennsylvania for 50 years prior to our Revolutionary War and championed by Benjamin Franklin. The Continental Congress financed our Revolutionary War against England with money issued by the Congress. Lincoln issued Greenbacks to finance the Civil War. It is now used by China. This concept is subject to a powerful taboo, and is thus unfamiliar to us. For a brilliant explanation of how private banking works and how public banking can work much better, see the 47 minute entertaining video Money as Debt by Paul Gignon. ((See also Ellen Hodgson Brown, The Web of Debt (The Third Millennium Press: Baton Rouge, LA, 2008).))

  • The Unconstitutional Filibuster Rule of the U.S. Senate that thwarts majority will to deal with these problems…

Under Senate Rule XXII, a minority of 41 Republican and Blue Dog Democratic Senators can stop anything that a majority of us want and need, even though we have elected a House, a Senate, and a President to meet our needs. This rule is unanimously maintained and defended by all the Senators as a part of its “tradition.” Our constitution provides that both the House and the Senate shall act by majority of a quorum. This Rule in requiring a supermajority of Senators to pass a law is thus unconstitutional. The Rule can be abolished by a simple majority of Senators if they had the will to do so under a parliamentary procedure known as the “nuclear option.” The Senators choose not to abolish it because it gives the Senators much more power to block legislation opposed by powerful special interests, and thus to obtain money for re-election. They fear the abolition of the Rule would be “nuclear” for their re-election financing. The filibuster can and will be used to thwart what must be done if we are to avoid total collapse. The spotlight must be focused on the Senators to use a simple majority of a quorum to abolish the supermajority requirement of Senate Rule XXII.

Doug Page is a retired lawyer for unions, a former Democratic politician, and a life long observer of government, unions and business. He can be reached at: dougpage2@earthlink.net. Read other articles by Doug, or visit Doug's website.

This article was posted on Monday, January 26th, 2009 at 10:00am and is filed under Capitalism, Democracy, Economy/Economics.

13 comments on this article so far ...

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  1. Sheila Velazquez said on January 26th, 2009 at 11:27am #

    Just like to comment on your suggestion that unemployment benefits be increased. As Robert Reich recently pointed out, only 40 percent of people who lose their jobs are eligible. The work force is now increasingly made up of part-time, temporary, contract, self-employed and other noneligible workers, and they are not being considered as their jobs disappear, perhaps faster than those in traditional (but not for long) jobs. These workers are also at the mercy of their “employers” as they have no bargaining chip, benefits, or security.

  2. Ron Horn said on January 26th, 2009 at 12:16pm #

    Great article. The problems and contradictions you cite are all related to the fact that we have class rule, that is, rule by a class of people who have secured the rights to own and control the wealth produced by working people. This arrangement has been brilliantly obscured by all kinds of myths such as a free press and a democratic political system, and enforced through private property and contract laws all of which form the basis of their class rule. Hence this class in the US frequently purses its interests by engaging in wars. political subversion, outsourcing jobs by moving factories to cheap labor countries, fouling the environment, etc that its citizens would never vote for. They are able to get away with doing this while maintain political legitimacy by its control of thought influencing institutions: public education and mass media, and through its control of jobs. But the cracks in their class rule is starting to become rather glaring as the economy collapses; and I believe that as people come under increasing duress, they will gradually seek out the truth and look at alternative ways of organizing their economy.

  3. Wingnut said on January 26th, 2009 at 3:27pm #

    Hi. Ever think about abolishing economies and ownership? Why not use a monetary-discriminationless supply/survival system like the USA military supply system or the USA public library system?

    Anyhoo, here’s a short piece that recently got censored-off-of a lesser blog.

    Seven Errors on the Path to a Failed Survival/Supply System

    1. Prior to joining, condoning, and promoting the pyramid scheme called capitalism, not doing a Google IMAGE SEARCH for ‘pyramid of capitalist’ in order to see a full color picture of capitalism’s structure. That picture was created way back in 1911 back when capitalism was first discovered to be a con/sham created by the Free Masons and Illuminati. They are long-ago dead of old age now…. but their AmWay-coupons-only sham is still trying to be escaped.

    2. Failure to make servitude illegal. All men are NOT created equal under capitalism. All men are created at the pyramid layer and with the cronies and opportunities… of their parents.

    3. Failure to follow Elliot Ness in busting “pay up or lose your wellbeing” Chicago-mob-like felony extortion. Pay-up or lose your house, anyone? Rampant.

    4. Failure to notice the parental policy reversal from share share share, to fight fight fight, when children turn 18 and get “sharktanked” into capitalism with “get a job or starve” (join or die) which is felony extortion and forced religion (railroading) into the competer’s church. This seriously kills membership in the cooperator’s church (Christian socialism… communes, potlucks, barnraising, things with no phenomenon called “ownership”).

    5. Failure to understand that the pyramid scheme of servitude infestation called capitalism… is EXACTLY the same as the pyramids we failed-at as children in the playgrounds and farmyards. While the upper 1/3 are “heads in the clouds”, the kids on the bottom ALWAYS GET HURT from having the weight of the world’s knees in their backs.

    6. Failure to make “discrimination” illegal, especially monetary discrimination.

    7. Failure to eliminate the discrimination of capitalism (AmWay/American Way/New World Order) seen in that organization getting “the exclusive” (legal tender) on the TYPE of survival coupons (money) allowed/accepted in supply depots (stores). Lets allow Christian money or cooperator’s church money to be legal tender too, and lets allow THAT type of money to be handed out like leafs falling from trees. This way, no particular church/religion can get such an illegal exclusive ever again, and thus never do a forced religion like capitalism has done to the 18 year olds.

    Hmm, in the USA military supply system (a socialism), and in the USA public library system (another socialism), no ranked-based discrimination, ownership, or money… is seen at all. All ranks get equal basic supplies (basic issue) in the USA military supply/survival system. Also, everyone tries to take care of each other on that team, where capitalism is an every-person-for-themselves nation-unto-selving system…. causing isolationism, distrust, robbery, locks, yard fences, borders, etc. Bordering based-upon ownershipism, is seen heavily on national levels, too.

    While we’re at it, lets level the hierarchical architecture and church simulator crap seen in USA courtrooms. You’d never see a military tribunal use unlevel architecture or false deities dressed in robes upon pulpits “on-high”. Right now, USA courtrooms are fear chambers… by special design. Sick!

    But generally, I say abolish/outlaw economies and ownership worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramids like capitalism.

  4. The Angry Peasant said on January 26th, 2009 at 8:11pm #

    Americans need to say, “No more.” We need to look Washington square in the face and say it. And the most effective way to be heard is to stop working. Everyone. In every little town, in every big city, people must get up from their desks, throw down those brooms, stop turning that crank in a factory. That’s it. Everyone goes on strike. That would wake the bastards up. Our demands are simple: No more long work hours, no more low pay, no more disappearing pensions, no more lack of representation and no more income taxes. That’s all we need to do. Just refuse to keep playing their twisted game. Of course, the lawyers, doctors, corporate executives, and college professors would never do this; they have it good enough not care about the rest of us. But the workers, the people keeping the country running, need to refuse to take one more shitty paycheck, one more sprained wrist with no doctor’s visit, one more unnecessary bureaucratic fee. If we would summon the courage to do this one thing, they would listen. Why won’t we? Time for the People to unite as never before.

  5. Tennessee-Socialist said on January 26th, 2009 at 8:41pm #

    WE HAVE 2 OPTIONS: SOCIALISM OR DEATH OF THE HUMAN SPECIES !!

    F*CK THIS SH*T !! i can’t take it anymore. The supermarkets and the grocery stores are turning into real houses of terror. The dollar is losing its value at a skyrocket pace. I just went to Wal-Mart, and all the prices were higher today on this black depressive monday. And Obama promised that he was gonna decrease the food prices.

    the neoliberal-capitalist system only benefits the upper classes. Upper class folks don’t care if the US dollar loses its value because of the fact that upper class business owners people, earn hundreds of thousands, and for them it is no problem when food gets expensive, only oppressed working classes *do depend* on the buying power of each dollar. Because of the fact that we the opressed classes only make like 1000 to 2000 a month (And those are the very lucky ones who are employed, the unemployed make nothing or a miger welfare food stamp check of 175 dollars a month)

  6. Red Rick said on January 27th, 2009 at 4:27am #

    “All truth passes through three stages; First it is ridiculed, Second it is violently opposed, and Third it is accepted as self-evident.”
    Arthur Schopenhauer

    I see some very insightful commentary and suggestion. But I see also the giant spider of economic control of our governance sitting atop the White House and Congress, amassing all the money and slowly turning my nation into a third world country. I believe that, as long as we seek solutions to the very serious problems that beset this world by utilizing the same old system, there will be no solutions.

    I see our new President as a decent enough man, one who has certainly played the system well to achieve so much so quickly, and I see those who rule this nation indulging Obama in his petty changes and minor corrections, grinning all the while with the full understanding that all the corrections, all the leveling ,all the assistance that this new government manages to gain is temporary and quite easily overcome.

    Does this mean that I am pessimistic of our chances at change, no, actually, quite the opposite. I think that , slowly to be sure, more and more are gaining the understanding that the change we seek can only be accomplished by attacking the fundamental reasons for the need to make changes; the rot at the foundation of our governance.

  7. Don Hawkins said on January 27th, 2009 at 7:25am #

    Let’s make that four systematic defects in our political economic outlook!

    Environment
    Global Warming Is Irreversible, Study Says
    by Richard Harris

    All Things Considered, January 26, 2009 · Climate change is essentially irreversible, according to a sobering new scientific study.
    As carbon dioxide emissions continue to rise, the world will experience more and more long-term environmental disruption. The damage will persist even when, and if, emissions are brought under control, says study author Susan Solomon, who is among the world’s top climate scientists.
    “We’re used to thinking about pollution problems as things that we can fix,” Solomon says. “Smog, we just cut back and everything will be better later. Or haze, you know, it’ll go away pretty quickly.”
    That’s the case for some of the gases that contribute to climate change, such as methane and nitrous oxide. But as Solomon and colleagues suggest in a new study published in the Proceedings of the National Academy of Sciences, it is not true for the most abundant greenhouse gas: carbon dioxide. Turning off the carbon dioxide emissions won’t stop global warming.
    “People have imagined that if we stopped emitting carbon dioxide that the climate would go back to normal in 100 years or 200 years. What we’re showing here is that’s not right. It’s essentially an irreversible change that will last for more than a thousand years,” Solomon says.
    This is because the oceans are currently soaking up a lot of the planet’s excess heat — and a lot of the carbon dioxide put into the air. The carbon dioxide and heat will eventually start coming out of the ocean. And that will take place for many hundreds of years.
    Solomon is a scientist with the National Oceanic and Atmospheric Administration. Her new study looked at the consequences of this long-term effect in terms of sea level rise and drought.
    If we continue with business as usual for even a few more decades, she says, those emissions could be enough to create permanent dust-bowl conditions in the U.S. Southwest and around the Mediterranean.
    “The sea level rise is a much slower thing, so it will take a long time to happen, but we will lock into it, based on the peak level of [carbon dioxide] we reach in this century,” Solomon says.
    The idea that changes will be irreversible has consequences for how we should deal with climate change. The global thermostat can’t be turned down quickly once it’s been turned up, so scientists say we need to proceed with more caution right now.
    “These are all … changes that are starting to happen in at least a minor way already,” says Michael Oppenheimer of Princeton University. “So the question becomes, where do we stop it, when does all of this become dangerous?”
    The answer, he says, is sooner rather than later. Scientists have been trying to advise politicians about finding an acceptable level of carbon dioxide in the atmosphere. The new study suggests that it’s even more important to aim low. If we overshoot, the damage can’t be easily undone. Oppenheimer feels more urgency than ever to deal with climate change, but he says that in the end, setting acceptable limits for carbon dioxide is a judgment call.
    “That’s really a political decision because there’s more at issue than just the science. It’s the issue of what the science says, plus what’s feasible politically, plus what’s reasonable economically to do,” Oppenheimer says.
    But despite this grim prognosis, Solomon says this is not time to declare the problem hopeless and give up.
    “I guess if it’s irreversible, to me it seems all the more reason you might want to do something about it,” she says. “Because committing to something that you can’t back out of seems to me like a step that you’d want to take even more carefully than something you thought you could reverse.” NPR

    I think Obama wants to go for it. He may need some help to get so called policy makers to focus. The question is how?

  8. Gary Corseri said on January 27th, 2009 at 10:41am #

    Doug Page–I’m with you as far as you go–and think we can go even farther.

    You might want to buttress your good arguments with Richard C. Cook’s thoughts on “social credit.” (Check out his new book, WE HOLD THESE TRUTHS.)

    Also, you mention the “unconstitutional filibuster rule” of the US Senate. But, why stop there? When you think about it, isn’t the Senate an antiquated body of filibusterers, blusterers and bought and paid for political hacks–often serving the interests of a foreign nation (Israel) above the interests of the US or humanity as a whole? Can we really claim to be a democracy when Dickhead Cheney’s state of Wyoming (with about 1/2 million residents) has the same representation in our “upper house” as the state of California with some 35 million residents? Is the vote of 1 citizen in Wyoming worth 70 times the vote of 1 citizen in California?

    Think of all the money that could be saved–salaries, election campaigns, staff, franking privileges, junkets to Caribbean “hotspots”–Aruba, etc.–(while the rest of us are freezing off our cajones and nipples), think of all the money saved, not to mention time, if we could eliminate that cancerous tumor on our body politic!

    Ah, ’tis enuf to make one giddy!

  9. Bob said on January 27th, 2009 at 4:53pm #

    Wingnut:

    Run, don’t walk to the nearest psychiatrist’s office, and don’t leave until the Dr. has seen you.

    Bob

  10. Wingnut said on January 28th, 2009 at 12:02am #

    “All truth passes through three stages; First it is ridiculed, Second it is violently opposed, and Third it is accepted as self-evident.”
    Arthur Schopenhauer via Red Rick

  11. Don Hawkins said on January 28th, 2009 at 4:01am #

    “It is sometimes imagined that slow processes such as climate changes pose small risks, on the basis of the assumption that a choice can always be made to quickly reduce emissions and thereby reverse any harm within a few years or decades,” the write. “We have shown that this assumption is incorrect for carbon dioxide emissions, because of the longevity of the atmospheric CO2 perturbation and ocean warming. Irreversible climate changes due to carbon dioxide emissions have already taken place, and future carbon dioxide emissions would imply further irreversible effects on the planet, with attendant long legacies for choices made by contemporary society.”

    ” These and other dangers pose substantial challenges to humanity and nature, with a magnitude that is directly linked to the peak level of carbon dioxide reached.” Susan Solomon, a scientist

    Is this true, yes. Now Susan wrote choices made by contemporary society. Hummm this contemporary society what the heck is that? Let’s see Exxon has a new commercial where they said in the coming years over a trillion dollars for schools and fire trucks and library’s nice things. Then they show these two box’s with more people in one box and you can see the people in the box. I guess these are the people who invest in the company. Then you have the other box with less people and that box the people are kind of a big blur nice touch. I get it that’s contemporary society some people you can see and others are a big blur. If Exxon doesn’t mind being in a box is not one of my favorite things I feel a song coming along. Is this irreversible effects part a game changer, yes and is it as big as a flying saucer landing in front of the Capital, close. Good bank bad bank could we do good Earth bad Earth I’ll bet Exxon can as these people seem to have an interesting imagination that you will find in the book of knowledge under the darkside. There is still time and band-aids is not the answer. Think of this as kind of a war. Oh I almost forgot those box’s Exxon put people in the wall’s are made of nothing they are not real and can be torn down with only a thought.

  12. Don Hawkins said on January 28th, 2009 at 5:12am #

    The Box

    In the not to distant future things on Earth were not going to well. The United States was on the brink of War with North Korea and Iran. Global warming was taking its toll on the human race and well there was a lack of hope though out the World. It was another hot day in Washington DC and the President was at his desk in the White House with his head in his hands looking down at the floor. At that moment he heard a strange noise and looked out the window at the front lawn of the White House just in time to see this very large silver saucer land right in front of the White House. Well for two day’s the ship was surrounded with every known weapon to man. The door to the ship opened and two very small robots walked out. In English the one robot said let’s talk. Well in about three hours the President all of congress and all the news media were on the front lawn looking at these two rather small robots. The one robot began to talk people of Earth you just don’t figure. You were all given a miracle of the Universe and you called it Earth. Well in about 2,000 years you have all managed to take this miracle and pollute it on a non stop basis to the point where your own survival is at stake and you are doing nothing about it even after you see it happening it don’t figure. You as human’s don’t seem to be able to get along with each other and are about to fight a War that could bring the end of you all. Just don’t figure. Well me and my little friend here have come to help. We have decided that you can’t work these problems out by yourselves so we are going to leave this box surrounded of course by a force field. At that moment a third robot brought out this black box and it was put on the lawn and the force field was activated. The first robot said people of Earth clean up your Planet learn to live together with out War and learn to be nice to each other. Please don’t force us to use the box. With that all three robots walked back onto the ship and it slowly lifted off the ground and in less time than it takes to say ouch it was gone.
    Well about 1,000 light years from Earth the three robots got out of there suits and they looked human but you could tell they were young. The one said to the other if dad finds out what we did we are in big trouble remember the first rule never interfere with another World or it’s people well the older of the three kid’s said hay what dad doesn’t know won’t hurt him. With that the younger of the three said do you think those human’s will ever find out there is nothing in that box? Well the energy source for the force field will run out in about 100 years and maybe they will learn to live better by then with that the one kid pushed this cool looking green button and they were headed home.

  13. Wingnut said on January 29th, 2009 at 3:30am #

    Ahh, forcing. Good ole “Or else” force. Nice. That story is a slight modification of the movie “The Day The Earth Stood Still”… when, like American government and American capitalism, fear from aliens who are “in power”… is used to scare the public into docilation and “do as you’re told, or else”.

    “Or else” is used all over the place on the planet, especially in capitalism and in parenting done by control-freak parents. How’s that working out? I would say that fear and “or else” extortion is not the route to anything good.

    Let’s say you would like to get a horse to help you (and itself) by removing a stump from a section of pasture. There are three ways to obtain that horse’s assistance.

    1. Whips and spurs. Force the horse to do what you want it to do… thru fear of more pain, just as the aliens did in Don’s story.

    2. The carrot-stick-sting method. Lure the horse by fooling it into thinking there’s goodness on the horizon… even though its a trick. This at least gives the horse the chance to see-thru the trick and refuse to move and likely kick the trickster in the head.

    3. Learn to speak horse, and ask the horse to help you. Prove to it that removing the stump is a wise idea, both for itself and for the other living beings that might use the pasture.

    Number three is, by far, the best method to get action out of living things. ASK the 18 year olds to go to work on mankind-helping things, don’t force them into capitalism with “join or else” (get a job or starve). And make everyone equal… pay-wise and wellbeing-wise. And we all know what I think is the correct way to pay everyone equally. Abolish wages and price tags (outlaw economies), and then pay NO wages. You won’t need them when there’s no such thing as price tags or entitles of ownership. You/we just need to keep the survival goods warehouses well stocked so non-hoardy loving equality can happen (Christianity & socialism). Abolish economies (and ownership), so wellbeing-based inequality can’t happen anymore. Remove the fears, don’t add yet another. Volunteers work much longer hours and do a much more quality job… than do force-ins. Best Regards. Wingnut