Death By Globalism—Economists Haven’t A Clue

Death By Globalism—Economists Haven’t A Clue

By Paul Craig Roberts

Have economists made themselves irrelevant?  If you have any doubts, have a look at the current issue of the magazine, International Economy, a slick endorsed by former Federal Reserve chairmen Paul Volcker and Alan Greenspan, by Jean-Claude Trichet, president of the European Central Bank, by former Secretary of State George Shultz, and by the New York Times and Washington Post, both of which declare the magazine to be “ahead of the curve.”

The main feature of the current issue is “The Great Stimulus Debate” [PDF] Is the Obama fiscal stimulus helping the economy or hindering it?

Princeton economics professor and New York Times columnist Paul Krugman [Email him] and Moody’s Analytics chief economist Mark Zandi [Email him] represent the Keynesian view that government deficit spending is needed to lift the economy out of recession. Zandi declares that thanks to the fiscal stimulus, “The economy has made enormous progress since early 2009″[PDF], an opinion shared by the President’s Council of Economic Advisors and the Congressional Budget Office.

The opposite view, associated with Harvard economics professor Robert Barro and with European  economists, such as Francesco Giavazzi and Marco Pagano and the European Central Bank, is that government budget surpluses achieved by cutting government spending spur the economy by reducing the ratio of debt to Gross Domestic Product.

This is the “let them eat cake” school of economics.

Barro says that fiscal stimulus has no effect, because people anticipate the future tax increases implied by government deficits and increase their personal savings to offset the added government debt. Giavazzi and Pagano reason that, since fiscal stimulus does not expand the economy, fiscal austerity consisting of higher taxes and reduced government spending could be the cure for unemployment.

If one overlooks the real world and the need of life for sustenance, one can become engrossed in this debate. However, the minute one looks out the window upon the world, one realizes that cutting Social Security, Medicare, Medicaid, food stamps, and housing subsidies when 15 million Americans have lost jobs, medical coverage, and homes is a certain path to death by starvation, curable diseases, and exposure, and the loss of the productive labor inputs from 15 million people. Although some proponents of this anti-Keynesian policy deny that it results in social upheaval, Gerald Celente’s observation is closer to the mark: “When people have nothing left to lose, they lose it.”

The Krugman Keynesian school is just as deluded.  Neither side in “The Great Stimulus Debate” has a clue that the problem for the U.S. is that a large chunk of U.S. GDP and the jobs, incomes, and careers associated with it, have been moved offshore and given to Chinese, Indians, and others with low wage rates. Profits have soared on Wall Street, while job prospects for the middle class have been eliminated.

The offshoring of American jobs resulted from (1) Wall Street pressures for “higher shareholder returns”, that is, for more profits, and from (2) no-think economists, such as the ones engaged in the debate over fiscal stimulus, who mistakenly associated globalism with free trade instead of with its antithesis—the pursuit of lowest factor cost abroad or absolute advantage, the opposite of comparative advantage, which is the basis for free trade theory. Even Krugman, who has some credentials as a trade theorist, has fallen for the equation of globalism with free trade.

As economists assume, incorrectly according to the latest trade theory by Ralph Gomory and William Baumol, that free trade is always mutually beneficial, economists have failed to examine the devastatingly harmful effects of offshoring. The more intelligent among them who point it out are dismissed as “protectionists.”

The reason fiscal stimulus cannot rescue the U.S. economy has nothing to do with the difference between Barro and Krugman. It has to do with the fact that a large percentage of high-productivity, high-value-added jobs and the middle class incomes and careers associated with them have been given to foreigners. What used to be U.S. GDP is now Chinese, Indian, and other country GDP.

When the jobs have been shipped overseas, fiscal stimulus does not call workers back to work in order to meet the rising consumer demand. If fiscal stimulus has any effect, it stimulates employment in China and India.

The “let them eat cake school” is equally off the mark. As investment, research, development, etc., have been moved offshore, cutting entitlements simply drives the domestic population deeper in the ground. Americans cannot pay their mortgages, car payments, tuition, utility bills, or for that matter, any bill, based on Chinese and Indian pay scales. Therefore, Americans are priced out of the labor market and become dependencies of the federal budget. “Fiscal  consolidation” means writing off large numbers of humans.

During the Great Depression, many wage and salary earners were new members of the labor force arriving from family farms, where many parents and grandparents still supported themselves. When their city jobs disappeared, many could return to the farm.

Today farming is in the hands of agribusiness. There are no farms to which the unemployed can return.

The “let them eat cake school” never mentions the one point in its favor.  The U.S., with all its huffed up power and importance, depends on the U.S. dollar as reserve currency. It is this role of the dollar that allows America to pay for its imports in its own currency.

For a country whose trade is as unbalanced as America’s, this privilege is what keeps the country afloat.

The threats to the dollar’s role are the budget and trade deficits. Both are so large and have accumulated for so long that the prospect of making good on them has evaporated. As I have written for a number of years, the U.S. is so dependent on the dollar as reserve currency that it must have as its main policy goal to preserve that role.

Otherwise, the U.S., an import-dependent country, will be unable to pay for its excess of imports over its exports.

“Fiscal consolidation,” the new term for austerity, could save the dollar. However, unless starvation, homelessness and social upheaval are the goals, the austerity must fall on the military budget.

America cannot afford its multi-trillion dollar wars that serve only to enrich those invested in the armaments industries. The U.S. cannot afford the neoconservative dream of world hegemony and a conquered Middle East open to Israeli colonization.

Is anyone surprised that not a single proponent of the “let them eat cake school” mentions cutting military spending?  Entitlements, despite the fact that they are paid for by earmarked taxes and have been in surplus since the Reagan administration, are always what economists put on the chopping block.

Where do the two schools stand on inflation vs. deflation? We don’t have to worry. Martin Feldstein, [Email him] one of America’s pre-eminent economists, says: “The good news…is that investors should worry about neither.” His explanation epitomizes the insouciance of American economists.

Feldstein says that there cannot be inflation because of the high rate of unemployment and the low rate of capacity utilization. Thus, “there is little upward pressure on wages and prices in the United States.” Moreover, “the recent rise in the value of the dollar relative to the euro and British pound helps by reducing import costs.”

As for deflation, no risk there either. The huge deficits prevent deflation, “so the good news is that the possibility of significant inflation or deflation during the next few years is low on the list of economic risks faced by the U.S. economy and by financial investors.”

What we have in front of us is an unaware economics profession. There may be some initial period of deflation as stock and housing prices decline with the economy, which is headed down and not up.  The deflation will be short lived, because as the government’s deficit rises with the declining economy, the prospect of financing a $2 trillion annual deficit evaporates once individual investors have completed their flight from the stock market into “safe” government bonds, once the hyped Greek, Spanish, and Irish crises have driven investors out of Euros into dollars, and once the banks’ excess reserves created by the bailout have been used up in the purchase of Treasuries.

Then what finances the deficit? Don’t look for an answer from either side of The Great Stimulus Debate. They haven’t a clue—despite the fact that the answer is obvious.

The Federal Reserve will monetize the federal government deficit. The result will be high inflation, possibly hyper-inflation and high unemployment simultaneously.

The no-think economics establishment has no policy response for economic Armageddon, assuming they are even capable of recognizing it.

Economists who have spent their professional lives rationalizing “globalism” as good for America have no idea of the disaster that they have wrought.

Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term.  He was Associate Editor of the Wall Street Journal.  He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand. He is the author of Supply-Side Revolution : An Insider’s Account of Policymaking in Washington; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelow’s Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.

Parts of America, Not Safe for Americans

Parts of America, Not Safe for Americans

by Jeff Davis

Liberal journalists like Arianna Huffington and Chris Mathews like to dismiss the idea of Mexican drug cartels taking over ranches and extensive swathes of US territory in Arizona and Texas. The liberals tell us that was all just right-wing paranoia ginned up by the Tea Party. So what on earth are we to make of the following story?

The Washington Times reports: “The federal government has posted signs along a major interstate highway in Arizona, more than 100 miles north of the U.S.-Mexico border, warning travelers the area is unsafe because of drug and alien smugglers, and a local sheriff says Mexican drug cartels now control some parts of the state. The signs were posted by the Bureau of Land Management (BLM) along a 60-mile stretch of Interstate 8 between Casa Grande and Gila Bend, a major east-west corridor linking Tucson and Phoenix with San Diego. They warn travelers that they are entering an ‘active drug and human smuggling area’ and they may encounter ‘armed criminals and smuggling vehicles traveling at high rates of speed.’ Beginning less than 50 miles south of Phoenix, the signs encourage travelers to use public lands north of Interstate 8 and to call 911 if they see suspicious activity.” (more…)

Burning the Koran is un-American?

Burning the Koran is un-American?

Really? Where’s it say that in the Constitution?

But that’s what the Obama administration claims:

The Obama administration on Tuesday weighed in against a Florida church’s threat to burn copies of the Muslim holy book, with the State Department calling the plan “un-American” and officials saying it could threaten U.S. troops, diplomats and travelers overseas.

State Department spokesman P.J. Crowley said the administration hoped Americans would stand up and condemn the church’s plan to burn copies of the Quran on Saturday to mark the ninth anniversary of the Sept. 11, 2001, attacks.

“We think that these are provocative acts,” Crowley said. “We would like to see more Americans stand up and say that this is inconsistent with our American values; in fact, these actions themselves are un-American.”

Free speech can threaten US troops? That’s weird. The Hollywood/New York/DC axis of evil keeps telling us that we’re blowing up all these countries to spread freedom and democratic principles like free speech. Now they’re telling us that we have to stifle our free speech for the sake of the troops. In other words, the military isn’t really making the world safe for democracy, and we should restrict our freedoms here to make war zones safe for the troops.

Also, we’re always being told that it’s outrageous to suggest that Muslim anger at our foreign policy and our constant meddling in their region of the world had anything at all to do with the 9/11 attacks on the WTC and the Pentagon. But now these same people are telling us that it’s too dangerous for a tiny little holy roller church in Florida to express their opinion of Islam because Muslims won’t like it?

Crowley then went on to say that if the Florida church would drop its plans to burn the Koran, and instead take a photograph of a crucifix in a jar of urine, that the federal government would give them $15,000.

No, I’m just kidding about that last part. Paying people to take pictures of Jesus Christ submerged in urine is what Republican administrations do.

Meanwhile, Kathy Shaidle has the best commentary on the upcoming Koran burning.

Victim of horrific racially motived torture featured on I Survived.

Victim of horrific racially motived torture featured on I Survived.

Interracial dating led to horrific torture and near fatal burning.

In 2005, April Sykes was raped and tortured for 12 hours, then stabbed and set on fire. She survived, but lost both of her hands and required extensive reconstructive surgeries. The perpetrator was Sykes’ black boyfriend.

Sykes was recently featured on the Cable TV show, I Survived.

Over 95% of all assaults involved a black and white, have a black perpetrator and a white victim. These crimes are regularly censured, blacklisted, and downplayed by the “mainstream” media. In the extremely rare event that a black is victimized by a white person, it is automatically made a major national news story.

Read Article.

Interracial dating is hardly the glamorous affair depicted on tv and in movies. Black men are 9 times more likely to beat or murder a girlfriend than white men. Heterosexual black men are over 14 times more likely to have been diagnosed with HIV/AIDS than white men. The CDC also suggests that infected black men are much less likely to get tested and know they have the disease.

Black men are the leading cause of death of both young black males and female. When white women date black men, they immediately place themselves into this extremely high risk category for premature death.

Genocide of Whites

Genocide of Whites

Stand and fight like men, or die like cowards!  The economy is the weak link within the liberal system, let it fall, when the time comes, don’t turn the power on, let the cities go dark, and kill them all!

White brothers, be ready. The republicans cannot save America, they will fail, nothing can be done to save the dieing nation of black run America. When this nation collapses, your time will come to stand and fight, do not forget our brothers and sisters who have been tortured, raped and murdered by the elites and their pets. When we retake our nations, let nuclear fire cleanse the enemy nations, wake the fuck up, buy guns and ammo, be ready to go, let not one mud enemy stand.

see disclaimer.