–Sucking Up: Has an Eminent Economist Sacrificed His Honor and Credibility to Grovel for a Job?

Mitchell’s laws:
●The more budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity starves the economy to feed the government, and leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
●To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Your mind knows he is lying to you, but your heart hopes somewhere, buried in all the lies, rests a kernel of truth. That is the leeway you give to your favorite politician.

Your mind knows they have no plan, but your heart hopes somewhere in all the flipping and flopping there is hidden a secret proposal to save you. That is the permission you give to your favorite political party.

Your mind tells you the words say, in very plain English, they care nothing for you, and what they do will hurt you and your family. But you close your mind when listening to their speeches, and follow the hope in your heart. That is the free pass you give to politics.

If you are a Republican, the amazing lies heard from Republican speakers, especially from Paul Ryan, do not trouble you at all. “Just politics,” you say, “and anyway, Obama lies, too.”

So, when both Ryan and Romney pledge to “broaden the tax base,” a euphemism for “raise taxes on the poor and cut taxes on the rich,” you nod and smile. “Just politics. He doesn’t really mean that. Just politics. And anyway, Obama will do that, too.” “And anyway . . . And anyway . . . “

You repeatedly forgive the politicians, but your mind and your heart expect more from academics, who ostensibly are not running for office, and so, should be honest and dispassionate. And that is where reality enters the room:

Romney Adviser: Yes, We’re Going To Slash Taxes Without Increasing The Deficit
By Henry Blodget | Daily Ticker – Wed, Aug 29, 2012

Republican nominee Mitt Romney has not shared many specifics of his (economic) plan, but the basic outline has emerged: Romney wants to cut taxes radically across the board.

One of the big mysteries of Romney’s plan, meanwhile, is how he will manage to cut tax rates across the board without radically increasing the deficit. Romney economic advisor Glenn Hubbard . . . says Romney is committed to making his tax cuts “revenue neutral”–in other words, not leading to an increase in the deficit.

When I asked how this was possible, given the magnitude of the cuts (20% across the board on personal income taxes, along with a 10-point cut to corporate income taxes), Hubbard explained that the cuts would be offset by: Stronger economic growth, and “Broadening the base” of taxpayers (in other words, having poor and lower-middle-income Americans pay income tax.)

Earlier this year, the Tax Policy Center concluded that it would be impossible for Romney to cut income taxes across the board and make the cuts “revenue neutral” without also effectively increasing taxes on the lowest-income Americans.

Professor Hubbard maintains that Romney’s tax plan will not only accelerate economic growth–which it almost certainly would–but will do it without increasing the deficit and without changing the ratio of total taxes paid by any income group.

Using back-of-the-envelope math, this seems very hard to believe.

“Revenue neutral” means the government does not increase its deficit spending. Here is why “revenue neutral” absolutely forces a yearly reduction in Gross Domestic Product, leading to recession and depression:

The most common measure of an economy is Gross Domestic Product (GDP), which is calculated like this:

GDP = Federal Spending + Non-federal spending – Net Imports.

So to accomplish a GDP growth of only $1, someone has to increase spending by at least $1 or Net Imports must decrease. But, if the federal government can’t spend that extra dollar (remember, it’s revenue neutral), the non-federal sector has no source for that additional dollar. While the non-federal sector can borrow, then repay, ultimately the federal government is the source of all dollars.

Ignoring for the moment, the disaster of “revenue neutral,” why would Hubbard, a respected economist, risk his reputation, credibility and his legacy by making such a ridiculous claim? According to Wikipedia, here are Hubbard’s credentials:

Hubbard received his B.A. and B.S. degrees summa cum laude from the University of Central Florida in 1979, and his Ph.D. in economics from Harvard University in 1983.

He is currently the Dean of the Columbia University Graduate School of Business, where he is also Russell L. Carson Professor of Finance and Economics. Hubbard previously served as Deputy Assistant Secretary at the U.S. Department of the Treasury from 1991 to 1993, and Chairman of the Council of Economic Advisors from 2001 to 2003. Hubbard is a Visiting Scholar at the conservative American Enterprise Institute, where he studies tax policy and health care.

Pretty impressive credentials, wouldn’t you say? So again, why would such an eminent scholar tell such an obvious lie, especially in his own field of expertise, economics? Here is a clue, again from Wikipedia:

He was tipped by some media outlets to be a candidate for the position of Chairman of the Federal Reserve when Alan Greenspan retired, although he was not nominated for the position. In August 2012, Politico claimed Hubbard to be “a likely Romney appointee as Federal Reserve chairman or Treasury secretary“

So you decide. Has Glenn Hubbard, the man of many degrees and honors, sold his soul to the devil, hoping it will bring him the honor of Fed Chairman or Treasury secretary? Like a boot-licking lackey, is he ready to say anything no matter how outrageous, to be appointed? Is he so desperate for a high level job, as to sacrifice his honor?

We forgive the Romneys and the Ryans of the world for lying to us. We already know they are scum.

But must we also forgive academics who display unrestrained, shameful, lying ambition, to grovel for jobs?

Rodger Malcolm Mitchell
Monetary Sovereignty

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Nine Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

#MONETARY SOVEREIGNTY

–An unrecognized problem in American education

Regular readers of this blog know I advocate 100% free, federally supported education for all Americans. By “education” I mean not only grades K through 12 (which insufficiently are local-government supported) but also college and post graduate. As the world transitions from physical work to mental work, education becomes ever more important, and high school simply isn’t enough to keep America competitive.

Our great and powerful nation is dying from the inside. Local school districts are short of the money necessary to attract the best teachers and provide the best physical resources. College is far too expensive, causing students to go deeply into debt, and that financial burden is minimal compared with the cost of post-graduate work. American education, from K through 16 and beyond, has reached a crisis. We are falling further and further behind, while inept politicians worry more about the so-called “deficit” than the future of America.

In that connection, I have reprinted a recent article by Sara Kendzior,* in its entirety (with her permission). It provides one more reason why federal financial support of colleges not only would be beneficial, but is necessary for our future.

by Sarah Kendzior*
The closing of American academia
The plight of adjunct professors highlights the end of higher education as a means to prosperity.
Last Modified: 20 Aug 2012

67 per cent of American university faculty are part-time employees on short-term contracts [AP]

It is 2011 and I’m sitting in the Palais des Congres in Montreal, watching anthropologists talk about structural inequality.

The American Anthropological Association meeting is held annually to showcase research from around the world, and like thousands of other anthropologists, I am paying to play: $650 for airfare, $400 for three nights in a “student” hotel, $70 for membership, and $94 for admission. The latter two fees are student rates. If I were an unemployed or underemployed scholar, the rates would double.

The theme of this year’s meeting is “Traces, Tidemarks and Legacies.” According to the explanation on the American Anthropological Association website, we live in a time when “the meaning and location of differences, both intellectually and morally, have been rearranged”. As the conference progresses, I begin to see what they mean. I am listening to the speaker bemoan the exploitative practices of the neoliberal model when a friend of mine taps me on the shoulder.
“I spent almost my entire salary to be here,” she says.

My friend is an adjunct. She has a PhD in anthropology and teaches at a university, where she is paid $2100 per course. While she is a professor, she is not a Professor. She is, like 67 per cent of American university faculty, a part-time employee on a contract that may or may not be renewed each semester. She receives no benefits or health care.

According to the Adjunct Project, a crowdsourced website revealing adjunct wages – data which universities have long kept under wraps – her salary is about average. If she taught five classes a year, a typical full-time faculty course load, she would make $10,500, well below the poverty line. Some adjuncts make more. I have one friend who was offered $5000 per course, but he turned it down and requested less so that his children would still qualify for food stamps.

Why is my friend, a smart woman with no money, spending nearly $2000 to attend a conference she cannot afford? She is looking for a way out. In America, academic hiring is rigid and seasonal. Each discipline has a conference, usually held in the fall, where interviews take place. These interviews can be announced days or even hours in advance, so most people book beforehand, often to receive no interviews at all.

The American Anthropological Association tends to hold its meetings in America’s most expensive cities, although they do have one stipulation: “AAA staff responsible for negotiating and administering annual meeting contracts shall show preference to locales with living wage ordinances.” This rule does not apply, unfortunately, to those in attendance.

In most professions, salaries below the poverty line would be cause for alarm. In academia, they are treated as a source of gratitude. Volunteerism is par for the course – literally. Teaching is touted as a “calling”, with compensation an afterthought. One American research university offers its PhD students a salary of $1000 per semester for the “opportunity” to design and teach a course for undergraduates, who are each paying about $50,000 in tuition. The university calls this position “Senior Teaching Assistant” because paying an instructor so far below minimum wage is probably illegal.

In addition to teaching, academics conduct research and publish, but they are not paid for this work either. Instead, all proceeds go to for-profit academic publishers, who block academic articles from the public through exorbitant download and subscription fees, making millions for themselves in the process. If authors want to make their research public, they have to pay the publisher an average of $3000 per article. Without an institutional affiliation, an academic cannot access scholarly research without paying, even for articles written by the scholar itself.

It may be hard to summon sympathy for people who walk willingly into such working conditions. “Bart, don’t make fun of grad students,” Marge told her son on an oft-quoted episode of The Simpsons. “They just made a terrible life choice.”

But all Americans should be concerned about adjuncts, and not only because adjuncts are the ones teaching our youth. The adjunct problem is emblematic of broader trends in American employment: the end of higher education as a means to prosperity, and the severing of opportunity to all but the most privileged.

In a searing commentary, political analyst Joshua Foust notes that the unpaid internships that were once limited to show business have now spread to nearly every industry. “It’s almost impossible to get a job working on policy in this town without an unpaid internship,” he writes from Washington DC, one of the most expensive cities in the country. Even law, once a safety net for American strivers, is now a profession where jobs pay as little as $10,000 a year – unfeasible for all but the wealthy, and devastating for those who have invested more than $100,000 into their degrees. One after another, the occupations that shape American society are becoming impossible for all but the most elite to enter.

Academia is vaunted for being a meritocracy. Publications are judged on blind review, and good graduate programs offer free tuition and a decent stipend. But its reliance on adjuncts makes it no different than professions that cater to the elite through unpaid internships.

Anthropologists are known for their attentiveness to social inequality, but few have acknowledged the plight of their peers. When I expressed doubt about the job market to one colleague, she advised me, with total seriousness, to “re-evaluate what work means” and to consider “post-work imaginaries”. A popular video on post-graduate employment cuts to the chase: “Why don’t you tap into your trust fund?”

In May 2012, I received my PhD, but I still do not know what to do with it. I struggle with the closed off nature of academic work, which I think should be accessible to everyone, but most of all I struggle with the limited opportunities in academia for Americans like me, people for whom education was once a path out of poverty, and not a way into it.

My father, the first person in his family to go to college, tries to tell me my degree has value. “Our family came here with nothing,” he says of my great-grandparents, who fled Poland a century ago. “Do you know how incredible it is that you did this, how proud they would be?”

And my heart broke a little when he said that, because his illusion is so touching – so revealing of the values of his generation, and so alien to the experience of mine.

*Sarah Kendzior is an anthropologist who recently received her PhD from Washington University in St Louis.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–What is “stimulus” and why does it ALWAYS work?

Some say the many federal stimulus attempts “didn’t work,” as witness the current poor economy. Others say stimulus did work, because without stimulus we would be in a more serious recession or depression.

Part of the problem may be the definition of “stimulus.”

Bernanke signals more stimulus, steps into election battle

Federal Reserve Chairman Ben Bernanke | Olivier Douliery/Abaca Press/MCT
WASHINGTON — A strong signal Friday from Chairman Ben Bernanke that more economic stimulus is on the way puts the Federal Reserve squarely in the middle of the fight for the White House in November’s presidential election.

Speaking at the Fed’s annual retreat in the Wyoming resort city of Jackson Hole, Bernanke offered a spirited defense of his unconventional efforts over the past three years to stimulate economic activity through the purchase of government and mortgage bonds. And he seemed to signal that more steps would be taken soon.

To stimulate the economy is to stimulate Gross Domestic Product (GDP) growth.
GDP = Federal Spending + Private Investment and Consumption + Net Exports
So, to stimulate GDP growth it is necessary to increase one or more of these factors: Federal Spending, Private Investment, Private Consumption, Net Exports.

Straightforward algebra.

In 2001, George W. Bush’s Economic Growth Tax Relief Reconciliation Act included tax rebate checks and tax reductions, which stimulated private investment and consumption for three years. Back then, there also were claims that the stimulus “didn’t work,” but:

The red line is Gross Domestic Product; The green line is Private Consumption; The blue line is Private Investment; The orange line is Federal deficit Spending

All rose in the 2001 – 2004 period, then began to fall, together.

[Important Note: When evaluating the effect of a stimulus, the claim often is made that “people didn’t spend the money; they just “sat on it.” But “sitting on” money, i.e. putting it in the bank, is investment, and Private Investment is part of GDP]

If the Fed does take action, it’d come less than two months before the Nov. 6 election, and history suggests that what the Fed does during an election is always viewed through a political prism.

President George H.W. Bush famously blamed his 1992 re-election defeat to Bill Clinton on then-Fed Chairman Alan Greenspan’s failure to cut interest rates in a slow economy.

President Bush wrongly believed low interest rates are stimulative. They are not. (See: “The low interest rate/GDP growth fallacy” )

Republicans have criticized the Fed’s use of bond buying to stimulate the economy, fearing it eventually will bring inflation.

With inflation hovering near historic lows, the greater danger is deflation;

Sen. Bob Corker, an influential Republican from Tennessee on the banking committee, underscored the political fight in a statement after Bernanke’s speech. He warned that “policies from Congress, not more short-term stimulus from the Fed,” are needed to restore growth.

He’s right. Congress, for political reasons, has abdicated its responsibility for growing the economy. Because tax reductions and spending increases – the two ways to stimulate the economy – also increase the deficit, and because increasing the deficit wrongly is considered negative for the economy (see the irony?), Congress asks the Fed to do what it cannot do.

The Fed’s reduction of interest rates (which contrary to popular wisdom, is slightly negative for the economy) and its “quantum easing” (buying long term bonds to lower interest rates), do not stimulate GDP growth. They don’t increase Federal Spending (Federal Reserve Purchases of government bonds are no “spending”). They don’t increase Private Investment and Consumption. And they have a little, but very little, effect on Net Exports (by slightly weakening the dollar). Quantitative easing is not a stimulus.

The Fed has been given the tool to control inflation (interest rates), not to grow GDP. Congress has asked the Fed to hammer nails with a wrench.

>Bernanke warned Friday that the Fed’s monetary policy “cannot achieve by itself what a broader, more balanced set of economic policies might achieve; in particular, it cannot neutralize the fiscal and financial risks that the country faces.”

That was a tweak of lawmakers, unable to agree on budget cuts, expiring tax cuts this year and additional measures to spark economic growth.

And a correct tweak it is. Our lawmakers believe GDP can be increased while the right side of the above equation is decreased. Essentially, our lawmakers deny algebra.

The algebraic calculation of GDP states that stimulus grows GDP if it increases Federal Spending, Private Spending, Private Investment and/or Net Exports. To stimulate the economy requires increasing the federal deficit.

Federal deficit spending increases (by identity) Federal Spending.
Federal deficit spending increases Private Spending and Private Investment by adding dollars to the private sector.
Federal deficit spending, in of itself, does not affect Net Exports, which currently run about $50 billion per year to the negative. Thus, for GDP to grow by even $1, the federal deficit must be at least $50 billion.

Consider the Troubled Asset Relief Program (TARP). The federal government purchased assets from institutions. Sounds good, right? Federal spending increases GDP, and dollars are added to the private economy – dollars which are spent and invested.

Unfortunately, the recipients have paid back the vast majority of the dollars, reducing their ability to spend and invest. On balance, TARP had very little long term effect on the right side of the equation. TARP was not a stimulus.

When people complain that stimulus doesn’t work, and others claim stimulus did work, they may not be talking about stimulus. Tarp and quantitative easing, so called “stimuli,” were not stimuli at all. Neither increased the right side of the equation.

By contrast, the American Recovery and Reinvestment Act (ARRA) of 2009 was a stimulus. It allocated $787 billion for tax cuts, unemployment benefits and various grants and loans. While loans are not stimulative (they must be paid back), the other spending is stimulative, because it increases the right side of the equation.

In summary, the measure of economic growth is not unemployment, business profitability, new business startups, poverty, hunger, consumer optimism or any other measure currently in vogue. The measure of economic growth is GDP growth. Period.

The formula for computing GDP is: GDP = Federal Spending + Private Investment + Private Consumption + Net Exports. For GDP to grow, at least one of the four factors must grow, and growing the first three factors requires the stimulus of federal deficit spending.

Many argue about whether or not stimulus works to increase GDP, but mathematically, true stimulus, i.e. federal deficit spending, does work, always works, cannot help but work.

Simple algebra says so.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

–Everyone knows the best way to drain blood out of an anemic.

As everyone knows, the best way to treat a victim of anemia is to drain their blood, the only question being, how best to do it. Shall we use leeches? Or is a direct tap into an artery better?

I thought of this when I saw two articles of the same ilk:

CNN MONEY.COM POLL
How would you balance the federal budget?

The headline doesn’t ask, “Should the federal budget be balanced?” No, it assumes everyone knows it should be balanced, and only wants to know how.

Balancing the federal budget means federal taxes would equal federal spending, so the government would add $0 net dollars to the economy. Combine that with our $50 billion negative trade balance, and a balanced budget would cause the economy to lose $50 billion every year.

Imagine that your own personal expenses equaled your salary, with nothing left over (balanced budget), but in addition you had to pay thousands every year to support your parents. How would your personal “economy” look?

The notion of a federally balanced budget not only is wrong; it’s downright stupid. But stupid is as stupid says, and here are the answers given:

15% of the respondents said to Cut Medicare
29% of the respondents said to Raise Taxes
13% of the respondents said to Cut Social Security
43% of the respondents said to Cut Defense Spending.

In total, 57% of the respondents wanted the government to remove dollars from their pockets, to help crash the economy. As for the other 43%, apparently they aren’t among the millions of people who work for defense-related industries, or for vendors to those people, and who would see their paychecks disappear if defense spending were cut.

In short, 100% of the respondents have been fooled by the 1% into believing the federal deficit and debt are too large. The poll names sample members of the 99% who would vote against their own best interests:

Josh Smith, 35, IT manager, New York City said: “Cut defense. We have the world’s largest budget.”
Shola Asenuga, 44, Physical therapist, Hampton, VA said: “Taxes should be raised across the board.”
Russ Homsy, 38, Attorney, Boston said: Cut Social Secuirity. The system is broken, anyway.”

This is the belief of America: Cut military spending because we spend the most. Raise my taxes and reduce Social Security. Yikes!

I can’t blame these people too much. They have been fed this nonsense by the media and the politicians, all owned by the 1%. But gosh, how difficult is this to figure out.

For instance, the article says:

$125 billion: Projected savings by 2021 if the Medicare eligibility age were raised from 65 to 67, today.

$208 billion: Added to revenue by 2016, if the tax rates on ordinary income were raised by one percentage point.

$125 billion “saved” for whom? America, the government would take $125 billion out of your pockets. $208 billion “added” for whom? America, the government would take $208 billion out of your pockets. This is what you want?? Really?

But there’s more: Consider the article in the June 18th Newsweek (“Middle Class, R.I.P”), by Paul Begala, excerpts of which are:

A recent report from the Federal Reserve documents the collapse of the middle class. Between 2007 and 2010 median wealth dropped a staggering 40 percent. As ever, the rich did fine, actually seeing their wealth increase as everyone else’s disappeared.

Today we again face a debt crisis. But where are the blue-ribbon commissions on the decline of the middle class? Our president rightly describes this era as “a make-or-break moment for the middle class,” but across America governors and mayors are forced to lay off teachers, cops, and firefighters—the kinds of people who serve, protect, and educate the middle class, and who can help poor people lift themselves up into the middle class, and members of the middle class lift themselves into prosperity.

Of course we have to cut spending. And, obviously, we need more tax revenue. But we have to do it in a way that protects the promise of opportunity for all. The key to paying off our crushing debt, ultimately, is economic growth. And the key to growth is an expanding middle class.

Have you ever read such nonsense? What is “crushing” about the debt? The federal government, being Monetarily Sovereign, has the unlimited ability to pay any debt of any size. Has anyone heard of any federal checks bouncing?

Sure the state, county and city governments are being crushed by debt. They’re not Monetarily Sovereign. They don’t have the federal government’s unlimited ability to create dollars. Mr. Begala doesn’t understand the difference (or pretends not to) — and he writes about economics for a large medium!

Mr. Begala claims to love the middle class, so what does he want to do? He wants to cut federal spending, the vast majority of which benefits the middle class, and he wants to increase taxes, thereby removing dollars from the economy. And this is supposed to benefit the middle class?

But the worst part of all is the casual assumptions we see in all our media and hear from our politicians: “Of course”. . . we have to cut spending. “Obviously” . . . we need more tax revenue. It’s so “obvious,” there’s no need for thought or debate.

And that is what the minions of the 1% rely on — the reluctance of people actually to think. How much easier just to float along, believing the pap you’re being fed, than to think to yourself, “Hmmm . . . The federal government can’t run out of dollars. It creates the dollars — as many as it wishes. I don’t create dollars and I can run short of dollars. So why is the federal government asking me for more money?“

Josh, Shola and Russ, the 1% has sold you and your fellow Americans a bridge to Brooklyn. Too bad you’ll have to pay the price, while the 1% laughs at you, as you grow poorer and they grow richer.

If you ever become anemic, and a quack doctor wants to remove your blood, I guess you’ll agree to that, too.

Rodger Malcolm Mitchell
Monetary Sovereignty

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#MONETARY SOVEREIGNTY

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