Why do we have brakes on a car?

Mary, New Hampshire
Two defining characteristics of a fascist state:

1) The industrial and business aristocracy are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite. This characteristic, we note, continues to be well and happy.

2) Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated entirely, or are severely suppressed. This, we note, is proceeding nicely.



Karen Garcia, New Paltz NY

Let's just call out the cult of the deficit scolds for what it is: class warfare.

They have their gold-plated knives out for the safety net of the New Deal. They're spending millions just to ensure that millions of their own fellow citizens don't ever get to collect on the great social insurance policies of the New Deal and the Great Society. The Fix the Debt campaign might be more aptly called The Fix is In -- for all but the most obscenely wealthy. Pete Peterson, and his sidekicks Simpson and Bowles, are in cahoots with our own "Democratic" president to hype their Orwellian "balanced approach." This is Newspeak for the imposition of austerity on the middle class -- combined with a few fleeting, token tax hikes on the plutocrats to make it seem like everybody's doing their "fair share."

It's an illusion. The Fix Is In.

The "tweaking" of Social Security via chained CPI is an exercise in cruel subterfuge. The average woman on Social Security received only $997 a month in 2010. If the Grand Bargain had succeeded then, her monthly income would have fallen to $933 (in inflation-adjusted 2010 dollars) by age 85 and $915 by age 95.

How is this not a War Against Women? Millions of older women already are living in poverty, unable to pay their bills, putting off medical care, scrimping on food. I guess the Scrooges of the ruling class won't be happy until we switch from Fancy Feast to the Walmart brand.

The Fix Is In, unless we all band together and fix their wagon.

Meme, Chicago
"Why do we have brakes on a car?"

That was the question posed by John Reed, the chairman of Citigroup from 1984-2000, to journalist extraordinaire, Bill Moyers, when Reed and Moyers sat down in early 2012 to discuss America's feeble, flaccid and failed financial services industry.

"Why do we have brakes on a car?" Moyers queried rhetorically. "So we can stop."

"No," Reed countered. "So we can go fast."

America needs serious, high-tech, state-of-the art, ABS brakes placed on her reckless, shameless financial services industry before another AIG or Lehman or Bear Stearns decides to drive the world's economies in a "suicide rap" right off the cliff--again! Dodd-Frank, while well-intentioned and produced with earnest deliberation, is nonetheless a miserable failure. It is too expansive, too vague and too deferential to the financial industry. If only one third of the rules have been implemented to date, the problem is not with the enforcement of the rules but the rules themselves.

At the risk of torturing the metaphor, the time to put new brakes on a car is not when it is already on the road "steppin' out over the line." The time for new brakes is/was when the car was in the shop, hobbled and broken.

Instead of Dodd-Frank, let's break up the "too big to fail banks" and reinstate Glass-Steagull--on steroids.





William D, London
How many bankers went to jail as a result of the 2008 crisis?

That is why things won't change.





rturkington, Virginia
I keep thinking how, right after it all unraveled, how any politico in reach of a microphone swore that heads would roll, that they would get to the bottom of things. That immediate actions would be taken to halt the types of practices that trashed the whole economy of not just this country but other countries as well.Then wealth spoke, and like the beholden, frightened weasels they are, the politicos scurried back into line.
Inside of a month, the new headlines read that, heck, it wasn't Wall St or the bankers or the bad business practices that were the problem, nah, wasn't 'them' and to try and regulate anything would just be the most horrid thing. You see they intoned, it was not them who was the problem, nah, it was 'really' all the fault of those who bought homes they couldn't afford. Middle classers who just lived too well and dreamed too big. No mention that those they were trash-talking were the ones who worked long and hard for years to have a taste of the American Dream.The spokesmen for wealth didn't see fit to mention that their chosen scapegoats, the working class, 'were' paying their bills til the jobs were all sent overseas. To increase corporate profit. Or that while Wall St and the investor class were quickly being bailed out the middle class was dying. That lack of decent paying jobs to be had, that lack of protections for those that remained meant the ones who could least afford it were once again taking it in the shorts. Jobs, homes, savings ..gone.

Newfie, Newfoundland
The never ending growth economy is a de-facto Ponzi scheme. Nothing grows forever in a finite world. The era of growth is ending. This will be the century of contraction and limits.



William B. Hess, Edwardsville IL
The key, as it has always been, is social accountability. Until all the perpetrators and their lobbied minions in Congress are held fully accountable for their decisions and actions, nothing will change all that much.

Corporate re-chartering needs to be done in accordance with the fine work of the Tellus Institute. 21st century corporations need to include wage earners and the public as equal and permanent stakeholders. Corporate charters need to be for specific, socially beneficial purposes and of limited duration, subject to review and renewed only if they clearly serve the public good. The idiocy of unlimited growth and an obsession with short-term profits at all costs needs to be abandoned to sustainable plans for the long-term benefit of all.

As long as we embrace the notion that the central purpose of corporations is to funnel the productivity of the nation into the already-bulging coffers of a few sociopathic plutocrats, we will create disaster after disaster until we are ground into the dust of history.

What we lack is not a paucity of good ideas for change, but the political will to throttle the latest generation of international robber barons.





Tim Kane Mesa AZ

I remember, I was in 8th grade. That made me, 14 years old, sick in bed. My mother threw me the tomb "Rise and Fall of the Third Reich". It's been some time, but somewhere in there, I walked through the logic of Germany's ability to re-arm itself and not face inflation during the depression. The problem I was trying to figure out why printing money created inflation in the 1920s but not in the 30s.

Here, at the age of 14 mind you, is what I walked through: A vendor cannot raise his prices if he has more supply to sell than there is demand for- especially if his competitors are in the same boat. In the Great Depression, as now, there was more supply than demand. If a widget maker raises prices, his competitor across the street will be glad to sell his widgets at the old prices. So the Germans could go ahead and borrow &/or print money in the Great Depression for rearmament and not worry about inflation.

How is it that so many buffoons of high office can't understand something so simple that a 14 year old could figure it out (meanwhile I, as of last Friday, am unemployed)?

A former co-worker once said that it's not a good idea to assume that someone did something because they are stupid. Same here. They have other motives.

In the case of our society, wealth is so concentrated, that elite gadflies in political circles, punditry, media, and so on want to dance to the tune that favors the wealthy. It's a variation of Stockholm syndrome. That or they are cruel. Or both.

Stabilization Won’t Save Us
By NASSIM NICHOLAS TALEB

THE fiscal cliff is not really a “cliff”; the entire country won’t fall into the ocean if we hit it. Some automatic tax cuts will expire; the government will be forced to cut some expenditures. The cliff is really just a red herring.

Likewise, any last-minute deal to avoid the spending cuts and tax increases scheduled to go into effect on Jan. 1 isn’t likely to save us from economic turmoil. It would merely let us continue the policy mistakes we’ve been making for years, allowing us only to temporarily stabilize the economy rather than address its deep, systemic failures.

Stabilization, of course, has long been the economic playbook of the United States government; it has kept interest rates low, shored up banks, purchased bad debts and printed money. But the effect is akin to treating metastatic cancer with painkillers. It has not only let deeper problems fester, but also aggravated inequality. Bankers have continued to get rich using taxpayer dollars as both fuel and backstop. And printing money tends to disproportionately benefit a certain class. The rise in asset prices made the superrich even richer, while the median family income has dropped.

Overstabilization also corrects problems that ought not to be corrected and renders the economy more fragile; and in a fragile economy, even small errors can lead to crises and plunge the entire system into chaos. That’s what happened in 2008. More than four years after that financial crisis began, nothing has been done to address its root causes.

Our goal instead should be an antifragile system — one in which mistakes don’t ricochet throughout the economy, but can instead be used to fuel growth. The key elements to such a system are decentralization of decision making and ensuring that all economic and political actors have some “skin in the game.”

Two of the biggest policy mistakes of the past decade resulted from centralized decision making. First, the Iraq war, in addition to its tragic outcomes, cost between 40 and 100 times the original estimates. The second was the 2008 crisis, which I believe resulted from an all-too-powerful Federal Reserve providing cheap money to stifle economic volatility; this, in turn, led to the accumulation of hidden risks in the economic system, which cascaded into a major blowup.

Just as we didn’t forecast these two mistakes and their impact, we’ll miss the next ones unless we confront our error-prone system. Fortunately, the solution can be bipartisan, pleasing both those who decry a large federal government and those who distrust the market.

First, in a decentralized system, errors are by nature smaller. Switzerland is one of the world’s wealthiest and most stable countries. It is also highly decentralized — with 26 cantons that are self-governing and make most of their own budgetary decisions. The absence of a central monopoly on taxation makes them compete for tax and bureaucratic efficiency. And if the Jura canton goes bankrupt, it will not destabilize the entire Swiss economy.

In decentralized systems, problems can be solved early and when they are small; stakeholders are also generally more willing to pay to solve local challenges (like fixing a bridge), which often affect them in a direct way. And when there are terrible failures in economic management — a bankrupt county, a state ill-prepared for its pension obligations — these do not necessarily bring the national economy to its knees. In fact, states and municipalities will learn from the mistakes of others, ultimately making the economy stronger.

It’s a myth that centralization and size bring “efficiency.” Centralized states are deficit-prone precisely because they tend to be gamed by lobbyists and large corporations, which increase their size in order to get the protection of bailouts. No large company should ever be bailed out; it creates a moral hazard.

Consider the difference between Silicon Valley entrepreneurs, who are taught to “fail early and often,” and large corporations that leech off governments and demand bailouts when they’re in trouble on the pretext that they are too big to fail. Entrepreneurs don’t ask for bailouts, and their failures do not destabilize the economy as a whole.

Second, there must be skin in the game across the board, so that nobody can inflict harm on others without first harming himself. Bankers got rich — and are still rich — from transferring risk to taxpayers (and we still haven’t seen clawbacks of executive pay at companies that were bailed out). Likewise, Washington bureaucrats haven’t been exposed to punishment for their errors, whereas officials at the municipal level often have to face the wrath of voters (and neighbors) who are affected by their mistakes.

If we want our economy not to be merely resilient, but to flourish, we must strive for antifragility. It is the difference between something that breaks severely after a policy error, and something that thrives from such mistakes. Since we cannot stop making mistakes and prediction errors, let us make sure their impact is limited and localized, and can in the long term help ensure our prosperity and growth.