Archive for May 27th, 2010

The 28th Amendment

The Blame Game surrounding the oil spill has BP blaming Transocean, the owner of the drilling rig, who in turn blames Halliburton’s cement work to cap the well. And of course, this is also a failure of the Minerals Management Services to evaluate and regulate the drilling operation, so many are blaming the “revolving door” between the MMS and industry. Without catering to corporate influence, the argument goes, the MMS would have acted more in favor of the public interest.

This “revolving door” reappears as a factor in every crisis, it seems. The financial crisis could have been averted had Washington not been in Wall Street’s pocket.  Close the revolving door. The environmental and health problems surrounding food are due to agribusiness influence on the USDA, FDA, and food policy. Close the revolving door. Why do we fight? Washington is a key player in the military-industrial complex. Some even talk about an academic-industrial complex with is corrupting American higher education.

The Citizen’s United Supreme Court ruling was a step in the wrong direction. One can only hope that these recent tragedies give a renewal of vigor to movements such as the 28th Amendment Movement, which seeks an amendment to the US constitution called the Separation of Corporation and State, or the Move to Amend, which is part of the “Campaign to Legalize Democracy.”

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Paul Krugman finds a gem in the OECD Economic outlook, which argues that the Fed should start increasing interest rates by the end of 2010. This, he notes, is in spite of the OECD’s own outlook for low inflation and high unemployment through 2011. Krugman writes,

The only explanation seems to be at the beginning of that passage: some people, the report claims, are starting to think there might be inflation, so even though they’re wrong according to our forecasts, see, we need to head off this phantom threat and slow the economy’s recovery … what?

What’s so scary about this is that the OECD virtually defines conventional wisdom; it’s a numbered-paragraph sort of place, where a committee has to sign off on everything, policing the nuances as they say. So what we get from this is that among sensible people the idea that you should undermine recovery to appease those who think there might be inflation even though actually there isn’t has become conventional wisdom — so conventional that it’s treated as self-evident.

This is really, really bad.

The same conventional wisdom predominates with deficit hawkery, and of course, even a liberal like Obama feels compelled to buy in to this rhetoric and make salutary cuts. Beliefs from the 70s are now so firmly entrenched that all must pay homage to them or be discredited. We desperately need more folks of Jamie Galbraith’s stature to become much more strident in their deficit falconry- not just arguing, as Krugman and many in the mainstream have, that deficits are okay now. They must also argue that the deficits, at least as we’re used to them, are never harmful absent full employment (assuming fiscal and monetary sovereignty et al.).

Update (2:30 PM): Either I read Krugman’s mind or he read mine…he just put up a new post pointing out the stupidity of 90% debt/GDP as some big red line:

So what’s happening is that the idea that Really Bad Things happen when debt crosses 90 percent of GDP is being treated as a solid fact, when it’s nothing of the sort. And if the Obama commission feeds that false perception, right there it’s doing a lot of harm.

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