How can we connect this discussion with policies to work on the income and wealth inequality (and lack of adequate growth in income/wealth for 75% of the U.S. population) problem that has accelerated coming out of the 1970s stagflation/oil shock/Reagan policies era?

One way to look at the problem of the individual mortgage failures (and personal debt problem) is not just that people were buying homes that they should not have, but that there had been over 30 years of inadquate wages, income and wealth (and inadequate growth in them) for at least 75% and perhaps as much as 90% of the U.S. population.

Wouldn't it be possible to make up the difference by lowering our dependence on oil imports and attempting to switch to a new energy economy?

But China is having its own slowdown ...

The number one thing I think we should be selling is "green tech", specifically energy efficiency and pollution avoidance/mitigation. Although I have never been to China myself, the stories from those visiting Chinese cities are clear: the population is (literally, in the proper sense of this word) choking on its own exhaust. They are going to need ZEVs (partial or full), pollution controls on power plants, more efficient building cooling/heating/power, and so on.

Let's admit it.

In the post-internet environment of globalized competition our median standard of living has only been able to hold its own -- barely -- because mercantilists (principally, China) have subsidized the American consumer (although leaving a trail of debt we're currently munching on). Now, it's deteriorating and will continue to do so for the foreseeable future.

Trying to maintain that debt-purchased standard of living in a world where American consumers have lost their AAA rating is a fool's errand.

The bad and good news is that energy is going to force us to transform the economy. For if there were a standard recovery, the next thing that would happen would be energy going up to $140/bbl and that would slow things down again, not to mention what happens if someone bombs Iraq and so forth.

Besides transportation by auto, we also need to reengineer transportation in general... trucks are not going to cut it any more. Similarly the way we do agriculture... large farms in the West and Midwest, things shipped out of season in refrigerated trucks and railcars... not gonna happen, wouldn't be prudent.

What has to rise is a sort of county-level carbon and transportation management economy, where we figure out how to (let's say) use the heat and carbon from power generation to grow things, and find solar and gravity-based ways to move them around... and employ people doing all of that. Reviving craft and having people actually make durable, well-made goods rather than use foreign machines to create them out of plastic and then use oil to bring them here... that's another win.

It simply takes one level of abstraction from current paradigms to come up with many of these things, and we will, because we have to... there is no going back.

It seems obvious that our policy intent should be to substitute domestic production for imports, especially for oil, leading with business investments and consumer durable goods that are substitutes for imported oil. In other words, design, retooling to manufacture, and purchases of vehicles that are not fueled with oil; building the infrastructure to deliver the alternative "fuels", presumably electricity and compressed natural gas, to these new vehicles; replacing our limited remaining oil-fired electric generating capacity with "greener" alternatives; and providing mass transit as a substitute for oil-fueled cars where appropriate. Although it will take time to work through, this import substitution is on the scale of our persistent balance of payments deficit (and I do understand the relationship between the current account deficit and the difference between domestic investment and savings). I acknowledge this will be an economic challenge for oil-producing countries and therefore will create some national security issues but it will likely alleviate even more national security issues than it creates.

Oops, wrong link. Chomsky's quote is from The Pentagon System, first published in Z Magazine in February 1993. Apologies for any confusion.

The mistaken link goes to an interesting article on art and anarchy, fwiw.

From Tim

American society is based upon one principle: free contract. Therefore, distribution of bargaining power determines wealth distribution and therefore economic and social stability.

In what history have monied interests in control willingly ceded it to allow for an equitable "distribution of bargaining power"?

If we were a democracy in fact, then popularly elected representatives would have provided for this or in some other manner provided for the equitable distribution of wealth. Otherwise, such redistribution is fleeting at best, absent at worst and only occurs as an aftermath of a crises in which the less monied interests take it in the shorts, big time.

The proportion of redistribution is the issue, and monied interests have steadfastly refused to yield (through the political / economic clout available in our election & congressional voting processes).

It hasn't been that long since the economic constraints of the New Deal and we ended up in the "second Guilded Age" per Krugman in Conscience of a Liberal. Thus, the bias in our national collective economic ideal allows for the avoidance / bypassing, or redefinition of those constraints.

Unless and until the collective national philosophy changes dramatically from "individualism" we will continue as before, interupted now and then by a self made economic crises, despite the occasional use and enforcement of constraints on unbridled profit motive.

Income disparity. No penalties for using slave labor abroad and bringing products back here to sell. The outright greed of profiteering without regard for cultivating a working class that can afford to live here. The wealthy might as well outsource the middle class and the poor to China and just deal and cater with each other.

There are two economies operating here and one is feeding off the other to protect their holdings and means of doing business. The government economy must interfere to prevent a complete economic collapse where only the poor and middle class stand to lose.

The jigsaw must begin by putting the missing pieces back together. There is a new direction demanded by nature and our environment to seek alternative energy and stop global warming. We begin by rolling back the Reagan tax cuts, re instating tariffs, penalyzing the outsourcing of jobs and rewarding companies keeping their business and labor with the US. Begin a National not for profit health care system and retool or direct manufacturing of goods for a new century while redirecting labor toward rebuilding our infrastructure as well. We must regulate greed, put a cap on it instead of allowing a few people to take all the water while the majority die of thirst. Nationalize instead of privatize and work toward making government services more efficient. We've just gotten too big for so many "private islands" to exist in our nation.

When a few people start making over $50 billion a year while we have high levels of poverty then their taxes must increase to pay their fair share based on excess amounts of profits if they want to do business in America.

There must be limits on what people can charge so campaign commercials don't cost a million to air. It's our air we allow the media to use.

The jigsaw starts coming together nicely when huge profits and greed is regulated and spread across the nation's needs. That is loving and supporting your country. What has been happening is these "economic royalists" are reducing the rest of us to serfdom milking us for what they know we must have to survive...the means to acquire food, shelter, and energy , family and education. Stimulus packages must be aimed at these goals and they must include penalties and regulations to prevent the selling out of America.

We need to stop cutting each others throats. If workers don't make enough to buy the houses they build, they don't get sold and all the economy is affected. This happens as our business is outsourced by greedy businesses for cheap labor abroad to lower the price of goods and still make a huge profit. Everyone else makes less money but they make considerably more. They get walled off with people like them making the same amounts of money while the economy and living standards decrease. Soon, even the wealthy are affected by their own greedy tactics as there is no one who will continue to support them or can afford to.

Complaining that you can only make one billion instead of two because of taxes or labor costs gets you no sympathizers.

Our present condition is the result of this type of Reaganomics and most agree that we need to start capping the greed and regulating the profiteering through taxation just to balance the books. These greedy groups refuse to give back one single dime and are only concerned about how to protect their holdings and get more. When the law is used to help you get away with breaking the law then something is definitely wrong.

There is one way to protect against deflation, add inflationary pressure, create jobs, and generate tax revenue.

The way to do this is to put in place a currency tax on the dollar value of Chinese and other imports from countries that practice mercantilism.

Relying on the research done by Peter Navarro; " the China Price advantage is driven by more mercantilist elements. Export subsides account for 17% of the advantage, an undervalued currency adds 11%, counterfeiting and piracy contribute 9%, and together, lax environmental and worker health and safety regulatory regimes add another 5%" the rate to account for unfair practices would be 42%.

Hi TPM,
Am I being moderated or censored? I'm kinda curious because my posts are being "reviewed by the blog owner" or something like that.

What's up?
Love,
poemworld

I don't think they've closed my account because I'm able to post comments everywhere EXCEPT on Krugman's post today, "Why WWII 'Worked'", which I seem to be completely blocked on. I know that Brad DeLong detests Chomsky, so maybe there's static there. I don't believe I've been offensive, just critical. The harshest word I've used is "hell". I guess some people are just too sensitive. Oh well...

Regarding your statement about a global currency, first, I would bring that currency under democratic control, from the local to global in that order, which is not the case currently under the "private" Federal Reserve. Second, the US dollar under Bretton Woods acted as a defacto global currency under what has been described as "the golden age of [state] capitalism". I hope these caveats address your concerns, though, of course, these suggestions are no panacea, only what I consider to be necessary, though not sufficient conditions for liberating humanity from domination by the wielders of the money weapon.

Well, the excreta did hit the fan in the end, didn't it.
Not sure if anyone ever did solve the puzzle. Oh well, how about strip poker instead?

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