Global Stagnation

It has been my contention since 2007 that global capitalism was entering a period of stagnation that could not be cured by the temporary fix of lowering interest rates. Yesterday’s grim unemployment report in the U.S. only compounded the problems in the rest of the world.

The report on American jobs added to the global pall that has deepened with Europe’s debt crisis and slowing growth in China and India. Global financial markets, weak in early trading on Friday, sank further on the report. The Dow Jones industrial average lost 2.22 percent, or 274.88 points, wiping out its gains for the year, and the main index of the German stock market closed down 3.4 percent.

The American economy since Ronald Reagan first started to push Supply Side economics (sometimes know as trickle-down economics) has increasingly skewed gains to the top 1% and flattened middle and lower class wages. In such an atmosphere the engine of consumer spending could only be fueled by easy consumer credit mixed with aggressive marketing efforts—the classic “keeping up with the Jones’s” routine. Fiscal stimulus depended mostly on aggressive military spending which seemed to grow even in the face of the collapse of the Soviet empire. The financial sector, which was once restricted to aiding the manufacturing economy, gradually became the driving force in the economy. Speculative finance became so important to keeping the dogs of depression at bay, that the Lender of Last resort–The Fed–essentially ended up becoming the backstop to the most egregious kind of derivative trading, pouring hundreds of billions into Wall Street investment banks.

But this horrendous imbalance was not confined to America. In both Europe and China, banks fueled property bubbles which have now burst and the bottom is not in sight. I don’t think any of the world’s leaders have a clue of how to overcome the stagnation without just pouring more debt capital into the economy. What is clear is that the average citizen has learned some lessons since 2008. Personal credit card debt has fallen quite dramatically.

When economist wonder why the economy seems to shrink every spring after rising in the fourth quarter, the answer seems obvious. People are willing to spend extra money to give gifts during the holiday season, but they spend most of the rest of the year paying down their credit cards after the Christmas binge.

So what is to be done? One solution might be to stop believing that automation and productivity are the be all and end all of society. I posted a link to an article by Tim Jackson entitled, Let’s be Less Productive, on my Facebook wall this week. It inspired a lot of comments and discussion. Here is Jackson’s argument in a nutshell.

But the relentless drive for productivity may also have some natural limits. Ever-increasing productivity means that if our economies don’t continue to expand, we risk putting people out of work. If more is possible each passing year with each working hour, then either output has to increase or else there is less work to go around. Like it or not, we find ourselves hooked on growth.

What, then, should happen when, for one reason or another, growth just isn’t to be had anymore? Maybe it’s a financial crisis. Or rising prices for resources like oil. Or the need to rein in growth for the damage it’s inflicting on the planet: climate change, deforestation, the loss of biodiversity. Maybe it’s any of the reasons growth can no longer be safely and easily assumed in any of today’s economies. The result is the same. Increasing productivity threatens full employment…

One solution would be to accept the productivity increases, shorten the workweek and share the available work…But there are sectors of the economy where chasing productivity growth doesn’t make sense at all. Certain kinds of tasks rely inherently on the allocation of people’s time and attention. The caring professions are a good example: medicine, social work, education. Expanding our economies in these directions has all sorts of advantages.

In the first place, the time spent by these professions directly improves the quality of our lives. Making them more and more efficient is not, after a certain point, actually desirable. What sense does it make to ask our teachers to teach ever bigger classes? Our doctors to treat more and more patients per hour?

Many of the artisans who correspond on this blog have made the argument for years that chasing growth is a fools errand. We have argued about the notion of a steady state economy. I cannot claim to have the answers to the Great Stagnation, but I don’t the economists do either.

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38 Responses to Global Stagnation

  1. woodnsoul says:

    I agree with you Jon. The concept eternal growth is about as realistic as the perpetual motion machine… and there are a multitude of issue arising when the myth bubble bursts and you’ve hit a a bunch of them here and the readership has joined.

    We need to figure out some answers pretty quickly i think, or someone needs to before we end up with a situation like The Bell Riots [ever prescient StarTrek examples].

  2. Rick Turner says:

    Sooner or later, Malthus will not be denied. The idea that we are smarter than nature is absurd. We cannot have continued population growth and not have a catastrophic event, whether cataclysmic or sustained over years, by which our numbers are severely reduced.

    And, as I’ve pointed out here before, we are approaching a time in which we can produce more goods and tchachkes than we need, though food production looms as a serious issue with climate change vs. population and access to water being a pretty big deal. Material goods…how much pre-landfill junk can we produce? Why? To provide jobs? What if a large proportion of what we use…furniture, houses, even clothing, or dare I say it, electronic consumer goods…were to last for generations? I grew up in a house full of antiques. I type this from a desk owned by my mother that was made in 1930. My other desk was made about a hundred years earlier. I’m not going out desk shopping any time soon… I listen to a conglomeration of audio equipment much of which was state-of-the-art 35 years ago, and it still sounds fantastic. Sure, I’ve added CD and plug in iTunes from a lap-top computer, but the core of the system…turntables, preamp, power amp, and speakers are “vintage”. I build instruments that I have every reason to believe will be useful a hundred years from now. This is all my commitment to moving to a steady state personal and family economy.

    Capital is outweighing labor, if only through automation in manufacturing processes, and yes, I’m a part of it. I love what my $55,000.00 CNC (computer numerical control) “robot” router can do, and yes, it it were working 40 hours a week, it would do the work of eight or ten skilled woodworkers with greater precision and a much better safety record…and though there would be (and is) maintenance to deal with, I would not be dealing with the personality issues of toxic employees who come and go in my, and everybody elses’ businesses.

    Bucky Fuller pointed out that we can have heaven on earth right now; the one ever increasing “natural” resource we have is knowledge. But we fail to use it, being caught up in the lizard brain greed bullshit of our constantly feuding ancestors…and contemporaries.

    Heaven on earth might just be a society where nobody has to work 40 hours to maintain a decent lifestyle. It might incorporate a balance of entrepreneurial spirit where creativity and ambition are rewarded while also having a social infrastructure network where we, the people, do maintain ownership of our truly shared resources, and I’d include a “smart” power grid and Internet grid among those things that I think should be owned in common, just like the street outside my window.

    This whole brouhaha over “job creation” is absurd, and yet it will determine the name of our next president. I will be absolutely amazed if even the bogus tilted unemployment numbers ever get below 7.5%. Obama can’t do it. Romney can’t do it (especially…he specializes in firing people!). I’d love to see the real number which would basically include every single person in the US who is not in school or college, is under the age of 65, and is physically and mentally capable of working 40 hours a week. I’m guessing that number would be in excess of 20% “unemployed”. 30% anyone? More? And all of that goes to show that even a dis-functional society simply does not need the goods and services that could be produced with full employment. Unless…unless…there was a massive CCC-like program to rebuild the infrastructure of America into a virtual Paradise. Deal with potholes in the streets (hey, it would be cheaper than dealing with all the blown tires, bent rims, and broken shock absorbers…). Take care of the National, State, and Municipal parks…really take care of them. Make our schools the envy of the world by getting teacher/student ratios down below 1:20. Deal with real crime, not victimless “crime”. Take care of all those rusting bridges. Rebuild America, and get the hell out of the Middle East. Put billions into developing alternative energy while we are in this natural gas fracking economic bubble…and a bubble it is, both literally and figuratively. Put solar hot water and solar voltaic systems on every south facing roof surface in America and let the Arabs pound sand. That is how to “win” the war on terrorism…by being a beacon to the world of how it can be.

  3. Rick Turner says:

    Oh, I’ve stopped using credit cards, both personal and for my company. I’m paying down the last one, and I have no intention of starting up again. I pay cash, check, or use a debit card. If I don’t have the dough, I don’t spend it. At some point I may need a car loan, but that’s it. I don’t mind doing lease-purchases for equipment…there are significant tax advantages, and I do wind up owning the gear, but as of now, everything is paid off. I only open accounts with three or four out of thirty or more vendors, so I can look around my small factory and know that virtually everything in the place belongs to me and my fellow stockholders.

    I know, it’s not the Bain way…

  4. len says:

    The problem of a steady state economy is that it is a classic stag hunt. If there is no means to regulate the wabbit hunter (the hunt ain’t no fun if the wabbit has the gun), it will only work occasionally.

    To repeat: if you don’t know what to measure and how to control inputs, there is little use for having a target output. You can’t synchronize what you can’t see. Going back to Barlow, why the heck would you be using all of those CPU cycles to measure “sensitivity”?

    Turner has the right idea: keep control close so you can see what you must measure. We seem to have gone off track precisely as we globalized and suddenly there were more wabbits. Otherwise, the CNC is useless without the knowledge of what makes wood ring. It is like another music domain that is still profitable, sheet music, because the notation barrier to entry reinforces the barrier of switching costs so even if the market is not wall-to-wall, the room is big enough.

    Turner also correctly identified the opportunity for locating a high-skill low walkthrough business (teaching) next to a high walk through low skill business (selling instruments). The reinforcing principle is vital to sustainable markets. If economists were better behaviorists instead of objectivists, we’d be bagging more stags.

    If the content market collapses, the web becomes a party line and little else. See Facebook stock.

  5. Rick Turner says:

    As Len alludes to, in my little industry, what I see as the best music stores are those that create community around them by offering lessons, having repair departments, encouraging long term employment among highly qualified sales staff, and having the guts to carry “boutique” instruments. Some of them have the space to have concert series that are a step up in size from house concerts (McCabe’s in Santa Monica, the Fret House in Covina). These kinds of stores would be the bane of Bain…they are communitarian in nature, may not be hugely profitable or “efficient” other than promoting and being centers of musical culture…which is often more important to the owners than big bucks. BTW, they can be nice little profit centers, too, though. Yet, there are curious deserts for this kind of store…Boston (other than the Music Emporium out in Lexington), and oddly, San Francisco where you have to go to Marin (Schoenberg) or Palo Alto (Gryphon) to get good, successful community oriented music stores.

    Here in Santa Cruz, city population of about 60,000, we have five prominent music stores, each with it’s strengths. That’s about the same number as “natural” food stores! Fewer than bike stores, though… But then on the artisinal scene, we have at least 10 separate guitar making workshops ranging from one man operations up to Santa Cruz Guitars making about 60 instruments a month. This may be the most intense concentration of independent makers in the US. Obviously, we are an exporting town, though I’m happy to have quite a few local musicians playing my instruments.

    Steady state, to me, does NOT mean stagnation. There’s no reason why we as a society cannot become increasingly rich not only in material goods, but in the more indefinable riches of culture and spirit, even as our population numbers stabilize. For a funny take on this concept, listen to Randy Newman’s “Political Science”…aka “Drop the big one now”. Yeah, Italian shoes for you and me… Corporations and stockholders should not need an every increasing population upon whom to foist shoddy goods for bubble profits. “Re-shoring” and more efficient manufacturing is coming to a local level, and so the future may just bring a lot more high quality bespoke goods… Not exactly a WalMart future, but one I think that can be infinitely better.

  6. Alex Bowles says:

    I’m already dreading Papola’s appearance, in which he’ll tell us that this is all wrong (or “crap” as he so delicately puts it) and that people who think otherwise Just Don’t Get It while insisting the only way we’ll have peace on earth is for a billion people in China and a billion more in India and that many again in Brazil and Africa and Indonesia to all get air conditioned McMansions with triple SUV sized garages and forget about global warming and peak oil because those are just wild hoaxes cooked up by people who think “good government” isn’t necessarily a contradiction in terms.

  7. John Papola says:

    Consumption isn’t an “engine”. Consumption is the end goal, but it is entirely dependent on effective production. When we consume more than we produce, the total stock of real wealth shrinks. This is an easy fact to understand and would be more widely appreciated were it not for the constant assault on our culture by Keynesian nonsense from all sides. Consumption uses stuff up. Production creates. If you want economic growth, you need increased productivity. You need more production per person, which requires more investment and less consumption in the short run.

    The story of great deregulation and liberalization since Reagan is mostly false in America. Where neo-liberal reform ACTUALLY made significant gains (Canada, Sweden, Australia) we’ve seen more sound government fiscal policy, stronger growth and far less pain during this recession.

    The Fed’s role in the past 40 years has been at the center of our problems. First, the great inflation unleashed by the end of the bretton woods gold standard by Nixon dropped the constraints on money growth. Than keynesian macro policy created the false belief that unemployment could be cured by inflation. The inflation of the 1970s with its high interest rates along with regulation Q, money markets, savings and loans and other bizarre institutions born out of regulations gave rise to the S&L crisis. The Fed came to the rescue after the panic of 1987. Wall street came to assume (righty) that the Fed would bail them out. They called it “the greenspan put”. Wrong-headed fear about deflation in the late 90s and early 2000s lead to Fed policy that produced an excessive boom. regulatory and fiscal policy directed that boom into housing.

    The easy money fueled foreign dollar accumulation which tragically came back to our shores in the form of treasury purchases instead of private investment. Boom turns to bust. The Fed than fails to stabilize monetary policy, allowing money-demand deflation and the collapse of nominal spending (which is bad). The recession got worse than it had to. Obama and Bush threw good money after bad with so-called “fiscal stimulus”, which made matters worse. And now we’re in the keynesian long run with Euro-style stagnation being driven by all sorts of horrible policies including 99 week unemployment benefits and retention of the horribly timed minimum wage hike. The pre-crazy Paul Krugman would have renounced these policies as precisely the sort of bad ideas that produced euro-sclerosis and high structural unemployment.

    Just look at France for an example. This is what Euro-style policies produce:

    Our current unemployment rate would be a “boom” rate in France.

    Oh… and don’t forget the general march towards more and more occupational licensing at the state level throughout the past 30 years, which hammers the working class and limits job opportunities. Alan Kruger’s own work (chairman of Obama’s Council of Economic Advisors) shows that the percentage of the workforce forced to get government licenses has gone from 5% in 1950 to 29% in 2006 and surely higher in the past 6 years.

    Consumption spending has been remarkably stable through the whole crisis. Yes, it tanked at the depth of the recession from September 2008 to July 2009… but it’s back on the same path and has been since then. US consumers are spending more money today than in 2007. When oh when will this ridiculous notion that consumption creates wealth instead of, you know, CONSUMES wealth finally die. Never I suppose.

    It’s savings and investment that have been hammered. And worse, it’s savings rates in general that have fallen in this pure-fiat money era. Less saving means less real investment. Instead of real investment, we’ve gotten fed-inflated bubbles.

    On top of these macro-issues, though, are real issues. K-12 education in the US sucks. We have chronic shortages in high tech labor markets even with +8% euro-sclerotic unemployment.

    We have an epic coordination problem going on in the US and government policy. In many many respects, our economy was freer in the 1950s and 1960s than today. We’ve moved in the wrong direction for the past 40 years except along a few narrow margins. Today’s stagnation, which libertarians like Peter Thiel and Tyler Cowen also note, is not the result of freer markets. Quite the opposite.

    But hey, if you want to peddle some crude political argument about “trickle down” that’s not really based in anything but popular myths and partisan narratives, that’s up to you.

    PS, Alex, attributing bizarre and false assertions to me (like championing unproductive consumption for emerging economies) isn’t the high ground. It’s the low ground. Being a demagogue and saying that I attack people for wanting “good” government is rhetorical flim flam. Who DOESN’T want “good” government? If we can get that, I’d love it. It’s like saying I’m against kids getting educated because I think the Feds should get out of education. That’s not serious discussion. It’s just mud-slinging.

  8. len says:

    Restore Glass-Steagal. Protecting wealth accumulated by the earning classes instead of letting the investing classes waste it gambling would return confidence to the middle class. We want to retire too.

    If you want economic growth, you need increased productivity. You need more production per person, which requires more investment and less consumption in the short run.

    Productivity has many forms. There isn’t a one to one correlation to monies available although there is a tighter relationship to monies earned. Rick’s example is sound. The more proximate economic relationships reinforce each other, growth isn’t an issue in terms of sustainability. It is more important to create sustainable walkthrough than a bigger mall. Growth focuses on building a bigger room. Sustainable business focuses on filling the room at hand.

    IOW, we aren’t talking about investor growth. We are talking about sustainable jobs. These are different ways of looking at economic stag hunts. Investors are too often wabbit hunters.

  9. Rick Turner says:

    “Trickle down” is what happens when the 1% pisses on the heads of the 99%. And it’s what’s happening right now.

    And “consumption” as a goal…I don’t know that that should be the goal other than consuming food. Producing long lasting goods for a stable population is more like it for the goal of bettering us all.

    And why are the religious nutters so intent on overpopulating the earth? Doesn’t seem to matter which god they pray to; they just want to breed like…yeah…wabbits…

  10. morgan warstler says:

    HOLY SHIT!!!

    Lookee here, Iraqi oil production to the rescue….

    10Mbpd by 2017!!!!

    Who’ da thunk it??


    Non-secular Muslim country that hates Iran. Democracy.

    And guess what, this isn’t starving for bread Arab Spring, no sir. This is RICH. Thankful for America. A Saudi Arabia for 2020.

  11. morgan warstler says:


    You should really roll around in your head my Guaranteed Income plan to Auction the Unemployed:

    It is where we end up. It is the most likely outcome facing the Zero Marginal Productivty worker.

    EVERYONE is going to have to work for a bossy boss doing something that the guy paying WANTS DONE. (market decisions)

    But EVERYONE who does work, will have their nut covered.

    In this way we don’t have to ice floe JTM. Even in his crotchety old age, we can still let someone find something he can do for $40 per week when he’s 78… while he earns $260.

    Just read the plan.

  12. Rick Turner says:

    So Morgan, will we get that oil cheap enough to pay for the whole Iraq war like Wolfie promised?

    Oil is to valuable to burn…

    We should be saving it for other uses.

  13. Alex Bowles says:

    Lucky for you, Pap, this blog doesn’t have a robust search feature. Anyone with a bit of time could have a field day with your definitions of “bizarre” and “false”. And speaking of definitions, it’s conceivable that “demagogue” doesn’t mean what you think it means. But what I’m really curious about is where you came up with the idea that people think consumption creates wealth? I mean, I agree that it’s stupid. And that’s why it has been asserted by precisely no one. Saying otherwise is a classic example of a straw man argument. Hilariously, you follow this with a demand for “serious conversation”.

    The point which you’ve so conspicuously (and deliberately?) missed is that we’ve already seen a massive creation of material wealth. The issues is that the distribution of said wealth has been so bad that we’re not only extraordinary running risks to the economy, we’re corroding the deeper – and vastly more difficult to recover – reserves of trust that are essential to any economy.

    People have done the work. They have not gotten paid. The people who ought to have paid them have offered them loans instead – loans which, due to the lack of payment, they cannot afford to refuse. Now they’re doubly screwed, and the government that theoretically exists to prevent these situations has become a chief enabler, creating a triple whammy of abuse and pain.

    If you want to chalk these failures up to “licensing issues” and “coordination problems” while suggesting that the only fault with austerity is that we didn’t see enough of it, that’s your prerogative. But you really shouldn’t be surprised that more people aren’t buying.

  14. len says:

    @Rick Turner

    And why are the religious nutters so intent on overpopulating the earth? Doesn’t seem to matter which god they pray to; they just want to breed like…yeah…wabbits…

    When applying operant conditioning to groups/demographics (social network), frequency (repetition of belief statement) and bundling (putting the weak argument among strong beliefs) work best when applied to a social network that is conditioned to accept authority and are supplicants by practice (seekers of spiritual rewards by submission to authority). If there is a strong “joyful/ecstatic” component, even better because emotional driving is the point, not logical clarity. Driving them emotionally works best when using the primary stimulli such as sex, food, group identity and so forth. Remember, negative or positive emotions both work but it is better to use the positive emotions because they are easier to sustain.

    Of the dominant religions, Christianity is best particularly those sects that make supplication to auithority a dominant belief (eg, Church of Christ). The prayerful religions are usually supplicant religions. Buddhism is much tougher because there is no divinity to offer supplicant prayers and there is no prayer per se. Instead one finds meditation where the spiritual goal of practice is non-reactive behavior and clarity of mind, both of which are antithetical to the practice of social network programming. Note which groups dominate the Tea Party in comparison to OWS.

    Awareness and clarity, frequency and amplitude. Know thy audience.

  15. Rick Turner says:

    Well, Len, my question was really rhetorical, as I’m sure you know.

    But it sure looks like the over-breeding is as much to gain “market share” as to do anything resembling good works…and that which isn’t seems to be simple irresponsibility and/or a lack of education. I think it’s time to stop financially rewarding the breeders and cut off tax deductions for more than…well, let’s say three kids unless they’re adopted. And maybe single parents who can’t afford more than three kids should give the excess up for adoption…

  16. len says:

    Or they’re bored as hell and sex is the only sin left that the congregation approves of in moderation. I saw an article once that said once the Catholic church lost the ability to control the economy and governments, that left only sex. And we see how well that works.

    The Chinese have been trying what you suggest. We’ll see how well that works. Here in Alabama, you’d be nailing the Hispanics and Blacks. Good luck with that one.

    Space-X is the most impressive demonstration of how a free society can trump any other. Here where I live, we are all rocket scientists and we were betting against privatization of the space program. We were wrong. Notice that with the entire budget of a starving nation, North Korea can’t do what Space-X did. It’s a hopeful sign that we may actually be getting our shit together in America. Now if we can just do something about the smell.

  17. Rick Turner says:

    If Space-X had had to develop it all privately, it never would have happened. Come on now, Len, you know that they…and Rutan…and Branson have been major beneficiaries of public spending on aerospace R&D. To claim otherwise would be like congratulating the railroad barons of the 19th century on how wisely they bought rights of way from Native Americans for the trans-continental railroad. Or like praising the private nuclear energy and reactor companies for developing atomic power. That “ain’t” how it happened. Oh, the oil industry in the U S???

    These “advances” have all been led by pigs feeding at the public trough. Space-X is no different. And then there’s the dark underbelly…our giving free passes to the Nazi engineers of the V-1 and V-2 programs. Nazis were bad…unless they were useful…

  18. len says:

    Government research advancing private investment and development is a pretty good model. You benefit from the trial and error of many a court musician and luthier. It isn’t all bad. Of course they benefitted by American rocket research. And the NKs benefit by Chinese and Russian research. The difference is in America, they get it done even when some experts said they couldn’t do it. It worked. All I can do is applaud.

    As for the Von Braun Team, I won’t apologize for the genius of American citizens who served their country of choice nobly and well. The Moon speaks for them. I will quibble with those who choose to rob them of their achievements or reputations as honorable men who kept to their obligations to see to it mankind reached the next step. As with the local shops who reinforce each other, their most important promises were not the ones they made to any government but to each other. That is a Team.

  19. Rick Turner says:

    Too many of the noble have been entranced by the dark side…plowshares as swords, and all that… I don’t care for the team that studiously ignores how their achievements are used by the politicians. Hiding behind ivory towers is a coward’s game.

  20. len says:

    @Rick Turner

    Then the upcoming election will be a barnburner, Rick. Our President is selectively murdering enemies with state of the art drones and signed into law his privilege to do it to our citizens if he deems it necessary. On the other side of the aisle, they steal from the poor to give to the rich and signed that law because it is considered necessary to turn our police forces into their personal armies.

    Arthur Rudolph died disgraced in Germany because Ronald Reagan needed a scapegoat for his Jewish supporters. Notice that we not only take the ones we need, we also throw them under the bus when they become inconvenient. Because I grew up with the rocket team as neighbors I can tell you they never ignored what the technology was used for. They tried and succeeded in using it for something better.

    LSD started out as cure for mental disease but by the time it made it to the streets, it was a party drug that caused mental disease when abused. Did that ever bother anyone in the teams you worked with? Probably it did but the genie was out of the bottle. How noble we are in character seems to depend on who is watching and when.

    Space-X got 1000 lbs of food and equipment to a space station and brought back the trash. Not a bad week’s work really.

  21. Alex Bowles says:

    @Rick Turner You’ll appreciate this. It’s about libraries, rather than music stores, but the problem is the same: communities becoming impoverished when bad definitions of value justify the destruction of real value in the name of “improvements” that are anything but.

    Sometimes this is corrupt. Often it’s just stupid. In either case, it runs roughshod over over people whose efforts go largely uncompensated. And that’s a problem.

    If the losses of private companies are to be socialized within already struggling communities the very least we can do is listen to people when they try to tell us where in the hierarchy of their needs things like public space, access to culture, and preservation of environment lie.

    The important thing here is that the state can provide for these in ways that the market, the church, and the university (those other bastions of any civilization) cannot and will not. While it’s asinine to think that the state is the best answer to everything, it’s just as idiotic to assert that it is, almost by definition, the worst. It terms of ending stagnation, there’s every reason to think that the state can’t help in ways that only it can.

    As for Pap? He’s a fucking idiot. I say that not just because of his propensity for straw man arguments. Nor is it because he can’t even construct his straw men himself, opting for the additional bit of dishonesty that comes from misrepresenting what others have said and knocking down those fictions instead.

    No, his real fault is that he thinks he can follow this nonsense with sanctimonious lectures about “the high road” and “serious conversation” and not have the people at the butt of this notice. In other words, he is a fucking idiot.

    I’d add “liar”, but I can’t actually find the posts in which he supported the kind of denial and spin related to climate change and peak oil I attributed to him. Others with a better memory on this point may have to show that these attributions are neither as “bizarre” or as “false” as he asserts. I’ll simply say that, in looking for said posts, I came across this gem:

    I believe in general that levels of campaign spending are positively correlated with increased awareness and education of the issues among the public at large yet they are very WEAKLY correlated with election outcomes.

    After fleshing this out this general assessment with two highly non-representative examples of electoral dynamics (the Meg Whitman fiasco and a presidential re-election campaign) he draws this stunning conclusion.

    The talk about money in politics is totally bankrupt if not openly fraudulent.

    Got that? John Papola thinks that the “talk about money in politics is totally bankrupt if not openly fraudulent.” And that’s based on two bad examples and one link – with which we’re about to have a field day.

    He supports his judgement (I use the term loosely) by linking to an interview with the Freakanomics author Stephen Dubner, a man who is famous for undermining inadvertent errors in conventional wisdom. That is to say, Dubner has made a career around examining unconsidered opinions that are unwittingly mistaken. Which is pretty much the opposite of “totally bankrupt if not openly fraudulent.”

    It’s possible that this is just Pap being illiterate again. After all, he didn’t know how to correctly use “demagogue” in a sentence but that didn’t stop him, and he penned an entire history of the financial collapse (see above) without mentioning “bankruptcy” or fraud” even once, so perhaps these are more terms that he’s simply unfamiliar with. But in this case, I don’t think illiteracy is the problem.

    No, I think the real problem is that John Papola is a fucking idiot.

    A bold assertion, I know, and one that some may not accept without more support. To elaborate, I must return to Dubner – the solitary and unshakable anchor for Pap’s sweeping and deeply considered judgement. Here, we must note that Dubner has written on many subjects, and some of them effectively (I’m sure). But his foray into campaign fiance is not his finest hour. Indeed, his oft repeated claim (election spending has little effect on electoral outcomes) is thoroughly dismantled in the criticism section of Wikipedia’s entry for his own book as being a conspicuously flawed pseudo-statistics. So it’s not like he’s unaware of the problem. He just ignores it.

    Now, normally I wouldn’t expect anyone to drill down this far when posting a single supporting link. However, if you’re going make serious personal attacks for even mentioning an issue, then the bar is a little higher.

    And by “higher” I mean actually reading the comments in the supporting post. Here’s it’s noted that the 1% variance that can (according to Dubner) be achieved or lost with each doubling or halving of campaign cash is, in many cases, the difference between victory and defeat. If not 1%, then certainly 2-3%, which is why large amounts are supposed to be so important.

    So even if Dubner’s right about the variance (a big and debated assumption) he’s still wrong about the conclusions – which is something that anyone even remotely careful would notice. But not John Papola, who – as we are coming to realize – is a fucking idiot.

    Also landing him on the fucking idiot list: not knowing when he has no idea what he’s talking about but making sweeping and highly caustic generalizations anyway. Now, if Papola were properly familiar with the campaign finance issue, he’d immediately recognize that Dubner is framing the entire topic in a deceptively limited way, and wouldn’t hang his hat on such a shaky peg. Not knowing any better, he does exactly that.

    Of course, anyone who follows this issue knows that the real concern is about legalized bribery. Even if the money had zero effect on election results (which is *not* what Dubner asserts), the fact that a candidate *thinks* it does is critical. Perception – not reality – is what will cause him to feel a disproportionate sense of obligation to a “donor” that he would not otherwise feel. And that’s the rub.

    More explicitly, that’s why the concern about hugely concentrated and readily identified sources of money in politics isn’t limited to the effect it has on determining who gets into office. Rather, it’s focused on how people behave once there. The related corruption and warped incentives are detailed with painful clarity and precision by any number of good governance groups, which – again – is something that anyone with an even passing familiarity understands very well. John Papola does not appreciate any of this at all. And yet, in his view, simply *discussing* the state of campaign finance without drawing the same (hilariously) uninformed conclusions that he’s drawn is an act of extreme personal dishonesty.

    Which gets back to my central point: John Papola is a fucking idiot. Indeed, I’m beginning to think my shower curtain has better judgement. But perhaps I haven’t made the case. So let’s look at this Dubner piece a bit further.

    (I realize that I’m putting a lot of weight on it, but since it was quite literally the one and only reference Pap provided when asserting that “the talk about money in politics is totally bankrupt if not openly fraudulent” I’ll just work with what I’ve got.)

    Dubner: If you like redistribution of wealth, you gotta love campaign spending…

    Um, what? These are not related. Like, not at all. What kind of person would open an argument with a remarks as asinine as this?

    …You got Sheldon Adelson here, giving $10 million to Gingrich. That’s basically a wonderful jobs program for people who work at TV stations and political campaigns, okay?

    No, Dubner, that’s not “okay”. That’s total horseshit. This is not a “jobs program” in any sense of the word. It’s neither administered by the government, nor is it administered primarily to give otherwise unemployable people something to do. It is an example of one private person hiring others – on a professional basis – to produce work which demands professional skill. That’s not state-sponsored social welfare. That’s someone being hired for an actual job. And it’s got nothing to do with “redistribution of wealth” which, very explicitly, does not involve trade. No third party is taking from one party and giving to another without direct exchange between them, based on the needs of a broader social agenda, which is actual redistribution of wealth. Going to work for a private individual or company – even on a political ad – is just not the same thing.

    Dubner continues.

    So a lot of the people who complain most loudly about campaign spending reform are the people who benefit from it, honestly.

    Um, what? It’s categorically untrue that “a lot” of the people who complain about this spending benefit from it, for the simple reason that perhaps a hundred million people see this as a huge problem, whereas the percentage of people who get paid by the related efforts (i.e. broadcast professionals) are a vanishingly small portion of that population.

    Of course, as media professionals the people that Dubner is trashing do have a disproportionately loud voice, so perhaps that’s what he meant by qualifying his remark somewhat. But even here, it’s a dodgy suggestion since the vast majority of people who are senior enough to have editorial control were in or near their jobs well before Citizens United unleashed the current wave of unregulated cash, which is what Adelson represents. That is to say, they didn’t pursue this money so much as this money came flooding into their already-established established operations. And many of them probably thought “hey, this feels really dirty.”

    Sudden unavoidable and unsolicited association with a patently corrupting influence is not necessarily a win in the eyes of everyone. So Dubner’s assertions that they (a) benefitting and (b) bing hypocrites for objecting is way off base, for at least two self-evident reasons.

    Self-evident, that is, to people who aren’t fucking idiots. Papola, on the other hand sees no problem here. Indeed, he sees no problem with any of this. Rather, he sees Dubner’s case as so strong and shining and true that he can use it support an attack as sweeping, as damning, and as personal as the one he makes.

    So let’s just take a minute and summarize glaring problems with Dubner’s presentation that are not problems for John Papola, who is a fucking idiot.


    1. Ignores the broader context of the issue, and focuses entirely on one aspect that simply does not represent the larger concern he’s “debunking”.

    2. Repeats a really dodgy claim about the part he does focus on, even when that line of reasoning has already already been shot down on his own Wikipedia page.

    3. Fails to recognize that the dicy conclusion from his already weak and narrow argument – if true – is actually a very big deal as well as being entirely supportive of the conventional wisdom he is “debunking.”

    4. Attacks his critics with an “example” that starts with a manipulative non sequetir.

    5. Goes on to heavily distort the meanings of commonly understood expressions employed in said non sequetir.

    6. Implies that the the number of people who care about the issue is so small that a significant number of them (“a lot”) can be drawn from the microscopically small ranks of those who work in broadcast television.

    7. Asserts that these people are, somehow, to stupid to see that this basis for undermining their professional credibility (which is a big deal in news) is actually a “benefit”. (I wonder if he got invited back?)

    Any of this is bad. All of it together is awful. In the view of most suitably critical people, Dubner is a not at all reliable. They’ll see the NYT’s decision to drop his blog as a wise move. They’re likely to reject Dubner’s premise, which is that concern about election finance is seriously overblown.

    That shabby reality is that this dude has made a career of promoting “unconventional wisdom”. That career has peaked. His effort to apply his tired schtick to campaign finance falls flat, and badly. He’s on thin ice and easy to recognizes being less than trustworthy.

    Unless you’re John Papola. Then you decide that this one guy and his one ropy, self-serving, badly informed, and publicly contradicted take is both the gospel truth and the final word on this major issue and in fact, his appearance on one talk show is so crushingly definitive and widely recognized that any further conversation that fails to agree is a sign that the person holding it is “totally bankrupt if not openly fraudulent.”

    From this we can safely conclude that John Papola is a fucking idiot.

    For future reference, Pap, you really need to tighten up your act. The constant stream of attacks on the personal integrity of others, blanked assertions of their “fraudulence” and “bankruptcy” along with the the constant bombast and relentless dismissal of their contributions as “shams” and “crap” and the work of “partisan hacks” who are “peddling crude political arguments” and “propaganda of the very worst kind” is not “the high road”. Nor are they fair reflections of the well-meaning people and thoughtful remarks to which you so frequently attribute them.

    Really, they’re just you being a fucking idiot.

    I promise you Pap, at this stage in my life I can see right through it. And I’ve got no patience for it. None whatsoever. So go point that that thing somewhere else, okay? Preferably, before you shoot yourself in the other foot.

    Now, about the libraries…

  22. len says:

    Thomas Sowell says we can’t justify taxes because the sick aren’t sick enough, the poor aren’t poor enough and the rich aren’t rich enough.

  23. len says:

    Originalism: the notion that judges can subjectively read the minds of the dead and reach an objective conclusion about their intentions for governing the not-yet-born.

  24. John Papola says:

    Well, Alex. That was quite a take down. It had nothing to do with my comments here in this thread other than an effort to, of course, demonstrate in apparently all respects that I am a “fucking idiot”. I’m not an expert in the science of determining fucking idiocy, but your method appears to be pretty carefully selected.

    I will admit that my language there an elsewhere is occasionally too hyperbolic. I will honestly make an effort to do Bette and be more careful. I find the discussion of campaign finance “fraudulent” for more reasons than mr Dubner. That was one reference. Its a blog comment made in haste, not a journal article. Sorry I didn’t spend more time doing research and draw out the other sources I’ve come across. But, yours is a useful standard, and I’ll really try no to run my mouth so freely on issues which I’ve spent relatively little time (compared to basic macro in particular).

    I’m happy to admit where I’ve made a mistake. I’m less happy calling someone else a “fucking idiot” who’s not a politician or paid pundit.

    It’s interesting that you don’t take similar exception to Rick’s Disturbing jab at “religious nutters overbreeding”. but I guess you’ve only lost your patience for certain favors of discourse.

    I’d love your feedback on my actual comment here, but I guess as hominem logic (he fucked up with Dubner so he’s an idiot) is the way you chose to do it.

  25. Rick Turner says:

    Any comments re. Scott Walker?

    I see this as a “push the pendulum” move…the public employees’ unions have had their way too long with a too-far removed public taxpayers. This is a reaction to government types having it too much better than working stiffs. I’m tired of the civil servant attitude of “well, this is what I’d be worth in the private sector”…it’s utter bullshit, and frankly, the private sector, as in finance, has gotten away with too much for too long as well. Very few of these folks are worth what they’ve been getting paid, and the pension fund thing has become a total ripoff. In the private sector, a lot of what has been executive compensation should by all rights go to stockholders. And in the public sector, the near impossibility of firing civil servants is a disgrace, to say nothing of their outrageous retirement age and compensation packages. Put ’em all into the SSI pool and be done with it.

  26. morgan warstler says:

    So Pappy and Dubner are idiots.

    And “Well-run libraries are filled with people because what a good library offers cannot be easily found elsewhere: an indoor public space in which you do not have to buy anything in order to stay.”

    Fer christ’s sake… if we turn the libraries in barracks from homeless people to live in but with an Internet connection to all the worlds books, then that’s CERTAINLY better then saving libraries based on on their bookish non-commerical vlaue.


    WHICH ACTUALLY is a very interesting intellectual dilemma whereby one atomic book purchased can be shared and that is a GOOD thing.

    But one book digitally distributed to the globe is a bad one.

    Of course, we’d have to ask ourselves one question only really…

    Can a modern system of income be established for an author / artist that must accept free digital distribution as fact?

    And for that we’d have to ask, what is the smallest amount of money we can get good authors to write books for?

    And then we’d have to ask how many people read a “good author’s book” when it is free.

    And then we could divide said amount by free readers over lifetime of book, and THEN maybe we could figure out how much advertising each reader would have to see to deliver that value.

    This would be a very progressive system because by REFUSING to sell the book to rich people for a set fee say $10 today…

    INSTEAD those rich people would have to give up the same amount of ATTENTION during the reading.

    And since you could sell the rich person’s attention for lots more than the poor person’s attention… the rich person would in fact be SUBSIDIZING the poor person’s book reading.

    Since time is money, and rich give same amount of time, but their time is worth more.

    So Free Books + Advertising + BARRACKS = better than libraries for the community.

  27. John Papola says:

    @Rick Turner
    I agreed with your comment in its entirety, Rick. The complaints coming out of wisconsin about walker’s changes sounded like what they really were: the complaints of a wildly out of touch class of entitled powers and beneficiaries whose deal was completely out of step with reality. Even after walker’s changes, public employees are still making out very well on benefit contributions and defined benefit pensions (which hardly anyone outside of the public sector gets today). The end of coerced union dues by the state is a clearly a victory for good teachers and taxpayers alike. But don’t take this idiot’s word for it. After all, I haven’t heavily footnoted my comment!

  28. Rick Turner says:

    See, John, there are some libertarian principles hiding in my demeanor! Actually, I describe myself as a Libertarian-Socialist if that makes sense…

    Perhaps civil servant pay+benefits should be indexed to some sort of industrial mean that somehow includes a negative factor when the “official” unemployment figure goes up over, say, 6%.

    One of the problems with bureaucracies…including private sector ones…is the disincentive to be creative and especially the inherent penalty for saying “yes” to clients, be they citizens (think planning departments, building departments, etc…) or potential customers. Especially in governmental structure, the tendency is to say “No, but you can appeal this decision”…and the bureaucrats get paid whether they move things along or not. We, the people, just suck hind tit. I’ve had old and recent experience in this from governmental agencies, and it’s infuriating.

  29. John Papola says:

    @Rick Turner
    I think the challenge in any organization is how to balance autonomy and creativity with accountability and responsibility. I’ve seen private bureaucracy. It’s just as gross as public. Just as budget-maximzing. The great difference is that it hurts the bottom line and eventually gets flushed. Sometimes for the bad, but often for the good. Recessions tend to be a time for that sort of evaluation, tragically.

    But the monopoly power plus the make-work “jobs program” nature of government bureaucracy combined with the ability to go out and take your revenue instead of having to make your revenue make them much more intransigent and even systematically rewarded. But there clearly is a tipping point. Eventually, the taxpayer does step forward to say enough is enough.

    The most remarkable place from what I understand is Sweden. They’ve managed to emerge with a civil service sector that’s much more well-liked, allegedly deserving of the praise and certainly less corrupt. Is it culture? Is it a fluke of history? I don’t know. But it’s very fascinating.

  30. len says:

    Can a modern system of income be established for an author / artist that must accept free digital distribution as fact?

    There is no such thing as “free digital distribution”. There is a digital distribution system that acquires content for free then profits by services such as adverstising, hosting, reselling of information collected and so on. What is there is inequitable distribution of profits to suppliers based on accounting fraud.

    Have you ever tried to work out the Google rules for monetization in actual practice?

    a) Algorithms are doing the first sort, not humans. A supplier can appeal but cannot determine the basis for “review judgement” which may or may not be done by humans.

    b) It is easy to prove in practice that the algorithms are flawed or based on specious measures. By experimentation they can shown to be based primarily on image analysis which makes assumptions which prove to be flawed in practice; then on text analysis which proves to be inadequate. Quick: is Danny Boy (music and lyrics) monetizable? What about photos of your own children? What about mashups of classic movies?

    Do the work first then tell me the economic theory or basis for monetization of digital libraries of harvested works and author submissions?

    The shameful fact is Lowery is right: the new boss is worse than the old boss as far as collecting and distributing revenues. One might think this could be worked out in our legal system but the power of big money over both the courts and the legislators have rendered that solution impotent.

  31. Fentex says:

    There is no such thing as “free digital distribution”. There is a digital distribution system that acquires content for free then profits by services such as adverstising, hosting, reselling of information collected and so on.

    This may describe who’s profiting from distributing today, but it isn’t an accurate statement about free distribution.

    Free distribution (apart from users purchasing of Internet connectivity) exists, plenty is going on behind, around and out of sight of people who are led to popular and advertised sites that exploit the opportunity to profit from succeeding in getting peoples attention.

    There is no reason legally sanctioned services couldn’t be the ones to do that except resistance to the idea by rights holders. And in it’s absence the unscrupulous take the income.

    This isn’t going away, there is no question that unauthorised distribution is going to be a fact of life forever – even if the Internet were ‘switched off’ unauthorised distribution would continue. Ease of duplication is a fact of nature now.

    There is no question if systems to work with free distribution can be established, they must be, and therefore will be.

    The question is simply how. In a regulated world the odds are efforts to establish a tax and distribution system will be made, although I think ISPs should be proactively providing high performance locally cached easy to use through open interfaces delivery of any and all digital goods with rigorously audited returns to rights holders in competition with each other.

    It may very well be that, in musics case, the hundred year window of profitting from recordings has closed and a recording of music may only ever be an advertisement or loss leader itself in future. I don’t think that’s true, but it is a possible consequence.

    As an aside I’ve recently bought a eInk e-reader and are trying to experience the future of books and am not enjoying the experience. Don’t know yet if it’s just decades of conditioning or the inadequacy of current equipment but reading these things is not as much fun as a paper book.

  32. len says:

    There is unlimited copying. It isn’t the same as free distribution. The web is not a magical fairy land. Servers, software, connections, energy, yadda cost money. Those using resources to distribute are sucking at the tits of those who pay for those things or own them. So once again, a licensing issue and a prosecution. Laws exist. Enforcement has been the problem. That era also seems to be closing.

    The competition for the best links will increase as well as the legal actions (see Microsoft vs Google recently on the links takedown notices). It has taken the legal community some years to figure out the best way to go after this goldmine of work for them but they do seem to be figuring it out. Predatory as it is much of evolution is driven by just such species of predators.

    The controls over distribution are already there. The question is will the market initiative shift away from the mostlyServerService providers to those that build creative communities for top quality content targeted to the self-selecting social network communities that are happy to share. At point of sharing, should say, Facebook, post a micropayment (quaint old notion) to the server farm owner (say Youtube) to distribute to the content community or should FB contract with the usual fee collection agencies?

  33. John Papola says:

    So, Alex… I guess I’m a “fucking idiot” for repeating Dubner and other analysis too stridently in another thread… but you’ve got absolutely nothing to say about my post-related macro comment above, which you initially claimed to be anxiously awaiting. Hmmm. Everyone else here seems able to engage and move on. Give and take. You took your angry ball and went home, huh? Oh well. I guess you really had no bones to pick with my comment above, so you preferred to rant about unrelated stuff. Pretty unappealing.

  34. Alex Bowles says:

    Pap, buddy, do yourself a favor: stop digging.

    Insisting I’ve said “absolutely nothing” with regard to your post when comments #13 and #14 speak to it directly only makes you look like, well, an idiot.

    Remember, you are entitled to your own opinions. You are not entitled to your own facts.

    Now perhaps you were simply being hasty and careless. No surprises there. But then you undermine yourself further by saying I “initially claimed to be anxiously awaiting” a response from you. In truth, I was awaiting no such thing and said nothing to suggest I was. But that didn’t stop you from simply making something up, fabricating spin out of thin air, and doing so with absolutely no regard for obvious reality.

    I won’t embarrass you further by asking for a citation that doesn’t exist. But I will say this pattern – and it is a pattern – does nothing to help your general credibility.

    Remember, it was your propensity for straw man arguments that got you in trouble in the first place. (On the off-chance you still don’t know what this is it, it’s the practice of misrepresenting or exaggerating someone’s argument to make it easier to attack.) Aside from being a logical fallacy, this habit involves the kind of casual slander that has no place in a conversation among friends.

    If you want to be taken seriously, you’ve got to become far more careful with the truth. Disagree with people’s opinions if you like. But don’t try passing off fiction as fact – especially when it involves misrepresenting others for your convenience.

    And that’s all there is to it.

  35. John Papola says:


    Jon’s post is all about income inequality leading to stagnation because of reduced consumer spending. He calls consumer spending “the engine”. To drive home the point, he notes:

    When economist wonder why the economy seems to shrink every spring after rising in the fourth quarter, the answer seems obvious. People are willing to spend extra money to give gifts during the holiday season, but they spend most of the rest of the year paying down their credit cards after the Christmas binge.

    Then, to further seal the deal, he denigrates productivity (aka more production per worker) saying that “One solution might be to stop believing that automation and productivity are the be all and end all of society.”

    My original post, which you “dreaded” (I guess that’s idiotically different from “anxiously awaited”), was focus first on rebutting this notion that consumption drives economic growth and then offered a host of reason why I believed we’ve seen growth slow since the 1970s.

    Here was your response:

    But what I’m really curious about is where you came up with the idea that people think consumption creates wealth? I mean, I agree that it’s stupid. And that’s why it has been asserted by precisely no one.

    “Precisely no one”? Nobody except Jon in this very post, who is echoing a legion of Keynesian-style analysts, the most crude of which is surely Robert Reich. If it’s “obviously ridiculous” as you put it (exactly), I would think you’d have spent some time helping Jon to understand that. Your intense and personally bitter word-parsing regarding my posts might have been helpful with your own keyboard there.

    What else did you offer in comment #15 and #16 besides mistakenly claiming that I was arguing with a straw man? Nothing. You repeated that income inequality by some measures went up, which was Jon’s whole Reagan rant point. Why is it up? How does this lead to stagnation? Nothing. No mechanism for how this hinders growth… which is the point of the post and my comment. You hand-waved away all of my points as simply being “my prerogative”.

    So, yeah, I remembered this as “absolutely nothing to say about my post-related macro comment”. I guess that’s not entirely true. It’s “practically nothing” and “absolutely nothing new”. So I’m a fucking idiot. Fine. You don’t want to dig into the discussion with a “fucking idiot” like me. Got it.

    But at least you ended that comment above with a straw man.

    The wealth is being created. It is not being distributed. Telling people who created the wealth that 6% is more than they deserve, and that austerity is what they need makes no sense whatsoever.

    Since when have I said that I want the average worker what they “deserve” or that THEY need “austerity”? When! Show me, mr. straw-man radar. Please. I want the government to shrink precisely along the lines that would take benefits and subsidies AWAY from the wealthy cronies who benefit from the system, NOT the average worker or free entrepreneur. Here’s my comment from the next post:

    So let’s cut all of the warfare, ALL of the corporate and farm welfare, delete the department of ed (it’s a failure), delete the department of energy (it’s a failure) and see where we shake out.

    I’ve been consistent about who I think needs to see some austerity and it is most certainly NOT the “people who created the wealth”. That’s a straw man you’ve erected of me, friend.

    Let’s not forget who preemptively called out the other in this thread, buddy. You’re the one who came out swinging in comment #6, claiming that I think we’ll “have peace on earth” once everyone in China, India, Africa and Indonesia get “air conditioned McMansions”. Jesus. You start us off with THAT line of baloney and then come at me with an angry cursing rant saying that I’m a “fucking idiot” who does nothing but argue with straw men? Shit. This is a no-win. You don’t hold yourself to the standard you hold others to. That blows.

    Think what you will of me, Alex. You poisoned this thread for me from the start. I did my best with my first comment to make a real argument for my ideas, and you came back this garbage.

    I’m done parsing. I’m done apologizing for not perfectly remembering your exact words from one week ago and not re-reading the entire thread every time I comment to make sure I get it right to a level of precision that you yourself clearly fail to achieve.

  36. Alex Bowles says:

    I have to admit that starting the thread the way I did was out of line. That was a mistake I won’t be repeating.

  37. John Papola says:

    Thank you for admitting that, Alex. And I admit that I can be sloppy for the sake of brevity and provocation. It’s a lazy way to do things. I’ll do better.

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