the guy by the door …

As Noam says real change “… is never a gift from above. It comes about because of people like you.” The ‘Obama’ bank bailout plan is in yet another revision. It’s architects realize that it is far too little and far too late. Early editions were welfare for Bank Executives – so blatantly so that even the corporate dominated media noticed. Newer editions promise improvement. But of the millions of homeowners in the foreclosure pipeline, only those who almost don’t need help will get any. The plan is still largely to save the financial institutions and ignore the peope.

Earlier I pointed to Dave Korten’s proposal.

Now there is a grassroots and netroots movement around the country.

Demonstrations around the country today Saturday April 11, 2009 starting 11AM Pacific – 2 PM Eastern.¹

In Boston, the demonstration is at the State House. Rain gear is advised.

Logos by Harvard Living Wage Campaign Alum Matt Skomorovsky

¹“the guy by the door” is hosted by the Berkman Center for Internet and Society at Harvard – close to the Atlantic. Because the corporate offices of the major media are in our time zone there is a substantial ‘Eastern Daylight chauvinism’. In my own modest way, I seek to address this.

Paul Krugman, Laureate of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 at a press conference at the Swedish Academy of Science in Stockholm [Photo Wikimedia Foundation] Treasury Secretary Timothy Geithner [Photo: U.S. Government]
  

A zombie idea is an idea that you keep on killing because it’s a bad idea but it just keeps on coming back.

Bank of Sweden Prize winner¹ and New York Times Columnist Paul Krugman on today’s Democracy Now! They aired before the formal announcement.

¹‘The Bank of Sweden Prize’ is the correct name for what is popularly and incorrectly called ‘The Nobel Prize in Economics.’ The meaning and purpose of this premeditated mislocution will not comfortable fit in a footnote.

The first feature after headlines on today’s Democracy Now! showed a clip of British Prime Minister Harold Brown admitting the AIC have imposed Neoliberal principals on developing countries, but not followed them themselves.

Too often, our responses to past crises have been inadequate or misdirected, promoting economic orthodoxies that we ourselves have not followed and that have condemned the world’s poorest to a deepening crisis of poverty.

Amy segued into an interview with a prominent critic of Neoliberal Globalization, University of Cambridge economist Ha-Joon Chang. Her introduction:

Ha-Joon Chang, Economist at the University of Cambridge specializing in developmental economics. In 2005, he was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought. He is author of the books Kicking Away the Ladder: Development Strategy in Historical Perspective and, his latest, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism.

Chang mentioned the Late Larry Summers by name. Tomorrow I’ll tie this together with the Sandel Summers Course at Harvard “Globalization and It’s Critics”. Y’all come back now, hear?

Congress is about to take up Obama’s “economic program”. It will have line items which at least sound progressive and/or populist. We should remember the Bush administration ‘ethanol debacle’ in evaluating these. Ecology is about economy and conversely^1,2. But the current “plan” seems to include a second “bailout” of the financial services industry. Hedge fund manager, the Late³ Larry Summers was on the TV machine assuring us that this time it will be different. Will it?⁴

What, exactly, will the $1 Trillion this will end up costing us save? If we give money to the banks to keep them afloat, do people get to stay in their homes? Or do they foreclosed anyway? Do we save the banks and do nothing for the borrowers? Do we save an abstraction, The Economy, and do nothing for the people who are it’s reality?

David Korten, author of When Corporations Rule the World and The Great Turning, appeared on Democracy Now this morning to discuss an alternative economic plan described in his new book, Agenda for a New Economy: From Phantom Wealth to Real Wealth. Korten argues convincingly that it is possible to have an economy, i.e. a tool of our own creation, which serves the people who compose and create it, rather than the reverse. One of the ingredients, he suggests, is letting banks that deserve to fail, fail. In fact the teaser above the title is, Why Wall Street Can’t Be Fixed and How to Replace It. A video clip of his interview with David Brancaccio on PBS.

Holy Schumpeter’s Ghost, Batman!

If, on the other hand, The Late Larry succeeds in saving the “too big to fail” banks while the “too little to bother with” homeowners undergo ‘creative destruction’ into homelessness, even the Ghost of Schumpeter will rise up and smite him, yet again.

Some thoughts from me, but hopefully not inconsistent with David’s ideas:

$1 Trillion, that’s the projected cost of all the rounds of bailout planned. That would buy 4 million homes at $250,000 a crack. If the gummint, [i.e. “we the people”] just paid the ‘bad’ mortgages and gave people their homes, it would prevent a serious housing crisis from becoming a diaspora. But it would still reward the financial services industry for bad behaviour. How about if we the people, just write down the value of the mortgages to a point where a people can afford them? Coincidentally, they might then be more in line with “economic fundamentals” than the value determined by the “free market” on speculative steroids. We might have to nationalize the banks to do that. Krugman, this year’s Bank of Sweden Prize winner, thinks that would be a good idea.

If we do major write downs of mortgage values, we probably should qualify them by making the homes purchased “limited equity”. That is, a regulation on the price of a future sale of the home. We do not want them to become instruments of speculation in a future housing bubble. Perhaps consideration should be given to the amount of equity a given borrower has acrued. I don’t know the details.

[back after i get my broken nose looked at]
¹See for example, the work of former Harvard Crimson President, Bill McKibben’s, Deep Economy.

²I met Steven Chu when he gave a talk at MIT about energy and Abrupt Climate Change^A. At the beginning of his talk, he mentioned briefly that there is a lot of room to address carbon emission in the area of conservation, but he wasn’t going to talk about it. he was going to talk about controlling carbon emission of energy generation^B. He was then the director of the Lawrence Berkeley National Laboratory. He was going to talking to people seeking careers in science and engineering research, i.e. usable results 10 or more years away. His appointment as Energy Secretary is very luke warm good news. It’s up to us to move his planning horizon in and his strategy towards conservation. His most amazing remark was after the talk. He turned to me with stunning earnestness. “These things are all really about money.” Well, that may be news to someone who worked for Bell Labs at the height of its monopoly [and the height of the Cold War], but if you got your PhD at Harlem’s CCNY, you pretty much know that. 🙂 🙂

³Obviously, I don’t believe that slinking off to be a hedge fund manager after being busted out of the Harvard Presidency amounts to resurrection. His appointment as Lamont University Professor, smells an awful lot like a deal to placate The Fellows^C. Not resurrection. Not even close.

⁴One bit of good news. His mentor/co-conspirator, Harvard Fellow Robert Rubin, having lined his pockets with a chunk of taxpayer money for misguiding Citigroup, has resigned from Citigroup. But, I did not hear of him giving the money back.

^AAbrupt Climate Change is much more descriptive of what matters to human life than global warming. It is the change of climate too rapidly for human societies to adapt that is the danger. I did not invent this phrase. I stole it from climate scientist Dr. Lonnie Thompson of Ohio State university. His talk before the 2007 meeting of the American Geophysical Union, recorded by Maria Gilardin of TUC Radio, is well worth listening to [lowband].

^BAll of us non-Nobel physicists know that energy is not created or generated. It is converted. More accurately, we siphon off the flow of entropy. It is ‘free energy’ that really matters.

^CHow much influence Summers’ mentor/co-conspirator Fellow Robert Rubin had I cannot say with precision. I can only say, “too much.”

Crises are hard to count because they depend on point of view. To shareholders in the financial services sector there is an international finance crisis. To the newly homeless, there is a housing crisis. These two crises are joined at the bank – in this case Bank of America. Climate change meets at the bank too. Harvard Fellow Robert Rubin’s Citibank has a major stack in coal. The number of crises depends on the time scale you choose – global climate change being the most imminent. But bioaccumulation¹ assures a very long list of toxic pollutants each with it’s own environmental consequence. The current cost effective mining technique – mount top removal – assures that vegetation is obliterated, streams are filled in as well as polluted which translates to loss of habitat for species etc.

A two local groups and a local chapters of a national group met to confront these crises and shut down Citibank in Harvard Square. [Photo Open Media Boston]

Jason Pramas of Open Media Boston reports (in text and video) that Rising Tide Boston, City Life/Vida Urbana, and Rainforest Action Network² joined in non-violent civil disobedience shutting down Citibank in Harvard Square.

¹This wikipedia page is barely adequate. An important concept deserves much better. If you don’t have the stomach to go eye-ball to eye-ball with the ruling class, you can fix the “bioaccumulation” wikipedia page. It won’t make them made at you.

²Their report on the protest. I wanted you to see their home page. I’m green with envy, but trying to be the bigger man. 🙁 They were on Democracy Now to debate whether “Clean Coal” makes any sense.

… and when I get back from dinner, more on the International Forum on Globalization Teach-In; Confronting the Global Triple Crisis

This video features David Harvey, the Distinguished Professor Anthropology¹, at my alma mater – City University of New York.

I wish I had met him.² His A Brief History of Neoliberalism [University of Chicago Center for International Studies Beyond the Headlines Series. October 26, 2005. Audio ] includes the financial takeover of New York City after the bankruptcy of New York City in 1975.^3,4

So I was part of all this. I knew vaguely what was happening to me, but the clarity of Harvey probably would have helped. I remembered the Penn Central bailout. The most obvious affront to labor was yet to come in 1980. Republican President Richard Nixon authorized $1.5 Billion in loan guarantees to a deeply ailing Chrysler Coporation under CEO Lee Iacocca. Among the justifications was saving American jobs. Iacocca took the ‘fresh capital’ and bought Japanese manufactured robots that ‘controlled labor cost’ i.e. put American autoworkers out of work.

*”Dung Deal” I stole from Freddy’s Brooklyn Roundhouse. “Deja Vu All Over Again” is legendary New York Yankee catcher and later manager, Yogi Berra.

There is a lot of commentary on left that this bailout is bad. There is also significant commentary from the  right that it is bad. I suspect they differ in what they think should be done. Missing from what I have seen so far, is how this bailout will hurt an effective response to the largest single cause of increasing human misery – global climate change. Same cause as class war, but is the “solution” timely?

¹ Professor of Anthropology Maple Raza who, among other things was the vidoeographer during the Spring 2001 occupation of Harvard’s Massachusetts Hall, notes with considerable pride that the Anthropology Department was the most progressive of the faculty. I believe him. Anthropologists have the notion that people were earning a living throughout the world as opposed to just England and that they’ve been doing it for a very long time as opposed to waiting until the 18th century. More recently one Harvard Anthropologist [i.o.u. a link] noticed that subsistence economies are by definition sustainable.

²Once again, I am indebted to Adaner Usmani for acquainting me with David Harvey.

³ I was a graduate student then. There was, as you might expect, a great deal of anxiety associated with this event.

⁴For those interested in Latin America, he makes significant mention of the effect of the “Chicago Boys” on Pinochet’s Chile. His account agrees remarkably well with that in Naomi Klein’s The Shock Doctrine: The Rise of Disaster Capitalism.

Protesting the proposed bailout – Wall St. Sept. 25, 2008. [IndyMedia]

More pictures from NYC IndyMedia.

 I lied …there’s a lot to say.

Where to begin? Adaner Usmani has posted this history of U.S. Govt. bailouts from Pro Publica.

…it is difficult to have faith in the policy wherewithal of a government that oversaw the utter mismanagement of the war in Iraq and the response to Hurricane Katrina. If any administration can turn this crisis into another depression, it is the Bush administration.

Joseph E Stiglitz ***  “The fruit of hypocrisy,” The Guardian 9/16/08.

Most of today’s Democracy Now! about workers¹: I) layoffs at the newspapers and II) a new book: The Big Squeeze: Tough Times for the American Worker.

I. The discussion of layoffs at the newspapers raised the question of whether bloggers aka citizen journalists can/will fill the gap. Chris Hedges, senior fellow at the Nation Institute is not optimistic:

I could believe that if there was reporting on the internet. You know, most of the bloggers don’t even pick up a phone, much less go out and report a story. Reporting a story, especially doing an investigative piece, is laborious, expensive, time-consuming.

Linda Jue, Director of New Voices in Independent Journalism and the past president of the Society of Professional Journalists, Northern California Chapter, on the other hand:

…I am witnessing, actually, in the Bay Area numerous new enterprises starting to come up, being formed actually by journalists, to find new business models that would be—that will sustain very good journalism…

II. The Big Squeeze: Tough Times for the American Worker. Steven Greenhouse, labor reporter for the New York Times, discusses the plight of workers and the role of contemporary unions. He has some interesting remarks about the “Change to Win” coalition of 5 major unions that left the AFL-CIO.

[More when DN! gets the transcript up.]

¹There is brief mention of more bank failures in the headlines. See next post.

Central bankers and government connected economists have been telling us, for quite some time now, “Everything will be OK if you just don’t look down.” Senator Chuck Schumer sent out a letter warning of the shakiness of IndyMac which has now collapsed. Regulators who were supposed to prevent such collapses are blaming Schumer for causing it.

Another thing you’re not supposed to notice, where will all the billion$ pumped into to the banking system to keep it afloat utimately come from. In the case of IndyMac it’s no mystery – the taxpayers. 🙂 NPR, has been taking the line that it is that shareholders who will pay. They had an expert from the Wall Street Journal espousing this view. But who ultimately underwrites the FDIC? We’ll see how this shakes out.

In the case of Fannie Mae and Freddie Mac, which back half of all of the nations home mortgages, it’s clear that the guarantor is the taxpayer – i.e. you and me.

[Update: July 29, 2008] From DemocracyNow!: 2 More Banks Close as Crisis Widens

In banking news, federal regulators have shut down two banks in California and Nevada. First National Bank of Nevada and the Californian First Heritage Bank were both folded for lacking sufficient capital. The closures come two weeks after the collapse of the California bank IndyMac.

 

Coming to a blog near you real soon now. Highlights:

Talk ain’t always cheap.

Maintenance deferred is maintenance denied.

Fixing a hole where the rain gets in.

What’s up with the endowment?

This one’s easy. Way up! 9% in 10 months. Due largely to commodities! Now before you say oil. Wheat, copper, and other commodities are up too. Of course, that may be passed along cost from higher oil. Then there’s food prices which the World Bank says went up 75% due to biofuel. Then there is the debate about how much of the price rises are due to speculation. And a new unexpected weirdness. I agree with Joe Lieberman on something! Large institutional investors, like Harvard, should not be allowed to speculate in energy and food.

And we save how much by de-unionizing labor?

So what are Allied-Barton and Harvard administrators talking about all this time?

The old contract was supposed to expire on June 30, 2008. Like a week ago. Nothing has been heard. BTW, the guards at Harvard Medical School don’t wear Allied-Barton whites. I shall make further inquiries.

Gotta get on the Red Line. More latta…

Bill McKibben was the first to make me aware that the importance of access to a vast store of low entropy carbon, is often undersold in describing the rise of capitalism. Normally, the Protestant ethic and/or Yankee ingenuity is center stage. The primeval ferns, having slowly but relentlessly done work against the second law of thermodynamics for millions of years, are just stage dressing. Fossil fuels look like lifeless ooze and/or rocks, but it has one essential property due to the action of life – the ability to progress to lower entropy state. This biogeological piggy bank has made a huge contribution to the rise of capitalism. Unfortunately, it has led to enormous as yet unaccounted costs of production.² One of these mega-externalities is the release of Carbon Dioxide and the consequent global warming. The crisis over ownership of low entropy carbon, predicted in the early ’70’s¹, is well upon us. The Carbon Wars of Acquisition are here, but are we facing Carbon Wars of Ejection – social dislocation due to global warming? You might check in with Bill McKibben.

This is Head of the Charles weekend and the Yard is posted with security regulations. Among them that access to the Houses, which includes Adams, will be restricted. I would be remiss, if I did not point out that Harvard’s Law Enforcement Community would like non-Harvard people to be the guest of a Harvard student. There will be other chances to see him. And I will be reporting on my trip to the First Annual:

IFG Teach-in: Confronting the Global Triple Crisis – Climate Change, Peak Oil, Global Resource Depletion & Extinction

¹James Ridgeway, The Last Play: The Struggle to Monopolize the World’s Energy Resources, Mentor/New American Library 1974.

²It has also had deleterious effects on economic theory by encouraging the erroneous assumption that the human econosphere is unbounded. It is potentially unbounded in an astrophysical sense, but there is a very large investment barrier presented by the gravitational well of the earth that makes states outside it effectively inaccessible on a time scale comparable to the global warming crisis.

The Thai government has issued a compulsory license for production of a generic version of an Aids drug. Abbot Labs has threatened reprisal. In the aftermath of 9/11, when 6 people had died of Anthrax, the Bush Administration proposed to issue a compulsory license for parallel importing of Cipro. The Aids toll is a bit higher. Democracy Now!

Also, morning becomes Μήδεια. Some people think she’s a cut up, but she makes me feel young. Code Pink had a card carrrying girlie-man with them. He was wearing a pink hat. I haven’t seen that since I left New York City. I got’s to get me one.

… but you non-Ben’s can read it if you like. I lied slightly. The next post down has some economics in it and there are some in the archives. What with the election and all maybe it’s time to check back in on the record of N. Gregory Mankiw.

No matter your politics, you have to agree Winston had a way with words.* The [U.S.**] National Academy of Sciences at least knows how to steal good writing. Their new report about economic competitiveness in science and technology, Rising Above the Gathering Storm, has a proposed solution for a mere 10 giga$/year. That’s like two weeks worth of depleted Uranium shells in Iraq

Anywho, former President of MIT, Charles Vest visited Richard Freeman’s:

Economics 2888hf : Economics of Science and Engineering Workshop

to give his insights into the report. Held in a multimedia lab of the Division of Continuing Education, there were participants at Harvey Mudd College [the top rated engineering school] and the National Science Foundation. I am told that the webcast will be posted to the DCE website later this week.

“Chuck” and I are now on a first name basis [sort of]. I thanked him for the dinner Bob Jaffe signed for. Chuck readily admitted that he is not an economist. We had a somewhat animated [I was anyway] discussion about Thomas Friedman’s, The World is Flat. For now, let me just say that I don’t think Chuck is aware of Tom’s underlying economic assumptions and how he has ‘ginned the intelligence’ to support them. In particular, Tom seemed to be bent on eliding free software and open source software. The underlying political economics is different. This article from gnu.org describes it. [I’d prefer a more stuffy quacademic treatment. I’ll look.] I’m concerned that Chuck may be doing the same thing. Rather awkward since, the free software movement started at M.I.T.  Also missing from the discussion was a socio-economic analysis of just who benefits from his recommendations. The ‘U.S. economy’ is a much too simplistic answer. It has somewhat of a trickle down character to it. Said another way, it follows the Feldskew view that the aggregate indices say it all about the people. How can an economy be “doing well” if MOST of the people in it aren’t? Platonism is on the march! In any case, it’s pretty clear that if Congress enacts Chucks recommendations, a good slice of the money will land at MIT. Old Presidents never die they just lose their faculties.***

Chuck did manage to mention both “intellectual commons” and “intellectual property“**** in the same talk. I will have to listen to a recording to give a good comment.
More soon.
*not available from Project Gutenberg.
**that would be “the colonies”.
*** except at Harvard, where they do die … or leave which is the same thing.

**** Richard Stallman of the Free Software Foundation raises the question, “Is there really such a thing as intellectual property? Or is it an overgeneralization wrought to legitimize right wing economics? Very interesting.