Afghanistan

Our top General in Afghanistan says unless we send more troops, we are in danger of losing the war. We lost the war in Afghanistan the day we sent the first troops. Only vain glory could lead us to think we could do what the Russians had failed to do. When will we learn that the outcome of a guerrilla war with a nationalistic bent can't be determined by outside intervention. The French could not do it in Viet Nam and neither could we. We have not controlled anything but the capital city for some time. We create more determined enemies by these efforts than friends. We are seen as the terrorists.

Symbiogenesis vs. Darwinism

Economics utilizes metaphors and ways of thinking from the natural sciences. Neo-Darwinism provides convenient support for the story of the beneficent outcome of something called free market competition. Darwinism holds that adaptations occur exclusively through random mutation that sometimes produces genes with useful attributes that give the organism an advantage in competition with other organisms. This view is being challenged by the research of Lynn Margulis, who observes that complexity at the level of the cell is not the result of lethal competition, but rather symbiotic relationships between gene sets.
Prof. Margulis argues that even new species occur over time when symbiotic partners fuse. She says, “we are all walking communities of bacteria.”
Consider what an economics built on both cooperation and competition would look like. Is it coincidence that my latest book is entitled, “Conflict and Cooperation.”

Health Care REform

There is nothing on the table now that can cover the uninsured and keep taxpayer costs reasonable. What would it take? First two key facts. About 25 % of Medicaid and Medicare funds are spent in the last year of recipients' lives. Second, the clever medical researchers will continue to invent ever more costly technologies and drugs to increase life a few more months or years. The nation must face the tradeoff between the ideal and what we want to spend. The only way that we can improve the care of those whose only option now is hospital emergency rooms is to insure them for basic medical care-- no open heart surgery, etc.
Senator Kennedy was diagnosed with cancer, and even with the best of treatment, his life was extended only a few months at a cost of hundreds of thousands of dollars. Those dollars could have paid the annual health insurance for 47 million uninsured.
There could be a list of medical procedures that simply are not available at public expense, such as is now operative in Oregon. The slogan-makers who obfuscate the unavoidable tradeoffs will throw smoke on this suggestion railing about making the the poor and uninsured second class citizens, but of course they are third class now and since few want to pay substantially more in taxes, they will remain such. Here, the unobtainable ideal is the enemy of substantial improvement. It would be nice for everyone to have the latest technology and drugs to extend their lives for a few more months. But, few including seniors during their tax-paying years want to pay for it. And, they know there is no end to ever more costly medical wonders.
Setting aside the scare words of “death panels,” these are the tradeoffs that could improve care for many and not break the bank. A public option that might reduce insurance administrative costs is a good idea, but the bitter debate over it is diverting attention from more essential tradeoffs.
If Obama is to make good on his promise to keep spending near present levels, then he must cap medicare and medicaid spending and divide the pie differently. Cover more people at reduced, less grandiose levels.

Cash for Clunkers--A Poem

A man losses his job.
Nobody has money
to buy what he makes.
And, he has no money
to buy what they make.

Who has the money?
Has it blown away,
leaving many destitute?
Have our factories rusted,
leaving labor no machines?

If it takes money
to make things,
then let’s make
more of it.

Can’t do that, old sages say.
We must suffer for past excesses.
But, those suffering
are not those who
made silly paper.

Can do it, new voices say.
If banks only want to play at the casino,
let the government write numbers
after the names of the homeless,
Joe the plumber and Sarah the unemployed.

Only blind superstition stops it.
We won’t be the first civilization
to worship old gods while
they perished from the earth.

Cash for Clunkers

Great idea. let's do more of it. The real weakness in the economy is consumer spending. The last expansion was fueled by ever increasing consumer debt, but that could not go on forever. How about cash for old water heaters and refrigerators? Let's turn them in for more energy efficient ones. How about any essential item made in the US that would put more people to work?
The only thing wrong with the cash for clunkers program is the means of finance. There is no reason except superstition to finance it with government borrowing. It could be done with funds created by the Treasury or Federal Reserve. News programs are asking "Where will the money come from?" The implication of the question is that the money supply is fixed and if we are to have cash for clunkers it has to come from savings rewarded by payment of interest. But, in a recession when all resources are not being used, there is no reason to save. There is no opportunity cost.
New money can come from where it always has come from--new credits created by banks. Our banks are now mostly solvent, but few want to borrow money to make things when consumer demand is weak. When the banks don't want to create more money to put all of our resources to work, the government should do it. There is no reason other than myth and superstition that we allow people to be unemployed and citizens to cut back on their living level. Our plants did not rust or our engineers lose the formulas. We just need to understand the essentials of money creation. Money is made when a bank writes numbers after a borrowers name. Of course they charge interest for the loan. If government has given banks the right to create money, then government can certainly do the job itself and without paying itself or anyone else interest.
Incidentally, you may have read that some banks and Goldman Sachs made millions (or was it billions) last quarter and payed their executives absurd bonuses after being bailed out by the government previously. They did not make profits loaning money to business to make things, but rather they profited from financial trades in the equivalent of a giant casino--buying and selling paper. We saved their butts for this??

Sotomayor and the Law

There is no such thing as THE law. In spite of this Sotomayor is being grilled as whether she will be guided by the law or utilize a set of social values in her future decisions. The questioners don’t really care about her answers, but rather hope to establish the dichotomy in the mind of the public. It is a false dichotomy--the words of the Constitution or precedent cases do not speak for themselves. They must be selected from among various possible candidates, interpreted and extended often to situations that the Constitutional writers could not have imagined.
The implication of the dichotomy is that some of the justices are not guided by social values, but only by a superior cool logic. This is false. Justices such as Scalia and Thomas most certainly have a social agenda. Bush’s nominees were picked with a view to having abortion made unconstitutional, among other things. Have no doubt that the Court found constitutional language that supported their ruling in Roe vs Wade, and will find words to support its repeal if they decide to reverse.
Instead of pretending that justices should not be guided by a social ideology, the Senate should inquire deeply into the nominee's values.

National debt clock

Some fellow with more money than insight has a National Debt Clock on a building in New York City. It announces that your family’s share is $74,090. The Associated Press story says, “The mountain of debt could become the next full-fledged economic crisis without firm action from Washington.” The firm action they have in mind is a reduction in the Federal budget. The real problem is not the size of the Federal budget. We will actually need more spending to put all of our labor to work. The problem is the way we finance government.
There is no reason to borrow and incur an interest payment obligation. The government could borrow from its own bank (the Federal Reserve) rather than sell bonds. Remember, there is no opportunity cost when resources are unemployed. No one needs to save or divert their private spending to taxes. To understand this, think what a primitive economy without money would do if it had unused resources. The chief or shaman would just order the unemployed to work making useful things. The missing ingredient is simply the signal to work, not a scarcity of resources. In a modern economy, the signal to work is a newly created dollar. When the private sector does not want to borrow to create dollars and jobs, the government must do it.
We are mired in the past with obsolete institutions. It would be a shame if we don’t spend enough to get out of this recession because of a reliance on the outmoded belief that government spending in a recession must be financed with government bonds.