Post WW2 International Economic Competitive Adjustment and the New Normal
Parts 1-3 Summary of
  Short Term Politics Versus Long-Term Returns  Prof. Mark Blyth PhD - Interpreted by Walter Antoniotti
Return to Political Economy Book Summaries  Updated 6/7/18        Please link to, use to educate and share. 
 

Executive Summary
Post Great Depression
Made Low Unemployment "the' Public Policy Goal.
 Post WW2 Pent-up Demand
increased AD, increasing US wages and Profits.
The Resulting High Inflation pushed interest rates up followed by a 30-year decline.
Profit Margins Stayed High as Western business used continuously falling interest rates for highly leveraged refinancing creating higher profit.
Western Business Adjusted to a mounting profit squeeze caused by increased flat world AS. "Wages fought profit and Profit Won."
Only U.S. Increasing Demand was available to soak up global savings surplus to negate AS > AD. This will continue.
Resulting Political Turmoil
will also continue but its effects will be less volatile.
Fiscal Policy AD Increases in the form of Infrastructure spending and or helicopter money drops like tax reductions.
Guaranteed Government Debts
may allow 2% real 1950's economic growth.
See
U.S. Post WW 2 Adjustments Part 1     Part 2

1. Cold War to 1980 AD > AS

2. Neo Liberal Reset 1980- 2008 AS > AD 3) Reactions to Neo Liberalism
Full Employment Goal = Inflation, Debtors Paradise

Business Responded to Inflation Led to
Deflation and a Creditors Paradise

1) Sustained Deflation has 
Winners and Losers

2) Globalization Failed 3) Pickett's R > G
and Back to Equilibrium
Structural Causes Structural Causes Winners Losers    Winners and Losers Historical Long Run?
Return on Capital Growth R > Growth rate of the Economy G. 90% of Income Gains Went to Top 1% and since 2012, most of this (70% of that 90%) went to Top 1/10 of 1%. Credit to consumers, business and governments  expanded to equate AD with AS.
Strong Unions
Restricted, Rigid Labor Markets
Central Government Strong
Central Bank Weak
Finance Weak
Weak Unions
Open Flexible Globalized Labor Markets
Government Less Economic Responsibility
Central Bank More Economic Responsibility
Finance Strong
Debtors: Can't or Wont Pay as Deflation Kills Wage Growth and Increases Real Debt Value Creditors lost as
Real Value Up
But Some Don't Pay
World's Very Poor and
Very, Very Rich Win

Vast Middle of Rich Western Nations are Stagnate
Economic Results
Sustained Inflation
Wages Share All Time High
Corporate Profits All Time Low
Inequality Low
Economic Results
Secular Deflation
Wages Share All Time Low
Corporate Profits All Time High
Inequality High
Populist Nationalist Parties attracted voters with renationalization and anti-austerity policies

 

Center Left Parties in control lost as lower wages and fighting more over less cartel politics blamed capitalism and globalism

Center right parties in control blamed immigrants and globalism


 

Part 4 Neo Liberal Economics failed to forecast
 US/Europe Financialization Collapse

I. Free Market Neoliberal Economic Orthodoxies wrong,
   A. Finance does affect real economy.
   B. Finance system can falter.
   C. Many economist wrong because of politics.

II. Real Economy of trade imbalances did not the root cause the 2007-2008 FINANCIAL CRASH
  
A. The earlier Dotcom Bubble Crash did not cause a banking crises because investors took the loss.
    B. World trade imbalances, the Balance of Financial Terror were not the root cause the crash
.
  
     1. U.S. negative trade balance, as many predicted, did not cause assets and the dollar to crash.
              a. As of 6/18 both have appreciated.
              b. See The New Financial Geopolitics: Post-Cold War Geopolitics in a World of ‘Long and Low.’ 96 min video
         2. Loans to Greece from Germany's trade surpluses were not the problem as France and the Benelux nations
             are the big players in the Transatlantic dollar flows needed for international trade and Exorbitant Dollar Privilege.1
             a. France runs a small trade balance.
             b. South Korea currency tanked even though she had a positive trade balance and ample dollar reserves..
    C. South Korea and the WEST could not get dollars needed to fund the substantial daily borrowing needed
         for international commerce.
 II. Almost all banks were very highly leveraged with substantial short term borrowing needed for daily operations.
     A. When Lemans $180 billion over-nigh funding needs were not met by the Funding Market, the entire market  crashed.
          1. Worldwide credit flows stopped and in a few days ATM machines would be empty.
          2. Bad housing loans were not the problem, rolling over daily funding needs with poor mortgage debt collateral
             immediately crashed the system.
     B. Credit stopped
          1. Europe's banks who had become the world's hedge fund for world dollar flows, was based on highly leveraged
              borrowed dollars.
          2. Few had dollar reserves to meet the daily needs of the banking and corporate world.
          3. The Walls Street model of an extremely  leverage wholesale funding model running out of NY and London
              had crashed.
     C. The FED decided to protect large U.S. money fund investments in Europe's banks.
          1. Doing so on a world stage was an unprecedented move.
          2. She provided unlimited dollar reserves liquidity to anywhere to almost anyone.
          3. FED did not want a "fire sale" of U.S. mortgages held by European banks
              a. U.S. government wanted to use tax payer dollars to finance the bailout.
              b. Uncontrollable private financing was not to be allowed.
          4. Half the liquidity, about $2.5 trillion, using fixed exchange rate currency swaps with Europe Central Banks
              was then loaned to European illiquid banks.
              a. As with the early 1990's collapse of the Soviet Union, the US did not help Russia with her 2007 financial problems.
              b. Helping Eastern Europe who were finances by Western Europe was intended.
              c. FED was messing in the world of geopolitics.

III. Was Federal Reserve involvement in a geopolitical world appropriate?
    A. No, if the crisis was a sovereign debt crisis' as the Euro Central Bank was the appropriate agency.
    B. No, if as the
Max Plank Institute believes, it was because of dysfunctional Euro participants.
    C. Yes if it was a failure in the Transatlantic Dollar Flows as described by Mark Blyth.

IV. Stability requires dollar supremacy
     A. World trade is stable because the world, through Europe's banks, completes the circular flow of dollars back
          to the US by investing in U.S. companies.
     B. Dollar investments dependent on high Intellectual Property generated corporate profits and U.S. economic growth.
          1. Substantial portion is in monopoly power companies Apple, Google, Facebook, Pfizer and Johnson/Johnson.
          2. These profits are politically dependent on intellectual property rights which are dependent on trade treaties,
     D. Distribution of these profits has resulted into an increase inequality of income.
     E. The disruption of this process, called the Trump astric, has many academics apprehensive
     F. Source
The New Financial Geopolitics ─ Europe: Helper, Spoiler, Risk Generator?  86 min video

 
 
 
  Part 5   Understanding Right and Left Populism
Summarized Below By Samir Gandesha, an Associate Professor in the Department of the Humanities and the Director of the Institute for the Humanities at Simon Fraser University. posted on  by 

History

 

1. Growth of Populism

Right-wing populist parties throughout Europe in Austria, Hungary, and Poland 
Also in Erdogan's Turkey 2003, Modi's India 2014,  Trump's American 2016, Batten's United Kingdom 2016.

Left-wing populism
The Arab Spring in 2011 Tahrir Square [Egypt] 2011 was short lived,
 
Zuccotti Park [NYNY] 2011
, was felt five years later in the rising support for Bernie Sanders and Jeremy Corbyn.

Latin America Bolivarian, Venezuela Bolivia and Argentina.

Focus on two populism accounts
to understand the difference between right and left forms of populism in the context of neo-liberal globalization.

Empirical study by Norris and
Inglehart (2016) emphasized
1) anti-establishment 2) authoritarian
3) nativism

Theoretical account by Ernesto Laclau (decades) saw an  “equivalential chain” of different demandsdemocratic, horizontal and egalitarian discourse.

 

 

 

 

 

2. Populism Explained: Economic Insecurity or
Cultural Backlash?

Three distinct elements
1) anti-establishmentism  
vs.
1) representative democracy;
2) authoritarianism           
vs.
2) liberalism  
3) nativism
                        vs.
3)osmopolitanism.

Two distinct axes: economic and cultural.
1)evel of state economic management
2) conservative” vs. “progressive” values.

Three approaches

1) the rules of the game
2) the “supply-side” party politics
3) the “demand-side” of party politics.

Two causes.
1) response to economic insecurity
2) backlash by older white males

Norris and Inglehart argue that the latter is the most convincing argument: “We believe that these are the groups most likely to feel that they have become strangers from the predominant values in their own country, left behind by progressive tides of cultural change which they do not share… The silent revolution of the 1970s appears to have spawned an angry and resentful counter-revolutionary backlash today.”

One wonders whether the authors don’t seriously underestimate the threat right-wing populism poses to the institutions of liberal-democracy in the United States. A worrying inference that the authors explicitly draw from their progressivist premises is that populism will eventually die out. The study therefore fails to sufficiently appreciate the ways in which populist governments seek to institutionalize their agendas, thereby changing the rules of the game. This has become most drastically evident in the case of Poland, for example, in which Andrzej Duda (leader of the right-populist Law and Justice party) has significantly limited the autonomy of the judicial branch of government.  Other such examples abound.

 

3. Neoliberal globalization is comprised of four processes:

1) accumulation by dispossession   2) de-regulation
3) privatization   4) upward re-distribution of wealth

Together they have increased economic insecurity and cultural anxiety by
1) the creation of surplus peoples   2) rising global inequality
3)  threats to identity.

Anxiety from neoliberal globalization has ammunition right and left populists.

Neither Norris and Inglehart nor Laclau adequately account for such insecurity in their theorization of populism.

“the people” are differentially deployed by right and left and they themselves must be understood in terms of the respective enemies through which “the people” is constructed. And this is the decisive dimension of populism.

Right populism defines "the people" as those confronting an external enemy.
1) Islamic terrorism  2) refugees   3) the European Commission,
4) International Jewish conspiracy ...
Left populism defines “the people” as social structures/institutions
1) state and capital that thwart its aspirations for self-determination
2) allows hospitality towards the other

Right populism defines the enemy in personalized terms
insecurity and anxiety are
necessary, unavoidable, even a favorable product of capitalist social relations.
generates acceptable fear of the stranger and a punitive state
Left populism defines the enemy in terms of socio-economic structures
insecurity and anxiety are
caused by a
dismantling of the welfare state and workforce casualisation.
These egalitarian solutions that can also turn authoritarian.
 

Summary of Summary
Neoliberal globalization has increased both
 economic insecurity and cultural anxiety.

Have theories of populism taken adequate account of such insecurity?

Such accounting is key to understanding the difference between
 right and left forms of populism

Understanding Right and Left Populism

Posted on  by 

By Samir Gandesha, an Associate Professor in the Department of the Humanities and the Director of the Institute for the Humanities at Simon Fraser University. . He is co-editor with Lars Rensmann of Arendt and Adorno: Political and Philosophical Investigations(Stanford, 2012). He is co-editor (with Johan Hartle) of Spell of Capital: Reification and Spectacle(University of Amsterdam Press, 2017) and Aesthetic Marx(Bloomsbury Press, 2017) also with Johan Hartle. Originally published at openDemocracy

Neoliberal globalization has increased both economic insecurity and cultural anxiety. Have theories of populism taken adequate account of such insecurity? Such accounting is key to understanding the difference between right and left forms of populism.

We appear to be living in an age of populism. Over the past two decades, we have witnessed the rise of right-wing populist parties throughout Europe such as Haider’s Freedom Party in Austria, Victor Orban’s Fidesz Party in Hungary, and the Polish Law and Justice Party. Today, the Five-Star Movement is in the process of negotiating a coalition arrangement with the far-right Liga Nord.

Such a development hasn’t been confined to Europe but is a global phenomenon as evinced, for example, by the electoral triumphs of Narendra Modi in India in 2014 and that of Recep Tayyip Erdogan in Turkey as early as 2003. But no phenomena more clearly evince this thesis than the stunning victory of Donald J. Trump in the 2016 American presidential election and the triumph of the Leave Campaign led by the United Kingdom Independence Party (UKIP).

But there has also been a populism of the left. The Arab Spring was widely regarded as a broad-based, if short-lived, popular revolt and therefore as a kind of populism in the streets in 2011. The events of Tahrir Square [Egypt] profoundly inspired the Occupy Movement. Radiating out beyond Zuccotti Park [NYNY], the movement spread through much of the western world. Arguably, the Occupy Movement’s most significant and enduring effect was to be felt five years later in the rising support for Bernie Sanders and Jeremy Corbyn.

Latin America, moreover, has seen a dramatic revival of populism in the Bolivarian model in the Chavez/Maduro regime in Venezuela and in Evo Morales in Bolivia as well as in the Kirchner governments in Argentina. The dramatic global rise of populist parties and movements has resulted in a burgeoning scholarshipon this most slippery of political concepts.

But can we understand populism with more precision? How can we account for its recent pervasiveness? I will focus on two exemplary accounts of populism before trying to arrive at some conclusions of how to understand the difference between right and left forms of populism in the context of neo-liberal globalization.

The first account is a recent widely-cited and discussed empirical study by Norris and Inglehart (2016). The second is a more theoretical account of populism by Ernesto Laclau articulated over several decades (Laclau 1977, Laclau and Mouffe 1985, Laclau 2006). If Norris and Inglehart struggle to come to terms with the populism of the left, then Laclau struggles to come to adequate grips with the populism of the right. The former draw upon a somewhat narrow definition of populism, emphasizing its anti-establishment, authoritarian and nativist dimensions; the latter understands populism as a logic constituted by the establishment of an “equivalentialchain” of differentdemands. It appears to suggest that populism is a democratic, horizontal and egalitarian discourse.

 

 

 

Populism Explained: Economic Insecurity or Cultural Backlash?

paper widely discussed in the media by Pippa Norris of Harvard University and Ronald Inglehart of the University of Michigan suggests – following Cas Mudde – that populism shares three distinct elements: 1) anti-establishmentism, 2) authoritarianism and 3) nativism. The first contrasts with the established structures orepresentative democracy; the second with the principles of liberalism(in particular with the protection of minority rights), and emphasizes the direct expression of popular will via charismatic leadership, referenda and plebiscites that circumvent the typical checks and balances of liberal-democracy; and the third contrasts with cosmopolitanism.

Building on Mudde’s conceptualization, the authors develop a heuristic model of populism based upon two distinct axes: economic and cultural. The former has to do with the level of state management of the economy, and the latter has to do with “conservative” versus “progressive” values. The authors suggest three possible analytical types of explanation for the rise of populism: 1) the rules of the game, 2) the “supply-side” of the market of party politics and 3) the “demand-side” of party politics. They gear their explanation to the third dimension and suggest that this can be understood to have two distinct – though not mutually exclusive – causes. The first is that populism emerges in response to economic insecurity, and the second is that populism appears as a backlash by older white males to the erosion of traditional cultural values.

Norris and Inglehart argue that the latter is the most convincing argument: “We believe that these are the groups most likely to feel that they have become strangers from the predominant values in their own country, left behind by progressive tides of cultural change which they do not share… The silent revolution of the 1970s appears to have spawned an angry and resentful counter-revolutionary backlash today.”

While the empirical data the authors cite to support their argument is indeed impressive, it is possible to raise significant objections about the way they frame this evidence. First, the separation of “supply” and “demand” explanations seems deeply dubious. In strictly economic terms, according to Say’s law of markets, for example, aggregate production necessarily creates an equal quantity of aggregate demand.

A second objection arises from the cultural backlash argument: by mischaracterizing Mudde’s definition as inherently authoritarian and nativist, Norris and Inglehart bias their conclusion towards culturalist explanations.

A third objection is that it is deeply debatable that “progressive values” are on the ascendant. Indeed, today it is far from clear what comprises “progressive values,” as we saw in the recent Democratic Presidential Nomination pitting Hilary Rodham Clinton against Bernie Sanders. This opposition has been echoed in debates between political theorists in terms of the relative priority between politics of recognition versus redistribution.

Whether populism can be understood exclusively in terms of traditionalist backlash is also debatable. If this was the predominant measure of populist politics, one could expect recent immigrants – who themselves hold traditional values – to the US, the UK and other parts of Europe to join in these movements. However, far from this being the case, they are often the targets of the backlash.

Finally, one wonders whether the authors don’t seriously underestimate the threat right-wing populism poses to the institutions of liberal-democracy in the United States. A worrying inference that the authors explicitly draw from their progressivist premises is that populism will eventually die out. The study therefore fails to sufficiently appreciate the ways in which populist governments seek to institutionalize their agendas, thereby changing the rules of the game. This has become most drastically evident in the case of Poland, for example, in which Andrzej Duda (leader of the right-populist Law and Justice party) has significantly limited the autonomy of the judicial branch of government.  Other such examples abound.

 

 

 

Understanding Populist Reason

In his hugely influential yet profoundly controversial work with Chantal Mouffe entitled Hegemony and Socialist Strategy, Laclau seeks to develop his analysis of populism so as to generate a new post-Marxist politics. In other words, Laclau is developing in a British context a political strategy that is germane to a context that has seen the rise of what StuartHall has called “authoritarian populism” in the form of Thatcherism. Hegemony and Socialist Strategy differs from Laclau’s earlier work in at least two ways: 1) it breaks with Althusserian Marxism, particularly that of Nicos Poulantzas, insofar as it no longer accords the working class a privileged role in social transformation; and 2) it provides a discursive account of the social. As he and Mouffe argue:

In our view, in order to advance in the determination of social antagonisms, it is necessary to analyse the plurality of diverse and frequently contradictory positions, and to discard the idea of a perfectly unified and homogenous agent, such as the ‘working class’ of classical discourse. The search for the ‘true’ working class and its limits is a false problem, and as such lacks any theoretical or political relevance.

The continuity, however, lies in the fact that Laclau insists upon the centrality of the concept of hegemonic articulation of heterogeneous political demands as the basis of a leftist political strategy.

In On Populist Reason (2005)Laclau argues against those political theorists who claim that populism is an irrational political discourse by reconstructing and foregrounding, as the title suggests, populism’s own distinctive reason. Its logic is that of an “antagonistic synthesis,” but now understood as an equivalential articulation of differences – that is a linking together of what different political demands share in common – in relation to a common “antagonistic frontier”. For Laclau, all democratic politics are, in fact, populist.In other words, if we assume that society is inherently heterogeneous, politics must entail the hegemonic articulation of a multiplicity of political demands in a manner that is always provisional and open to revision. A given hegemonic equivalential articulation of differences is always shifting, temporary and open  because based on a logic of the empty signifier. Too much for me!

The key difference from his previous work is Laclau’s attempt to conceptualize the affective dimension of politics via Lacanian psychoanalysis.  John Kraniauskas understands this as the articulation of a Gramscian Lacan in contradistinction to Žižek’s Hegelian Lacan. While the latter takes, as its point of departure, the understanding of the “desire of the Other” (the impossible-because-unattainable desire for intersubjective recognition), the former can be understood in terms of political desire.

For Laclau political desire is geared to what Lacan calls the “objet petit a,” meaning a partial object that is a fragment of the Real (that which eludes symbolization yet is caught within the symbolic order). The “object petit a” is often symbolized by the bountiful breast and, as such, promises a return to an original plenitude prior to the symbolic order based on the split between signifier and signified.

Political desire, then, is established through the Name or the coincidence of signifier and signified that is only set retroactively. The key point Laclau is making here is that this Lacanian understanding of political desire enables is an alternative to Freud’s, the latter being mass politics grounded in the love of an authoritarian leader who represents the Imago of the father. In contrast, political desire grounded in the utopic logic of the “objet petit a” is characterized by the horizontal relations between brothers (and presumably, sisters).

Several criticisms can be made of Laclau’s approach to populism. Critics have drawn attention to its formalism, stemming from its reliance on structural linguistics in which signification is understood by way of a system of differences with no positive terms. This formalist premise is the basis for his understanding of the figure of the peopleas an empty signifier that can take on radically divergent contents. What the approach seems to elide is the historical continuity of this figure.

Secondly, it appears that Laclau thinks either we must conceive of necessity in reductive terms that is, of a closed historical totality, orthe social dissolves completely into an infinite, deconstructive play of radical difference. This is untenable.

Thirdly, Laclau also downplays the role of institutions in historical change and continuity. Can we understand the mechanism of articulation other than through institutions such as the state, political parties, trades unions, and the whole host of organizations and associations that comprised what Gramsci called “civil society”?

Finally and most importantly for our purposes, the above questions are raised by the Freudian/Lacanian psychoanalysis upon which Laclau depends to ground his account of populism, in particular to rescue populism from the “denigration of the masses” of figures like Gustav Le Bon. Laclau’s engagement with Freudian social psychology, however, must be regarded as a missed opportunity, since he ignores the problem that occupies such an important role in Group Psychology and the Analysis of the Ego, namely the phenomenon of the regression of the group through a libidinal cathexis in the figure of the leader possessed of (real or imaginary) strength. Such an investment constitutes what Erich Fromm called an “escape from freedom.”

 

 

Differentiating Right and Left Populisms

According to David Harvey, neoliberal globalization is comprised of four processes: accumulation by dispossession; de-regulation; privatization; and an upward re-distribution of wealth. Taken together they have increased both economic insecurity and cultural anxiety via three features in particular: the creation of surplus peoples, rising global inequality, and threats to identity.

The anxiety wrought by neoliberal globalization has created a rich and fertile ground for populist politics of both right and left. Neither Norris and Inglehart nor Laclau adequately account for such insecurity in their theorization of populism. As we have seen, populism can be understood as a mobilizing discourse that conceives of political subjectivity as comprised of “the people.” Yet this figure of “the people,” as Agamben has indicatedin What is a people? (2000) is deeply ambivalent insofar as it can be understood both in terms of the  body politic as a whole (as in the US Constitution’s “We the People”), or in terms of what Ranciere calls the “part that has no part,” or the dispossessed and the displaced; as in “The people united shall never be defeated,” or in the Black Panthers’ famous slogan: “All Power to the People.”

In this dichotomy, the figure of “the people” can be understood in terms of its differential deployments by right and left, which themselves must be understood in terms of the respective enemies through which “the people” is constructed. And this is the decisive dimension of populism.

Right populism conflates “the people” with an embattled nation confronting its external enemies: Islamic terrorism, refugees, the European Commission, the International Jewish conspiracy, and so on. The left, in marked contrast, defines “the people” in relation to the social structures and institutions – for example, state and capital – that thwart its aspirations for self-determination; a construction which does not necessarily, however, preclude hospitality towards the Other.

In other words, right-wing or authoritarian populism defines the enemy in personalized terms, whereas, while this is not always true, left-wing populism tends to define the enemy in terms of bearers of socio-economic structures and rarely as particular groups. The right, in a tradition stemming back to Hobbes, takes insecurity and anxiety as the necessary, unavoidable, and indeed perhaps even favourable product of capitalist social relations. It transforms such insecurity and anxiety into the fear of the stranger and an argument for a punitive state. In contrast, the left seeks to provide an account of the sources of such insecurity in the processes that have led to the dismantling of the welfare state, and corresponding phenomena such as “zero-hours” contracts, the casualization of labour, and generalized precarity.

It then proposes transformative and egalitarian solutions to these problems. Of course, left populism can also turn authoritarian – largely though not exclusively due to the interference and threatened military intervention of the global hegemon and its allies – with an increasing vilification of the opposition, as we saw in Venezuela and Ecuador with Rafael Correa.

This is a much shorter version of a chapter in a forthcoming volume edited by Jeremiah Morelock entitled Critical Theory and Authoritarian Populism,(University of Westminster Press).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part 6 Populism is the Reset

Populism not economic distribution complaint, it is driven by 3 decades of market driven globalization.

It is not just about wage stagnation and loss of jobs, it is about loss of social esteem, unfairness, and humiliation.

from Michael Sandel: Populism, Trump, and the Future of Democracy

Important Question, is Kantian Morality enough for the Public Sector enough,
especially since cit is too much!
Editor's Note: Michael wants more that Kant , Editor thinks Kant is enough.
He is a lot of Charles Murray who id basically correct but wants too much control of Morals and ethics.
 

Predictions

1. Working Properly, our mixed economy will react and create a more equitable Income Distribution.

2. If Not, Deep Do Do

3. Historically low interest rates will continue.

4. Governments spent $15 trillion buying bad loans.
This time of sovereign, business and consumer debt and or equities could crash.

 if necessary, they will print money again

5. Capitalism will survive as being "fragile", it gains from external shocks.