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Archive for the month “October, 2016”

Thirty Year Class Warfare

Who knew when they voted for Ronald Reagan that they would be voting for thirty years of class warfare?  Ronald Reagan’s budget director David Stockman wrote a tell all book explaining that the three year fazed in tax cut was a “Trojan Horse” for bringing the top tax rate on the rich down from 70% to 28%.  That tripled the national debt from just fewer than one trillion dollars to three trillion dollars when Reagan left office and four trillion dollars when his successor George Bush Sr. left office. That left a 25% gap in the budget from which we have never recovered.  Clinton balanced the budget, then George Bush Jr. followed the same Reagan formula of military increases, massive tax cuts, and wildly out of balance budgets.  Trump promises more of the same, even after we now know the top 1% have quadrupled their income and flat-lined the middle class.  Reagan repealed the equal time provision on radio and television news in 1987 and right wingers were suddenly free to lie until they were blue in the face on the air, creating the current extreme division in politics with no respect for the other side.  That’s not quite the Roman “bread and circuses” formula but the circus part is there in the form of today’s news information entertainment shows, as corporations gutted the budgets of media news departments forcing reporters to drop investigations and be stenographers to power instead.  Then the Supreme Court turned so far right that moderate Republican appointees became liberals and hard right appointees gave corporations and the rich the right to spend unlimited amounts of money on political campaigns.  Now the right wing Senate refuses to hold hearings on Supreme Court appointees unless we go even further on this thirty year class warfare on the middle class.  Trump does not offer change, only regression and more of this discredited trickle down theory.

How We Got Here

Hedrick Smith, in his 2012 book Who Stole the American Dream?, blames it all on the Louis Powell 1971 memo to right wingers that we have to stop losing to the left by bolstering corporations and the rich. About this same time, Leo Strauss became a popular philosopher on the right with his teachings that we need just one religion for the society, Christianity, in spite of his own Jewishness.  Leo Straus also preached that elites must decide what is best for the people and then tell lies to get the people to follow their policies. The Powell approach began with seventies right wing institutes being set up along these lines such as the libertarian CATO institute and the conservative Heritage foundation and the Koch brothers American Legislative Exchange Council (ALEC).  In 1976, George Bush Sr. was CIA director and ordered the CIA to estimate Soviet Military Spending two ways.  The traditional A team way was an honest assessment, the new B team way would price Soviet tanks planes missiles and ships at the cost of those same items produced in America.  This wildly exaggerated Soviet military spending while not accounting for the huge gap in quality of weaponry between the two nations, where the Soviets were typically eight years behind.  All this was a reaction to the Civil Rights and Vietnam War opposition movements.  It complemented Nixon’s Southern Strategy where the Lincoln party of Civil Rights changed into the party of segregation and the New Jim Crow (2010), Michelle Alexander’s book of the same name.  Nixon’s War on Drugs was the prime vehicle to mass incarceration of black men.  Jimmy Carter has said there are six times as many black men imprisoned today as there were when he was president 1977-1981.  He has also said we no longer live in a democracy, we are living under an oligarchy of the rich, and he is empirically supported by the new Princeton study of how the top 10% get what they want out of congress while the middle class majority at the 50th percentile is ignored.

Empire, the Real Underlying Cause

Seventy years of empire since World War II is the real problem.  With the largest share of military spending in the economy of any Western or NATO nation over that whole period of time, diversion of research and capital out of the manufacturing sector into the military sector has given manufacturing a half life of thirty years, 40% in 1950, 20% in 1980, and 10% in 2010.  Because we do not understand well even today that the Smoot Hawley tariff law of June 1930 was the real cause of the Great Depression.  The economy was just fine until June 1930, the stock market crash of October 28, 1929 was a reaction to the special session of congress reporting the bill out of committee four days before, the Thursday before the Monday crash.  The agricultural trade war that ensued with Europe left the main agricultural power of Europe, France, especially weak and vulnerable for the 1940 defeat.  For a generation after the war America was fine except for the gradual erosion of share of the world economy.  Incomes doubled across the board, high low and middle incomes prospered proportionally until the seventies oil crisis.  Funding for monetarism under Nixon turned economists away from the Keynesian theory of government spending stimulating the economy, and the new right wing think tanks formed after Vietnam propelled Reagan into office in 1980 with a new surge of the Cold War.  Reagan helped things along with his anti-union policies as mergers and acquisitions pushed the stock market up 1981-1984.  However, Reagan stalled the 2% growth of 1981 with the biggest peacetime increase in military spending ever in 1982, causing the 10.8% unemployment recession before the full phasing in of the three-year tax cuts lead to 6.4% economic growth in the 1984 re-election year.  People voted with their feet to join the military economy of the Eastern Seaboard and California at the expense of the manufacturing heartland of the Great Lakes region.  Nevertheless, Reagan had to increase the deficit twice as much (3.0% GDP) compared to the military spending increase (1.5% GDP) to lift the economy up with classic Keynesian stimulus.  Reagan would never give Keynes the credit, however.  Productivity increased just as much after Reagan as before, but now the newly empowered and under-taxed rich refused to share the wealth with the 99%.  Yes, it is the 99% because in the 1979-2007 congressional study, if you take out the top 1% from the top 5%, there is minimal change over the thirty years for the next 4%, so the rich did not share the wealth with even their top managers just outside the top 1%.  Greed was good according to Ayn Rand and the movie “Wall Street.”

SAGE Military Keynesianism

This article starts with a discussion of classical Keynesian theory about military spending.  The theory treats military spending like all other government spending, treating it as putting money into the economy.  The big difference with military spending is that it overpays and gets the best and brightest scientists and engineers and then does not give a product back into the economic mainstream.  Military resources deplete investment capital reducing the economic growth rate.  Military resources sit idle in peacetime and destroy things in wartime; they do not create goods to distribute around the rest of the economy like manufacturing does.  The military is dependent on politicians instead of the free market place.  Military engineers make things expensive and more complex; market place engineers make things efficient and low cost.  Most defense contractors are forced to specialize in the military because one-third higher paid military engineers cannot function well in the civilian economy and would have to take a pay cut.  I think of the military sector as socialism for the upper middle class.

This links to one of two 2000 word peer reviewed listings coming out in the SAGE Encyclopedia of War in October 12, 2016, one on “Political Economy of War” and this on “Military Keynesianism” https://www.academia.edu/29175791/SAGE_Military_Keynesianism_October_12_2016_5_p

 

Dr. Robert Reuschlein, Dr. Peace,

Nominated and vetted for the Nobel Peace Prize 2016,

To be announced October 7, in Oslo Norway.

Real Economy Institute,

Contact  bobreuschlein@gmail.com

Info www.realeconomy.com

Letter to Nobel Committee

I am writing this letter two days before the final Nobel Peace Prize decision on October 7, 2016.

The Robert Reuschlein peer reviewed entry called “Political Economy of War” comes out this month in the SAGE Encyclopedia of War. This letter draws extensively from that 2383 word entry and the complete writing is now on my academia.edu website with a link at the bottom of this open letter.  This is the latest attempt to bring thirty years of work, 24 years before my doctorate, increasing up to peer review standards.  My regional economic work runs throughout the entry with the basic stagnant economy point that military spending displaces manufacturing, regionally, state by state, and nationally.  Thus, one part of a country will benefit at the expense of another part of the country.  In addition, the country as a whole will lose output and growth.  Moreover, over the long run high military societies will fall behind low military societies, making the high military societies weak and the low military societies strong.  These findings are at the heart of my other more precision work as an engineer and accountant in 1986 before becoming an academic in 2009.  The precision findings that demand a “reduction of armies” for national survival are these two:

https://www.academia.edu/7632773/PROOF_of_Peace_Economics_11_pages_1986

https://www.academia.edu/4475604/DEFENSE_STRATEGY_Chapter_Peace_Economics_7_p._1986

 

Election Implications

Politicians in general do not understand the trade issues.  American politicians in particular do not understand how some European countries can keep factories from moving overseas by controlling the capital flows.  Ignorance about military spending’s role in the economy is equally simplistic and fails to understand that military spending reduces a nation’s capital supply, the major cause of reducing manufacturing. Talk of an information economy detracts from the vital role manufacturing plays in successful economies.  The rise of the service sector is a hallmark of a declining empire as manufacturing disappears.  Trump’s approach to trade is a lot like that of Herbert Hoover.  So independent economists estimate a lose of 3.5 million jobs with Trump, and largely because of Clinton’s infrastructure and green jobs program independent economists predict her plan will net 10 million jobs.  Since mainstream economists do not understand the impact of military spending, they will have not included the military buildup loss of jobs under either Trump or Clinton.  That will be worse under Trump’s large increase than Clinton’s moderate increase, but both are set on increases, which will hurt.  Mainstream monetarist economists also may underestimate the tax increases or decreases each is asking for.  Hillary’s tax on the rich may hurt the economy, while Trump’s tax decrease may help the economy.  However, as of two weeks ago, Trump dropped the middle class tax cut in his plan, while Hillary does have a middle class tax cut.  Sales are more important to business than capital, so I give a slight edge to the Clinton approach.  However, the nine-year cycle may strike next year giving us a cyclic recession regardless of whom we elect.  2008-9 plus nine years is 2017-18, so look out for the Juglar cycle. Talk is of an investment bubble.  The possibility of a one-term presidency exists.

Benefits of Awarding the Nobel Peace Prize to Robert Reuschlein

The million-dollar prize and publicity would make it possible to introduce the world to a new way of thinking about military spending, the economy, and global warming.  With the staff to research new stock market strategies and national strategies to finally, force politicians to recognize the huge drawbacks to keeping military spending excessively high for long periods, especially in peacetime but also in wartime.  There is no safe level of military spending, like radiation, the lower the dose the better.  Haven’t we learned from the Balkans, Syria, and the implosion of the Soviet Union?  My 140 press releases the last three years show a vast need for further research forever changing the way we look at our world.  Let the paradigm shifts begin.

SAGE Political Economy of War

This article starts with a discussion of the military industrial complex.  The second section shows how the founding figures of America feared a standing army.  Then the discussion explains what happened to America after the Second World War.  The third section goes into various impacts of military buildups worldwide over the last seventy years. The fourth section goes over the total military spending of the world and the several categories of military impacts in the United States total that are left out of the narrowly defined Defense Budget. The fifth section describes where the major military plants are located and how all elected Cold War presidents of the United States came from high military states.  How the system operates is also in this section.  The sixth section explains what happens regionally in a military buildup or builddown in America. The seventh section goes over the Obama drone war, the Bush Iraq War, and the Reagan Cold War buildups.  The last section is about summary conclusions followed by a bibliography.

This links to one of two 2000 word peer reviewed listings coming out in the SAGE Encyclopedia of War in October 2016, one on “Military Keynesianism” and this one on “Political Economy of War”.

https://www.academia.edu/28849523/SAGE_POLITICAL_ECONOMY_OF_WAR_2016

Dr. Robert Reuschlein, Dr. Peace,

Nominated and vetted for the Nobel Peace Prize 2016,

To be announced October 7, in Oslo Norway.

Real Economy Institute,

Contact  bobreuschlein@gmail.com

Info www.realeconomy.com

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