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by Rob Horning

8 Jan 2009

It’s clear our economy has run into an effective demand problem: for highly logical reasons banks are loath to lend and consumers are choosing to save rather than spend. (How dare we! After so much effort has been invested in making us slavishly consume the surplus!) This WSJ chart illuminates what it has chosen to call “the frugality trap”:

The chart illustrates how the U.S. economy’s dependence on consumer spending has grown and grown over the past few decades, but seemed to reach a ceiling in 2001. The current crisis may be an indication that the level achieved was not as stable as it appeared, but the solution the ruling class has apparently settled on is an effort to restore that level. That’s why it is a trap rather than an opportunity to reconceive our collective economic purpose. An economic reorganization to stabilize a smaller personal consumption to GDP ratio would presumably be to painful—it would seem to mean a reduction in living standards and would definitely mean growing accustomed to acquiring fewer new things—and politically unacceptable. Obama’s proposed fiscal stimulus package (a wealth of spending initiatives and, as we’ve recently learned, tax cuts) is meant to try to turn the tide against this, and the stock markets anyway seem enthusiastic about its chances.

But there remains something jarring about shoveling money at people so they will buy more, particularly since easy credit, fueling heedless consumerism, helped bring the economy to this point where it requires stimulus. Economist Arnold Kling, an outspoken stimulus skeptic, expresses the problem succinctly: “from a Keynesian perspective, you always want to transfer wealth from the prudent to the profligate. But from any normal perspective, you don’t.” This is exactly what sticks in my craw when I think about, say, plans to prevent foreclosures. Money is being transferred from the prudent people who eschewed real-estate purchases they couldn’t afford (like me) to those profligate people who trusted in the zeitgeist (made manifest in ready credit) and didn’t worry about such trivial concerns as affordability. They were acting on the same principles as the bankers apparently were, if this immortal quote from Citibank CEO Chuck Prince, uttered at the height of the bubble, is any indication: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” If the credit is out there, you’re a fool not to take it, even if you know the whole thing is unsustainable. (Some of Ponzi schemer BernieMadoff’s clients apparently had this view as well.) Of course, no one is taking Prince’s compensation from the bubble years back since he was fired, whereas the people who danced to the music by buying overpriced, oversized houses now have to give them back to the banks.

Anyway, a Keynesian stimulus requires getting people—anyone, prudent or not—to spend, even if they don’t “deserve” to. The need to overcome that ideological obstacle requires a strenuous effort to remove moral debate from economic policy considerations. This column by the FT’s Martin Wolf is an excellent example. The most important lesson from Keynes, he argues, is

that one should not treat the economy as a morality tale. In the 1930s, two opposing ideological visions were on offer: the Austrian; and the socialist. The Austrians – Ludwig von Mises and Friedrich von Hayek – argued that a purging of the excesses of the 1920s was required. Socialists argued that socialism needed to replace failed capitalism, outright. These views were grounded in alternative secular religions: the former in the view that individual self-seeking behaviour guaranteed a stable economic order; the latter in the idea that the identical motivation could lead only to exploitation, instability and crisis.
Keynes’s genius – a very English one – was to insist we should approach an economic system not as a morality play but as a technical challenge. He wished to preserve as much liberty as possible, while recognising that the minimum state was unacceptable to a democratic society with an urbanised economy. He wished to preserve a market economy, without believing that laisser faire makes everything for the best in the best of all possible worlds.

But the ideological impediment is persistent, warranting political compromise that tends to reinforce the skepticism.Paul Krugman has written a series of posts about the stimulus possibly being too small:

I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

Tyler Cowen makes precisely that case in advance, in economic terms: He argues that

Recovery requires that zombie banks behave like real banks, that risk premia are properly priced, and that the economy undergoes its sectoral shifts toward whatever will replace construction and finance and debt-driven consumption. Fiscal policy won’t do much toward these ends and in fact a temporarily successful stimulus might hinder these long-run adjustments.

Perhaps the ideological conundrum comes down to this: when individuals and firms spend recklessly, this constitutes their freedom (even when the need to spend feels like a compulsion); when governments do the same, this proves they are dispensable (even when government credit is universally acknowledged as necessary to maintain the economic system as we know it). How can we resent and discourage the systemic incentives to fiscal recklessness at the individual level by licensing the government to be reckless in our stead?

by PopMatters Staff

8 Jan 2009

1. The latest book or movie that made you cry?
Indiana Jones and the Kingdom of the Crystal Skull. I cried because I was hoping so bad that they would show a real alien, and then they did. I couldn’t believe they went there. God bless.

2. The fictional character most like you?
Mutt Williams from Indiana Jones and the Kingdom of the Crystal Skull. I thought I hated Shia LeBeouf going into this movie, but I changed my mind real quick. When he was swinging from the vines with the monkeys, that was right up my alley.

3. The greatest album, ever?
Indiana Jones and the Kingdom of the Crystal Skull soundtrack. I was so pumped that they got John Williams back to do the compositions for this soundtrack, just like with the first three movies. There’s some amazing and pioneering usage of a continuum on this album. “Ants!” is the type of tune I could never sick of, it makes feel good when things aren’t going so well. “Secret Doors and Scorpions” is another banger, such a a summer jam.

4. Star Trek or Star Wars?
I haven’t seen any Star Trek, plus Star Wars has Harrison Ford in it and was created by George Lucas. Indiana Jones and the Kingdom of the Crystal Skull had Harrison Ford in it and was created by George Lucas.

5. Your ideal brain food?
I’ve never had it but monkey brains.

by David Pullar

8 Jan 2009

Anyone with a passion for language has them—those pesky words or constructions that turn your blood to at least a simmer, if not a boil.  There are plenty of places to vent this frustration: talk radio, letters to the editor, the entire blogosphere and the Lake Superior State University List of Words to Be Banished from the Queen’s English for Mis-use, Over-use and General Uselessness.

This year’s list, the 34th annual collation, is heavily influenced by political fads: “maverick” is there, as are “first dude” and “bailout”.  The environment has had its day for many, with “green” and “carbon footprint” leading the poll for overuse and annoyance value.  I’m surprised that “working families” wasn’t included.  Australian Prime Minister Kevin Rudd made the phrase so ubiquitous in 2008 that even Barack Obama’s speechwriters started to adopt it, a rare case of eastward cultural transmission across the Pacific.

Naturally, we can criticise the pundits and politicians for their inane phrases, but sometimes the truth hits a little closer to home.  For book reviewers, even more so than book writers, clichés are an occupational hazard.  Churning out a thousand words on a volume that failed to stir you in any way is a challenge – even books evoking passion can be hard to describe without falling back on stock phrases and comparisons.

Emre Peker at The Millions Book Review did a clever Google study of common phrases in book reviews.  A quick Google search of my own work showed that I have so far been innocent of these particular banalities, but I have committed the NY Times’ sins of using “compelling” and “eschew” in reviews (“Seven Deadly Words of Book Reviewing”).

The danger is that once you are aware of your own clichés and idiosyncrasies, you can become shy of using almost any colourful phrase.  A level of introspection is good for any writer, but crippling self-criticism does no one any favours.

Do your reviews and blog posts about books tend to use the same stock phrases?  Do you scan through the thesaurus for an alternative to “incandescent”?  Is there a good way of describing a second major work without using the word “sophomore”?  What words are you keen to abolish?

by Jamie Lynn Dunston

7 Jan 2009

Dear Supreme Ruler 2020,

I don’t think we should see each other any more. 

You’ve probably seen this coming for a long time now.  Ever since you came into my life back in July, things have been somewhat strained between us.  I thought I could handle your eighty pages of documentation—after all, who actually reads that stuff anyway?  After a cursory glance at the table of contents, I was eager to get to know you, and after I navigated your tutorials, I thought I understood you pretty well.  But when we started getting serious, it didn’t take me long to realize that there is far more to you than meets the eye. 

It’s not you, SR2020, it’s me.  You’re a real catch, with your lovely graphics, excellent ambient musical score, and your substantially varied level design.  You deserve a gamer who will treat you the way you deserve to be treated—with the respect and devotion a game like you requires.  I’m just not looking for a serious gaming relationship right now. 

There’s so much to love about you, SR2020.  You’re a fantastically in-depth turn-based strategy with a well-constructed and believable, historically-based backstory.  I thought that you would be a perfect match for someone like me, with a Master’s degree in US History, or anyone with an interest in military history, international diplomacy, or combat strategy.  And I think that there are gamers out there for you.  I know there are.  But I’m not one of them, I’m sorry.  It’s a personal failing of mine that I can’t keep straight the difference between an A4D and an A3J, and I’m working through this. 

You’ve got to believe me, SR2020, I gave it my best shot.  I read the entire user manual.  I played the tutorials, which I have to admit left me a bit cold.  I was okay with that, because you seemed to have such promise.  And then I played a vehicle-transport level, and everything was great.  But when I tried to defend the borders of the US against simultaneous attacks from Canada and Mexico, things really started to break down.  Maybe things would be better if we tried again with the help of the Supreme Wiki.  It’s constantly expanding and has grown considerably since last time I saw you.  But I just feel like I need some time off right now, to cry and learn and grow. 

So, SR2020, I guess this is goodbye.  I’ll never regret our time together, and I’ll always remember you with affection.  I know you’ll make some lucky wargamer very happy someday. 

I hope we can still be friends. 

Always,

by Randy Haecker

7 Jan 2009

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James Allan of Glasvegas

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Glasvegas

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No, it’s not Joe Strummer. It’s James Allan from Glasvegas.

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Rab Allan, Caroline McKay, James Allan and Paul Donoghue of Glasvegas

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James Allan gives a hand to the crowd.

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James Allan and Paul Donoghue of Glasvegas

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Glasvegas

See more of Randy Haecker’s photos on Flickr.

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