Wednesday, March 09, 2011


Eternal vigilance. You've heard the quote many time: "Eternal vigilance is the price of liberty." Almost invariably, Thomas Jefferson gets the credit for saying those words. Almost invariably, the person repeating those words is a gun nut or a high-testosterone militarist dreaming of the day when he can shoot Ay-rabs and libruls with gleeful abandon.

Guess what? Jefferson never uttered or wrote that phrase. And the guy who did say it had a very different message in mind.

As near as anyone can tell, the quote was first uttered by Wendell Phillips in an 1852 speech given in Boston. Dig the context:
Eternal vigilance is the price of liberty -- power is ever stealing from the many to the few... The hand entrusted with power becomes...the necessary enemy of the people. Only by continual oversight can the democrat in office be prevented from hardening into a despot: only by unintermitted Agitation can a people be kept sufficiently awake to principle not to let liberty be smothered in material prosperity.
"Power is ever stealing from the many to the few." That sounds like a prophecy of Wall Street's epochal heist of America's wealth.

The problem isn't gummint. The problem is libertarianism. Here's an important point which most people refuse to recognize:
Tax revenue as a percentage of the economy is at a 50-year low. (In 1986, the top marginal tax rate was 50 percent -- today it's 35 percent.) That means the United States has the resources to balance its books in the end, if its leaders can summon the political will to do so. And the markets know that.
Under Ike, the top tax rate climbed parlously near 90% -- and the country was doing great. Let's go back to the future.

Or maybe we should just buy a bank. This piece has garnered a lot of attention, though not enough attention. North Dakota is doing (relatively) well right now, because North Dakota -- unlike, say, Wisconsin -- owns a bank.
Wisconsin could draw down the fund by the small amount needed to meet pension obligations, and put the bulk of the remaining money to work creating jobs, helping local businesses, and increasing tax revenues for the state. It could do this by forming its own bank, following the lead of North Dakota, the only state to have its own bank—and the only state to escape the credit crisis.

This could be done without spending the pension fund money or lending it. The funds would just be shifted from one form of investment to another (equity in a bank). When a bank makes a loan, neither the bank’s own capital nor its customers’ demand deposits are actually lent to borrowers. As observed on the Dallas Federal Reserve’s website, “Banks actually create money when they lend it.” They simply extend accounting-entry bank credit, which is extinguished when the loan is repaid. Creating this sort of credit-money is a privilege available only to banks—but states can tap into that privilege by owning a bank.
Here's more:
An innovative answer is provided by the state of North Dakota, one of only two states (along with Montana) expected to meet its budget in 2010. North Dakota was also the only state to actually gain jobs in 2009 while other states were losing them. Since 2000, North Dakota’s GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but in 2009 it had a budget surplus of $1.3 billion, the largest it ever had – not bad for a state of only 700,000 people.
The BND is 100% owned by the state, and it is required to operate in the interest of the public. Its stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota.
I've said it before and I'll say it again: We must recognize a distinction between industrial capitalism and finance capitalism. Industrial capitalism = good; finance capitalism = bad.
"Industrial capitalism" refers to the manufacture of stuff -- cars, shoes, toothbrushes, condoms, TVs, pig iron. Stuff.

"Finance capitalism" refers to stocks, bonds, financial instruments. Numbers. Concepts. Abstract intangibles. Anti-stuff, if you will.

Financial capitalists got us into our current mess. You can't blame the industrial capitalists, and you can't blame labor (unless you've been programmed by ideology to do so).
Adam Smith's entire argument was about industrial capitalism -- and nothing else. Laissez faire may be a good general rule, but only in that realm. When it comes to finance capitalism, the answer is simple: Socialize it, or at least a good chunk of it. See here.

I think the "industrial capitalism versus finance capitalism" distinction is the big point which riverdaughter misses here.

Soldiers, why would you shoot fellow Americans to benefit Wall Street? Professor Peter Dale Scott weighs in on the financial bailout. Worth reading. He argues that the military has taken on a new function: Protecting the owners of this country in case the Wall Street heist of our economy places the citizenry in a rebellious mood.
This document embodied the secret Continuity of Government (COG) planning conducted secretly by Rumsfeld, Cheney and others through the 1980s and 1990s. This planning was initially for continuity measures in the event of a nuclear attack, but soon called for suspension of the Constitution, not just "after a nuclear war" but for any "national security emergency". This was defined in Reagan's Executive Order 12656 of November 18, 1988, as "any occurrence, including natural disaster, military attack, technological emergency, or other emergency, that seriously degrades or seriously threatens the national security of the United States." The effect was to impose on domestic civil society the extreme measures once planned for a response to a nuclear attack from abroad.
Russ Feingold. If there's one politician I can support without reservation -- okay, in all of human history, there has never been such a politician. The words "reservations" and "politician" should always go together. But the one who comes closest to being supportable without reservation is Russ Feingold. If you want to know what his new organization Progressives United has been up to, check out his message.
I tell everybody within earshot, learn a language then bail before Obama closes the borders to keep us from escaping.
There aren't enough Russ Feingolds in the House and Senate to push back against the vampire squids.
So how long before the U.S. Congress decides to pass a law making it illegal for states to own banks? Seeing as how North Dakota is doing well.
Just a note. The nation was founded on mercantilism. Marx first identified capitalism in the mid 1800s as a result of the economy switching from the laissez-faire neoclassical economy put forth by Adam Smith which was based on the inputs of labor and land. Capitalism sprung up from the need to buy machinery and plant as we industrialized. Land became less important and people were seen as accessories to the machines. That gave rise to the need for financial capital to get more machines and plants.

Adam Smith quit being relevant in all markets where machines/plants are relevant because economies of scale force you out of the market structure where laissez faire works best. That would be perfectly competitive firms. Once you have the need for huge amounts of money, machinary, plant and you have nonhomogenous products (think wheat as homogenous), you can't apply Smith's lessons. This was the lesson of Marx who first coined the term capitalism and also referred to Smith as a classical economist. The country wasn't founded on capitalism. It was founded on mercantilism. Capitalism didn't exist until about 20 years before the civil war and was really the reason for the civil war. It was a war from the northern industrial capitalists on the old school, agrarian neoclassical (laissez faire)south. It continues today in a less violent form.
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