Robert Reich's Supercapitalism (book review)

I was inspired to read Robert B. Reich's latest book Supercapitalism: The Transformation of Business, Democracy, and Everyday Life after seeing him numerous times on shows such as The Rachel Maddow Show and Countdown with Keith Olbermann this past month or so. His insights on economic issues are invaluable and usually spot on. I have long admired Reich, who was one of the few genuinely liberal voices in the more moderate Clinton Administration, and perhaps the best, most effective Secretary of Labor in the post World War II era.

Oligarchs speak on the financial collapse

A guest op-ed in the Washington Post yesterday regarding the prospects of the U.S. defaulting on its debt, reminded me of a comment I had made on DailyKos about a week ago. Which led me to polishing and expanding the comment and posting it a diary.

Writing in the conservative magazine The Weekly Standard a few days before Christmas, Christopher Caldwell, reviewed Treasury Secretary Henry Paulson’s and Fed Chief Ben Bernanke’s erratic responses to the collapse of the financial system – and defended them::

Sunday Morning Comics - It's a New Year Edition

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A green industrial policy?

Back in the 1980s, writers such as Robert Reich were advocating what was called an "industrial policy", that is, the government should intervene in the economy and explicitly help a particular industry or set of industries in order to make them more competitive. Yes, I know this sounds like "picking winners", except that governments have been doing this successfully for hundreds of years. Think of it as the equivalent of the Park Service being stewards of a national park, intervening when necessary to keep the ecosystem healthy. Now, think of the economy as an ecosystem, and think of industrial policy as a way to keep the economy healthy.

Sunday Morning Comics - Oh the Horror, Bail Out Now Redux Edition

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From an interview with the Dilbert creator:

Q. If Dilbert were real, would he still have a job?

A. No. I'm drawing a series right now where he gets laid off and he has to go through a really tough bunch of interviews to try and get another job. At one point he is asked whether he would take a bullet for a prospective employer and they make him go to a firing range to prove it.

Is this a capital goods depression?

My intellectual mentor, the late Professor Seymour Melman of Columbia University, was very enamored of a small booklet written in 1935 called “The Chief Cause Of This And Other Depressions.” The author was Leonard P. Ayres, Vice President of the Cleveland Trust Company. This is the gist of what Ayres said, at least the way I interpret it:

A recession, or a long one, would benefit from a short-term stimulus, or if you consider two years to be medium-term, a medium-term stimulus. However, if this is a depression, you have a different animal.

The Melman/Ayres view of depressions is that they are partly or significantly caused by a collapse in the capital goods industries. That is, the machinery and such that is used to make other stuff loses their markets. When these industries start to collapse, the unemployment there causes a greater lack of demand among the consumer goods industries, starting a snowballing effect in the wider economy.