HAVE THE SHADOWS OF THE CRISIS PASSED? NO.
THE SHADOWS OF THE COMING STORM LOOM LARGE OVER HEAD.
Today is January 21, 2015. The president of the world's most important country, Barack Obama, has just delivered his opinion about the state of the union that he is trying to preside over. We thought this would be an appropriate moment to discuss the real state of the union in the United States and the real state of the planet that we live on. These are obviously big subjects we cannot cover all aspects of this in this lecture and we will refer you back to our website for documentation of various statements that we make. So let's just step back and take a global view.
WHAT'S THE STATE OF THE PLANET?
What's the state of the planet right now? Well, let's just not take our word for it, but take the opinion of the leading scientists of the world. We have spent 20 years studying global indicators and interviewing global experts around the world, so what do these guys say? Do they agree with the president that things are going just great? Well no they don't. The opinion of the leading scientists in the world is that our planet, due to government policies that are insane and stupid, is in the process of committing suicide. As a matter of fact, we are in the middle of the greatest mass murder, the greatest destruction of life since the Permian extinction 250 million years ago.
THE MASSACRE OF OTHER FORMS OF LIFE
HUMAN EXISTENCE IS IN TROUBLE
Now there is a problem with this, that human beings are dependent on other forms of life. So killing off these other forms of life at a very high pace is a bad idea really, and this will lead to the extinction of human beings as a species. Don't worry about nature. Nature has been around for 5 billion years. According to scientists, human beings have been around for about 50,000. This is a short-term diversion, a short-term diversion that has done a truly staggering amount of damage but it's a short-term diversion and nature will correct this whole situation. Unfortunately human beings will be exterminated in the process of what will be the correction, but it is going to get corrected, so there is a bright side to all this. Don't worry about nature, nature is going to be just fine, it's going to go on for billions more years so that's okay. Human beings unfortunately are going to be exterminated if they keep doing what they're doing, their basically going to exterminate themselves. So that's not so good for humans. The outlook of the future not so good for humans just fine for nature. So that's the big picture.
Now did we hear any intelligent discussion about that last night from Mr. Barack Obama? No we did not. There was very little, if any discussion about that from him and either he is delusional or we can speculate what his motives are, but whatever his motives are, maybe he didn't want to make the tough decisions. But anyway there was no discussion about that. So there's a fundamental problem right off the bat.
IS THE PLUTOCRATIC, NEO-LIBERAL ECONOMIC PLAN OF OUR LEADERS WORKING?
Okay now let's shift gears a little bit here and analyze the state of the American economy. the plutocrats who run this planet, who are in the dominant driver's seat tell us that this is what they're doing, is good for everybody, and they tell us also that money is the ultimate goal of life. That's it. I mean you got a look at everything, profits and losses and have something losing money, you know it's bad and had to stop it etc. etc. This is the way we need to run things. So okay we don't agree, but let's just look at things from their point of view, maybe they're doing a great job in this. So let's look at the Commerce Department's official statistics for the net international investment position of the United States of America.
AMERICA GOES FROM WORLD'S LARGEST CREDITOR, TO WORLD'S LARGEST DEBTOR
Now from 1916 during World War I, when the British liquidated their international positions and bought US weapons, even though America claimed to be neutral. America has been the number one creditor in the world until about 1980. Now in 1980 we began to have what you might call fairytale economics. Reagan gave a whole lot of tax cuts for the rich that were not paid for, which basically plunged the US government into a financial crisis it still hasn't recovered from, and all also in many ways much more disturbing introduced trade policies, where US corporations could set up factories overseas, fire their US workers and make higher profits on the grounds that this was part of some magical process ordinary people just weren't smart enough to understand that would create an economic utopia.
Okay let's just see how all that work. Maybe it created an economic utopia like they claimed. okay so let's just go back to the Commerce Department's to test this, the official statistics of US government of where we're at, uh oh uh oh, looks like we have a $-5 trillion international position. Now let's step back a bit. That's a loss! It's not a profit. So if all this is so good and these people are so smart, how did they create a $5 trillion loss? That's a lot of money.
THE DESTRUCTION OF AMERICAN WAGES
Okay maybe they just screwed up in this area. Maybe everything else is okay. So let's look at what's happened to the average American citizen. So the surely they got more money right? I mean they must have. The economic press and the experts keep telling us globalization, plutocratic globalization not real globalization, but plutocracy is the way to go, that it can help the Americans and so on. Okay so let's look at average wages surely they're at a record high right now?
Okay let's just go back and look at the official US government statistics. Let's go check them and hopefully we will find the good news were looking for. Okay. Wait a minute! Average wages peaked back in 1973 and today are back to where they were in the early 1960s and we just had Martin Luther King's birthday and it's interesting when you listen to Dr. King's statements about social justice that wages today are actually lower than at the time Dr. King died. So that's not so good.
And one of the ways by the way the decline in wages has been papered over is politicians like to talk about average family income. okay well that lumps Bill Gates and Warren Buffet's wealth and the ridiculous inequality altogether and a fact that is not widely discussed is one of the reasons why average family income, which also doesn't look so good either, but that does not look as bad as wages, is that women have had to go into the workforce, and we are in favor of opportunities for women, it is at the core value of what we believe, but a part of the influx of women into the labor force was that working-class women had to go into the labor force to keep their families from going bankrupt. Yes. So that has been papered over the actual decline of what working people have been paid.
THE AMERICAN WORKING PERSON IS DROWNING IN A SEA OF DEBT
So for working people, today is a state of emergency in America, and the other thing that is papered over the crisis of working people in America has been a huge escalation of debt, credit card debt, real estate debt, student debt. So we have working people in really dire shape - dire shape in other words not good. So okay well we're just not doing so well so far this whole idea that profit and losses are where we need to go. So we're just not doing so good. So surely we got some good news in there.
WE'RE NUMBER 2 IN THE WORLD IN CHILD POVERTY
JUST BEHIND ROMANIA. HALF OF AMERICA'S SCHOOL CHILDREN ARE IN POVERTY
So let's I guess we are making progress against poverty. Isn't that what happened. We made huge progress against poverty. I mean we fought a war on poverty so surely must've defeated it. I mean we're Americans we can do it. We're number one. So let's just check out poverty and surely will see some huge increase in prosperity for the poor. Okay so let's look at child poverty at the time that Martin Luther King died. Uh oh. This surely must be some sort of mistake; child poverty is actually higher today!
Okay and the newspapers right before this triumphant state of the Union address by Pres. Obama pointed out that the majority of the schoolchildren now in America are living in poverty. Sounds like some things might be amiss. Now in our 20 year study of global statistics and indicators there are two things. one of the things you look at is time statistics, whether things are going up or down, the other thing you look at is international statistics, so I mean were constantly told that America's number one. Okay maybe poverty's not doing so good here, but surely were doing better than everybody else? I mean we're number one! Our schoolbooks tell us that our politicians that, were number one. America's number one. We're better than everybody. Okay so let's look at child poverty here. Uh oh! This is not so good.
Well maybe there is some good news, we historically have been number one in child poverty and that's not so good. In deference to our president we did find some good news a year ago. So listen to this, that this will warm your heart hopefully, that we lost our position as being the worst country in terms of child poverty to Romania. Romania, so maybe this is a trend. Yet the problem is that at the rate things are going it may be 100 years before we got into the middle of the pack in terms of child poverty, but you know it's a trend, it's a trend so let's see that that might be some good news here.
Now we're going to pause, we're going to try to look for some good news here, and then were to come back because we seem to be having some problems to find all the good news the president talked about but didn't.. Hang in there. Stay tuned folks and we'll be back for the next part of the lecture.
Okay we are now going to resume our lecture and continue to analyze the state of the union and our president's assertions about the state of the union.
HOW REAL IS THIS SO CALLED RECOVERY?
Now last night he trumpeted this marvelous economic recovery that we recovered, we were back, and so on and so forth. Now we are all in favor of economic recovery and in fairness the president and his team deserves a lot of credit for their handling of a near total catastrophe created by the previous policies of the previous Bush administration. For 2009, not something that everybody agreed with, but they did do a good job, made some mistakes, of preventing a wholesale economic collapse and Pres. Obama and his team deserve some very serious credit for that.
What did not happen after 2009 was a plan to deal with the fundamental problems on an adequate level that caused the catastrophe of 2008. Now it lets do a medical analogy. Now 2008 is the equivalent of a big fat guy who got no exercise, who smoked one pack a day, you get the general picture and who had a massive coronary heart attack and passed out on the pavement. Okay now they did get him recovered, they did prevent him from dying - translate having a rerun of the 1930's. What did not happen was to get the guy back losing weight, stopping smoking, getting on a healthy recovery plan for the long term. That did not happen
What did happen was $4 trillion of funny money from the Federal Reserve printed out of nowhere and 40% of that has now gone into buying mortgages, which is just mind-boggling and about $5 trillion of budget deficits. In other words we borrowed our way out of the hole. That's not a long-term plan. We're not opposed to deficits. We're not balanced-budget fanatics, but that's not a long-term plan. What is needed is a plan to deal with the structural deficits in the budget and in many ways far more important the structural deficits in trade policy. This just wasn't discussed last night. It's as if that wasn't a problem. We need to do a little bit of an economics lesson here as to some to understand where we are, we need to understood where we were and how we got here.
REAGAN'S POLICIES AND TODAY'S ECONOMIC DISASTER
As we mentioned in the previous lecture President Reagan set in motion a series of fiscal disasters. it's a two-pronged disaster, first place that he created these huge deficits, what is less widely understood is that in key parts of federal discretionary spending, particularly in the environmental and energy areas, the budget cuts that he put in remained permanent and a good part of the budget, a good part of the government and the government capital resources, were severely damaged and haven't recovered since then.
For example Reagan completely decimated the renewable energy budget at the energy Department, government research matters, okay. It matters and the end result of that is that we did not develop a renewable energy economy. had the government commitment to renewable energy remained what it is - we've got to understand the world we lost because of Reagan's policies - if it were not for Reagan, the skies over the super cities of the third world today would be clear, there would be no global warming situation, we would not be dependent on very dubious countries in the Middle East for oil. We would not, because we would have developed solar cars, we would have developed solar power, and we would've developed nuclear fusion. All that was destroyed. All that was destroyed, and so we have a very terrible legacy as a result of these policies.
RAISING TAXES IN THE 1990'S HELPED THE BUDGET
Now in 1993 Bill Clinton came in and we began to get, in fairness to President Clinton whose policies we've criticized, he did put in some budget sanity. Now what was a key part of President Clinton's budget sanity? Listen up folks because this is very at odds with what we heard last night. President Clinton wisely raised tax rates on upper income individuals; let me repeat that, he raise tax rates on upper-income individuals. That's extremely significant because the income is concentrated at the upper end of the tax percentages. So that raises a huge amount of money. Now what he did not do, which was something disastrous - the idea that was proposed last night by Obama, which was to keep the ridiculously low tax rates for upper-income individuals, and to eliminate on the grounds they were so-called loopholes, incentives for savings. Now the latter part is just plain crazy.
NO PLAN TO IMPROVE AMERICAN SAVINGS
Now let's get some reality here with the capital gains tax in most of the Asian states that have been successful - well it's zero. Same with the state taxes in the social democratic countries in Europe. A lot of liberals in the United States simply do not understand international intelligent tax policy. For example in Germany, a social democratic country, what is the tax rate - the estate tax rate for family businesses? Zero. That's what it is. Sweden has abolished the estate tax and historically in the postwar era Americans have had the highest capital gains and estate tax rates in the world, and that's one of the reasons why we don't have the savings. So the last thing we should be doing is to be reducing savings. We need more savings, not less savings to build a 21st-century economy.
So Pres. Osama's plan is a case study of what not to do in terms of taxation. now we're going to go back and discuss the issue of taxes a little further, we need to address the other key problem, the other huge deficit, well there are some other deficits beyond that, such as the poverty deficit and the environmental deficits, which we will discuss in another lecture, but we're concentrating on two main financial deficits here, which is the trade deficits and the budget deficits. now the trade deficits , there was just no plan whatsoever presented last night about that, and quite the contrary, president Obama is continuing to propose policies that can be only considered national suicide in terms of trade .
THE DETERIORATION OF AMERICAN TRADE
Now part of the problem is that the economic success under Clinton papered over an enormous deterioration of America's international trade situation. now one of the things that people have a problem in understanding president Reagan about is that Reagan's rhetoric was often quite at odds with reality. Reagan talked a loud game in terms of military aggressiveness, but Reagan was actually very cautious and very smart in keeping the US out of wars, and in Lebanon when lunatics blew up the US Marine barracks, Reagan smart enough to withdraw from the lunatic asylum of Lebanon rather than declaring a war on terror and all sorts of other nonsense.
In terms of trade, Clinton was very much to the right of Reagan on trade. Reagan took a very tough action vis-à-vis the Japanese auto manufacturers in putting in nontariff barriers, without which, you would not have probably much of the US auto industry at all, and in the Plaza Accords, Reagan engineered a massive devaluation of the US dollar. Now this series of policies worked. It worked. So that by the time that Clinton came in, in 1990-91 the trade deficit had dropped to almost 0. Now Clinton pursued policies that were just way to the right of Reagan and what was papered over in all the rhetoric about Clinton doing such a great job was a massive deterioration of the US trade position under Clinton, and what Clinton proposed never happen.
Clinton assured us that this was this magical process of so-called "globalization" and that we would just reduce tariffs, and there was a high-tech angle to this you see, that we would let the Chinese and whoever get the "junk jobs" like auto making and steel, we were told those were junk jobs, and that we did not need them, and so what if the if the US industries went to pieces, that didn't matter because in order to build some high-tech wonderland we had to let those jobs go down the drain, and then we would build high-tech jobs and little Johnny and Susie would be having marvelous jobs in high-tech and so on and so forth, rather than working in a stinky steel mill and all that other nonsense that was dished up. This just didn't happen.
Clinton did succeed in destroying whole sections of US industry, but the big boom and exports in high-tech never happened you see that was going to compensate for that, so the end result is that we have lost literally trillions of dollars in our trade with China, and it's a lot worse than that, because wholesale US industries have now been set up in foreign countries and we are dependent on them. So this is going to be a very difficult situation to get out of and probably will take about 10 years to get out of. our president came up with a solution of this a couple months ago that he thought was pretty clever, listen to this one: Let's classify the American factories in China as "American factories" and then claim that's American goods, well what of what a brilliant idea, except that it obviously is complete nonsense, but this kind of thinking pervades the Obama administration tragically. We wish our president the best, we want him to do a good job, but he is just very misguided in terms of trade.
AN INDUSTRIAL STRATEGY IS NEEDED
Now what is needed is an industrial strategy. What is needed is a something similar to that well-known ultraliberal by the name of Ronald Reagan, to raise the value of China's currency, and there is a man in Congress who is providing leadership. That man's name is Sherrod Brown and Sen. Brown can be considered a man of the 21st century. He sees what needs to get done. The point is these policies aren't going to work. The current policies of Obama are not going to work. So Sen. Brown's policies, one way or another are going to be adopted. As in many other aspects of the whole situation, the question is what kind of smoldering heap of rubble the US economy will be before they are adopted.
TODAY'S PROBLEMS ARE A BYPRODUCT OF
HISTORICALLY INSANE TAX POLICIES UNDER BUSH
Now the same goes with the budget deficit, where were down to about a $600 billion budget deficit, that's that structural. How did we get into this mess on the budget deficit? Now some people are saying it's just the folks, the old folks got too much Social Security, that's their reaction regarding the people who caused the trouble. my goodness gracious we all love them but hey we got to slash their incomes or its Medicare, that's that that's what did it, that's the old folks on Social Security, Medicare, they're the villains of the whole situation. Well that's just nonsense. In straight talk that's just nonsense okay. What caused the financial disaster that we're in were completely irresponsible policies by the Bush administration.
In 2001 Bush put through a series of totally ridiculous tax cuts for the super rich who were then larded up with some tax cuts for the middle class to make them more palatable. Basically the thing was a budget buster. So after 20 years of excruciating pain digging out from the hole of the Reagan administration's insane fiscal policies, the exact same policies were put back in. Now historians will record that the Bush tax cuts have got to be one of the most disastrous and irresponsible fiscal policies in the history of the world going back to John Laws destruction of the finances of the French state, back in the in the 17th century. This is one for the record books. Now there's problem one, runaway tax cuts for the super rich, okay. problem two, run away war, while Reagan was smart enough and man enough to realize that getting the US involved in runaway imperialism was insane, this was not the view of the Bush administration and it was not view of the current Democratic front runner Hillary Clinton, they had a very different point of view of the terrorist attacks that were produced you might say by totally incompetent intelligence policies by the Bush administration of Condoleezza Rice's chief national security advisor, who held 30 meetings on space weapons and no meetings on terrorism. Hmm clever...
THE CAMPAIGN OF GLOBAL IMPERIALISM THAT BEGAN UNDER BUSH
INCREASED SEVERELY BY OBAMA
So anyways Bush concluded that we needed to have a campaign of global imperialism that we would conquer the world and we would go into Iraq, invade Iraq topple, Saddam Hussein and create a democratic wonderland. Well we all know that ended up being a total catastrophe and the long-term cost is about $3-$5 trillion.
That's a lot of money. So these are two huge financial problems here, and we are disappointed with our progressive brethren that they do not seem to have a plan for the budget deficit. You have people like Krugman who seem to suggest that it's not a problem, it is a problem.
The first thing we need to do is to curb the runaway tax cuts for the super rich and curb the runaway imperialism. Unfortunately Pres. Barack Obama has been going in the exact opposite direction, and Obama signed the Bush tax cuts that were meant to be temporary into permanent law. These recent antics last night suggest that he's going in a different direction. Now we need to talk about what he did. Now he said last night is very interesting, but is also wrong - that's compounding a problem that he already made. But that's what he did.
Now let's look at the military stuff. Obama has submitted the largest military budgets in the history of this country. He has - larger than Reagan. Now that is mind-boggling, since the end of the Cold War, Obama has submitted larger military budgets in constant dollars than any president in the history the United States. Now he is also expanded US war all around the world. He has bombed more foreign countries than any president since World War II.
LIBYA NOW WRECKED BY CIVIL WAR
So okay we got to get back to the presidents triumphalism last night. Okay well surely he won some huge victories, and unlike Bush he's created great things, and democracy is thriving wherever he has intervened. okay so let's look at Libya, okay a fake report of a massacre was touted so Obama launched an attack on Libya in conjunction with that garden spot of democracy Saudi Arabia, one of the most oppressive regimes and insane regimes in history world, so teamed up with the Saudi's, we know they're friends of democracy, so Obama claimed, in which we know they are not and we overthrow Qaddafi when Hillary Clinton heard he had been tortured to death and murdered, she giggled and thought that was funny so that that's just marvelous according to her, we think it's sick and twisted, but anyway that's that something other people can sort out. So surely Libya today is a thriving Scandinavian type democracy. Well no! They're in a state of complete Civil War. In fact by destabilizing Libya and plunging it into chaos, we now have violence and chaos all across North Africa. So okay well maybe he's eventually going to produce a democracy in Libya, let's give the president the benefit of the doubt, but so far things are not looking so good.
Okay Syria. Hillary Clinton had previously decided that president Qaddafi was not up to her standards and she said he had to go, so they got rid of him and that didn't work so well. And then she found another leader that she had previously praised as a reformer, claimed later she hadn't, but that she just quoted somebody, but whatever. Anyway she concluded that that the president Assad Syria was just not up to her standards and he just had to go! Queen Hillary had decided he needed to be removed and replaced by maybe Anne-Marie slaughter, or some of the other right-wing warmongers she bought into the state department. He just had to go!
U.S. INTERVENTION IN SYRIA HELPS ISIS TERRORIST GROUP COME TO POWER
So what's happened? A total disaster. Syria's and chaos and the US has sent weapons, well we technically didn't send weapons, we just helped the Saudi's and the Qataris and the Turks send weapons, although now we are sending weapons and the forces that that ended up becoming a major force against president Assad were the Islamic extremists, the fellows by the name of ISIS.
OTHER MILITARY "SUCESSES"
So okay that didn't work out. Let's take Yemen which Obama said was a proven success, well that's disintegrated. We can go on and on, putting more troops in Afghanistan than the Russians. The point is this has got to stop okay? Now in 2014 things took a particularly dire turn where the runaway imperialists in the Obama administration decided to take on the other nuclear superpower in the world, Russia. We helped to sponsor a coup in Kiev and then adopted a highly confrontational approach to the Russian's decision to absorb Crimea, which is about 95% Russian into Russia. So in other words Russia joined Russia, but we had a tremendous uproar in which we slapped sanctions on Russia and so on and so forth. This is pushing things into a very dangerous move towards World War III. So this is a policy that clearly needs to be changed we have some ideas about that.
So this is not working this is not working the Obama strategy is not working. Now what we need to do, and we may produce another lecture today before running out of time, but we do with this briefly sum up some ideas of what real reform and what real reform looks like.
WHAT DOES REAL REFORM LOOK LIKE?
Real reform is a plan to deal with the budget deficit. What does that include? A cornerstone of that is a value added tax, which every other modern state in the world has. You cannot claim you're a progressive and claim you do not support a value-added tax. And progressive who do so should please contact us for the address of the tooth fairy, because that's about how logical that is. You cannot have a modern welfare state without a value-added tax.
IT'S TIME TO RAISE TAXES ACROSS THE BOARD
We have to raise taxes across the board and that's without hurting incentives for investment - the exact opposite of what Obama's proposed. we need an energy tax, gas taxes in Norway and Germany is about three dollars a gallon, we certainly don't suggest we go there, there should certainly be a blueprint to get up to a dollar a gallon, and not immediately, but that would raise some serious money. Again you cannot be a progressive and claim you don't support energy taxes. You can't. Because no welfare state in the history of the world has ever been built without a serious energy tax and the energy tax is a win-win situation, even supported by people such as Senator Inhofe believe it or not, and Charles Krauthammer. There is a lot of support on the right for it. And the gas tax is a win-win because it's an environmental plus.
THE NEED FOR A NATIONAL INDUSTRIAL STRATEGY
So there's a plan there. On a larger issue we need nothing short of a national industrial strategy, such as that advocated by groups such as the AFL-CIO back in the in the 1980s, such as that advocated by visionary leaders like our former Congressman Dick Gephardt and former Congressman Bonner.
IN THE 19TH CENTURY THE AMERICAN DREAM
WAS BUILT BY GOVERNMENT INTERVENTION.
IF WE WANT TO IMPROVE THE FUTURE WE MUST LEARN FROM THE PAST.
We are up against foreign governments. We are. And the history of America by the way is of government involvement in the economy, the Erie Canal was built by the government. The history of the 19th century economy, contrary to what you might've heard, was not free enterprise. Free enterprise had nothing to do with the government. The exact opposite is true. The American dream, the American industrial machine, was built by the highest tariff laws in the world and a massive process of Imperial conquest that was not so good for our Native American friends, and the distribution of the spoils to big business. So that's how it happened.
THE NEED FOR A NEW DEAL - A GREEN NEW DEAL
Now we don't recommend Imperial conquest today. Absolutely not. But the point is we currently have government policies. The entire US economy is a series of government policies. So we don't have free enterprise here. We need to shift those incentives towards things that help working people to get wages back up and build a green economy, if you will a Green new deal. We need the exact opposite of the conventional thinking and in conclusion in Asia you have had government economic leadership. yes their environmental policies are disastrous, but the government economic leadership in places like China, Singapore, South Korea, Malaysia, Indonesia has produced results and in a modern state like German.
IT'S TIME FOR THE GOVERNMENT TO INVEST IN ITS WORKERS
Germany runs a budget of balance of trade surplus, because the German government got involved in doing what Clinton talked about doing in terms of upgrading the training of German workers and so on and so forth, but you have to have a massive involvement in the in the government.
HOW DO YOU SOLVE A PROBLEM?
THE FIRST STEP IS ADMITTING YOU'RE IN TROUBLE
But a final point is you need to admit you're in trouble and we are very disturbed and disappointed at the President's statements last night. If you don't admit you're in trouble, you can't solve a problem, you can't. And you can't get the political will to solve the problem. So you need to go to our website, read some of our key reports which will be listed on the webpage that we post this lecture on, but read some of our key summaries, there's a whole lot of other issues to discuss.
CHECK OUT OUR WEBSITE FOR MORE INFORMATION
Our entire lecture together is about 35 minutes but that's just the start, that's a start, and that sums up all what we have to say day and as we say go to our website and read more about this. That concludes this lecture.