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PROPHETS WITHOUT HONOR ON WALL STREET (PART I)

August 6, 2014

PROPHETS WITHOUT HONOR ON WALL STREET (PART I)
The Bible correctly notes that a prophet is not without honor save in his own country. This scriptural observation has its counterpart in the “dismal science” of economics. Thus Paul Krugman and Joseph Stiglitz, perhaps the two most prestigious economic dissenters of the modern era, are astonishingly prescient, widely read, and largely ignored by those in power, all per Robert Kuttner’s book reviews of two of their books of a few years ago, Krugman’s End This Depression Now, and Stiglitz’s The Price Of Inequality; How Today’s Divided Society Endangers Our Future.
It is too bad that those in power are ignoring what these two brilliant economists have to write and say, since I think the successful management of our economy hinges on their advice rather than that of those whose sole criterion for success is profit. Profit is one criterion for successful economic performance, but there are others, ranging from fair distribution of new wealth created to how the economy performs for the have-nots to how policy choices in tax and trade affect our competitive stance in the global marketplace, among many other such criteria. The end of affluence for the few does not justify the means in arranging for such an outcome at the expense of the many. An economy which assures huge profits to a narrow slice of people (as it does currently) is clearly not an economy that is performing well for the great majority of Americans. Its lack of performance that it could and should be achieving is creating stress and pain for many if not most Americans, both economic and otherwise.
The idea of profit as a guide to economic success, while a factor, is therefore drawn much too narrowly to define successful economic performance. GDP doesn’t tell the whole story in any event; the end of the story comes only with a fair distribution of profits from such national product in accord with fairly crafted policy – a largely legislative chore constitutionally given to the House of Representatives for implementation of the public will (it says here – before Wall Street will was substituted for public will).
So is secular Wall Street listening to these two “prophets” in their own country? Of course not; nor did the profit-driven Pharisees listen to the carpenter’s son who had another vision for humanity in a different context. It interfered with the pharisaic vision of their exclusive role as gatekeepers of power and profit. Who listens to some rube and his ragtag band from out in the country? People like that can upset the profit-making applecart. Ignore him, and if he persists, hang him.
While I don’t think Wall Street is ready to hang Krugman and Stiglitz, such profit-seekers have been doing a good job of ignoring them, as Kuttner notes. Contrary to daily and incessant propaganda emanating from Wall Street and its hired guns, we know that it is possible to have a well-performing economy where profits to investors are not so great but other factors to be evaluated are prospering.
For instance, I can remember when the Dow was at 750 and the nation was prospering (a situation that runs counter to the daily mythology being spread by those on Wall Street who are the current “gatekeepers of power and profit”), which proves that there is little if any connection between prosperity for the few as a necessary prelude or concomitant to general prosperity. Recent experience indeed rather proves the contrary, as demonstrated by Piketty’s r > g killer formula which, based on three centuries of statistics, concludes this argument. As our management of capitalism has turned out (per Piketty), the rich are getting richer and the poor are getting poorer and it is not a matter of fault. He writes that it is baked into the system and (as he calls it) “the central contradiction of capitalism.” The system contains the seeds of its own destruction “if left unattended.”
Worse, it is accelerating as profit supplants other considerations in our attempts to manage our economy while inept politicians “follow the money” (aka campaign contributions) in making economic “policy.” Our present course is a recipe for ultimate failure of our capitalist system and (per Piketty) if left unattended may bring about its collapse sooner rather than later. Krugman and Stiglitz are trying to “attend” to it, but are being ignored. There is no room at the inn for economic beatitudes in a world ruled by those who have a psychotic penchant for profit, an all-consuming search oblivious to any system or the people in it.
Neither party has done much to reverse shrunken government or deepening inequality; nor has either party taken the wisdom of these two Nobel Prize winners to heart in either making or reversing policy decisions vital to the health of our economy, omissions that have had and are having tragic consequences for millions of Americans in terms of a grossly underperforming economy and the trillions in production of goods and services and income lost as a result of policies based on the narrow criterion of profit. It will take years for our economy to recover from present policies of austerity and coddling of the investment and banking class even if we adopt Krugman-Stiglitz policies, an adoption nowhere yet in sight as we continue our descent down the economic abyss to a destination no one can predict.
I will expand on the work of our home country prophets in Part II. They are not “without honor” to me, whatever their addresses, and they certainly have my attention. Stay tuned. GERALD E

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2 Comments
  1. Consciousness comes before being. Being conscious makes us aware of our inner capacity for both good and bad, building up and tearing down, giving life and taking life. Economics must be guided by our “better natures” that would fight through our shadow natures of ego and narcissism. Economics, at its best, will reflect the reality of our interconnected-ness. The boulder of consumerism can crush our human consciousness if there is an absence of critical reflection on our true natures. In that respect, consumerism is a sly and cunning power. It can make us believe that consuming is our goal, our destiny, our reason for being. Of course, most of us know that material wealth is no predictor of happiness. On the other hand, most of us know that acute poverty does not necessarily crush the human spirit. In fact, the crush of poverty can enliven and deepen the human spirit toward cries and actions of justice. All to say, there is a necessary discipline of daily awareness and reflection of who we are as a human species, a human family, being aware of our true natures and what is ultimately important in our day to day living. Yes, we all need daily bread. That need must be married to our inner understanding of our collective human consciousness.

    • You are, of course, right. Unfortunately, I am called to deal with the stark horror of class dictatorship in parceling out what we collectively produce, a task involving recipients ranging from the greedy to the poverty stricken. Someone has to do it, and I have elected myself. I am anti-Pharisee to the core. Hotter here, and I have my first red tomato! Vitamin C awaits. J

      Gerald E. Read my blog at: elderblogger.wordpress.com

      On Wed, Aug 6, 2014 at 11:26 AM, elderblogger wrote:

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