Economic Inequality

[pbrower2a]

(05-27-2016, 03:44 PM)John J. Xenakis Wrote:

(05-26-2016, 11:52 AM)pbrower2a Wrote: >   Do Keynesian economics well, and you prove the Austrian school
>   wrong.  Do Keynesian economics badly, and you will get the results
>   that prove the Austrian school right. Sponsor a corrupt
>   speculative boom (the "Ownership Economy" of George Worthless
>   Bush), and get an economic meltdown. The Double-Zero Decade was
>   practically a replay of the 1920s, and Sinclair Lewis'
>   Babbitt caught the mood of both decades very well as it
>   caught the mood of no intervening decades from the 1930s to the
>   1990s.

>   I could see the 2007-2009 crash coming when I read a Business
>   Week article exposing the ratings scandal on packaged
>   mortgages. It's possible to hedge risks on large volumes of
>   well-performing risks of fault (or as in insurance, on large-scale
>   catastrophes), but the packaging of fecal loans has no such
>   value. Those loans should have never been made.

I'd be interested in seeing something where you made such a prediction
in 2006-7.  Perhaps you can find something in the tft archive.

http://generationaldynamics.com/tftarchive

I remember my visceral reaction, but I am not sure whether or where I posted my concern. For all I know I may have posted my concern in some news chatline that does not exist now (the old New York Times Forums?) or does not keep posts from the time. Yes, if it was not published and does not remain published, then it might as well not exist.

Quote:If you're going to blame the 2007-9 crash on Bush, then you have to
blame the 2000 Nasdaq crash on Clinton, and you have to blame the
approaching crash on Obama.  Actually, if you're going to be
political, then you could blame both the Nasdaq crash and the 2007
crisis on Clinton.

But Bill Clinton did not sponsor the dot.com boom. More significant may have been the fall of the gigantic Enron Corporation (which I often slurred as "Enrot", "Enrotten", and "Enrob" as its business tactics and weird structure of partnerships between the company and its directors) -- but Enron had its connections with Republican politicians, especially in Texas.

Quote:In fact, none of that is true.  Keynesian economics is completely
wrong because it doesn't take generational theory into account.  The
Austrian school is completely wrong because it doesn't take
generational theory into account.  No politician could have either
caused or prevented any of the bubbles or crashes we're seeing.  The
1990s bubble occurred because that was exactly the time that the
survivors of the 1929 crash and Great Depression retired.  The
mid-2000s credit and real estate bubbles occurred because the
destructive, self-destructive financial engineers of Generation-X
wanted to to screw their fathers, and ended up screwing everyone.

The generational theory puts more importance on the political and cultural activity of a generation, and that is very different from retirements from manufacturing industries. A generation's peak power in defining the institutions in which it has influence is just before its first members start retiring. But it is not the workers or even managers who create the culture; it is the directors, judges, and professors who have some of the cushiest jobs and are most able to protect the agenda of their generation. Directors, judges, and professors can stick around until they get carried off in stretchers or decide that they are dying.

The last to remember a folly as well as its consequences who still have some influence are the last to resist the folly when it appears in some tempting guise. Such may be the childhood memories of people in their early eighties, but child memories are extremely strong. Maybe those in leadership roles at advanced age have reinforcement of their memories from having full educations in the wake of the folly as others do not. So pedagogy meets early memories and enforces those memories. People younger than the youngest to remember some traumatic event don't absorb the lesson in quite the same way.

So the youngest people to remember the Stock Market Crash of 1929 are the last wave of the GI Generation. Such people may put up the most vehement resistance to deeds likely to bring about a repeat of the folly. Once those people are off the scene, the temptations that brought about the folly eighty years earlier overpower such resistance as people have to the folly.

Remember: all blunders and follies have some initial attraction. Without the initial attraction nobody would ever fall for a course leading to disaster. The people who have seen it all before can give good reasons to not fall to the blunder. But when those have seen it all are all dead, senile, or otherwise off the scene, people who do not know from their own experience are up to their own wisdom for judgment. Dead people have no loyal constituency.

Thus GIs who remembered the speculative boom of the late 1920s leading to economic calamity could stop a repeat of such a calamity until about 2005.

Quote:You might find it interesting to know that the real estate bubble
began in 1995.

** The housing bubble began in 1995.
** http://www.generationaldynamics.com/pg/x...tm#e090908

The bubble accelerated in its destructiveness a few years later.

But note some of the consequences of what I say here. Although I still consider George W. Bush a singularly awful President, I cannot put all the fault on him for the economic meltdown that manifested itself in the year and a half of economic downturn, one that after a year and a half was as destructive as the downturn beginning with he Crash of '29, completely upon Dubya. Yes, I can still interpret his dreadful Presidency as practically a telescoping of the worst traits of the Harding, Coolidge, and Hoover administrations into eight years instead of twelve, but I can no longer make him a villain for the economic meltdown (The bungled response to 9/11, the mishandling of Hurricane Katrina, and the military disaster in Iraq  are separate from this). As around 1920 America was highly receptive to weak leadership that would indulge Americans' greed, intellectual laziness, and moral lassitude.  Republicans could have nominated a stronger leader than Dubya who would not have made the same mistakes -- and did not. Americans had the chance to elect Al Gore, who would have basically continued the agenda of Bill Clinton (which had worked well enough).

2000 marks, much as did 1920 roughly eighty years ago, the start of the last phase of a Third Turning: what I call the Degeneracy, a time of depraved mass culture, weak government unable or unwilling to address the moral issues of the time, and business practices that sink to the worst for about eighty years. A Degeneracy eventually pushes society as a whole onto a destructive course to be rectified only in a Crisis.