Alan Greenspan's response to Bernie Sanders in the first video is contradictory. First he says that the incomes and purchasing power of American workers/employees are more important than what they make, and then he says that the job of monetary policy/the federal reserve is to create a climate that is favorable to capital investment and entrepreneurship. This is contradictory; you can't have a full-fledged support of capital investment/innovation and have high wages at the same time in a world labor market where the supply of labor exceeds the demand for its services. The world has 6 billion people, of which only a small percentage have capital. This means that the current wages and salaries that people in North America, Europe, and Japan enjoy, which are largely the result of laws favorable to labor, unionization, and a limited number of workers, enjoy would be driven down dramatically. If labor strikes in one country, demanding high wages, corporations have the option of simply moving to a poorer country. Therefore, national governments must support some sort of non-market mechanism that guarantees that factories will stay in their country and that wages will stay high. In the past, the mechanism that did this was communism - the fear of revolution kept wages high - but now that communism has all but collapsed, the average world-wide wage could be driven down closer to what the average Chinese household makes: an average of 500 dollars in disposable income per year after basic expenses.
Hooray for Alan Greenspan! He knows wages are important, but knowingly supports a policy that drives down the average wage! This, folks, is what is called "sophistry". He is a libertarian ideologue that's too cowardly to just come out and say that he doesn't care how much of the pie workers receive.
Before I touch upon the second video, I would like to say that Greenspan is correct for supporting innovation and entrepreneurship, but wrong in using them as an excuse for poverty. Innovation is useless if 60% of the population can't afford it.
Okay, onto the second video. Greenspan starts the video by saying "that's going to be a terrible situation" when the people of the world realize that there are not enough resources to meet everyone's demands. And he's right! At least from his Randian, libertarian perspective. The world he fears is not the world of poverty; he doesn't give a shit about that world. The world that Greenspan fears is the world where Marxian politics returns, or in his view, the return of "collectivism". And this is where a contradiction develops: Mr. Greenspan is for capitalism, acknowledges that collectivism is irrational, yet is consciously moving the country toward an economic and political climate where collectivism could take over again. But there is no contradiction, because Mr. Greenspan reduces the complexity known as homo sapient to "status seeker", a creature only happy when it is high up on the "pecking order". In other words, people don't care how comfortable they are materially, as long as they have status. This viewpoint is, of course, absurd; there are as many ways to be happy as there are people. Status is obviously important to making a person happy, but it is not the only way, nor even the primary way. Therefore, Mr. Greenspan's "low wage paradise", where the people care more about their status than incomes is a fantasy land.
Any skilled laborers reading this paragraph, including engineers and professionals, should be very afraid of Greenspan. He is in favor of allowing an indiscriminate number of skilled laborers from others countries to enter the country to "drive down salaries" so that "the income inequality will be reduced". Mr. Greenspan's answer to inequality is to make everyone poor!
While it is true, as Greenspan said, that the inequality between wage earners and salary earners would be reduced if foreign skilled labor is allowed to enter the country in large numbers, he fails to mention that this would create a corresponding increase in inequality between salary earners and the rich and wage earners and the rich, hence increasing the income inequality that counts.
What Greenspan is really doing is defending the rich. He doesn't really care about income inequality. Driving down the salaries of salary earners would definitely have an effect: It would further stabilize the political system, at least in the short-term, because then the wage and salary earners would have less to fight about in terms of material status. This is the Korean model. Many white collar workers here in Korea don't make much more than the unionized workers do.
Alan Greenspan is out of touch with the real world. Bernie Sanders is right. He thinks that jealousy is the primary threat to capitalism, when a large proportion the population living in poverty is obviously more important. If jealousy were really so important to the survival of capitalism, the system would have already collapsed, because there are millions of people who make more money than the average person. Instead, high wages have allowed capitalism to survive and stay robust through 150 years of revolutionary politics. Take away the high wages and the system teeters.
So why does Greenspan want to allow large numbers of unskilled and skilled labor to enter the country to drive down wages and salaries? Because he really doesn't care about the stability of the system. Police state, communist dictatorship, *shrug*, he just doesn't care. It doesn't matter to him. He is too entrenched in his ideology to step back and analyze the objective causes of the last 90 years of fascist and totalitarian governments: poverty and greed. Mr. Greenspan has therefore learnt nothing from recent history, which is why I say "We are on the road back to Marx". Driving down wages is that road..
17 comments:
I didn't know this was a political/economical blog.
I generally like Vermont as a state. There's a good portion of them that want to secede from the Union, and there's a town that passed a law to arrest George Bush on sight.
I agree Greenspan is evil and threat to liberty. His policies are a large part of the cause of the financial meltdown that is occurring. Before becoming Chairman of the FED he wasn't so bad from what I understand; he was even for a gold standard.
Do you mean the gold standard that needs fiat overhead to implement and regulate it?
There's an "About Furlong Colony 1" you should read. It outlines the categories schedule.
Alan Greenspan is the same as he was before he chaired the FED. The only difference is that he chaired the FED. He still believes in the gold standard, eliminating the minimum wage, eliminating the welfare state, etc.
Its funny for you to claim he's for the gold standard and at the same time he's the world's greatest counterfeiter.
From my limited understanding, as long as the value of the currency is tied in some way to a commodity, that makes sense to me. The current monetary policy is whats causing the increasing gap between the poor and the rich and destroying the middle class in the US at the same time.
Your understanding is flawed. The commodity still has to be minted and officialized. If this is not done, the currency market would create a never-ending flood of counterfeit. You know! Fools' Gold!
Moreover, because the supply of gold is less than the demand would be for it as a currency and jewelry, the currency itself would be worth more than the commodities and products it would be supposed to be a medium of exchange for. God was only a good medium of exchange in primitive times, because it had no value beyond its beauty. In primitive times, gold had already shown its limit as an exchange medium, as silver and copper were minted to makeup for the shortage. Imagine 6 billion people needing to use gold as an exchange! It simply would not work!
The real problem is not the inevitable fiat system, but the people who chair that system. The leaders of those banks are to blame and should be discarded when they fuck up. Allowing sub-prime loans was a bad idea from the beginning.
You can blame Clinton and the democrats for that because of their changes to the Community Reinvestment Act in 1995.
Republicans tried to pass through regulations on this but were opposed by the democrats...
In 2003, Representative Barney Frank (the man heading up the house Democrats on this bailout) (D-MA) said "These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis, the more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
Not that I'm in favor of regulation, but when you have policies in place that essentially force banks to provide credit, and then you change the legislation to forcefully make sure banks were providing credit (Obama was involved in such lawsuits against banks that were not in line with CRA) then I guess you should at least regulate to minimize the pain.
Jimmy Carter, Bill Clinton, Barack Obama, Greenspan, Bernanke, Frank...all men that should be thrown in jail.
Good thing I believe the Democrats are essentially a capitalist party as well. Who had the most to gain from such legislation, Josh?
The capitalist isn't the CEO of Goldman Sachs. The capitalist is the man selling organic vegetables from his own garden.
Pish-posh. Both are capitalists. You just want to define small-capitalists as capitalists, because that is the political-ethic you feel comfortable with defending. However, the reality of the situation is that both are capitalists.
Sometimes I wonder if classical liberals can even read:
"Some economists have claimed that the CRA encouraged risky lending[12][13] and contributed to the development of the subprime mortgage crisis. According to the Wall Street Journal, the law forced banks to make loans to borrowers who often could not repay them.[14] Federal Reserve chairman Ben Bernanke admitted that an underlying assumption of the CRA – that more lending is always better for local communities – is questionable.[15] However, this is disputed by Robert Gordon who has pointed out that approximately half of the loans were made by independent mortgage companies that were not regulated by the CRA, and thus had no government obligation to offer credit to minorities. In the later part of the crisis, these mortgage companies made subprime loans at twice the rate of CRA banks. Another third of the major subprime lenders were regulated, but had very little CRA involvement.[16][17] Gordon also makes the argument that the weakening of the CRA in 2004 was followed by intensified subprime lending.[16] Austrian economist Thomas DiLorenzo counters Gordon's statistic by arguing that even if half of the subprime loans were made by non-CRA companies, the CRA had still caused tens of billions in defaults on mortgages by unqualified borrowers. He also argues against Gordon's three main propositions stating that Gordon's first two propositions flatly contradict each other, whereas the third is unequivocally false.[18]"
http://en.wikipedia.org/wiki/Community_Reinvestment_Act#Criticism
More: "Ellen Seidman, the former director of the US Office of Thrift Supervision,[1] has stated her belief that the CRA did not have an effect on the United States housing bubble. She observes that CRA banks were particularly warned to make responsible investments, citing a speech by herself as an example.[2] She notes that if unregulated independent mortgage companies do make subprime loans, affiliated CRA banks should not be able to count them for CRA purposes, although she does not indicate whether this practice currently occurs. An analysis by attorneys Traiger and Hinckley concluded that CRA banks were less likely to sell risky mortgages onto the secondary market, and likely mitigated the effect of the subprime crisis."
Offering is not the same as requiring them to grant loans. Read the opening paragraph and think about it.
The CRA is a lot like laws that forced telephone companies to OFFER service in the country.
Moreover, the CRA was reviewed multiple times over the last 13 years, by both parties. If Ron Paul is part of the Republican party, then Ron Paul is responsible for the very thing he has partially attributed blame.
Other causes of the housing collapse:
1. Lower wages for new auto workers.
2. Loss of jobs accross the board, hence leading to personal bankruptcy and foreclosures.
3. Falling wages in the service, resource, farming, and construction industries because of semi-skilled foreign workers entering the job market via the H-1B visa. Those who could just barely make the payments before, are now forced to sell their homes, because their earning power has dropped.
"Ellen Seidman is Financial Services Policy Director in the Asset Building Program of the New America Foundation. In this capacity, she provides national leadership on public policy issues related to expanding access to wealth-building financial services, especially for low- and moderate-income families; improving financial education; forging a new responsibility framework for consumer financial services in 21st century; and helping Americans to better manage their debt. A major focus of Ms. Seidman's work will be to develop a novel, forward looking policy framework to encourage greater responsibility and accountability in the delivery of financial services to low-, moderate- and middle-income Americans."
She works to provide people with loans and she was director of the US Office of Thrift Supervision under CLINTON...a little conflict of interest on the topic me thinks.
You can't say Ron Paul is responsible for the CRA simply because he has been elected to Congress. That's rather silly.
I can say because he is a part of the Republican party. Period, end.
It doesn't matter who says it, Josh. The fact is that more than half of the bad credit was caused by private companies. Moreover, since the CRA does not force the banks to give loans, only to offer loans, the whole issue becomes moot. It was the decision of the banks, not a result of the CRA.
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