Wisconsin Recall Effort

Wisconsin's political civil war may soon bring a shift in the state Senate as recall efforts target 8 Republican senators. It is possible that the state senate will soon be democrat controlled allowing Democrats to essentially block all of Walker's new legislation. An even more worrying turn for Walker is that if the election were held today Walker would lose to Barrett by double digits showing hes clearly lost support among independents. It's clear now to the Republican party that Walker's recent hard won victory was Pyhrric and will result most likely in the strongest backlash the state party has ever seen. Worse for the republicans all of the gains Walker has made in the past few months will no doubt will be undone within 2 years as a new administration takes power. But stranger things have happened in the past in Wisconsin politics with political dualism making Wisconsin a difficult bronco to tame, like Qaddafi he might just hold on to power until the end of his natural term.   

Michael Moore on Wisconsin Union Busting

Many in fact a majority of Americans don't like Michael Moore's opinions all that much but that doesn't at all mean that he's wrong, in fact many of his ideas have solid foundations in economics. A major problem today is the heterogeneity of news media in other words, people choose what they want to hear think of FOX NEWS or MSNBC. These reinforce ones thinking and leads to a breakdown in individual thinking.

Keynesian Economics

A very good description of the two competing economic theories for times of recession. There is is something to say for both theories but there is good reason that Keynes rains supreme it's because most economists believe his theory is correct, for it takes in the variable of the animal spirit or rather what is captured by game theory and the Cournot-Nash equilibrium.

The Recession

Several years ago I helped apply the Great Recession term to our current economic predicament, now however it seems that my worst fears were realized, in fact exceeded my fears in many ways. In the mean time I've finished my M.B.A. with a focus on global strategy and lived for some time in Europe where I can say they put the party in hard economic times. Still when we look at the good old U.S. we are in a bad situation although not equally, in fact corporate profits are higher than ever. Indeed many companies have just learned that they don't need you to make profit, they need a few dozen Chinese but they don't need you. This is the first time in American history where the bargaining power of the worker has been reduced to virtually nothing. This might be an exaggeration but as a worker you are not going to be demanding a raise from your boss unless you are a CEO of a bailed out company. The truth of the matter is that companies are turning a profit because they don't need you anymore, in fact they have just cut about 15% of America out of their tiny (and I mean tiny) share of the pie and realized their profits are just fine. Well what does this mean, it means that companies aren't increasing production because there is no demand and have learned to make money from the demand which already existed. Is it a waste of talent? Does it reduce the well being of America? Well yes, and no capitalism demands inefficiency. In fact capitalism is probably just as inefficient as communism in many respects. Consider that a huge portion of the economy is based simply on marketing, consider how much more productive we would be if no company had to advertise and people simply produced products which benefited the material wealth of the common man. Well the company directed to produce the good in question would get complacent and not innovate at the same rate also a bad outcome. Still we understand due to game theory that unless people are forced to choose the optimal path people will always choose what best benefits them and as a result there is a loss of wealth. Well those unemployed and underemployed in this economy represent the loss of wealth. Companies know if they were all hired with each company taking their share of workers demand would increase to where the extra costs of the workers will be satisfied with a greater overall demand for their goods. But heres the problem all companies have to do it in tandem for them to benefit otherwise another company will benefit from your new employees buying power while your company suffers additional cost without additional revenue. This is where Keynesian economics comes into play whereby the government artificially creates demand by stimulating the economy employing all (some) workers and the increase demand will sustain itself after the stimulant money is used. This theory was successfully implemented during WW2 where the economy recovered from the depression only when demand was great enough to make hiring a necessity. Now we don't have the political will to do this kind of spending which means unemployment will only slowly return to its 'natural level over the course of several years. High unemployment is thus an inevitable result of the boom and bust cycles of capitalism but due to game theory communism has just as nasty side effects, the solution, well there isn't one, there never was. One thing is for absolute certain the stimulus wasn't big enough and since the small one was too little too late people have written off stimulus as a viable means to economic recovery. Theoretically due to game theory stimulus is the only means out of the crisis since businesses wont blink first. But the political will of the people (masses with pitchforks) is for austerity because they mistakenly believe macroeconomics is the same as their personal finances (dag nabbit if I can't go out and spend more than I earn how can that big ole' goermint do it). The definition of conservatism is to not to change the definition of insanity is doing the same thing over again expecting a different result. Still there will be no Keynesian stimulus, rather a simple old fashioned long laissez-faire recession which will hurt the poor who vote for the conservatives who in turn do the same things which dont employ those who voted for them.

The Great Recession

The bottom of the economy is any ones guess, but for the average American it doesn't matter, they are already suffering. Unemployment is rising almost at the rate of inflation, the disparity of wealth is the greatest since the summer of 1929, and the Republicans are eager to give tax cuts to the wealthiest of Americans, at a time when social services are at their greatest demand. What is clear is that the laissez-faire economics the Republicans have touted for, well, ever, is not working, and truthfully never have. The problem of the economy is rather simple, the base of the economy as in peoples earning power and spending power is been quietly eroded for the past 8 years as the wealth of the nation has been redistributed to the top at every increasing rates. Globalization has eroded our production capacity and has ushered in a global working class, for the third world it means greater opportunities and benefits, for the established 1st world the direct competition with the pay of the third world has greatly reduced their standard of living. A nations wealth is dependent entirely upon the strength of the working and middle classes ability to earn excess spending income. Income now stagnated at the very top of the economic higharchy. Hoovernomics should have been laid to rest long ago, but its recent incarnation with Reaganomics (recession of 1991) and Bushanomics (2001 & current) show that when wealth collects at the top it refuses to circulate choking off the means of economic growth. With the credit crisis worsening and the nation's people unable to get the capital to invest in either purchases or their own business the economy will most certainly collapse under the hoarding carried out by the banks and the wealthies in society. As taxpayers we just gave 1 trillion in free credit to the wealthiest, yet they have chosen to horde that generous sum as well. We have no choice any longer, the nation needs a new deal, the nuclear option must be made. It is certainly regrettable that raw capitalism has failed, but to prevent the fall of the American system all together we no longer have any choice, the banks must be made to lend. We must nationalize the banks. Capitalism itself will fail if we refuse to act, we must replace the feet of capitalism in order to save the body. Iceland has recently been forced to nationalize and Britain is currently in the process. America will face a depression unless the the money is forced to flow to the bottom, confidence must be restored. America must be restored.

Russian Resurgence

Since the start of hostilities over the breakaway Georgian province of South Ossetia began on Thursday, the world has been watching a train wreck of western diplomacy and power. We have been absolutely and unequivocally humiliated by an aggressive and re assertive Russian superpower. In retrospective relativity the years since the fall of the Soviet Union were only a short blip on a timeline in which Russia has remained a consistent and unassailable world power. The humiliation we dealt to Russian pride following the Soviet collapse has weighed heavily upon the Russian psyche as they began to reform their economy to a point where their capital boasts more billionaires than our own largest city (New York). We have known of the resurgence of Russia for years, but ignored the threat lurking on Europe's border. As we reveled in being number 1 the Russians spent their time grinding their teeth, selling us oil and biding their time to make their strike to superpower status when we were least capable of putting the bear back in its cage. Overstretched over committed, overspent, and essentially exhausted at running the worlds affairs for the better part of two decades, Russia is more than willing to step in and snatch up a few satellite states which are left vulnerable outside the protection of NATO. The "disproportionate use of force" which has entered the administrations vocabulary recently, leads credence to the impotence the United States and Europe has with dealing with a resurgent Russia. Russia is not a nation which can be understood and reasoned with as we would with an Englishman over high tea. As Winston Churchill once said "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest." Russia's history is that of no other nation, they are the essence of Frauds id run amok in shaping a society. Russians are the most passionate, patient, stubborn, and primal people on earth. Their nature is that of the primal desires which are inherent in all man but their passions and primal drive unregulated by a national consciousness or superego if you will makes them unpredictable and dangerous to the reserved, logical, and contemplative nature of the overinflated western superego. Russia quite simply cannot be reasoned with, its interest are its driving passion, and as with all mans id, they are in short order: money, power, and (beautiful) women. In modern Russia, thanks to western dependence on Russia for raw materials there isn't a shortage of any of these desires. Unfortunately there are few good options the west has in dealing with Putin's Russia, any choice we make will end in hardship and pain for us and our allies. The bear has us literally over a barrel. What can be done? Well again I say we have the free world, the most powerful forum in which to voice our opinions. The G-8, the free worlds economic forum should be whittled down a notch to the G-7, excluding Putin's Russia will send a clear signal that the free still own the vast majority of the world's economic clout. Denying Russia access to the World Trade Organization would also make Russia reconsider their economic confidence, as they are still vulnerable despite their recent windfalls to investors concerns and competition from more agreeable countries, India and the far east for example. Finally uncouth nations don't deserve the privilege of hosting humanities shining example of civilization, the Olympic games. The 2014 Sochi games should be relocated, lets say to Argentina (just for the novelty of it being in South America) . As I write this, Russian tanks are rolling in a show of force towards the Georgian capital of Tiblisi, and have occupied the port city of Poti destroying every remaining vestage of the Georgian defence infrastructure along the way, in a clear violation of the cease-fire accords, agreed to by both sides more than 24 hours ago. Its time to open up the floodgates of support to the besieged Georgians, let the Russians know that the free world will not stand for a rampaging animal at our doorstep. If we fail today than our allies throughout what Russia calls its "near abroad" will fall victim to Russian autocratic hegemony. Ukraine will surely feel the heat in the coming months as Russian nationalist will begin to stir and raise objections to Ukraine's president Victor Yushchenko's western NATO bid. Russia will do its part to destabilize the region in order to rebuild it in its own image. Its imperative that we expand NATO to shield the fledgling nations now coming out from underneath the unforgiving and selfish clutches of the newly confident and vengeful Russia. A bear cannot be reasoned with, only dealt with, as primal nature knows no law but that of immediate desire. Now free men must stand in front of tyranny and protect the innocent, exhibit courage in both word and deed, and never abandon a true friend and ally.

Adrian Waukau 8-13-2008