Generational Dynamics Forum - New Site

Regarding the stock market --

It looks like someone else is thinking along the same lines as in one of my earlier posts. In that
one must own a stock for a minimum period of time before one can sell it.

http://www.zerohedge.com/news/guest-pos ... -be-closed

1) All shares must be owned for at least four hours 2) All trading must be executed by humans on a transparent exchange where all trading activity (and open orders) is visible to all participants 3) Intervention in the market by the Federal Reserve or any Central State agency or agents is against the law.

Higgenbotham wrote:The implicit assumption in my statement was that the deterioration in the fiscal condition of a geographic area on the periphery of Europe or the US will eventually lead to a breakup, similar to the breakup of the Soviet Union. That alone isn't a sufficient cause or reason; it's only a symptom. I'll try to go into the common causes at a later date.

This post will cover the first common cause, which is the social contract common to these political units and the conflict between its promise, its recognition as a right and the inability to deliver it over the long term due to its unaffordability.

The Soviet Union, Europe and the United States were competing industrial societies organized around a similar social contract. In exchange for giving up a significant block of time until retirement, the individual who buys into the social contract gets (or used to get) the following (it varies a little, but I'll list it for the US):

1. A house with a mortgage in a safe and pleasant neighborhood of their choice that will be paid off and have significant worth upon retirement. The US obsession with crime and prisons figures into this part of the contract.
2. The ability to educate children with the assumption being that they will have the opportunity to live better than their parents.
3. Affordable health care.
4. A pension that will provide basic necessities in old age.

Housing, education, health care, and retirement. We hear it over and over. In the Soviet Union, everyone got a flat and a dacha, education, health care, and a pension. In one sense, the Soviet Union was thought of as a competing model.

Starting in the mid 1970s or so, this social contract started to break down in the industrialized countries. It broke down, I believe, because it could no longer operate at a profit. This was most apparent and unfixable in the Soviet Union, and the obvious "fix" was to slide over to the slightly better model of the US and Europe.

In the US, each of the 4 cornerstones is failing, which means if people invest toward willingly forgoing that significant block of time until retirement, they run the risk instead of getting nothing for their effort, except maybe some student loan debt that can't be discharged. The obsession of the authorities at this juncture is therefore to:

1. Bring the housing bubble back by trying to get the banks to lend.
2. Create an education bubble (keeps 20 somethings off the streets too).
3. Provide health care for everybody with Obamacare.
4. Maintain the value of the pensions by creating a stock and bond bubble.

I think the primary cause of the collapse of the Soviet Union was that the social contract became unaffordable. We see the same theme now in Europe. What the Greeks are really saying is we want the contract we were promised and the Germans are saying you can't have it because you were profligate. We all recognize the second part of the argument. Since there isn't a competing system to slide over to, everything is at an impasse. There is no solution because the contract that the Greeks were promised and still want simply is not affordable and can't be made affordable, yet at the same time, the EU promised it as a condition of membership.

As I think we all agree, this situation will exist in America, probably within the next 2 years. There is going to be a hell of a lot of turmoil in this country once the citizens understand and accept that the 4 cornerstones of the social contract are gone and are not coming back.

The question is whether the US as a united political entity can find a way to get the citizens to accept that the very political entity that can no longer provide the social contract is worthy of entering into a new contract with. I think the answer to that will ultimately be no, regardless of the strength of its history. If the social contract in the US had been broken in a thoughtful and humane way the resolution might be different, but it was broken through deceit and lies, and in a very disrespectful manner, the same way it was broken in the Soviet Union.

Across the official political and media spectrum, there is an acceptance of the essential framework of Ryan’s plan—that the working class must pay for the massive debts resulting from the bailout of the banks, the tax cuts for the financial elite, and the overall crisis of American capitalism through ever more painful cuts in its living standards.

The Democrats, no less than the Republicans, represent the American ruling class and defend its interests.

http://www.wsws.org/articles/2011/apr20 ... -a07.shtml

Using some key words from the above, this article came up near the top of the list. Judging from what I'm reading on the forum, everyone has come to accept the above statement, perhaps substituting "9X percent" for "working class". The article continues:

The Socialist Equality Party and the World Socialist Web Site reject the entire framework of the official budget debate. We reject the proposition that working people should sacrifice to prop up the crisis-ridden and historically bankrupt capitalist system. The barbaric proposals emanating from the ruling class and its political servants provide the most compelling argument for the overthrow of this system and its replacement with socialism.

There are two irreconcilably opposed lines: that of the ruling class and both of its parties, which insist on the financial aristocracy’s “right” to personal wealth and profit, and that of the revolutionary socialist party, which articulates the interests of the working class. We insist that the working class has social rights—to secure and good-paying employment, health care, housing, education, a comfortable retirement, a world free of war and repression, a future for the youth—and that these rights must be secured through a frontal assault on the wealth and privileges of the ruling class.

Within the existing framework of the US as a united political unit, I think we have 2 conditions that most citizens can agree on:

1. The ruling class is a united front, now similar to the ruling class of the former Soviet Union, and the social contract has been stolen by the elites.
2. Regardless, the social contract is unaffordable anyway.

Despite the fact that the social contract is unaffordable, the fact that the social contract has been stolen by the elites will lead some to believe that it can be restored by punishing the elites and overturning their rule, which is a likely prescription for some kind of violence or breakup. This brings up the further question of whether the US citizens will willingly go to war for the elites when that diversionary card is played or whether some will turn on them, and how and where this is likely to occur.

We also need to consider that if the US elites play the diversionary card of going to war with China or get dragged into a war with China, funding could come into question.

I think the conditions that need to be taken into account in this context are:

1. The social contract is unaffordable.
2. US borrowing is at or near its limit and the US credit rating has been downgraded once.
3. The US receives significant funding from China via the Chinese purchases of US debt.
4. If the US leadership chooses the diversionary tactic of going to war with China, the Chinese will cut off that source of funding.
5. When the Chinese cut off that source of funding, in order to maintain the increased costs necessitated by the war effort, the social contract will require further drastic cuts.

From Joseph Stiglitz:

For decades after the beginning of the Cold War, the United States and the Soviet Union were engaged in a battle over human rights. The Universal Declaration of Human Rights listed both basic economic and political rights. The United States only wanted to talk about political rights, the Soviet Union about economic rights. Many of those in the Third World, while noting the importance of political rights, gave greater weight to economic rights: What good does the right to vote mean to a person starving to death? They questioned whether someone without any education could meaningfully exercise the right to vote when there are complex issues in dispute.

Finally, under the Bush administration, the United States began to recognize the importance of economic rights — but the recognition was lopsided: it recognized the right of capital to move freely in and out of countries, capital market liberalization. Intellectual property rights and property rights more generally are other economic rights that have been emphasized. But why should these economic rights — rights of corporations — have precedence over the more basic economic rights of individuals, such as the rights of access to health care or to housing or to education? Or the right to a certain minimal level of security?

These are basic issues that all societies have to face. A full discussion of the issues would take us beyond the scope of this short book. What should be clear, however, is that these matters of rights are not God-given. They are social constructs. We can think of them as part of the social contract that governs how we live together as a community.

http://www.college.columbia.edu/cct/may ... bia_forum3

OK, that completes discussion of the first common cause plus some background. The next common cause has to do with the new technologies. If anybody has anything to add in the meantime, please do.

I can't recall if I posted this already, but, here it is...a mathematical approach to history and prediction...sounds a lot like GD, only he calls it "cliodynamics"...

http://www.newscientist.com/article/mg2 ... print=true

Given the discord I was waiting for the Noske phenomenon to resurface in South Africa. Given the typical discourse affirmed from the Politico on this cycle the order of exploitation of man by man remain intact and are complicated to a geopolitical formation. The older confusion did note the colossal illusion of choice of the union leaders which never made on criteria of industrial competence, but of merely legal, bureaucratic or demagogic competence. And the more the organizations became larger, the more frequent became their intervention in the class struggle and a more widespread action. Noted also it became necessary to reduce the leading office to an office purely of administration and accounting, the more industrial technical capacity became a non-value and bureaucratic and commercial capacity took the upper hand. There was thus formed a real and proper caste of union functionaries and journalists, with a corps psychology absolutely in contrast to the psychology of the workers, which ended with assuming towards the working mass the same position as the governing bureaucracy towards a parliamentary state. To be noted it is the bureaucracy which reigns and governs as it is with Perestroika when followed to current logical realities.

Taken from the red playbook adversaries don’t worry themselves with judging the attitude of socialists in the same way as they do principles and methods that the socialists have always professed and followed. Doing do this would mean truly considering them and doing something concrete. They don’t even attempt this judgment, being incapable of it. They lose their way when placed before men of character groping about in the darkness, giving up all hope in the blind alleys of gossip, of slander, of defamation. They don’t understand a straightforward, strictly coherent demeanor. They are hypnotized by facts, by current events. They don’t understand the man of character, who weighs and judges facts not in and of themselves as much as in their relationship with the past and the future; that facts are thus judged primarily for their effect, their eternal nature. They are mystics of the fact. And a mystic can’t judge: he can only bless or hate. But this is the strength of socialists. To have preserved character. To have succeeded in defeating sentimentality, to have succeeded in throttling the throbbing of the heart as a stimulus to action, as a stimulus to the manifestations of collective life. In this period of history the Socialists have realized for historic ends humanity in its most perfect form. A humanity that doesn’t fall into the easy traps of illusion. A humanity that has rejected as useless and harmful the inferior forms of spiritual life: the impulses of the tender heart and sentimentality. They have rejected this consciously. Because they knew how to assimilate the teachings of their greatest teachers, as well as the teachings that are spontaneously produced by bourgeois reality, bitten into by the reagents of socialist criticism. The Socialists have remained steadfast in their ranks determined by the demands of the social class. As a collective they are not disturbed by the painful spectacles that are presented to them.

This is what we witness as the seen and unseen we comment upon as the condition. In this time of darkness your light must shine and your seal in the forehead is dependant on no one. It is your time to prepare for the nonsense upon us.

The situation may end up worse here than in the former Soviet Union or Europe for several reasons: I agree H and they grope in darkness
since the calculations are the same for both models they still deny. "seek while he may be found" because a period of darkness is coming and with it will come "a famine… of the hearing."

Clio being the muse of history, I suppose that's apt.

Prior to the invention of modern banking, if the social compact was broken (and that compact is virtually identical in every society, only the means of distribution and enforcement differ) it was broken because of disaster of some kind, war, siege, collapse, drought, etc. Since the invention of banking, it gets broken (in the West) because bankers get too greedy. Thus we have the generation of Marxism as a reaction to the creation of modern banks. The ebb and flow of history has become much greater simply due to the banks, there is little reason to look for some further cause for the increase in the amplitude of historical waves since 1600. Those who are willing to use such banks grow their fortunes and their power much more rapidly than those who do not, and they collapse from their zenith to their nadir much more rapidly and more completely than those others as well.

It's funny to hear the fevered discussions of social security on TV. You'd think there were no possible solutions at all. In fact, there are many.
1. Simply do nothing, and allow benefits to drop to 75% of what was promised when the trust fund runs out.
2. Drop benefits paid out by 10% now, which puts off trust fund depeletion something like 3 decades further.
3. Increase the payroll tax by 2.8% which would fund the system as it stands past 2100.
4. Assuming life extension treatments become available by 2035, offer such at no charge if the person accepting allows their SS account to revert to the status it held when they were 30 years old. (yeah, a bit futuristic, but I include it because I think it's very likely to happen.)
5. Raise the retirement age.
6. Some combination of the above.

This just shows how totally ineffective our politics has become. When simple solutions can't be managed in a rational manner because our politicians can't bear to implement ANYTHING, we've got problems far beyond the social compact, our government has broken and it badly needs to be fixed.

Increasing the tax is always the solution to Statists. The nature of economics points to its induced failure
time and time again. Never will Statists effectivley produce profit. No one denies a mixed market. I will leave
it at the 5 bags of grain and when the Statist start eating the fourth bag it always fails. The American breaking
glass and hubris is the culprit. I do not deny the need for a Sheriff for order and we can clearly see what the
so called smart kids are up to. I find the moral question of fight it on another soil to some merit but will convey
it again as the burn rate. To many forget fiat is designed for one function as we covered here.
The truth is that fiat economics has been designed to completely hide the monetary system that is the economy as conveyed.

OLD1953 wrote:
It's funny to hear the fevered discussions of Social Security on TV. You'd think there were no possible solutions at all. In fact, there are many.
1. Simply do nothing, and allow benefits to drop to 75% of what was promised when the trust fund runs out.
2. Drop benefits paid out by 10% now, which puts off trust fund depletion something like 3 decades further.
3. Increase the payroll tax by 2.8% which would fund the system as it stands past 2100.
4. Assuming life extension treatments become available by 2035, offer such at no charge if the person accepting allows their SS account to revert to the status it held when they were 30 years old. (yeah, a bit futuristic, but I include it because I think it's very likely to happen.)
5. Raise the retirement age.
6. Some combination of the above.

This just shows how totally ineffective our politics has become. When simple solutions can't be managed in a rational manner because our politicians can't bear to implement ANYTHING, we've got problems far beyond the social compact, our government has broken and it badly needs to be fixed.

The problem here is not that there is no solution for Social Security ( although other problems, like the debt crisis in Europe may not have a solution that does not include the collapse of governments and societies ). Nor is the problem "how totally ineffective our politics has become".

To the contrary. Our politics are very effective in achieving their goals. The goal of modern day politicians is to get re-elected. They almost always do. Except on rare occasions the politicians are extremely effective at achieving their goals. Politicians promise things and they never want to get caught breaking a promise, so they just lie about history. The reason Social Security needs a solution is because the politicians kept promising more things with less cost while failing to pay for the things they had previously promised. They also stole money ( taxes ) they collected for the purpose of keeping a previous promise and used it to partially pay for even more promises. They are now telling more lies to cover up previous lies. Social Security is simple to explain, compared to say Medicare or Health Care. Yet the Media helps the politicians lie about the simple history of Social Security benefits and also lie about the simple history of Social Security taxes.

The American people have one, and only one, effective way to control politicians. Fire them.

The American people started their most recent attempt to do just that in 2010. If the Democrats lose control of both the White House and the Senate in 2012, then the American people win this round ( the 2010 through 2012 election cycle ), and the politicians will have once again been put on notice of who is in charge.

The last previous attempt to send this message was in the ( 2006 through 2008 election cycle ) when Republicans lost control of the White House, the House of Representatives and the Senate. Democrats had the largest super majorities in Congress since before most Americans were born during the two year period after Obama took office in 2008. Yet they failed to fix simple things like Social Security or any thing else.

It was not because the politics were ineffective. The politics worked great. They got elected in 2008 with huge super majorities and started making more promises without fixing the problems caused by the previous promises they made, but failed to keep. The politicians believed, and recent polls appear to suggest they may be right, that making promises to give away money now and balance the budget later, is very effective politics.

If Democrats hold on to power in the White House or the Senate, then our current, and long standing, politics will once again have been proven to be highly effective.

If the Republicans lost control in the 2006-2008 cycle and the Democrats do lose control in the 2010-2012 cycle, then maybe, just maybe, members of both parties will decide that current politics are not effective and modify the way they are doing business, but I would not bet the farm on that.

Generational dynamics plays a role here in the willingness of individuals with independent interests, such as members of the media and prosecutors and judges, to actively work to excuse, and cover up, lies, and also crimes, by the politicians, financial elites and other wrong doers of current generations in power. I am not sure that incompetence, laziness and a de-emphaisis of absolute moral values by institutions are not also factors.

OLD1953 wrote:Prior to the invention of modern banking, if the social compact was broken (and that compact is virtually identical in every society, only the means of distribution and enforcement differ) it was broken because of disaster of some kind, war, siege, collapse, drought, etc. Since the invention of banking, it gets broken (in the West) because bankers get too greedy. Thus we have the generation of Marxism as a reaction to the creation of modern banks. The ebb and flow of history has become much greater simply due to the banks, there is little reason to look for some further cause for the increase in the amplitude of historical waves since 1600. Those who are willing to use such banks grow their fortunes and their power much more rapidly than those who do not, and they collapse from their zenith to their nadir much more rapidly and more completely than those others as well.

I'm guessing that when you speak of the social contract here you are speaking exclusively in terms of economic rights, as I did. Though I quoted Stiglitz and, while I don't think his comments are accurate, they distinguish between political and economic rights, and how the Soviets/Marxists changed the terms of the debate, as you also note. My view is Roosevelt was the first in the United States to codify the economic rights with government work programs and Social Security circa 1935, we got a cabinet office called HEW (health, education, and welfare) in 1953, then Johnson codified the Great Society from 1964 to 1968 or so.

Going into this generational crisis period, we have for the first time in US history the notion that there are "certain economic rights" and as the economy winds down these are harder to guarantee than the "certain unalienable rights", and just when people will be counting on them. When John or others ask how this crisis period is different from the previous crisis period, here is one difference.

The assignment of blame for the failure to deliver the "certain economic rights" that have been codified into law or have at a minimum become thought of as rights seems to be falling on government and not the banksters. It surprised me that when the housing bubble burst polls asked who was to blame - was it the Fed, the Banksters, Fannie Mae and Freddie Mac, Congress, or the President, and the response was that the government was largely to blame, with Congress given most of the blame. For the high cost of education and health care, the public similarly blames government.

Surely, the founding and success of the US was not based on "certain economic rights" and at least some Americans understand that history, and it is a strong and successful history. However, if that was understood well enough, the idea that there are economic rights in this society that can't be taken care of as a course of the natural outflow of the "certain inalienable rights" would never have been considered, I don't think. In assenting to "certain economic rights" Americans have already collectively rejected their history. There's nothing in the Constitution and no Amendment that guarantees it (to be clear, I'm not arguing that Social Security or Obamacare are unconstitutional, just that there's nothing in the Constitution that guarantees these kinds of economic rights). There hasn't yet been a crisis to test it.

The constitutional basis of the Social Security Act was uncertain. The basic problem is that under the "reserve clause" of the Constitution (the 10th Amendment) powers not specifically granted to the federal government are reserved for the States or the people.

Ultimately, the CES opted for the taxing power as the basis for the new program, and the Congress agreed, but how the courts would see this choice was very much an open question.

Similar to the recent Supreme Court justification for Obamacare.

http://www.ssa.gov/history/court.html
http://www.thedailybeast.com/articles/2 ... acare.html

Higgenbotham wrote:The assignment of blame for the failure to deliver the "certain economic rights" that have been codified into law or have at a minimum become thought of as rights seems to be falling on government and not the banksters. It surprised me that when the housing bubble burst polls asked who was to blame - was it the Fed, the Banksters, Fannie Mae and Freddie Mac, Congress, or the President, and the response was that the government was largely to blame, with Congress given most of the blame. For the high cost of education and health care, the public similarly blames government.

I posted this above and thought I'd leave it. I've been checking assumptions to see if anything has changed and ran across this article, which states:

In assessing blame for the housing crash, people are increasingly seeing financial institutions as the central culprit. Amid the swirl of recent disclosures about banks following improper and illegal procedures in pursuing foreclosures, 42 percent blame lenders, while 29 percent blame regulators. When the question was asked in early 2008, as the crisis was still building, the numbers were reversed, with 40 percent blaming regulators and 28 percent blaming lenders. Only a handful of respondents at either moment blamed the borrowers themselves for taking loans they could not afford.

Who ultimately gets the blame for the failure of the first item on the list is going to be important. If public ire is now shifting toward the banksters, then the chance of a Soviet or European style breakup is diminished. Though there are many other factors besides this one, it is an important factor. But even if the public turns against the banksters, the government is going to have to punish the banksters, or the government could become the next target.

http://www.nytimes.com/2011/06/30/business/30poll.html

I'm not finding very many polls along these lines. Gallup keeps asking the stupid question of whether Obama or Bush is more to blame for the bad economy, which isn't useful information as far as I'm concerned.