Not going into all the parts, but the Oil Drum blogsite has a new post with a series of observations about energy related events across the globe.  It’s a good snapshot.  One take away is that we’re probably going to have to put infrastructure in place to use our natural gas for transportation, at minimum.  Can Democrats and Republicans get together on this?  Probably not because Republicans are only about trimming New Deal and Great Society safety nets in order to satisfy their ideological goals of shrinking government and giving their masters, the already wealthy, even more tax breaks.

Republicans in Congress were just barely able to extend for 90 days funding of nationally important transportation projects.  The only conclusion is that the GOP has become, collectively, a fifth column traitor against our future economic health.

From the Economist:

The Treasury has just published a white paper full of reasons to favour additional investment. Even if you are sceptical of the utility of fiscal stimulus qua stimulus, now seems like a very good time to undertake much more investment than normal. As the Treasury paper points out, very low interest rates and high unemployment mean that the odds of crowding out private spending and investment are much lower than normal. Cheaper than normal capital and labour also imply that taxpayers will receive a better deal on spending than would typically be the case. The cost-benefit calculus on infrastructure investment has shifted toward doing more of it, or at least squeezing more expected investment into the present period. Other research, like the new Brookings paper by Brad DeLong and Larry Summers, also indicates that the bar for greater investment should be lower. Given the potential that unemployment will become increasingly persistent as time goes on, the value of government spending that reduces joblessness—even temporarily—is higher than may be appreciated. Any projects that seemed like good ideas in general, and there are a lot of them, look like really, really good ideas now.

And yet Congress has struggled mightily to keep even existing spending going. The nation’s primary transportation-funding law expired in 2009. Normally a wholesale replacement or reauthorisation would follow that expiration; Congress has instead repeatedly extended the old law while bickering over how to come up with money to replace the increasingly meagre take from the nation’s petrol tax. The latest extension is set to expire, and legislators are arguing over what to do next. They might extend the measure again—for 60 to 90 days. Or they might stonewall themselves into a temporary shutdown of all federally funded projects.

Inaction is absurd and embarrassing, especially since funding is the primary (though not the only) source of disagreement and the costs of borrowing and unemployment (and the likelihood of a decent return on infrastructure investment) indicate that just borrowing the money to spend on new roads and rails would be a reasonable course of action. If ever there should have been a policy so obviously sensible as to attract bipartisan support, more money for infrastructure was it. Right now, when it comes to partisan politics, sensibility’s got nothing to do with it.

Beezer here.  How else to figure it?  Big oligopolies in Banking, Fossil Energy, Agriculture and Health Insurance are funding Super PACs which daily bombard us with propaganda about how they still need subsidies and protections against competition.  Tea Partiers and Libertarians are so disgusted with our government’s inability to help ‘We the People,’ they’ve paradoxically joined forces with the oligopolies–the very forces that bribe our government to insure our government serves the wealthy oligopolies instead of the general population.   

From an article in businessinsider.com entitled 50 Facts About Health Care That Will Astonish You.  Here’s ten of these facts, none of which should astonish Beezernotes readers.

1) What the United States spent on health care in 2009 was greater than the entire GDP of Great Britain

2) Health care costs accounted for just 9.5% of all personal consumption back in 1980. Today they account for approximately 16.3%

3) The United States spent 2.47 trillion dollars on health care in 2009. It is being projected that the U.S. will spend 4.5 trillion dollars on health care in 2019

4) Approximately 41 percent of working age Americans either have medical bill problems or are currently paying off medical debt

5) Medical bills are a major factor in more than 60 percent of the personal bankruptcies in the United States

6) Over the past decade, health insurance premiums have risen three times faster than wages have in the United States

7)  The chairman of Aetna the third largest health insurance company in the United States brought in a staggering $68.7 million during 2010

8) The top executives at the five largest for-profit health insurance companies in the United States combined to receive nearly $200 million in total compensation for 2009

9) Even as the rest of the country struggled with a deep recession, U.S. health insurance companies increased their profits by 56 percent during 2009 alone

10) America’s five biggest for-profit health insurance companies ended 2009 with a combined profit of $12.2 billion.

Beezer here.  We really, really have to do a better job.  If only we could crawl out from under these huge, non competitive oligopolies that own our Congress, hook line and sinker.  Of course the Republicans think moving more of the cost over to elderly families is the answer.  What a bunch of creeps.

According to Baseline Scenario, which got a pre-publish date copy, a new book by Jacob Hacker and Paul Pierson entitled “Winner-Take-All Politics,” gives a badly needed political explanation for America’s current woes.

Beezer, as a wizened veteran of politics, has always posited politics as a main, if not the key, dynamic forming our national economy.  Which by itself need not be a negative.  In a Democracy, if the political structure represents the majority will overall (with Constitutional protections for minority rights), then there’s no reason politics can’t be a strong positive force for the economy and the commonweal.

And as someone old enough to remember times as ancient as the 1950s, Beezer became increasingly uncomfortable during the late 1990s about the political climate.  It had obviously become something other than a forum to discuss the commonweal.  But it was hard to pin down, exactly, what was going on.

The Great Recession revealed what had become different.  America had been captured by Oligopolies.  For all intents and purposes, the public was out of the loop.  Industry after industry had successfully captured Congress, as Oligopolies always attempt to do, in order to stifle competition and control their industry solely for their own, private, benefit.  The sole corporation that was supposed to protect the public from such predation (the Constitutional corporation otherwise known as the Federal Government) not only no longer served that function, it became a major force enabling this predation.

“Winner-Take-All Politics,” explains that the transformation of our political system is possibly the primary underlying cause of our current economic problems.

From Kwak’s review:  ”…their argument is simple: business interests in all sectors organized a takeover of political power that pushed organized labor and other groups protecting middle-class interests to the sidelines and made possible decades of policies that have enriched the super-rich at the expense of everyone else, including the merely affluent. Finance was simply the biggest and most profitable of these sectors–and, we would emphasize, the one best able to hold the government hostage in a financial and economic crisis.”

There are varying opinions about when this process began in earnest, but the book’s authors explain that it was during the 1970s where the transformation of our political system began.  From there forward its been all downhill for public opinions to affect politics.

“Hacker and Pierson, however, point the finger at the 1970s. As they describe in Chapter 4, the Nixon presidency saw the high-water market of the regulatory state; the demise of traditional liberalism occurred during the Carter administration, despite Democratic control of Washington, when highly organized business interests were able to torpedo the Democratic agenda and begin the era of cutting taxes for the rich that apparently has not yet ended today.

Why then? Not, as popular commentary would have it, because public opinion shifted. Hacker and Pierson cite studies showing that public opinion on issues such as inequality has not shifted over the past thirty years; most people still think society is too unequal and that taxes should be used to reduce inequality. What has shifted is that Congressmen are now much more receptive to the opinions of the rich, and there is actually a negative correlation between their positions and the preferences of their poor constituents (p. 111). Citing Martin Gilens, they write, “When well-off people strongly supported a policy change, it had almost three times the chance of becoming law as when they strongly opposed it. When median-income people strongly supported a policy change, it had hardly any greater chance of becoming law than when they strongly opposed it” (p. 112). In other words, it isn’t public opinion, or the median voter, that matters; it’s what the rich want.

That shift occurred in the 1970s because businesses and the super-rich began a process of political organization in the early 1970s that enabled them to pool their wealth and contacts to achieve dominant political influence (described in Chapter 5). To take one of the many statistics they provide, the number of companies with registered lobbyists in Washington grew from 175 in 1971 to nearly 2,500 in 1982 (p. 118). Money pouring into lobbying firms, political campaigns, and ideological think tanks created the organizational muscle that gave the Republicans a formidable institutional advantage by the 1980s. The Democrats have only reduced that advantage in the past two decades by becoming more like Republicans–more business-friendly, more anti-tax, and more dependent on money from the super-rich. And that dependency has severely limited both their ability and their desire to fight back on behalf of the middle class (let alone the poor), which has few defenders in Washington.”

Beezer here.  Must buy this book.  It sounds as if it is a good recounting of the process where Oligopolies are naturally formed and do what they always do–capture government and make it another tool for their suppression of competition.  And the recent Supreme Court decision that corporations were just like real people has put the cherry atop a very toxic cake for America.  Normally this would be a discussion about the problems faced by a developing nation.  Sadly, the book is about the United States. 

The first thing you need to understand is that there is no such thing as “free markets” in the real world.

All market participants, in truth, fight like mad to eliminate competition.  What they want is domination.  Overtime, domination occurs.  The losers leave the field of competition and the winners are left, larger and more concentrated.  By the way, this process happens under Communism or Capitalism: The first being domination by one political regime; the second domination by one, or just a few, large corporations.

In either circumstance the public eventually loses its freedom and the affected economies suffer.  Wealth and power flow up the income pyramid, mirroring the same upward flow in the political or market economy as the concentrations merge and become one:  Master of both the political and economic realms.

The only defense is competition.  In what could be viewed as a supreme irony, the only body that can force competition is the public one–government.

Ergo, the public must understand that concentrated centers of power need to be periodically broken up.  Real competition must be re-installed. 

Right now such an effort is being made by the US government, and some state attorneys general, against the concentration of financial power that’s been building up for years in the banking/investment industries.  Financial reform is underway in Congress.  Federal regulators and a few powerful state attorney generals are beginning investigations of alleged abuse by the few remaining bank holding companies, the markets themselves, and other major participants like hedge funds.

In a capitalist based economy, domination of an industry by a few corporations is called an Oligopoly.  Oligopolies seek to insure their domination by influencing government to pass laws and regulations inhibiting competition.  The agents in the government who have the responsibility of protecting Oligopolist and inhibiting competition are called Plutocrats.

Plutocrats aren’t necessarily just government regulators.  They can be elected officials too.  Powerfully wealthy corporations can funnel millions of dollars into key Congressional campaigns to help elect people who will pass the laws, and influence their regulations to favor the Oligopolists.

The main lesson in this brief essay is that the public needs to understand that their government is the best bulwark against this very natural progression.  If the government is allowed to be captured, then retracing the steps in this corrosive progression can become almost impossible.

Such is the place we now find ourselves in the United States where Oligopolies have been building up in several key industries, including finance/investment, agriculture, energy and health care.  After 30 years of not paying any attention to this natural progression, we find ourselves fighting for a return to competition in several vital industries.

Will the nation succeed in restoring competition?  Not until the public understands that what they really desire is not “free markets,” but competitive ones.

Both former President Bill Clinton and President Barack Obama are center left in the political spectrum.

Two obvious differences are that Clinton came from a Governor’s office, one that is primarily administrative and executive, whereas Obama came from the US Senate which is legislative; and Clinton came to the Presidency just as the internet boom began, whereas Obama won the Presidency during the worst financial collapse since the Great Depression.

The real comparison is more striking, however.  Clinton came to office just as a tremendous economic engine started to hit on all cylinders.  He was lucky.  He enjoyed the benefit of a tremendously positive “Black Swan:”  A surprising and powerful fortunate event that lifted all economic boats pretty much around the world. 

Obama came to office when the country’s economic engine nearly stalled out completely.  Bad luck in extremis.  He inherited the first result of a powerfully negative “Black Swan,” that’s been marshalling its forces for more than 30 years.

That said, both men’s approach to problem solving derives primarily from the political center.  Both men supported health care reform aimed at insuring more Americans.  Clinton failed.  Obama succeeded after a long, divisive battle.  Opponents labeled Obama as a socialist, someone from the political extreme.  Yet a major goal of Obama’s with the reform, possibly THE major goal, was to control out of control medical costs.  That’s a conservative goal.  He wanted to reduce the rate of government spending on health care.  But he also wanted to insure more Americans, considered a liberal goal.  

As a legislator, particularly one from the US Senate, Obama desires compromise, the mother’s milk of legislation.  He wants bi-partisan legislation.  It’s what he understands best.  But this impulse ran straight into a headwall called the Great Recession and an ideological divide that began under President Reagan in the early 1980s.  This is the negative “Black Swan” bedeviling Obama and the nation. 

That divide is best explained as one where many Americans believe the government is totally ineffective and cannot actually improve economic vitality.  The more it tries, this ideology goes, the worse things get.  Reagan famously said “Government isn’t the solution.  It’s the problem.”

This attitude is relatively new in American history.  The academic economic thought it relies upon (loosely attributed to economist Milton Friedman and dubbed the “Chicago School”) is relatively new, as well.  Previously, Americans believed their government could be an engine for progress and often supported large government programs aimed at boosting the private economy.

So Obama takes office as one of the most spectacular failures in the private economy begins it’s economic damage.  And he does so at a time when many, if not most, Americans believe the government can’t help anyway.  Unforseen events are suddenly descending on America.  There is a negative Black Swan at work here.

Give Obama credit for soldiering on despite the storm he is trying to help the American economy sail through.  He inherited a total economic mess when his opposition, informed by the Chicago school, firmly believes that the government can’t help.  That the private markets two years ago pretty much left the field of battle and decamped somewhere on the plains of Long Island haven’t shaken this crowd’s belief of ascendent private markets in the slightest.

Further complicating Obama’s challenge is that the dynamics of this Black Swan have been at work in other industries besides finance.  Despite the Chicago School’s academic constructs, private industry appears to depend very much on the government. 

Oligopolies have developed in most of the country’s vital industries as a result of this, not just in finance, but in energy, health care and agriculture too.  The paradox is that the “government can’t do anything to improve the private economy,” attitude is obviously not shared by the private economy itself.

The political ideology derived from the Chicago School and crystalized by Reagan recommended a laissez faire government.  Less regulation, not more.   Less government goal setting, not more.  Flat tax rates instead of progressive ones.  Stay away from private enterprise, this ideology demands.  Unfettered private industry will provide.

The result.  Oligopolies built up as the American public embraced the new ideology, ignoring previously understood truths about the importance of governance.  Rather than distancing government from private industry, this ideology led straight to the capture of governance by industry winners.  Oligopolies always capture the government to insure their dominance.  They don’t encourage competition, they destroy it with the help of a captive government.

Income inequality built up to unheard of levels in America.  It wasn’t “trickle down” economics, it was a steady river of money going “trickle up” the economic income ladder.

Serious problems such as the country’s addiction to foreign petroleum were not addressed. Now Obama must make the effort.  But it’s hard to solve an obvious problem when so many corporations are making good money the way things are.  Industrial agriculture has systematically destroyed America’s previously diverse, and thus more stable, farming system.  It has been replaced by the manufacturing model of concentration and production.  Like Ford said “You can have any color model T.  As long as it’s black:”  Today you can have any food you prefer, as long as it’s corn. 

Still Obama does not directly attack these oligopolic industries for what they are:  non competitive industries whose profits derive primarily from government tax and subsidy support.   Unlike Franklin Delano Roosevelt, president during the Great Depression, Obama cannot call upon a public’s belief in the important role of government because that sense has been greatly diminished and compromised.

Clinton, frankly, had none of this to face.  A new innovation that positively affected the entire economy (a positive Black Swan event no one really saw coming) swept through his entire time as President, only collapsing after he left office.  This boom masked the corrosive attitudes that were at work, unseen from the public eyes–the negative Black Swan that had been building up since Reagan brought the Chicago School economic philosophy into dominance.

That Black Swan resulted in our financial recession.  And it will result in a number of other disasters (try food and energy) in the relatively near future.

Clinton and Obama.  Other than their centrist approach to problem solving, have about zero in common.  Clinton enjoyed a positive Black Swan.  Obama fights a negative one.