Imperfect Ideas. –Robert M. Shelby, 11-3-10. [1212 txt wds]

In today’s Benicia Herald Forum (11-3-10), Jim Pugh’s featured “Social Democracy?” is well worth careful reading. I sincerely admire the way he embraces his topic and works it out into print. We don’t get enough of this sort of concision. There is no comparison between his last feature and this one. Here he gets to the nub of things and gives us something to work with instead of merely against. Both smart and cool, Jim is worth debating. Debate in print is slow and clunky but it has the virtue of calm deliberation that lets each participant reach as clear and connected a presentation as possible. Our abilities are not cut and dried. They can expand in a flash sometimes startling in revelation, of what seemed polarized before suddenly gaining a higher dimension that redefines prior oppositions and fuses horizons together into a fresh circumference.

Learning to use a mind well is not easy and not everyone perceives world and self fully enough to feel need for improvement in method or result. It’s sad we can’t expect new results from doing the same old things. Repeated argument in habitual ways from flawed assumptions framed with inapt terms never reaches a novel conclusion or revised perception of facts at issue. The premises we reason from never get expanded or revised that way. Only folks sure in knowing the whole truth need never change view.

Mr. Pugh and I agree, this country is in terrible shape. He says our national debt is so huge the government will have to print more money to pay its bills. Government, of course, does not print much money. It extends credit as authorized by Congress and allocated within limits by administration. The Fed is the main agent of credit extension. It’s job is to prevent inflation or deflation by setting its Fund rate up or down as needed. Just now at quarter percent for the previous year, it’s too low to set farther down with worthwhile effect. The Wall Street Journal Survey Rate at 3.25% and a Federal Discount Rate at 0.75% (at which eligible institutions can borrow direct from a Federal Reserve bank) means, everyone in the borrower-lender line earns more money than the Federal Reserve. The Fed seems able to create money out of air. Today it announced a further purchase of $600 billion in Treasury notes (or bonds.) With what did it buy them? Its own credit. What did it buy? Indebtedness of U.S. taxpayers through their government. Harvey Rifkin, is this clunky or smooth? Mr. Pugh, will this aid circulation enough to start putting people back to work? Oh, I forgot. Printing money won’t get the bills paid.

Government can’t actually pay all its bills at once or even in the same accounting cycle, so it borrows from foreign governments. Interest due can keep climbing until it’s all our government can afford to pay, like a poor family and its credit cards. We all see the problem. We differ on how to solve it. Stimulate growth? Cut spending? Mr. Pugh supposes Obama and the Democrats want a totally managed economy. No, we want an economy that works well for nearly everyone. Conservatives insist there must be winners and losers. Liberals disagree with them not only on what it means to win or lose but on what it should mean to win or lose. We feel that losing should not be equivalent to death nor winning amount to the one, great meaning of life. We differ on the meanings of human life and civilization. We see conservatives of all sorts as viewing macro-economy in terms of micro-economy.

There are differences between the way a family runs its finances and the way national and global economies work. There are limits for either one, but the micro-economy (of a family or tiny business) lives “close to the bone with a wolf around the corner.” Nations and the world economy are less precarious, so similarities are less prominent and effects of error less immediate. Cities are more like families than nations. Bankruptcy is more devastating and sooner revealed, less easy to disguise by slick accounting or complex if honest maneuvers. Nations can juggle things internally and hold off wolves with sanctions and threat of force. So too, in effect, can the heads of mega-corporations, short of state or federal audits that may bring slaps on an abstract wrist, but little people must toe the line carefully.

Jim Pugh seems adamantly convinced Obama seeks total Socialism. It doesn’t matter how Obama would reply to the charge or who would defend him in what way. Can it be that Jim wants to pin that label on the President to alter people’s perception and sway opinion in disregard of truth? Why would anyone want to win a case by faking evidence? Can it be that some people care so little about truth they will say or do anything to persuade others on the ground that winning is its own justification? We saw this amply demonstrated in yesterday’s sweeping takeover of the House of Representatives. Little folks won nothing. The winners were big money tycoons who will profit from two years of legislative stalemate, during which they can make hay toward harvest in 2012. That harvest may prove surprising. More than one set of circumstances can disgust and anger voters into doing the unexpected.

Mr. Pugh next turns to social democracies abroad. Scandinavia and Holland. He doesn’t mention Spain, Italy, Greece, France or Germany, each of which is quite a different case.

He implies that Obama may not be smart enough to see how Socialism works only in countries with less than twenty million people, and then imperfectly. Here, Mr. Pugh has both overstated himself and implied more than he knows for a fact. Size has no sure bearing on whether measures work or fail merely because Jim labels them “Socialist.” Our long successful program of Social Security works well and will not succumb soon either for systemic reasons or from his categorical bias against it.

Mr. Pugh thinks inflation is death to an economy. That, however, is a matter of degree and viewpoint. Inflation is bad for owners, lenders and sellers but good for renters, debtors and buyers. Inflation in the post-WWI Weimar Republic devastated everyone except the cartels and made way for National Socialism. Some want that here. They’re so high above ground they don’t need legs. Mr. Pugh seems to think nobody sees the risk of inflation spiralling out of control but conservatives. But isn’t control “Socialist”?

Mr. Pugh also says the U. S. “no longer produces anything” yet the less it produces the more people demand “entitlements.” He says people want entitlements more than jobs, but now even jobs are entitlements. I say, people prefer jobs but want life support in the absence of jobs. They want protection from starvation and sleeping in the rain. Yes, jobs with perks are preferred, but jobs in any case. To say we produce too little is more accurate, but that deficiency is no fault of the workforce. The causes are deep in the managerial psyche and relate to imperfect ideas of what capital enterprise is about.

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