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Who: Kimball Corson. Text and Photos not disclaimed or that are obviously not mine are copyright (c) Kimball Corson 2004-2013
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What Is Necessary To Reverse Labor's Falling Share Of National Income
Kimball Corson
11/22/2014, Pago Pago, American Samoa

For the last thirty-five years or so, labor's share of national income or GDP has fallen and capital's has risen. This has seriously harmed the middle and lower classes in America, which have actually sustained real income losses. It has also skewed the distribution of income in favor of the rich and caused consumption and investment to stall or decrease relatively. Savings relative to GDP has shot up as the rich hoard income. So have financial asset prices with the resulting increase in demand for them. Government's effort to provide more liquidity and lower interest rates has pushed financial asset prices even higher and it has increased hoarding and money held in off shore accounts. The velocity of circulation of money still drops and deflation lurks in the wings. The Fed has trouble reaching its target rate of inflation.

Some think this trend in labor's share will reverse itself. Other's, like this author, don't. Consider what needs to occur for labor's share of income to rise and capital's, to fall. Some or all of the following needs to happen: labor needs to replace robots and other machines installed to replace labor; interest income and income from economic rents throughout the economy would need to drop instead of continuing to rise; and, quite importantly, reported and shadow unemployment would need to drop substantially, so the percentage of the working age population employed could rise markedly.

Government policy would need to change substantially, too. Pushing excess liquidity into the economy and the banking system needs to stop. It really only enriches the already rich and encourages banks to engage in bad lending. Their asset base is loaded with bad debt, much of it relatively new. The effort doesn't work as suggested to increase investment. Depressing interest rates, which causes financial asset prices to further rise and their markets to bubble up, needs to stop as well. It too, only enriches the rich and doesn't increase investment. Investment is stalled because government and private consumption is relatively depressed, hoarding is on the rise, and deficit hawks are at the helm of government. Allowing capital to move production abroad, while then allowing it unfettered access to US markets for its resulting products, also badly injures U.S. labor's employment and its share of national income. We drown in a sea of bad, presumably unintended consequences.

Additionally, the aggregate burden of the U.S. tax system needs to be made much less regressive and much more progressive, if it is to help any reversal. It too, only relatively enriches the rich and like other such results, just skews the mal-distribution of income further. Finally, reversal in the decline of labor's share would be greatly aided by a guaranteed minimum income for all, financed by highly progressive average and marginal income taxes, highly progressive average and marginal inheritances taxes and sensible class-neutral revisions to the Tax Code in the public's interest, corking the myriad loopholes which have been drilled into it by lobbyists for the rich.

In short, by its actions and inactions, government itself has seriously compounded the problem of labor's declining share of national income, hammered the middle and lower classes and worsened the already bad distribution of income.

The bottom line, it is submitted, is don't hold your breath on any reversal of the decline in labor's share of income, for any real improvement in the mal-distribution of income or for the middle and lower classes in America to fare much better -- at least with the institutional and governmental system and arrangements we have in place, and with our present system of campaign finance.

The Core Problem Of The World Economy And With Capitalism
Kimball Corson
11/20/2014, Pago Pago, American Samoa

The core problem worldwide is productive capacity has largely out run the capacity of debt ridden and lowly paid worker consumers to buy the goods and services capable of being produced. A decade or so ago, producers sought out newly emerging consumers in developing countries to avoid the impact of the imbalance in their home countries, but that option is now waning. This leaves few good investment opportunities and the problem is fast becoming one that is global.

Productive capacities are badly out of line with consumption levels because of the skewed distributions of income, especially in China, Japan (which has a derivative problem), the United States and several, but not all European countries. The skews in these countries, except for Scandinavia, keep consumers from buying more and this is creating deflationary pressures for both commodity prices and the prices of goods, and, and it is stalling out investment.

Income distribution problems are the world's key economic problem now. Everywhere, high income earners of the world and their banks sit on cash hoards that are neither lent or spent. Banks and those controlling available or discretionary income are in effect saving the liquidity created by the Fed instead of lending it and spending it. For example, US holdings of liquid savings deposits as a percentage of GDP, has gone up dramatically from about 17 percent at the time of the 2008 crash to over 42 percent currently, even though GDP has itself risen notably. Meanwhile, the federal funds rate has dropped from about 4 percent to zero over that same interval. No real inducement to save is there.The cash hoards are not invested because there is already a glut of productive capacity relative to consumption levels and deflation threatens. Returns relative to risks are inadequate. The high income earners of the world hoard income and spend too little of it on consumption because they have relatively too much of it and therefore their marginal and average propensities to consume are relatively too low.

Capitalism stalls out with this imbalance between consumption and production and leaves anything resembling Says law in total disarray. Keynes' greatest contribution was to show us that Says law can grossly fail; however, he didn't, as here, tie any such failure directly to the mal-distributions of income. His focus was on the general business cycle and the role of "animal Spirits" among investors (a "we don't know" designation). This business cycles perspective he addressed is one thing, but the constant economic malaise from the investment/production vs. income/consumption imbalance addressed here is another matter entirely.

Keynes and his leading followers wrote between the era of robber barons in the 1890's and the early 1960's, when the income distribution problems the world faced were relatively minor. However, as Thomas Piketty, the French economist, suggests and we mostly now realize, economic growth and labor's share of income invariably stalls and falls relative to that of capital because of 1) the greater mechanization of production by robots and such, and 2) the compounding of interest. As we move toward a Marxian surplus of labor, with depressed wages and technological change geared toward displacing other workers, Labor's share of income cannot help but fall, and capital's share rise. This state of affairs skews in the distributions of income ever more rapidly. The suggestion, of course, is skewing is inevitable, but we have no corrective method of dealing with it or its consequences. So economic situations simply gets worse. Capitalism in the modern world is fatally flawed and has no corrective mechanism to remedy this problem which is becoming acute, but being ignored.

The consequences of the skew problem addressed here in turn induces world governments -- such as the US, Japan and also China until now, to pour excessive liquidity into their economies and to lower interest rates, in the hope of causing more capital investment, but the efforts fail everywhere (except until now in China) because of the relative lack of investment opportunities due to the production/consumption imbalance created by the skewed income distributions in the various countries. What happens instead of increased investment is those with high incomes hoard more, banks sit on more money and financial asset markets and housing markets tend to bubble up as is now the case in China, Japan and the United States.

These consequences of these distributional skews and their attending inter-country interactions are not well studied or understood because the neoclassical framework of economics inadequately considers these aspects of world economies and because the implicit implications offend those who sponsor neoclassical economic study and research and their spokesmen. A willful blindness attends.

Capitalism as we know it is in big trouble

On Doing Macro Economics
Kimball Corson
11/18/2014, Pago Pago, American Samoa

Many economists don't do economics at all well. Many authors on Seeking Alpha do better, but in pieces and also often missing the largest picture. I don't mean microeconomics, either, the forte of neoclassical economists. Most can do that. I mean true bird's eye macro economics with explicit or implicit normative implications, like the piece I just did on income distributions being the world economy's central economic problem or the typical work of Michael Hudson, Nouriel Roubini, Warren Mosler and perhaps James Galbraith, for examples.

Many economists see a part of the big picture, but do not see it all in the aggregate. They too often therefore scribble pieces on one or another aspect of economics, a school or an individual thinker -- Sraffa, Pigou or Bastiat or the New Keynesians or exchange rates, for examples -- but that doesn't do macro economics in the manner I describe. Hudson is my best exemplar of someone who does serious macro economics and sees the aggregate big picture with all of its pieces and knows what is going on. N. Roubini does pretty well, too. So does Warren Mosler who, ironically, is not even an economist per se. Why this state of affairs, I ask.

Neoclassical economists -- who either largely ignore the financial sector altogether, view the real economy as all that matters or have badly mistaken views on how the money, banking and finance sectors work -- are not really equipped to do effective macro economics as I describe it. That knocks a whole lot of economists out of the picture. With Keen, Hudson and Mosler, as conspicuous exceptions, the heterodox economists are typically too busy, exchanging papers, focusing on details and expanding their areas, to do serious macro economics in the manner I describe. Worse, many heterodox economists don't know neoclassical economics well enough, mistakenly viewing it as anathema. Other economists, both young and old, are too steeped on their own personal learning curves to do macro economics. These factors eliminate too many more. We all continue to learn, but, as I explain here, that is not all there is to be done.

The goal should be to do good macro economics and by that means to establish a core consensus on what is and what needs to be done, socially. We are much too scattered and dispersed in our current thinking to be anywhere close to that, regrettably. There is more unified focus on some useful macro economic issues on Seeking Alpha than there is in the mainstream economic profession. That so, economists are commensurately much less useful than we could be. Worse, we are too rigid in our stratification and segmented thinking to change much. Our corporate donors and sponsors like to keep it that way. As well, we sometime don't adequately distinguish in our thinking between immediate market dynamics and longer term static economic theories. Economists get a lot inaccurately and, worse, miss much besides, largely because of these limitations.

Once all these various groups of segment economists and these limitations are winnowed out, we have very few left who can actually do good macro economics in the sense I mean and are most useful, very few indeed. This is not intended as a criticism of the profession per se, but could be, but is more intended as a description of the current state of affairs.

This is an unfortunate state of affairs, I suggest.

The Income Distribution is America's Central Economic Problem
Kimball Corson
11/18/2014, Pago Pago, American Samoa

In the US, the money supply is not the problem. The velocity of circulation is. But why? Here is why. The money supply has increased significantly, but the truth is it largely does not matter. Nor does it matter how low interest rates go, because hoarding by the rich notwithstanding is the problem.

Banks and those controlling available or discretionary income are in effect saving the liquidity created by the Fed instead of lending it and spending it. US holdings of liquid savings deposits as a percentage of GDP, has gone up dramatically from about 17 percent at the time of the 2008 crash to over 42 percent currently, even though GDP has itself risen notably. Meanwhile, the federal funds rate has dropped from about 4 percent to zero over that same interval. No real inducement to save there.

The truth is the average and marginal propensities to spend on consumption of the top 10 percent of income earners in the US, who now receive about half of all income and spend commensurately little of it relative to those with incomes in the bottom 50 percent, are too low and they and the banks are hoarding that money and spending and lending relatively little of it. If that income not spent or lent by the rich and their banks went to the bottom 50 percent of income earners instead, America would be truly economically booming.

This is America's central economic problem and the reason for its malaise in a nutshell. But nobody and I mean nobody wants to talk about this.

What to Do About Immigration
Kimball Corson
11/17/2014, Pago Pago, American Samoa

Opinions vary. Sundry Teabaggers want all illegals shipped out of the country bar none. Some liberals want amnesty for all. Others want amnesty for children here with relatives in the country. Opinions are all over the place.

Where there is consensus in theory is we want our boarders closed or rigidly closed. That is of course is impossible. So the question becomes, what can reasonably be done about our boarders. Our present approach is -- to the extent manpower permits -- catch them crossing, process them and ship them back to wherever, across the boarder. The effort is imperfect and expensive. Many of the same faces keep appearing. Not all are from Mexico, as that country points out when it is asked for help. Central America contributes many. Cowboys with guns want open season on coyotes. One GOP candidate for the House thought we should use F-16's on crossing illegals, but backed off that when pressed and said he meant for hitting drug lords and their mules.

Liberals like amnesty for all or many because they see future Democratic voters in those allowed to stay. Republicans like some illegals because their lawns need mowing and their hedges need trimming. The idea of temporary green cards for seasonal farm workers has been around a long time. But there are leakages in the system and our Immigration Service is under-staffed and over-worked. So are our boarder guards. So are those working to process immigrants. and preliminarily screen amnesty claims.

So the questions become how to effectively regulate illegal boarder crossings at some level of success and at what level of expense. How to best process illegals and their claims and How to handle illegals 1) already in the country and working and 2) in the country, but not working. And how to handle illegals coming into the country after just crossing the boarder? Who should get green cards? Who should get a shot at later citizenship? Who should be shipped out? Should any here get amnesty? For whom and why?

We are long on questions and short on any answers supported by a consensus. A bit of a pickle. Let's see what Obama and congress will do here, if anything. Hopefully, the Teabaggers don't threaten to shut the government down again if they don't get whatever they ultimately decide is their way.

Internet Referenda
Kimball Corson
11/17/2014, Pago Pago, American Samoa

Should Internet Referenda Be Used to Establish Federal Policy and Precedent?

The technology is available. Public internet referenda would end-run efforts to buy results from our elected representative with campaign contributions. The American people would acquire a much greater say in matters before congress. Lobbyists would be significantly neutered. Informative neutral information packets, already in widespread use, could be mailed to internet voters in advance. Special encryption could be used to protect voting internet connections. Passwords could be issued to eligible voters. Some of the money could be gotten out of politics. Better enfranchised, Americans would take a much greater interest in voting.

What gets referred to referenda would be an issue but that can be solved. Policy questions and guidelines, key presidential questions and many actual decisions could easily be turned over to the public.Campaign financial reform could be passed and Washington could well be cleaned up. Turnout would be what it will be.

Representatives would lose significant power and control and they could be forced by guideline, on for example, tax reform, to get to work on things that matter to the American public. It would be highly educational for the American public which would become much better informed. I see no problems that could not be surmounted and I see huge opportunities and advantages to advance the nation.

Why not?

Fraud in Our Military Is Growing
Kimball Corson
11/17/2014, Pago Pago, American Samoa

Frauds, including bribes, in the military have shot through the roof. We all know about the rape and sexual harassment problem and how they are mishandled, but now there is the fraud problem, too.

Here is an example. Fabian Barrera found a way to make fast cash in the Texas National Guard, earning roughly $181,000 for claiming to have steered 119 potential recruits to join the military. But it was a fraud because the former captain never actually referred any of them. His hand slap was three years. Justice Department lawyers describe the Barrera case as part of a recurring pattern of corruption that spans a broad cross section of the military.

Prosecutors have found their hands full: defendants who bill for services they do not provide, those who steer lucrative contracts to select business partners and those who use bribes to game a vast military enterprise. Despite numerous cases that have produced long prison sentences, the problems have continued abroad and at home with a frequency that law enforcement officials consider troubling.

"The schemes we see really run the gamut from relatively small bribes paid to somebody in Afghanistan to hundreds of millions of dollars' worth of contracts being steered in the direction of a favored company who's paying bribes," Assistant Attorney General Leslie Caldwell, head of the Justice Department's criminal division, said in an interview.

These are our brave fighting men, or rather their attorneys are. And, hey, I am a vet.

How to Fix the Mess that is America
Kimball Corson
11/16/2014, Pago Pago, American Samoa

There is the lurking sentiment among people of sensible and informed dispositions, or at least the fond hope, that the American people at some point in the future will say enough is enough and rise up in rebellion or take to the streets. This is seen as the ultimate answer because all else will have failed. But it will never happen, at least not for long or successfully.

Because if it does happen it will be immediately snuffed out. Here is how and why.

Any uprising, rebellion or revolutionary effort will be shut down in a heart beat by our militarized police and the US Army and people will find themselves in FIMA/military detention centers or camps, some taking re-education classes. There is zero chance of proceeding in that direction. The oligarchy is prepared and ready for us. But how?

Here's how. Any public assembly or people taking to the streets for that purpose and free speech can be blocked and criminalized under the little known Federal Restricted Buildings and Grounds Improvement Act of 2011, passed by congress and signed into law by Obama. This law gives the President, Homeland Secretary or any designee(s) of either, the right to declare any area off limits for civil assembly and speech and, further and worse, to arrest for civil detainment as a criminal any and all persons in that area without notice, or any requirement of knowledge by those arrested that the area had been declared off limits.

A rebellion, uprising or embryonic revolution can be crushed instantly and participants immediately taken into custody as criminals for civil detainment in existing FIMA or Military facilities set up for this purpose. There is a leaked Army training manual covering the operation and running of these facilities which are for the detainment of large numbers of the civilian population, as well as of terrorists. I have it and have read it. Brown & Root had the construction contracts for the facilities. I have read them, too.

So forget any prospect for an American street level uprising. Occupy New York was a close as we will ever have gotten. Any new effort will be still born. The law to do all this is now already in place as are the detention facilities. The emotional response of "taking to the streets" is gone. We will have to use our heads and that is hard to do for aggravated Americans.

There is a solution. It is this. There first has to be widespread understanding in some detail about what is going on. I have targeted that in my posts, as have my friends and many others. Second, it is then necessary to vote a huge, controlling block of progressive independents into congress to change things. As a campaign oath they must eschew taking money. The Republican and Democratic parties now have all the political control and they in turn are controlled by the monied interests or Oligarchs. Many, new independents are necessary.Then campaign finance reform can be enacted to get the money and Oligarchs out of politics. From there, the mess we have now can be progressively cleaned up in increments, mostly by corrective and further legislation.

I see no other way.

The Problem with the Top Mainstream Economics Departments
Kimball Corson
11/16/2014, Pago Pago, American Samoa

There is a sentiment out there that the top university rankings in economics (and also other subjects) is all just specious nonsense. That is patent nonsense as I will explain. Part of the contrary sentiment of course is just sour grapes from those who could not get in or perhaps survive academically. Part of the sentiment also springs from the heterodox schools and thinking that the top schools are too buried in mainstream orthodoxy and too controlling, which are true. And part of the sentiment springs from a general animus toward anything or anyone at the top, a populist notion.

However, if you think the rest of the world and significantly lower ranked schools seriously compete in terms of the quality of students and of faculty, you are badly mistaken. The top econ departments get the cream of the crop and push mainstream economics. But that is the problem in a way. The relevant issues are what is taught and how it is taught in those and other universities. Instruction in quantitative techniques is markedly superior, but such is not the problem.

The framework of analysis in the top econ departments is mainstream neoclassical economics. Most economists at large recognize mainstream neoclassical analysis is clearly too narrow and flawed in some important regards. Worse, Chicago and now Harvard have become doctrinairely and apologetically very biased toward conservatism and a lassiez faire form of libertarianism. Neoclassical economics by no means needs to be that badly biased, even without the heterodox extensions, corrections and adjustments it needs for veracity. This is true because better students tend to sort it out and learn it all anyway. Recently, there have been walk-out strikes in Mankie's undergrad Harvard econ classes because of the problems I discuss here. Even the newbies know something is wrong. But how to proceed is the problem.

So the question is why is there this problem. The answer is simple. The mainstream is being very conspicuously belligerent here because its corporate research sponsors and top university donors have too much influence and control over the teaching and the research agendas. That control is considerable. It has been in place for sometime and it is growing stronger as the shift in Harvard's economic department toward more conservatism indicates. For example, in about 1985, I was at MIT talking with a professor I was hiring as an expert witness in an big antitrust case I was handling. I asked him why MIT had no Marxist on it econ faculty like the top European Universities, He quickly said MIT's corporate research sponsors and university donors would not tolerate that even for a heart beat.

It had snowed the night before our meeting in his office at MIT and there was about four and a half feet of new snow on the ground. I had to low crawl on my belly much of the way from my nearby lodgings to get to Sloan Hall where the econ department is located. When I got there, about ten faculty members were already in their offices. I asked how and why. My expert explained, helicopters picked them up at their homes and brought them in. Without that minimal staffing, MIT's econ department would lose about $400,000 for that day in corporate research grant funding. Talk about control! And this was way back then.

The corporate control has other implications. Conservative faculty are hired and promoted over others, and what they teach and how they teach it is also controlled. A graduate student doesn't dare to try to do a dissertation under, say, Martin Feldstein, on an aspect of MMT, for example. Heterodoxy is off limits where does not fit the conservative paradigm which is, in most regards. And good luck trying to get non-mainstream stuff published in the leading journals which the same top schools control. It is a lock out and it creates resentments. The money is controlling. If smart young grad students want recognition and later career advancement, they had better get in line and tow the line. Only the likes of later Laureates like Krugman and Stiglitz dare step out of line a bit. They are sort of untouchables.

Top university faculty also whore themselves out as consultants because their resumes allow them to command top dollar saying and writing things publicly for their sponsors they would not dare to in a university graduate seminar or class. The profession has adopted a toothless code of ethics, ignored in the breach more than honored. It is a mess.

In short mainstream economics in America has largely been corrupted by corporate money and bought off, much like our congress. It has deliberately been made irrelevant and an apologist in broad terms for the status quo.

This is the problem in a nutshell. The hinterland must carry the torch in a balanced fashion until we come to our senses and act honestly.

2015 University Rankings
Kimball Corson
11/15/2014, Pago Pago, American Samoa

Here Are the Top 10 National Universities for 2015 by U.S. News & World Report

1. Princeton University
2. Harvard University
3. Yale University
4. Columbia University
4. Stanford University
4. University of Chicago
7. Massachusetts Institute of Technology
8. Duke University
8. University of Pennsylvania
10. California Institute of Technology
(MIT like Cal Tech is a bit weaker in Languages and the Arts.)

US News & World Report ranks the best economics departments in the US as a four way tie for first place(first, in this order, Harvard, MIT, Princeton, Chicago):

1. MIT
1. Princeton
1. Harvard
1. Chicago

I would not rank them as a tie, but instead in the above order. Chicago and now Harvard are doctrinairely and apologetically very biased toward conservatism and laissez fair libertarianism. Neoclassical economics does not have to be that badly biased.

Defecting Citizens Who Become Foreign Fighters
Kimball Corson
11/15/2014, Pago Pago, American Samoa

A new United Nations report declares that terrorist groups fighting in countries like Syria and Iraq are recruiting foreigners on an "unprecedented scale." An estimated 15,000 radicals from more than 80 nations are believed to have flocked to both war-torn nations to join extremist groups battling there. The U.N. explained that these foreign fighters will "form the core of a new diaspora that may seed the threat for years to come. "

The act of foreign fighting -- people becoming involved in a conflict they have no direct stake in on the basis of a transnational ideology -- is not at all new. It is something history has observed for centuries. The Spanish Civil War in the 1930s attracted people from all over the world. The Afghan conflict in the 1980s mobilized up to 20,000 foreign fighters.

That last conflict is noteworthy and a model of sorts. At the end of the Afghanistan conflict, foreign fighters could not go back to their home countries. Many were brutalized killers, who had only the skills to be a fighter or terrorist, and no other employment option except to go from battlefront to battlefront. Al-Qaeda eventually came out of these individuals.

Those induced to become foreign fighters and so brutalized are often mentally naive, mentally defective, poorly educated and those most vulnerable to propaganda. It is to the advantage of their native countries to lose them in the first instance. However, after the initial conflicts or wars they have joined end, they become threats to their original countries and often seek to re-enter those countries illegally and become terrorists.

That is, of course. the fear now. Thousands of fighters are making connections in Syria and Iraq. At the end of the Islamic State conflict, should they live so long, there be thousands of such brutalized fighters with no place to go and not much else to do except become terrorists. They are not the foundations for a civilization and the world is stuck with them until their deaths.

Our Banking System Remains in Bad Trouble
Kimball Corson
11/15/2014, Pago Pago, American Samoa

These facts are too little known but are an important unattended problem.

The Fed is very catty about these matters. The truth is that if we look the banks in our banking system and their portfolios, the volume of criticized (read, bad) assets remains elevated at $340.8 billion, or 10.1 percent of total bank loans, which is approximately double the pre-crisis levels of bad loans. QE hasn't bought enough bad loans yet or it simply cannot keep up. (A criticized asset is one identified and noted as being substandard, doubtful, or a loss -- all as defined by uniform loan classification standards.)

In a supplemental report by the Fed on leveraged lending, serious deficiencies in underwriting standards and risk management of leveraged loans were found.
Leveraged loans in the banks totaled $767 billion, or 22.6 percent of their portfolio and accounted for $254.7 billion, or 74.7 percent, of criticized assets. Material weaknesses in the underwriting and risk management of leveraged loans were also observed, and 33.2 percent of leveraged loans were criticized.

In short banks continue to write bad loans and have twice as many of them as they did before the 2008 financial crash. The Fed seems not to care much or, at least not enough to mandate change.

Obama and the GOP Plan to Sell America Out to Global Capitalism
Kimball Corson
11/15/2014, Pago Pago, American Samoa

The GOP and Obama want the the Trans-Pacific Partnership Treaty (PPT) and the Transatlantic Trade and Investment Partnership Treaty (TTIP) shoved through the senate and signed by the president into law as fast as possible before people wake up and understand what is involved.

Negotiations on the treaties have been conducted behind closed doors for some time now and their now substantially harmonized terms have been deliberately kept secret or at least hazy. Corporate global capitalism is after the treaties with a vengeance. Adoption of the treaties could be the biggest result of the GOP's midterm elections. The earlier Democratic senate balked on an earlier version of the PPT and it went nowhere. Now the senate, which must pass on treaties, is loaded with cow towing Republicans.

The treaties are a horrible bit of work and that Obama wants them is a terrible sell out. He should know better. The parties to the TPP treaty are the U.S., Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Canada, Peru, Singapore, South Korea, and Vietnam. . The parties to the TTIP Treaty are the U.S. and the 28 member states of the European Union. Obama and the GOP have worked hard to harmonize the treaties. For years, the White House has been quietly negotiating the two pacts, one with countries in Europe and the other with countries mostly in Asia. Together they comprise the vast majority of the world's economy. It's hard to give a comprehensive update on these talks because we know so little about the details.

The PPT and TTIP are designed to increase global corporate profits and promote global corporate interests. They do this in several ways. Innocuously enough, they would harmonize corporate regulations across countries, but the twist is at the same time it would liberalize such regulations substantially. Teams of corporate lawyers, it is claimed, cannot manage the varied regulations across countries as they do now.

From leaked sources, we learn much more importantly, the PPT and TTIP would limit signatory governments from adopting laws or policies that in any way or in any area would impede or limit corporate profits. For example, "buy American" legislation mandating government purchases from domestic producers would be out and illegal. Changes in national laws which injured global corporate profits would also be illegal. Corporations could sue any government for making such a change and recover lost profits as damages from the country.

In short, huge chunks of national sovereignty are being ceded away by treaty to the interests of global corporations, contrary to the actual and prospective interests of a nation's citizens and, in our case, the US constitution. All for the benefit of global corporate capitalists. And Obama is willing to do this. TPP and TTIP would limit government policies and laws on everything from financial services to the environment to food safety. Nothing is not covered that can impact corporate profits in the global context.

To enforce TPP and TTIP, as some point out, the treaties set up an alternate world judicial system for large corporations, known as "investor-state dispute settlement councils." Countries would have to adjudicate their disagreements with global corporations in these foreign tribunals instead of in their own country's courts arguably, in our case, in violation of article two of the Constitution.

International private corporations could sue countries through the settlement council process and seek monetary damages from any country that they claim violated the treaty and thereby constrained or reduced their "expected future profits." This is a direct quote from the text, we are told.

In particular, the TPP and TTIP aggressively defend intellectual property rights, including patents and copyrights on things like entertainment products and on prescription drugs. Critics claim this blocks a country from changing its copyright, patent and other intellectual property laws and will kill many generic prescription drugs while disabling countries' efforts to negotiate lower drug prices around the world. This directly contradicts foreign policy initiatives like the president's AIDS relief program, by increasing the cost of and reducing access to life-saving medication.

In embryonic form what is happening here is a corporate world government is being formed, starting with the judicial branch and, further, by acquiring some exclusive sovereign rights from each member nation. It is a federation of sorts where profits are king, so to speak. I believe it is wholly unconstitutional for the US to cede judicial and other sovereign rights to any entity or federation because they are exclusive to the US under the constitution and vested in the people and so are not subject to being negotiated away by our representatives. It would be a neoclassical wet dream to have a world corporate governmental structure organized around the maximization of the profits from global capitalism, yet that is where this effort is headed, but this point is not understood by most.

Many Democrats oppose the TPP and TTIP, citing concern with excessive secrecy, the potential for undermining regulations, and the theory that any gains from the deal would go to the corporate elite at the expense of the public. Among Republicans in the senate, there's a split between their establishment and Teabagger wings. But pro-corporate politicians of both parties could constitute enough of a majority to push fast-track approval through in all likelihood.

The US media thinks these trade treaties are ducky and universally good so they are of no use in the matter except to brainwash the public. However, the Public Citizen's Global Trade Watch, a group which has been working on trade issues almost single-handedly for years, believes that a by-partisan coalition of liberals and moderate conservative could get the TPP and TTIP sidelined. That contrasts much of the chatter coming out of Washington.

But with sufficient grassroots pressure, perhaps this exercise in corporate hegemony masquerading as trade policy can get killed at least for now.

The Sell Out by Our Representatives to the Oligarchs Is a Done Deal
Kimball Corson
11/15/2014, Pago Pago, American Samoa

"A new study from Princeton spells bad news for American democracy--namely, that it no longer exists. Asking "[w]ho really rules?" researchers Martin Gilens and Benjamin I. Page argue that over the past few decades America's political system has slowly transformed from a democracy into an oligarchy, where wealthy elites wield most of the power.

"Using data drawn from over 1,800 different policy initiatives from 1981 to 2002, the two conclude that rich, well-connected individuals on the political scene now steer the direction of the country, regardless of or even against the will of the majority of voters.

'"The central point that emerges from our research is that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy," they write, "while mass-based interest groups and average citizens have little or no independent influence."
"As one illustration, Gilens and Page compare the political preferences of Americans at the 50th income percentile to preferences of Americans at the 90th percentile as well as major lobbying or business groups. They find that the government--whether Republican or Democratic--more often follows the preferences of the latter group rather than the first.

"The researches note that this is not a new development caused by, say, recent Supreme Court decisions allowing more money in politics, such as Citizens United or the ruling on McCutcheon v. FEC. As the data stretching back to the 1980s suggests, this has been a long term trend, and is therefore harder for most people to perceive, let alone reverse.

'"Ordinary citizens," they write, "might often be observed to 'win' (that is, to get their preferred policy outcomes) even if they had no independent effect whatsoever on policy making, if elites (with whom they often agree) actually prevail."'

Talking Points Memo

China and the CIA
Kimball Corson
11/15/2014, Pago Pago, American Samoa

Most people do not realize that with the world-wide propensity to lie about financial matters -- as was the case on Wall Street just before the financial crash when liquidity dried up because no one believed anyone's books -- the CIA has been developing a large cadre of financial analysts that is beginning to rival those at the big banks. Why? Because people -- and more importantly -- countries lie about their financial affairs and generate disinformation.

CIA analysts try to sort such information and get at the truth of matters. Recently, for example, China said it had acquired a bit over a 1000 tons of gold, when the truth is it had acquired five times that much. The CIA has also determined, according to a leaked source, that the US has been engaged in price supporting purchases of US debt in world markets through one or more secret third party agents since China and Russia have reduced their US debt holdings by almost 70 to 80 percent, beginning for China with the crash in 2008 and for Russia, since before sanctions were imposed. The CIA tries to determine true positions on national balance sheets in light of the lies and disinformation now rather widely generated.

This is of interest -- albeit in a somewhat disconnected way -- with the recent development that China is developing and ramping up a vilification propaganda war by its Communist Party against the West generally but more specifically against the United States -- notwithstanding Obama's up coming visit. China tends to do this when it feels pressured. The unifying power of an external enemy is comforting..

"Historically, during every period with many deep conflicts within the country, there has been a surge of anti-foreign sentiments from the party," said Zhang Lifan, a historian, pointing to Mao Zedong's disastrous Cultural Revolution as an example. At the moment, he said, "the political establishment needs the public to turn their rage toward foreign countries" because anger over the widening gap between rich and poor in China has reached "crisis levels." (We are not alone but not quite there yet.)

We can only hope we don't retaliate in kind against China or Gorbachev might be correct that we are entering into a new cold war era. The CIA's financial analysts are going to be of increasing importance either way. Truth, propaganda and lying are not compatible bedfellows.


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