The conservatives are always dreaming up new attacks on the most disadvantaged people in our societies. in the US, the front line of the war on the poor is the on-going attacks on the Social Security system. As I’ve noted in the past this entire debate is based upon the around the’s claim that the system can go broke. I dealt with that issue in these blogs – Social security insolvency 101 and The time has come to tell the American people the truth – among others, and I won’t repeat the points. They are clear – the US Social Security Trust Funds are just elaborate accounting smokescreens that ultimately mean nothing if one comprehends the financial capacity of the US government. They represent a case of a government creating a farcical structure to administer some program and then elevating the structure to a false level of importance that actually leads them to introduce policies which undermine the initial purpose of the program – and all without any basis. The determinants of future standards of living will be the availability of sufficient real goods and services of an acceptable quality. If they are available the US government will be able to purchase them with the stroke of a computer key. But because the conservatives have everyone thinking the funds will go broke, they can then force ridiculous time-wasting concepts into the public debate. One such attack is the proposal to use Chained-CPI measures as the Cost-of-Living-Adjustment (COLA) index in social security pensions.

The Politics of Envy – that old chestnut from the neo-liberals – is bandied around every time there is any insinuation that the capitalist system produces distributional outcomes that are not remotely proportional to the effort put into production. Whenever governments challenge the distributional outcomes – for example, propose increasing taxes on the higher income recipients (note I don’t use the word “earners”) there is hell to cry and the defense put up always appeals to the old tags – “socialist class warriors undermining incentive”, “envy”, etc. In the 1980s, when privatisation formed the first wave of the neo-liberal onslaught, we all apparently became “capitalists” or “shareholders”. We were told that it was dinosauric to think in terms of the old class categories – labour and capital. That was just so “yesterday” and we should just get over it and realise that we all had a stake in a system where reduced regulation and oversight would produce unimaginable wealth, even if the first manifestations of this new “incentivised” economy channelled increasing shares of real income to the highest percentiles in the distribution. No worries, “trickle-down” would spread the largesse. We know better now – and increasingly the recognition, exemplified in 2006 by Warren Buffett’s suggestion that “There’s class warfare, all right … but it’s my class, the rich class, that’s making war, and we’re winning” (Source), is that class is alive and well and in prosecuting their demands for higher shares of real income, the elites have not only caused the crisis but are now, in recovery, reinstating the dynamics that will lead to the next crisis. The big changes in policy structures that have to be made to avoid another global crisis are not even remotely on the radar.

Republican Presidential (Bush) and Presidential hopeful (Romney) advisor and a principal deficit terrorist, Glenn Hubbard has once again re-cycled his obsession about the apparent necessity for the US to pass a balanced budget amendment which would require governments to eschew their fiscal responsibility and behave like automatums irrespective of the state of the cycle or the behaviour of the other sectors (external and private domestic). In his latest New York Times article (August 11, 2013) – Republicans and Democrats Both Miscalculated – (with T. Kane), we see a tired conservative hack, worn out from repeated failed attempts to push a balanced budget amendment into US law, wimpering about the need for another vote on this issue, but signifying a boring lameness that is being overtaken by the duration of time that has elapsed without the doomsday arriving and more recent evidence refuting the position outright.

There was an interesting article in the Wall Street Journal (July 7, 2013) by US economist Alan S. Blinder – The Economy Needs More Spending Now . I am building a little database of what well-known economists said in 2008, 2009 and 2010 at the height of the crisis and in the early days of the fiscal and monetary interventions and what they are saying now. There is a lot of dodging and weaving I can tell you. Stories change, previous prognostications of certainty now appear highly qualified and nuanced and facts are denied. Alan Blinder was worried that the US Federal Reserve rapid building of reserves would have to be withdrawn quickly because otherwise banks would eventually lend them all out and inflation would accelerate. Of-course, banks don’t lend their reserves to customers and the predictions were not remotely accurate. In the article noted, Blinder continues to operate at what I am sure he thinks is the more reasonable end of mainstream macroeconomics. He is advocating more spending as a means of boosting higher economic growth. But when you appreciate the framework he is operating in, you realise that he is just part of the problem and part of the narrative that allows the IMF to talk about “growth friendly austerity” – the misnomer (or outright lie) of 2012-13.