This is the Nederlog of May
27. It is an ordinary crisis issue.
I will not summarize it as it is already over 55 Kb, but it does
include some quite interesting articles, while the last
item shows The Force Of Milton Friedman's Thinking, in song, no
less, that is here transcribed.
O yes, there is no "On the crisis series" item: there is too much
already. Maybe tomorrow. 1. About Thomas Piketty
item today are in fact two articles about Thomas Piketty. I
could have selected more, but I use these today.
First, there is this, by Jennifer Rankin on The Guardian:
The reason is
that the Financial Times criticized Piketty in what seemed to be a
serious fashion - until one looks at what they say: mostly the same,
except for the usual statistical vagueries and uncertainties, which
they then use to support the opposite conclusion: Inequality
risen since the 1970ies.
That is so absurd a conclusion that is so much in contradiction
all the other data, all not of Piketty's, that I have seen through the
years, with one good example being this video - which was put on my
site on April 6, 2013, that is, a year before I heard of Piketty:
So this it made me more
pro-Piketty than I
was before, though this still will not move me to read his
book: I know
a reasonable amount of economics (and I do not think it is a real
science, for the most part); what Piketty says seemed to me anyway
correct (see the above video); and I do not have the patience to work
through yet another
thick volume of economics that explains conclusions I mostly agree to
anyway: Yes, there has been an enormous increase in
inequalities since Keynes was replaced by Friedman (and also see the last item), and indeed that was also the main
point of Friedman replacing Keynes: the unstoppable greed of many of
Anyway, here is the beginning of the above first dotted link:
Thomas Piketty has
accused the Financial Times
of ridiculous and dishonest criticism of his economics book on
inequality, which has become a publishing sensation.
The French economist,
whose 577-page tome Capital in the Twenty-First Century has become an
unlikely must-read for business leaders and politicians alike, said it
was ridiculous to suggest that his central thesis on rising inequality
The newspaper concluded
there was little evidence in Piketty's original sources to verify his
theory that the richest were accumulating more wealth, widening the gap
between the haves and the have-nots in Europe and the United States.
In an interview with the
Agence France-Presse news agency, the economist said: "The FT is being
ridiculous because all of its contemporaries recognise that the biggest
fortunes have grown faster."
That is about it, and I
agree with Piketty, also for the quoted reason, and indeed without
necessarily agreeing with him on the details, that I also do not want
There is considerably more in the above linked article, but I turn to
the second one, which is by Paul Mason, also on The Guardian:
Thomas Piketty's Capital was still No 3 on the Amazon
bestseller list when the Financial Times dropped its front-page bombshell. By picking through the spreadsheets
the "rock-star French economist" had placed online, the FT concluded
that his key data appeared to be "constructed out of thin air".
Piketty's claim that
inequality in the west has risen since the 1970s is wrong, says the FT's Chris Giles. And on this basis, Piketty's
view that rising inequality is the central contradiction of capitalism,
and will get worse, is also wrong.
As I explained, I think Chris
Giles is lying. Paul Mason explains it as follows (and I select only
one quote: there is much more in the article):
Piketty's figures show a
clear upward trend to inequality in the UK since the 70s; the FT's
preferred official data dissolves into a series of squiggles that show
nothing conclusive. And let's be clear why: the HMRC currently
estimates that the top 10% of the population own 70% of the wealth,
while the Office for National Statistics thinks they own just 44%. The
discrepancy occurs because, of course, there is neither requirement nor
desire to record actual market wealth at all. There are only
inheritance tax returns on estates big enough to pay it.
The old Inland Revenue figures for UK wealth were so wonky
that they abandoned efforts to calculate them: but in their last
attempt (2005) they said that on top of £3.4tn "identified" wealth in
the UK, a further £1.7tn had to be assumed that was either not declared
or belonged to people who slipped through the net.
That is, the FT "relied" on
the official numbers, that grossly underestimate the wealth of the
rich. So yes, it seems Piketty is quite right: The FT was - quite
consciously also - dishonest.
2. War Is A Racket The
item is the text of a speech made by Major General Smedley Butler
USMC, in 1933. I'd heard of this before, but now found it:
This begins as follows,
by the at the time most decorated Marine in US history, and it also
explains something about the sources of wealth of some of the currently
rich (not all of course: quite a few of the mega-rich these days are
newly rich, due to computing or the internet):
WAR is a
racket. It always has been.
It is possibly the oldest, easily the most profitable,
surely the most vicious. It is the only one international in scope. It
is the only one in which the profits are reckoned in dollars and the
losses in lives.
A racket is best described, I believe, as something that is
not what it seems to the majority of the people. Only a small "inside"
group knows what it is about. It is conducted for the benefit of the
very few, at the expense of the very many. Out of war a few people make
In the World War [I] a mere handful garnered the profits of
the conflict. At least 21,000 new millionaires and billionaires were
made in the United States during the World War. That many admitted
their huge blood gains in their income tax returns. How many other war
millionaires falsified their tax returns no one knows.
Notice this is the
beginning of a rather long but very clear speech, in which Hitler and
Mussolini are also mentioned. It certainly is worth reading in full,
and I may return to it.
Drone Memo's Hack Author Should Be In Prison. Instead,
He'll Be a Judge. The
item is an article by Ted Rall on Common Dreams:
Conservatives say, and
this is one of their more successful memes, that poor people are
immoral. The proles have sex and kids out of wedlock and expect us
(i.e., upstanding middle- and upper-class patriots) to pay for them.
They steal Medicare and cheat on welfare. They don't follow The Rules
(rules written by, let's just say, not them). Which makes them Bad.
This was always hogwash,
of course. Though it is true that poverty causes people to do bad
things, class and morals are uncorrelated. But who's worse, the poor
thief or the wealthy person who refuses to pay him a living wage?
Yes, indeed. But in fact
Ted Rall is out for David Barron, and with reason:
I'm a cartoonist,
but I can't imagine any reading of the Constitution — left, right, in
Swahili — that allows the president to circumvent due process and
habeas corpus. I can't see how Obama can get around Ronald Reagan's Executive Order 12333, even after Bush amended it.
Political assassinations are clearly proscribed: "No person employed by
or acting on behalf of the United States Government shall engage in, or
conspire to engage in, assassination." (Yes, even bin Laden.)
I have no doubt that
David Barron, who is a professor at the very fancy Harvard Law School
and held the impressive title of Former Acting Chief of the Justice
Department's Office of Legal Counsel, and who furthermore is President
Obama's nominee to fill a vacancy on the United States Court of Appeals
for the First Circuit in Boston, did his very bestest with his mad
legal skillz to come up with a "kill 'em all, let Obama sort 'em out"
memo he could be proud of.
Still, this topic prompts
What kind of human being
would accept such an assignment? Did anyone check for a belly button?
How badly would such a
person have to mangle the English language, logic, Constitutional law
and legal precedent, in order to extract the justification for mass
murder he was asked to produce?
In fact, there is no
legal or moral justification, as Barron also knew. And yes, I agree
Rall is angry, but he has the right to be angry, and he is right that
the - secret! - memo must be filled with twisted legalese quasi-logic.
There is more under
the last dotted link, and it is worth reading, though indeed I do not
think it will make a difference, though that is not Rall's fault: The
rich and the government can do almost any crime and not
go to jail or
even face a court; the poor are locked up for years in for-profit
prisons merely for having or selling marijuana.
Mao Generation to the Me Generation:
Tales From the New China The
item is an article by Jaeah Lee and James West on Mother Jones:
In fact, it is a long
interview with Evan Osnos, who knows China well and has lived there.
Here is a bit from
How does one tell
the story of a place changing so rapidly that the outside observer can
hardly keep up? In his book, released just last week, Osnos argues
that the country's remarkable growth has unleashed an age of
possibility for Chinese citizens, an unprecedented fervor for chasing
dreams and soul-searching. For eight years, Osnos followed the lives of
Chinese people tugged by these tides of change: A peasant's daughter
turned online dating tycoon, a young political scientist and ardent
defender of China's one-party system, a street sweeper moonlighting as
a poet, a political dissident revered abroad but erased at home,
corrupt officials that make Washington look like child's play.
The fact is that
China has enormously and very rapidly changed since Osnos first went
there, in 1996. Here are the first question and answer:
What are the most notable ways China has changed since you first
This is one of the things that's thrilling about China's metamorphosis,
which is really what it is. It's how physical it is. When I lived in
Beijing in 1996, it was a horizontal city. If you wanted to go out for
a burger, if you wanted to really treat yourself, you went to this
place called the Jianguo Hotel. The architect had proudly described it
as a perfect replica of a Holiday Inn that he had seen in Palo Alto,
California. It's exactly what you would imagine a Palo Alto Holiday Inn
Now, of course, 40
percent of the skyscrapers under construction worldwide are in China.
It's rare, if you look back through history, there are these moments—we
had one in the United States, there was one in the UK—where countries
just physically transform themselves. That was quite striking.
There is a lot more
under the last dotted link, and I thought it a good and interesting
Indeed, this may
be because I'm interested in China since the early seventies (I even
tried to learn the language by myself ca. 1972 but failed), but I do
not really think so: It is an enormous country that is now extremely
fast developing, and it also has a history that is quite amazing (for
which see the excellent and amazing books by the late Joseph Needham)
Private Equity Limited Partnership Agreement Release: The Industry’s
Snowden Moment The
item is an article by Yves Smith on Naked Capitalism:
This is fairly
technical, though the basic idea is simple:
Private Equity Limied
Partnership Agreements, that codify the contracts between private
equity firms and investors, were so secret that they should be kept
secret in their entirety, as trade secrets, which means that
they are not even open to Freedom of Information Act laws, but now at
least some have been released in Pennsylvania.
Actually, these legal
"agreements" were quite dishonest, but no one could find this
out without seeing them, which was impossible. Now some have been seen,
and the relation with Snowden is as follows:
The Snowden/NSA Analogy
For decades, the NSA kept
its domestic spying activities under wraps, claiming that it served as
a wise and responsible steward of the powers with which it had been
entrusted. Similarly, the private equity industry has insisted for
decades that none of the usual SEC and FOIA transparency requirements
should apply to its activities, but that the general partners should be
trusted to comply with the law and treat investors fairly.
revealed that much of the NSA’s domestic spying is arguably illegal,
and that a primary objective of the secrecy surrounding it was to
shield the NSA from accountability and oversight, since that would curb
the scope of the agency’s actions. The private equity industry now
finds itself in much the same situation, albeit in this case, there’s
no Snowden-like insider who chose to break institutional rules and give
confidential information to journalists. Here, a public pension fund
had simply made them public and it took a surprisingly long amount of
time for anyone to notice.
uncomfortable analogy to the NSA’s fetish with secrecy remains. Here
the exposure of key documents reveals the private equity industry’s
claims that the general partners obey the law are false. Instead,
critical elements of their scams and violations of public interest
depend on their being hidden from view.
Of course, I do not
think this is as large or as important as Snowden, and in fact I do not
expect to read much about it in the ordinary media, but I've always
thought - and I worked for a bank, long ago, which may explain part of
my interest - that "private equity firms" are scams, from the name
"equity" (which was
taken from Aristotle) downwards, and so it is nice to see that they are.
And they are scams in the sense that they draw investors to make
money, but in fact make money from their investors in dishonest ways.
Of The Derivatives Bubble Hanging Over The Global Economy Hits A Record
item is an article by Michael Snyder that I found on Washington's Blog
but that originates on Snyder's The Economic Collapse site:
This starts as
follows, with heartening news, so to speak:
derivatives bubble is now 20 percent bigger than it was just before the
last great financial crisis struck in 2008. It is a financial
bubble far larger than anything the world has ever seen, and when it
finally bursts it is going to be a complete and utter nightmare for the
financial system of the planet. (...) Instead of actually doing
something about the insanely reckless behavior of the big banks, our
leaders have allowed the derivatives bubble and these banks to get
larger than ever. [Background.]
In fact, as
I have written about previously, the big Wall Street banks are
collectively 37 percent larger than they were just prior to the last
recession. “Too big to fail” is a far more massive problem than
it was the last time around, and at some point this derivatives bubble
is going to burst and start taking those banks down. When that
day arrives, we are going to be facing a crisis that is going to make
2008 look like a Sunday picnic.
There is considerably
more in the article, that I found fairly convincing, if only because no
precise predictions are made, except for insisting that the situation
now is considerably worse than it was in 2008, and it is worse simply
because (1) no one has done anything about the banks while (2) the
even larger than they were and (3) the bank managers are even more
than they were in 2008.
Markets Rule Us’
item is not an article but a video that I found thanks to a
reference on Truthdig. This is the Milton Friedman Choir,
introduced by Milton Friedman, who sing the following song:
This is frighteningly
stupid, to be sure, so here is the full text, presumably all from
Friedman (who was an ideologist very
much more than an economist) and who also introduces them.
MF: Ha, ha, ha. And
now ladies and gentlemen,
the Milton Friedman Choir
Milton Friedman on
Corporations have no social
Except to those who own their
The corporation really has no
Friedman on corporations says
Corporate conscience is
corporation really has no
So for those who want corporations virtuous
It's not possible that is unless
It makes some cash for
corporation really has no
So if you want your
Let the corporate seize the
There really is no better
Let's privatize, choice is the
Let corporations run our
Let the free market make the
Choose to privatize I say
From kindergarten to senior high school
Today the parents have no
But in the future they will choose their
Competition will make all the rules
So if you want your
It's a corporate world
really is no better
Let's privatize I always
Let corporations run our
Let's use free markets as our
Privatize I always say
From student to client to customer
Let's get this school stuff straight
Let markets rule
States should not school
Now we're free to choose
We'll retrain our teachers
And purchase our
For business is
And school is school
And freedom to choose says Friedman
Or you will loose says
Freedom is freedom says Friedman
Unquote. That is to say (but MF did not say
If the rich are free, the poor will be poorer
If the rich are
free, the poor will perish
In concentration camps or other misery
But the rich will smile, and smile, and smile
have no conscience.
Indeed, for those who
are not - not all are, indeed! - here is the beginning of "On
bodies have no soul.
Corporate bodies are more
profligate than individuals, because they have more power to do
mischief, and are less amenable to disgrace or punishment. They feel
neither shame, remorse, gratitude, nor goodwill. The principle of
private or natural conscience is extinguished in each individual (we
have no moral sense in the breasts of others), and nothing is
considered but how the united efforts of the whole (released from idle
scruples) may be best directed to the obtaining of political advantages
and privileges to be shared as common spoil. Each member reaps the
benefit, and lays the blame, if there is any, upon the rest.
And so on...
(but I agree Hazlitt was a real genius, quite unlike Friedman).
P.S. May 28, 2014:
I corrected the date in the first line of the Introduction.
It is more proper
that law should govern than any one of the
citizens: upon the same principle, if it is advantageous to place the
supreme power in some particular persons, they should be appointed to
be only guardians, and the servants of the laws.
(And I note the whole file I
from is quite pertinent.)
(that I prefer
to call M.E.: The "/CFS" is added to facilitate search machines) which
is a disease I have since 1.1.1979: