Discussion between Mark Blyth and Wendy Schiller on Nov. 9, 2016
The following video is well worth investing 90 minutes.
Mark Blyth is absolutely brilliant. Here are some choice quotes that I manually transcribed.
“How is all of this going to play out? Where is it all connected? Well, here’s a simple way of thinking about it. From 1945 to 1975, we targeted a particular economic variable called “full employment”. And there’s a thing called the Lukas Critique, which basically says that if you keep targeting something, people will game it. And they did: unions gamed it, employers gamed it. And the result was inflation.
“And after a while, that inflation became painful. Painful enough that the people who were hurt by it, the creditor classes in these countries, they banded together and funded a market-friendly revolution. And they deregulated finance and they deregulated banks and they integrated the economies of the world. And they globalized labor such that labor could no longer demand that it gets its share of productivity—because if you don’t, I’ll just move your job somewhere else.
“And all of those trade agreements—which is inevitable and we can’t roll back…you know you can go on the web and type “WTO Text” and you’ll find that it’s a very long, 700-page, legal agreement that took 5 years to thrash out between corporate interests, lawyers, lobbyists with very little input from civil society.
“The same is true of the EUs agreements on capital movements, the banking union, take your pick. And there’s a moment when people just began to figure out that for the past 30 years, from about 1985 until now, huge amounts of money have been generated in the global economy and, as we know from the work of Thomas Piketty and others, most of it’s gone up to a tiny fraction of the population. So there’s been a huge amount of growth, but hardly anyone’s benefited.
“Now there’s a macro-economic underpinning to this as well. Because after we decided to target full employment for 30 years, we decided to target inflation for 30 years. I don’t see where the Lukas Critique doesn’t actually apply to that one as well. And we’ve managed to create a world in which you can dump 13 trillion Euros into the global money supply through quantitative easing and other programs and there’s no inflation anywhere.
“And here’s your problem. Once you’ve levered up your banking system and bailed it out and dumped that on the public purse and said you need to cut that terrible debt. When people’s personal balance sheets are still bloated from all the credit they took on in the 2000s and they don’t have wage growth and there’s no inflation to ease the burden of the debt, then the creditors fight harder to get their money back.
“So why Trump? It’s economic. If you recognize that simple fact, you can put Trump in there with Brexit, you can put Trump in there with Jeremy Corbyn, you can put him in with all the rest of it.
“And I’ll leave you with one set of numbers, which is an absolute planner for this whole thing. In 2015, Wall Street bonuses, not regular compensation, 7 years after they were bailed out with the public purse, totaled $28.4 billion. Total compensation paid to every single person in this country (the U.S.) who earns minimum wage: $14 billion. I’ll stop there.”
Because they’re all cheating. It reminds me of the 2008 crash, which was acknowledged days after the market actually crashed because all of the big banks wouldn’t mark to market until they’d shored up a “net short position themselves”. I’m citing from my review of The Big Short in Capsule Movie Reviews Vol.2016.14. Another quote from that movie is also very similar.
“Look at the TABX. You can see that the CDOs are worth zero! So you know what they’re doing right? They’re selling their dog-shit CDOs, then they go to another bank and short the shit they just fucking sold! Right now, every bank in town is unloading these shit bonds onto unsuspecting customers. And they won’t devalue them until they get them off their books. This level of criminality is unprecedented, even on fucking Wall Street.”
After Wendy Schiller gave an encouraging speech to the precious snowflakes, talking about power dynamics between Republicans and Democrats, Blyth continued mercilessly.
“I think the Wall Street issue goes much deeper than this. If you download from Wikileaks the Podesta e-mails and start searching for place names, something very interesting happens. One of the place names that comes up the most is Martha’s Vineyard. Another one that comes up after that is Davos. Another one that comes after that is Washington D.C. and then basically the distribution of real places where real people actually live disappears into the tail.
“We talk about the Democrats, the Democratic Party. I don’t know who that is. I know that there’s a bunch of people who have made very nice, six-figure careers in D.C. bouncing from agency to agency, starting wars, getting promoted, never actually paying the cost for it, waiting for the next administration to give them another pay-hike.”
A little later, Blyth again:
“Let’s think about what Obama’s actually doing for his legacy. You know they were saying he was going to ram TTIP through a lame-duck session of Congress? A free-trade agreement. You that thing that lots of people were upset about?
“Let’s go to Europe for a moment. Sigmund Gabriel, the head of the Social Democrats [Germany]. I was at his shop 3 weeks ago, I said, where’s Sigmund? He was in Wallonia, campaigning for a free-trade agreement with Canada. This is the head of the Social Democratic Party. When their job is carrying water for corporations to get investor-protection treaties and then communing with Goldman, where the money is, then why would you believe in them? I think the credibility problem is absolutely enormous.”
These quotes are mostly to do with finance, but Blyth ranges all over with equal sagacity, especially in European and world politics and climate change. Here’s one more on climate change.
“I’ll tell you what’s not going to happen and I posted a map of heat signatures of all around the globe. The average high temperature for Providence in November is 53ºF. The average is 51.7ºF. Every single day this month has been about 10ºF above that. And this isn’t local to us. It’s roasting. The entire Arctic is 5ºF above normal.
“And we now have a government that says that. He says—and he says he was joking, but he did say it—that this is a hoax perpetuated by the Chinese government. And we know that the Republican Party en masse refuses to believe in climate change or global warming.
“This is your disaster. This is an unmitigated disaster. Paris is already redundant. It is completely redundant. 2ºC. We’re already there. Forget about it, right? So it’s just a question of when the water in Boston Harbor starts to hit the million-dollar condos and then maybe people will wake up about it. And it’s probably coming a lot sooner than we think, in that regard.
“Would it have been any different with Clinton in charge? I don’t think—I like to call it the “nudge” liberalism—incremental approach that those politicians seem to favor…they would have done a focus group to find out if people liked climate change or not and they probably would have found that many people don’t like it, so they probably would have left it alone. I don’t think they would have done anything different.
“They would both be equally hopeless. Basically, we’re roasting.”