To refresh your memory, these two hidden truths, or "things," were explained previously:
Thing 1: There is no such thing as a free market. The truth is, so-called free markets, the foundation of Freidman economics, simply do not and cannot exist in the real world. They are a fantasy, and pretending you can create such markets by formal de-regulation only screws it up for everybody.
Thing 5: Assume the worst about people and you get the worst.The truth is, no society, much less any economic activity, can survive and work efficiently if everyone really operates on the rational basis of grabbing their own short-term personal profit by any means possible, because the system would completely collapse under the weight of cheating, catching cheaters, and punishing them. No trust, no market.
"Larry Summers and I were both on the side of 'we need a more definitive clean-up of the financial system.' And the question was if somebody, you know, really wasn't solvent, do you need the government to put in capital, realize the losses, clean it up, and then put it back into private hands?" - Christina Romer, White House Economic Advisor 2009 - 2010
Any serious study of this administration's policies reveals a most pragmatic response by Obama at almost every turn. From the selection of Treasury Secretary Tim Geithner and many other establishment appointees, to the decision not to seize or take the banks to the woodshed, Obama has erred on the side of caution and market reassurance rather than a confrontation with forces that would flirt with a stalemate leading to economic stagnation or catastrophe. It is essential that the story be told clearly and that we rely on the accomplishments. That looks to be the approach the Obama campaign will employ based upon the message from the campaign thus far. The facts are more than embarrassing for the right's apologists.
Just how stupid does Mitt Romney think we are? If you've been following his campaign from the beginning, that's a question you have probably asked many times.That's how the Nobel Economic Laureate begins this column this morning, immediately reminding us that Romney appeared at a drywall factory (owned by a Republican, btw) which was closed during the Bush administration yet blaming Obama for the closure, attempting to make it a symbol. As Krugman notes, "It was a symbol, all right - but not in the way he intended," especially as the press quickly picked up on when the factory closed. And although the Romney campaign attempted to cover itself by saying the factory was still closed because Obama's policies had failed to get the economy going again, Krugman counters saying, "Actually, that factory would probably still be closed even if the economy had done better - drywall is mainly used in new houses, and while the economy may be coming back, the Bush-era housing bubble isn't."
There is more - deliciously so.
If you have been a regular reader of Daily Kos over the past few years, you will have few earthshaking moments while reading this book - almost all of the points Frank makes have appeared here, in front-page stories and in posts by reader. Nevertheless this book may qualify as essential reading for how much it brings together, and in the fashion it provides a coherent explanation of what has happened, from the strategy and tactics of those who have already destroyed trillions of the wealth of others in America and abroad, in the failure of Obama and Cogressional Democrats to have prevented it from happening and in allowing it - at least until recently - to continue pretty much unabated. Or, as Frank puts it near the end of his Introduction,
This is the story of a swindle that will have terrible consequences down the road. And although it sounds curious to say so, the newest Right has met its goals not by deception alone - although there has benn a great deal of this - but by offering and idealism so powerful that it clouds its partisans' perceptions of reality. (p. 12)
And if there is a key, brief takeaway that can be learned from how they operated, it is found on p. 33:
To play by the rules was a chump's game.
between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.
And if we look at Capital Gains taxes, currently at only 15%,
taxes on capital gains are much lower than they were in 1979 - and the richest one-thousandth of Americans account for half of all income from capital gains.
Given this history, Krugman asks a very basic question, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs?
Please keep reading.
Like it or not, it is almost certain you indirectly support capitalism run amok with your purchases. If you have Stainmaster carpet, you feed Koch Industries. If you buy Angel Soft or Quilted Northern TP, you feed the Koch machine to the tune of about $7 a week. If you are a woman with Lycra in your clothing (It's not just for shape-wear and swimsuits any more. Even slacks, jeans and shirts now tend to have it) you are feeding the Koch Brothers. (I plead guilty.) Would that our donations to the Tea Party were put to more productive use!!!!! But our purchases ought to be directed more productively and profitably for our own interests and those of most Americans. (Note to self...)
But, aside from being one of the largest privately held companies in the US, Kochs' biggest product is the "Astroturf" organizations they've built to launch the so-called Tea Party movement and capture the politics of America. You owe it to yourself to read up and remember the details of the Bloomberg article. It will come in handy (over and over) as we in Virginia try to stave off a complete Tea Party takeover of the Virginia Senate. Go ahead. Read it! Then, ask yourselves how patriotic these so-called Tea party "patriots" really are.
Why? Because when the parents do their taxes they are often middle class people whose incremental tax rate is either 15% or 25% or 28% (I have only a few students from families whose incremental rate would be 33% and none that I know of in the top bracket of 35%). Thus a 9% personal income tax rate seems appealing.
What too many fail to realize is that it would be achieved by eliminating most deductions, thus raising the effective tax rate they would pay. We are in the 28% bracket, but the effective income tax rate on our adjusted gross income was only 17% this past year because of the deductions we are allowed.
And that says NOTHING about the impact of a national sales tax of 9%, which would clobber lower and middle class families, while largely exempting the upper classes. Hell, 9% is even lower than the current 15% Capital Gains rate that enables many wealthy to pay lower effective tax rates than their employees, eg: Warren Buffett paying at a lower rate on his income than his secretary - who also has to pay payroll taxes on most of her income.
A few more thoughts: