This is interesting. Philip Mirowski, a "historian and philosopher of economic thought at the University of Notre Dame" and author of a newish book called Never Let a Serious Crisis Go to Waste (a book I mostly recommend), used the keynote speech for a conference in Australia ("Life and Debt: Living through the Financialisation of the Biosphere") to attack Naomi Klein and all other leftists who are under the impression that, unlike the right, their political view is closer to or agrees better with the current scientific understanding, particularly in the area of climate change. (Mirowski is a leftist thinker who is in the habit of attacking other leftist thinkers, including me—read his new book). Here is the lecture...
But here is where Mirowski makes a massive mistake: He argues that neoliberals actually do have the same close and practical relationship science as those on the left. Science (in the form of geoengineering), he says near the end of the lecture, is just as important to their thinking as ours. The problem with this argument? Neoliberals are not dealing with science but with science fiction. And those two things are not at all the same.
The right, then, is either in the past (denial) or in the future (science fiction) but nowhere to be found in the moment, the concrete science, the current hard data. Where the left is is still where the science is.
Finally, Mirowski should not give neoliberals so much credit. They are delaying action not because they are waiting for the science to arrive, but because they want to pass the problem into the future ("In the long run we are all dead"). And this nihilistic program (pushing as much of the present into the future) is indeed consistent with the 30-year financialization of the economy.
Mentioned yesterday, and worth watching in full if you haven't yet. Ezra Klein calls it "perhaps the single best economic speech of his presidency."
President Obama just wrapped up a big speech at the liberal Center for American Progress on how the chasms between rich and poor are undermining the country. He says this is a "profoundly unequal" economy, pledges to push for an increase in the federal minimum wage, cites Pope Francis' scathing critique of capitalism, and argues that class matters as much as race:
The fact is this: The opportunity gap in America is now as much about class as it is about race. And that gap is growing...So if we're going to take on growing inequality, and try to improve upward mobility for all people, we've got to move beyond the false notion that this is an issue exclusively of minority concern.
(Incidentally, this is a similar point—classism is as much a barrier as racism—to the one Kanye West has been trying to make in recent interviews, except that West can't help but argue it from an egocentric millioniare fashion-obsessed celebrity perspective.)
On the policy front, Obama briefly mentions the need for "targeted initiatives" to address racialized income gaps, but doesn't explain what those might be. And as Colorlines points out, he glosses over how people of color have been deliberately cut out of the benefits of America's post-war economic growth.
What say you, Slog?
Working more used to hurt your salary, says a recent paper from Cornell University, but not anymore. In fact, say researchers Youngjoo Cha and Kim Weeden, the wage premium for working longer hours is growing. By the end of the first decade of the 21st century, "overworkers" earned about 6 percent more than their shorter-working counterparts.
On this PDF file, Pew Charitable Trusts provides an excellent picture of the facts concerning class mobility in the US...
Polling by The Pew Charitable Trusts finds that 40 percent of Americans consider it common for a person in the United States to start poor, work hard, and become rich. But that rags-to-riches story is more prevalent in Hollywood than in reality. In fact, 43 percent of Americans raised at the bottom of the income ladder remain stuck there as adults, and 70 percent never even make it to the middle.
Paul Krugman, after cautiously pointing out the reasons why Obamacare is already "reducing the rate of medical spending," writes:
And the biggest savings may be yet to come. The Independent Payment Advisory Board, a panel with the power to impose cost-saving measures (subject to Congressional overrides) if Medicare spending grows above target, hasn’t yet been established, in part because of the near-certainty that any appointments to the board would be filibustered by Republicans yelling about “death panels.” Now that the filibuster has been reformed, the board can come into being.
The saddest part of this story about a cop shooting a shoplifter at a Chicago suburban mall is from the woman who came out to find her car shot up, behind the police tape and inaccessible until the crime scene gets processed:
Watching the scene from the department store's window, Turner's daughter Meghan said she was still planning on shopping elsewhere early this morning.
"I just need a nap so I can go back out at 5 a.m.," she said.
Kind of beyond satire. Also, the mob mentality, so focused on buying that they don't even see what's right in front of their eyes:
Several shoppers approaching the blocked main entrance and walked to the edge of the police tape without breaking stride, prompting warnings from police not to duck under the tape. The shoppers were directed by police to an unblocked entrance north of the police tape.
The thing that drives me up the wall is when mainstream economists (meaning neoclassical economists), after years and years of pushing a bad idea on the public and students, turn to, when finally admitting that their bad idea is really a bad idea, and claim a good idea that they ignored and kept on the fringes. Krugman's recent post serves as an excellent example of this species of lameness. Though it's about the idea of how the current recession (or stagnation) could be the "new normal," it references a talk delivered by (of all people) Larry Summers (a neoclassical hack) but makes no mention of the long and rich research on this very subject by the Marxists (most notably the late Paul Sweezy) at the Monthly Review:
What if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?
You might imagine that speculations along these lines are the province of a radical fringe. And they are indeed radical; but fringe, not so much. A number of economists have been flirting with such thoughts for a while. And now they’ve moved into the mainstream. In fact, the case for “secular stagnation” — a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between — was made forcefully recently at the most ultrarespectable of venues, the I.M.F.’s big annual research conference. And the person making that case was none other than Larry Summers. Yes, that Larry Summers.
The first solution, war, was normal (destruction cleared the ground for rapid redevelopment—1947 to 1971); the second solution, financialization, was abnormal (or even a brilliant innovation) because it was not tied to growth or expansion in the real economy. It instead absorbed the stagnation problem and transformed economic growth into debt accumulation. One must remember that in 1950, private debt in the US was actually lower than government debt. Private debt rapidly increased in the 70s and exploded in the 80s and 90s.
Every Marxist economist knows that incomes have been stagnant for the past 40 years. And now that the financial sector has lost much of its legitimacy (the illusion of social usefulness), but none of its power, this stagnation has been exposed. But it's not the new normal; it's just the way it is.
And KIRO reported her "radical idea":
On Monday night, she spoke to supporters of Boeing Machinists, six days after they rejected a contract guaranteeing jobs in Everett building the new 777X airliner for eight years, in exchange for new workers giving up their guaranteed company pensions.
Now Boeing is threatening to take those jobs to other states. “That will be nothing short of economic terrorism because it's going to devastate the state's economy,” she said.
Sawant is calling for machinists to literally take-possession of the Everett airplane-building factory, if Boeing moves out. She calls that "democratic ownership."
Boeing, however, is actually faced with a problem that first confronted the US's manufacturing sector in the early 70s—the knowledge of production has been generalized. Indeed, the Italian Marxist economist Carlo Vercellone argues in his brilliant paper "The Crisis of the Law of Value and the Becoming-Rent of Profit" that the reason why the rich abandoned production (Detroit) and flew to finance (Manhattan) in this period (the early 70s) is precisely because "the knowledge informing industrial capitalism" had been absorbed by the commons—or what he calls "general intellect." Finance offered a moat that could not be easily crossed by the rest of society. It's impossible to contain or control cultural knowledge, police social learning. Information is our air. But money as only money can be checked, concentrated, protected. The dispute between managers and workers at Boeing does not have money at its heart but knowledge. What is radical is to expose this fact.
Yesterday, I posted about how globalization is not about comparative advantage (the ideal) but arbitrage (the reality). Comparative advantage is taking advantage of some natural/cultural and abundant resource that can be sold cheaply on the global market; arbitrage is "taking advantage of the price differences between two or more markets." In the heat of composing that post, I forgot to mention the source of the idea—a book, Demand Side Economics: Demand Side Minds, by the economist Alan Harvey. (You can read my 171 highlights and 2 notes of the book here)
The relevant passages:
Explicit in the new globalization is the free flow of capital and the opening and integration of markets. And while "trade" denotes an exchange, the current phenomenon is one of arbitrage of labor, regulation, currencies and financial instruments. Arbitrage is taking advantage of the price differences between two or more markets.
Financial arbitrage involves taking advantage of tiny differences in interest rates, exchange rates, spot and futures prices, or any other differences that can be found, buying in one market and selling in another. Financial arbitrage accounts for a tremendous proportion of the volume of financial transactions. Labor arbitrage refers to exploitation differences in wage rates (adjusted for productivity) by moving operations, notably to the country with the lowest wages per unit of output. Regulatory arbitrage indicates the tendency to move activities to jurisdictions with the least onerous restrictions.
The model that originally described the gains to be expected from trade was developed in the 19th Century by British economist David Ricardo (1772-1823). It is based on the concept of comparative advantage. Where one country might have a comparative advantage in wine and another in wool, it benefits both parties to trade. "Comparative" signifies other than absolute. For example, if country A can make 8 gallons of wine or raise one sheep and country B can make only 4 gallons of wine per sheep, it doesn't really matter if "A" can make 100 gallons per man and "B" only 20. The benefit exists to trade sheep (or wool) for wine. No matter the relative level of prosperity, if we can get more wine by growing sheep and trading wool for it than by growing grapes and producing it ourselves, we are better off to do so. Ricardo's principle of comparative advantage and win-win from trade has the precision of the hypothetical.
Again, and this is pointed at my critics—particularly the ones whose eyes turn red when I post about biology—I never write out of pure air. What ever I post has the matter of a book in mind.
Lastly, I will have something to say about this 2012 film in the near future:
At City Hall on Friday night, Conlin said it’s not alarming to have a Socialist on the Seattle City Council because “when we think of socialism, we think of Sweden, and that's a pretty good model."The thing that bothers me about this comment is that we in America never think of the 2008 bailout of the entire financial system as socialism. And yet the whole sad business cannot go under any other name than socialism. Simply because the major newspapers did not use the world "nationalization" doesn't mean the American banking system and stock markets were never nationalized. We must not look to Sweden to see socialism at work. The system is not foreign but right in front of your nose, if you visit your bank's website or ATM or teller. It's not a matter of capitalism or socialism (I refer you to the stupid Forbes post). Socialism is always the state of things. The question is, then: What kind of socialism? Kshama Sawant represents democratic socialism and Chase does not.
Former U.S. Treasury Secretary Timothy Geithner is joining private-equity firm Warburg Pincus LLC after a quarter-century career in public service that was capped by his oversight of financial crisis rescues of Wall Street banks and General Motors Corp.
Geithner, 52, will become president at the New York-based buyout firm starting March 1 and help manage the company, its investment funds and client communications, Warburg Pincus said yesterday in a statement.
Former Obama administration budget director Peter Orszag is joining Citigroup's global banking division, the bank said Thursday.
Orszag will hold the title of vice chairman, and has been tapped to serve in the bank's Senior Strategic Advisory Group, which includes some of Citi's most senior bankers.
In physics, one of the attempts to solve the fact that the mathematics that explains the behavior of macro-phenomena is incompatible with that which explains micro-phenomena is called string theory. In neoclassical economics, which is not a natural science but a social one, the attempt to solve an imagined incompatibility between macroeconomics and microeconomics is called "the representative agent."
For the purpose of modeling economic activity, and models are what replaced planning in the neoliberal moment (1973 to 2008), neoclassical economics reduces the complicated business of market deals, bonds, banks, imports, exports, balance of payments, production of products, wages, unions, research and development, financial innovations, technological innovations, insurance policies, storage of goods, interest rates, and so on into one individual: the representative agent. The French economist Alan Kirman (who also happens to be one of the few French intellectuals whose command of English is impeccable) was so startled by this solution to the macroeconomic/microeconomic question that he had to ask: "Whom or what does the representative agent represent?" In the essay, Kirman dismantles the fiction but, sadly, only for the purpose of improving agent modeling. Models that are based on one individual, he argues, will only result in a weak or poor image of this or that state of economics, which as an aggregate corresponds to an emergent event. And the law of emergent events is that they have different properties from their constituent elements or parts—in the case of economics, individuals and their activities.
But Kirman has to also recognize that the neoclassical invention of an individual representative has almost everything to do with the ideological and political project of normalizing what is for many not a normal mode of being in the world: the entrepreneur. The representative agent is in essence a man with money, with capital, with a surplus of resources, and must therefore rationalize along the lines of that very specific and very limited social context. Because money equals social power, this kind of individual has the ability to generalize this limited context: everyone becomes (sees herself/himself as) an entrepreneur. You are human capital, you invest in your children, your home is an investment; and if you dance beautifully, you have lots of cultural capital to exploit. And if you are doing nothing with your life, it is because you're too lazy to exploit yourself. Self-help becomes a big industry in this regime of things and also game theory. Why? Because the rationality of the self-interested entrepreneur is expanded into a universal rationality. But this rationality is precisely what collapses the minute there is panic in the market. It is at this point, the crash of the rational actors, that behavioral economics attempts to clean the mess.
My next post in this series will concern the limits of entrepreneurial reason and the current response to these limits, behavioral economics, which has its roots in two brilliant Israeli social psychologists.
A WSJ post by Andrew Huszar, the man who "managed the Federal Reserve's $1.25 trillion agency mortgage-backed security purchase program" that's known as quantitative easing (QE)...
I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.
This is news to me: Economics has obtained the mirror image of scientific truths...
Economics can provide powerful insights on market behavior. Indeed, economists from various ideological backgrounds have managed to reach a consensus on several major issues, and from that vantage point, we can say the field has developed something resembling scientific knowledge.
One of those insights is that people respond to incentives. If I offer a teenager $50 to mow my lawn — and an extra $25 if he trims the bushes — then I can expect to shell out $75. I just offered my little helper a handsome incentive, and there’s a very good chance he’ll respond to it. This insight on human behavior is so basic and obvious that it is listed as one of the foundations of economics in Harvard economist Greg Mankiw’s textbook Principles of Economics.Insight on human behavior? He has no idea of the very short history of capitalism (an economic form that did not exist 300 years ago), no idea that the labor market was something that had to be imposed with state force on the population, that it did not spring out of the air or the mind of God. But to be aware of this is to take history into account, and doing such a thing would not be economics.
The number of poor people in America is 3 million higher than the official count, encompassing 1 in 6 residents due to out-of-pocket medical costs and work-related expenses, according to a revised census measure released Wednesday.
So, "unofficially" there are now 49.7 million poor Americans. If Congress were to accept this new number, and the new way of measuring poverty that goes with it, more people in need would get federal aid. But, add that to the list of things this Congress hasn't gotten around to yet.
Demanding even a $15 minimum is still not high enough...
Via @HalfinTen: What the minimum wage looks like if adjusted to keep pace with average wages or other standards: pic.twitter.com/NK1ET4mx0M
— American Progress (@amprog) November 2, 2013
The ratio of CEO-to-worker pay has increased 1,000 percent since 1950, according to data from Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.
The amounts of money made by those at the top is so obscene (or disgusting, in the social sense) that CEOs are doing everything in their power to kill a SEC rule that would require corporations to make the very fact of it very visible to the public.
Nothing seems to get U.S. corporations' dander up like a threat to the pay and perks of their chief executives.
That's one explanation for corporate America's superheated, turbocharged, over-the-top reaction to the CEO pay ratio rule recently proposed by the Securities and Exchange Commission...
The rule requires most large public companies to calculate the ratio of the pay of their chief executive officer to the median pay of all their employees. Its general terms were mandated by the Dodd-Frank Act, which imposed numerous regulatory changes on corporate and banking behavior in the wake of the 2008 financial meltdown.
The last great movement in continental philosophy is called speculative realism. One of the leading figures of this movement is Graham Harman, a philosopher who sees objects as fundamentally autonomous. Before an objects relations, there is just the object itself, and within the object are parts that are deep and inaccessible to the outside, to other objects. But many, like myself, see the relations as fundamental. There is no object before or after relations. Marx, of course, saw objects in terms of social relations and relations of production. Harman, the philosopher of objects, is to deliver a lecture on Nov 21 that will confront/encounter the alien Marxist object and other objects in the market system of value and meaning. This is a big deal in the world of continental philosophy. I really want to read this paper:
Object-oriented philosophy insists on the autonomy of objects outside any relation networks in which they might be enmeshed. In some quarters this has led to the accusation of “commodity fetishism,” since it seems to violate Marx’s principle by fetishizing an object itself outside its conditions of production. The first problem with this claim is that it rests on a theory of value, not of being. Marx would decry the claim that salt has value outside the productive relations that made it usable, but good materialist that he was, would never have denied the reality of salt prior to its entering into such relations. Nonetheless, this charge of commodity fetishism does open up the possibility of a dialogue between object-oriented philosophy and economics. What is an object for this philosophy, and what is an object for Marxist and other economics, and is there any point of intersection between these two?
This week, the Seattle City Attorney's office dropped criminal trespassing charges it had filed against five activists who held a sit-in at a bank in July to protest a South Seattle man's foreclosure and eviction.
"We looked at the cases again after your inquiry," says John Schochet, the city attorney's deputy chief of staff, "and determined that they didn't meet our standards for civil disobedience/protest charges." Pressed to explain why the city would initially believe it had the basis to press charges and later retract them, Schochet said that even if a crime was committed, "our office is exercising its discretion not to pursue these charges here."
Some of the activists suggest they were charged—and then let off the hook—because Wells Fargo is the city's bank, and prosecution would entail political undertones. "They realized a trial where they are representing their bank's interests against three senior citizens and two young teachers wouldn't look too good in the eyes of the public," says Kailyn Nicholson, a teacher who participated in the sit-in. "I'm glad they came to their senses."
Before writing my piece on socialism and Kshama Sawant, a socialist and rising star in local politics, I inteverviwed Leo Panitch (the editor of the Socialist Register) and Sam Gindin (an economist)—both authored one of the most important left-thinking books of our moment, The Making of Global Capitalism (I reviewed it here)—to discuss the situation of socialism in our day. Here is a part of that talk….
I think that for the 19th century and the course of the 20th, when people thought of capitalism, used the word capitalism, they were aware that it was a systemic alternative to socialism, how ever broadly and differentially that was defined—social democracy, communism, syndicalism, and so on. Where we stand today, even though there is plenty of protest, be it anarchist inspired, as a lot of it is, it does appear that capitalism has no alternative. But I’m sure during the course of the 21st century there is going to be a revival and great interest in going beyond merely protest to trying to imagine and construct political vehicles for what may not be called the same things they were called in the 19th century and 20th century but will amount to a democratic form of socialism as a vision and as a practice.
I think for that happen a lot of the left’s language of the Bolsheviks revolution is going to be abandoned and that would be a bloody good thing, given how arcane it is and meaningless to so many people. And it grew, after all, out of very different social conditions in a very specific part of the world. I also think, however, that what will have to be abandoned, and is being abandoned by the people who are protesting, are the kind of harmony language of social democracy, which is, you know, the Fabians: We will educate the ruling class to socialism through a series of gradual reforms that they will see it as in their own interest and these will add up to something that is not the current system. The evidence so far has been that when it comes to democratizing the economy, the owners of the banks and industries are not going to hand over their property. Even in Sweden, the same 15 families who owned the country through the 20th century bulk at any attempt to do that, to let go of what they own. But all of this raises the question can we make this transition democratically? Who knows. What’s certain is that it’s great that people are talking about socialism. Nevertheless, we must not forget that we are talking about a process that could take decades to build up support and institutional capacity to put all of that back on the agenda. But I do think it is going to happen.
What about the future of trade unionism?
You should look at a piece in last year’s Socialist Register, the 2013 volume, by Sam called “Rethinking Unions, Registering Socialism,” in which he argues that the way American trade unions are currently structured, there is really no way forward with them. And we need to think about entirely new union organizations. And that could only happen with the reemergence of a political left that would take that on. Right Sam?
Yes. You see, after the war you have a kind of unionism that emerges and the left within it is marginalized, but the unions retain their economic strength. That itself comes into contradiction in the late 60s, with the squeeze on profits and you end up with neoliberalism. And what you have got through that whole period is a kind of unionism of the 50s and 60s, a unionism that worked in that period but is now no longer capable of even defending workers. And so it raises the question of how do workers and unions get revived. To be revived, they have to be reoriented to not be sectional organizations that represent a specific group of workers but have to become class organizations. My argument is that there is no internal dynamic in unions that can do that. It’s not going to come from the top, and though members may occasionally rebel, they will not be able to sustain that rebellion. So it makes it essential to have a left that has its feet inside of the unions and outside as part of the revival of unions. And also to create larger class organizations that can begin to engage in social change.
Worth your time is this recent LSE lecture, "Why Growth Theory Requires a Theory of the State Beyond Market Failures," by the economist Mariana Mazzucato, whose book The Entrepreneurial State: Debunking Public vs. Private Myths in Risk and Innovation, is also worth your time. In my opinion, the ideas expressed in the lecture have expanded considerably from those in the book. Mazzucato's basic argument is that the state is the true source of technological and scientific innovation and not the private sector. In her picture of things, and a picture which is closer to the truth of things, the private sector only appears on the scene when all of the major risks, the major financial unknowns of a research project have been absorbed by the long and deep investment of the state.
And what is it that corporations do these days, if they are not really investing in new products? Share buybacks is where their money goes. Now Mazzucato's lecture provided a fact that much improved my image of Steve Jobs: Apparently Apple had to wait for his death to begin this sad business of reallocating money from projects that develop new things to a scheme that increases the value of shares...
Activist investor Carl Icahn is at it again, this time writing an open letter to Apple CEO Tim Cook and urging the company to buy back $150 billion of its own stock.
His idea: Apple (AAPL, Fortune 500) shares are extremely undervalued, so now's the time for the company to invest in itself — and increase the value of its investors' stock holdings.
Goldy explained in The Morning News that McDonald's offers a "McResources" phone line that encourages their employees to go on government assistance programs like food stamps and Medicaid. As horrifying as that news is, the reality of the situation doesn't really strike you until you watch this video that was released on the Low Pay Is Not OK site.
This is fucking maddening. It's unacceptable, especially since Republicans everywhere are cutting government assistance, leaving these people with nowhere to get the help they need. Pass this video around. People need to see it.
Last week, I wrote about one Silicon Valley investor's excited response to the government shutdown, a response sparked by his belief that "stasis in the government is actually good for all of us." It was an extraordinary statement, it seemed to me, not only because it ignored the very real damage the government's gridlock was doing to normal, non-wealthy people all over the country, but because it revealed a broader ideological shift among certain members of the technological elite, from political apathy to active anti-government hostility.
But this weekend, at a Y Combinator start-up school, one tech entrepreneur outdid that investor by not just cheerleading dysfunction in Washington, but calling for Silicon Valley to literally secede from the United States.
CNET reports that Balaji Srinivasan, the co-founder of San Francisco–based genetics company Counsyl, used his opportunity to address a roomful of aspiring start-up founders at Y Combinator to give a talk called "Silicon Valley's Ultimate Exit," a techno-utopian vision of a world free of the constraints of civil society...
It is often said that cockroaches would survive humans after the end of the world. This cannot be correct. Cockroaches will certainly go with humans because they depend on us. Cockroaches are synanthropic, with humans. Similarly, Silicon Valley would not survive the death of the state.
What might be behind Canada's growing economy:
CEOs' wallets are turning into one of the biggest winners from the rising stock market, with the top 10 payouts hitting a record $4.7 billion, and they're likely to get even fatter next year.
In this video, Danny Dorling, a Professor of Human Geography at the University of Sheffield, discusses the main points of his new book Population 10 Billion...
But the book actually had little to say about this link (a page at most) and lot to say about something I had completely missed: Leaders and thinkers in the First World obsess over population growth in the Third World because they do not want address the real problem, which is simply and only the rate of waste and consumption in advanced capitalist societies. Meaning, a baby born in black Africa is not the same as one born in the West. The environmental impact of the former is much, much lower than that of the latter. If humans had an impact that was closer (and not by much) to that of the black African, there would be no climate crisis with even 10 billion humans, the projected leveling point of the global population. So it is not about population but behavior. But those in the West do not want to change how they consume; they instead want to, one, point at problems whose solutions solve nothing and, two, continue practices that actually worsen the situation.
How austerity destroyed Europe's economy, in one graph: http://t.co/pDODpGbf7i
— Ezra Klein (@ezraklein) October 21, 2013
Socialism means only this: The market is subordinated to other social concerns...
Why are you voting for Kshama? Tweet your pic with #Vote4Kshama pic.twitter.com/ztRXR2NYgZ
— Patrick Ayers (@ayerspra) October 18, 2013
Tea Party person fighting with a bank?
Tea Party aligned Georgia Rep. Tom Graves (R), who castigates Washington for fiscal irresponsibility, reached an out of court settlement Wednesday after he was sued for defaulting on a $2.2 million loan — which his attorney argued is the bank's fault for lending him the money in the first place.All of this only makes sense if the contradiction at the core of popular American economic thinking is appreciated: Noise is only made about public debt, and little is made about private debt—which is much, much, much larger than anything you can imagine, crashed the economy in 2008, and caused a dramatic increase in government debt.
Graves and his business partner Chip Rogers — who is the state Senate's Republican majority leader — took out a $2.2 million loan from the Bartow County Bank in 2007 to buy and renovate a local motel. The project soon went belly-up.
The image, which hangs in London Heathrow Airport, is for an ad that promotes the business of HSBC...