These are the facts (as I see them)

[Scam of God]

* Over the past four decades, America has gradually ceded its industrial base to overseas competitors. Clinton's 'New Economy' has not (as of yet, at least) materialized: nothing has replaced industrial manufacturing.

* The present financial crisis is largely the result of a glut of financial capital relative to industrial investment: if a rich nation has enough money to take care of its basic needs, why would it bother investing in things it already thinks it has? Why not live la vita bene and overproduce houses?

* This fact makes any centralized re-industrialization scheme like a new New Deal quite suspect: if all the financial wells have run dry, then simply taxing the rich and forcing re-investment seems quite counter-productive -- the wealthy would do it themselves, if they had the money. Which they don't. And loans and credit are severely lacking today, and will probably be even moreso five years from now.

* We therefore cannot rely on the Federal government to buy our way out of this mess. And, of course, without cheap loans and credit to fuel their endeavors, the barons of industry will be useless also. Protectionism is a no-go (what industry remains to protect?), and totally unfettered free-trade will simply exacerbate the problem.

* Therefore, the crisis is structural: and, if we use it wisely, an opportunity to re-structure some things.

Anyone care to point out where I'm wrong?

[minionofmidas]

* Over the past four decades, America has gradually ceded its industrial base to overseas competitors. Clinton's 'New Economy' has not (as of yet, at least) materialized: nothing has replaced industrial manufacturing.

It's not just that. Manufacturing has also required fewer and fewer people to work it. Partly thanks to the tax structure, of course, which encourages innovations in that direction. And if, literally, nothing had "replaced" industrial manufacturing, unemployment would have been rampant throughout the 1990s. Still, the void left is obvious. No complete disagreement here.

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It's much more complicated than that, and a lot to do with who, exactly, got paid to do what, exactly, and with the legalization of a lot of forms of gambling that oughtn't to be legal. Not that what you're saying is wrong, of course.

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Why should the rich be doing that? I think the past twenty years make it abundantly clear they would be doing no such thing unless quite forcibly pointed in that direction by the state - and certainly wouldn't be doing so in any place where they'd have to be paying non-neglibible labour costs. This is not to say that any government measures short of now-unthinkably-high tariffs and a complete end to tax breaks or deductions for any kind of labor-saving modernizations could force a "re-industrialization". Or that doing *that* would be a good thing, all things considered... Though levying the true cost on transportation would help.

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The barons of industry? They don't exist, not any more, not since the last Depression.

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Of course it's structural. And the development towards the next bust in a decade is already well under way. The opportunity is, basically, already gone.

[Scam of God]

It's not just that. Manufacturing has also required fewer and fewer people to work it. Partly thanks to the tax structure, of course, which encourages innovations in that direction. And if, literally, nothing had "replaced" industrial manufacturing, unemployment would have been rampant throughout the 1990s. Still, the void left is obvious. No complete disagreement here.

But that is the nature of industrial capitalism more generally - it gradually renders itself into obsolescence. What we ought to do is hook that innate tendency (towards automation and labour-saving techniques) into something more broadly beneficial to more people.

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Right, but those are the particularities of the situation. I can't but feel we'd have had roughly the same crisis had an entirely different set of players been at the helm.

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Because it would be profitable for them to do so.

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Or unless it would be economically beneficial to them.

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Again: the focus needs to be on progress outside of the confines of the State. If the central government is broke - as it most assuredly now is - then there will be no more opportunity to enact any of those policies in the near future. A State which can't pay for internal improvements, well, can't pay for internal improvements.

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Oh, they still exist. I'm talking more about boardroom congregations than Rockefellers, however.

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But what can we do in the interim to salvage our economy?

[minionofmidas]

But that is the nature of industrial capitalism more generally - it gradually renders itself into obsolescence. What we ought to do is hook that innate tendency (towards automation and labour-saving techniques) into something more broadly beneficial to more people.

Sounds marxist to me. Few things are ever inevitable, and I certainly haven't the slightest clue how you're going to "hook that tendency into something more broadly beneficial to more people" without destroying the basis for what makes that tendency "inevitable" in the first place.

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Right, but those are the particularities of the situation. I can't but feel we'd have had roughly the same crisis had an entirely different set of players been at the helm. [/quote]Ah, no individual small group of players was "at the helm", really. Certainly, no one behaved as if he was, and certainly, just exchanging the personnel chosen under the same constitutions (and I'm thinking of the major investment banks and the major global orgs like the World Bank etc as well as countries) would have changed nothing.

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Because it would be profitable for them to do so.[/quote]Why would that be profitable for them? And even if it were, why would "they" believe it to be - which is actually much the more relevant question? (They really being the bulk of "them" and their investment guy at their bank - that's what's relevant.) Under the current setup, they clearly don't, and probably quite rightly, too.

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Or unless it would be economically beneficial to them. [/quote]Which it would be only if they had no other more profitable (or believed to be more profitable) avenues available to them. So what are you going to do, abolish income tax on income derived by manual labor (lowering gross wages so as to keep net wages equal)?

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There is no human society outside of the confines of human society and the rules it has set, explicitly or implicitly, actively or by neglect. Never has been.

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Oh, they still exist. I'm talking more about boardroom congregations than Rockefellers, however.[/quote]That's more of a gentry of general wealth. Far too many families to be considered "barons" - we're talking in excess of one percent of the population here - and far too varied interests, too - none of these people are dependent exclusively on "industry".

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Nothing. It's too late. The window of opportunity for more sweeping financial regulation, or for some kind of modified return to Bretton Woods (or the Gold Standard if you prefer that kind of language) has closed already. It was there for a fleeting moment. Using it would, of course, have meant a longer acute recession.

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The central government of the United States is not broke. The central government of no northern/western country of more than, oh, say the size of Greece, is in the remotest danger of being allowed to go bankrupt. At least as long as they don't try to enact any of these policies.

[Scam of God]

Sounds marxist to me.

It is, if my mini-rant about overproduction didn't tip you off. Should that be a reason to object to it out-of-hand?

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But the long-term tendency of capitalism - towards economic competitiveness through technological progress - generally is, as long as the system itself remains intact and stable.

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I have my own ideas towards that end - broadening (and largely democratizing) productive power through selective investment in particular technologies.

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Which is precisely my point.

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Because all productive industries are profitable, though that's of course a teleology. If they had enough disposable income to do it, don't you think the owning classes of America would love to turn it into a little Japan?

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As I said above, if they had the cash to invest in technologically-heavy industries, they would.

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I certainly don't think that would be an inherently bad idea.

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Society != the State, though it's often mistaken for such by social-democrats.

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That seems rather nit-picky to me.

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This is the crux of my argument: it will become increasingly difficult in the future to rely on financial regulation, and even less so on direct government intervention, and so structures have to be put in place now that can affect a progressive outcome without reliance on an entity which may no longer be functioning in a certain period of time.

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So you say now. In a decade you may feel differently.

[minionofmidas]

Should that be a reason to object to it out-of-hand?

nyes... which is why I added something behind that sentence.

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Selective investment by whom, under which rules set by whom, on account of what?

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Which is precisely my point. [/quote]Yes, I guess so.

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Because all productive industries are profitable, though that's of course a teleology. If they had enough disposable income to do it, don't you think the owning classes of America would love to turn it into a little Japan?

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As I said above, if they had the cash to invest in technologically-heavy industries, they would. [/quote]Oh no, they wouldn't. They would invest in whatever they felt would produce the biggest income at the least risk to their savings. Except for a large minority among them who would invest in whatever they felt would produce the biggest income at the least risk to their savings and not be obviously morally objectionable. "They felt" being instrumental - it means what they'd invest in is heavily affected by what ideology they believed in - and what ideology the people who taught their investment bankers believed in. Investing in heavy industries in the United States really wasn't nearly as profitable as investing in other people's bad housing loans, so they weren't interested in it. Nothing mysterious about it, really.

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I certainly don't think that would be an inherently bad idea. [/quote]Nor do I, actually.

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Society != the State, though it's often mistaken for such by social-democrats. [/quote]Yes, but only in the "person operating a machine != the machine itself" way. This mythological evil bugger juggernaut called the state who does things nobody wants, yeah well, he doesn't exist. It's just that most people working the cogs aren't wholly aware of the indirect consequences of their actions in conjunction with the likely actions of others.

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Ugly little buggers, nits. Can  - and do - derail the nicest theories. Best to pick them wherever they are.

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So, what kind of "structures"? And note that changes to the tax system are hardly "direct government intervention" but certainly are government intervention nonetheless. Ceasing to maintain the road in front of your house is a government intervention, if you will. (Of course our current mammoth states are more lumbering along than truly "functioning", but I see absolutely nothing to imply that anything might stop them from doing so - certainly not their debts.)

[Scam of God]

nyes... which is why I added something behind that sentence.

Huh?

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Both State and private investors.

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Either through grants or negative-subsidies (i.e. complete tax rebates on those companies involved in the research).

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Desktop manufacturing.

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I don't particularly disagree with this. And it's part and parcel of my current critique: there wasn't nearly enough investment in the technological sectors (and its direct corollary, manufacturing) in the past few decades, and now we're paying the price for it.

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It can be. In fact, I started a thread about one of the biggest examples earlier this month: the Interstate Highway System. Simply because the government does something good in the short-medium term doesn't mean that it will always be inherently good.

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Worker's co-operatives (which should go tax free, to allow them to compete); unions which aren't neutered by State involvement in their internal affairs (and which thus allows them to make more radical demands than at present); mutualist organization. 

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And which can be used to establish organizations until the point they can stand on their own.

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Wait until their debts get enormous enough. Then we'll see all the gains made by the working-class under the auspices of the State in the last century melt away into nothing.

[minionofmidas]

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Desktop manufacturing.

Not what I was asking.

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Nor vice versa, actually. Though I'm not sure what that's got to do with what I was saying...

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Worker's co-operatives (which should go tax free, to allow them to compete); unions which aren't neutered by State involvement in their internal affairs (and which thus allows them to make more radical demands than at present). [/quote]All of which requires fairly direct state intervention.

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That's already been happening for the past thirty years, with some ups and downs.  Though the percentage of the people to be within said working class is lower than it was a century ago. Debt constraints have been a factor in that, but so has ideology. And no, the process isn't likely to be getting reversed right now...

[Scam of God]

Not what I was asking.

Then what were you asking? I'm sorry, but it's very difficult to understand you sometimes.

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You said that -

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- and I gave you a direct example of it doing, if not something nobody wants, then certainly something that has proved harmful over a fairly extended period of time.

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To the contrary: all of these things, if they are robust enough, can exist completely outside of the State, and will very frequently find themselves in opposition to the State.

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Well, we'll see.

[minionofmidas]

Not what I was asking.

Then what were you asking? I'm sorry, but it's very difficult to understand you sometimes.

"Who or what would make them (the state, the private investors in question) do so? Why would they do what you want?"

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- and I gave you a direct example of it doing, if not something nobody wants, then certainly something that has proved harmful over a fairly extended period of time. [/quote]No, you gave an example of the people manning (as it were) the state not really knowing/caring what their actions lead to.
And most people quite approve of the interstate system still... why the hell would it be scrapped as long as that's the case?

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To the contrary: all of these things, if they are robust enough, can exist completely outside of the State, and will very frequently find themselves in opposition to the State. [/quote]They don't exist outside the state if the state can take their tax benefits away anytime. And finding yourself in opposition to the government of the day is not the same thing as opposition to the state. And none of which contradicts the fact that their creation would be (partly) the result of state intervention.

[Scam of God]

"Who or what would make them (the state, the private investors in question) do so? Why would they do what you want?"

They almost certainly wouldn't, until we change our entire political paradigm. Which I am focused on now.

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Is there a fundamental difference?

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What "the people" want and what "the people" need can be very much at odds. This is why I'm not a populist.

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They'd only need those tax benefits until such a time as they are firmly established and competitive.

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It can certainly turn into it fairly quickly.

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See above.

[minionofmidas]

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Is there a fundamental difference?

No, as we seem to be describing the same extremely common phenomenon. And yes, as only one description attempts (however insufficiently) to descibe what is happening and why. The other creates an artificial Black Box that it doesn't attempt to look into.

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What "the people" want and what "the people" need can be very much at odds. [/quote]Absolutely. And what they get, and what they do, are different beasts yet again. This isn't going to change - not even by abolishing representative democracy.* This is part of the framework any attempts at meaningful reform will have to work within.

*In theory, these discrepancies might be reduced by drastically decreasing communities' interaction with other communities. Unlearn the internal combustion engine and you're halfway there. Not that that would be enough, as all those little societies would still tend towards some sort of not-exactly-democratic ideal.

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They'd only need those tax benefits until such a time as they are firmly established and competitive. [/quote]You think? Okay, the state could still, theoretically, tax them into oblivion. Or just destroy them by police action, or even by inaction.
You will need a degree of acceptance of the state and by the state to achieve anything lasting. This will require getting your hands dirty. It will also involve making mistakes and doing stuff you'd better not have done, in retrospect. [/is reminded of 1980s history of Green Parties]