Wednesday, September 25, 2013


SHOCKER: NY Mayor hopeful Bill de Blasio IS A COMMUNIST!

Carl Stoll

Communist, eh? The president of Italy is a Communist too. In the 1950s and 60s Giorgio Napolitano was a top maker  and shaker in the Politbureau of the Italian Communist Party, He spent the summers with his family on Lake Baikal in Siberia. In 1956 Napolitano gave a press conference congratulating Communist Russia on crushing the Hungarian Revolution.

But he's changed his views.

The president of Brazil is a Communist, too. She’s very popular. She was a communist guerrilla during the brutal military dictatorship that governed Brazil after the CIA boosted the army into power in order to cut short unsettling populist experiences – unsettling for the rich ruling class, that is.  

The Brazilian economy is doing very well under its Communist president. The Brazilian  government pays poor families food allowances to encourage them to send their children to school. That way poor children can learn and eventually earn respectable incomes.

They used to have programmes like that in the US, too, but the Republicans got rid of them. Now many people go hungry in the US, because the Republicans prevent the government from spending any money to preserve the people’s health, improve their earning power and fund infrastructure investments that encourage private enterprise to invest in turn.

In the 1950s,  by contrast,  Republican President Eisenhower invested vast sums of federal tax revenue into expanding the country’s productive capacity. A lot of this productive infrastructure investment was disguised as military spending.   Among other things the federal government offered generous scholarships to the population at large. Aren’t many scholarships around these days. 
The federal government pulverised billions of dollars on a megalomaniac national superhighway system – essential for fighting off the Russians, you know. Presidents Johnson and Nixon and a wee little bit Carter were the last presidents who believed in welfare and expressly proposed to boost government investment to spur on private investment.

Keynesianism became unfashionable when it proved unable to jump-start Western economies out of the deep slump that ensued from the 1973 Arab petroleum boycott.[1]

The feebleness of the world economy after 1973 was attributed by current ideological fashion to excessive government spending, government waste, high taxes, too many giveaways to the poor.

Since that time a big theoretical issue has developed around so-called “external shocks”. In 1973, as far as I am aware, economists had not yet explored the issue of external shocks. They were known to exist, but they were not systematically incorporated into explanatory models of economic events.  

Even without explicitly using the “shock” concept, there was really no good reason to expect the world economy to recover swiftly from such a massive change in basic market parameters. The Arab oil boycott of 1973 tripled or quintupled energy prices, I forget which. Big price shocks like that demand massive readjustments that  take  a long time to play themselves out. European industry took several  years to adjust to the sudden disappearance of many businesses that suddenly became too energy-inefficient to continue producing  at the new prices. The whole profile of industry changed, new business models replaced the old, unemployment mushroomed, the pattern of foreign trade shifted and so forth.

So it seems that the dumping of Keynesianism as the standard economic policy in favour of monetarism and its successors – the  successive economic orthodoxies of the parasitical financial oligarchy -- was an error, based on suspiciously premature and hasty reasoning from a scanty data  base.

Comparison of tax rates and economic growth rates before 1973 and after 1980 reveals clearly that when the highest income tax rate was 92%, capitalists invested much more readily than when the rate went down to 28%. So the argument that raising taxes reduces investment is false. Tax rates affect investment much less than does the investor’s chance of making a profit.

After Carter the economy started going downhill. That period is known as the “Reagan Revolution”. The Conservative Republicans swore that getting government out of the economy was a prescription for sparking rapid economic growth. It never happened. There wasn’t much growth. Instead wealth began rapidly concentrating in the top income brackets. All additional national income ensuing from any growth was collected by the rich, while most people’s incomes started stagnating.

[Paragraph removed for review. I discovered that my reasoning was false. I must consult the original article before posting the corrections.] 

But in Brazil the economy has been doing very well ever since a militant labour unionist -- Lula -- became president in free elections and at once cranked up the economy with looser monetary policies, raised taxes on the rich and on corporations and  expanded government spending. You know, what they used to call Keynesianism, right? His right-hand woman was an ex-Communist guerrilla. Back during the dictatorship she was captured by the military, imprisoned and tortured.  Now she’s the boss.

Perhaps if the American President were a Communist, we wouldn't be in such a pickle, don’t you think?

I think if the US had had Communist governments over the last 20 years, a lot of very expensive blunders could have been avoided. The Commies would have spotted at once the danger resulting from dependence on overseas energy sources. By the Second Five-Year Plan, much of industry would have already been converted to other energy sources, new manufactures, etc.  With a Communist economic policy, exporting jobs overseas wouldn't have become the economy’s most dynamic segment.

I learned a rather saddening fact a few years ago. It seems to be true, since I have not noticed anyone disputing it – the US taught the Brazilian dictatorship how to torture prisoners. Taught lots of other Latam despotisms, too. Torture training was organised through the US development aid agency, USAID, and funded from the foreign aid budget.    

Author’s confession:  The above history is a summary presentation and I hold it to be accurate overall and in all its decisive aspects. However some details were simplified and certain points are polemically expressed.   

[1] In the context of this essay, the Arab oil boycott of 1973 is considered merely an anonymous,
 random external shock. The boycott’s causes were political in nature and cannot be dealt with in the brief confines of this economic essay.