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David Stockman On Crony Capitalism

Ronald Reagan budget director David Stockman says crony capitalism has left the U.S. economy in giant trouble.  He’s with us.

David Stockman, wunderkind of the Reagan administration and a key architect of the biggest tax cut in U.S. history. (AP)

David Stockman, wunderkind of the Reagan administration and a key architect of the biggest tax cut in U.S. history. (AP)

1980s White House budget director David Stockman was a right-hand man to his boss Ronald Reagan.  Deep in the heart of the Reagan revolution.  In 1985, Stockman resigned.  Moved on.

Now he’s looking back on 80 years of American history and economics and politics – and warning we are in giant trouble.  Practically doomed, Stockman says, by Republican loyalty to the rich, Democrat loyalty to social welfare we can’t afford, crony capitalism, and a Fed run amuck.  There’s plenty of pushback, but he’s out there loud.

This hour, On Point:  David Stockman on American doom.

-Tom Ashbrook

Guest

David Stockman, budget director for President Ronald Reagan from 1981 to 1985. Author of “The Great Deformation: The Corruption of Capitalism in America.”

Roger Lowenstein, contributing writer to the New York Times Magazine and a columnist for Bloomberg News.

From Tom’s Reading List

The New York Times (David Stockman) “Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.”

The Washington Post “The country began veering badly off course, Stockman argues, in August 1971. That was when Nixon decided to scrap the international financial arrangement that anchored the dollar’s value to gold and thus other currencies in the decades after World War II. ‘In an act that cascaded down through the decades, Richard Nixon caused the United States to default on its . . . obligations . . . and thereby inaugurated an era of global trade imbalance, currency pegging and manipulation, massive debt creation, and financial speculation that had no historic antecedents,’ Stockman writes. ‘It became the era of bubble finance.”’”

The Atlantic “David Stockman, formerly a leading conservative Reaganite, now blames some of the economic program that he once supported for the 2008 meltdown and sluggish recovery. But liberal Democrats who may be excited about a Stockman defection will be sorely disappointed: His critique of the Obama economic program is just as strong as what he says about his erstwhile friends in the Republican Party.”

Excerpt: ‘The Great Deformation’ by David Stockman

 

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  • OnPointComments

    “American households lost … more than $7 trillion in the 2007 housing crash.”  The banking regulators and legislators all insisted that it was de facto discrimination that those who couldn’t qualify for mortgages under prevailing lending standards were denied the opportunity to buy a house, so they changed the rules.  Now the Obama administration wants to repeat the same mistake again.
     
    Obama To Banks: Let’s Do The Bubble Again
    http://news.investors.com/ibd-editorials/040313-650384-obama-wants-banks-to-loosen-lending-standards.htm#ixzz2PSgH5T4V 
     
    And as if another housing crash won’t be enough, the CFPB has added auto and student loans to the next bubble.
     
    http://news.investors.com/ibd-editorials-perspective/030613-647029-cfpb-to-sue-racist-auto-student-lenders.htm?p=full 
     
    The IBD has it exactly right:  “The bureau is pursuing racism charges based on “disparate impact,” a dubious legal theory that uses statistical models to prove bias.”  As stated in the article, ” “discriminatory effects” analysis excludes key credit factors.”  All that matters is the statistics; credit scores, income, and ability to repay the loan all count for nothing.
     
    Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.”  Einstein thought it was insanity; perhaps it’s just stupidity.

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      More IBD editorials. Quel surprise.

    • nj_v2

      IBD, handmaiden to the corporate overlords.

      Zzzzzzzzzzzzz…

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        I thought the slogan was “IBD: The place every LATimes hack aspires to”.

  • brettearle

    He’s starting to look like Cheney.

    • Payhole Everdouche

      You are starting to sound like G.W.Bush. =)

  • twenty_niner

    Stockman is spot on. 

    We had a tech bubble that was replaced by a housing bubble that was replaced by a printing/government-spending bubble; each bubble dwarfing the one before it, powered by a Fed that has investors convinced that printing and the discount window and endless POMOs cure all evils.

    Real innovation has given way to financial innovation, and why not? Why toil in a lab for years trying to invent something that only has a small chance of panning out when you can just play with money all day at 0%. And if another black swan spoils the party, who cares? We’ve got a big printing press and lots of ink, and then of course there’s TARP 2.0, but this time, add another zero.

  • Wm_James_from_Missouri

    Mr. Stockman,

    I was able to listen to some of the radio show you did with Diane Rehm, yesterday. Although I agreed with some of the things you had to say, I disagree with some of the concepts you were pushing because I do not believe they tell the whole story. If you really want to start fixing our economy in a fair and just manner, I would suggest that you start pushing for laws that force profitable companies to pay cash dividends to stockholders and support the taxing of such dividends at earned income rates. This ridicules, manipulative hoarding that continues to go on by these large corporations is destructive to the US and to capitalism at large. You say you want to change the Feds position on interest rates, well; give the Fed some competition in the market place. Make the banks compete with dividend paying equities. I do think you are correct about lowering the corporate tax rate, though. However, I do not support a complete elimination of corporate tax.

    Now, that said; I do not think that “free traders” are being honest about the nature of the technological world we live in today. It is a fact that over 70 % of the equities traded on the major exchanges today are performed by sophisticated trading algorithms*, which most Americans do not have access to or the abilities to acquire for their personal use, due to cost. The average American, does not have the money, time, education, skill or will or connections to compete on a “free market, level playing ground”. This distortion was not conceived of by Adam Smith and is still not a factor in the thinking of free marketers. Technology is forcing the “average man” to his knees !

     

    If the above example isn’t enough to sway you, consider the machine, The D Wave, so called, adiabatic quantum computer developed with Lockheed Martin.

    http://en.wikipedia.org/wiki/D-Wave_Systems

     
    It is though by some that it could move through a possibly near infinite number of “ states” to analyze complex financial strategies.**
    I am curious, do you think you or any other human could compete with such a machine ? This invention is one of many that are shaping our modern world. Adam Smith was correct years ago, but the light of his sun is dimming. The trend line is clear, HUMANS WILL NOT BE ABLE TO COMPETE, AGAINST SUCH SYSTEMS AND DEVICES IN THE FUTURE, PERIOD !

    Any such, “ pick yourself up by your bootstraps, work long and hard, get more and more education, etc. are useful in the near term, but, complete folly for the long haul. We need visionaries that are willing to make a clean break with past thinking and start developing systems that GUAREENTEE wealth for all.

    I am not pleading for Communism, we know that doesn’t work, but I am suggesting that something that is not now, will have to be, if we are to survive.

     
    * This is also true in Great Britain.
    ** Among other impressive feats.

  • MadMarkTheCodeWarrior

    Behold true believers of lazy fairy mythonomics, the wizard pulls back the curtain to give you a glimpse of what’s been going on behind the curtains.

    Now, more than ever before, the game has been rigged not to foster investment and growth, but the systematic siphoning off of capital to the powerful through program trading, ‘high finance’, and changes to tax laws that benefit the wealthy.

    The greatest heist of all time was done in broad daylight and although we know where the money went, no one has gone to jail.

  • Steve_in_Vermont

    It does seem that every generation has to make its own mistakes. We then look
    back and agree, they certainly should have known better. We then go ahead and do
    the same thing, expecting a different result. In the past I though all we needed
    was strong leadership. But now I realize that in order to have that you need a
    people willing to be lead. I doubt people would respond to such a person. As
    a society, we’re simply to fractured to be united by even the best leadership. Perhaps we’ve become “The United (In Individual
    Self Interest) States of America.

  • Fredlinskip

    “(The economy) did recover after 1982, but mainly because the Federal Reserve defeated inflation.” -Stockman (2011)
    The implication seems to be that it wasn’t the tax cuts, but cutting interest rates from 21% (under Carter) down to 7%, that is what is most responsible for ending the recession (greatest since Depression), which had occurred shortly after “Economic Recovery Tax Act” was passed on July 29, 1981.

       I find it interesting that it seemed to be Hinckley’s attack on Reagan that ultimately granted the “political capital” to enable Reagan to push through his “trickle-down” proposals through congress.
    Lots of “fuzzy math” going on back then- much of it perpetuated by Stockman.
        Reagan plan originally proposed that 83 deficit would be zero (and  national debt would be reduce), but it was actually on it’s way to 6.3% of GDP- a peacetime record that still stands.
    National debt tripled.

    STILL, for all that “stimulus spending”,  GNP grew at slower rate under Reagan than under Carter.

  • Fredlinskip

      It seems Stockman has come a long way as far as attempting to redeem himself for his part in creating a fiscal philosophy which wrought so much damage to this country’s long term fiscal welfare.
       He seems to do what he can to speak ‘truth to power”, but unfortunately has not seemed to receive that much press.

        “The Republican Party has totally abdicated its job…. to act as the guardian of fiscal discipline and responsibility. …(And is) on an anti-tax jihad – one that benefits the prosperous classes.”- Stockman- 2011

        Stockman (after leaving office in ’85), in a closed meeting with board of NY stock exchange:
    “We are wantonly violating cardinal rule of sound public finance: gov must extract from people in taxes what they dispense in benefits, services, and protections…. If Securities and Exchange Commission had jurisdiction over executive and legislative branches, many of us would be in jail.”

  • 1Brett1

    Hello? David Stockman, the ’80s called…they want their eyeglasses back!

  • albert Sordi

    The repeal of Glass Steagall by Clinton is much to blame for the financial problems of the US.  Americans need to stop playing the two party charade.  The country is ruled by international bankers.

    • creaker

      The two party charade is the basis for our democracy – both parties squaring off like professional wrestlers, lots of big talk over what they will do and who will win, putting on a big show for the masses, when the real reason for it all is just for a few folks to make a lot money.

    • MadMarkTheCodeWarrior

      Do you mean the ‘gramm-leach-bliley’ act? (All republicans)

      It was veto-proof but only 58 Ds and 6 Rs voted against it.

      It was a collaborative effort in wishful thinking and bad judgement defying the lessons of history. :^(

      • WorriedfortheCountry

        I did not sign that bill — repeal Glass-Steagall.
            – Bill Clinton

        I sense a pattern.

        It is time to take responsibility for your actions.

        • MadMarkTheCodeWarrior

          I was opposed. It was patently dangerous.

          When did Clinton deny his signing of the gramm-leach-bliley act: the event was preserved in video for all time? Where do you get these nuggets?

          • WorriedfortheCountry

             We can agree that it was a bipartisan debacle.  However, it never would have happened if Clinton didn’t sign it and Robert Rubin’s and Larry Summer’s push.

          • MadMarkTheCodeWarrior

            So he never denied signing it?

            Yes, he should have not signed it but, look at the voting record for the act. It was veto-proof by some analysis. On the other hand Clinton did do some horse trading to get things that he wanted.

            And then there’s Rubin and Summers who were part of the Randian kabal that help engineer that unconscionable deregulation.

            They were all guilty of being tools of the banks.

  • stephenreal

    Hey David Stockman, how would you save social security, medicare and medicaid ? Is it all just a pyramid scheme? Help!

  • Fredlinskip

    ‘Trickle down’ presupposes that if taxes and regulation are low, especially on top %ers, then business prospers, more people are hired, more revenue created, deficits diminish, etc. Surely this concept has been “blown out of water” by now???   Still, there are those who have been so personally invested in  “Reagan is king” beliefs that they deny it to this day. And why not?- most of the wealthiest Americans have profited immensely- unfortunately at expense of rest of country, from this strategy. And “$ talks, bull__ walks”, as they say.Heck, Money is free speech, and corporations are people these days.There is a push in congress to bring corporate rate down to 25%- haven’t seen that low since just before Depression hit. Hmmm.GOP argument seems to be:So what that wages have stagnated, & we now have mostly a “service economy”, that produces less and less? So what that much of the job creation as of late, has been at Wal-mart level?And how can one blame this on tax policy, regulation, and corps & wealthy not paying “fair share” anyway?    Record profits– so what? Time for Americans to let go of their so called “entitlements”. If you’ve not hitched your “American Dream” in some manner to corporate bandwagon, then there are other rewards in life besides financial. $ isn’t everything.   What about “globalization”? This ain’t Eisenhower’s economy. We’ve got to be able to compete with everyone else, yes? Does this not create race to bottom as far as employment and wages? Great that investor class hangs on to shirttails of record corporate profit. Party going to last forever??  Hope they got in at right time. Hope they get out right time as well.Don’t mean to be so pessimistic. Hopefully economy is on uphill spiral and all will be peachy.I think Stockman offers some words of caution.

  • creaker

    It’s always been this way – the oligarchy (and every government is an oligarchy, terms like democracy or communism are just window dressings) manipulates the rules to make more money. For them.

  • jimino

    Please ask Mr. Stockman what he considers an appropriate penalty to be
    imposed on people like himself who played such a significant role in
    ruining our economy.  Should they forfeit everything they have, like we
    require of common low-level drug dealers, or at least everything they
    make from a book they write after their harmful actions? 

    Or does he advocate continuing our policy of not requiring any responsibility on the part of those of his ilk and allowing them to keep all of their ill-gotten gains for themselves and their offspring.

  • MadMarkTheCodeWarrior

    Hi David,

    What are the key difficulties that you see in tearing down the Reagan mythology? It’s become like a religion for Republicans.

    What was your motivation behind Reaganomics back then?
    - Mark

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      “Republicans”?

      Hey, don’t forget the Beltway Inbreds. They didn’t do all that service “on bended knee” in order for you to forget them now.

      • MadMarkTheCodeWarrior

        There’s plenty of blame to go around. I prefer to attack the leaders, cheerleaders and their henchmen.

        • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

          Fair enough. The media crit in me is always close to the surface.

          • MadMarkTheCodeWarrior

             I would actually like to have a few words with Mr. Obama: Wall Street WTF?

  • Michiganjf

    “We’re in bigger trouble than we think???!!”

    Bigger trouble than WHO thinks???

    Stockman should read the comments on this website for a few weeks… many have been trying to sound an alarm for more than a decade now… especially regarding Republican stupidity!

  • albert Sordi

    When the corruption and crisis of capitalism becomes to exposed to the masses,  is the time when the capitalists, and their govt media, start sending off people to war.

    No surprise we have seen the 911 scam and the wardrums going at an alarming rate since then.

    • AC

      o, now i get your name choice! (too agressive tho, you’re not as funny)

      • albert Sordi

        Hey AC,  Tell me. Am I more aggressive than corrupt congressmen, ruthless lobbyists, warmongering defense contractors, greedy bankers??  
        You think we should not be too harsh on these scumbags?

        • AC

          hey, go live in africa where your schoolmaster beats you if you didnt bring in enough money from begging.
          this is a HUMAN issue, you’re rants do nothing to help at all

          • albert Sordi

            Lots of people should be punished for their crimes, including many bankers and politicians. 

          • AC

            i don’t disagree with this comment at all.

  • sjw81

    Agree with all David has said, he is so right. many others have said same-Ike, Robert Riech Ron Paul,After Schock authors, Bernei Sanders…all diverse but all correct . Thats why occupy wall st and tea party are so alike…

  • stephenreal

    but what about social security dave?

  • albert Sordi

    Are you trying to discredit this man???  Why can’t you understand that it takes those inside the beast to best see its faults?

  • albert Sordi

    Capitalism is synonymous with corruption, exploitation and excess.

    • AC

      stop complaining and offer a suggestion then

      • WorriedfortheCountry

         He prefers Hugo Chavez’s fascist methods.

        • AC

          all system’s have their problems, but this sort of commentary annoys me.
          i don’t think this man has ever traveled outside this country – he thinks he does because he watches foreign movies…..

          • albert Sordi

            America’s debt obsession and disproportionate standard of living (while producing relatively little) is the product of misery and theft of your fellow citizens of the world. 

            Your commentary madame is that which is unqualified.   I suggest you enjoy the binge while it lasts.

          • AC

            where have you been then? i’ve been everywhere, including asia, africa & the middle east. your delusional if you think this is the worst. absolutely delusional. like corruption is a western concept. so stoopid.
            also, strangely, most foreign friends gripe to me more about france & england then the US, and I’m not american so i don’t think they’re just being kind…

          • albert Sordi

            Some people travel and only stay at the best hotels.   Some people lack perspective and understanding of economics.

          • AC

            this doesn’t make sense? also, haven’t you heard about what is means to ‘assume’?
            sheesh. i only took 2 classes of economics in college and i will admidt – i, & some friends, used to gripe about that what a baloney, made-up science it is (we didn’t use the word baloney). talk about something depending on perspective!

          • MadMarkTheCodeWarrior

            Some people choose to live in a bubble, on vacation, and all too often at home. I choose to pop the bubble, live and think outside of the box.

            In AC’s defense, I think she too lives outside of the bubble, choosing investigation and introspection over incestuous ideological affirmation… Call it living in the bubble or sticking one’s head in the sand, some choose to be ignorant and stay that way never challenging their tenuous understanding of reality.

            I’m not accusing you of the latter, I just think you both got into a fight over semantics that escalated out of control. I think you two are in danger of being in vigorous agreement. :^)

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            No skin off my nose, but there are a lot more people on the internets to say “unqualified commentary” to than AC.

        • albert Sordi

          Did you say fascism???  Guantanamo, Homeland security, Patriot Act, Goldman Sachs and Skull and Bones dynasties, drones in the sky?  Look around you pal.

      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        While over the top, I find Sordi’s ideas a useful corrective for the narrative to be found on  Evening News.

        Whenever the spectre of regulation comes up, half our media discourse seems to be “CapitalismYea!!!” and “whatever rich people wish to do is Capitalism / Market Driven / entrepreneurial now”, as if those words had a magical meaning.

        • AC

          if not capitilism what? what system in history has EVER worked w/o corruption? i can’t think of a one….but i am weak on this subject and don’t have a good grasp of it – i just recognize pointlessness when i see it, & Sordi is extremely pointless, bashing something w/o taking any responsibility to fix it; i bet between his screen name and his rightousness, he feels clever. not to me, tho, he’s just the constant….

          • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

            Well, of course no system ever has.

            I’m just as concerned about pointlessness as you are. However, as I’m given to doing, I’m sorta going meta, and what I see is a change in the press corps where the terms from Reagan’s era and the policy terms from the likes of Reagan and Nixon have changed in an Orwellian way: Nobody talks about the change in terms.

          • AC

            i need to read more on that, i’m not really aware what their policies were or the historical effects they’ve had

  • nj_v2

    Like Richard Wolff says, capitalism no longer works. Even regulated capitalism. The rich and powerful will always have the means to subvert or avoid any rules that would limit their power, and to game the system to their advantage.

    A more fundamental and radical change is needed.

    • Gregg Smith

      How about we spend our way out of debt by passing around other peoples money to create demand? That’ll work.

      • nj_v2

        Let us know when you have something worthwhile to contribute. Give us some kind of signal.

    • JobExperience

       Capitalism has hit the fan, and Stockman only wants to discard the fan.

  • Michiganjf

    FINALLY!!!!!!!

     A Republican who admits Bush and the Republicans left the deficit at a Trillion before anyone really even knew the name Obama!!!

    … and that, up from a SURPLUS!!!

    In truth, Bush left the deficit at 1.3-1.4 trillion, a level from which President Obama has reduced the REPUBLICAN DEFICIT.

  • Gwatti

    There is no correlation between zero % interest rates and improving employment. It’s sole causal effect: significantly expanding the divide between the 1% and the 99%. It’s causing, not easing, social strain. It’s beyond a failed policy.  It’s unconscionable. QE Infinity. We are being drugged into complacency as Wall Street gorges on Bernanke’s printed money.

  • AC

    what is Mr. Stockman’s proposal to fix the problem & then maintain it?

    • 1Brett1

      I didn’t hear anything but a lot of broad platitudes and simplistic generalizations.

  • Trudie

    He speaks the truth….history has shown he is correct..

    • JobExperience

      You mean Zinn, I suppose, not Stockman.
      Stockman speaks the press release.

  • creaker

    Howard Zinn – A People’s History of the United States – it’s always been this way, any slant that this is some terrible thing that’s only happening in our day and age after a history of responsible capitalism and government is complete fantasy.

  • J__o__h__n

    Both sides have made mistakes but they aren’t equally wrong.  The Democrats should not have gone along with the Republicans, but that doesn’t make them equally responsible. 

    • Ray in VT

      I did find it disappointing that Mr. Stockman mentioned only the actions of the Democrats regarding the repeal of Glass-Steagall.  There’s plenty of blame for both sides.

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    Social Security is broke and needs to be “reformed”.

    The Obama stimulus was a waste.

    Thus ends the information portion of this hour’s program.

    I thought Stockman was supposed to be more of an economist than the typical media figure making the mainstream media rounds.

  • fhbstoneham

    Tom, Why don’t you let us hear what Stockman has to say? We don’t tune it to listen to you. Don’t you realize that your guests are there to talk not you? If you want to monologues, go someplace else.

    In every show, you spend much more time talking than your guests. Get over it.

  • nj_v2

    Means testing isn’t the only solution for Social Security. The problem is really just the rabbit-passing-through-the-snake problem of the Boomer bulge coming of age. Not that means testing is a bad idea, but raising the cap easily solves the problem. 

    • Fredlinskip

      Boomer generation was perhaps most productive generation ever. During their boom years is when SS, medicare should have been shored up. Unfortunately Wars and lopsided system that benefited the few at expense of many intervened. 

  • Markus6

    Two broad forces are driving this. People don’t like to give up stuff and they only see one side. CEOs, Wall Street, bankers will grab everything they can as will unions, people living off the government and the rest. 

    Each side is so myopic, they justify themselves because the other side is so evil. And this demonization locks us into our existing positions. 

    We’re both black and white and naive in how we think. 

    • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

      When CEOs, Wall Street and bankers grab everything they can and corporations go bankrupt, CNBC will be there to cheer InvisibleHands, Beeyotches.

      When the riffraff try the same, what our press corps say is “You’re ruining your company’s competitiveness! Give back more benefits yesterday! That corporation has to be stable in ten years!”

      And do you mean poor people living off the government, or rich people doing the same?

  • realedreform

    Finally!  You are covering perhaps THE most important issue of our day!  And yes, what they put into the US Constitution re money DOES matter!  

  • Michiganjf

    WAIT A MINUTE!!!!

     Republican Phil Gramm “spear-headed” the  the Gramm-Leach-Bliley Act , which repealed Glass-Steagall!!!!

    All three sponsors in that bill’s name are REPUBLICANS!!!!

    Yes, Clinton signed it, BUT THIS WAS A REPUBLCAN INITIATIVE, PUSHED FOR BY VERY POWERFUL REPUBLICANS!!!!!

    Good God, Republicans love to try and re-write history!!!
    They might as well be writing history in Saudi Arabia or the Soviet Union!!

    • WorriedfortheCountry

      Ever hear of a man named Robert Rubin?

      Treasury secretary under Clinton and Co-chairman of Goldman-Sachs.

    • William

       Clinton signed it, Clinton owns it.

  • http://www.facebook.com/profile.php?id=1408098372 Mari McAvenia

    Who exactly will be “doomed” the worst in this scenario, Mr. Stockman? Certainly not the Wall Streeters & their pet politicians. Sheldon Wolin, Barbara Ehrenreich & Chris Hedges have been warning us “little people” about this rigged game for many years. Few have paid attention.

    • JobExperience

       Why ain’t you teachin’ college, Girl?
      When I get my own school, you’re hired.

  • RolloMartins

    Stockman’s ignorance of fiat macroeconomics is frightening. He is right about the defense industry (which is to say Eisenhower was right), but his ideas re deficit reduction is gold-standard era thinking. Memo: We have a fiat system now, not a gold-standard.

  • realedreform

    Finally!  You are covering what may be THE most important issue of our day! And yes, what they put into the US Constitution re money DOES matter!

  • dallas rolnick

    Question for Stockman: Are we screwing up with misguided fiscal policy, or are we being robbed?  And where is the money going?

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    Having had his own rude awakening during the early Reagan years, would David Stockman hazard to guess why Dodd/Frank is not as good a piece of legislation as it could have been?

  • DrewInGeorgia

    Does your guest dismiss any accountability on the part of The Market? Wall Street drives the piss poor decision making by politicians that your guest is complaining about Tom, what are his solutions? What do you think about a Non-Profit exchange with set pay for traders Mr. Stockman? About reversal of Citizens United through new legislation? About effective tax rates being collected on investment income? About addressing the lobby leviathan?

    The moment the definition of Income was changed to include wages we declared Capitalism to be the winner and the wage earner to be the loser. “But businesses won’t do business any more if their income is taxed higher”…bullskat. This is just as ridiculous as saying that someone won’t try to earn a profit if he’ll only get 750K versus a million. Decreasing incentive discourages abuse. I’m listening closely but I’m not hearing any concrete solutions.

    I like the list you just read off Tom, short of revolution I can’t foresee any of it being implemented.

  • John-Michael Battaglia

    On Point should consider following-up the interview with David Stockman by interviewing author Andrew Bachevich, whose book, Washington Rules: America’s Path to Permanent War, echoes the insights provided by Stockman regarding how politicians of all stripes and colors have wittingly and unwittingly undermined the economic and moral strength America used to have by committing the country to a defense-oriented economy that has made us the scourge of the world, not its saviour.

  • Rayburn Clipper

    It needed to be said, Capitalism is broken, and the patches just aren’t going to work.  I’m buying the book, he’s preaching to the choir but he’s the first one to do so.

    • JobExperience

      Not much of a reader I see

    • AC

      ummmmmmm
      “The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.”  Thomas Jefferson

      • Fredlinskip

        Good quote, but if it was up to Jefferson, we’d all still be farming.
        Then again, maybe we’d be better off.

        • AC

          i’m joining one of those local co-op farms that are local. as long as they have restrictions on genetically enhanced foods anyway. i’ll have to check….

          • AC

            i’m getting worse at writing somehow – yesterday i wrote ‘your’ when i meant ‘you are’ today i’m being redundant…..next i’ll spell something else incorrectly…

      • MadMarkTheCodeWarrior

        That is one fabulous quote!

    • AC

      i’ve got more……

  • pete

    Good rebuttal of Stockman from Krugmans blog as of 2 hrs ago:
    http://krugman.blogs.nytimes.com/2013/04/03/debt-and-david-stockman/

    • WorriedfortheCountry
      • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

        Victor Hanson. National Review. Figures.

        • WorriedfortheCountry

           Dr. Hanson is a brilliant fellow, eh?

        • Ken Wilson

           Krugman. New York Times. Figures.

      • pete

        Your link is pointless drivel about California politics. What does that have to do with Stockman’s claim that our debt dooms us and the sky is falling? Krugman points out that Obama dug out from under Bush’s debt runup and decreased our debt to GDP ratio by over 25% since the peak in 2001. (there’s a nice graph).

  • ToyYoda

    Why did you let Lowenstein go?  I think this show would have been a lot more interesting with both guests who have opposing view points.

  • http://www.facebook.com/danny.kuhn.56 Danny Kuhn

    Mr. Stockman, what do you suggest that a common working person should do as an individual to protect ourselves?  Is there any way we can make our future better, or has the die been cast, and we all just along for the ride?

    • JobExperience

       Well, Danny, a smart lad like you should buy two of my books, tape them together to make an excellent pair of short shorts.     Big Daddy Dave S.

  • DrewInGeorgia

    Monetary Systems are tools, nothing more.
    When tools break you obtain or create new ones.
    Adaptation or extinction, we choose.

    • AC

      i want to like this a million times!

      i’ve got squat for ideas tho, i stink….:(
      you?

      • DrewInGeorgia

        Thanks AC!

        Ideas? Let me think about it… lol

        I’m working on a reply but I warn you it will be long, boring, and likely crazier than a Mad Hatter.
        Get back to you in a bit.

        • Fredlinskip

          How ’bout eliminating policy that encourage job growth overseas instead of here.
          How bout having corporations pay some tax once in awhile, instead of encouraging some kind of “starve the beast” strategy, (which is supposed to somehow lower national debt?)
          How bout policy that encourages Corps to invest here.
          How bout stopping subsidizing oil cos and their ilk (that is they tax us).
          How bout working on reducing all the inefficiencies in health care.
          Lots of stuff can be done.
           

      • DrewInGeorgia

        I didn’t forget about you, just been extremely busy.
        I haven’t even had time to read most of the comments from this show but I have been wracking my brain since yesterday. Long boring post still coming as soon as time permits.

        :’)

        • AC

          no worries, my new project is starting later than projected – i feel like i’ve got lots of time…
          that reminds me; time has more worth to me than ‘money’. i would consider myself wealthy if i was in complete control of how i spend my time on what w/o losing the ability to provide for myself or loved ones…..
          hope you work that in somewhere…..maybe one of those ‘social work sharing’ or whatever it’s called, specially since so many jobs are drying up…..

      • DrewInGeorgia

        “is there any way that we can craft a financial system in which people are free to be innovative and if they want to aggressively bet on markets with their own resources, but have a system that separates that activity from the financial infrastructure that allows the rest of the economy to function, so that when they’re gambling, you know, they’re not gambling the entire system?”

        The Grand Casino, get all that high-risk gambling isolated from the public purse. I like it.

        The quote was taken from Fresh Air yesterday, if you missed it it’s definitely worth a listen when you get the time. It was a great discussion and about halfway through it dances around being downright brilliant. There was also a transcript provided if you’d rather read what was said.

        http://www.wbur.org/npr/175950416/the-alchemists-who-control-the-purse-strings-of-the-economy

        I’m going to have to reserve laying out my ideas here for a solution to our failing monetary systems, they’re just too extensive. It’s like perpetual rabbit-chasing: The deeper you dig, the further the hole goes. Like I said, think tome. If I were intelligent enough I’d try to write a book. Even if I had the wits though, I don’t currently have the time.

  • arydberg

    Tom,   

    Could you please explain why the federal reserve bank (which has nothing to do with the federal government)  Has the power to mint money while our federal government has to borrow from this bank.     Perhaps it is the government that should be minting our money as both Lincoln and JFK did.     

  • Sam Ribnick

    Tom – please ask Mr. Stockman about the culture that has driven us to this point. 

    While I agree with much of Mr. Stockman’s argument, it seems like fiscal policy proposals are besides the point. No matter what policy we put in place, those in power in the government and private sector will continue to manipulate the rules to their own benefit. Without a culture shift, his policy proposals will still land us right back where we are now.

  • http://profile.yahoo.com/JXSANCUDPIKQSPID5KT2U4XK5Y TF

    Let’s remember what “means testing for SocSec” will do: It’ll give the uberlords and their outsized media advocates a step towards calling Social Security “welfare” (’70s no-no word) or “entitlements” (’00s no-no word).

    If middle-class folks thought that the narrative of poor Americans being called “moochers” tiring last year, we ain’t heard nothing yet. That will creep upwards steadily.

    The continuing debasement of the language means that those words are coming for those of us in the 50th percentile.

    • JobExperience

       Yes, its a stepping stone on the way to death camps.

  • DrewInGeorgia

    Jumping into The-Way-Back-Machine will not move us forward. It’s time for new ideas, doing it all over again will not correct the inherent flaws in Capitalism.

    • AC

      i totally agree with you!

    • Fredlinskip

      Learning from history so as to help instruct “new ideas” is not such a bad thing. No?

    • TyroneJ

       True, but the only other major economic system of the last century, Socialism, failed miserably. Forty years ago, more than half of the World’s population lived in Socialist States. Now, it’s almost none. The USSR + Eastern Europe collapsed, China saw the writing on the wall and dumped socialism, etc. Until someone comes up with a “3rd way” to examine, Capitalism is the only option that semi-works.

      • Mo_1981

        I don’t understand why the capitalism, socialism, communism ideals can’t be blended into an ideology that works for everyone, instead of totally opposing everything else in favor of capitalism….especially since we already implement a lot of socialistic policies and don’t acknowledge that we do.

        • DrewInGeorgia

          We don’t need an ideology, that’s a majority of the problem now. All we need is an equivalent and efficient system for commerce. A tool not a religion.

          The bottom line is that we have the resources and available workforce to solve a lot of our major problems right now, yet we don’t. Why? Because we can’t afford to. It’s insane.

          It’s like we have our hands around our own throat squeezing desperately while trying to scream that we can’t breath.
          All so some ‘special’ individuals can keep their pockets well-lined, warm, and cozy.

          • TheDailyBuzzherd

            Drew, quite right, this is articulating exactly what I’ve thought for some time now.

            Capitalism rewards the most successful to the point where many not even related in the affairs of those successful are penalized. Part of that is written in our tax code. Second, capitalism is extremely wasteful. Forget the navel-pondering free marketers, the as-noted cannibalistic realities of this system produce unnecessary shortages of human, financial and natural “capital” that benefits no one. Worse, it encourages practitioners of so-called “creative destruction”, “disaster capitalism” and all their cousins to create shortages and bubbles, sometimes intentionally, to the detriment of everyone else. This practice is nowhere more evident then the brain drain of Main Street to Wall Street where such software engineers and purveyors of predatory investment twist laws and ethics to fit their ends, all legally justifiable, and morally bankrupt.

            It’s time for a proper reading for Capitalism and its legacy.

          • Doubting_Thomas12

            Things have changed somewhat since the crisis. As I’ll tell anyone who’ll listen, the best engineer of my classmates sent Goldman’s offer letter back smeared with something particularly foul :D

            The best and the brightest no longer go to to Wall Street; the actual numbers have gone down by about half. It’s lost its appeal, because everybody knows it’s dirty as sin and nothing useful comes out of it anymore. Trading and speculation are NOT investment.

          • TheDailyBuzzherd

            Thomas, unfortunately, their system is based on debt, that’s where the money is, so speculation rewards and penalizes handsomely.

            Kudos to your classmate, he’s a rare example of  restraint, grace and courage. We’ve been taught morals in school and at home from Day One, so it’s a pleasure to read when someone adheres to them.

      • DrewInGeorgia

        People have come up with a “3rd way”. In fact there have been many proposed. Seriously examined or considered? Not so much. The reasons are obvious: At some point any change whatsoever would require many currently in power to have their power diminished.
        It has always been this way and maybe always will, but then again maybe not.

        Capitalism is cannibalistic. Yes it has produced many great results but it has fostered far more negative ones, there’s one being discussed in hour 2 of OP right now. We see the unintended consequences play out and continue marching right along. All of the great things we have achieved could have been achieved under a different monetary system. And they could have been achieved much more efficiently.

    • Mo_1981

      He did have some radical ideas to shake up the system…reigning in banks etc which should be implemented, but never will. We will never move forward if we just keep making small tweaks to an already fractured system, instead of completely changing it.

      • Doubting_Thomas12

        Been saying this for years. We keep building our economy on sand, and we’re shocked when it collapses. But people make money building, selling and speculating on the sandcastles, so by jove we’ll keep at it!

  • AC

    personally, i’m more worried about how unnecessary people are becoming. this is the beginning of a really dangerous/desparate time period. you know how i feel about technology replacing jobs. that’s only going to trickle down & get worse.

    • Fredlinskip

      1964 World’s Fair prophesized that technology would bring about a more leisurely existence full of contraptions to do all the work, shorter work weeks, etc.
      Seems this was utopian fantasy.

  • AC

    wow. a whole hour to say people should have more of a sense of individual responsibility over their behaviour? thanks….:/

  • Brandon Poulson

    In my opinion Mr. Stockman is spot on in many respects, but perhaps not all. With regard to Main St., I hear a lot of comments about how bad things are, but I just don’t see it. People are still paying $5 for a Latte at Starbucks – en masse. Times can’t be that bad.

    • realedreform

      They’re as drunk on paper money as they are on coffee? Seriously, I heard yesterday that President Obama is encouraging banks to lend to folks with lower credit ratings so that they can “buy” houses.  What????  We are not only drunk on credit, we’re insane, too! 

      • StilllHere

        Sounds like an idea that can’t fail!

    • Doubting_Thomas12

      There are some things people won’t go without. But check WHO is buying. Are they the same people? Getting  the more expensive coffees? The devil is always in the details.

      Times are still bad for everyone not involved in bucket houses. Don’t let the interest free loans pumping up speculation in the stock market and real estate fool you.

    • StilllHere

      Agreed. Check the Panera parking lot, also an indicator that things aren’t so bad.

  • realedreform

    If you want to know more about why David Stockman is concerned, google “learn austrian economics” for resources from Tom Woods, Mises.org and the Foundation for Economic Education.  I would share the exact links, but for some reason On Point won’t let me.  I’ve tried twice.  

    • Ray in VT

      I remember once reading a bit of something that Woods wrote where he said something to the effect that the South was on the side of liberty in the Civil War, and I thought “what is wrong with that guy”.  Once I figured out that he was a libertarian as associated with Mises, then the motivations behind his highly questionable historical interpretations all made sense.

      • realedreform

        there is evidence that slavery was on its way out and that the war btwn states was about economics and that US Constitution had no clause that kept states in federation in perpetuity so that, yes, the south was not the “bad guy” it has been superficially portrayed as.  You find out a lot when you read the details of history beyond a bit. 

        • Fredlinskip

          So…
          in your view South’s secession from U.S. was justified act of rising up against “tyrannical government” as “implied” in Constitution?

        • JobExperience

           Slavery is extant in our prison industrial complex and human trafficking. It never died out. Racist libertarians still want it back. A $2.13 minimum wage in restaurant work, Goodwill’s special $2/hr exception, and new grad internships amount to the same thing. And if you argue some slaves were well-treated, try living on the minimum wage.

          • realedreform

            Minimum wage is a band-aid until free market money is restored.  Min wage requirements mean fewer jobs.  Prison is where you get the government minimum wage and it’s a handy thing for an outlaw government to encourage because it helps the employment figures.  Imagine if all the people in US prisons were out on the street looking for jobs. 

          • 1Brett1

            “Min wage requirements mean fewer jobs.”

            Oh, yeah, do away with minimum wage standards, and instead of a given company having 10 employees working 30 hrs. each at minimum wage ($2,325), you’d have companies employing 30 employees working 10 hrs. each at $5 an hour ($1,500) to do the same work…there are lots of companies that would love this, and, yes, there would be more jobs…

          • JobExperience

             “real “assumes an immobility and stasis that is impossible. Maybe he’s been on Ramen noodles too long. Take him down to Guantanamo for tube feeding. It’s like all the money is owned by gamblers who destroy but never produce and people who do the needed work are forever shortchanged. Deregulation intensifies the core problem.

          • realedreform

            “It’s like all the money is owned by gamblers who destroy but never
            produce and people who do the needed work are forever shortchanged.”  Exactly – this is what happens with fiat money Check out “Fiat Money Inflation in France” for more about how speculators are rewarded, savers penalized and society degraded by dishonest money. 

          • Tyranipocrit

             you do a very good job of pitting one group of people against another.  That is why we cant move forward.  Who should have jobs, and who shouldn’t.  Just white poeple.  Just suburban middle class people.  Just irish people.  Just gerrman people.  Just 2-3 generation americans.  just 3rd generation americans.  just men, no women. No hispanics.  Why are those people in prison?  Why are so many people in america incarcerated?  Why are we a police state?  Who do the police work for?

            racism, xenophobia, fear of crime–these are manufactured ideas to keep the working class divided.  An enlightened workiing class would recognize their oppressors and shake th eearth–tearing down the vampire capitalists.

        • 1Brett1

          To characterize slavery and economics as two distinctly separate, mutually-exclusive entities that had no relationship in determining the climate, as it were, during mid-19th century America is…well, a simplistic and inaccurate view of historical relationships and how they relate to each other. 

        • Ray in VT

          It is not historically accurate to portray the Civil War as being only about slavery, although that was certainly a major factor, especially considering that human chattel was, by some estimates, the second most valuable commodity in the United States at the time, behind only the land itself.  On the other hand, Southern historians have been trying to pitch this it wasn’t about slavery line for 150 years, and that certainly isn’t true.  Given what the Southern states were trying to defend and further expand into the Western states, that being the peculiar institution that was perpetual, race-based human slavery, they most certainly deserve the role of the “bad guy”.  While much of the Western world was abolishing slavery, a sizable faction in the South with much political power chose to double down and risk everything on protections that wretched practice.

          Read South Carolina’s declaration of secession.  It is chock full of a list of grievances that have supposedly been visited upon the citizens of that state regarding their peculiar institution.

          There were certainly changes afoot that were making slavery less and less economically advantageous, and it was in 1861 that serfdom was ended in Russia, but those facts do not necessarily lead to the conclusion that slavery would have inevitably died out within any given number of years, especially if those controlling the levers of power in the slave states were willing to accept the economic inefficiency of the system in order to maintain their position atop the power system.  There were plenty of advantages to integration of the freedman population into the political and economic life of the South after the war, but the white power structures maintained a racist social organization until the Federal government took action to finish the job that it started with emancipation and Reconstruction.

          I am quite familiar with many of the details of the situation, given that I have a BA in history, thank you kindly, so I can most certainly do without yet another dose of Southern historical revisionism on the subject.

    • nj_v2

      I pretty much reject out of hand anything from the Libertarian fantasists.

      • realedreform

         a closed mind is a closed mind

        • JobExperience

           And a make believe golden age is stupid.
          And a disproven theory is invalid.
          Austrian economics endeavors to solve Elite’s economic problems of the 19th Century, but ours are different and much worse. Deregulation from the top unleashes waste and majority ruin now.

          • realedreform

            The last two comments are incorrect.  I encourage readers to  look into Austrian economics for themselves. 

          • JobExperience

             Head in septic tank is worse than head in sand.

        • nj_v2

          And a bogus, simplistic, unrealistic theoretical economic framework is a bogus, simplistic, unrealistic theoretical economic framework.

  • Don_B1

    You are so correct!

    There is so much wrong with David Stockman’s analysis there is absolutely NO, repeat NO, possibility of his (false) “solutions” fixing the economy.
    To start, Stockman likes to pull big numbers out of context and then points out their “contribution” to our problems, when his “fix” would only make things worse. He just loves to point out America’s international debt as “eight trillion dollars” without pointing out that it is a cumulative debt that started in the 1980s (not the 1970s) and is not really that much because it does not account for capital gains. it is also lessened by the net investment gains that the U.S. takes in from foreign investments. See:

    http://krugman.blogs.nytimes.com/2013/04/03/america-the-debtor/

    But where Stockman is totally wrong, because for all his (mixed up) financial acumen, he is a no-nothing when it comes to macroeconomics; as an example, it was not Keynesian economics to repeal Glass-Stegal. And most of the pressure to do that came from Republicans, namely Senator Phil Gramm.

    His hallucinations about the Gold Standard are playing out right now in Europe where he is being proved totally wrong. There the euro is performing the same role as a gold standard, preventing the countries (the “Southern Tier”) that have suffered a real estate or other private sector bubble (Spain, etc.) recover by devaluing their currency relative to the other members of the Eurozone. These countries (like the countries under a gold standard or Argentina when it pegged its Peso to the U.S. dollar) borrowed in a currency that they did NOT control and therefore could not devalue to earn money in exports and rebuild their economies.

    The countries that got OFF the gold standard first in the Great Depression began recovering first.

    See:

    http://krugman.blogs.nytimes.com/2013/03/31/more-stockman/

    particularly the link to Mark Thoma:

    http://economistsview.typepad.com/economistsview/2013/03/david-stockman-goes-way-way-over-the-top.html

    for a more complete destruction of Mr.Stockman’s “analysis,” presented in three/four further links.

  • jiminy cricket

    Lowenstein = glass of water half full
    Stockman = glass of water half empty
    Mr. Stockman on one hand says “we’re in uncharted territory” and then on other hand tells us with such certainty that there is danger ahead. Ok, so what else is new? History IS uncharted territory. It is quite personally cathartic to put a pox on all your houses, (I know, I do it all the time), but if all Mr. Stockman prescribes is a pre-determined laundry list I don’t see how productive it is. No matter how well thought or well-intentioned they are, if Mr. Lowenstein can point out how so many holes in so short a time, I fail to understand just how wise Mr. Stockman really is.

    • JobExperience

      Dave is still using the Gipper’s flat earth map, with the dragons, the two-headed women, and the Edge. Next he’ll be quoting Revelations on the whirlwind economy.

  • JobExperience

    Cronyism? Cronyism! Really?
    If this halfassed guy making the talkshow rounds  (DRShow yesterday) is not systemic cronyism I don’t know what is. It illustrates well how the celebrity and publishing aspects of MSM extend into NPR.

  • TomK_in_Boston

    I turn on the corporate media and what do I hear? The unemployment crisis? Skyrocketing inequality? Financial con artists born on 3′rd base paying 10% tax rates or maybe zero?

    NO! It’s the big bad debt. Oooh, the debt is so horrible, I better hurry and accept Paul Ry-un vouchers instead of medicare and privatized, cut SS.

    Give me a break, please. Our debt is no big deal and guess what – it’s primarily owed TO Americans! The widows and orphans with T-bills in their brokerage accts are the creditors, and it’s no bad thing when they have $ to spend.

    Debt hysteris is being used as a class warfare tactic to scare the middle class into giving up even more. If you’re really concerned about the debt, raise taxes on the romneys and the corporations and cut the military.

    • WorriedfortheCountry

      The head in the sand routine will only work temporarily.

      http://www.usdebtclock.org/

      • TomK_in_Boston

        OOoooh. So scary! We better give up everything the USA has built up since 1929 or mr debt’s gonna get us!

        Why don’t you take your head out of the sand and notice that all the wealth in the USA is flowing to the oligarchs screaming about the debt? You’re too easy to con.

        • twenty_niner

          “wealth in the USA is flowing to the oligarchs screaming about the debt?”

          Courtesy of the Fed.

          Big banks get 0% at the discount window to gamble with, while retirees, savers, and people on fixed incomes get zippy.

          http://money.usnews.com/money/blogs/the-best-life/2012/03/19/3-ways-low-interest-rates-hurt-seniors

          Worse, the real rate of inflation is well under reported,

          http://www.shadowstats.com/

          so what few crumbs people are managing to scrape together are worth less and less, again courtesy of the Fed.

          • TomK_in_Boston

            Sure. The fed, the tax cutters, the deregulators, the offshorers, the outsourcers, the privatizers, the “crony capitalists”, the military contractors…. the whole stinking stew of voodoo economics.

            Funny how the solution seems to be giving the kids vouchers instead of real medicare and cutting the SS they will get. Anyone get that?

    • twenty_niner

      The Glad Game: borrow, print, POMO, repeat…

      http://www.youtube.com/watch?v=7bhyKS_SWPM

    • Bruce94

      Exactly, debt hysteria = distraction from the need to 1) raise taxes on corporations and the super rich by closing loopholes, increasing rates or some combination and 2) cut a bloated defense budget.  

      By the way, didn’t the deficit hawks get the memo?  In spite of unprecedented obstructionism and brinkmanship from the GOP, the deficit under Obama has declined in absolute and relative terms (i.e. as a percent of GDP) dropping from $1.3T in 2010 to $1.0T in 2012 and projected to be $900B in 2013. 

      If you factor in the adverse effects of the Tea Party-sponsored credit downgrade and GOP refusal to pass The American Jobs Act (and other legislation consisting of proven, bipartisan proposals that have accelerated previous recoveries), the deficit trajectory could be much lower today.

      • TomK_in_Boston

        No, they didn’t get the memo about the declining deficit – they sure won’t get it from their puppet masters and they don’t seem about to figure it out for themselves. 

        Deficits rise after economic crashes, rise a lot after hugh economic crashes like the Bush crash,  and decline in economic recoveries. This is especially true in deficits/GDP, since GDP falls in a crash and rises in a recovery. So we’re seeing the obvious, but the class warriors don’t want to let a crisis go to waste.

      • MadMarkTheCodeWarrior

        No, they got the memo… it’s sitting int the inbox, unread because they are to busy listening to Fox News at home and Rush in the car.

  • http://twitter.com/GetDanHarris Dan Harris

    Mr. Stockton’s cogent statements remind me of @Dylan:disqus Ratigan’s Greedy Bastards.

  • http://twitter.com/the_damned_fool the damned fool

    For more information on changing the system to prevent corruption, see http://www.rootstrikers.org

  • hennorama

     We hear from Mr. Stockman and his ilk only when they have books to sell.

    His ideas are neither new nor true.

    He makes the hilarious comparison between Wal-Mart and Whole Foods, as if they were comparable. Comparing the growth rates of Wal-Mart, a giant mass retailer with sales of $226 B in 2007, to Whole Foods, a specialty food seller with sales of $6.5 B in 2007, is ridiculous on its face.

    And drawing conclusions from such a silly comparison is even worse.

    Perhaps Mr. Stockman has never heard of the economic concept of the “low base effect”, whereby it’s much easier to show a large percentage change compared to a low initial value. It’s much easier for Whole Foods to grow sales on a percentage basis, through acquisition and expansion, from the relatively low base of $6.5 B than for Wal-Mart to grow enough to show the same percentage increase. For example, if Whole Foods doubled their 2007 sales, it would mean an increase of $6.5 B. If Wal-Mart doubled it 2007 sales, it would mean an increase of $226 B, nearly 35 times the amount required for Whole Foods to double.

    Go away Mr. Stockman, and come back when you have something new to say.

    • JobExperience

       He needs to bring Traitor Joe’s into the mix.
      Secrecy keeps us useless eaters dumbheaded.

    • Bruce94

      I confess I haven’t had a chance to listen to the entire show today (out of pocket with other commitments), but judging from the comments below, I felt compelled to offer a little history. 

      Back in April 2011, Stockman was being channeled by liberals after his article, “The Bipartisan March to Fiscal Madness,” appeared in the NY Times.  In that piece, he identified several fatal flaws in the Ryan Budget not the least of which was that Ryan put the whole burden of entitlement reform on the poor and coddled the rich. 

      He also observed that the shift of wealth and income to the top 1% in the last three decades resulted from  extremely low rates of taxation (esp. capital gains) and extremely low interest rates.  And he seemed to renounce the old, bogus supply-side theory that he once championed for Reagan as irrelevant in a new era of capitalism ushered in by deregulation and globalization (which the apostle of small govt. Reagan facilitated). 

      Anyway, I haven’t paid too much attention to Stockman lately as I believe he may have experienced an epiphany or two since the NY Times article, and may have become a born-again libertarian.  So I no longer put much stock in what Stockman says.

  • Trond33

    Mr. Stockman is right on point on his historical perspectives, right up to recent history.  His prescriptions for the US economy are largely on point.  If you do not need social security, why should you drain the government coffers.  

    However, I am not fond of full fledge open capitalism.  I think partly what the US suffers from is special interest regulatory processes.  I think there is a need for macro regulatory oversight, or common sense regulations.  To achieve this, we have to ban the revolving door between corporations and regulatory agencies.  We need a senior regulatory corps that is akin to the judicial branch, professionals who are impartial and 100% committed to the good of society.  

    • StilllHere

      Social Security is a scam!  It should be discontinued in favor a better designed welfare program.

      • nj_v2

        ^ Sadly ignorant. Unable to differentiate insurance from welfare.

  • http://www.facebook.com/MobyFrick Michael Frick

    Is there any real distinction between capitalism and “crony capitalism,” or does capitalism by definition serve the interests of the privileged?

    • JobExperience

      There are cliques at every level of capitalism that foster collusion and corruption but the enormous power evident in an Empire makes for a change of quality and not only of quantity (prevalence).  The NDAA is good evidence that Justice is no longer possible, not just difficult. The Unitary Executive condones unbounded power with impunity by example (role model?). Selective development of technology for social control (aggregate data) and intimidation (drones and militarized policing) has intensified and quickened erosion of equality under law. As this perfected totalitarianism ripens it makes a joke of previous forms (Nazism, Stalinism, Khmer Rouge) And the colonizing of minds by every possible Oligarch institution coincides with it, in fact makes it possible. But Michael Frick is somehow outside the bubble. Mike, I’d love hearing your take on the pending environmental cascade failure.

    • Fredlinskip

      There have always been those at bottom & top of economic ladder.
       Do you think “American Dream” should be about a few kings and a whole lot of peasants or perhaps a more sustainable economy might involve greater balance with a large middle class?

    • Fredlinskip

      There have always been those at bottom & top of economic ladder.
       Do you think “American Dream” should be about a few kings and a whole lot of peasants or perhaps a more sustainable economy might involve greater balance with a large middle class?

      • JobExperience

         It wouldn’t be so bad if we all actually had a piece of the action, but it would still be bad. The environmental splash is coming up fast as is the global blowback. We not only have to spread it around: We have to reformulate what we’re spreading.

    • crescentfang

       The difference between “capitalism” and “crony capitalism” is the involvement of the government in the second one.  If you have an all powerful government, then it is more profitable to go to the king’s court and pay for special treatment than to compete for customers.  Capitalism has its problems but corrupt government is what makes them insolvable.  Government is a monopoly and Capitalism is greed limited by competition.  When the government stops enforcing competition and starts outlawing it, your economy is finished.

      • OnPointComments

        Very well stated.

      • Tyranipocrit

         its just not that simple.  Capitalism is the crisis.  All governemnt are corrupt in a capitalists system.  its inevitable.  Forceful powerful regulation is necessary–is paramount.

        • crescentfang

          As far as I can tell that “Forceful powerful regulation” is being controlled by the capitalists in our system and by even more corrupt tyrants in places like Russia, China, the Philippines, etc.  Why would a tyrant do anything for you?  Don’t they all serve themselves?

          • Tyranipocrit

             there is no regulation in china.  Period.  I dont see regulation as a tyrant.  i see it as a democratic organization of the people.  I look at europe and i see well balanced societies with more democratic involvement, more regulation, more benefits, higher mobility, better health and overall happiness–no gm, no big pharma raging out of control, les BS propaganda, less nationalism (jingoism), exxeedingly better education without charter schools or standardized exams, a more highly educated and creative society, universal healthcare, recognition of environmental problems and solutions.  America is rapidly descending into a third world dump because of stubborn outdated propaganda and false beliefs in capitalism and religion and a pathetically narrow view of life, the world, and existance. 

          • crescentfang

            The grass always looks greener on the other side of the fence.  I haven’t spent enough time in Europe to form a firm opinion of society there but I’m pretty sure I wouldn’t want to live there.

  • TomK_in_Boston

    We’re gonna be like Greece! Greece, I tell you!

    We’re doomed unless we give the romneygarchs more tax breaks, voucherize medicare, and privatize SS.

    Be very afraid, and submit to the mind control!

    • http://www.facebook.com/people/John-Sehler/100000396279499 John Sehler

      Do away with the Magna Carta, give everyone who dosen’t make $500,000 a year a pitch fork so we can deal with the trickle down.

  • Fredlinskip

    I guess I think Stockman’s views are relevant because he, as much as anyone is responsible for “trickle down” economics. This represented biggest shift in economic policy since Great Depression and sent our country off in a different wondrous direction. 
      And the rhetoric of “starve the beast” and feed the rich” which has been GOP mantra for 30+ years can be traced to this point.Stockman and Reagan policies blew up military budget, cut off revenue, exploded the debt. Bush followed in the same tracks pushing exact same policies to the hilt and the economy blew up in all our faces.  I am glad to see that he has changed his opinion on a lot of these issues. I have a lot of respect for those that have courage enough to do so. Perhaps he’s trying to make amends?  I guess I’m a bit disappointed that so many seem to write off his views as irrelevant.   I can understand GOP wishing to do so, because it tarnishes the sheen of St. Reagan.   Some of those on this page seem to be fans of Richard Wolf- he speaks eloquently to these issues.    I guess if everyone within 50 miles believes something different, then 50 million Elvis fans can’t be wrong.   

  • http://www.facebook.com/people/Mizan-Nunes/1847532975 Mizan Nunes

    We are constantly told by radio stations and other news outlets that the economy is growing, unemployment is down and the DOW is up, juxtaposed with wars. Thank you David Stockman for making it plain. Mizan Kirby-Nunes

  • Payhole Everdouche

    Please invite Christina Romer by herself, for the full hour, as soon as possible.

  • jefe68

    A very critique of David Stockman’s screed.

    David Stockman’s Delusions: The Gold Standard Is Still a Really, Really Terrible Idea

    http://www.theatlantic.com/business/archive/2013/04/david-stockmans-delusions-the-gold-standard-is-still-a-really-really-terrible-idea/274559/

  • Tyranipocrit

    a Reaganite has no right to talk about crony capitalism.  guess what stockboy–american robber barons are busy stealing form us too

  • http://twitter.com/MBumbel marcelo bumbel

    THANK YOU for having Stockman on the show! Please bring more people like him. Excellent interview! 

  • http://www.findingourdream.blogspot.com Hal Horvath

    How could David Stockman have avoided his speculation (since he clearly doesn’t know) about whether we were on track into Great Depression II in 2009?

    After all, that’s the clear, repeatedly demonstrated (over and over) natural, normal outcome of a big mortgage debt bubble bursting.

    Not even rocket science, just being good at paying attention to more information (not stopping your reading within narrow limits).

    That’s just like understaning a bank run, really understanding the way it works.  How the economy works on a basic level.

    The economy is like weather in a way — it has a *l.o.t.* of pieces, not just 3 or 4, that you have to master, to even be relevant. Forecasts are *often* right, and sometimes far from right. Stockman does the mistake of thinking he has mastered what he hasn’t. Stick to what you know! And learn more.

  • StilllHere

    I gather Stockman blames big government.  Good for him!

    • Regular_Listener

       Except that the politicians who say they are against big government are actually in favor of the kind of big government Stockman is talking about.

  • LoganEcholls

    Lowenstein’s deposit insurance snipe was a red herring.  Stockman wanted to keep this insurance only for banks that were giving traditional loans, and remove it for activity of investment banks that is purely stock market speculation and other high risk ventures.   This is just common sense, why give banks a incentive to gamble?  There is no social benefit for this.  If the banks were separated by a revamped Glass-Stiegel, this would be a no-brainer.

  • Regular_Listener

    I like Stockman.  I have always had a soft spot for curmudgeons.  Even if they are not always right, they are often willing to point out problems that others close their eyes to.  

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