Truthout has another item on SOTU 2014: The Cognitive Power of the President by George Lakoff.

Beyond material power, the president has even greater power – cognitive power – and he hasn’t used it much. Cognitive power is the power to put important ideas in people’s minds by shaping public discourse. He has the unique power to change how America thinks simply by discussing crucial ideas over and over.
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He started talking, as Elizabeth Warren has so eloquently, about the crucial nature of public resources, but he messed up once (“You didn’t build it”) and stopped. He needs to take up that theme, get it right and repeat it in every speech.

When Lakoff started talking about cognitive power, I immediately started to think of Elizabeth Warren.  She has shaped a lot of the national debate about holding banks and bankers accountable among other things.  She has much less formal power than the President, but she sure knows how to multiply the strength of her informal power.  What has Hillary Clinton done to change the tone of the debate in this country?

Truthout has Dean Baker’s article President Obama’s Inequality Story.

There are some items on President Obama’s agenda that push in the wrong direction, most notably his plans for the Trans-Pacific Partnership (TPP). This is wrongly billed as a “free-trade” agreement. In reality it has very little to do with free trade.
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Unfortunately, full employment does not seem to be on anyone’s agenda right now. The budget cuts that slowed the economy and cost us millions of jobs over the last three years are now largely behind us, but no one seems prepared to push an investment agenda or the sort of trade policy that can bring us back to full employment any time soon.

That means we will see little real progress in addressing inequality based on President Obama’s agenda. An increase in the minimum wage is an important goal with substantial benefits but it should not be confused with an inequality agenda.

I don’t expect a lot from Obama’s State of the Union address.  His adamant position on this equality destroying TPP agreement and his inability to see the damage he is doing to the economy with his efforts to cut the deficit preclude his figuring out what this country needs right now.

So if he doesn’t know what the country needs, how can he figure out how to fix the problems?

I’d give my wisdom teeth to be wrong about the speech.

Alternet has the article The 20 Richest Americans Are Greedy Takers—Not Inspirational ‘Makers’.

They have all taken from the public or from employees, or through taxes or untaxed inheritances.
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The top individuals on the 2013  Forbes 400 list are generally believed to be makers of great companies or concepts. They are the role models of Paul Ryan, who  laments, “We’re going to a majority of takers versus makers in America.” They are defended by Cato Institute CEO  John A. Allison IV, who once protested: “Instead of an attack on the 1 percent, let’s call it an attack on the very productive.”

But many of the richest Americans are takers. The top twenty, with a total net worth of almost  two-thirds of a trillion dollars, have all taken from the public or from employees, or through taxes or untaxed inheritances.

Read the article to see if your favorite billionaire is on this list.  Decide if they built it themselves or had help.

The web site community-wealth.org is the one mentioned in the previous post The Promise and Limitations of Worker Co-ops – Gar Alperovitz on Reality Asserts Itself (4/5).

The purpose of the web site is succinctly stated in its subtitle “Resources for democratic, community-based economic development”.

Here is an adapted excerpt and transcript of Democracy Democracy Collaborative Executive Director Ted Howard’s presentation to a four-city teleconference organized by the regional Federal Reserve Banks in Baltimore, Cleveland, Detroit and Philadelphia.

The Real News Network has the video The Promise and Limitations of Worker Co-ops – Gar Alperovitz on Reality Asserts Itself (4/5). This is the continuation of the series I started to cover in the previous blog post Understanding the Imperialist System Changed My Life – Gar Alperovitz on Reality Asserts Itself (Parts 1 – 3 out of 5).

The following excerpt gives you a small taste of what is covered in the interview:

ALPEROVITZ: Who has power, because the planning system’s going to be controlled by somebody, and it’s either the corporations or we have to–and to say that is to say, you want to play this game about changing the system? The chips are three decades of your life. We’re talking about big-time build from the bottom, begin to reshape from the neighborhood, from the worker-owned co-ops, from the cities, some of the really interesting things that you’re doing here in Baltimore, beginning to build up knowledge, ideas, experiments, a program that actually is practical and look at it as a 30-year strike, as a strategy at least to begin to deal with the power of this system. So that’s the name of the game.

JAY: And, I mean, it flows from the idea that concentration of ownership gives rise to concentration of political power.

ALPEROVITZ: Yes.

JAY: So you need to change the way things are owned.

ALPEROVITZ: That’s the central element. Systems–you know, in feudalism it was land; who owned the land had the power. Capitalism, who owns the capital has the power. State socialism, there was a form where the state controlled it, and it could have been democratized.

JAY: Well, it was another form of too much concentration of ownership, because the party winds up controlling the state, so the party now has the concentration of ownership, and you wind up with the same kind of–similar kind of problem. I can’t say the same kind, but it’s a similar kind of problem.

ALPEROVITZ: Yeah, exactly, which tells you that the model that we want to build has to have democratized ownership, but democratized in a way that builds from the bottom up, so that the concentrations of power are not overly concentrated, that the terms are whether–appropriate to the scale. So little co-ops in some places, city-owned in other places, neighborhood-owned in other places.

This interview has hit on the core point that concentrations of power are not good. They may lead to efficiency over medium time frames, but they also lead to fragility over longer time frames. So the new model of cooperatives will be good as long as there are lots of them with competing ideas and products.

What used to keep the “capitalist” system in this country from being driven to concentrations of power was the anti-trust law framework. Enforcement of anti-trust has practically disappeared from the scene. Of course the lack of anti-trust regulation is a political problem because of the concentration of power in control of the politics.

Worker coops and increased anti-trust regulation could go hand-in-hand toward getting us back on the right track, but only if centralized political power can be prevented from reining these things in. The people with the power aren’t going to give it up very easily. So it all boils down in the end to solving this problem of concentrated political power.

I wait for part 5 to find out what Gar has to say about solving that problem, other than hoping that somehow these experimental organizations will lead to such a solution to breaking up the political power of the vested interests? Also, we have to account for the fact that concentrations of power exist on a global scale. If we were to solve it in the USA, would that be enough?

The more i think about it, the breaking up of the concentrated economic power may be enough to solve our problems. It probably matters less how each and every small center of power organizes itself. That can evolve if the environment is made to support the evolution. Evolution is the adaptation to the environment. It works in biology and it works in any system where “natural” selection is allowed to work.

The Real News Network has a blockbuster series of interviews starting with Understanding the Imperialist System Changed My Life – Gar Alperovitz on Reality Asserts Itself (1/5) .

Mr.[Dr.]  Alperovitz tells TRNN Senior Editor Paul Jay, that the Vietnam War made it clear there was no way to a more rational capitalism and there had to be fundamental change –   January 23, 2014

ALPEROVITZ: …And it turns out there are discontinuities in the negotiations over Europe in the spring of 1945. The U.S. gets very tough: we’re going to have to move our troops to Japan; we’d better have a showdown with the Russians now before we move. And then all of a sudden they relax and they start being very nice to the Russians. And why did that happen is what really intrigued me. Not explained.

Well, what happened is the secretary of war came into the president’s office and he says, now is not the time (in April 1945) to have a showdown. Wait for a few months and I’ll give you something better–namely, the atomic bomb

To say the least this is earth shattering information to those of us who did not know the extent to which the academic world has known this for years.

The second part in the series is Nuclear Attack on Japan was Opposed by American Military Leadership – Gar Alperovitz on Reality Asserts Itself (2/5).

ALPEROVITZ: Truman. His secretary of war says, this is the “master card” of diplomacy against the Russians, the atomic bomb. There are many, many documents that strongly suggest–particularly the secretary of state, James F. Byrnes, understood that the bomb was more a diplomatic tool than a military tool. The chief of staff of the U.S. Army and the Combined Chiefs, General Marshall, said, this is not a military decision. It has nothing to do with the military. It may be a diplomatic, political, other kind of decision, but it’s not a military decision.

So, interestingly, the military–and I mentioned this, I think, in our last discussion–virtually all the major American military leaders went public after the war saying the atomic bomb was totally unnecessary. Some called it barbaric. The president’s chief of staff went public. Can you imagine the chief of staff saying–and he was a good friend of the president–said, this is barbarism. I wasn’t taught to kill children and women. So that’s very clear.
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The thing that I think’s important to understand, because these people were ordinary human beings–the president, his secretary of state, they were not evil guys. They were caught up in an ideology that somehow, if we followed American strategy, we could save the world from another war, and the Russians are, they believe, communist devils. So they were operating out of a framework of ideology that dominated their thinking to the extent that 300,000 civilians were burned unnecessarily, killed. But it’s a mistake to see them just as bad guys. Much more important is: how does American corporate capitalism develop that ideology? And what does it really take to reach much deeper than good guys and bad guys?

There are echoes of this behavior when Nixon took over from Johnson and, of course, our entry into the war in Iraq. You really have to watch the video. They don’t even get into what Reagan did to Carter with Iran. If you know about that episode, you see how it fits with what they do talk about.

Part 3 of the series is Capitalism in Long Term Stagnation and Decay – Gar Alperovitz on Reality Asserts Itself (3/5).

ALPEROVITZ: Well, there’s lots of reasons why the economy is in trouble. I mean, the most obvious one is that when you concentrate all the income at the top, people don’t buy. They can’t buy enough. They can invest it or they can put it under the mattress or they can put it in stock speculation, but they’ve got a house, they’ve got two houses, three cars–they can’t purchase enough. The Keynesian idea is to stimulate the economy. So that’s the same–you have this in Marxist theory in another way. By and large, if you concentrate it all at the top, there’s not enough purchasing power to make the rest of the system work. So what happens is you throw people out of work and you have an economy within a large population, large numbers of whom are out of work. So I think that’s the central phenomenon that’s going on, concentration of income and wealth at the top and no way to reallocate it through purchasing power.

The discussion goes on to talk about what can we do to make a better system. This is where it gets really interesting. However, if I quoted every interesting thing in these interviews, I would have to repeat the entire transcripts. That is why I have chosen a few meager excerpts to whet your appetite.

From what I have excerpted you won’t see where the following is coming from, so you’ll really have to watch the video or read the transcripts.

All I have been writing on this blog about running Social Security like a real pension system by diversifying its investment portfolio all fits in with the picture that Alperovitz is painting.

Use the search box on my blog site here to find the articles on Social Security. I will mention just one of the recent ones, The End of the Assault on Social Security and Medicare.

The other thing that excites me about this has to do with the current Governor’s race in Massachusetts. We have a fine field of Democrats running for the nomination for that office. To varying degrees, they all espouse progressive ideas.

However, there is one candidate who has given some hints that he is the one who really understands the issues raised by Alperovitz. That candidate is Steve Grossman. The Boston Globe has raised some concerns about his possible conflicts of interest as they see it, but if he has the vision that I suspect he might have, I think those concerns might all fall by the wayside.

I have just returned from a house party in Sturbridge for Martha Coakley who is also running for Governor. I think she gets the issues that are important, too.

New Economic Perspectives has the article The New Populism Needs to Get This Straight by Joe Firestone. Until very recently, I would have been shocked by what this article has to say.

…the economic fact that the surpluses of the Clinton’s term, as well as his deficit reduction policies, were bad for the US because they reduced or eliminated private sector surpluses causing a growth in private sector debt in Clinton’s “goldilocks” economy.
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It would greatly help the new populism and the DC progressive establishment, also, if it took the trouble to learn a simple macroeconomic equation, which is an accounting identity, and which will help them gain clarity of thinking when it comes to fiscal policy, trade policy, and their inter-relationship. That equation is:

The Government Sector Balance + The Private Sector Balance + The Foreign Sector Balance = 0; where the balances refer to transaction flows in an accounting period.

The Government Sector Balance is positive when the Government taxes more dollars than it spends. That’s what we’ve been calling “a surplus.” The private sector is positive when it saves more dollars than it spends, and the foreign sector is positive when it saves more dollars than it spends. This last, please note, is equivalent to what I’ve been calling a “trade deficit.”

So now, let’s say people want to save 6% of GDP per year, and they also want to run a trade deficit of 4% of GDP per year. Then a policy of deficit reduction that aims at a deficit of 3% obviously won’t accommodate these private sector desires, since 6% + 4% requires a government deficit of 10% for support.

The point of this article is that you may be surprised at who goes into debt when the government runs a surplus as opposed to who goes into debt when it is just a question of very unequal distribution of wealth.  When you put together insufficient deficit and very unequal distribution of wealth, you get the great recession of 2008-2010 and the still present aftermath.

Until I started reading New Economic Perspectives and reading about MMT in other places as well, I depended on my knowledge of economics from what I learned in the early 1960s. I was and am a firm believer in Keynesian economics. However, I did not understand the debt and deficit the way I do now as explained in this article.

The people who blog in places like New Economic Perspectives need to understand that even their potential allies, who escaped the brainwashing of the Kochs and of Pete Peterson, may still have trouble understanding the impact of deficits and surpluses as now so well understood by people who are current.

So keeping up the efforts to re-educate and specifically communicating with progressives is essential to shifting the country’s thinking.

Extra credit diversion.

It is interesting to reconcile these ideas with the ideas from my previous post Diagrams and Dollars: Modern Money Illustrated (Part 1 & 2). Let us look at the final diagram from that post.

The PS pot is for the “Private Sector”, and the FG pot is for the “Federal Government”. The issue of Private Sector debt is hidden by this diagram because the PS pot is undifferentiated. To really understand the point of the current article, you have to see that the PS pot can be separated into the domestic private sector and foreign part of the “private” sector. The “foreign sector balance” in the equation from the current article [which has nothing to do with the FG pot] is the part of the PS pot that is not domestic. The “private sector balance” in the equation from the current article is the “domestic part” of the PS pot.

The level of the Treasury Bond Saving Accounts pot is labeled “National Savings Clock”. I think this is a misnomer. This total is for the entire savings from the PS pot which includes non-domestic savings in USA money.  Also realize that the contents of the Treasury Bond Saving Accounts pot is held by the FG where it is accounted for as  as a liability just like a savings account sitting in a bank is thought of as a liability of the bank.

Also note that the domestic part of the PS pot can be further divided into the part for the wealthy 1% of the domestic population and the part for the other 99% of the population.  A lot of our troubles are hidden in that separation.

The totals for the PS pot may look great, but the health of the different parts of that pot may look totally different from the pot as a whole.

This discussion is already getting too complicated. I really need to make my own drawing and devote a separate article to this topic.

There is a link above to the book Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems [Paperback] by L. Randall Wray.

PBS has the article Exposing the Textbook Scam: How to Save Us from Economists. At first, I was afraid of what crap this article might contain, then I realized how topsy-turvy the world has become.

As we see it, the problem begins with a failure to diagnose the problems of unemployment and inequality. Many macroeconomics textbooks today accept as plausible, if not gospel, that there can never be a deficiency of aggregate demand — a deficiency of spending, that is — caused by our present economic system. According to this orthodoxy, economic downturns are caused by factors external to the system itself and can usually be attributed to the government mucking with the market: government overspending, for example, which racks up a ruinous debt load or profligacy by the central bank, creating too much money out of thin air. If this were the case, the best policy for recovery would be to cut back government spending, taxation, regulation and money creation.
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Our opposing point of view has a small but growing minority of economists, among them Paul Krugman, whose textbook ranks third in the macroeconomics market and whose basic economics textbook, written with Robin Wells, has also gained some popularity.

This alternative view of macro is popularly called “Keynesian,” but it includes all kinds of leftist views, from institutionalist to radical. It asserts that downturns and crises are not due to technological change or any other external forces, but primarily to the extreme swings of the economic system itself, which government must moderate. It also argues that inequality has a seriously negative impact on the macro-economy — decreasing aggregate demand — as well as obviously harming so many of the individuals that the economy supposedly serves.

How can anyone alive today that is more than 5 years old still believe “that there can never be a deficiency of aggregate demand”?  How can aggregate demand stay at a high level when people suddenly lose their money or become afraid to spend it?  Didn’t you see this happen with your own eyes in the economic collapse as George W. Bush was at the end of his term as President, and extending well into Barack Obama’s term?  How could you believe anyone who tells you that this did not happen?

Before the 2008-2009 collapse, if you knew anything about the Great Depression of the 1930s, how could you possibly believe that such a thing could not happen?

The “alternative” view is the one that I was taught in the early 1960s when I studied economics from Paul Samuelson’s text book.  This view is the one that I never stopped believing in. This is the same economics that Paul Krugman undoubtedly learned at about the same time that I did.

To show you how old I am, I was going to make a remark about how similar this fashion fad in economics textbooks is to how my wide neckties are coming back in fashion.  Then I realized that I also had narrow ties, and I don’t know which set of ties may be coming back into fashion.

I think that what this article proves is that the likes of the Koch brothers, Pete Peterson and his Peterson Institute, and Ron Paul have been very successful since the 1960s.  They probably were taught the same economics as I was in the 1960s, but they did not like what they were taught.  Since the 1960s, they have been using whatever resources they had to erase what we were taught from our collective memories and replace it with the garbage that suits them better.  In the case of the Kochs and Petersen, their resources were enormous amounts of money.  In Paul’s case it was the national political stage.  I don’t know what Milton Friedman’s motivations might have been.  Was he just seeking glory, or was he the tool of these other folks?

This also explains why President Obama cannot get his economic policies right.  He is of the younger generation that was brainwashed with Friedmanomics.  Some of the people he chose for his cabinet tried to explain the real economics to him, but he never could quite believe it.  All the people who understand real economics have since left his administration, and what was left were the ones who were equally brainwashed, or self-interested enough to believe Friedmanomics.  (Well, who knows if they really believe it, but it sure is profitable for them to say they believe Friedmanomics.)

The Daily Kos has the article You won’t believe why MSNBC cut away from this interview. I could add the subtitle, “Why you won’t catch me watching MSNBC”

I used to just mute commercials on TV. Now some of the visuals are so offensive, I just have to change channels. If I miss the next muted commercial or the whole rest of the show, so be it. I wonder how many companies will wise up and insist that their commercials do not run after certain other commercials.

Alternet has the article Boob Deodorant? The Latest Absurdity From the Beauty Industry.

…you need to start deodorizing under your boobs.

I can already hear your objections: “But the area under my boobs doesn’t stink!” or “What kind of marketing genius not only came up with the term ‘swoob,’ but actually thought half the world’s population might be dumb enough to buy into it?” or simply, “This is a dumb product aimed at inventing an insecurity and then claiming to cure it.”

Based on my scientific sampling of one, I can say that any woman that would fall for this product really does not understand men.  You don’t have to put perfume on boobs to get men interested.

Here is a test, how many heterosexual men would care if the model pictured wore perfume?