As I mentioned earlier in the week, Republicans Call for Most Oppressive Government, I’ve been listening to the audio version of Matt Taibbi’s 2010 book, Griftopia. And although I think it is a great book, there were two things in it that really stood out as being totally wrong. It’s five years later, and I would guess that Taibbi has since been educated on the topics. They are both bits of conventional wisdom that usually get taken as fact without any thought. As a result, it is a good idea to go over them and discuss them. Taibbi is very much a liberal, and if he thinks these things are true, there are doubtless a lot of other liberals who don’t even think to question them.

Social Security Trust Fund

At one point in the book, he was talking about the rise in the payroll tax. It touches on one of my own favorite articles, Reagan’s Legacy: Tax Cuts for Rich, Tax Hikes for the Rest. Taibbi was talking about how Alan Greenspan headed the commission that recommended raising the payroll tax. But then the extra money didn’t go to social security. It was just loaned out to the federal government for deficit spending. Well, yeah; so what?!

I hear people make this argument all the time: there is no trust fund! It’s just a bunch of worthless paper! This just isn’t true. No one would say such a ridiculous thing about an investor who had a lot of money invested in treasury bills. They would say such a person was a prudent investor. They would call someone who stored cash under their bed a loon, yet that is what they are expecting with Social Security. The extra money that the Social Security Administration (SSA) was taking in had to be stored somehow. What were they supposed to do?

The payroll taxes went up in 1984, as a result of the Social Security Reform Act of 1983. If the SSA had invested the money in gold, it would have done well that year because gold was at an all time low. But for the money taken in in 2012, the trust fund would have lost almost 40% of its value. Looking at the long view, if all the trust fund were invested in 1980, it would now be worth 37% less. The Social Security trust fund is invested in a mix of treasury securities. But if you just look at 30-year securities, you see that they have done much better than gold.

And clearly: the SSA wouldn’t have been holding actual gold. It would have been holding “worthless” paper that said that it owned gold. It could have been holding on to actual cash, but there are two problems with this. First, it is worth a whole lot less now because of inflation. And second, there isn’t enough cash to do this. In 2011, there was $2.6 trillion in the trust fund. There is only $1.2 trillion in circulation. You can’t just have trillions of dollars sitting around because there aren’t trillions of dollars in existence. And if there were, it would be very bad. Money is supposed to be moving around. If it isn’t, it is indeed “useless.”

Strong Dollar

Taibbi also claimed that Greenspan was wrong to say that it didn’t matter if the international value of US currency went down. Okay, on this one, Taibbi is half right. It does matter because we live in a global economy. Just the same, the vast majority of what we spend our money on is stuff that is right here in the US: houses, food, healthcare. There is a downside when the value of the dollar goes down. But there is also an upside. Taibbi doesn’t talk about this at all. And that is a very big problem.

What most people need are jobs. When the dollar is too valuable, it makes imports too competitive. That means that Americans are put out of work because the things they make cost too much. There is obviously a balance that we want to achieve. But certainly over the last several decades, the problem has been that the American dollar is worth too much, not that it is worth too little.

What’s especially bad about this is that Taibbi is making the argument for the rich. If you have a lot of money, the more each dollar is worth, the better. But most people do not have a lot of money. In fact, most people live paycheck to paycheck. Their biggest concern is that they will lose their jobs. Making our steel and lumber and cars more expensive to export is not good for such people.

Sobering Conclusion

Matt Taibbi is a really smart and knowledgeable guy. If, after researching the 2008 financial crisis, he still manages to push two very tired, very wrong conservative talking points, what hope has the average American of understanding what’s really going on? Both of these points are commonly made on Fox News and the crazy editorial page of The Wall Street Journal. The decades long conservative disinformation campaign has been highly effective. We really need to push back against it — hard. I think Matt Taibbi needs to write a book about both these things to atone for his sins.

In the mean time, you might read The End of Loser Liberalism (Free!) and Social Security: the Phony Crisis.

The Sociologist Lane Kenworthy wrote a very interesting article a few months back (via Mark Thoma), America Is Exceptional… and Ordinary. He framed it interestingly, “To some, ‘exceptional’ doesn’t just mean different; it means best. To others it means worst. As we’ll see, America is both.” But I do think that’s where he gets the idea wrong. “American exceptionalism” is not about how we compare to other countries. The point is that America should never be compared to other countries. And this is why in general, the idea of American exceptionalism is not used by those complaining about the country. They are interested in comparing so the whole conception of exceptionalism gets in the way of seeing America clearly.

But Kenworthy presents a lot of data. It all compares the US to the other advanced economies that we normally think of ourselves as being comparable to: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, South Korea, Spain, Sweden, and Switzerland. And much of the data is damned sobering. Americans like to make a big deal of us being the richest country — but that’s mostly due to our size. We aren’t even the richest per capita — that title goes to Norway.

When you look at per capita GDP growth, you see that over the last 35 years, we’ve done pretty much exactly as well as other countries that haven’t seen their workers’ rights savaged and who haven’t seen their income inequality skyrocket. These are also countries that manage to provide healthcare to all their citizens. Perhaps the most amazing thing at the last Republican debate was that Donald Trump said what is only too clear that Republican elites believe: that in order for America to be competitive, the middle class must see its standard of living drop: “wages too high.”

Our poor are worse off that most of the other countries: Norway, Switzerland, Austria, Denmark, Canada, Finland, the Netherlands, Australia, Germany, Belgium, France, Ireland, and Sweden. Our incomes are by far the most unequal. And interestingly, ours is the only one that has seen that inequality go up substantially since the 2008 financial crisis. In 1980, we were by far the best educated country, but now eight countries beat us. And they beat us not because we are doing worse, but because they have continued to improve while we’ve allowed ourselves to stagnate. Because you know what we learned at that time: “Government is not the solution to our problem; government is the problem.”

We spend roughly twice what all the other countries do on healthcare. And we manage to do this without even covering all of our people. In 1980, we spent the most on healthcare, but we were still part of the pack. At that time, we were in the middle of the pack in terms of life expectancies. Now that we are spending vastly more on healthcare, but our life expectancy has dropped to dead last. That doesn’t mean our life expectancies haven’t gone up. It is just that the other countries have seen theirs go up a lot more. Those countries, it would seem, do not think that government “is the problem.”

When you look at what percentage of us work (between the ages of 25 and 64), we are in the bottom half. Those other countries generally make it easier to be unemployed. According to conservative dogma, they should have a lot more people unemployed. But they don’t. We tax (and spend) very little, yet this hasn’t caused companies to go crazy hiring people. So much for supply side economics! I assume our poor employment numbers have something to do with a lack of demand. The middle class isn’t getting its fair share of the economy, so it can’t buy stuff that others would make. And the reason the middle class isn’t getting its fair share has a lot to do with the abysmal shape of our labor unions — only Korea is worse.

We’re the most religious country by a wide margin, but that is going down. We are the most punitive, and that is still going up (but at a reduced rate). In this land of immigrants, we are only in the middle of the pack when it comes to the foreign-born share of the population. And listening to the Republican presidential debates, you don’t get the impression that we are moving in a positive direction. And don’t believe what Republicans sometimes say about just being against illegal immigration; the truth is, Conservatives Hate All Immigrants.

Although Lane Kenworthy started his article saying that the US was exceptional in both good and bad ways, almost all of the data indicate that it is exceptional in bad ways. But as I said: it doesn’t matter. When people talk about “American exceptionalism” they use it in the same way they use “support the troops.” It is a way of stopping people from talking about the issues involved. The true “American exceptionalism” that they are pushing is the idea that America is the best by definition. And that is pretty much the only way that America can be the best. In almost every other way, we look pretty bad.

Given that we spent almost a week enjoying music from Mali, I figure I ought to say something about the Bamako hotel attack that took place just one week after the attacks in Paris. There are a few things that are worth noting. Note is that this was a terrorist attack. It was apparently carried out by Al-Mourabitoun and Al-Qaeda in the Islamic Maghreb. There were at least 19 people murdered. But I guess we don’t really care because most Americans don’t even know where Mali is, and the people there are used to being killed or don’t value life like we do or something.

Maybe it is that it is an attack by people who don’t look like us on people who don’t look like us. (In fact, that’s not true: it was an expensive hotel and over half of the victims were “white” — but only one was American, Anita Datar — working on family planning and HIV.) According to a BBC report, Mali has been under attack for the last three years — a situation that has been made much worse by the destabilization of Libya. It’s interesting to me especially, because the United States acts so much like Don Quixote. We throw ourselves into situations, make them worse, and then ride off thinking that we have done good. Of course, Don Quixote is insane. And the US is supposedly the most civilized of countries with by far the biggest military in the world.

The four or five gunmen who stormed the hotel were yelling “Allāhu Akbar” (“Allah is great”). So I guess that means Sam Harris was right. This is all about religion. It isn’t a question of a decades long separatist conflict with rebels in north Mali and west Niger. And before the Harrisistas start complaining that The Profit doesn’t say it is only Islam that is to blame, let’s be clear: I don’t think there has ever been a war in which most of the people didn’t feel God was on their side. In the Battle of Lena, both side thought Odin was on their side. Here’s a bit of history for you all: none of it was actually about Odin.

This attack took place on 20 November 2015. I looked back a year after the Paris attacks. So let’s look back at 20 November 2014 from the Global Terrorism Database. There were at least 105 fatalities from 39 attacks. And this isn’t taking into account all the people fighting against them, not to mention our own bombing and drone campaigns. I am almost to the point where I want to throw up my hands and just repeat, over and over, “They raped our queen, so we raped their city, and we were right!”

Of course, I fear that most people on all sides of these conflicts would respond the opposite from the way I intend. They would say, “Right on!” I’ve been more than clear over the years that I am not a pacifist. But it is clear that there are ways to make the world better and ways to make the world worse. We all know that the Iraq War destabilized the Middle East and made the world worse. Less known is that after almost 15 years of war, the Taliban have a tighter grip on Afghanistan than when we started. Well played, comrades; well played!

Meanwhile, death is everywhere — random and brutal. And our response here in the US is, “Not our fault! Close the borders! Hide under the bed! Oh, and keep up that drone program, because it’s working so very well!” Meanwhile, the people of Mali get on with their lives. They do not have the luxury to pretend that the world will be safe if only they close their borders.

You know me: Not a Real Man™. In general, I think men who act macho and belligerent are hiding something. They have very small penises or are awful in bed or are gay but too cowardly to admit it. Something. Regardless, it’s all about being terrified. So I’m not at all surprised that the political party of the macho man, the Republicans, should show its true colors and quake at the idea that terrorists kill people. I’m sure they are looking for women to walk in front of them so they lessen the impact of any bomb blast. If they are kidnapped, they won’t need to be tortured to yell, “Do it to Julia!”

It seems to me that the Paris bombings are a bigger media event here than they are there. We really are a nation of cowards. It takes almost nothing to set us off. This is why, with less than 5% of the world’s population, we spend just short of half of all the money on weapons. It’s why Bush’s line was so effective, “Fight them there, so we don’t have to fight them here.” We just want to hide from the threats of the world. And that’s because we have to face such minor threats here. It’s also because we have one political party with an ideology so repugnant to the vast majority of people, the only way it can get power is by fear mongering.

I’ve always consider myself a coward. Yet I have often times gone into very dangerous situations and locations — alone. It’s not because I’m foolhardy. I just trust that (1) threats are usually overblown; and (2) I can usually handle situations. Given what I see among so many American men, I can’t consider myself a coward in an absolute sense — just relative to what I think true bravery would be. So I don’t know what that makes people who are afraid to live near a methadone clinic or a prison or a Syrian refugee family. We need a new word, but I’m afraid it is one that I would ban from this site on stylistic grounds.

The ultimate example of this is Big Chicken — or as I like to think of him, “Governor Shouts a Lot,” Chris Christie. He made the bold statement last week that we shouldn’t let Syrian orphans under five years old in. It’s not clear that he is actually afraid of them. He said, “But you know, they have no family here. How are we going to care for these folks?” Yeah, how would we ever be able to care for children? We just have no experience with that!

After the attacks in Paris, people opened their homes to strangers. The French government is not halting Syrian refugees from entering the country. But here, well, we can’t do that. It’s nice to be humane and all. But when you are vewy vewy afwaid, you just can’t allow it. I’ve been saying this about police for years: if they can’t stop killing unarmed people because they were afraid they might get a paper cut, can we at least cut the crap about them being brave?

The same thing goes for the Republicans (and frankly, a sad number of Democrats too): these men are something far below cowards. If Dante’s Inferno is real, they will spend eternity fleeing in terror from dandelion spores. But unfortunately, in this world, these men have power. And Walter’s assurance to Donny is not appropriate. These guys are going to hurt the whole world unless we fight back. Then they’ll run for their guns and a line of women to hide behind.

It seems to me that I read Matt Taibbi’s Griftopia several years ago. But regardless, someone has gone and put the audio book of it on YouTube. I’m sure it won’t stay there long — it’s clear copyright infringement, even though 99% of the money that will ever be made on the book has been made (but you know how corporations think: 1% is 1%). But I started listening to it while cooking. It’s kind of funny hearing Taibbi’s rather foul mouthed prose being delivered by the highly respectable Patrick Egan. But it works surprisingly well. And it is a good reminder of just how engaging a writer Taibbi is. Really, in his way, he’s as good as Thomas Frank.

The book is five years old. Yet it could have been released this month. The only thing is that he focuses on the term “Tea Party” more than is normal anymore. But the same people and groups are out there. And certainly I still use the term. If I had been writing in the 1960s, I would have talked about the “Birchers.” Today, it is the “Tea Party” — just ask Claire Conner. But that style of writing has fallen a bit out of fashion. But everything Taibbi talks about in the book is still going on — even down to the details. The conservatives are still fighting the same lost battles.

One thing that Taibbi notes (as have I) is that the Tea Party isn’t exactly wrong in its anger. But just as Thomas Frank has documented so well, they express their anger in a way that helps the very people they are supposedly angry at. And he mentioned something that I know from my own personal experience. Supposedly liberal regulations that harm small business people come at us almost exclusively from the state and local government. It is not the federal government that is keeping the small business person down.

Yet the Tea Party types are laser focused on the federal government. And they are the ones who are forever telling us that local control is better than federal control. Obviously, like everything else about the Tea Party and the Republican base, they think this because they have been taught to believe it. The vast majority of these people have no actual experience being in business. They just “know” this stuff because people who have spent their whole lives either in politics or in big business have told them so. But it is interesting to consider why this is the Republican dogma, especially when you consider that “local control” and “states’ rights” have always been dog-whistles for the racism that the Republican Party was founded to oppose.

I think I know the real reason. Clearly, the base is highly bigoted and the modern Republican Party would not be against slavery if it were still a political issue. But for the elites using the issue, it is all about taxes. As I’ve discussed before, state and local taxes combined are actually regressive. At the federal level, there are two kinds of taxes: the payroll and income taxes. The payroll tax is unbelievably regressive. Because it is seen as an insurance policy rather than a tax, the super rich pay virtually nothing at all, while I (grossing less than $30,000 per year) pay 15.3% of my money. And to add insult to injury, the Republicans constantly remind me that they won’t be able to afford to pay me my insurance when I am due to receive it.

So all the taxes other than the federal income tax are regressive. The federal income tax is only major tax that is modestly progressive. And so the rich want to vilify the federal government because they want to get rid of this one progressive tax. The Republican base has been good enough to go along with this plan, even though it isn’t the federal government that is going to bother them or tax them excessively. It is the state and local government. And the anti-government types are loudly screaming for the kind of government that is most intrusive.

The Paris attacks continue to really bother me. Violence, I understand. It happens all the time. But I keep feeling paralyzed regarding the response to it. A small group of extremists carry out a terrorist operation — killing themselves in the process. And suddenly it is clash of the civilizations? Especially here in the US, it seems that conservatives want to use this as a second chance to fight the Iraq War. This time it will be different!

I’ll admit: I don’t know what to do. The situation in Iraq and Syria is bad. But that was true before the Paris attacks. I get that the French government used it as an excuse to step up its minor bombing campaign. I think that’s probably the wrong thing to do. I think building a coalition is probably better. But it is all understandable. What isn’t understandable is all the conservatives in this country who shockingly claim that we need to start bombing ISIS. When countered with the fact that we have been bombing them hard — many thousands of missions — then the conservatives change the subject to something that Obama isn’t doing. He isn’t giving the Kurds enough support; he isn’t backing the right groups; he isn’t dropping nuclear weapons. Whatever.

Tuesday morning, I watched a new documentary by Max Blumenthal and James Kleinfeld, Je Ne Suis Pas Charlie (I am not Charlie). It looks at the rise of Islamophobia following the Charlie Hebdo massacre. What really struck me was how the French fascists have embraced the Jews but are using the Muslims in exactly the same way that fascists traditionally used Jews in the last century. And a few people note that it is all simply because it is useful to their imperialistic aims. As soon as the Jews are not useful to the fascists, I’m sure the Jews will find themselves in the same category as the Muslims, blacks, and Gypsies.

But what’s really amazing to me is the way that almost no one learns anything. Sure, most people have learned that it is wrong to hate Jews. Yet these same people did not learn to avoid treating Jews as a monolithic group. And they did not learn to avoid applying the same vile logic to a new minority groups. And here in America, it seems we will never learn that we can’t bomb our way to peace. Not that I’m surprised. The entire conservative approach to policy is to look for an excuse to do what they want to do anyway.

I’m sure that to some extent, I fall into the liberal trap of thinking that there are reasonable solutions to the problems of belligerent groups. But I’m not suggesting that anyone just roll over. We in the advanced economies have the advantage of great resources — especially in terms of knowledge and time. So why is it that we seem to be doing exactly what ISIS wants us to do? Why is it we act like third grade boys who can’t wait until tomorrow to answer a challenge properly because we think we’ll look like wimps if we don’t act without consideration.

The monthly jobs report came out last Friday and it was pretty good. Dean Baker wrote, October Jobs Growth Pushes Unemployment Rate Down to 5.0 Percent. And you know what that means: the inflation is coming! Because, as we all learned in Econ 101, 5% unemployment is full employment. Of course, that actually means nothing. But that doesn’t mean that the Federal Reserve isn’t going to step in and slow the economy to stop even the possibility of inflation.

The unemployment rate may be down, but that doesn’t actually mean that much. As Baker noted, “The labor force participation rate is actually down 0.4 percentage points from its year-ago level.” The employment to population ratio of people between the ages of 25 and 54 was 80.0% in January of 2008. Today, it is 77.2%. So we have a low unemployment rate because lots of people in the prime working age range are simply not trying to find jobs because they aren’t readily available.

But what does that matter?! The Federal Reserve wants to increase interest rates because rich people think they might lose a little money due to inflation. So what is inflation currently? The core inflation rate right now is 1.89%. It has been almost three years since inflation has been above 2% — and then just for a single month. You have to go back a year further to find inflation above 2% for several months. How high? It peaked at 2.31%. And then you have to go back to November 2008 to be above 2% again.

They reason I bring this all up is because the Fed’s inflation target is supposed to be 2%. But it sure doesn’t look like that. It looks like the Fed has a 2% inflation ceiling. If we had a 2% inflation target, we would think years of less than 2% inflation would be followed by years of more than 2% inflation. But that’s not the way the Fed works, apparently.

Dean Baker’s conclusion is pretty much what any person in the normal economy would think, “In short, this is a much more positive report than we saw in the prior two months. However, there is much in the report that indicates there is a still a large amount of slack in the labor market.” In other words: there is no fear of inflation. Workers aren’t making more money. And the power elite think we need to stop this from happening out of fear that modest inflation might happen.

Matt Yglesias wrote a very good rundown of what everyone should know, We Could Have an Economic Boom This Winter — If the Fed Doesn’t Screw It Up. That’s the thing that is so horrible about the Federal Reserve. It is an institution by, for, and of the power elite. It is supposed to have a dual mandate: keep inflation low and employment high. But it never much frets about employment. For the last five years, it has been looking for any excuse to raise interest rates. It isn’t the case that the Fed is monitoring the economy and deciding what to do. It wants to raise interest rates and it is simply looking for an excuse to do it.

Chad Stone, the chief economist at the Center for Budget and Policy Priorities tweeted out what should be obvious, “Three more months of jobs reports like today’s and maybe the Fed should start considering the possibility of raising rates.” That would be the reasonable thing. But instead, the Fed acts like an AA member standing at a free bar, “Gimme an excuse!”

In addition to suppressing workers’ wages and keeping millions of others out of work, the Fed could be setting the stage for a Republican president in 2017. Sure, there is some risk of a moderate rise in inflation if the Fed doesn’t raise interest rates. But there is a far bigger risk that it will tank the economy if it does. But that latter possibility doesn’t much concern the Fed, because it isn’t likely to hurt them or anyone they know.