What's Not So

How much crop can a sharecropper share?

How much crop a sharecropper can share is obviously crucial both to sharecroppers and landlords. It is in fact of current concern to all of us. Because the share of the crop the sharecropper surrenders is exactly equivalent to what a debtor gives up in paying interest on debts. Sharecroppers – and debtors – cannot consume or invest that which they give up.

If a sharecropper shares too little of his crop, the landlord fails to extract maximum possible income from the farm he owns, and “leaves money on the table”. The landlord obviously wants to maximize the percentage of the crop he takes. On the other hand, if the landlord takes too much, the sharecropper can’t survive to plant a crop next year. The landlord must leave the sharecropper at least enough to survive on. If the farmer does not survive, no crop is produced next year, and output falls. The system collapses.

Thus, there is an upper limit on the amount of the farm’s production that the sharecropper can turn over to the landlord.

Both sharecroppers and landlords understood this elementary fact, even though they were not economic geniuses. In the US, they ended up setting the amount taken by the landlord at about 50% of the crop. That number produced a stable system. It could go on indefinitely. Unfair, maybe, but stable. Sustainable.

Which means landlords and sharecroppers were smarter than our “Nobel Laureates” in economics. (Nobody gets a Nobel Prize for Economics, there simply isn’t one, but the winners of the faux-Nobel prize in economics “in honor of Alfred Nobel” allow it to be called, erroneously, the Nobel Prize.)

The “Nobel Laureates” lead almost all of the economics profession, and just about every talking head on television, in blissfully ignoring a very similar limit we have run into these days. Today’s limit is not on how much crop a sharecropper can share without collapsing the system, but rather how much interest the average person can pay.

But it is important. Interest paid by wage earners is just like the portion of their crops surrendered by sharecroppers. Interest payments, just like surrendered crop shares, can not be consumed by the wage earner, nor invested. Those who pay interest, either directly or indirectly, can not use their interest payments in any way. Mortgages, auto loans, credit card debt, and student loans are places where interest is paid directly. Less obvious are indirect payments: everything purchased has built into its price the interest paid in producing it. And interest payments made indirectly account for a big portion of the taxes everyone pays, both local and national.

Interest payments are simply taken away from interest payers, just as crop shares are taken from the sharecropper.

Almost all economists believe there is no upper limit on the percent of income paid to the average citizen that can be extracted for interest payments, because total debt in the economy “doesn’t matter”.

They think this because they, and everyone else, learned it in the basic economics course they took in school: total debt doesn’t matter. It can’t matter, after all, because “it’s just money we owe to ourselves”.

This is taught almost everywhere. It is advanced in the press, for example, by “Nobel Laureate” Paul Krugman in the New York Times.

A simple thought experiment shows it to be total nonsense.

Imagine it is Paris, during the French revolution. Marie Antoinette is in the tumbrel rolling to the guillotine. She is about to lose her head. She shouts to the angry crowds around the tumbrel, who can no longer feed their families because so much of what they produce is shipped off to the crown as taxes and interest on debt: “Your debts can’t possibly matter. After all, it’s just money we owe to ourselves”.

Marie Antoinette probably did not shout that out, because it is so patently false. Not so The New York Times, the Wall Street Journal, and Fox News. They, and almost everyone else, simply assume it is true, that debt can’t possibly matter, because it’s “just money we owe to ourselves”. (The WSJ and Fox News are of course against Federal debt, which they ceaselessly tell us is ‘bad’. Non-federal debt, twice a large, is never discussed, because it is ‘good’.)

Why is this falsehood so widely believed? The textbook “Economics” by Paul Samuelson, first published shortly after WWII, quickly became a classic, used worldwide for teaching basic economics. His book dominated the teaching of economics throughout the last half of the 20^th century. Samuelson taught at MIT. The “Paul Samuelson Professor of Economics at MIT” spoke recently at Davos. David Stiglitz and Paul Krugman, two “Nobel Laureates” in Economics, are products of MIT.

What does Samuelson teach about debt? He says in his textbook that “debt can’t make any difference, because after all it is just money we owe to ourselves.” And so say Therow and Heilbrenner and Stiglitz and Krugman, who on his blog this past December repeated Samuelson’s further explanation that debt within a body politic is just like money lent by a wife to her husband to start a business, so “it can’t make any difference”.

But it DOES make a difference, because the bulk of debt is not “in the family”. It is owed by the 99% not to their family but to the 1%. We have a big group of debtors – almost everyone – whose debt is owed to a much smaller group or creditors, the 1%. And it keeps growing.

Many have argued that the growing debt burden on the “the middle class” is unfair. It is worse than unfair – it is unstable. Unsustainable. Doomed.

Once interest payments extracted from the “middle class” grow large enough, the debtors can no longer purchase the output that society is capable of producing. The shortage of “demand” causes production to shrink. Unemployment climbs. Demand shrinks further. The economy collapses.

As now.

It’s very much like the collapse that would occur if landlords extracted too much from sharecroppers. But they did not. Sharecropping may heve been unfair (and continues to be!), but it was stable. It could be sustained forever.

Not so the growing debt burden. At some point, it hits a ceiling, and can grow no more. Economic collapse eventually occurs, due to insufficient “demand”. (The needs are still there, maybe growing in fact, but they can’t be filled because the debtors can’t afford to pay for them. And the purchases of the creditors – the 1% - are insufficient to buy all that could be produced.)

There are two solutions offered to “fix” the economy, one from each end of the left/right spectrum. Both are wrong. Neither will fix the underlying problem: too much interest-bearing debt.

The left wants government to attack the lack of demand directly: “jumpstart” the economy by replacing declining private demand with public demand; have the government step in and spend money that will replace the decline in private spending. This means increasing the deficit and therefore (in our present system), government debt. Krugman keeps arguing that Obama’s efforts to do this have been too small, if only they were larger they would work. Wrong. They can’t work.

Those efforts are widely condemned as ‘Keynesean’, with the accompanying mantra “You can’t borrow your way out of debt.” It won’t work, but not because deficit spending is ‘Keynesean’. It’s because you can’t jumpstart a car that is out of gas. Total debt is at a limit. It simply cannot be increased.

The right has a different solution: get the government “off the back of business.” Cut “unnecessary regulation” Cut taxes. Let the free market reign, and Adam Smith’s “invisible hand” will do its magic.

This not only does not work, it will make the situation worse.

Both left and right define recovery of the economy as “getting the banks lending again.”

Fix the economy by increasing the debt of $600,000 already on the backs of a typical family of four? Nonsense.

The problem is the huge total debt itself. It must be reduced. Drastically. And it will be reduced, one way or another. Like a sharecropper who needs at least enough to live on, so do average citizens. Take too much away from them in interest, and collapse ensues.

As Michael Hudson keeps saying, debt that cannot be repaid will not be repaid.

So the only question is whether debt will be drastically reduced by peaceful means, or by violence. Once enough people cannot feed their families, violence ensues.

Let’s reduce total debt substantially. And peacefully.

The "Merchants Limited" was almost as fast in 1950 as the Acela is now.

In 1950, two daily trains each way between NY and Boston traveled the distance in 4 hours. Called "The Merchants Limited", they let you leave at 7 AM, arrive in the other city at 11 AM for lunch and meetings, re-board by 5 pm, be back in your home city at 9 pm.

The 4 hour travel time included 20 minutes in New Haven to switch locomotives between diesel and electric, a delay no longer needed. So train travel time was actually 3 hours 40 minutes, with stops in Providence and New London.

Today, the high speed Acela makes it between NY and Boston in 3 hours 30 minutes, sometimes with no stop at all in New Haven. So 61 years later, today's "high speed trains" travel between Boston and New York 10 minutes faster than they did in 1950.

That's ten minutes faster in 61 years. At this rate, it will take 183 years for train travel time between Boston and New York fall to 3 hours

Using GPS, I recently clocked the Acela making 150 MPH between New London and Providence – for less than a minute. Also, for under a minute, it reached 149 MPH between Providence and Boston. If it went non-stop at 150 MPH all the way, the Acela could make the distance between NY and Boston in less than 90 minutes. It's the infrastructure, the tracks and the overhead gantry wires, that slow it down. Much of the time, you can look out the window and watch the cars on I-95 passing you by.

But as you go slowly through New London on the Acela, even when there is no stop there, you get a good look across the river at the Electric Boat Company. That's where we build nuclear submarines with money that could otherwise be spent to make our trains go fast.

Ross Perot pointed out in 1992 that our spending on "national defense" was 39 times per capita what Germany spent. Germany has plenty of real high speed trains. We have lame excuses for them like Acela. We also have 50,000 US troops stationed in Germany, sixty six years after we defeated the Germans in WWII. Much US taxpayer money is shipped across the Atlantic to support those troops, where Germany welcomes it because spending it there benefits the Germans.

What's wrong with this picture?

Why Single Payer Health Insurance Saves a Ton of Money

Single payer supporters do a good job of setting forth the fairness argument: “everybody in, nobody out.” But on the economic argument, many miss the main point. They usually place blame for the huge markups charged by insurance companies on inefficiency and greed. But it's much worse. Those big markups are inherent in the nature of the private health insurance business itself. Even if all CEO's worked for $1 per year, if net profits of insurers were limited to 5% of sales, and if all operations were highly efficient, the big markups would still be there.

Healthcare insurers are not stupid and inefficient. They are smart and efficient. For private health insurance, alas, it pays to spend a lot of money denying care. The famous "invisible hand" pushes them to charge a big 45% markup over treatment cost..

Physicians for a National Health Plan did research that unearthed the often cited number of 31% for “overhead”. That is, 31% of policy prices are diverted from paying for actual medical treatments. They would better be called a markup of 45%, a markup over the cost of the medical treatments paid for by insurance. Single-payer Medicare shines by comparison, with a low markup of less than 5%.

Unfortunately, many follow PNHP in blaming the big disparity on inefficient administrative costs, or on greedy insurer profits and CEO salaries.

But that truly unconscionable 45% markup is not due to inefficiency or greed. Instead it follows inevitably from the nature of the private health insurance business. It is caused by the“invisible hand” so much admired by advocates of free markets. The market pushes insurers into minimizing their TOTAL costs, not just the medical treatments they pay for – i.e., not just their costs for “medical losses”. (As they were called until recently. That common industry term was dropped because people don't like their treatments being called “losses”. This is glaring evidence that health insurance is very different from all other kinds of insurance, where a loss is a loss, both to insurer and insured.)

Total cost for any insurer is the sum of loss cost plus loss prevention cost. For health insurers, loss cost is what they pay for treatments. Payment for treatment denials is a loss prevention cost they pay to prevent loss costs. And here's the rub: if insurers were to decrease that denial cost, the result would be an increase in treatment cost GREATER than the decrease in denial cost. Their total costs therefore already ARE at a minimum.

Sadly for us and for the health insurers themselves, to achieve minimum total cost, the famous invisible hand of the market forces insurers to spend a lot to prevent losses. So they spend a ton of money on armies of denial clerks. The full cost of those treatment denials is a whopping 45% of treatment costs.

Free marketers think competition will drive that “overhead” down. It won't. It is high because competition minimizes TOTAL costs, not just treatment costs. For health insurance, unfortunately, minimum total cost occurs when loss prevention costs (for denials) equal 45% of loss costs (for actual treatments).

What do the insureds get for that 45% markup, which is bundled into their policy prices? Treatment denials. And where does almost all the money paying for those costly treatment denials go, 45% of actual medical treatment costs? Out of state, never to return. Over $2,000 per year per insured is shipped off and lost forever, for treatment denials serving the policy holder no good purpose.

THAT is the economic argument for single payer. Private health insurers are impelled by the famous invisible hand of the market to incur denial costs of  45% of actual treatment costs. Money for that noxious markup goes down the drain forever. It is inevitable with private insurance. It can be cut substantially by moving to a single payer health insurance system.

Jobs? Forget jobs. They're gone for good and they're not coming back. We need Social Credit.

 

Everywhere you turn, the same cry is in the air: Jobs! We've got to get jobs back for people!

The shouters may have different remedies, but all have the same object: to eliminate unemployment, to restore jobs.

The liberals think we can do it by “stimulating” the economy with a “jump start” in the form of government spending, with large though temporary deficits. Paul Krugman will tell you on any day of the week that the stimulus applied thus far is too small, but all would be well if we just made it bigger.

The Republicans and the Tea Baggers (are they any different?) would have us cut government spending and taxes, get the government “off our back”, and let the Free Market do its work to restore the economy, and therefore jobs. The invisible hand will get us back our jobs.

They are all wrong. The jobs are gone, and they are not coming back.

Why? Two reasons: technology, and globalization. Both are inexorable trends, and both are killing our jobs.

Start with technology. I have been an engineer devoted to increasing human productivity for almost my entire career. In one way or another, this is what all engineers do, but I have been specifically devoted to developing tools and systems whose purpose is to multiply the productivity of workers using them.

When McCormick invented his reaper, it allowed one agricultural worker to do the work of six. The number of people needed to cultivate a field of wheat is determined by how many are needed to reap it once it becomes ripe. One farmer on a McCormick reaper did the work of six with scythes. Suddenly, five scythe-wielders could go off and take up a different line of work. One worker could produce enough wheat for the daily bread of all six.

When we started Camex in 1974 to build a new electronic Composition and Makeup system for newspaper composing rooms, we estimated that each worker using our computer graphic workstation would be able to do the work of six compositors using the then-conventional means for manual composition and make up of ads and pages. Once that productivity multiple was proven in practice, our systems were installed in composing rooms all over the world. The workers had nothing to fear; their strong unions had negotiated settlements with publishers which allowed using the technology only if no one was laid off. The labor displacement on which we depended therefore came into play only as older workers retired. Since the work force was aging, we built a successful business. But as one third-generation compositor accurately foresaw, his son could never follow in his footsteps.

I have always thought of the twentieth century as one of progress, best signified by the fact that in 1900 nine out of ten people were farmers, whereas by 2000 fewer than 10% of Americans worked on farms. At the beginning of the century, growing food for 10 required 9 people farming; by 2000, one person on the farm could produce food for all 10 plus additional food for export.

Where did all those farmers go? Many went to work in manufacturing, on the assembly lines once disdained as dehumanizing (e.g., by Charlie Chaplin in “Modern Times”). When the cotton picking machine came along, many Southern field workers were given one-way bus tickets to Detroit.

In the next generation, people moved into the office as “knowledge workers”, manipulating symbols rather than wrenches. All, including manufacturing workers, could aspire to membership in the “middle class”. They could own a house, a car, a washing machine and a television set, and send their kids to school to do better than they themselves had done.

These are the jobs we are supposed to “get back”. Assembly line jobs in manufacturing. Office jobs.

But they are not coming back. Ever. Because, as each example above shows, technology enables improved labor productivity via increased capital investment. A McCormick reaper cost a lot more than a scythe. A cotton picking machine cost much more than a field hand's wages. A Camex system cost much more than the equipment used previously by compositors. New technology lets you improve labor productivity by expending more capital costs in order to cut labor costs – by bumping up “capex” (capital expense) to reduce “opex”(operating expense, mostly labor costs). And, we have organized society so the rewards for increased labor productivity go not to the workers whose labor is more productive, but to the owners of the capital used to achieve that increased labor productivity. This has been true for more than 30 years.

I first read the term “dark factory” in a trade magazine last year. Its implications took a while to sink in. A dark factory is one run entirely by robots, and a new term was needed for a phenomenon we are just beginning to see. As more and more robots are installed in a factory to achieve yet higher and higher worker productivity, the time comes when the last robot is slid into place. At that point, there is no longer any need for any workers in the factory at all, so the lights can be turned out: we have a “dark factory”.

Think about what this means. The factory is all capex, no opex – at least none for labor. There is no need for workers in the manufacturing operation any more. But unlike the Southern planters, we can't just buy these suddenly unusable workers a one-way bus ticket to Detroit, where they can get employed in a productive job in a new field. There is nothing anymore they can do that is worth what they need to live on. They have been replaced by machines.

And the labor movement? What is it going to do about a dark factory? Call a strike of the factory workers? There aren't any left. Technology is doing away with the need for workers, just as 100 years ago it eliminated the need for horses for transportation.

But what about the factory's output? Who will buy it? Not clear. If the GDP all goes to the top 1% and their hangers-on and attendants, maybe they can buy all the output. The Financial Times reported recently that WalMart profits were disappointing, but luxury goods suppliers were flourishing. Leaving the bottom 99% without the income to buy stuff flaunted by the top 1% is social dynamite, but that's where "dark factories" are taking us.

And then there is globalization, perhaps best explained by a fable.

Imagine a town in Indiana whose economy is based on a local factory that makes toaster ovens. Everybody in town either works at the factory or works to supply goods and services to those employed there. Then one day someone discovers a cave in West Virginia that has an apparently endless supply of toaster ovens in it, available for free: an act of of God. What should the country do? Seal the cave back up, so the Indiana town can survive? Or does it see that free toaster ovens are good for the country, therefore keeps the cave open as a source of supply, and provides assistance so the town in Indiana can find another contribution it can make to the economy? Obviously, in an ideal world, the latter, since it provides the greatest benefit to the greatest number.

But now suppose the cave is found not in West Virginia but somewhere in South East Asia. Does that make any difference? Of course not – those toaster ovens are now available to everyone in the country at a much lower price than those made in Indiana, so we should allow them in without a tariff designed to make them as costly as those made in Indiana. So the Indiana town must still find something else to do, just as Adam Smith said they must.

But wait a minute, this just in: someone has worked their way to the back of the cave and found that the toaster ovens were not placed there by an act of God, but instead are being made by child slaves, working under inhumane conditions.

What then? Do we still take their “work product” because it is so much cheaper than that made in Indiana? As it happens, this is not a hypothetical question. It is what “globalization” means in fact. We can buy toaster ovens made in Asia by workers being paid slave wages working in inhumane conditions, and boy are they cheap. Do we do this? You bet we do. Check out what toaster ovens cost at WalMart, and where they are made.

So between dark factories in the US and slave wages in the “low labor cost” parts of the world, it is illusory to think that anything can restore the “jobs” we once disdained but now want back. It won't happen.

In part because the decision as to a way forward is in the hands not of those who have been displaced from the workforce or those still in it, but by the oligarchs who have bought the politicians of both parties. And they own both the dark factories and the businesses engaged in “global trade”. They are doing very nicely, thank you. They have no reason to see any need for change in the system, and they control it.

But even if we had a “Cairo moment” here in the US and won a government “of, by and for the people” instead of the oligarchy we have now, what should we do? Impose high tariffs, ban dark factories and robots, and get our jobs back? No, there is another way, one that does not require such an anti-technology, Luddite move.

We must first realize that for many people in the society, there is no longer anything economically worthwhile for them to do. The dark and almost-dark factories can churn out enough stuff for everyone, along with imports from “low wage” parts of the world.

How then can the resultant GDP all be bought? By seeing to it that everyone in the society participates in its consumption just by virtue of being here, which entitles them to a share of society's output. This is not a “social safety net”, it is that dreaded thing, an “entitlement”. It is a sharing of production that everyone is entitled to by virtue of their being a part of the social fabric that makes that production possible. It is just like the oil bounty passed out by the State of Alaska to every inhabitant, on the grounds that the oil “belongs to everyone in the state” Even Sarah Palin favors that bounty.

What is such sharing of a bounty called? Social Credit. The idea has been around for a long time. Even Richard Nixon favored a version of it. In the US, it would call for granting to everyone a sum capable of sustaining existence, something like $1,500 a month. It would be granted to everyone, not just retirees, or those who can prove they are “in need”. The economy would still be open to entrepreneurship and the “free market”. You could climb as high as you like, but you will see a strongly progressive income tax enforced without the shameless loopholes we have now.

Yes, there will be a continuous “redistribution” of wealth, from those at the top to those at the bottom. Without such redistribution, wealth gets concentrated into fewer and fewer hands, and the system collapses.

Why should even those currently at the top favor this? Because it can be stable, as our present system is not, as evidenced by the Global Financial Collapse, which shows no sign of ending. As much as those at the top dislike taxation, I am sure they would prefer it to finding their head on a pike, which is the alternative we are heading for now.

So forget jobs. They are not coming back. Social Credit is what we need. Think of it: a stable society with no extreme poverty, where GNP is high, inequality is very much present but far lower than it is now, and anyone can freely engage their animal spirits to improve their lot. Isn't this what everyone, left right and center, says they want?

The Free Market Can't Deliver Health Insurance. At all. Ever.

   

We are being deluged from both left and right with healthcare nonsense. Rachel Maddow, a fan of Obamacare, reported on Tuesday that the health insurance lobby has not pushed for its repeal. But she utterly missed the significance of this fact, because she and many others wrongly think the healthcos oppose Obamacare. Actually, they want it, and they own the federal government, so there is no chance it will be undone.

 

Why did the healthcos push Obamacare upon us? They realized that even under the rigged system of recent years, they were doomed. As heathcare costs rose for decades, insurers simply raised policy prices. But for the past 15 years their market penetration has been dropping, as more and more employers cut healthcare benefits. The healthcos saw that raising prices further would induce even faster decline of policy purchases. Selling health insurance, especially in a free market, had become an impossible business proposition. They were staring into a death spiral.

 

So they turned to government and pushed for Obamacare, which gives them guaranteed customers, a hand in the public till, and the opportunity to profit even more on the higher prices they will charge for policies with limited treatment denials. Appropriately, their stocks surged when 'healthcare reform' passed.

  Libertarians and free market advocates in Congress can rave on, seeking repeal of Obamacare. But insurers won't let repeal happen. If it did, they'd be toast. Even if we did turn to free market health insurance, we couldn't have it. It's impossible. Can't happen. Time to look elsewhere.

 

For lower costs and universal coverage, let's go for single payer at the state level.

 

Why do we keep hearing about "sovereign debt", not total debt?

Fascinating how discussion of the current economy almost always ignores the enormity of total debt, public plus private. We keep hearing how the rise in sovereign debt will burden our grandchildren, but the much-discussed $13 trillion of US national debt is less than 1/4 of the total debt carried by the populace.

The underlying assumption is that public debt is bad, private debt is good, and there is no need even to mention total debt, since the monetary system is basically stable. To fix the system, we  keep being told, we only need to limit public spending ("tighten our  belts") and rein in Wall Street to prevent those nasty ‘cycles’ of asset bubbles building and crashing.

Meanwhile, almost no one questions why total debt keeps rising, or how high it can go before it becomes unsustainable, or what happens if and when when it reaches its limit.

Why isn’t the economics profession, and the popular press, addressing these questions? When total debt reaches $50 trillion, as it has in the US, isn’t it quite possible it has hit an upper limit of sustainability? That’s $600,000 per family of four. At 5%, their interest payments would total $30,000 per year, some direct, some indirect. That's $30,000 of their income that they can't consume or invest because it is diverted to interest payments.

Is it any wonder total debt can’t go any higher? What happens when it hits its limit? Why is this never discussed, except by a few economists like Steve Keen and Ann Pettifors? How can it be ignored by the likes of Paul Krugman and Dean Baker?

Let's pay off the national debt with Greenbacks printed by the US.

In yet another home run from Ellen Brown, her article in the Huffington Post nails what the "Deficit Terrorists" have wrought in Britain.

She mentions the phony specter of hyperinflation. Everybody “knows” that Germany's post-WWI hyperinflation and the eventual worthlessness of the US Continental both resulted from government "printing too much money." But it just ain’t so.  The German government turned the central bank over to private interests who then ruined the German Mark with hyperinflation. The Mark was rescued only when the government finally reclaimed sole power to issue money. The Continental was ruined deliberately by counterfeits the British printed by the bushel in Manhattan, not by Congress over-issuing them.

So suppose that both Britain and the US each handled their national debt not by counter-productive “belt tightening” but simply by printing money to pay it off. All of it. What would happen? Hyperinflation? Not at all.

Ellen notes that the total U.S. money supply is about $13 trillion—thus more than the approximately $11 trillion of national debt, whose escalation is scaring everybody. So printing Greenbacks to pay off the national debt in total wouldn’t even double the money supply. Inflationary? Yes, at a time when the government is trying mightily and unsuccessfully to induce some inflation to counter the deflation now hurting the economy. Maximum inflation would occur in the unlikely event that former bond holders simply spent all the money used to pay down the debt rather than re-investing any of it.  The value of the dollar (and debts held in dollars) might then experience a one-time devaluation of about 30 to 40%, or about six years of the “normal” devaluation of 5% per annum.

Would that be hyperinflationary? No, not by a long shot.

But the national debt—and the interest we and our grandchildren have to pay on it—would be gone forever.

How’s them apples?

Video on cell phones? Not soon.

One thing “everybody knows that just ain’t so” is that we will all soon be watching videos on our cell phones. 

The rather sudden appearance of wideband Web access via cable, largely due to the enormous capacity of fiber optics, has induced many to believe incorrectly that the same is about to happen for wireless communication, via either 3G or 4G phone networks. Not so. 

The entire wireless spectrum available to cell phone users must be divided among the concurrent users reached by a single transmitter at the base station for the cell.  That spectrum is sufficient for thousands of voice users, but for far fewer concurrent video users – maybe 100 or so. Even five concurrent video downloads can confound a given base station in a cell tower at present. 

There is just not enough spectrum available to provide video to the thousands of concurrent cell phones within the footprint of a typical cell tower today.  Those towers are dotted around the landscape in church towers and fake pine trees, each one covering many square miles of geography containing many wireless cell phone users. Coverage is annoyingly spotty today even for voice, both because towers are not numerous enough, leaving dead spots, and also because some base stations are trying to serve too many users at once. And that’s just for audio. Even low quality video, equivalent to old analog VHS tapes, soaks up the bandwidth of more than 20 voice channels

Having too many users attempt video streaming brings the cell to its knees. To get coverage for video comparable to what we have today for voice means that the essentially fixed bandwidth available to each base station must be divided among a much smaller number of users. That will require at least 20 times the number of base stations – or a base station on every fifth telephone pole, not just a few in the center of town in the church steeple. Demand will rise rapidly as more and more Web video clips become available, especially for ads. But the 20X multiple of base stations needed to provide the needed bandwidth per user will take longer to happen – maybe 10 years.

Meantime, we can all expect the kind of confusion and service interruption that prevailed when Steve Jobs attempted to demonstrate the new Apple iPhone last week to an auditorium full of people who were already online with their wireless phones and computers.  To demonstrate his new phone, he found he could not get a reliable connection, and had to ask everyone in the auditorium to turn off their phones and computers before he could proceed. Steve was irked and seemed surprised that he had the problem.  He should not have been. We are all going to have it, and we won’t be able to solve it like he did, when the users soaking up the available bandwidth, rather than being gathered together in an auditorium, are spread across the several miles a cell phone tower covers.

What does this mean?  It’s not clear. People have become very dependent on their cell phones, and service interruptions like the one Steve experienced will not go down well with the public. Limited bandwidth is one reason that wireless providers have been arguing they need to be excluded from any “net neutrality” legislation.  One way to provide for orderly allocation of the available bandwidth is to charge for its use. Just as people were once very sensitive to “minutes of use” of airtime for cell phones, they would be quite sensitive to using wireless video if it cost them enough per minute. Is that what we want? And would it still be necessary after there is indeed a base station on every fifth telephone pole?

 (BTW – It makes no difference just which channel jammed for Steve – it could have been the cell phone network, the local WiFi network, or even the cable network to which the WiFi was connected. No matter – too many wireless users easily piling on caused the lockup.  Even if it was the cable Internet connection that saturated, it would have done so only because it was so easy for too many wireless WiFi users to connect to it. If each had had to plug in via cable, it would not have happened, because that many cable outlets would simply not have been supplied.)

Obama's Healthcare Reform is not a government takeover of healthcare

Republicans have it all wrong when they smear Obama's Health Insurance reform as a government takeover of healthcare.  Actually, it's the exact opposite. It's a takeover of the government by the health insurance industry.

I'm sure the healthcos were surprised to find themselves opposed by the Republicans. After all, having bought and paid in full for BOTH parties, they were entitled to expect support from both, not just Obama and the Democratic Congress.

Maybe the Republicans are miffed that the healthcos showered the Dems with more cash. After all, a few years back, Sen. Rick Santorum was the No. 1 recipient of their largesse, and Sen. Hillary Clinton was No. 2.  But last year, Sen. Kerry was No. 1, and the healthcos topped the list of Obama donors.

But even though those pesky Republicans behaved like ingrates, the healthcos got exactly the "Healthcare Reform" they wanted. What they want, they get. Always. (Even Medicare. After opposing it for decades, they switched to supporting it in 1965 when they found they could no longer profitably insure those over 65. Two weeks later Medicare was on its way through Congress.)

For BOTH parties in Washington, it's not the voters who count, it's the donors. Both the Dems and the Repubs answer to the same corporate paymasters.

Single-payer Medicare For All, favored by most voters and physicians and some 80% of Democrats, was "politically impossible". It was kept "off the table", even though it would provide better coverage, would cover everyone, no exceptions, and would cut the total national healthcare bill substantially.

On war, healthcare, and the economy, we get the opposite of what voters want. From both parties.

"Liar Loans" did NOT cause the financial collapse

Do umbrellas cause rain?

Did the ship's band playing “Nearer My God To Thee” cause the Titanic to sink?

Did "liar loans" cause the Global Financial Collapse?

The correct answer to all these quesions is a resounding “No!”

Irresponsible lending & borrowing - "liar loans" - did NOT cause the collapse, though such loans were often criminal and the guilty should be punished.

Meanwhile, blaming liar loans is greatly distracting us from the real cause of the collapse. Mistaking the cause leads to incorrect cures.  Bailouts, stimulus packages and improved regulation, necessary or not, don't address the underlying problem, and so can't fix what ails us.

The real problem?  Unpayable interest. Total debt, public and private, long ago reached a level requiring unsustainable interest payments. Debt is now about $50 trillion in the US, or about $600,000 per family of four. At 5% interest, $600,000 of debt requires interest payments of $30,000 per year. Is it any wonder we have exceeded the upper limit of sustainable interest payments?  

Once total interest payments as a fraction of GDP reach a ceiling beyond which interest payers simply can't pay, it becomes impossible to increase total debt by making responsible loans.  It can’t be done. When that point was reached years ago, outstanding loans - total debt - would have stopped increasing if all lenders and borrowers had been prudent and honest. They would have stopped making many new loans and total debt would have stopped increasing. The resultant credit crunch would have produced a financial downturn at that time, with no liar loans ever issued.  

Instead, when creditable borrowers could no longer be found, banks kept the game going, making phony profits by issuing loans to borrowers who management knew would never repay them – liar loans. And Wall Street helped forestall the day of reckoning by repackaging those bad loans, often dishhonestly, for resale to greater fools. 

Since lenders must have known that after a period of time the loans would fail and the roof would fall in, what were they thinking?

Bank CEO's and their loan officers whispered to one another the most corrosive meme of the new millenium: “IBG, YBG”. “I’ll Be Gone, You’ll Be Gone” – gone with their huge bonuses and posh severance packages intact.

THAT is what induced irresponsible lending. But those liar loans didn’t CAUSE the crash, they just delayed it, forestalling the inevitable collapse for five or six years.

And it isn’t over yet. What’s coming is not just another downturn. Total debt remains at about $50 trillion, so what we are in for is Phase II of the collapse brought on by unsustainable debt. (That's real current total debt, not to be confused with the partly illusory $52 trillion of unfunded future government obligations the deficit hawks keep railing about.) 

The true cause of the collapse was missed even by some who correctly warned of Phase I. They mistakenly blamed bad loans for the oncoming crash, rather than total debt reaching heights requiring unsustainable interest payments.

Alas, almost everyone now believes that bad loans caused the crash, and if we just prevent bad loans, we'll prevent another crash.  But that won't work, since bad loans did not cause the crash. "It's not what you don't know that gets you into trouble. It's what you know for sure that just aint so."

Indeed, we must prevent miscreants from issuing or taking liar loans, but the crash would have happened even without the bad loans – in fact, it would have happened sooner. To prevent future crashes, we need to turn our attention to how we can reduce our overwhelming total debt, and also to reforming our money and banking system so debt doesn't keep increasing to an unsustainable level.  

Our financial system won’t be “fixed” until interest payments are massively reduced. And we must devise a new money and banking system. We need a system that does not need interest payments as a percentage of income to keep increasing forever, an impossibility our present system seems to require.