Inflation and Keynes

I wanted to comment on Nicholas Von Hoffman's article ["Inflation is the Cruelest Tax," 7/15/04 TPP]. The reason that Friedman is associated with the hard right is his acceptance of the dominance of markets as "works of nature" as opposed to artifacts of society and government's interaction. The distinction is subtle, but if you buy into Friedman's view (and the dominant one in economics) that markets are the result of the interaction of freedom and human nature, then you buy into the whole neoconservative (called neoclassical in economics) viewpoint. This includes the ideas that government action is bad, inflation is to be avoided at all costs as are unions. Indeed, viewing inflation as a tax means embracing the view of the people who lend money. In fact, inflation benefits those who borrow as well as the normal working class (because borrowers pay back less purchasing power and tolerating inflation avoids the job-destroying actions enacted by the Fed to avoid inflation). Analyzed through this view, the Fed's actions since the early 1980s can be seen as designed to help the moneyed interests at the expense of the interests of working people.

So what causes inflation if Friedman's view is incorrect? There is a small group of economists (mainly located at University of Missouri in Kansas City and the New School) called Post-Keynesians who believe that the message of John Maynard Keynes has been lost in the view of markets as described above. The Post-Keynesian view of inflation asserts that it is the result of the struggle to increase the shares of the economy's output between the workers and owners in society. Inflation happens when economic times are good and the need for continued production gives the workers the ability to increase their wages. The owners/managers go along, but then raise the price of their outputs (they can do this because most firms have market power and because they need to maintain some margin of profit to satisfy their owners/investors). When most firms are in this dilemma the average price of goods goes up (which is inflation), but it happens as a side effect of the owners/managers getting back the increased wages they had been forced to provide, not because of Friedman's view that there is too much money in the economy.

The way that the Fed (our country's central bank) and the other central banks in market economies "cures" inflation is to lower the supply of money enough to lower the economy's activity (causing a lowered demand for goods and services, hence of labor, enough to lower labor's bargaining position) which causes no increase in wages and no need for the owners/managers to raise the price of their output. That is why the Fed is raising interest rates -- it will lower the demand for output/workers, even though there are many many people not working now. This action will tilt the struggle over output in favor of the owners/managers, to the determent of the workers. Thus, the Fed should not try to "cure" inflation; rather it should tolerate it (at least at this point in our jobless recovery). The investors will still continue to invest (although for reasons I don't have room to explain here) and the "recovery" will continue to stumble along. Raising interest rates in an attempt to squash inflation will also significantly damage the "recovery."

So, we should not embrace Friedman's view of the causes, and cures of, inflation. Rather, we should use Keynes's views, according to what he wrote, not what other economists wrote about him.

Thomas A. Swanke
Chadron, Neb.

Serial Liar

Margie Burns ["What Makes a Neo-Con," 7/1/04 TPP] is correct about what would have happened had W. floated the idea of invading Iraq during the 2000 election. What I find ironic is during the debates W. was critical of US action in Bosnia and promised his administration would not engage in nation building. (Memo to Kerry ad producers: Clips of W promising not to engage in nation building would make a good ad.) Before we say 9/11 preempted this position, let's remember his security advisor has stated the W. administration was planning to invade Iraq as early as January 2001. The guy lied to the electorate about his nation building plans, he lied about his reasons for dragging us into Iraq, and now he's lying about his lying.

Larry Roth
Kansas City, Mo.

When Can We Protest?

In response to John Broggs's letter ["Dems not Progressive," 7/15/04 TPP], you advised him that "This is not a year for protest votes." Okay, but since 1996, 2000 and now 2004 were not and are not years for protest votes please let your progressive readers know when they will finally be permitted to vote their consciences. My bet is you won't commit to any year soon, now will you?

Shelly Wallman
New York, N.Y.

Green in S.C.

Your [7/15/04] edition included the statement (under the letter entitled "Dems not progressive"): "This is not the time for protest votes."

The South Carolina Green Party has nominated Efia Nwangaza for US Senate. She will be on the ballot this fall. The South Carolina Green Party secured ballot status this year. ...

Efia is an attorney in Greenville. She was born in Virginia, daughter to a Pentecostal preacher who preached peace to his flock. She is considered a veteran of the civil rights movement and has served on the national boards of NOW, Not In Our Name, United for Peace and Justice, The October 22nd Coalition, The Jerico Project, and founded both the Malcolm X Grassroots Center and the Afrikan Amerikan Institute. In 1993 she ran against Patricia Ireland for the presidency of the National Organization for Women. With no money and only two weeks to organize, she won 30% of the vote running on a platform of reforming NOW so that it better represented the needs of working women and women of color.

She's been recognized by the US branch of Amnesty International for her work against the death penalty, and has served as a member of the board of the South Carolina Progressive Network and the South Carolina ACLU. Finally, she's attended both the UN Conference on Racism in Durban, South Africa and the UN Conference on the Status of Women in Beijing, China. The first week of this year she was in Baghdad, standing outside the walls of Abu Ghraib representing United for Peace and Justice, and heard first hand about the concerns that just such abuses were happening. Later this year Efia will travel to Haiti to assess the situation there first hand.

Efia does all this, and still offers her time and energy to represent the Four Pillars of the Green Party by running for the US Senate. Peace, ecological wisdom, grassroots democracy, social justice were the words coming from Efia's mouth when she addressed the Green Party national convention, bringing the audience to it's feet several times with her passionate calls for an end to the war on Iraq, to bring justice to political prisoners in the US, for reparations for slavery.

This is our first run in South Carolina, and it's an important race. Both the Democratic and Republican party nominees are pro-war, pro-death penalty and anti-gay marriage. Both oppose late-term abortions. Both can fairly be called "corporatists." (See scgreenparty.org.)

Gregg Jocoy
Fort Mill, S.C.

Greens, Dems Should Talk

I am a registered Democrat who often votes for and participates in activism with Greens. One of my ongoing goals as an activist is to build bridges between progressives which transcend parties. I have spent the last four years defending Ralph Nader to Dems (including my own father) while at the same time encouraging Greens to not simply write off the entire Democratic party. I encourage Greens, independents and other "third" party progressives to focus on local, winnable elections, and grassroots activism and to avoid alienating progressive non-Greens. I strongly encourage Dems to support electoral reforms such as Clean Elections and Instant Runoff Voting. IRV would eliminate the so-called "spoiler" factor. If a Dem doesn't support IRV, I take it as a sign that they would probably rather destroy the Greens than co-exist. Progressive Dems should demand that elected officials and candidates support IRV and other electoral reforms.

The need to build a broad progressive movement transcends even the crucial task of removing Bush from the White House. We need to also think local and long-term. I don't believe any one of us really knows exactly what the right electoral strategy is, so it's best to be flexible, tolerant and civil. If Kerry is elected, fine. That's about one tenth of one percent of what we need to do. Progressives also should remember to work together on all the countless non-electoral activities which we agree upon. These include demonstrations, teach-ins, economic actions, supporting and creating independent media, arts and culture, and building sustainable, responsible, locally-based economies. Remember, Bush couldn't be Bush without voter apathy and ignorance, corporate wealth, corporate media and America's oil addiction propping him up. Let's focus on being green and democratic rather than worrying so much about being Greens and Democrats. Maybe someday we can build a world where an administration like the Bush bunch isn't possible.

Matt Corsaro
New Paltz, NY


What I learned from the NBA (re Paul Richard's letter, 7/15/04 TPP): There are two kinds of competition -- one is "to the death," a la the Roman gladiators -- the second is "ongoing," a la professional sports and the US economy. The latter requires very special conditions if it is to succeed over time. First, it must be thought of as a competitive partnership, with everyone in the same boat, as it were. Second, there must be very specific rules, lest cheaters take unfair advantage. Third, without the means and willingness to enforce those rules, all bets are off.

Thus, those who really believe that competition is the best economic model (including the other professional sports) should take a lesson from the NBA model:

1. A commissioner with near-dictatorial powers over both players and owners (to deal with conflicts, bullies and cheaters).

2. Revenue-sharing between rich and poor teams (hoping to level the playing field).

3. Revenue-sharing between owners and players (45%/55%. written in stone).

4. A salary cap (only after the first three conditions are in place).

The New York Yankees and Microsoft need to be reined in because ongoing competition does not work properly when one team or company has such an egregious advantage over everyone else. Whether or not there are benefits to players/workers or fans/consumers is irrelevant.

Would anyone care to argue with this logic?

Shorey H. Chapman
San Francisco, Calif.


Ted Rall's column in your 7/15/04 issue says the last time the US elected a cross-party ticket for president and vice-president was 1796. Actually, in 1864 the voters elected a Republican for president and a Democrat for vice-president. The Lincoln-Johnson ticket ran under the Union Party label to emphasize that it was a bipartisan ticket. Also, in 1840, the voters chose the candidates nominated by the Whig Party, which was a Whig for president (William Henry Harrison) and a Democrat for vice-president (John Tyler).

Richard Winger
San Francisco, Calif.

Tax Refunds No Scam

In the 4/15/04 issue I read a short article by Deborah Ortiz titled "Tax Preparation Scam" in which she implies that tax preparation firms offering the Refund Anticipation Loan (RAL) are "scamming" the poor who receive the Earned Income Tax Credit (EITC).

I am an H&R Block franchise owner. Many of our clients, especially the EITC clients, are very anxious to receive their refund as quickly as possible -- no matter the cost. By the time they get to us they are desperate for money. Many of our filing services are free if we do the tax preparation and the refund can be received in 10-15 days. Our fee for the RAL is a flat $30 processing fee. The bank that makes the loan does charge a very high fee. We have no control over those fees. Ms. Ortiz should not cast the blame for the bank's high fees on the tax preparation firms.

While the EITC may be "an effective national anti-poverty program," a living wage for all work would be much better. You will recall that the EITC was adopted in lieu of an increase in the minimum wage.

Sharon K. Reynolds
Dallas, Ore.

Can't Please Everyone

I do not know where the copies of your lying, disgusting filth are coming from. I never want another copy of this rag in my mailbox. I wouldn't even wrap my garbage in it! I am curious why you don't have Hillary, Chucky Schumer, Richard Ben Veniste and Carl Levin on your staff along with the other anti-Christian, anti-American, pro-Israel writers. You are slipping! My neighbor asked me if I belonged to the Commie Party!

Carol Kennedy
Manistee, Mich.

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