Occupy Wall Street – Manifesto for a U.S. Parliament

The movement to occupy Wall Street represents something that has not happened in the U.S. for a very long time: a struggle for systemic change. Grassroots movements in the U.S. tend to deal with single social issues, and almost never identify any systemic problem. Occupy Wall Street seems to take aim at the biggest problem for the U.S.: the fact that the country is an oligarchic corporate state.

I was down at Zuccotti Park today, and what struck me was the lack of a systemic message to actually deal with the problem. In order to create such a message, you must first understand why the problem came about. So why is the U.S. an oligarchic corporate state?

I strongly believe that the U.S. constitution is to blame. The constitution was written in the 18^th century, for the 18^th century. Back then, only wealthy, white men were allowed to vote. In the U.S. voting system there can only ever be two parties, because whoever gets a majority in a district wins representation from the entire district, and it becomes very unlikely that a third of fourth party can ever win any representation in any district in the whole country.

So, the two political parties we have today both grew out of political movements among wealthy, land-owning, white men, and those parties still represent the same slice of the population today.

To illustrate how economically conservative the U.S. system is, consider the fact that there is not a majority within the Democratic Party that supports universal healthcare. Such a position cannot be found even within the most extreme right-wing parties in the rest of the world, which says a lot about the Republican position.

In order for real change to come about in the U.S., we need changes to the voting system that allows for more parties. If every vote counted towards representation in the legislature it would mean the end of the oligarchic corporate state. We need PROPORTIONAL REPRESENTATION.

So, what is proportional representation? First of all, it is the system of choice of the vast majority of advanced countries in the world. If a party receives 15% of the votes, it receives 15% of the seats in the legislative body. This inevitably leads to more parties, and a range of views being represented. If 10% of the population is environmentally conscious, there will be a green party, and if 10% of the population are libertarians, there will be a libertarian party in the legislative body.

Here is my suggestion for bringing democracy to the U.S.: The U.S. Parliament

The Inception of a U.S. Parliament

The idea behind a bicameral system (the House and the Senate) where one body can overrule the other is, in reality, an idea of permanently limiting political change. The result is that it becomes almost impossible to bring about fundamental political change as society changes, and the fundamental situation that existed at the time of the creation of the bicameral system will, in essence, be preserved indefinitely.

In my suggestion, the two houses of Congress would be merged into one unicameral Parliament, with a fixed number of seats, perhaps 501 (in order to prevent a deadlock). Elections would be held every 4 years. Each state would be awarded a number of seats based on population size, in the same way as the present Electoral College awards votes for President based on population size. Each vote in the Parliament would be decided by means of a simple majority, with the exception of a vote of no confidence in the President or the governing party or coalition, which would be decided by a two-thirds majority. Filibustering and other abusive tools would be removed entirely.

The fact that all states have an equal voice in the Senate is frankly absurd. I completely understand the need for regional considerations, but the legal independence of U.S. states more than makes up for potential negative effects of populous states being more influential on a federal level. U.S. voters must realize that there is a time and place for everything. The U.S. Senate is not the place to discuss the construction of a local playground, and The Montana Senate is not the place to discuss the moral implications of abortion.

For Montana with 0.3% of the population, to have equal power to California with 12% of the population, is beyond absurd, and deeply undemocratic.

Proportional Representation

What makes the American political system different from most other political systems (save for some other Anglo-Saxon countries) is the lack of proportional representation. If 49% of voters in a given constituency vote for a certain party, those voters could receive 0% representation in the legislature. This is not an anamoly either; it happens all the time.

In a system with proportional representation, if 49% of voters vote for a certain party, that party receives 49% representation from that constituency in the legislature, no more, no less. How could anyone seriously say that proportional representation is unfair, unjustified, or in any way unsuitable? It directly transcribes what the voters want!

The votes would be counted according to the D’Hondt method, and a party must receive at least 8% of the national vote in order to be represented in Parliament. That rule ensures that extremist parties are not represented in Parliament.

The Bill of Parliament

The concept of a “Bill of Parliament” would be very different from a “Bill of Congress”. The problem with bills in the U.S. today is that they lead to corruption through earmarks and lack of coherence. Earmarks obviously lead to corruption by individual Congressmen, when money is being appropriated to corporate donors by the recipient Congressmen. However, the sprawling nature of American bills of Congress also further weakens the small aspects of democracy that do exist in the U.S.

If a bill about, for instance, construction safety is being held hostage by means of a provision about space exploration in the same bill, it amounts to making a mockery of the political system. For a political system to work for the voters, bills must be philosophically coherent and earmarks as we know them must be abolished. It must be this way in order for the most rational, efficient solution to converge with the will of the people.

The Usage of a Mixed Personal and Party Vote – The Party-List Ballot

One of the common objections to a political system that is based on political parties, as opposed to individual politicians, is that such a system takes away the ability of the voter to vote for a politician that he or she particularly likes. This problem can be remedied by the party-list ballot. In such a system, the voter takes a ballot for the party that he or she likes, and on that ballot, the party has listed the politicians that it considers best suited for the job of being a member of Parliament.

The party lists politicians in order, 1, 2, 3, and so on. Any politician on the list can be ticked off, and the vote would go to that party, and that specific politician who has been ticked off. If the voter chooses not to tick an individual off, the vote goes to the party, and the person who is number 1 on the party’s list. When all the votes are counted, the voters may have defied the choices of the party, and number 1 and 2 on the list, may have been exchanged for number 5 and 12 as the party’s representatives in Parliament.

End the Role of Money in U.S. Politics

The financial aspects of U.S. politics are alien and preposterous to most non-Americans. The idea of both local and national politicians going around the country begging for money from wealthy people, corporations and organizations is simply unbelievable. Most U.S. politicians don’t even try to claim that they have guiding principles for the benefit of their voters, naturally because that would be too transparent in light of billions of dollars in campaign donations. In ancient Rome, votes could be bought openly, and it is frankly not much different in the U.S. today.

All money contributions to politicians must be ended. Political parties should be funded with tax money, as they are in many other countries. The consequence of this will be a constant debate based on actual issues instead of who can afford the most advertising on TV.

Decrease the Power of the President

A U.S. President is the head of state, the head of government and commander-in-chief. No other modern country has this configuration, and for very good reasons. To give one individual such vast powers is simply dangerous. However the role of the President would be changed, at least one of the three roles would have to be given to someone else in order to safeguard the country against a semi-dictatorship. It should be easier to fire the President through a vote of no-confidence.

It is definitely possible to have a significant President, elected in a separate election, as well as a Parliament with proportional representation. Finland is one country that has this.

Homogenization of Voting Cycles - Avoid The Do-Nothing Government

In the current system, as a result of not holding elections for the House and Senate at the same time, those two houses of Congress tend to go to different parties, as the ruling party usually gets punished by voters after a while in the majority. As a result of this, every piece of legislation that politicians try to introduce will either be shut down, watered down or changed beyond recognition. Result: a broken, do-nothing government. In a unicameral system, like the one I'm suggesting, this could not happen, but there could nevertheless be harmful effects of voting cycles via the interaction between local and federal elections.

In a system with a U.S. Parliament, there would obviously still be local elections, with proportional representation of course. Those elections must be held at the same time as the Parliamentary election in order to avoid the situation with the do-nothing government, where local elections are unfairly impacted by national politics, for instance. The goal should be to have as vibrant a political discussion as possible, with the merits of different policies at center stage at all times.

Increase Voter Participation by Practical Means

The United States has, by far, the lowest voter participation out of the OECD countries. This is, of course, a testament to a non-working system. Most U.S. voters obviously feel that there is no point in voting, and many of them are consistently and strongly prevented from voting, legally and illegally. Voter suppression is so rampant that it is worthy of a banana republic. Here are some numbers of voter turnout in OECD countries between the years 1945 and 2005, and the voting system used in parenthesis:

The Netherlands: 84.8% (proportional representation)

Sweden: 83.3% (proportional representation)

Israel: 80.0% (proportional representation)

Germany: 80.0% (proportional representation)

Great Britain: 73.0% (fundamentally the same voting system as the U.S.)

Canada: 66.9% (fundamentally the same voting system as the U.S.)

United States (midterm): 40.6%, (presidential) 55.1%

As you can see, the three countries with the lowest numbers all have one thing in common: they all have the winner-takes-all voting system, the U.S. system, in which very large parts of the population are shut out of the political process completely.

There are a number of practical measures that can be taken to make it easier for people to vote, such as:

- conduct all voting on Sundays

- automatically register every U.S. citizen as a voter on the person’s 18th birthday

- create a national ID card which is sent to every U.S. citizen when the person turns 18

- allow mail-in ballots in every election

By changing the voting system the U.S. could finally become a democratic country!

U.S. Recovery Plan - Turning the Chinese into Americans

There have been many stories in the news lately, detailing statements from the U.S. government about the dollar. Statements known as “talking up the dollar” have been coming very frequently from Geithner, Bernanke and Obama. This, of course, is meant to make people around the world believe that, even though they’re doing nothing about it (and are actually making things worse every day), effective policies to keep the dollar strong will come in the future.


However, this strategy goes deeper than that. The U.S. government has now embarked on some pathetically futile strategy to try to change other peoples’ behavior to suit American economic needs. This is very evident in this recent speech by Bernanke, as reported by the NYT:


http://www.nytimes.com/2009/10/20/business/economy/20fed.html?hp


The problem, in essence according to Bernanke, is that people in Asia, and especially China, don’t spend money like drunken sailors, as is the custom in the U.S.. If the Chinese started consuming their own goods instead of selling them to other countries (and getting rich in the process), then the U.S. could become more competitive on the international arena.


It’s like asking the sports team you’re playing against to bench its best player, in order to make the game more fun for everyone else. How quaint.


The average person might not think much of a statement like “the trade imbalances on the world market are too large, and should be reduced by increased domestic consumption in China”. But it is in its core, a pathetic, vain and useless attempt to deal with the economic crisis in the U.S. by trying to take a non-existent shortcut.


Geithner, Bernanke and Obama know that the U.S. can’t export its way out of the crisis, because American goods cannot compete. If the dollar were to implode, American exports probably would be competitive for a while based on price alone, but the larger implications would unequivocally be irreversible, long-term economic stagnation. So again, the only way to take this shortcut is to tell others to change their ways. Now, how likely is it that that will happen?


Bernanke goes on to say that China should increase its social protection for citizens as a way to increase domestic consumption. Now, I’d be the first to agree with such a policy, but alas, China does not care about its own citizens. China is simply the authoritarian political/economical system it has always been. It doesn’t matter if the country calls itself communist, capitalist or imperial: the outcome is the same (the same goes for Russia, by the way). Much like the United States, whoever grabs the power has the power.


The much criticized “Asian values doctrine” can actually be helpful in this context. This doctrine, much favored by the Chinese government, is influenced by Confucianism and other eastern philosophies, but as applied to modern society, it proclaims that individual considerations, be they materialistic or human rights related, should be sacrificed for the good of the authority. I have myself met many Chinese students who have defended this doctrine vigorously.


Where does that leave the Chinese consumer? When, at any time, your house might be bulldozed for a new dam project, your farm taken away because a local politician sold it, or your salary might be cut in half, what is the most rational thing to do in order to protect yourself from catastrophe? You save money!


American politicians seem to think that Asian people save money as some kind of old, funny habit. In fact, they are just being rational, and Americans should obviously be doing the same thing, considering the fact that there is no social safety net in the U.S., and that we have a casino economy.


The Chinese will probably increase their own consumption eventually, but in order for that to be of any help to the U.S. they would have to start buying lots of American goods, and I don’t see that as very likely.


If the Chinese do increase their domestic consumption of domestic goods, I’m sure that won’t be at the expense of exports to the U.S.. They’ll just make up for that by building more factories and enlisting more unemployed people from the countryside to work in them.


Moving on to those who actually control things in China. Why the hell would they try to export less?? In 2007, George W. Bush asked Hu Jintao if they couldn’t please let the Chinese currency appreciate against the dollar. Jintao simply responded: “Why?”.


Embarking on a policy to export less, when exports have taken China out of the dark ages and into the light, would be something that not even a retarded Chinese equivalent of George W. Bush would attempt.

Advocating that the Chinese should be turned into Americans is so pathetic, I’m almost out of words.


Wait, I have a suggestion: if China actually were a communist country, exactly as described by Marx, then it would export almost nothing. So, the plan is simple: invade China, overthrow the authoritarian capitalist government, and install a philosophically pure communist rule! Then America can have its wonderful bubble/casino economy back on its feet!






Moreover, I advise that the winner-takes-all voting system should be destroyed.

Why Does the World Need the Dollar?

Earlier this year, I wrote a lot about inflation, and whether or not it would occur. I now believe that the dice has been thrown, that there’s no turning back: there will be large-scale inflation soon enough. The reason: the U.S. has spent almost $12 Trillion in an attempt to re-inflate the economy artificially.


To put it bluntly, the U.S. economy should no longer be described as being on a “sugar rush”. A more accurate analogy would be a cocaine high. What else could account for a 60% surge in stocks while the real unemployment rate is 20%?


Related to this is the U.S. dollar. Inflation hurts the dollar, but that’s far from the whole story. The dollar’s future as the world’s reserve currency is at stake. If everyone who holds dollars or dollar-related assets abroad starts thinking that these dollars will be worth a lot less in the near future, there will be no alternative to a currency crisis.


The fact that the U.S. has the world’s reserve currency enables it to spend far more than it makes. As I have mentioned before, this is the reason why a lot of economists, and especially American economists, are of the mindset that macro-economic models don’t apply to the U.S.. I think there’s some truth to that, because if you don’t HAVE TO ever pay back your loans, you don’t really have to worry about them. However, what happens on the day that you have to start paying?


Some prominent economists, most notably Paul Krugman, are currently claiming that a weak dollar is good for the U.S.. This will help U.S. exports, the theory goes. Also, according to Krugman, the U.S. needs to spend money on stimulus to get the economy going again, in other words through Keynesian spending.


Krugman does not address the potential of the dollar losing its position as the world’s reserve currency, but instead focuses his analysis on the short-term perspective of fighting the crisis and unemployment at all costs. What he does not realize is how real of a danger this is, but I’m sure he realizes the consequences if this were to actually happen. That’s probably why he’s not talking about it.


I believe that it actually wouldn’t take that much for the dollar to lose its position right now. Under the surface, many important international economic players have been discussing replacing the dollar with something else. These players include both wishful thinkers and those who would actually be in financial danger in the short term. If a few of these players were to move away from the dollar, it might set off a chain reaction that could crush the currency.


First this spring, people like Vladimir Putin and Hugo Chavez started talking about the need for replacing the dollar, while barely being able to hide their excitement.


Second, shortly after that, the IMF started dusting off the old idea of international drawing rights, or a basket of currencies. This debate was also helped forward by Joseph Stiglitz and Simon Johnson, both formerly connected to the World Bank and the IMF.


Third, and this is one of the most important ones, China started voicing concerns about the dollar. This time, Geithner had to go to China and give a speech about how great the dollar was doing. China buys a third of U.S. debt on the international market.


Fourth, and this one might turn out to be very important too, Japan elected a new non-conservative government for the first time ever. Japan buys about the same amount of U.S. debt as China does. One of the basic premises of the new Japanese government was that it would stop trying to be the U.S.’s lap dog. We’ll see how that goes, but I don’t think we can expect to see Japan follow Geithner’s every whim.


Fifth, rumor has it that the Arab Gulf states want to get rid of the dollar too. Their incomes are down by more than half since the beginning of the crisis, and they’re getting a little desperate. For the dollar to drop drastically in addition would be disastrous for them.


All these economic players are not dumb, they understand, in contrast to people like Krugman, that there are some very real dangers connected to owning dollars at the present time. They may run the risk of losing their savings and day-to-day incomes at the same time.


The number one question then becomes: Why does the world need the dollar?


The dollar was instituted as the world’s reserve currency at a time when the U.S. was a world leader in production as well as consumption. This meant that the dollar was both “as safe as houses” and “as good as gold”. An advanced economy with a competitive industry would be less likely to resort to irresponsible fiscal practices, and an insatiable, highly materialistic American consumer could keep the smoke in the chimneys in factories around the world. In other words, the U.S. was the economic engine of the world, and that’s why it made sense to use the dollar as the reserve currency.


However, the U.S. is not in the same position either in terms of production or consumption, and definitely not in terms of fiscal responsibility. The American manufacturing industry is not competitive, and the American service industry turned out to be smoke and mirrors on Wall Street. There is no way that the American consumer is going to get back to spending the way they used to, because it was all built on credit.


I believe that there is a shift happening in the world economy right now. In terms of the future developments of the balance of power between the big three blocks, Asia, the EU and the U.S., this is how I think about it:


It is clear to see that China will only continue to increase both its sophistication and volume of trade. The recent crisis has only strengthened the country’s position. The U.S. is no longer China’s biggest trading partner, the EU is. Japan is also increasing trade with China, and so is India.


It seems that the EU will continue to do what it is currently doing: to be competitive in very advanced industries, while not growing or shrinking much either way. I’m basing this on a continued focus on industrial policies, a good access to education and in general a less volatile society.


With respect to the U.S., it is very hard to see what the country has going for it. Where is the growth going to come? What is going to improve? The country has no industrial policy, and will not get one soon. One year at an American University costs as much as a Mercedes E-Class. The political system is deadlocked by lobbyists who bribe individual politicians. Industry resistance to innovation digs the grave of American manufacturing. More importantly: the country is bankrupt.


I believe that the world economy will shift, and that the dependence on the U.S. will have to be lowered. This will mean more power for Asia, and a tighter relationship to that continent on the part of both the U.S. and the EU. This will also mean that the dollar will most likely be given up as the world’s reserve currency.


What will this mean for the U.S.? Simply put: a drastic reduction in material prosperity across the board.






Moreover, I advise that the winner-takes-all voting system should be destroyed.

Ease of Doing Business at Home - Difficulty of Competing Internationally

“Saturn builds cars that Americans wanna buy!!”

I’ve seen this commercial very often in the last few weeks, but the guy in the clip did not really hit the nail on the head, now that Saturn will be closed. Apparently, Saturn did not make cars that Americans want to buy… (They were supposed to merge with “Penske”. Maybe it was George Costanza’s shoddy work on the “Penske file” that killed the deal…)


The Saturn brand was started as a way for American cars to compete with Japanese and European cars. In the commercial, the message is that what Americans now want in a car is fuel-efficiency, design, reliability and other things that are usually associated with foreign cars. By imitating these foreign cars, Saturn has claimed to also possess these attributes. However, just saying it, doesn’t make it so.


It has become blatantly apparent that the American car industry is uncompetitive. It is, however, not only the car industry that is uncompetitive. The U.S. manufacturing industry, about 7% of the economy, has been shrinking steadily for decades, and the size of it is now almost half of what it is in most other industrialized countries, as a portion of GDP.


There are several reasons for this, but one of the most important ones is that U.S. industrial goods cannot compete in the international trade arena.


It is quite easy to get a grip on the market dynamics of a domestic market; the market within just one country. For instance, if you raise the fuel efficiency standard on cars, cars will become more expensive, and in the short term, fewer people will buy them. That’s the easy bit.


Industrial products, and cars in particular, are for the most part dependent on international trade. When it comes to very advanced industrial goods, it is usually not possible to sell them in a single market and still be profitable; you need more customers, and industrial products almost always fit in to some type of chain of products that are dependent on each other.


For 30 or 40 years in the western industrialized world, a steady stream of legislation and industrial policies have followed much the same path. Legislation with respect to efficiency standards, safety standards, health care, vacation time and much more has followed the same trajectory in most industrialized countries: a significant increase in these standards and rights.


However, the exception is the United States.


As I outlined in my post about circular looting, (in the list to the right on March 19) I believe that the political system which allows large-scale corporate donations to politicians has created a “business-friendly” climate in the United States. This climate has been developing over the last 30 or 40 years, and has led to policies that make it as easy as possible for companies to turn quick profits in the U.S., at the cost of long-term perspectives.


Think of it this way: as U.S. automakers were making money selling gas guzzlers in the U.S. (while not being able to sell them elsewhere), automakers in Europe and Asia were being subjected to ever stricter regulations on efficiency standards, forcing them to develop better engines. In the U.S., on the other hand, the powerful industrial companies have stood in the way of any changes that might hurt their bottom lines in the short term.


This process also applies to a lot of other areas. European and Asian automakers had to deal with higher costs for vacation time, labor rights and taxes. This was by no means easy for these companies, but what this actually does in the long term is to make them more competitive.


The politicians of Europe and Asia developed this legislation because they thought it was the right thing to do. A cleaner environment and 6 weeks of vacation for everybody were simply seen as moral imperatives. They did not think of the eventual side effects.


Because industrial companies in Europe and Asia have had to fight much harder to remain profitable, they have developed better products and improved productivity and technology, while they have also had less of an impact on the environment and created better working conditions.


(Nowadays, it is widely known amongst economists that the previous estimates of American workers being more productive than others are not true. The PC revolution did increase this productivity, but it was later just inflated by Wall Street profits, which later turned out to be an illusion of productivity)


OK, I know what you’re going to say: the UAW has cost the American auto industry so much that they are the reason American cars are not competitive. I agree that there is some truth to that. The UAW is what I would call a “labor aristocracy union”. Such unions are very selfish (in the beginning very racist), and have no concern for society as a whole. That is very different from European unions, which would for instance fight for more vacation for everybody, not just autoworkers.


However, the over-reaching of the UAW does not explain the fact that innovation was stifled, and that such massive lobbying to stop any improvements was undertaken for decades. The auto companies also agreed that they should be the ones to pay for workers’ health insurance, which is something I disagree with. This stance comes from the anti-socialist movement of the early 20th century. Again, the companies chose this path themselves.


The short-term perspective of the American industrial sector which has involved fierce resistance to any environmental, safety or labor-related reforms, has brought the sector to its knees. In economic boom times, the American model works. In economic recessions, the weak will be taken to the slaughter.


This is the perfect example of what the Freiburg school of economics is all about: we need capitalism, but the framework within which capitalism exists can make it stronger, and make it function much better.


A “Freiburgian” would say: Saturn didn’t make cars that Americans wanted to buy, because the economic and societal framework surrounding the auto industry promoted a hunt for short-term profits.






Moreover, I advise that the winner-takes-all voting system should be destroyed.

Devaluation of the Currency - Ultimate Keynesian Folly

How is The United States going to get out of the current crisis? The various bailouts are truly unprecedented, and the effects are starting to show. Here are a few examples:


- The FDIC has essentially run out of money, and will probably need a bailout very soon


- Congress is just about to hit its debt ceiling of $12 Trillion, and Geithner will soon (middle of October) ask for it to be made higher

- Corporate insiders, those who own stocks of the companies that they themselves work for, are selling their companies’ stocks at a very high rate. This signals trouble ahead to say the least


- The U.S. government pretty much owns the entire mortgage market as of now, as well as most of the toxic mortgage-backed securities


- 46% of the Treasury’s expenditure is now paid for with loans (link coming)


It can be difficult to understand how all this is related, but the simplest explanation for it is that this Keynesian spending is meant to bridge the gap from the distressed current situation to the return of the good times. The economic destruction that the crisis of 2008 has caused is enormous, and something has to come in place of what has been destroyed. If nothing does, the economy will simply re-align itself at a new, much lower level, with a lower standard of living in the country.


That “something” which must come in place of what has been destroyed can be a number of things. As I have mentioned in previous postings, it can be a bubble of some sort: housing, technology or developing economies. Of course, this is not an improvement; it is just make-believe.


Wall Street, the government and the media have during 2009 desperately been seeking a new bubble, but nobody has been able to figure out, and convince others of, what it could be. Instead, the financial establishment has tried to pretend that nothing bad actually happened, and that the crisis was just a mistake, which would be a reason for the stock market to go back to its old levels.


The “something” that could bring the U.S. back from the crisis could also be foreign exports. This is how South Korea and Sweden were able to get out of their structural crises 10 and 20 years ago, respectively. Unfortunately for the U.S., the country does not have a competitive export industry, and there are very few people who believe that it will become competitive any time soon. The U.S. industrial base is barely half the size of, for instance, Germany’s or Sweden’s, as a share of GDP. I believe that for the U.S. to become a successful exporter again, changes to the educational system are a must.


In order to become a successful exporter you must have one of 2 things: better products or better prices. If you don’t have either, there is a third way: devaluation of the currency.


A currency devaluation instantly lowers the prices of a country’s products abroad. To my great shock, this was even discussed as an alternative on CNBC’s Squawk Box this morning. This, if anything, is a sign of true desperation.


If you have to resort to currency devaluation, you might as well throw in the towel. The only thing this does is to artificially support uncompetitive industries that will eventually die anyway. In the meantime, you have lost a lot of economic power as you have sold out your currency. This is more important to the U.S. than to any other country in the world. Here’s why:


The only reason that the U.S. has been able to spend far more than it has earned for the longest time is the position of the dollar as the world’s reserve currency. This is the reason why traditional macro-economic models are usually said not to apply to the U.S.. The country is like a rich kid whose parents don’t care how much credit card debt he runs up.


It can in this context be helpful to compare the U.S. to Britain, which also spends much more than it earns. Since the crisis hit, Britain has had to face it head-on. Sure, it tried to re-inflate bubbles and bring the good, debt-fueled times back American-style, but those feeble attempts failed. The result: there is no alternative other than severe budget cuts and structural changes, or what I earlier called a re-alignment of the economy at a lower level.


If the U.S. devalues the dollar, which it seems to be doing with all these crazy bailouts, it will have to start operating like most other countries: spend only what you earn. Since the bailouts began, more and more voices have been heard in terms of lost faith in the dollar. We’ve heard it from the Chinese, the IMF, The World Bank and even the Japanese.


Of course, to spend only what you earn is a policy that I whole-heartedly support, but I would prefer that this insight come as a result of intelligent discussions, rather than through financial destruction and a huge loss of economic position for the U.S..


To sum up what I’ve been arguing (in a somewhat rambling way perhaps…), I believe that the U.S. is playing with it’s most precious resource, the dollar. To lose control of the power that the dollar holds would be disastrous for the national finances, and probably irreversible. The absolutely enormous bailouts have put the dollar at risk, and the government is jumping headlong into unknown territory.


History will not be kind to the Paulson/Bush/Geithner/Obama alliance…






Moreover, I advise that the winner-takes-all voting system should be destroyed.

Secret: No More Money Market Fund Protection - The Illusion Continues

This is just a quick note on the state of the market and the economy right now. I am very bothered by the false spin that has been coming out of almost every media outlet and the government ever since this spring. The absence of reasonable economic analysis is almost complete.


The government and the media are currently putting ordinary people at risk by not telling them that certain guarantee programs are ending. As of last week, September 18, the Treasury Department’s ” Temporary Guarantee Program for Money Market Funds” HAS ENDED.


Click to view: http://www.treas.gov/press/releases/tg76.htm (note that this only says that the program will end on September 18, there is no announcement that it has actually ended, which it has)


They obviously don’t want anyone to know this, because they don’t want anyone to withdraw money from these funds. If you remember, this program was started last autumn, because the withdrawals that were seen during the most chaotic days could have absolutely destroyed the stock market. The program was initiated not out of concern for ordinary people who had money in these funds, but as a way to support stock prices. The consideration is the same today.


I have not seen a single media entry, except one mention on the CNBC website, telling this story. The problem with these funds is that people see them as savings accounts. In fact, a lot of the money is invested in stocks, and although the fund will not swing like stocks, there is a much higher risk of losing all your money. There is no FDIC protection. A lot of people in Britain and The Netherlands lost money in this way last year.

There are a few people who seem to be keeping an eye on things though. The government is about to hit its debt ceiling of 12 Trillion Dollars soon, and the word is that Geithner is about to ask for it to be raised. In other words, the government has spent so much money bailing out anything and everything, that the $700 Billion last year is now like a spit in the bucket. The question will soon become: who will bail out the government? The situation is really serious now. Please take a look at CNBC's Heidi Moore's article on that:

http://www.cnbc.com/id/33019073/

The absolute surge in stocks over the summer was not something that I foresaw. I am flabbergasted at it. Then it came to me; this is the same pattern as during the depression. Here’s what happened back then:


- 1929: crash


- Early 1930: stock market up by 50%


- Late 1930: stock market down 50%


A lot of things are different now, but I wouldn’t be surprised if the same thing happens within 4-5 months. By this I mean, of course, that the crash and the 50% surge has already happened, and we're just waiting for the 50% drop. After that, all the terrible mistakes that the Treasury, the Fed and Congress have made will become very apparent. They have essentially done everything wrong in the handling of this crisis.


This is my basis for this accusation: this crisis has been dealt with as if it were a smaller, cyclical crisis, but the medicine has been administered on a massive scale. I believe that this is a structural crisis, and that none of the cyclical theories apply. Now we will only get debasement of currency, more unemployment, and a downward-spiraling trend.




Moreover, I advise that the winner-takes-all voting system should be destroyed.

Manifesto for a U.S. Parliament - 2009 Update

In light of recent political developments, I am, to my great surprise, no longer alone in calling for an overhaul of the way decisions are taken in this country. So far in the year 2009, we have seen more starkly than perhaps ever before how far away the U.S. is from being a democratic country.


The healthcare debate in particular has raised a lot of questions regarding the decision-making process. More specifically, the role of the Senate has been put into question. The media makes it seem as if any healthcare reform hinges on a small group of senators, lead by Max Baucus from Montana. They may in fact be right, and considering the fact that this man represents roughly 0.15% of the population (90% of which are white), it is easy to see why such a situation might be called into question even in the U.S..


In an excellent article in the Washington Post called The Gangs of D.C., Alec MacGillis explains the strange power of the Senate and the impact this has on democracy at large. Also, focusing on procedural issues, Eric Etheridge of The New York Times writes about the Senate, filibusters and democracy.


I obviously agree with what these writers are saying about the Senate; it is an unbelievably undemocratic institution even before taking into account the tens of millions in corporate “donations” that these individual senators receive. However, neither of these issues can hold a candle to the fact that voters in the U.S. never have any real choice to begin with, because there is no proportional representation.


Before I continue, let me just reiterate what proportional representation is. First of all, it is the system of choice of the vast majority of advanced countries in the world. If a party receives 15% of the votes, it receives 15% of the seats in the legislative body. This inevitably leads to more parties, and a range of views being represented. If 10% of the population is environmentally conscious, there will be a green party, and if 10% of the population are libertarians, there will be a libertarian party in the legislative body. Neither of these things could ever happen in the U.S. because there is no proportional representation.


Instead, the U.S. system has evolved into nothing short of a corporate state. It is clearer than ever that citizens actually have very little say in what happens in their country. This would never happen in a system with proportional representation.


Here is my suggestion for bringing democracy to the U.S.: The U.S. Parliament


The Inception of a U.S. Parliament


The idea behind a bicameral system (the current system) where one body can overrule the other is, in reality, an idea of permanently limiting political change. The result is that it becomes almost impossible to bring about fundamental political change as society changes, and the fundamental situation that existed at the time of the creation of the bicameral system will, in essence, be preserved indefinitely. At the time of the creation of the American political system, wealthy, white, older men were the only citizens who were allowed to, and were ever supposed to be, involved in the political process. That is largely unchanged to this day, all things considered.


In my suggestion, the two houses of Congress would be merged into one unicameral Parliament, with a fixed number of seats, perhaps 501 (in order to prevent a deadlock). Elections would be held every 4 years. Each state would be awarded a number of seats based on population size, in the same way as the present electoral college awards votes for President based on population size. Each vote in the Parliament would be decided by means of a simple majority, with the exception of a vote of no confidence in the President or the governing party or coalition, which would be decided by a two-thirds majority. Filibustering and other abusive tools would be removed entirely.


The fact that all states have an equal voice in the Senate is frankly absurd. I completely understand the need for regional considerations, but the legal independence of U.S. states more than makes up for potential negative effects of populous states being more influential on a federal level. U.S. voters must realize that there is a time and place for everything. The U.S. Senate is not the place to discuss the construction of a local playground, and The Montana Senate is not the place to discuss the moral implications of abortion.


For Montana with 0.3% of the population, to have equal power to California with 12% of the population, is beyond absurd, and deeply undemocratic.


Proportional Representation


What makes the American political system different from most other political systems (save for some other Anglo-Saxon countries) is the lack of proportional representation. If 49% of voters in a given constituency vote for a certain party, those voters could receive 0% representation in the legislature. This is not an anamoly either; it happens all the time.


In a system with proportional representation, if 49% of voters vote for a certain party, that party receives 49% representation from that constituency in the legislature, no more, no less. How could anyone seriously say that proportional representation is unfair, unjustified, or in any way unsuitable? It directly transcribes what the voters want!


The votes would be counted according to the D’Hondt method, and a party must receive at least 8% of the national vote in order to be represented in Parliament. That rule ensures that extremist parties are not represented in Parliament.

The Bill of Parliament


The concept of a “Bill of Parliament” would be very different from a “Bill of Congress”. The problem with bills in the U.S. today is that they lead to corruption through earmarks and lack of coherence. Earmarks obviously lead to corruption by individual Congressmen, when money is being appropriated to corporate donors by the recipient Congressmen. However, the sprawling nature of American bills of Congress also further weakens the small aspects of democracy that do exists in the U.S..


If a bill about, for instance, construction safety is being held hostage by means of a provision about space exploration in the same bill, it amounts to making a mockery of the political system. For a political system to work for the voters, bills must be philosophically coherent and earmarks as we know them must be abolished. It must be this way in order for the most rational, efficient solution to converge with the will of the people.


The Usage of a Mixed Personal and Party Vote – The Party-List Ballot


One of the common objections to a political system that is based on political parties, as opposed to individual politicians, is that such a system takes away the ability of the voter to vote for a politician that he or she particularly likes. This problem can be remedied by the party-list ballot. In such a system, the voter takes a ballot for the party that he or she likes, and on that ballot, the party has listed the politicians that it considers best suited for the job of being a member of Parliament.


The party lists politicians in order, 1, 2, 3, and so on. Any politician on the list can be ticked off, and the vote would go to that party, and that specific politician who has been ticked off. If the voter chooses not to tick an individual off, the vote goes to the party, and the person who is number 1 on the party’s list. When all the votes are counted, the voters may have defied the choices of the party, and number 1 and 2 on the list, may have been exchanged for number 5 and 12 as the party’s representatives in Parliament.


End the Role of Money in U.S. Politics


The financial aspects of U.S. politics are alien and preposterous to most non-Americans. The idea of both local and national politicians going around the country begging for money from wealthy people, corporations and organizations is simply unbelievable. Most U.S. politicians don’t even try to claim that they have guiding principles for the benefit of their voters, naturally because that would be too transparent in light of billions of dollars in campaign donations. In ancient Rome, votes could be bought openly, and it is frankly not much different in the U.S. today. That U.S. voters continue to accept this is beyond me.


As a result of the government in general receding since the days of Reagan, a power vacuum was created. Slowly but surely, aided by both Republicans and Democrats, the U.S. actually turned into something that is very much like a “corporate state”. In some ways, this state can eventually turn almost as bad as a “failed state”, since it may lead to a form of anarchism (a sort of Ayn Rand-style unregulated economy).


All money contributions to politicians must be made illegal immediately. Period. Political advertising on TV and elsewhere must also be ended, and campaigns should be conducted purely through debates in the media. Each political party would be given a set amount of money from U.S. taxpayers, end of story.


Decrease the Power of the President


A U.S. President is the head of state, the head of government and commander-in-chief. No other modern country has this configuration, and for very good reasons. To give one individual such vast powers is simply dangerous, and as we have seen during the last 8 years, it can have truly disastrous consequences. However the role of the President would be changed, at least one of the three roles would have to be given to someone else in order to safeguard the country against a semi-dictatorship. It should be easier to fire the President through a vote of no-confidence.


It is definitely possible to have a significant President, elected in a separate election, as well as a Parliament with proportional representation. Finland is one country that has this.


Homogenization of Voting Cycles - Avoid The Do-Nothing Government

In the current system, as a result of not holding elections for the House and Senate at the same time, those two houses of Congress tend to go to different parties, as the ruling party usually gets punished by voters after a while in the majority. As a result of this, every piece of legislation that politicians try to introduce will be either shot down, watered down or changed beyond recognition. Result: a do-nothing government. In a unicameral system, like the one I'm suggesting, this could not happen, but there could nevertheless be harmful effects of voting cycles via the interaction between local and federal elections.

In a system with a U.S. Parliament, there would obviously still be local elections, with proportional representation of course. Those elections must be held at the same time as the Parliamentary election in order to avoid the situation with the do-nothing government, where local elections are unfairly impacted by national politics, for instance. The goal should be to have as vibrant a political discussion as possible, with the merits of different policies at center stage at all times.

Increase Voter Participation by Practical Means


The United States has, by far, the lowest voter participation out of the OECD countries


This is, of course, a testament to a non-working system. Most U.S. voters obviously feel that there is no point in voting, and many of them are consistently and strongly prevented from voting, legally and illegally. Voter suppression is so rampant that it is worthy of a banana republic. Here are some numbers of voter turnout in OECD countries between the years 1945 and 2005:


The Netherlands: 84.8% (proportional representation)


Sweden: 83.3% (proportional representation)


Israel: 80.0% (proportional representation)


Germany: 80.0% (proportional representation)


Great Britain: 73.0% (fundamentally the same voting system as the U.S.)


Canada: 66.9% (fundamentally the same voting system as the U.S.)


United States (midterm): 40.6%, (presidential) 55.1%


As you can see, the three countries with the lowest numbers all have one thing in common: they all have the winner-takes-all voting system in which very large parts of the population are shut out of the political process completely.


There are a number of practical measures that can be taken to make it easier for people to vote, such as:


- conduct all voting on Sundays


- automatically register every U.S. citizen as a voter on the person’s 18th birthday


- create a national ID card which is sent to every U.S. citizen when the person turns 18


- allow mail-in ballots in every election


- End all electronic voting and create completely uncomplicated, nationally standardized paper ballots