Tuesday, May 31, 2005
Deep Throat has finally outed himself - it's Mark Felt, one time number two man at the FBI. In my lifetime, I never thought I'd find out Deep Throat's identity, at least not until I was a very old woman. Both Woodward and Bernstein, and their Washington Post editor, Ben Bradlee, had all promised they'd never reveal who Deep Throat was until his death.
But Felt revealed himself, and, very reluctantly, both Woodward and Bernstein finally confirmed it tonight just in time for the 6 o'clock news on television.
Besides the astounding news, the reaction of former Nixon operatives has been very revealing.
Of course, Pat Buchanan was expected to squeal like a pig that Felt was a turncoat and betrayer who acted out of maliciousness because he was passed over for the top spot at the FBI after J. Edgar Hoover's death.
David Gergen stated that the public will never know the whole story and also implied that sour grapes was behind Felt's whistleblowing. But the real surprise, at least to me, was Chuck Colson's response.
He dismissed Felt as a bum who should have gone to other law enforcement officials or to a Grand Jury rather than to the press. All I can say is "oh get real, Chuckie."
Nixon was firing special prosecutors and putting politically beholden outsiders in to head the FBI precisely to control his malfeasance from ever getting out. By definition, a cover up involves preventing damaging information from being revealed through official channels.
With his enemies lists and his concerted attacks on both the media and his political opponents, Nixon was going to make sure this story never saw the light of day. No, Chuckie, Mark Felt wasn't a criminal, he was a patriot who was afraid his beloved FBI would become tarnished in the criminal cover up of a Republican administration. And worse, he was afraid the nation itself would be irreparably damaged if these men got away with their high crimes and misdemeanors.
What becomes painfully obvious in watching all these President's Men is how unsorry they are for the events they engineered. They may be terribly sorry they got caught red handed, but they're not a whit contrite at what they did. They still don't get it that they were the criminals. But the worst is Chuck Colson. He is a sanctimonious hypocrite who deserves scorn.
Colson has spent years masquerading as a contrite and pious Christian who was born again in prison. And no doubt his prison ministry has helped many men and women to build new lives. However, he has also used that ministry, and the pulpit, to champion political causes and candidates under the guise of Christian morality.
The very least that must be expected of a convicted criminal who went to jail for his part in the cover up of the burglary of a political opponent's headquarters is contrition, genuine repentance for the criminal activity, the dishonesty, and the immorality of those activities. Morality does not begin and end below the waistline. It's about more than just sexual behavior. Morality is also about ethics, honesty, and integrity all of which were sadly lacking in the Nixon administration.
That Colson was never truly sorry for his role in the Watergate break in and cover up is apparent from his anger at Mr. Felt. Colson is still furious that Mark Felt snitched on him. That's the attitude not of a repenant criminal, but just of a criminal.
In light of today's news, it might be wise to reconsider the dilemna brought on by Newsweek's very public embarrassment caused by their mishandling of information provided by an anonymous source.
There is a vast difference in the way the Washington Post handled the Watergate scandal. Unlike Newsweek, the Post did not simply take the uncorroborated allegations of one source. Nor did they interpet official silence to be verification of serious charges.
When confronted with Deep Throat's stunning allegations about the President and his administration, the two young Post reporters, Carl Bernstein and Bob Woodward, did extensive leg work. They examined the corroborating documents that Deep Throat provided and interviewed countless other witnesses; and before the Post ran the story, they had pieced together a coherent and provable tale that was carefully laid out for the public. It was impossible to ignore because of the wealth of corroborated detail. These journalists did their investigative work carefully and precisely.
There were two differences between the 1970s and today. One was that the level of journalistic responsibility was far higher. Reporters took accuracy and objectivity much more seriously than they do today.
The other is that they had serious-minded editors who gave them time to develop a story and to do the necessary fact checking. Today, everybody wants to be first with the story. The pressure to scoop CNN and even the bloggers is enormous. The problem is that there is a vast difference between scooping everybody else with a breaking story of a fire or an accident, which is visible and highly verifiable right on the spot, and trying to scoop everybody with a hastily done and sloppily researched investigative piece.
Competing to scoop the Drudge Report may not be the best use of a newspaper's resources. And too often it leads to the worst kind of errors.
And the real problem is that once a newspaper or news magazine loses its credibility with the public, the politicians will be free to engage in all kinds of dishonest activity with impunity because who will be there to blow the whistle once nobody believes the media and the bloggers anymore?
We cut our own throats when we practice sloppy journalism. But we also kill democracy's greatest safeguard when we do so.
Monday, May 30, 2005
On this day I have watched the motorcycles zoom by in formation on Route 95, I've heard their roar - the roar of Rolling Thunder. Those are the bikers who converge on Washington, DC every Memorial Day to honor their brothers and sisters in arms, those who have fallen in our nation's wars. The bikers are also veterans, many Vietnam vets. And they come to remember those that America turned its back on.
Vietnam was the first and only war we lost. And at the time, passions were running high. It was easy for those who opposed our government's Vietnam policies to blame the troops, who were mostly 19 year old kids.
I am opposed to the War of Choice in Iraq. I believe we entered that war under false pretenses and have done much harm to our standing at home and abroad. We have never been more hated in the Muslim world and disrespected in Europe. I hope in some small measure that our actions have brought some good to the Iraqis, but I have my doubts about that too.
The one thing I do not doubt, though, is that our many soldiers there are serving honorably. The problems of disrespect for the Koran and mistreatment of Iraqi prisoners of war are not the action of a few renegade guards but part of a much more widespread pattern of tacit encouragement for these reprehensible actions from the very top of the military hierarchy and from their civilian bosses at the Pentagon. I believe low level guards were led to believe that what they were doing was accepted behavior. So far, we have only seen the tip of the iceberg on this.
And so I want to issue a plea to all those, who like me, oppose this war, to please still honor the troops. Many are our next door neighbors. They are idealists who have been willing to make the ultimate sacrifice to protect your freedom and mine. They too have been misled by some in our government.
I protested the war in Vietnam. And after that war I volunteered at a Vietnam Veterans of America center that helped vets get back on their feet. (By the way, Senator John Kerry was instrumental in getting the funding for these centers.) From the vets that I met there, as well as from friends who had been in Vietnam Veterans Against The War, I learned a tremendous amount of respect for the men and women in uniform.
This is their day. And it is our day to remember their many sacrifices and to say thank you.
Friday, May 27, 2005
Here's a link to an article about a custody fight that involves First Amendment religious freedom. A judge in Indianapolis, in a divorce case, has ordered that a little boy cannot be brought up by his parents as a Wiccan. Neither parent, however, asked for such a ruling. Both, in fact, are practicing Wiccans and the boy's religious upbringing was never in contention in their custody case.
Wicca is a nature-based Pagan faith. According to the article, some Wiccan sects practice limited nudity. Although the newspaper article tried to downplay that fact as innocent, it may offend enough people and cause them to believe the judge has a valid point. So let me state that I practiced Wicca for 10 years, in my 20s and early 30s. I never, never participated in a group that had nudity - if not out of a false sense of modesty, then because nobody, and I mean nobody, was going to see my cellulite. Vanity is not pretty, but then neither is cellulite.
Seriously, there are some Wiccan groups who do conduct rites in the nude. But many do not. So unless the judge knew that this specific group was engaging in a practice he considered harmful to a young boy, he had no right to impose his religious prejudices on the parents of this child.
And unlike some divorce cases, neither parent was objecting to raising the boy as a Wiccan. The parents share custody and still share the same religious beliefs. This is an unasked for intrusion by the judge who stated plainly that he doesn't believe the boy should be brought up in a non-mainstream religion.
To put that in perspective, forty years ago in many parts of America (and even today in some small towns) Judaism would be considered "not the mainstream" of religion. Surely, so would Buddhism, Jainism and even Islam. So, do judges take this precious freedom away from parents who happen to end up in court on other matters?
And again, given that some Democrats sold out their party's right to filibuster extreme rightwing judicial nominees, what will happen if a case like this reaches the Supreme Court in a few years, as surely one will?
On that note, I really must say good-bye now. Until Monday, when something else will, no doubt, upset me enough to take to the computer to post. But until then, I am taking a break and going to chill in beautiful Roanoke for a couple of days.
Shalom and Namaste!
Thursday, May 26, 2005
And Moderates Call This a Victory?
Here’s a link to an AFL-CIO website explaining just what’s so bad about Janice Rogers Brown, one of the Bush judicial nominees who will get an up or down vote under the recent Senate compromise on the filibuster.
Not only has she called Social Security the cannibalization of the young by the old seeking free stuff from the government, but she also feels that racial harassment in the work place is a protected activity under the First Amendment. It’s interesting that bigots have rights but victims don’t in Brown’s world. There’s much more, including a useful action that you can take, at this site.
Strange Bedfellows Indeed
And here’s an interesting link to David Brooks’ latest column in the New York Times, in which he suggests an alliance between liberals and Evangelical conservatives. He argues that they are the only two groups that actually care about truly helping the poor and protecting the environment.
I can think of several holes in his argument. Firstly, Republicans, in general, and Evangelicals, specifically, frequently distrust the government to run anti-poverty programs. The Republican and Evangelical answer to the problem of aiding the poor is to have more faith-based private programs. Liberals would prefer secular public programs run by faith-neutral government agencies.
Another question I have is would the Christian Right really be willing to put aside their differences to work with those with whom they have such a strong divergence of opinion on social issues ranging from abortion to stem cell research to birth control? I see a real chasm that both sides would have to work hard to overcome in order to form an alliance. Still, politics has made for some strange bedfellows before.
I remain skeptical, but I’m willing to listen.
In the Catholic Church: Liberals 0, Molesters 1+
And Andrew Sullivan has a piece on Fr. Marciel Macial, the founder of a rightwing Catholic group that originated in Mexico City, called the Legionaries of Christ. Fr. Macial has been accused of molesting young men and the case was before the Vatican’s Congregation for the Doctrine of the Faith, formerly headed by Cardinal Joseph Ratzinger, now Pope Benedict the XVI.
The Legionaries of Christ issued a statement that somebody from the Vatican has cleared Fr. Macial of all charges. There is now some confusion over which agency in the vast Vatican bureaucracy issued the letter that seemed to vindicate Fr. Macial. However, the Congregation for the Doctrine of the Faith denies that it was them. But they also stated that at this time they have no plans to bring any action against the aging Mexican founder of the Legionaries.
Here's another link, provided by Andrew Sullivan at his Daily Dish blog, that explains this case more fully.
Let’s see, Fr. Thomas Reese, the editor of the liberal Jesuit publication America, was forced to step down from that magazine and was, in effect, silenced but a possible child molester who spouts the right party line may no longer be subject to investigation? Strange priorities these people have.
And That's All Folks!
I will be a way this weekend. Have a lovely Memorial Day Weekend. May you all have peace and relaxation. Despite the always dire world situation, we all sometimes just need a break to have fun.
Tuesday, May 24, 2005
I am not as convinced as some of my liberal friends that this was necessarily a good compromise, either for Democrats or the nation. I wish I could be as optimistic as they are. Hell, I could use some positive feel good emotions right about now. And pessimism is always a bummer.
But to me this compromise feels more like a defeat – or at least a Phyrric Victory – than an actual win. The bottom line is that three fairly awful and out of the mainstream judicial nominees will now be seated on the federal bench
This is not just about the so-called culture wars and abortion rights. These judges will make many decisions that will affect the laws of our land, the way those laws are interpreted, and the way those interpretations affect the lives of millions of ordinary Americans.
They will get to rule on labor laws, civil and human rights laws, First Amendment issues of freedom of speech, separation of church and state, and, yes, stem cell research, and reproductive freedom.
Some of the future cases that may come before them include over-zealous pharmacists who want the right to deny birth control pills to women (and not just single women anymore); those seeking redress for workplace violations of overtime rules, harassment, and the right to join a labor union; police violations of civil rights; death penalty legislation such as whether a minor can be executed as an adult offender; and so many other major constitutional issues. I am also left wondering what would have happened in the Terri Schiavo case if one of these Bush nominees had been on the bench?
And, of course, that is what the right is wondering and thinking too. Some of us have irreconcilable differences in this country about whether we are going to become a theocracy or maintain separation of church and state. And some of these judges will come down on the wrong side of those issues. But under this compromise, they will not be filibustered.
According to the compromise, the judicial filibuster will be reserved for only the most extraordinary of cases. But when President Bush’s own Attorney General, Alberto Gonzales, has criticized one of them, Priscilla Owen, as being too much of a judicial activist, it’s hard to imagine a case more extraordinary or extreme.
So I will not pop the cork on the champagne bottle to celebrate this compromise as a victory. As somebody at DailyKos said, it feels more like a coup than a compromise.
And in the end, I think it will hurt the Democrats more than the Republicans. According to polls, 47 percent of people are not paying much attention to this issue. But of those who are, about half supported the Democrats on saving the filibuster even if it meant shutting down Senate business. That half also opposed these judicial nominees as being too extreme.
Right now, both President Bush and the Republican Congress are suffering their lowest approval ratings. Unfortunately, the Democrats are not doing much better in the public’s opinion. I believe this is because Americans don’t think our country is heading in the right direction. They are fearful about Social Security reform. They hated the Congressional interference with the Schiavo case and considered it to be overreaching.
But did they see the Democrats as their champions, fighting the Republicans for them on these and other issues?
Just the opposite. They have seen Democrats talk tough but then run for cover when the going got tough.
It’s like watching somebody’s body language while they speak. If the person is saying no and nodding his head yes, observers are going to believe the body language before the words. So, no matter what the Democrats say, if they don’t walk their talk, they are going to continue to be seen as the party that stands for nothing and will say anything to get elected.
It’s what the public thought about John Kerry in the last election. It’s what they told the pollsters. They may not have liked Bush but they trusted him because they felt they knew where he stood. Republicans spent years taking hits for their ideas, but they never wavered from their core beliefs. They were willing to be seen as backbench bomb throwers in the Congress but they stood firm, drew a line in the sand, and never made dubious compromises. And that’s what gained them the respect of voters even when those voters disagreed with them.
Unfortunately, the Democrats continue take the wrong lessons from the Republicans with each defeat they suffer. They keep thinking they’ve got to tack right and adopt Republican principles. But it’s really the Republican tactic of standing up for their beliefs and sticking to their guns that they need to emulate not the Republicans’ ideology.
Right now the public perceives Democrats as wishy-washy and unable to stand for any belief. This compromise did not help their cause in the long run. It made them look like more of the same flip floppers who care more about their political careers than the nation.
And that perception will kill them every time.
Monday, May 23, 2005
I got back from Fort Lauderdale a week ago. But I had computer issues, namely the lack of a monitor. It got fried even before I left for Florida.
But first an update on the family situation
My mother had a mild stroke. Before I left for Fort Lauderdale, she had left the hospital and was already in a rehab center. When I got there, she was able to speak, though her speech was slow and somewhat slurred. However, she could be understood. On a telephone, it’s still sometimes a little difficult to comprehend all her words, but in person it’s easier to make out what she’s saying.
She also can walk with the aid of a walker and the therapist. There is a great deal of improvement and the staff continues to work with her. I’m not sure when, or even if, she will be able to return to her home but she is coherent, has the ability to make all her wishes and needs known, and has some mobility.
I have two things to say about this experience.
The first is that I am convinced that the remarkable recovery of this 90-year-old woman is due to the fact that medical intervention occurred so quickly. She woke my father up in the middle of the night because she needed to go to the bathroom and couldn’t stand up on her own. He tried to help her but she collapsed anyway. As she was falling to the floor, my father realized that she was having a stroke and immediately called 911. As he was hanging up, after having described her symptoms, the operator told him to open his front door. No sooner did he put the phone down and head for the door than the paramedics were right there. They immediately began working on my mother as they rushed her to the hospital.
This is not the first time my parents have experienced such rapid response from Broward County’s paramedics in the middle of the night. For all that I laugh about South Florida, the one thing they do right is emergency response. I am profoundly grateful to those people who showed up. They, and my father’s quick thinking, saved my mother’s life and made it possible for her to walk and talk again.
I am also amazed at the quality of care she has gotten in both the hospital and the rehab center. Every one of the people who work with her are dedicated, hard working and very caring professionals. I am profoundly grateful to all of them.
After returning from Fort Lauderdale, I still had the computer issues to deal with. Hence, no blogging. I now have a new monitor. It’s a flat screen that is half the size of my old monitor. It’s amazing how much of a difference this has made and how much more room I have on my computer stand. I’m still going to need to replace the CPU soon. But rebuilding slowly, first the keyboard, then the monitor, and then a new CPU seems to be the way to go for those of us with middle class pockets and time to do it gradually
It’s good to be back. I will be blogging about politics, the economy and all the good fights of the day in the future. For now, I’m sorry if I bored you with my personal rambling. But for today, it just felt right.
Tuesday, May 03, 2005
Yes it does.
Life came at me the other day when my father told me my mother had a stroke. She's been stabilized and is showing vast improvement even in just a few days. She can still speak, though slowly, and can move the side that was affected by the stroke. So we are hopeful.
Nevertheless, I am going to be with my mother and father for a few days.
And, my computer monitor got fried yesterday (yes, life comes at you).
I am not exactly sure when I'll be back to blog, but I figure in about two to three weeks things might settle back to normal with a new computer, or at least a new monitor. When I get back from helping my folks, I'll assess my computer needs and focus back on this. But for now there are other priorities.
Until I'm back, please keep me in your thoughts and prayers.
May the Peace of God go with you, Shalom, and Namaste!
I remember my own first time standing at the bema of my parents’ synagogue. It was a heady experience, treading where no Jewish woman had gone before. In addition to being a pioneer for Jewish women’s rights, other equally exhilarating experiences were taking place for all of us.
Nineteen-sixty-nine was also the year that I first heard about the Jewish Renewal Movement. That was a group of mostly young Jews seeking to rediscover their traditional roots and at the same time renew those ancient symbols with modern relevance.
It was also the era when the great union activist, Caesar Chavez, began organizing farm workers. The United Farm Workers Union called for a boycott of iceberg lettuce to protest the refusal of California growers to negotiate with them.
A group of rabbis, many of them mainstream religious leaders from Conservative and Reform synagogues, got together and studied Torah, Talmud, Mishna and other sacred Jewish writings. They discovered there was a Talmudic prohibition against eating the fruit that came from the toil of oppressed workers. Using that passage, they declared California iceberg lettuce not kosher because the growers were engaging in unfair and oppressive labor practices.
That was only one imaginative use of traditional symbols in a modern context. Another that was far more controversial (and that was never endorsed by the more mainstream leaders) was when a group of young Jewish peace activists burned their draft cards using the flames of Shabbat candles on a Friday night.
To me, this was the equivalent of the Folk Mass and peace services that radical Catholics, like the Berrigan brothers, were holding. They too were finding ways to make the ancient symbols of their faith relevant to modern political struggles.
One of my favorite examples of this, among Jews, was a Peace Seder that was held on Passover, 1969, in Washington, DC. Arthur Waskow, then a young liberal rabbi presided over it and later wrote movingly about the experience.
The reason I’m reminiscing about all of this is that recently I attended a Labor Seder, which comes out of that same tradition of recasting old symbols with new meaning. Like the Peace Seder of 1969, this Seder sought to link the liberation of the ancient Hebrews from Egypt to a modern political struggle against oppression.
The Labor Seder that I just attended was held at the AFL-CIO Building. The rabbi who presided over it referred back to the 1969 Peace Seder and mentioned Rabbi Waskow. And that reference sent me back down through the years. In 1969, as a teenager, I longed to be able to go to Washington, DC, where the first Jewish Renewal Havurah (congregation) had been formed, to experience that first Peace Seder.
At the same time, I was also studying more traditional Judaism with a group of Lubavitcsher Hasidism. Those are the ultra-Orthodox mystical Jews who wear the long black coats, broad-brimmed hats, and long beards. They taught me that at Passover, every Jew must regard the Seder as a celebration of their personal liberation from Egypt, their own redemption from slavery.
In that context, it may not be so far fetched to recite this new version of the traditional Seder (Seder, by the way, is simply the order of the retelling of the Exodus story of liberation).
The AFL-CIO Seder does not replace the traditional family Seder. It’s held a few days after the official Passover Seders take place so as not to interfere with a more traditional family observance. So, many of the attendees also recite the traditional Haggadah retelling of the Passover story and sing all the traditional holiday songs.
The Labor Seder is an additional Passover celebration and an additional telling. It tells a newer, more modern tale of liberation from oppression. It’s the story of the Jewish (and Italian and Irish) immigrant girls who perished in the infamous 1919 fire at the Triangle Dress Factory, in New York City, because the fire exits had all been locked by their employer and they couldn’t escape. It tells the tale of those who went on strikes and picketed and marched in the 20s and 30s so that their descendants could have a 40 hour work week, overtime pay, and decent and safe working conditions.
As I write this, I realize that all of those things for which my ancestors fought are being threatened. The rights of ordinary working people are once again under assault. This time because of greater automation in the work place, the exporting of jobs overseas, and the general rush to the bottom. Organized labor has never, since the 1920s, been as weak as it is now.
As anti-labor laws make it harder for unions to organize, we are slowly being stripped of those hard fought for rights such as overtime pay, employer-paid health insurance, pension plans, and even Social Security, which has been the ultimate safety net. And who is left to fight for the middle class?
At times like this, it’s good to have a Labor Seder, a Peace Seder, a Freedom Seder. In fact, any type of order of retelling that reminds us of the struggles of our grandparents, who fought to ensure a certain level of fairness at work, and decency of treatment for those who work. And it’s even better to once again remember that eating the fruits of the toil of exploited labor is still unkosher.
Sunday, May 01, 2005
I’m afraid we may already be seeing this prediction come true. The latest economic statistics, as reported in Friday’s New York Times, show that economic growth slowed during this past quarter. It went from 3.8 percent in the last quarter of 2004 to 3.1 percent in the first quarter of 2005.
Now, traditionally, 3.1 percent is not a shabby rate of growth for the Gross Domestic Product (GDP) and it is far from a sign of recession. Economists don’t consider an economy to be in a real recession until the GDP dips below 2 percent. However, a decline of .7 percentage points is not good news. It’s not the raw percentage, but the direction the economy is moving in that should concern people. What’s significant is that the economy has contracted at a precipitous pace in only three months. Not a very good sign, especially since the rate of job growth has been so sluggish even during the height of the recovery.
While the GDP was roaring along at 4 and 5 percent last year, new jobs were not being created at a fast enough pace to improve the unemployment rate. Also, wages have stayed flat. While corporations were enjoying record profits, little of that bounty was trickling down to the employees who were the ones responsible for that remarkable success . And we are now past the peak of the recovery and heading into the next dip in the GDP.
One of the major factors contributing to this economic slowdown is the high price of gasoline. People are being affected by the rise in prices at the gas pump so they are cutting back on other discretionary spending. Keep in mind that the major engine of our economy is consumer spending. It was the only thing that kept the last recession as mild as it was. And it was consumer confidence and spending that brought us out of that recession as quickly as it did.
Now, at a time of rising fuel and food prices, the demand for retail goods is contracting. So far, stores have managed to keep consumers buying by offering deep discounts and almost constant sales. But as retailers’ own costs keep going up, due to higher shipping expenses, they are being hit by the dilemma of how much of these higher costs they can absorb, or how much they will be able to pass on to their customers, who have come to expect low prices and perpetual sales discounts.
A businessperson can actually go bankrupt even if he is selling at a high volume. If his expenses exceed his gross revenue they will erode his profit margin. And that is the danger now facing many companies, who, although their raw volume of sales looks good on paper, are posting disappointing profits for the first quarter.
In economics, you truly see how tightly interrelated things are. Sluggish job growth and nearly flat wage growth can dampen demand for goods. So, when businesses send manufacturing overseas, boost their productivity at home by extensive use of automation, lay off domestic workers or cut their hours and wages, they do cut costs and temporarily boost profits.
However, in the long run, they kill the goose that lays the golden egg. That’s because the largest market for consumer goods is the United States. The low paid workers of China and Mexico still can’t afford even the deeply discounted goods that they produce which are shipped back to Wal Marts over here.
We are now in a situation that Benjamin Franklin would have called “pennywise and pound foolish.”
Eventually, low paid and laid off workers, even in the prosperous U.S., have to stop buying stuff, no matter how much Wal Mart discounts their merchandise. And when we stop buying, the world economy suffers, including our own. And higher prices for necessities such as food and fuel, only hastens the day when Americans have to stop purchasing clothes, cars, DVDs, CDs, and other discretionary items.
The largest factor now leading to suppression of demand for goods in the U.S. is higher gas prices. People need gas to get to work, to go shopping, to transport their kids to after school activities. And this is just the beginning of the summer vacation season. That's a time when traditionally people take to their cars for road trips, and gas prices usually rise as demand goes up. So, higher gas prices probably haven’t even peaked yet. But the hotel and leisure industry is nervous that it won't be getting as many visitors this summer, as travelers choose to stay closer to home because of expensive fuel costs. A contraction of the hotel and leisure industry will also impact the economy badly.
Rising oil prices also will mean that the cost of doing business will get more expensive for retailers. The first place we’ll see this is in grocery prices. Food isn’t a discretionary item. Everybody needs to purchase foodstuff. So grocers are in a better position to pass along any rise in their expenses to their customers than other retailers are. And more food is imported from far away than ever before. Lots of urban areas don’t have the luxury of locally grown produce and farmers’ markets, so look for higher prices for perishables such as meat, vegetables and dairy products, especially during next winter, when such goods will need to be shipped from further south and from Mexico and South and Central America.
Higher fuel and grocery costs will also put inflationary pressure on the economy at a time when consumer demand for discretionary purchases is slowing down. Inflation is pernicious because it eats away at both corporate profits and ordinary workers’ earnings and buying power.
According to classical economic theory, inflation is caused by an expanding economy and accelerating growth rate, which leads to higher wage increases and therefore higher prices for goods and lots of available credit for borrowing. In other words, the money supply is abundant.
In such a scenario, inflation is controlled by raising interest rates, tightening the money supply, and slowing down growth to a more manageable pace. With slower growth, prices drop back down and consumer buying power once again picks up. So do profits for businesses.
The ideal situation, in all cases, is slow, steady growth that produces neither inflation nor recession. But in reality the economy goes through cycles of slow growth (recession) and fast growth (which leads to inflation) and the cycles are hopefully self-correcting. That, at least, is what classical economics used to tell us.
It’s an overly optimistic view.
In the 1970s, a new phenomenon emerged called stagflation. It’s a situation where the economy is slowing down and hitting recession, yet prices are climbing, causing inflation at the same time. The first time this happened, it baffled the classically trained economists. Back in the 70s, this situation was thought to be impossible. After all, you slowed inflation by introducing slightly recessionary conditions. So, how could you have both occurring at once?
The wild card, then and now, is oil prices. The first time we had stagflation was during the last oil crisis in the 70s.
Today, wages have not risen with the recent recovery. So no inflationary pressure is coming from that sector. Prices have been so low that until recently there was actually fear of deflation, which is when prices get so low that they flatline growth, which is what recently happened to Japan's economy. So wage increases, a traditional cause of inflation, can’t be blamed this time.
It’s oil, not just the prices consumers are encountering at the pump, but also oil’s impact on shipping costs for retailers, that is driving food prices higher. Since the ordinary worker never got a raise during the last recovery, now that prices are finally starting to climb, the American consumer (who is also, needless to say, the American worker) can no longer sustain this nation’s long shopping spree.
Given how much manufacturing now takes place overseas and how much the opportunity for well paying jobs is shrinking at home – our burgeoning trade deficit, which also harms our economy, could be the subject of a whole other blog – we need to go to Plan B fast. Only, the Republican Administration doesn’t have a Plan B, except to keep rewarding its same cronies at the expense of everybody else. But this time, continuing to do the same thing that you’ve been doing and expecting a different outcome is – a recipe for economic disaster.