Beck is apparently an autodidact, self-taught, like Karl Rove. He seems to me an intelligent person whose self-educated work product shows typical signs of the defects of self-education as opposed to "rubbing minds" with teachers and other students. One pursues ones own preconceived notions and thus gathers over-simplified conspiratorial theories with elements excessively minimized or magnified. A lot of his "knowledge" is outdated, even by conservative's standards. For example, aside from magnifying the Tides Foundation and the Cloward and Piven Nation article published 45 years ago, he advocates for the gold standard of his sponsor, Goldline. But even Cleon Skousen's nephew, Mark Skousen, in his book Economics of a Pure Gold Standard, (1977) says that the pure specie standard is "highly impractical." Communist Manifesto Marxism was a rational response to the "Satanic mills" of the century before 1848, and Austrian School Economics to conditions of 1940, but not wholly to conditions of 2011. Nevertheless, as of February 2011, his TV show is Number Three in viewership of "cable news,' right behind O'Reilly and Hannity.
All the usual grossly exaggerated talking
points of fiscal conservatives are in Broke,
plus endless quickie, snarky jabs; making the book irritating, but not worth
refudiating on every point. Beck spends a lot of words to persuade readers that
spending and debt are bad and the United States is so deep in debt
it's "broke." One might ask: Doesn't whether spending is bad depend in any
degree on what one buys? Does Beck think that wealthy people or corporations or
nations never have substantial debts? Is a billion or a trillion a big number?
It depends on what you are talking about. If an ordinary American or family was
a billion in dollar debt and couldn't pay back, they'd be in big trouble.
But big numbers don't necessarily mean big trouble for a nation, especially the richest and most powerful one on earth. Debt, borrowing, necessarily means some lender is extending credit. Among principal reasons our federal and state governments are so expensive is one largely unexposed by "lamestream" media. It is the complete capture, not only of regulatory agencies, but of the Judicial and Legislative branches of government by corporations and cartels seeking "rent" (corporate welfare) for their political sponsorship of thus corrupted elected officials. From nationally advertised aspirin selling for 4-6 times as much as chemically identical house brands, through OPEC and ICE (the Intercontinental Exchange), lack of any anti-trust enforcement means government has no effective means of enabling competition to drive prices down. See Barry Lynn, Cornered, The New Monopoly Capitalism and the Economics of Destruction, passim.
Beck has a table of S&P Credit Ratings and Outlooks on page 153. It shows the U.S. with an AAA credit rating, stable outlook, public debt at 52% of GDP and cost of debt at only 2.2% yield on bonds. Japan has an AA rating, public debt of 192% of GDP and cost of debt only .08%. A more common indicator of cost of debt might be interest rates, which, on Treasury debt, has been extremely low since the crash. Do we hear anything in the media about the Treasury having to pay high interest to borrow, or having any difficulty selling its debt? Treasury auctions debt about 300 times a year. The US is not having any trouble borrowing to refinance or even increase its debt. And one wonders exactly what China, e.g., could do to the U.S., with all our debt that it holds. Stop selling us running shoes? Dump all of our bonds on the open market at once? They would take enormous losses by increasing the supply of the bonds. Buying our bonds at only now .25% to .5% interest is little better than stuffing our cash in a mattress. Would the U.S. government let them buy profit-making property here? Yes, some, but the Chinese would be under no illusion that our government would let them buy and control property of strategic value here (e.g., nuclear power plants) or extort higher profits than "American" corporations already do.
There's a double page color map of the world on pages 162-3 showing countries in deeper and lesser debt with colors. It can be used to partially refudiate Beck's own conclusion that we're in a world of trouble from debt. It shows that several countries large in size and population or rich in resources have less debt but have average citizens that are very poor (China, Russia, and Saudi Arabia.) Others that have more debt also have citizens whose apparent standards of living are much higher (the US, European Union, Canada.) About half of our national debt is owed by some Americans to other Americans, but not owed by individuals to other individuals. If you divide the National Debt by the number of families the result is a staggering per family and per person figure. But it's not impressive when you realize that a) you aren't personally responsible for it, b) it can be paid back over generations, c) paid for partly by deflation of the dollar, productivity and GDP growth, and that e) the US can create its own money (or credit.) Credit creation is what the bailouts, and the stimulus involved, as well as "quantitative easing." And where is the general inflation conservatives keep fear mongering about? Some prices (mostly commodities) are going up, moved probably partly by speculation in the futures markets. But inflation isn't happening in general. And if inflation did happen and was uniform, it would be only an inconvenience for average folks. Who would it be bad for: creditors. Debtors, getting more dollars, would get to repay fixed nominal debts. Are you a bank (creditor) or a borrower?
Beck, who is a multimillionaire, will never have to depend on Social Security. He really appears to hate Social Security and Medicare. He says that "entitlements like Social Security and Medicare are murdering our finances" pg. 202, italics are reviewer's.) His attitude toward them is illustrated, I think, in the title of a graph on page 147 showing a line representing spending on national defense going down as a percent of GDP intersecting a line representing Social Security, Medicare and Medicaid going up. The graph title is ""Freebies versus Freedom." Here, I think, a good response would be: "I paid for my SS and Medicare through not 40 quarters, but X years of work. And I don't begrudge poor people Medicaid as a "freebie.' I pride myself and my country on being humane enough to tax me a little to pay to avoid poor people's suffering and earlier death."
Is Social Security broke? Is its trust fund
filled with "worthless IOU's?" Social
Security can be fixed by either raising the contribution rate of employers and
employees or taking the salary cap off employees contributions. Alan Blinder, Princeton economist, has estimated that another 33
million jobs can be offshored. That makes madness of raising the retirement age
and making geezers like me cling to jobs. Beck makes the typical conservative's
argument: "The Trust Fund has no money in
it. "[It's] a vault filled with $2.5
trillion in worthless I.O.U.s because Congress already spent the money"
(italics are Beck's pg. 206.) It's as
if the "money" was coins and bills stuck
in locked cash registers which Big Spendin' Democrats broke into and stole. The
argument gets a little plausibility from the hard currency theory: as if only
coins and bills are money. Aside from pointing out that even a Beck readers'
own "money in the bank" is mostly merely entries in electronically kept books,
an argument to make may be called "The Relative Trust Argument." Unless you are
a hermit or survivalist, trusting some person or organization, more than
others, is inevitable. Living inescapably entails making probability judgments
about trust. So, at rock bottom, which is more probable, that the federal government
will keep paying Social Security to 53 million Americans, or that unnamed
private profit -- making corporations would keep paying annuities? AIG sold
annuities, among other things.
The U.S. government has never failed to pay Social Security recipients. Meanwhile hundreds of thousands of private corporations have gone bankrupt and failed to pay their creditors. At worst, the Federal Reserve can "print money," i.e., simply use keystrokes to credit the Trust Fund with cash. Don't let the "That would be inflationary" objection stop thought. It didn't create inflation when the Fed did the bailouts and quantitative easing.
Fiscal conservatives say they revere the Constitution, and Beck, in Part Three, The Plan, makes an argument that our founding documents guarantee only individual rights, not the entitlement -- equalization "of results" programs. He quotes the passage about Life, Liberty and Pursuit of Happiness from the Declaration of Independence. He doesn't quote the Preamble to the Constitution, which sets forth the six purposes, including promotion of the General Welfare, for which the Constitution was ordained. (To be fair, he did quote this in Arguing with Idiots, but even there, he had highlighted the whole phrase "provide for the common defense," but only "welfare" in "promote the general welfare.") I may be wrong about his not quoting it. I wanted to look up all his references to the Constitution, but turning to the back of the book, I found it has Citations by page numbers, but no index.
Beck's plan is familiar: cut entitlement spending, restore faith, decentralize governance; reform taxation to his liking, even, he says, "Declare War on Defense Dollars." But that's disappointing. In the short chapter on it, beyond standard nostrums like "Don't Go Looking for Trouble," cut the brass, business-like procurement, don't nation -- build, I do not see him explicitly calling to save hundreds of billions with a "cease fire unless fired upon in Iraq and Afghanistan and withdraw as soon as possible." In fact, I saw only one specific recommendation: replace costly fast jets in our wars in the Middle East with turboprop plans so we won't need to build long and therefore expensive runways. A "Sustainable Defense Initiative" has a whole set of sensible proposed cuts. But Beck doesn't even call for cutting the MV-22 tilt rotor flying coffin. Good luck to Tea Party on that one. Even McCain and Cheney couldn't cut it. As we reel from the audacity of Tea Party House members and governors, let's remember the saying "The Senate is where everything goes to die," and the veto power of Obama, feckless as he is.
It is amazing the number of people
who think they know causal laws, that "X causes Y" in our economy. Forget the
extreme complexity of it, the extreme cartelization, its' subjection to
exogenous shocks. According to them, inflation, etc. has only one simple cause.
Perhaps the best way to deal with that is to propose other causes or different
effects and ask them simply to state their evidence for their proposed "law." For example, Beck makes his own version of
the "crowding out" argument. His version (pps. 150-151) is that with all the
borrowing the government does, interest rates will rise to extreme levels and
that on the national debt will crowd out other government expenditures we need
or desire. Evidently he doesn't concede power to the Federal Reserve to lower
Since he can't currently cite ill effects of high interest, his
argument is conditional. "What if they [interest rates] don't stay pretty low?
"The really scary numbers start to pile up when you consider what happens if
interest rates rise even more than the CBO thinks." Perhaps the best answer to
such a conditional argument is to ask why one would go beyond both the CBO's extended
baseline and even alternative fiscal scenarios in favor of vague fear mongering
assumptions. If that doesn't work perhaps Mencken's adage should be applied. He
said "One good horselaugh is worth a thousand syllogisms." One might say "Yeah,
and if my grandmother had wings, she'd be an airliner." Beck's argument again depends on two
assumptions: first that the spending so far has not bought necessities or
valuable goods. Second, that there is a fixed amount of funds that can be
The latter may get its plausibility from the fact that there is a fixed amount of bills and coins in print. But it should be possible to disabuse Beck readers with the point that your "money in the bank" is not coins and bills stuck in mattresses and maybe with explanation of fractional reserve banking used to "create money," i.e., credit.