Paul Craig Roberts Calls for Revolution

"Without a revolution, Americans are history."

Paul Craig Roberts, former assistant Secretary of the Treasury and the father of Reaganomics, believes the United States is beyond repair and that only a revolution will save the country. Before you go thinking he's just another GOP fringe player who hates Obama, his vitriol cuts both ways -- he famously called for the impeachment of George W. Bush in 2005. As an economist, he believes Wall Street and the corporations have painted the U.S. into a corner.

Americans have no greater enemies than Wall Street and the corporations and their prostitutes in Congress and the White House.{...}The United States and the welfare of its 300 million people cannot be restored unless the neocons, Wall Street, the corporations, and their servile slaves in Congress and the White House can be defeated.

He makes a big deal about the jobs we've lost offshore, and suggests a re-vamped tax system that would force corporations to pay higher taxes if their goods are produced in lower-cost regions. The thinking is that the lowest taxes would be paid by corporations in the U.S., the higher taxes would offset the advantage of using slave labor elsewhere, and the jobs would come rushing back home.

I don't think that would actually work, and here's why. Heavy manufacturing is dead in the U.S. Punitive taxation might re-animate it for a little while, but ultimately consumers would revolt due to higher prices. So that only leaves the true engine of the American economy going forward, which is technology. The problem with taxing technology is that it's location independent. Microsoft CEO Steve Ballmer already said they could move the whole company offshore in a weekend if Congress took away their preferential tax treatment.

As for revolution, I just don't think Americans have it in them any more. What the Founding Fathers considered a "long train of abuses" would today be the short bus to special education class. The American Revolution was fought over a four percent tax without representation. FOUR PERCENT. But then, the founders didn't have cable TV and Oprah Winfrey to keep them narcotized.

As for Roberts vilifying Wall Street, what else is new? Few are harsher critics of the guys at the top of the Street than I am (I honestly believe that every TARP application should have been accompanied by the CEO's resignation letter), but pieces like this are just plain scapegoating. He was a respected economist in his day, but I fear he may have gone off the deep end on this one.

Besides, in a nation comprised primarily of frightened city-dwellers, is revolution even possible any more?

Comments (5)

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Frabjous, what's your opinion? Comment below:

Even though I do not find the "founder of Reagonomics" a great source of prestige, I was nodding and agreeing with every word right until the moment he started ranting about taxes on offshoring companies (in your summary) and that private pensions taxes will be the only attempted solution (in the full version). From that point on, he mixes good points with not-so-good points (or downright stupid points).

I couple of points: one on his article and the other on the Politic's article

1) Taxes on companies which offshore jobs? Really? Putting aside the free market argument (which is easily made weaker by pointing out that some foreign countries don't exactly play by the rules cough EU&Airbus cough China&Yuan), it just doesn't work: yes, in the short term you will slow/stop some companies from offshoring, but you are not creating ANYTHING. You are building a manufactured "improvement" which will inevitably explode when its inefficiencies and high prices become unsustainable

2) What needs to be done probably is to actually create the basis of an advanced manufacturing industry (sorry, US will never again be able to compete on price alone): therefore education, research, simplifying the myriad of administrative rules and procedures, trying to be a teeny little bit more collaborative.

As a side note, I cannot tire of praising Germany: their success in exporting doesn't come of some innate quality like "german cars are better". The foundation of the success are the extremely powerful unions and their spirit of collaboration with the big industrial conglomerates. If you look at the real wages in Germany, from 1990 to 2008 have hardly increased. At first this was due to the enormous costs of unification with the eastern side of the country, but shortly after the beginning of decade, the unions, in dealing with the industry with government's intercession - hear hear - agreed to allow inflation to outpace wage increase, which was followed by massive investments in technology and productivity. Of course, lately they benefited from the plunge of the euro, but that's not enough of an explanation for the massive improvement of their economy.

When will I get to see that level of cooperation in USA? (or UK, or Italy, or Japan, for what matters)

Humf...long rant again. But really, is it that hard to agree on investing on the basis - infrastructure, education and research - and allow entrepreneurial minds to do the rest?

ke18sb, what's your opinion? Comment below:

Minor point and kinda an off tangent side point. I find it so irreverent when 100+ year old tax rates are referenced as a comparison to modern times. The world is a more expensive place today. Technology, while it improves our standard of living, has a hefty price. There are paved roads, interstate highways, bridges, tunnels, power grids, water systems, the CIA, FBI, military, etc. All these things cost a pretty penny. That money needs to come from somewhere. Also, technology even increases costs of things on a side by side comparison. Take a school today vs. a school 50 years ago. The fixed costs have remained the same but we have added computers, internet, projectors, white boards, etc. These things are all nicer and no doubt assist in the education process but undoubtedly have higher expenses. The point being, it is expensive to run a first world country today and thus archaic tax comparisons are just that. Now, what those taxes should be and how much should be provided is a different argument in itself.

SinoMonkey, what's your opinion? Comment below:

That was a great read.

Personally, I agree with some sort of incentive system to keep jobs in America. How it's done is the big question. For instance, in this article,, it's mentioned that despite investments and innovation in the Technology sector, much of that benefit is actually going to China, where both the manufacturing and research scaling up takes place.

Don't think that by focusing on education, the US can suddenly start innovating. China and India are turning out engineers and scientists much faster than the liberal arts American education and pretty soon, we'll lose in that front as well. The only possible way to remedy is for America to continue to attract the best minds from Abroad. But if they don't have jobs here, why would they stay? (I have a few international friends and the majority of them are taking their US education and returning).

Some say we should focus instead on the service sector, but there's an extent on how much service we truly need. For instance, we can't really have a nation of bankers, lawyers, doctors, real estate brokers or accountants. Where will the rest of America work in this service oriented economy? Wal Mart?

Midas Mulligan Magoo, what's your opinion? Comment below:

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