Insights from General Glut

General Glut has been saying some interesting things of late.

On the political side of the economy he says:

I've said before that the Dems need a strong moral argument in favor of Social Security. That moral argument rests upon social solidarity across the generations. For God's sake, that even a conservative argument -- at least it was back when there were such people in the United States before "conservative" became the label for nut-job libertarians, yahoo imperialists and money-grubbing ladder-climbers. Put the argument in the context of what we owe one another as members of the same society. We don't owe the aged an "opportunity," we owe them a safety net and a minimum guaranteed standard of living -- period.

The Los Angeles Times and now the Washington Post are getting in on a big story of the last thirty years -- the massive transfer of economic risk from capital to labor. Why can't the Dems use this stuff?? The vast majority of people don't want more risk for more "opportunity" -- the research shows it.

On the trade deficit, he thinks that while the US is losing its ability to export the traditional range of goods and services, it is compensating for this loss by effectively exporting housing.

[I]n fact housing has become rather easy to export thanks to the mortgage-backed security and US government agencies like Fannie Mae and Freddie Mac which create and sell them. In fact, exporting our houses is precisely part of the US strategy for financing the trade deficit... The goal seems to be to create or provide the context for the creation of expensive new assets with which the US can trade for goods and services. Thus the US sells the means of production and the means of reproduction to foreign capital for current consumption.

However, unlike the sale of goods and services, the sale of assets to foreigners involve the transfer of claims to future dividend, interest or rental income generated in the US. In other words, it will come back to haunt the US economy. It may not be sustainable long term.