Dr. Rodrigue Tremblay selected writings

Written by  //  November 7, 2012  //  Rodrigue Tremblay  //  4 Comments

Rodrigue Tremblay is a Canadian-born economist, political figure, humanist and professor. He taught economics at the Université de Montréal. He specializes in macroeconomics, international trade and finance, and public finance. He is a prolific author of books on economics, politics and ethics, including his recent “BIG PICTURE WORLD where his articles on current economic and ethics issues are posted, along with a number of thoughtful comments and questions from readers to which Dr. Tremblay responds in courteous detail.
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[Excerpts from] A Four-More-Years Mandate for Barack Obama: A New Opportunity
By Rodrigue Tremblay
(The New American Empire) American voters must be congratulated for their democratic decision in this 2012 election for giving President Barack Obama a second chance, even if it was done within a close margin.
Indeed, President Barack Obama not only defeated his republican opponent, but he overcame a concerted effort to defeat him by right wing billionaires, buttressed by the U.S. Supreme Court’s decision of January 19, 2010 to open the gate for unlimited corporate money in U.S. elections. A majority of Americans have decided not give more power to the super wealthy in the U.S. government as compared to the huge influence that they already have.
During this campaign, President Obama was also subjected to some not-so-subtle racist attacks that he had to sidestep.
Similarly, Barack Obama overcame the efforts by a powerful foreign politician, i.e. Israeli Prime Minister Binyamin Netanyahu, to replace him. Indeed, Netanyahu shamelessly and openly campaigned against the incumbent American president and he enrolled the powerful pro-Israel lobby and its neocon cohort in the media in that endeavor. His incendiary war statements also had the effect of pushing up oil prices, thus weakening the U.S. economy at a crucial political time for the President. A Romney win could easily have been viewed as a Netanyahu electoral victory in the U.S.
5 August
[Excerpts from] Why Are Things Crumbling Around Us…and Could Easily Get Worse?
I- I believe that we live presently in what I would call a semi-civilized world; and I would like to demonstrate it.
We live indeed in a troubled period. When we look around us and see what is happening, we really feel that everything is collapsing.
In a recent article, for example, it was said: “Indifference to the importance of ethics and the common good is the Holy Grail of modern finance.”
In fact, I do not think it is only in financial matters that we are regressing morally, but in many other areas.
There is a risk, in my view, that this twenty-first century will be more like the nineteenth and be the opposite of the second half of the twentieth century, during which humanity made considerable progress regarding international law and individual and collective rights —including the right of education for all—the triumph of the democratic way of government over all others and a better distribution of the collective wealth.
Conversely, if we were to continue on the current trend, the twenty-first century would be a world in which militarized empires and financial empires impose their laws, where other types of empire would impose their backward and totalitarian religious doctrines, where a self-centered individualism would erode the social fabric based on empathy and solidarity, and where wealth and power in society would be unduly concentrated. And, if I may cite Lord Acton, “Power tends to corrupt, and absolute power corrupts absolutely”, this will also mean a more corrupt world.
Indeed, in many fields, we see that the priority given to human beings–the only moral agents, it must be emphasized–is being neglected and has even become secondary to other priorities that fall within a narrow ideology and are far from being moral. The consequence is that the public interest, the common good, is increasingly being sacrificed in favor of ideological interests and economic interests, when it’s not to systems that crush rather than free the people.
In short, I believe that at the beginning of this twenty-first century we are in the midst of a moral and intellectual regression, as we gradually move away from the social and economic progress that was made during the twentieth century, and all that for a return to the jungle of the nineteenth century, when immoral and lawless empires controlled the planet and crushed peoples at will.
In some areas, notably regarding religion, there seems to be a wish to return to the darkness that existed before the eighteenth century, the century of the Enlightenment, that paved the way for the immense human progress the world has made since.
II- I see five main causes for this moral regression–if not an actual decline or even decadence–in the march for human progress.
I summarize:
What I see is
– First, a poor model of economic development.
– Second. Our democracies, under the impact of technology, give more power to money and to those who control it.
– Third, the weakening of nation states.
– Fourth. As a result of modern communication technology, homo sapiens is becoming homo digitalis.
– Finally, a fifth cause of the current decline is an old, religion-based moral code.
My most general conclusion is that the world needs now a moral revolution. I am under no illusions that this kind of fundamental change might occur soon; it could perhaps necessitate that the situation escalate to a point that change becomes inevitable. This could only happen after a major cataclysm.

My specific conclusions are more practical.
Regarding the economy and politics, for example, the remedies are obvious enough: we must stop digging and undertake real fundamental reforms.
First, we must stop managing the entire economy according to the interests of bankers and speculators. The problem is that these big interests corrupt politicians and control the media so that nothing gets done, except that things get worse. Also, secondly, it is essential to restore power to the people and to reduce or eliminate the influence of money in politics. In other words, we must do the exact opposite of what the U.S. Supreme Court says should be done.
The same thing can be said about our archaic voting system. At the very least we should copy the French political model and have run-off elections, to prevent political adventurers from gaining almost absolute power with a minority of popular support.
In regard to the moral character of individuals, studies show that there are only twenty percent of people who are spontaneously empathetic. Therefore, as the Chinese philosopher Hsün Tzu (c.310—c.220 BC) once said  “The nature of man is evil; his goodness is only acquired by training,” the teaching of moral rules of life in society seems to be an unavoidable necessity.
Regarding the climate of permanent war in which we live presently, I just wish that the cycle of one hundred years of hegemonic world wars, identified by Toynbee and others, won’t apply to our century and that war-crazy psychopaths will not succeed. Otherwise, the disaster that could hit humanity would be unparalleled.

I finally conclude that our civilization is still very primitive. Indeed, humanity has a long way to go, because we’re still in the infancy of a genuine civilization.

Article en français: Pourquoi les choses vont mal…et pourraient facilement empirer?


23 October
Financial Black Holes and Economic Stagnation: An Explanation
Presently, one has the net impression that today’s governments, both in Europe and in the United States, have their fingers plugging the holes in the financial dike, but fear that that the entire dam could collapse in the not too distant future with dire economic consequences.
What makes the current financial crisis so troublesome is not only that debt levels are historically high for some countries, but also because the usual instruments and procedures to reduce the debt burden, while doing the least damage to the real economy, have been rendered inoperative, due to a large extent, to the poisonous so-called financial ≥innovations≤ that have taken place since 1999 in the general climate of wholesale financial deregulation. As a consequence, financial debt in many countries creates a sort of financial black hole that siphons off money income and prevents it from being re-circulated back into the economy. This creates a serious deficiency of demand (when consumers spend less, when corporations postpone investments and when governments adopt austerity programs) that translates into low output growth, economic stagnation and high unemployment.
… don’t look elsewhere to understand why there is so much economic stagnation around and why unemployment remains so high. It is because of all these financial black holes that suck money from the economy without putting it back. The correct policies would be to close these financial black holes, and the quicker the better. (The alternative would be even more massive government deficits!)
—But don’t hold your breath before such appropriate policies are implemented. Too many politicians have been bought lock, stock and barrel by the same interests that profit greatly from the existence of these financial black holes.
10 October
Professor Tremblay has published a new piece “The Five Macro Crises of Our Times” – “we are facing simultaneously at least five intractable worldwide crises that it will take years to solve or to outlive. They are a financial crisis that it will take at least twenty years to jugulate, an energy crisis that’s looming on the not too far horizon and which threatens the very foundation of the economic prosperity of the last half century, a double-barreled demographic crisis of a magnitude never encountered during the entire history of humankind, a political crisis that is related to the ingrained inability of governments most everywhere to solve society’s problems, and, as a general background, a moral crisis that corrupts most institutions and makes them ineffective in promoting the common good.”
9 September
A Few Important Causes of the Decline of the United States of America
-The first cause is a moral one: it is related to the widespread corruption that permeates many institutions and sectors of the U.S. society, the most corrupt of them all being the political system and the corporate system. It is no accident that the epicenter where these two corrupt systems meet is at the Pentagon, an agency that reports upon reports picture as a cesspool of corruption.
The second cause of American decline is more structural and more economic in nature. It is related to a widespread ignorance of the practical consequences of economic and financial globalization that began under the Nixon Republican administration (1969-1973) and which accelerated under the Republican administrations of Ronald Reagan (1981-1989) and of George H. Bush (1989-1993).
15 August
The Aim Should be to Restore Confidence and Avoid a Global Economic Depression
… If ways could be found to curtail such unproductive expenditures, this would alleviate a lot of budget pressure and at least slowdown the rate of increase of the public debt.
Secondly, tax measures could be introduced to discourage American companies from exporting jobs abroad. Presently, through various schemes, most large American companies hardly pay any taxes on the earnings and profits they make by operating abroad. This put domestic job-creating investments at a big disadvantage. Non-repatriating profits, beyond a certain threshold, could be subject to a special assessment. Try it, and you will observe an inflow of job-creating capital into the U.S..
Thirdly, with aging social infrastructures crumbling, the government could embark on a ten-year Eisenhower-type infrastructure program. This would go a long way to rejuvenate the ailing construction industry.
A fourth avenue would be to reformulate immigration policies in the current context of free international trade and high domestic unemployment. In such an environment when labor-intensive goods can be imported, the need for imported cheap labor is greatly reduced and limited to very specific industries, such as agriculture.
18 July
Greece and the Euro: A Time of Excessive and Unproductive Debt and of Financial Implosion
In retrospect, it seems that the creation of the Eurozone in 1999 was more a political gamble than a well-thought-out economic and monetary project. This is most unfortunate, because once the most estranged members of the zone begin defaulting on their debts and possibly revert to their own national currencies, the financial shock will have real economic consequences, not only in Europe, but around the world.
Many economists think that the best option for Greece and the rest of the EU should be to engineer an “orderly default” on Greece’s public debt which would allow Athens to withdraw simultaneously from the Eurozone and to reintroduce its national currency, the drachma, at a debased rate. This would avoid a prolonged economic depression in Greece.
Refusing to accept the obvious, i.e. an orderly default, would please Greece’s banking creditors but will badly hurt its economy, its workers and its citizens. That’s what bankruptcy laws are for, i.e. to liberate debtors from impossible-to-repay debts.
4 January
BIG BROTHER: The Police State Mentality in the Electronic Age
Nowadays, with super computers and revolutionary new models to gather information and build databases, governments, i.e. bureaucrats and politicians, are in a position as never before to accumulate and correlate tremendous amounts of personal information on their citizens, from public (federal, state and local) as well as from a plethora of private sources. Government intelligence on each and every citizen is thus rendered much easier and, I would add, much more frightening. Indeed, the potential for abuse is enormous.


9 November
The Fed and the Debased “Imperial Dollar”: Future Inflation, Timid Economic Growth and Higher Interest Rates Ahead
After the election of fiscal conservatives on November 2nd, it seems that printing money is the only instrument left for the Obama administration to stimulate the economy. …
U.S. economic problems are essentially structural in nature, and are due to a bad housing mortgage policy, a bad industrial policy, a bad financial policy, a bad fiscal policy, a bad foreign investment policy, too much entitlement debt, severe demographic problems related to the aging baby-boomers, and to very costly hegemonic wars abroad. Relying exclusively on monetary quick fixes to correct them misses the mark and may have serious unintended negative consequences down the road
14 September
Save the Banks and Kill the Economy
… Now, at mid-term, President Barack Obama is saddled with the devastating image of a defender and promoter of Bush’s wars in Afghanistan and Iraq and is viewed by many as having sided with Wall Street bankers against Main Street folks, just as George W. Bush did with his Goldman Sachs-connected Treasury Secretary Henry Paulson and his banking bailouts. To many Americans, indeed, the Obama administration looks more and more like a third-term Bush II administration. For many Americans, it’s a nightmare.
The biggest mistake that President Barack Obama seems to have made, at the beginning of his mandate, was to not disassociate himself more clearly from the previous Bush administration. Now, it’s too late, and unfortunately for him and the divided Democrats, they are poised to suffer the wrath of an enraged and disillusioned electorate.


8 September
The U.S. 2008 Presidential Election: An Evaluation
The 2008 American presidential election is a most unusual and interesting election, and it will be studied intensively in the coming years. My preliminary assessment is that this is still a presidential election for the Democrats to lose, but they may lose it, at least at the strategic presidential level.
Of course, the Democrats have not yet lost the 2008 presidential election, far from it, but they must quickly regain the momentum and take control of the political agenda by reorienting their strategy and tactics. As President John Kennedy once said, “an error is not a mistake unless you refuse to correct it.”
For strategy, for instance, they would be wise to place less emphasis on the persona of Sen. Obama and his wife and more on issues. They must demonstrate to the American electorate that they are better prepared to tackle them, while their adversaries are likely to make matters worse.
Are Americans better off today than eight years ago? By most measures, they are not. It should be no surprise that Americans are eager for a change in leadership, especially as it is related to their number one preoccupation, the economy. If they were to vote for four more years of the same, it would only be by default. How could it be otherwise with the incumbent Republican George W. Bush having the highest disapproval rating (69%) ever of any American president?
Amazingly, however, the Democrats seem to have some problem zeroing in on a slogan. Perhaps they could adopt a slogan such as: “For a Better and More Prosperous America”. —I may be wrong, but I think that’s what a majority of Americans want.

4 Comments on "Dr. Rodrigue Tremblay selected writings"

  1. JE October 23, 2011 at 4:19 pm · Reply

    Re: Financial Black Holes and Economic Stagnation: An Explanation
    And now that we have an explanation?… I would love to hear an explanation from the policy makers and legislators, of their actions and INACTION…
    Sad realization will be that trillions in wealth has been destroyed (irrecoverably) and most are still in denial and are buying time till the magicians turn a loss into something else.
    Weird things happen around black holes, and laws on particle physics are still being rewritten as a result of these influences … same in economics.
    I like what Dr. Tremblay wrote…regrettably, not much is actionable by our current leadership. Any benevolent dictators out there?

  2. Guy Stanley October 23, 2011 at 4:35 pm · Reply

    Dr. R.T. is always interesting. A couple of questions are in order. Why not just let the banks go bust on their bum loans instead of all the acrobatics about relief funds and haircuts? Possibly one basic reason is that large bank failures threaten to take down whole economies because they also take down the payment system. One answer then might be to separate the private investment banks from the payment system and create a separate public system for retail deposit-taking institutions managed in effect as an enormous spread sheet overseen by an operation such as OFSI and the central bank. The Volker rule goes part way down this road, and Glass-Steagall went a bit further–but maybe not far enough. Any comments? Don’t worry, I can take it and would like to have them.
    PS Don’t forget, Keynes was no free trader and even less a fan of the proposition that in principle open national capital accounts should be open to unrestricted money flows.

  3. Rodrigue TREMBLAY October 24, 2011 at 10:19 am · Reply

    Answer to Guy Stanley by R. Tremblay.:
    Your comment is very well taken. You have to remember that Mr. Harry Paulson was George W. Bush’s Treasury Secretary when Lehman Brothers failed on Monday September 15, 2008. As a former C.E.O. of Goldman Sachs, there was no way that he would have let his former bank and the other four or five largest American banks fail. That’s the reason he scared Bush and Congress into bailing out the American International Group (AIG) to the tune of a $85 billion guarantee so that this large insurance company could pay in full its gambling CDS debts to the largest U.S. banks (J.P. Morgan Chase, Goldman Sachs, Citibank, Wells Fargo, Bank of America) and to other foreign banks.
    This public subsidy guaranteed the value of all the CDSs issued by AIG against the banks’ CDO bonds, Some of the money came from the $700 billion Troubled Assets Relief Program (TARP) and from other similar programs of subsidy. Keep in mind that the TARP program was raised to $1.5 trillion by President Obama’s Treasury Secretary, Timothy Geithner, on February 10, 2009.
    I thought at the time and still think that the U.S. government should have placed the five largest insolvent American banks into receivership. I proposed the establishment of a Banking Restructuring Trust in September 2008. This would have been more efficient and less costly than throwing trillions of dollars down a black hole without even solving the banking structural problem. The chairman of the 1990s S&L Resolution Trust Corp. (RTC), William Seidman, made a similar recommendation, and so did former Federal Reserve Chairman Paul A. Volcker and former Treasury Secretary Nicholas F. Brady.
    Such a solution would have meant that many of the banks’ illiquid assets in CDOs (“Collateralized Debt Obligations”) and in CDS (“Credit Default Swaps”) and other shaky assets, would have been written off or cancelled in a chapter 11-like process. Such a process would have cleansed the banks from the excesses accumulated in previous years and prepare them to meet credit demand as the economy recovers.
    I am afraid that European governments are now about to make the same mistake as the U.S. government in 2008 and they will pump public money into sick banks without solving the underlying problem.
    As to the 1933 Glass-Steagall Act, it was gutted out with the signature of President Bill Clinton in 1999. At a minimum, it should be reinstated, and a wall of separation should be placed between FDIC-insured deposit-taking banks and investment banks.

  4. Pierre Arbour October 25, 2011 at 11:39 am · Reply

    Cher Rodrigue,
    I read your article with interest; however, you do not explain how you will plug the black holes.The damages have already been done and I believe that one way to alleviate the anticipated depression is to launch a vast program of infrastructure spending which will stimulate the economy, lower unemployment and temporarily raise the debt ceiling of the U.S. while creating much needed improvement on roads, bridges, schools, etc. this is unlikely to happen in the u.s. until 2013 and Europe is stalled too caught in their own problems [the club med. Or less nicely the PIIGS ]
    As for Greece,they used the euro to over spend and over borrow at subsidized interest rate. It is over and financial rescue plans involving even more loans to Greece will simply postpone the inevitable. Less than 3% of the European Union should not bring the whole eurozone down and Greece should leave the Euro and go back to the drachma at the same rate at which they came in, namely 38 drachma to the euro. I do not believe that credit swaps have been used for more than 20% of Greek debt and American and European banks having insured these loans will have to pay up. In the aftermath of the operation all lenders will have drachma on their books which will plunge in value until an equilibrium is achieved at possibly 60 to 70% hair cut; European banks will have to be recapitalized and Greece will finally be able to manage their own affairs while still a member of the European Union similar to what Sweden has done beautifully with their Kroner and not with the Euro. A possible scenario is the events surrounding the Argentinian exit from parity with the US dollar 12 years ago or so; it took 5 years for the country to get back to a growth mode and today it is prosperous while lenders have taken obviously a financial bath. The Greek crisis has lasted 2 years thus distracting everybody [European Central bank, the European parliament, the IMF and of course the main players France and Germany]. An exit would be beneficial for both Greece and the euro zone, and also for the world economy. Pierre Arbour

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