Bob
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The Green-Dog Democrat*
"But we’re not a democracy. It’s a terrible misunderstanding
and a slander to the idea of democracy to call us that.
In reality, we’re a plutocracy: a government by the wealthy."
Ramsey Clark
April 10, 2011 -- Weeping for America
Are you familiar with the following quotations by historic giants in the affairs of America? "We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both." -- Supreme Court Justice Louis D. Brandeis
"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist" -- Dwight D. Eisenhower
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." -- John Kenneth Galbraith
"We have got rid of the fetish of the divine right of kings, and that slavery is of divine origin and authority. But the divine right of property has taken its place. The tendency plainly is towards . . . "a government of the rich, by the rich, and for the rich." -- Rutherford B. Hayes
"There is a natural aristocracy among men. The grounds of this are virtue and talents. . . . There is also an artificial aristocracy founded on wealth and birth, without either virtue or talents; for with these it would belong to the first class. . . . The artificial aristocracy is a mischievous ingredient in government, and provision should be made to prevent its ascendancy." -- Thomas Jefferson
"I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed." -- Abraham Lincoln
"We are free today substantially, but the day will come when our Republic will be an impossibility. It will be an impossibility because wealth will be concentrated in the hands of a few. A Republic cannot stand upon bayonets, and when the day comes, when the wealth of the nation will be in the hands of a few, then we must reply upon the wisdom of the best elements in the country to readjust the laws of the nation to the changed conditions." -- James Madison
"Of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of plutocracy." -- John Pierpont Morgan
"The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic State itself. That, in its essence, is Fascism -- ownership of a government by an individual, by a group or by any controlling private power." -- Franklin D. Roosevelt
"Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of today." -- Theodore Roosevelt
"Of course I believe in the free enterprise, but in my system of free enterprise, the Democratic principle is that there never was, never has been, and never will be room for the ruthless exploitation of the many for the benefit of the few." -- Harry S. Truman
"I consider that brokers come into the world with souls -- I am satisfied they do; and if they wear them out in the course of a long career of stock-jobbing, have they not a right to come in at the eleventh hour and get themselves half-soled, like old boots, and be saved at last? . . .. Mind, I do not say that a broker will be saved, or even that is uncommon likely that such a thing will happen -- I only say that Lazarus was raised from the dead, the five thousand were fed with twelve loaves of bread, the water was turned into wine, the Israelites crossed the Red Sea dry-shod, and a broker can be saved. True, the angel that accomplishes the task may require all eternity to rest himself in . . . " -- Mark Twain
Were all of the giants of America who are quoted above still living, it sure seems likely that most of them would be weeping for America. Why? If you don't know why, you haven't been paying attention, Bunkie. But you no doubt know why. Something of a review of the principal reasons is in the commentaries that follow in this Green Dog. Read and weep -- for America.
Please be sure to forward this Green Dog to all the folks you can who are right or left or middle-ways or sideways politically. What's here is information that can make them better informed and better able to evaluate what they read and hear in the news media and so-called news media -- better able to separate the chaff from the chaff in ideology-based "analyses" they may read or hear -- better able to make sensible, intelligent demands of their U.S. senators and representatives and the president -- better able to debate the issues.
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The Green-Dog Democrat
Carlin knew the rich just want more By Bill Berry
(Madison, Wisc.) Capital Times
March 14, 2011
AH, THE WEEK of St. Patty's Day, and maybe the luck of the Irish will lead us to the pot o' gold coins.
But don't count on it. Not in Wisconsin, not in these times. Nonetheless, in honor of this hopeful holiday, when a saint evicted the snakes from the green island, we can go to that great American philosopher of Irish descent. Surely he can put the events of recent weeks in context.
We speak here of George Carlin, who left the earth too soon in 2008, but saw the future quite clearly, which may have hastened his departure. Thanks to the Internet, he will be forever with us, or at least until Big Brother yanks him away for being too subversive.
For now, you can find Carlin's 2005 skit, "The American Dream," quite easily. I can't, however, recommend it in this column, because it is indelicately laced with some of the "seven dirty words" that got him arrested at, appropriately, Milwaukee's Summerfest in 1972. So promise you won't go and find it, and if you do, I didn't send you there. My parish priest would frown upon that.
"Education Sucks" I'll clean things up here a bit, so you get the gist of the genius. It must be said that Carlin actually agreed with Gov. Scott Walker on education. As Carlin said, "Education sucks." But their views diverge from that point. To wit:
"The reason education sucks and will never, ever, ever be fixed is because the owners of this country don't want that. … I'm talking about the real owners, the big, wealthy business interests that control things and make all the important decisions. They got the politicians. The politicians are there to make you believe you have freedom of choice. You don't. You have owners. They own you."
Before Citizens United In fact, said Carlin, they own everything — the best land, corporations, you name it. Well before the Citizens United [1] decision of last year, Carlin was proclaiming the owners have "long since bought and paid for the Senate and Congress, the statehouse, the city halls. They have the judges in their back pockets." Media? "They own all the big media companies, so they control just about all of the news and information you get to hear."
The owners spend billions every year lobbying to get what they want, said the Irishman who wore black, not green, adding: "You know what they want? They want more for themselves and less for everybody else. I'll tell you what they don't want. They don't want a population of citizens capable of critical thinking — well-informed, well-educated people capable of critical thinking. That doesn't help them. That's against their interest. They want obedient workers, people who are just smart enough to run the machines and do the paperwork and just dumb enough to passively accept all these increasingly (bleep) jobs with the lower pay, the longer hours, the reduced benefits, the end of overtime and the vanishing pension that disappears as soon as you come to collect it."
Hush-a-Bye, Hush-a-Bye And now, said the comedian who didn't crack a smile throughout the whole routine, "They're coming for your Social Security money. They want it back so they can give it to their criminal friends on Wall Street, and you know what, they'll get it. You know why? It's a big club, and you ain't in it. You and I ain't in the big club.
"They don't care about you at all, at all, at all, you know, and nobody seems to notice, nobody seems to care. That's what the owners want. Call it the American dream, because you have to be asleep to believe it."
That last part, the line about people being asleep, would have to be altered after the past few weeks in Wisconsin. The governor deserves credit for that. Of course, the owners want us to go back to sleep. Sit back, watch basketball, or go to the store and buy some stuff. It'll all get better. That's what we're told to believe.
© Copyright 2011, madison.com
Bill Berry of Stevens Point writes a semimonthly column for The Capital Times. billnick@charter.net
http://tinyurl.com/44v8sxn [1] -- See the GDD issue of 1/25/10 at http://tinyurl.com/y4ots54 and its prequel GDD of 9/25/09 at http://tinyurl.com/y97wqrr -- GDD
Losing our way
By Bob Herbert
The New York Times
March 26, 2011
SO HERE WE ARE pouring shiploads of cash into yet another war, this time in Libya, while simultaneously demolishing school budgets, closing libraries, laying off teachers and police officers, and generally letting the bottom fall out of the quality of life here at home.
Welcome to America in the second decade of the 21st century. An army of long-term unemployed workers is spread across the land, the human fallout from the Great Recession and long years of misguided economic policies. Optimism is in short supply. The few jobs now being created too often pay a pittance, not nearly enough to pry open the doors to a middle-class standard of living.
Arthur Miller, echoing the poet Archibald MacLeish, liked to say that the essence of America was its promises. That was a long time ago. Limitless greed, unrestrained corporate power and a ferocious addiction to foreign oil have led us to an era of perpetual war and economic decline. Young people today are staring at a future in which they will be less well off than their elders, a reversal of fortune that should send a shudder through everyone.
Lost Country The U.S. has not just misplaced its priorities. When the most powerful country ever to inhabit the earth finds it so easy to plunge into the horror of warfare but almost impossible to find adequate work for its people or to properly educate its young, it has lost its way entirely.
Nearly 14 million Americans are jobless and the outlook for many of them is grim. Since there is just one job available for every five individuals looking for work, four of the five are out of luck. Instead of a land of opportunity, the U.S. is increasingly becoming a place of limited expectations. A college professor in Washington told me this week that graduates from his program were finding jobs, but they were not making very much money, certainly not enough to think about raising a family.
There is plenty of economic activity in the U.S., and plenty of wealth. But like greedy children, the folks at the top are seizing virtually all the marbles. Income and wealth inequality in the U.S. have reached stages that would make the third world blush. As the Economic Policy Institute has reported, the richest 10 percent of Americans received an unconscionable 100 percent of the average income growth in the years 2000 to 2007, the most recent extended period of economic expansion.
Ancient History Americans behave as if this is somehow normal or acceptable. It shouldn’t be, and didn’t used to be. Through much of the post-World War II era, income distribution was far more equitable, with the top 10 percent of families accounting for just a third of average income growth, and the bottom 90 percent receiving two-thirds. That seems like ancient history now.
The current maldistribution of wealth is also scandalous. In 2009, the richest 5 percent claimed 63.5 percent of the nation’s wealth. The overwhelming majority, the bottom 80 percent, collectively held just 12.8 percent.
This inequality, in which an enormous segment of the population struggles while the fortunate few ride the gravy train, is a world-class recipe for social unrest. Downward mobility is an ever-shortening fuse leading to profound consequences.
A stark example of the fundamental unfairness that is now so widespread was in The New York Times on Friday under the headline: "G.E.’s Strategies Let It Avoid Taxes Altogether." Despite profits of $14.2 billion — $5.1 billion from its operations in the United States — General Electric did not have to pay any U.S. taxes last year.
Corporate-Government Arrangement As The Times’s David Kocieniewski reported, "Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore."
G.E. is the nation’s largest corporation. Its chief executive, Jeffrey Immelt, is the leader of President Barack Obama’s Council on Jobs and Competitiveness. You can understand how ordinary workers might look at this cozy corporate-government arrangement and conclude that it is not fully committed to the best interests of working people.
Overwhelming imbalances in wealth and income inevitably result in enormous imbalances of political power. So the corporations and the very wealthy continue to do well. The employment crisis never gets addressed. The wars never end. And nation-building never gets a foothold here at home.
New ideas and new leadership have seldom been more urgently needed.
© 2011 The New York Times Company
This is my last column for The New York Times after an exhilarating, nearly 18-year run. I’m off to write a book and expand my efforts on behalf of working people, the poor and others who are struggling in our society. My thanks to all the readers who have been so kind to me over the years. I can be reached going forward at bobherbert88@gmail.com.
http://tinyurl.com/3pt3eg8
The New American Dream By William Rivers Pitt
Truthout
March 31, 2011
IF YOU ARE wealthy, you are living in the Golden Age of your American Dream, and it's a damned fine time to be alive. The two major political parties are working hammer and tong to bless you and keep you. The laws are being re-written -- often by fiat, and in defiance of court orders -- to strengthen the walls separating you and your wealth from the motley masses. Your stock portfolio, mostly made by and for oil and war, continues to swell. Your banks and Wall Street shops destroyed the economy for everyone except you, and not only did they get away with it, they were handed a vast dollop of taxpayer cash as a bonus prize.
The little people probably crack you up when you bother to think about them. Their version of the American Dream is a ragged blanket too short to cover them, but they still buy into it, and that's the secret of your strength in the end. So many of them walk into the voting booths and solemnly vote against their own best interests, and for yours, because the American Dream makes them think they, too, will be rich someday. They won't -- you've made sure of that -- but so long as they keep believing it, your money will continue to roll in.
The Whole Store The Citizens United Supreme Court decision swept away the last tattered shreds of the façade of fairness in politics and electioneering, and now you own the whole store. You can use your vast financial resources to lie on a national level now, lie with your bare face hanging out, because it works. You're not the bad guy in America. Teachers, cops, firefighters, union members and public-sector employees are the bad guys, the reason for all our economic woes. NPR and Planned Parenthood are the bad guys. You did that, and when governors like Scott Walker rampage through worker's rights on your dime, you chuckle into your sleeve and enjoy your interest rate.
We're firing teachers and missiles simultaneously, to poach a line from Jon Stewart, and the inherent disconnect fails to sink in among those serving as dray horses for your greed and ambition. They're in the traces, bellowing about what you want them to focus on thanks to your total control of the "mainstream" news media, and they plow your fields with the power of their incoherent, misdirected rage.
They pay their taxes. Isn't that a hoot? They pay their taxes dutifully and annually, and that money gets shunted right to you and your friends, thanks to the politicians who love you and the laws that favor you, not to mention the wars that sustain you. They pay their taxes when they should just pay you, right? Talk about getting rid of government waste. They should just pay you directly and cut out the middle man, because it all goes to the same place in the end. You.
Who You Are You are General Electric, and you paid no taxes in 2010. You made $14.2 billion in worldwide profits, $5.1 billion of which was made in America, and your tax burden amounted to a big fat zero. In fact, you claimed a tax benefit of $3.2 billion, thanks to your anti-tax lobbying efforts in Washington and your use of offshore tax havens that protect and defend your profit margin.
You are ExxonMobil, and you paid no taxes in 2009. In fact, you got a $156 million return.
You are Bank of America, and despite receiving a massive chunk of the taxpayer-funded bailout, despite recording a profit of $4.4 billion, you paid no taxes and received a $1.9 billion rebate.
You are Chevron, and you made $10 billion in 2009. You paid no taxes, and got a $19 million refund.
You are Citigroup, and you paid no taxes despite earning more than $4 billion, and despite getting a sizeable chunk of the taxpayer-funded bailout.
The Catbird Seat Your favorite part of it all? The part that makes you laugh out loud?
It's when you hear the politicians you own talk about "shared sacrifices" and "fiscal responsibility." Man, that's a hoot. You watch them rave and froth on Capitol Hill about shutting down the government because the country doesn't have enough money to fund "entitlement programs" the little people have been paying into for decades. The very term -- "entitlement" -- cracks you up; how is it an entitlement if people paid for it? Nobody asks that question, of course. Nobody asks about cutting the bloated defense budget. Nobody asks where the billions diverted to Iraq and Afghanistan actually went, or where the money for Libya is going. For damned sure, nobody demands that you pony up and pay your fair share. You made sure of that, and the show goes on.
The United States of America has undergone a powerful transformation over the course of a single generation, and you are right up there in the catbird seat, watching it all unfold. For you, the New American Dream is "I got mine, kiss my ass, work and die (if you can find work, sucker), and pay me." For everyone else, the New American Dream is about simple survival, about running as fast as they can while going inexorably backwards.
Maybe you can even see the cancer eating away at the country that has treated you so royally, but you don't really care. You are safe and comfortable behind your gilded walls.
For now, anyway.
THIS WORK by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.
William Rivers Pitt is a Truthout editor and columnist. He is also a New York Times and internationally bestselling author of two books: War on Iraq: What Team Bush Doesn't Want You to Know and The Greatest Sedition Is Silence. His newest book, House of Ill Repute: Reflections on War, Lies, and America's Ravaged Reputation, is now available from PoliPointPress.
http://www.truth-out.org/the-new-american-dream68847
Of the 1%, by the 1%, for the 1% By Joseph Stiglitz
Vanity Fair
May, 2011 Issue
IT'S NO USE pretending that what has obviously happened has not in fact happened: The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school diplomas, the decline has been precipitous — 12 percent in the last quarter-century alone.
All the growth in recent decades — and more — has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.
Invalid Justification Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century — inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called "marginal-productivity theory." In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin.
The corporate executives who helped bring on the recession of the past three years — whose contribution to our society, and to their own companies, has been massively negative — went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards "performance bonuses" that they felt compelled to change the name to "retention bonuses" (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.
Not Jack Horner's Pie Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year — an economy like America’s — is not likely to do well over the long haul. There are several reasons for this.
First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets — our people — in the most productive way possible. Second, many of the distortions that lead to inequality — such as those associated with monopoly power and preferential tax treatment for special interests — undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.
Third, and perhaps most important, a modern economy requires "collective action" — it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.
No Surprise None of this should come as a surprise — it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security — they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government — one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.
Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: Labor-saving technologies have reduced the demand for many "good" middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role — for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.
Whatever Money Wants . . . But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. [1] Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power — from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself — one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.
When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement — we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s — a scandal whose dimensions, by today’s standards, seem almost quaint — the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. "I certainly hope so," he replied.
The Divine Right of Corporations The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift — through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price — it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.
America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect — people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military — the reality is that the "all-volunteer" army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: Borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window.
Fat Chance There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: They encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the "core" labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment — things workers care about. But the top 1 percent don’t need to care.
Or, more accurately, they think they don’t. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: The chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them.
No Trickle-Down Here It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East; rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from "food insecurity") — given all this, there is ample evidence that something has blocked the vaunted "trickling down" from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation — voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.
In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses — will they be next? They are right to worry. These are societies where a minuscule fraction of the population — less than 1 percent — controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.
American Rampart-Storming? As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society — something he called "self-interest properly understood." The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest "properly understood" is different. It means appreciating that paying attention to everyone else’s self-interest — in other words, the common welfare — is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook — in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: Looking out for the other guy isn’t just good for the soul — it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
© 2011 Vanity Fair
Stiglitz's accomplished background is too lengthy to fit in this space -- go to http://www.josephstiglitz.com/ http://tinyurl.com/6k39w4z [1] -- "You can't be evangelical and associate yourself with Jesus and what he says about the poor and just have no other domestic concerns than tax cuts for wealthy people." -- The Rev. Jim Wallis -- GDD
The Mellon doctrine By Paul Krugman
The New York Times
April 1, 2011
"LIQUIDATE LABOR, liquidate stocks, liquidate the farmers, liquidate real estate." That, according to Herbert Hoover, was the advice he received from Andrew Mellon, the Treasury secretary, as America plunged into depression. To be fair, there’s some question about whether Mellon actually said that; all we have is Hoover’s version, written many years later.
But one thing is clear: Mellon-style liquidationism is now the official doctrine of the G.O.P. [1]
Two weeks ago, Republican staff at the Congressional Joint Economic Committee released a report, "Spend Less, Owe Less, Grow the Economy," which argued that slashing government spending and employment in the face of a deeply depressed economy would actually create jobs. In part, they invoked the aid of the confidence fairy; more on that in a minute. But the leading argument was pure Mellon.
Twisted Logic Here’s the report’s explanation of how layoffs would create jobs: "A smaller government work force increases the available supply of educated, skilled workers for private firms, thus lowering labor costs." Dropping the euphemisms, what this says is that by increasing unemployment, particularly of "educated, skilled workers" — in case you’re wondering, that mainly means schoolteachers — we can drive down wages, which would encourage hiring.
There is, if you think about it, an immediate logical problem here: Republicans are saying that job destruction leads to lower wages, which leads to job creation. But won’t this job creation lead to higher wages, which leads to job destruction, which leads to . . .? I need some aspirin.
Beyond that, why would lower wages promote higher employment?
Fallacy of Composition There’s a fallacy of composition here: Since workers at any individual company may be able to save their jobs by accepting a pay cut, you might think that we can increase overall employment by cutting everyone’s wages. But pay cuts at, say, General Motors have helped save some workers’ jobs by making G.M. more competitive with other companies whose wage costs haven’t fallen. There’s no comparable benefit when you cut everyone’s wages at the same time.
In fact, across-the-board wage cuts would almost certainly reduce, not increase, employment. Why? Because while earnings would fall, debts would not, so a general fall in wages would worsen the debt problems that are, at this point, the principal obstacle to recovery.
In short, Mellonism is as wrong now as it was fourscore years ago.
Now, liquidationism isn’t the only argument the G.O.P. report advances to support the claim that reducing employment actually creates jobs. It also invokes the confidence fairy; that is, it suggests that cuts in public spending will stimulate private spending by raising consumer and business confidence, leading to economic expansion.
Or maybe "suggests" isn’t the right word; "insinuates" may be closer to the mark. For a funny thing has happened lately to the doctrine of "expansionary austerity," the notion that cutting government spending, even in a slump, leads to faster economic growth.
Same Old Arguments A year ago, conservatives gleefully trumpeted statistical studies supposedly showing many successful examples of expansionary austerity. Since then, however, those studies have been more or less thoroughly debunked by careful researchers, notably at the International Monetary Fund.
To their credit, the staffers who wrote that G.O.P. report were clearly aware that the evidence no longer supports their position. To their discredit, their response was to make the same old arguments, while adding weasel words to cover themselves: Instead of asserting outright that spending cuts are expansionary, the report says that confidence effects of austerity "can boost G.D.P. growth." Can under what circumstances? Boost relative to what? It doesn’t say.
Did I mention that in Britain, where the government that took power last May bought completely into the doctrine of expansionary austerity, the economy has stalled and business confidence has fallen to a two-year low? And even the government’s new, more pessimistic projections are based on the assumption that highly indebted British households will take on even more debt in the years ahead.
Familes Pay Price But never mind the lessons of history, or events unfolding across the Atlantic: Republicans are now fully committed to the doctrine that we must destroy employment in order to save it.
And Democrats are offering little pushback. The White House, in particular, has effectively surrendered in the war of ideas; it no longer even tries to make the case against sharp spending cuts in the face of high unemployment.
So that’s the state of policy debate in the world’s greatest nation: One party has embraced 80-year-old economic fallacies, while the other has lost the will to fight. And American families will pay the price.
© 2011 The New York Times Company http://tinyurl.com/3bb7tkh [1] -- There's more about the ghost of Mellon at http://tinyurl.com/3w2r37o -- GDD
America’s billion-dollar-a-year men By Sam Pizzigati
Too Much
April 2, 2011
ONLY IN AMERICA can someone make $85 million in a year and feel underpaid.
This past Friday, USA Today’s annual corporate CEO pay survey — the first major national report so far this year on 2010 executive pay — revealed that Viacom chief Philippe Dauman earned $84.5 million last year.
But Friday also brought new numbers on annual "top 25" hedge fund manager compensation from AR magazine, the hedge fund industry’s trade journal. The hedge fund earnings needed in 2010 to make this exalted top 25: $210 million, well over double the four-score millions that went to Viacom’s Dauman. Last year’s top hedge fund kingpin, John Paulson, walked off with an astounding $4.9 billion in 2010 from his hedge fund labors. Paulson made more in a week than Dauman made for his entire year.
Momentary Crimp A decade ago, by contrast, corporate CEOs and hedge fund managers were still rubbing elbows at paycheck time. In 2002, a hedge fund manager only needed $30 million to make the industry’s top 25, almost exactly the entry ante for that year’s corporate CEO top 25. Since then, hedge fund manager earnings have exploded spectacularly. The total compensation for the hedgie top 25 stood at $2.8 billion in 2003. This total quintupled over the next three years, to $14 billion in 2006, then soared to $22.3 billion in 2007, just before the financial industry meltdown.
That unpleasantness did put a bit of a crimp into hedge fund rewards, but only for a moment. Last year’s hedge fund manager top 25 total: $22.03 billion. Six of last year’s top 25 pulled in over $1 billion each. America may not yet have recovered from the Great Recession. Hedge fund managers certainly have.
How can hedge fund managers be doing so over-the-top well? Running hedge funds essentially gives these "financial wizards" a license to print money. Hedge funds, in effect, operate as mutual funds for deep-pocket investors — and deep pockets only. The hoi polloi can’t invest in hedge funds, and this closed, private status frees hedge funds from those pesky government regulations that open-to-the-general-public mutual funds have to face.
Betting on Failures Hedge fund managers, without regulators looking over their shoulders, can invest the dollars they grab from investors any way they choose. Actually, "bet" might be a better word choice here. Hedge funds have zilch interest in making investments that create real economic value. Their goal instead: Find and exploit marketplace "inefficiencies" that offer the potential for quick — and enormous — killings.
Hedge fund managers make some of these killings the old-fashioned way, gambling on stocks. Sometimes they bet that particular stocks, or other financial assets, will rise. Sometimes they sell particular stocks "short," betting they’ll sink.
John Paulson, 2010’s top hedge fund earner, placed his biggest bets last year on gold. Other hedge fund managers are chasing after far more unconventional windfall opportunities — in lawsuits, for instance. In these lawsuit bets, hedge funds advance millions of dollars to law firms handling promising medical malpractice claims or big-time class actions against misbehaving corporations. The hedge funds then charge these law firms interest, at sky-high rates, on the mega-million-dollar loans. The law firms, in turn, pass the interest charges onto their clients. The interest charges can add up. Clients who "win" their cases can end up owing money.
Heads I Win, Tails You Lose Hedge fund managers don’t have to win all their bets to hit their personal jackpots. They don’t even have to win any. The reason: Investors pay hedge fund managers fees for the privilege of managing their money, usually 2 percent of the total invested. Hedgie superstars can charge more, 3 percent and up. These superstars do, of course, have to deliver big returns every so often, to justify those fees, and these big returns provide hedge fund managers an even more lucrative income stream. Hedge fund managers routinely rake off 20 percent of whatever investment profits they generate.
The superstars rake even higher shares. Last year, for instance, Moore Capital Management’s Louis Bacon charged investors 3 percent of the money they gave him as a management fee and claimed 25 percent of his investment profits as a "performance fee." Bacon, for the year, scored a $230 million personal payday.
Bacon’s fellow hedgie, Leon Cooperman of Omega Advisors, took home $240 million last year. Cooperman "laughed" last week when a New York Times reporter called to tell him he had made the latest hedge fund manager top 25. "I have no idea how much I made last year," Cooperman explained to the reporter. "I don’t know until it’s tax time."
What Kind of Loophole? And tax time just happens to be when hedge fund managers really clean up. Corporate CEOs face a 35 percent tax rate on all compensation over $373,650 they took home in 2010. Hedge fund honchos, thanks to the infamous "carried interest" tax loophole, only pay a 15 percent tax on the hundreds of millions they pull in from their "performance fees."
Concerned lawmakers have been trying — and failing — to close the "carried interest" loophole for the past half-dozen years. This fantastically lucrative free-pass for hedgies will this year cost the federal treasury upwards of $4 billion — from just the top 25 hedge fund managers alone.
Even so, this week on Capitol Hill, frenzied budget negotiators won’t be debating "carried interest" as they struggle to avoid a federal government shutdown. Lawmakers just won’t have the time. Negotiating away the jobs of Head Start teachers, after all, can really chew up the hours fast.
SAM PIZZIGATI edits Too Much, the online weekly on excess and inequality published by the Washington, D.C.-based Institute for Policy Studies. Read the current issue or sign up to receive Too Much in your email inbox.
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The peasants need pitchforks By Robert Scheer
Truthdig
April 5, 2011
A "WORKING CLASS hero," John Lennon told us in his song of that title, "is something to be/ Keep you doped with religion and sex and TV/ And you think you’re so clever and classless and free/ But you’re still fucking peasants as far as I can see."
The delusion of a classless America in which opportunity is equally distributed is the most effective deception perpetrated by the moneyed elite that controls all the key levers of power in what passes for our democracy. It is a myth blown away by Nobel Prize winner Joseph E. Stiglitz in the current issue of Vanity Fair. In an article entitled "Of the 1%, by the 1%, for the 1%" Stiglitz states that the top thin layer of the superwealthy controls 40 percent of all wealth in what is now the most sharply class-divided of all developed nations: "Americans have been watching protests against repressive regimes that concentrate massive wealth in the hands of an elite few. Yet, in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income — an inequality even the wealthy will come to regret."
No. No Control That is the harsh reality obscured by the media’s focus on celebrity gossip, sports rivalries and lotteries, situations in which the average person can pretend that he or she is plugged into the winning side. The illusion of personal power substitutes consumer sovereignty — which smartphone to purchase — for real power over the decisions that affect our lives. Even though most Americans accept that the political game is rigged, we have long assumed that the choices we make in the economic sphere as to career and home are matters that respond to our wisdom and will. But the banking tsunami that wiped out so many jobs and so much homeownership has demonstrated that most Americans have no real control over any of that, and while they suffer, the corporate rich reward themselves in direct proportion to the amount of suffering they have caused.
Instead of taxing the superrich on the bonuses dispensed by top corporations such as Exxon, Bank of America, General Electric, Chevron and Boeing, all of which managed to avoid paying any federal corporate taxes last year, the politicians of both parties in Congress are about to accede to the Republican demand that programs that help ordinary folks be cut to pay for the programs that bailed out the banks.
It is a reality further obscured by the academic elite, led by economists who receive enormous payoffs from Wall Street in speaking and consulting fees, and their less privileged university colleagues who are so often dependent upon wealthy sponsors for their research funding. Then there are the media, which are indistinguishable parts of the corporate-owned culture and which with rare exception pretend that we are all in the same lifeboat while they fawn in their coverage of those who bilk us and also dispense fat fees to top pundits. Complementing all that is the dark distraction of the faux populists, led by tea party demagogues, who blame unions and immigrants for the crimes of Wall Street hustlers.
Victory of the Greedy My book on the banking meltdown, The Great American Stickup, begins with the following words: "They did it. Yes, there is a ‘they’: the captains of finance, their lobbyists, and allies among leading politicians of both parties, who together destroyed an American regulatory system that had been functioning splendidly. …" They got to rewrite the laws to enable their massive greed over everything from the tax codes to the sale of toxic derivatives over the past quarter century, smashing the American middle class and with it the nation’s experiment in democracy.
The lobbyists are deliberately bipartisan in their bribery, and the authors of our demise are equally marked as Democrats and Republicans. Ronald Reagan first effectively sang the siren song of ending government’s role in corporate crime prevention, but it was Democrat Bill Clinton who accomplished much of that goal. It is the enduring conceit of the top Democratic leaders that they are valiantly holding back the forces of evil when they actually have continuously been complicit.
Shared Blame The veterans of the Clinton years, so prominent in the Obama administration, still deny their role in the disaster of the last 25 years. Yet the sad tale of income inequality that Stiglitz laments is as much a result of their policies as those of their Republican rivals. In one of the best studies of this growing gap in income, economists Emmanuel Saez and Thomas Piketty found that during Clinton’s tenure in the White House the income of the top 1 percent increased by 10.1 percent per year, while that of the other 99 percent of Americans increased by only 2.4 percent a year. Thanks to President Bill Clinton’s deregulation and the save-the-rich policies of George W. Bush, the situation deteriorated further from 2002 to 2006, a period in which the top 1 percent increased its income 11 percent annually while the rest of Americans had a truly paltry gain of 1 percent per year.
And that was before the meltdown that wiped out the jobs and home values of so many tens of millions of American families. "The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles," Stiglitz concludes, "but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late."
Copyright © 2011 Truthdig, L.L.C.
Robert Scheer has one of the most distinguished bios in American journalism -- http://www.truthdig.com/robert_scheer#bio http://tinyurl.com/3t2bt5j
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