Steven Long was a janitor at CenturyLink Field in Seattle, home of the Seattle Seahawks. As befits many jobs in our society, this one didn't pay Mr. Long enough to afford a place to live. So he lived out of his truck.
In Seattle a car cannot remain parked in the same spot for more than 72 hours (unless I suspect that spot is the driveway of a home). Mr. Long's truck was not in the best of repair and he was unable to move it so it was impounded.
Mr. Long sued the city claiming that because he was living out of his truck, the city could not legally impound his truck. He relied on Washington state's homestead law.
The city argued that the application of the homestead law was improper and that the city was well within its authority to impound the truck. The city denied that impounding the truck amounted to a forced sale of Mr. Long's homestead because there was no constitutional right to housing.
Mr. Long prevailed when the judge ruled that his truck was his home.
This decision comes on the heels of a decision in Clark County, Washington, in which a court held that police officers violated a homeless man's 4th Amendment right to privacy when they lifted up the tarp under which he was sleeping, found a bag of meth and arrested him.
The homeless are being criminalized as a result of gentrification and city's attempts to lure affluent whites from the suburbs to downtown business districts. The homeless are an inconvenience as well as a reminder that our economy hasn't come close to benefiting everyone in society.
First you get cities making it illegal for the homeless to camp under overpasses. Then you make it a crime to provide food to the homeless without a permit.
As a result of conservative lawmakers, funding to mental health providers, homeless shelters and homeless advocacy grounds have been cut to the bone. The minimum wage isn't even enough for a person to live on. We subsidize low-wage employers by proving food stamps, welfare and Medicaid to those who can't afford to live on the wages employers like Wal-Mart, McDonald's and the like pay.
These two court rulings out of Washington are evidence that at least two judges understand the new American economy and the criminalization of the poor.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Monday, March 12, 2018
Monday, August 22, 2016
Just go sit at that other table and wait your turn
A couple of weeks ago I was listening to Democracy Now! and heard a replay of a debate between Pulitizer Prize winning journalist and author, Chris Hedges, and economist and former secretary of labor under Bill Clinton, Robert Reich, about the upcoming election.
The debate first aired a day or two after Bernie Sanders betrayed his supporters and endorsed Hillary Clinton. Right around that time, Dr. Jill Stein, the current nominee of the Green Party offered to drop out of the race for her party's nomination if Sen. Sanders would run as the Green Party candidate. He declined the offer (raising questions of why he even bothered running in the first place).
The question before the panel was what should progressives do in the upcoming election.
While Mr. Hedges urged progressives to support the Green Party instead of the pro-corporate Democratic Party, Mr. Reich raised the alarm and claimed that the only way to save America was to elect Hillary so that Trump would be defeated. He told the listeners that they had to abandon their convictions and vote for Clinton because the alternative was so much worse.
Mr. Reich stated over and over that now was not the time to launch a third party bid for the White House. He said he would work to jump start a progressive movement in time for the 2020 election. Bullshit, I say.
In 2020 Mr. Reich will make the same old tired arguments that now is not the time, that progressives need to be patient and wait... and wait... and wait.
To be fair to Mr. Reich, he's not the only one spouting this garbage. Ben Jealous, former head of the NAACP and now an investment banker, says the same thing.
Mr. Reich and Mr. Jealous are mere mascots for the Democratic Party who are trotted out to convince voters who are sick and tired of the way the party abandoned the working class for Wall Street money. They will continue to tell their flocks of listeners that now is not the time to exercise one's conscience. They will continue to tell them that they have to hold their noses and flip the lever for the Democratic candidate because the alternative is so much worse. They will continue to tell them to wait another four years.
And then they will rinse and repeat.
If you think that you can work within the existing system to reverse three decades worth of economic policy that has hammered the working class and poor, you are deluding yourself. If you think that you can work within the existing system to stop the continuing rape of our environment by oil, gas and coal companies, you are deluding yourself. If you think that you can work within the existing system to make health care a right and not a privilege, you are deluding yourself. If you think that you can work within the existing system to reverse the tide of the corporatist state in which we live, you are deluding yourself.
President Obama is every bit the shill for corporate interests, the oil companies and the warmongers that George W. Bush was. He may talk a big game, but when the chips are on the table he's not willing to shove them in the middle.
The debate first aired a day or two after Bernie Sanders betrayed his supporters and endorsed Hillary Clinton. Right around that time, Dr. Jill Stein, the current nominee of the Green Party offered to drop out of the race for her party's nomination if Sen. Sanders would run as the Green Party candidate. He declined the offer (raising questions of why he even bothered running in the first place).
The question before the panel was what should progressives do in the upcoming election.
While Mr. Hedges urged progressives to support the Green Party instead of the pro-corporate Democratic Party, Mr. Reich raised the alarm and claimed that the only way to save America was to elect Hillary so that Trump would be defeated. He told the listeners that they had to abandon their convictions and vote for Clinton because the alternative was so much worse.
Mr. Reich stated over and over that now was not the time to launch a third party bid for the White House. He said he would work to jump start a progressive movement in time for the 2020 election. Bullshit, I say.
In 2020 Mr. Reich will make the same old tired arguments that now is not the time, that progressives need to be patient and wait... and wait... and wait.
To be fair to Mr. Reich, he's not the only one spouting this garbage. Ben Jealous, former head of the NAACP and now an investment banker, says the same thing.
Mr. Reich and Mr. Jealous are mere mascots for the Democratic Party who are trotted out to convince voters who are sick and tired of the way the party abandoned the working class for Wall Street money. They will continue to tell their flocks of listeners that now is not the time to exercise one's conscience. They will continue to tell them that they have to hold their noses and flip the lever for the Democratic candidate because the alternative is so much worse. They will continue to tell them to wait another four years.
And then they will rinse and repeat.
If you think that you can work within the existing system to reverse three decades worth of economic policy that has hammered the working class and poor, you are deluding yourself. If you think that you can work within the existing system to stop the continuing rape of our environment by oil, gas and coal companies, you are deluding yourself. If you think that you can work within the existing system to make health care a right and not a privilege, you are deluding yourself. If you think that you can work within the existing system to reverse the tide of the corporatist state in which we live, you are deluding yourself.
President Obama is every bit the shill for corporate interests, the oil companies and the warmongers that George W. Bush was. He may talk a big game, but when the chips are on the table he's not willing to shove them in the middle.
Friday, July 15, 2016
Black and white and green
I read an interesting article in Slate yesterday about the demographic problems that Donald Trump is facing in the general election this fall. But that's not what I wanted to talk about today. I did read one stat that I think is a good jumping off point for looking at how American capitalism is unique in the world.
Trump has unprecedented pull with working-class whites, especially men. If he can match past Republican performance with college-educated whites and hold his increased share among their counterparts with high school diplomas, he’ll have a smooth path to victory.
Why is it that white working class males are such solid Republicans? Why are they supporting candidates whose policies benefit the corporate class at the expense of the working class?
It has to do with the unique nature of American capitalism. And just what is unique about American capitalism?
The legacy of slavery and institutional racism are foundations upon which the American economic system is built. For generations the corporate elite and their bag men have fomented racism as a means of dividing the working class. And they have succeeded. Today white working class males feel they have more in common with their bosses than they do with their fellow workers.
The white working class has been so permeated with racist ideology that they have become blind to what's in their own self interest. Republicans and toadies of the corporate class realized this during the Civil Rights movement. There's a reason that Martin Luther King, Jr. was assassinated following a speech to sanitation workers in Memphis. In tying the fight for equality with the fight for workers to earn a living wage and with the fight against the war in Vietnam, King became a dangerous figure and had to be eliminated.
Republicans, conservatives and the corporate class have been sowing seeds of discord within the ranks of the working class ever since. They have done this by portraying the struggles of racial and ethnic minorities as attacks on American values instead of a attack against economic and political oppression.
The result has been a fragmented working class that works against its own self-interest. This fragmented working class allows the corporate class to hold down wages and move jobs overseas whenever it becomes profitable for them to do so.
So long as the corporate class is able to use race as a wedge to drive between workers, the working class in this country will continue to be oppressed with low wages, no job security and private health care coverage.
For all of the talk from our political leaders about what happened in Baton Rouge, St. Paul and Dallas last week, we will never eliminate racism because it is so ingrained in our economic system. We can move beyond prejudice but institutional racism will remain because it brings about bigger profits for the corporate class.
Trump has unprecedented pull with working-class whites, especially men. If he can match past Republican performance with college-educated whites and hold his increased share among their counterparts with high school diplomas, he’ll have a smooth path to victory.
Why is it that white working class males are such solid Republicans? Why are they supporting candidates whose policies benefit the corporate class at the expense of the working class?
It has to do with the unique nature of American capitalism. And just what is unique about American capitalism?
The legacy of slavery and institutional racism are foundations upon which the American economic system is built. For generations the corporate elite and their bag men have fomented racism as a means of dividing the working class. And they have succeeded. Today white working class males feel they have more in common with their bosses than they do with their fellow workers.
The white working class has been so permeated with racist ideology that they have become blind to what's in their own self interest. Republicans and toadies of the corporate class realized this during the Civil Rights movement. There's a reason that Martin Luther King, Jr. was assassinated following a speech to sanitation workers in Memphis. In tying the fight for equality with the fight for workers to earn a living wage and with the fight against the war in Vietnam, King became a dangerous figure and had to be eliminated.
Republicans, conservatives and the corporate class have been sowing seeds of discord within the ranks of the working class ever since. They have done this by portraying the struggles of racial and ethnic minorities as attacks on American values instead of a attack against economic and political oppression.
The result has been a fragmented working class that works against its own self-interest. This fragmented working class allows the corporate class to hold down wages and move jobs overseas whenever it becomes profitable for them to do so.
So long as the corporate class is able to use race as a wedge to drive between workers, the working class in this country will continue to be oppressed with low wages, no job security and private health care coverage.
For all of the talk from our political leaders about what happened in Baton Rouge, St. Paul and Dallas last week, we will never eliminate racism because it is so ingrained in our economic system. We can move beyond prejudice but institutional racism will remain because it brings about bigger profits for the corporate class.
Thursday, June 30, 2016
The Olympic boondoggle
If you have any delusions that the use of public money to build stadiums or host sporting events provides an economic benefit to a city or country, please take a couple of minutes to read these articles about the burning dumpster fire that is Rio de Janeiro and the Summer Olympics.
"Rio de Janeiro governor declares state of financial emergency ahead of Olympics" The Guardian (6/17/16)
"As the Olympics near. Brazil and Rio let the bad times roll," New York Times (6/25/16)
"Rio visitors greeted with 'Welcome to Hell' banner," Yahoo Sports (6/28/16)
The only folks who claim that hosting these types of events and building fancy new playgrounds for fat cat owners are the owners themselves, the organizers of the games, league officials and every local politician who has his or her hand in the fire.
As I have stated before, if these really were money-making propositions, there would be no shortage of investors willing to pony up the bucks to make them happen. The very fact that state and local governments end up picking up the tab for these expenses tells you all you need to know about whether or not they are economic engines.
"Rio de Janeiro governor declares state of financial emergency ahead of Olympics" The Guardian (6/17/16)
"As the Olympics near. Brazil and Rio let the bad times roll," New York Times (6/25/16)
"Rio visitors greeted with 'Welcome to Hell' banner," Yahoo Sports (6/28/16)
The only folks who claim that hosting these types of events and building fancy new playgrounds for fat cat owners are the owners themselves, the organizers of the games, league officials and every local politician who has his or her hand in the fire.
As I have stated before, if these really were money-making propositions, there would be no shortage of investors willing to pony up the bucks to make them happen. The very fact that state and local governments end up picking up the tab for these expenses tells you all you need to know about whether or not they are economic engines.
Thursday, July 31, 2014
Vultures holding Argentina hostage
Back in 2001 Argentina defaulted on its debt obligations due to a cratering economy. Over the intervening years the government reached agreements with most creditors on reducing the amount owed on the outstanding bonds. Some creditors accepted discounts of up to 70% on their holdings.But something else happened in the wake of Argentina's default. So-called vulture capitalists swooped in and bought government bonds at highly discounted prices - for pennies on the dollar. These vultures didn't like the terms of Argentina's agreements with other creditors. Despite the fact they bought the bonds at a steep discount, despite the fact they bought the bonds after Argentina had defaulted on them, despite the fact the effective interest rates on the bonds were astronomical, the vultures wanted to receive face value for their "investment."
They filed suit in New York to stop Argentina from paying off the creditors who accepted discounts at the expense of the creditors who refused to enter into the agreement. The court, not surprisingly, sided with the American-based hedge funds who brought the suit. Argentina appealed up to the US Supreme Court which upheld the lower courts' rulings and put a halt to Argentina's plan to pay off the creditors who accepted the deal.
Now Argentina and its creditors are in negotiations to avoid another default. The original agreement called for Argentina to make a payment to creditors on June 30, 2014. The ongoing litigation prevented those payments from being made. Now, 30 days later, Argentina is on the brink of a second default if an agreement isn't reached by midnight.
I'm not going to beat around the bush on this one. The US courts got it wrong. Investors bought Argentina's bonds because they carried a higher interest rate than comparable bonds in other countries. They carried a higher interest rate because there was a greater chance of default on those bond offerings than in the United States or Western Europe.
When the Argentine economy crashed and country defaulted bondholders knew they weren't getting face value on their bonds. That is the price one pays for receiving a higher interest rate. Institutional investors knew their best bet was to negotiate a discount on their holdings since it's better to get something back rather than nothing. These large investors knew what they were getting themselves into. Wealthy individual investors had access to information and they were well suited to weigh the promised return versus the risk of default.
But the vulture capitalists didn't think the same rules should apply to them. These hedge funds didn't hold Argentine bonds at the time of the original default. They bought them later, at a very steep discount. And why were the bonds sold at such a discount? Could it possibly be because no one expected Argentina to pay the bond's face value at maturity? The vulture capitalists entered into their transactions well aware that they weren't going to get face value for their bonds.
But now a group of greedy capitalists are attempting to hold an entire nation hostage so that they can fatten their wallets.The Era of the Ugly American is live and well.
See also:
"Argentina blames US mediator for debt default," BBC News (July 31, 2014)
Wednesday, July 2, 2014
End of the road in the World Cup
Yesterday the dream of a World Cup trophy died for the United States with a 2-1 loss to Belgium. The US performance has been described as gutsy and gritty. In the soccer world those are euphemisms for teams that were overmatched and outplayed. The US team is completely bereft of creativity in the midfield. They are not capable to maintaining possession and dictating pace. Until those deficits are addressed, the US will always be an underdog in the World Cup.
The style of play for the US is very reminiscent of England's style for most of the last 50 years - at least until an influx of foreign players in the Premier League caused English sides to realize there's more to soccer than launching long balls and crosses all day long. So long as the US relies on guts and grit its results in the World Cup will be similar to that of England - no trophies.
The one bright spot yesterday was US goalkeeper Tim Howard, making what may have been his last start for the national team. Mr. Howard made 16 saves - a World Cup record. He deserves combat pay for his performance. He was the only member of the US team who deserved to be on the same field with the Belgians. Unfortunately, if your game plan is to stand around and let the other team take target practice on your keeper, you have no margin of error.
We'll have to wait and see if anything changes over the next four years.
In the meantime, Juliet Macur penned this wonderful article in the New York Times about the legacy of sports stadiums after the fans have left. These palaces of sport are built using hundreds of millions of dollars of public money and then sit empty afterward - relics of crony capitalism.
Many of these arenas will be vacant after the games have left. In most of the cities there aren't enough supporters of local soccer teams to fill the venues for ordinary league games. In some cities there aren't any teams that are willing to pay the astronomical rents to use the stadiums.
At the same time FIFA (the world governing body for soccer) rakes in billions of dollars from the World Cup and washes its hands of the aftermath of rampant graft and corruption.
Over the next four years Russia will be next to spend public money on stadiums that aren't needed and will sit unused after the tournament is over. This is on top of the billions of dollars thrown away on the Sochi Olympics earlier this year.
As I've said before, if sports stadiums are the engines of economic development as supporters claim them to be, there should be problem lining up private investors to put their money into the projects in hopes of making massive profits on the back end. The fact that these stadiums are built using nothing but public funds should tell us everything we need to know about the myth of stadium construction.
The working class and poor folks in Brazil are learning that lesson first hand.
The style of play for the US is very reminiscent of England's style for most of the last 50 years - at least until an influx of foreign players in the Premier League caused English sides to realize there's more to soccer than launching long balls and crosses all day long. So long as the US relies on guts and grit its results in the World Cup will be similar to that of England - no trophies.
The one bright spot yesterday was US goalkeeper Tim Howard, making what may have been his last start for the national team. Mr. Howard made 16 saves - a World Cup record. He deserves combat pay for his performance. He was the only member of the US team who deserved to be on the same field with the Belgians. Unfortunately, if your game plan is to stand around and let the other team take target practice on your keeper, you have no margin of error.
We'll have to wait and see if anything changes over the next four years.
In the meantime, Juliet Macur penned this wonderful article in the New York Times about the legacy of sports stadiums after the fans have left. These palaces of sport are built using hundreds of millions of dollars of public money and then sit empty afterward - relics of crony capitalism.
Many of these arenas will be vacant after the games have left. In most of the cities there aren't enough supporters of local soccer teams to fill the venues for ordinary league games. In some cities there aren't any teams that are willing to pay the astronomical rents to use the stadiums.
At the same time FIFA (the world governing body for soccer) rakes in billions of dollars from the World Cup and washes its hands of the aftermath of rampant graft and corruption.
Over the next four years Russia will be next to spend public money on stadiums that aren't needed and will sit unused after the tournament is over. This is on top of the billions of dollars thrown away on the Sochi Olympics earlier this year.
As I've said before, if sports stadiums are the engines of economic development as supporters claim them to be, there should be problem lining up private investors to put their money into the projects in hopes of making massive profits on the back end. The fact that these stadiums are built using nothing but public funds should tell us everything we need to know about the myth of stadium construction.
The working class and poor folks in Brazil are learning that lesson first hand.
Tuesday, July 1, 2014
My religion is more important than your health
When the US Supreme Court released its decision in Burwell v. Hobby Lobby Stores, Inc. yesterday it pointed out yet another flaw in the delivery system for the Affordable Care Act. By yet another 5-4 decision, the Court held that family businesses and for-profit closely held corporations could opt out of providing contraceptive coverage for their employees if it went against the religious beliefs of the owners of the company.
As I have written before, the biggest problem with the ACA is that it left the current medical care delivery system in place. Thus, most folks are beholden to their employers for health care coverage. Rather than creating a program of universal health care, the ACA is nothing but a corporate welfare system for the insurance companies. They are guaranteed their profits while no one else even has a guarantee of coverage.
In Burwell, Hobby Lobby argued that the contraceptive mandate in the ACA violated the religious beliefs of the owners of the company. They argued that since religious non-profits were allowed to opt-out of contraceptive coverage that they should get to opt-out, too. Let's just forget for a second that Hobby Lobby is a for-profit company that employs over 16,000 people.
Let's also forget for a second just how specious the company's argument really is. It is of no concern to the owners of Hobby Lobby what their employees do when they go home at night. The last time I checked, there is no commandment telling folks not to have sex as often as they want - provided they aren't committing adultery. But I do seem to recall a commandment that says we shouldn't go around killing folks.
So, is Hobby Lobby also arguing that shouldn't have to pay that portion of their taxes that go to war-mongering? Are they asking the states to exempt them from that portion of their state taxes that go to pay for executing prisoners?
No, you say? Well that's awfully damn funny, ain't it?
So the fine Christian owners of Hobby Lobby have no problem with spending money to build war planes and guns and bombs and drones. They have no problem spending money to send troops overseas to shoot at people. They have no problem with remote controlled aircraft shooting missiles at groups of people. They haven't the slightest problem with strapping down prisoners and killing them with questionable drugs. But someone wants to put on a condom or take a birth control pill and the whole world's going to stop spinning.
Give me a fucking break.
Religious belief is the straw man in all of this. The real target is paring down the ACA so that companies don't have to provide decent health care coverage for their employees. The more watered-down the coverage offered by a company, the less money it costs them and the more money the top managers and owners can walk away with.
People who work for Hobby Lobby aren't working their because they share the same religious beliefs with the money-hoarding owners of the company. They're working there because they need a paycheck to pay the bills. More and more folks are forced to work for low-wage service companies because the manufacturing jobs are being shipped overseas in the name of higher profits.
What will be the next domino to fall? Which company is going to step up next and argue that they shouldn't have to comply with one provision or another of the ACA because it goes against some principle by which the company stands? And how many more workers are going to see their coverage pared down so that the owners of the company can put more money in their pockets.
As with most everything he has done over the course of his presidency, Barack Obama made a half-assed effort to appease those on the left. The ACA was a very cynical attempt to placate those who demanded a single-payer health care system that guaranteed coverage for all. The ACA will fail not because the wingnuts defunded it, the ACA will fail because the courts sanctioned a death of a thousand cuts.
As I have written before, the biggest problem with the ACA is that it left the current medical care delivery system in place. Thus, most folks are beholden to their employers for health care coverage. Rather than creating a program of universal health care, the ACA is nothing but a corporate welfare system for the insurance companies. They are guaranteed their profits while no one else even has a guarantee of coverage.
In Burwell, Hobby Lobby argued that the contraceptive mandate in the ACA violated the religious beliefs of the owners of the company. They argued that since religious non-profits were allowed to opt-out of contraceptive coverage that they should get to opt-out, too. Let's just forget for a second that Hobby Lobby is a for-profit company that employs over 16,000 people.
Let's also forget for a second just how specious the company's argument really is. It is of no concern to the owners of Hobby Lobby what their employees do when they go home at night. The last time I checked, there is no commandment telling folks not to have sex as often as they want - provided they aren't committing adultery. But I do seem to recall a commandment that says we shouldn't go around killing folks.
So, is Hobby Lobby also arguing that shouldn't have to pay that portion of their taxes that go to war-mongering? Are they asking the states to exempt them from that portion of their state taxes that go to pay for executing prisoners?
No, you say? Well that's awfully damn funny, ain't it?
So the fine Christian owners of Hobby Lobby have no problem with spending money to build war planes and guns and bombs and drones. They have no problem spending money to send troops overseas to shoot at people. They have no problem with remote controlled aircraft shooting missiles at groups of people. They haven't the slightest problem with strapping down prisoners and killing them with questionable drugs. But someone wants to put on a condom or take a birth control pill and the whole world's going to stop spinning.
Give me a fucking break.
Religious belief is the straw man in all of this. The real target is paring down the ACA so that companies don't have to provide decent health care coverage for their employees. The more watered-down the coverage offered by a company, the less money it costs them and the more money the top managers and owners can walk away with.
People who work for Hobby Lobby aren't working their because they share the same religious beliefs with the money-hoarding owners of the company. They're working there because they need a paycheck to pay the bills. More and more folks are forced to work for low-wage service companies because the manufacturing jobs are being shipped overseas in the name of higher profits.
What will be the next domino to fall? Which company is going to step up next and argue that they shouldn't have to comply with one provision or another of the ACA because it goes against some principle by which the company stands? And how many more workers are going to see their coverage pared down so that the owners of the company can put more money in their pockets.
As with most everything he has done over the course of his presidency, Barack Obama made a half-assed effort to appease those on the left. The ACA was a very cynical attempt to placate those who demanded a single-payer health care system that guaranteed coverage for all. The ACA will fail not because the wingnuts defunded it, the ACA will fail because the courts sanctioned a death of a thousand cuts.
Friday, June 20, 2014
The two faces of the World Cup
I had to wait until my girls went to bed before I could finally sit down and watch the Uruguay-England match from the World Cup. Watching Luis Suarez put those two balls in the net was well worth the wait. I haven't much doubt that Luis Suarez is the best striker in the world. Just watch what this team did against England and compare that to the debacle that was their opener against Costa Rica and you can't help but think Suarez is the best.
But the story of this World Cup isn't just what's happening on the pitch. The real story is what's going on away from the cameras and media. The Brazilian government has sold its soul to host both the World Cup and the Olympics and it's the poorest of Brazilians who are paying the price.
For those of y'all who have been enjoying the football, here's an interview Dave Zirin gave to Amy Goodman on Democracy Now! on Thursday in
which he puts the World Cup in its proper perspective.
Tuesday, May 6, 2014
Hanging him out to dry
NBA Commissioner Adam Silver was so disturbed by a recent recording of Donald Sterling telling his girlfriend not to bring her black friends to L.A. Clipper games that he placed a lifetime ban on Mr. Sterling and put in motion a plan to force him to sell his basketball team.
Players were so put out by Mr. Sterling's comments that they wore their warm-up jerseys inside-out in order to cover up the team's logo. They wore black socks as part of their protest.
Comments and pundits were beside themselves that a rich white dude would be saying something so outrageous in the 21st century. The local chapter of the NAACP decided not to award Mr. Sterling his second Lifetime Achievement Award after the recording surfaced.
But let's keep in mind that Mr. Sterling's comments were made in a private telephone conversation that was taped by the person at the other end of the phone. Let's keep in mind that he is being castigated for holding personal beliefs that a great majority of us find offensive. He committed no crime. But for the recording no one would ever have known Mr. Sterling's personal biases.
Or maybe they would have if they had been paying attention.
Back in 2009 Mr. Sterling entered into a $2.725 million agreement with the U.S. Justice Department to settle claims that Mr. Sterling discriminated against minorities who lived in apartment buildings he owned. Mr. Sterling would be the first one to say that the agreement was not an admission of guilt but an agreement to settle a dispute in a way that both sides could live with.
Of course $2.725 million is an awful lot of money to plop down to walk away from a nasty lawsuit if there wasn't some ring of truth to the allegations.
The NBA was well aware of the settlement when it happened. Then-commissioner David Stern didn't even raise a finger. And, once Mr. Sterling showed that he was willing to spend some money to attract better players to the city's second basketball team, free agents signed up without regard to the outcome of the housing discrimination litigation.
The NAACP didn't seem to care. Mr. Sterling wrote some big checks and that was enough to give him a plaque or two.
But the settlement of the housing discrimination lawsuit wasn't nearly as sexy as a recording in which Mr. Sterling voiced his bias against black folk. It's much easier to write a headline about what he said than about the settlement of a lawsuit.
For all the eye-rubbing and hand-wringing that accompanied the release of the recording, few people acknowledged that Mr. Sterling's prejudices were far from unknown. The players who signed to play for the Clippers didn't have to look hard to find out their new boss was a bigot. League officials conveniently forgot about the 2009 settlement when it suited their purposes. Why didn't the league try to force Mr. Sterling out years ago?
What does it say to our society that making racist and bigoted comments is crossing some unspoken line while carrying out acts of actual discrimination isn't give a second thought? Is it because those in positions of power and influence would rather move our focus from discriminatory business practices to the rantings of one man? Is it because if we actually acknowledge the discriminatory conduct we would realize that discrimination and racism are integral parts of most business plans?
Just turn whites workers and black workers against each other and the next thing you know there's nobody putting pressure on you to pay a living wage and there's no one to fight against closing a plant and moving production overseas.
Mr. Sterling became expendable when he was turned into the poster boy for racism. Suddenly everyone else could point and wag their fingers and avoid any scrutiny into their own personal and business practices.
Players were so put out by Mr. Sterling's comments that they wore their warm-up jerseys inside-out in order to cover up the team's logo. They wore black socks as part of their protest.
Comments and pundits were beside themselves that a rich white dude would be saying something so outrageous in the 21st century. The local chapter of the NAACP decided not to award Mr. Sterling his second Lifetime Achievement Award after the recording surfaced.
But let's keep in mind that Mr. Sterling's comments were made in a private telephone conversation that was taped by the person at the other end of the phone. Let's keep in mind that he is being castigated for holding personal beliefs that a great majority of us find offensive. He committed no crime. But for the recording no one would ever have known Mr. Sterling's personal biases.
Or maybe they would have if they had been paying attention.
Back in 2009 Mr. Sterling entered into a $2.725 million agreement with the U.S. Justice Department to settle claims that Mr. Sterling discriminated against minorities who lived in apartment buildings he owned. Mr. Sterling would be the first one to say that the agreement was not an admission of guilt but an agreement to settle a dispute in a way that both sides could live with.
Of course $2.725 million is an awful lot of money to plop down to walk away from a nasty lawsuit if there wasn't some ring of truth to the allegations.
The NBA was well aware of the settlement when it happened. Then-commissioner David Stern didn't even raise a finger. And, once Mr. Sterling showed that he was willing to spend some money to attract better players to the city's second basketball team, free agents signed up without regard to the outcome of the housing discrimination litigation.
The NAACP didn't seem to care. Mr. Sterling wrote some big checks and that was enough to give him a plaque or two.
But the settlement of the housing discrimination lawsuit wasn't nearly as sexy as a recording in which Mr. Sterling voiced his bias against black folk. It's much easier to write a headline about what he said than about the settlement of a lawsuit.
For all the eye-rubbing and hand-wringing that accompanied the release of the recording, few people acknowledged that Mr. Sterling's prejudices were far from unknown. The players who signed to play for the Clippers didn't have to look hard to find out their new boss was a bigot. League officials conveniently forgot about the 2009 settlement when it suited their purposes. Why didn't the league try to force Mr. Sterling out years ago?
What does it say to our society that making racist and bigoted comments is crossing some unspoken line while carrying out acts of actual discrimination isn't give a second thought? Is it because those in positions of power and influence would rather move our focus from discriminatory business practices to the rantings of one man? Is it because if we actually acknowledge the discriminatory conduct we would realize that discrimination and racism are integral parts of most business plans?
Just turn whites workers and black workers against each other and the next thing you know there's nobody putting pressure on you to pay a living wage and there's no one to fight against closing a plant and moving production overseas.
Mr. Sterling became expendable when he was turned into the poster boy for racism. Suddenly everyone else could point and wag their fingers and avoid any scrutiny into their own personal and business practices.
Monday, April 28, 2014
Get a clue, Jack
My plan had been to be home in the middle of the afternoon last Friday. It had been a long week and I was looking forward to hanging out in the backyard playing with the dog and doing some work in the garden. But, as tends to be the case these days, that plan didn't quite work out and I didn't leave the office until 6:30pm.
I turned the radio on and Marketplace had already begun. Someone was talking about progress in Detroit. This mysterious someone was saying that in tearing down abandoned homes, the city was showing signs of recovery. Sure.
At first I thought Kai Ryssdal was talking to one of the show's correspondents. Then I realized he was talking to a cabinet secretary. The person on the other end of the line turned out to be the Treasury Secretary, Jack Lew. Y'all might remember Mr. Lew as the guy who got a lot of attention from the press when he changed his signature so it would be somewhat legible on our currency.
Now I could start talking about how, at a certain age, we all have a fairly distinct signature. My illegible scrawl developed when I was the treasurer of a housing co-op in college. Once a week I had to go into the office and write a bunch of checks to pay the bills. My hand would start to hurt after jotting down my signature so many times. In response I changed the way I signed my name so it would involve less moving of the pen. My signature has remained, more or less, the same ever since.
The fact that Mr. Lew was so concerned about how his signature looked that he wanted to change it - and that he changed it - highlights something endemic to our political class. Our modern-day politicians are chameleons with their fingers in the wind. They will make changes to their appearance, their speech or some other aspect of the personality at the drop of a dime if a consultant tells them there are votes to be had and money to be raised if he makes the change. Then they carry on as if nothing ever happened.
For a reminder of how blatant it can be, just go back and take a look at Mitt Romney trying to act like everyman by taking off his jacket and rolling up his sleeves during the 2012 campaign. There were few things more painful (and transparent) than watching Mr. Romney try to act like a normal Joe.
But, back to the point, Mr. Ryssdal asked Mr. Lew a couple of pointed questions about the economic recovery. He wanted to know why economists proclaimed that the economy was doing fairly well while unemployment was still sky high. Mr. Lew did everything he could to avoid answering the question that he was asked. Mr. Ryssdal was having none of it, however.
Mr. Lew went on to try to explain how profits and the stock market were up. But he had very little to say about why large companies were sitting on piles of cash instead of hiring workers. Mr. Lew mentioned the people he had discussed the state of the economy with and, to no one's surprise, those folks were CEO's and their ilk. No wonder Mr. Lew had no clue as to how the economic recovery was playing across the country.
Not surprisingly, though, Mr. Ryssdal never asked the really hard questions about the structural changes in the economy. There were no questions about whether high unemployment rates were putting downward pressure on wages which, in turn, would put downward pressure on demand which, in turn, made companies less likely to increase production and hire more workers.
The fact of the matter is that our economy is rotting from the inside out. Manufacturing companies have farmed out the jobs on the assembly line that paid well to developing countries who are desperate for jobs. Those well-paid jobs we lose are replaced by low-pay jobs in the service sector. These jobs pay less than a living wage and few benefits leaving less money on the table for folks to spend.
These low-wage employers are then subsidized by government redistribution policies so they can keep their wages low. Now this isn't the typical destruction of the middle class argument that President Obama likes to make. The term middle class has very little meaning in our economy.
Originally the term referred to small shopkeepers and merchants who worked for themselves and had few employees. These shopkeepers weren't the owners of the means of production and they weren't being exploited for their labor power. These are the folks Adam Smith was talking about when he said England was a nation of shopkeepers.
The "recovery" over the past few years has been concentrated at the high-end of the income spectrum. All of the indices our politicians like to point out to prove the economy is righting itself measure how well things are for the people on top. If our politicians were concerned about the plight of the working poor, we would have far more talk about our high unemployment rate than we have of the state of the Dow Jones Index.
Mr. Lew is completely out of touch with reality and, until someone in Washington takes a look at how current economic trends affect the working poor, the situation will continue to get worse. The Dow can go as high as it wants - that doesn't put food on someone's table. If the private sector isn't going to increase the number of jobs in the economy then the government must step in with jobs programs that put the unemployed, and underemployed, back to work rebuilding our nation's infrastructure.
Yes, it would be expensive. But that money would be better spent than the money that was laundered through the government's bailout scheme in which companies (who espoused a belief in capitalism) held out their hands for government largesse and then paid the executives who ran the companies into the ground a king's ransom in salaries and bonuses.
I turned the radio on and Marketplace had already begun. Someone was talking about progress in Detroit. This mysterious someone was saying that in tearing down abandoned homes, the city was showing signs of recovery. Sure.
At first I thought Kai Ryssdal was talking to one of the show's correspondents. Then I realized he was talking to a cabinet secretary. The person on the other end of the line turned out to be the Treasury Secretary, Jack Lew. Y'all might remember Mr. Lew as the guy who got a lot of attention from the press when he changed his signature so it would be somewhat legible on our currency.
Now I could start talking about how, at a certain age, we all have a fairly distinct signature. My illegible scrawl developed when I was the treasurer of a housing co-op in college. Once a week I had to go into the office and write a bunch of checks to pay the bills. My hand would start to hurt after jotting down my signature so many times. In response I changed the way I signed my name so it would involve less moving of the pen. My signature has remained, more or less, the same ever since.
The fact that Mr. Lew was so concerned about how his signature looked that he wanted to change it - and that he changed it - highlights something endemic to our political class. Our modern-day politicians are chameleons with their fingers in the wind. They will make changes to their appearance, their speech or some other aspect of the personality at the drop of a dime if a consultant tells them there are votes to be had and money to be raised if he makes the change. Then they carry on as if nothing ever happened.
For a reminder of how blatant it can be, just go back and take a look at Mitt Romney trying to act like everyman by taking off his jacket and rolling up his sleeves during the 2012 campaign. There were few things more painful (and transparent) than watching Mr. Romney try to act like a normal Joe.
But, back to the point, Mr. Ryssdal asked Mr. Lew a couple of pointed questions about the economic recovery. He wanted to know why economists proclaimed that the economy was doing fairly well while unemployment was still sky high. Mr. Lew did everything he could to avoid answering the question that he was asked. Mr. Ryssdal was having none of it, however.
Mr. Lew went on to try to explain how profits and the stock market were up. But he had very little to say about why large companies were sitting on piles of cash instead of hiring workers. Mr. Lew mentioned the people he had discussed the state of the economy with and, to no one's surprise, those folks were CEO's and their ilk. No wonder Mr. Lew had no clue as to how the economic recovery was playing across the country.
Not surprisingly, though, Mr. Ryssdal never asked the really hard questions about the structural changes in the economy. There were no questions about whether high unemployment rates were putting downward pressure on wages which, in turn, would put downward pressure on demand which, in turn, made companies less likely to increase production and hire more workers.
The fact of the matter is that our economy is rotting from the inside out. Manufacturing companies have farmed out the jobs on the assembly line that paid well to developing countries who are desperate for jobs. Those well-paid jobs we lose are replaced by low-pay jobs in the service sector. These jobs pay less than a living wage and few benefits leaving less money on the table for folks to spend.
These low-wage employers are then subsidized by government redistribution policies so they can keep their wages low. Now this isn't the typical destruction of the middle class argument that President Obama likes to make. The term middle class has very little meaning in our economy.
Originally the term referred to small shopkeepers and merchants who worked for themselves and had few employees. These shopkeepers weren't the owners of the means of production and they weren't being exploited for their labor power. These are the folks Adam Smith was talking about when he said England was a nation of shopkeepers.
The "recovery" over the past few years has been concentrated at the high-end of the income spectrum. All of the indices our politicians like to point out to prove the economy is righting itself measure how well things are for the people on top. If our politicians were concerned about the plight of the working poor, we would have far more talk about our high unemployment rate than we have of the state of the Dow Jones Index.
Mr. Lew is completely out of touch with reality and, until someone in Washington takes a look at how current economic trends affect the working poor, the situation will continue to get worse. The Dow can go as high as it wants - that doesn't put food on someone's table. If the private sector isn't going to increase the number of jobs in the economy then the government must step in with jobs programs that put the unemployed, and underemployed, back to work rebuilding our nation's infrastructure.
Yes, it would be expensive. But that money would be better spent than the money that was laundered through the government's bailout scheme in which companies (who espoused a belief in capitalism) held out their hands for government largesse and then paid the executives who ran the companies into the ground a king's ransom in salaries and bonuses.
Friday, March 14, 2014
Living on the dole
We've all been taught to love capitalism. Such a wonderful system it is. It rewards those who work hard and take chances. Come up with a good idea or a better way of doing things and you can go from sweeping the streets to the penthouse in short order.
Our media has a love affair with the so-called titans of industry. They're rolling in dough so we must adore and worship them. They are proof that hard work can lead to wealth.
Sports broadcasters are in love with the owners of franchises. During every game there is the obligatory shot of an owner sitting in a luxury box with his fellow millionaires and billionaires watching their teams play on a football field that was subsidized by the very folks who can't afford to buy a ticket to sit in their pleasure palaces.
These billionaires who love to throw their money around on the newest and shiniest toys are able to blackmail cities and states into building their factories with taxpayer money while the working poor suffer from budget cuts.
The latest farce is here in Houston. Our local electricity provider, Reliant Energy, purchased the naming rights to the Astrodome years ago and then purchased the naming rights to the new stadium being built to house the Houston Texans and the Houston Livestock Show and Rodeo. Since then the company was purchased by NRG which has decided it's time to market itself and slap its name and logos all over the building.
According to the Houston Chronicle:
But here's the part about the name change that caught my attention:
As for the Rodeo, for those of y'all who aren't familiar with the three-week long extravaganza currently going on, it is one of the biggest charitable organizations in the state. The Rodeo pays out millions of dollars to state and local charities and in scholarships for young people. The share of the naming rights going their way is going to a good cause rather than someone's back pocket.
You see, Bob McNair and his ilk love to preach the virtues of capitalism. They will tell you that just handing out money to the poor will never solve the problem of poverty. Government assistance just breeds more dependence, they'll tell you. It weakens the soul, it creates a culture of dependency.
But don't get in their way when they're running to the window to get their hand-out. Nope, we can't expand Medicaid coverage, we can't increase school funding, we can't raise the minimum wage, we can't build more affordable housing, we can't put a public works jobs program into place, but we can damn sure hand out millions of dollars a year to the wealthy.
That's capitalism for you.
Our media has a love affair with the so-called titans of industry. They're rolling in dough so we must adore and worship them. They are proof that hard work can lead to wealth.
Sports broadcasters are in love with the owners of franchises. During every game there is the obligatory shot of an owner sitting in a luxury box with his fellow millionaires and billionaires watching their teams play on a football field that was subsidized by the very folks who can't afford to buy a ticket to sit in their pleasure palaces.
These billionaires who love to throw their money around on the newest and shiniest toys are able to blackmail cities and states into building their factories with taxpayer money while the working poor suffer from budget cuts.
The latest farce is here in Houston. Our local electricity provider, Reliant Energy, purchased the naming rights to the Astrodome years ago and then purchased the naming rights to the new stadium being built to house the Houston Texans and the Houston Livestock Show and Rodeo. Since then the company was purchased by NRG which has decided it's time to market itself and slap its name and logos all over the building.
According to the Houston Chronicle:
County sources say NRG, which acquired Reliant's retail operations in 2009, is planning a rebranding effort that will involve swapping out every sign bearing the Reliant name. The name change would apply to all facilities in the Harris County-owned park, including the Center, the Arena and the Astrodome, according to NRG.What we know as Reliant Stadium was built on the public's dime. Bob McNair - a ridiculously wealthy man who professes his love for capitalism - put up a token amount of money and the county picked up the rest of the tab by taxing folks who stay in hotels and rent cars. The stadium, and the ground on which it sits, is owned by Harris County.
But here's the part about the name change that caught my attention:
Reliant bought the naming rights for the Houston Texans' stadium and surrounding buildings in 2002 for $300 million, the most lucrative deal of its kind at the time.
The 32-year agreement required Reliant to pay about $10 million a year, with 75 percent going to the NFL team, 15 percent to the Houston Livestock Show & Rodeo and 10 percent to Harris County. Those terms remain the same.Interesting, Bob McNair takes home 75% of the bounty for the naming rights to a stadium he neither owns nor paid for. Yes, the Texans pay a yearly lease for the right to use the stadium ten weekends a year. But that just makes them a tenant - since when does a tenant get a bigger piece of the pie than the landlord?
As for the Rodeo, for those of y'all who aren't familiar with the three-week long extravaganza currently going on, it is one of the biggest charitable organizations in the state. The Rodeo pays out millions of dollars to state and local charities and in scholarships for young people. The share of the naming rights going their way is going to a good cause rather than someone's back pocket.
You see, Bob McNair and his ilk love to preach the virtues of capitalism. They will tell you that just handing out money to the poor will never solve the problem of poverty. Government assistance just breeds more dependence, they'll tell you. It weakens the soul, it creates a culture of dependency.
But don't get in their way when they're running to the window to get their hand-out. Nope, we can't expand Medicaid coverage, we can't increase school funding, we can't raise the minimum wage, we can't build more affordable housing, we can't put a public works jobs program into place, but we can damn sure hand out millions of dollars a year to the wealthy.
That's capitalism for you.
Wednesday, March 12, 2014
It's hard work losing money
In February 2013 Warren Buffett bought the struggling Heinz Company. The company was bleeding cash and Mr. Buffett swept in like a rescuing angel. Or so he made himself appear.
Now, a year later, and Heinz is still awash in red ink. The company lost almost $72 million in 2013. The losses continue.
The company has closed down three plants (two in the US) and laid off some 3,400 workers in an effort to regain profitability.
William Johnson, who was the CEO until the end of 2013, took home over $110 million in compensation for running the company into the ground (hmmm, it seems cutting his pay may have stanched the bleeding). The current boss, Bernardo Hees has been paid over $9 million since coming aboard last June.
This is the world of 21st century capitalism. Run a company into the ground and take a little off the top for the trouble. Isn't this an economic system that is supposed to reward success and punish failure? Isn't this an economic system that is supposed to provide incentives to make a profit?
The reality is our economic system acts as a vacuum that takes money from the pockets of those who produce the goods and puts it in the pockets of those who live off the labor of others. Companies pay outrageous salaries to CEO's who sit and fiddle while the company goes under. The high pay of executives is rationalized by claiming the company must pay through the nose to keep up with the Joneses.
Of course it helps that CEO's sit on other corporate boards - and often serve on the compensation committee - voting increased pay and benefits to their fellow CEO's.
And while Wall Street and media focus on share prices and quarterly numbers, very few folks pay attention to what's happening at the bottom. You will never hear experts and pundits in the corporate media placing the blame for the slumping global economy on the crisis of overproduction. That would require some basic questioning of the system.
While those at the top of the corporate ladder gorge themselves on the labor of others, those who actually do the work find themselves in a more precarious position every day. Just what do you think is going to happen when the masses of workers can no longer afford the products their labor produces?
Now, a year later, and Heinz is still awash in red ink. The company lost almost $72 million in 2013. The losses continue.
The company has closed down three plants (two in the US) and laid off some 3,400 workers in an effort to regain profitability.
William Johnson, who was the CEO until the end of 2013, took home over $110 million in compensation for running the company into the ground (hmmm, it seems cutting his pay may have stanched the bleeding). The current boss, Bernardo Hees has been paid over $9 million since coming aboard last June.
This is the world of 21st century capitalism. Run a company into the ground and take a little off the top for the trouble. Isn't this an economic system that is supposed to reward success and punish failure? Isn't this an economic system that is supposed to provide incentives to make a profit?
The reality is our economic system acts as a vacuum that takes money from the pockets of those who produce the goods and puts it in the pockets of those who live off the labor of others. Companies pay outrageous salaries to CEO's who sit and fiddle while the company goes under. The high pay of executives is rationalized by claiming the company must pay through the nose to keep up with the Joneses.
Of course it helps that CEO's sit on other corporate boards - and often serve on the compensation committee - voting increased pay and benefits to their fellow CEO's.
And while Wall Street and media focus on share prices and quarterly numbers, very few folks pay attention to what's happening at the bottom. You will never hear experts and pundits in the corporate media placing the blame for the slumping global economy on the crisis of overproduction. That would require some basic questioning of the system.
While those at the top of the corporate ladder gorge themselves on the labor of others, those who actually do the work find themselves in a more precarious position every day. Just what do you think is going to happen when the masses of workers can no longer afford the products their labor produces?
Wednesday, February 26, 2014
When the truth isn't so clear cut
The story line was that the Ukrainian government under President Viktor Yanukovych precipitated the situation in Kiev by choosing to strengthen his country's ties with Russia rather than aligning with the European Union. This decision supposedly caused so much consternation with the opposition parties that activists took over the streets to protest the decision.
When the demonstrations turned violent, President Yanukovych turned his security forces on their own countrymen and ordered them to fire. Dozens were killed and Yanukovych suddenly found himself in an untenable position.
President Obama called on Mr. Yanukovych to tell his security forces to stand down. Mr. Obama proclaimed that the United States stood behind those protesting for freedom and democracy. He said the country needed to move toward multi-party democracy and needed to open itself to the West.
Mr. Yanukovych fled the capital on Saturday just before the Parliament voted to remove him from office. The protesters were victorious. Democracy had triumphed. Ukraine could now turn its attention to the West.
But not so fast.
What was really going on in the Ukraine? What was really at stake?
Maybe a clue could be gathered from yesterday's announcement by the European Union that it would provide loans to the Ukrainian government to assist in economic and political reform. At the same time the EU warned Russia to stop meddling in the internal affairs of Ukraine.
A similar situation is playing itself out in Venezuela where the US government is providing backing for the groups organizing street protests against the government of Nicholas Maduro. Venezuela has been on Washington's shit list ever since Hugo Chavez came to power and began attacking the fundamental and systemic inequality in the nation.
The language the US uses when discussing Venezuela in public mirrors that they use when talking about the situation in the Ukraine. In both cases our government claims to be on the side of democracy and human rights. Washington issued calls for both governments to order their security forces to stand down. Yet, in both cases, our government was working behind the scenes to effect the overthrow of democratically elected governments.
As an aside, my wife and I had a conversation about Venezuela the other day. She had a couple of Venezuelan students who both came from fairly wealthy families who had the money to send them to college in the United States. Neither of them had anything good to say about Hugo Chavez. They blamed him for the worsening economic situation in the country. My wife adopted their views on the situation. Thus she never contemplated the condition of the poor and the ways in which they had been exploited by international capital for decades. She also didn't understand that our government cut aid to Venezuela because our elected officials didn't like the idea of a socialist trying to make things better for the poor and working class. She also didn't understand that our government has been funding various opposition groups for years in an effort to destabilize the government down there.
In both the Ukraine and Venezuela the parties in power had enough support in the legislature to pass the laws they wanted to without any assistance from the opposition. Now I'll be the first to tell you that operating in that manner is a recipe for disaster as it marginalizes a great number of people (look at what happened in Egypt under the Muslim Brotherhood), but it certainly doesn't give the United States the right to meddle in their politics to try to put someone friendly in power. The irony is you don't have to leave this state to see such tactics demonstrated. The Texas Taliban, under Governor Rick Perry, has forced its views on women's rights, gay rights, health care and the environment down everyone's throats in the Lone Star State simply because they don't need Democratic support in the state legislature to pass anything.
And the notion that our government will go out on a limb to promote democracy and human rights is downright laughable. Where is the US outrage over the non-democratic governments of Saudi Arabia and Bahrain? Where is the outrage over the treatment of women? Last time I checked we're still providing military hardware to the Saudis and military assistance to the Bahrainis. For decades our government openly supported right-wing military dictatorships in South and Central America. No one in Washington ever raised a stink about the slaughter of innocents in East Timor at the hands of the Indonesian government.
The truth about what happened in Ukraine is a very murky concept indeed and it certainly doesn't follow the narrative we've been force fed over the past few weeks.
When the demonstrations turned violent, President Yanukovych turned his security forces on their own countrymen and ordered them to fire. Dozens were killed and Yanukovych suddenly found himself in an untenable position.
President Obama called on Mr. Yanukovych to tell his security forces to stand down. Mr. Obama proclaimed that the United States stood behind those protesting for freedom and democracy. He said the country needed to move toward multi-party democracy and needed to open itself to the West.
Mr. Yanukovych fled the capital on Saturday just before the Parliament voted to remove him from office. The protesters were victorious. Democracy had triumphed. Ukraine could now turn its attention to the West.
But not so fast.
What was really going on in the Ukraine? What was really at stake?
Maybe a clue could be gathered from yesterday's announcement by the European Union that it would provide loans to the Ukrainian government to assist in economic and political reform. At the same time the EU warned Russia to stop meddling in the internal affairs of Ukraine.
And then there was US Assistant Secretary of State Victoria Nuland having the spotlight thrust on her for using some very colorful language in talking about the EU. But that episode only served to divert people's attention to what was really important on the leaked telephone conversation. On tape we had Ms. Nuland talking with the US ambassador to Ukraine, Geoffery Pyatt, about who the US was backing in the confrontation. That's right, while everyone focused on Ms. Nuland telling the EU to fuck off, everyone ignored the fact that US officials were working with the opposition to overthrow the democratically elected government of Viktor Yanukovych.VICTORIA NULAND: Good. So, I don’t think Klitsch should go into the government. I don’t think it’s necessary. I don’t think it’s a good idea.
GEOFFREY PYATT: Yeah. I mean, I guess, you think—in terms of him not going into the government, just let him sort of stay out and do his political homework and stuff. I’m just thinking, in terms of sort of the process moving ahead, we want to keep the moderate democrats together. The problem is going to be Tyahnybok and his guys. And, you know, I’m sure that’s part of what Yanukovych is calculating on all of this. I kind of—
VICTORIA NULAND: I think—I think Yats is the guy who’s got the economic experience, the governing experience. He’s the guy—you know, what he needs is Klitsch and Tyahnybok on the outside. He needs to be talking to them four times a week. You know, I just think Klitsch going in, he’s going to be at that level working for Yatsenyuk. It’s just not going to work.
A similar situation is playing itself out in Venezuela where the US government is providing backing for the groups organizing street protests against the government of Nicholas Maduro. Venezuela has been on Washington's shit list ever since Hugo Chavez came to power and began attacking the fundamental and systemic inequality in the nation.
The language the US uses when discussing Venezuela in public mirrors that they use when talking about the situation in the Ukraine. In both cases our government claims to be on the side of democracy and human rights. Washington issued calls for both governments to order their security forces to stand down. Yet, in both cases, our government was working behind the scenes to effect the overthrow of democratically elected governments.
As an aside, my wife and I had a conversation about Venezuela the other day. She had a couple of Venezuelan students who both came from fairly wealthy families who had the money to send them to college in the United States. Neither of them had anything good to say about Hugo Chavez. They blamed him for the worsening economic situation in the country. My wife adopted their views on the situation. Thus she never contemplated the condition of the poor and the ways in which they had been exploited by international capital for decades. She also didn't understand that our government cut aid to Venezuela because our elected officials didn't like the idea of a socialist trying to make things better for the poor and working class. She also didn't understand that our government has been funding various opposition groups for years in an effort to destabilize the government down there.
In both the Ukraine and Venezuela the parties in power had enough support in the legislature to pass the laws they wanted to without any assistance from the opposition. Now I'll be the first to tell you that operating in that manner is a recipe for disaster as it marginalizes a great number of people (look at what happened in Egypt under the Muslim Brotherhood), but it certainly doesn't give the United States the right to meddle in their politics to try to put someone friendly in power. The irony is you don't have to leave this state to see such tactics demonstrated. The Texas Taliban, under Governor Rick Perry, has forced its views on women's rights, gay rights, health care and the environment down everyone's throats in the Lone Star State simply because they don't need Democratic support in the state legislature to pass anything.
And the notion that our government will go out on a limb to promote democracy and human rights is downright laughable. Where is the US outrage over the non-democratic governments of Saudi Arabia and Bahrain? Where is the outrage over the treatment of women? Last time I checked we're still providing military hardware to the Saudis and military assistance to the Bahrainis. For decades our government openly supported right-wing military dictatorships in South and Central America. No one in Washington ever raised a stink about the slaughter of innocents in East Timor at the hands of the Indonesian government.
The truth about what happened in Ukraine is a very murky concept indeed and it certainly doesn't follow the narrative we've been force fed over the past few weeks.
Monday, December 30, 2013
Book review - The Crash of 2016
In The Crash of 2016: The Plot to Destroy America and What We Can Do About It, author Thom Hartman lays out his case for why the US economy is heading for the cliff. According to Mr. Hartman's theory, major recessions come about every 80 years or so because that gives society enough time to forget what caused the last recession and so we repeat the cycle ad infinitum.
Every major recession has followed speculative bubbles and war. The speculative bubbles are caused by serious reductions in the top tax rates which leads to, what Mr. Hartman refers to as, "hot money." This hot money, having no place to go finds itself caught up in bubbles -- whether they be tulips, stocks or housing.
After the crash the top marginal tax rates are raised again, which cools off the hot money, and the economy starts humming along nicely. Until, that is, enough time has passed so that everyone forgets the tax cuts, the speculative bubbles and war and another crash occurs.
Mr. Hartman's theory of cycles is a popular theory to explain most historic phenomenon. So, while it's easy to explain and has a certain symmetry to it, the theory leaves a bit to be desired. And, to be fair to Mr. Hartman, the same applies to every other historian and theoretician who has tried to tie history to cycles.
Mr. Hartman's book also suffers from another common problem. Mr. Hartman is an unabashed progressive - and there's not a damn thing wrong with that. But he also harbors an undying faith and belief in capitalism. His mission is to try to restore our economic system to some mythological one in which this abstraction called the middle class brought about widespread prosperity.
This is the same line of thought that President Obama has espoused since he was chosen to run for president. Go back and listen to his campaign speeches and his pronouncements during his time in office. He constantly talks about programs that benefit the middle class - but he never mentions the working poor. Doing so would remind us all about the ways in which capitalism has, by design, left behind the vast majority of folks in the world.
His focus also renders him blind to the essential contradiction in capitalism. The system is designed to concentrate profits in fewer and fewer hands. As capitalism is dependent upon increased levels of consumption to keep the wheels turning, this overbearing march toward higher profits leaves those who produce the goods and services with less. So, while we pump out more and more product, fewer folks have the means to purchase them. It is this crisis of overproduction that brings about periodic recessions and market failures.
Every major recession has followed speculative bubbles and war. The speculative bubbles are caused by serious reductions in the top tax rates which leads to, what Mr. Hartman refers to as, "hot money." This hot money, having no place to go finds itself caught up in bubbles -- whether they be tulips, stocks or housing.
After the crash the top marginal tax rates are raised again, which cools off the hot money, and the economy starts humming along nicely. Until, that is, enough time has passed so that everyone forgets the tax cuts, the speculative bubbles and war and another crash occurs.
Mr. Hartman's theory of cycles is a popular theory to explain most historic phenomenon. So, while it's easy to explain and has a certain symmetry to it, the theory leaves a bit to be desired. And, to be fair to Mr. Hartman, the same applies to every other historian and theoretician who has tried to tie history to cycles.
Mr. Hartman's book also suffers from another common problem. Mr. Hartman is an unabashed progressive - and there's not a damn thing wrong with that. But he also harbors an undying faith and belief in capitalism. His mission is to try to restore our economic system to some mythological one in which this abstraction called the middle class brought about widespread prosperity.
This is the same line of thought that President Obama has espoused since he was chosen to run for president. Go back and listen to his campaign speeches and his pronouncements during his time in office. He constantly talks about programs that benefit the middle class - but he never mentions the working poor. Doing so would remind us all about the ways in which capitalism has, by design, left behind the vast majority of folks in the world.
His focus also renders him blind to the essential contradiction in capitalism. The system is designed to concentrate profits in fewer and fewer hands. As capitalism is dependent upon increased levels of consumption to keep the wheels turning, this overbearing march toward higher profits leaves those who produce the goods and services with less. So, while we pump out more and more product, fewer folks have the means to purchase them. It is this crisis of overproduction that brings about periodic recessions and market failures.
Wednesday, December 18, 2013
Democracy on hold
The United States shall guarantee to every State in this Union a Republican Form of Government...
-- U.S. Constitution, Art. IV, Sec. IVLast month the city of Detroit filed the largest municipal bankruptcy case in history. For years the city has been in a steady state of decline that began when the automakers pulled up stakes and settled in the suburbs. Over the years more and more employers have left the city, leaving the municipal tax base in shambles.
Property values plummeted. Tax revenues dried up. The city couldn't afford to provide police and fire services and schools had no money.
Into the fiscal mess stepped Michigan Governor Rick Snyder who decreed that the state had the right to appoint an emergency manager, Kevyn Orr, to get the city through the crisis since local government officials couldn't seem to get out of their own way. Residents were understandably upset about the governor, in essence, voiding their local elections and choosing someone he wanted to run the city.
As a result of the uproar, the emergency manager law was tossed out by an appeals court because the law nullified the very principle of democracy. White voters in the suburbs and rural areas then approved a constitutional amendment giving the governor the power to appoint emergency managers to run cities which were teetering on the edge of insolvency. Interestingly enough, the people affected by the law were mostly black.
The problems in Detroit have to do with an eroding industrial base and very bad investment choices by the city - choices brought to the city by the very law firm, Jones Day, where Mr. Orr worked.
And now, instead of looking toward those who made the decisions that brought Detroit to its knees, the emergency manager is looking toward retired city workers to pay for a mess they had no hand in creating. By taking the city into bankruptcy, Mr. Orr is seeking to have a federal court allow creditors to raid the city's pension fund.
As an aside, Mr. Orr is being paid a salary of $275,00 to take from the old, the poor and the working class and hand it over to banks and wealthy investors. He is also living in a $4200 a month condo on the state's dime.
The city made a promise to its employees that they would receive a pension upon retiring. Most of the pensions are fairly modest and provide just enough money for retirees to get by on. But because the retirees are unsecured creditors, they have no protection in bankruptcy court. Their pensions will be sacrificed so that wealthy bondholders and bankers can get paid.
Employee unions are also under attack as Mr. Orr seeks to void union contracts and drive wages down. Union employees didn't create the fiscal problems in Detroit - yet they, too, are being asked to pay the price so that wealthy investors can cut their losses.
In addition Mr. Orr is looking at selling the city's art collection and park lands. In other words, the commons will be sold so that investors can cash a check.
And all the while the people who live in Detroit have no say in what happens to them because the governor decided to take away their right to vote.
See also:
"Detroit accused of exaggerating $18bn debts in push for bankruptcy," The Guardian (11/20/2013)
Monday, December 9, 2013
Robbing the poor and giving to the rich
The other day I wrote about Black Friday protests at Wal-Mart and the ways in which large corporations shift the burden of paying employees to taxpayers, today we'll take a look at how these same corporations take money from taxpayers to pay executives a king's ransom.
According to a recent report from the Institute of Policy Studies, thanks to changes in the tax code, corporations are able to deduct the cost of "performance-based pay" for executives. In the fast food industry the CEO's of the six biggest public companies averaged over $19 million dollars a year in compensation in 2011 and 2012 with slightly over $15 million of that based on performance. Taxpayers subsidized over $5 million per CEO per year thanks to the tax code.
At the same time front-line fast-food employees are receiving federal assistance to the tune of nearly $7 billion a year.
That's how free enterprise works in the United States. Corporations rely on government tax breaks and subsidies to fill their coffers with cash and distribute it to the highest executives while the people on the ground who do the actual work struggle to keep their heads above water.
But heaven forbid we raise the minimum wage to a level that workers can actually live on. We just can't do it. Where's the money going to come from? We can't possible take it from the suits in the corporate office or from shareholders collecting their rents. Instead we'll leave the workers to fend for themselves as in Victorian England.
So we continue to put the squeeze on the working poor. Meanwhile we have an unemployment rate that is still too high. We have anemic job growth. And we have little manufacturing left in this country.
In order to keep the economy afloat someone has to be able to buy the stuff we make and sell. It's that consumption that makes the wheels turn. But, as we increase the numbers of the working poor and concentrate more and more wealth at the very top of the ladder we are sowing the seeds of our own destruction.
Our economic model is unsustainable. The system almost collapsed of its own weight a few years ago. Only fistfuls of money from the government to the very companies that caused the meltdown kept it running. It was telling that our government was more than willing to back up the money truck to companies on the brink of ruin but that it couldn't spare a dime for the ordinary folks whose lives were cast asunder as the result of something they had no hand in.
Just remember that, at the end of the day, there are more workers than CEO's.
According to a recent report from the Institute of Policy Studies, thanks to changes in the tax code, corporations are able to deduct the cost of "performance-based pay" for executives. In the fast food industry the CEO's of the six biggest public companies averaged over $19 million dollars a year in compensation in 2011 and 2012 with slightly over $15 million of that based on performance. Taxpayers subsidized over $5 million per CEO per year thanks to the tax code.
At the same time front-line fast-food employees are receiving federal assistance to the tune of nearly $7 billion a year.
That's how free enterprise works in the United States. Corporations rely on government tax breaks and subsidies to fill their coffers with cash and distribute it to the highest executives while the people on the ground who do the actual work struggle to keep their heads above water.
But heaven forbid we raise the minimum wage to a level that workers can actually live on. We just can't do it. Where's the money going to come from? We can't possible take it from the suits in the corporate office or from shareholders collecting their rents. Instead we'll leave the workers to fend for themselves as in Victorian England.
So we continue to put the squeeze on the working poor. Meanwhile we have an unemployment rate that is still too high. We have anemic job growth. And we have little manufacturing left in this country.
In order to keep the economy afloat someone has to be able to buy the stuff we make and sell. It's that consumption that makes the wheels turn. But, as we increase the numbers of the working poor and concentrate more and more wealth at the very top of the ladder we are sowing the seeds of our own destruction.
Our economic model is unsustainable. The system almost collapsed of its own weight a few years ago. Only fistfuls of money from the government to the very companies that caused the meltdown kept it running. It was telling that our government was more than willing to back up the money truck to companies on the brink of ruin but that it couldn't spare a dime for the ordinary folks whose lives were cast asunder as the result of something they had no hand in.
Just remember that, at the end of the day, there are more workers than CEO's.
Friday, November 29, 2013
Black day for Wal-Mart
It was bad enough when it was just Black Friday. Then the stores started racing each other to see who could open earliest. One year when I took my oldest up to College Station to watch the Longhorns stomp on the Aggies we saw the line of folks waiting outside a store before the football game ever started.
Now, of course, we have stores open on Thanksgiving Day because it's so much more important to sell the latest consumer devices than to allow your employees to spend a day with their families.
Today is also a day of protest against Wal-Mart and their business practices. Wal-Mart made around $17 billion last year. The company earns that profit by paying its hourly workers subsistence wages and by holding their hours down.
Wal-Mart is able to do this because their actions are subsidized by our government us. To be fair, Wal-Mart isn't the only company that pays its employees poverty-level wages because we, the taxpayers, subsidize them. Wal-Mart, however, serves as the poster child because of the ruthless way it conducts its business.
Workers who toil for minimum wage can work full-time and still find themselves under the federal poverty line. They may receive food stamps (SNAP), welfare payments or earned income tax credits to supplement their meager incomes. They may also qualify for Medicaid (or subsidies for private health insurance). President Clinton's welfare reform package encouraged companies to keep their wages low since welfare recipients were required to work (and, needless to say, found themselves in minimum wage jobs).
These income transfer programs allow them to scrape by. But someone who is working a full-time job shouldn't have to just scrape by. It is a sad statement on our economic model that you can work full-time and still be living in poverty.
Ironically enough, the same companies that take advantage of income transfer programs to subsidize their low wages, do their best to do away with any legislation that would further regulate their businesses. They are more than happy for government interference when it allows them to pay poverty-level wages but want no part of it should the proposed rules or regulations deflect one penny from the bottom line.
The federal minimum wage must be raised. And I'm not talking about President Obama's day-late-and-dollar-short plan of hiking it to $9.00 an hour. That figure still leaves full-time workers in poverty. The minimum wage needs to be raised to somewhere between $12.00 and $15.00 an hour. Wal-Mart and its shareholders can subsist on a little less profit every year but their employees can't survive on what they make today. That dynamic needs to change.
Our economic philosophy cannot be built solely on the idea of greater economic efficiency. Our society is not a machine. It is made up of people who all have to put food on the table and clothes on their backs. Economic fairness and equity must trump efficiency in the long run.
Now, of course, we have stores open on Thanksgiving Day because it's so much more important to sell the latest consumer devices than to allow your employees to spend a day with their families.
Today is also a day of protest against Wal-Mart and their business practices. Wal-Mart made around $17 billion last year. The company earns that profit by paying its hourly workers subsistence wages and by holding their hours down.
 Wa |
| Sign at a Wal-Mart in Ohio asking for donations for associates who can't afford Thanksgiving Dinner on the wages Wal-Mart pays. |
Workers who toil for minimum wage can work full-time and still find themselves under the federal poverty line. They may receive food stamps (SNAP), welfare payments or earned income tax credits to supplement their meager incomes. They may also qualify for Medicaid (or subsidies for private health insurance). President Clinton's welfare reform package encouraged companies to keep their wages low since welfare recipients were required to work (and, needless to say, found themselves in minimum wage jobs).
These income transfer programs allow them to scrape by. But someone who is working a full-time job shouldn't have to just scrape by. It is a sad statement on our economic model that you can work full-time and still be living in poverty.
Ironically enough, the same companies that take advantage of income transfer programs to subsidize their low wages, do their best to do away with any legislation that would further regulate their businesses. They are more than happy for government interference when it allows them to pay poverty-level wages but want no part of it should the proposed rules or regulations deflect one penny from the bottom line.
The federal minimum wage must be raised. And I'm not talking about President Obama's day-late-and-dollar-short plan of hiking it to $9.00 an hour. That figure still leaves full-time workers in poverty. The minimum wage needs to be raised to somewhere between $12.00 and $15.00 an hour. Wal-Mart and its shareholders can subsist on a little less profit every year but their employees can't survive on what they make today. That dynamic needs to change.
Our economic philosophy cannot be built solely on the idea of greater economic efficiency. Our society is not a machine. It is made up of people who all have to put food on the table and clothes on their backs. Economic fairness and equity must trump efficiency in the long run.
Tuesday, November 26, 2013
Another useless conference
Last week marked the end of the 19th annual UN conference on climate change (referred to in bureaucratic UN-speak as the Congress of Parties) in Warsaw, Poland. As is par for the course there were no binding agreements hammered out and no decisive actions other than proclaiming that in two year's time in Paris the parties will reach an agreement about trying to reverse climate change. Of course that raises the question of why there's going to be another annual conference next fall if no one's going to agree to anything. But...
The biggest issue of contention is the idea that the developed world either needs to pay for, or provide sources of funding for, projects in the developing world that will allow continued development without increasing carbon emissions. The nations in the developing world like the idea because they would like to raise their living standards but new technologies - while beneficial to the planet - tend to be a bit more expensive than yesterday's "dirty energy" solutions. The governments in the developed world don't like the idea because, well, because it's the poorer nations' faults for being so poor and they just need to figure out how to carry out these changes.
Of course the developed world's point of view isn't put across so bluntly, but the fact remains the advanced capitalist countries and the (crypto-fascist) Chinese have fucked this planet up to an unimaginable degree but, since we can't put a price tag on clean air, clean water and the climate, we're not about to do a damn thing about it. It's the nature of capitalism, folks. If you can't monetize it - it just doesn't exist to be analyzed.
Since no one owns the air above us we have pumped tons and tons of hazardous materials into the sky without giving a second thought to the consequences. And because industry operated for decades on the model that you might as well pollute because it doesn't cost anything to do so, the governments that serve as bag men for the industrialists are downright hostile to any scheme that would cost their biggest campaign contributors a penny for their past sins.
In the meantime every new initiative aimed at fixing the mess we've made of the planet puts the burden on the developing world to keep their emissions down to a level that all but insures the largest corporations of cheap pools of labor for years into the future.
The simple fact of the matter is that we, through our consumption and way of life, have done far more harm to the environment than can be quantified. If we were forced to pay the true cost of environment degradation in the products we purchase, our lifestyles would change in a hurry. Yet our leaders aren't willing to concede that the decisions that have been made in Washington and western Europe have put the developing world in a can't-win position.
Until a plan is developed that takes into account the harm we have done to the planet and creates a mechanism by which the developing world has access to money (cash, not debt obligations) to raise their citizens' standards of living in an ecologically friendly manner, these conferences are a waste of everyone's time and money.
The biggest issue of contention is the idea that the developed world either needs to pay for, or provide sources of funding for, projects in the developing world that will allow continued development without increasing carbon emissions. The nations in the developing world like the idea because they would like to raise their living standards but new technologies - while beneficial to the planet - tend to be a bit more expensive than yesterday's "dirty energy" solutions. The governments in the developed world don't like the idea because, well, because it's the poorer nations' faults for being so poor and they just need to figure out how to carry out these changes.
Of course the developed world's point of view isn't put across so bluntly, but the fact remains the advanced capitalist countries and the (crypto-fascist) Chinese have fucked this planet up to an unimaginable degree but, since we can't put a price tag on clean air, clean water and the climate, we're not about to do a damn thing about it. It's the nature of capitalism, folks. If you can't monetize it - it just doesn't exist to be analyzed.
Since no one owns the air above us we have pumped tons and tons of hazardous materials into the sky without giving a second thought to the consequences. And because industry operated for decades on the model that you might as well pollute because it doesn't cost anything to do so, the governments that serve as bag men for the industrialists are downright hostile to any scheme that would cost their biggest campaign contributors a penny for their past sins.
In the meantime every new initiative aimed at fixing the mess we've made of the planet puts the burden on the developing world to keep their emissions down to a level that all but insures the largest corporations of cheap pools of labor for years into the future.
The simple fact of the matter is that we, through our consumption and way of life, have done far more harm to the environment than can be quantified. If we were forced to pay the true cost of environment degradation in the products we purchase, our lifestyles would change in a hurry. Yet our leaders aren't willing to concede that the decisions that have been made in Washington and western Europe have put the developing world in a can't-win position.
Until a plan is developed that takes into account the harm we have done to the planet and creates a mechanism by which the developing world has access to money (cash, not debt obligations) to raise their citizens' standards of living in an ecologically friendly manner, these conferences are a waste of everyone's time and money.
Monday, November 18, 2013
Feeding at the trough
Boeing is a hugely profitable company. Between them and the European consortium, Airbus, they control most of the market for commercial airplanes. Boeing also does a brisk business as a defense contractor.
But sometimes making money hand over fist isn't enough. Last week the union of Boeing machinists rejected a contract offer that would end their traditional pension plan (and replace it with a 401k) and increase health care costs. As a sweetener, Boeing offered workers a $10,000 bonus if they approved the contract.
Union members voted overwhelmingly to reject the contract offer on the grounds that the new contract would represent serious givebacks to the company. The changes in the company's pension plan are the most insidious. For decades employers assumed the risk on pensions - guaranteeing payouts to their former employees. Back in the 1980's and 1990's employers looked at the piles of cash that were being held to pay these pension obligations and found another way to extract money from the wallets of their employees. The 401(k) was born. Now, instead of the employer assuming the risk to funding the pension fund down the road, the employees are forced to assume the risk of the vagaries of the market. Meanwhile, corporate executives and their shareholders get their rocks off looking at the growing bottom line.
Boeing officials immediately announced that, as a result of the vote, they might have to look elsewhere for a location to manufacture their latest plane. Political "leaders" in Washington then decided to try to rush a vote through the state legislature offering $8.7 billion in tax breaks to the company.
This is on top of a package of tax breaks the state handed over to the company in 2003. For corporations, government largesse is like crack. They keep on coming back for more and more and more.
This is free enterprise at work here in these United States. There is a race to the bottom as companies seek to find locales that will offer up the cheapest labor and the biggest package of tax breaks so they can squeeze out even larger profits. And states and municipalities are only too eager to play the game - never once stopping to think that they may be on the wrong end of the equation some day.
In the meantime, taxpayers are asked to subsidize these bastions of modern-day capitalism while students, the elderly and the poor are asked to make do with less.
It's a nice little irony that those on the right are quick to criticize any government program that's purpose is to assist those in need, but they have no compunction about ponying up billions of dollars to satisfy the greed of corporate executives and their shareholders.
But sometimes making money hand over fist isn't enough. Last week the union of Boeing machinists rejected a contract offer that would end their traditional pension plan (and replace it with a 401k) and increase health care costs. As a sweetener, Boeing offered workers a $10,000 bonus if they approved the contract.
Union members voted overwhelmingly to reject the contract offer on the grounds that the new contract would represent serious givebacks to the company. The changes in the company's pension plan are the most insidious. For decades employers assumed the risk on pensions - guaranteeing payouts to their former employees. Back in the 1980's and 1990's employers looked at the piles of cash that were being held to pay these pension obligations and found another way to extract money from the wallets of their employees. The 401(k) was born. Now, instead of the employer assuming the risk to funding the pension fund down the road, the employees are forced to assume the risk of the vagaries of the market. Meanwhile, corporate executives and their shareholders get their rocks off looking at the growing bottom line.
Boeing officials immediately announced that, as a result of the vote, they might have to look elsewhere for a location to manufacture their latest plane. Political "leaders" in Washington then decided to try to rush a vote through the state legislature offering $8.7 billion in tax breaks to the company.
This is on top of a package of tax breaks the state handed over to the company in 2003. For corporations, government largesse is like crack. They keep on coming back for more and more and more.
This is free enterprise at work here in these United States. There is a race to the bottom as companies seek to find locales that will offer up the cheapest labor and the biggest package of tax breaks so they can squeeze out even larger profits. And states and municipalities are only too eager to play the game - never once stopping to think that they may be on the wrong end of the equation some day.
In the meantime, taxpayers are asked to subsidize these bastions of modern-day capitalism while students, the elderly and the poor are asked to make do with less.
It's a nice little irony that those on the right are quick to criticize any government program that's purpose is to assist those in need, but they have no compunction about ponying up billions of dollars to satisfy the greed of corporate executives and their shareholders.
Friday, November 15, 2013
A false debate
Janet Yellen, President Obama's choice to lead the Federal Reserve, went up to Capitol Hill yesterday to face the Senate Banking Committee for her confirmation hearing.
Predictably Republicans were critical of Ms. Yellen while Democrats were supportive. The Fed's so-called quantitative easing policy took center stage. Republican senators took their time criticizing the policy and raising the specter of inflation. Their contention was that the expansive monetary policy was not working.
On that point I agree with them. But not for the reasons they gave.
According to the Keynesian model, whenever the economy is in a period of decline, it is primarily because their is an inadequate level of investment. Keynes theorized that if there was insufficient private investment in the economy then the government needed to step in to make up the difference. This could be accomplished in a variety of ways.
First, the government could take the direct approach and up the level of aggregate spending. This is the path that President Roosevelt eventually took to try to bring the country out of the Great Depression. Some of the increase in spending is the result of welfare programs that assist folks in need. Overall investment can also be increased by reducing taxes - therefore freeing up more money for investment. Finally, total investment can be increased by reducing the interest rates the Fed charges banks to borrow money. Reducing those rates should, in theory, lead to lower interest rates on loans and credit cards.
Of these methods, the most direct way of impacting the economy is through direct government investment. That entails public works projects such as road, bridge and school construction. It can also be accomplished through programs in which the government hires unemployed folks to carry out various projects. President Roosevelt's New Deal created an alphabet soup of direct hire programs that brought the unemployment rate down. The New Deal programs put money in the pockets of those who needed it most. They spent the money on essential goods and services which insured that the money kept circulating through the economy.
While cutting taxes also puts more money in people's hands, it puts more money in the hands of those who have more money. Just think about it, if you cut taxes, the folks who benefit are the folks who have the most money to begin with. Some of that money is spent on essential goods and services but a good chunk of that money is squirreled away where it doesn't increase overall demand for goods and services and, therefore, workers. The best example of this would be the mountain of cash most corporations are sitting on as we speak. Instead of using that money to hire new workers, companies are hoarding it or doling out more bonuses to executives and managers.
The least effective method of spurring economic growth is through monetary policy. While raising interest rates is a great way to choke off the economy by making it more expensive for businesses to borrow money to invest in new plants, equipment and workers, lowering rates have a very marginal effect on economic growth. Again, just look at the amount of cash that companies have sitting in their bank accounts right now. If banks aren't willing to lend out money, it doesn't matter how low interest rates are - no one will be borrowing. As it stands right now, the interest rate the Fed charges banks to borrow is effectively zero - yet the economy still stumbles along with unreasonably high unemployment.
We have sat through years of record low interest rates and expansive monetary policy and yet we still have unemployment well over 7% and low- to moderate economic growth. It's the policy, stupid.
Trying to restart the economy by tinkering with interest rates is, as Mr. Keynes once said, akin to trying to push a string. Republicans would have you believe that the biggest worry we have right now is the possibility of inflation. I've got news for you. The only folks worried about inflation are bankers and those who lend money. The real problem is unemployment and sluggish demand. Those problems are not going to be solved by expanding the money supply. Those problems will only be solved by polices that promote full employment.
Until we have unemployment down to manageable levels, inflation isn't something we should fear. Quite the contrary. Except for inflation caused by external shocks to the economy, inflationary pressures are a sign that aggregate demand is increasing due to increased employment.
If working folks had political power in proportion to their numbers, we wouldn't be having this silly debate over inflation versus employment. But such is that artificial world known as Washington, D.C.
Predictably Republicans were critical of Ms. Yellen while Democrats were supportive. The Fed's so-called quantitative easing policy took center stage. Republican senators took their time criticizing the policy and raising the specter of inflation. Their contention was that the expansive monetary policy was not working.
On that point I agree with them. But not for the reasons they gave.
According to the Keynesian model, whenever the economy is in a period of decline, it is primarily because their is an inadequate level of investment. Keynes theorized that if there was insufficient private investment in the economy then the government needed to step in to make up the difference. This could be accomplished in a variety of ways.
First, the government could take the direct approach and up the level of aggregate spending. This is the path that President Roosevelt eventually took to try to bring the country out of the Great Depression. Some of the increase in spending is the result of welfare programs that assist folks in need. Overall investment can also be increased by reducing taxes - therefore freeing up more money for investment. Finally, total investment can be increased by reducing the interest rates the Fed charges banks to borrow money. Reducing those rates should, in theory, lead to lower interest rates on loans and credit cards.
Of these methods, the most direct way of impacting the economy is through direct government investment. That entails public works projects such as road, bridge and school construction. It can also be accomplished through programs in which the government hires unemployed folks to carry out various projects. President Roosevelt's New Deal created an alphabet soup of direct hire programs that brought the unemployment rate down. The New Deal programs put money in the pockets of those who needed it most. They spent the money on essential goods and services which insured that the money kept circulating through the economy.
While cutting taxes also puts more money in people's hands, it puts more money in the hands of those who have more money. Just think about it, if you cut taxes, the folks who benefit are the folks who have the most money to begin with. Some of that money is spent on essential goods and services but a good chunk of that money is squirreled away where it doesn't increase overall demand for goods and services and, therefore, workers. The best example of this would be the mountain of cash most corporations are sitting on as we speak. Instead of using that money to hire new workers, companies are hoarding it or doling out more bonuses to executives and managers.
The least effective method of spurring economic growth is through monetary policy. While raising interest rates is a great way to choke off the economy by making it more expensive for businesses to borrow money to invest in new plants, equipment and workers, lowering rates have a very marginal effect on economic growth. Again, just look at the amount of cash that companies have sitting in their bank accounts right now. If banks aren't willing to lend out money, it doesn't matter how low interest rates are - no one will be borrowing. As it stands right now, the interest rate the Fed charges banks to borrow is effectively zero - yet the economy still stumbles along with unreasonably high unemployment.
We have sat through years of record low interest rates and expansive monetary policy and yet we still have unemployment well over 7% and low- to moderate economic growth. It's the policy, stupid.
Trying to restart the economy by tinkering with interest rates is, as Mr. Keynes once said, akin to trying to push a string. Republicans would have you believe that the biggest worry we have right now is the possibility of inflation. I've got news for you. The only folks worried about inflation are bankers and those who lend money. The real problem is unemployment and sluggish demand. Those problems are not going to be solved by expanding the money supply. Those problems will only be solved by polices that promote full employment.
Until we have unemployment down to manageable levels, inflation isn't something we should fear. Quite the contrary. Except for inflation caused by external shocks to the economy, inflationary pressures are a sign that aggregate demand is increasing due to increased employment.
If working folks had political power in proportion to their numbers, we wouldn't be having this silly debate over inflation versus employment. But such is that artificial world known as Washington, D.C.
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