Obama in Osawatomie

Here is Obama giving a key political speech calling for a better economic deal for the middle class:



My problem with Obama: he gives great rhetoric, but if you measure his promises in 2008 with his delivery over the past 3 years, it is clear that you can't trust what he claims to stand for.

I hope I'm wrong and Obama truly is going to support a more progressive agenda for America. The bottom 99% really do need a new deal that ends the war on the bottom 99% by the ultra-rich that has been going on for 30+ years in America.

Here is Robert Reich's take on Obama's Osawatomie speech:

The President’s speech today in Osawatomie, Kansas — where Teddy Roosevelt gave his “New Nationalism” speech in 1910 — is the most important economic speech of his presidency in terms of connecting the dots, laying out the reasons behind our economic and political crises, and asserting a willingness to take on the powerful and the privileged that have gamed the system to their advantage.

Here are the highlights (and, if you’ll pardon me, my annotations):

For most Americans, the basic bargain that made this country great has eroded. Long before the recession hit, hard work stopped paying off for too many people. Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t - and too many families found themselves racking up more and more debt just to keep up.

He’s absolutely right – and it’s the first time he or any other president has clearly stated the long-term structural problem that’s been widening the gap between the very top and everyone else for thirty years – the breaking of the basic bargain linking pay to productivity gains.

For many years, credit cards and home equity loans papered over the harsh realities of this new economy. But in 2008, the house of cards collapsed.

Exactly. But the first papering over was when large numbers of women went into paid work, starting the in the late 1970s and 1980s, in order to prop up family incomes that were stagnating or dropping because male wages were under siege – from globalization, technological change, and the decline of unions. Only when this coping mechanism was exhausted, and when housing prices started to climb, did Americans shift to credit cards and home equity loans as a means of papering over the new harsh reality of an economy that was working for a minority at the top but not for most of the middle class.

We all know the story by now: Mortgages sold to people who couldn’t afford them, or sometimes even understand them. Banks and investors allowed to keep packaging the risk and selling it off. Huge bets - and huge bonuses - made with other people’s money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn’t have the authority to look at all.

It was wrong. It combined the breathtaking greed of a few with irresponsibility across the system. And it plunged our economy and the world into a crisis from which we are still fighting to recover. It claimed the jobs, homes, and the basic security of millions - innocent, hard-working Americans who had met their responsibilities, but were still left holding the bag.

Precisely – and it’s about time he used the term “wrong” to describe Wall Street’s antics, and the abject failure of regulators (led by Alan Greenspan and the Fed) to stop what was going on. But these “wrongs” were only the proximate cause of the economic crisis. The underlying cause was, as the President said before, the breaking of the basic bargain linking pay to productivity.

Ever since, there has been a raging debate over the best way to restore growth and prosperity; balance and fairness. Throughout the country, it has sparked protests and political movements - from the Tea Party to the people who have been occupying the streets of New York and other cities. It’s left Washington in a near-constant state of gridlock. And it’s been the topic of heated and sometimes colorful discussion among the men and women who are running for president.

But this isn’t just another political debate. This is the defining issue of our time. This is a make or break moment for the middle class, and all those who are fighting to get into the middle class. At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, and secure their retirement.

Right again. It is the defining issue of our time. But I wish he wouldn’t lump the Tea Party in with the Occupiers. The former hates government; the latter focuses blame on Wall Street and corporate greed – just where the President did a moment ago.

Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia. After all that’s happened, after the worst economic crisis since the Great Depression, they want to return to the same practices that got us into this mess. In fact, they want to go back to the same policies that have stacked the deck against middle-class Americans for too many years. Their philosophy is simple: we are better off when everyone is left to fend for themselves and play by their own rules.

He might have been a bit stronger here. The “they” who are suffering collective amnesia include many of the privileged and powerful who have gained enormous wealth by using their political muscle to entrench their privilege and power. In other words, it’s not simply or even mainly amnesia. It’s a clear and concerted strategy.

Well, I’m here to say they are wrong. I’m here to reaffirm my deep conviction that we are greater together than we are on our own. I believe that this country succeeds when everyone gets a fair shot, when everyone does their fair share, and when everyone plays by the same rules. Those aren’t Democratic or Republican values; 1% values or 99% values. They’re American values, and we have to reclaim them.

Amen.

…

In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism. “Our country,” he said, “…means nothing unless it means the triumph of a real democracy…of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.”

Some background: In 1909, Herbert Croly, a young political philosopher and journalist, argued in his best-selling The Promise of American Life that the large American corporation should be regulated by the nation and directed toward national goals. “The constructive idea behind a policy of the recognition of the semi-monopolistic corporation is, of course, the idea that they can be converted into economic agents…for the national economic interest,” Croly wrote. Teddy Roosevelt’s New Nationalism embraced Croly’s idea.

For this, Roosevelt was called a radical, a socialist, even a communist. But today, we are a richer nation and a stronger democracy because of what he fought for in his last campaign: an eight hour work day and a minimum wage for women; insurance for the unemployed, the elderly, and those with disabilities; political reform and a progressive income tax.

Today, over one hundred years later, our economy has gone through another transformation. Over the last few decades, huge advances in technology have allowed businesses to do more with less, and made it easier for them to set up shop and hire workers anywhere in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans.

Factories where people thought they would retire suddenly picked up and went overseas, where the workers were cheaper. Steel mills that needed 1,000 employees are now able to do the same work with 100, so that layoffs were too often permanent, not just a temporary part of the business cycle. These changes didn’t just affect blue-collar workers. If you were a bank teller or a phone operator or a travel agent, you saw many in your profession replaced by ATMs or the internet. Today, even higher-skilled jobs like accountants and middle management can be outsourced to countries like China and India. And if you’re someone whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer when it comes to asking for better wages and benefits - especially since fewer Americans today are part of a union.

Now, just as there was in Teddy Roosevelt’s time, there’s been a certain crowd in Washington for the last few decades who respond to this economic challenge with the same old tune. “The market will take care of everything,” they tell us. If only we cut more regulations and cut more taxes - especially for the wealthy - our economy will grow stronger. Sure, there will be winners and losers. But if the winners do really well, jobs and prosperity will eventually trickle down to everyone else. And even if prosperity doesn’t trickle down, they argue, that’s the price of liberty.

It’s a simple theory - one that speaks to our rugged individualism and healthy skepticism of too much government. It fits well on a bumper sticker. Here’s the problem: It doesn’t work. It’s never worked. It didn’t work when it was tried in the decade before the Great Depression. It’s not what led to the incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.

Obama is advocating Croly’s proposal that large corporations be regulated for the nation’s good. But he’s updating Croly. The next paragraphs are important.

Remember that in those years, in 2001 and 2003, Congress passed two of the most expensive tax cuts for the wealthy in history, and what did they get us? The slowest job growth in half a century. Massive deficits that have made it much harder to pay for the investments that built this country and provided the basic security that helped millions of Americans reach and stay in the middle class - things like education and infrastructure; science and technology; Medicare and Social Security.

Remember that in those years, thanks to some of the same folks who are running Congress now, we had weak regulation and little oversight, and what did that get us? Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.

We simply cannot return to this brand of you're-on-your-own economics if we’re serious about rebuilding the middle class in this country. We know that it doesn’t result in a strong economy. It results in an economy that invests too little in its people and its future. It doesn’t result in a prosperity that trickles down. It results in a prosperity that’s enjoyed by fewer and fewer of our citizens.

Look at the statistics. In the last few decades, the average income of the top one percent has gone up by more than 250%, to $1.2 million per year. For the top one hundredth of one percent, the average income is now $27 million per year. The typical CEO who used to earn about 30 times more than his or her workers now earns 110 times more. And yet, over the last decade, the incomes of most Americans have actually fallen by about six percent.

The very first time the President has emphasized this grotesque trend. Now listen for how he connects this with the deterioration of our economy and democracy:

This kind of inequality - a level we haven’t seen since the Great Depression - hurts us all. When middle-class families can no longer afford to buy the goods and services that businesses are selling, it drags down the entire economy, from top to bottom. America was built on the idea of broad-based prosperity - that’s why a CEO like Henry Ford made it his mission to pay his workers enough so that they could buy the cars they made. It’s also why a recent study showed that countries with less inequality tend to have stronger and steadier economic growth over the long run.

Inequality also distorts our democracy. It gives an outsized voice to the few who can afford high-priced lobbyists and unlimited campaign contributions, and runs the risk of selling out our democracy to the highest bidder. And it leaves everyone else rightly suspicious that the system in Washington is rigged against them - that our elected representatives aren’t looking out for the interests of most Americans.

More fundamentally, this kind of gaping inequality gives lie to the promise at the very heart of America: that this is the place where you can make it if you try. We tell people that in this country, even if you’re born with nothing, hard work can get you into the middle class; and that your children will have the chance to do even better than you. That’s why immigrants from around the world flocked to our shores.

And what it’s done to equal opportunity, and how it’s eroded upward mobility:

And yet, over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk. A few years after World War II, a child who was born into poverty had a slightly better than 50-50 chance of becoming middle class as an adult. By 1980, that chance fell to around 40%. And if the trend of rising inequality over the last few decades continues, it’s estimated that a child born today will only have a 1 in 3 chance of making it to the middle class.

It’s heartbreaking enough that there are millions of working families in this country who are now forced to take their children to food banks for a decent meal. But the idea that those children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work? That’s inexcusable. It’s wrong. It flies in the face of everything we stand for.

What should we do about this? Not turn to protectionism or become neo-Luddites. Nor turn to some version of government planning.

Fortunately, that’s not a future we have to accept. Because there’s another view about how we build a strong middle class in this country - a view that’s truer to our history; a vision that’s been embraced by people of both parties for more than two hundred years.

It’s not a view that we should somehow turn back technology or put up walls around America. It’s not a view that says we should punish profit or success or pretend that government knows how to fix all society’s problems. It’s a view that says in America, we are greater together - when everyone engages in fair play, everyone gets a fair shot, everyone does their fair share.

So what does that mean for restoring middle-class security in today’s economy?

It starts by making sure that everyone in America gets a fair shot at success. The truth is, we’ll never be able to compete with other countries when it comes to who’s best at letting their businesses pay the lowest wages or pollute as much as they want. That’s a race to the bottom that we can’t win - and shouldn’t want to win. Those countries don’t have a strong middle-class. They don’t have our standard of living.

In 1910, Teddy Roosevelt came here, to Osawatomie, and laid out his vision for what he called a New Nationalism. …

The fact is, this crisis has left a deficit of trust between Main Street and Wall Street. And major banks that were rescued by the taxpayers have an obligation to go the extra mile in helping to close that deficit. At minimum, they should be remedying past mortgage abuses that led to the financial crisis, and working to keep responsible homeowners in their home. We’re going to keep pushing them to provide more time for unemployed homeowners to look for work without having to worry about immediately losing their house.

I wish the Obama administration had made this a condition for the banks receiving bailouts.

But there’s far more to the speech. Read it in full. It lays out the basis for what could be the platform Obama will run on in 2012 — increasing taxes on the rich, investing in the rest us, requiring corporations and Wall Street banks that reap benefits from being in America create good jobs for Americans, and protecting our democracy from being corrupted by money — a new New Nationalism.

Here, finally, is the Barack Obama many of us thought we had elected in 2008. Since then we’ve had a president who has only reluctantly stood up to the moneyed interests Teddy Roosevelt and his cousin Franklin stood up to.

Hopefully Obama will carry this message through 2012, and gain a mandate to use his second term to take on the growing inequities and game-rigging practices that have been undermining the American economy and American democracy for years.

If you don't read Robert Reich's blog, you should be. As his blurb on his blog points out, here is uniquely qualified to provide insight into the economy & politics of today:

Robert Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His "Marketplace" commentaries can be found on publicradio.com and iTunes. He is also Common Cause's board chairman.

Update 2011dec08: In contrast to Robert Reich's hopefulness about Obama, here is a strongly negative response by Yves Smith at her Naked Capitalism blog:

Wow, I have to hand it to Obama’s spinmeisters. They’ve managed to find a way to resurrect his old hopium branding by calling it something completely different that still has many of the old associations.

And we have a twofer in Obama’s launch of his new branding as True Son of Teddy Roosevelt. Never mind that Teddy, unlike Obama, was accomplished in many walks of life and had meaningful political accomplishments (such as reforming the corrupt New York City police department) before becoming President at the tender age of 42. The second element of this finesse is that Obama is using the Rooseveltian imagery to claim he will pass legislation to get tough on Big Finance miscreants. That posture, is of course meant to underscore the idea that you just can’t get the perps with the present, weak set of laws.

...

While we have the Feds insisting that it’s just too hard to go after miscreants in finance, this week we have Nevada Attorney General Catherine Cortez Masto continuing with her step-by-step, classic prosecution strategy of going after low level organization members to roll the higher ups. As we’ve indicated, she has targeted Lender Processing Services and is going after more mid level employees. Her effort has the potential to bust open bad conduct across all major servicers. LPS has among other things, allegedly engaged in escrow abuses and charging other impermissible fees, as well as foreclosure related abuses. LPS maintains that everything it did was with the full knowledge and approval of its clients, meaning the big servicers.

And the reach of Masto’s effort, and the potential damage to the Administration’s credibility has just grown considerably. Yesterday, California attorney general Kamala Harris joined the Masto effort. This strongly suggests that Harris will also be seeking indictments. And remember, California, unlike Nevada, has a major bank headquartered in state (Wells) as well as other substantial banking operations (the legacy Countrywide units). For Harris, who is reputed to be, shall we say it politely, sensitive to the political winds, to make a shift like this, suggests a real change in the political climate is underway.

...

The list of evidence supporting this view is so lengthy that I am certain to miss quite a few items: the lack of serious investigation, the phony stress tests, the perpetually missing in action DOJ, allowing the banks to exit the TARP pronto, the mortgage fraud whitewash investigation, the clever sidelining of Elizabeth Warren, the way too weak Dodd Frank legislation, which is being watered down further with the blessing of Timothy Geithner. And speaking of legislation, gee, if it was really that hard to prosecute bank miscreants, why wasn’t that incorporated in Dodd Frank? Awfully convenient to notice that supposed oversight now, with no hope of getting a tough bill passed at this juncture and statutes of limitations running out.

Frankly, the fact that the Administration has joined Khuzami in the “oh, it’s SO hard to prosecute” messaging leads me to believe the SEC really will throw the case. It’s plenty clear this Administration has let the people who really count know it has no intention of ever carrying a stick.

The Psychology of Successful Begging

Here is a quick lesson from a psychology prof, Dan Ariely, about the techniques for successful begging:

One day a few years ago I passed a street teeming with panhandlers, begging for change. And it made me wonder what causes people to stop for beggars and what causes them to walk on by. So I hung out for a while, engaging in a bit of discreet peoplewatching. Many people passed the beggars without giving anything, but there were a few who stopped. What was it that separated those who paused and gave money from those who didn’t? And what separated the more successful beggars from those who were less successful? Was it something specific about their situation, or their presentation? Was it the beggar’s strategy?

To look into this question, I called on Daniel Berger Jones, an acting student at Boston University who had just finished hiking around Europe. Not having shaved in months and already looking pretty scruffy, he was ready for the job (plus as part of his training to be an actor I figured it would be good for him to learn how to beg for money – at the time he did not see that particular benefit). So I found a street corner and placed him there to take on the panhandling trade. I asked Daniel to try a few different approaches to begging and to keep track of the approaches that made him more or less money. (Of course, after the experiment was over we donated all the money that he made to charity). The general setup was what we call a 2×2 design: When people walked by, Daniel would either be sitting down (the passive approach) or standing up (the active approach) and he would either look them in the eyes or not. So there were times when he was 1) sitting down and looking people in the eyes, 2) sitting down and not looking people in the eyes, 3) standing up and looking people in the eyes, or 4) standing up and not looking people in the eyes.

Daniel got to work, scrounging for money. He stayed on his corner for a while, trying the different approaches. And it turned out that both his position and his eye contact did, in fact, make a difference. He made more money when he was standing and when he looked people in the eyes. It seemed that the most lucrative strategy was to put in more effort, to get people to notice him, and to look them in the eyes so that they could not pretend to not see him.

Interestingly, while the eye contact approach was working in general, it was clear that some of the passersby had a counterstrategy: they were actively shifting their gaze in what seemed to be an attempt to pretend that he wasn’t there. They simply acted as if there was a dark hole in front of them rather than a person, and they were quite successful at averting their gaze.

At some point, something very interesting happened. There was another beggar on the street – a professional beggar – who approached young Daniel and said, “Look kid, you don’t know what you’re doing. Let me teach you.” And so he did. This beggar took our concept of effort and human contact to the next level, walking right up to people and offering his hand up for them to shake. With this dramatic gesture, people had a very hard time refusing him or pretending that they did not seen him. Apparently, the social forces of a handshake are simply too strong and too deeply engrained to resist – and many people gave in and shook his hand. Of course, once they shook his hand, they would also look him in the eyes; the beggar succeeded at breaking the social barrier and was able to get many people to give him money. Once he became a real flesh and blood person with eyes, a smile and needs, people gave in and opened their wallets. When the beggar left his new pupil, he felt so sorry for poor Daniel –and his panhandling ineptitude– that he actually gave him some money. Of course Daniel tried to refuse, but the beggar insisted.

I think there are two main lessons here. The first is to realize how much of our lives are structured by social norms. We do what we think is right, and if someone gives us a hand, there’s a good chance we will shake it, make eye contact, and act very differently than we would otherwise.

The second lesson is to confront the tendency to avert our eyes when we know that someone is in need. We realize that if we face the problem, we’ll feel compelled to do something about it, and so we avoid looking and thereby avoid the temptation to give in and help. We know that if we stop for a beggar on the street, we will have a very hard time refusing his plea for help, so we try hard to ignore the hardship in front of us: we want to see, hear, and speak no evil. And if we can pretend that it isn’t there, we can trick ourselves into believing –at least for that moment– that it doesn’t exist. The good news is that, while it is difficult to stop ignoring the sad things, if we actively chose to pay attention there is a good chance that we will take an action and help a person in need.

After reading this and thinking about it, I've decided to take responsibility for my actions. I now plan to actively greet beggars, wish them a good day, but not give in to the urge to hand over money. I don't like being manipulated. Private charity is effectively a strategy for "hiring beggars" to populate the streets.

I prefer a rational system where the government assures a basic level of income security. Otherwise, the crafty beggars can use "technique" to get the money leaving the inept to quietly starve. That bugs me. Life is unfair, and it doesn't help if the needy become manipulative so that that the more brazen beggars "succeed" at the expense of the inept beggars. I want justice and fairness in my charity. This calls for a rational system of spotting need and ensuring a basic level of comfort and care to the needy.

There are studies that show that Republicans give more to charity than Democrats. But I think the Republicans are hypocrites. They give to co-religionists. A lot of those gala "charity balls" count as charity when in fact they are really a social event with a ticket price that hives off money to a "charity" such as helping the needy opera in town or the down-and-out art centre where the needy gather to get a little "culture".

I think the Democrats are more like me: they want charity run rationally by the government so that the cheats and frauds don't get it all.

How the "Job Creators" Have Failed

In the US the Republican party continues to argue for tax cuts for the ultra-rich and for corporations on the myth that these are "job creators" and you need to do everything possible to encourage them.

Here is the reality. From a post by Ed Yardini:

Click to Enlarge

The rebound in [business] profits’ share of National Income has been spectacular. It jumped from a recession low of 7.9% during Q4-2008 to 14.7% during the third quarter of this year. That surpasses all previous cyclical peaks.

...

Compensation of employees continued to lose share of National Income during Q3. It fell to 61.4%, the lowest since Q3-1965, and down from a record high of 68.5% during Q2-1980.

Let me spell this out very simply for you: the rich get richer, the poor get poorer.

If you are working, all of your increased productivity has gone as profits to the corporations and the workers have received none of it.

American Income Inequality 2011

Here is the data released today by the Congressional Budget Office: the rich get richer and the poor get left in the dust...

Click to Enlarge
The above is as old as the Bible since the rich over time got richer and the poor poorer. That was why there was a jubilee to remit debts, because the rich will constantly grab more, and without pushback from government power or religious power, this leads to the collapse of society. The OWS movement is the modern evidence of this ancient problem and the need, yet again, of a remedy.

The Dilbert Version of "Occupy Wall Street"

Here is a nice bit by Scott Adams, creator of the Dilbert cartoon, to put the issues of Occupy Wall Street into simple terms people can understand:

If you and a friend go to lunch with each other on a regular basis, but you pay for lunch three times as often as your friend, is that fair?

Your mind immediately wonders if there are extenuating circumstances. Is the friend doing something for you in some other way? Are you wealthy whereas your friend is not? Is your friend also a client? Did your friend drive from out of town? Are these lunches always in the same place?

When evaluating fairness, we understand that you need to throw everything into the mix. You can't isolate one variable. For example, when comparing the tax burden on the rich versus the other 99%, you want to look beyond the federal income tax rate and include payroll taxes, sales taxes, and any other taxes. That's fair, right?

Wait...Are we leaving something out? Why don't we also tally up the benefits of the taxes? That's part of the equation too. Let's go back to our lunch example to see why.

Suppose you buy lunch three times more often than your friend, but in every case you eat at your favorite place in the world and your friend can barely tolerate the cuisine. Let's also assume it's a long drive for your friend, but very convenient for you. In fact, it's the only restaurant that's near enough to your workplace for you to have lunch in an hour. You both get the benefit of your friendly banter, but only one of you enjoys the food and convenience. With this new information, it seems a bit fairer that you pay for lunch more often than your friend because you get the most benefit.

Now back to taxes. Doesn't the fairness argument demand that we at least try to determine who gets the most benefits from taxes paid? I think it does. (This is a good time to remind you that fairness isn't a real thing. I'm just chasing shadows here to make a point.)

So who benefits most from taxes? Is it the wealthy person who benefits from protecting his fortune, or is it the people who consume the greatest percentage of the social services? Let's consider some specifics to tease out an answer.

Consider Social Security. The wealthy pay a much lower percentage of their total income towards social security because the tax only applies to the first $106,800 of income. And the wealthy also make a lot of money from investments that are not subject to the tax. But on the benefit side, Social Security has no real value to the wealthy. The retirement payout isn't enough to change their lifestyles. Social Security is an odd tax in the sense that you're really just letting the government hold your dollar with the promise that if you live long enough they might give you one or even two dollars later. In that sense, the tax is only unfair to the people who die young.

How about the military? All citizens get the same bodily protection. But the rich also get to protect vast fortunes whereas the poor and middle class have less to protect. But remember that half of the country pays zero federal income tax. Financially, they get a free ride from military protection, unless they are in the military. And a typical rich person might pay a hundred times more in federal taxes, on an absolute dollar basis, than a typical middle class taxpayer. That seems about right.

If you think of paying taxes for military protection as a sort of insurance policy, I would argue that it has great value for protecting your first $100 million of assets and a rapidly declining value for protecting anything above that arbitrary number. In other words, if a wealthy person loses all but his last $100 million, his lifestyle would be about the same as before. A wealthy person's practical benefit from the military is capped even if his fortune is not.

We can't ignore the physical and emotional cost to military people and their families, which is concentrated in the non-wealthy portion of the population. But as long as military service remains voluntary, I think we can view that noble calling as a separate issue from taxes.

How about sales taxes? There are no sales taxes on groceries, rent, education, medical care, garbage service, water, or any of the essential services provided by public agencies. That covers most of the budget for low income families. My guess is that most people pay about 1% of their income for sales taxes and get more than their money's worth in state services in return. The rich pay a much higher dollar amount, but arguably that's a good value for them too. They have more assets to protect from criminals, more cars on the road, and so on.

I don't have an overall conclusion in terms of tax fairness because fairness isn't a real thing. People simply do whatever they think will maximize their benefit, give or take some irrationality. Fairness is just the marketing spin. All I'm saying today is that any discussion of tax rate fairness needs to include a discussion of who gets the most benefits. A more complete discussion of fairness, as I'm suggesting, will still be ridiculous, because fairness is an illusion. But for some reason I can't settle for half an illusion. I like my absurdities in full servings.

Looking at society is a lot like the three blind me inspecting the elephant. Each "sees" something different. The billionaires are convinced that it was their genius and hard work that got them their wealth. Others, like Warren Buffett, point out that you can't make a billion without a society with the infrastructure in place to support your entrepreneurial spirit.

For too long -- roughly 40 years -- the radical right has been selling the American people a pig in a poke. They have claimed that if you bow and scrape when the rich pass by they will toss dollar bills out the window to make your life better (the infamous Reagan "trickle down" economy). The latest incarnation is "don't tax the rich because they are the 'job creators' and if you tax them they will go on strike and there will be no more jobs". It is an utter lie, but it scares a lot of people. The OWS movement is finally breaking the mental shackles of 40 years of right wing propaganda.

A Trip Down Memory Lane

Here is a bit from an interesting article in the NY Magazine. It looks at the march of the "bonus army" in 1932 and compares with with the Occupy Wall Street demonstrations today.

During the death throes of Herbert Hoover’s presidency in June 1932, desperate bands of men traveled to Washington and set up camp within view of the Capitol. The first contingent journeyed all the way from Portland, Oregon, but others soon converged from all over—alone, in groups, with families—until their main Hooverville on the Anacostia River’s fetid mudflats swelled to a population as high as 20,000. The men, World War I veterans who could not find jobs, became known as the Bonus Army—for the modest government bonus they were owed for their service. Under a law passed in 1924, they had been awarded roughly $1,000 each, to be collected in 1945 or at death, whichever came first. But they didn’t want to wait any longer for their pre–New Deal entitlement—especially given that Congress had bailed out big business with the creation of a Reconstruction Finance Corporation earlier in its session. Father Charles Coughlin, the populist “Radio Priest” who became a phenomenon for railing against “greedy bankers and financiers,” framed Washington’s double standard this way: “If the government can pay $2 billion to the bankers and the railroads, why cannot it pay the $2 billion to the soldiers?”

The echoes of our own Great Recession do not end there. Both parties were alarmed by this motley assemblage and its political rallies; the Secret Service infiltrated its ranks to root out radicals. But a good Communist was hard to find. The men were mostly middle-class, patriotic Americans. They kept their improvised hovels clean and maintained small gardens. Even so, good behavior by the Bonus Army did not prevent the U.S. Army’s hotheaded chief of staff, General Douglas MacArthur, from summoning an overwhelming force to evict it from Pennsylvania Avenue late that July. After assaulting the veterans and thousands of onlookers with tear gas, ­MacArthur’s troops crossed the bridge and burned down the encampment. The general had acted against Hoover’s wishes, but the president expressed satisfaction afterward that the government had dispatched “a mob”—albeit at the cost of killing two of the demonstrators. The public had another take. When graphic newsreels of the riotous mêlée fanned out to the nation’s movie theaters, audiences booed MacArthur and his troops, not the men down on their luck. Even the mining heiress Evalyn Walsh McLean, the owner of the Hope diamond and wife of the proprietor of the Washington Post, professed solidarity with the “mob” that had occupied the nation’s capital.

...

These efforts to domesticate and contain the protests are unlikely to succeed. It is not frustration that’s roiling America but anger, the anger of a full-fledged class war. Try as polite company keeps trying to ignore it, that war has been building in this country and abroad for much of this decade and has been waged in earnest in America since the fall of 2008. But the crisp agenda demanded of Occupy Wall Street will not be forthcoming. The inchoateness of our particular class war is central to its meaning. America is not Tahrir Square or the riot-scarred precincts of North London, where everyone knows at birth who is in which class and why. We pride ourselves on being a “classless” democracy. We abhor ideology. When Americans left and right, young and old, express anger at an overclass, they don’t necessarily agree about who’s on which side of that class divide. The often confusing fluidity of class definitions, especially in an America as polarized as ours is now, may make our home­grown class war more volatile, not less.

The tea-party right finds the hippie-scented movement in lower Manhattan repellent, but it and Occupy Wall Street are two sides of the same coin. “Take Back America,” the initial tea-party battle cry, would work for those in Zuccotti Park as well. The disagreement is about which America needs to be taken back, and from whom.

...

But while Romney is a class enemy liberals and conservatives can unite against, perhaps nothing has revealed how much the class warriors of the right and left of our time have in common than the national outpouring after Steve Jobs’s death. Indeed, the near-universal over-the-top emotional response—more commensurate with a saintly religious or civic leader, not a sometimes bullying captain of industry—brought Americans of all stripes together as few events have in recent memory.

Some on the right were baffled that the ostensible Marxists demonstrating in lower Manhattan would observe a moment of silence and assemble makeshift shrines for a top one-percenter like Jobs, whose expensive products were engineered for near-­instant obsolescence and produced by Chinese laborers in factories with substandard health-and-safety records. For heaven’s sake, the guy didn’t even join Warren Buffett and Bill Gates in their Giving Pledge. “There is perhaps no greater image of irony,” wrote the conservative blogger Michelle Malkin, “than that of anti-capitalist, anti-corporate, anti-materialist extremists of the Occupy Wall Street movement paying tribute to Steve Jobs.”

Go read the whole article. There is a lot to be learned from this article by Frank Rich. It is well worth your time.

Is Democracy Coming to America?

It is starting to look like the people are going to claw back a voice in government. After 50 years of being marginalized by politicians bought and sold by lobbyists, there is a force in the streets with Occupy Wall Street that looks like it may grow to the point where numbers will finally overcome money.



Here are some key bits from a NY Times op-ed by Paul Krugman:

It remains to be seen whether the Occupy Wall Street protests will change America’s direction. Yet the protests have already elicited a remarkably hysterical reaction from Wall Street, the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.

And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.” The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,” while Herman Cain calls them “anti-American.” My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.

Michael Bloomberg, New York’s mayor and a financial-industry titan in his own right, was a bit more moderate, but still accused the protesters of trying to “take the jobs away from people working in this city,” a statement that bears no resemblance to the movement’s actual goals.

And if you were listening to talking heads on CNBC, you learned that the protesters “let their freak flags fly,” and are “aligned with Lenin.”

The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.

...

And then there’s the campaign of character assassination against Elizabeth Warren, the financial reformer now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”

But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky. George Will declared that she has a “collectivist agenda,” that she believes that “individualism is a chimera.” And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is.

...

So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

This is what the Occupy Wall Street demonstrations are about: social justice. The bottom 99% have been fleeced and squeezed and abused. They have finally risen up and demand a better deal. America has seen a New Deal, a Fair Deal, a Great Society, and it is asking for a Just Society with a fair deal for the bottom 99%.

Lawrence O'Donnelll Crusading for the Bottom 90%

Here is yet another excellent piece by Lawrence O'Donnell in his The Last Word program at MSNBC. He interviews Michael Moore who is present at the Occupy Wall Street protest:



Best line of the interview: The future has been stolen.

Linda McQuaing Calls for Another Canadian "Me Too!"

Funny how Canada toddles after America. Nothing succeeds in Canada until it "proves" itself in the US. Ideas aren't serious until advocated south of the border. And "leadership" in Canada is pointing out that something is done in the US so it surely must be tried out in Canada as well.

Here's a bit from Linda McQuaig offering a "me too!" on taxes and social policy in her column in the Toronto Sun:

Canada’s ultra-rich — those in the top 0.01 per cent — now have a bigger share of national income than at any point in Canadian history, according to data compiled by McMaster University economist Michael Veall. But the median Canadian family income hasn’t grown in 30 years; in fact, it’s declined from $48,800 (in today’s dollars) to $46,700.

This means ordinary Canadians have little buying power, reducing the incentive for business and the wealthy to invest their substantial cash reserves in ways that create jobs.

As growing inequality becomes a global issue, the subject is strangely absent from Canadian politics, including the current Ontario election.

While the NDP has called for increased corporate taxes, it’s retreated in recent years from urging higher taxes on the rich — as even Bob Rae did when he was Ontario NDP leader. In the 1990 provincial election, Rae ran on a platform that included a provincial estate tax — and won a majority government.

Is it too much to hope that our most progressive party would take a stand as progressive as the president of the United States and America’s second richest man?

Don't get me wrong. I'm behind McQuaig's advocacy. My problem is that it is packaged up with a pretty ribbon and bow of "me too!".

Bad News for Canada

The National Post is not known for its "socialist" message, but they've published an article that would warm the heart of any Marxist. They've printed the truth:

Work hard and you'll get ahead. That's been the mantra of folks who prefer their governments small and their success big.

But as two recent Conference Board of Canada reports show, that mantra is being cast into doubt. According to the voice of Canada's business establishment: "High inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. . High inequality [also] raises a moral question about fairness and social justice."

Say the word "inequality," and many people automatically assume you're talking about the poor. But a mounting body of research shows that, left unchecked, a growing income gap affects the rich, the poor and everyone in between.

Economic growth used to be touted as the surest ticket to broad-based prosperity. But during the strongest period of economic growth in the past 30 years, between 1997 and 2007, a third of all income gains went to the richest 1% of Canadian tax filers.

Think that's normal? In the 1960s, the most recent comparable period of sustained growth, the richest 1% took only 8% of the gains from growth.

Not since 1920, when Ottawa began to collect income data, have Canada's elites pocketed a larger share of the income gains from economic growth. Top marginal tax rates for millionaires also are at rates last seen in 1920.

...

Canada's top 100 CEOs have seen a 13% year-over-year jump in average pay, rising to an average of $6-million. In contrast, the average earnings of employed Canadians has fallen to $38,500.

...

It's the promise of their own upward mobility that has many Canadians willing to brush aside the handsome gains enjoyed by the rich in the past 20 years. But rising inequality, in good times and bad, makes it increasingly feel like the game is rigged, destabilizing foundational values and expectations.

...

So what can we do to turn this story around?

Some will call for change that doesn't much disturb the status quo: Improvements in productivity, or tax cuts for Canadians with the lowest taxable incomes. But truly reducing inequality requires either increased incomes or lower costs for the majority. That means bosses and owners sharing more of the productivity gains and profits with workers; or paying more tax to expand affordable access to post-secondary education, public transit and child care, thus taking the pinch out of small paycheques.

For those who feel these measures are too costly, they should consider the alternative.

History has shown us, time and again: When too much is controlled by too few, something has to give. Continuously rising inequality is unsustainable.

Everyone has a stake in fixing this. And the fix has no political colour. It is about the future of Canada and where we're heading as an economy, a society, a democracy. That's why even conservatives are worrying about Canada's rising income gap.

I fervently hope the Conservative government listens to this. I pray that the top 1% realize the dark days ahead can't be avoided if they do not listen to this. The social contract in Canada is threatened by runaway elites. They need to be harnessed to the rest of us to ensure that we as a country progress and don't fall apart in some idiotic fight over crumbs off the table of the ultra-rich.

Elizabeth Warren on the Campaign Trail

Here she goes with a wonderful message of social justice...



I sure hope she is the first sprig of green in a new springtime of democracy in America. I hope many more follow her example and take to the hustings to bring the bottom 90% some hope of a better tomorrow, a more just tomorrow, a tomorrow where future generations have a chance at a decent life.

US Tax Cuts

Here is a bit from a post by Paul Krugman on his NY Times blog walking through the logic of "tax cuts" to show that the real effect is quite different from how it is presented by the spin doctors:

Suppose that it’s 1979, and individual A is a member of the working poor, paying 12 percent of his income in taxes — basically payroll tax and not much else. Meanwhile, individual B is very wealthy, and pays 40 percent of his income in taxes — as the very wealthy did on average 30 years ago.

Now suppose that 30 years of conservative governance lead to a fall of a quarter in both individuals’ average tax rates; A’s rate falls from 12 to 9, B’s from 40 to 30. Would it make sense to say that they have gained equally from tax cuts?

Clearly not. A’s after-tax income has risen from 88 to 91 percent of pretax income, a gain of 3.4 percent. B’s after-tax income has risen from 60 to 70 percent of pretax income, a gain of 16.7 percent. The distribution of after-tax income has become substantially less equal. And that’s the calculation I was doing here.

Now, right-wingers come back and say that this is what has to happen when you cut taxes. No, it doesn’t. And anyway, cutting taxes is itself a choice — and they’re a choice that then leads to demands that we cut programs for the poor and middle class to close the deficit those tax cuts created.

The point is that yes, tax policy these past 30 years has been very much tilted toward benefiting the rich.

The poor American taxpayer is caught in a double whammy. On the one hand the rich are dumping the cost of government on the bottom 90% by using their wealth to buy politicians and the Republican party to push for ever more "tax cuts" for the rich. On the other hand, you have government taking that hard earned money and wasting it. Here's a bit from an article on The Atlantice:

$16 for a Muffin?! A Justice Department Boondoggle

Yes, hotel food is overpriced. But $16 muffins, $5 sodas, and $8 cups of coffee are still pretty pricey for a government agency -- or anyone.

...

Internal inspectors -- from the same office which once upon a time investigated the Justice Department's role in the 2006 U.S. Attorney scandal -- have concluded that mid-level DOJ officials consistently failed in 2008 and 2009 to follow federal guidelines designed to keep food and beverage costs at reasonable rates for government-sponsored conferences. They were taken advantage of, in other words, by private contractors (See? It doesn't just happen with military contracts).

...

conference attendees received Cracker Jacks, popcorn, and candy bars at a single break that cost $32 per person

...

The Justice Department will say this is old news and that it has done much more since 2009 to reduce these costs. And Congressional Republicans and the GOP presidential candidates will likely use the report to take pot shots at Eric Holder and President Barack Obama for wasteful government spending. Perhaps the only appetizing "component" of this meal is that copies of Michael Kinsley's under-appreciated book "Curse of the Giant Muffins and Other Washington Maladies" now likely will soar. In fact, I hear the Justice Department just bought a few copies at $125 each.

I understand the political right doing these boondoggles for their rich friends. What I don't understand is that Obama -- who promised transparency in government -- has allowed this to go on under his administration. Why? Did he really think that nobody cares how tax dollars are wasted? Why did his people allow this to go on. Didn't they know it would be used by the political right to undermine him?

A Campaign to Replace Obama

Here's a post by Yves Smith on her Naked Capitalist blog. I love the last line of the post:

I’ve started #ReasonsToPrimaryObama. The Wrongway Prez needs to be replaced, and we need alternatives beyond the ones being served up by the Republicans.

Yes! Get a real Democrat to run for president in 2012.

Why is she doing this? Because...

Obama created an unnecessary financial crisis. Not that we would have escaped eventually having one, but he played like a fool into the Republican desire to use the debt ceiling to push for budget cuts, and he tried outsmarting them to get his long standing desire of entitlements cuts through. Having the S&P downgrade hit when the Eurozone crisis was in an acute phase was like rolling a car full of explosives into a burning house. “Obama victory” may come to be the modern version of “Pyrrhic victory”.

And the man touted as a silver tongued orator can’t even talk up the markets. He actually managed to talk them down. Big time.

As numbed readers no doubt know, the S&P closed down 6.66%. BAC [Bank of America] fell a stunning 20% on the day and its CDS spreads are up big. The VIX rose over 50% to 50.

He is a disaster as a "leader". First, he lied about what he would do when elected. Once he got into power his only real concern is getting re-elected. He has flubbed every initiative he has come up with. In the election he claimed "jobs" was his #1 job, but 2.5 years into his mandate he is only now talking about jobs but has put forward a pathetic joke as his "initiative" to create more jobs. Hopeless!

How to Squeeze Workers for More

Here is a bit from a post on the Stumbling and Mumbling blog that spots an odd discrepancy:

Oliver Letwin has been doing some blue sky thinking.The Guardian reports him as saying that it is

only through "some real discipline and some fear" of job losses that excellence would be achieved in the public sector.

I'm not sure Letwin really believes this. If he did, he would be also advocating introducing fear into corporate boardrooms, because there is at least some evidence that fines work better than bonuses in stimulating good performance. Funnily enough, though, he seems silent on this. He seems to subscribe to the asymmetric theory of motivation: bosses are motivated by big money, but workers are motivated by fear.

Personally I think the current situation should be reversed. Workers should be stimulated by money and bosses should be encouraged to stellar performance by fear, more fear, and yet more fear. Bring back the rack!

I would love to see the Wall Street titans have to give up their billion dollar bonuses and instead find themselves on the rack with a guy in a black hood asking "Why didn't you meet your performance goal of delivering a 20% increase in profits above last year's level?" I think we might hear squeals of enthusiasm about meeting new and higher performance goals from the top executives!

Marie Antoinette Moments

Here are some bits from a series of vignettes of how out-of-touch the ultra-rich are from mainstream Americans. This needs to keep being hammered home until ordinary Americans catch on to how the last 40 years have been a Rip Van Winkle era where the bottom 90% slept while the top 1% went on a binge of greed and theft that is nearly incomprehensible...

From an slideshow article on Salon magazine by David Sirota:

As the economy for most regular people continued to sputter toward the end of the Bush years, and as Wall Street was gearing up to administer its mortgage-meltdown pile driver on unsuspecting Americans, multimillion-dollar parties became all the rage.

The most famous of these was the $5 million birthday bash for the Darth Vader of private equity, Stephen Schwarzman. (This orgy of ostentation was made even more disgusting by New York Times' Andrew Ross Sorkin and his "In Defense of Schwarzman" apologia that is, in retrospect, a perfect example of how an entire Let Them Eat Cake propaganda system replaced serious financial journalism.)

But before Schwarzman could be held up as an anomaly, he was soon topped by a $20 million celebrity-studded hotel party right in the heart of the desperately poor Middle East. Held just weeks after the global economic meltdown commenced, the bash included "a fireworks show that organizers said was visible from outer space," according to the New York Daily News.

...

There have been many individual instances of shocking elitism that somehow portray the rich as oppressed. Until last year, my personal favorite was the one where a top Wall Street fundraiser for President Obama complained that "the investment community feels very put-upon" and that bankers "feel there is no reason why they shouldn't earn $1 million to $200 million a year, and they don't want to be held responsible for the global financial meltdown" that they created.

...when September 2010 rolled around ... the nation was formally introduced to hedge fund manager Anthony Scaramucci, who used a nationally televised presidential town hall meeting to declare himself the man that "represent[s] the Wall Street community."

Lecturing President Obama -- a president who had helped pass the multitrillion-dollar Wall Street bailouts, refused to prosecute Wall Street wrongdoers, and almost singlehandedly halted U.S. House-passed legislation cracking down on excessive bonuses at bailed-out banks -- Scaramucci declared that though Wall Street pay was at that very moment continuing to break records, Wall Streeters nonetheless feel "like a piñata."

"Maybe you don't feel like you're beating us with a stick, but we certainly feel like we've been whacked with a stick," he said. "When are we going to stop whacking Wall Street like a piñata?"

Not only did Scaramucci somehow manage to mix an aw-shucks aggrieved-regular-guy shtick with a self-important declaration that he "represents the Wall Street community"; not only was he speaking as a member of a hedge fund industry whose 25 top execs made $1 billion each during a recession year that saw middle-class wages continue to flatline; and not only did he find a particularly colorful victim metaphor about piñatas while simultaneously failing to mention the bailouts -- he pulled it all off in the context of a nationally televised White House event, deliberately seizing the media attention as an opportunity to tell the world to eat cake. Wonder what kind of bonus he earned for that.

...

As Mother Jones has reported, the average American family in the bottom 90 percent of income earners makes just $31,244 a year -- and, to reiterate, that's the average, meaning many make far less. Similarly, the median net worth of American families is a mere $120,000 -- and remember, "net worth" means the sum value of all of a family's assets liquid or otherwise, from income to home to car to furniture to the kids' dirty undies.

...

The Washington Post's article headlined "Squeaking By on $300,000" was absurd enough, but a Sunday Styles piece in the New York Times took that cheeky, gee-whiz journalism a step further. Daring readers to attempt the supposed hardships of affluence, the piece was titled "You Try to Live on 500K in This Town." (The story naturally fails to mention that the city's median household income is about $38,000 a year, meaning that most New Yorkers take the headline's challenge on a yearly basis.) Instead, it reported on a proposal to limit bailed-out bank salaries to a half million dollars a year, and then proceeded to try to cheekily illustrate how impossible that would be in the Big Apple.

According to the Times' "cold hard math," this is virtually untenable given expenses that include $32,000-a-kid private school bills, $96,000-a-year mortgages, $96,000-a-year co-op maintenance fees, $45,000-a-year nanny tabs and, of course, the undebatable requirement that very rich people take "at least two vacations a year, a winter trip to the sun and a spring trip to the ski slopes." And mind you, the Times was quick to inform us, this doesn't even include other "prerequisites" to living in New York City like "restaurants, dry cleaning... kennels for the dog when the family is away, summer camp, spas and other grooming" and $1,000 suits from Brooks Brothers.

...

During a January 2008 Democratic presidential debate, ABC News' Charlie Gibson -- who made $7 million a year -- used a question about taxes to insinuate that a household pulling in $200,000 a year is merely making a middle-class income, when in fact, roughly 97 percent of American households make less.

Gibson's message, however out of touch, subsequently oozed into cable TV -- and from there, into elite culture at large. In 2010, for example, CNN's Kiran Chetry suggested that "in some parts of the country" making $250,000 a year "is middle class" -- a statement that defies Census data showing that even in the wealthiest enclaves in America, a quarter-mil a year is still three times the median income. Meanwhile, University of Chicago professor Todd Henderson garnered national headlines for an essay railing on the repeal of Bush's tax cuts -- an essay declaring that his family's $250,000-a-year income meant he was "just getting by."

...

One of the hallmarks of Let Them Eat Cake-ism is an absolute lack of self-awareness mixed with a complete disregard for hypocrisy or personal responsibility. The end result is an especially nauseating "for me, but not for thee" attitude.

In this recession, that has manifested itself as bankers walking away from their obligations to cover their own losses and happily vacuuming up public bailout dollars -- all while lecturing strapped homeowners about their moral responsibility to pay their bills.

Go read the original to get the full article and the embedded links.

I keep wondering when Americans will wake up from their forty year illusion of "trickle-down economics" and the idea that if you keep cutting taxes for the rich it won't mean more taxes for the bottom 90%. I know that it will have to stop some day unless, when the US hits a 0% tax rate for the rich, I mean "the job creators", it starts a negative tax, i.e. it starts giving "cash incentives" in lieu of taxes in the hopes that billionaires-soon-to-become-trillionaires will find the kindness in their hearts to employ some of the 200 million abysmally impoverished Americans in some capacity at a newly established starting wage of $1 an hour. Well, maybe if you give the ultra-rich an instant cash reward of $10,000 per employee, they might find their way to make those $2/hour jobs since that means $10K will yield an immediate $5K profit for the "job creators".

Buffett on America

Here is an interview of Warren Buffett with Bloomberg news. Buffett is one of the very few American gazillionaires who accepts that "the system" is tilted way too far to benefit the rich and hurt the poor:


Here are key bits. First he recognizes that the system is fundamentally unfair:

“I think for example we’ve had a period in the last 15 years where the 400 top taxpayers in the United States -– if you go back 15 years they had an average income of about $45 million. Now they have an average income of $350 million in the most recent figures. Whereas their tax rates went from 27 percent down to 16 percent.”

“That’s not my idea of America. I mean I want everybody to get rich, but I think that the rich have a responsibility to pay higher tax rates.”

Second, I like the fact that he supports Elizabeth Warren:

“We need a lot of correction. You see what happened in the mortgage issuance market of five years ago. It is up to the industry and the government to correct it. It is great if the industry does it by itself, but it is clear you need a policeman, and she is a pretty good policeman. You want people to take out mortgages where it is appropriate, where they know what they are doing, and where they can handle the problems. You always said people that lose jobs, where there are deaths or something, so you will have foreclosures, but you should not have mass amounts of people entering into transactions they do not understand. It is a huge transaction. There is a real job to be done in making sure that people both understand the contract and can handle a contract under most circumstances.”

Going Green and the Hand Wringing Apologists

There is a lot of brow-beating of people in the developed world about their "guilt". Guilt for a "colonial" past. Guilt about outrageously self-indulgent lifestyles. Guilt about greedily seizing resources and living the underdeveloped world desperate and without.

Well... I was never a colonialist. I don't live an indulgent lifestyle. And I've never hogged resources. Sure, colonialism was rampant 300 years ago. But if you go back 2000 years you find Romans, Chinese, Persians, Indians, etc. as the great colonialists. Why don't be beat Iranians, Chinese, Indians, etc. about the ears for having "empires". My ancestors were running around half naked in the northern fringe woodlands 2000 years ago.

As for using an "unfair" share of resources:

Click to Enlarge
The above graph is from a post on energy by Ed Yardini in his blog Dr. Ed's Blog.

As the graph makes clear, the rising standard of living in China and India (and more generally in southeast Asia) means that resource consumption there has rapidly surpassed the "developed" world. Sure, the per-capita resource use is still low, but the graph shows the trend. In 30-50 years the overwhelming about of resource consumption will be with the billion+ populations of China and India.

Oil consumption is falling in the "developed" world while it is strongly rising in the "undeveloped" world. But all the anti-technology, "green", guilt-ridden propaganda used to make people in the developed world feel guilty is out-dated. It doesn't reflect the world we now live in. But it always takes time for people to throw off out-dated mental shackles.

Dale Peterson's "The Moral Lives of Animals"

I quite enjoyed this book. The author has an excellent style and peppers his points with interesting commentary and results from scientific research.

His purpose in writing this book is to get us to recognize our in-built prejudice, what he calls Darwinian narcissism, our view that nature is out there for us to exploit. Also, he wants us to understand our deep evolutionary connection with the rest of life and, in particular, with animals that share similar brain structures. He argues for not just similar emotions and thoughts across species lines, but an incipient morality shared by us and animals. I love the bits about altruism.

He is not one of these authors with a soapbox and the accusatory rant of a preacher. He isn't beating the reader about the head with some "revelation" he has about the place of animals in the world. His style is more lyrical and seductive. He wins the reader over by laying out a feast of story, anecdote, scientific research, and personal experience. This is like sitting with a friend on the front porch and sharing insights and experience. It is very pleasant.

I love the bit where he argues that morality has two sides: rules and empathy. I enjoy his honesty in pointing out that men and women share an understanding of both sides to morality but that there is a deep divide between them. Men go off the deep end with their rules and their Bible-thumping, verse citing, hard legal case arguing. Women go off the deep end with their sympathetic relationships and understanding of the need for special pleading for each instance. I really like the fact that he points out that morality is a crazy mix of rules and empathy and he doesn't get boxed in by trying to spell out in some absolutist sense exactly which of what makes up morality. Instead he paints pictures and opens your eyes and gets you to wondering.

I do recommend this book.

Truth about Taxes

I assumed that since taxes are progressive that the "fair share" of the rich was proportionally more than the fair share of the poor. But I now discover I was wrong.

Here's a post by Paul Krugman that sets me straight:

The claim that only rich people pay taxes is a zombie lie — something that keeps coming back no matter how many times it’s killed by evidence.

So, let’s try another shot to the head.

Yes, high-income people pay the bulk of the federal income tax. But that’s not the only tax! And while the income tax is quite progressive, the payroll tax — the other major federal tax — isn’t; and state and local taxes are strongly regressive.

Citizens for Tax Justice (pdf) has the goods: combining all taxes, federal, state, and local, we get this:

Click to Enlarge
The overall system is barely progressive at all.

And here’s the thing: the people peddling this stuff about those lucky duckies who don’t pay tax because their incomes are low know all this, because it has been pointed out many times. They are deliberately trying to deceive you.

I always assumed that the progressive income tax portion swamped the regressive payroll taxes. But I now stand corrected. It ends up that the tax burden in the US is shouldered by everyone.

But that strikes me as unfair. The person who makes more can afford more. They should be shouldering more of the burden of taxes. And to tax those in the lowest 20% for more than a fairly nominal amount strikes me as imposing too big a burden on families whose resources are already stretched to the limit.

The Leftovers are Becoming Stale

I love this video. It is Paul Ryan trying to sell warmed over "you can't tax the rich because they create the jobs" while his town hall Republican audience is violently against this hogwash. They bought it for 30 years, but they've had enough. They've waited for 30 years to see the "trickle down" economy deliver something to them and they have now realized they have been taken for a ride...



I sure hope this is like the first crocus of spring, or the wonderful daffodil whose early bloom reminds you that the deathscape of winter is giving way to a new dawning, a new time of hope and growth.

Update: I just read this bit about Republicans wanting to abolish child labor laws as part of their rush to recapture the "good old days" of the early 19th century when the poor went about in rags while the upper class had big houses packed with servants to do their bidding.



I love the fact that he claims that child labour is reprehensible, but gosh, he wants to dismantle the laws because he believes in "states rights", yep, that "states rights" that led to the Civil War. This guy is a Neanderthal. Wait... that is an insult to the Neanderthals who probably had more principles and ethics than this guy!