Bush the Lighter

If you can't tell already, I find Jeb Bush to be an intellectually contemptible person. I am not the only one to realize the "smart one" label was laughably misplaced. It's as if he doesn't bother to keep up and assumes his conservative instincts will see him through. Recently he went on record saying the Voting Rights Act of 1965 is no longer needed; specifically stating that a federal role was not needed to ensure voting access in certain states with a history of voting rights denial, e.g., Jim Crow. He said this with what should have the benefit of hindsight. It should have been as obvious to him as the rest of us that, because of the Court ruling, the states no longer bound by the VRA, primarily in the South, immediately began re-implementing voting restrictions, measures that would not have passed muster with the VRA- and all done by Republican-controlled states and municipalities because there was no longer VRA-mandated federal oversight.

This is precisely what what liberals warned would happen and precisely what the Supreme Court majority assured us would not happen.

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Speaking of pompous presidential candidates, those of a certain age remember how George Bush the Elder played the racial fear card with that infamous Willie Horton political attack ad, the one that attacked Democratic candidate Michael Dukakis because he, as Massachusetts governor, had allowed Mr. Horton, a felon, to have a weekend pass. You know the story; Willie stabbed and raped at the first opportunity. Bad call, Gov. You know why you remember it? Because Republicans played that Horton attack ad incessantly and made sure everyone had their primal fears rubbed raw. Republicans know fear helps them win elections; they stoke it every chance they get.

So it is interesting how Huckabee has largely avoided a similar fate. You do remember the incident, don't you? OK, most of us don't, nor did we hear much about it at the time, which is really my point. Fortunately, some have seen fit to remind us.  And yes, if Huckabee starts to climb in the polls, one or more of his Republican opponents may bring up his Willie Horton moment.

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Business Insider reports that economists are surprised that consumers are saving more than expected. This can be a problem in an economy where consumer spending plays such a dominant role. "Secular stagnation," they say. They shouldn't be surprised. As I have said more than once about job security; it has been stripped away for millions of us, and when people know they don't have job security, along with low wages and benefits, they do the rational thing and cut back on spending, especially when credit card debt is already high. It really should be obvious why households feel the need to save and pare down debt.

All that cheap plastic crap from China will sit on Walmart's shelves for a little longer, so there is a good side, I suppose.

Trade Gets No Respect

I posted earlier this summer about international trade and why the US media has little to say about it. I contended that the investor class does not want to talk much about international trade because an informed electorate would threaten the continuance of free trade's role in an inherently unequal economic system on which the privileged and powerful depend.

For some, mostly wealthy, mostly Republican, and mostly on the Right,  there is not much to discuss regarding free trade; for them it is the default position that rarely needs defending, except to marginalize and shame heretics who might be tempted to explore the vast chasm between the orthodox gospel theory of free trade and the brutal empiricism of what the rest of us call the real world. They are rather oblivious to distinctions between global trade, which has many benefits, and unfettered free trade, which doesn't.

There is, of course, the cynical proponent, the paid operative, side by side with the ideologically-committed true believer. The former are less interested in the vagaries of free trade as an economic doctrine, but are determined to crack the whip of orthodoxy because they are, like the true believers, pleased to see global trade increase, but also because ever-increasing global trade contributes to what they view as the proper hierarchy of power, the one that puts corporations, the powerful men who run them, and that ever-astute risk-taking investor on top, and workers and other less morally-deserving hoi polloi on the bottom. Their incessant message is that robust and unfettered trade represents efficiency, choice, and competition, all of which we are told to crave and admire. You can't compete? Don't be weak, it's your fault anyway, so suck it up.

Having said this, it is also true that many on the Left do not have much to say about international trade, as it is currently playing out, despite bountiful data and a well-developed but under-utilized theoretical framework that vividly describes reality: unfettered, global trade impoverishes the working class and enriches (most) corporations and the managerial and investor classes.

Of course, there has been some protest against globalization. There is currently a push-back, one that may be growing, against the Trans-Pacific Partnership, just as there was against NAFTA. Nevertheless, the TPP remains a second-tier concern for the Left.

The Left finds itself once again ideologically divided, its modest resources spread thin. Protesting the ravages of aggressive trade means the Left, to some extent, aligns itself with Corporate America. If you protest, say, Chinese or Korean steel dumping in the US, you not only are taking the ostensible view of the US Chamber of Commerce (e.g., imports are fine, but only at market prices), but you are uniting with the America's economic aristocracy, largely white, Republican, and reactionary.

And this is something the Left cannot abide. It is easier to view the US as economic aggressor. With that as their default position, few are willing to rally against Chinese trade aggression or systemic Korean disregard for American patents, copyrights, or intellectual property. We see occasional outbursts against China's export quality control, such as with food additives, but that is because our health as individuals is threatened. But cheap Chinese products as a growing threat to America's economic interests? Yeah, maybe, but I have a save-a-bug rally to attend, so later, dude.

What the US does in international commerce is considered an existential threat. To report critically about what China does is effortlessly labeled as fear-mongering and bigotry. The Left will do anything to avoid such charges, so any viewpoint that might equate the two countries is embraced very reluctantly. Accordingly, we rarely see any on the Left protesting the systematic circle jerk to which China subjects American companies.

The Left wants to see other nations, at least the non-white ones, as valiantly defending their economic sovereignty. American corporations are the modern exemplars of economic imperialism. The Left too often is content to view avarice as uniquely American (or western); nations whose citizens have brown or black skin are perpetually the designated victim.

To be sure, the American Left opposes oppression of civil rights abroad, be it China, Iran, or Zimbabwe. But when they care to look at the massive, chronic trade deficits the US has with Asia and elsewhere, or when they read how corrupt officials stonewall foreign companies in China, steal technology, or hack our government's computers, the protests are muted. Instead a blame-America-first mentality kicks in. Those on the Right complain about this all the time, and they have a point.

To fairly examine East Asia's neo-mercantilist complicity in America's de-industrialization requires a willingness to confront uncomfortable realities, so most on the Left move on to something less ambiguous, like minimum wage increases, or social security. Others, of course, focus on social issues, such as gay marriage or abortion rights. The dismantling of American industry remains a low priority with purveyors of identity politics.

Cheaper Still

Low wages are the prime reason the US economy continues to be sluggish for most of us. Suppressed income, of course, is not to be found on Wall Street, Corporate America, and the rentier class, but it has come to define much of the middle class even as the number of working poor continues to rise.

The US economy depends on consumer spending as the core of economic activity: if there is enough spending, it spurs GDP growth, if not, growth stagnates or even declines. We are, for better or worse, a consumption-driven economy. All economies are, to one extent or another, but the US is especially dependent on it.

For most of the post-war period, Japan, to give one comparison, has depended far less on consumer spending to fuel its own GDP growth. The difference was that Japan emphasized capital investment over consumption. Citizens there consumed less and saved more. All that capital investment created massive over production. That's where exports, disproportionately to America, came in. We consume, Japan saves and exports excess capacity. China and Korea have adopted this model.

Accordingly, some economists argue against policies that encourage savings. A dollar saved means a dollar not spent. While the argument is still made that Americans should save more, the counter argument says that doing so will only slow down the economy: Corporate America, small companies, and the employees that work for them all want everyone to buy their products and services. No customers means no sales, so no profits. It also means no employee paychecks and no tax revenues either.

All of which brings us to low wages; not jobs, not investment, not savings, not manufacturing capacity, but the wages Corporate America pays to the millions of jobs that already exist--it is those low wages are the at the heart of our national decay. Low wages are killing the American dream for many. Wages not only have not kept up with productivity for literally decades, but for many of us, wage declines are accelerating.

As compelling as it is, the specifics of America's evolution into a low-wage nation, complete with an overclass and mandated inequality, seem of little concern to many of us, even as we sense we have been victimized by a rigged system. It has taken years, decades actually, but the cumulative effects of neo-liberal, trickle-down policies, and their southern variation, what I call Dixification, have come home to roost.

Cheap Labor Only, Please

Manufacturing and trade news do not get much coverage in our mainstream press. Japanese obsess over trade data, as do the Chinese, Koreans, and most others who take manufacturing seriously. This is obvious from reading any of the mainstream and  business-oriented newspapers overseas.

Ours? The focus is more on Wall Street, corporate profits, and finance. Our corporate media does not want to spend much time on the implications of large, chronic, and structural trade deficits, except for the predictable paeans to free trade, how much we benefit, and how boorishly stupid you are if you are not a committed free trader. Honest analyses of how we arrived at our current condition are rare; most commentary is ideologically driven tripe that contends workers are overpaid and investors need more profits. 

To be sure, we have all read of the decline of American manufacturing. And for those who are determined to know, many websites and blogs, especially those hosted by academics, cover these subjects very well. But while complaints about Chinese currency manipulation and the hazards of doing business in China do get coverage, little is said in the mainstream media about the role of American corporations and how they turned over technology and manufacturing to China and other trade competitors, all in an effort to tap cheap labor, ignore the challenges and capital requirements of advanced manufacturing, boost short-term profits, and please the investor class.

As Chinese wages continue to climb, we are now seeing some evidence of a pick-up in US manufacturing. But a central conundrum remains: Should it be a matter of policy to promote the return of manufacturing to the US? Or is the market going to resolve domestic manufacturing, and perhaps give a boost to exports, without policy intervention?

It is hard to get enthusiastic about an improving manufacturing sector, especially in the face of new data. I once would have welcomed it more openly, but it is becoming increasingly clear that a global economy or neo-mercantilist trading partners are only secondary reasons. In other words, less blame should be attributed to cheap labor in China and more to the desire for cheap labor in the US. The current condition of the US, complete with massive trade and current account deficits, is the direct result of wealthy and well-connected purveyors of neo-liberal free markets. It is they who have hobbled government's essential regulatory role (derivatives anyone?) and facilitated the dominance of finance and the rentier class.

So there is little reason to think that newly created manufacturing jobs are going to pay very well. Neo-liberal policy wonks, along with right-wing politicians, have had a 30+ year run promoting ideas, policies, and legislation that has weakened labor unions, kept minimum wages low, undermined workers' rights and put into place an elaborate tax code that ensures that corporations will largely avoid taxes. All of that in addition to the glories of free and unfettered international trade.

All of which was always the goal. To the extent that corporations locate or relocate manufacturing in the US, it will only be in response to low wages, obscene tax giveaways from states, the absence of unions, and elaborate agreements with government officials that ensure corporations will continue to privatize the benefits and socialize that costs. If manufacturing does meaningfully increase in the US, it will only be because wages have been driven down. If wages go up, even in accordance with productivity gains, corporations will threaten to off-shore production once again.

Reckless Indifference

This lengthy chart reveals much about what powerful Republicans think of the rest of us. A quick look below at the tax proposals of the Republican presidential candidates reveals just how willing they are to exacerbate inequality.

It should be apparent that each proposal overwhelmingly benefits those already wealthy and will have little positive impact on millions of struggling families. It should be equally obvious that these tax proposals will make the deficit much worse.

None of the candidates has any intention of reimplementing the tax structures of the past that helped create the middle class, provided for solid growth, paid for defense-and wars-with taxes, and managed to balance the budget, or come very close to it.

There is only one major difference between now and earlier in the post-war period, up to the 1980s, and it isn't government spending. The difference is that 30+ years of tax cuts for the wealthy, starting with Ronald Reagan, have shielded the very wealthy from the taxes they used to pay. That has created a two-fold tax structure: the middle and working class are asked to pay more, and the budget shortfalls, dramatically larger than in the past, end up as government debt, picked up by China and other trading partners.

The current set of proposals only worsens the trend. Every detail is a giveaway to America's richest.


Tax Proposals Infographic by: Certified Tax Coach

We Are The Many

Asia-Pacific Economic Cooperation, or APEC, is in town. Security is tight and Waikiki is cordoned off.  Among the festivities was a performance by Makana, a popular local musician, for the numerous leaders from Asia, including China and Japan, along with the US. President Obama was there. You can read more about how the APEC forum turned out here.

As our local newspaper explains, Makana gave an unexpected and gutsy performance in which he sang his new song, We Are the Many, while he shows off an Occupy with Aloha shirt. The video below shows him singing. You will see why it was bold. In my view it was also highly appropriate.

Was anyone offended? Tough shit. If any world leader was offended, it serves to demonstrate why Occupy Wall Street is necessary in the first place.

The second video is a better-quality, professionally recorded version of the same song. Good job, Makana.

Economic Stupidity at Work

Teabaggers in Congress are hard at work saving you money:

WASHINGTON -- If you think Congress doesn't understand the economy now, wait till you see what a key House panel wants to do to the people who help figure it out.

Lawmakers are taking on the budget for the Census Bureau, pushing cuts that could leave economists and businesses in the dark about key economic information even as they are trying to map a path through a treacherous, uncertain economy.

The House Appropriations Committee is set to put the final touches on a funding bill Wednesday that proposes to slash the government's data collection arm by 25 percent -- a cut that economists and statistics experts say could end up costing taxpayers and businesses billions.

"It's essentially turning out the lights as economic policymakers are trying to do their work," said Andrew Reamer, a George Washington University professor who focuses on economics and U.S. competitiveness.

The bill is the Commerce, Justice and Science appropriations measure for 2012, and the cuts in question target the Commerce Department's Census Bureau -- recently one of the bogeymen of the right. The cuts would take effect in October, leaving the bureau little time even to plan to mitigate the impacts.

And those impacts would be many. The Census Bureau declined to comment, but a member of Congress was willing to pass along the agency's estimate of what the cuts could mean.

"It would have major, permanent impacts on the nation's economic and demographic statistics," the bureau said, according to Rep. Carolyn Maloney (D-N.Y.), a member and past chair of the House Joint Economic Committee.

"It leaves me rather speechless, actually," said Maurine Haver, the head of the National Association of Business Economists' statistics committee. "I just don't understand it."

Experts on the Census said there are several programs the bureau runs that could be affected by the proposed cuts. One is the $124 million Economic Census, which serves as the benchmark for the nation's fiscal reports, including evaluations of the Gross Domestic Product, jobs data and economic activity across industries.

"The Economic Census is the foundation for the country's most important measures of our economy," Maloney said. "A cut to the Census Bureau of this magnitude will undermine the confidence in our fundamental economic statistics, like the GDP..."

Read the entire article here.

One wonders what the strategy is, if any. All indications are that businesses are significant users of census data. Republicans usually want to undercut the weakest and most vulnerable in society, not business. One could argue that teabagger members of the House are so determined to cut spending, and show their constituents what a fine job they're doing, that they will attack whatever low-hanging fruit they can find. Many freshmen Republicans, the ones put into office by teabaggers, don't actually believe in government anyway.

The cynic in me says conservatives politicians want to hide America's deteriorating socio-economic demographic data from voters, the public, and the world, not unlike the way other countries do it, such as China. Researchers can bang Republicans over the head with empirical reality, sometimes known as facts, but it's harder if you can deny them some of that data in the first place. It is no coincidence that conservatives are the most vociferous opponents of the Freedom of Information Act.

Meanwhile, have you seen the new Fox News Logo?




The irony is that Fox viewers are far less likely to understand the joke precisely because they watch Fox News.

Less Wall Street, More Main Street

I want to share a post by airmechild who captures much of what is wrong with the American economic model. I quote at length:

There is a show on one of the major networks, ABC I think, called the Shark Tank. Basically the show is about entrepreneurs looking for investment capital to start or expand their business. They pitch their ideas to a group of likely investors hopping to get at least one of them to invest money in their business.

In one show a business woman asked for an investment to expand her line of shoes into the next lower class of stores. Her shoes sold well in very upscale boutiques and she wanted to sell in stores like Nordstrom’s and Macys. All of which would require expanding her manufacturing and distribution base.

One of the “sharks” asked where she had her shoes manufactured. She replied Florida and Mass. His response was that she should moved it (manufacturing) to China. The show includes several minutes of bantering between investors and the client until a deal is reached. After all “you have to respect the money.” One of the investors will say during the deal making processes.

Simply, it’s all about the money. Wall Street, the unofficial indicator of “profitability” of Americas companies, has dictated it to be so. Over and over since Reagan came along we have heard the mantra “Wall Street says…” or “the Street…” as the gospel of business or the economy.

Remember this, if you learn nothing more about economics, Wall Street does not represent the American worker, businessman or America. It only represents the greed of the investors. In recent years many a business decision, work force cuts or outsourcing was made simply at the behest of Wall Street. Not one of these decisions bettered America, the economy or a worker (blue or white color.)

It has had just the opposite effect. Wall Street made pitting a company and its tax structure against communities and states for “competitive” tax rates. Another moniker for improved wealth to the investors. The next step was to pit American workers against Foreign workers. After all according to the “Street” our wages are to high.

So the contestant should move production to China? That's our investor class talking; if it can juice up profit margins, they are all for it. Lost jobs? Not my problem.

This infatuation with giving what the investor class wants is seriously undermining this country. They have convinced themselves, and apparently many others, that individual greed is all we need and the less one cares about others, the better off we will be. It is all about me and my profits. Labor is just an abstract, a necessity. The lower management can lower labor costs, the better investors like it.  

No wonder other countries are doing better than the US. Germans, for example, are in utter disbelief and think we are insane. 

Hat tip to airmechild. There is more at the original.

European Dismay

In my last post I referred to Tom Friedman's article on how badly the US is polarized and how deeply it has affected our ability to function on even a basic level. Thanks in no small measure to Republican obfuscation, we have become a bizarre parody of ourselves. It is almost like a skit on Saturday Night Live, to which Republicans would whine about how they are being unfairly stereotyped as being in the pockets of the rich. "We will not try to balance the budget on the backs of the poor," I can hear them say.  Except that they are. Slash social security and threaten to shut down the government if Dems don't give tax breaks to the rich? They want that too. How painfully obvious does it have to get before we realize today's Republicans are no longer the party of Eisenhower?

Unfortunately, there are too many Democratics who seem either resigned to events, and are not fighting back, or are actively assisting our transition to oligarchy.

Americans don't take foreign opinion into proper account account very well. As a result, too many Americans have increasingly indefensible views on our international role and rank. And thanks to our deeply compromised media, few Americans are hearing what others think about us and our government, and why it should matter.  

Our recent elections, a giveaway to corporate America disguised as economic populism, has dismayed many in Europe just as it did many progressives here.  How can it be, they ask, that Americans can be so narrow and forgetful as to vote back into power the same corrupt party that helped put the economy in the ditch just before Obama's term began in January 2009?

Europeans, the same people who have national health care of one sort or another, and pay less for it, have no desire to adopt America's for-profit, pay-through-the-nose model designed to enrich the insurance industry. Europeans get more for less, and they know it. They see our recent protracted effort to adopt universal health coverage as symptomatic of American ineptitude. They could see, just we could, at least those of us who didn't watch Fox News, that very high majorities of us wanted a public option.

Yet we couldn't get it done, despite public opinion and Democratic control of the House, the Senate, and the Presidency. Support declined only when it became clear that we would end up with an unworkable compromise that enabled insurance companies to continue dominating the process.

Steven Hill has written more on the European reaction. In a recent post at Alternet, Hill relates his own experience:

"While participating in a conference in Budapest in September, where prominent conservative leaders and thinkers were in attendance, including the president of the European Parliament and two prime ministers, some of the most eye-opening comments had to do with new perceptions about America. One speaker, Christian Stoffaes, who is chairman of the Center for International Prospective Studies based in Paris, stated the “United States is in disarray, extremely polarized. It is practically a civil war there, and you can’t count on it.” This theme was echoed by others speakers, who went even further. One said “We need to shift our emphasis eastward (towards Asia) and not wait for the Obama administration.” I found these statements to be surprising, and even vaguely alarming, given the importance of the transatlantic relationship in the post-World War II era. But there was a widespread view that the US is being consumed by the severity of the Great Recession, brought on by a broken Wall Street capitalism, as well as by the quagmires of the Iraq and Afghanistan conflicts, and an inability to change course."

 Regarding the failed Copenhagen Summit on climate change, Europeans saw that the US was not serious about climate change. Calling it a real wakeup call for the Europeans, Hill notes a sudden European epiphany:

...it wasn’t George W. Bush who was the problem, but something more profound about America’s broken political system that prevents any leader, even one as talented as Obama, from delivering.  That political system is marinated in money, is paralyzed by a “filibuster-gone-wild” Senate that has allowed a minority of Senators to obstruct all legislation, and is hamstrung by a sclerotic, winner-take-all, two-party electoral system that has left voters poorly represented and deeply frustrated." 

Ain't it just swell? Hill captures one more quotation that I must share here because it is a sentiment that many progressives share, including myself. German Finance Minister, Wolfgang Schauble, says "...The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base."

Exactly.

Bear in mind this is the same Germany that has higher taxes and more regulations, higher wages and higher unionization, and health care for everyone. It has paid vacations for all, generous maternity leave, more generous pensions, and much greater job security. And wealth is much more evenly distributed because of taxes. All socialist programs.

Just what Republicans insist would destroy the US. Yet Germany has generally better demographics, such as lower homelessness, lower crime, higher literacy, and longer life expectancy.  

Germany also has a massive trade surplus. And It does not owe $ trillions to China.

Republicans have their arguments completely backwards. But at least we have more billionnaires.