Where the Money Goes

As some readers know, I have lamented the dominance of Wall before. I and certainly many others, have expressed disgust over the way Wall Street sucks money out of the economy. This is not mere rhetoric spewed from that swirling cacophony called the Internet. Let me provide a very specific example of what I mean when the Wall Street feeding frenzy is damaging America: the current practice of stock buybacks. It is a simple enough to understand, and why corporations might want to do it when warranted. What is not as obvious is the broader ramifications.

As you should know, publicly-traded companies become public by issuing stock, shares of which are available to anyone who cares to buy them. Said companies often issue additional shares from time to time as a way to raise capital, which is not debt, and in lieu of borrowing, which is. Over time, a company, call it Acme Widget, may have raised a great deal of capital by issuing a flood of stock. Companies like Acme may or may not have grown as a result.

However, Wall Street doesn't just want to see Acme make profits; what it really wants is for the stock price to rise and it cares little about how it is done. Rising stock prices are harder to come by if Acme has gazillions of shares floating around. On a per-share basis, earnings look better if Acme has, say, 300 million shares instead of three billion. Obviously they are not better, they only look better.

What to do? Acme could use its profits on R&D, or on new equipment, two mainstays of stable growth. Or Acme could buy back shares of its stock. This has some ramifications. Apologists will tell you Acme is investing in its future, and buybacks should be seen as a mark of confidence. That is risible nonsense. What does Acme get by blowing its earnings on its own stock? Companies like Acme are now spending big money, billions of dollars in some cases, buying (back) something that is not a productive asset. Cash spent on buybacks is cash not spent on increased wages, new technologies, or something corporate America could really use; higher quality products and processes. But buybacks enrich the investor class, which insists that maximizing shareholder value should be a corporation's overriding objective. If they get rich, then, well, that's it.

There is, finally, a growing recognition that American capitalism, with its obsession of stock buybacks, is toxic to this country's long-term health. At MarketWatch, not exactly the New Left Review, Rex Nutting writes:

Many factors have been blamed for the plummeting fortunes of the American middle class: globalization, technology, deregulation, easy credit, the winner-take-all economy, and even the inevitable tide of history. 

But one under-appreciated factor is a pervasive business model that encourages top managers of American corporations to loot their company for short-term gains, depriving those companies of the funds they need to build and enlarge, and invest in their workers for the long haul. 

How do they loot their company? By using large stock buybacks to manage the short-term objectives that trigger higher compensation for themselves. By using those stock buybacks to manipulate the share price, which allows them to use inside information to time their own stock sales. By using buybacks to funnel most of the company’s profits back to shareholders (including themselves).

Upper management at publicly traded companies is highly incentivized to enrich the already rich, most of whom are passive investors and have nothing to do with those companies except that they own shares. CEOs have garnered enormous wealth in recent decades because they also own many shares. Their role helps explain the corporate America's felt need to aggressively engage in stock buybacks. CEOs generally don't get multi-million dollar paychecks; that's for professional athletes. They get big paychecks, to be sure, but the really big money comes from stock options, though with a catch. Generally the stock has to appreciate in value up to a pre-determined amount, and within a certain time frame. Therein lies the short-term thinking in so many American companies that focus on their stock instead of on their products, customers, and employees.

This unproductive but highly addictive practice plays out as such: CEOs know that if they can get or keep the stock price at a certain level, their previously awarded stock options can be exercised. He, or occasionally she, sell those shares on the open market. The result is a windfall of cash, sometimes many millions of dollars. And this is an ongoing process: stock options awarded, work the stock, cash in, fresh stock options, repeat and enrich yourself.

Most shares the CEOs care to sell end up in the open market, where they tend to weigh down the price of the stock. That won't make investors happy, nor the CEO, who hopes for more stock options in the future. That's where the stock buybacks come in. CEOs and compliant corporate boards are only too happy to accommodate them, for they, CEOs, others in upper management, boards and investors alike stand to benefit.

The situation is complicated only somewhat by dividends. CEOs and investors alike are more inclined to keep their shares if the company pays a dividend. Fine, you say, except that dividends can get very expensive. Again, this is cash that could have been plowed into productive assets. But once dividends are paid, they are gone forever and they go mostly to the hedge funds, investment banks, and the rest of Wall Street, as well as the CEOs.

It is essential that voters understand the damage being done. Corporate America extracts profits from the working- and middle-class. That is as it always has been. And that is not the problem since customers, that's us, get something in return. The difference now is that those profits are not finding their way back, in the form of increased wages, to middle America. To reiterate, corporate America is on a buyback frenzy to please investors, and it is using money that in the past went to increased wages and capital improvements.  Instead, the use of stock options and buybacks ensures that an ever-increasing portion of capital sifts upward to the very top, where it remains in control of the .01%. Even the rich are beginning to recognize the recklessness.

It is the antithesis of the intellectual asininity called "trickle-down." Indeed, it is an ongoing debate whether neoliberalism's warriors were ever ideologically naive enough to buy into the trickle-down argument, or they simply figured we were.

 

Enrichment for the Few

Former AT&T Broadband CEO Leo Hindery recently acknowledged that executive pay in America has gotten completely out of control, and that it has caused a "structural breakdown of the meritocracy of our nation."

Hindery says it is "born out of cronyism." Well, yes, shameless cronyism is certainly a defining feature of American corporate culture, but who are the cronies and how do they get that way? Cronyism is an American way to avoid the obvious Marxian reality that corporatism in America is and always has been class-based and is intended to be an enrichment mechanism for the well-placed and the wealthy. It is all about enriching the upper class and not Americans in general.

All the same, Hindery's disgust is fully merited. In a recent interview;

Hindery observed that, even as CEO pay has skyrocketed in recent decades, it has not "trickled down" to workers, who must increasingly borrow money to finance their spending. That dynamic helped set the stage for the most recent recession and helps explain today's sluggish recovery.

That's exactly it; rich CEOs are not directly the problem, but more of a symptom. The real problem is how little of the country's growth in the last 30+ years has gone to the middle and working class and instead has gone to those at the very top, the 1/10th of 1%, a class of individuals who were already rich when inequality was merely significant instead of obscene. 

The problem is that too many of us must hunker down just to pay the basics. There is nothing left in a growing number of paychecks for families to buy groceries, pay the rent, pay or save for education, and put away some for retirement. So at the end of the week, something must go. A low-wage economy, which America now is, means increasing numbers of us have nothing left for an occasional splurge on just the products corporations want so much to sell us. Neoliberal politicians, some Democrats, mostly Republicans, have forgotten that one company's employee is another company's customer.
  
As Hindery states; "The only time the U.S. economy and any of the developed economies prosper is when there's a vibrant middle class that grows from the bottom up...We've trashed that whole principle."

To make matters much worse, the figures on inequality generally do not include assets CEOs and their investor class enablers are able to shield from taxation. And that means many billions of dollars leave the US and end up in foreign banks accounts. That does nothing for the US economy, though it is quite beneficial for places such as Bermuda, the Cayman Islands, and Switzerland. It isn't the middle class that sends these huge sums offshore. It is the very wealthy, who quite literally have more money than they know what to do with. While some of that wealth continues to be productively employed, an increasing amount is pumped into the political process--overtly creating a plutocracy--or is frittered away on ostentatious displays; the hyperwealthy's version of crass consumption.

Recent evidence of the astronomical sums the super-wealthy hide or send abroad, you know, people like Mitt Romney, demonstrates we have been seriously underestimating the amount of wealth that has left the United States. 

In a recent article in Slate, Jordan Weissmann shares the findings:

Economists Emmanuel Saez, of the University of California–Berkeley, and Gabriel Zucman, of the London School of Economics, are out with a new set of findings on American wealth inequality, and their numbers are startling. Wealth, for reference, is the value of what you own—assets like housing, stocks, and bonds, minus your debts. And while it certainly comes up from time to time, it has tended to play second fiddle to income in conversations about America’s widening class divide. In part, that’s because it’s a trickier conversation subject. Wealth has always been far more concentrated than income in the United States. Plus, research suggested that the top 1 percent of households had actually lost some of its share since the 1980s. 

That might not really have been the case. 

Forget the 1 percent. The winners of this race, according to Zucman and Saez, have been the 0.1 percent. Since the 1960s, the richest one-thousandth of U.S. households, with a minimum net worth today above $20 million, have more than doubled their share of U.S. wealth, from around 10 percent to more than 20 percent. Take a moment to process that. One-thousandth of the country owns one-fifth of the wealth. By comparison, the entire top 1 percent of households takes in about 22 percent of U.S. income, counting capital gains.

This is hideous, not because a few people are hyperwealthy, but because they helped create the deeply unfair and unsustainable economy that allowed them to attain that wealth. Now they dominate society, law, commerce, media, banking, and the democratic process to ensure their interests are protected and a Dixified, socioeconomic heirarchy is ever more institutionalized.

Say good bye to democracy. 

Democracy's Ills

How does that quote go again: "These are the times that try men's souls"? There is a frustrating duopoly at play; in our elections, in civil discourse, in our constitution, and certainly in our strained sense of democracy. We have come to learn, again, that our constitution is flawed and limiting. We, or most of us, say we support democracy, but we can't avoid the question as to why democracy and free elections have led us to the abyss. We speak of equality, think of ourselves, naively, as a classless society, and insist on such time-tested homilies as equal representation, or no taxation without representation (yeah, that's a good one). We have created or inherited a political system that we once urged, or sometimes forced, upon the world but which is now badly failing us.

On the one hand we continue to espouse boilerplate straight from civics class: freedom of expression, free markets makes for free people, a free press is the bedrock of a free society, all this freedom wrapped in a proud belief that minimum government yields maximum democracy --but it's all painfully juxtaposed against the urgently felt need to take back the public arena from the oligarchs, the corrupt, and religious fanatics. We, most of us, value freedom of speech; some of us still venerate the oh-so-learned Supreme Court for protecting our rights, but how many of us really believe Citizens United was a good decision? Or that denying the hyper-wealthy--or corporations--the right to buy elections, politicians, and the media is an affront to their free speech? 

On the other hand, do we know, or care to know, how much voter ignorance and apathy have contributed to our condition? I didn't vote for the jackasses that say we need to cut social security and food stamps from the poor because that's a good way to balance the budget. But millions did.

We may lament that people vote for selfish or irrational reasons, but we must remind ourselves that in the formative years of our republic, universal suffrage was seen as a horrible idea by the aristocracy and most of the founding fathers. The argument always given was that commoners, the illiterate, women, the melanin-enriched, the unpropertied, all of them would make poor voting choices. Specifically, they would vote themselves goods and services that were economically unsustainable, and would destabilize government. They usually left unstated their fear that the power and privileges of the upper class would be threatened by true democracy. 

So it might seem ironic that the most powerful and privileged in society, and among the best educated, are now the ones pushing and protecting policies, practices and legislation that are selfish, reckless, and demonstrably unsustainable. The middle class largely supports the same stabilizing policies of the past, including responsible taxation, support for the self-funding and efficient social security system, regulations that return us to the decades of stable banking we once enjoyed, and more.

And yet just enough people vote for politicians who have made it clear they don't want Americans to have better health care, have no intention of reining in Wall Street, will forever feed the military-industrial gravy train, and consistently vote for the interests of the wealthy and against the poor and working class. 

The real tragedy of American democracy is not just that so many politicians, mostly Republicans, actively support a Dixified nation with a small ruling class at the bidding of corporations. It is that many others, mostly Democrats, claim to support working class folks, but end up going along with the money train; it is they who will settle for scraps and claim progress; it is they who will support legislation so weak, toothless, and watered down as to be useless. They, not all, but too many of them, want you to believe they are fighting for middle America. 

What is depressing about this is though there are many politicians who want to and try to do the right thing, there always seems to be enough politicians, either outright reactionaries or compromised "moderates" who either bitterly oppose anyone who tries to do anything that most Americans actually support, or quietly insist-mostly at election time--that they are for you, but cannot or will not actually promote legislation that is, in fact, popular. Who do they think votes them into office? Why don't they get behind legislation that their base supports? You would think that far-right Republicans would abandon bills that even their Republican base is cool to, just as Democrats should be more enthusiastic about, say, a minimum wage increase. How politically popular does something have to be before Democrats will come out of hiding and publicly support it? It's as if they would rather dodge the attacks from Republicans and right-wing media, and chase Wall Street dollars, than respond to the voters who actually put them into office. It is little wonder that so many of America's poor and working class are disaffected and don't bother to vote. 

But hey, congrats to Harry Reid on filibuster reform; you too Diane Feinstein. It took you a while, but you finally decided that after years of record obstructionism that you should step in and actually do something about it. Too bad it took you five years to notice what Republicans were doing to the economy, the political process, and your party's president.

The Road to Plutocracy

The United States once generally adhered to economic policies that were pretty common sense on their face: We believed in economic democracy, not oligarchy, we believed that severe maldistribution of wealth was not just fundamentally unfair, but unsustainable and dangerous. For generations we properly regulated banks and we had few banking issues as a result.

When the US fought wars, we paid for them in part with steeply progressive--and temporary--tax rates. It was obvious to us and to our trading partners that manufacturing and a modern infrastructure were the bases of economic strength; banks should only play a supportive role. Moreover the US generously supported public universities, which returned the favor by providing us with scientific and technological preeminence. Economic doctrine and history both informed mainstream policies.

We once understood that a strong middle class was essential to overall prosperity as well as the foundation of democracy and free elections. As part of the social contract, industry generally worked with labor, offering wages that were in line with ever-rising productivity. There was little vilification of labor unions at a time when membership was far higher. Corporate dividends and government interest were paid overwhelmingly to Americans and not to neo-mercantilists in Asia and shadowy investors in the Cayman Islands. While the wealthy have always benefited the most, dividends and interest payments in the past were mostly pumped back into local communities. In other words, debt and equities were held almost entirely by Americans. Recipients spent this unearned income within the US, largely in their own communities. That which they saved went into a local banks and credit unions, not Wall Street. This whole process helped grow the economy and stabilize neighborhoods.

We would have been aghast at the idea that massive, intractable trade deficits would arrive and be accepted with surprisingly alacrity. That banks would be allowed to once again trade in securities, take wild, highly-leveraged bets with other people's money, dominate the political process, and virtually insulate themselves from legal accountability. Because of compliant politicians who now have all the money they need to stay in office, the big banks and other stars of Wall Street have been able to maximize gains to themselves, and spread losses onto others, primarily tax payers. This includes companies that have been propped up by taxpayers. It's a sweet deal for the investor class; get the middle class to foot the bill, while dividends and capital gains go overwhelmingly to the investor class. It is, at its simplest, a rigged financial system that has privatized the gains and socialized the costs.

It is all coming undone, though not by the middle class, not by local banks, not by unions, and certainly not by gays, secularists, feminists, immigrants, or Democrats trying to rein in a bloated defense budget. But we have been assured repeatedly that minimal regulations are good because unfettered financial markets will make the best decisions, that they allocate capital most efficiently. Neo-liberalism fetishizes minimal regulations, free and unmonitored movement of capital, low taxes, and free trade.That same neo-liberalism has been a cheerleader for policies that have hollowed out our industrial base, turned the economy over to a rapacious financial system, have put us into deep debt to Japan, China, and elsewhere. In the process, dividends and interest payments that used to stimulate the American economy now stimulate theirs.

Now we are told to spend freely, with few admonishments to save more. Our economic system is now deeply dependent on middle class consumers willing to endlessly consume, a process that is far less beneficial than in decades past because so much of what we buy is imported. Part of the massive earnings enjoyed by our trading partners is now used to finance US debt. The Reagan administration set us on this course of indebtedness because it knew foreign governments had piles of US dollars, and because conservatives in our own government refused to allow a level of taxation that would pay the bills. The 1% are now able to avoid taxation on income that would have been taxed in the past; taxes that would have helped to pay for the Iraq war, which has gone unpaid, and such things as maintaining a modern infrastructure.

Most of the middle class is in serious debt. Families will not and should not spend freely if their job security is in question. Many have experienced wage reductions as they move from one employer to another. An ever-growing proportion of American families realize they cannot simultaneously save enough for retirement, pay for basics, including health care, rising food and energy prices--especially in the face of no commensurate wage increases-- and also set aside for their children's needs, including college tuition. This is not a sudden condition; it has been building for decades.

The right wing and other intellectual thugs want you to believe that it started with President Obama. They hope you don't notice the policies they are espousing are the same ones that have been largely in place for most of the last 30 plus years.

It is, in any event, a laughably ignorant concept to argue that Obama is even in a position to have anything more than a modest effect, for good or bad. The conditions that most people and the government are now in are far larger and intractable for any president to handle. It has taken America 30+ years to get here, it cannot be turned around in four years, not when Bush handed Obama a shit storm and two unpaid wars, not when Republicans oppose him on every substantive point, and not when those same Republicans are able to exploit what we now see are serious shortcomings in the structure of our system of government.

It has taken the US decades to drift into the present condition. During this time the wealthy have garnered ever more of the wealth, paid ever decreasing taxes for it, run corporations that have earned more, paid lower wages, have been taxed less, and have more freedom to move capital around the world, and fewer obligations to middle class families. This is as the wealthy have always wanted it, and it is what today's Republican Party wants. Their biggest concern is that President Obama would do something to stop this inexorable trend towards plutocracy.

Avoiding the Real Issues

As America continues to struggle, many have reminded us of the value of innovation-- in technology and commerce, mostly, --but also in education and government. President Obama himself has often stressed the importance of innovation; how we once had it in abundance, how it now is eroding, and what we must do to get it back. The value of innovation would seem to be something that progressives and conservatives could mostly agree on, and that helps explain why the President talks about it. There is, of course, less agreement on just how innovation should be enhanced, and what the proper role of government should be.

When President Obama talks about the importance of innovation, he has often, inadvertently or not, draped it in conservative talking points. We need to "work harder", "stay in school", --or go back to school-- and get that degree or those credentials. It's a competitive world out there; if you can't get the job you want, it's because you are not properly trained and credentialed. And, of course, you cannot blame corporate America if you don't have the proper skills. We must not let down them down; work harder and prove your value to the job creators.

This storyline is not so wrong as it is incomplete. Obviously, there is much to be said for staying is school, seeking additional training, or more broadly, the role of innovation. American commerce still provides sundry example of where hard work and innovation can take you; they are the twin edges we must sharpen if we are to meet future challenges.

Every speech devoted to either of these takes the focus away from the underlying causes of US difficulty; jobs, to be sure, but also wage levels for the jobs we still have. Most people are in fact employed, and most jobs have not been outsourced or lost to foreign competition. What is not being acknowledged is that a disproportionate number of the jobs Americans now have face little foreign competition. That's the good part; the bad part is modest wages, benefits, and skill requirements for so many of these jobs. You don't need a degree to work fast food, retailing, and the like. And what about that other more technical job you went to back to school for, got a degree in, and now are heavily in debt for? Sorry, that job has been filled.

The problem of our sluggish economic growth is not a lack of innovation. We have bought into an economic doctrine that sanctifies free trade, financial deregulation, including unfettered flow of capital, and an obsession with credit and debt. It is a system designed by and for banks and the investor class, with little regard for main street or the middle class. The result is an indifference to massive trade deficits, dangerously leveraged banks, and an increasingly ability of the wealthy to avoid taxation and accountability.

Employees are seen as a mere input in this profit model. Low wages are good since they improve the bottom line. If workers are recalcitrant and actually want a living wage, management should be free to outsource production to low wage countries. To hear some tell it, management is virtually obligated to fire its American workers and seek cheap unregulated workers abroad, for improving the bottom line is management's only real responsibility. It's what the investors want, you know.

And the people who work for the company? That's labor, an input. Lower input costs mean higher profits. Why pay more? Any manager who does not seek to maximize profits is doing a disservice to investors, just like they were all taught in American business schools. It's all very rational and efficient, don't you see?

Innovation does not directly address any of this. We have innovated like crazy and what are the results? Entire industries have been shipped overseas. Because we have allowed our industrial base and concomitant skills to erode, seeking out overseas producers has become a default position. A generation has grown up assuming that American reliance on foreign manufacturers is the natural order of things.

Nor do the calls for greater innovation say who will benefit from the results. Asia is a huge beneficiary of US economic policy. For generations our tax dollars have poured into basic R&D, much of it going to public universities. It has been a great success story, and it has played a key role in America's development. And like the recent round of stimulus spending, much of those tax dollars ends up in Asia. Working harder, as even Obama has exhorted, does nothing to change the imbalances. US corporations already have what they always want; cheap labor, huge profits. The investor class took a hit in 2008, but they have recovered nicely, and have fat dividends and lightly-taxed capital gains to show for it.

So the middle class needs to work harder? For them? Because the job creators need help? Americans are already working harder than elsewhere in the OECD; we also have, in recent decades, relatively little to show for it. Wages have been suppressed, union membership has plummeted, and pensions and benefits have become even more rarefied. All of this is the direct result of flawed policies made in response to legitimate economic challenges.

Innovation will help; it always has. But the role of innovation has been undermined for the same reason our techno-industrial base has. Economic history is very clear on this: Nations that vigorously promote and defend their industrial and technical base have thrived. Those that didn't, and let their financial sector dominate, have crumbled.

America will not be an exception.

The American Dream

This is a TED video worth watching. For those who think that talk of the increasingly hideous inequality in the America is just the politics of envy, class warfare, or some other ignorant talking point, you will notice some inescapable details; facts, empiricism, and methodology. You will also be at pains to explain why you think the USA is number one, as so many mindlessly believe.

Bear in mind while you watch this video that Mitt Romney's two favorite campaign promises are to provide even greater tax cuts to the rich, and to overturn Obamacare. And he has repeatedly made clear that he would not do anything to rein in the Wall Street banks. If you think those are good ideas, you are likely to learn something from this.

For more information on the speaker, Richard Wilkinson, and what his research so compelling demonstrates, visit The Equality Trust.
 “If Americans want to live the American dream, they should go to Denmark.”

Impressive

You've got to hand it to Republican Party operatives. After more than 30 years of constant effort, conservatives within the party, media, the judiciary, and in the corporate world, have managed to turn upside down much of what the public thought it knew about government, unions, taxes, and even teachers.

I make a distinction between Republicans and conservatives that some may see as unnecessary; are not Republicans and conservatives synonymous? Pretty much, at least in 2012, but it would be difficult to overstate just how far to the right the Republican Party has lurched; a process that began, to the dismay of millions of moderate and liberal Republicans, with the nomination of Barry Goldwater in 1964. The cleansing process picked up rapidly in the 1980s and 1990s, with numerous watershed moments, such as the arrival of Newt Gingrich and the politics of destruction. As testimony to Republicans' new approach to governing, many will recall that the Party was able to keep Whitewater in public view, with the help of a stupidly compliant press, for literally years on end, only to have the process finally wind down having demonstrated no presidential malfeasance.

From the judicial standpoint, it was a waste of time and taxpayers' money. But upholding the law had nothing to do with it. The objective was to vilify a Democratic President, obstruct his agenda and ability to govern, and convince the public that conservatives stood on principles. The never-ending rush to spin the story helped feed the narrative that liberals are not to be trusted. Even today people will refer to Whitewater as a scandal, forgetting that there was no wrongdoing, despite years of investigation. It was only a scandal because the Republican hierarchy kept claiming it was. And many will be surprised when reminded that the 12 years of Reagan and Bush saw a dramatically greater number of actual convictions, not accusations, than in the eight years of Clinton. If the reality goes against what you had heard and "just assumed," it is because Republicans worked hard to make it so, for they have shown a superior ability to get their ideas into the media and into people's heads. They dominate most narratives because they understand how to make their messages simple and emotional. What sounds implausible or even ridiculous at first becomes accepted as truth if repeated enough. All propagandists understand this. This why Republicans have said for decades they, against all evidence, are the party of personal responsibility, fiscal prudence, and limited government. Voters who don't study the facts have come to accept this narrative.

And now we see Republican spin taken to new heights, creating a parallel world of logic and reason. They have managed what should have been impossible in a sane world of evidence, facts, and reason; divert enough of the electorate's, and the media's, attention away from the Wall Street banks and turn the middle class against itself. Significant numbers of Americans now think that public workers earn too much, are lazy and irresponsible, and are a drain on our fragile economy.Too many show an infantile understanding of economics by buying into Republican rhetoric that teachers' salaries are too high, so we must rein in those destructive teachers' unions. "Never mind that stuff you hear about Wall Street. Those guys deserve every penny they got, and besides, look at all the jobs they create."

The truly reprehensible thing about Mitt Romney is that he personally promotes these ideas and never once has acknowledged that the Bush tax cuts, which he wants to deepen, have been a prime contributor to the federal deficit. Everything the man says indicates he will be for the one percent and will penalize the working class, and yet he is running as a viable candidate.

And as we just saw in Wisconsin, there are plenty of voters who are fine with Scott Walker's effort to strip away the hard-fought gains by teachers and other public workers. Many now instinctively believe that there is such a thing in America as "big labor," and that cutting back salaries and benefits of teachers, librarians, firefighters, cops, and others, will somehow drive the economy forward, that and more tax cuts for the wealthy. Republicans have apparently convinced more than a few that teachers are now fat cats. The Wall Street bankers that drove the economy into recession have almost entirely avoided legal scrutiny. Forgotten is their unforgivable act of paying mammoth executive compensation with the very tax dollars meant to stabilize the catastrophic mess they created. No accountability, no significant judicial proceedings, and the few penalties levied have been easily paid and treated as nothing more than the cost of doing business.

The banks got away with it while attention has been diverted to where Republicans want it. They, including Mitt Romney himself, have convinced many that pushing back against the oligarchy is class warfare, but endless bitching about teachers and other members of the middle class, with an eye to stripping their rights and reducing their pay, is productive policy. And they have roughly half of that middle class believing it.

That is quite an accomplishment.

Lying: An Unregulated Industry

We keep hearing the same theme on the Republican campaign trail, the same tired bromide about how government weighs heavily on the private sector, the onerous regulations that sap our energy, and the ruinous taxes that undermine private initiative. And of course, all of this is what President Obama wants, because liberals, especially the foreign-born dark ones, want bureaucrats to take over the economy. That's why there are fewer civil servants now than when Obama assumed office. He wanted to destroy the big banks, which is why he rescued them. And his anti-corporate mentality explains not only that GM is turning profits and cutting paychecks, but that corporate profits are way up, as is the stock market. Private sector job creation has steadily climbed, despite Obama's confiscatory socialism. And he wants to drive up oil prices, which is why domestic oil production-and domestic drilling permits-- have increased every year since Bush left office, the same year Wall Street triggered the recession.

For some people, in other words, facts don't matter. Not even to presidential candidates. We have been subjected to a barrage of rhetoric that says essentially two things: 1) taxes are too high, and that is half the reason why the economy is sluggish, and 2) regulations are too numerous and burdensome, which is the other half. The solution? It's simple. In the Manichean mind of Republicanism, all policy prescriptions are simple; cut taxes and regulations. 

Never mind that we already have the lowest taxes in the OECD; no where else are the very wealthy able to protect so much of their money. And that nonsense about corporate taxes at a ruinous 35%? I addressed that here. Union death-grip on the economy? The United States has the lowest union membership in the entire OECD. And it has been steadily declining, exactly what conservatives have always wanted. And we have the cheapest gasoline in the OECD as well.

But that campaign theme, the one about unleashing the private sector by gutting taxes and government? None of the four Republicans left standing (OK, Paul and Gingrich are on their knees) ever misses a chance to tell voters that fewer corporate regulations means freedom for us all. We are left with a truism that Republicans have understood better than Democrats: you can get enough people, not all, but enough of them, to believe outrageous and nonsensical tripe if you just repeat it enough, preferably with confidence and conviction, if not outright rage.

Now for some reality. According to Ifo Institute for Economic Research at the University of Munich, in a study that compiled World Bank data, and entitled Business Regulation in International Comparison (available here), the United States is a mighty fine place to do business. The US is suffering, and fares poorly when broad demographic data are compared to similar OECD members, but when it comes to business getting what it wants, the US scored higher than any other large country. It was third overall (among a total of 30 OECD and non-OECD countries), bested marginally by smallish New Zealand and Singapore.

The US scored highest in category 5 -protecting investors- confirming the charge that government prioritizes the interests of the investor class. And we were fourth-best, right up there with the two authoritarian states, Hong Kong and Singapore, when it came to the relative ease of starting a business. The real kicker is that the US was also ranked fourth-best when it came to hiring and firing workers, where nations scored high if business was able to fire workers easily and avoid costly penalties and benefits.

Republicans like Romney and Santorum have been telling us that they will unleash the private sector from that horrid Obama, and they will do it by ever more tax cuts, ever fewer regulations.

They are full of shit. The reality is almost the complete opposite of their fact-free narrative. If suppressing working-class wages and unions, enabling and subsidizing the welfare queens on Wall Street, cutting taxes for the investor class, and letting management compensation run wild were the appropriate policy tools, Wall Street would not have crashed and we would not have had the recession in the first place.

If you know anything about economic history, you know that we have been on this path for decades. And all the Republican candidates can do is call for more of it.

Obama's Burden

A recent cover story of The Week magazine relates the difficult choices President Obama faces in Afghanistan. These choices are part of the larger set of problems he has faced since his first day in office. The two endless (and thankless) wars in the Middle East were only his biggest foreign challenge for a president who also had to overcome the biggest economic recession since the 1930's, the spectacular fallout from Wall Street's recklessly irresponsible activity; activity, it should be added, that was condoned and even applauded by free market ideologues, including Alan Greenspan.

All of this in addition to a massive trade deficit, one caused by policies that have allowed widespread offshoring of jobs and a corporate culture that does not take manufacturing seriously--these are the prime reason industries have been hollowed out.  This bears repeating: It is our own incoherent industrial policies that have contributed the most to our weakened industrial base and the mammoth trade deficit that it engendered, not China, not Japan, not foreign oil.

Obama faced two hugely expensive wars, neither of which was going well. He was forced to choose from several poor choices. The wars have added enormously to the national debt, an issue that did not seem to bother Republicans while Bush was in office.

The US has generally paid for its wars by raising taxes. We certainly did so in WWII, the Korean War, and Viet Nam. Many voters have forgotten how unusual and as we now know, reckless it was for George W. Bush, who inherited a huge budget surplus, to first squander the surplus by passing costly tax cuts for those already wealthy.  He too was faced with a large national debt as well as a seriously eroding infrastructure. He opted for tax cuts, the budget deficits returned, and then he went to war. Bush and the Republican-controlled congress refused to pay for it and the federal government has been growing its deficit ever since.

Obama tried to do what many economists said he must do; stimulate the economy, and keep the budget deficit from becoming too large, not an easy task, but then he did not create the conditions and policies in place when he took office. Others created them; Obama is getting blamed for them.

The irony is that Obama's fiscal stimulus was conventional, mainstream, and conservative. Keynes himself made it clear that government stimulus spending was very much a conservative alternative to the much greater pain of allowing massive unemployment and the resultant upheaval and unrest.

Obama gets blamed for continuing unemployment too, of course. The realty is that we have a much smaller industrial base that will call back workers when conditions improve. This is a big reason the recession lasted as long as it did, and why the recovery is so slow: there are far fewer good-paying jobs. Instead, millions of people have been forced to settle for poorer paying jobs than the ones they once held, and often with fewer benefits. Lower wages exacerbates economic recovery.

The final kicker is one left out of most analyses that focus on the mortgage crisis. The middle class carried the economy all the way until near the end of Bush the Lesser's second term. They did so by running up massive personal debts on their credit cards. That was unsustainable, of course, so once the Wall Street bankers crashed the economy, and unemployment started to rise, middle class consumers cut back on expenses. The cutbacks were prudent for the individual, but they hurt spending, tax receipts, and other peoples' jobs that depended on spending.

This is the mess the President faced on inauguration date. None of it started with him. And the process, the wars, the deindustrialization, the irresponsible tax cuts, the eroding infrastructure, the mortgage bubble, the suppression of wages, the dominance of unaccountable banks, all of it, was well under way long before most of us had even heard of Barack Obama.

Now bear in mind that most of the same people who got us in this mess, including essentially every Republican in congress, are completely opposed to Obama's every effort to extricate us, as if we can actually dig ourselves out of the hole, the one the middle class did not dig, without some pain and sacrifice. So if Obama tries to raise taxes to where they were in the Clinton boom years, he is a big government socialist. Never mind that taxes were higher under Reagan. If he tries to cut subsidies to Big Oil, as if they they needed it, he is undermining business. If he tries to rein in our out of control defense spending, he is endangering America's security. Never mind that the level of spending he proposes would still be higher than it was in Bush's first term. And every effort to get Wall Street under greater control, before it ruins it again for the rest of us, is opposed. Republicans insisted in 2010 that the Bush tax cuts be extended, and they were willing to shut down Washington to get them.  And now, of course, Obama gets blamed for the inevitably larger budget deficit.

Republicans have left the President with few options: Republicans will continue to support looser regulations and lower taxes (for the rich). Never mind that these are what created the financial mess in the first place. Only now are Republicans insisting on lower spending, not coincidentally on the programs that help the bottom half of society. Any honest appraisal of the federal budget will show that even significantly lower spending will do little to close the budget gap, not when tax revenues-from individuals and corporations alike-are the lowest they have been in decades.

Here is a short video that covers much of the above. It offers up in graphic form the impact on the federal deficit and debt of the wars, the bank bailouts, the recession, and most of all the Bush tax cuts.



One more thing; Obama even got Osama bin Ladin, after the trail had gone cold, so no, Bush, you don't get credit. 

All the Money Rich Bankers Could Ever Want

I believe the desire to hold the Federal Reserve Bank accountable to the American people is a major issue that progressives and disaffected right-wing populists, e.g. tea-partiers, have in common. Many do not seem to be aware of this shared interest.

The following is from Alan Grayson, former congressman from Florida. I have reproduced it in its entirety. The original is here. Mr Grayson is campaigning to win back his seat in 2012.

        The Fed Bailouts: Money for Nothing

I think it’s fair to say that Congressman Ron Paul and I are the parents of the GAO’s audit of the Federal Reserve. And I say that knowing full well that Dr. Paul has somewhat complicated views regarding gay marriage.

Anyway, one of our love children is a massive 251-page GAO report technocratically entitled “Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance.” It is almost as weighty as that 13-lb. baby born in Germany last week, named Jihad. It also is the first independent audit of the Federal Reserve in the Fed’s 99-year history.

Feel free to take a look at it yourself, it’s right here. It documents Wall Street bailouts by the Fed that dwarf the $700 billion TARP, and everything else you’ve heard about.

I wouldn’t want anyone to think that I’m dramatizing or amplifying what this GAO report says, so I’m just going to list some of my favorite parts, by page number.

Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, more than $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received more than a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.

Pages 133 & 137 – Some of these “broad-based emergency program” loans were long-term, and some were short-term. But the “term-adjusted borrowing” was equivalent to a total of $1,139,000,000,000 more than one year. That’s more than $1 trillion out the door. Lending for these programs in fact peaked at more than $1 trillion.

Pages 135 & 196 – Sixty percent of the $738 billion “Commercial Paper Funding Facility” went to the subsidiaries of foreign banks. 36% of the $71 billion Term Asset-Backed Securities Loan Facility also went to subsidiaries of foreign banks.

Page 205 – Separate and apart from these “broad-based emergency program” loans were another $10,057,000,000,000 in “currency swaps.” In the “currency swaps,” the Fed handed dollars to foreign central banks, no strings attached, to fund bailouts in other countries. The Fed’s only “collateral” was a corresponding amount of foreign currency, which never left the Fed’s books (even to be deposited to earn interest), plus a promise to repay. But the Fed agreed to give back the foreign currency at the original exchange rate, even if the foreign currency appreciated in value during the period of the swap. These currency swaps and the “broad-based emergency program” loans, together, totaled more than $26 trillion. That’s almost $100,000 for every man, woman, and child in America. That’s an amount equal to more than seven years of federal spending -- on the military, Social Security, Medicare, Medicaid, interest on the debt, and everything else. And around twice American’s total GNP.

Page 201 – Here again, these “swaps” were of varying length, but on Dec. 4, 2008, there were $588,000,000,000 outstanding. That’s almost $2,000 for every American. All sent to foreign countries. That’s more than twenty times as much as our foreign aid budget.

Page 129 – In October 2008, the Fed gave $60,000,000,000 to the Swiss National Bank with the specific understanding that the money would be used to bail out UBS, a Swiss bank. Not an American bank. A Swiss bank.

Pages 3 & 4 – In addition to the “broad-based programs,” and in addition to the “currency swaps,” there have been hundreds of billions of dollars in Fed loans called “assistance to individual institutions.” This has included Bear Stearns, AIG, Citigroup, Bank of America, and “some primary dealers.” The Fed decided unilaterally who received this “assistance,” and who didn’t.

Pages 101 & 173 – You may have heard somewhere that these were riskless transactions, where the Fed always had enough collateral to avoid losses. Not true. The “Maiden Lane I” bailout fund was in the hole for almost two years.

Page 4 – You also may have heard somewhere that all this money was paid back. Not true. The GAO lists five Fed bailout programs that still have amounts outstanding, including $909,000,000,000 (just under a trillion dollars) for the Fed’s Agency Mortgage-Backed Securities Purchase Program alone. That’s almost $3,000 for every American.

Page 126 – In contemporaneous documents, the Fed apparently did not even take a stab at explaining why it helped some banks (like Goldman Sachs and Morgan Stanley) and not others. After the fact, the Fed referred vaguely to “strains in the financial markets,” “transitional credit,” and the Fed’s all-time favorite rationale for everything it does, “increasing liquidity.”

81 different places in the GAO report – The Fed applied nothing even resembling a consistent policy toward valuing the assets that it acquired. Sometimes it asked its counterparty to take a “haircut” (discount), sometimes it didn’t. Having read the whole report, I see no rhyme or reason to those decisions, with billions upon billions of dollars at stake.

Page 2 – As massive as these enumerated Fed bailouts were, there were yet more. The GAO did not even endeavor to analyze the Fed’s discount window lending, or its single-tranche term repurchase agreements.

Pages 13 & 14 – And the Fed wasn’t the only one bailing out Wall Street, of course. On top of what the Fed did, there was the $700,000,000,000 TARP program authorized by Congress (which I voted against). The Federal Deposit Insurance Corp. (FDIC) also provided a federal guarantee for $600,000,000,000 in bonds issued by Wall Street.

There is one thing that I’d like to add to this, which isn’t in the GAO’s report. All this is something new, very new. For the first 96 years of the Fed’s existence, the Fed’s primary market activities were to buy or sell U.S. Treasury bonds (to change the money supply), and to lend at the “discount window.” Neither of these activities permitted the Fed to play favorites. But the programs that the GAO audited are fundamentally different. They allowed the Fed to choose winners and losers.

So what does all this mean? Here are some short observations:

(1) In the case of TARP, at least The People’s representatives got a vote. In the case of the Fed’s bailouts, which were roughly 20 times as substantial, there was never any vote. Unelected functionaries, with all sorts of ties to Wall Street, handed out trillions of dollars to Wall Street. That’s now how a democracy should function, or even can function.

(2) The notion that this was all without risk, just because the Fed can keep printing money, is both laughable and cryable (if that were a word). Leaving aside the example of Germany’s hyperinflation in 1923, we have the more recent examples of Iceland (75% of GNP gone when the central bank took over three failed banks) and Ireland (100% of GNP gone when the central bank tried to rescue property firms).

(3) In the same way that American troops cannot act as police officers for the world, our central bank cannot act as piggy bank for the world. If the European Central Bank wants to bail out UBS, fine. But there is no reason why our money should be involved in that.

(4) For the Fed to pick and choose among aid recipients, and then pick and choose who takes a “haircut” and who doesn’t, is both corporate welfare and socialism. The Fed is a central bank, not a barber shop.

(5) The main, if not the sole, qualification for getting help from the Fed was to have lost huge amounts of money. The Fed bailouts rewarded failure, and penalized success. (If you don’t believe me, ask Jamie Dimon at JP Morgan.) The Fed helped the losers to squander and destroy even more capital.

(6) During all the time that the Fed was stuffing money into the pockets of failed banks, many Americans couldn’t borrow a dime for a home, a car, or anything else. If the Fed had extended $26 trillion in credit to the American people instead of Wall Street, would there be 24 million Americans today who can’t find a full-time job?

And here’s what bothers me most about all this: it can happen again. I’ve called the GAO report a bailout autopsy. But it’s an autopsy of the undead.

Courage,

Alan Grayson

Economists for Occupy Wall Street

A short video from economists who understand what #OWS is, and why it is protesting this country's unsustainable, rigged system.

Occupy Economics from Softbox on Vimeo.


From econ4.org.

How They Really Feel

This man's comments speaks volumes on the attitudes of the wealthy. His disdain for those with less money is palpable. He clearly is equating people's value with the size of their portfolio. Rich people are better.



And it is not just an arrogant attitude; he is also egregiously wrong,his intellectual honesty clearly compromised by his ideology. Notice that he claims to be subsidizing the 99% because he is making big bucks. It is especially ridiculous in light of the massive amounts of money our government has directed at the 1%, and especially the 0.1%, who operate under a self-serving delusion that everything they have is because of skill and hard work. Overlooked by this dickhead are the endless flows of government contracts and concessions to big Pharma, defense contractors and the like. Overlooked are the multi-million dollar giveaways by state and municipal governments as they compete to entice corporations to locate in their areas.

Richie Rich also ignores huge sums given to banks as part of their bailout, money bank executives then used to pay outsized bonuses. And just this week we read that those banks earned roughly $13 billion in interest directly the result of the sweetheart deal they received for tanking the US economy. Here is the gist of it, as related by AllGov:

Thanks to the Federal Reserve’s generous lending during the 2007-2009 financial crisis, banks that were teetering and at risk of collapsing wound up making billions of dollars in profits, according to Bloomberg Markets magazine.

After combing through 29,000 pages of Fed documents released to Bloomberg by court order, the publication determined that banks earned about $13 billion in income by taking advantage of the Fed’s below-market rates. These loans were made without informing the public or Congress of which institutions were borrowing heavily to stave off disaster.

Finally, have a look at the chart below. The corporations in these sectors are generally run by individuals who espouse rugged individualism, a can-do attitude, and the glories of a free market. They also almost always bitch about high taxes and government regulation. As you can see, they rarely pay their share of taxes, but they sure know how to pull in those tax subsidies- nearly $223 billion from 2008-2010.

Source: Citizens for Tax Justice

That's some serious corporate welfare. And from their government-subsidized profits, they pay outsized compensation to people like the guy in the video. If corporate boards claim that their executives deserve their often huge compensation, then those corporations don't need and don't deserve government support.  If you cannot live without taxpayers like me subsidizing your bottom line, then your insistence on fat bonuses is even more morally obscene than it already is.

Or is this a problem only when the recipients are the 99%?

The implicit message: It's just good business, complete with tax write-offs, when rich guys are in on it, and it's socialism only when the poor receive it.

More on How People Are Fighting Back

Here is more on how people are fighting back against an unsustainable and deeply damaging banking system; not the one most of us grew up with, to be sure, but the one it has become. It was a good weekend, what with my beloved mother's birthday, Guy Fawkes Day (for which the BBC dutifully broadcast V for Vendetta), all in addition to #OWS efforts to encourage the 99% to move their money. 

Growing anecdotal information suggests that quite a few of us pulled accounts from the likes of Bank of America, Chase, and Wells Fargo, and took their business to credit unions and community banks. 

The Credit Union Times reported 40,000+ new accounts on Saturday. Other branches around the country reported hundreds to thousands of new accounts.

For their part, mega-banks say they are pleased with the action, because it is cleaning out the small accounts, the ones with high margins and low profitability. A Motley Fool apologist admits to much, but still defends Wall Street banks:

What’s important is realizing there are injustices with bailouts, cronyism and money in politics. People should really be upset about them. But they should realize at the same time that the economic system we have in the United States, compared to the rest of the globe, has created more wealth for everybody than almost any other country on Earth.

Bullshit, the banking system we had until a few years ago did indeed, play a crucial role in America's development, but not the one we currently have. Apparently it is too much trouble for him to show even the dimmest awareness of the massive changes that have taken place.

America's small regional banks are (mostly) not the problem. It is the global banking giants that are undermining the middle class. Read some details on this from a British banking perspective at George Monbiot's excellent column called The 1% are the very best destroyers of wealth the world has ever seen. 

Reinstate Glass-Steagall

Why Cain Connects With Republicans

This is another reason why #OWS is fighting back: The country's socio-economic standing in the world continues to deteriorate. One measure of that can be seen in a widely disseminated story that America's poorest of the poor now represent 1 in 15 citizens, those who's income is 50% or less than the official poverty level. 

Let that sink in a bit. That is about 21 million people. They are not just unemployed, or down on the luck, or facing lean times, or whatever other cliche' gets bandied about. These are America's very poorest, and the number--and proportion-- are now higher than ever. As the original AP article states:

The ranks of America's poorest poor have climbed to a record high — 1 in 15 people — spread widely across metropolitan areas as the housing bust pushed many inner-city poor into suburbs and other outlying places and shriveled jobs and income 

New census data paint a stark portrait of the nation's haves and have-nots at a time when unemployment remains persistently high. It comes a week before the government releases first-ever economic data that will show more Hispanics, elderly and working-age poor have fallen into poverty. 

In all, the numbers underscore the breadth and scope by which the downturn has reached further into mainstream America.

And yet, some presidential candidates seem to think there is no connection between unemployment and the high crimes on Wall Street, Herman Cain for one. Cain, whom I view as the intellectual equivalent of a freak show at a second-rate carnival, argues instead that significant tax cuts for America's wealthiest are what is needed. This is at the core of his asinine 9-9-9 plan. Never mind that we have been cutting taxes on the wealthy for a generation; they are apparently not rich enough. Another round of tax cuts on the top 1% will somehow induce them to create jobs.

In effect, Herman Cain is telling us that there really is no banking problem in this country. Those mobs at #OWS are just lazy and disaffected; they just want to blame others for their own problems. You just aren't working hard enough, that's all.

Holy freakin' shit. Cain, you cannot be serious. Are you saying the big banks have not created a crisis? Not only is this a miserable misreading of America's deep economic difficulties, you want us to think that simply getting a job, never mind their scarcity, somehow fixes an entrenched banking issue, just makes it all go away. Or maybe we just need to keep working because the banks have not really created a crisis anyway, so don't worry about it. Is that it?

Herman Cain's position on complex politico-economic issues is what we so often find in conservative ideologues; it comes down to simplistic moralizing about what he considers to be other people's personal shortcomings, their defective characters, their basic immorality. His economic policies make no sense, and his bravado intertwined with appalling ignorance may be galling for some of us, but that is beside the point for most Republican primary voters. Cain is demonstrating a punitive, stern, father figure sense of morality. And that is what most Republicans instinctively look for in their candidates.

Fight Back, With a Message

Here is a way to make your voice heard. It isn't new, but I like it. Send them a message --and make them pay for it.



Not sure about the wooden shingle; you can probably find some free cardboard lying around.

Blowing Up the Economy

Here's Rachel Maddow giving an excellent overview of how Wall Street blew up the economy. This is the corrupt casino mentality that now dominates our lives. It is what happens when wealth is dramatically concentrated in the hands of so few that they literally don't know how to put it all to productive use. 

It doesn't help that many of those same people are America's most rapacious and reckless, the ones that want you to think they are creating wealth and should only be envied. Perhaps you have heard that investment bankers show personality characteristics very similar to psychopaths. And no, it is not the occasional rogue trader.

And who protects these guys? Who refused to investigate years of fraud? Who denounces Occupy Wall Street as unAmerican practitioners of class warfare, but has shown remarkable indifference to Wall Street's trillion dollar scams?

Who were Elliot Spitzer's mortal enemies, the ones who gleefully rejoiced when he was brought down?

Those are not rhetorical questions. You know the answer.

Visit msnbc.com for breaking news, world news, and news about the economy

Conservatives Get Their Way

At the heart of America's often shallow debate about political economy, policy, and the direction this country should take, is the cluster of variables surrounding taxes, regulation, economic policy, and the proper role of government. The basic conservative argument is that taxes are too high, regulation is too onerous and counterproductive, and business is too hobbled by misguided bureaucrats. 

The Republican prescription has been simple, persuasive for some, and amazingly consistent for a generation: cut taxes and everything good will happen. It is the elixir, the panacea, the cure-all for all that ails you. And if tax cuts are not enough (they are always a prerequisite), then just cut back on all that wasteful spending, which for conservatives means the welfare state and other transfers that go from deserving producers to the undeserving takers. 

To hear Republicans tell it, America is near comatose because of high taxes, radical unions ("big labor," as they say with a straight face), and more recently, government spending, not on defense of course, but on character-destroying entitlements such as social security, medicare, welfare, public education, and infrastructure boondoggles. 

Millions of Americans believe this argument; teabaggers in particular have been convinced that they are "taxed enough already" and that Democrats are transferring massive amounts of money "we don't have" to undeserving liberals who vote Democrat for that precise reason. Joshua Holland has an excellent article the title of which precisely captures what has become a real problem for the reality-based community: Thanks to Decades of Conservative Spin, Americans Are Hopelessly Confused About Taxes, Spending and the Deficit. 

As Holland states:

A good number of Americans are hopelessly confused about taxes, deficits and the debt. And it's no mystery why – conservatives have spent 30 years divorcing the taxes we pay from the services they finance. They've bent themselves into intellectual pretzels arguing that cutting taxes – on the wealthy – leads to more revenues in the coffers. They've invented narratives about taxes driving “producers” to sunnier climes, killing jobs by the bushel, and relentlessly spun the wholly false notion that we're facing “runaway spending” and are “taxed to death.”

Holland implicates the mainstream media for its failure to critically assess and challenge what has been Republican class warfare disguised as common sense. It is a narrative that has proved persuasive to people who do not often hear, and don't want to hear, analyses that challenge that narrative.

My immediate purpose is not to resolve ideological differences or to prove the efficacy of certain policy preferences. In this occasional series; let's call it "Conservatives Get Their Way," I want to show that regardless of how else you or I might feel about it, the inescapable conclusion is that on economic policy and legislation, including taxation, conservatives, the right-wing, the Republican party, and most assuredly, corporate America, have gotten most of what they have wanted on the policies, legislation, and legal opinions that overwhelmingly benefit them.

It is not a matter of conservatives wanting to move away from what they consider to be harmful, liberal policies. The reality is that Republicans, with the help of some Democrats, have undercut what they hate, and have already turned over power to wealthy oligarchs. The conservative charge that liberals, socialists, Democrats, dirty fucking hippies, a black President, "teh gays," and all the rest are destroying America, is demonstrably false. We do not have "Big Labor", high taxes, or profit-killing regulations, a large and expensive public sector, high social spending, or job-killing environmental regulations. In fact, we lag other industrialized nations on each of these points; our taxes are among the lowest, as is union membership and pubic sector spending.

So where does the US lead? Corporate profits and executive compensation. And of course, we do spend a pantload on defense, precisely what most conservatives and nearly all Republican politicians demand. 

The evidence more clearly shows that corporate America, the Republican party, and the conservative policies and legislation they say we need, but have already enacted, are undermining America's economic strength, its political institutions, and its social fabric. In other words, America's right wing not only has got its arguments mostly backwards, it is precisely the conservative policies they claim we need that have created the current mess, one that has been in the making for 35 plus years.

Conservatives get their way and they have the results one would expect; massive inequality, an unending gravy train for our bloated defense industry, executive compensation that has reached obscene levels, is largely detached from job performance (golden parachutes anyone?), and is loaded with money-saving perks denied to the rest of us. 

They succeeded in largely gutting private pension systems for workers, outsourced much of our manufacturing base to cheap labor countries, hobbled unions, have enjoyed significant productivity increases but have not shared those increases with their employees, and have beat back nearly all efforts to hold them accountable on the environment, tax loopholes, and regulations.

Much of this is vividly on display on Wall Street, where the perpetrators of massive fraud and malfeasance have managed to beat back essentially all efforts to hold them accountable and to rein in their ridiculously irresponsible behavior. 

Any no, it is not because Congress can't do anything; progressive Dems favor and vote for legislation that would return us to more stable and equitable times, legislation that we once had in place, such as Glass-Steagal.

It is because nearly all Republicans, joined by a few Blue Dog Democrats, have voted for the legislation that is so overwhelming favorable to the overclass.

It isn't Congress; it is Republicans in Congress.

Gallows Humor

In solidarity with Occupy Wall Street, I share with you a few timely and appropriate funnies. They would be funnier if they were not so true.

This last one is my favorite. I recall the John Maynard Keynes quote: "Capitalism is the extraordinary belief that the nastiest of men for the nastiest of motives will somehow work for the benefit of all."

Our Corrupt and Fraudulent Economy

Here's Dylan Ratigan from a while back, just in case you missed it the first time. Ratigan's anger is what Occupy Wall Street is all about.

I share that anger and disgust. The only thing unusual about his critique is that it aired on mainstream television.


Hat tip to Angel Guerrero for refreshing my memory.

Why Occupy Wall Street is Angry

This country once had a stable financial system. It was the direct result of the New Deal. The crash of '29 had been created by greed, lax rules, and government institutions unequipped and ideologically unprepared to tame capitalism's most rapacious players.

Enter FDR and the New Deal. With it Americans enjoyed roughly 50 years of prosperity and a largely stable banking system. The good 'ol days, as conservatives seem to pine. And there was good reason why we look fondly at what seems to have been our economic heyday. What conservatives forget is that we had far less income inequality, higher taxes, greater union membership, lower consumer, state and federal debt. We had a trade surplus, a much larger manufacturing base, and little outsourcing. And we did not have job-killing free trade agreements, such as NAFTA!

Underlying all of this was a rigid set of banking rules that, among other things, kept commercial banks out of the stock market and enforced prudent capitalization requirements. Upon assuming office, President Reagan immediately worked to overturn regulations and help Wall Street's rise to dominance, a rise that continues today despite Obama's half-hearted and ineffectual efforts to reprioritize Main Street.

Banks quickly capitalized on the changes Reagan set in motion; systemic banking failure began within a few years. Those failures have been with us in regular intervals ever since, all the while wealth continues to concentrate in the hands of those who created the economic chaos in the first place.

Here is Elizabeth Warren explaining the process.