What is a Progressive?

Katrina vanden Heuvel on Andrew Cuomo at the Nation:

Cuomo is a contradictory figure. He describes himself as progressive, but spent most of 2011 in a warm embrace with the state’s Republican leaders. His is the progressivism that is good on social issues (marriage equality) and not-so-good on economic fairness.

I've said it before and I'll say it again.  Economic fairness is THE MOST IMPORTANT ISSUE from a progressive viewpoint.

In our country money is power.  Political fairness and economic fairness go hand in hand.  The less concerned someone is with how they are going to survive the next month, the more time they have for participating in the political process. Democracy depends on having an involved and informed electorate.  Poverty destroys that.

Ask any unemployed member of the LGBT community which is more important - having a job or being able to marry.  I can guarantee you what most of them would say.

I'm not saying social issues - abortion rights, LGBT rights, etc. - are not important.  All I am saying is that any person who is "business friendly" in the Andrew Cuomo sense is by definition not a progressive.  And its about time real progressives called them out on that.

The Distinction Between an Act of Terrorism and an Act of War

When we do it, it's an act of war.

When they do it, it's terrorism.

OWS = Terrorism

Booman is right: it doesn't take much to reach the conclusion that people engaged in peaceful protest are being treated as potential terrorists by law enforcement authorities.

And based on my own personal observations (yes I have been to an OWS event in NYC) I agree with him that most participants are well aware of the risk that they take.

But I am heartened by the fact that, notwithstanding this recognition, whenever law enforcement has intervened to break up an encampment or a protest, the next day the crowds become larger and larger.

The government can't arrest everybody but the one percent - can it?

It's Been Awhile...

Those of you who know me personally know that I have been experiencing some economic problems of late.  About a month ago I took on some temporary work that has helped alleviate the situation, but the hours are long and I find myself getting home every evening too tired to even contemplate turning on the computer.  My apologies - I hope things will improve in the near future....

The Lie about Regulations

Over the last month or so there have been a number of posts by bloggers I respect regarding the conservative mantra that excessive government regulations are strangling the economy and keeping unemployment high.  See here, here and here.

Not only is there little evidence that this is the case, but, as Kevin Drum points out in an excellent piece, the fact is that large corporations prefer regulations that are complex, cumbersome and opaque to those that are simple and easy to understand:

The "Volcker rule" is a simple thing. Basically, it says that if you're a bank that takes deposits and benefits from federal deposit insurance, you can't also make risky trades that might blow up your bank and cost the taxpayers a bundle. Wall Street never liked the rule, because banks make a lot of their money these days trading for their own accounts and didn't want their trading profits cut off. They fought the idea in Congress, but in the end, the Dodd-Frank bill that passed in 2010 included a version of the Volcker rule in its final draft.

Was this a victory for common sense? Hardly. Last month regulators unveiled their first take on the actual implementation of the Volcker rule, and it had become a monster. "Only in today's regulatory climate could such a simple idea become so complex, generating a rule whose preamble alone is 215 pages, with 381 footnotes to boot," complained American Bankers Association Chief Executive Frank Keating.

Poor banks! But step back for a moment. How did Paul Volcker's baby get so bloated? Keating's crocodile tears aside, the answer is: banks. When it comes to financial regulation, fighting against new laws is merely their first line of defense. When they lose, as they did in the Dodd-Frank battle, the action simply moves to the regulatory agency charged with implementing the law. James Stewart explains what happened next:

When the proposed regulations for the Volcker Rule finally emerged for public comment, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

…"Here's the key word in the rules: 'exemption,'" former Senator Ted Kaufman, Democrat of Delaware, told me. "Let me tell you, as soon as you see that, it's pronounced 'loophole.' That's what it means in English." Mr. Kaufman, now teaching at Duke University School of Law, earlier proposed a tougher version of the Volcker Rule, which was voted down in the Senate. "We've been through this before," he said. "I know these folks, these Wall Street guys. I went to school with them. They're smart as hell. You give them the smallest little hole, and they'll run through it."

This is probably the biggest reason that no one should take too seriously Republican complaints about burdensome regulations strangling the economy. The truth is that most reformers prefer fairly simple rules. In the tax world, they'd prefer to simply tax all income. In the environmental world, they'd prefer to set firm limits for pollutants. In the financial world, they'd prefer blunt rules that cut off risky activity at its knees.

But businesses don't like simple rules, because simple rules are hard to evade. So they lobby endlessly for exemptions both big and small. This is why we end up with tax subsidies for bow-and-arrow makers. It's why we end up with environmental rules that treat a hundred different industries a hundred different ways. It's why financial regulators don't enact simple leverage rules or place firm asset caps on firm size. Those would be hard to get around and might genuinely eat into bank profits. Complex rules, conversely, are the meat and drink of $500-per-hour lawyers and whiz kid engineers. If the rules are complicated enough, smart lawyers can always find ways around them. And American corporations employ lots of smart lawyers.

I started practicing as a tax lawyer in 1984, and a couple of years later I accompanied a senior partner of our firm to Washington to lobby on behalf of a bank client of ours for a special exemption from newly-passed limitations on the foreign tax credit rules, which were enacted as part of the Tax Reform Act of 1986.  I remember being quite convinced of the rightness of our client's position, as well as being kind of in awe of being in the heart of power.  As a Navy brat from San Diego, son of a junior officer who had not achieved the upper ranks, I really had only been exposed to the upper echelon of power like this once before - as a intern on Capital Hill in 1980 while I was in college.  I had stars in my eyes both in 1980 and 1986, and was really kind of oblivious to what I was doing there.

When I think back on it now, I cringe at the thrill I felt at the time.  Things have changed in a lot of respects since then though - at the time we failed to get the exemption we were lobbying for.

Incidentally the Tax Reform Act of 1986 was the fourth major tax "reform" legislation of the Reagan Administration, following the Economic Recovery TAx Act of 1981, the Tax Equity and Fiscal Responsibility Act of 1982, and the Deficit Reduction Act of 1984.  Except for legislation passed in 1993, which raised tax rates slightly did little more but a little tinkering around the edges, there was no major changes to the tax laws governing corporations and business during the entire Clinton Administration.  So why is it that Democrats have this reputation for creating business "uncertaintly?"  Every time I think of this charge I think of the Reagan tax bills - nobody knew from one year to then next what the tax law was going to look like.  Talk about uncertainty!

One more point:  one provision of the 1986 law was to change the name "Internal Revenue Code of 1954" to "Internal Revenue Code of 1986."  They didn't re-codify the tax laws - the basic structure of the Internal Revenue Code wasn't changed and the basic rules remained the same.  All that was different was they added a whole bunch of special rules and exemptions layered on top of the original code.   But the Republican leadership thought so much of their work that they decided to remind everyone what a wonderful thing they had accomplished.  Even at the time I remember thinking that this was a major act of hubris on their part.

"Technocrats"

Headline in today's New York Times:

"Greece and Italy Seek a Solution from Technocrats"

OMG.

Newsflash:  there is no such thing as an economic technician who makes his decisions free of political prejudices.  Everyone has political views, and attempts to characterize a particular policy decision as "nonpartisan" is just bullshit. It's public relations by an entrenched elite seeking to protect themselves while imposing painful austerity on everyone else.

 It's a cover for imposing an unpopular decision on an unwilling electorate.

More on the technocrats:  Atrios, Krugman I, Crooked Timber and Krugman II

Debt and Equity

Martin Wolf makes an interesting point in his column this morning - one you never hear talked about but which is a major factor in how we found ourselves in the economic mess we are in.  The gist of the column is that banks protestations that they are mending their ways aren't believable until they put their weight behind real reforms that address the real issues, including:

Third, banks should join with other businesses in a campaign to end the distortions in corporate taxation in favour of debt. There is too much debt in the economy. The consequences have been dire.

For many people this requires an explanation.  As I stated in an earlier post, corporations are basically mechanisms for owners of capital to act collectively to make a profit.  When a corporation needs to raise capital, it can do it in one of two ways - it can issues shares of stock, or it can borrow.

Well - really, there are all kinds of ways it can raise capital, and they all have various fancy names, but from an corporate income tax perspective - and this is true under the tax laws of virtually every country in the world - any instrument a company uses to raise capital has to fall within one of these two classes - it is either equity capital (shares of stock) or it is indebtedness.

The character of the instrument is extremely important for tax purposes - because when an owner of "shares" receives a payment on his investment in the company, it is called a dividend and when an owner of "debt" receives a payment on his investment in the company it is called interest.  And in determining the company's income subject to tax, interest is considered a deductible expense, and dividends are not.  [In many countries - including the US - the recipient of a "dividend" is also treated differently from the recipient of "interest".  In the US, dividends are taxed at the capital gains rate, while interest is taxed as ordinary income.]

The result is that there is a huge tax benefit for a company, when raising capital, to have the instrument characterized as debt, and payments on the instrument to be treated as interest.  But, of course, there is a downside to having so much debt.  If a company's income declines, its shareholders just have to sit there and suffer - but if the creditors aren't paid they can sue to be paid and, ultimately, force the company into bankruptcy.

So when a company needs to raise capital to, say, build a factory, it can either issue stock or borrow.  Now there are clearly other considerations that go into the decision, but there is little doubt that the tax consequences of choosing debt or equity is a major one.

And of course, the rules for determining whether an instrument is equity or debt are hugely complex.  You don't think they could come up with a simple rule for what is a debt instrument and what is equity, do you?  Too many tax lawyers are reaping exhorbitant fees delivering legal opinions on the issue.  Years ago - before I graduated from law school - Congress passed a directive to the IRS to issue regulations setting forth rules for determining whether an instrument issued by a corporation was stock or debt.  Several years later the IRS issued a draft set of rules, which set forth such a hue and cry that the draft was withdrawn and they never tried again.

As a former money center tax lawyer I can tell you that most of their time is spent on two basic issues - whether an instrument is debt or equity, and whether a payment is ordinary income or capital gain.  It is a huge issue for corporations everywhere.

It is also, of course, a huge issue for banks.  After all, a traditional bank is allowed to make loans but is not allowed to make stock investments.  Addressing the adverse consequences of tax incentives to borrow will result in an huge decline in demand for their main product - loans.

Martin Wolf is right.  The difference between a share of stock and a bond from a tax perspective creates huge distortions in corporate decision-making.

But any serious attempt to address this issue would have to be undertaken in the context of comprehensive corporate tax reform.  Good luck there.

De-Rigging the Labor Market?

Michael Lind has an excellent article in Salon today entitled "How the Rich Rig the System."  I agree with virtually all of it.  But I had to blink twice when I read this:

Between the 1930s, the New Deal raised the wages of working-class Americans by rigging labor markets in their favor. 

WTF?

What is a corporation?  It is essentially a group of investors (stockholders) pooling their capital to produce a product for sale in the marketplace and electing representatives (officers and directors) to represent their interests in producing and selling that product.  It is the essence of a collective enterprise.

What is a union?  It is a group of workers electing representatives to collectively bargain the terms upon which they offer their "product" - their services - in the marketplace.

New Deal laws protecting the rights of labor to collectively bargain did not "rig" the labor markets.  They leveled the playing field.

Weather

After enduring what has been a horrible year weatherwise, including the horrendous snowstorm that cause, for my household, our longest power outage since we moved here 16 years ago, I have been telling everyone I can that I am convinced that our climate is changing for the worse, and that this is only the beginning.  On the first point, at least, it appears that I'm correct:

Fourteen U.S. Billion Dollar Weather Disasters in 2011: A New Record

It's time to add another billion-dollar weather disaster to the growing 2011 total of these costly disasters: the extraordinary early-season Northeast U.S. snowstorm of October 29, which dumped up to 32 inches of snow, brought winds gusts of 70 mph to the coast, and killed at least 22 people. Not since the infamous snow hurricane of 1804 have such prodigious amounts of October snow been recorded in New England and, to a lesser extent, in the mid-Atlantic states. Trees that had not yet lost their leaves suffered tremendous damage from the wet, heavy snow. Snapped branches and falling trees brought down numerous power lines, leaving at least 3 million people without electricity. The damage estimate in Connecticut alone is $3 billion, far more than the damage Hurricane Irene did to the state. Hundreds of thousands still remain without power a week after the storm, with full electricity not expected to be restored until Monday.

The October 29 snow storm brings the 2011 tally of U.S. billion-dollar weather disasters to fourteen, thoroughly smashing the previous record of nine such disasters, set in 2008. Between 1980 - 2010, the U.S. averaged 3.5 of these weather disasters per year. Through August, the National Climatic Data Center (NCDC) estimated that ten weather disasters costing at least $1 billion had hit the U.S., at total cost of up to $45 billion. However, the October 29 snow storm brings us up to eleven billion-dollar disasters, and a new disaster analysis done by global reinsurance company AON Benfield adds three more. Flood damage from the remnants of Tropical Storm Lee in the Northeast on September 8 is now estimated at more than $1 billion, and two outbreaks of severe thunderstorms and tornadoes--one in April and one in June--now have damage estimates exceeding $1 billion. A remarkable seven severe thunderstorm/tornado outbreaks did more than $1 billion each in damage in 2011, and an eighth outbreak July 10 - 14 came close, with damages of $900 million. In total, the fourteen billion-dollar disasters killed 675 people. Tornadoes, hurricanes, and floods in these fourteen disasters killed over 600 people, putting 2011 into fourth place since 1940 for most deaths by severe storms. Only 2005, with over 1,000 deaths caused by Katrina, 1969, with over 700 hurricane and flood-related deaths, and 1972, with 676 hurricane and flood-related deaths, were deadlier years for storms, according to NOAA. The fourteen billion-dollar weather disasters of 2011 caused $53 billion in damage, putting 2011 in fifth place for most damages from billion-dollar weather disasters. The top damage years, according to NCDC in adjusted 2011 dollars, were 2005 (the year of Hurricanes Katrina, Rita and Wilma), 2008 (Hurricane Ike), 1988 (Midwest drought), and 1980 (Midwest drought). With nearly two months remaining in 2011, the potential exists for more billion-dollar weather disasters this year. Our first opportunity comes Tuesday, when the NOAA Storm Prediction Center is forecasting the possibility of a severe weather outbreak centered over Arkansas and Missouri.

Joe Romm at Think Progress comments:

No, not all of those events can be attributable to climate change, but climate change almost certainly made most of them worse (see “Tornadoes, extreme weather, and climate change“).  As climatologist Kevin Trenberth always reminds us:

One of the opening statements, which I’m sure you’ve probably heard is “Well you can’t attribute a single event to climate change.” But there is a systematic influence on all of these weather events now-a-days because of the fact that there is this extra water vapor lurking around in the atmosphere than there used to be say 30 years ago. It’s about a 4% extra amount, it invigorates the storms, it provides plenty of moisture for these storms and it’s unfortunate that the public is not associating these with the fact that this is one manifestation of climate change. And the prospects are that these kinds of things will only get bigger and worse in the future.

This statement was made in the context of criticizing the media for failing to associate these storms with global warming when reporting them.  And frankly, I have seen lots of reports on the October blizzard (having lived through it), but nothing that mentioned even a possible connection to global warming.

I'm no scientist, but the fact is we have been hearing about this for over 30 years and doing nothing to address it.  Last week I heard that carbon emissions increased 6% from 2009 to 2010, meaning not only have we still done little to address the issue, but in fact things are continuing to get worse.

Now the scientists' predictions are starting to come true, and we are still ignoring what is going on.

Wall Street Profits

From the Washington Post this past Sunday:

President Obama has called people who work on Wall Street “fat-cat bankers,” and his reelection campaign has sought to harness public frustration with Wall Street. Financial executives retort that the president’s pursuit of financial regulations is punitive and that new rules may be “holding us back.”

But both sides face an inconvenient fact: During Obama’s tenure, Wall Street has roared back, even as the broader economy has struggled.

The largest banks are larger than they were when Obama took office and are nearing the level of profits they were making before the depths of the financial crisis in 2008, according to government data.  Wall Street firms — independent companies and the securities-trading arms of banks — are doing even better. They earned more in the first 2-1/2 years of the Obama administration than they did during the eight years of the George W. Bush administration, industry data show.

Behind this turnaround, in significant measure, are government policies that helped the financial sector avert collapse and then gave financial firms huge benefits on the path to recovery. For example, the federal government invested hundreds of billions of taxpayer dollars in banks — low-cost money that the firms used for high-yielding investments on which they made big profits.

Stabilizing the financial system was considered necessary to prevent an even deeper economic recession. But some critics say the Bush administration, which first moved to bail out Wall Street, and the Obama administration, which ultimately stabilized it, took a far less aggressive approach to helping the American people.

…        

Banks’ profits up

Profits have also rebounded. The largest banks, including Bank of America, Citigroup and Wells Fargo, earned $34 billion in profit in the first half of the year, nearly matching what they earned in the same period in 2007 and more than in the same period of any other year.

Securities firms — the trading arms of big banks and hundreds of other independent firms — have fared even better. They’ve generated at least $83 billion in profit during the past 21 / 2 years, compared with $77 billion during the entire Bush administration, according to data from the Securities Industry and Financial Markets Association.

Compensation at these firms also has bounced back. Financial firms paid about $20.8 billion in bonuses for work done in 2010, according to research by the New York state comptroller. In New York City, the average Wall Street salary last year grew 16.1 percent, to $361,330, which is more than five times the average salary of a private-sector worker in the city.

By contrast, millions of Americans continue to face economic difficulties.

The title of the article is refers to the fact that Wall Street's resurgence muddies Obama's message.  Ya think?

ht/Kevin Drum

Doubling Down

Atrios has a running joke on his blog that no matter how bad economies are, the answer of the elite class is always more austerity.

Today in France:

French Prime Minister Francois Fillon Monday unveiled the country's second austerity package in under three months including increases in sales taxes, an acceleration of pension reform and a levy on big business. 

The austerity package comes a growth prospects have dwindled with the euro-zone debt crisis, and after France, the currency bloc's second largest economy, was warned last month that the outlook on its prized triple-A credit rating is under pressure.

Europe is heading for recession and yet they adopt policies like this that will only make it worse.

Atrios calls them lunatics.  I think that's being charitable.

The Crisis in the NCAA

There have been several bloggers that I follow (see here and here) that have referred to this Taylor Branch article in the Atlantic magazine about the NCAA.  I must say that this is not something the I have focused on in quite some time, but it is clear that the NCAA's viability as an institution appears on the wane.

It will be interesting to see how this shakes out.  My personal view of this is that exploitation of athletes is just too much to go on, and that the NCAA should abandon the "amateur" status and just formally recognize college athletics for what it truly is - player development ("minor leagues") for professional sports.  But once that happens, then what?  Running a sports business seems to me a completely different business from educating students, and I'm not sure the two should be housed under the same organization.

Of course, as time goes on, it seems more and more that the business of our colleges and universities is business - not educating our students.  But that's a topic for another day....

What the Future Holds

I am no Luddite, but I do find this article on the pace of technological change and its impact on the workplace to be disturbing.

The conventional explanation for America's current plight is that, at an annualised 2.5% for the most recent quarter (compared with an historical average of 3.3%), the economy is simply not expanding fast enough to put all the people who lost their jobs back to work. Consumer demand, say economists like Dr Tyson, is evidently not there for companies to start hiring again. Clearly, too many chastened Americans are continuing to pay off their debts and save for rainy days, rather than splurging on things they may fancy but can easily manage without.  

There is a good deal of truth in that. But it misses a crucial change that economists are loth to accept, though technologists have been concerned about it for several years. This is the disturbing thought that, sluggish business cycles aside, America's current employment woes stem from a precipitous and permanent change caused by not too little technological progress, but too much. The evidence is irrefutable that computerised automation, networks and artificial intelligence (AI)—including machine-learning, language-translation, and speech- and pattern-recognition software—are beginning to render many jobs simply obsolete.

This is unlike the job destruction and creation that has taken place continuously since the beginning of the Industrial Revolution, as machines gradually replaced the muscle-power of human labourers and horses. Today, automation is having an impact not just on routine work, but on cognitive and even creative tasks as well. A tipping point seems to have been reached, at which AI-based automation threatens to supplant the brain-power of large swathes of middle-income employees.

That makes a huge, disruptive difference. Not only is AI software much cheaper than mechanical automation to install and operate, there is a far greater incentive to adopt it—given the significantly higher cost of knowledge workers compared with their blue-collar brothers and sisters in the workshop, on the production line, at the check-out and in the field. 

In many ways, the white-collar employees who man the cubicles of business today share the plight of agricultural workers a century ago. In 1900, nearly half of the adult population worked on the land. Thanks to tractors, combine harvesters, crop-picking machines and other forms of mechanisation, agriculture now accounts for little more than 2% of the working population. 

Displaced agricultural workers then, though, could migrate from fields to factories and earn higher wages in the process. What is in store for the Dilberts of today? Media theorist Douglas Rushkoff (“Program or Be Programmed” and “Life Inc”) would argue "nothing in particular." Put bluntly, few new white-collar jobs, as people know them, are going to be created to replace those now being lost—despite the hopes many place in technology, innovation and better education. 

The argument against the Luddite Fallacy rests on two assumptions: one is that machines are tools used by workers to increase their productivity; the other is that the majority of workers are capable of becoming machine operators. What happens when these assumptions cease to apply—when machines are smart enough to become workers? In other words, when capital becomes labour. At that point, the Luddite Fallacy looks rather less fallacious.

Read the whole thing - including the comments.  Lots to chew on, including the idea that there is a lot in the way of potential demand for goods and services in the world - particularly in the developing world - that could keep everyone productive for a long time.

I remember watching the new Star Trek movie last year - where the first 10-15 minutes or so takes place on Earth some 300 years from now.  The world as depicted in that movie looks idyllic.  In light of this article, you have to ask yourself - how many people live on that world and what do they all do?

ht/Paul Krugman

Rubber Checks

Matt Goldstein has a story about how MF Global investors got screwed because they received their withdrawals by check delivered via snail mail rather than by wire transfer.

One thing though - I have made a number of withdrawals from mutual funds that I have investments in and they have always been paid to me via snail mail.  An alternative was for me to pay $25 to have them sent by Federal Express, but every time I asked I was told wire transfer was not available.

I guess that's the rule for us peons.

Because They Are Thieves

To rephrase Atrios, I'll never understand why, in the midst of a crisis where millions of homeowners found themselves underwater and unable to pay their mortgages, our government responded by providing trillions of assistance to the creditors and nothing to the debtors.  I mean, wouldn't making it easier for debtors to pay their debts relieve the creditors' problems as well?

As time goes by, the best answer I can come up with is the Shock Doctrine theory.  They saw an opportunity to screw the masses in the guise of avoiding a calamity, and they took it.  And the calamity continues....

Greece and Italy

I found this post by Kevin Drum last Tuesday to be a great explanation of what is going on in Greece that even my 13 year-old could understand (after explaining to him what "austerity" means).  As you probably know, Papandreou reversed himself on the referendum on Thursday and survived a no confidence vote on Friday, but it is still unclear whether the Greek Parliament will approve the terms of the rescue deal and pass the legislation necessary to implement it.  At this point, it seems Papandreou is trying to negotiation deal to broaden to coalition in order to insure that support, but it appears he is getting nowhere.

Here is the latest from Yves Smith.

And it seems that almost every day I am reading things (such as this and this) about Italy that makes me think it's teetering on the edge as well.  This passage was particularly troubling:

Undermined by market mistrust of Prime Minister Silvio Berlusconi's government, Italy's 10-year bonds yields soared to a euro era high of 6.4 percent last week. 

That is close to levels that made the debt-service burdens of Greece, Ireland and Portugal unsustainably onerous and triggered bailouts by the euro zone and the International Monetary Fund. But Italy, with 1.9 trillion euros in public debt, is simply too large to bail out. 

Yikes!

Story of the Week

I don't get to watch Rachel Maddow much.  Our basic cable package here doesn't include any of the all-news networks, including MSNBC (not sure how I feel about this - certainly it helps me avoid much of the crap that passes for news these days).  But I try to make it a point to listen to the podcast of her program the next morning.  Yesterday I heard this and couldn't stop laughing:


Hilarious!

But at the time really scary.

When will people realize that this is nothing but a big joke?

The Northeast Snowstorm

I am currently sitting in a Starbucks using their free wi-fi.  We have been without power for 48 hours and counting, and between struggling to keep warm and cleaning up the mess, this is my first contact with the outside world for some time.  Glad...sort of...to see that things have continued as usual in my absence....

Kids Vote?

Jonathan Bernstein has a fascinating post regarding whether or not kids should be allowed to vote.  Fascinating because it raises a question I had never before thought about and addresses it thoughtfully.

This post got me to thinking about something that, it seems to me, is related to this question - namely, that when we re-district and re-assign representatives among our citizens, we do so on the basis of total population, including those who are not allowed to vote.  Children and prison inmates are included in those population totals, even if they are not allowed to vote.  So in a sense, our elected representatives are apportioned on the basis of total population even if that populations includes a significant number of non-voters.

So the idea of allowing children to vote (and having parents exercise the vote on their behalf until they reach a certain age) has a certain ring of legitimacy to me.  But I would have to think about it more before I came to a definite conclusion.

Any thoughts?

More on Ryan and Right-Wing Whining

David Adkins is the latest to weigh in, but look at the Digby and Krugman posts as well.

And unfortunately this is so true -

After trying to take the bread off the tables of America's seniors while doling out big tax breaks to billionaires, Paul Ryan is whining about President Obama's harsh rhetoric. And sadly, his whine will register with a lot of comfortable "moderates" who value "civility of discourse" over actually telling the truth or getting anything done.

Digby said it well yesterday:

And Lord help the poor Democrat who even timidly attempts to speak to those grievances --- he or she is instantly attacked for "dividing the American people," (unlike that congressman who giggled and smirked about "driving the liberals crazy.") It's an extremely successful gambit that's deployed over and over again because liberals and establishment types invariably take the bait. For reasons best left to sociologists and psychologists, the mere hint from a right winger that a liberal might be divisive makes them run for cover.

Goodness knows I have more Democrats like that in my own local circles than I can shake a stick at. It's easy for progressives online to get sucked into an echo chamber in which Democrats are fleeing Obama by the millions because of his lack of progressivism. But the reality is that there are also millions of people in this country who would otherwise vote Democratic on policy, but happily vote for a "nice" Republican if the Democrat seemed too "mean."

It's not just that Republicans have a lot of moneyed interests on their side. It's also that the Republican base is simply much more politically belligerent than the Democratic base. In a perfect world, the entire Democratic voting bloc would laugh in Ryan's whining face. In this world, sadly, a great many of them will listen with a "sympathetic" ear and an "open mind."

Why Does the Media Love Paul Ryan?

The guy really lives in a fantasy land.  Jonathan Chait has a great takedown of his speech today at the Heritage Foundation.  Read it.

ht-Kevin Drum

Bacon's Rebellion

A very interesting post by Eric Loomis on the origins of Bacon's rebellion and how it impacted the development of slave labor in colonial Virginia.

Recently I read a book about the pre-civil years that spoke in terms of a conflict over the issue of whether the country would be a "slave labor" country or a "free labor" country.  I'll be honest, I never really thought in terms of abolition being an economic issue for working class whites, but clearly this was one of the motivations behind the abolition movement.

Even more interesting are some of the comments to the post, many of which deal with how little students learn about these kinds of events in contemporary American history classes.  Once again, I recommend "Lies My Teacher Told Me" to get a good basic re-learning of American History.

I especially liked this comment:

I have a friend whose theory is that right after Sputnik we put a lot of money into education. Then the sixties happened. Conservatives have vowed never to let that happen again.

As a Trustee on my local school board, all I can say is "Ain't it the truth...."

The Public Health Effects of the Recession

Bryce Covert discusses recent research on how foreclosures affect physical and mental health.

I am sure that the same people who scream about "moral hazard" will respond to this by saying, in effect, "too bad, losers."

Leona Helmsley Redux

Here is another attempt to close a loophole biting the dust.

Employees have payroll and income taxes withheld from their paychecks.  Customers have sales taxes charged on their bills.  But heaven forbid you withhold taxes on payments made to businesses and investors.

Back in 1982, the law enacting the first Reagan tax hike (to offset the cuts made in 1981) included a provision for withholding taxes on interest and dividends (there is a inside great story that goes along with this if anyone is interested) - a provision that never went into effect and that was repealed six months later.  Seems that wealthy investors don't like having taxes withheld from them.

Apparently, neither do wealthy defense contractors.

Leona Helmsley:  "Only little people pay taxes."

Ain't it the truth....

The Vatican and the Economy

The Vatican's Report: "Toward's Reforming the International Financial and Monetary Systems."

I could never understand how any good Christian - be him or her Catholic or otherwise - could believe in an unfettered free market system based on the corporate model.

The press is playing this up as Vatican support for the protests sprouting all over the world.  Here is the New York Times and Guardian stories about the report.

Economic justice has been central to Christian doctrine since the Sermon on the Mount, yet something that has not really been focused upon in recent decades.  Remember Liberation Theology, which was denounced as godless Marxism by the right wing in the 1980s?

In my mind, the big question is whether this is a torch that will be picked up by rank and file bishops and priests.  If the Catholic clergy spent half the energy on this issue as they do on human reproduction, it would be a great boost toward freeing up our economy.

Michelle Malkin's Vibrator

Please, isn't there anything more important to get angry about?

They do have a thing about female sexuality tho....

A Good Sign [Updated]

We need more and more of these kinds of people to recognize that protecting the country and protecting the 1% can be two very different things - especially when it comes to "protecting" the 1% from the remaining 99%.  Now if only some NYPD cops would join in as well....

UPDATE:  Well, it's not the NYPD, but it's a start....

Global Warming Skeptic Changes His Mind

Or, as Atrios says, "So sorry for wasting everybody's time and helping to destroy the world."

This issue has been with us for over thirty years and so far next to nothing has been done about it.  And at the same time, I'm still seeing commercials on a regular basis touting the benefits of "clean coal."

Idiots.

Big Money Politics

The juxtaposition of these two stories in Salon this morning was more than I could stand.

The first relates the story of a young mother running for school board in Colorado.  Her opponent is an investment banker who is receiving large donations from corporate donors as well as an appearance by former President George W. Bush.  For a school board election!

The second relates how members of the "supercommittee" - the committee of six democrats and six republicans charged with coming up with a deficit reduction plan - are raking in donations from big corporate donors.

That's all you need to know about what's wrong with politics in this country.

Our Screwed-up Tax System

From Angry Bear, a great illustration of all that is wrong with our tax system.

I actually think that companies should be able to deduct dividends.  It would eliminate the double tax issue, as well as the perverse incentive for companies to borrow instead of raising equity capital.  Of course, it would be a great incentive for companies to distribute more to their shareholders as well.  Right now they are hoarding literally trillions in cash, and it would probably help to get this money back into the economy.

BofA's Derivatives

This story is all over the business news services and blogs, but as far as I can see hasn't been picked up by the mainstream press.  From Bloomberg News:

Bank of America Corp., hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren't authorized to speak publicly.  The Fed has signaled that it favors moving the derivatives to give relief to the bank holder company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people.  The bank doesn't believe regulatory approval is needed, said people with knowledge of its position.

This is being viewed, rightly so, as a shift of the risk of loss on these derivatives from the counterparties and the stockholders of BofA to the government.  It should be noted that, because of a change in the law that took place in 2005, if the bank and its assets are used to pay its creditors, the derivatives counterparties get paid ahead of the banks depositors.  Thus, this greatly increases the exposure of the FDIC - and thus of taxpayers - should BofA fail.

The fact that this is being permitted is just horrendous.  But par for the course - heads the bank and its shareholders win, tails the taxpayers lose....

More from Nakedcapitalism and The Big Picture.

Why Does the Business Community Hate Obama?

Ezra Klein has an interesting post up about the report of the Immelt Committee, which was released yesterday:

Recently, I wrote about attending a conference of medical-industry types in which Jeffrey Immelt, CEO of General Electric and chairman of the President’s Council on Jobs and Competitiveness, spoke to an audience made up of his Obama-skeptic colleagues. Immelt, somewhat surprisingly, made no move to defend the president who appointed him. “Our job,” he told the assembled crowd, “is to make our ideas his ideas.”

The Council on Jobs and Competitiveness is the Obama administration’s answer to the charge that it doesn’t listen to the business community. It includes not just Immelt but executives from Xerox, DuPont, American Express, Kleiner Perkins Caufield & Byers, TIAA-CREF, Southwest Airlines, Procter & Gamble, Boeing, Intel, Citigroup, Eastman Kodak, Facebook, Comcast, BNSF Railway and UBS Investment Bank. And today it released its interim report (PDF).

This is, in other words, the big moment: This is the business community trying to make its ideas President Obama’s ideas. But here’s the thing: Its ideas don’t seem to differ much from Obama’s ideas.

Which leads to an interesting questions - if in fact they see eye to eye on so much, why is the relationship so antagonistic?  Klein cites Matthew Yglesias:

Another possibility is that the gulf between the business community and the White House is more cultural and personal than it is substantive. Matt Yglesias had an interesting take on this last week. “A lot of what you have is . . . a kind of bitter feud between businessmen and the kids they went to college with who didn’t go on to become businessmen. What did they do instead? They became teachers or doctors or nurses or professors or lawyers or scientists or nonprofit workers. . . . The business coalition sees the service coalition as composed of useless moochers, and the service coalition sees the business coalition as greedy bastards.”

“If it were merely a clash of objective interests, it really wouldn’t be much of a clash,” Yglesias wrote. “A healthy business environment needs schools and hospitals and public infrastructure to backstop it, and nobody is made happy by a business cycle downturn. There’s tension at the margin, but it’s not a zero-sum world. Layered on top is, I think, a raw level of gut-level dislike — both kinds of people think the other kind of people are clueless about what really matters in life.”

Increasingly, I’m coming to agree with that analysis.

So am I.

Why Economists?

You may have noticed that a disproportionate number of my posts refer to blogs and columns by economists or about the economy.  I thought it might be useful to explain why that is.

I like to think that I can distill my political philosophy into several key principles.  One of them is that money and freedom are interdependent - that is to so, the amount of "freedom" an individual has is a direct function his or her wealth.  There are probably a lot of people that dispute this, but I think that anyone who seriously studies the history of societies will ultimately reach this conclusion.  [I should also point out that as populations grows and technology modernizes, the relationship between money and freedom becomes stronger.  For example, two centuries ago an individual in America could migrate West and stake a claim to a homestead and, even if making a subsistence living, could exercise a great deal of freedom over his life.  It is impossible to imagine anyone having that ability today.]

Thus, as a person who strongly believes in the dignity of the individual and the "inalienable rights" of life, liberty and the pursuit of happiness, how society's wealth is distributed among its citizens is key, because wealth determines the extent to which individuals will be able to exercise these inalienable rights.

By the time I graduated from college in 1981, I perceived the 20th century as a time of the greatest expansion of freedom in history - with great gains in the rights of women and minorities accompanied by a great expansion of the "middle class," providing large numbers of working class Americans with the ability to exercise their freedoms and make a better future for their children in ways that were really unprecedented in human history.

And when I see stories like this one, showing how wealth inequality has grown substantially over the last three decades, I see the ability of ordinary citizens to exercise their rights to liberty and the pursuit of happiness declining.  Something happened beginning three decades ago to reverse the trend of the prior century of American history towards the expansion of the liberties of our citizens, and the consequence of this has been devastating to millions of them.

We need to reverse this trend, and set us back on the course of expanding freedoms for all of our citizens.

Best Steve Jobs Obituary

I love the Onion.  I don't read it nearly often enough....

Just Wow

Susie Madrak on the NYPD's "Paid Detail Unit."

You know, up until now I had no idea this program actually existed.  Now that I know that it does, I'm appalled.

On second thought, I shouldn't be.  It's been apparent to me that in the last 30 years almost all of our military actions have been taken in the name of some vague notion of "national interest," which generally means the interests of our business elite in exploiting the resources of weaker countries.  Why should our domestic security apparatus be any different?

It Was a Stupid Idea to Begin With

From Steve Benen, Washington is apparently starting to get worried that the "super-committee" won't reach an agreement.  You remember, the committee that was born out of the compromise over raising the debt ceiling?  The one that if they fail to reach agreement all kinds of dire spending cuts will take effect?

Remember all those predictions that said the super-committee would fail because Republicans would never go for a compromise that included tax increases on the wealthy?  Well, as it turns out, the super-committee is failing because Republicans refuse to consider a compromise that includes tax increases on the wealthy.  Try not to be surprised.

Not to worry though - whether the dire consequences will actually kick in remains to be seen:

The supposed across-the-coard cuts aren't slated to go into effect until January 1, 2013.  Put more simply: They might not ever go into effect.

The automatic cuts - known as sequestration - are often discussed in Washington as if they're certain, an inevitability that Congress won't be able to prevent.  But on the same day those cuts would go into effect, the Bush tax rates, which President Obama extended for two years, are set to expire, leading to an "automatic" tax hike that is treated in Washinton as anything but inevitable.... A lame duck Congress would have two months after the 2012 election to stave off the expiration of both that tax policy and the super committee's "automatic" cuts.

Sounds like so much political posturing designed mostly to kick the can until after the next presidential election.  Anyone surprised by this?

Our Democratic Leaders

This is the sort of thing that drives me insane.

Oh, my.  Jeff Immelt, who President Obama for some reason appointed to head his job creation panel, insists that what's good for GE is good for America:

I want you to root for me. Look, every one in Germany roots for Siemens, everyone in Japan roots for Toshiba, everyone in China roots for China South Rail, I want you to say, win GE.

I think this notion that it’s the population of the US against big companies is just wrong.

Wow.  First, the macro picture.  Here are corporate profits versus employee compensation, both measured as index numbers with the 2001 business cycle peak = 100: 

We've all grown together!  Or, actually, not. 

Also, GE isn't in any important sense an "American" company.  More than half its employees are overseas.  I'm sure Immelt would claim that this is just what he needs to do to compete; but in that case, he can't have it both ways and also demand that we cheer for GE as an American champion. 

Awesome cluelessness.  And this is the head of a job-creation task force in a Democratic administration?  

 I remember when Immelt was appointed, wondering what Obama was thinking.  Immelt isn't the only one who's clueless.

Here we go again....

When the banks start hurting, governments start bailing them out:

The governments rushed to support Dexia after it became the first bank to gall victim to the two-year-old eurozone debt crisis, as a credit crunch denied it access to wholesale funds and sent its shares down 42pc last week.

 And the markets rebounded today on this announcement as well:

 "We are determined to do everything necessary to ensure the recapitalization of Europe's banks," Chancellor Angela Merkel said in Berlin after meeting with President Nicolas Sarkozy of France.

As usual, the solution to financial crises is to have taxpayers give rich bankers more free money. 

I’m fairly certain that, should we find a repeat of the financial crisis we had three years ago, American taxpayers would not stand for another round of bank bailouts like we had back then.  That is probably why our Treasury Secretary has practically been begging European leaders to do something to prevent an impending crisis:

Speaking at the Washington Ideas Forum in the downtown Newseum, Geithner mixed praise and criticism of Europe as he continued an ongoing effort to push its policymakers toward a more forceful approach toward dealing with debt woes. 

"Europe matters a lot to us.  We don't want to see Europe weakened by a protracted crisis.  Europe understands that." he said but left no doubt at his impatience with progress so far.

"They are moving too slowly," Geithner said.  "Europe is a large part of the global economy, and a severe crisis in Europe would be damaging" around the world. 

 If you wonder whether  “Occupy Wall Street” is spreading to Europe as well, here is your answer:

            

 Stay tuned – this could get very interesting.

Elizabeth Warren for President

Here is the video everyone is talking about:

Look, what she says here about the social contract is so basic it shouldn't need to be said.  But it does, over and over and over again, especially because our leaders have so obviously forgotten this.

Especially, unfortunately, our President, who jettisoned her....

Why Does Health Care Cost More in the US?

While my brother the orthopedic surgeon is not going to be happy, I am really not surprised that a big part of the answer is this....

Obama Pivots - or At Least He Appears To

Lots of commentary today about the President's more confrontational approach with the Republicans.

David Brooks' column especially has generated a lot of responses.  My favorite is this one by Steve Benen, appropriately entitled "Don't Blame Charlie Brown for Learning Lucy's Lesson."  John Amato has a similar take.  I tend to agree that Obama is doing this because he has to, not because he wants to.

More From Suskind

Brad DeLong has more passages from the Suskind book.  Fascinating reading.

One point I should make - I remember when Geitner was first nominated to be Treasury Secretary that I thought it was a wrong choice.  As time has gone by, nothing has occurred to change my mind about this, and as I read these passages I feel more strongly about this than ever.

But then, I thought Rahm as chief of staff was a big mistake too.

I get the impression that the two of them combined time and time again to keep the president from trusting his instincts.  I guess I'm gonna have to read the whole book to confirm this.  But with the little I've read so far, I can understand how things have turned out the way they have.

In any case, Obama appears like putty in their hands.  Hopefully he reads the book, sees what a weakling he looks like, and grows a pair.

Agreeing to Disagree

I have learned a lot of things reading blogs, mostly ideas that I never really thought about before.  And one of them is perfectly encapsulated by this:

[T]he elite commentariat, the people whose job it is to pay attention to this crap, should be smart enough to understand that it doesn't matter one bit if people in Washington get along, and should get that whether tipandronniehavedrinksafterwork is, in fact, about the least important thing in the universe. More than that, "unity of purpose" is both an unachievable and undesirable goal. This is a democracy, people disagree about stuff. That's good, not bad.

 Emphasis mine!

Of course, the rich and powerful don't like people disagreeing with them.  The want to both exercise their power and be loved!

Class Warfare?

There has been a class war raging in this country for some time now.  Only its the upper classes that have been waging it, and the media, being comprised mainly of upper class individuals (especially since the media consolidation of the 80s and 90s), has been ignoring it.  Some casualties.

And its been successful, since the middle class is dying in America.

General Observation

When I am perusing the web for interesting stories, I find myself spending a lot of time reading blogs and columns by economists - no doubt because I think the single greatest issue affecting the greatest number of people is the country's economic policy.  The best of these blogs do a great job of placing our current situation in historical context.  I'm a firm believer that we can learn from history if we are willing to remember it.

So I found this post (ht Paul Krugman) most interesting, particularly the charts comparing the 2000s and the 1970s.  Most people think of the 1970s as a time of economic "malaise" (remember that term?), but compared to where we are now that decade was paradise.

It Doesn't Matter

As the healthcare debate showed, it doesn't matter whether the proposal embraces conservative principles, or even that it was originally championed by a nationally prominent conservative governor.  If a Democrat proposes something, Republicans will oppose it - period full stop.

Kevin Drum provides another beautiful example....

Why was there no additional stimulus?

Brad Delong copies an interesting passage from Ron Suskind's new book.  Definitely worth a look.

He Should Have Been Fired Then and There

A new book says Treasury Secretary Geitner disobeyed an order from the President at the height of the financial crisis.

Digby, as usual, has a great take on this one:

As I said, I haven't read the book although I plan to. But if this passage is correct, I don't think it excuses the President at all. What it does is paint him as somewhat weak in his early days in office, which I don't find surprising. It's reminiscent of another young president who got swept along by the existing hierarchy and approved a fateful assault called the Bay of Pigs. The question is what happened next. In Kennedy's case, he learned to be extremely skeptical of the establishment and he relied on different advisors before making such decisions in the future.

It must mean something that Tim Geithner is almost all that's left of President Obama's original economic advisers. The only logical answer is that in spite of the above anecdote the President came to depend on Geithner to the exclusion of the others --- and that is very different from how Kennedy reacted. 

Indeed, it must mean something, and that something isn't good.

The Solyndra "Scandal"

I really don't know a whole lot about this, but I do tend to think that this is a good explanation of what happened and why....

Did Obama Take His Eye Off the Ball?

I happen to think he did.

Kevin Drum, looking at this chart, thinks that things were looking better and he couldn't be faulted for shifting his focus to other things.

Perhaps.  But note that the US economy needs to produce about 200,000 jobs per month just to keep up with the growing population.  That threshhold was only crossed in April 2010, and that rate of job growth last a grand total of 2 months.

Certainly by the end of the summer of 2010, he should have recognized the problem and shifted his focus and attention back to the jobs front. Instead, he took a "stay the course" tack.  In my opinion, if he had campaigned hard on jobs in the fall of 2010, maybe the losses in last November wouldn't have been quite so bad.

I'm not a fan of the Bill Clinton, but when it comes to politics he had this right:  It's the economy stupid!

OMG - You've Had SEX???

We really are a nation of prudes.

Perhaps Presidential Speeches Don't Work

There have been a number of commentators who have made this assertion.  In his blog, Jonathan Bernstein has said this, and most recently Matthew Yglesias at ThinkProgress.

Of course, using Atrios as an example - pointing out that he is not "fired up and ready to go" in supporting the president - is not really fair.  Atrios is always depressed and sarcastic, and my guess is that his audience is depressed and sarcarstic as well and not really that full of Obama supporters in any event.

But why should I - a lifelong liberal Democrat - be dancing in the streets with happiness at what the President has proposed?  I myself am not at all impressed by the President's proposal.  I know some people like Paul Krugman have stated they were pleasantly surprised by the size of the bill, but frankly I'm not.  In the next day or so I will provide my own critique of what the president has proposed.  It isn't pretty.

Besides, there is nothing I am reading that indicates the Republicans are ready to compromise on anything. On the contrary....

Given past history - the penchant of the President to compromise - the likelihood is that if anything is passed, it will be a watered down version of what he has proposed which will have little if any impact.

So why should I be dancing in the streets?

OK, I'm back

And I'm going to make a concerted effort to post every day now - I promise!

Of course, this is just a promise to myself at this point, which is the easiest kind of promise to make!

Why is Obama Doing This?

The New York Times has a story today regarding how the Obama Administration is pressuring the New York State Attorney General to agree to the global settlement on mortgage operations by the big banks.

Then in a follow-up I read this:

A week ago, I finally read an in-depth investigation that found that in “a staggering 92 percent of the claims brought by creditors asserting the right to foreclose against bankrupt families in New York City and the close-in suburbs, banks and mortgage servicers couldn’t prove they had the right to kick the families out on the street… By robosigning documents and pressing foreclosures without the proper paperwork, banks have attempted to steamroll their way over sometimes-outgunned homeowners.”

The investigation was done not by the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS), nor by the Federal Deposit Insurance Corporation (FDIC) but by…wait for it…the New York Post. The Post! If the Post is capable of pulling off this investigation and making it public and subject to democratic discussion, why can’t the Obama administration?  And this is what the New York AG’s office has to deal with: signing a deal absolving and protecting the banks when places like the New York Post are out there finding evidence of massive fraud.

Now I don't read the New York Post out of principle - it is a disgusting right wing rag as far as I am concerned, making Fox News look tame by comparison.  So if they come out with this kind of report, I gotta think making this kind of settlement is bonkers - people on both the left and the right are going to scream blue murder.

Of course, the question in the title to this post is rhetorical.  We all know why the administration is doing this.

Hang in the Eric - you're on the side of the angels with this one.