Category Archives: Shared ArtImage
Jared Kushner is currently taking a victory lap, crowin’ about his “Stealth Data Machine” that put Donald Trump over the top in the 2016 race. Let’s pry off the lid and peer into the inner-workings of this “Data Machine.”
The Signal in the Noise
Building on the work of @LouiseMensch and data analysis by @Conspirator0 on Twitter, Tea Pain has stumbled onto a possible “signal in the noise” that opens a window into the data-swappin’ shenanigans going on between Trump Tower, Spectrum Health and Russia’s Alfa Bank during the election.
Spectrum Health, owned by Michigan’s powerful Devos family, attempted to explain the IP activity as “Voice over IP traffic”, whereas Alfa Bank offered an even more exotic explanation that “hackers attempted to make it look like we contacted Trump Tower.”
The data traffic, when analyzed, tells a very different story, a story of automated, orchestrated data sharing among multiple sites for a…
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Yves here. This Real News Network interview is from a multi-part series about Michael Hudson’s new book, J is for Junk Economics. And after a lively discussion by readers of the economic necessity of many to become expats to get their living costs down to a viable level, a discussion of the disingenuous political messaging around retirement seemed likely. Among the people in my age cohort, the ones that managed to attach themselves to capital (being in finance long enough at a senior enough level, working in Corporate America and stock or stock options) are generally set to have an adequate to very comfortable retirement. The ones who didn’t (and these include people I know who are very well paid professionals but for various reasons, like health problems or periods of unemployment that drained savings, haven’t put much away) will either have to continue working well past a normal retirement age (even charitably assuming they can find adequately compensated work) or face a struggle or even poverty.
SHARMINI PERIES: It’s The Real News Network. I’m Sharmini Peries, coming to you from Baltimore. I’m speaking with Michael Hudson about his new book J Is For Junk Economics: A Guide to Reality in the Age of Deception.
Thanks for joining me again, Michael.
MICHAEL HUDSON: Good to be here.
SHARMINI PERIES: So, Michael, on page 260 of your book you deal with the issue of Social Security and it’s a myth that Social Security should be pre-funded by its beneficiaries, or that progressive taxes should be abolished in favor of a flat tax. Just one tax rate for everyone you criticize. We talked about this earlier, but let’s apply what this actually means when it comes to Social Security.
MICHAEL HUDSON: The mythology aims to convince people that if they’re the beneficiaries of Social Security, they should be responsible for saving up to pre-fund it. That’s like saying that you’re the beneficiary of public education, so you have to pay for the schooling. You’re the beneficiary of healthcare, you have to save up to pay for that. You’re the beneficiary of America’s military spending that keeps us from being invaded next week by Russia, you have to spend for all that – in advance, and lend the money to the government for when it’s needed.
Where do you draw the line? Nobody anticipated in the 19th century that people would have to pay for their own retirement. That was viewed as an obligation of society. You had the first public pension (social security) program in Germany under Bismarck. The whole idea is that this is a public obligation. There are certain rights of citizens, and among these rights is that after your working life you deserve to live in retirement. That means that you have to be able to afford this retirement, and not have to beg in the street for money. The wool that’s been pulled over people’s eyes is to imagine that because they’re the beneficiaries of Social Security, they have to actually pay for it.
This was Alan Greenspan’s trick that he pulled in the 1980s as head of the Greenspan Commission. He said that what was needed in America was to traumatize the workers – to squeeze them so much that they won’t have the courage to strike. Not have the courage to ask for better working conditions. He recognized that the best way to really squeeze wage earners is to sharply increase their taxes. He didn’t call FICA wage withholding a tax, but of course it is. His trick was to say that it’s not really a tax, but a contribution to Social Security. And now it siphons off 15.4% of everybody’s pay check, right off the top.
The effect of what Greenspan did was more than just to make wage earners pay this FICA rake-off out of their paycheck every month. The charge was set so high that the Social Security fund lent its surplus to the government. Now, with all this huge surplus that we’re squeezing out of the wage earners, there’s a cut-off point: around $120,000. The richest people don’t have to pay for Social Security funding, only the wage-earner class has to. Their forced savings are lent to the government to enable it to claim that it has so much extra money in the budget pouring in from social security that now it can afford to cut taxes on the rich.
So the sharp increase in Social Security tax for wage earners went hand-in-hand with sharp reductions in taxes on real estate, finance for the top One Percent – the people who live on economic rent, not by working, not by producing goods and services but by making money on their real estate, stocks and bonds “in their sleep.” That’s how the five percent have basically been able to make their money.
The idea that Social Security has to be funded by its beneficiaries has been a setup for the wealthy to claim that the government budget doesn’t have enough money to keep paying. Social Security may begin to run a budget deficit. After having run a surplus since 1933, for 70 years, now we have to begin paying some of this savings out. That’s called a deficit, as if it’s a disaster and we have to begin cutting back Social Security. The implication is that wage earners will have to starve in the street after they retire.
The Federal Reserve has just published statistics saying the average American family, 55 and 60 years old, only has about $14,000 worth of savings. This isn’t nearly enough to retire on. There’s also been a vast looting of pension funds, largely by Wall Street. That’s why the investment banks have had to pay tens of billions of dollars of penalties for cheating pension funds and other investors. The current risk-free rate of return is 0.1% on government bonds, so the pension funds don’t have enough money to pay pensions at the rate that their junk economics advisors forecast. The money that people thought was going to be available for their retirement, all of a sudden isn’t. The pretense is that nobody could have forecast this!
There are so many corporate pension funds that are going bankrupt that the Pension Benefit Guarantee Corporation doesn’t have enough money to bail them out. The PBGC is in deficit. If you’re going to be a corporate raider, if you’re going to be a Governor Romney or whatever and you take over a company, you do what Sam Zell did with the Chicago Tribune: You loot the pension fund, you empty it out to pay the bondholders that have lent you the money to buy out the company. You then tell the workers, “I’m sorry there is nothing there. It’s wiped out.” Half of the employee stock ownership programs go bankrupt. That was already a critique made in the 1950s and ‘60s.
In Chile, the Chicago Boys really developed this strategy. University of Chicago economists made it possible, by privatizing and corporatizing the Social Security system. Their ploy was to set aside a pension fund managed by the company, mostly to invest in its own stock. The company would then set up an affiliate that would actually own the company under an umbrella, and then leave the company with its pension fund to go bankrupt – having already emptied out the pension fund by loaning it to the corporate shell.
So it’s become a shell game. There’s really no Social Security problem. Of course the government has enough tax revenue to pay Social Security. That’s what the tax system is all about. Just look at our military spending. But if you do what Donald Trump does, and say that you’re not going to tax the rich; and if you do what Alan Greenspan did and not make higher-income individuals contribute to the Social Security system, then of course it’s going to show a deficit. It’s supposed to show a deficit when more people retire. It was always intended to show a deficit. But now that the government actually isn’t using Social Security surpluses to pretend that it can afford to cut taxes on the rich, they’re baiting and switching. This is basically part of the shell game. Explaining its myth is partly what I try to do in my book.
SHARMINI PERIES: If the rich people don’t have to contribute to the Social Security base, are they able to draw on it?
MICHAEL HUDSON: They will draw Social Security up to the given wage that they didn’t pay Social Security on, which is up to $120,000 these days. So yes, they will get that little bit. But what people make over $120,000 is completely exempt from the Social Security system. These are the rich people who run corporations and give themselves golden parachutes.
Even for companies that have engaged in massive financial fraud, the large banks, City Bank, Wells Fargo – all these have golden parachutes. They still are getting enormous pensions for the rest of their lives. And they’re talking as if, well, corporate pensions are in deficit, but for the leading officers, arrangements are quite different from the pensions to the blue collar workers and the wage earners as a whole. So there’s a whole array of fictitious economic statistics.
I describe this in my dictionary as “mathiness.” The idea that if you can put a number on something, it somehow is scientific. But the number really is the product of corporate accountants and lobbyists reclassifying income in a way that it doesn’t appear to be taxable income.
Taking money out and giving it to the richest 5%, while making it appear as if all this deficit is the problem of the 95%, is “blame the victim” economics. You could say that’s the way the economic accounts are being presented by Congress to the American people. The aim is to popularize a “blame the victim” economics. As if it’s your fault that Social Security’s going bankrupt. This is a mythology saying that we should not treat retirement as a public obligation. It’s becoming the same as treating healthcare as not being a public obligation.
We have the highest healthcare costs in the world, so out of your paycheck – which is not increasing – you’re going to have to pay more and more for FICA withholding for Social Security, more and more for healthcare, for the pharmaceutical monopoly and the health insurance monopoly. You’ll also have to pay more and more to use public services for transportation to get to work, because the state is not funding that anymore. We’re cutting taxes on the rich, so we don’t have the money to do what social democracies are supposed to do. You’re going to privatize the roads, so that now you’re going to have to pay to use the road to drive to work, if you don’t have public transportation.
You’re turning the economy into what used to be called feudalism. Except that we don’t have outright serfdom, because people can live wherever they want. But they all have to pay to this new hereditary “financial/real estate/public enterprise” class that is transforming the economy.
SHARMINI PERIES All right, Michael. Many, many, many things to learn from your great book, J Is For Junk Economics: A Guide to Reality in the Age of Deception. Michael is actually on the road promoting the book. So if you have an opportunity to see him at one of the places he’s going to be speaking, you should check out his website, michael-hudson.com
So I thank you so much for joining us today, Michael. And as most of you know, Michael Hudson is a regular guest on The Real News Network. We’ll be unpacking his book and some of the concepts in it on an ongoing basis. So please stay tuned for those interviews.
Thank you so much for joining us today, Michael.
By David Llewellyn-Smith, founding publisher and former editor-in-chief of The Diplomat magazine, now the Asia Pacific’s leading geo-politics website. Cross posted from MacroBusiness
From the always essential Jeremy Grantham’s latest note:
An extraordinary, large exit poll run by Reuters/Ipsos in which 45,000 people participated took place in the early evening on election day in the US. To say this was a detailed poll is an understatement. The spreadsheet for each question in small print runs the length of a generous dining room table, 11 feet! It will tell you how the American Hindu sample of 172 voted. The poll’s early results of 9,0002 inputs also revealed on the night before the election, when the bookies’ odds 3 against Trump were 5 to 1, that the odds were wrong. The critical statement polled, in my opinion, was this: “America needs a strong leader to take the country back from the rich and powerful.”
From my perspective, the pushback against the rich and powerful for several decades has been very unexpectedly wimpy. “Occupy Wall Street” aside, the average voter had sat still for a series of major tax cuts for the higher tax brackets and on capital – capital gains and dividends. The lowerincome workers had paid the cost of outsourcing and labor-saving technology but had received no material help, while corporations and corporate officers and owners were the beneficiaries. In fact, money spent on worker training and education declined relative to foreign competitors. This shows up clearly in declining educational standards where today the US global rank is, to be friendly, mediocre. Most scarily in this regard, the average Chinese 20-year-old now ranks 2 full years ahead of his American counterpart in math proficiency! So, all in all, we can say that global forces pushed wages down and politics pushed them deliberately lower. The combined result is shown in Exhibit 1: The share of GDP going to labor hit historical lows as recently as 2014 and the share going to corporate profits hit a simultaneous high. Similarly, Exhibit 2 shows that the share of all income going to the top 0.1% rose well beyond any previous record and approached 100% of all the recovery in total income since the lows of 2009!
The “rich and powerful” not only increased their share of income and capital at an unprecedented rate in recent decades, but they also increased their grip on politics through a rising tide of political spending, including lobbying and the new Super PACs, courtesy of the Supreme Court’s ruling in Citizens United. Even before this ruling, Princeton University Professors Gilens and Page had reported4 on the complete lack of influence that voter opinion had on the probabilities of any bill passing through Congress. If favored by the public the average 31% chance of passing rose to a dizzying 32%. If not favored, it fell to 30%, justifying the nickname given to the influence of the average citizen: “Gilens’ Flatline.” When favored by the richest 10%, bills passed at a 65% rate – there is inertia after all. But when opposed by the wealthier and supported by inertia, the passing rate was essentially nil. Those hoping that there is any life at all left in representative democracy have to hope that some critics of this work are right when they claim that the data is complicated to sort out and the conclusions may be overstated. Anecdotal evidence on such issues as the minimum wage and gun laws, though, suggests that majority opinion is, shall we say, easily offset. Scarily, Gilens’ work does not include the post Citizens United data on political spending that is shown in Exhibit 3. I could not resist throwing in political contributions from unions, which are often cited by right-wingers as somehow balancing the books. And once upon a time they did. But, as unions have been severely weakened by the same combination of global forces and politics previously described, political contributions from unions have become a rounding error, offsettable by a mere handful or less of billionaires.
The Citizens United ruling reminds me of what a good ally of the “rich and powerful” and corporatism the Supreme Court’s majority has recently been, particularly in its strange assumption that corporations are human and deserve the same constitutional protections as we humans. It turns out, though, that humans are quite often cooperative and altruistic for no apparent self-advantage. Corporations, tied as they are these days to the single-minded goal of profit maximizing, seem to be close to saying that altruism, or the common good, when it compromises profitability, is a dereliction of their duty. In a human this would be considered pathological. (I wonder what the Founding Fathers would really have thought of this odd idea of corporate humanity. Or the equally odd idea that unlimited spending by corporations on elections is the moral equivalent of free speech.)
It is data like this that has led me over the last 10 years to believe that this country does indeed need to be saved from “the rich and powerful”; to believe that corporate interests were coming to dominate the public good; to believe that when in conflict corporations would, perhaps under the usual career risk pressure we all know so well, choose short-term profit maximizing over the well-being of workers. Nowhere was this better demonstrated than in their dispensing with the jewel in the crown of the old social contract, the defined benefit plan. This was done on the stated grounds of unaffordability even as corporate profits hit unprecedented high levels of GDP. Pensions that guaranteed a share of final salary were always going to be expensive and in hindsight we should perhaps consider it remarkable that it was ever voluntarily done at all…a testimonial to the old days when labor, cities, and countries of origin were also considered to be stakeholders of corporations. Worse yet, when deciding between their grandchildren’s well-being in a climate-controlled world or maximizing profits in a climatedamaging world, so far at least, they have collectively chosen short-term profits. In fact, the erosion of democracy began in earnest in the mid 70s when Senator Lawton Chiles (D. Florida) began his successful crusade to shine light in the dark places of government. His “Government in the Sunshine” legislation opened the door to vastly more effective lobbying by those with the means to pay, because the spotlight his legislation cast on government work, such as Committee mark-ups of Congressional bills, enabled lobbyists to pay fully only for loyalty they could actually observe.
The data on rising inequality also led me to check what others had thought and written on this issue and made me realize that a self-destructive streak in capitalism had been well-noted in the past. A particular surprise to me was Schumpeter – he of “creative destruction fame” – who believed capitalism in its current form would eventually fail through overreaching, using its increasing power to dispense with regulations designed to protect the public good (that has a painful echo today doesn’t it?) until pushback FDR style (or Teddy Roosevelt style) results in a more controlled mix, which Schumpeter called socialism. There was also a suggestion in his work and that of Keynes that excessive corporate power would weaken the demand from ordinary workers and hence weaken the economy. This last point is also emphasized more recently by Mancur Olson, who argued that “Parochial cartels and lobbies tend to accumulate over time until they begin to sap a country’s vitality. A war or some other catastrophe sweeps away the choking undergrowth of pressure groups,” as The Economist rather eloquently summarized his thinking in his obituary of March 1998.
To promote a pushback against excessive corporatism (and elements of oligarchy) one needs first of all to recognize the problem. Given the rather apathetic response from what used to be called “the workers” to the last 30 years of relative slide, there appears to have been no such recognition. But then on the eve of the election I realized that the point had finally been made. For an astonishing 75% of those first 9,000 polled agreed that, yes, we did indeed need to be saved from the rich and powerful. From now on, in my opinion, we live in a different world from the one we grew up in. A world in which a degree of economic struggle between the financial elite, perhaps 10% but more likely 1%, and all the rest is finally recognized. The wimpy phase is probably over. The question now is which path will this struggle take? Will it be a broad societal effort through established political means to move things back to the 1950s to 1960s when a CEO’s pay was 40x his average employee’s pay and not today’s over 300x; when corporations never dreamt of leaving the US merely to save money; when investment banks set the standard (and a very high one) of ethical behavior? Or do we try to do it through the other historically well-used method, and a much more dangerous one – that of resorting to a “strong leader?” Strong leaders work out just fine if we end up with a Marcus Aurelius, the mostly benevolent and wisest of Roman Emperors. But when things go wrong, as they often do, we could more easily end up with Caligula.
As I read the poll on election night, “recapturing the country from the rich and powerful” seemed a long overdue cry from the broad public. The kick in the stomach, however, was the “strong leader” bit. On feeling that kick, a more dynamic betting man than I would have realized how wrong the 5 to 1 odds against Trump were and would have made a big wager on him. He not only would have scored higher on the “strong leader” bit than his rival, but despite his personal wealth, the words “rich and powerful” were much more closely aligned with “establishment” for candidate Clinton, almost a “Ms. Establishment 2016” in the minds of supporters and opponents alike.
I felt the pain from the “strong leader” bit because, like almost all in my age cohort, I am fanatically well-disposed to democracy. We were born, after all, at a time that overlapped the trio of nightmarish, strong leaders of the 1930s and 1940s, Hitler, Mussolini, and Stalin. But I believe this fanaticism has weakened in other age cohorts born less close to these three as they have receded steadily into history. A recent report5 captured this decline: Of those born, as I was, in the 1930s, fully 75% gave a 10 out of 10 for extreme support for democracy. But each younger cohort felt less enthusiastic: 62%, 57%, 50%, and 43% for each younger cohort by decade until by the time we get to those born in the 1970s, the 40-year-olds, extreme support is down to 32%! And this is not the worst of it. The same report listed those who were actually against democracy as a “bad” or “very bad” way to “run this country.” Shockingly, in the period from 1995 to 2011, the percent of each age group agreeing to that proposition doubled. From 5.5% to 12% for those over 65 rising to a frightening 24%, up from 12.5% for the 16- to 24-year-olds.
By this time some readers may be asking for a profile of the 74% of the final 45,000 who voted against the rich and powerful. Who are these people? Well, they are us. All of us. I have never heard of a vote so uniform: whether Republican 72% or Democrat 77%; Male 74% or Female 75%; White 75% or Black 74%; Rich 70% or Poor 79%; Christian 74% or Muslim 72%; Graduates 68% or not 76%; they all agreed. They have all had it with the rich and powerful. And as for me, I don’t blame them. I think capitalism has lost its way. And has badly diluted the value of democracy along the way. We can only hope it is very temporary.
Trump recognized this streak of strong opinion and played to it, clearly stating his intention to look after the forgotten workers. Clinton diffused her message as looking after almost everyone and, I suppose, that includes you workers – as it were. To move the dial in the right direction is very important: Measures of income equality are correlated positively with everything valuable in a cohesive society. Exhibit 4 shows nine of these clear correlations, for which the US shows poorly in all! How far away this is from the widely-held belief that the US is best or nearly best at everything that matters. The way to improve this situation, though, is fortunately straightforward: Increase taxes on capital and on the very rich, perhaps slowly over a number of years, and increase the effort on worker training and education. These actions will by no means be a total cure for long-term job displacement but they would be a great and necessary improvement.
The real challenge in promoting less inequality is to increase the share of GDP going to labor. Almost certainly, for any given increase in their share of GDP there must be a decline in the share going to corporate profits. How does the program of the new strong leader stack up on this one? He is surrounded by capitalists and billionaires who, to further advantage corporations and the super rich, are apparently prepared to wage war on the already sadly diminished regulations that defend ordinary people (and, yes, with no regulations corporations would make more money). The war would also include direct tax cuts for the rich and corporations, which would further increase the share of the pie going to corporations. This is a strategy that if successful in the long-run – despite its current market appeal – could not possibly be worse for the workers if he tried. Perhaps they, the workers, will feel betrayed as their share drops in order to further fatten corporations. Perhaps they will be bamboozled enough not to notice the betrayal. For bamboozlement of the working poor has become an art form in the last 30 years, with bamboozlement defined as an ability to persuade people to vote against their own economic interest for one reason or another. For example, 62% of voters do not like the sound of “death tax,” which in the form of estate tax is paid by only 1-2% of American families. An astonishing 35% of those earning less than $10,000 a year do not approve of increasing taxes on the rich. Does it get any richer than that? It has been called the Homer Simpson effect,6 whereby the poor voter reacts negatively to the idea of tax, which like death has little appeal, but does not get the point that a tax decrease for the rich has unpleasant implications for them. But, the gods willing, you probably can’t bamboozle enough of the people enough of the time. And the Reuters/Ipsos poll clearly shows that the worms have turned. The lack of class war or economic war in the US has always been a fiction, but it has been mostly hidden, and deliberately so, by the side so completely winning the undeclared war. Perhaps the 74% vote was indeed a public declaration that the war is now official.
The Republican Administration seems to feel that it received a broad mandate and perhaps it did. But my guess is that this poll provides the real mandate that waits to be addressed. And it is a narrow, focused one: Save me, oh leaders, from the rich and powerful! It looks so far as if this point has been largely missed. If it has been, there will likely be powerful and sustained pushback from the poor and not yet quite powerless.
Spot on, as usual.
Some of the collected thoughts of writer Charles D. Hayes:
The really scary thing about hard-right Christian fundamentalists is not just their fervent belief in a prophesized Apocalypse to come, but in their eagerness to help bring it about. In their view, it’s a vengeful comeuppance overdue nonbelievers.
This is why having Steve Bannon at the helm in the Trump Administration represents a clear and present danger to this country. Steve Bannon is bat-shit crazy.
So, we have a mentally unstable president and his chief adviser is an admitted apocalypticist and Trump supporters just want us to give these people a chance. If irony were water, we would all drown.
* * *
During the 2016 campaign, recall that Donald Trump said he was beholden to no one, he couldn’t be influenced by contributions, then why are his Cabinet appointees big campaign contributors?
Remember how he was going to hire only the very best people? Then, why does he appoint a Secretary of Education, who has demonstrated that she is clueless about the major philosophical issues facing public education? She is, however, a major contributor, so this is glaring proof of a Trump lie.
Political propagandists advocate telling the same lies repeatedly, until they are accepted as truth. Trump says one thing and does another, so often, that any objective analysis shows clearly that he is the most dishonest person in the history of presidential politics and that’s really saying something.
We know that telling lies repeatedly convinces gullible citizens. So, in this case the best defense may be an overwhelming offense with the antidote to Donald Trump being an endless repetition of the truth.
Trump supporters need to be the target of an unrelenting barrage of facts, it may not breach their partisan gullibility, but it may impede their ability to promote a Kellyanne Conway version of reality.
* * *
Citizens who genuflect approval when executives earn hundreds of times more than workers, but who balk at raising the minimum wage have been rendered ethically incapacitated from having swallowed whole, the psychological power of hierarchical authority, overriding their own ability to offer judgments about ideas as morally intuitive as the concept of justice.
* * *
I’m confident I’m having an experience like millions of other folks as we keep trying to resume something akin to life before the election, but nothing is working. I keep going over and over the fact that this is unlike any election that anyone alive has ever experienced, since we now have a President of the United States who could not pass a citizenship test with an online tutorial. Every new day when you turn on a television or computer for the day’s news, it’s like listening for breaking glass. Each day you think, well we are still here, no nukes, no war, so far, not yet anyway, and still it doesn’t help all that much, because tomorrow is another day and a president with a serious personality disorder who is mentally unfit is like a fuse in search of a match.
The extreme right-wing ideologues that Trump surrounds himself with are despicable people with contemptible ideas, but for the most part we are relying on them, because they aren’t completely bat-shit crazy, so we must depend on them to keep the bull subdued, when in the china shop, or talking to China, or North Korea, or Iran, or Mexico. So, onward we cope, hoping it will get easier while not believing it for a minute.
* * *
I’ve read several posts lately in which conservatives have argued that liberalism is a mental disease. Just think, if only that were the case we could spread the germs and infect those who lack the common decency to support the need for universal healthcare.
Thank goodness for the pandemics in 1935, 1938, 1964, 1965 and the more recent one’s that have given us Social Security, Medicare, The Civil Rights Act, the 8-hour workday and overtime pay, the minimum wage, the GI Bill of Rights, The Clean Water Act, The Family and Medical Leave Act, The Consumer Protection Agency, The Rural Electrification Act, The Affordable Healthcare Act, and many other examples.
But, as I keep pointing out, that we have had service men and women die on the battlefield, only to have some members of their own family die from a lack of health insurance is only something that could occur in a society that is still very sick.
* * *
The 2016 election was unique, in that, our media, in effect, normalized the bizarrely abnormal by reporting a “this versus that” campaign, while giving billions of dollars of free air time to one candidate simply because of his hot button appeal—an appeal driven by racism, misogyny, ethnocentrism and the fear and insecurity of people facing an unjust economic future.
The press should have brought the full force of investigative journalism to bear on Donald Trump’s business practices, and his foreign debt, and they should have been insistent on him releasing his tax returns. One candidate experienced extreme vetting, one simply refused vetting.
That our media helped to normalize the abnormal is unfortunately something that’s going to be very hard to fix because now the buffoon is in-charge and his abnormal behavior finally seems to be awakening the press to the monster they helped win the White House. But what is to be done now is an open question.
The emphasis on bringing back manufacturing jobs is good, but short sighted. Even, if this effort proved very successful, it would still not come close to fixing what is broken in America’s workplace. Automation, via robotics and digital app technology, means a future with an exponential decrease in traditional manufacturing jobs.
We are on track to experience a metaphorically dead middle class, unless, we can contrive a living wage economy, for all full-time employment. We have no shortage of things that need to be done in America. Things that really need to be accomplished, but that no one wants to pay for.
We hear a continuous incessant cry about the need for free markets, which, ignores the reality than nothing we do, is free. For example, we don’t pay the ecological tax that our busyness exacts on the environment. Costs that at some point future generations are going to have to pay for in a reduction in quality of life.
The problem, is that until we stop the looting at the top tiers in our economy, we can’t allot equity, at the foundation level. When it comes to fair compensation, we are like the frog in a pot of water on a hot stove that boils before realizing it should have jumped out when the water was still warm.
We have gone from living wages at a minimum wage and reasonable compensation for executive pay, to blatant inequality for minimum wages and outright open looting at the executive level. In a sane and just society, this is simply untenable and in the long term unacceptable.
The financialization of our economy long ago severed the link with which labor keeps pace with productivity via compensation. This is not rocket science, but for America’s future, it’s just as important.
Y’all have made it clear for all to see what a lucky man I am.
Cancer stalks us all. Being attacked by that beast is nothing to complain of after all the good things that have come to me.
I find myself with a support system anyone would envy.
Because my Facebook friendships come from several of my lives, some of you don’t know my wife Tracy Russell who demonstrates every day what it means when I say that I “married well.”
What a turn in my life that I can say that after losing Donna Mobley! I don’t know which hits me harder now—how convinced I was that my life had tumbled into nothingness or the fact that Tracy knew it when she took me on as the world’s most unlikely emotional reconstruction project.
That is, she knew I was broken and she married me anyway.
Nobody I’d rather have beside me in this.
Moving outward from my rock solid spouse, I will observe that if you have four kids there will be drama. There is none right now. All hands are on deck backing me up and backing Tracy up.
I live in a retirement community among people with whom I have little in common….except that we all face health challenges.
According to my medical team, I’m doing well. I feel much better but spend much of my time feeling weak as a kitten.
When I told my editors about my diagnosis, they were totally supportive. Reshuffle my work load. Take time off and know the gig would be there for me. Whatever I wanted. What a blessing that is!
I’m trying to keep up with my column, How Did I Miss That?. It does not require an attention span, which I lack right now.
Because I am without the ability to bear down on a topic, I am going to cheat a little for a comment on our current political pass by recycling remarks I made to a Trump voter back when it looked like Trump would snatch defeat from the jaws of victory and lose to an establishment candidate in a change year.
I don’t feel better about Mr. Trump’s announcement that he’s appointed “the highest IQ cabinet in history.” Our history-challenged POTUS should look up what JFK said about that.
I think we were not teleported into this moment. History does matter, so I’m going to re-tell some very recent history from my point of view in this letter to an early Trump supporter:
You claim to be worried about the national debt.
You do not, however, conduct yourself as if the national debt were important.
I expect you voted for Mr. Bush over Mr. Gore and, in that campaign, the primary issue was whether to use the prosperity of the Clinton years to pay down debt or to fund a tax cut.
To the credit of the voters, Mr. Gore won the popular vote, but the Electoral College and the SCOTUS, not necessarily in that order, installed Mr. Bush.
Mr. Bush could, of course, have paid down debt while he had a surplus and explained to voters like you why that’s important.
You pay down debt in a time of surplus. You do not cut the budget into a slow economy, which is exactly what your side of the political street has advocated.
Leaving aside the magic of the aggregate demand curve, which you steadfastly refuse to learn about, there’s another reason. In a recessionary economy interest rates are very low, making it a great time to borrow money.
Businesses typically do not take advantage because a downturn means fewer customers and no need to expand capacity. Very big businesses with lots of cash on the balance sheet use the recession to upgrade on the cheap, but even they seldom expand.
Government, on the other hand, is responsible for a lot of capital improvements that require upkeep: highways, bridges, dams, and airports. Government also should be, but is not at this time, responsible for the electrical grid, which is generations behind Europe and much of Asia.
Government expenditures have something called “velocity.” That is, all expenditures do not stimulate the economy equally.
The same could be said of tax cuts, except the only tax cut with any simulative effect to speak of is the payroll tax.
In a recession, you are not trying to get money into the hands of the folks you call “job creators” because they are not failing to invest for lack of funds. They fail to invest for lack of customers.
All tax cuts are not equal because—Reaganomics to the contrary—the goal is not investment. The goal is spending.
American politicians generally—not just Trump—are selling manufacturing snake oil. Those jobs are gone and few of them will ever come back. Pretending otherwise is irresponsible.
One thing about China’s socialist tradition is they still have five year plans and you can see what they intend to accomplish. They, too, are bleeding manufacturing jobs. Their plan, since they do not have to deal with messy democracy, is to face facts and let them go. Their goal is transition to a service economy.
We already have a service economy. As usual, ahead of their curve.
“Service economy” is not all about flipping burgers. It’s about intellectual property—who creates it and who owns it.
I have taught lots of Chinese graduate students. I’m betting more than you have. Based on my observations, Chinese come to graduate school much better prepared than Americans.
However, they do not do greatly better once they arrive. I teach in social sciences, where we deal in questions that either have no answers or have answers that raise new questions.
American students from first tier universities are used to those kinds of questions. They are, in a word, creative. Chinese students have a much larger store of known facts but their ability to project into the unknown is stunted. They catch on quickly and I don’t mean to denigrate knowing a lot of stuff.
My point is that we can compete and we can prevail. But I digress.
For you and I, balancing a budget means our spending does not exceed our income.
On the macro level, balancing a budget means the debt grows less than the economy does. Any particular year does not matter. When you have a reserve currency, and particular decade does not matter. This does not mean that deficits should be ignored. It’s a statement of priorities. Deficit spending is necessary to reconstruct that aggregate demand curve you choose to ignore.
The amount of demand that is missing is a knowable number. It is not a matter of opinion. It’s a matter of arithmetic.
The recovery has been sluggish because Obama did not get the stimulus needed and much of what he did get came in the form of tax cuts.
Social Security is not as critical as it would be thanks to all those undocumented workers Mr. Trump wants to deport. There’s quite a controversy over how many years undocumented workers add to both Social Security and Medicare but there is no question that having all those people paying in who will never take out does give US taxpayers a margin they would not have otherwise.
The conservative think tank turned political shop, the Heritage Foundation, produced a “study” that claimed otherwise. But I’ve got to think you can see what they did wrong without my prodding.
I agree with Bernie Sanders that SS benefits need to be increased and the retirement age cut rather than raised.
Why? You don’t deal with a structural unemployment problem by forcing people to stay in the work force longer.
How? Remove the cap on the payroll tax. I did not know there was a cap until the first year I hit it and thought I had gotten a pay raise. At those income levels, the impact on the demand curve is marginal. The pain would be nonexistent.
Having people retire earlier with smaller benefits is a concession to the new employment reality. I live in a “retirement community” and everybody works.
Another problem with the new employment reality that must be solved is the impact of the “gig economy.” I learned about it first when I was working my way though school. I knew I would have lots of jobs during the school year but I didn’t know exactly where they would come from and what I would be doing. That’s OK when you are a student. It’s harder for adults.
But the big deal is that the time of the fixed retirement benefit is long gone. People will still need to retire,
The fixed income benefit was a creature of the labor movement, and the labor movement has not figured out a way to organize workplaces that are no longer physical places. Ditto the regime of wages and hours we are used to ever since the New Deal gave us the Fair Labor Standards Act.
Giving the FLSA a 21st Century overhaul is hard with a party controlling Congress that purports to believe that the market exerts all necessary control over wages and hours.
This would be the same party that opposed the federal right to organize in the NLRA.
The same party that called the GI Bill “the dole.”
The New Deal and the Reagan Revolution are blueprints for very different societies.
The Soviet Union paradigm is not an option on the table, except perhaps in the mind of Mr. Putin and his pal Mr. Trump.
They say you run in poetry and govern in prose but I want to suggest you don’t do either in cartoons. It takes real people with real ideas supported by real numbers.
Democratic forms of government are run by who shows up. Those forms do not lend themselves to reification. Government can be stupid if the people who show up are stupid and authoritarian if the people who show up are authoritarian.
I have always tried to show up when necessary, when I thought I could do what was required better than anybody else willing to serve. I am sure as hell not authoritarian and I’m sure you can form your own opinion whether I’m stupid. But I am the government. And so are you, if you choose to be.
I should write a long post but I feel like screaming and a short post can accomplish that.
A new Wall Street Journal story, Health Care’s Bipartisan Problem: The Sick Are Expensive and Someone Has to Pay, is narrowly very good and broadly terrible. Despite the fact that the US health care system is doing a worse and worse job of delivering results yet is chewing up ever more of national resources, the press and punditocracy almost without exception refuse to question the basic premise of how the system operates. Remember that the cost of the US health care system is roughly twice that in GDP terms of that of other advanced economies, yet delivers worse results. A reminder from 2014:
Despite having the most expensive health care system, the United States ranks last overall among 11 industrialized countries on measures of health system quality, efficiency, access to care, equity, and healthy lives, according to a new Commonwealth Fund report. The other countries included in the study were Australia, Canada, France, Germany, the Netherlands, New Zealand Norway, Sweden Switzerland, and the United Kingdom. While there is room for improvement in every country, the U.S. stands out for having the highest costs and lowest performance—the U.S. spent $8,508 per person on health care in 2011, compared with $3,406 in the United Kingdom, which ranked first overall.
That is roughly the same sort of performance Soviet manufacturing showed in the decade before the implosion of the USSR. From Yegor Gaidar’s book Collapse of an Empire:
In manufacturing per unit, the U.S.S.R. in 1980 used 1.8 times more steel than the United States, 2.3 times more cement, 7.6 times more [mineral] fertilizer, and 1.5 times more timber.
The causes include:
A pay-for-piecework system that rewards doctors for over-treatment. These incentives are reinforced by encouraging patients to expect too much of doctors and demand surgeries and medications rather than accept that they may have to live with limitations or a slow recovery. I hate to rely on anecdote, but how many doctors are like the now 75-year-old orthopedist I finally found after seeing God knows how many who either had no clue and/or were super eager to operate. For instance, when I called his office to come in because I was pretty sure I had broken my little toe, he refused to see me and told me to tape it to my next toe. And this month, I managed to bang the hell out of myself in a bad fall (proving at least that I have no bone density problems) when I already had an injury and set myself back and then some. I hobbled in to see him. He poked and prodded and made me move a bit, declared me to have not done any permanent damage, and told me I needed a couple of weeks to heal more and to rest. And for this he charged $100 (the functional equivalent of bupkis in Manhattan) when I hadn’t seen him in over 10 years. When I was in Oz, most doctors were of his school of practice: their reflex if a problem didn’t look scary was to tell the patient to wait ten days and call the office, and if things hadn’t gotten materially better, then they would investigate further.
Similarly, I’ve been appalled when I visit doctors and mention what I consider to be a minor complaint that they almost universally regard it as a request for meds and are creepily eager to provide them.
And ads like this only encourage this sort of thing. I only watch TV an itty bit when on the treadmill, yet I’ve seen this commercial on CNN in prime time repeatedly. Mind you, this is for a diabetes medication, yet it sure looks like they are selling a great club drug:
The TV version has all the dance sequences and none of the charts or scenes in the bathroom, so the “gee this is a super happy drug” message is even stronger.
Drug company rent extraction. The US funds a huge amount of basic R&D and demands way too little. Big Pharma has succeeded in creating an intellectual property regime that makes it more attractive to milk existing patents and cheat on drug marketing than discover new drugs. Over 85% of the so-called new drug applications for the last 15 years have been for extensions of patents on existing drugs based on minor reformulations. The industry also spends more on marketing than R&D, and you can be sure that the beancounters allocate as much overhead as possible to R&D. Yet they’ve managed to con much of the public and complicit legislators that they need fat profits to “innovate” when they instead go to CEO and executive bonuses
Even worse, drug company marketing abuses kill people on a large scale basis. Vioxx and Oxycontin are poster children.
Needless insurance company costs and burdening of doctors with unnecessary admin work. One of the big reasons for the shortage of primary care physicians is the every-rising hassle of dealing with insurance companies. My impression is most doctors spend a day a week fighting to get paid, on top of having to pay staff to deal with paperwork. That is driving more and more MDs into concierge practices and services focused on the rich, like cosmetic services and anti-aging, that are outside the medical/insurance regime.
Iatrngenic conditions are a big problem. This is not unique to American medicine, but I would love to see comparative statistics. For instance, between superbugs, MRSA, and pneumonia, anyone who is sick should avoid a hospital stay unless there is no other choice.
As we know all too well, Obama made his health care “reform” all about institutionalizing the medical industrial complex looting. The bill was written by health care industry lobbyists. Drug company and insurer stocks both rose when it was passed. Even though insurers are whinging on how they are having a hard time making enough money on Obamacare exchange plans (and this serves as their excuse for dropping them and/or raising premiums), the press seldom mentions that they made out handsomely on Medicaid expansion. And let us not forget that Obamacare also barred drug reimportation from Canada.
So having chosen to misuse a once-in-a-generation opportunity to have a go at the fundamental problems of a clearly broken health care system, Obama, as he did with the banks, sided with powerful incumbents at the expense of ordinary Americans. Some people may perceive that they have been helped, but I wonder how many have road tested their coverage via suffering a serious mishap. As readers know too well (and many have told us), if you are hit by a bus and get taken to an emergency room not in your network, the costs are all on your dime. Even if you schedule an operation in network, it is impossible to prevent the hospital from gaming the system and scheduling practitioners who are not in network as part of the team so as to run up a bigger tab (lawyers have told us you can contest the bill successfully if you’ve demanded that they schedule only in-network professionals and they agree, but why should people who are having to deal with the stress of recovery from a major procedure be put through fights like that?). As we’ve also discussed, many insurers are effectively excluding pre-existing conditions via narrow networks that do not include specialists that can treat them.
Yet the frustrating Wall Street Journal article does a fine job of discussing the problem of treating people with costly ailments in our current broken system without once acknowledging the structural issues that make American medicine so egregiously overpriced. While it does marshall some useful data, for instance, that 1% of patients account for 21% of health care costs, far worse than the usual 80/20 rule, it conflates that with the pre-existing conditions problem, when end-of-life care is a big ticket item included in those figures.
Nobel Prize winner Angus Deaton stated clearly what is wrong. The American health care system “seems optimally designed for rent seeking and very poorly designed to improve people’s health.” And nothing is going to get better until we tackle that problem head on.
There are two fundamental ways, we do politics, either we compare ideas and strive to negotiate compromise, or we simply relate. The former method relies on reason, the latter emotion.
To reason one’s way politically, requires a civic education and a willingness to live up to one’s responsibility as a citizen in a democratic republic. To relate via emotion, is a tribalistic inclination based, in part, on the primal instinct of us vs them. It’s akin to the same impetus that enables us to become instant fans of team sports.
Now, these two dramatically different methods are not completely cut and dried. Most of us exercise these methods as matters of degree. But, unless you do your homework to the point that you know what you are talking about, then, relating is the only option because you will lack the knowledge necessary to participate in political discussion effectively.
Citizens who wear their politics as a matter of their tribal identity are infamous for offering political arguments that are intelligibly incoherent, reminiscent of the tea party and Trump supporters frequently interviewed on television carrying placards.
When citizens’ primary political orientation is one of relating, facts don’t matter, policy doesn’t matter, better arguments don’t matter, instead fear and hatred often substitute for substance and that’s where we find ourselves today.
We have a President-elect, whose support is steeped in emotional revulsion of the “other” and yet, those of us who care about policy and the better argument are still trying to address their emotion with reason and it’s not working, it’s like fighting fire with oxygen.
The angst felt by those who rely on relating over reason is real. They have good reasons to be upset. We have a dysfunctional political system and both major parties share blame. Now, those of us who rely on reason are also upset because we believe that our way of life depends upon reason, in the same tradition that our founders crafted the laws and rules we try to live by.
So, what is happening is that those of us who advocate reason get emotional when the relaters just relate and they get more emotional when we try to use logic, at which time, they just call us “liberals” and they think by doing that they have won the argument.
For citizens, whose politics is simply a matter of their identity, as in us vs them, they don’t think the rules apply to them, everything they do is automatically self-justifying their identity, is their license of legitimacy, in all important matters.
For example, for the GOP, Democratic Party appointees must meet astringent vetting standards, for the GOP, however, expediency trumps the need for vetting.
My point, in this piece, is that to deal effectively with the emotional angst of people who are never going to become civically responsible, we are going to have to come up with ways to appeal to their emotions by addressing their concerns in an emotional tribal context.
We must discuss the things they care about, family, work, military service, firearms, and religion in terms they can relate to emotionally, or else we are just going to become more and more polarized.
One method that I have used effectively, for example, is to discuss healthcare on their terms, using examples of the armed services risking their lives on foreign soil, while their family members back home face life and death medical issues because they can’t afford health insurance. This makes a difference because they can relate.
Now, admittedly there is no point in trying to reason with dyed in the wool ideologues and when I identify them as such I’ve just started blocking them, but some of us have friends and family members that we don’t want to write off and it takes an extraordinary effort to communicate effectively.
In these instances, the trick is not getting so angry that we blow and I will admit that despite my best efforts, there are times in which I just lose it. It’s very hard at times not to tell these folks where to get off the train, but if we don’t at least try relate on their terms, nothing is to be gained. If you have ideas about how to do this, please post them.