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Posts Tagged ‘Politics

Financial History Does Rhyme…

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Economist Alan Blinder

Alan Blinder: Financial Collapse – A 10-Step Recovery Plan: “1. Remember That People Forget…. 2. Do Not Rely on Self-Regulation…. 3. Honor Thy Shareholders…. 4. Elevate Risk Management…. 5. Use Less Leverage…. 6. Keep It Simple, Stupid…. 7. Standardize Derivatives and Trade Them on Exchanges…. 8. Keep Things on the Balance Sheet…. 9. Fix Perverse Compensation…. 10. Watch Out for Consumers…. Twain is said to have quipped that while history doesn’t repeat itself, it does rhyme. There will be financial crises in the future, and the next one won’t be a carbon copy of the last. Neither, however, will it be so different that these commandments won’t apply. Financial history does rhyme, but we’re already forgetting the meter.”

Darn good advise. But will organizations and people take note or long remember?

H/T Brad DeLong

Written by Valerie Curl

January 24, 2013 at 1:06 PM

Rebuttal to Book Review: Forgotten Conservatives in American History

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Thomas JeffersonOn the American Conservative website, Stephen M. Klugewicz favorably reviewed the book, Forgotten Conservatives in American History by Brion McClanahan and Clyde Wilson. The main thesis of the book, to which Klugewicz approves, is that many forgotten great American conservatives have been ignored by history professors, etc, who have chosen a liberal – or progressive – definition of history that excludes those who these three consider great conservatives.

I have a hard time accepting many of the people noted in the review are real conservatives, in the Burkean sense. My take on Burke, whose ideas I only know from cursory reading, is that he would have been appalled by the South choosing secession, or war, as several of the author’s – and the reviewer – choices advocated. In addition, the authors’ bent towards Southern Civil War arguments on State’s Rights reveals a thorough misunderstanding the volatile and varied arguments that occurred throughout the 13 states during the development of the Constitution.

MIT’s Pauline Maier’s Ratification: The People Debate the Constitution, 1787-1788 provides an excellent description, taken from newspaper accounts, personal diaries, and legislative records of the time, of the often hyperbolic arguments that occurred throughout the states. One of the biggest arguments was, indeed, over states’ rights. But unlike what we now hear of states’ rights vs federal government, it was whether states’ rights (e.g. state governments) took precedence over “the people.”

Several delegates to the convention, mainly from southern slave holding states, argued that states’ rights should be primary while the rights of the people were secondary. Obviously, that argument was lost to anyone seriously reading the Constitution, but the compromise the delegates chose was to limit federal powers to such things as affected all citizens and to not end slavery.

It should be noted, too, that Madison, Randolph, and Mason – all of Southern states – first wrote letters to each other and then to Jefferson and finally to Washington advocating the idea of a Constitutional Convention, rather than attending the upcoming, though lowly attended, Confederation Congress and putting their ideas before that Congress.

It was these men who saw first saw the states’ rights issue as unworkable for a strong, economically healthy, growing nation. Individual state coinage valuations, individual state debts, and disparate taxation had failed in their opinions. The new nation, they argued, needed a strong central government with one currency for trade stability and one main taxation method to stabilize the crushing states’ debt and one strong central government to bring all the states together into one cohesive whole.

So, in a larger sense, the notion of states’ rights as envisioned by many pre-Civil War separatists as well as by some now completely misreads history and the arguments that caught up the entire 13 colonies, from editorial writers to barkeeps to farmers and everyone in between, prior to the passage of the Constitution.

I’m not a conservative in the current definition of that term. I probably would be considered more Burkean with a bit of Adam Smith and more than a bit of TR domestic economic progressivism. Of course, many of my beliefs and leanings comes from having studied European history, especially social history, from the Dark Ages forward. As well as having lived a fairly long and well traveled life within the U.S.

Thus, many of those greats whom the authors applaud I find more than a bit elitist and regressive. HL Mencken, for example, positively hated average workers while glorifying what he considered to be his class: the educated, well heeled aristocrats of society. His works and comments fairly drips of disdain for average workers. As for Cleveland, while he ran a clean administration (something almost new during that age of political corruption,) his fiscal policies probably led to the rise of the riots and silver policy arguments sparked in the West mainly by farmers who were being destroyed by the railroads.

So, what I see in this book review is an argument for conservatism based on protecting the economic elite regardless of every other citizen’s economic outlook as well as a general misunderstanding of the founding of the Constitution.

I understand the desire for movement conservatives to rewrite history that favors their side of the political and ideological aisle as well as their desire to cast about for conservative American heroes, I find many of their heroes to be less than heroes and the arguments in favor of those heroes lacking in general scholarship as well understanding of a nation moving forwards towards “a more perfect union.”

No union can be perfect if nearly half the nation, either in the past or the future, is left out of, ignored by, or excluded from the decision making process. History is the process of progressive change towards more equality of opportunity and decision making. Conservatives fail history’s lessons if they seek to promote a brand of conservatism that glorifies economic elitism over opportunities for the many.

The truly great accomplishments of TR’s progressivism and FDR’s populism and Ike’s understanding of the common man was that average Americans, without power and money, were able to break out of their family history, create new businesses and industries, and rise to wealth.

Thus, the modern conservative movement’s attempt to rewrite history in order to gain its own movement heroes seems a futile effort at best and a fallacy at worst. Nothing will stop history from moving towards a more equitable and open future.

Written by Valerie Curl

January 16, 2013 at 9:32 AM

A New Progressive Movement: Making Unions Relevent Again

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As part of my New Year’s resolution, I plan to post a series of my thoughts on creating a new progressive movement. What is occurring in the US, regarding income and opportunity inequity is economically unsustainable and, in the long run, politically destabilizing…the realization of which is why the original progressive movement came into being just over a hundred years ago during the original Gilded Age. This post is my first towards stimulating thoughts, and discussion, of a new and completely different progressive movement.

Union strength logoMy previous post asked about the potential future of labor unions and could unions reinvent themselves to become more relevant in the future. Obviously, the answer to these two questions lies with unions themselves, in how they are organized and what their goals are. Jerry Tucker, whose speech in 2005 at the Sorbonne, was highlighted in that post, argued for unions to shift their focus by becoming more inclusive in ways that stand for middle class incomes and values across the entire spectrum of economic and educational issues.

But the world is changing as a result of globalization. Next year, NY City taxis will bear a “Made in Mexico” logo along with thousands of other products imported from south of the border. Right now, Mexico’s industrial output rivals, and potentially exceeds, the United States, according to all economic reports. If US workers are to have any chance of retaining their jobs and competing in a global marketplace without being forced to accept nearly slave wages, unions must change. Not just reform but fundamentally change how they operate.

Decades ago, unions were the one place workers received the training and education needed to become skilled workers. Unions, through their apprenticeship programs, trained future union members and workers. Collaborating with schools, local unions invested part of their dues in creating dedicated shops to train students. Skilled union members (journeymen and masters) taught the various classes. Upon graduation and certification, offered the students assistance in finding jobs when the students signed up to become members of the union.

In addition to initial training, unions provided on-going skills training, at minimal costs, to any member who signed up. In this way, workers continually developed their job skills and became even more loyal to the union.

Centuries ago, the forerunners of unions were craft guilds. Among the things craft guilds did, besides offering training to apprentices and continually training throughout the life of the members, they offered what we now consider benefits. Employers did not pay those benefits, rather members themselves, in their craft guild dues, contributed to those benefits. Modern unions would do well to return to that ancient model of the guild – or union – by providing health and retirement benefits. Instead of asking company management for greater benefits that depress salaries and increase product costs, unions can take those responsibilities on themselves which should provide unions with greater bargaining power not only with companies but also with health care providers (insurance companies) and greater control over retirement investments. As a result, this leaves union leadership only negotiating work conditions (safety and hours) and worker salaries, thus breaking the bond of workplace benefits in order to provide members with increased employment opportunities, from one company to another, and greater economic security in the long run.

Another obstacle that stands in the way of union rehabilitation is incompetence, at least in the public’s mind. Whether that notion is true or not, it has become part of the general belief system among the public. Thus, unions need to change that belief system by changing how they deal with incompetent workers. In the ‘30s and ‘40s, behavioral scientists and economists thought that if a worker no longer had to be concerned with being fired, those workers would do a better job simply because of the security they had. We now know that thesis was incorrect. All too often when workers no longer fear being fired, they simply slack off and become lazy. The potential of being fired for incompetence and laziness provides a powerful motivator towards doing a better job. Unions must become more proactive in this area by eliminating seniority in favor of competence and skill as well as remove failing workers more quickly. The failed workers can be retrained or simply told to retire. There is no reason why seniority or tenure should allow an incompetent or lazy worker to retain his job. Doing so hurts not only the image of the union but the skilled profession at large.

Something that works to great effect in Germany is having a worker as part of the company’s board. Unions could ask in their negotiations to have a union member become a member of the company’s board just as Germany’s companies have done. By doing so, workers will have a voice in how the company behaves, its compensation packages, expansion activities, and goals for the future. Thus, workers can become partners with management to achieve company success. But, in assuming this responsibility, the union must make sure that the representative truly represents the members/workers as true financial partners of the company, and not just representing union management or his own fortunes. For example, years ago GM had union representatives who supposedly worked with management to increase productivity, amongst a whole host of other problems. What occurred was those representatives received much greater pay and failed to produce the results for which they were challenged. It looked like graft and greed to those on the outside. Unions can and should do better at uphold the highest ethical and moral standards. Integrity counts.

Perhaps most controversial of all would be changing union contracts within Right to Work states. Why should employees who refuse to join the union receive the same negotiated benefits as union employees? Again, if union picks the tab for health care and retirement, companies no longer need to offer those benefits to workers which makes union membership more attractive. It would become a case of join the union or go without health and retirement benefits. As a final resort, unions could say that they will only negotiate salaries for their members. If a worker is not a member, then that worker is not covered by any wage negotiations. I’m not sure if this last idea is legal, but it is worth considering.

Lastly, unions must change how they currently think and operate. Every worker in the country should be within the scope of union thinking, not just in how to grow individual unions but in how to grow cross union membership. In other words, unions need to become more inclusive of all workers regardless of profession. Why not open up membership to people outside of particular union segmentation? Think about how Credit Unions changed to attract customers outside of specific union membership. Labor unions could do the same, thus attracting greater membership and growing their influence again.

I’m sure more ideas exist out there. These are just mine, based on ideas I’ve thought about for some time now. I’d like to hear from others and build conversations around some new innovative ways of doing things to solve our challenges. As I’ve been writing off and on for the last four years, America needs new ideas because the old ones no longer work in a highly competitive global environment.

A new progressive movement needs to be born with new ideas.

Written by Valerie Curl

January 3, 2013 at 9:21 AM

Can American Labor Unions Be Relevant Again?

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      “I believe leaders of the business community, with few exceptions, have chosen to wage a one-sided class war today in our country — a war against working people, the unemployed, the poor, the minorities, the very young and the very old, and even many in the middle class of our society.”

      “I would rather sit with the rural poor, the desperate children of urban blight, the victims of racism, and working people seeking a better life than with those whose religion is the status quo, whose goal is profit and whose hearts are cold. We intend to reforge the links with those who believe in struggle: the kind of people who sat down in the factories in the 1930’s and who marched in Selma in the 1960’s.”

      – UAW President Douglas Fraser in 1978

Jerry Tucker Labor Leader and ActivistFor decades, American workers have progressively watched their incomes and working conditions decrease and their opportunities lowered. As a result, Americans continue to view the economy and their families’ prospects negatively. Every American knows why these reduced expectations are occurring, but no one seems to have a definitive answer.

On March 12, 2005 at the conference on “Work and Social Movements in the United States” at University of Paris – Sorbonne, the late Jerry Tucker, labor leader and activist, told the audience,

”America’s 21st century workers need a labor movement committed to fight alongside them against those ‘who would destroy us and ruin [their] lives’ and leaders who have the courage to launch a strategic counter-offensive against the aggression on all fronts. If there are such leaders, they can start by openly ‘speaking truth to power’ and denouncing corporate America’s war on workers and working class communities, naming the ideological nest the perpetrators swarm out of, and condemning the overwhelming government backing they receive.

Yes, today many American workers are cynical and, collectively, do have reduced expectations. They know all too well that their quality of life is under attack and, for many of them, that unionism has not held up its end in the struggle. That was also true in the early 1930s. But that does not mean now, as then, that the willingness to fight back, the urgency to resist injustice, and the desire for dignity have been driven from the consciousness of our sisters and brothers. They have it in them to engage in struggle when they perceive the struggle has immediacy in their lives, when the injustices are real, and when they know they will not be alone. There are among them good and even great leaders for the struggle to come. A program that reconnects with workers built around their needs at the base, not just the notions of distant bureaucrats, is the way to start rebuilding the labor movement.

With history as our guide, the revitalization of the labor movement also cannot occur without a revitalization of an independent left within labor. U. S. labor as we know it today, and as is demonstrated by the narrow limits of the AFL-CIO debate, lacks the credibility to form the multi-lateral and multi-racial relationships for a new, dynamic social movement. A revival of progressive, socially-conscious left thinking internally could alter that reality and open up many new options.

U. S. labor needs a counter-offensive. And, the centerpiece of labor’s counter-offensive, with or without all current labor leaders, should be derived from a new vision of America based on justice and the creation of a new social intersection for all of those abused by the nexus of corporation and state and today’s neoliberalism.

A true crisis-resolution strategy must re-introduce a culture, and shared vision, of struggle and of common defense, through worker-to-worker, union-to-union, and social-movement-to-social-movement solidarity. Under one broad social banner, we need to declare war on poverty, racism, sexism, imperialism, and the denial of the fundamental right to affordable health care for all, full employment, shorter work-time, and many others of the true values due all participants in a just society.

Crisis-bound, U.S. labor is at a crossroads. The direction it takes will impact, for better or worse, the lives of a majority of all Americans.” [my emphasis]

Two Million – That’s the Number of the Month

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President-Congressional Leaders

On Jan 2, just a couple of days away, two million unemployed workers will lose their minimal ability to pay their bills. Unless Congress reaches a deal, on Tuesday, Jan 2, two million families will lose their unemployment compensation.

That’s two million American families without any income because both Congress failed them and our capitalist system is unable to create enough jobs at present.

If this circumstance doesn’t sicken you, then I’m left wondering about your compassion, common religious tenets, (i.e., Christianity), and moral values.

Americans like to talk about human values and even condemn other countries for their failures on Human Rights. But is not Congress, led by a Republican House and a Republican filibustering Senate, now just as guilty of devaluing human lives through their often demonetization of the unemployed as lazy, drug addled takers and their inability to do their Congressional job to resolve the fiscal cliff?

Just today, Senate Minority Leader Mitch McConnell asked what other non-defense discretionary budget cuts were going to pay for an extension in unemployment. I can almost hear Old Scrooge saying, “Are there no prisons? Are there no workhouses?”

What kind of society have we become?

Only since Obama became president has the GOP demanded that unemployment benefits be paid for with cuts to other parts of the non-defense discretionary budget which has already taken an enormous hit and is at historic lows.

Discretionary Spending

But we all know those facts. We also know that unemployment benefits provide the biggest boost to the economy as that money is immediately spent in the economy on food, housing, utilities and other necessary living expenses.

Perhaps what is lesser known are three additional facts:

  • Failing to extend unemployment benefits, according to the CBO, would decrease GDP by 0.5% – or $750 billion.
  • Extending unemployment would add, again according to the CBO, would add another 300,000 jobs to the economy.
  • The Congressional Budget Office (CBO) says every $1 of unemployment insurance benefit grows the total economy by $1.10. And every $1 million of the benefit adds six new American jobs. Moreover, unemployment insurance has more economic impact than many other spending proposals according to the CBO.

In other words, for a mere fraction of the cost American taxpayers spend through the tax system to banks, private equity carve outs, and other corporate entities, extended unemployment benefits would increase jobs and GDP as well as save two million families from absolutely no income on which to live.

Perhaps I’m old fashioned or learned too well the religious lessons of my childhood, but I simply cannot accept the idea – and the selfish, self-centered ideology behind it – that we should allow our neighbors, and their children, go hungry or lose their housing because we, the richest nation on earth with a better than $15 trillion economy, are too cheap to help these families as we’ve always done since UI was enacted decades ago.

What would such a lapse, or the price to other important responsibilities for the nation, have to say about our moral fiber as Americans? It seems to me Winthrop’s “Shining City on the Hill” will have become a shadow, a mere ghost of what has been and could continue to be.

Written by Valerie Curl

December 29, 2012 at 9:49 AM

Neo-Liberalism Brought On the Fiscal Cliff

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Victors-SpoilsWhile the nation rapidly approaches the so-called fiscal cliff as a result of Republican intransigence on taxes, a few other facts should be highlighted.

  • The data of The Economic Policy Institute (EPI) in its “The State of Working America” analysis shows that between 1983 and 2010 the top 5 percent of income earners increased their share of the pie by 74.2 percent, while the bottom 60 percent of us had our share of national income decrease.
  • As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers). In terms of financial wealth (total net worth minus the value of one’s home), the top 1% of households had an even greater share: 42.1%. (Economist Edward N. Wolff of New York University 2012).
  • Wealth distribution became even more concentrated between 1983 and 2004, in good part due to the tax cuts. Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the ’80s, ’90s, and early 2000s
  • New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004; although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% – those between the 60th and 80th rungs of the income ladder — made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% — that’s one-tenth of one percent — had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).
  • But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% — that’s one-hundredth of one percent — receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009).

Here is what Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City, has to say about the neo-liberal economics policy that led to these statistics and why Democrats and Progressives should reject them.

Neo-liberal economics has devastated the global economy and produced all of the predictive failures and evil consequences that progressives have long attributed to its micro-economic myths. Far too many progressives, however, continue to believe the similarly mythical and self-destructive macro-economic myths about deficits, debt, and austerity. It is hard enough countering Pete Peterson’s billion dollar campaign to inflict austerity and unravel and privatize the safety net. Peterson funds myriad front groups. We also have to counter the Wall Street wing of the Democratic Party, which dominates Treasury, OMB, the Justice Department, and the office of the Chief of Staff and favors austerity and unraveling the safety net. We should not have to deprogram progressives indoctrinated into repeating neo-liberal economic dogmas.

Progressives should be able to observe that the neo-liberal macro-economic predictions have been consistently falsified by reality. They should have seen documentaries like Inside Job and Capitalism: A Love Story about the catastrophic failure of neo-liberal economics and economists. They should read sites like New Economic Perspectives and Paul Krugman’s columns that explain why austerity is self-destructive and why the safety net need not, and should not, be attacked. Progressives need to say “no” to anyone who wants to “bleed” the economy through austerity or cutting the safety net.

Prof. Black points to the reason why much of So. America hates neo-liberal economic policies after having to suffer through them decades ago. And it’s why Ecuador’s Rafael Correa refused to enact neo-liberal economic policies after the world wide recession hit. As a result of Correa’s policies, Ecuador’ economy is growing and doing well.

Written by Valerie Curl

December 28, 2012 at 1:12 PM

NRA Interpretation A Fraud

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This afternoon while in my car, I heard an NPR report on guns and potential gun control laws. The story led with a report that military style assault weapons and large magazine (30 bullets per) have skyrocketed since last weekend, following the grade school massacre in CT. A gun shop dealer said the weapons and magazines have flown off the shelf, depleting his supply as people buy and stock up ahead of any legislation. One guy said he’d been saving for a new car but decided instead to buy an assault weapon now since he may not be able later on.

Granted that I was a small child in the ’50s, but I don’t remember this kind of fanaticism withGuns and Money military style firearms. But then, adults had lived through the horrors of WWII and lost friends or family in that carnage. Everyone back home had read the battlefield reports of journalists like Ernie Pyle. They were sickened by the killing and apparently approved of the gun restrictions put in place in 1934 as well as the Supreme Court’s decisions affirming gun restrictions based on their interpretation that “well regulated militias” was the more powerful phrase in the 2nd Amendment.

Richard Posner, judge for the United States Court of Appeals for the Seventh Circuit, compared Heller to Roe v. Wade inasmuch as it created a federal constitutional right that did not previously exist, and he asserted that the originalist method – to which Justice Antonin Scalia claims to adhere – would have yielded the opposite result of the majority opinion. Previous to the Heller decision, the SCOTUS stated two things regarding gun ownership: 1) there is no absolute Constitutional right to own guns outside of a “well regulated militia” and thus long upheld the National Firearms Act of 1934 which restricted what firearms could be legally purchased and used, based on pre-eminent belief that the militia (i.e. military) clause took precedence over the rest of the amendment; and 2) gun laws devolved to the States as per the 14th Amendment.

In US vs Miller (1939) the Court did rule that the rights of states to form militias, not the rights of individuals to own guns, were the focus of the Second Amendment, and that its protections must be understood within the context of militia service. But at the same time, the Court hinted for the first time at an individual right in acknowledging that when the amendment was drafted, militias usually included all free men, and required that these men provide their own weapons. In other words, the amendment was tied to a generally understood “common obligation . . . to possess arms . . . and to cooperate in the work of defense.” Moreover, the Court opened the door to an individual reading of the amendment even further by holding that a sawed-off shotgun was unprotected because it had no “reasonable relationship to the preservation or efficiency of a well regulated militia.” Taken together, these two parts of the ruling suggested that all “free men” could possess weapons of the type used for militia service. But in the short term the Court closed this door by insisting that only those guns usable in militia service, and held for the purpose of militia service were protected by the Second Amendment.

In a New Yorker article, Jeffrey Toobin wrote,

For more than a hundred years, the answer was clear, even if the words of the amendment itself were not. The text of the amendment is divided into two clauses and is, as a whole, ungrammatical: “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.” The courts had found that the first part, the “militia clause,” trumped the second part, the “bear arms” clause. In other words, according to the Supreme Court, and the lower courts as well, the amendment conferred on state militias a right to bear arms—but did not give individuals a right to own or carry a weapon.

Enter the modern National Rifle Association. Before the nineteen-seventies, the N.R.A. had been devoted mostly to non-political issues, like gun safety. But a coup d’état at the group’s annual convention in 1977 brought a group of committed political conservatives to power—as part of the leading edge of the new, more rightward-leaning Republican Party. (Jill Lepore recounted this history in a recent piece for The New Yorker.) The new group pushed for a novel interpretation of the Second Amendment, one that gave individuals, not just militias, the right to bear arms. It was an uphill struggle. At first, their views were widely scorned. Chief Justice Warren E. Burger, who was no liberal, mocked the individual-rights theory of the amendment as “a fraud.”

No flaming liberal, Chief Justice Warren Burger (R), appointed by President Richard Nixon:

“In 1986, the N.R.A.’s interpretation of the Second Amendment achieved new legal authority with the passage of the Firearms Owners Protection Act, which repealed parts of the 1968 Gun Control Act by invoking “the rights of citizens … to keep and bear arms under the Second Amendment.” This interpretation was supported by a growing body of scholarship, much of it funded by the N.R.A. According to the constitutional-law scholar Carl Bogus, at least sixteen of the twenty-seven law-review articles published between 1970 and 1989 that were favorable to the N.R.A.’s interpretation of the Second Amendment were “written by lawyers who had been directly employed by or represented the N.R.A. or other gun-rights organizations.” In an interview, former Chief Justice Warren Burger said that the new interpretation of the Second Amendment was “one of the greatest pieces of fraud, I repeat the word ‘fraud,’ on the American public by special-interest groups that I have ever seen in my lifetime.”

Written by Valerie Curl

December 20, 2012 at 9:57 AM

The Status Quo is Not Enough

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Throughout most of November I was sick so I neglected my regular posts. In addition, it seemed as though far too many American voters just don’t care enough about what was and is happening and who continues to influence Congressional members (for example, per Pew Poll results (pdf): 61% of those polled have never heard of Grover Norquist). It’s doubly hard to maintain a positive attitude and seek to change the national dialog when so many voters don’t have a clue as to what is going on and don’t seem to care. Nevertheless, I will continue to try because I do care about my country: the country my ancestors helped found and defend for nearly 300 years.

So, here’s my editorial of the day…and maybe the week.

House Speaker Boehner, President Obama, Minority Leader Senator McConnell

Regarding the upcoming debt ceiling fight that Senator Graham (R- SC) announced this week, I’m sure Republicans believe that Obama will give in again rather than risk the nation’s credit rating and default on the debt as he did last year. However, given Obama’s recent sharp rhetoric to the nation’s business leaders, he’s very likely to allow the GOP to shut the government down rather than give in to them. As a result, the interest on the debt and the military will be paid. Beyond that, who knows.

All other payments will depend upon how much existing and incoming cash exists for any other payments. Further, it’s possible interest rates on the debt will increase which will exacerbate the debt situation, and defaulting on the debt – or even putting the debt in jeopardy of default – will put our national ability to retain the dollar as the world’s reserve currency at risk. Being the world’s reserve currency gives the US enormous latitude in cheap borrowing costs (safe haven for investments) that other nations simply do not have. China has been lobbying the BRICs for the last couple of years to end the dollar as the reserve currency in favor of another currency, presumably theirs. Just think how much more leverage a debt default will give China in its arguments against the dollar…and the US.

Nevertheless, once the GOP begins feeling the heat from their various constituents and donors as well as from the nation’s CEOs, they’ll back off and raise the debt ceiling. But by then the damage will already have been done to the nation’s credit rating as well a having put another knife in the heart of the GOP.

For those of you who believe that ending the GOP control of the House in the next election is eminent as a result of their intransigence and, frankly, economic stupidity, let me remind you of Republican gerrymandering in 2010. That gerrymandering will enable the House to remain in GOP hands until at least the next census in 2020 unless many of those GOP controlled districts suddenly turn blue. The only way to turn those gerrymandered GOP districts will become blue is for the Dems to have better policies and policy arguments that address the needs of ordinary middle income voters (jobs, income security, opportunity, economic growth, etc.) while at the same time putting our fiscal house in order.

Right now, the Dems need to focus on creating a new progressive movement to meet the challenges of the 21st century. Globalization is not going to go away, nor should it. Globalization has caused billions around the world to rise out of poverty. That’s a really good thing that Dems should applaud. Besides, unless the US wants a global trade war, it just ain’t gonna happen.

However, the Dems can create policies that address the immediate and long term challenges of globalization via better education (see Finland and Singapore, for example); a tax code that is fair both vertically and horizontally including eliminating much of needless spending on legacy industries; an improved patent system that enables/fosters innovation rather than suppresses innovation (see Ford vs owners of the Selden Patent); a reduction in the financialization of the US economy through better, more effective regulations and rules that puts (as in rewards) capital to work in the real economy rather than in speculation and short term investments/trading; and rebuilds/renews our national infrastructure to compete in the 21st century, and a host of other policies that encourages higher wages which make income subsidies unnecessary and irrelevant.

Meanwhile, Dems should push to reform the federal government to streamline it and make it more efficient. For example, think about the DHS for a moment. Has the DHS made the nation’s security branches more effective or efficient? Have the many national security branches worked together better and more effectively? Has the monies allocated to DHS over the last 10 years been effectively and efficiently spent – or has Congress doled out the cash in its usual inefficient, vote getting, pork laden manner?

Our federal government is based on an early 20th Century model that has grown exponentially while not becoming more efficient or effective. Obama spoke a couple of years ago during his State of the Union message about this problem and asked Congress to help/authorize him collapse departments and consolidate similar programs. Congress did nothing in response. Nothing! Because doing so means loss of generous donors (“Mr. CEO, we’re thinking about changing the law…”) as well as loss of individual, personal power via chairmanships and other important committee positions. Yet, the GOP felt perfectly comfortable in the last election attacking Obama for not making the federal government more efficient by consolidating similar programs (i.e., employment programs); yet, only Congress has the power to do so since Congress took the power to collapse department and consolidate programs away from the President many decades ago.

Beyond these suggestions, Dems need to better communicate their ideas and policies. Essentially, they need a wordsmith like Frank Luntz on their side of the political spectrum. It’s not enough to have better policy ideas if they cannot communicate how those ideas will make lives better for the broader populace. Superior communications ability is what caused FDR to win all but about 7 electoral votes in his second election.

Moreover, Dems need an antidote to the Tea Party. It’s not appropriate to winning elections to deride the Tea Party as no-nothings or radicals or whatever. You don’t win elections by deriding and denigrating nearly half the voters.

Dems, across the board, and their supporters must understand the motives of the Tea Party and their supporters and build communications scripts that speak to their needs and fears as well as their hopes and longings. Deriding them does nothing but create more antagonism and stubborn hatred. Instead, answer their fears with understanding and assurances that we all, from whatever party allegiances, seek the same goal of a sustainable and prosperous country where everyone can find or achieve his/her dreams. In addition, Dems need to form a broad coalition of activists, akin to the Tea Party, to influence not only the national conversation as the Tea Party has but to influence primaries, even in Red State gerrymandered districts.

Finally, Dems need to work diligently to remove money from politics. As long as both sides of aisle depend upon corporate and special interest funding via lobbying dollars and PACs and hugely funded outside organizations (501(c)4s) like American Crossroads or Americans for Prosperity, nothing will ever change for the good of the American people at large. Right now, both sides of aisle award the highest fundraisers with chairmanships and other committee perks. Not on expertise or knowledge of the subject matter. (Thanks, Newt! We, the American people, really needed your putting fundraising dollars, in the mid 90s, ahead of subject matter knowledge and expertise.) But rather on their ability to fund raise.

The current scenario is not that much different than the early 1900s “Millionaires Congress” in which Congressional candidates and members were openly bought by millionaires. Even McKinley’s presidency was purchased by our Gilded Age millionaires. Our founders expected Congress to reflect the will of the people – their voting constituents – rather than those who through large donations buy and write legislation and seats. Yet, it’s not enough in this era of partisan politics to denounce via hyperbole our modern days millionaires (Koch Bros, Addelson, etc.), Dems must explain – clearly, succinctly and simply – why the ideas of those groups and people are wrong for America at large…and how their policy ideas will harm/hurt average American families – in which Dems very much believe – in our global economy and in our local and state communities.

Lastly, Dems must communicate a better understanding of the rising libertarian movement within the GOP. Even though Friedman’s neo-liberal financial movement gained wide support throughout the country, it’s fallacious underpinnings have begun to crumble worldwide, especially in the BRIC countries.

Moreover, classical libertarianism, as espoused by Heyak, is not opposed to many Dems policies, such as retirement security (i.e. social security) and national health care. Hayek, in a published paper (pdf) for a Chicago audience, stated that he was not a conservative but a classical liberal, meaning he did not look back at the past but towards the future and all it might hold. In addition, he stated that many of the changes which the future might hold would necessitate the state providing income security (i.e, unemployment benefits and retirement) and national health care to the masses. He saw these benefits as not evils but as beneficial and appropriate for social stability.

Dems should be proclaiming what Hayek said as akin to their philosophy along with libertarian ideology against perpetual war and loss of individual freedoms per the NDAA and Patriot Act. True libertarians, not the Ayn Rand Koch Bros version, are natural allies of Dems, if only Dems would wake up to that fact. Where Hayek and Dems differ is on regulation. Hayek lived during the rise of Communism and feared Stalinism, with good reason. But Stalin’s – and even Mao’s – Communism was defeated; the modern state is not going to now or ever control the means and ownership of production. The new free market state must fear, instead, the ownership of production and innovation by the few powerful. And this is where Friedman’s policies appear to break down because he did not address, in the larger public economic context, the rise of economic and political powerhouses to buy and shape policy that control the societal benefits of the larger political audience – the average voters. Hayek, while he was ultimately wrong, and yet right in his fear regarding the issue of Communism and Socialism, given the world’s turn towards free market capitalism, was an important voice of that era and, thus, his support for income security and health care should also provide mutually important points of discussion among Dems and true libertarians.

Moreover, an alliance with those young anti war-forever libertarians just might break the back of neo-con Republicans at the ballot box. Dems are not the party of forever wars or American imperialism. That ideology is a Cheney, et al, belief. It is not traditionally American nor does it reflect traditional American values. As a result, Dems could, if they used their powers of persuasion and understanding, move those young anti-imperialistic libertarians from the GOP into the Dem column, especially if Dems, as a policy platform, also openly promoted fair, open and honest financial industry dealings.

As I said, Dems need to create a new Progressive Era with entirely new policies that meet the challenges of a globalized 21st Century while reassuring average middle and working income voters that their voices are being heard and that the nation is becoming fiscally sound and secure. But as long as Dems keep fighting old wars and allowing the GOP – and the monied class – to set the agenda and dominate the national conversation, a new progressive movement cannot take place. A new TR cannot rise to the top until the nation is ready for a new progressive era. Thus, the job of every Dem should be to promote and discuss new, progressive ideas.

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Written by Valerie Curl

December 12, 2012 at 9:55 AM

Just Say No…To Mary Miller to Head the SEC

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Mary Schapiro, the current Securities and Exchange Commission Chairman, has resigned her position, effective on December 14. President Obama has nominated Mary J Miller to replace Shapiro. However, it appears Ms. Miller does not have the qualifications for this top cop position.

Simon Johnson, over at baselinescenario.com, explains Ms. Miller’s credentials:

The Obama administration is floating the idea that Mary J. Miller, under secretary for domestic finance at the Treasury Department, could become its nominee to lead the Securities and Exchange Commission. Ms. Miller, a longtime executive in the mutual funds industry, has served in the Treasury under Timothy Geithner since February 2010.

Ms. Miller represents the financial sector’s preferred approach to financial reform – some rhetoric but very little by way of serious effort. She has no time for people who are serious about making the financial system safer. And there is no willingness to really face down powerful people on Wall Street.[…]

She has no experience as a regulator or as an enforcer of the law. She has never worked on securities fraud. And she has no track record of standing up to powerful vested interests; in fact, she helped push the recent JOBS Act, which greatly undermine the protections available to investors. In addition, her work experience is entirely within the mutual fund industry – 26 years at T. Rowe Price. And a major agenda item now for the S.E.C. is mutual funds and how to make them less vulnerable to the kind of runs that occurred in September 2008. (For a primer, please see my recent column for Yahoo Finance.)

The mutual-fund industry does not want reform, and it worked long and hard to keep Mary Schapiro, the departing S.E.C. chairwoman, from pushing forward some sensible ideas. After outside pressure was brought to bear, including by Ms. Bair’s systemic risk council (of which I am a member), there are signs that the S.E.C. will finally at least issue some proposed changes for public comment.

After the 2007-2008 financial meltdown, we need the best cop to clean up the Street. And there are much better candidates for this top, vitally important position, namely Neil Barofsky, former Senator Ted Kaufman of Delaware, Dennis Kelleher of Better Markets, and Sheila Bair, formerly head of the FDIC.

Credo Action has created an online petition urging President Obama to appoint an S.E.C. chairman who will hold Wall Street accountable, and naming Mr. Barofsky as a worthy choice. The petition had more than 35,000 signatures by Wednesday morning. I urge you to sign the petition so we get the best SEC cop available…and not another Wall St sympathizer.

Written by Valerie Curl

November 28, 2012 at 9:09 PM

America’s CEOs Say Fix the Debt…As Long As We’re Exempt

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Having watched the last episode of the History Channel’s “The Men Who Built America”, I get the feeling I’m seeing history repeat itself again.

At the end of the 19th C and beginning of the 20th C, America’s richest CEOs pooled their money to buy the presidency for their favored candidate, Wm McKinley, who would allow them to business as usual regardless of the devastating price paid by labor, farmers and merchants. Their concerns were to keep their monopolies and their extraordinary wealth, regardless of the effects on rest of the populace.

After McKinley was killed shortly after his 2nd inauguration, Teddy Roosevelt, who was hated by those captains of industry, became president and began the progressive era, breaking up the industrial and banking monopolies as well as ushering in an era that protected labor, farmers, and merchants. These changes led to a vast improvement in working conditions and higher wages which eventually led to the great expansion of the middle class.

The times may be different, but the arguments from huge businesses remain the same.

‘Fix The Debt’ CEOs Underfund Employee Retirement, Demand Cuts For Elderly

A group of high-profile corporate CEOs are lobbying Capitol Hill this week to put Social Security and Medicare cuts at the forefront of deficit reduction negotiations. Their own retirement funds, however, are secure: The coalition includes 54 CEOs who have amassed combined pension assets of more than $649 million from their companies’ executive retirement plans, according to a new report from the Institute for Policy Studies, titled “A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts.”

The CEOs’ employees are much less secure in their retirement than the CEOs. According to the report, less than 60 percent of the 71 public companies offer pension plans for their employees. Of the 41 companies that do, 39 of them haven’t contributed enough to their workers’ pension funds to enable the plans to pay out their anticipated obligations. Among the companies with employee pension funds in the red, these deficits exceed $100 billion.

The CEOs are among 71 chief executives of publicly traded companies who belong to the Fiscal Leadership Council of the influential Campaign to Fix the Debt, a group which has raised more than $60 million to lobby for a debt deal driven by cuts to “entitlements.” The coalition will meet Wednesday morning with congressional leaders, according to sources familiar with the group’s lobbying activities. The group, funded in part by former private equity magnate Peter G. Peterson’s foundation, has pledged to push for austerity during the lame duck congressional session, and beyond. Peterson has spent nearly half a billion dollars in recent years pushing his austerity agenda.

As the debate heats up over whether to cut Medicare, Social Security or Medicaid in order to maintain federal spending and corporate tax breaks, companies with well-compensated CEOs who preside over underfunded employee pension funds invite a new round of questions about the motives, and methods, of the CEOs pressuring Congress and the White House to cut programs for the middle class.

The companies in arrears on their pension funds include defense giant Boeing, which paid CEO Jim McNerney $23 million last year; Honeywell, where CEO Dave Cote earned more than $55 million in compensation in 2011; and AT&T, which docked CEO Randall Stephenson’s pay by $2 million last year after he orchestrated a failed takeover of T-Mobile. The $2 million penalty meant that Stephenson made only $22 million total that year, as opposed to the $24 million he would otherwise have been paid.

Boeing, Honeywell, and AT&T represent just three of the dozen companies who are cited in the IPS report as having CEOs with individual retirement assets totaling more than $20 million each, despite the fact that their companies have underfunded pension funds for their employees.

If each of these 12 CEOs were to convert his retirement accounts into annuities at age 65, the report shows each would receive a monthly check for at least $110,000 for life. By contrast, the average monthly Social Security payment was $1,237 in October. Still, the CEOs argue that Social Security benefits are too generous.

Written by Valerie Curl

November 27, 2012 at 8:32 PM

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