Posted on www.alternet.org today is Elizabeth Warren's speech to Netroots Nation 2010. Entitled "My Mission Is To Restore America's Great Middle Class", the author spells out what has become her lifelong academic interest in and her advocacy for the middle class. Virtually, no one in Washington,D.C., who knows Elizabeth Warren, doesn't believe she should lead the new Consumer Financial Protection Bureau. Critics have complained she can't get confirmed but then again none of President Obama's appointees can get confirmed. That is no reason not to nominate the best and Elizabeth Warren with her idealism and her political shrewdness is the best and only candidate for the first person to head the Consumer Financial Protection Bureau. Even conservatives admitted they liked her work overseeing the TARP funds, but then turned against her when the unions came out in full support of her nomination.
Her speech starts with a history of her family in Oklahoma and how her grandmother lived in the America that existed between boom and bust from 1794 until the Great Depression. She writes that just three laws fundamentally altered the course of America's history. The first one, FDIC insurance, made it safe to put money in the banks. The second, Glass-Steagal, tried to separate the risk-taking on Wall Street from your community bank. And the third, SEC regulations provided "some cops to watch the robbers". From those three laws we got 50 years of economic peace, no financial panics, no metldowns and the development of a strong and prosperous middle class in America.
Shortly after her grandmother died at the age of 94 in 1970, Warren writes that we began unraveling. Part of it was that we didn't upgrade regulations that had been put into law in the 1930s and consequently, the regulatory framework began to disappear. The other development was that income and productivity, which were intertwined since WWII began to diverge. Starting in the 1970s, as we saw in my earlier post,productivity continues to rise--indeed rise at a somewhat steeper rate--while incomes flattened out, so that today a fully employed male makes less money than his father did a generation ago, once you adjust for inflation.
With the income side flat, expenses rose. The core expenses for the middle class--housing, health insurance, day care, college--went up by more than 100 percent. Naturally, savings had to decline and families had to assume more debt to make ends meet and to remain middle class. Over time, Warren argues, the business model for lending changed called the "tricks and traps" model where the real plan was to make the money on the back end. So that middle class families could not price out the credit agreements. For example, just last year about $150 billion flowed out of the pockets of ordinary families on penalty rates, on penalty rates of interest, payday loans, credit cards, overdraft for checks, kickbacks on car loans.
That's why the new Consumer Financial Protection Bureau had to be created and why it must be built. Here she outlines her philosophy for this new agency and its fundamental purpose to defend American families. Besides defending families, she wants to create workable, realistic markets that make for a viable, functioning credit system.
One of the most intriguing aspects of her talk was the discussion of how this would be the first agency that would be created in the digital age. It will be an agency that will have the capacity to communicate with millions of Americans by just hitting a button and also where millions can communicate with the agency by pushing the send button.
She reminded the Netroots audience that it took FDR several years to get his economic package into place because of the economic royalists. She reminded the audience that President Obama fought for this and that the banks, who had been bailed out to a tune of $700 billion and a few trillion in guarantees didn't then ask for regulations that would help ordinary Americans. In fact, she recalls banks fighting every inch of the way and lobbyists saying, "We will kill the consumer agency." "We scratched, and we bit, and we hung on. And we didn't give up. And today here's where we are. With a good, strong set of tools to change the consumer market."
It's interesting to remember that the consumer agency was dead on arrival last February.
Will this save the middle class? Warren says no because so much has been broken. "We've got to have changes in labor policy, we've got to have change in health policy, we've got to have changes in education policy. That's what it will take to restore a middle class."
Monday, August 2, 2010
How Many Jobs Can The Republicans Kill This Week
Ed Schultz on his television show urged Harry Reid to keep the Senate in session until the situation with the 99ers was taken care of. Agree. But Schultz wrongfully told 99ers to vote against Democrats if the situation isn't rectified. That's ass backwards in my opinion. The 99ers and other unemployed Americans' situation will worsen if Republicans even get close to power until they have purged themselves of their thinking.
This morning the Senate Democrats sent out an e-mail on four job-killing efforts of the Republicans just this week. The White House and the Senate have been trying to pass state aid that would save thousands of police officers and firefighters from getting laid off. Already Drudge is touting criminals going wild in St Louis because of police layoffs. Another part of the bill is a teachers jobs measure which would help states retain 130,000 K-12 teachers. Another bill is the scaled down energy bill, which would still create 700,000 jobs. And, most astonishingly, a small business bill, which would help small businesses create 500,000 jobs.
The memo points out that Sen. George LeMieux from Florida, a co-sponsor of the small business bill and whom I quoted in an earlier post as saying he couldn't understand why Republicans would oppose it, now claims " the bill should have 70,80 or more votes in the chamber". Democrats rightfully point out that they have accomodated Republicans by making many changes in the bill to accomodate them. You might remember Senator Grassley on Healthcare saying he wanted 85 votes in the Senate. It should be noted that this bill allows for $30 billion to be loaned (not given) to small banks to assist small businesses. As one Republican noted, 93% of all new jobs created since the 1990s came from small businesses. This particular bill has been passed by huge bipartisan majorities throughout the last two decades.
I don't think it's the Republicans pathological hatred of President Obama which is at work here. Nor do I believe they will win back power and then pass all these bills to become the "saviors of the economy." Ideologically, they are now wedded to a second economy, which bypasses the American people altogether. This afternoon, it was announced that the Chamber of Commerce has now upped their campaign contributions this year to $75 million and another set of conservative non-profits funded by corporations will pony up $300 million for the election. And still later, the new Karl Rove talking points have been handed down saying that the tax breaks for the rich generated government revenues (we've already seen that is a lie) and created jobs (and we have seen that is a lie).
It would be interesting for some journalist to penetrate the veil and get the Republicans to actually reveal their ultimate agenda. I can guarantee you it's not something that American can afford.
This morning the Senate Democrats sent out an e-mail on four job-killing efforts of the Republicans just this week. The White House and the Senate have been trying to pass state aid that would save thousands of police officers and firefighters from getting laid off. Already Drudge is touting criminals going wild in St Louis because of police layoffs. Another part of the bill is a teachers jobs measure which would help states retain 130,000 K-12 teachers. Another bill is the scaled down energy bill, which would still create 700,000 jobs. And, most astonishingly, a small business bill, which would help small businesses create 500,000 jobs.
The memo points out that Sen. George LeMieux from Florida, a co-sponsor of the small business bill and whom I quoted in an earlier post as saying he couldn't understand why Republicans would oppose it, now claims " the bill should have 70,80 or more votes in the chamber". Democrats rightfully point out that they have accomodated Republicans by making many changes in the bill to accomodate them. You might remember Senator Grassley on Healthcare saying he wanted 85 votes in the Senate. It should be noted that this bill allows for $30 billion to be loaned (not given) to small banks to assist small businesses. As one Republican noted, 93% of all new jobs created since the 1990s came from small businesses. This particular bill has been passed by huge bipartisan majorities throughout the last two decades.
I don't think it's the Republicans pathological hatred of President Obama which is at work here. Nor do I believe they will win back power and then pass all these bills to become the "saviors of the economy." Ideologically, they are now wedded to a second economy, which bypasses the American people altogether. This afternoon, it was announced that the Chamber of Commerce has now upped their campaign contributions this year to $75 million and another set of conservative non-profits funded by corporations will pony up $300 million for the election. And still later, the new Karl Rove talking points have been handed down saying that the tax breaks for the rich generated government revenues (we've already seen that is a lie) and created jobs (and we have seen that is a lie).
It would be interesting for some journalist to penetrate the veil and get the Republicans to actually reveal their ultimate agenda. I can guarantee you it's not something that American can afford.
Taxes, Deficits and The Imperial Economy
First note of the day--the CBO priced the McColm Social Security Plan and it will take us fully funded into 2083 or roughly covering my own and my son's retirement. And that's without any cuts in benefits or raising the retirement age. So the phony debate really has to do with phasing the program out, not strenghtening it.
This past weekend we saw Republican congresscritters double down on extending the Bush tax cuts for the wealthiest. This in the face of a virtual avalanche of data showing they are the major reason for our massive deficits. The previous argument has been that these cuts would stimulate the economy and generate increased government revenues. The jury is in on not generating government revenues but in the last few days many people have written op-eds showing that after the tax cuts were enacted, job creation was roughly the same as before. However, the Republicans could pull a rabbit out of the hat if they argued that President Obama's ability to create by this December more jobs in his short-term of office than George W in eight years because of the existing tax structure. They already have written off the stimulus package as ineffective as John Boehner said he doesn't need to hear from economists about the stimulus to know it failed.
Reading David Stockman's op-ed yesterday about old-time Republican values, you begin to understand the term "conservative" as it shows up in Gallup polls. The 40% of the public that identifies as conservative related to values of fiscal prudence, etc. As a blogger noted yesterday, Republicans are not conservative, they are radical. And the present bunch are extremely radical.
The Financial Times (July 30) printed an article by Edward Luce "The Crisis of Middle Class America". Luce draws a picture of several middle-class Americans, who basically are fully employed but admit they exist two paychecks from the gutter. Before the Great Recession, there had been a personal recession ordinary Americans have been suffering for years. Dubbed "median wage stagnation", the annual incomes of the bottom 90% of American families have been essentially flat since 1973--having risen by only 10 percent in real terms over the last 37 years. This means that most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 percent have tripled. In 1973, chief executives were on the average paid 26 times the median income. Now the multiple is above 300.
Economists believe this is a structural problem and the trend is getting stronger. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000--the first time where Americans were worse off at the end of a cycle than at the start. Worse than the long era of stagnating incomes is declining income mobility. It should be no surprise that a majority of Americans tell pollsters that they expect their children to be worse off than they are.
Edward Luce interviewed Michael Spence, a Nobel Prize-winning economist, whom the World Bank has commissioned to lead a four-year study into the future of global growth. Spence believes the Great Stagnation is a profound crisis of identity for America. Spence says the problem was cushioned and partially hidden by the availability of cheap debt. Now that easy money has turned into heavy debt and the cushion is gone.
To be pessimistic about the future is so new for Americans, he says. He says that,"When people lose the sense of optimism, things tend to get more volatile. The future I most fear for America is Latin American: a grossly unequal society that is prone to wild swings from populism to orthodoxy, which makes sensible government increasingly hard to imagine."
Paul Krugman is fascinating to watch--especially the last few weeks--as he has pondered the gibberish coming out of Washington on the economy. This is a Nobel prize winner confronted with the world of political stupidity and even his reactions are getting volatile. Yesterday, he wrote an op-ed "Defining Prosperity Down", where he claims the governing elite just doesn't care--that a once-unthinkable level of economic distress is in the process of becoming the new normal. He is not talking about a stagnation of wages but an acceptance of high unemployment as structural. Governing elites, rather than take responsibility for job creation, are accepting high unemployment as a permanent part of the economic landscape. As he wrotes, they will condemn large numbers of Americans to long-term joblessness. He sees Congress sitting on its hands not only refusing to spend anything to create jobs but unwilling even to mitigate the suffering of the jobless.
As Krugman notes, structural unemployment becomes a self-fulfilling prophecy as long-term unemployed lose their skills and their connections with the work force, they become unemployable.
He shoots at the hyper concern about deficits and debt, noting that investors have been eagerly buying U.S. debt , driving interest rates to historic laws. He blasts those wanting to extend the tax cuts for the rich no matter what the amount of red ink they create. He then blasts the FED because it has a two-fold purpose--full employment and price stability. He says that the FED actually has a couple of tools left but they refuse to use them because they argue now that business is uncertain about future regulations. Krugman points out that this is completely at odds with all actual evidence. He foresees the FED actually tolerating deflation.
Robert Kuttner in "The Appeal of Austerity is Fading--Where is Obama?" points out that the deficit hawks, who look alike like the chicken hawks, have hogged all the microphones but that the consensus among them is breaking apart. He points to the defections of budget guru Robert Greenstein, who has had a longstanding concern about the unsustainably large deficits, and Yale economist Robert Shiller, who have taken to criticising Erskine Bowles, the chair of Obama's own commission on budget reform, that the federal budget should be balanced at about 21 percent of GDP, roughly the postwar average. The Center for Budget and Policy Priorities (CBPP) has just released a paper written by Paul Van de Water, which points out that with an aging population and heavy defense costs, government has to spend more than the 21% Bowles and the Heritage Foundation argue.
Fareed Zakaria in today Washington Post delivers a strong op-ed "To deal with the deficit, let the tax cuts expire". He argues that the "Bush tax cuts" passed in 2001 and 2003 remain the single largest cause of America's structural deficit. According to the CBO, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts. The CBO estimates that creating tax credits for jobs--like in the small business loan bill Republicans are stopping--would create four to six times as many jobs as tax cuts. Zakaria argues that all of the Bush tax cuts are unaffordable. He points out that the United States has one of the smallest governments among all the world's rich countries, yet we refuse to pay for it.
Democrats fear the old Republican refrain about them tax and spending. As one colleague of mine at IRI used to say, "we just spend." The Republicans seem commited to building the shanty town on the Hill. With the exception of Arthur Laffer, every Republican economist has defected from their current political position of maintaining these tax cuts. Catastrophic is what libertarian Alan Greenspan says and Paul Volcker defected to Obama years ago. So it comes down to ideology alone and that's what I want to explore in further posts.
Over the last week, we saw the Washington Post explore in a three-part series Secret America, the $1.2 trillion-a-year military/ terrorist/ intelligence complex which has no accountability, no oversight and no known effectiveness. Over $500 billion of this complex goes to private corporations, who were aligned with George W. Bush and Dick Cheney. Then we have seen a series of analyses by economists that American corporations are no longer involved in job creation but are simply hoarders of cash. And I've argued that there are whole subcultures virtually immune to the economic downturn. What strikes me is that anyone seriously trying to come to grips with the economic crisis in America neglects to factor in the notion that maybe the requirements of our economic system are not what we assume. We need to review the economics of empire to get a greater grip on understanding the conundrum we face. Empires are notorious for only bringing home the bacon for an elite class. Remember Britain's imperial greatness came at the same time as Charles Dickens' novels.
This past weekend we saw Republican congresscritters double down on extending the Bush tax cuts for the wealthiest. This in the face of a virtual avalanche of data showing they are the major reason for our massive deficits. The previous argument has been that these cuts would stimulate the economy and generate increased government revenues. The jury is in on not generating government revenues but in the last few days many people have written op-eds showing that after the tax cuts were enacted, job creation was roughly the same as before. However, the Republicans could pull a rabbit out of the hat if they argued that President Obama's ability to create by this December more jobs in his short-term of office than George W in eight years because of the existing tax structure. They already have written off the stimulus package as ineffective as John Boehner said he doesn't need to hear from economists about the stimulus to know it failed.
Reading David Stockman's op-ed yesterday about old-time Republican values, you begin to understand the term "conservative" as it shows up in Gallup polls. The 40% of the public that identifies as conservative related to values of fiscal prudence, etc. As a blogger noted yesterday, Republicans are not conservative, they are radical. And the present bunch are extremely radical.
The Financial Times (July 30) printed an article by Edward Luce "The Crisis of Middle Class America". Luce draws a picture of several middle-class Americans, who basically are fully employed but admit they exist two paychecks from the gutter. Before the Great Recession, there had been a personal recession ordinary Americans have been suffering for years. Dubbed "median wage stagnation", the annual incomes of the bottom 90% of American families have been essentially flat since 1973--having risen by only 10 percent in real terms over the last 37 years. This means that most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 percent have tripled. In 1973, chief executives were on the average paid 26 times the median income. Now the multiple is above 300.
Economists believe this is a structural problem and the trend is getting stronger. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000--the first time where Americans were worse off at the end of a cycle than at the start. Worse than the long era of stagnating incomes is declining income mobility. It should be no surprise that a majority of Americans tell pollsters that they expect their children to be worse off than they are.
Edward Luce interviewed Michael Spence, a Nobel Prize-winning economist, whom the World Bank has commissioned to lead a four-year study into the future of global growth. Spence believes the Great Stagnation is a profound crisis of identity for America. Spence says the problem was cushioned and partially hidden by the availability of cheap debt. Now that easy money has turned into heavy debt and the cushion is gone.
To be pessimistic about the future is so new for Americans, he says. He says that,"When people lose the sense of optimism, things tend to get more volatile. The future I most fear for America is Latin American: a grossly unequal society that is prone to wild swings from populism to orthodoxy, which makes sensible government increasingly hard to imagine."
Paul Krugman is fascinating to watch--especially the last few weeks--as he has pondered the gibberish coming out of Washington on the economy. This is a Nobel prize winner confronted with the world of political stupidity and even his reactions are getting volatile. Yesterday, he wrote an op-ed "Defining Prosperity Down", where he claims the governing elite just doesn't care--that a once-unthinkable level of economic distress is in the process of becoming the new normal. He is not talking about a stagnation of wages but an acceptance of high unemployment as structural. Governing elites, rather than take responsibility for job creation, are accepting high unemployment as a permanent part of the economic landscape. As he wrotes, they will condemn large numbers of Americans to long-term joblessness. He sees Congress sitting on its hands not only refusing to spend anything to create jobs but unwilling even to mitigate the suffering of the jobless.
As Krugman notes, structural unemployment becomes a self-fulfilling prophecy as long-term unemployed lose their skills and their connections with the work force, they become unemployable.
He shoots at the hyper concern about deficits and debt, noting that investors have been eagerly buying U.S. debt , driving interest rates to historic laws. He blasts those wanting to extend the tax cuts for the rich no matter what the amount of red ink they create. He then blasts the FED because it has a two-fold purpose--full employment and price stability. He says that the FED actually has a couple of tools left but they refuse to use them because they argue now that business is uncertain about future regulations. Krugman points out that this is completely at odds with all actual evidence. He foresees the FED actually tolerating deflation.
Robert Kuttner in "The Appeal of Austerity is Fading--Where is Obama?" points out that the deficit hawks, who look alike like the chicken hawks, have hogged all the microphones but that the consensus among them is breaking apart. He points to the defections of budget guru Robert Greenstein, who has had a longstanding concern about the unsustainably large deficits, and Yale economist Robert Shiller, who have taken to criticising Erskine Bowles, the chair of Obama's own commission on budget reform, that the federal budget should be balanced at about 21 percent of GDP, roughly the postwar average. The Center for Budget and Policy Priorities (CBPP) has just released a paper written by Paul Van de Water, which points out that with an aging population and heavy defense costs, government has to spend more than the 21% Bowles and the Heritage Foundation argue.
Fareed Zakaria in today Washington Post delivers a strong op-ed "To deal with the deficit, let the tax cuts expire". He argues that the "Bush tax cuts" passed in 2001 and 2003 remain the single largest cause of America's structural deficit. According to the CBO, nearly half the cost of all legislation enacted from 2001 to 2007 can be attributed to the tax cuts. The CBO estimates that creating tax credits for jobs--like in the small business loan bill Republicans are stopping--would create four to six times as many jobs as tax cuts. Zakaria argues that all of the Bush tax cuts are unaffordable. He points out that the United States has one of the smallest governments among all the world's rich countries, yet we refuse to pay for it.
Democrats fear the old Republican refrain about them tax and spending. As one colleague of mine at IRI used to say, "we just spend." The Republicans seem commited to building the shanty town on the Hill. With the exception of Arthur Laffer, every Republican economist has defected from their current political position of maintaining these tax cuts. Catastrophic is what libertarian Alan Greenspan says and Paul Volcker defected to Obama years ago. So it comes down to ideology alone and that's what I want to explore in further posts.
Over the last week, we saw the Washington Post explore in a three-part series Secret America, the $1.2 trillion-a-year military/ terrorist/ intelligence complex which has no accountability, no oversight and no known effectiveness. Over $500 billion of this complex goes to private corporations, who were aligned with George W. Bush and Dick Cheney. Then we have seen a series of analyses by economists that American corporations are no longer involved in job creation but are simply hoarders of cash. And I've argued that there are whole subcultures virtually immune to the economic downturn. What strikes me is that anyone seriously trying to come to grips with the economic crisis in America neglects to factor in the notion that maybe the requirements of our economic system are not what we assume. We need to review the economics of empire to get a greater grip on understanding the conundrum we face. Empires are notorious for only bringing home the bacon for an elite class. Remember Britain's imperial greatness came at the same time as Charles Dickens' novels.
Sunday, August 1, 2010
Papoose For Not Insane*
*famous Yippie campaign button popularized by John Lennon
Where are the anarchists when we need them? I've never understood the demonstrations at G-8 meetings. No one understands them and nothing ever comes from them. Anarchists should return to domestic soil and engage in surreal acts of disobedience and disruption.
One possible venue for the re-emergence of popular disruption would be Glenn Beck's August "To Restore Honor" rally at the Lincoln Memorial to "claim the civil rights movement" as his own. Now that we know he's going blind, I suggest someone rent some kleig lights such as those for movie premiers and strategically aim them at him during his speech. Another idea would be to let off the anti-riot noise makers to force those attending to hit the mall holding their ears because the screaming noise.
The Right has been vowing violence since days before President Obama was elected. We have already had several plots against the President, the killing of the guard at the Holocaust Museum, the neo-Nazi in Belfast, Maine, who was building a dirty nuclear bomb, the killing of the Pittsburgh police by a Beck-inspired fan, the murder of Dr.Tiller as he was acting as an usher in his Lutheran Church. Now Glenn Beck tells a Kansas audience that violence is coming because those of us for Obama are against God. Rush Limbaugh not to be outdone says there is coming a war by the country class (real Americans) and the elite, which at $55 million a year he is not apart of. Neo-Nazis are patrolling the Arizona border hunting wetbacks and the Christian Hataree militia plots to kill Detroit policemen.
Dana Milbank scored again today with his op-ed on Glenn Beck and the Oakland Shooter. He claims that Beck's violent rhetoric may soon have a body count. Beck already does. The Cop shooter in Pittsburgh was an avid listener and was convinced Obama was going to take his guns. Two weeks ago, an unemployed, former felon named Byron Williams injured two Oakland policemen by shooting a 9mm handgun, a shotgun, and a .308 caliber rifle. Finally, he was captured. He wanted to create a revolution. His targets were the Tides Foundation and the ACLU. He was infuriated that the left has jammed its agenda down the country's throats.
If you've listened to Beck's chalkboard conspiracies, the "thugs and goons" of the Tides Foundation are seeking power and want to destroy capitalism. Literally, no one in America has publically talked abut the Tides Foundation except Glenn Beck. He says that the Tides Foundation is funded by George Soros. When I knew about them, they were funded by wealthy liberals from the Bay area, who earned their fortunes in the first Silicon Valley boom. They reconverted a building at the Presidio in San Francisco into the Henry David Thoreau Center, which provides office space for NGOs, working on progressive causes. "Thugs and goons", they are not as Yoda would say. More hippie. But Beck's obsessive mentions on them--29 over an 18-month period--triggered Byron Williams' paranoia. Just like Bill O'Reilly and Sean Hannity's obsession with Dr.Tiller triggered his murder.
When I feel the dark side coming, I like to listen to Mike Malloy, who rants about the rightwing and their antics. It's cathartic. But I think we need something more. Ms. Sherrod is fighting back by suing Breibart for his edited video. And he suddenly goes silent. These are all bullies and they hunt in packs. It's really time we see the emergence of a counter-force. What ever happened to Edward Abbey's Monkey-Wrench Gang? They eventually went on to become "eco-terrorists", many of whom are now held in secret prisons in the United States. So that might not be viable.
In Arizona, I can see the re-emergence of parachutistas, the Mexicans who used to squat on properties during land disputes in Mexico. Latinos might want to team up and squat in John McCain's 14 homes, seize his Sidona ranch, and take over the Phoenix condos. If violence becomes the name of the game, perhaps a few selected targets like the CEO of Massey Mining or Goldman Sachs. The Billionaires for Wealthfare were a good antidote to the teabaggers but were a little too showbiz to be effective. How about Youtube's of Rupert Murdoch's yacht burning down to sea level at dusk?
While we extol the non-violence of the Civil Rights Movement and other such movements abroad for achieving their objectives, we have to acknowledge that the labor struggles were violent and that only after social unrest did companies seek social peace. President Obama even remarked how resilient the American people have been during this time of economic insecurity. But there has to be some fight back. And it will have to be in the arena of the culture at large.
What is needed is an in-between strategy to expose the buffonery and idiocy of the right's call for revolution. A few good bits. Moments of surrealism and Dada to expose the clown-like nature of these boobs. Radio interference of Limbaugh and other right-wing talk shows with alternative programming. The actions have to be unexpected and appear spontaneous for maximum effectiveness. I think Stuttering John of the old Howard Stern show should be brought back to ambush these people in interviews. It's a time to allow the imagination to run wild.
Let the Yippies have an encore!
Where are the anarchists when we need them? I've never understood the demonstrations at G-8 meetings. No one understands them and nothing ever comes from them. Anarchists should return to domestic soil and engage in surreal acts of disobedience and disruption.
One possible venue for the re-emergence of popular disruption would be Glenn Beck's August "To Restore Honor" rally at the Lincoln Memorial to "claim the civil rights movement" as his own. Now that we know he's going blind, I suggest someone rent some kleig lights such as those for movie premiers and strategically aim them at him during his speech. Another idea would be to let off the anti-riot noise makers to force those attending to hit the mall holding their ears because the screaming noise.
The Right has been vowing violence since days before President Obama was elected. We have already had several plots against the President, the killing of the guard at the Holocaust Museum, the neo-Nazi in Belfast, Maine, who was building a dirty nuclear bomb, the killing of the Pittsburgh police by a Beck-inspired fan, the murder of Dr.Tiller as he was acting as an usher in his Lutheran Church. Now Glenn Beck tells a Kansas audience that violence is coming because those of us for Obama are against God. Rush Limbaugh not to be outdone says there is coming a war by the country class (real Americans) and the elite, which at $55 million a year he is not apart of. Neo-Nazis are patrolling the Arizona border hunting wetbacks and the Christian Hataree militia plots to kill Detroit policemen.
Dana Milbank scored again today with his op-ed on Glenn Beck and the Oakland Shooter. He claims that Beck's violent rhetoric may soon have a body count. Beck already does. The Cop shooter in Pittsburgh was an avid listener and was convinced Obama was going to take his guns. Two weeks ago, an unemployed, former felon named Byron Williams injured two Oakland policemen by shooting a 9mm handgun, a shotgun, and a .308 caliber rifle. Finally, he was captured. He wanted to create a revolution. His targets were the Tides Foundation and the ACLU. He was infuriated that the left has jammed its agenda down the country's throats.
If you've listened to Beck's chalkboard conspiracies, the "thugs and goons" of the Tides Foundation are seeking power and want to destroy capitalism. Literally, no one in America has publically talked abut the Tides Foundation except Glenn Beck. He says that the Tides Foundation is funded by George Soros. When I knew about them, they were funded by wealthy liberals from the Bay area, who earned their fortunes in the first Silicon Valley boom. They reconverted a building at the Presidio in San Francisco into the Henry David Thoreau Center, which provides office space for NGOs, working on progressive causes. "Thugs and goons", they are not as Yoda would say. More hippie. But Beck's obsessive mentions on them--29 over an 18-month period--triggered Byron Williams' paranoia. Just like Bill O'Reilly and Sean Hannity's obsession with Dr.Tiller triggered his murder.
When I feel the dark side coming, I like to listen to Mike Malloy, who rants about the rightwing and their antics. It's cathartic. But I think we need something more. Ms. Sherrod is fighting back by suing Breibart for his edited video. And he suddenly goes silent. These are all bullies and they hunt in packs. It's really time we see the emergence of a counter-force. What ever happened to Edward Abbey's Monkey-Wrench Gang? They eventually went on to become "eco-terrorists", many of whom are now held in secret prisons in the United States. So that might not be viable.
In Arizona, I can see the re-emergence of parachutistas, the Mexicans who used to squat on properties during land disputes in Mexico. Latinos might want to team up and squat in John McCain's 14 homes, seize his Sidona ranch, and take over the Phoenix condos. If violence becomes the name of the game, perhaps a few selected targets like the CEO of Massey Mining or Goldman Sachs. The Billionaires for Wealthfare were a good antidote to the teabaggers but were a little too showbiz to be effective. How about Youtube's of Rupert Murdoch's yacht burning down to sea level at dusk?
While we extol the non-violence of the Civil Rights Movement and other such movements abroad for achieving their objectives, we have to acknowledge that the labor struggles were violent and that only after social unrest did companies seek social peace. President Obama even remarked how resilient the American people have been during this time of economic insecurity. But there has to be some fight back. And it will have to be in the arena of the culture at large.
What is needed is an in-between strategy to expose the buffonery and idiocy of the right's call for revolution. A few good bits. Moments of surrealism and Dada to expose the clown-like nature of these boobs. Radio interference of Limbaugh and other right-wing talk shows with alternative programming. The actions have to be unexpected and appear spontaneous for maximum effectiveness. I think Stuttering John of the old Howard Stern show should be brought back to ambush these people in interviews. It's a time to allow the imagination to run wild.
Let the Yippies have an encore!
Republican Greyhairs Got Ape
Former Fed Chairman Alan Greenspan on NBC's "Meet the Press" said that Republicans pushing to extend the Bush tax cuts without offsetting the costs elsewhere would create a disasterous situation for the economy. He slammed the idea that tha tax cuts paid for themselves by generating revenue and productivity. He said they did neither. Greenspan also said that we have very few tools left to change the unemployment situation. While jobs will be created, the level of unemployment will remain about the same.
David Stockman, the former director of the Office of Management and Budget under President Reagan and known for "being taken to the woodshed" for his criticisms of Reagan's policies, had a virtual tantrum on the pages of the New York Times in an op-ed entitled "Four Deformations of the Apocalypse." In this lengthy piece, he lays out the Republican economic fallacies of the last four decades. His lead sentence says it all. "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing."
David Stockman recalls the days when Republicans used to believe that prosperity depended upon the regular balancing of accounts--in government, in international trade, on the ledgers of central banks and in financial affairs of private hosueholds and busineses,too. The new catchism, Stockman warns, has amounted to little more than money printing and deficit finance--"vulgar Keynesianism robed in the ideological vestments of the prosperous classes."
He argues that this approach has led to the serial financial bubbles and Wall Street depredations that have crippled our economy. He claims that these new policy doctrines have created four great deformations to the national economy.
The first of these he says started when the Nixon Administration defaulted on American obligations under the 1944 Bretton Woods Agreement to balance our accounts with the world. Since then , he says we have lived beyond our means as a nation with a cumulative current-account deficit--the combined sortfall on our trade in goods, services and income--of around $8 trillion. He frontally attacks Milton Friedman on this saying that if the free market set currency rates, then the trade deficits would self-correct. Obviously, that didn't happen since politicians around the world cheapened their own currency.
The second unhappy change in the American economy, according to Stockman, has been the extraordinary growth of our public debt. In 1970, it was about 40% of gross domestic product. When it reaches $18 trillion by 2015, this will be forty times that of 1970. He blames the debt explosion not on Democratic spending but instead on the Republican's embrace of the Dick Cheney motto "Deficits don't matter." He blames the neo-conservatives for pushing the military budget skyward without any revenue base. He notes that the old Republican guard fought through the 1984 election to control the deficit by rolling back 40% of the original Reagan tax cuts. But he said when the time came when Paul Volcker crushed inflation, that a new generation of tax-cutters claimed that the economy would outgrow the deficit if it were plied with enough tax cuts. This is the slogan of congressional Republicans today.
The net effect was that by 2009, the tax-cutters reduced federal revenues to 15% of GDP, lower than they had been since the 1940s. Then he points out That George W waged two wars that were unfinanced,and signed a $420 billion non-defense appropriations, which was a 65% increase from what he had inherited.
The Third change in the American economy has been the vast, unproductive expansion of our financial sector. He blames the Republicans for removing traditional restrictions on leverage and speculation. As a result, combined assets of conventional banks and the so-called shadow banking system grew from a mere $500 billion in 1970 to $30 trillion in September 2008. He says that these trillion-dollar conglomerates are not free enterprises but are wards of the state, extracting billions from the economy with speculation in stocks, bonds, commodities and derivatives. They could never have survived, if their deposits had not been government-guaranteed.
The fourtth destructive change has been the hollowing out of the larger American economy. This I have alluded to in other posts. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12% to 68 million from 77 million. The only reason there has not been a greater reduction in nonfarm payrolls is that low-paying jobs have made up the difference.
Stockman writes that during the last bubble (2002 to 2006) the top 1% received two-thirds of the gain in national income, while the bottom 90 percent got only 12 percent. He claims that this is not the market's fault but that of bad economic policy.
The result Stockman says is the day of reckoning has arrived. Rather than a conventional economic recovery, we will have a long period of debt liquidation and downsizing. He argues that the old Republican virtues are what's called for, not the hyper-trickle down of current congressional Republicans.
If you want to learn about Republican plans for the future, just read Rep. Ryan's "Blueprint for the Future", which the CBO says will deepen deficits for the future and only produce a balanced budget in 70 years. The effect on the country would be to guarantee we would become the world's biggest banana republic.
David Stockman, the former director of the Office of Management and Budget under President Reagan and known for "being taken to the woodshed" for his criticisms of Reagan's policies, had a virtual tantrum on the pages of the New York Times in an op-ed entitled "Four Deformations of the Apocalypse." In this lengthy piece, he lays out the Republican economic fallacies of the last four decades. His lead sentence says it all. "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing."
David Stockman recalls the days when Republicans used to believe that prosperity depended upon the regular balancing of accounts--in government, in international trade, on the ledgers of central banks and in financial affairs of private hosueholds and busineses,too. The new catchism, Stockman warns, has amounted to little more than money printing and deficit finance--"vulgar Keynesianism robed in the ideological vestments of the prosperous classes."
He argues that this approach has led to the serial financial bubbles and Wall Street depredations that have crippled our economy. He claims that these new policy doctrines have created four great deformations to the national economy.
The first of these he says started when the Nixon Administration defaulted on American obligations under the 1944 Bretton Woods Agreement to balance our accounts with the world. Since then , he says we have lived beyond our means as a nation with a cumulative current-account deficit--the combined sortfall on our trade in goods, services and income--of around $8 trillion. He frontally attacks Milton Friedman on this saying that if the free market set currency rates, then the trade deficits would self-correct. Obviously, that didn't happen since politicians around the world cheapened their own currency.
The second unhappy change in the American economy, according to Stockman, has been the extraordinary growth of our public debt. In 1970, it was about 40% of gross domestic product. When it reaches $18 trillion by 2015, this will be forty times that of 1970. He blames the debt explosion not on Democratic spending but instead on the Republican's embrace of the Dick Cheney motto "Deficits don't matter." He blames the neo-conservatives for pushing the military budget skyward without any revenue base. He notes that the old Republican guard fought through the 1984 election to control the deficit by rolling back 40% of the original Reagan tax cuts. But he said when the time came when Paul Volcker crushed inflation, that a new generation of tax-cutters claimed that the economy would outgrow the deficit if it were plied with enough tax cuts. This is the slogan of congressional Republicans today.
The net effect was that by 2009, the tax-cutters reduced federal revenues to 15% of GDP, lower than they had been since the 1940s. Then he points out That George W waged two wars that were unfinanced,and signed a $420 billion non-defense appropriations, which was a 65% increase from what he had inherited.
The Third change in the American economy has been the vast, unproductive expansion of our financial sector. He blames the Republicans for removing traditional restrictions on leverage and speculation. As a result, combined assets of conventional banks and the so-called shadow banking system grew from a mere $500 billion in 1970 to $30 trillion in September 2008. He says that these trillion-dollar conglomerates are not free enterprises but are wards of the state, extracting billions from the economy with speculation in stocks, bonds, commodities and derivatives. They could never have survived, if their deposits had not been government-guaranteed.
The fourtth destructive change has been the hollowing out of the larger American economy. This I have alluded to in other posts. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12% to 68 million from 77 million. The only reason there has not been a greater reduction in nonfarm payrolls is that low-paying jobs have made up the difference.
Stockman writes that during the last bubble (2002 to 2006) the top 1% received two-thirds of the gain in national income, while the bottom 90 percent got only 12 percent. He claims that this is not the market's fault but that of bad economic policy.
The result Stockman says is the day of reckoning has arrived. Rather than a conventional economic recovery, we will have a long period of debt liquidation and downsizing. He argues that the old Republican virtues are what's called for, not the hyper-trickle down of current congressional Republicans.
If you want to learn about Republican plans for the future, just read Rep. Ryan's "Blueprint for the Future", which the CBO says will deepen deficits for the future and only produce a balanced budget in 70 years. The effect on the country would be to guarantee we would become the world's biggest banana republic.
Hobo Nation Rises
Tomorrow the Senate is scheduled to vote on a $10 billion bill to save 135,000 jobs in the field of education. Like the previous jobs creation bill, I expect Republicans to block it. At last glance, this would make three separate jobs creating and saving bills they have blocked. Will they pay politically for this?
It depends on the success of the unemployed netroots--a collection of blogs and sites that connect the jobless and update them in detail on Congress' work on unemployment issues. Republicans have taken to attacking the unemployed as hobos, drug addicts, lazy and refusing to take an honest job. This rhetoric worked to attract blue collar workers reacting to welfare. But the Republicans may have stepped on a minefield, since many of the unemployed white collar workers proclaim they have always voted Republican.
The unemployed netroots came to fruition during the eight month battle to extend unemployment insurance, when unemployment soared to 10%. Now that we are approaching mid-terms,these netroots and grassroots organizers are hooking up with formal organizing groups to add power to their effort. Already, a number of unions and other organizations have created dedicated working groups or online organizations for the jobless. Last year, the International Association of Machinists and Aerospace Workers founded the Union of Unemployed or U-Cubed, for jobless workers. The AFL-CIO's Working America has launched Unemployment Lifeline. Working America claims to be the "biggest organization of the unemployed", saying they have 500,000 members. Working America is actually conducting door-to-door canvassing to recruit more unemployed members. U-Cubed plans to call out politicians campaigning during the August recess, with plans to visit events in Kansas and west coast states.
The talent pool here is deep. There have been more than 30 million people, who were left without work during the recession and 14.6 million are currently unemployed. As many as 4 million people are the 99ers, who have exhausted the maximum weeks of federal and state unemployment benefits. Unlike teabaggers, who depend on military pensions and other government programs and are upper middle class, these people have become radicalized by experiencing a period of extreme economic insecurity.
Michael Thornton started the biggest sites in the unemployment netroots called LayoffList in 2008. At the Rochester (N.Y.) Unemployment Examiner, he receives more than a million hit on his articles about Congress' deliberations on these matters. He claims that the unemployed are "energized and motvated" for the fall elections. As he said, if only half the unemployed vote, it would swing the elections nationwide.
Let's hope this effort materializes on election day.
It depends on the success of the unemployed netroots--a collection of blogs and sites that connect the jobless and update them in detail on Congress' work on unemployment issues. Republicans have taken to attacking the unemployed as hobos, drug addicts, lazy and refusing to take an honest job. This rhetoric worked to attract blue collar workers reacting to welfare. But the Republicans may have stepped on a minefield, since many of the unemployed white collar workers proclaim they have always voted Republican.
The unemployed netroots came to fruition during the eight month battle to extend unemployment insurance, when unemployment soared to 10%. Now that we are approaching mid-terms,these netroots and grassroots organizers are hooking up with formal organizing groups to add power to their effort. Already, a number of unions and other organizations have created dedicated working groups or online organizations for the jobless. Last year, the International Association of Machinists and Aerospace Workers founded the Union of Unemployed or U-Cubed, for jobless workers. The AFL-CIO's Working America has launched Unemployment Lifeline. Working America claims to be the "biggest organization of the unemployed", saying they have 500,000 members. Working America is actually conducting door-to-door canvassing to recruit more unemployed members. U-Cubed plans to call out politicians campaigning during the August recess, with plans to visit events in Kansas and west coast states.
The talent pool here is deep. There have been more than 30 million people, who were left without work during the recession and 14.6 million are currently unemployed. As many as 4 million people are the 99ers, who have exhausted the maximum weeks of federal and state unemployment benefits. Unlike teabaggers, who depend on military pensions and other government programs and are upper middle class, these people have become radicalized by experiencing a period of extreme economic insecurity.
Michael Thornton started the biggest sites in the unemployment netroots called LayoffList in 2008. At the Rochester (N.Y.) Unemployment Examiner, he receives more than a million hit on his articles about Congress' deliberations on these matters. He claims that the unemployed are "energized and motvated" for the fall elections. As he said, if only half the unemployed vote, it would swing the elections nationwide.
Let's hope this effort materializes on election day.
That's Why It's Called Capitalism
There were two must-read articles in the last two days. In Friday's Washington Post, Steven Pearlstein's "The New Division of Labor: Adding profits, subtracting workers"; and in Friday's New York Times Bob Herbert's "A Sin and A Shame". This Great Recession was not a natural consequence of economic cycles but a man-made disaster caused by deregulation,over-leveraging of debt and retooling corporations toward a more efficient use of labor to maximize profits. Recently, the Brookings Institute conducted a series of studies, which demonstrates that without a profound change in our economy, current levels of unemployment will continue for the foreseeable future.
This past week , Princeton's Alan Blinder, a former vice chairman of the FED, and Mark Zandi, chief economist at Moody's Analytics and a former adviser to John McCain's presidential campaign, released a paper showing how the government saved the country from another Great Depression. Using a standard econometric model, they backed out everything the government did to staunch the bleeding of the crisis and stimulate the economy. From zero interest lending. the TARP program, bailing out the auto industry, tax cuts and infrastructure payments and providing the states with money, they concluded the economy would now be 8 percent smaller, with 8 million fewer jobs and a federal deficit this year of $2 trillion, not $1.4 trillion. This tracks with earlier testimony of FED chief Bernanke that without these measures, the unemployment rate would be closer to 30%.
This week President Obama did a victory lap in Motor City, where he visited the auto industry. The use of $86 billion in government funds to bail out Chrysler and General Motors has paid off handsomely. For the first time since 2004,all three major American car companies are operating at a profit and they have repaid up to $8 billion in loans. The auto industry has added 55,000 jobs this year and exports are up 57%. And the industry is rapidly moving to the production of energy efficient vehicles. President Obama deserved his victory lap since the Auto bailout was opposed by virtually every single Republican.
So why can't there be more such programs? Baby-boomer progressives always ask why President Obama with clear majorities can not embark on more aggressive job-creating programs like FDR. Besides the obvious obstructionism of the Republicans in the Senate, we have to realize that the media and the Beltway are immune to the effects of the recession. D.C. lawyers, K Street lobbyists, policy think tanks and employees of the government and Congressional staff inhabit a world immune to the world of the economy.
A recent scandal involving an NGO I once led revealed that salaries of this govermment-funded entity range from 3 to 5 times that of the average American family. If you walk that across the whole Beltway, you are looking at married couples earning a combined income of $200 to $400,000 per year, with retirement plans and medical insurance. The only hit they have taken so far is with 501-Ks. For them, there is no urgency to the economy and no real perceived long-term downside to the economy in their hermetically sealed world. This accounts for the lack of etnhusiasm for letting the Bush tax cuts for the wealthy die, because they would be affected.
Today's Washington is not the sleepy parochial Southern town, which saw the flood of New Dealers hoping to serve the public good. In fact, I would argue the denizens of the Beltway have no sense of the public good.
Then we move to another untouched part of our economy--American corporations. Steven Pearlstein notes the irony of the four giant banners hanging outside the U.S. Chamber of Commerce , which spells J-O-B-S. The private businesses the Chamber purports to represent eliminated 8 million jobs in 2008 and 2009 and have managed to add a scant 600,000 since then. While the jobs haven't returned, corporate profits have been soaring. Today, they are at $1.2 trillion annually, which are now larger than they were at the height of the financial bubble. While Chamber President Tom Donohue says that corporations are holding on to $2 trillion in cash reserves because they are uncertain in this investment climate, the reality is that corporations used the recession to find out ways to produce more with less workers. What used to be the case, funds would go to research and development and investing in new equipment and plants has now changed to spending in faster-growing markets abroad and paying down your debt. As we all know, corporations are not in the business to create jobs, but profits. And there are doing that at a record pace. Why stop and why support any further govermment programs to strengthen job creation?
Bob Herbert's piece follows the logic of Pearlstein by emphasizing how shabbily American corporations have treated workers. His point is that there was absolutely no need for so many men and women to be forced out of their jobs in the Great Recession. Herbert cites the studies of Andrew Sum, an economic professor and director of the Center for Labor Market Studies at Northeastern University in Boston, which shows that the carnage in the workplace was way out of porportion to the economic hit that corporations were taking. Professor Sum says that even though the country emerged from the recession early in the summer of 2009, this period of economic recovery "has seen the most lopsided gains in corporate profits relative to real wages and salaries in our history." Citing a figure of $1.84 trillion cash on hand, a 27 percent increase since 2007, Sum notes that as a percent of total company assets, this cash has reached a level not seen in the past half-century.
Andrew Sum backed up to the start of the recession in December 2007 and found that the real aggregate output in the United States as measured by the gross domestic product, fell about 2.5 percent but employers cut their payrolls by 6 percent. The consequence was that by the end of the fourth quarter in 2008, corporate profits exploded and by the time we reach the first quarter of 2010 by $572 billion, But wage and salries will have gone down by $122 billion.
Both Pearlstein and Herbert essentially agree that there can't be a robust recovery as long as corporations are intent on keeping idle workers sidelines and squeezing the pay out of those who remain on the job. Pearlstein thinks the Chamber should change the banners outside their building to T-H-A-N-K-S to President Obama. Herbert ends his piece by noting that ALCOA, which laid off 37,000 workers, will not rehire despite huge profits. "Until we begin to value our workers," he writes," and understand the critical importance of employment to a thriving economy, we will continue to see our standards of living decline."
With America' economic might shrinking relative to the world and the competition sharp for cutting edge technologies, you would think that such a large country would have a national industrial policy. But the sacred commitment to the free market prevents this from happening. This is clear just by the example of the inability to develop a coherent energy policy, when that is essential to future national security. The Obama Administration will steer us out of the Great Recession but not on to safe shores. The question is really how can we transform our economy away from its consumer base to production with the minimum of unrest and upheaval.
This past week , Princeton's Alan Blinder, a former vice chairman of the FED, and Mark Zandi, chief economist at Moody's Analytics and a former adviser to John McCain's presidential campaign, released a paper showing how the government saved the country from another Great Depression. Using a standard econometric model, they backed out everything the government did to staunch the bleeding of the crisis and stimulate the economy. From zero interest lending. the TARP program, bailing out the auto industry, tax cuts and infrastructure payments and providing the states with money, they concluded the economy would now be 8 percent smaller, with 8 million fewer jobs and a federal deficit this year of $2 trillion, not $1.4 trillion. This tracks with earlier testimony of FED chief Bernanke that without these measures, the unemployment rate would be closer to 30%.
This week President Obama did a victory lap in Motor City, where he visited the auto industry. The use of $86 billion in government funds to bail out Chrysler and General Motors has paid off handsomely. For the first time since 2004,all three major American car companies are operating at a profit and they have repaid up to $8 billion in loans. The auto industry has added 55,000 jobs this year and exports are up 57%. And the industry is rapidly moving to the production of energy efficient vehicles. President Obama deserved his victory lap since the Auto bailout was opposed by virtually every single Republican.
So why can't there be more such programs? Baby-boomer progressives always ask why President Obama with clear majorities can not embark on more aggressive job-creating programs like FDR. Besides the obvious obstructionism of the Republicans in the Senate, we have to realize that the media and the Beltway are immune to the effects of the recession. D.C. lawyers, K Street lobbyists, policy think tanks and employees of the government and Congressional staff inhabit a world immune to the world of the economy.
A recent scandal involving an NGO I once led revealed that salaries of this govermment-funded entity range from 3 to 5 times that of the average American family. If you walk that across the whole Beltway, you are looking at married couples earning a combined income of $200 to $400,000 per year, with retirement plans and medical insurance. The only hit they have taken so far is with 501-Ks. For them, there is no urgency to the economy and no real perceived long-term downside to the economy in their hermetically sealed world. This accounts for the lack of etnhusiasm for letting the Bush tax cuts for the wealthy die, because they would be affected.
Today's Washington is not the sleepy parochial Southern town, which saw the flood of New Dealers hoping to serve the public good. In fact, I would argue the denizens of the Beltway have no sense of the public good.
Then we move to another untouched part of our economy--American corporations. Steven Pearlstein notes the irony of the four giant banners hanging outside the U.S. Chamber of Commerce , which spells J-O-B-S. The private businesses the Chamber purports to represent eliminated 8 million jobs in 2008 and 2009 and have managed to add a scant 600,000 since then. While the jobs haven't returned, corporate profits have been soaring. Today, they are at $1.2 trillion annually, which are now larger than they were at the height of the financial bubble. While Chamber President Tom Donohue says that corporations are holding on to $2 trillion in cash reserves because they are uncertain in this investment climate, the reality is that corporations used the recession to find out ways to produce more with less workers. What used to be the case, funds would go to research and development and investing in new equipment and plants has now changed to spending in faster-growing markets abroad and paying down your debt. As we all know, corporations are not in the business to create jobs, but profits. And there are doing that at a record pace. Why stop and why support any further govermment programs to strengthen job creation?
Bob Herbert's piece follows the logic of Pearlstein by emphasizing how shabbily American corporations have treated workers. His point is that there was absolutely no need for so many men and women to be forced out of their jobs in the Great Recession. Herbert cites the studies of Andrew Sum, an economic professor and director of the Center for Labor Market Studies at Northeastern University in Boston, which shows that the carnage in the workplace was way out of porportion to the economic hit that corporations were taking. Professor Sum says that even though the country emerged from the recession early in the summer of 2009, this period of economic recovery "has seen the most lopsided gains in corporate profits relative to real wages and salaries in our history." Citing a figure of $1.84 trillion cash on hand, a 27 percent increase since 2007, Sum notes that as a percent of total company assets, this cash has reached a level not seen in the past half-century.
Andrew Sum backed up to the start of the recession in December 2007 and found that the real aggregate output in the United States as measured by the gross domestic product, fell about 2.5 percent but employers cut their payrolls by 6 percent. The consequence was that by the end of the fourth quarter in 2008, corporate profits exploded and by the time we reach the first quarter of 2010 by $572 billion, But wage and salries will have gone down by $122 billion.
Both Pearlstein and Herbert essentially agree that there can't be a robust recovery as long as corporations are intent on keeping idle workers sidelines and squeezing the pay out of those who remain on the job. Pearlstein thinks the Chamber should change the banners outside their building to T-H-A-N-K-S to President Obama. Herbert ends his piece by noting that ALCOA, which laid off 37,000 workers, will not rehire despite huge profits. "Until we begin to value our workers," he writes," and understand the critical importance of employment to a thriving economy, we will continue to see our standards of living decline."
With America' economic might shrinking relative to the world and the competition sharp for cutting edge technologies, you would think that such a large country would have a national industrial policy. But the sacred commitment to the free market prevents this from happening. This is clear just by the example of the inability to develop a coherent energy policy, when that is essential to future national security. The Obama Administration will steer us out of the Great Recession but not on to safe shores. The question is really how can we transform our economy away from its consumer base to production with the minimum of unrest and upheaval.
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