Mar 17, 2014

* NEW * Paul Krugman won’t save us: We need a new conversation about inequality

by Thomas Frank. I've been saying this for years (though not this well). You've probably been saying this for years. EVERYONE has been saying this for years. So when are we going to stop talking and start DOING! From Salon, Feb 23, 2014. Accessed Mar 17, 2014.

Aug 25, 2013

The Comforts of the Apocalypse

By Rob Goodman. Much food for thought. Why are we here? Where are we going? What does it all mean? From The Chronical of Higher Education, Aug 19, 2013. Accessed Aug 25, 2013.

The Blip

By Benjamin Wallace-Wells. What if everything we've come to think of as American is predicated on a freak coincidence of economic history? And what if that coincidence has run its course? (And note the Comments.) From New York Magazine, Jul 21, 2013. Accessed Aug 1, 2013.

UK Report Recommends Author Payments for Library Ebook Lending

By Ian Clark. The UK is way ahead of us in bringing eBooks to public libraries, though even they still have a long way to go. From Library Journal, Aug 1, 2013. Accessed Aug 2, 2013.

Oct 27, 2012

Chart of the Day: The Price of Inequality

By Adam Frost, et al. Why are we in last place? From New Statesman, Oct 26, 2012. Accessed Oct 27, 2012.

The Self-Destruction of the 1 Percent

by Christia Freeland. Forgetting the past, and condemned to repeat it. From New York Times, Oct 13, 2012. Accessed October 15, 2012.

Mar 10, 2011
The anti-labor activities in Ohio and Wisconsin in recent days are the tip of the iceberg—the tip that the mainstream media has seen fit to cover. Here are some dramatic numbers which are a harbinger of perilous times to come:¹

• Twenty-three percent of the jobs lost during the recession were low-wage jobs, while 49 percent of the jobs gained in the last “recovery” year were.
• Forty percent of the jobs lost in the recession were high-wage jobs; and an even less favorable number gained in the last year were—only 14 percent.
• One in five who are working part time want full-time work.
• Six percent of the significant productivity gains seen in the last 18 months were shared with workers. In past recoveries, that figure has averaged 58 percent.

Dec 09, 2010
Many are the voices,^1,2 all urging the same thing: “Give him a break, he’s doing the best he can.” Meanwhile, for the progressive base, currently led by Bernie Sanders and his filibuster threat, this is the last straw.

The “package,” which would add nearly a trillion dollars more to the deficit before the next election³, represents a huge giveaway to the super-rich and peanuts to the poor. It will further solidify a permanent underclass of unemployed Americans, extending their puny benefits for another 13 months, while retaining for the plutocracy their ability to continue scrambling for an ever larger portion of the pie.

The long death march of Social Security takes another giant step forward, as a third of the payroll deduction is slashed for one year, a cut which the corporatocracy will almost surely try to make permanent, as the Bush tax cuts are shaping up to be.

The capital gains and dividends giveaway—they are taxed at 15%, only about half the 25-28% the middle class pay on their income—will be extended another two years.

Blood in the streets is postponed by extending unemployment benefits to a chunk of the 15.1 million idle Americans. That largess accounts for only $56 billion of the $900 billion price tag on the package, as 7 million unemployed were facing no income and virtually no prospects of work in 2011.

This “center” cannot hold, and should a filibuster fail to materialize or fail to be effective against this boondoggle, then look for things to begin falling apart in 2011. Whether it take the form of China calling in our markers, a third conflict initiated against Iran, a descent into anarchy via the reinvigorated Republican assault on government, or something unexpected and out of the blue, yet it will come.

Former Secretary of Labor Robert Reich has provided one of the clearest and most comprehensive explanations of what is happening, and why the current tax “compromise” has to be where we draw the line in the sand.⁴
____________________
¹ No Deficit of Courage,by Jon Meacham, from the NY Times, Dec 8, 2010, accessed Dec 9, 2010.
² Falling Off the Bandwagon, by Gail Collins, from the NY Times, Dec 8, 2010, accessed Dec 9, 2010.
³ Tax Deal Suggests New Path for Obama, by David M. Herszenhorn and Jackie Calmes, from the NY Times, Dec 6, 2010, accessed Dec 9, 2010.
⁴ Why the Obama Tax Deal Confirms the Republic Worldview, by Robert Reich, in the Huffington Post, Dec 8, 2010, accessed Dec 9, 2010.
tags: Economics

Nov 27, 2010
We live in an Ayn Rand/Milton Friedman world now. Dog eat dog. Every man for himself. Greed is good. A world where selfishness has become a moral imperative. And we see where it has gotten us. Income inequity of medieval proportions. One out of four or five Americans out of work or working part time or for peanuts or well below their level of education and expertise. A financial sector as out of control as any rogue nation or organized criminal enterprise. Obesity and diabetes epidemics, particularly among our children, threatening to blow health care costs into the stratosphere. Social, economic, and political systems in the hands of an international corporate plutocracy hellbent on destroying those systems, humanity, and the earth itself in pursuit of ever higher profits.

This is where the Chicago School has brought us, and there is no arguing with the numbers or the damage already done.

So why not jettison this twisted perversion of Darwinism, and instead promote a system with a moral imperative exactly counter to the failed policies of the last thirty years. This system says, in essence, “We will all be better off if we all are better off.”.

I am sick when I think of the scores of children who have died while I write this short piece¹. I know that had these children been spared, educated, and allowed to engage with the family of man into adulthood, this world would be so much richer, in its art, its science, its humanity.

Instead, we live in a world where the few squeeze the many, gutting our hard-won middle class standard of living in order to fill pockets already overflowing with ill-gotten gains. There is a better way, working together for the benefit of all. Most of us are ready to make do with a little less, and a few must make do with a lot less (they will still enjoy levels of wealth way beyond their needs), in order that all of us have enough. FDR said it best: “The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.”.

If this is true—and Jesus, Moses, and Mohammed are with me in believing it is—then in pursuing policies exactly in contradiction to this path, our world is heading for trouble. Progressives recognize this; Tea Partiers recognize this, though they ascribe it to the wrong reasons. Greg Mortenson, Paul Farmer, Sarah Chayes, and hundreds of lesser known toilers in the most bereft corners of the world recognize this. If there is a people anywhere on our globe more capable of recognizing this, and acting on it, than those of us here in the U.S., I don’t know who they are.

If not us, who? If not now, when?
____________________
¹ Today, over 22,000 children died around the world, from GlobalIssues.org, accessed November 27, 2010.
tags: Economics

May 12, 2010

A recent daily quotation from the upper right-hand corner of this page was from FDR, and it read:

The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have too little.

This is, in a way, the only message of All Together Now. We are an advanced society, with wealth to spare and all the comforts of modern life, yet we are confronted with challenges that cannot be overcome without wide agreement and cooperation on many issues. Our first imperative, indeed, our only imperative, is to arrange our society in such a way that everyone who today has too little has enough. Instead, we are hellbent in the opposite direction, with fewer and fewer hoarding more and more, and with more Americans falling into poverty every year.

Make no mistake, the plutocrats have their hands in your pockets bigtime. What started with the Reagan Revolution thirty years ago has accelerated into a massive transfer of wealth from the middle class to a tiny plutocracy at the top, where in 2007 one percent of the American population owned 35% of the nation’s wealth, and the top 20 percent owned 85 percent of it, leaving 15% for the bottom 80 percent. And in terms of strictly financial wealth, which leaves out home equity values, the bottom 80 percent have only a seven percent share in the pie. And those numbers have gotten consistently worse since 1980, except for a brief respite during the Clinton administration.¹

How has it happened? Primarily through the exploitation of disaster capitalism, so brilliantly explicated by Naomi Klein in The Shock Doctrine: The Rise of Disaster Capitalism. The Asian tsunami, Katrina, 9/11, the world economic collapse of 2008 now wending its crippling way through Europe, all have been grist for the mill of the disaster capitalists. They have used every tragedy to press forward with the neo-liberal agenda of privatization, warmaking, and an all-out assault on social equity programs.

It would be one thing if the 2008 global collapse lowered all boats in anything like equal measure. It did not. It is estimated that there has been an astounding 36.1 percent drop in the wealth of the median household since the peak of the housing bubble in 2007, while the wealth of the top 1 percent of households dropped by just 11.1 percent.¹ In other words, the economic collapse was just another disaster in aid of a huge transfer of wealth to the top.

Two more sobering statistics: 94 percent of the wealth created between 1983 and 2004 went to the top 20 percent of the population, the bottom 80 percent receiving only six percent. And in Europe, the ratio of executive/CEO pay to factory worker pay is about 25:1. In 1960 in the U.S., that ratio was 42:1; in 2000 it reached its high of 531:1. That is $531 paid to a CEO for every dollar earned by the one doing the actual work. This is not social injustice; this is brigandage.

Read the front page tomorrow, and see if more than half the stories there don’t, in the end, come down to some scheme that will end up diminishing the wealth of the poor and middle class while enriching the multi-billionaires who are destroying our world and our society. The Wall Street “crash,” that brought windfall profits and obscene bonuses to the executives who caused it; the oil spill in the Gulf that has destroyed thousands of small businesses, wreaked havoc on a large chunk of the American environment, and brought the company that built the rig $270 million in insurance profits²; the euro crisis in Greece that is being used to justify an assault on poor and middle class wages, pensions, and social services^3,4; endless wars that empty the public coffers, bankrupting our children and grandchildren while filling the pockets of private enterprise profiteers with our hard-earned treasure. The list goes on and on.

It will end. It will end at the ballot box or it will end in the streets. But it will end. Let us hope it ends at the ballot box where, indeed, it still can end, our current crop of despicable politicians notwithstanding. We still have the power. We must wake up, organize, and take back our country. There are worthy organizations working toward that end, many of which have been mentioned on this site. However, our work starts with the neighbor next door, down our street, in our communities. Find your kindred spirits. Meet, discuss, plan, and act. You have nothing to lose but your chains.

Dec 01, 2009
We have no rights but those we declare for ourselves. We have no right to food, clothing, or shelter, the necessities for sustaining life. People go hungry every day, are dressed in rags, and sleep every night on the cold hard streets. Even here in the promised land.

We have no right to health care, as the thousands who die needlessly every year will attest, or would if they could.

We have no right even to work, as nearly one in five of our working-age population will tell you.

The one right we have declared for ourselves is the right to an education, and we have made provision for underwriting the delivery of that right through the public coffers. All adults pay, that all children may learn.

If we can do that, why can we not, in the richest country in the history of the world, declare for all our citizens the right to the basic necessities of life, including the right to health care and the right to work, and make provision for underwriting the delivery of those rights through the public coffers? Of course, we could, were we not so busy pouring our wealth into mindless, endless, meaningless wars, and were the fat cats of the military-political-industrial-academic complex not so in command of a world they are fast destroying to fill their bulging pockets even fuller.

Well, the times they are a’changin’ and do not for a moment think they are not. Voices everywhere are raised in indignation and in anger. Thus far, our collective response has been inchoate. But it will not be for long. Regrettably, we seem to need a leader, a flint upon which to strike the spark of action. Soon, someone will step out of the shadows and assume that role. They will speak to the need for justice and for equity, and the decent American people will rise together and take their country back from the thieves and their toadies.

The American Idea is the hope of the world, and that Idea—subdued now under an avalanche of greed and governmental corruption—must prevail, or the world is lost.

tags: Economics

Sep 03, 2009

[S]houldn’t the vision of marshaling forces to improve conditions for the greatest possible number of Americans be the appropriate goal for any civilized society? —Arianna Huffington, August 31, 2009, The Huffington Post

Jul 19, 2009







We need fundamental, systemic change in this country in the way we:

1. manage our financial sector, including banking, investment, and consumer credit;
2. produce and consume electricity;
3. balance worker and environmental interests against the capitalist profit motive;
4. pay for and provide health care; and
5. educate our children.

Jul 13, 2009
It was Winston Churchill who famously observed, “[D]emocracy is the worst form of government except all those other forms that have been tried from time to time.”¹

One may say the same about capitalism—it is the worst economic system except for all the others we have tried. The essential problem with capitalism is that it can too easily be subverted to the service and enrichment of the few, to the detriment of the many. It happened in the last decades of the 19th century, during the 1920s, and again during the early 2000s, following the extensive deregulation of the financial industry at the end of the Clinton administration.

An economic system, like a political system, must be administered for the benefit of society in general, and in order for that to happen, it must be rigorously restrained and guided by a set of rules. The New Political Party (NPP), in setting out its fourth platform plank on the economy, proposes that the following should be among those rules:

• Lenders may not dissociate themselves from the risk involved in their lending. Without having to retain risk, lenders make bad loans. When they sell off those loans in complex and opaque bundles of derivatives, the system embarks on a game of musical chairs. When the music stops, the public is the player left standing.
• Interest rate limitations will be placed on all business and consumer credit products, perhaps indexed to the prime rate.
• States are required to live within their income. Individuals are well-advised to do so. In order to assure future generations of an equal opportunity to better their economic lives, the federal government will operate on a balanced budget that includes a significant annual reduction in the deficit.
• Globalization has lifted millions out of poverty around the world and kept down prices on thousands of consumer items. However, it has done so at the expense of American manufacturing and with a disregard for hard-won labor and environmental protections. This needs to be reversed, both in the cause of economic and political justice, and in order to save human civilization from the perils of global warming. The U.S. will not admit manufactured goods from countries which do not observe the minimal labor and environmental protections enjoyed in this country. This includes the right of workers to organize and bargain for enhanced working conditions and environmental protections at least as stringent as those required at home.
• Shared labor and environmental protections will serve to level the playing field among international competitors. To level it further, the U.S. will cease subsidizing American farmers and industry, a practice which plays havoc with the economies of developing countries, often forcing them to focus on limited and exotic products to the detriment of their ability to support their local population with staples.
• Plank 1 and 3 (a living wage and universal health care) will act as powerful improvements to our national economy.

May 08, 2009
Perhaps the central theme of All Together Now is our belief that the way to future progress in the world—and away from the divisiveness, animosities, and looming social, political, and environmental disasters we face on so many fronts—is to optimize our human capital. We must free humanity from the shackles of poverty, ignorance, and oppression, not out of altruistic motives but as a survival tactic. We are going to need all the help we can get in the 21st century if our species is to survive, let alone to thrive. As we are now able to end poverty and ignorance and oppression, so we must work tirelessly to do so, liberating billions of minds and bodies to join in our common struggle for survival.

This TED Talk by economist Alex Tabarrok, entitled How ideas trump economic crises—a surprising lesson from 1929, supports and advances our thesis from an economic perspective.
tags: Economics

Apr 10, 2009
We love capitalism. We think it the optimal engine for economic growth and for democratizing prosperity, way better than communism, fascism, feudalism, or any of the other isms that have been tried and have failed over the course of the last thousand years.

However, capitalism is oblivious to any but its own imperatives, and therefore needs to be monitored, regulated, and contained, lest it lay waste the very soil in which it thrives. A corporation is not a human being, and when we granted corporations personhood in the 1886 Supreme Court case, Santa Clara County v. Southern Pacific Railroad,¹ we took the first step down a road that has brought us, today, to an economic meltdown that increasingly appears capable of outdoing the Great Depression.

Two subsequent blunders have succeeded that first one. The hard-won labor and environmental protections enacted during the first 70 years of the last century were cast aside by the rush to globalization enabled by NAFTA and other open and not-so-open international trade agreements. And finally, the economic protections put in place during the New Deal were dismantled during the waning days of the Clinton administration, largely at the urging of individuals now directing Obama’s economic policies.

Make no mistake, this has been an equal opportunity dismantling of a government of, by, and for the people, and a wholesale handover to the corporations by the real axis of evil: the military/industrial/beltway complex. The Democrats are as fully responsible for our current plight as the Republicans, and perhaps even more so.

Unrestrained capitalism is a monster, as ravenous, insatiable, and pitiless as a starving wolf. It will subordinate, subjugate, and ultimately consume any resource available to it, human or environmental, to meet its sole objectives: growth and profit.

Capitalism subordinated to the service of the people can make this earth a paradise for all living things. However, when all of life is subordinated to the service of capitalism, as has essentially been the case since the Reagan administration, there will be nothing to hand on to our children but a vast and barren wasteland, overseen by the tattered remnants of a fascist police state, in which their lives will be brutish, violent, and short.

We are already well down that road.
____________________
¹ Corporate personhood debate, from Wikipedia, accessed Apr 4, 2009.
tags: Economics

Apr 09, 2009
Back in Resting on One’s Laurels on Feb 6, we noted that our web host claimed we had 10,183 unique visitors to our site in January. We doubted it then, and perhaps they have come to their senses, because they recorded far fewer unique visitors—5,860—for March. Consulting our yokefellow regarding possible reasons for the precipitous decline, she remarked, “I don’t read it much myself anymore. It’s so depressing!”

We are less concerned about our site being depressing than we are about its being wrong. We often hope we are wrong, having predicted only yesterday, for instance, the end of Western civilization.

But there is no letup in sight for job losses, bank bailouts, or maniacs on shooting rampages (five in the last month, not counting the two murderous attacks in Oakland and Pittsburgh that together killed seven policemen). And now the right is arming, as reported by Charles M. Blow in his latest column in the Times.¹ They are being nudged toward violence by the increasingly shrill and irresponsible media and even by the occasional politician (e.g., see Minnesota Republican Michele Bachmann’s rant²). Background checks for gun purchases are up almost 30 percent from a year ago, with 5.5 million requests from November to February alone.

Obama needs to lay off the victory laps in foreign lands and start dealing with a deterioriating domestic scene that neither the three-trillion-dollar bank bailouts nor the puny stimulus package are going to affect much. He will end up by addressing what he should have addressed from the very beginning—the wretched state of the American family under the thumb of the corporatocracy.

The right are voicing hysterical declarations to “take back America,” while it is still very much in their hands and under their control. A few touchy-feely pronouncements regarding torture, stem cells, and abortion will not hide the fact that we live under a government of, by, and for the corporations. And we are witnessing what that means when such a situation is allowed to run its course.

How the demise of democracy may finally come about will be the subject of our entry tomorrow.
____________________
¹ Pitchforks and Pistols, by Charles M. Blow, from the New York Times, Apr 3, 2009, accessed Apr 4, 2009.
² Michele Bachmann: I Want People “Armed and Dangerous” Over Obama Tax Plan, by Rachel Weiner, from the Huffington Post, Mar 23, 2009, accessed Apr 4, 2009.
tags: Economics

Apr 03, 2009
The nonprofit sector of the economy constitutes 11 percent of the workforce, more than the auto and financial industries combined. They are suffering a triple whammy in the present downturn: less foundation and individual giving; diminished support from states and localities that are themselves feeling the pinch; and dramatically increased demand from the populations they serve.

In The Quiet Crisis: The Impact of the Economic Downturn on the Nonprofit Sector (.pdf, 2.6Mb, 22 pages), a joint report by Civic Enterprises and the Democratic Leadership Council, the parameters of the problem are made starkly evident:

• Churches saw a decrease of $3 to $5 billion in expected giving in the third quarter of 2008.
• United Way saw an increase of 60 percent in the calls for basic services in 2008.
• Chicago is trimming its Meals on Wheels budget by more than a third.
• Arizona saw an increase of over 100 percent in the number of people who sought social services from 2007 to 2008.
• Michigan suffered simultaneous increase in demand by 70 percent of its nonprofits while 50 percent say their financial support has declined.

• Pass the Serve America Act, a $5.7 billion program that will increase the number of AmeriCorps volunteers from 75,000 to 250,000. The Senate passed their version of this bill last week.
• Adopt a handful of tax incentives that will expand private giving and volunteering.
• Establish a fund that would produce programs to improve nonprofit management and develop new ideas and pilot programs to improve existing systems.
• Give nonprofit housing and financial institutions a prominent role in solving the nation’s massive mortgage and foreclosure problems.

Mar 26, 2009

There is no doubt the government is taking a risk. The question is how best to do it.
Treasury Secretary Timothy Geithner¹

Mar 25, 2009
The $780 billion in bank bailouts and the $180 billion in the A.I.G. bailout having failed to deliver one degree of thaw to the credit freeze, the government will now step in and supply up to $1 trillion to purchase bad mortgages and related paper—the famous “toxic assets”—from those same institutions which have been so busy incurring our impotent wrath by distributing big bonuses from our wallets.¹

The $1 trillion will be made available as loans to hedge funds and other cowboy financial investment institutions, providing them with up to 97 percent of the money necessary to purchase, at auction, packages of these troubled assets. The buyers won’t be required to put up any collateral other than the toxic assets themselves, and the government refuses to say how much interest they will charge the investors or reveal other details of the plan. The potential payoff—interest on the loans and participation in the profits from resales—could be many years down the road.

To date, investors haven’t been willing to pay more than about 30 cents on the dollar for these assets, and the banks haven’t been willing to sell them for less than 60 cents. The banks’ participation in this plan will be voluntary, so it is difficult to see how a significant portion of the assets will change hands, even when the buyers are purchasing them with borrowed money (ours). It is also difficult to believe that even if the banks do get these assets off their books that they will suddenly be willing to start performing their primary function of granting loans as opposed to bucking up their reserves, adding to their empires through the purchase of smaller and even more troubled institutions, handing out more bonuses, etc., etc., which is all the bailout money has prompted them to do. (Note to Obama: Why not take the $1 trillion and start making low-interest loans direct to the individuals and businesses that need them rather than handing over all that cash to the same reckless gamblers who landed us in this economic hellhole?)

Meanwhile, Glass-Stegall, like Generalissimo Francisco Franco, is still dead. And no significant regulation legislation is pending before either house of Congress. The foxes (Summers, Geithner) are still in charge of the henhouse, transparency continues to elude an administration which has gone hoarse guaranteeing it, and if there is a light at the end of this tunnel, let us hope it is not the 3:10 from Yuma, bearing down on what little remains of our hopes, our dreams, and our 401k’s.
____________________
¹ Toxic Asset Plan Foresees Big Subsidies for Investors, by Edmund L. Andrews, Eric Dash, and Graham Bowley, from the New York Times, Mar 20, 2009, accessed Mar 22, 2009.
tags: Economics

Feb 24, 2009
We have recently noted with some despair the unfortunate tendency of state governors to jump at layoffs as the first, and too often only, remedy for budget problems.¹ A recent report from the Pew Center on the States entitled Trade-Off Time: How Four States Continue to Deliver, shows that some states are applying far more savvy methods in order to get more bang from the taxpayer’s buck and to minimize layoffs and tax increases.

The featured states—Indiana, Maryland, Utah, and Virginia— are leading the nation in what would seem to be common sense methods of measuring the performances of government programs and using those measurements to determine where to concentrate their resources. As the man said, common sense isn’t all that common, especially in politics. Other states and, for that matter, families fretting over their own budget challenges, can take a lesson from the solid results these states have attained through careful evaluation of their programs:

• “[T]he Virginia Department of Corrections replaced private food service contracts at several prisons when data showed that the services could be provided more cheaply in-house for a total annual savings of $851,000.” (So much for the wonders of privatization.)
• With a far-seeing eye toward future crime and social service costs, Virginia also determined the cost-effectiveness of investing in prekindergarten.
• Utah requires new programs to have measurable goals to gauge progress, and when those goals are not met, the program is killed or altered. A $300,000 program to help businesses recruit new employees was radically cut and retargeted when it failed to show measurable success.
• Utah Governor Jon Huntsman challenged agencies to cut energy use 20 percent by 2015. The ensuing change to a four-day week with 10-hour days is expected to save the state $3 million in energy costs and save the employees $6 million in commuting expenses.
• In Maryland, a statistical management system in Baltimore that generated $350 million in savings and won an Innovations on American Government Award from Harvard, has been expanded to the state level. Among other advantages, the state saved $1.5 million by closing an under-capacity juvenile justice detention center and transferring part of the funds to more effective community-based programs.
• Indiana Governor Mitch Daniels, a former director of the U.S. Office of Management and Budget, has created a state-level version of the OMB that requires measurable goals from all government departments. Child services received additional funding when studies indicated the funds would lower instances of child abuse and neglect, and those goals are being carefully monitored. Other programs costing $1.5 million were cut because they did not provide explicit, measurable goals.

Feb 18, 2009
It is over 1,000 pages and we admit we haven’t read it all (who has?); however, the Obama stimulus package is probably law by now (we are writing this on Sunday, February 15, and Obama is expected to sign it on Tuesday). So you may be wondering the same thing we are: “What’s in it for me?” If you, like us, are among low- to moderate-income Americans, there is quite a lot in it for you, as well as for the states you live in, most of which are hurting badly. The people at the Center on Budget and Policy Priorities have read it and and have offered the following summary¹ of the high points for those of us who are suffering most. Click on the footnoted links to read more on each subject:

• Provide Medicaid relief to the states: $89 billion over nine calendar quarters.²
• Help state and local governments avert budget cuts: $39.5 for education budgets, $8.8 billion for other key services, and $5 billion in incentive grants.³
• Education: $44.6 billion to the Department of Education for Title I, Special Education, Pell Grants, and other national educational assistance purposes.⁴
• Unemployment Insurance: $25/week increase in unemployment benefits. Eighteen million people are expected to benefit from this provision.⁵
• Child Care: $2 billion to states to subsidize child care for low-income working families or low-income families in which the parents are engaged in education or training.⁶
• Child Support: $1 billion to suspend a 2006 provision that would have reduced this support by 20 percent.⁷
• Training and Employment Services: $3.95 billion for job training and employment services for dislocated workers, youths, and adults.⁸
• Food Stamp (or Supplemental Nutrition Assistance) Program: $20 billion, most of which ($19 billion) would be used to increase maximum food stamp benefits by 13.6 percent. Fourteen million households will benefit.⁹
• Emergency Shelter Grant Program: $1.5 billion for states (25 percent) and localities (75 percent) for homelessness prevention, emergency shelters, and street outreach.¹⁰
• Child Tax Credit: Lowering the income threshold for eligibility for this tax credit will essentially increase the benefit currently received in low-income families, as well as increase the numbers of eligible families. It is estimated this benefit will total approximately $14.8 billion.¹¹.
• Making Work Pay Tax Credit: No figure was provided for this centerpiece of the tax relief provision of the stimulus package. However, most workers not claimed as a dependent on someone else’s tax return will be eligible for a tax credit (reduction) of $400.¹²

Feb 13, 2009
We’re about to fall off a cliff.

In fact, we probably already have and, like Wile E. Coyote, haven’t quite realized it yet. You can’t lose two and a half million jobs in five months. You can’t spend $850 billion stimulating a dead economy that groans under a $1 trillion annual deficit after a $750 billion bank bailout on top of an $11 trillion national debt. You can’t fight two losing wars simultaneously.

And when you try, you are in for a fall. For all the bad news we have absorbed of late, we are still just those few steps off the cliff edge, still suspended in the air. We await that moment when we look down and realize the earth is no longer under us. We will then look up and into the camera, a hapless grimace of quiet desperation will flit across our features, and down we’ll go, a little cloud of smoke in the place where we once stood.

And then what? Will there be riots in the street? Will a Mad Max sort of dystopia begin popping up here and there in the heartland? Will the “best lack all conviction, while the worst are full of a passionate intensity”?¹

Or will the shock be so sharp and so sudden that our better instincts will prevail, and we come together in that sort of involuntary embrace that brings the young innocents together at the howl of the werewolf, the creak of the hinge?

Whatever may be, as Margo Channing observed, “Fasten your seatbelts, it’s going to be a bumpy night.”²
____________________
¹ The Second Coming, by William Butler Yeats, accessed February 10, 2009
² Memorable Quotes for All About Eve, accessed February 10, 2009
tags: Economics

Jan 29, 2009
“Slow or negative economic growth, combined with highly volatile prices, will erode the real wages of many workers, particularly the low-wage and poorer households. In many countries, the middle classes will also be seriously affected.” So concludes the International Labour Organization, the U.N. body that “is devoted to advancing opportunities for women and men to obtain decent and productive work in conditions of freedom, equity, security and human dignity.”

Their first Global Wage Report 2008/09, Executive Summary (.pdf, 4 pp., 63Kb) paints a bleak world picture for us wage slaves, and one which we would do well to anticipate and struggle against by lobbying our governments to establish living minimum wages and to secure and extend our rights to collective bargaining. Among the report’s conclusions and recommendations:

• 2009 wages will decline by .5 percent in industrial countries.
• Levels of minimum wage should be increased wherever possible.
• Between 2001 and 2007, real wages grew close to 0 percent in the U.S.
• Wage growth has trailed GDP growth and is continuing to decline (i.e., the profits are going elsewhere).
• Wage inequality (the difference between the highest and lowest wages) is growing most rapidly in the U.S., Germany, and Poland.
• In most countries, women’s wages still amount to only 70 to 90 percent of men’s and the gap is closing very slowly, if at all.

Jan 28, 2009
We consider ourself to be fiscally conservative. By that, we mean we believe we should pay as we go, exercise oversight and restraint on our expenditures, and practice thrift as a general rule. President Obama has made frequent mention of his determination to spend the taxpayer’s money with care and, when he discovers it is not being well spent, to act swiftly to minimize the waste and damage. These used to be good Republican principles and the fact that they aren’t anymore shows just how far the party has diverged from its core beliefs.

We hope Obama will not tolerate the egregious and irresponsible handling of public monies described in a recent report from the Special Inspector General for Iraq Reconstruction. The report, Cost, Outcome, and Oversight of Iraq Reconstruction Contract with Kellogg Brown & Root Services, Inc. (.pdf, 61 pp., 2.1Mb), concerns one of many contracts, often awarded with no competition, that resulted in hasty, shoddy, incomplete, and unmaintained repairs to the Iraq infrastructure which the Bush administration foolishly attempted to deliver in the midst of a war. Its conclusion struggles to paint a bright face on disaster:

The lack of security, the absence of protection against infrastructure looting, and poor pre-war maintenance were the major contributors to the cost of this contract. What KBR improved was better than the pre-war facilities, but unless the Government of Iraq completes what KBR started and maintains what it provided, the value of KBR’s effort will be diminished and possibly lost.

Jan 22, 2009
Don’t get us wrong. We’re not part of the Consumer Society and if we were churchgoing folk, we’d be sitting in a pew at Reverend Billy’s Church of Stop Shopping.

Remember 9/11 and the opportunity our new president had to draw the nation together in a spirit of sacrifice for the long and demanding struggle ahead? Sacrifice? Heck no, said the man who must have been born with a foot in his mouth, “Go Shopping!”

As inappropriate as that injunction was back then, it has now come in to vogue, and voices as progressive as Robert Scheer on Left, Right, and Center¹ are telling us, If you got it, spend it! It won’t be easy, just when everyone who is lucky enough to still be employed is trying to sock more away in their IRAs or under their mattresses. However, in the short run, spending is the only thing that is going to keep our ship afloat. Government must spend on projects that will put money in people’s pockets for them to spend. And then they have to spend it.

And not at minimum-wage WalMarts, where it will go right back to China and into the pockets of Sam Walton’s worthless billionaire progeny. It must be spent at home, on goods and services that originate at home and where your money will stay at home, enjoying the multiplier effect as it is spent over and over again by the people whose jobs you will help preserve.

Here are a few ideas for how you might do that:

• Get a manicure.
• Hire a neighborhood kid to clean out your garage.
• Make Wednesday night Restaurant Night.
• Join a Community-Supported Agriculture (CSA) farm.
• Instead of a movie, go to a local play, concert, or other live performance.
• Take music, cooking, singing, dancing, acting, painting, or computer lessons.
• Buy a book from a local bookstore (if you can find one); buy a second one for your library.
• Buy a house. There has never been a better time. And if the $700 billion giveaway to the banks has still not shaken loose any mortgage money, go to your credit union, your rich uncle, your savings, and kludge together a down payment somehow, because there are bargains aplenty out there.
• Get an energy audit on your house, then have it made weather tight.
• Buy a pellet stove.

Jan 11, 2009
In the year between October 2007, when the market peaked, and October 2008, more than $2 trillion worth of stock value held in 401(k)s, IRAs, and “defined-contribution” (e.g., pension) plans was wiped out, according to the Boston College Center for Retirement Research. This amounts to something in the neighborhood of 40 percent of their value.

An article in last Thursday’s Wall Street Journal, “Big Slide in 401(k)s Spurs Calls for Change,” by Eleanor Laise,¹ has 35-year-old Kristine Gardner, an IT project manager from Longview, Washington (is there irony in that place name?) bewailing her losses: “There’s no guarantee that when you’re ready to retire you’re going to have the money. You either put it in a money market which pays 1%, which isn’t enough to retire, or you expose yourself to huge market risk and you can lose half your retirement in one year.”

Maybe Kristine will be ready to listen now to that simple piece of advice one hears at every Prepare-For-Your-Retirement seminar one attends: The closer you get to retirement, the less of your nest egg should be placed at risk. The market is for the long run, not for the home stretch to retirement. From our mountaintop perspective of 63 years, we can reassure Kristine that if she doesn’t lose her nerve and bail out when the market is in the basement, things should look rosier in 30 years—although “past performance is no guarantee of future results.”

The tanking of the market—the most precipitous drop most of us can remember—has indeed been a disaster. At least one billionaire who didn’t get bailed out (the only one?) committed suicide last week.² The important point made by the Journal article, however, is in the headline. The market decline has produced all sorts of calls for change in retirement instruments. 401(k)s essentially replaced pension plans provided by companies. The latter were like an annuity or Social Security, in that they guaranteed a specified amount to a retiree for life. You knew where you stood. 401(k)s, on the other hand, guarantee nothing, and require workers to manage their own money. And even the most level-headed and least greedy among us took a hit in the recent downturn.

Some are now arguing for federalizing retirement funding, limiting the maneuvering room workers have to manage their savings, and other fairly radical proposals. The barn door has violently banged open, the horse—40% of our riskiest assets—is history (at least for now), and naturally everyone is screaming in pain. It is going to get worse, but it is also going to get better. Best we should calm down and try to take the long view (see above).

The progressive view—at least this progressive’s view—is that just as the worker is worthy of their hire, the retiree is worthy of a secure and comfortable retirement, free from anxiety over the money running out. The present arrangement does not provide that. Market volatility is too great for people who should be more risk-averse than many are, and many people simply don’t put aside enough—too often because they don’t earn enough—to assure a worry-free retirement.

With the Boomers living longer and facing retirement in huge numbers (the first generation heavily dependent on 401(k)s), the last thing our society needs is a horde of destitute old people. However, that may be exactly what we are in for. Therefore the current alternatives available to us must be enhanced, and we must, as a society, protect one another from destitution however we can.

The problem is a complicated one, and the sooner we begin discussing it calmly and progressively, the sooner we will come together with a solution.

Note: In an effort to recharge our batteries and prepare for the dawn of a new political day in America, we will take a week off All Together Now. We expect to be back on Monday, January 19—Inauguration Eve. Until then, thanks for reading!
____________________
¹ The Wall Street Journal, Thursday, January 8, 2009, pp. 1, 12
² Banks rescue suicide billionaire’s interests, from CNN.com, January 7, 2009, accessed January 8, 2009
tags: Economics

Jan 10, 2009
The latest word out of the mainstream media is that Obama will go ahead with a $300 billion tax cut for middle-class workers and small businesses as part of the new administration’s economic stimulus effort.¹ That figure represents about 39 percent of the $775 billion his advisers are looking to inject into the economy. He is doing it at the behest of the Republican minority, and the figure would amount to about $500 each for us middle-class workers. That is $100 less than the utterly ineffective midsummer checks from Bush 2, and far less tangible, coming, as it will, in slightly reduced withholding of federal income taxes dragged out over a long series of paychecks.

The Republicans are also encouraging Obama to loan, rather than grant, relief money to the states, a move which would almost certainly be useless in helping to bring about an economic recovery, in fact, quite the contrary. This was argued very cogently a few days ago by the Center on Budget and Policy Priorities (CBPP), which concluded, “The proposal reflects misperceptions about why states face large deficits, how state budgets and constitutions work, how states would use fiscal relief, and what will happen if they do not receive it.”² CBPP notes the states’ shortfalls over the next two and one-half years are projected at $350 billion, close to the amount Obama plans to waste in tiny giveaways to taxpayers who don’t need it.

These Republican positions reflect the nefarious subtext of practically every Republican “proposal” we have heard for the last 30 years: Cut taxes, cut taxes, cut taxes, and don’t give anything to anyone but the filthy rich, especially any entity, such as the states, that serves the common good.

Having given in on the tax cut issue, it will be interesting to see if Obama gives in on the state loan issue as well. And if he does so on both, we shall see how quickly, readily, and collegially the Republicans fall into his camp and enable smooth passage of his stimulus passage. Our prediction? Don’t hold your breath.

In naming Hillary to the highest post he could bring himself to award her, in naming many another leftover Clintonite as well as a couple of Republicans to high-level positions in his administration, in handing over a hefty portion of his stimulus package to Republican ideology, Obama is apparently trying to please all of the people all of the time. He will not. He cannot. He has apparently never taken note of wise advice the journalist Herbert Bayard Swope passed along a while back:

I cannot give you the formula for success, but I can give you the formula for failure, which is: try to please everybody.

Jan 08, 2009
Naomi Klein’s The Shock Doctrine masterfully lays bare the tendency of the right to take advantage of disasters to advance their agenda. There is no reason why progressives can’t take a page from that playbook, and no time like the present.

The Political Economy Research Institute (PERI) of the University of Massachusetts at Amherst, together with the Bernard Schwartz Center for Economic Policy at the New School in New York, have published A Progressive Program for Economic Recovery & Financial Reconstruction (.pdf, 25 pp., 192Kb).

Yesterday, we noted the ways the bailout is going wrong, even failing to achieve its nonprogressive ends. This PERI report shows the way for the Obama administration to reverse these failings and instead achieve a successful financial recovery for progressive ends. Obama’s program, they say, “must promote a fundamental reversal of direction ... [F]inancial markets must ... serve the needs of society.” The report is an excellent summary of the progressive viewpoint toward markets and society. Following are a few of its recommendations, together with an estimated cost of some (see the report for details):

• Keep state and local services flowing and state and local workers employed ($75 billion per year for 2 years)
• Keep people in their homes ($3-400 billion over two years)
• Invest in public infrastructure, education, and green spending initiatives ($300 billion)
• Protect key industries such as the automobile industry ($100 billion)
• Make government an employer of last resort
• Reverse extreme inequality and restore family and community health
• The Federal Reserve should support the fiscal expansion and be subject to more oversight
• Promote international coordination of expansionary policies
• Utilize leverage provided by partial ownership of financial institutions
• Establish codes of conduct for all financial institutions receiving government aid (No, we haven’t!)
• Empower financial regulators to identify and reduce fraud
• Restructure the Troubled Asset Relief Program
• Transform financial firm incentive structures that induce excessive risk taking
• Prohibit the sale of financial securities that are too complex to be sold on exchanges

Jan 07, 2009
We have been trying to make head or tail out of the financial debacle for weeks now.¹ Two reports have been released in the recent past by the Treasury Department, attempting to explain what they have done with the money and with the power conferred upon them by Congress last fall. One report was sent to Congress² and one to the Congressional Oversight Panel³.

We diligently attempted to read both of these reports but had to conclude, along with poor Casca, that “it was Greek to [us].” One recalls the “Plain English” laws passed a few years ago in the realm of public contracts (insurance, etc.), and wonder whether we should not pass one for the federal government. Obfuscation, of course, is an important tactic used by the guilty to hide their shame, and one can only conclude that the dense unreadability of these reports is intentional and so motivated. Our frustration level was so high that we send a heartfelt message to Paul Krugman begging him to read the reports and translate them for us common mortals.

In the meanwhile, the New York Times published a pair of op-ed pieces last Sunday entitled The End of the Financial World As We Know It, and How to Repair a Broken Financial World, by Michael Lewis and David Einhorn, which added some to our understanding of what went on and where we go from here:

• The world has seen the last vestige of faith in the U.S.—that we at least knew how to handle money—destroyed in the recent cataclysm, and it has shaken the world to its foundations.
• The Bernard Madoff scheme was suspected by many people, including those who benefited from it, many years before the scandal broke, and the S.E.C. was warned about it explicitly nine years ago. Their failure to do anything about it reveals the absence of check and balances in the system.
• The system requires CEOs to manage for the short term, but our common welfare depends upon a healthy long-term financial establishment, and that is where regulation and oversight come in. Dismantle them, and the result is as predictable as it would be if you were to suspend all watchfulness and release all constraints on your infant or, more terrifyingly, on your teenage son. Say the authors: “The tyranny of the short term has extended itself with frightening ease into the entities that were meant to, one way or another, discipline Wall Street, and force it to consider its enlightened self-interest.”
• The credit-rating agencies (e.g., Moody’s, Standard & Poor’s) failed to red-flag the increasing risk taken on by the issuers of bonds. The fact that those issuers pay for the operation of these credit-rating agencies may be part of the problem. “[R]ather than expose financial risk [the credit-rating agencies] systematically disguised it.”
• The SEC is fraught with conflicts of potential interest and political sensitivities that keep it from doing its proper job. Its enforcement division is a revolving door into high-level positions at companies whose activities it is supposed to enforce.
• “And here’s the most incredible thing of all: 18 months into the most spectacular man-made financial calamity in modern experience, nothing has been done to change ... any of the ... bad incentives that led us here in the first place.”
• Meanwhile, the seven bailouts and six strategies entered into so far have not produced the confidence in the financial markets, or opened up capital for lending, which they were primarily intended to do.
• A $306 billion giveaway in guarantees to Citigroup is equal to the combined annual expenditures of six federal departments.
• The law of unintended consequences has hit the financial bailout program hard. While the miscreants are being rewarded, the innocents (small solvent companies) are being forced out of business by their creditors.
• The authors suggest two solutions to the mess: “A) repair the social safety net, now badly rent in ways that cause perfectly rational people to be terrified; and B) transform the bailout of the banks into a rescue of homeowners.”

Dec 21, 2008
Yes, Virginia, there is a Congressional Oversight Panel (COP) charged with trying to figure out what the Treasury Department is doing with your $700 billion bank bailout. Though they don’t have many answers at this point, they have at least come up with a few relevant Questions About the $700 Billion Emergency Economic Stabilization Funds (.pdf, 1.3Mb). This initial panel report was released on December 10, 2008. They intend to issue monthly reports and we will update this ATN item with links to those reports as they are released.

Among partial answers received from Treasury so far is a confirmation of our worst fear that Treasury has administered the program without seeking to specifically monitor the use of funds supplied to the banks, but instead relying on “general metrics” that will evaluate the overall economic effects of the disbursed funds. As the report notes, “Using general metrics could be a substitute for using no metrics at all, thus committing taxpayer resources with no meaningful oversight.”¹

Here are the ten questions the panel hopes to answer in the coming months:

1. What is Treasury’s strategy?
2. Is the strategy working to stabilize markets?
3. Is the strategy helping to reduce foreclosures?
4. What have financial institutions done with the taxpayers’ money received so far?
5. Is the public receiving a fair deal?
6. What is Treasury doing to help the American family?
7. Is Treasury imposing reforms on financial institutions that are taking taxpayer money?
8. How is Treasury deciding which institutions receive the money?
9. What is the Scope of Treasury’s statutory authority?
10. Is Treasury looking ahead?

Dec 10, 2008
How we got here? Simple:

• The Clinton administration passed the Financial Services Modernization Act, eliminating New Deal barriers against mergers of commercial and investment banks.¹
• The Clinton administration passed the Commodity Futures Modernization Act, which banned government regulation of the new derivatives market.¹
• The commercial side of the newly merged banks lured millions of first-time home buyers with mortgages whose initial terms were too enticing to resist, knowing their investment side would re-package and re-sell the mortgages in derivative bundles, eliminating risk to the original lender.
• While housing values increased, banks around the world rushed to purchase these derivatives, without understanding them or the risks involved, heeding only the apparent increases in their value. They borrowed money to purchase these derivatives, often as much as $30 for every dollar they put up of their own.
• Bankers were able to show huge short-term “book” profits from these derivative sales, earning themselves gigantic bonuses.
• Housing values leveled off at the same time the rosy mortgage terms expired, and people who should never have qualified for mortgages suddenly found themselves unable to pay them.
• Those derivatives purchased by banks around the world, on borrowed money, lost their value, often ruining the banks (Washington Mutual and others), crippling the largest financial institutions in the country and around the world, and, oh yes, incidentally sending millions of homeowners into foreclosure and out onto the streets.

• We’ve stopped spending, we know that. November, including Black Friday, totted up the lowest sales in 30 years.²
• Jobs are dropping like flies. Not since December 1974 (Nixon was president!) have we lost more jobs than we did in November (533,000).³
• Being a consumer society and one which has dropped manufacturing jobs in favor of service jobs, those first two numbers do not bode well for the future. If we don’t spend, we don’t work.
• This graphic from the Bureau of Labor Statistics is a little scary. Note the increasing rate of decline in employment during this recession, and note how long it took during the last recession in 2001 for employment figures to get back to the pre-recession level (three+ years).

Nov 29, 2008
As did John McCain, we confess to a lack of perfect understanding of the “dismal science” of economics. We are more or less at one with Mr. Micawber, who summed up all fiscal wisdom thus: “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”¹

Though economists pretend to more complications in their calling than this, it all comes down to the same thing: Live within your means or pay the consequences. Thus far, many domestic enterprises which have failed to live within their means, which concocted exotic and opaque financial instruments and bought them with—horrors!—borrowed money, have failed to pay any consequences; however, we Micawber types know those consequences are coming, don’t we?

As we say, the ins and outs of the dismal science are a closed book to us. With a ten trillion dollar national debt, four trillions of which were added by Bush in the largest increase under any U.S. president,² we suspect much misery lies in wait just over the horizon.

For 32 metropolitan transit agencies, that horizon is now. In a deal too complicated to describe here, but which is admirably explicated in the Tax Foundation’s Fiscal Fact No. 153, Transit Agencies in Bind Due to SILO Deals and AIG Collapse, those agencies—very likely including your bus and subway provider—may be in for many billions in contract termination fees demanded by foreign banks. The perfect storm of economic collapse has rippled across the landscape, with a great deal more damage impending than we are advised of on the nightly news.

The transit agencies have now gone to Congress looking for—what else?—their own bailout.³ They are going to have to stand at the end of a long and very unruly line.
____________________
¹ David Copperfield, chapter 12, by Charles Dickens (Accessed November 25, 2008)
² Bush Administration Adds $4 Trillion to National Debt, by Mark Knoller, from CBS News, September 29, 2008 (Accessed November 25, 2008)
³ Transit Agencies on Capitol Hill to Lobby for Bailout, from Tax Foundation, November 19, 2008 (Accessed November 25, 2008)
tags: Economics

Nov 23, 2008
If the Obama administration doesn’t hit the ground running, it won’t be because the cities are dragging their feet. For a measly $24.5 billion (a tenth of the amount Treasury Secretary Paulson has already handed out to banks and investment houses, although we still do not know who has gotten what, and it hasn’t made much of a difference, has it?), the cities are ready to go with 4,591 infrastructure projects in 153 cities and in ten different categories, including energy, transit, highway, airport, Amtrak, water/wastewater, public safety, and school and public housing modernization.

In a press release from the United States Conference of Mayors, they state the projects are ready to go and could be started and completed in 2009. The projects would create more than a quarter of a million good-paying jobs.¹

For a complete list of projects, costs, and employment figures, see the conference’s report, Ready-to-Go Projects (.pdf).

A boost to our sagging infrastructure and some major relief for our soaring unemployment! We hope Obama is listening, and we hope Paulson hasn’t emptied the whole $700 billion purse into his cronies’ pockets by January 20.

Update, Jan 13, 2009: The Conference of Mayors has released its third report. It now has over 15,000 ready-to-go projects in 641 cities capable of producing over 1.22 million jobs.²
____________________
¹ Press Release (.pdf), November 14, 2008 (Accessed November 18, 2008)
² Press Release (.pdf), December 19, 2008 (Accessed January 13, 2009)
tags: Economics

Nov 16, 2008
A new political dawn is breaking in America. A black Democrat is on his way into the White House with a large mandate—and expectation—for change.

How did it all happen? A look at three selected national maps will tell a large part of the tale. Open these in separate tabs or windows, so you can go from one to the other. (Hint for Internet Explorer or Firefox users: right click the links):

• United States presidential election, 2004 from Wikipedia. Scroll down to the map.
• United States presidential election, 2008 from Wikipedia.
• Average freshman graduation rate, 2004-2005, by state, from the National Center for Education Statistics.

Oct 14, 2008
If we were to retire and begin collecting Social Security as early as we could (age 62), our payments would be just about enough to purchase health insurance. We probably wouldn’t need it for long since, absent any funds for food, we would starve to death before too long.

The boomer generation, of which we are among the earliest, is approaching retirement age this year, and they have saved, on average, only $38,000, not counting pensions, homes, and social security.² Those with qualified retirement plans such as 401(k)’s, have an average retirement savings of $88,000. Still that is only enough to generate an annual retirement income of about $5,000.

With the current meltdown of the international financial system, retirement considerations are coming to the forefront of most older people’s attentions. AARP has published a report summarizing the results of a poll taken in September entitled Retirement Security or Insecurity?: The Experience of Workers Aged 45 and Older. The poll assessed people’s expectations regarding their retirement years in light of the current fiscal troubles. Some of the report’s findings, if you are in this particular boat at the present time, may sound familiar:

• A majority (69%) are anticipating a lower standard of living when they retire, lower even than what they might have looked forward to before the current troubles began.
• Most people (65%) expect to delay retirement and work longer.
• Most people (58%) believe they are not saving enough for retirement.
• Retirement plans offered by employers (e.g., 401(k)) are a powerful aid toward retirement savings. Sixty-three percent of workers whose employer does not offer such a plan would take part in one if their employer did. Furthermore, workers whose employer does offer such a plan are more likely to save outside of work as well (contributing to a Roth IRA, for instance), than workers who are not offered such a plan (59% to 51%).
• Additional economic strains felt over the past 12 months have resulted in many having difficulty paying basic bills (56%); having to help a family member pay bills (47%); looking for additional work hours or better-paying jobs (24% and 18%); suspending retirement account contributions or prematurely withdrawing money from such accounts (20% and 13%); or having a family member move in with them (12%).

Oct 06, 2008
Income and wealth disparity in this country has ballooned out of control since 1980. This may be the starkest way of illustrating this fact: The 40 percent of the population (you and me, probably) who were making between $50,000 and $100,000 in 1980 (in 2005 dollars) were still making between $50,000 and $100,000 25 years later. Those in the top five percent of the population, however, whose mean family income in 1980 was about $150,000, were making over $300,000 in 2005. The disparity between the top one-tenth of one percent and the rest of us is even more obscene. This small number of Americans—about 300,000— had more wealth in 2006 than the poorest 120 million Americans combined.¹

Americans support these sorts of inequities apparently because we have become convinced that we are plausible candidates for enjoying this windfall in the future and to mess with the status quo could scotch our chances. Perhaps our national Horatio Alger myths, combined with the ubiquitous (and cruelly regressive) lotteries, have molded this attitude among our people. One wonders how many generations of such growing disparities, how many financial collapses, how many foreclosed mortgages it will take to snap us out our willful ignorance of the facts.

The Century Foundation has provided a graphic summary of income and wealth disparities in their recent report, A Rising Tide that Lifts Only Yachts (.pdf).

This country needs an attitude adjustment. We need to decide what is too little and what is too much, and then rebalance our resources so no one falls into either extreme. At one end, our minimum wage for a full-time worker needs to be adequate to feed, clothe, house, and insure a reasonably sized family. At the other extreme, we have to stop rewarding failed CEOs with $210 million golden parachutes.² There is a happy medium within our grasp. A truly democratic nation’s role is to enable the greatest good for the greatest number, sacrificing none of its precious human resources to predatory capitalism, but harnessing that capitalism to raise a tide that will lift all boats.

Anything less is slow suicide, as the last few weeks have shown.
____________________
¹ ’04 Income in U.S. Was Below 2000 Level, by David Cay Johnston, from the New York Times, November 28, 2006 (Accessed September 27, 2008)
² Nardelli out at Home Depot, by Parija B. Kavilanz, from CNNMoney.com, January 3, 2007 (Accessed September 27, 2008)
tags: Economics

Oct 02, 2008
We are writing this on the evening of Wednesday, October 1, 2008. U. S. senators are gathering to approve the Bush/Paulsen bailout plan to save the economy. The bill has been packed with extraneous provisions to induce the senators to vote for it, like enticing a child into an abyss with a bauble. The plan itself calls for turning over $700 billion of public money to an individual over whom there will be scant supervision, difficult if not impossible to impose. No one has defined exactly what the problem is or whether the plan is likely to solve it.

It comes on the heels of a half dozen extraordinary measures taken by the executive branch, which together have failed to forestall this massive federal intervention into, and disruption of, our economy. The measures have included the nationalization of Fannie and Freddie Mac, IndyBank, and AIG; the brokered sales of Bear Stearns and Washington Mutual to J.P. Morgan/Chase, Merrill Lynch to Bank of America, and Wachovia to Citigroup; and passive witness to the death of Lehman Brothers. Through it all, not a single criminal accusation, let alone a charge, has been leveled at the masters of the universe who created this mess.

There has been no debate on the nature or correctness of the plan, and no alternative method has been posed for alleviating the alleged stress on the credit markets. Mere dickering over details of the one idea on the table has failed to secure real oversight, adequate guarantees of public ownership of the entities which will be bailed out, or any relief for the struggling homeowners who were conned into mortgages they could not afford by the flim-flam boys posing as bankers and who are now in charge of the “recovery.”

Two days ago the House rejected the plan 228 to 205. The stock market dipped 778 points, then gained well over half of that back the next day. Today it was down twenty points. No foundations trembled.

The New York Times is in favor of the plan, as is their respected op-ed economic columnist Paul Krugman, both major party presidential candidates Obama and McCain, and apparently every pundit, policy wonk, and economist in the land. The people, however, are opposed, with their phone calls to legislators running 100 to one against its passage.¹

Should this plan be passed by a Congress with a 15 percent approval rating,² half that of the most unpopular president in history,³ in the sixth year of an endless war; our good name in tatters; the middle class losing ground while the richest live like emperors;⁴ prisons bursting with our young men;⁵ our elderly torn between buying their medicine and heating their homes;⁶ our youth directionless and stupid from years of repression, neglect, and disdain; our planet in a maelstrom of climatic change and degradation; should this plan be passed, starving our government of another trillion dollars and consigning our fate into the hands of foreign nations assuming this debt, then the papers, and the pundits, and the politicos take warning:

The voice of the people is the voice of god.

And it will have the final say.
____________________
¹ Bailout Defeated, Blame Flies, Wall Street Tanks, by Karen Tumulty, from Time Magazine, September 29, 2008 (Accessed October 1, 2008)
² Congressional Performance, from Rasmussen Report, August 27, 2008 (Accessed October 1, 2008)
³ Bush’s Approval Rating Drops to New Low, by Jeffrey M. Jones, from USA Today/Gallup Poll September 26-27, 2008 (Accessed October 1, 2008)
⁴ Income Gap is Widening, Data Shows, by David Cay Johnston, from the New York Times, March 29, 2007 (Accessed October 1, 2008)
⁵ New High in U.S. Prison Number, by N.C. Aizenman, from the Washington Post, February 29, 2008 (Accessed October 1, 2008)
⁶ Winter heat crisis looms, little relief seen, by Ben Rooney, from CNNMoney.com, September 2, 2008 (Accessed October 1, 2008)
tags: Economics

Sep 29, 2008
A popular government, without popular information, or the means of acquiring it, is but a Prologue to a Farce or a Tragedy, or perhaps both. —James Madison, 1822

Without transparency in government, there is no accountability. This administration has specialized in secrecy, opacity, and non-accountability. Utilizing 9/11 in a cynical power grab, it rushed Congress and the American people into the Patriot Act—dismantling basic Constitutional freedoms—and a unilateral war against a non-aggressor. As this item is being written (September 26), it is going for the hat trick, using the burst housing bubble, which it engineered, to take secret control of our economy, with no transparency and no legal or congressional oversight.

The Paulsen plan, if enacted in its essence with only minor amendments, will destroy the underpinnings of our country’s economy. When government is in bed with industry, the former supported by the profits of the latter, and the latter protected against losses by the former, when risk is removed from the capitalist equation by the governing body, the political system can no longer be called a democracy and the economic system can no longer be called capitalism. What they amount to then is plainly and simply fascism.

The Century Foundation—too late, perhaps?—has just released a report entitled Reinventing Transparent Government, written by Patrick Radden Keefe. It details the extraordinary lengths to which the Bush administration has gone in blanketing our government in secrecy, and makes five recommendations for beginning the task of returning transparency, and thus accountability, to our government:

• Create a national declassification center and database
• Establish transparency and oversight in government budgets and contracts
• Clarify a uniform set of definitions for sensitive but unclassified information
• Reinvigorate the Freedom of Information Act
• Rein in the use of the State Secrets Doctrine

Sep 26, 2008
Remember that check you got from Uncle Sam last summer, the one that was going to jump-start the economy and get it back in shape? How’s that working out?

Okay, never mind. However, we could have taken that roughly $100 billion and put it into a plan devised by the Center for American Progress and the Political Economy Research Institute (PERI) at the University of Massachusetts/Amherst. For the same amount of money, raised through auctioning off carbon permits, we could invest in the following six energy strategies:

• Retrofitting buildings to improve energy efficiency
• Expanding mass transit and freight rail
• Constructing “smart” electrical grid transmission systems
• Wind power
• Solar power
• Next-generation biofuels

Sep 25, 2008
Capitalism is either the servant or the master of the people. When it is the master, as it has been throughout its existence in China, and as it has been, once again, throughout the last thirty years in the United States, the results are disastrous. We will take up China, with its rampant pollution; its countryside in chaotic, open revolt; its scrambling and scattershot repression; its suborning of global industry, at a later date. Home is where our heart is.

A government of the people, by the people, and for the people devotes its institutions—social, economic, and political—to the general welfare and improvement of its citizenry—that is its purpose and its reason for being. Its institutions exist to ensure that all the people have adequate housing, nutrition, sanitation, education, mobility, economic opportunities, and protection from economic and physical threats from within and without. If they exist for any other reason—say, to enrich a small plutocracy at the expense of the people, their environment, and the future of the planet—then it is not a government of, by, and for the people nor, to the extent the plutocracy has a stranglehold on that government’s institutions, can it be said to be a democracy.

In 2008, five weeks and five days before a national election, our democracy is on the brink of dissolution. The plutocracy that has dominated our government since 1980 has brought us perpetual war,¹ global economic collapse,² a ten trillion dollar deficit with more trillions to come,³ and a suspended Constitution. The Democratic takeover of Congress in 2006 has done nothing to stem the tide of these developments. Nor does either major presidential candidate question the fundamental misdirection of our nation or acknowledge its expropriation by an international corporate plutocracy.

The only candidate who does—Ralph Nader—will not be elected. And so, during the next administration, we will enter a fourth decade of corporate hegemony over American democratic institutions. Whether this will bring about worldwide depression, devastating global conflicts, or the final deterioration of the American moral example, no one can say. However, it will surely not result in the pursuit or realization of those goals noted above, the only goals to which a democratic government can, or should, aspire.
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¹ Perpetual War, from Wikipedia (“Perpetual war is a war with no clear ending conditions. It also describes a situation of ongoing tension that seems likely to escalate at any moment, similar to the Cold War.”) (Accessed September 21, 2008)
² Can American Afford It?, by Robert Gavin, from the Boston Globe, September 21, 2008 (“The crisis, which began in the nation’s housing bust and spread into credit and stock markets, is pushing the global financial system to the brink of collapse....”) (Accessed September 21, 2008)
³ The U.S. National Debt Clock (Accessed September 21, 2008)
tags: Economics

Sep 22, 2008
At the tail end of a very bad couple of weeks for the American citizen, when we assumed the bad debts of Fannie and Freddie without a ripple of protest from the Democrats controlling Congress, and with the explicit approval of Barack Obama¹; and when we then assumed the bad debts of AIG with the implicit approval of Obama,² the time has come to revisit our attitude toward him.

On Wednesday, September 17, 2008, Democracy Now featured an interview with economists Nomi Prins and Michael Hudson. Their views are summarized in anchor Amy Goodman’s column on Truthdig.com, entitled Wall Street Socialists. Prins contends the government has taken on “the risk of items it cannot begin to understand.” She identifies the true culprit in the sudden collapse of all these investment banks and other agglomerated financial institutions—Bear Stearns, Lehman Brothers, AIG, Merrill Lynch, IndyMac— as the enormous amount of debt they took on to invest in instruments that have now gone bad owing to the subprime mortgage crisis. That debt sometimes reached 25 to 30 times the amount of capital put up for the purchases. This is all too reminiscent of the margin calls in 1929 that precipitated the collapse of Wall Street and worldwide finance which only recovered ten years later with the advent of the most destructive war in human history.

Protections were put in place back then to disallow the practices that caused the Depression, one of the main ones being the Glass-Steagall Act. That act, along with several other regulatory measures, was repealed after 20 years of vigorous opposition by far right laissez-faire capitalists. Repealed by Republicans? No, by President Clinton.³

So here we are, citizens without a viable champion to vigorously protect our pensions, our homes (four million of which are expected to be lost this year), our investments; indeed, our government and our candidates have rushed to protect everyone except its ordinary citizens. Where this will lead, whether to a ten-year depression, to a bankrupt FDIC, to war—who can say? But the failures are not over, a fact that everyone seems to agree on, and the national debt stands today on the brink of $10 trillion dollars with several trillions more to come imminently from these bailouts, not to mention two continuing and losing wars financed entirely on borrowed money.

On June 26, we noted that we could not vote for a warmonger.⁴ We also cannot vote for a man who essentially supports a status quo where narrow corporate interests and a small circle of billionaires at odds with the general welfare control the direction of our nation. If today were November 4, with despair in our heart, we would pull the lever for Ralph Nader.

But it is not November 4. There are still six weeks to go.
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¹ Obama says intervention of U.S. housing lenders necessary, from Reuters News Service, September 7, 2008 (Accessed September 18, 2008)
² AIG bailout prompts more criticism from McCain, Obama, by Mike Sunnucks, from the Phoenix Business Journal, September 17, 2008 (Accessed September 18, 2008)
³ The Long Demise of Glass-Steagall, from PBS.org’s Frontline, undated (Accessed September 18, 2008)
⁴ Obama v. Nader, Part 1, from All Together Now, June 26, 2008
tags: Economics

Sep 09, 2008
We read in the NYTimes this morning¹ that the federal government is taking over management of Fannie Mae and Freddie Mac, replacing the boards and officers with federal functionaries. Their rationale: “Publicly, administration officials have tried to bolster the companies because the nation’s mortgage system relies on their continued ability to purchase mortgages from commercial lenders and pull the housing markets out of their slump.”

The FM/2 failures stand to cost billions of taxpayer dollars in the near future. The home mortgage mess, combined with the Iraq mess, will add trillions more to our already $9.67 trillion national debt.² Foreclosures are up, ruining the savings and the lives of millions of Americans. And since 2003, the CEO of Freddie Mac has walked away with $38 million in compensation.

Can someone tell us why this should be? Can someone tell us why those “commercial lenders” should be allowed to make loans they have reason to believe are bad ones—indeed, to actively pursue insolvent borrowers and hornswoggle them into signing up for adjustable rate mortgages that only look good until the first adjustment puts them out on the streets—then be able to resell them to a government-guaranteed corporation where, when they go belly up, as millions have, the taxpayer picks up the loss? And expropriate—you certainly cannot characterize it as earning—millions in “compensation” while they’re doing it?

We will tell us why. Because we let them. Because we were so busy shopping and following the vicissitudes of Paris Hilton and watching television and working two jobs that we failed to notice, a few years back, that the henhouse had been turned over to the foxes. And now the henhouse is decimated,³ middle-class income has deteriorated,⁴ the foxes are fattening up on easy pickings,⁵ and we are looking around for a third job.

What will it take to wake us up, and may it not, by then, be too late?
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¹U.S. Rescue Seen at Hand for 2 Mortgage Giants, from the New York Times, September 6, 2008 (free registration may be required) (Accessed September 6, 2008)
²U.S. National Debt Clock, from information obtained from the U.S. Department of Treasury (Accessed September 6, 2008)
³Foreclosures in Connecticut, Nation at Record Rate, from the Hartford Courant, September 6, 2008 (Accessed September 6, 2008)
⁴Earning Less and Dying Younger: How the Growing Strain on America’s Middle Class Is Pummeling Our Health, from Alternet.org, September 4, 2008 (Accessed September 6, 2008)
⁵Exxon Shatters Record Profits, from CNNMoney.com, February 1, 2008 (Accessed September 6, 2008)
tags: Economics

Aug 15, 2008
Supply-side economics, often conflated with the term “trickle-down economics,” is premised upon a simple proposition: Cut taxes and the economic growth resulting from the freed-up capital will more than make up for the lost revenue. Our nation has been in thrall to this reasonable-sounding notion for thirty years, since the Reagan administration gave it a go. You will recall our national debt hit $1 trillion for the first time during Reagan’s first year in office¹ and went soaring into the stratosphere from there through Bush 1, only to be tamed, finally, by a Clinton administration that left office with a budget surplus. The “Big Lie” has continued throughout the Bush 2 administration, however, and the national debt is now $9.5 trillion, increasing over $1.7 billion every day (largely thanks to the Iraq and Afghani conflicts).²

It’s time to bury the Supply-Side, Trickle-Down fantasy, and the Center on Budget and Policy Priorities does so handily in their recent report, “Evidence Shows that Tax Cuts Lose Revenue.” And there’s so much evidence that even Bushite economists are backpedalling from such absurd voodoo economics.

Reminder: Have you claimed your Economic Stimulus Payment yet? Five million Americans who aren’t required to file a tax return haven’t.³ Go to this IRS web page to find out how you can get yours.
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¹The Presidents, by Henry F. Graff, Simon and Schuster, 2002, p. 518.
²U.S. National Debt Clock
³“More Than 5 Million Americans Still Need to Claim Their Economic Stimulus Payments,” from the Center on Budget and Policy Priorities (CBPP)
tags: Economics

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Aug 14, 2008
Since the days of Enron and the other corporate debacles that rang in the beginning of the new millennium, a huge industry has grown up that purports to provide independent judgments on the quality of corporate governance. The industry is dominated by four firms, the best known being Institutional Shareholder Services (ISS). It was sold in 2001 for a reported $45 million.

By tweaking numbers available through SEC filings and other public sources, these companies come up with ratings that they claim can predict future performance of the companies. Problem is, they don’t. In a recent study by the Stanford Graduate School of Business entitled, “Rating the Ratings: How Good Are Commercial Governance Ratings?,” the authors conclude that they aren’t very good at all. The study looked for correlations among the ratings of four leading watchdog companies and five basic performance metrics: restatement of financial results, shareholder lawsuits, return on assets, and some things called the Q Ratio and Alpha which only someone who spends 24/7 wringing money out of the stock market can understand. They found slight to no correlation among the elements, and practically no agreement among the leading companies’ ratings (many of the same corporations were rated by more than one watchdog).

So why then did a company that sold for $45 million in 2001 manage to get itself sold again in 2006 for over half a billion dollars, despite the fact that its product is, well, worthless? I guess it just proves that, even in the heady regions of high finance, there’s one—or two—born every minute.
tags: Economics

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Aug 12, 2008
Kiva is an organization that manages a web site for soliciting donations from “social investors” to third-world entrepreneurs, and funnels those donations to the microfinance institutions (MFIs) which disburse the funds and receive the payments back from the entrepreneurs. Kiva’s mission is “to connect people through lending for the sake of alleviating poverty.” They currently list 101 MFIs, which they call “Field Partners,” on their site.

The site is full of information regarding donors and the individuals seeking loans to start or support small, often family-run, businesses, and Kiva makes it easy for donors to find and fund entrepreneurs they wish to support. The extent of activity on the site is made clear by statistics Kiva provides. In one recent week, $631,600 was lent out; 1,479 entrepreneurs were funded; 2,766 new “lenders” joined Kiva; 8,295 “lenders” made a loan; and 555 loans were repaid. Though not as world-shattering as one might hope, this level of activity is nonetheless admirable. We have been a member of Kiva, and regular donor, since April 2007.

We use the word “donor” and put the word “lender” in quotation marks because that is one of the problems with Kiva. Those of us whom Kiva calls “lenders” aren’t, because lenders expect a return on their loan and we don’t get one. If a borrower pays back a loan which we helped with (and a remarkably high number—99.7 percent to date—do), all we get is the amount of our contribution back, which we are then encouraged to contribute to someone else. This, of course, is contrary to the point of making loans, which is to risk capital in the expectation of improving upon it. The MFIs receive the interest on the loans—the average rate, according to Kiva, is 21 percent—but the lenders do not (nor does Kiva). Furthermore, our donations are not tax-deductible. We therefore become what Kiva calls “social investors,” people who support this initiative for altruistic motives.

This fact is not made very clear on Kiva, another problem with the site. The “About Lending” section of the Help Center doesn’t mention it, and one would expect it would be there. It is found toward the bottom of the “How Kiva Works” section, where, in answer to the question, “Do I get interest on my loan?,” Kiva simply says by way of explanation, “No, loans made through Kiva’s website do not earn any interest ... Providing interest to our lenders is legally complex. However, we may provide this option in the future in accordance with U.S. law and regulations.” We hope they do, and soon. The repayment rate is high enough to make these extremely attractive investments, and we would increase ours in Kiva severalfold if we had the opportunity to earn as much as we could get on a 12-month CD.

Although Kiva claims it “will not partner with an organization that charges exorbitant interest rates,” 21 percent (as an average rate) seems high to us. It does to Mohammad Yunus as well. He is the man who made micro-lending famous (and won a Nobel Prize for it). He has been quoted as saying that MFIs should charge for the cost of borrowing funds plus 10 to 15 percent for operating expenses. His Grameen Bank charges 20 percent interest to borrowers.¹ That’s problem #2.

Problem #3 is more intractable. Many borrowers on Kiva are women, and many lenders, acknowledging the dismal, often criminal, treatment of women around the world in general and in the countries Kiva serves in particular, are careful to select female entrepreneurs for their donations. Unfortunately, as we have discovered (Kiva is admirably frank about disclosing borrowers’ stories as they become known to them), the female borrowers are often no more than “fronts” for a male behind the scenes (often a husband or other family member) who actually receives the funds and uses them for purposes other than the stated ones.

Kiva has attempted to gloss over this fact. In a private correspondence in late June 2008, a Kiva Customer Service Manager made the following argument to me regarding this situation:

“It’s important to note that many microfinance institutions will not lend to men, per their mission, and, in instances where women participate in the family business, women will often act as the business manager and point of contact for loans to fund family businesses that they receive through their local MFI. In this capacity they are the ones who complete the loan applications, have the funds disbursed to them, make scheduled repayments, and otherwise administer the loan. Far from a position of indignity, this gives the women in the family significant power over the family business and a level of participation that some may not ordinarily have. It also helps them to establish relationships with their MFI so that, if they so choose, down the road they can take out a loan to start their own independent business.”

I ... discover from your response to my query that such arrangements are common—the woman applies for the loan and is the figurehead recipient, but the funds go directly to the husband. And this is because many MFI[s] will not lend to men! Logic worthy of Lewis Carroll, and a cynical Lewis Carroll at that. And, of course, the people you are relying upon to provide the capital for these loans are not informed of this arrangement.

I want to reiterate a point I made, and a point which I believe many of your [field] partners—who loan only to women—are trying to make: This world is ruled—badly—by men. Women are routinely exploited, oppressed, beaten, raped, and killed by men, and with impunity. Microfinance provides a way out for these women, a means to procure some independence, self-esteem, and empowerment. Many of us believe that liberating and empowering the world’s women provides one possible means of saving a world which is otherwise lost. If our support of these women is to be undermined by deceptive advertising, whether initiated by Kiva or your [field] partners, then we may need to take our money, our hopes, and our ideals elsewhere.

A rather extreme position, you will probably say. And no doubt there are many instances where the woman plays the part you describe in your note and does, indeed, win a measure of respect, value, and independence in playing that part. I suspect there are many more instances, however, where she is simply being used by the males in her family and, in these instances, so are we and, I would think, so is Kiva.

I admire the operation you have put together, and the beauty, comprehensiveness, and utility of your web site. I even admire the frankness which is evident in much of the informational material on the site. However, the problem at issue is not a trivial one, and I am sincerely sorry to say your response has not adequately addressed it.

Read More about Kiva

Aug 09, 2008
That’s six trillion, 393 billion, 94 million dollars. And that’s how much we've spent—in 2008 dollars—on all the wars we’ve fought since the American Revolution. Which, at only $1.8 billion, was a bargain.

In a bit over five years, we have spent almost as much—$648 billion—fighting a losing conflict in Iraq as we spent fighting the losing conflict in Vietnam over ten years ($689 billion). We’ve spent in Iraq more than 10 times the amount spent in the Civil War—by both sides combined.

Furthermore, these estimates do not include costs of veterans’ benefits, interest paid for borrowing money to finance the conflict (and almost all the money for Iraq has been borrowed. Our nation’s grandchildren will pay for it in a starkly lower standard of living), or assistance to allies. Indeed, it has been estimated by credible economists that the Iraq boondoggle has already committed us to total spending in excess of three trillion dollars.¹

All this comes from a Congressional Research Service (CRS) report (RS22926) released late last month.

Read it and weep.
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¹The Three Trillion Dollar War, by Joseph E. Stiglitz and Linda J. Bilmes, W.W. Norton, 2008 (Accessed August 2, 2008)
tags: Economics

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Aug 05, 2008
One-third of American families with children are classified as low income because they earn less than twice the federal poverty level. As they add hours and/or family members to the work force, they quickly cease to qualify for various modes of assistance available to them, rendering the additional income far less valuable than that obtained by their initial efforts.

A pair of new reports from the “nonpartisan” Urban Institute entitled, “Making Work Pay Enough,” and “A New Safety Net for Low-Income Families” propose a number of policy tweaks that federal and state governments can make to those assistance programs to remove the disincentives to self-improvement for these families. (The first report is available at the link below; the second is available here.)

Meanwhile, the second of three increases in the minimum wage—arguably the only accomplishment of the 110th Congress, and a shamefully meager and mean-spirited one at that—kicked in last month. The first increase, in 2007, took the wage from $5.15 an hour to $5.85; last month’s to $6.55, and next year’s final increase will send it soaring to $7.25. As has been the case since 1997, one full-time worker in a minimum-wage family will continue to make about half the federal poverty level.¹

I take the biblical adage, “The workman is worthy of his hire” to mean that if you are going to take advantage of someone’s full-time labor, you owe them a living wage. All the policy tweaks in the world won’t bring about the justice this situation calls for. The American worker and the American people need to wake up. CEO’s are making more than 500 times what their average worker is making,² and the middle class has seen a net loss in income during the present administration.³

This government was founded on principles of equity, in opposition to the accumulation of wealth in a few hands. The first step to restoring our nation’s economic health should be to raise the minimum wage to a living wage (which will vary from state to state), and keep it there by indexing it to a real annual cost-of-living increase, and not to the cruel fiction of the Consumer Price Index.⁴
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¹Oregon State University (Accessed July 30, 2008)
²Wages in America: The Rich Get Richer and the Rest Get Less, from The War at Home: The Corporate Offensive in America From Reagan to Bush, by Jack Rasmus (Accessed July 30, 2008)
³2005 Incomes, on Average, Still Below 2000 Peak, David Cay Johnston, citing IRS data, in the New York Times, August 21, 2008 (Accessed July 30, 2008)
⁴“Using the Consumer Price Index to Rob Americans Blind,” by Richard Benson, at SafeHaven.com (Access July 30, 2008)
tags: Economics

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Jul 26, 2008
Human capital is our most precious resource, and we waste it at our peril. Human capital will solve the energy crisis, cure disease, end global warming, and establish universal justice and peace. And if human capital doesn’t do these things, some other force will, to the everlasting regret of the few of us who survive.

This is why we must end poverty and ignorance throughout the world. Not because it is good or even right to do so—although it surely is both. But because it is essential that we liberate as much human capital as possible, to take on these species-threatening challenges.

So, how do we do it? The United Nations Development Programme has some sound suggestions for ways to begin eradicating poverty. In their report, “Creating Value for All: Strategies for Doing Business with the Poor,” they summarize the product of research based on 50 case studies involving efforts to engage the world’s poor in economic activity, as clients and customers on the demand side, and as employees, producers, entrepreneurs, and business owners on the supply side. Their argument:

[T]he poor harbour a potential for consumption, production, innovation and entrepreneurial activity that is largely untapped. This report ... gives many examples of firms that—by doing business with the poor—are generating profits, creating new growth potential and improving poor people’s lives. The report’s main message: Business with the poor can create value for all.

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Jul 24, 2008
I hate debt. Other than a small mortgage, which we only have because it provides a tax deduction, my wife and I don't carry any consumer debt. I don’t even use a credit card anymore (which I used to pay off every month). Now, it’s strictly the debit card. I’m not looking for a medal. I’m describing a personality quirk. Debt makes me nervous.

A recent, really scary article by Gretchen Mortenson in the New York Times reminded me why. “Given a Shovel, Americans Dig Deeper Into Debt” describes the hapless story of Diane McLeod, a middle-class woman from a thrifty home who ended up jobless, homeless, penniless, and under a mountain of debt. Some of the numbers in the story are terrifying: Americans carry $2.56 trillion in consumer debt, up 22 percent since 2000. The average household’s credit card debt is over $8,500, up 15 percent since 2000. But the numbers aren’t as scary as the reasons behind them.

Why all this growth in consumer debt? To paraphrase Field of Dreams, if the opportunity to borrow is there, they’ll come. And it is there aplenty following all the banking and investment deregulation that has gone on since the Reagan years, through Clinton, and bigtime during Bush. What it essentially comes down to is risk reduction. Lenders no longer have to assess the risks involved in lending—which used to be their primary responsibility—because they can lay off a loan as soon as they make it, and well before it goes bad, by packaging it into bundles of securities which are then resold and off their books. Along the way, lenders can assess all sorts of fees that make up for the initial come-on of unrealistically low interest rates.

McCain, who has confessed to a weak head for economics¹, would have this situation continue. Obama has not, as yet, come out with an economic plan that does much to reverse the scandalous lack of regulation, or to restore the accountability, of lending institutions.

Money is a drug. And if our banks are going to stand on every street corner and whisper, “Psst! Want a taste?” to passersby because they stand only to reap the profits and are uninvolved in the consequences, then we need to treat them as we treat other such predators.

See also Going Under: A Nation in Debt
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¹"The issue of economics is not something I’ve understood as well as I should," quoted in “Responding to Recession,” by Paul Krugman, The New York Times, January 14, 2008 (Accessed July 20, 2008)
tags: Economics

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Jul 07, 2008
This is just a very useful and informative 463 pages full of numbers, assembled biennially by the American Association of Retired Persons (which seems now to be referring to itself, at least online, only by its acronym, AARP). This 2008 edition of the “State Handbook of Economic, Demographic, and Fiscal Indicators” provides “useful data on such topics as population, poverty rates, per capita state personal income, state and local revenues, expenditures, tax rates, and property tax relief programs. Gender and age comparisons are provided for some of the data.” The report facilitates state-national comparisons by setting some data numbers side by side. It also shows changes in some numbers over a period of a decade.

Among the items I found of interest:

• The national poverty rate increased 12.9% between 1996 and 2006, and stands at 13.3% of the population in 2006. (The poverty threshold for a family of four with two children in 2007 was $21,027¹.)
• The highest poverty rate increase in any demographic group was for males 75 and over (25.1% increase); the second highest was for males age 18-64 (17.4% increase).
• The largest impoverished demographic group in America were females under 18 (18.5%), followed closely by males under 18 (18.2%) We visit poverty most heavily upon those whose futures are most direly affected by it. No child—in America or throughout the world—should live in poverty, fear, hunger, disease, or ignorance.
• The poverty rate in my state of Vermont increased only 6.4% during the period in which the nation's increased 12.9%; and only 10.3% live in poverty in Vermont, compared to the national number of 13.3%. Not much, however, to crow about.
• And we're growing older. Though the number of males in Vermont increased 6.5% from 1996 to 2006, the number of males over 75 increased 30.2% and the number under 18 decreased 8.6%. Female numbers were comparable.
• I was surprised to learn that only 39% of our general revenues in 2005 came from income, sales, and property taxes combined, which I would have thought accounted for the lion's share of our revenues. The largest piece (27%) came from federal aid, a proportion unchanged since 1995.

Download the Handbook

Jul 05, 2008


Just because you're paranoid doesn't mean people aren't following you around.

Case in point: The Brookings Institution has just come up with a plan to grab my—and your—retirement nest egg. The plot is lovingly obfuscated in their recent publication, “Increasing Annuitization in 401(k) Plans with Automatic Trial Income.”

Now annuities, in and of themselves, are not evil. You have a certain amount accrued in your retirement accounts (IRAs, 401(k)s, pensions, etc.). When retirement comes, how are you going to assure that those funds are withdrawn in such a way that they will last as long as you do? One way is to purchase an annuity. For a set amount of up-front cash, the annuity provider will send you a monthly check for the rest of your (and your spouse's) life, however short or long that may be.

People don't buy annuities, according to the Brookings paper, for several reasons: they're too expensive, and potential customers are unfamiliar with them, biased against them, or too lazy to inform themselves. The solution: “[D]e­mand would increase and workers would be bet­ter off if market function improved and behavioral obstacles were circumvented or mitigated.” In circumvention of those pesky behavioral obstacles, the authors propose a sea change in 401(k) withdrawals that would see them automatically converted to two-year “trial” annuities, unless the retiree affirmatively opts out. At the end of the two-year period, the retiree would again have to affirmatively opt out in order to prevent the annuitization from becoming a lifetime commitment.

The current political climate, characterized in my view (as well as that of other eminently reasonable individuals) by corporate and executive branch gangsterism, would have us believe that we should make our own decisions regarding planning for retirement (i.e., privatize Social Security), until such time as we retire, when the pros will take over and relieve us of our funds as thoroughly, quickly, and automatically as possible. A default program such as that proposed by Brookings would provide a huge windfall for the corporate and Wall Street types who, for the past 30 years, have been busily sucking our nation's wealth up into the top one-tenth of one percent of the population.

Again, annuities are not evil, and they do offer a means—similar to Social Security benefits—of providing a dependable level of income over an unknown period of time. However, they are expensive (i.e., the lump-sum up-front purchase price does not currently translate into a very attractive monthly income, actuarially speaking). In other words, your peace of mind is bought at an unacceptably high price.

My alternative to the Brookings plan?: Let the greedy providers who are selling us these instruments look for less of a killing when they do so. How? Find a means to increase competition among providers, legislate for “plain English” prospectuses that don't require an MBA to understand; and then, perhaps, institute an opt-in plan for the automatic conversion of 401(k) payouts to trial annuities which this report describes.
tags: Economics

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Jul 02, 2008
It was Grover Norquist who made the widely quoted quip, “I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

But that was no quip, and if you want to know how serious these people are about starving government, take note of a bill now before the Senate, brought to our attention by the Center on Budget and Policy Priorities. Ostensibly intended to provide some relief to homeowners during the current housing debacle, it “includes a provision that would allow non-itemizers to deduct property taxes up to an amount of $500 for an individual and $1,000 for a couple.”¹ That's the first tax decrease provision.

But there's a catch, a very sneaky one, and it comprises the second tax decrease attempt. The deduction would be denied to any resident of a locality that increases its property tax rate between the time of the enactment of the bill and December 31 of this year. There are some exemptions to that provision, but in essence we see here a reaching down from the federal to the local level to turn off another spigot of taxation.

We all know how much depends on our local property taxes—schools, fire and police, libraries, local road maintenance, social services, and more. And when housing values fall, local property tax rates have to rise just to generate the same level of income.

This is more than an overreaching, tax-averse, corporate-dominated federal government power play. Local property tax rates are already a cause for contention in small communities. This legislation would set neighbor against neighbor and citizens against their own elected representatives. This legislation seeks to do an end-run around the states' prerogative to grant taxing power to localities, and to drown local government in the bathtub.

And where are the voices of the Democrats who gained a majority in Congress in 2006? As silent as they were when they granted Bush the funds to continue his war through the end of his term; as silent as they were when they extended his power to spy on Americans and indemnified his accomplices.

In the end, we will remember not the words of our enemies, but the silence of our friends.
[Martin Luther King, Jr.]

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Jun 25, 2008
Global warming is here. And it's going to affect every aspect of our lives, indeed, it has already begun to do so. Droughts and cataclysmic weather disasters are becoming common occurrences in the news: the 2005 hurricane in New Orleans, the 2004 tsunami in Asia, the 2003 heat wave in France that killed almost 15,000 people.

Businesses, if they are able to acknowledge the potential for disruption created by climate change, face both risks and opportunities. The Pew Center on Global Climate Change has provided a wake-up call to businesses in its 40-page report, "Adapting to Climate Change: A Business Approach":

This paper outlines a sensible business approach to analyzing and adapting to the physical risks of climate change. It focuses on a critical first step in assessing these climate impacts: understanding the potential risks to business and the importance of taking action to mitigate those risks.

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Jun 22, 2008
The Rand Corporation, the conservative think tank...

Isn’t it sad and distressing that when one of those words—liberal, conservative—comes up, half of us suddenly go deaf and the other half are prepared to swallow any nonsense—no matter how ridiculous—that follows. We have to cut that out. We have to stop demonizing one another on such slim evidence as a broadly characterizing adjective. The polarization that has infected political discourse over the past 30 years has got to go. It has been useful in assembling sufficient constituencies of erstwhile fringe groups (some lunatic) to bring to power a generation of corporate thieves masquerading as right-wing ideologues. Have they now been sufficiently unmasked, their motives and their boundless cupidity sufficiently revealed over the past decade, that we may hope to bid them a happy farewell in the not too distant future?

I am convinced that a true conservative and a true liberal share many of the same hopes and aspirations for this world. Sometimes I can’t decide which I am, particularly when I find myself reading a report like the one that is the subject of this entry.

The Rand Corporation, a conservative think tank, has published an enlightening and useful “Occasional Paper,” entitled “Breaking the Failed-State Cycle,” by Marla C. Haims, David C. Gompert, Gregory F. Treverton, and Brooke K. Stearns. The link to the report is below, and it is well worth reading in its entirety (58 pp.); however, it can be summed up in a few words: Assistance to failed states almost always fails because the institutions doing the assisting don’t work together.

Failed states, for the purpose of this paper, are the ones flagged for “Alert” by the Fund for Peace in its annual Failed State Index. Thirty-two of the 177 countries covered in this Index are flagged for “Alert” and a whopping 97 others are in the next category, “Warning.” Failed states fail in the areas of security, economics, and governance. Different donor institutions serve different areas, and they are not integrated in their approach, so their efforts more often than not come to naught. The paper’s concluding recommendations may be summed up in even fewer words: Get together!

This, of course, is the theme of All Together Now. We’ve stressed it in the past and, in varying ways, it may be discerned in every entry on this site. We will continue to return to it over and over. The problems we face—and they are many and perilous—will only be solved by concerted action. We cannot wait for our “leaders” to decide the time is ripe. They are incapable of acting to ameliorate the unique perils faced by our species at this moment in history. I wonder if they were ever capable of advancing the well-being of our species. Today, they are in thrall to a worldwide corporate hegemony that threatens all life on the planet. We, the People, acting together, will reverse the tide of environmental degradation, of militaristic brinkmanship, of the exploitation of the earth’s resources by predatory elites—or no one will.
tags: Economics

Download the Report

Jun 20, 2008
As everyone knows, the U.S. has never ratified the Kyoto Protocol treaty. Nevertheless, most of the rest of the world takes a less blasé attitude toward the impending doom threatened by global warming. The European Union (EU), in particular, has led the way in taking responsibility for initiating steps to lower its greenhouse gas emissions.

The EU has just completed a three-year “trial” period for an Emissions Trading System (ETS), popularly known as a cap-and-trade system. A report released by The Pew Center on Global Climate Change entitled, “The European Union's Emissions Trading System in Perspective,” written by A. Danny Ellerman and Paul Joskow of MIT, contains the following good news:

Although there have been plenty of rough edges, a transparent and widely accepted price for tradable CO2 emission allowances emerged by January 1, 2005, a functioning market for allowances has developed quickly and effortlessly without any prodding by the Commission or member state governments, the cap-and-trade infrastructure of market institutions, registries, monitoring, reporting and verification is in place, and a significant segment of European industry is incorporating the price of CO2 emissions into their daily production decisions ... The initial challenge is simply to establish a system that will demonstrate the societal decision that GHG emissions shall have a price and to provide the signal of what constitutes appropriate short-term and long-term measures to limit GHG emissions. In this, the EU has done more with the ETS, despite all its faults, than any other nation or set of nations.

Read the Report

Jun 18, 2008
We're wading in debt. We're swimming in debt. We're drowning in debt.

The U.S. used to pride itself on being a thrifty nation. Today, our savings rate is in the minus figures: we spend more than we make and we don't save at all. Millions of us are in bondage to our credit cards, maxed out and barely able to make the monthly interest payments. Consumer debt in April 2008 exceeded $2.5 trillion dollars, as reported by the Federal Reserve. (For comparison purposes, the month I was born consumer debt was under $6 billion.) How did we come to such a pass?

For a New Thrift: Confronting the Debt Culture, a publication of The Thrift Project, delves into that question and comes up with some answers. Sponsored by eight agencies led by the Institute for American Values, For a New Thrift focuses on institutions:

When a society creates democratic institutions to encourage thrift, more people are likely to engage in the positive activities of saving, conservation, and asset building. When a society fails to nurture such institutions, limits access to them, or supports institutions opposed [to] thrift, more people are likely to over-spend, fall into consumerism as a philosophy of life, and go into debt.

Read Whitehead's Article

Jun 09, 2008
Members of the American Public Transportation Association (APTA) include 1500 public transportation systems that serve more than 90% of those using public transportation in the U.S. and Canada.

APTA reports ridership in public transit systems was up 3.3% in the first quarter of 1998, for a total of 2.6 billion trips, 85 million more than for the same period last year. And that was before gasoline hit $4 a gallon. Wait 'til next quarter!
tags: Economics

Read the Press Release

Jun 03, 2008
The World Bank isn't among our favorite organizations, but they released a report on microfinance last month, and since we'll be talking more about this subject in future posts, I decided to note it.

Among the report's most important conclusions is that microfinance—small business loans to mostly poor, mostly third world, mostly female borrowers—is actually an effective and successful program, whether pursued by non-profit or for-profit institutions.

They take a few expected shots at microfinance ("the evidence lags far behind some of the rhetoric on the potential for microfinance to reduce poverty") and opine that microfinance will never be an attractive investment for those for whom maximizing profit is the first or only consideration.

But isn't that the point? Isn't that what we have to get away from in this world? Not the concept of profit (though there are those who would disagree with me on that), but of maximizing profit at any cost—to human beings, to the environment, to the future. It simply doesn't work anymore. And, in retrospect, it ought never to have been condoned as a legitimate feature of capitalism in the first place.
tags: Economics

Go to Report (.pdf)