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Thursday, September 18, 2014

America's middle class: So Much Poorer than you think or imagine.


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America's middle class: Poorer than you think

August 5, 2014: 3:25 PM ET



average median net worth

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NEW YORK (CNNMoney)

Rich Americans. That's our global reputation.

The numbers seem to back it up. Americans' average wealth tops $301,000 per adult, enough to rank us fourth on the latest Credit Suisse Global Wealth report.
But that figure doesn't tell you how the middle class American is doing.
Americans' median wealth is a mere $44,900 per adult -- half have more, half have less. That's only good enough for 19th place, below Japan, Canada, Australia and much of Western Europe.
"Americans tend to think of their middle class as being the richest in the world, but it turns out, in terms of wealth, they rank fairly low among major industrialized countries," said Edward Wolff, a New York University economics professor who studies net worth.
Why is there such a big difference between the two measures?
Super rich Americans skew average wealth upwards. The U.S. has 42% of the world's millionaires, and 49% of those with more than $50 million in assets.
This schism secures us the top rank in one net worth measure -- wealth inequality.
There's one main reason why the average Spaniard or Italian has more to his name than the typical American: real estate.
Home ownership rates are higher in many European countries than in the U.S., giving Joe European more assets to his name than his American counterpart. Plus, it's easier for Americans to borrow money, which eats away at their net worth, said Jim Davies, an economics professor at Western University in Ontario, Canada, and co-author of the Credit Suisse report.
Middle class Americans were also hurt greatly by the housing collapse at the end of the last decade. The median wealth of families was $77,300 in 2010, a nearly 40% drop from 2007, according to Federal Reserve statistics.
"Changes in home prices have a big effect on the wealth in the middle," Davies said.
Middle class Australians, by comparison, are leading the pack. The country's residents have the highest median net worth, coming in at $219,500. Australia also has low wealth inequality.
This is in part because Australians have a strong tradition of home ownership, though escalating prices have made it tougher for young adults to secure the Australian Dream. Those down under also have a mandatory retirement savings program, where they must squirrel away more than 9% of their income for their Golden Years, and they carry relatively low credit card and student loan debt.
Americans, meanwhile, are having trouble building wealth because wages have stagnated for more than a decade. Median household income was $51,017 in 2012, compared to $56,080 in 1999, according to the Census Bureau's most recent statistics.
Americans sound off on The Dream
There are many reasons why middle class incomes are suffering, including the decline of unions' power, the shift of jobs overseas and the increasing use of technology in the workplace, said Kenneth Thomas, professor of political science at University of Missouri, St. Louis.
Also, Americans have to pay more out of pocket for basics, such as health care and higher education, reducing their ability to build their nest egg.
"Middle class families haven't been able to save anything," Wolff said. 

Monday, September 15, 2014

The atheist libertarian lie: Ayn Rand, income inequality and the fantasy of the “free market”

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The atheist libertarian lie: Ayn Rand, income inequality and the fantasy of the “free market”

Atheist libertarians pose as skeptics -- except when it comes to free markets and the nature of corporate power





The atheist libertarian lie: Ayn Rand, income inequality and the fantasy of the "free market"Rand Paul, Ayn Rand, Richard Dawkins (Credit: AP/Timothy D. Easley/Reuters/Chris Keane)
 
Why atheists are disproportionately drawn to libertarianism is a question that many liberal atheists have trouble grasping.  To believe that markets operate and exist in a state of nature is, in itself, to believe in the supernatural. The very thing atheists have spent their lives fleeing from.

According to the American Values Survey, a mere 7 percent of Americans identify as “consistently libertarian.” Compared to the general population, libertarians are significantly more likely to be white (94 percent), young (62 percent under 50) and male (68 percent). You know, almost identical to the demographic makeup of atheists – white (95 percent), young (65 percent under 50) and male (67 percent). So there’s your first clue.

Your second clue is that atheist libertarians are skeptical of government authority in the same way they’re skeptical of religion. In their mind, the state and the pope are interchangeable, which partly explains the libertarian atheist’s guttural gag reflex to what they perceive as government interference with the natural order of things, especially “free markets.”

Robert Reich says that one of the most deceptive ideas embraced by the Ayn Rand-inspired libertarian movement is that the free market is natural, and exists outside and beyond government. In other words, the “free market” is a constructed supernatural myth.

There is much to cover here, but a jumping-off point is the fact that corporations are a government construct, and that fact alone refutes any case for economic libertarianism. Corporations, which are designed to protect shareholders insofar as mitigating risk beyond the amount of their investment, are created and maintained only via government action.  “Statutes, passed by the government, allow for the creation of corporations, and anyone wishing to form one must fill out the necessary government paperwork and utilize the apparatus of the state in numerous ways. Thus, the corporate entity is by definition a government-created obstruction to the free marketplace, so the entire concept should be appalling to libertarians,” says David Niose, an atheist and legal director of the American Humanist Association.

In the 18th century, Adam Smith, the granddaddy of American free-market capitalism, wrote his economic tome “The Wealth of Nations.” But his book has as much relevance to modern mega-corporation hyper-capitalism today as the Old Testament has to morality in the 21st century.

Reich says rules that define the playing field of today’s capitalism don’t exist in nature; they are human creations. Governments don’t “intrude” on free markets; governments organize and maintain them. Markets aren’t “free” of rules; the rules define them. “In reality, the ‘free market’ is a bunch of rules about 1) what can be owned and traded (the genome? slaves? nuclear materials? babies? votes?); 2) on what terms (equal access to the Internet? the right to organize unions? corporate monopolies? the length of patent protections?); 3) under what conditions (poisonous drugs? unsafe foods? deceptive Ponzi schemes? uninsured derivatives? dangerous workplaces?); 4) what’s private and what’s public (police? roads? clean air and clean water? healthcare? good schools? parks and playgrounds?); 5) how to pay for what (taxes, user fees, individual pricing?). And so on.”

Atheists are skeptics, but atheist libertarians evidently check their skepticism at the door when it comes to corporate power and the self-regulatory willingness of corporations to act in the interests of the common good. In the mind of an atheist libertarian, both religion and government is bad, but corporations are saintly. On what planet, where? Corporations exist for one purpose only: to derive maximum profit for their shareholders. “The corporation’s legally defined mandate is to pursue, relentlessly and without exception, its own self-interest, regardless of the often harmful consequences it might cause others,” writes Joel Bakan, author of “The Corporation: The Pathological Pursuit of Profit and Power.”

Corporations pollute, lie, steal, oppress, manipulate and deceive, all in the name of maximizing profit. Corporations have no interest for the common good. You really believe Big Tobacco wouldn’t sell cigarettes to 10-year-olds if government didn’t prohibit it? Do you really think Big Oil wouldn’t discharge more poisons and environmentally harmful waste into the atmosphere if government regulations didn’t restrict it? Do you really believe Wal-Mart wouldn’t pay its workers less than the current minimum wage if the federal government didn’t prohibit it? If you answered yes to any of the above, you may be an atheist libertarian in desperate need of Jesus.

That awkward pause that inevitably follows asking a libertarian how it is that unrestricted corporate power, particularly for Big Oil, helps solve our existential crisis, climate change, is always enjoyable. “Corporations will harm you, or even kill you, if it is profitable to do so and they can get away with it … recall the infamous case of the Ford Pinto, where in the 1970s the automaker did a cost-benefit analysis and decided not to remedy a defective gas tank design because doing so would be more expensive than simply allowing the inevitable deaths and injuries to occur and then paying the anticipated settlements,” warns Niose.

In the 1970s, consumer protection advocate Ralph Nader became famous for helping protect car owners from the unsafe practices of the auto industry. Corporate America, in turn, went out of its way in a coordinated effort, led by U.S. Supreme Court Justice Lewis Powell, to destroy Nader. The documentary “Unreasonable Man” demonstrates how corporate CEOs of America’s biggest corporations had Nader followed in an attempt to discredit and blackmail him. General Motors went so far as to send an attractive lady to his local supermarket in an effort to meet him, and seduce him. That’s how much corporate America was fearful of having to implement pesky and costly measures designed to protect the well-being of their customers.

Today America is facing its greatest moral crisis since the civil rights movement, and its greatest economic crisis since the Great Depression: income inequality. Now, income inequality doesn’t happen by accident. It happens by the political choices a country makes. Today America is the most income unequal among all developed nations, and we find ourselves here today not because of government regulation or interference, but a lack thereof. The past three decades have seen our political class become totally beholden to the armies of corporate lobbyists who fund the political campaigns of our elected officials. Today the bottom 99 percent of income earners has no influence on domestic policy whatsoever.

The unilateral control that Wall Street and mega-corporations have over economic policy is now extreme, and our corporate overlords have seen to the greatest transfer of wealth from the middle class to the rich in U.S. history, while corporations contribute their lowest share of total federal tax revenue ever. The destruction of labor; serf-level minimum wage; and the deregulation, monopolization and privatization of public assets have pushed us deeper into becoming a winner-takes-all society.

In effect, America virtually exists as a libertarian state, certainly when compared to liberal democracies found in Western Europe, Canada and Australia. In these countries, there’s a sense of “we are all in this together,” but here the romantic idealism of the rugged individual allows corporate influence of the political class to gut public safety nets, eradicate collective bargaining, strip regulatory control of our banks, water, skies and our food.

By every measure, Australians, Scandinavians, Canadians, Germans and the Dutch are happier and more economically secure. The U.N. World Development Fund, the U.N. World Happiness Index and the Social Progress Index contain the empirical evidence atheist libertarians  should seek, and the results are conclusive: People are happier, healthier and more socially mobile where the size of the state is bigger, and taxes and regulations on corporations are greater. You know, the opposite of the libertarian dream that would turn America into a deeper nightmare.

CJ Werleman is the author of "Crucifying America" and "God Hates You. Hate Him Back." You can follow him on Twitter:  @cjwerleman

Friday, September 5, 2014

3 Ways American Workers Get Screwed Without Even Realizing It


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Thanks to extra responsibilities like email and overtime, we spend many more hours on the job than we think we do.







September 5, 2014  


Most jobs have their downsides. Whether it’s a grueling hour-plus commute or an overly demanding boss, our complaints about work typically involve being forced to spend more time and energy on work-related activities than we're expected to. But there are other, more insidious ways that work starts to invade our personal lives, often without our even noticing. These issues are clearly very different for low-wage and white-collar workers (having your hourly paycheck docked because you miss the bus and show up five minutes late is not the same as a salaried employee being asked to stay a few hours late to work on a project), but we all experience them to some degree. Here are three of the most common ways American workers get screwed.
1. The 40-hour workweek is a fantasy.
While most of us would shudder at the thought of working six days a week, a new Gallup study reports that full-time U.S. workers spend about 47 hours per week on the job, the equivalent of almost an entire extra workday. This added time can be drawn from any number of sources: mandatory meetings outside of work hours, eating lunch at our desks because we’re too busy to take a break, or simply staying an hour or two late every night to meet deadlines or wrap up tasks.
This infringement on workers’ time is even more egregious for employees who make minimum wage. For many of these workers, who are cobbling together weekly schedules with multiple part-time and temporary jobs, full-time status is just a pipedream. But the ongoing fast-food worker strikes have helped bring the issue of wage theft to national attention. Nine out of every 10 fast-food workers say they don’t get the pay they earned because of off-the-clock work. Across the low-wage spectrum, wage theft includes not just uncompensated overtime, but sneakier tactics like requiring workers to sign blank timesheets and then recording fewer hours worked or erasing hours from timecards. According to a report by the Economic Policy Institute, a left-leaning think tank, more than 60% of low-wage workers have some pay illegally withheld by their employers each week.
2. The tyranny of email.
Earlier this year, the Internet lit up with the news that French workers would now be required to switch off their work phones after 6pm, ignoring all work-related emails. While it turns out that the original coverage of the story was misleading (the agreement only covers tech and consulting workers who have daily contracts—some 200,000 in total), the acknowledgment that people have their own lives outside of the office clearly struck a chord.
Here in the U.S., we answer emails on our subway commutes, on vacations, during meals with friends and loved ones. Thousands of words have been spilled on how changing employer expectations and the ubiquity of smartphones keep us tied to our work long after we’ve left the office. Close to 40% of workers regularly send, receive and check emails outside of working hours. The average worker checks his or her email an astounding 74 times per day. German company Daimler recently offered up a radical solution for its employees that would provoke profound anxiety in most American emailing addicts. With their “holiday mode” setting, which goes into effect for all out-of-work-hours emails, the email sender receives an automatic response with an alternate person to contact, and then their original message is destroyed.
3. What vacation time?
As Bryce Covert points out at Think Progress, no worker in the United States is guaranteed paid time off and a full quarter of American workers have no vacation days at all. But a survey by Glassdoor found that those who do get paid time off usually use only half of it, while 15% don’t take any at all. Thanks to pressure from higher-ups, a lack of other employees who are qualified or available to cover for them, or simply the stress of having too much work, thousands of American workers are leaving one of their most important benefits untapped. Employees stressed by economic insecurity worry about being seen as replaceable or inconsistent by their bosses.
But this mentality is all wrong. Employees have a contractual right to the schedule they agreed upon with their employers, and shouldn’t feel pressured or culpable for wanting to take a few days away from their busy work lives. And needless to say, answering emails from your boss while you’re laying on the beach doesn’t quite count as taking time off.
* * * * *
Countless studies have proven that more work does not necessarily mean better work. That time spent shoveling down a quick salad in front of your desktop, answering emails in bed, or working a 12-hour day at the office actually makes you less productive, not to mention less satisfied with your life. So push back against it any way you can.
An article published by the Markkula Center for Applied Ethics at Santa Clara University makes the point that these cases of overwork are often a result of our own paranoia about our job performance and our employers may not even know how hard we’re pushing ourselves. “As management at many organizations becomes more horizontal, workers may be involved in several different projects at once. The lack of a central authority can mean no one knows how much any particular person is being asked to do.”
Rather than resenting your boss for sending you emails at 11pm, wait until the next morning to respond so he or she doesn’t expect that you’ll always be on call. Be upfront when you can’t tackle yet another project. Don’t feel guilty for taking 30 minutes to eat lunch outdoors in the fresh air. And for god’s sake, use that vacation time! 
Allegra Kirkland is AlterNet's associate managing editor. Her writing has appeared in the Chicago Reader, Inc., Daily Serving and the Nation.

Wednesday, September 3, 2014

Why the Fed Must Act Now to Get Money into the Hands of Ordinary Americans

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More experts are asking for a money drop on Main Street.


September 2, 2014 



When an article appears in Foreign Affairs, the mouthpiece of the policy-setting Council on Foreign Relations, recommending that the Federal Reserve do a money drop directly on the 99%, you know the central bank must be down to its last bullet.
The September/October issue of Foreign Affairs features an article by Mark Blyth and Eric Lonergan titled “Print Less But Transfer More: Why Central Banks Should Give Money Directly To The People.” It’s the sort of thing normally heard only from money reformers and Social Credit enthusiasts far from the mainstream. What’s going on?
The Fed, it seems, has finally run out of other ammo. It has to taper its quantitative easing program, which is eating up the Treasuries and mortgage-backed securities needed as collateral for the repo market that is the engine of the bankers’ shell game. The Fed’s Zero Interest Rate Policy (ZIRP) has also done serious collateral damage. The banks that get the money just put it in interest-bearing Federal Reserve accounts or buy foreign debt or speculate with it; and the profits go back to the 1%, who park it offshore to avoid taxes. Worse, any increase in the money supply from increased borrowing increases the overall debt burden and compounding finance costs, which are already a major constraint on economic growth.
Meanwhile, the economy continues to teeter on the edge of deflation. The Fed needs to pump up the money supply and stimulate demand in some other way. All else having failed, it is reduced to trying what money reformers have been advocating for decades — get money into the pockets of the people who actually spend it on goods and services.
A Helicopater Drop on Main Street
Blyth and Lonergan write:
[L]ow inflation . . . occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. . . . At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.
Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality. [Emphasis added.]
A money drop directly on consumers is not a new idea for the Fed. Ben Bernanke recommended it in his notorious 2002 helicopter speech to the Japanese who were caught in a similar deflation trap. But the Japanese ignored the advice. According to Blyth and Lonergan:
Bernanke argued that the Bank of Japan needed to act more aggressively and suggested it consider an unconventional approach: give Japanese households cash directly. Consumers could use the new windfalls to spend their way out of the recession, driving up demand and raising prices.
. . . The conservative economist Milton Friedman also saw the appeal of direct money transfers, which he likened to dropping cash out of a helicopter. Japan never tried using them, however, and the country’s economy has never fully recovered. Between 1993 and 2003, Japan’s annual growth rates averaged less than one percent.
Today most of the global economy is drowning in debt, and central banks have played all their other cards.  Blyth and Lonergan write:
It’s well past time, then, for U.S. policymakers — as well as their counterparts in other developed countries — to consider a version of Friedman’s helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers wouldn’t cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them.
The Hyperinflation Bugaboo
The main reason governments have not tried this approach, say the authors, is the widespread belief that it will trigger hyperinflation. But will it? In a Forbes article titled “Money Growth Does Not Cause Inflation!”, John Harvey argues that the rule as taught in economics class is based on some invalid assumptions. The formula is:
MV = Py
When the velocity of money (V) and the quantity of goods sold (y) are constant, adding money (M) must drive up prices (P). But, says Harvey, V and y are not constant. The more money people have to spend (M), the more money that will change hands (V), and the more goods and services that will get sold (y). Only when V and y reach their limits – only when demand is saturated and productivity is at full capacity – will consumer prices be driven up. And they are nowhere near their limits yet.
The US output gap – the difference between actual output (y) and potential output – is currently estimated at about $1 trillion annually. That means the money supply could be increased by at least $1 trillion without driving up prices.
As for V, the relevant figure for the lower 80% (the target population of Blyth and Lonergan) is the velocity of M1 –– coins, dollar bills, and checkbook money. Fully 76% of Americans nowlive paycheck to paycheck. When they get money, they spend it. They don’t trade in the forms of investment called “near money” and “near, near money” that make up the bulk of M2 and M3.
The velocity of M1 in 2012 was 7 (down from a high of 10 in 2007). That means M1 changed hands seven times during 2012 – from housewife to grocer to farmer, etc. Since each recipient owes taxes on this money, increasing GDP by one dollar increases the tax base by seven dollars.
Total tax revenue as a percentage of GDP in 2012 was 24.3%. Extrapolating from those figures, one dollar spent seven times over on goods and services could increase tax revenue to the government by 7 x 24.3% = $1.7. The government could actually get more back in taxes than it paid out! Even with some leakage in those figures, the entire dividend paid out by the Fed might be taxed back to the government, so that the money supply would not increase at all.
Assume a $1 trillion dividend issued in the form of debit cards that could be used only for goods and services. A back-of-the-envelope estimate is that if $1 trillion were shared by all US adults making under $35,000 annually, they could each get about $600 per month.  If the total dividend were $2 trillion, they could get $1,200 per month. And in either case it could, at least in theory, all come back in taxes to the government without any net increase in the money supply.
There are also other ways to get money back into the Treasury so that there is no net increase in the money supply. They include closing tax loopholes, taxing the $21 trillion or more hidden in offshore tax havens, raising tax rates on the rich to levels like those seen in the boom years after World War II, and setting up a system of public banks that would return the interest on loans to the government. If bank credit were made a public utility, nearly $1 trillion could be returned annually to the Treasury just in bank profits and savings on interest on the federal debt.  Interest collected by U.S. banks in 2011 was $507 billion (down from $725 billion in 2007), and total interest paid on the federal debt was $454 billion.
Thus there are many ways to return the money issued in a national dividend to the government. The same money could be spent and collected back year after year, without creating price inflation or hyperinflating the money supply.
Why It's the Job of the Fed
Why not just stimulate employment through the congressional funding of infrastructure projects, as politicians usually advocate? Blyth and Lonergan write:
The problem with these proposals is that infrastructure spending takes too long to revive an ailing economy. . . . Governments should . . . continue to invest in infrastructure and research, but when facing insufficient demand, they should tackle the spending problem quickly and directly.
Still, getting money into the pockets of the people sounds more like fiscal policy (the business of Congress) than monetary policy (the business of the Fed). But monetary policy means managing the money supply, and that is the point of a dividend. The antidote to deflation – a shrinking supply of money – is to add more. The Fed tried adding money to bank balance sheets through its quantitative easing program, but the result was simply to drive up the profits of the 1%. The alternative that hasn’t yet been tried is to bypass the profit-siphoning 1% and get the money directly to the consumers who create consumer demand.
There is another reason for handing the job to the Fed. Congress has been eviscerated by a political system that keeps legislators in open battle, deadlocked in inaction. The Fed, however, is “independent.” At least, it is independent of government. It marches to the drum of Wall Street, but it does not need to ask permission from voters or legislators before it acts. It is basically a dictatorship. The Fed did not ask permission before it advanced $85 billion to buy an 80% equity stake in an insurance company (AIG), or issued over $24 trillion in very-low-interest credit to bail out the banks, or issued trillions of dollars in those glorified “open market operations” called quantitative easing. As noted in an opinion piece in the Atlantic titled “How Dare the Fed Buy AIG”:
It’s probable that they don’t actually have the legal right to do anything like this.  Their authority is this:  who’s going to stop them?  No one wants to take on responsibility for this mess themselves.
There is a third reason for handing the job to the Fed. It is actually in the interest of the banks – the Fed’s real constituency – to issue a national dividend to the laboring masses. Interest and fees cannot be squeezed from people who are bankrupt. Creditor and debtor are in a symbiotic relationship. Like parasites and cancers, compound interest grows exponentially, doubling and doubling again until the host is consumed; and we are now at the end stage of that cycle. To keep the host alive, the creditors must restock their food source. Dropping money on Main Street is thus not only the Fed’s last bullet but is a critical play for keeping the game going.
Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of twelve books including the bestselling Web of Debt. In her latest book, The Public Bank Solution, she explores successful public banking models historically and globally. She is currently running for California State Treasurer on a state bank platform.

Monday, September 1, 2014

The right’s food stamp embarrassment: A history lesson for the haters

SALON




The right’s food stamp embarrassment: A history lesson for the haters


While conservatives love to beat up on the SNAP program, there's an awkward little fact that might horrify them






The right's food stamp embarrassment: A history lesson for the hatersFranklin D. Roosevelt (Credit: AP)
Food stamps became part of American life 50 years ago this Sunday when President Lyndon B. Johnson signed the Food Stamp Act into law on Aug. 31, 1964. The program has been a whipping boy almost ever since, especially from conservatives who call the Supplemental Nutrition Assistance Program (SNAP, the contemporary name for food stamps) a costly and demoralizing example of government overreach.
But SNAP was not an idea first created by liberal do-gooders of the 1960s. Food stamps emerged three decades earlier with active participation of businessmen, the heroes of the exact group of people who want to see the program dissolved today.
The early Great Depression was marked by a “paradox of poverty amidst plenty.” Massive crop surpluses led to low prices for farmers. At first, President Franklin D. Roosevelt’s administration tried paying farmers to plow under surplus crops and kill livestock. In theory, decreasing the supply would raise farm prices incentivizing farmers to get their crops to market. But the plan was met with outrage from hungry citizens who said they could have put the destroyed “surplus” food to good use.
After this failed start, Roosevelt tried another plan. Government purchased excess crops at a set price and distributed them at little or no cost to poor Americans. But this system was also met with criticism, this time from the sellers of food goods. Wholesalers and retailers were upset that government distribution bypassed “the regular commercial system,” undercutting their profits.
The Roosevelt administration started the first pilot food stamp program in 1939 to integrate businesses in getting food to the hungry. However, there were concerns about the food stamp program’s success. A newsmagazine at the time reported, “there was no difficulty in selling the idea to grocers,” but some feared that the “real beneficiaries” wouldn’t cooperate. Unlike the image conjured up today of the poor clamoring for government aid, in the time of perhaps the greatest need in the past century, businesses were more excited about the federal assistance than the hungry individuals who were to benefit.
And it turns out businessmen had good reason for their glee; in the first months of the pilot program, grocery receipts were up 15 percent in the dozen “stamp towns.” Conservatives appreciated people “going through the regular channels of trade” and not relying on “government machinery” to bring food to people. The program proved to be so successful that it expanded to half of the counties in the nation by 1943. But the conditions that led to the program’s creation, high unemployment and large agricultural surpluses, disappeared in the WWII economy and the pilot program was shelved.

Twenty years later, the 1960 CBS documentary “Harvest of Shame” demonstrated hunger and poverty remained a reality for far too many Americans. Newly inaugurated President John F. Kennedy found it unconscionable that in the wealthiest nation on the planet, close to one-quarter lived in poverty without access to enough nutritious food to lead productive lives. He used his first executive orderin office to reinstate the food stamp pilot program.
After JFK’s assassination, President Johnson reflected on the continued existence of hunger in America. However, the Texan was adamant that any government help would provide people with “a hand up, not a hand out.” Food stamps provided the perfect way to do this. JFK’s pilot program had proven that food stamps improved low-income families’ diets “while strengthening markets for the farmer and immeasurably improving the volume of retail food sales.” And importantly, the poor purchased more food “using their own dollars.” Based on this assessment, LBJ made the Food Stamp Program a permanent part of the welfare state.
Much like grocers in the stamp towns of the late 1930s, grocery chains today continue to bring in increased sales from SNAP receipts during recessions. Remember last winter when stimulus funds expired and Wal-Mart disclosed lower than expected fourth quarter profits? While Wal-Mart refuses to disclose its total revenues from SNAP, it is estimated they took in 18 percent of total SNAP benefits in 2013, or close to $13 billion in sales. They publicly reported lower earnings per share as “the sales impact from the reduction in SNAP benefits that went into effect Nov. 1 is greater than we expected.”
SNAP recipients, then, are not the program’s only beneficiaries. Businesses profit handsomely from them, too. How ironic that in today’s concentrated grocery-retail market, the chains most ideologically opposed to welfare spending benefit the most from this welfare program. Even more ironic is the fact that the idea behind SNAP originated with grocery men in the 1930s who saw a way to route welfare spending through their businesses. When will today’s conservatives claim as their own these daring and entrepreneurial businessmen who, in part, made the Food Stamp Program possible?

Friday, August 29, 2014

4 Calamities Destroying America's Economy Being Ignored by Elites



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Calamities Destroying America's Economy Being Ignored by Elites



Our leaders are blind to these drivers of economic decline.



August 27, 2014 


The world’s current economic and political structures are proving incapable of fixing the global crisis of poverty, unemployment, and dislocation from a viable way of life for the majority of the world’s population. Why? Let us begin with one present-day example: Larry Summers, former Secretary of the Treasury and also former chair of the Board of Economic Advisors, recently was the principal guest of the national radio broadcast “On Point.” The topic of the hour-long dialogue was growing “inequality.”
 
Summers posited that we are in an oddly slow recovery. He gave some reasons for the slowness but maintained that the measures instigated by the government (the Federal Reserve pumping funds into the economy, and the like) were fundamentally correct, and that with patience and persistence the recovery would solve the problems we have.
 
This basically is the position of Obama and importantly, by no means only his. Every government in every country subscribes essentially to this same apostolic faith.  That faith is pathetic and even grotesquely mistaken. It ignores the four “Tsunami” causes for the globally increasing inequality:
 
1. Automation: The number of jobs that have been automated out of existence in the last 30 years is astronomical. Any effort to enumerate them would be silly. Useful, on the contrary, are perhaps a few hints of the kinds of automation that are still in the future, but nonetheless just around the corner. Observe what is happening in retail –  Amazon.com, and more generally in the service sector, in banks and offices; but beyond that consider the near future of robotics, and close to that the potential of self-driving cars, and of course the galloping field of fabricators. Automation so far has only been the first breeze of an approaching hurricane.
 
2. A second colossal cause is globalization. Despite the nonstop discussion of that topic its basic significance is still largely misunderstood. That factory work is outsourced to lower wage countries is a belittling phrase; more accurate is the contrast between the former monopoly of a very few colonial powers and the now prevailing condition where all countries everywhere — even the Central African Republic and Borneo and Mongolia — are indevelopment.  In other words, in all countries people are looking for jobs. Thus the supply of labor has burst through all bounds! This in turn means that the value of unskilled work has plummeted beyond human sustainability much less economic growth. 
 
3.  Environmental degradation is growing. The depletion of natural resources is directly caused by fruitless efforts to stem unemployment.  Unemployment threatens to grow continuously and the only response we have so far marshaled is economic growth, which self-evidently is coupled to the depletion of our resources.
 
4. The fourth mega-force that escalates inequality everywhere is the industrialization of farming. Throughout the millennia of the Agricultural epoch approximately 75% of the population lived and worked on farms. That percentage only started to gallop away from this ratio when farming became mechanized. However, in the brief period of less than 200 years a breathtaking transformation has taken place. Worldwide 70% of farmers have been driven from their work and their land.  In country after country the percentage of people still working and living on farms has thundered downwards so that it is now in some countries only about 4%. On some continents that human migration is still in its headlong tilt: but as villages die, the former farmers do not find work; they are absorbed in slums and sink down in the morass of extreme poverty, violence, crime, prostitution and drugs.
 
The really foul and grotesque dimension of this lies in its cognitive segregation, for the worldwide migration away from the farms is hardly mentioned when the deficit of jobs and the rise of inequality are discussed. In sheer numbers, this is obviously the most gargantuan cause.
 
It is stunning that there are whole shelves of books about the job-problem, but the reality of the loss of working on farms has rarely been included in the workforce calculations. In essence it means that 75% of the total working population have been cut off from their work and that the need to find re-employment for that huge number is part of the monster-problem that we are failing to even identify let alone solve.
 
If one adds these four Tsunamis together —automation, globalization, destruction of natural resources and the industrialization of farming — then it becomes obvious that the remedies now applied — stimulation of the economy, raising the minimum wage, more education and the rest — are laughably inadequate. It also becomes evident that we are emphatically not in a recovery, somnambulant or otherwise.
 
None of these causes are “circular,” or as it is sometimes expressed cyclical, which recoveries by definition are. All four are linear: automation, globalization, destruction of the environment and the migration away from the land will grow, far beyond where they are now, and will multiply. The inequality will become even more monstrous and more dangerous than it is now. The contrast between slums and the palaces of the superrich is already surreal and fantastic, but it will grow further and beyond our worst imaginings. The faith that we are in a circular turning wheel situation, and that automatically, obedient to the laws of economics, we move towards equilibrium, is totally unfounded.  It is just a misguided medieval superstition.
 
We are not turning in a circle; on the contrary we are undergoing a gigantic linear transformation that is as all changing as the shift from agriculture to industrialization.
 
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Why is this a gigantic linear transformation? Because there is no circling back to a former “better” time.  The mega-factors listed have produced an enormous rift or a bifurcation. It is a split between the 20%, Oasis people (the rich) and the 80%, Desert people (the poor.)  Other groups have of course a greater liking for describing the division as between 1% and 99% but that seems too exaggerated.
 
New Work New Culture is a new way of looking at and actualizing how people can live in peace and prosperity, working together to provide what is needed not just for survival but for joyous fulfillment.  People of good will must stop looking back, yearning for the good old days. 
 
New Work New Culture gives us a roadmap to take on the task to articulate a ladder that defines a practical, performable sequence of steps in detail that is realistic and manageable. By doing so we will not just alleviate the four Tsunami Calamities but give life to a rise, an ascent that has become possible with the technology that we now have.
 
 (Frithjof Bergmann is a retired Professor of Philosophy from the University of Michigan.  He has been writing, teaching and organizing for the ideas of New Work for more than 3 decades.  He has authored many works, including On Being Free (1977).  He is a principal organizer of the New Work New Culture conference in Detroit, Michigan from October 18-20. #NWNC2014)