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Tuesday, May 3, 2016

The rich simply can’t lose in our rigged economy


Robert Reich: The rich simply can’t lose in our rigged economy

Yahoo's Marisa Mayer nets $50 million even if she's canned. Why must the stakes be so high for the rest of us?


Robert Reich: The rich simply can't lose in our rigged economy

This originally appeared on Robert Reich's blog.
Marissa Mayer tells us a lot about why Americans are so angry, and why anti-establishment fury has become the biggest single force in American politics today.

Mayer is CEO of Yahoo. Yahoo’s stock lost about a third of its value last year, as the company went from making $7.5 billion in 2014 to losing $4.4 billion in 2015. Yet Mayer raked in $36 million in compensation.

Even if Yahoo’s board fires her, her contract stipulates she gets $54.9 million in severance. The severance package was disclosed in a regulatory filing last Friday with the Securities and Exchange Commission.

In other words, Mayer can’t lose.

It’s another example of no-lose socialism for the rich – winning big regardless of what you do.

Why do Yahoo’s shareholders put up with it? Mostly because they don’t know about it.

Most of their shares are held by big pension funds, mutual funds, and insurance funds whose managers don’t want to rock the boat because they skim the cream regardless of what happens to Yahoo.

In other words, more no-lose socialism for the rich.

I don’t want to pick on Ms. Mayer or the managers of the funds that invest in Yahoo. They’re typical of the no-lose system in which America’s corporate and financial elite now operate.

But the rest of America works in a different system.

Theirs is cutthroat hyper-capitalism – in which wages are shrinking, median household income continues to drop, workers are fired without warning, two-thirds are living paycheck to paycheck, and employees are being classified as “independent contractors” without any labor protections at all.

Why is there no-lose socialism for the rich and cutthroat hyper-capitalism for everyone else?

Because the rules of the game – including labor laws, pension laws, corporate laws, and tax laws – have been crafted by those at the top, and the lawyers and lobbyists who work for them.

Does that mean we have to await Bernie Sanders’s “political revolution” (or, perish the thought, Donald Trump’s authoritarian populism) before any of this is likely to change?

Before we go to the barricades, you should know about another CEO named Hamdi Ulukaya, who’s developing a third model – neither no-lose socialism for the rich nor hyper-capitalism for everyone else.

Ulukaya is the Turkish-born founder and CEO of Chobani, the upstart Greek yogurt maker recently valued at as much as $5 billion.

Last Tuesday Ulukaya announced he’s giving all his 2,000 full-time workers shares of stock worth up to 10 percent of the privately held company’s value when it’s sold or goes public, based on each employee’s tenure and role at the company.

If the company ends up being valued at $3 billion, for example, the average employee payout could be $150,000. Some long-tenured employees will get more than $1 million.

Ulukaya’s announcement raised eyebrows all over corporate America. Many are viewing it an act of charity (Forbes Magazine calls it one of “the most selfless corporate acts of the year”).

In reality, Mr. Ulukaya’s decision is just good business. Employees who are partners become even more dedicated to increasing a company’s value.

Which is why research shows that employee-owned companies – even those with workers holding only a minority stake – tend to out-perform the competition.

Mr. Ulukaya just increased the odds that Chobani will be valued at more than $5 billion when it’s sold or its shares of stock are available to the public. Which will make him, as well as his employees, far wealthier.

As Ulukaya wrote to his workers, the award isn’t a gift but “a mutual promise to work together with a shared purpose and responsibility.”

A handful of other companies are inching their way in a similar direction.

Apple decided last October it would award shares not just to executives or engineers but to hourly paid workers as well. Twitter CEO Jack Dorsey is giving a third of his Twitter stock (about 1 percent of the company) ”to our employee equity pool to reinvest directly in our people.
Employee stock ownership plans, which have been around for years, are lately seeing a bit of a comeback.

But the vast majority of American companies are still locked in the old hyper-capitalist model that views workers as costs to be cut rather than as partners to share in success.

That’s largely because Wall Street still looks unfavorably on such collaboration (remember, Chobani is still privately held).

The Street remains obsessed with short-term stock performance, and its analysts don’t believe hourly workers have much to contribute to the bottom line.

But they’re prepared to lavish unprecedented rewards on CEOs who don’t deserve squat.

Let them compare Yahoo with Chobani in a few years, and see which model works best.

If I were a betting man, I’d put my money on Greek yoghurt.

And I’d bet on a model of capitalism that’s neither no-lose socialism for the rich nor cruel hyper-capitalism for the rest, but share-the-gains capitalism for everyone.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His new movie "Inequality for All" is in Theaters. His widely-read blog can be found atwww.robertreich.org.

Friday, April 29, 2016

Capitalism Makes Us Destroy Our Planet

Dissident Voice: a radical newsletter in the struggle for peace and social justice

The Devil Capitalism Makes Us Destroy Our Planet

Okay, here’s the proposition — you can have a good job, decent pay, lots of overtime, but only if you give me your grandchildren or maybe your great-grandchildren.
Would you make this deal with the devil?
This is pretty much the choice currently offered workers by the captains of the carbon extraction, transportation and burning industries.
In fact, in a more general sense, it seems to be the choice being forced upon many governments around the world by the devil, which has taken the form of our current economic system.
Capitalism is asking us to choose between jobs and the future livability of our planet. Capitalism tells us it makes sense to flood some of the best food growing land in B.C. and build a dam to provide electricity for Alberta’s tar sands; capitalism says build more pipelines across B.C. and allow hundreds more oil tankers every year to sail through pristine waters; capitalism doesn’t care that more carbon extraction will guarantee our planet is cooked.
Capitalism, especially the current neoliberal version, says profitability should be the sole criteria by which we decide what gets built, what services are provided and who works. If there’s a profit to be made, let’s invest in it. Don’t do it if there’s no profit to be made. The ‘invisible hand’ of the market will solve all our problems.
Profits bring jobs, the capitalist devil whispers in our ears. Jobs! So you can overcome or avoid the misery of unemployment. Jobs! So you won’t fall behind on your mortgage, your credit card payments or your student loan. Jobs! So you will be able to buy ever more stuff that you don’t really need but somehow those great commercials convince you otherwise.
“Think about the jobs!” the devil/capitalism repeats over and over again. When brave critics ask: “What about the consequences to our environment?” the devil/capitalism answers: “Don’t listen to those Leap-ing people. They’re radicals. They’re tree-hugging, moonbeam-chasing hippies. They’re Original People. They’re anti-development. They’re socialists. They’re from downtown Toronto. Think about the jobs!”
So what do we do? Listen to the devil and build more pipelines, tar sands plants, fracked oil wells, housing that requires ever more carbon-spewing automobiles and tell ourselves that we are not responsible for what happens to our grandchildren?
Or do we cast out the devil? Tell the beast we do not have to choose between jobs and the environment, that, in fact, there will be more jobs in a sustainable energy-based economy. Proclaim loudly that, if forced to choose between capitalism and the environment, we will choose the environment every glorious day on this wondrous planet.
The truth is the devil’s way leads to hell on earth. Building our economy solely on capitalist greed for profit has placed us all, lobster-like, into a pot of hot water that is only a few degrees away from cooking our great-grandchildren. Our most critical task right now is figuring out a way of getting out of the pot and turning down the heat.
The good news is the devil’s way is not the only way, despite the constant media bombardment proclaiming that to be so. Humankind has followed the devil/capitalism path for only a relatively short time. We have tens of thousands of years of history proving that we can organize our lives around values other than greed for profit. Even today, in the midst of the most capitalist-dominated period ever, most of our lives, outside of paid work, is based on love, caring, sharing, solidarity, respect and doing what’s best for our collective future. This is called family and community.
If we can just come to the understanding that an economic and political system can also be based on these ‘community values’ we would have a path to building a viable alternative to the mess we are in.
The devil promotes the idea that we have no alternative to the way things are, but if all the people who care about their grandchildren come together to talk about a better way, we can have jobs, lower the temperature and save our planet for future generations.
Gary Engler is journalist and novelist from Vancouver. Read other articles by Gary.

Wednesday, April 27, 2016

Thomas Frank on How Democrats Went From Being the ‘Party of the People’ to the Party of Rich Elites

In These Times

Thomas Frank on How Democrats Went From Being the ‘Party of the People’ to the Party of Rich Elites

Democrats have gone from the party of the New Deal to a party that is defending mass inequality.
The Democratic Party was once the party of the New Deal and the ally of organized labor. But by the time of Bill Clinton's presidency, it had become the enemy of New Deal programs like welfare and Social Security and the champion of free trade deals. What explains this apparent reversal? Thomas Frank—best known for his analysis of the Republican Party base in What's the Matter with Kansas?attempts to answer this question in his latest book, Listen Liberal: Or, What Ever Happened to the Party of the People? 
According to Frank, popular explanations which blame corporate lobby groups and the growing power of money in politics are insufficient. Frank instead points to a decision by Democratic Party elites in the 1970s to marginalize labor unions and transform from the party of the working class to the party of the professional class. In so doing, the Democratic Party radically changed the way it understood social problems and how to solve them, trading in the principle of solidarity for the principle of competitive individualism and meritocracy. The end result is that the party which created the New Deal and helped create the middle class has now become “the party of mass inequality.” In These Times spoke with Frank recently about the book via telephone.
The book is about how the Democratic Party turned its back on working people and now pursues policies that actually increase inequality. What are the policies or ideological commitments in the Democratic Party that make you think this?

The first piece of evidence is what’s happened since the financial crisis. This is the great story of our time. Inequality has actually gotten worse since then, which is a remarkable thing. This is under a Democratic president who we were assured (or warned) was the most liberal or radical president we would ever see.  Yet inequality has gotten worse, and the gains since the financial crisis, since the recovery began, have gone entirely to the top 10 percent of the income distribution.
This is not only because of those evil Republicans, but because Obama played it the way he wanted to. Even when he had a majority in both houses of Congress and could choose whoever he wanted to be in his administration, he consistently made policies that favored the top 10 percent over everybody else. He helped out Wall Street in an enormous way when they were entirely at his mercy.
He could have done anything he wanted with them, in the way that Franklin Roosevelt did in the ‘30s. But he chose not to.
Why is that? This is supposed to be the Democratic Party, the party that’s interested in working people, average Americans. Why would they react to a financial crisis in this way? Once you start digging into this story, it goes very deep. You find that there was a transition in the Democratic Party in the ‘70s, 80’s and ‘90s where they convinced themselves that they needed to abandon working people in order to serve a different constituency: a constituency essentially of white-collar professionals.
That’s the most important group in their coalition. That’s who they won over in the ’70s, ’80s and ’90s. That’s who they serve, and that’s where they draw from. The leaders of the Democratic Party are always from this particular stratum of society.
A lot of progressives that I talk to are pretty familiar with the idea that the Democratic Party is no longer protecting the interests of workers, but it’s pretty common for us to blame it on mainly the power of money in politics. But you start the book in chapter one by arguing there’s actually something much deeper going on. Can you say something about that?
Money in politics is a big part of the story, but social class goes deeper than that. The Democrats have basically made their commitment [to white-collar professionals] already before money and politics became such a big deal. It worked out well for them because of money in politics. So when they chose essentially the top 10 percent of the income distribution as their most important constituents, that is the story of money.
It wasn’t apparent at the time in the ‘70s and ‘80s when they made that choice. But over the years, it has become clear that that was a smart choice in terms of their ability to raise money. Organized labor, of course, is no slouch in terms of money. They have a lot of clout in dollar terms. However, they contribute and contribute to the Democrats and they almost never get their way—they don’t get, say, the Employee Free Choice Act, or Bill Clinton passes NAFTA. They do have a lot of money, but their money doesn’t count.
All of this happened because of the civil war within the Democratic Party. They fought with each other all the time in the ‘70s and the ‘80s. One side hadn’t completely captured the party until Bill Clinton came along in the ‘90s. That was a moment of victory for them.
Bill Clinton’s presidency is what progressives usually cite as the time when things went bad. But there’s a trend that goes back to the ’70s, right?
Historians always cite the ’68 election as the turning point. The party was torn apart by the controversy over the Vietnam war, protesters were in the streets in Chicago and the Democratic candidate Hubert Humphrey went on to lose. Democrats thought this was terrible, and it was. So they set up a commission to reorganize the party, the McGovern Commission.
The McGovern Commission basically set up our modern system of primaries. Before the commission, we didn’t have these long primary contests in state after state after state. Primaries are a good thing, as were most things the McGovern Commission did.
But they also removed organized labor from its structural position of power in the Democratic Party. There was a lot of resentment towards labor during the Vietnam War. A lot of unions took President Johnson’s side on Vietnam. There was also this sense—which I think was correct at the time—that labor was a dinosaur, that it was out of touch and undemocratic and very white.
There were a lot of reasonable objections to organized labor at the time. The problem is, when you get rid of labor in your party, you also get rid of issues that matter to working people. That’s the basic mistake that Democrats made in the ’70s. Of course, labor still is a big part of the Democratic coalition—it gives them their money, it helps out at election time in a huge way. But unions no longer have the presence in party councils that they used to. That disappeared.
One of the most shocking quotes in the book is from Alfred Kahn, an advisor to Jimmy Carter, who said, “I’d love the Teamsters to be worse off. I’d love the automobile workers to be worse off.” He then basically says that unionized workers are exploiting other workers.
Isn’t that amazing? He’s describing a situation in the 1970s. There was all this controversy in the 1970s about labor versus management—this was the last decade where those fights were front and center in our national politics. And he’s coming down squarely on the side of management in those fights.
And remember, Kahn was a very important figure in the Carter administration. The way that he describes unions is incorrect—he’s actually describing professionals. Professionals are a protected class that you can’t do anything about—they’re protected by the laws of every state that dictate who can practice in these fields. It’s funny that he projects that onto organized labor and holds them responsible for the sins of another group.
This is a Democrat in an administration that is actually not very liberal. This is the administration that carried out the first of the big deregulations. This is the administration that had the great big capital gains tax cuts, that carried out the austerity plan that saw the Federal Reserve jack its interest rates sky high. They clubbed the economy to the ground in order to stop “wage inflation,” in which workers, if they have enough power, can keep demanding higher wages. It was incredible.
What’s the content of the ideology of the professional class and how does it hurt working people? What are their guiding principles?
The first commandment of the professional class is the idea of meritocracy, which allows people to think that those on top are there because they deserve to be. With the professional class, it’s always associated with education. They deserve to be there because they worked really hard and went to a good college and to a good graduate school. They’re high achievers. Democrats are really given to credentialism in a way that Republicans aren’t.
If you look at the last few Democratic presidents, Bill Clinton and Obama, and Hillary Clinton as well, their lives are a tale of educational achievement. This is what opened up the doors of the world to them. It’s a party of who people who have gotten where they are by dint of educational accomplishment.
This produces a set of related ideas. When the Democrats, the party of the professionals, look at the economic problems of working-class people, they always see an educational problem, because they look at working class people and say, “Those people didn’t do what I did”: go and get advanced degrees, go to the right college, get the high SAT scores and study STEM or whatever.
There’s another interesting part of this ideology: this endless search for consensus. Washington is a city of professionals with advanced degrees, and Democrats look around them there and say, “We’re all intelligent people. We all went to good schools. We know what the problems are and we know what the answers are, and politics just get in the way.”
This is a very typical way of thinking for the professional class: reaching for consensus, because politics is this ugly thing that you don’t really need. You see this in Obama’s endless efforts to negotiate a grand bargain with Republicans because everybody in Washington knows the answers to the problems—we just have to get together, sit down and make an agreement. The same with Obamacare: He spent so many months trying to get Republicans to sign on, even just one or two, so that he could say it was bipartisan. It was an act of consensus. And the Republicans really played him, because they knew that’s what he’d do.
To go back to your point about education: At one point you quote Arne Duncan, who was Obama’s secretary of education, saying that the only way to end poverty is through education. Why can’t that work?
The big overarching problem of our time is inequality. If you look at historical charts of productivity and wage growth, these two things went hand in hand for decades after World War II, which we think of as a prosperous, middle-class time when even people with a high school degree, blue-collar workers, could lead a middle class life. And then everything went wrong in the 1970s. Productivity continued to go up and wage growth stopped. Wage growth has basically been flat ever since then. But productivity goes up by leaps and bounds all the time. We have all of these wonderful technological advances. Workers are more productive than ever but they haven’t benefited from it. That’s the core problem of inequality.
Now, if the problem was that workers weren’t educated enough, weren’t smart enough, productivity would not be going up. But that productivity line is still going up. So we can see that education is not the issue.
It’s important that people get an education, of course. I spent 25 years of my life getting an education. It’s basic to me. It’s a fundamental human right that people should have the right to pursue whatever they want to the maximum extent of their individual potential. But the idea that this is what is holding them back is simply incorrect as a matter of fact. What’s holding them back is that they don’t have the power to demand higher wages.
If we talk about the problem as one of education rather than power, then the blame goes back to these workers. They just didn’t go out and work hard and do their homework and get a gold star from their teacher. If you take the education explanation for inequality, ultimately you’re blaming the victims themselves.
Unfortunately, that is the Democratic view. That’s why Democrats have essentially become the party of mass inequality. They don’t really have a problem with it.
So really, the solution would have to be solidarity and organized power.
That was an essential point that I try to make in Listen Liberal: that there is no solidarity in a meritocracy. A meritocracy really is every man for himself.
Don’t get me wrong. People at the top of the meritocracy, professionals, obviously have enormous respect for one another. That is the nature of professional meritocracy. They have enormous respect for the people at the top, but they feel very little solidarity for people beneath them who don’t rise in the meritocracy.
Look at the white-collar workplace. If some professional gets fired, the other professionals don’t rally around and go on strike or protest or something like that. They just don’t do that. They feel no solidarity because everything goes back to you and whether or not you’ve made the grade. If somebody gets fired, they must’ve deserved it somehow.
I have my own personal experience. Look at academia over the last 20 years. They’re cranking out these Ph.D.s in the humanities who can’t get jobs on tenure track and instead have to work as adjuncts for very low pay, no benefits. One of the fascinating parts about this is that, with a few exceptions, the people who do have tenure-track jobs and are at the top of their fields, do very little about what’s happened to their colleagues who work as adjuncts. Essentially this is the Uberizing of higher education. The professionals who are in a position of authority have done almost nothing about it. There are academics here and there who feel bad about what’s happened to adjuncts and do say things about it, but by and large, overall, there is no solidarity in that meritocracy. They just don’t care.
Do you think there’s a connection between the fact that the Democratic Party has turned against workers and the rise of Donald Trump?
Yes. Because if you look at the polling, Trump is winning the votes of a lot of people who used to be Democrats. These white, working-class people are his main base of support. As a group, these people were once Democrats all over the country. These are Franklin Roosevelt’s people. These are the people that the Democrats essentially decided to turn their backs on back in the 1970s. They call them the legatees of the New Deal. They were done with these guys, and now look what’s happened—they’ve gone with Donald Trump. That’s frightening and horrifying.
But Trump talks about their issues in a way that they find compelling, especially the trade issue. When he talks about trade, they believe him. Ironically, he’s saying the same things that Hillary Clinton and Bernie Sanders are saying about trade, but for whatever reason people find him more believable on this subject than they do Hillary Clinton.
Do you think that the rise of the Bernie campaign could herald a new era in the history of the Democratic Party?
I hope so. Both Trump and Bernie are turning their respective parties upside down. What Bernie is doing is very impressive. I interviewed him a few years ago and have always admired him. I think he’s a great man. To think that he could beat a Clinton in a Democratic primary anywhere in this country, let alone many primaries, was unthinkable a short time ago. And he’s done it without any Wall Street or big-business backing. That is extraordinary. It shows the kind of desperation that’s out there.
He has shown the way, and whether he gets the nomination or not (he probably won’t), there’ll be another Bernie four years from now. And there’ll also be another Trump. The Republican Party is being turned on its head much more violently than the Democrats. Hillary will probably get the nomination. I live in Washington, D.C., and I spend time around Hillary-style Democrats. They really think that they’ve got this thing in the bag. And I don’t just mean her versus Bernie. I mean the Democratic Party winning the presidency for the rest of our lives. From here to eternity. They can choose whoever they want. They could nominate anybody and they would win. They think they’re in charge.
One of your villains from the ’70s is Frederick Dutton, who wrote a book about how the Democratic Party needed to realign itself. You have a quote from him saying, “Every major realignment in U.S. political history has been accompanied by the coming of a large new group into the electorate.” You’re very critical of how he uses that idea in the ‘70s. But if you look at the newer voters attached to the Bernie campaign, it looks like the Democratic Party is experiencing something like that now.
Yes, in both cases you’re talking about a generational shift. That’s what he meant in 1971. He was talking about the counterculture and the “Now Generation” and the idea that they would come into the electorate and demand a different kind of politics—specifically his kind of politics.
Everybody always sees this new group that’s coming in as supporting what they want. That’s what he thought. I have a certain amount of contempt for that. Many years ago I wrote a book about the counterculture and how it was used for this purpose—specifically by the advertising industry. But Bernie’s doing the same thing. He’s using it for his own purposes.
Millenials’ take on the world is fascinating. Just a few years ago, people thought of them as very different. But now they’re coming out of college with enormous student debt, and they’re discovering that the job market is casualized and Uberized. The work that they do is completely casual. The idea of having a middle-class lifestyle in that situation is completely off the table for them.
Every time I think about these people, it burns me up. It makes me so angry what we’ve done to them as a society. It really gives the lie to Democratic Party platitudes about the world an education will open up for you. That path just doesn’t work anymore. Millenials can see that in their own lives very plainly.
So I’m very excited that they’re pro-Bernie. They really are the future.

Tobita Chow is chair of The People’s Lobby, an independent political organization based in Chicago, and co-author of "The Movement We Need," a pamphlet on analysis and strategy for the progressive movement. He has been involved in faith-based community organizing on the South Side of Chicago since 2009, and is a leader in the “Moral Mondays Illinois” campaign against state budget cuts. He is an MDiv student at the Lutheran School of Theology at Chicago.