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Thursday, March 28, 2013

Fast Food Workers Will Still Be Screwed Under Obamacare and Worse Under the GOP

capitalism - Fast Food Workers Will Still Be Screwed Under Obamacare


Mar 28, 2013 11:07 AM 13,368 235

Fast Food Workers Will Still Be Screwed Under Obamacare

Hamilton Nolan
After Obamacare passed, a broad variety of employers—including many of America's Most Asshole-ish Bosses—are going so far as to lay off employees in anticipation of the new health care costs they'd have to pay. Well, good news: business owners can just leave their employees uninsured. Problem solved!

There's good news and bad news, and they're interchangeable depending on where you fall on the capitalist-to-socialist spectrum. The WSJ reports that many fast food chains, including Wendy's, Chipotle, and Popeye's Chicken, are now telling investors that Obamacare may only cost them about $5K per restaurant per year (rather than the previous estimate of $25K), because—God Bless America—most employees will just decline health care coverage. And pay a price for it!
They say many employees will decline company-offered insurance, either because they can get insurance through Medicaid or a family member, or because they prefer to pay the penalty for not having health insurance. The penalty next year will be as low as $95 next year, much less than most employees will be asked to pay through company-sponsored insurance plans...

Ralph Bower, Popeye's president-U.S., said in an interview that fewer than 5% of employees have signed up for a plan that carries high deductibles and costs $2.50 a week. So he doesn't expect many more employees to enroll next year, when employees likely will have to pay about $25 a week for a plan offering more coverage.
So, to recap the situation: for fast food workers, the net effect of our new national health care plan will be to cost them $95 for the privilege of continuing to not have health care. Cool. (Related).

The important thing here is that Popeye's will still be able to maintain the low price of its Handcrafted Chicken Tenders, which is what got America sick in the first place.

[WSJ. Photo: Mark Turnauckas/ Flickr]

Think Your Money is Safe? Think Again: The Confiscation Scheme Planned for US and UK Depositors


Confiscating the customer deposits in Cyprus banks was not a one-off. It could happen here.

Photo Credit: Tatiana Popova/ Shutterstock.com
Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.

New Zealand has a similar directive, discussed in my last article here, indicating that this isn’t just an emergency measure for troubled Eurozone countries. New Zealand’s Voxy reported on March 19th:

The National Government [is] pushing a Cyprus-style solution to bank failure in New Zealand which will see small depositors lose some of their savings to fund big bank bailouts . . . .
Open Bank Resolution (OBR) is Finance Minister Bill English’s favoured option dealing with a major bank failure. If a bank fails under OBR, all depositors will have their savings reduced overnight to fund the bank’s bail out.

Can They Do That?

Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.

The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equitywould become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.

No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.  

An Imminent Risk

If our IOUs are converted to bank stock, they will no longer be subject to insurance protection but will be “at risk” and vulnerable to being wiped out, just as the Lehman Brothers shareholders were in 2008.  That this dire scenario could actually materialize was underscored by Yves Smith in a March 19th post titled When You Weren’t Looking, Democrat Bank Stooges Launch Bills to Permit Bailouts, Deregulate Derivatives.She writes:

In the US, depositors have actually been put in a worse position than Cyprus deposit-holders, at least if they are at the big banks that play in the derivatives casino. The regulators have turned a blind eye as banks use their depositaries to fund derivatives exposures. And as bad as that is, the depositors, unlike their Cypriot confreres, aren’t even senior creditors. Remember Lehman? When the investment bank failed, unsecured creditors (and remember, depositors are unsecured creditors) got eight cents on the dollar. One big reason was that derivatives counterparties require collateral for any exposures, meaning they are secured creditors. The 2005 bankruptcy reforms made derivatives counterparties senior to unsecured lenders.

One might wonder why the posting of collateral by a derivative counterparty, at some percentage of full exposure, makes the creditor “secured,” while the depositor who puts up 100 cents on the dollar is “unsecured.” But moving on – Smith writes:

Lehman had only two itty bitty banking subsidiaries, and to my knowledge, was not gathering retail deposits. But as readers may recall, Bank of America moved most of its derivatives from its Merrill Lynch operation [to] its depositary in late 2011. 

Its “depositary” is the arm of the bank that takes deposits; and at B of A, that means lots and lots of deposits. The deposits are now subject to being wiped out by a major derivatives loss. How bad could that be? Smith quotes Bloomberg:
. . . Bank of America’s holding company . . . held almost $75 trillion of derivatives at the end of June . . . .

That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.

$75 trillion and $79 trillion in derivatives! These two mega-banks alone hold more in notional derivatives each than the entire global GDP (at $70 trillion). The “notional value” of derivatives is not the same as cash at risk, but according to a cross-post on Smith’s site:

By at least one estimate, in 2010 there was a total of $12 trillion in cash tied up (at risk) in derivatives . . . .

$12 trillion is close to the US GDP.  Smith goes on:

. . . Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. . . . Lehman failed over a weekend after JP Morgan grabbed collateral.

But it’s even worse than that. During the savings & loan crisis, the FDIC did not have enough in deposit insurance receipts to pay for the Resolution Trust Corporation wind-down vehicle. It had to get more funding from Congress. This move paves the way for another TARP-style shakedown of taxpayers, this time to save depositors.

Perhaps, but Congress has already been burned and is liable to balk a second time. Section 716 of the Dodd-Frank Act specifically prohibits public support for speculative derivatives activities. And in the Eurozone, while the European Stability Mechanism committed Eurozone countries to bail out failed banks, they are apparently having second thoughts there as well. On March 25th, Dutch Finance Minister Jeroen Dijsselbloem, who played a leading role in imposing the deposit confiscation plan on Cyprus, told reporters that it would be the template for any future bank bailouts, and that “the aim is for the ESM never to have to be used.”

That explains the need for the FDIC-BOE resolution. If the anticipated enabling legislation is passed, the FDIC will no longer need to protect depositor funds; it can just confiscate them.

Worse Than a Tax

An FDIC confiscation of deposits to recapitalize the banks is far different from a simple tax on taxpayers to pay government expenses. The government's debt is at least arguably the people’s debt, since the government is there to provide services for the people. But when the banks get into trouble with their derivative schemes, they are not serving depositors, who are not getting a cut of the profits. Taking depositor funds is simply theft.

What should be done is to raise FDIC insurance premiums and make the banks pay to keep their depositors whole, but premiums are already high; and the FDIC, like other government regulatory agencies, is subject to regulatory capture.  Deposit insurance has failed, and so has the private banking system that has depended on it for the trust that makes banking work.

The Cyprus haircut on depositors was called a “wealth tax” and was written off by commentators as “deserved,” because much of the money in Cypriot accounts belongs to foreign oligarchs, tax dodgers and money launderers. But if that template is applied in the US, it will be a tax on the poor and middle class.
Wealthy Americans don't keep most of their money in bank accounts.  They keep it in the stock market, in real estate, in over-the-counter derivatives, in gold and silver, and so forth.

Are you safe, then, if your money is in gold and silver? Apparently not – if it’s stored in a safety deposit box in the bank.  Homeland Security has reportedly told banks that it has authority to seize the contents of safety deposit boxes without a warrant when it’s a matter of “national security,” which a major bank crisis no doubt will be.

The Swedish Alternative: Nationalize the Banks

Another alternative was considered but rejected by President Obama in 2009: nationalize mega-banks that fail. In a February 2009 article titled "Are Uninsured Bank Depositors in Danger?", Felix Salmon discussed a newsletter by Asia-based investment strategist Christopher Wood, in which Wood wrote:

It is . . . amazing that Obama does not understand the political appeal of the nationalization option. . . . [D]espite this latest setback nationalization of the banks is coming sooner or later because the realities of the situation will demand it. The result will be shareholders wiped out and bondholders forced to take debt-for-equity swaps, if not hopefully depositors.

On whether depositors could indeed be forced to become equity holders, Salmon commented:

It’s worth remembering that depositors are unsecured creditors of any bank; usually, indeed, they’re by far the largest class of unsecured creditors.

President Obama acknowledged that bank nationalization had worked in Sweden, and that the course pursued by the US Fed had not worked in Japan, which wound up instead in a "lost decade."  But Obama opted for the Japanese approach because, according to Ed Harrison, “Americans will not tolerate nationalization.”

But that was four years ago. When Americans realize that the alternative is to have their ready cash transformed into “bank stock” of questionable marketability, moving failed mega-banks into the public sector may start to have more appeal.

Ellen Brown is an attorney, author, and president of the Public Banking Institute. Her latest book is Web of Debt.

Tuesday, March 26, 2013

The '147 People' Destroying the US Economy

Can 147 people perpetuate economic injustice – and make it even worse? Can they subvert the workings of democracy, both abroad and here in the United States? Can 147 people hijack the global economy, plunder the environment, build a world for themselves that serves the few and deprives the many?

There must be some explanation for last week’s economic madness. Take a look:

Cyprus: The European Union acted destructively – and self-destructively – when it tried to seize a portion of the insured savings accounts of the citizens of Cyprus. They were telling anyone with a savings account in the financially troubled nations of the Eurozone: Forget your guaranteed deposits. If we need your money in order to bail out the big banks – banks which have already gambled recklessly with it – we’ll take it.

That didn’t just create a political firestorm in Cyprus. It threatened the European Union’s banking system, and perhaps the Union itself. The fact that the tax on deposits has been partially retracted doesn’t change the basic question: What were they thinking?

The Grand Bargain: The President and Congressional Republicans reportedly moved closer to a deal that would cut Social Security and Medicare while raising taxes – mostly on the middle class – without doing more to create jobs. A “Grand Bargain” like that would run counter to both public opinion and informed economic judgement.

Who would impose more economy-killing austerity when there’s so much evidence of the harm it does? Why would the White House want to become the face of a deal to cut Social Security, killing its own party’s political prospects for a generation?

There’s more:

Him again: Washington reporters once again sought the opinion of Ex-Wyoming senator Alan Simpson, a vitriolic blowhard with no discernible knowledge of either economics or social insurance, and then wrote up his opinions on those topics in flattering pieces like this one.

Derivatives, the Sequel: Four short years after too-big-to-fail banks nearly destroyed the world economy, as the nation continues to suffer the after-effects of the crisis they created, a Congressional committee moved to undo the already-insufficient safeguards in the Dodd/Frank law.

Within days of a Senate Report which outlined the mendacity, extreme risk, and potentiality criminality surrounding JPMorgan Chase’s “London Whale” fiasco, the House Agriculture Committee approved new bills that would legalize trades like the “London Whale.”

Above the Law: The Attorney General of the United States remained silent as the controversy continued over his recent admission that banks like Dimon’s were too big to face prosecution. And yet there were no moves to change either Holder’s policy or the size of these institutions. Politico, the Washington insiders’ tip sheet, ran a piece entitled “Why Washington won’t break up the big banks.”

Dimon Unbound: The Senate report also provided evidence that JPMorgan Chase’s CEO, Jamie Dimon, failed to manage his bank’s risk and concealed information about its losses from regulators. We learned last week that regulators lowered their rating of Dimon’s bank after chastising the bank’s leadership for management failures that included inadequate safeguards against money-laundering, poor risk management, and failure to separate the banks’ own investments from those of its customers.

Illegalities during Dimon’s tenure as CEO have cost his shareholders billions in settlements and fines. Poor risk management (and additional potential illegalities) cost it another $6.2 billion in Whale-related losses. And yet last week Dimon’s own Board “strongly endorsed” his dual role as CEO and Board Chair, an unusual concentration of power at what is (by some measurements) the world’s largest bank, and commended itself in a proxy filing for the “strength and independence” of its oversight, adding: “The Firm has had strong performance through the cycle since Mr. Dimon became Chairman and CEO.”
All this, in just seven days. Has the world gone insane? What is everybody thinking?

That’s where the number “147″ comes in.

Anthropologist Robin Dunbar tried to find out how many people the typical person “really knows.” He compared primate brains to social groups and published his findings in papers with titles like “Neocortex size as a constraint on group size in primates.”

Dunbar concluded that the optimum number for a network of human acquaintances was 147.5, a figure which was then rounded up to 150 and became known as “Dunbar’s Number.” He found groups of 150-200 in all sorts of places: Hutterite settlements. Roman army units. Academic sub-specialties. Dunbar concluded that “there is a cognitive limit to the number of individuals with whom any one person can maintain stable relationships.”

Around 150 or 200 people form a human being’s social universe. They shape his or her world view, his or her world.

That means that 147 people can change the course of history. Not necessarily the same 147 people, of course. But the small social groups which surround our world’s leaders have extraordinary power.

Economist Simon Johnson mentioned Dunbar’s Number last week in a column about incoming Treasury Secretary Jacob Lew and the new SEC chair, Mary Jo White. “The issue is not so much their track record,” Johnson wrote, “because neither has worked directly on financial-sector policy issues; it is much more about whom they know.”

“If most financial experts you know work at, for example, Citigroup,” added Johnson, “then you are more likely to see the financial world through their eyes.”
Lew is a former Citigroup executive. That mismanaged megabank is also the former corporate home of ex-Clinton Treasury Secretary Robert Rubin, and the current home of Peter Orszag, formerly President Obama’s OMB Director. For her part, White went from prosecuting criminals to defending Wall Street bankers. That was also Attorney General Eric Holder’s profession before he was appointed to his current position.

These are the people who surround our President, our Senators, our Representatives. They talk to them every day. They say, This is how the world works. They say, Everybody knows these things.

Their European counterparts saw the effects of austerity on the economies of their Union: Unemployment up. Gross domestic product down. Even the deficits, which austerity was meant to reduce, have been rising as the result of these unwise cuts.

But, they say, we know Angela Merkel. We know George Osborne and Christine Lagarde. We trust their judgement. How did the predictably disastrous plan to tax guaranteed savings accounts in Cyprus get approved? It’s not hard to imagine: “Everybody we know” thought it was a great idea.

That’s how it works here in the US, too. Larry Summers, Alan Greenspan and Robert Rubin were spectacularly wrong about everything: deregulation, the housing bubble, government spending, everything. But we know them.

Nobel Prize-winning economists like Paul Krugman and Joseph Stiglitz keep explaining why more stimulus spending is needed. But we don’t know them – not the way we know Larry, Alan, and Bob. Same for Simon Johnson, or William K. Black Jr., or Robert Johnson, or any of the other economists we don’t know very well.

And when we don’t know someone very well, their criticisms make us uncomfortable.

Bill Clinton’s “Third Way” triangulation led to welfare “reform” that’s proven disastrous. His Wall Street deregulation ruined the economy, and his brand of old-fashioned pseudo-centrism is out of touch with today’s political and economic realities. But we know him.

Bill Clinton doesn’t make us uncomfortable at all.

Investigate Jamie Dimon, or Lloyd Blankfein, or Robert Rubin? But they were our clients, and will be again once we leave government. Investigate them? We know them.

Dimon’s Board of Directors is a case study in Dunbar’s Number. It includes Honeywell CEO David Cote, who was a member of the Simpson Bowles Commission. There’s a retired senior executive with another big defense contractor, Boeing. Together with Dimon, that makes three CEOs who earn their money from government largesse.

The CEO of Comcast is on Dimon’s Board, too. (The media’s leaders are always among the 147.) One seat belongs to the head of one of the accounting groups that overlooked massive bank fraud when signing off on their annual statements. Another belongs to the former CEO of Exxon Mobil.

The “147″ run companies. They also hold fundraisers for politicians – in both parties.

When Senator Obama became President Obama, during the gravest unemployment crisis since the Great Depression, one of his first acts was to create a “Deficit Commission” instead of a “Jobs Commission.” Why? Because “147 people” thought that was the right priority. Then he appointed the dyspeptic, unlikable, and uninformed Sen. Simpson to co-chair it.

You see, the “147 people” in Washington’s political and media circles like Alan Simpson. To them he’s not an embarrassment to his President, a paid pitchman for billionaire Pete Peterson’s anti-Social Security jihad. (We know Pete!) To them Simpson’s not an ill-informed and misogynistic bully who taunts women with comments about “310 million tits.” To them he’s Al. They know him. They say he’s a lot of fun when you get to know him.

They really say that.

Then there are the news anchors and journalists who say things like this: Everybody knows that we need to cut Social Security. Everybody knows the deficit is our most urgent problem.

Everybody knew that Saddam had weapons of mass destruction, too.
Everybody understands that the right-wing, anti-government Simpson Bowles plan represents the “political center,” although it’s far to the right of public opinion – even of Republican or Tea Party voters’ opinion – on issues that range from job creation to increasing Social Security benefits.

You can’t fit millions of frustrated voters into a social group of 147 people.
When Teddy Roosevelt became President, J.P. Morgan (the person, not the bank) suggested he “send your man to my man and they can fix it up.” He was shocked that the new President chose instead to operate outside the Circle in order to create real change. And when Franklin D. Roosevelt became President he brought in new faces, new voices, new ideas. He broke the social circle that had paralyzed government and the economy.

But the circle of right-wing Republicans and corporatist Clintonite Democrats is still intact. That means Barack Obama, Nancy Pelosi and other Democratic leaders will keep on promoting the right-wing agenda known as Simpson Bowles until their party loses all its political power at the polls.

It also means that Republican extremism will still be reported with straight-faced gravity.Congressional committees will keep deregulating big banks, the Justice Department will avoid prosecuting them, and their Boards of Directors will keep rewarding their executives. They’ll all keep doing exactly what they’re doing – until the economy blows up again, perhaps with far worse consequences than the last time.

And when the next crisis comes, “147 people” will react to it exactly the same way they reacted to the last one. You can almost hear them now, can’t you? You can’t blame us, they’ll say. Nobody could’ve seen this coming. How do we know that?

Because we asked everybody we know.

Richard Eskow
Richard (RJ) Eskow is a well-known blogger and writer, a former Wall Street executive, an experienced consultant, and a former musician. He has experience in health insurance and economics, occupational health, benefits, risk management, finance, and information technology. Richard has consulting experience in the US and over 20 countries.

Monday, March 25, 2013

Five Ugly Extremes of Inequality in America-- The Contrasts Will Drop Your Chin to the Floor


Any of the ten richest Americans could pay a year's rent for all of America's homeless with their 2012 income.

The first step is to learn the facts, and then to get angry and to ask ourselves, as progressives and caring human beings, what we can do about the relentless transfer of wealth to a small group of well-positioned Americans.
1. $2.13 per hour vs. $3,000,000.00 per hour

Each of the Koch brothers saw his investments grow by $6 billion in one year, which is three million dollars per hour based on a 40-hour 'work' week. They used some of the money to try to kill renewable energystandards around the country.

Their income portrays them, in a society measured by economic status, as a million times more valuable than the restaurant server who cheers up our lunch hours while hoping to make enough in tips to pay the bills.

A comparison of top and bottom salaries within large corporations is much less severe, but a lot more common. For CEOs and minimum-wage workers, the difference is $5,000.00 per hour vs. $7.25 per hour.

2. A single top income could buy housing for every homeless person in the U.S.

On a winter day in 2012 over 633,000 people were homeless in the United States. Based on an annual single room occupancy (SRO) cost of $558 per month, any ONE of the ten richest Americans would have enough with his 2012 income to pay for a room for every homeless person in the U.S. for the entire year. These ten rich men together made more than our entire housing budget.

For anyone still believing "they earned it," it should be noted that most of the Forbes 400 earnings came from minimally-taxed, non-job-creating capital gains.

3. The poorest 47% of Americans have no wealth

In 1983 the poorest 47% of America had $15,000 per family, 2.5 percent of the nation's wealth.

In 2009 the poorest 47% of America owned ZERO PERCENT of the nation's wealth (their debt exceeded their assets).

At the other extreme, the 400 wealthiest Americans own as much wealth as 80 million families -- 62% of America. The reason, once again, is the stock market. Since 1980 the American GDP has approximatelydoubled. Inflation-adjusted wages have gone down. But the stock market has increased by over ten times, and the richest quintile of Americans owns 93% of it.

4. The U.S. is nearly the most wealth-unequal country in the entire world

Out of 141 countries, the U.S. has the 4th-highest degree of wealth inequality in the world, trailing only Russia, Ukraine, and Lebanon.

Yet the financial industry keeps creating new wealth for its millionaires. According to the authors of theGlobal Wealth Report, the world's wealth has doubled in ten years, from $113 trillion to $223 trillion, and is expected to reach $330 trillion by 2017.

5. A can of soup for a black or Hispanic woman, a mansion and yacht for the businessman

That's literally true. For every one dollar of assets owned by a single black or Hispanic woman, a member of the Forbes 400 has over forty million dollars.

Minority families once had substantial equity in their homes, but after Wall Street caused the housing crash, median wealth fell 66% for Hispanic households and 53% for black households. Now the average single black or Hispanic woman has about $100 in net worth.

What to do?

End the capital gains giveaway, which benefits the wealthy almost exclusively.

Institute a Financial Speculation Tax, both to raise needed funds from a currently untaxed subsidy on stock purchases, and to reduce the risk of the irresponsible trading that nearly brought down the economy.

Perhaps above all, we progressives have to choose one strategy and pursue it in a cohesive, unrelenting attack on greed. Only this will heal the ugly gash of inequality that has split our country in two.
Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

Friday, March 22, 2013

Does Irrationality Doom America?

How rational problem-solving has ceased to be "serious" among US elites.

An American flag hangs over the New York Stock Exchange on October 11, 2012 in New York City. The US jobs market brightened in February as the unemployment rate tumbled and jobs growth picked up, official data released Friday showed.


The United States is on the verge of committing suicide. Slow suicide, perhaps, which may take decades to fully play out, but suicide nonetheless. The proximate event is the sequester - deep across-the-board cuts to military and discretionary domestic spending, originally conceived as a Sword of Damocles, but which Tea Party-dominated Republicans now see as just the perfect budget axe. And that's just one of several successive and mostly recurring crisis points at which Republicans are obstinantly demanding deep budget cuts that will inevitably slow, if not cripple the already weak economy - as well as debilitating or destroying vital government functions in the long run.

This comes at a time when there's actually a staggering need to vastly expand the scope of government action to deal with multiple looming threats of environmental catastrophe - not to mention previously intolerable levels of unemployment, and a crumbling infrastructure. Climate change is just the most prominent of such environmental threats - not just to the United States, but to the continued existence of advanced industrial civilisation as a whole - which the US can't even begin to rationally grapple with as long as anti-government ideology blocks even the most common sense actions on well-understood problems. A super-power whose highways are cracking and bridges are falling down, and which then responds by slashing spending cannot be long for this world. If it staggers on for a few more decades, that's nothing compared to the centuries that the Roman Empire endured, much less the millenia of dynastic Egypt's glory.

If markets actually worked in practice the way that they do in the simplest of textbook examples, GOP plans to radically slash government spending might not be so problematic. But realworld markets not only go into crippling crises, like the Great Depression or its still-enduring younger brother, they also fail to meet important human needs. Indeed, as conservative German economist Adolph Wagner noted in the late 19th century, the wealthier a nation becomes, the more it turns to non-market governmnet spending to meet needs that markets simply fail to meet. This observation was made well before the widespread rise of mass democratic government in the 20th century which underlay the rise of the modern welfare throuhgout the Western world. Thus, the practice of state spending to enhance the general welfare has deep historical and empirical foundations, and the sort of endless cutting that GOP now demands is nothing short of a suicidal policy for any would-be modern nation-state. The US already spends far less in the way of government social spending than most other advanced industrial nations - 16 percent of GDP compared to 20 percent for Norway, Britain and the Netherlands, 25 percent for Germany and Finland, 26 percent for Austria, Belgium and Denmark, 27 percent for Sweden and 28 percent for France, according to the OECD - and GOP plans would slash current spending significantly below where we are today.

'Sequestration' : A term unclear to many in US   

Centrist enablers

The culprit here, however, is not just GOP extremism - which is, after all, wildly unpopular - but rather the morally feckless elite centrists who enable them by obscuring what they're up to, and by painting the Democrats are equally to blame, no matter what the Democrats do, short of capitulating completely.
Slates's Matthew Yglesias has recently captured the essenial cognitive trick by which centrist ideology rationalises itself by blaming the (relatively, at least) blameless:
[S]eriousness can refer both to the merits of an initiative or to its political viability. So scrapping the minimum wage in favor of a Guaranteed Basic Income isn't a serious proposal, since obviously it stands zero chance of passing Congress.
Once you embrace the Principle of Seriousness, the way is clear for rigorous BipartisanThink. If the parties fail to agree because one party is being unreasonable and the other party is failing to cater to their unreasonable demands, then the apparently reasonable party is in fact failing to be serious. After all, a serious proposal is one that stands a chance of passing. Reasonable proposals will not pass a Congress in which one party is being unreasonable, so by definition the Principle of Seriousness allocates the blame equally to both sides. Balance is restored to the Force.
This passage captures the essence of "seriousness" perfectly. But it says nothing about how or why we got here, or where it will lead - all vitally important topics to consider, but impossible to focus on accurately as long as we're subjected to the rule of "serious" discourse. For now, we need to tease out a few more points from Yglesias's insight.

Serious and viable

Let's begin by noting that what he's described is a form of fallacious reasoning, specifically, the fallacy of equivocation, in which one word is used with two different meanings. In its most basic form, one meaning is replaced by another: "Feathers are light; black is dark; therefore no feathers are black". Or "Nothing is better than eternal salvation. A ham sandwich is better than nothing. Therefore, a ham sandwich is better than eternal salvation". You don't have to observe a dietary law against eating pork to see something fishy about such "logic". But what Yglesias is describing is a less patently ridiculous form, in which the two different meanings are essentially welded together - without, of course, acknowledging what has been done.

Yet, the fundamental fact remains: the basis of what's going on here is a commonplace logical fallacy. That alone is reason enough to reject it out of hand - but not to understand how and why it works. And so we continue with three more points teased out from Yglesias's insight:
  1. If unreasonable positions ensure that the other side gets equal blame in the centrist's scorekeeping and resulting media coverage, then they are inherently "can't lose" positions. This provides a basic floor which biases the entire process against being reasonable.
  2. If some sort of action is eventually necessary (as it is with budget issues, and most other governmental questions as well), then the unreasonable side - which by definition cares less (perhaps not at all) about real-world consequences - has an increasing advantage the longer that the issue remains unresolved, thus further motivating them to remain unreasonable. If they start at 50 percent (equal blame), things only get better for them over time, as the blame burdern remains constant, but the cost pressure to do something rises much more accurately on the reasonable side.
  3. The realm of conceivable alternatives is heavily skewed to the unreasonable side, for at least two main reasons identifiable as distinct forms of bias. First off, there's an enormous gap between what sounds reasonable initially and what can actually work - as any inventor, engineer, or even songsmith knows. If there's no workability test, then the fantasy-based side can crank out alternatives far faster and more easily than the reality-based side can ever dream of. Secondly, because of the bias against "politically unviable" ideas, there is a prohibitive bias against reasonable alternatives that might respond to claims, complaints or positions of the unreasonable side, and thus exert pressure on them to respond, change, or even yield. 
A classic example of this second bias against reasonable alternatives is the Progressive Caucus's repeated offerings (20112012) of a budget that would balance in ten years - unlike Ryan's - provide pro-growth investments for the future, preserve popular welfare state programmes, and include a diverse mix of tax increases that still leave tax burderns well below historic highs. The Progressive Caucus budgets have been routinely ignored, despite having significant support (read about their most recent offering, an alternative to the sequester here - when people were polled on it, it swamped the competition, even edging out the GOP plan among Republicans). The obvious "reason" is that they have no chance of being passed by intransigent Republicans - ie, "they are not serious" in the "politically viable" sense. But, of course, they are serious in the "solves the budget deficit" sense - which the Republican's Ryan budgets never have been before now (his 2011 version balanced the budget in 2063 and his 2012 version balanced it in 2040 - despite deceptive claims to the contrary, neither accomplished any significant deficit reduction in the first ten years). If the Beltway media had initially decided that actually solving problems ought to be given a high priority, then the Progressive Caucus budgets would have gotten vastly more coverage, Ryan's would have been laughed off-stage and - voila! - the Progressive Caucus budgets would magically become "serious" in the "politically viable" sense as well.

Disallowing frivolity

So why is the discussion dominated by a non-solution while a real solution can't even be discussed? It's because the "politically viable" sense of serious totally dominates over the "pragmatically effective" sense of the word, and because what is politically viable is circularly defined: extremist Republican non-solutions are politically viable because Republicans adamantly insist that they are, no matter how laughable they may be - and centrist bipartisan ideologues routinely and reliably endorse their false claims as matters of fact when they do so. The fact that they aren't even remotely serious, in the problem-solving sense, never even enters the picture.

One further point. There is a dynamic, deceptive cross-over effect, in which one meaning of serious - politically viable - masquerades as the other, providing a pragmatic real-world solution. Indeed, this is very essense of the deception involved. After all, the game could not even get started if, from the beginning, we disallowed ideas that don't solve the problem at hand. Historically, the US used to do a decent job of screening out such ideas, up until 1995, when Newt Gingrich became Speaker of the House. On taking power, Gingrich devoted a great deal of energy and attention to resructuring the House to disable reality checks, as independent conservative Bruce Bartlett has explained, including downsizing or eliminating centres of staff expertise and abolishing the Office of Technology Assessment. That's how Gingrich helped create the world in which Paul Ryan thrives.

Code talkers

There is another way to understand the confusion of meaning about "serious" policy aside from seeing it as a fallacy, and that is to see it as involving a form of "code-switching". Code-switching refers to a linguistic practice of bilingual speakers switching from one language to another. There are various different schools of thought about the what, why and how of code-switching, but nobody doubts that it's a widespread phenomenon among bilingual speakers. And linguists don't only use it to refer to switching between different languages. Code-switching is also used to describe how African-Americans may switch from an informal, "down-home" to a more formal, professionalised mode of speech.
Given this sense of code-switching, it doesn't seem to be much of stretch to consider wonkish economic policy talk, for example, as one mode of speech, and sports-metaphor-driven conflictual power-politics talk - extensively critiqued in James Fallows' 1996 Breaking The News, for example - as another. From this perspective, what I've described above as a logical fallacy appears instead as a switching point, from one mode to the other. But, of course, there's a sense in which both modes are conginually operative, just as bilingual speakers are continually able to understand one another and to respond in either language. Because both understandings remain operative throughout - at least potentially - one cannot pretend that the fallacy "goes away" somehow, it merely gets submerged. This example of code-switching has an inherently deceptive quality and purpose to it, but it can be examined in terms that allow study and comparison with other examples, other situations where this need not be the case.

For example, in one theory, Wikipedia explains:
The Communication Accommodation Theory (CAT), developed by Howard Giles, professor of communication at the University of California, Santa Barbara, seeks to explain the cognitive reasons for code-switching, and other changes in speech, as a person seeks either to emphasize or to minimize the social differences between him- or herself and the other person(s) in conversation. Prof. Giles posits that when speakers seek approval in a social situation they are likely to converge their speech with that of the other person speaking. This can include, but is not limited to, the language of choice, accent, dialect, and para-linguistic features used in the conversation. In contrast to convergence, speakers might also engage in divergent speech, with which an individual person emphasizes the social distance between him- or herself and other speakers by using speech with linguistic features characteristic of his or her own group.
This might be seen in the situation described above like this: divergent speech that emphasises social distance is the language of conflict - specifically, in this case, class conflict: upper vs all the rest (but portrayed as middle vs under). This is what's used the moment any talk of raising taxes is involved. Convergant speech is dispassionate wonk talk, relatively drained of emotion - as well as inconvenient facts. The perversity of the situation is that conflictual language is used to exclude the interests and priorities of the large majority of the American people, while the dispassionate wonk talk is used to create a bipartisan elite concensus that fundamentally excludes just those interests and priorities. That's how you create an "expert" discourse of very serious people who are utterly out of touch with the world they are guiding to catastrophe.

Which is, of course, exactly how the financial crises was created in the first place. Not to mention the Iraq War. This is how US elites operate nowadays - not just in one field of politics, but all across the board. Problem-solving and argument-winning have become two entirely antagonistic activities, and "moderate" "centrist" "bipartisanship" has become the creation of such profound confusion that the voting public won't catch on until it's far, far too late.

This is how empires die. It is the exact opposite of how republics thrive.

Paul Rosenberg is a California-based writer/activist, senior editor for Random Lengths News, where he's worked since 2002. He's also written for Publishers Weekly, Christian Science Monitor, LA Times, LA Weeklyand Denver Post. In 2000/2001, he was a principal editor/writer at Indymedia LA. He was a front-page blogger at Open Left from 2007 to 2011.

Follow him on Twitter: @PaulHRosenberg

The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.

Mental Breakdown of a Nation: The epic story of humanity in four parts.


From the book Water: The Essence of Life by Mark Niemeyer


Mental Breakdown of a Nation

Humanity 1.0: Our Birth

The epic story of humanity in four parts.

Humanity 1.0: Our Birth

As far as we know, we emerged about 200,000 years ago. At this time we had no language, no clothing, no art, no religion. We lived in the wild and ate what we could forage or hunt. We were hard to distinguish from our closest cousins – the chimpanzees and bonobos. 

What came to differentiate us from them – our remarkable capacity for innovation – was still only a faint trace at this time, a latent capacity. During the first hundred thousand years of our existence, we were confined to a small area in the hot, dry savanna of East Africa. 

There . . . we roamed, sweat, and slept beneath the stars on hard ground. We lived like the animals that we are . . .

Mental Breakdown of a Nation

Humanity 2.0: The First Leap

The epic story of humanity in four parts.
Agriculture was like a secret code. Once we discovered it, it unlocked a magical, controlling power over nature that until then had only belong to the realm of supernatural beings. 

We discovered our power to tinker with the processes of life … that we could cull endlessly reliable sources of dinner by cordoning off “our own” pieces of earth, and bending the environment to suit our will.

We banned all other species from our space, except for those we planned to chew and swallow.

Everything we sowed and everything we reaped was aimed at maintaining a single species – ourselves.

Before agriculture, it took human beings 50,000 years to move out of Africa. After agriculture, it took humanity a tenth of that time to cover the entire globe …

Mental Breakdown of a Nation 

Humanity 3.0: Project Total Control

The epic story

of humanity in four parts.


Mental Breakdown of a Nation

When humans figured out how to synthesize fertilizer from fossil fuels, we suddenly gleaned two billion people's worth of food from the same small piece of land – flouting competition and lack of resources, and spreading across the globe like contagion. We waged war on our microscopic enemies: bacteria, viruses, fungi, and all other microbes. We conjured antibiotics, vaccines, water-treatment plants, and continued to annihilate as much of our biological competition as possible. In short: we were cunning.

Hunger led us to agriculture. Later, lust, pride, beauty, cleanliness, power, order, and control drove us to even greater discoveries: penicillin, ethanol, organ transplants, and silicone breasts. And every new discovery harbored a secret prophecy, a vision of future humanity – sublime and indestructible – promising to extend our life spans, make us invulnerable, make things easier, more comfortable, more convenient, and efficient.

In just these past two hundred years, the number of humans inhabiting the earth went from one to eight billion. We've taken over the whole planet, and we just keep growing … 

Check out Humanity 1.0: Our Birth & Humanity 2.0: The First Leap … 


Part 4 coming soon.

Thursday, March 14, 2013

The Economy Sucks Because Banks Are Still Sticking It To Overextended Home Loan Borrowers


The Economy Sucks Because Banks Are Still Sticking It To Overextended Home Loan Borrowers

Banks aren't budging, and government isn't offering millions of households what they need. 

Photo Credit: Shutterstock

If the Dow Jones Industral Average is hitting records highs, how come the economy where most Americans live still sucks?

The answer is not just that many people don't own stocks or that cash-rich businesses aren’t hiring, or other oft-cited trends such as stagnant wages or stubborn jobless rates. It’s because a giant slice of the housing market is still frozen, due to millions of underwater mortgages, and that is smothering local economies.

“Each house that is sold creates a number of jobs,” said YouWalkAway.com founder Jon D. Maddux, whose company advises people facing foreclosure. “There is a huge drain on the economy because of this.”

How serious is this economic undercurrent? It depends who you ask, but some affordable housing experts say that it is so big—with 27.5 percent of U.S. mortgage holders owing more than their house was worth as of December—that it helped push the U.S. mobility rate to its lowest level since the Census Bureau started tracking it decades ago. In other words, even though 792,000 people moved last year because lenders foreclosed or were evicted, 13.8 million were stranded with underwater mortgages as of December.

“The underwater homeowners is a serious drag on the economy,” said Brent White, a law professor at University of Arizona and author of Underwater Home: What Should You Do If You Own More On Your Home Than It’s Worth. “When there was a housing boom, there was a lot of spending because homeowners had a lot of positive equity. They were spending because they felt wealthy… now they feel poor. They think their house is not a good investment anymore. There is a negative wealth effect because they feel poor.”

With so many households and communities still held hostage by debt, it is no wonder that news reports of Wall Street's recovery land with a thud on Main Streets across America (see map) where the real estate collapse is still raw. And the prospects for solving this nationwide economic crisis are very slim, because neither the private sector nor government has anything underway that’s intended to help most of these 13.8 million underwater households.
“They’re not offering that,” White said. “That’s the problem. It’s not there.”

Beyond Foreclosures: The Rest Of The Iceberg

The housing bubble was at the heart of the meltdown that caused the Great Recession. People bought homes with easy access to capital. Or they borrowed against rising home values to finance their lifestyles. When those loans could no longer be paid, the market crashed. But the debts did not go away. The most visible part of that collapse was the foreclosure crisis. Today, private investors are buying thousands of foreclosed homes, causing low-end home prices to rise. But they haven’t risen enough to fix underwater mortgages—where the money owed is more than current selling prices.

“The housing market is bifurcated,” said Paul Staley, who buys and sells low-end homes for a Bay Area affordable housing non-profit. “On one hand, what’s happening is prices are strong, but there’s a huge portion of supply where people are not free to trade because they’re still underwater. They’re trying for a loan modification. They want to move, but can’t. Not yet. How do you work that out? This is thousands of local households.”

“There is an artificiality in the housing market now,” he explained, saying that prices are rising in part because a significant supply of affordable homes—those with underwater mortgages—are not available for sale. “Banks slowed down the foreclosure process. But all these other homes are in limbo. The next big question is how do you resolve the debt issues hanging over these homes?”

That question does not have quick answers. Lenders do not want to take losses, so they’re waiting for prices to rise. While there’s cheery business press coverage touting the marketplace for liberating a lucky few, the larger reality is that millions of people are stuck in homes they paid too much for—or borrowed too much against—and are hesitant to spend, slowing local economies. In 2012, Zillow Real Estate Research said 2 million borrowers recovered from underwater positions, but 13.8 million borrowers remain there. And those individuals are not spending money for much besides bills and other necessities.
“I think of the fear that people have,” Maddux said, when asked about underwater loans and the falling mobility rate. “They are afraid to sell their homes because they cannot buy another one. That is a very strong drain on the mobility rate… You do have this very real problem with inventory and problem with people unable to sell their homes.”

“If you have an underwater home and you are unemployed and you get a job offer across the country, you can’t take it,” said White. “If you’re underemployed and you get an offer across your state, you can’t take it. That’s not good for the economy. You want people to go where their talents can be used effectively.”

“The people who are least able to afford these kinds of things are locked in homes that are distant—far from where they work,” said MobilityLab.org’s Tom Fairchild, whose organization encourages people to bike and walk to work, not commute in cars. “They’re locked in this formula of drive until you can qualify… They underestimate the costs. We see this all over the country.”

Neither the private sector nor the government is offering much help either, these experts said. Financial industry lobbyists were successful in persuading Congress not to require them to accept losses on underwater loans—and offer borrowers a new terms at a lower rate, White said. Many of today’s underwater loans were written a few years ago when interest rates were nearly double what they are today. Because those homes are now worth less than their mortgages, they’re stuck: no lender will work with them to refinance negative equity, because a lender looks to the home’s value as its way to secure potential losses.
Moreover, most of the government programs, such as the recent multibillion-dollar settlement with the state attorneys general, is designed for people who are facing the loss of their home—foreclosure and eviction—which is not the same as having an underwater mortgage. The underwater borrowers are mostly still paying, quite profitably for the lenders. In some cases, banks accept what's known as short sales, where a new buyer pays less than the loan. But that is a lengthy process and not widespread.

“There has been some refinancing,” White said, but not enough. “If you really wanted to solve the problem, you might require banks to refinance, or have direct lending from the government—refinancing at today’s interest rates… Japan had a direct government refi program when its home prices crashed in the 1990s.”

When asked if he saw anything on the horizon that might break the underwater mortgage logjam, White said no, there was no public or private sector initiative of that scale.

Sympathy For Banks, Not Borrowers

Some of the reason is government policymakers and lenders are not very sympathetic to people who are seen as borrowing and spending beyond their means. That stance, when examined, is hypocritical, White said.

Businesses, including lenders, are encouraged to write off bad debt and are rewarded with higher market valuations, while individuals who write off bad debt are penalized by lower credit scores and higher borrowing costs. “We expect people to keep paying, but we expect business to shed their toxic debt,” he said. 

What this means is that regions of the country with the most underwater loans (see map) are poised to have a drag on local economic recovery into the foreseeable future. And it is not because of the oft-cited factors associated with America’s growing gap between the haves and have-nots, such as still-high unemployent, wage stagnation, globalization and reluctance in hiring trends.
It’s because lenders—and the government—are not willing to stop a massive transfer of wealth from 13.8 million still-underwater borrowers to banks by lowering their interest rates, and in so doing allowing each of those households to spend several hundred dollars a month elsewhere in their communities.  

Steven Rosenfeld covers democracy issues for AlterNet and is the author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).

Tuesday, March 12, 2013

Washington Moves to Planet Rand: Why the Rich Prosper While We Get Screwed



On Planet Rand, the stock-market boom is a wonderful thing precisely because it rests upon the recent rise in corporate profits.

Photo Credit: Flickr
This morning I received an email blast form Amazon. It was pushing The Fountainhead and Atlas Shrugged, the old and new testament of the Ayn Rand nation, which includes much of the Tea Party and its Republican allies.

How appropriate to be promoting Ayn Rand books just as the stock market and corporate profits both reached record highs. How appropriate to think of the infamous John Galt withdrawing from society in comfort while the rest of us face high unemployment, oppressive student loans, increasing healthcare costs, upside-down mortgages, and declining real incomes. But, according to Rand's philosophy, this is as it should be -- the wealthy getting all the rewards while the rest of us get nothing.

None of this is accidental. Our two-tiered economic recovery is the direct result of policies, or the lack thereof, that flow directly from Randian principles. If we don't do something soon, we'll all be living on Planet Rand.

Who Owns the Stock Market?

Before exploring this Randian policy coup, let's be clear on who owns how much stock in America, and therefore who is benefiting most from the record rise in the equity markets.

As of 2010, the top 1 percent of households owned 35 percent of all the stocks in America while the bottom 80 percent of us owned only 8 percent. These percentages include both direct ownership of stock shares and indirect ownership through mutual funds, trusts, and IRAs, Keogh plans, 401(k) plans, and other retirement accounts. (See "Wealth, Income and Power" by G William Domhoff.) So the current market boom is extremely profitable for the well-to-do, especially the super-rich, which is precisely what an Ayn Rand true-believer would cherish. Why is that?

On Planet Rand, each individual pursues his or her own rational self-interest. That is the definition of morality. It excludes altruism, which is posited as a negative, guilt-driven trait that should be avoided at all costs. Yes, this sounds selfish, but that's a good thing on Planet Rand, because acting in your own rational self-interest leads to improvement, success, fulfillment and happiness. That's how you can become a "maker" instead of a spineless moocher. (When I hear all this talk about the "makers," the Yiddish word macher always comes to mind -- a word used to describe an ambitious, puffed-up schemer. )

So on Planet Rand, the stock-market boom is a wonderful thing precisely because it rests upon the recent rise in corporate profits. (The New York Times reports that corporate profits as a share of national income are at their highest levels since 1950.) Aren't those corporations run by the smart, successful CEOs who are society's "makers"? Aren't those CEOs applying Randian reason in pursuit of their self-interest? Surely, this is why these makers deserve everything they can get.

Why Are We Being Left Behind?

It's easy to see why the Randians would adore the super-rich. After all they're not alone in their idolization of the wealthy. It's seems like most of Congress adores the super-rich as well. But why do the Randians refer to everyone else as moochers? Why be so hard on the rest of us?

This becomes clearer when we look at two kinds of answers to the question of why most of us have been left out of the current economic recovery. The first set of answers comes from a straightforward analysis about how our economy works, and doesn't work:
  • High unemployment depresses wages of low- and middle-income wage-earners
  • Increases in the use of advanced technologies allow corporations to produce more with less labor, thereby keeping unemployment high
  • Increased global production creates jobs elsewhere
  • Fiscal austerity leads to job, wage and benefit cuts for public employees
  • Fiscal austerity also prevents the additional stimulus we need to create jobs
  • Attacks on unions further erode workers' bargaining power and keeps wages low
  • Wall Street is using indirect government support to gamble rather than to rework mortgages and invest in businesses
You'll find many of these causal explanations coming from insightful political economists like Paul Krugman and Robert Reich.

Screw the Rest of Us!

The second kind of explanation is what you'll find on Planet Rand. In that world, there is no such thing as the "public interest." Even the family doesn't count for much. It's all up to the individual.

Randians love the free-market for entirely different reasons than Adam Smith. They make no pretense that the invisible hand of deregulated markets will make all boats rise. That's just guilt-driven altruism parading as economic analysis, they say. The point of under-regulated markets is that they allow individuals to succeed on their own. Regulations of all kinds are opposed because they represent the evil hand of government. In fact, on Planet Rand, there's a constant state of war between the collectivists -- as represented by the government -- and the individual "makers." If you're not a maker then you're a parasite. We deserve only what each of us can get on our own, they would claim. We live to pursue our rational self-interest, not to better anyone else's.

Washington Moves Toward Planet Rand

This world view has become the heart and soul of the Tea Party and a good portion of the Republican Party as well. As a result, any and all efforts to help spread the recovery are vehemently opposed:
  • Unemployment insurance? It prevents the unemployed from seeking jobs. Let them get by on their own wits, not on our money. It's bad for them. It's bad for the rest of us.
  • Increase the minimum wage? All money transactions are fair trades. You get what someone is willing to pay you, no more, no less. The government shouldn't be telling a businessman what to pay anyone.
  • Public job creation to reduce unemployment? You must be kidding. The government is an ever present threat to liberty. It should only provide for defense, courts and police. Job creation only comes from the makers.
  • Aid to states and localities to prevent layoffs of teachers and other public employees? No, lay them off. Get rid of public education. Get rid of as much government as possible.
  • Close tax loopholes for large corporations and hedge funds?Not a chance. Under no circumstances do we want one penny more going to government.
Romney's 47 percent/maker-taker comments were no fluke. After all, he tapped Paul Ryan, a self-syled Randian acolyte, as his running mate. It's also not a fluke that the Republican Party will oppose any and all efforts to make Wall Street pay for the damage it has done to the economy. Sure, they get lots of fat campaign donations. But in addition to the corruption that infects both parties, we find a new philosophical meanness that particularly permeates through the Tea Party/Republican Party. In the name of fighting for individual freedom and against government, they are more than happy to screw those who are harmed by Wall Street's insatiable greed.

The Randian policy coup helps explain why facts no longer matter in policy debates, why failed and disproven economic policies (like supply side economics) never go away, and why compromise is out of the question. These folks are at war against anyone who supports the public interest and the very notion of the common good.

Let me repeat: on Planet Rand, there is no common good, there is no altruism, there is no whining about CEOs and Wall Street barons. There is only individual self-interest and the crusade against government.

Democrats Become the Old Republicans

Here's the scary part. The more the Randian philosophy infects the Republicans, the more the Democrats move to the right. As President Clinton sarcastically quipped in 1993, "Where are all the Democrats? I hope you're all aware we're all Eisenhower Republicans...Here we are, and we're standing for lower deficits and free trade and the bond market. Isn't that great?"

President Clinton was onto something. Aren't President Obama and a large chunk of the Democratic Party still "standing for lower, deficits and free trade and the bond market"? (BTW, when President Clinton reappointed Alan Greenspan as chairman of the Federal Reserve in 1996, did he know or care that Greenspan had been among the most loyal members of Ayn Rand's inner circle?)

The Randian Antidote: Movement-Building

It's almost a cliché now to suggest that we need to build a progressive populist movement if we really want to do something about increasing inequality, unemployment, the student debt burden, and the continuing Wall Street rip-offs. Nevertheless, it's still true. Nothing much will happen if all we do is put forth wonky policy proposals from our many 501c3 non-profit organizations.
Also, hoping that a few solid Democrats can do it all for us is a pipe dream. For more than a generation progressives have been trying to put more people like Elizabeth Warren and Bernie Sanders into Congress, and we're still going backward.

Both the Tea Party and Occupy Wall Street proved that mass mobilization can dramatically shift the terms of debate. Yes, the Tea Party has some very rich donors, but I doubt that money alone accounts for the success of that formation, or for why no sustained progressive movement has emerged. But this much is clear: If we want out of the Randian economy, we need to break out of our separate issue silos to form a common vision and organization that can take back America from its corporate rulers. For most Americans, the spirit of solidarity, community and commonwealth trumps greed and selfishness. They are waiting for a way out of Planet Rand.

Les Leopold is the executive director of the Labor Institute in New York, and author of How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America's Wealth (J. Wiley and Sons, 2013).