Category: Economics

Here’s a Real Shock: America is “Becoming” an Oligarchy, Princeton Study Says

The US is dominated by a rich and powerful elite.

So concludes a recent study by Princeton University Prof. Martin Gilens and Northwestern University Prof. Benjamin I. Page, according to the BBC.

oligarchyThis will come as a shock to absolutely nobody who has been paying attention to the American political scene the past 30+ years. The study “compared the public’s influence on 1,779 policy issues between 1981 and 2002, finding that more often than not, the interests of wealthy groups and individuals won out over the demands of the general public. For instance, when 80 percent of the public asked for a change of some sort, they got their way only about 43 percent of the time [links to PDF of study].

While the study gingerly sidestepped the question of declaring this country an oligarchy in outright terms (“Our findings are consistent with the U.S. being an oligarchy but don’t prove that to be so,” Page said), the fact is that this development has been pretty clearly visible to all but the blindest of observers for some time now. On any number of issues — gun control leaps immediately to mind — when significant majorities not only of voters but even of gun owners and NRA members support reform and the gun industry lobbying group opposes it, its opposition wins out. (This despite the demonstrable fact that in the last election, the NRA lost virtually every single election in which it invested. As Media Matters found, “Of the nearly $18 million the NRA poured into the 2012 elections, over 95 percent was spent on races where the NRA-backed candidate lost.”)

The study concludes, in its abstract, “[E]conomic elites and organized groups representing business
interests have substantial independent impacts on U.S. government policy, while average citizens
and mass-based interest groups have little or no independent influence.”

To put it more clearly and directly, we need look only to this quotation from Independent Senator Bernie Sanders of Vermont: “An “upper-crust of extremely wealthy families are hell-bent on destroying the democratic vision of a strong middle-class which has made the United States the envy of the world. In its place they are determined to create an oligarchy in which a small number of families control the economic and political life of our country.”

Wake up and smell the non-Fair Trade coffee, Senator. That ship has long since sailed.

President Obama Dropped the Sledge Hammer and Walked Away

Thomas Frank authored a scathing attack on President Obama at Salon.com today. In a piece on the emptiness of the new bipartisan cry for equality of opportunity rather than less inequality of income, Frank provides a succinct summary of the squandered opportunity that is our current President:

The distressing fact is that Obama had perhaps the greatest chance of any president in recent years to smash the barriers that keep the talented from climbing the ladder, and he chose to do nothing. The sledgehammer was in the president’s hands, the nation was cheering for him to start pounding—and he walked away from the job.

obamagrimaceFor me, it is this more than anything else that has soured me on a man I was reluctant to support, excited to see elected, and hopeful about as a leader. When he refused to prosecute any of the Bush Administration war and Constitutional criminals, I got my first whiff of a man who was not a powerful leader, a man who lacked the backbone and courage we needed at the time, a man less interested in healing the nation than in consolidating his power. The many horrific Bush Administration policies he’s not only continued but in many, many cases extended and worsened just added more dismay to the growing pile of smelly malaise that was building around his Presidency.

Frank makes the clear and accurate point that “equality of opportunity” doesn’t mean what it once did. Today, that phrase means that anyone can make it into the ranks of the 1%, that anyone can succeed in joining the ranks of the ultra-greedy power brokers

Even his signature domestic social policy, the Affordable Care Act, was a disappointment from Day One when he announced, completely without provocation or cause, that he was taking the Single Payer Option off the table before the first words of debate had been uttered. “How could he do that?” I remember asking myself incredulously. “I know he’s not a liberal but he’s a former community organizer for God’s sake. He has the best chance in 100 years — and probably for the next 100 — to put us on an equal footing with the superior systems of every other Western democracy and he’s going to blow it by designing a plan that helps insurance companies, Big Pharma and the medical establishment while tossing the People a few helpful but insignificant crumbs?” Yep, that’s what he did alright.

We need a Progressive President. And 2016 is our best shot in many decades at getting one because the Republicans are sure to nominate a hard-right winger who will disgust the vast majority of the American electorate. At the very least, Progressives need to begin now on a long-term strategy to move the conversation and the agenda in this country leftward, back toward and beyond the center from the center-right now co-occupied by both major parties to one degree or another.

 

The Eerie Parallels Between Ryan’s View of the Poor and the Irish Potato Famine

New York Times columnist Timothy Egan’s pre-St. Patrick’s Day post about the tone-deafness of Paul Ryan is a classic.

Right-wingnut Rep. Paul Ryan (R-WI)

Right-wingnut Rep. Paul Ryan (R-WI)

In his piece, Egan compares Ryan’s attitude toward the poor in America with the Victorian English approach to the Irish Potato Famine that killed over a million people, many of them children, in the mid-19th Century. It is breath-taking how closely the language of the two eras parallels itself.

England declined to help “bail out” the starving Irish because of concerns that doing so would “set up a culture of dependency.” As Egan observes, “His [Ryan’s] oft-stated ‘culture of dependency’ is a safety net that becomes a lazy-day hammock.” The attitude in both cases seems to be that folks who are poor are in that condition because of some fundamental character flaw or defect; that being poor is an effect, not a cause.

While it’s not likely that Ryan’s cold-hearted intransigence is going to result in the deaths of a million or more people, it’s also not believable that it won’t lead to any deaths. And it certainly does lead to unneeded and undeserved misery and pain and suffering. But Ryan and his Ayn Rand-inspired acolytes clearly do not concern themselves with this “collateral damage.” Unmindful of the Irish Potato Famine — from which Ryan claims his forbears escaped to come to America — the Tea Party GOP is more concerned with ideology than compassion, with winning elections than with helping their fellow humans.

I honestly do not see how people who have those kinds of attitudes can call themselves followers of Jesus Christ, whose teachings are all about love, compassion, service to humanity. For that matter, I don’t see how they can sleep at night or look themselves in the mirror.

It really is sad.

The Arrogance of the Greedy Knows No Bounds: Pope Threatened With Economic Retribution

Wow.

Just when I thought I’d seen the arrogance of the greedy upper class in America get as bad as it was likely to get, one of them pulls one of the biggest boneheaded stunts of the decade. Maybe the century.

Home Depot founder and alleged devout Catholic Kenneth Langone told a CBS News interviewer that he had told Pope Francis, through his friend Cardinal Timothy Dolan, “You want to be careful about generalities. Rich people in one country don’t act the same as rich people in another country.” He also related the story of an unidentified big donor to the Catholic church who is ‘concerned that the Pope’s criticism of capitalism are “exclusionary,” especially his statements about the “culture of prosperity” leading to the wealthy being “incapable of feeling compassion for the poor”.’

pope_francis_wavingIn other words. Hey, Pope Francis! You want to keep these big donations from rich American Catholics pouring in? You’d better stop talking so much like that guy Jesus you’re always yapping about.”

Or what? You’ll become a Methodist? You’ll stop giving because, after all, it’s never about “doing the right thing” so much as greasing the right palms to keep increasing your horde of money?

Jesus had a good name for that kind of behavior. He called those who engaged in it “hypocrites.” If you have a problem with the way Pope Francis is behaving and talking, maybe you have a problem with Jesus. I suspect he has a problem with you.

 

Kathleen Parker Gets One Wrong

I’m a big fan of Kathleen Parker. I have a friend who shares her better columns with me and I seek her out from time to time for clever and clear insights on a variety of subjects. Her column today was appropriate to the New Year as it discussed the American Dream and its accompanying hope in an increasingly hopeless America.

In the midst of a pretty good piece, Ms. Parker hits a really sour note.

Envy is the core emotion driving the current debate about income inequality and the notion that the poor are poor because the rich are rich. Nonsense. The economy is not, in fact, a pie. When one gets a bigger slice, others do not ipso facto get a smaller one. Instead of redistributing wealth to spread misery around, the goal should be to make the poor richer, which means jobs, education and tax/regulation relief for employers.

income_inequality_photoWrong. Even though we may agree that our economy is not a zero-sum game so that one person’s loss is directly and measurably attributable as someone else’s gain, the fact is that the poor are poor in this society precisely and almost entirely because the rich are too rich. The underlying assumption Ms. Parker conveniently overlooks is that of unending growth in the economy, a growth that is simply and completely unsustainable.

So long as the economy grows, it can add jobs and wealth. But the resource base on which it has grown these many decades is fast disappearing and the total cost of continuing to deplete those resources is becoming unacceptably high. Therefore, we must find ways to create a sustainable economy and in such an economy, there is something of a zero-sum game at work. When a tiny percentage of the total population hordes an enormous percentage of the wealth and earns a disproportionate share of the income available, everyone else suffers. Not in direct proportion perhaps, at least not at first, but, as we’ve seen in the past 10-15 years, in increasingly large ratios.

Both President Obama and Pope Francis see clearly that inequality of income, wealth and economic opportunity are, taken together, our society’s biggest challenge. The redistribution of wealth along more equitable lines — lines that recognize the unsustainability of the assumption of continued and unlimited growth — is the most vital imperative of survival of our culture and our social structures. The social contract has been voided and broken by the rich and powerful; they are about to discover the real cost of such greedy overstepping, and the outcome will be shockingly injurious, perhaps fatal, to essentially unbridled capitalism.

 

Tight Link Between Union Membership and Middle Class Income

unions-middle-classThis chart depicts the incredibly close connection between union membership and middle-class incomes. It’s almost as if the two were inextricably and intimately linked. Oh, wait. They are! The destruction of unions by corporations, the exporting of U.S. jobs overseas, the artificially created wealth that exploded in the housing bubble of the past five years, and other causes has all but wiped out the middle class in this country. Without the middle class, companies have no markets for most of their products. Without markets, they have no sales and no profits.

This union bubble will definitely burst and when it does, things are going to get really ugly around here.

One of my biggest disappointments in the Obama Administration has been its utter failure to do anything meaningful to shore up unions. The cause of the working family in this nation is no longer championed by either of the two major political parties. This observation must soon result in the emergence of a strong third party focused on the people. The Greens or the Socialists or some combination or permutation will have to move to the fore over the next decade or so. Otherwise, America may not be recoverable.

Stock Market is Lousy Indicator of the Economy. Can’t We Find Something Better?

New York Times economic columnist Robert J. Samuelson wrote a column the other day essentially pointing out the extreme disconnect that has become obvious between the performance of the stock exchanges and real-life economic circumstances. Not that this was some big shock. For many years, that disconnect has been annoying people who really try to understand our overly complicated economy. The stock markets and their indexes are like trickle-down economics: they tell us what investors are betting and believing about the present and near future of American corporations and damn little else.

In recent months, the stock markets have been breaking their own records almost daily. Yet the economy still has too-high unemployment, too-low average wages, and far too great economic inequality to be seen as even favorable let alone ragingly successful.

economic_indicatorsWhat, then, are some candidates for more meaningful indexes or measures of the economic health of our nation? Is there a single index or composite index that might be of more value, that the media might begin to publicize rather than or in addition to the meaninglessness of stock market performance?

Part of the answer to that question lies in the precursor question of what we consider to constitute a “good” economy. And a very real and important problem associated with that question is the Western capitalist notion that only an economy that continues to grow is a good economy. But anyone who thinks about the problem very long can easily see that the idea of perpetual, infinite, unregulated growth is not a sustainable idea on any level. A perpetual-growth model eventually runs out of resources. So long as resources are not infinite and so long as we refuse to develop and use renewable resources so that we do have something resembling unlimited access, we will not be able to continue growing our economy and nor will any other nation.

Another problem that arises when we grapple with the idea of the measurability of an economy is that there are intangibles that seem to need to be included and yet practically cannot be. Things like happiness, safety, consumer confidence, and other such immeasurable notions cannot easily be taken into account numerically. And if they can’t be measured, they will not be perceived by economists and their supporting casts as important enough to be included.

But none of this means we cannot come up with a measure or set of measures that will meaningfully describe our economy that most reasonably educated and informed people could understand fairly readily.

The fact is, there is a plethora of such indexes an composites used by organizations and individuals across a broad spectrum of economic participants. The problem is that the news media are too lazy or incompetent or lemming-like to understand that the stock market indexes they report so routinely that people think they actually mean something, are essentially worthless junk news. Less than half of Americans own any stock and the vast majority own minuscule holdings, both absolutely and in terms of the share of their wealth represented.

Most indexes — e.g. the Conference Board’s mainly excellent composites — are heavily skewed toward the business and commerce side of the economy, leaving out the consumer side other than indirectly. For example, the mean wage of American workers is a hugely important indicator that’s omitted from the Conference Board’s calculations. (As far as I can tell from their site, at least.) But news of these other indexes is confined to business shows, which the vast majority of listeners and viewers tune out because they see them as too detailed and focused on investing.

Anyone got any ideas how we might approach solving this problem? Economic illiteracy, which is promoted by the use of junk news like stock market indexes in the media, is unhealthy for a nation whose economy is in nearly constant flux and disruption these days. We can’t make informed electoral and policy decisions in the absence of meaningful, quality data.

(Here, BTW, is a reasonably informative piece from the SF Fed on the question I’m raising. Though short on ideas and details, it’s at least a decent attempt to frame the question.)

Help Me Accelerate Gift-Based Economy?

I have a deep-seated belief that among the many transformational events taking place in the world today, market-based economies are in steep and irreversible decline. I don’t think capitalism or social democracy-based systems will collapse during my lifetime but I do think the handwriting is on the wall and that my kids and grandkids will be dealing with an entirely different model.

Screenshot_6_25_13_6_29_PMThe model I think has the best hope of allowing more members of society to thrive than any other is the gift-based economy. To that end, I’ve been working for over a year with Dr. Timothy Wilken creating The Gifting Earth (TGE). This online community is designed to provide a low-friction way for people to request what they need, offer what they have to give away or share, and create an economy with no quid pro quo basis or any other transactional mechanism.

We’ve been online about 10 weeks now and we’ve got the kinks out of the system. What we need now is more members.

I’d consider it a personal favor if you’d do one of both of these things to help us get some traction with TGE.

First, we’d love for you to Like our Facebook page. As soon as we get 25 Likes we can create one with our own URL and that will help a lot as we begin to promote TGE among social networks.

Second, it would be even greater if you’d join TGE. Just go to the site and sign up It’s free, all communication about transactions takes place within the walls of the community, and you’ll get to be a real pioneer in what I think has the real potential to be a major wave of the future on Planet Earth.