“Say what you need to say plainly and
then take responsibility for it.” -Ai Weiwei

What’s
Wrong Today:

Disinformation
has become the American way: Every conservative
or corporatist group has full time lobbyists working to protect its turf. From
the Koch
Brothers to the Heritage Foundation to Fox News.

In other words, you shouldn’t believe
anything the Republicans or their fellow travelers say. They are all lobbying
organizations for the plutocracy and the Corporatocracy. They would pay your
mother to say good things about them. It is ever thus with the plutocrats and
the deficit scolds.

Consider
what Comstock Partners wrote:

Comstock says that the
major problem that cratered the economy was the credit crisis of 2008. That was
brought on by the housing boom, the explosion of household credit and the
associated sleazy practices by the mortgage banking industry. When the boom
collapsed, middle class households were left with a severely depleted asset
(their homes), record debt and low savings. Since then, they have been struggling
to get out of debt and increase their savings when their wage growth has been extremely
limited, a problem we seem incapable of solving.

The result is the
weak recovery that follows major credit crises.

More
from Comstock:

The
deficit is now mixed up with the fiscal cliff as the major problem holding back
the economy. The fiscal cliff is an
artificial problem manufactured in Washington during the debt limit
negotiations in the summer of 2011 that caused the loss of the U.S.
triple-A credit rating.

This is the disinformation machine at work: The Republicans
didn’t win the national debate about how to deal with the economy, so the frame
was changed to the damage the Fiscal Cliff would cause. They then smuggle in plutocrat-friendly policies under the
pretense that they are simply sensible responses to the Cliff or to budget
deficit.

Here is Paul Krugman in the
NYT:

He goes on
to say:

The point
is that the class war by Republicans is still on, this time with extra
crispy deception added. This means that you should look very closely at any proposals
coming from the usual suspects especially if the proposal is being
represented as a bipartisan, common-sense solution (this
means you, Fix The Debt!).

The Hill reports that Dan Holler, communications director for
Heritage Action for America, a sister
organization of the Heritage Foundation, said about the Fiscal Cliff:

This is
the GOP’s problem: They don’t plan to work for the people of the United States;
they’re bought and paid for by plutocrats and corporatists.

Let’s
remember that the GOP excoriated the President for waging class warfare, while they adopted language pitting the
classes against each other: the 47%, makers vs. takers, job creators
vs. parasites.

The hypocrisy
would be astounding if not for the past 10 years of disinformation.

Now comes Mr.
Boehner, armed with an ideology that believes people choose to be poor. Boehner’s
proposal will (1) rob seniors of important elements of safety-net programs, (2)
eliminate popular tax deductions for middle class families, (3) further
reduce revenues by reducing tax rates for the wealthy, while shifting a
larger tax burden onto middle and lower income households and
(4) Make Medicare even less progressive.

Boehner
says he is channeling Bowles-Simpson, but B-S started from a “baseline” that already assumed the end of the Bush
tax cuts.

Today,
Boehner and the deficit scolds want us to count the expiration of those cuts, which
were never affordable, as some kind of big giveback by the rich. Isn’t.

Again
from Krugman:

Whenever some
deficit-scold group talks about “shared sacrifice,” you should ask: Sacrifice
by whom and relative to what?

 

What’s
Wrong Today:

Yesterday,
CNN reported that four years after the worst
economy since the Great Depression, US corporate profits are stronger than ever:

After-tax
profits accounted for 11.1% of GDP last quarter, compared with an average of 8%
during the previous economic expansion. They fell as low as 4.6% of GDP during
the recession.

Another
government report shows that total wages as a percent of GDP are at an all time
low of 43.5% of GDP. Until 1975, wages usually accounted for at least 50% of
GDP, and had been as high as 49% as recently as early 2001. This is both cause
and effect. One reason companies are more profitable is that they’re paying
employees less than they ever have as a share of GDP. And that, in turn, is one
reason the economy is so weak: Those “wages” are other companies’
revenue.

In short,
our current tax structure and governing philosophy is creating a country of a few million
overlords and 300+ million serfs. Below, Wages/GDP (%):

As is evident in the above graph, overall economic growth has greatly outpaced growth in hourly wages and job creation since the end of
Great Recession, so workers’ share of the economic pie has dropped steadily.

So,
What’s Wrong?

This is just
more evidence of the conundrum that the Wrongologist has reported on recently, here, talking about
high corporate profits and poor job growth and here, talking about
high corporate profits and no growth in median income since 1999.

Josh
Barros wrote last Thursday in Bloomberg’s Ticker:

Republicans
want us to believe that lower taxes will promote higher median income for
Americans.

The main
problem with this position is the lack of evidence to support it: Lower taxes
and a smaller government probably wouldn’t increase GDP growth. Moreover, there’s
no reason to assume that if it did, any growth would accrue in a more equal
manner than we have experienced in the past 13 years.

The effect of Boehner/Ryan-style fiscal policy, which makes taxes both lower and
less progressive while shrinking employee benefits, would be a rise in after-tax inequality.

Conservatives’
ideas are not good for the middle class or the working poor. Since the 1970s, wage gains have been decoupled
from productivity gains and the average American family has received a
disproportionately small share of the benefits of that economic growth.

And conservatives
have nothing to say about how to fix this problem.

One
conservative message about income inequality is to say that it doesn’t matter,
that we should accept rises in both pre-tax and post-tax inequality. This is
the implication of studies periodically put out by the Heritage Foundation, arguing that the poor aren’t really poor
if they have microwave ovens.

This
isn’t an appealing or winning argument. The problem with rising inequality is
not that lower-income families can’t afford cheap electronics; it’s that they can’t keep pace with the
rising costs of health care and education.

There’s
also no reason to think that whatever standard of living we start from, an
economy where nearly all the upside accrues to a small fraction of families is either politically sustainable or morally
acceptable.

If
Republicans joined Democrats in the cause of containing costs in health care,
the effect would be to raise real
incomes for the middle class. The rising cost of health care benefits
has been a key driver of middle-class wage stagnation. Unfortunately, Republicans
have no real interest in controlling health care costs: It requires going
against the economic interests of a large portion of their base.

Obviously, Republicans are not interested in doing that. Instead of
trying to make Obamacare less costly, they fought as hard as they could to stop
it. If you think Republican’s objections are just because they are deficit
hawks who want to curb government spending, rather than wanting to curb government
spending specifically directed at poor people, note how they are now proposing to protect Medicare: By making it harder for poor people to afford it!

Republicans remain one-trick ponies
for the 1%.

Paul
Krugman in today’s New
York Times:

While the
details of the President’s $4 trillion, 10-year budget balance plan must be
vetted, the general contour appears sound:

• $1.6
  trillion in tax increases on the top 2% of earners

• $1.6
  trillion in domestic spending cuts, including Medicare savings

• $800
  billion in defense spending cuts

If the
Republican Party has a better approach, it is their turn to
suggest it.

Last
year during the “Grand Bargain”, the Administration put 10 to 1 – cuts to
revenues on the table, yet Republicans rejected it. They wanted more and were
unwilling to compromise. Did the Democrats whine, pout and act like teenagers?
No, they campaigned on protecting Medicare and Social Security, while raising
taxes on the top 2% of earners, won the presidency and gained seats in the
House and Senate.

When Mr.
Romney campaigned on increasing defense spending by $2 trillion, even though
the Defense Department was not seeking those increases and did not need them, not a peep was heard from Republicans
about deficits.

We’ve
got two political parties in the US: The Democratic Party wants to balance the
books by raising taxes in a progressive manner, while protecting the social
safety net (Social Security, Medicare and to a lesser extent, Medicaid).  The Republican Party wants to scale back the
social safety net while keeping taxes as flat and low as possible.

In an ideal world, both parties would
lay out their proposals and the voters would choose which one they like best.
However, in the presidential election, Mr. Romney ran a
campaign about nothing: No specifics about revenues,
expense cuts, just defense spending increases. Their math never added up during
the campaign, but that didn’t stop them from not offering specifics.

Seinfeld
would have been proud.

Michael
Grunwald in Time Magazine:

Reporters
know the Republicans are aware that their voter base generally favors the
social safety net and favors progressive taxation.

Reporters also know that voters
will punish a party that seeks to scale back the social safety net, which
is why Republicans have spent the past 30+ years working to undermine it while
claiming that they are trying to “save it.”

So how can Republicans present a
proposal that includes big cuts to SS and Medicare, while keeping upper rate
taxes low without being punished for it by the voters?

By
keeping silent on their plans while insisting that they will not negotiate until the other side presents a
plan that makes massive cuts to the social safety net and keeps upper income
taxes low.

As Krugman said, the GOP has
been playing this deficit con game for
years, yet the chattering class in DC continues to portray the GOP as
the “serious” party when it comes to tackling deficits.

Ronald Reagan’s tax giveaways and
military spending created large deficits, yet in the eyes of the main stream
media, the GOP remained the “fiscally responsible” party. G. W. Bush
wasted his inherited budget surpluses on two wars, tax cuts for the wealthy,
and a prescription drug plan that wasn’t paid for.

The GOP was still was portrayed as
fiscally responsible.

In the Obama era, the Democrats have
ensured that the programs they enacted, like health care reform, are either budget
neutral or actually reduce the deficit and they have enacted policies to reduce
the cost of Medicare without cutting benefits.

Yet Democrats are still portrayed by
the press as less than fiscally responsible.

The headline is that the GOP was backed into a corner that they
can’t easily get out of, when last week, the Democrats finally called the GOP’s
bluff. In response, Messrs. Boehner, Kantor and McConnell have been all bluster
and no bacon, still trying to hew to their strategy. It doesn’t look like Mr.
Obama will play the same game with them as last time.

Late today Republicans
sent the White House a
counter-proposal,  offering $800 billion in revenue gains from
closing loopholes and a total of $2.2 trillion of overall deficit reduction. We’ll
see over the next few days if is truly worthy of consideration.

In England, their right wing equivalent
of the Republican Party has made good on its promises of spending cuts and
lower taxes. They have created the
policy nirvana that the US Republican Party seeks for us:

• Spending
  has been cut viciously, and taxes have been lowered for the rich
• Was
  the deficit reduced? No, it has increased
• Has
  business boomed now that they are brimming with confidence at the Government’s
  good sense? It has not

Their right wing has torpedoed the British economy with the very policies America’s Republican
Party wants us to embrace.

Time for the people to tell the
Republicans we have had enough of their con. There is no evidence to support their contention that lower taxes will
grow the economy or reduce income inequality.

What’s
Wrong Today:

What could be wrong
with our quest to increase fuel economy? It helps the environment and lowers
our cost of commuting, a big deal with high gas prices.

In
1993, the average new passenger car got 28.4 miles per gallon (MPG). The best-selling car got 18 MPG in the city and 27 on the highway.

In
2010, the average new car got 33.7 MPG, while the best-selling car got 22
(city) and 33 (highway) MPG.

The Economist carried this chart laying out our
success with gas economy:

According
to Michelle
Hirsch of The Fiscal Times, fuel
standards will rise to 34.1 MPG by 2017.
 

One
particularly interesting trend was highlighted in a recent study on
“Transportation and the New Generation” by the Frontier Group: From 2001 to 2009, the average annual number of vehicle miles traveled by young people
(16 to 34-year-olds) decreased from 10,300 miles to 7,900 miles per capita—a
drop of 23%. [PDF ]

Doug
Short of Advisor Perspectives prepared this
chart showing how miles driven
has
fallen from 3.04 trillion miles in 2008 to 2.94 trillion miles in 2012, less
than they drove in 2006. (The grey bars show periods of recession) 

 

So, What’s Wrong?

Unintended
consequences can accompany a good thing and that’s true with improved gas mileage. Just as cars
are growing more fuel-efficient, Americans are driving less. While better
fuel-efficiency is good news for Americans’ wallets and less driving good for
the country’s air, for our highways
and mass-transit systems, it is a burgeoning disaster.

Why?

Because we fund highway infrastructure mostly
from federal fuel tax revenue. Fuel taxes go into the Highway Trust Fund
(HTF), which was created in 1956 to finance highway construction nationally. Buy fewer gallons of fuel and the amount
available to fund improvements declines.

Fuel taxes
account for 22% of all highway funding and 17% of mass-transit funding
nationally (with the rest coming from state and local governments). The HTF spends
most of its funds on highway and bridge maintenance and construction, but in
1982, Congress created a Mass Transit account within the HTF.

The current
rate of 18.4¢ was established
in 1997. Today, 15.44¢ of every 18.4¢ of fuel-tax per gallon funds
highways, while 2.86¢ funds mass transit and 0.1¢ funds clean-up of leaking
underground storage tanks. The HTF also receives some revenue from taxes on
truck tires, diesel, and other driving-related sources, but most of its money comes from gas taxes.

But as the
trend in tax receipts has slowed, the HTF has suffered:

• Funds
  paid into the HTF fell by 14% from 2007 to 2010

• Between
  2008 and 2010 Congress transferred $34.5 billion in general revenues into the
  HTF, the first time it had ever received such an infusion

(To learn more about how the Highway Trust Fund operates,
read The Federal Excise Tax on
Gasoline and the Highway Trust Fund: A Short History by James M. Bickley here).

Higher
fuel economy standards starting in 2017 will cause gas tax revenues to decline
by 21% by 2040. Earlier this year the Congressional Budget Office forecast that
the HTF will be unable to fund highway maintenance by 2013. The CBO projects that
the HTF will pay $589 billion to states by 2022 and take in $422 billion during
the same period. The CBO lays out the options to fund the shortfall as:

• Raise
  the gas tax by 5¢

• Divert
  funds from the general fund to the HTF

• Cut
  infrastructure spending by 10%

Mr. Obama opposes
raising the gas tax, so it is probably a political impossibility. And with the Fiscal Slope and the deficit
fighting in Congress, that money will be difficult to find elsewhere. This
leaves us with CBO’s “cut infrastructure spending by 10%.

This isn’t just a federal problem. Around 50% of all
surface-transportation funding and 20% of mass-transit funding comes from the
states, most of which face budgetary
woes of their own.

Repairing
America’s transportation infrastructure cannot afford to wait. The American
Society of Civil Engineers (ASCE) estimated in 2009 that 36% of America’s major
urban highways are congested, costing
$78.2 billion each year in wasted time and fuel costs. They also say
that our roads rate a “D” on their infrastructure
report card. They estimate the 5
year need for funding to be $930 billion 
 and estimate that spending for
the same period will be $380.5 billion.

We all
experience poor roads and road repair projects that take years to complete.
Fortunately, few of us experience the catastrophic failure of a bridge during
rush hour, but most of us know about delays at a bridge toll.

On our
roads, we get to experience the
leading edge of our nation’s decline to third-world status every day.

We can’t
let political inaction push us toward the CBO’s cut our infrastructure expense
option. Congress and the people need
to make highway infrastructure a priority.

You can’t grow the economy and get down to
business if you can’t get there from here.

Build it
and they will come.

 

 

 

What’s Wrong Today:

More
Thanksgiving holiday reading in the Wall
Street Journal brought this unhappy
report:

“The darkest
pages of Afghan history are reserved for a traitorous king named Shah Shuja.
Enthroned by British invaders in 1839, he was ignominiously slaughtered once
the routed infidels left.

President Hamid Karzai knows this story well.
He hails from the same Pashtun sub-clan as the reviled 19th-century monarch.”

The WSJ goes on to report that the
Taliban in their leaflets, poems and
songs mock Mr. Karzai as the
modern-day Shuja, a ruler imposed by outsiders and destined to meet an
unhappy end:

“Mr. Karzai
understands that his future survival depends on proving that he is no puppet of
the Western unbelievers—no matter
how much he actually depends on their money and troops.”

This contradiction has crippled our
Counter-insurgency program (COIN) and President Obama’s surge in the Afghan war, America’s longest foreign conflict. If the
Pentagon and the White House knew about this and still went forward with both programs, the Petraeus
resignation needs to be just the first of many. 

Karzai’s
concern for his neck means we will see no progress on the ground and continuing
rifts with him as we move to bring our troops home in two years.

Had You
Heard This?

Mr. Karzai’s
deep ambivalence was visible to our military commanders during a visit to
Kandahar (the Taliban’s hometown)
in 2010. They had flown him to a meeting with elders, where Mr. Karzai was to
kick off the military offensive that
was to be the centerpiece of Mr. Obama’s troop surge. From the WSJ:

“Instead, as
stunned generals looked on, Mr. Karzai called the Taliban ‘brothers’ and told the turbaned elders that
the war wouldn’t end as long as he was seen as a ‘foreign stooge.’ He then asked the elders whether
they wanted the offensive to begin. Hearing shouts of ‘no,’ Mr. Karzai ordered a halt to the
long-planned operation to clear Afghanistan’s second-largest city.”

So, we revised our Kandahar campaign to conform to Mr. Karzai’s demands. The
military abandoned plans to ring the city with Baghdad-style checkpoints,
biometric control posts and walls to filter out insurgents, measures that Mr.
Karzai, a Kandahar native himself, thought would erode support for his
government.

If we knew this in 2010, WHY have we persisted
with the charade?

Today, the
Taliban remains a very potent force in Kandahar, carrying out assassinations
almost every week. It has never been a secure city for coalition forces. They
are powerful even at the gates of Kabul. They are active today in provinces
where they were not in 2001.

So, What’s Wrong?

We are in negotiations with Mr. Karzai on the shape of our post-2014
military presence and this disconnect has never been clearer: As the New
York Times stated:

“The planning for a
post-2014 mission has emerged as an early test for President Obama in his new
term as he tries to flesh out the strategy for transferring the responsibility
for security to the Afghans. But it is not the only challenge: After the White
House decides what sort of military presence to propose to the Afghan government
for after 2014, it must turn to the question of how quickly to reduce its troop
force before then.”

Let’s add that how we deal
with an increasingly nervous and assertive Mr. Karzai is likely to be one of Mr. Obama’s biggest
2nd term foreign-policy headaches.

It looks
like when we leave in 2014, an
undefeated Taliban insurgency will remain, along with a dysfunctional
government that is mired in corruption and is utterly dependent on
foreign aid. The Taliban, for their
part, have warned that whoever allows US bases to remain in the country will “go
down in history as a traitor and slave.”

Umm, wouldn’t
that be Mr. Karzai?
And given his ambivalence, doesn’t he own a large piece of the responsibility
for our failure to achieve many of
America’s war objectives in Afghanistan?

Mr. Karzai
has been able to do whatever he wants in his spat with Washington: This year he
forced the US to stop unilateral Special Operations night raids; he insisted on
taking custody of hundreds of insurgent suspects held by the US at the Baghran
airfield. He then released many of them in a failed effort to convince the
Taliban to open peace talks. He disbanded Western-backed private security firms
and removed cabinet ministers and provincial governors that he suspected of
being too close to the US.

In recent
weeks, Mr. Karzai ordered the ouster of international representatives from the
country’s elections watchdog agency. He
has suggested that Afghanistan may deny US troops immunity from local law after
2014, the deal-breaker in similar talks in Iraq. He has threatened to
turn to China and Russia as alternative military allies. He has intensified his
criticism of NATO forces, regularly issuing statements that condemn the US for
causing civilian casualties.

Apparently, Washington views this as just
Karzai being Karzai. But, maybe
not: The WSJ reports that Mr. Karzai
also remains suspicious of the second leg of the American war plan: The
creation of a 352,000-member Afghan army and police force. Unlike his security ministers, who eagerly backed the
American-funded ramp-up and the gravy train that came with it, Mr.
Karzai felt that a large force perpetuates Kabul’s dependence on foreigners and exposes him to the possibility of a
coup. Mr. Karzai said in an interview with the Journal:

“I don’t believe in a big army. I never
believed in a big army… I believe
in an army that is…apolitical
and one paid for by the Afghan taxpayers’ money.”

Mr. Karzai
could be overplaying his hand. It is a vicious cycle: Karzai’s statements fuel the temptation simply to
walk away from Afghanistan. Given the
Taliban’s view of
Mr. Karzai, he probably will not survive 2014 if he remains in Afghanistan. So,
his remarks calling for a diminished American role fall into the category of “Be careful of what you wish for.”

What’s Next?

Karzai’s intransigence colors our internal debate
about whether to keep US forces in Afghanistan after 2014.

A valid
issue for both sides to consider was asked by Karzai’s Chief of Staff, Mr. Khurram:

“If 150,000 foreign troops haven’t been
successful here so far, how could 10,000, 20,000 or 30,000 that would stay
inside their bases after 2014 achieve any success?”

Indeed. Why
are we staying there a day longer than today? According to Anthony Cordesman of
the Center
for Strategic and International Studies, we will spend a total of $198.2
billion in Afghanistan in FY 2012 and FY 2013. He goes on to say:

“This is an
incredible amount of money to have spent with so few controls, so few plans, so
little auditing, and almost no credible measures of effectiveness.”

That money would
be much better spent helping to repair the damage from the Superstorm Sandy, rebuilding
our bridges and highways or paying our veterans the benefits they deserve.

Our troops
in Afghanistan are being injured and are dying under an ill-conceived strategy by a succession of Generals and a Commander-in-Chief
who ignored Karzai’s
motivations on the ground. We are propping up Mr. Karzai, who
apparently doesn’t share our basic goals for his country!

Our troops face the prospect of coming home understanding that we have accomplished
nothing for the blood we have shed and the US treasure that has been wasted.

Vietnam,
Iraq and now, Afghanistan. We want the Hollywood ending, because Washington writes the screenplay and we buy
the tickets.

What
continues to amaze is that we always
pick a “go to guy” like Diem, Saddam, Karzai or any other of the 50+
handpicked tin horns over the years.

We then
expect them to earn the trust of their people and deliver them to play a role in our movie, that of the grateful locals. 

Then comes
the failure and the lack of reckoning for it.

Oh and our
continuing failure to understand the limits of our supposed Exceptionalism…

Look at how shabbily we have used our soldiers
and how great is their sacrifice!

 

What’s
Wrong Today:

Sorry for
the radio silence, the Wrongologist was fighting a turkey-induced coma.

A holiday
story caught our eye. The Wall Street Journal reported
that work is the last thing that people
are thankful for:

“The workplace
ranks dead last among the places people express gratitude, from homes and
neighborhoods to places of worship. Only 10% of adults say thanks to a
colleague every day, and just 7% express gratitude daily to a boss, according
to a survey this year of 2,007 people for the John Templeton Foundation of West
Conshohocken, Pa., a nonprofit organization that sponsors research on
creativity, gratitude, freedom and other topics…

A common attitude
from the corner office is ‘We thank people around here: It’s called a paycheck,’
says Bob Nelson, an employee-motivation consultant in San Diego…”

Research suggests that employees who feel
appreciated are more productive and loyal. But some bosses are afraid employees
will take advantage of them if they heap on the gratitude.

More than
half of human-resources managers say showing appreciation for workers cuts
turnover, and 49% believe it increases profit, according to a study of 815 managers
released last week by the Society for Human Resource Management (SHRM). Employers
are placing less importance on recognition programs. Although 77% of companies
still have them, according to the SHRM study, surveys in the past six years show a gradual decline in
total offerings and employer cutbacks in existing programs.

So, What’s
Wrong?

Generally,
work life in America has gone downhill. This isn’t about the millions who can’t find a job or stagnant wages. It’s
about those who are still working, where it’s anything goes at work, including bullying, abuse and violence. Any business or institution that is serious about protecting their employees from all forms of violence and abuse ought to consider implementing some form of workplace violence prevention strategy.

All of this shows just
another facet of the coarsening of
civility in America.
And spare us the
“they should be thankful that they get a paycheck” argument. If
people work only for a paycheck, they’ll only work hard enough to keep from
getting fired.

Bullying in the workplace
is common. A 2012
CareerBuilder survey showed 35% of all employees directly experienced
workplace bullying, up from 27% last year. 16% of these workers reported they
suffered health-related problems as a result of bullying and 17% decided to
quit their jobs to escape the situation.

Of workers who felt
bullied, 48% pointed to incidents with their bosses, while 45% said coworkers and
26% mentioned someone higher up in the company other than their boss (respondents could list more than one choice).

54% of
those bullied said they were bullied by someone older than they are, while 29%
said the bully was younger.

The Workplace Bullying
Institute tries to raise awareness of abuse in the workplace as well as
lobbying states to pass worker protections legislation. So far, thirteen states
have laws on the books to prevent abuse in the workplace. Yet lawsuits are
thrown out by the courts and the message clearly is offenders in the workplace
can get completely away
with it.

In
a case cited by David
Yamada, a professor and founding director of the New Workplace Institute at
Boston’s Suffolk University Law School, a physician in Arkansas abused an
employee for two years, called her a “slut,” and told her repeatedly that women
who work outside the home are “whores and prostitutes.” Making matters worse,
he threatened to kill her if she quit. In its decision, an Arkansas court ruled
that even if the allegations were true, they still didn’t add up to intentional
affliction of emotional stress. While the case dates from 1996, this type of
mistreatment is still common today particularly in the health care industry.

Workplace abuse costs money and is the #1 reason people look for new jobs.

Finally, workplace violence is the 4th leading cause
of death at the workplace and the
leading cause of workplace death for women.

The
documentary, Murder by
Proxy, is a documentary that describes a failed attempt to get a workplace anti-bullying law passed in the
State of Washington. It shows a description of workplace mass murder
and the conditions of the work environment before the tragedies happened.

These studies, the film and the WSJ article offer food
for thought on how the workplace in
this country is turning into a nightmare, particularly for the young and for those at the
bottom of the pyramid.  

Nothing’s
Wrong Today:

Sometime in the next few days, The
Wrongologist Blog will pass twenty five thousand hits.

The Wrongologist has been blogging for
about 18 months and if you had said at the start that the blog would reach 25K
hits, he would have been amazed.

It’s a small blog, with a small readership. There
are blogs that get a million hits per day. That isn’t the Wrongologist blog.

The Wrongologist is not doing this to make money,
but because he is an opinionated person. He could add advertising, but thinks
that it draws attention away from the hard work of reading the words.

The Wrongologist is now going to step
out of speaking in the third person and speak from the heart:

This blog is an extension of my education about politics,
economics and American history, my experience in the business world and my antipathy for dissembling, mendacious
politicians. I lean to the left of center politically, but I work hard
to be an equal opportunity scold. I poke holes in the positions of doctrinaire
politicians who would rather tell us the talking points (once again) than to
tell the truth or explain clearly the logical result of the policy decisions
they support.

That will always be wrong in my book.

I have heard from some that the blog
is not always an easy read and
that some posts may be too long for many of today’s attention spans. I try to
distill complex issues to as near to their essence as I can, but we live in a complicated
world where the details of policy and politics really matter.

I hope that many more of you will begin to leave comments. They help me and they also help the
other readers understand the issues at hand.   

I’ve learned a ton since I started writing the blog in March,
2011 and hopefully, some of you have learned a few things as well. Researching
issues that I address takes time and I try hard to be
accurate in what I post. If you have
detected errors, I apologize for that.

Anyway, nearing 25,000 hits seems like a good time to take a
moment and give thanks to those who follow the Wrongologist blog. I really
appreciate it. If you enjoy the Wrongologist, please tell a friend about it.

I’d like to recognize Monty, Fred and
David for their early and continuing support of the blog.

Please give to your local food bank.

Happy Thanksgiving to all…and you’re welcome!

What’s Wrong Today:

Breezy Point is a tiny community at
the far western tip of the Rockaway Peninsula. To the northwest, you can see
Manhattan, while Sandy Hook, NJ is off to the southwest. The neighborhood
started in the early 1900’s as a summer bungalow community for people from
Brooklyn and Queens. Because it was 98+% Irish, Breezy back then was called the
Irish Riviera. Until the 1970’s, most bungalows were not winterized, so the large summer
population left right after Labor Day. It has always been a tight-knit, family
oriented place.

The
Wrongologist’s maternal grandmother bought a place there in the 1920’s. This
photo from 1934 gives a good idea of how close the bungalows are to each other.

The
Wrongologist’s father’s extended family had the bungalow across the “walk” (too
small for cars) from his grandmother’s place. His parents met there, talking
across the walk over the course of a summer. Even today, family members still live
at Breezy. It has been part of the Wrongologist’s family’s life for 90+ years.

Today,
Breezy Point is a private cooperative of 3500 homes. It has its own security
force, 3 volunteer fire departments and has been for at least 60 years, a gated
community. Although it is exclusive, it is not wealthy.

It was
devastated by Hurricane Sandy and the fire that burned
110 houses to the ground on the night of the storm.  

During Mr.
Obama’s visit to NY last week, after he named Shaun Donovan, his HUD Secretary,
to spearhead federal recovery efforts, the president reflexively pledged to restore ravaged neighborhoods and
homes in Queens and Staten Island to the way they were before Hurricane Sandy.

It was business as
usual
and possibly the last thing the country should be doing.

Politics
aside, there is no logic to FEMA simply rebuilding single-family homes on
barrier islands like the Rockaways, where they will fall again during the next
major storm surge.

We need cost-benefit
analyses to answer tough questions like whether it’s actually worth saving some
neighborhoods in flood zones. Communities
like Breezy Point should be given knowledge, power and choice about their
options, then the responsibility to live by that choice.

Americans like living by the water.
But government-subsidized flood insurance
eliminates much of the financial risk in the event of disaster.

The question after Sandy is whether the country will keep paying
billions to return people to their high risk locations, or whether we’ll
instead say “build if you want, but
the risk is all yours.”

As Justin Gillis and
Felicity Barringer wrote in the New York Times, the federal government is bound by law to pay for much of the
cost of fixing storm-damaged infrastructure, including homes. It is part of the Stafford
Act that kicks in when the president declares a federal disaster that
exceeds the response capacity of state and local governments.

Add in the National Flood Insurance Program and it is clear that the federal government makes
it easier to live in a danger zone than to make the tough choice to
relocate:

• Billions of tax dollars have been spent on subsidizing
  coastal reconstruction in the aftermath of storms, usually with little
  consideration of whether it actually makes sense to keep rebuilding in the same
  disaster-prone area

• If history is a guide, a large fraction of the federal money
  allotted to New York, New Jersey and other states recovering from Hurricane Sandy, (an amount
  that could exceed $30 billion), will likely be used the same way

The
federal flood insurance program is already under financial strain, and
Sandy could cost as much as $7 billion just
in government insurance claims, while
the program itself can only add an additional $3 billion to its current debt
levels.

This should prompt lawmakers to reform the program. If subsidized flood insurance is no
longer a given, we might also begin to see a slowdown in coastal and other
flood plain population growth.

We have
to try and build improved physical protection for
established coastal population centers. But the best way to ensure that the
next Sandy does less damage is simply to move some people out of harm’s way, or
at least make it more expensive to
stay there.

Otherwise, our tax money will go toward putting things back as
they were, essentially duplicating the vulnerability that existed before the
hurricane.

So far, there has been much discussion
about the possibility of building multi-billion dollar sea walls and barriers
that might be able to shield Manhattan and other vulnerable places from the
kind of storm surges that caused so much destruction during Sandy.

The Maeslant Surge Barrier in Rotterdam (NYT)

According to Michael Kimmelman of The
New York Times, there
is a rough consensus about how to protect New York City. Engineers are looking at
London, Rotterdam, Hamburg and Tokyo, where sea walls, levees and wetlands,
flood plains and floating city blocks have been conceived.

Building
similar projects to protect the New York region would require developing and
executing a supra-regional plan involving an alphabet soup of agencies and
public officials: Congress and the governors of New York, New
Jersey and Connecticut; the Corps of Engineers; FEMA; Homeland Security; the NYS
Public Service Commission (to compel companies like Con Ed and Verizon to
safeguard its equipment); Amtrak; the MTA; the city’s planning, transportation,
parks and environmental protection departments; and the Port Authority.  

Thames River Flood Barrier in London (NYT)

Money shouldn’t be the problem, considering the
hundreds of billions of dollars, and more lives, that a few more Sandy’s could
cost. So the problem is not technological or from a long-term cost-benefit
perspective, financial.

Rather, it
is a test for our inconvenient democracy.

The hardest part of what lies ahead won’t be deciding whether to construct huge
sea walls across the Verrazano Narrows and Hell Gate, or overhauling New York’s sewage and storm water system, which already spews toxic waste into its rivers whenever a couple of inches of rain fall.  

 

The real problem is that billions of
dollars may end up being spent to
protect businesses in Lower Manhattan while old, working-class communities like Breezy Point on
the waterfronts of Queens, Brooklyn and Staten Island most
likely won’t get the same protection. The accompanying pain, dislocation and inequity
will upend lives, undo communities and shake assumptions about city life. It will
be very hard to bear.

It’s no wonder presidents promise to
rebuild and stick taxpayers with the tab.

But, it’s
no good trying to put things back the way they were, because we shouldn’t go back
there. There are tough decisions ahead
about nature and numbers, population density, economics and geology.

So the
real question post-Sandy is: How can we accomplish what must be done, in time
and with fairness?

What’s
Wrong Today:

Democrats are still taking 2012 Presidential election victory laps,
wasting their breath talking about how the Republicans
need to retool their party if they are to be relevant in 2014 or in
2016. This is wishful thinking.
Right-aligned politicians are not going to shift towards moderate viewpoints
and make legislating in the center-left a breeze for Mr. Obama.  

Democrats need to get back to focusing
on how they will deliver more jobs to
the American people, before Mr. Obama is declared the Democrat’s Hoover.
They need to find a candidate on their
shallow bench of less than 60-year-old
politicians who can appeal to the increasingly younger electorate. They
should figure out how they will sell a winning middle class message, particularly
if Mr. Obama’s Grand Bargain, which today
looks to be anti-middle class, becomes another Democratic legacy.

If they fail to work conclusively on
these issues, they will be vulnerable to a successful attack from the Republican
party, possibly to an attack by a populist from the far right, even from a
third party right wing candidate.

It isn’t that farfetched.

Look at these voter demographics from November 6th:

1. According
to the Census Bureau, 63.4% of the US
population consists of non-Hispanic
whites

2. The portion of non-Hispanic
white voters was 70% because minorities are younger and some are not
citizens

3. Obama
won the Presidential race in states that, on the whole, are “whiter” than
average:

• The states he won where the portion of non-Hispanic whites exceeded the average are: NH (92.2%), IA
  (86.4%), WI (83.1%), MN (82.8%), OH (81.0%), PA (79.2%), OR (78.1%), MI (76.4%),
  CO (69.7%) and VA (64.5%). These represent 113 electoral votes.  

• He
  won in only 3 states with a higher % of minorities than the national average: Florida,
  Nevada, and New Mexico, representing 40 electoral votes.

In many
of these states, running a blue collar white guy instead of a corporate raider
white guy probably would have helped the Republicans, who
won states with higher minority
populations where voting was divided more clearly by evangelical and/or
ethnic lines, including: Texas, Arizona, Georgia, South Carolina, Mississippi,
Alabama and Louisiana (97 electoral votes).

Looking
at this, there is room for a populist Tea-Party
type to succeed in winning the Presidency. And if the Republican nominee
is a centrist, a third party could emerge
to the right of the Republican party.

And
the work of mobilizing a populist candidate to challenge Democrats has already started. Let’s look at two of their ideas that
have gained traction:

1. State Secession is being used as a tool
to keep the true believers on the extreme right engaged:

Petitions signed by hundreds of thousands of Americans
seeking permission for their states to peacefully secede from the union have
now been filed for all 50 states on the White House website.
There is no proof that the petitioners
actually are residents of the state where they have signed petitions. These
are Internet petitions, after all.

The petitions are symbolic
and nothing new.
Similar petitions were filed after the 2004 and 2008 elections. Secession,
though, is not the only thing people are petitioning for: There are 140
petitions currently displayed on the site: two seeking federal legalization of
marijuana, one asking for the halt of U.S. drone strikes and one demanding a recount of the election.

2. An
impeach
Obama movement by the far right  is also
underway. The Conservative Majority Fund, a conservative group known
primarily for spreading the birther conspiracy, has launched a robocall campaign
to gin up support for the President’s impeachment. Open
Secrets.org shows that the Conservative Majority fund spent $4.25 million
against Mr. Obama in the 2012 election cycle.

The HuffPo detailed
an email sent by the Fund:

“Our only recourse now is to move
forward with the full impeachment of President Obama. We suspect that Obama is
guilty of high crimes and misdemeanors and that there may be grounds for
impeachment as is laid out in the constitution. Further, he may not even be a
U.S. citizen…Impeachment is our only option.”

People
in Washington, Colorado, New Jersey and Virginia have reported receiving the
call.

Rather than make
fun of these two points on a curve, consider for a moment that they actually point towards something:
These continuing efforts to undermine the legitimacy of the Federal Government
and the Democrats could open the door
to a Republican or Tea Party populist presidential
candidate who runs on jobs, jobs,
jobs while directly soliciting the working class.

By then, the working
class may well be desperate for a good economy and they could give the Tea
Party an audience. The candidate wouldn’t need special skills or
qualifications, just an especially
well-crafted faux-sincere demagogic appeal.

Democrats should expect to see assaults on labor unions,
environmental and financial regulation; the Tea Party’s favorite job-killing
bogey men. The Right knows the
value of picking their villains early in the play.

If we are still experiencing a stagnant economy, in which real wage
growth is flat and unemployment remains high, the Republicans or a third party to their
right may not find winning in 2016 such heavy lifting.

The angry, white guy could easily
make a comeback, when it is the morning after in America.

So, go
ahead, order your Biden or Hillary 2016 buttons.

Let
the positioning begin!

What’s
Wrong Today:

In a small victory in the battle against
childhood obesity, private equity-backed Hostess Brands Inc. went
back in the bankruptcy oven today,
filing for Chapter 7 liquidation, nearly three years after exiting from its
first bankruptcy filing, and 11 months after its second Chapter 11 filing.

 

Management says that the financial toll is due to out-of-control labor costs
and pension and medical benefit obligations borne by the maker of Twinkies and
Wonder Bread.

 

Hostess
has about $2.5 billion in sales
from a long list of iconic

consumer brands of snack cakes and breads such as Butternut, Ding Dongs, Dolly Madison, Drake’s, Home Pride,
Ho Hos, Hostess, Twinkies, Yodels, Wonder, Merita and Nature’s Pride. The
company says it has suspended operations at all of its 33 plants around
the United States as it moves to start liquidating assets.

 

The liquidation could cost as many as 18,500 jobs
nationally.

 

In the conservative
press, the Hostess liquidation is taking on the narrative of an out of control
union management forcing its members to the unemployment line and forcing the end
of an iconic brand.

 

Why? Because Hostess had given some striking union employees
a deadline to return to work on
Thursday, but the union would not end its strike, saying it had already
given more in concessions than its workers could bear and that it would not
bend further. This was despite the fact that Hostess had already reached an agreement on pay and benefit cuts with the
International Brotherhood of Teamsters, its largest union.

 

Management makes the point that it had made deals with 70% of its unionized employees, but
not with its largest unsecured
creditor, the Bakery & Confectionery
Union which, through its pension fund, is
owed $944 million of the $980 million the company owes to unsecured creditors.

 

Hostess also owes $860 million in secured debt.

Hostess has 19,000 employees, 83% of whom
are members of unions working under
372 collective bargaining agreements (CBA). The employees belong to 12
separate unions. On average, that
means there are only 51 employees per CBA at Hostess.  

 

The company is majority owned by private equity
(PE) firms; Ripplewood Holdings owns 68.56% of Hostess’ equity, while Silver
Point Finance owns 12.28%.

 

Union officials blamed mismanagement for the company’s
woes. Union President Frank Hurt said
in a statement that the company’s failure was not the fault of the union
but the “result of nearly a
decade of financial and operational mismanagement” and that
management was trying to make union workers the scapegoats for a plan by Wall
Street investors to sell Hostess.

As Deal
Pipeline’s Jamie
Mason reported, the company first filed for Chapter 11 as Interstate
Bakeries Corp. on Sept. 22, 2004, in the US Bankruptcy Court for the Western
District of Missouri in Kansas City. The debtor exited from bankruptcy
protection 4-1/2 years later on Feb. 3, 2009.

 

Since its exit from Chapter 11, the
debtor’s financial performance hasn’t kept pace with the projections set forth
in its reorganization plan:

• For the 2010 fiscal year, the company had a net loss of $138
  million
• In 2011, the company had a $341 million net loss

The proposed deal with the various unions, according to the Chicago Tribune’s Phil
Rosenthal, looked like this:

Wages
would drop 8% across the board, including management’s, with the promise of a 3%
increase in each of the 2nd through 4th years of the five-year
deal, with a 1% increase in year 5.

There
also would be sharp reductions in pension plan payments.

The
company reduced executive pay in April
and Chief Executive Gregory Rayburn said the company’s lawyers, bankers and
other bankruptcy advisers would forgo $60 million in fees, an 18% discount.

Union members stood
to get a 25% equity stake in the company and would be in line for $100 million of the recovered
debt, plus two of the company’s eight board seats and one seat on the board’s
executive compensation committee.

Sounds like an acceptable
deal to the Wrongologist.

 

But, maybe the union gets to move their pension liability to the US government via the
Pension Benefit Guaranty Corp like this Hostess pension
plan did in the prior bankruptcy, possibly a better deal for the union than
the PE guys are offering. In any event, while
the baker’s union didn’t agree to this round of cuts, they had agreed to others
in the past.

 

And those cuts also came with promises that were not kept.

Hostess had poor management for many years, so it is understandable
that when you work for a company that’s
operated under Chapter 11 protection for 5 of the past 8 years, the
next new deal would test the union and its workers’ faith, even with new
management.

Instead
of turning this into another job creator vs. union parable, how about realizing that this was a
poorly run company and past leadership had just brutalized it?

Both sides contributed to this
situation. We can’t blame the unions for taking a stand, at some point you have
to take a stand. For those who don’t
understand that, it’s called PRIDE. How about accepting that the union
gave what they believed they should/could in the past and the company didn’t get
back to profitability?

You
can’t blame the current management;
they are just trying to turn the company around. Maybe they are just trying to
make the union succumb to public opinion and really will avoid liquidation in
the end.

However, with $2.5
Billion in sales, it is certain that a
new investor will buy the Hostess assets. The new investor will not have
to restructure the legacy debt or deal with inflexible work rules.

Let’s hope the new
investor offers pensions, sick leave, vacation and medical benefits. All workers deserve them.

So, it isn’t really the
end of the Hostess brand. And for all those kids and parents who grew up on
Wonder Bread and Twinkies….they will be back.

Probably
without the unions. Let’s just leave it at that.