Economic Policy – Page 26 – The Wrongologist

Sunday Cartoon Blogging – January 17, 2016

Another jam-packed news week: David Bowie stepped through the door, the Dow fell through the floor, the SOTU had the lowest ratings ever, the Republicans debated, and you didn’t win Powerball.

So, something to cheer you up at the start your week:

COW Foxes

Gonna miss ol’ Ziggy:

COW Bowie2

Wall Street longs for yesterday:

COW Lost Pet

The GOP debate followed the usual script:

COW Big Tent

Republicans are beginning to rationalize about the probable primary winner:

COW Satan for Prez

In this primary season it has become clear that facts don’t matter. How you feel matters. Other people don’t matter. How you relate to your tribe matters. Irresponsible tax policies, silly monetary policies (gold!), destructive foreign policy, no climate policy, no healthcare policy, no infrastructure policy, charter schools as an education policy, these all matter. Except for militarism, do they have any public policy positions?

The Clintons begin to understand the threat:

COW First Word

Angry Men Now a Political Force

The spin after the SOTU was about how angry voters are, and the political opening that creates, despite the genuine good news on the economy. Here is Mr. Obama from the SOTU:

Most of all, democracy breaks down when the average person feels their voice doesn’t matter; that the system is rigged in favor of the rich or the powerful or some narrow interest.

We can’t change the fact that some people are angry, but this article from the Washington Monthly by Andrew Yarrow points to some stunning facts about how men in particular have been left by the wayside of American life:

At least 20% of the nation’s 90 million white men have been pushed to the sidelines, either retreating or storming out of the mainstream of American life. They are not the men you see at work, who play with their children, go out with their wives or partners, are involved in their communities, and earn a living to save for their children’s education and their own retirement. What they do doesn’t register in…the gross domestic product…

Yarrow continues:

We know that they are out there. But they don’t fit old stereotypes of failure, so we’ve had trouble coming to grips with who they are or naming the problem. Parts of their stories have garnered significant attention, but we don’t see that what have been treated as separate problems are closely related.

Here are a few statistics from the article that merit your attention:

• Today, fewer than seven out of ten American men work; in the 1950s, nine out of ten worked.
• Since the 1970s, inflation-adjusted incomes for the bottom 80% of men have fallen, with the most dramatic declines occurring among the bottom 40%, most of whom do not have a college education.
• Today, just half of men are husbands; in 1960, three-fourths of men were married.
• As Barack Obama leaves office, only two out of three children live with their fathers; when John Kennedy was elected President, nine out of ten children lived with their fathers.
• Today, 43% of 18-to-34-year-old American men live with their parents (compared to 36% of millennial women); in 1960, about 28% lived at home.
• There are 36% more women in college than men, whereas in 1970, there were about 35% more men than women in college.
• Men are 50% less likely to trust government than women.
• In recent years, there has been a roughly 20-point gender voting gap, with white men being much more likely not only to vote for Republicans but to express disillusionment and anger toward government; until about 1980, men and women voted roughly evenly for Democrats and Republicans.

The point is that a lot has gone wrong for many white men, a demographic that once was the epitome of privilege and high expectations. And while politicians discuss stagnant wages, broken families and inequality, few notice, much less talk about the probable linkages between these issues and the impact of angry males on our politics.

Some may be thinking that this is a manufactured issue. After all, men still out-earn women, and they still hold most of the CEO and board–level jobs. And none of this white male angst should obscure the continuing struggles of women and people of color, including men of color. African-American and Latino men have had it worse than white men for a very long time.

But we ignore any group’s anger at our peril. The Bundy Brigade’s antics in Utah and Oregon is just one recent example. Many men are mad as hell, and their anger is often turned on scapegoats: Government in the case of the Bundys; Muslims, immigrants, African Americans, and Latinos in the case of others.

In 2016 we are seeing several presidential candidates feeding from the trough of this anger. Playing to the inchoate anger of a sizable minority of white men who have been benched economically, or who simply left the field, is a dangerous demagoguery, one that only benefits the demagogues.

2015 Is On The Run

Time to put our boot on the throat of 2015:

COW New Year

Perhaps Toles means “shred of dignity”. It was certainly an indecorous year.

News you can’t use:

The Onion’s 2015 Year in Review. This sends 2015 off with all due respect.

2015 in mass shootings (Rolling Stone). There have been 353 mass shootings in the US to this point, according the Mass Shooting Tracker, a crowd-sourced database. (The tracker defines a mass shooting as one in which at least four people are killed or wounded; the FBI uses three dead or wounded as its criteria.)

10 of the Worst Cable News Moments of 2015 (MoJo). We’ve barely survived another 12 months of cable news. Mother Jones gives you a few of the best of the worst the M$M had to offer in 2015.

Lower Jobless Claims Don’t Point to A Robust Labor Market (WSJ). less than 15 million American made first-time requests for government assistance this year, about half as many claims as were made in 2009, and far fewer than the number filed during the 1980s and 90s when the economy was expanding at a strong clip. The greatest concern in the labor market isn’t those who recently lost their jobs, it is the persistently large number out of work for months or years, and those stuck in low-paying and part-time jobs.

Heavily redacted Benghazi emails released on Christmas Eve (The Hill). Politicians release bad news on slow news days because they think the opposition isn’t listening, but the GOP ALWAYS listens to Hillary.

Meet a Koch-like family working to influence State Legislatures (Political Research Associates). The DeVos family (Amway) is one of the most influential families in conservative politics. Though they share the Kochs´ commitment to corporate welfare, the DeVoses also promote a Christian Right cultural and social agenda.

Climate Talks

The climate is speaking to us, but is anybody listening? Here is what the climate is telling us:

50% of Forest Bird species will go extinct in 50 years
99% of Rhinos gone since 1914
97% of Tigers gone since 1914
90% of Lions gone since 1993
90% of Sea Turtles gone since 1980
90% of Monarch Butterflies gone since 1995
90% of Big Ocean Fish gone since 1950
80% of Antarctic Krill gone since 1975
80% of Western Gorillas gone since 1955
60% of Forest Elephants gone since 1970
50% of the Great Barrier Reef gone since 1985
40% of Giraffes gone since 2000
40% of ocean phytoplankton gone since 1950
70% of Marine Birds gone since 1950
97% – Humans & Livestock are now 97% of land-air vertebrate biomass, while 10,000 years ago humans were just 0.01% of land-air vertebrate biomass
1,000,000 – The number of humans, net, that are added to earth every 4½ days

But, you gotta admit, antibiotic resistant germs are doing really, really well!

Now, maybe you accept climate change as a reality. Or, you may be a climate change skeptic, or a climate change denier, but no one should misunderstand what the climate is telling us. Slowly, the world is seeing more greenhouse gases being emitted into the atmosphere, destroying ecosystems and encouraging global warming. The greenhouses gases can be caused by many different things, however, a lot of the earth’s greenhouses gases comes from various industrial businesses that burn hydrocarbon fuels. Some of these businesses have been asked to pay carbon tax as a result. The money from this tax gets contributed towards fighting climate change. Hopefully, more businesses will realize the impact they are having on the world and will look to lower the amount of carbon dioxide that they emit.

And, given the above, shouldn’t activists on all sides be discussing what can be done to stop the decline in flora and fauna? There cannot be a more important global problem that needs solving. Even Mr. Market should be working to help solve the die-off of species. Yet, we haven’t heard any ideas from him.

Here’s an idea: Getting human population growth and global GDP growth under control must be job one. Income inequality shouldn’t automatically prompt politicians to make calls for ever higher GDP growth, so that trickle-down will help the masses, since growing our way out of the die-off of species isn’t a viable long-term strategy.

You’d think politicians and economists would be asking: “Do we need to rethink our entire conceptual framework about population and economic growth?” Well, they aren’t interested in that thought.

They offer the same old thinking, just rearranged. If you want a Thanksgiving metaphor, your dinner plate is filled with turkey, dressing, mashed potatoes, and cranberry sauce. And you take your fork and mix them all up, but they’re still the same. Even when you put gravy over all of it, it’s still not new. But it looks new, if somebody doesn’t think too carefully about what’s behind the new analysis.

Here is a view of the political divide on global warming in the US from The Economist:

And the NYT reported that on Tuesday, Republicans undercut Mr. Obama’s pledge at the Paris Climate Summit by approving two measures that Obama is sure to veto. The vote was largely along party lines. After the votes, Sen. John Barasso, (R-WY) said: (brackets by the Wrongologist)

While the president is at this climate conference, the American people [believe] that [his pledge] has a very, very low priority…

When Republicans in the Senate think the American people see climate change as a low priority when the poll above says they actually think its a pretty big deal, you know why we can’t get at solutions to the die-off of species.

Isn’t it curious that intelligent, educated conservatives denigrate climate change and its consequences, as some kind of phony science? They must see that there are plenty of business opportunities, and fortunes to be made as a result of climate change. This would normally have their hearts all aflutter at the chance to put their money behind a few disruptive innovations. But they have no interest, and are simply standing pat on the problem.

They are not alone. The Economist says the climate change just ain’t a big issue globally: (emphasis by the Wrongologist)

A giant opinion-gathering exercise carried out by the UN finds that people in highly developed countries view climate change as the tenth most important issue out of a list of 16 that includes health care, phone and internet access, jobs, political freedom and reliable energy. In poor countries-and indeed in the world as a whole-climate change comes 16th out of 16.

It’s beginning to look like a few billion lemmings are just gonna follow their reproductive organs off a cliff.

And even if a few of today’s lemmings think they’re doing something new, for all of them together, well, things look grim.

Oligarchs Seek Indentured Servants

Just when you thought that there couldn’t be another scheme to further mess with college students as they embark on their post-college journey, along come Income Share Agreements (ISAs).

The ISA is a contract whereby an individual investor (or a fund) would agree to provide a student with a lump-sum payment to be used for education costs, in exchange for receiving a share of the student’s income for a fixed period (5-10? years). The repayment would most likely be structured as a dividend on a security, thereby allowing the investor to pay a lower tax rate than on interest income.

Individual ISA contracts would be pooled and sold to investors. These are the kind of contracts that could only flourish in our growing oligarchy.

We have a student debt bubble. Student debt has tripled in 10 years, now totaling more than $1.3 trillion, or more than the country’s total debt for credit cards, auto loans and any other category except for home mortgages. Student debt default rates are equal to those of the 2008 subprime housing loan crisis, and the debt continues to grow, up this year by an estimated 8% with an estimated average debt of $35k each. About 70% percent of students have graduated with debt this year.

And now, ISAs are the new idea to siphon off student debt into the private sector. WaPo reported on Friday that Purdue University signed an agreement with Vemo Education a Virginia financial services firm, to look into the use of ISAs to help Purdue students pay for their educations. In an earlier WaPo op-ed, Mitch Daniels, former Republican governor of Indiana and President of Purdue, said:

From the student’s standpoint, ISAs assure a manageable payback amount, never more than the agreed portion of their incomes…Best of all, they shift the risk of career shortcomings from student to investor: If the graduate earns less than expected, it is the investors who are disappointed; if the student decides to go off to find himself in Nepal instead of working, the loss is entirely on the funding providers, who will presumably price that risk accordingly when offering their terms. This is true “debt-free” college.

What a nice way to say “indentured servitude.” And universities get to keep raising tuition faster than inflation. Sounds like a real winner for Mitch and other Republicans.

The argument by the free-market types is that ISAs shift risk from the backs of students to the investors. If the student has not earned enough over the period of the agreement to return the original capital to the investor, the student would have no further money obligation.

Sounds good. But, why would the investors agree to fund any low-paying degrees? It is logical that they would look to fund only those who represented a low risk of achieving significant earnings in the initial 10 years of working. So they would want to finance medical and engineering degrees while leaving the social workers and teachers to public sector finance. If private sources (investment funds) are providing the money and setting the terms, then loans will only go to those who are most likely to be successful.

And, Mr. Market will tell us which degrees and careers are worthy.

The investment fund will have access to voluminous private data that will allow it to make a precise (nearly riskless?) ISA negotiation with the student, while students are likely to only have access to their University’s aggregate data on expected salaries by type of degree.

If there was any doubt that this is a neo-con approved idea, consider that Republican presidential candidate Sen. Marco Rubio (R-FL) and Rep. Tom Petri, (R-WI) proposed ISA legislation with a maximum contract length of 30 years and the share of income capped at 15%. This is touted by Sen. Rubio’s supporters as evidence of his “innovative ideas.”

Sadly this idea has been around since the 1950s, when it was first floated by conservative economist Milton Friedman.

One of the most significant factors in our uneven economic recovery since 2008 is how we’ve become beholden to the oligarchs. The gig economy has replaced permanent jobs. Wages have stagnated, and companies are motivated solely by returning money to shareholders, often through share repurchases.

Now, college students are supposed to provide another class of equity return for the investors. They are to syndicate themselves to “shareholders”?

It’s a sick idea, one that only the greediest among us would support.

Democrats: Where the White Voters At?

Yesterday, we examined the fact that the poorest Americans are the least likely to vote, so they cede the policy agenda to those who do support the weakening of America’s social safety net, and who use low voter turnout as a key election strategy.

Do the Democrats have a strategy to counter the election strategy of the GOP? If they do it isn’t evident.

Dems think that they have a permanent Electoral College presidential majority, and that changing American demographics will help them build majorities in both houses of Congress by the mid-2040’s. They are apparently willing to wait for demographics to become destiny: The numbers of white working-class voters will dip to just 30% of all voters by 2020 and 44% of white voters.

This is a dramatic decline from 1988, when white working-class voters were 54% of all voters and 64% of white voters.

But, in the last three presidential elections, the Democratic candidate lost among white working-class (non-college) voters by an average of 22 points, and by 26 points in 2012 (62%-36%). Despite Mr. Obama winning two terms, his “Obama coalition” will not insure a Democratic majority in Congress, or even provide with certainty the election of a Democratic president again in 2016.

In fact, PPP, a Democrat-leaning polling firm with a great record for accuracy, says this about 2016:

Early general election contests are shaping up to be very competitive with Hillary Clinton polling within 2 points of 5 out of 6 Republicans that we tested against her. The only GOP hopeful to actually lead Clinton is Marco Rubio at 45/43. Rubio is also the only candidate in the field with a positive favorability rating among the overall electorate, at 39/37.

Pew found that those who are most unlikely to vote are demographically distinct from likely voters:

• 34% of nonvoters are younger than 30 years old
• 43% of nonvoters are Hispanic, African American, or other racial and ethnic minorities
• 46% of nonvoters have family incomes less than $30,000 per year, while only 19% of likely voters are from low-income families
• 72% of likely voters have completed at least some college, while 54% of non-voters did not attend college

On the subject of the white working class voter, The Democratic Strategist produced an analysis about the subject, “Roundtable on Progressives and the White Working Class”, which asked the question: “What do you think is the most important single step progressives and Democrats can take to regain support among white working class Americans?”

One thing stood out in their deliberations: It was clear from surveys that white working-class voters support public action to address chronic joblessness, income disparities, and unequal education and social opportunities. They cited the study on the 50th anniversary of the War on Poverty conducted by the Center for American Progress, which found that more than two-thirds of white non-college voters supported 11 out of 11 policies to fight poverty, including:

• An increase in the minimum wage
• Subsidized child care
• Expanded Earned Income Tax Credit
• A national jobs program to combat unemployment

Support among this cohort topped 80% for universal pre-k, expanded Pell grants for low-income families, and affordable child care, and was basically on par with the views of African Americans and Latinos.

That indicates that there is a path for Democrats to gain a larger share of white working class voters, but The Democratic establishment does not have a serious plan that shows white non-college voters that they see the real problems facing Americans the same way.

Here is a modest program to improve Democrats’ chances with white working class voters:

1. The old guard Democratic leaders must go: Why would any Democratic candidate want to brand themselves with a party leadership that tells them to run content-free campaigns?
2. They should look at the political landscape: People are discontented, in part, because incomes haven’t risen in 15 years. What have Democrats done in response? Virtually nothing.
3. Democratic politicians need to listen to constituents. Democrats will never appeal to the majority of working Americans by primarily making more promises to enact new civil rights rules, or environmental laws. They have to deal with incomes.

The economic struggles of the white working class, combined with a feeling of powerlessness, have undoubtedly made them susceptible to right-wing rhetoric, a major coup for Republicans. The key to Democrats winning over this demographic is more about calls for straightforward job creation, wage increases, and benefits for working-aged families, and less about ploys that superficially connect to them.

We should remember that “low income white” is not a synonym for “Republican.”

Shouldn’t Democrats Be Doing Better?

Wrongo watched the first half hour of the Republican Debate. If you feel you must, a transcript of the whole debate is here. The focus was supposedly on the economy. Perhaps the funniest thing was that the media password for WiFi was “stophillary”.

You will be inundated with expert opinion about what was said and who the “winners” were, but none of that is important. All you need are the Wrongologist’s observations: First, the moderators couldn’t be trusted to offer a reality-based picture of the world, any more than the candidates. Maria Bartiromo asked Jeb about unemployment, saying that almost 40% of Americans are without a job and are not even looking. Really? Media Matters checked, and her number included children, retirees, college students, and stay-at-home parents.

Yep, Republican policies will get those kids and retirees into the workforce.

Regarding the candidates:

• There was oratory, little of which sounded informed
• Most denied basic facts about economic and jobs growth
• Most candidates agreed that nobody needs a minimum wage, much less a higher minimum wage
• They agreed we need a small government, but one that still can dominate the world

When a Republican says “small government,” they really mean making the government’s legal and regulatory arm ineffective enough to allow businesses to do whatever the Hades they want until something bad happens. Then Congress can say: “who could have imagined” like the morons they are, and ask the taxpayers to clean up the mess.

You would think that the debate performance by Republicans, and their relative lack of political experience, opens up a window for Democrats in 2016. It should, but Democrats may not be in a position to take advantage. Since the Reagan era, they have deserted the world view and policies that gave them an upper hand politically. They have left the New Deal and Great Society behind, and failed to replace them with anything that anyone thinks is worth getting excited about.

They have morphed into “Republican Lite.” Republicans don’t like Democrats because they won’t agree to the GOP’s fringe ideas on guns, climate change and gutting the Voting Rights and Civil Rights Acts.

Most of the rest of the country just doesn’t care about these new Dems. Some detest their support of abortion and gay and transgender rights. Democrats aren’t doing better because it is obvious that they have become what we used to call moderate Republicans, and why should right-of-center voters settle for the imitation flavor?

A pundit said last week that Barack Obama is only slightly to the left of Richard Nixon. Judge for yourself: Nixon instituted national price controls, ended convertibility of the dollar into gold, signed legislation that started the EPA, and endorsed the failed Equal Rights Amendment. Would Obama we know today have done all of those things?

Since 2008, Democrats have lost the electoral argument in the states. Republicans now control both houses in 31 state legislatures, and have gained 900 seats in those state legislatures on Obama’s watch.

That doesn’t sound like Democrats are following a winning strategy.

Bernie Sanders is attempting to help the Democratic Party rediscover who they once were. However, that re-discovery is not widespread, and may be occurring too late to be of service in this election cycle. If the re-awakening does not occur in this cycle, there is reason to believe that the oligarchs will have all the votes they need both in Congress and on the Supreme Court to ensure a semi-permanent reign.

So Democrats, the choice is yours: You can endorse centrist, middle-of-the-road issues, or you can represent the issues that the American people actually care about. If you go middle of the road, know that you’re putting the millennial vote in play, since they are a generation that, for the most part, remains politically independent.

This strategy may lead to Hillary taking the White House, but it will make taking back the Senate harder, and it will not reduce the Republican majority in the H0use.

Democrats need to do better.

They Call It “Class Warfare” For a Reason

Many pundits have commented on research by Angus Deaton and Anne Case of Princeton (h/t: Naked Capitalism for an ungated copy of the report) showing that mortality rates for middle-aged white Americans have risen since 1999, in contrast to the patterns for every other racial group and for residents of virtually every other affluent country. Here is a comparison of mortality rates among developed countries, with the US middle-aged white population:

“USW” above stands for US non-Hispanic Whites, while “USH” is US Hispanics, both are census descriptions. Deaton and Case found that rising substance abuse, including alcohol-related disease and painkiller overdose, was the main cause of the disturbing trend:

“Poisonings” refers to drugs and opioids. White Americans are killing themselves directly or indirectly, in increasing numbers. Suicide is up, and so are deaths from drug poisoning and the chronic liver disease that excessive drinking causes. This has happened before, in Russia after the fall of Communism. But it’s a shock to see it in America.

Why this has happened with few noticing until now, is a great question. There have been warning signs of distress, such as the fact that US life expectancy has stopped rising, and that death rates among white women had risen (and over the same time period examined in the Deaton-Case study). USA Today reported in 2008 that the problem highlighted by Deaton and Case already was already flowering in the Deep South and Appalachia. Citing a study by the Harvard School of Public Health and the University of Washington, they found that:

4% of the male population and 19% of the female population experienced either declines or stagnation in their life expectancy in the ’80s and ’90s.

Krugman in Monday’s NYT called it “Despair, American Style“, but like others, did not offer a complte explanation of the phenomena. Deeper analysis is necessary. It would be helpful to see the data mapped. An educated guess is that it is correlated with states that made up the old Confederacy and the American rust belt, as the 2008 Harvard study found.

For example, a 2013 report by the Trust for America’s Health (TFAH) identified West Virginia as leading the nation in drug overdose deaths, with a rate of 28.9 per 100,000 residents. The state’s fatal overdose rate increased by 605% between 1999 and 2010, and has jumped 1,056% since 1979. The majority of these deaths are attributable to the abuse of addictive prescription painkillers.

Assuming that Krugman is correct and it is related to despair, maybe we should look at whether this cohort possesses the things necessary to make life worthwhile, including food security, and a decent place to live, a way to be a part of a larger community, a sense of self-worth. If you’ve lived long enough to see people break, and then try to figure out why they did, while others did not, a lot of it is whether they were part of a supportive community, or an indifferent/cruel environment.

Job and income insecurity causes stress, and stress is a killer. Over an extended period of time, the physical effects of stress can result in long term adverse effects to health, including contributing to chronic pain and depression. Some manage to find relief by opting to buy weed online, but others struggle to get a hold of these products due to local legislation and turn to their doctors for other methods. Some may even find themselves using cambodian mushrooms to help manage their anxiety and stress before turning to any doctor’s orders.

But our physicians are also at fault. Here is a CDC article that says that the amount of pain Americans report has not increased, while the prescribing of pain meds has quadrupled since 1999. Deaton and Case also point out that opioids are prescribed far more often here to treat maladies that include pain than in other countries.

This didn’t happen yesterday, and it won’t be cured by exhortations to “eat healthy,” or “do yoga,” or to follow the great American mantra: “study hard”. To end despair in the working class, we need a better program:

(a) Supportive communities that end stigmatizing of low income earners
(b) Universal health care
(c) A jobs guarantee, with a living minimum wage, so people have better options than the Dollar Store or fast food
(d) Free college, so parents believe that their kids have a shot at a better life

Job and income insecurity are insidious. When you spend a few years out of work, despair creeps in. Despair will push you to the fringes of society, and then, society will blame you for being there.

A redesign of our capitalism is the answer.

Does any presidential candidate support this?

Monday Wake Up Call – November 9, 2015

Welcome to Monday. In doing research for a post on GDP, I stumbled on this speech at the University of Kansas by Robert F. Kennedy in March, 1968 while he was running for president. There is a surprising parallel between events then and now. Consider his joke about the polarization in the Senate:

I think of the warmth that exists in the Senate of the United States – I don’t know why you’re laughing – I was sick last year and I received a message from the Senate of the United States which said: ‘We hope you recover,’ and the vote was 42 to 40.

Or, his thoughts about the (then) current state of the nation that mirrors today: (edits and brackets by the Wrongologist)

There is much more to this critical election year than the war in Vietnam…at…the root of all of it, [is] the national soul of the United States. The President calls it “restlessness.” Our cabinet officers…and others tell us that America is deep in a malaise of spirit: discouraging initiative, paralyzing will and action, and dividing Americans from one another, by their age, their views and by the color of their skin and I don’t think we have to accept that here in the United States of America.

Or, his thoughts about income inequality that are still relevant today:

I have seen children in Mississippi…with distended stomachs, whose faces are covered with sores from starvation, and we haven’t developed a policy so we can get enough food so that they can live…so that their lives are not destroyed, I don’t think that’s acceptable in the United States of America and I think we need a change.

Or, his thoughts about race in America:

I have seen the people of the black ghetto, listening to ever greater promises of equality and of justice, as they sit in the same decaying schools and huddled in the same filthy rooms…warding off the cold and warding off the rats. If we believe that we, as Americans, are bound together by a common concern for each other, then an urgent national priority is upon us. We must begin to end the disgrace of this other America.

We tend to remember RFK as the anti-Vietnam candidate in 1968. But he was very concerned about political polarization, income inequality and the great stain of racism in America. His comments on those issues could be made today. The oligarchs are still at work, attempting to politically isolate the progressive candidates. Income inequality has gotten substantially worse, and race relations have not improved, as the “Black Lives Matter” movement shows.

RFK’s passion to end the Vietnam War led him to say:

It was said, a number of years ago that this is ‘their war’…’this is the war of the South Vietnamese’ that ‘we can help them, but we can’t win it for them’ but over the period of the last three years we have made the war and the struggle in South Vietnam our war, and I think that’s unacceptable.

Does that sound like the Middle East today? He goes on to say:

I think it’s a question of the people of South Vietnam feeling it’s worth their efforts – that they’re going to make the sacrifice – that they feel that their country and their government is worth fighting for and…the last several years have shown…that the people of South Vietnam feel no association and no affiliation for the government of Saigon and I don’t think it’s up to us here in the United States…

Bobby closed with:

So I come here to Kansas to ask for your help…If you believe that the United States can do better. If you believe that we should change our course of action. If you believe that the United States stands for something here internally as well as elsewhere around the globe, I ask for your help and your assistance and your hand over the period of the next five months.

We really need an RFK in our politics today. Let’s hope that his plain-speaking idealism is not lost forever. For your wake-up, listen to his comments on GDP in the KU speech:

He is challenging the basic way we measure economic progress and well-being. RFK said the Gross Domestic Product counts “everything, in short, except that which makes life worthwhile.”

For those who read the Wrongologist in email, you can listen to the video here.

The Republican “Free Stuff” Meme

At the last Republican presidential debate, Chris Christie (R-NJ) characterized the Democratic candidates’ debate as:

A parade of, ‘I’ll give you this for free; I’ll give you that for free’.

Senator Marco Rubio said: (brackets by the Wrongologist)

It [the first Democratic debate] was basically a…debate about who was going to give away the most free stuff: Free college education, free college education for people illegally in this country, free health care, free everything.

Jeb Bush says that black voters should back him, since his:

…message is one of hope and aspiration, not one of division and get in line and we’ll take care of you with free stuff…

For the record, Medicare, Medicaid, Social Security, and unemployment have dedicated tax revenue streams. If we back out those funded benefits, all other elements of the so-called social safety net “free stuff” adds up to ~$405 billion, a fraction of the $1.2 trillion in “unfunded” Federal entitlements, and most of the rest goes to top income earners.

So, what do Republicans mean when they say “Free Stuff”? From Jared Bernstein:

There are at least three definitions of “free stuff.” The broadest would simply include all government benefits. A narrower version might apply only when people receive more in benefits than they pay in taxes. A third might refer to any net gain relative to the status quo.

Under any of these definitions, the Republican claims are misleading: they attack help for people who need it, while implicitly condoning tax subsidies for the wealthy. What the Republicans want us to focus on are public education, Medicaid, and direct cash assistance to the poor, but the government provides other subsidies, some of which the GOP seems perfectly happy to keep in place.

For example, Rubio and Bush want to cut capital gains taxes below the current level (Rubio would completely abolish them). But today’s reduced cap gains rate already provides a significant benefit to people who invest in assets (i.e., the wealthy). Then there are things like regressive housing tax breaks, about 70% of which go to those in the top 20%. In addition, 68% of the tax benefits for retirement savings and 64% of subsidies for individual retirement accounts (IRAs) accrue to the top 20%.

Can it be that government benefits for poor people are “free stuff”, while benefits for the wealthy are not?

Maybe Christie, Rubio, and Bush subscribe to the second definition described above: It’s “free stuff” if you receive more in benefits than you pay in taxes, but not if you pay more in taxes than you receive in benefits.

The third way to think about “free stuff” mirrors the most accepted concept of “free”. Bernstein asks:

Suppose, for example, that you opened your email today to find an unexpected $100 Amazon gift card. No matter how much money you had spent or planned to spend at Amazon, you would call this “free” money. Or imagine that you go out to dinner at a restaurant and a waiter decides to “comp” your dessert. Regardless of the overall price of your meal, you would likely consider that dessert item to be “free.”

Under this definition, “free stuff” from the government would be new benefits or reduced taxes relative to one’s current situation. Since the Christie, Rubio, and Bush tax plans all contain massive tax cuts, they would give away huge amounts of foregone tax revenue as “free stuff,” and unlike the “free stuff” proposed by the Democratic candidates – the GOP “free stuff” would go to their very wealthy patrons.

From the carried interest loophole, to drug patent law, to defense industry markups, to sweetheart deals for the oil industry, the total “free stuff” for the 1% dwarfs that available to the rest of us. Yet, the nattering nabobs of trickledown continue to target removing the scraps doled out to the 99%.

Social stability is the reason the rich should not begrudge the support given to those that are less fortunate in our society. The rich have the most to lose should the vast majority decide they have suffered enough, and we see an “off with their heads” moment.

Extra money in the hands of the 1% or the .01% just creates bidding wars for penthouse apartments that the 2% can no longer afford.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Economic Policy