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The Wrongologist

Geopolitics, Power and Political Economy

Audit The Federal Reserve?

Well, it should be no surprise that the Federal Reserve is already audited, but Rep. Thomas Massie (R-KY) re-introduced an “Audit the Fed” bill in the House on Wednesday, and Sen. Rand Paul (R-KY) introduced companion legislation in the US Senate. This has been a pet idea of Republicans for years. The GOP’s reasoning was summed up by Rep. Massie:

Behind closed doors, the Fed crafts monetary policy that will continue to devalue our currency, slow economic growth, and make life harder for the poor and middle class…

Mr. Massie apparently does not know that the US dollar is among the strongest currencies in international markets. Otherwise, he wouldn’t say that the Fed is debasing our currency. This guy is the exact reason why Congress’ role in directing the Fed should not be enlarged. Some suggest the bill is inaccurately named, but as the WSJ says:

Fed officials meet several times a year to decide what to do with short-term interest rates and how to influence them—actions that affect the borrowing costs of households, businesses and investors across the country. The “Audit the Fed” measures would require the Government Accountability Office (GAO) to examine those decisions.

And then report their findings to various Congressional committees. The GAO already has some Fed oversight, but the bill would repeal restrictions on their oversight. The most important restriction blocks the GAO from reviewing:

Deliberations, decisions, or actions on monetary policy matters, [as well as] discussion or communication among or between members of the Board and officers and employees related to such deliberations.

The repeal of these existing restrictions would allow the GAO to view all materials and transcripts related to meetings of the Fed’s Federal Open Market Committee (FOMC), the entity that sets US interest rates. It would require the GAO, at the request of Congress, to provide recommendations on monetary policy, including the FOMC’s interest-rate decisions, to Congress.

This would make meeting-by-meeting monetary policy decisions subject to Congressional review and, potentially, Congressional pressure. Judging by Mr. Massie’s level of knowledge about central banking, it would be highly likely that political pressure and rabble-rousing would be unavoidable.

The Fed’s financial statements are already audited in the usual sense by the government’s Inspector General (IG) and by Deloitte, a world-class independent accounting firm. The resulting financial reports are available to the public online. Every security owned by the Fed, including its unique identifying CUSIP number, is also available online.

The GAO reviews the Fed’s activities at the request of Congress, and has wide latitude to review Fed operations. For example, the Dodd-Frank Act required the GAO to conduct reviews of the Fed’s emergency lending programs during the 2008 crisis, along with the Fed’s governance structure.  Since the financial crisis, the GAO has done some 70 reviews of aspects of Fed operations. That’s about 10 reviews a year since the end of the crisis.

Sen. Ted Cruz (R-TX), who joined with Sen. Paul to introduce the “Audit the Fed” legislation in the Senate, speaks for many of the Right Wing political class when he says, “the Fed is a group of unaccountable, unelected philosopher kings making decisions that affect every American”.

The bill’s proponents argue that “transparency” is lacking, and this will be cured with more Congressional oversight. Or, by more finger-pointing by certain gerrymandered GOP lifers talking about how the FOMC decisions are based on incorrect assumptions and broken models. There will probably be about as much value-added oversight as the various Benghazi committees exercised over the State Department.

In 2017 we’re having the same debates about the role of the Federal Reserve Bank that America had in the early 1900s prior to the Federal Reserve Act’s passage in 1913. We still hear voices calling for either more or less restrictive monetary policy, for more or less regulation, and even for the Fed to be abolished.

These are the same issues that Sen. Nelson Aldrich, banker Paul Warburg and their colleagues debated a hundred years ago. Back then, the debate was highly politicized, since there was widespread populist mistrust of Wall Street and of the concept of a centralized federal banking authority. Sound familiar?

So, time to let the GOP politicize the Fed. Time to let the Congress get its hands on monetary policy, even though they have proven to have zero ability to handle fiscal policy. Consider Congress’s failure to pass budgets, and their willingness to let the US government default on its debt.

Shouldn’t we keep the Fed’s deliberations free from grandstanding politicians playing to a conspiracy hungry constituency?

Isn’t this supposed to be the Congress that believed in less government?

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Wrongo’s Useless 2017 Predictions

It’s tough to make predictions. Especially about the future.”Yogi Berra

Since you have already plunged a stake into the heart of 2016, it is time for some predictions about 2017, which most likely, won’t happen. We can expect the following:

  1. There will be more global political and social turmoil:
    1. The EU could collapse. France is a Marine LePen government away from pursuing an exit from the EU, so there would be a Frexit to go along with Brexit.
    2. China’s economy is wobbling, and China’s president Xi has leaned into a populist message:

On this New Year, I am most concerned about the difficulties of the masses: how they eat, how they live, whether they can have a good New Year…

  1. The US will continue to lose influence globally despite “Mr. Unpredictable” becoming our Orange Overlord: Trump brags about winning when he negotiates. That has been undeniably true in his real estate and name brand licensing. He will find that when the other side doesn’t need access to his brand in order to succeed, he will have to resort to instilling fear. That may work once, but it will not work consistently.
  2. A corollary: Trump arrives in the Oval Office as an overconfident leader, the man with no plan but with a short attention span, and within six months, he will have his first major policy failure. Getting his hand burned will make him more subdued, more conservative and less populist thereafter.
  3. A second corollary: The triumvirate of Russia/Turkey/Iran will elbow the US firmly out of the Fertile Crescent, and secure friendly regimes in Damascus, Baghdad and Tehran. This will push American influence in the Middle East back to just the Gulf States, a weakened Saudi Arabia, and an increasingly isolated Israel.
  4. Domestically, drug abuse, suicide, and general self-destructive behavior will continue to climb and become impossible to ignore.
  5. The Trump stock market rally has already turned into the Santa Selloff. The Dow peaked on December 20 at 19,975, 25 points away from party-hat time. But since then, Dow 20,000 slipped through our fingers like sand. It closed the year at 19,719, down 281 points from 20k.
  6. Regarding the stock market, many people who want to sell stocks waited until 2017 in order to pay lower capital gains tax. Selling in January could lower prices further.
  7. The growing antibiotic resistance to main stream drugs will impact health in the US.

Meta Prediction: It is certain that few Trump voters will get the results they voted for. Some people who voted for Trump have incompatible outcomes in mind, so it’s a virtual guarantee that a sizable minority are going to feel cheated when they fail to get what they were promised.

OTOH, when Trump fails, most of his base will blame anyone but the Donald. The question is, when disillusionment sets in, will the reaction be a turning away, or a doubling down on the anger?

Wrongo thinks anger will win out.

The coming Trump administration will seem like a fractious family outing: Just under half of the family (the “landslide” segment) wanted to go out, but now, the whole family has to go. Those who wanted to stay home will sulk in the back seat while Daddy tells them to stop bitching.

Meanwhile, once we are out of the driveway, it dawns on everyone that Daddy hasn’t decided yet where to go. Everyone pipes up with suggestions, but Daddy again tells everyone to shut up, because it’s his decision alone. There will be the usual “are we there yet?” complaining, some motion sickness and incessant fighting over who is touching whom.

Daddy won’t reveal the destination, but insists everyone will love it once they get there, even those who wanted to stay home, those who wanted to go the beach, and those who wanted to head over the cliff like Thelma and Louise.

Time for our Monday Wake Up Call, “Wake Up Everybody”, originally by Harold Melvin and The Bluenotes, featuring Teddy Pendergrass. Teddy left the group for his solo career after this album.

But, today we will hear and watch John Legend’s cover of the tune, backed by the Roots Band along with Melanie Fiona, and Common. The song is as strong as it was 42 years ago when it was released:

Those who read the Wrongologist in email can view the video here.

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GOP Plans To Gut Dodd-Frank

Do you trust the banks and brokerage houses to govern themselves? Do you think that reducing banking regulations will help the economy, or your personal financial situation? Before you answer:

  • Remember that the economic meltdown of 2008 was caused by overreach by the financial industry.
  • Remember that it took the next eight years to climb out of the Great Recession and return to pre-2008 employment levels.

Dave Dayen in the Fiscal Times points out that there will be a vote this week in the Congress that will say a lot about how willing the Democrats in Congress will be to fight the deregulation avalanche that’s about to come crashing down on We the People. From Dayen: (brackets and emphasis by the Wrongologist)

As early as Wednesday, the House will take up H.R. 6392, the Systemic Risk Designation Improvement Act. This bill would lift mandatory Dodd-Frank regulatory supervision for all banks with more than $50 billion in assets, meaning those financial giants would no longer be subject to blanket requirements regarding capital and leverage, public disclosures and the production of “living wills” to map out how to unwind [the bank] during a crisis.

The intent of the new regulation authored by Blaine Leutkemeyer (R-MO), isn’t about helping the biggest banks, but the relatively smaller regional players, firms like PNC Bank, Capital One and SunTrust. An estimated 28 institutions would be affected. The eight “global systemically important banks” would remain subject to the standards: Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, Wells Fargo, Bank of New York Mellon, Morgan Stanley and State Street Bank.

But the so-called regional banks are not small operations. These 28 regionals have combined assets of about $4.5 trillion. It is useful to remember that in the 2008 crisis, regional banks like Washington Mutual and Wachovia also came crashing down.

The American Banker says that the Financial Stability Oversight Council (FSOC), the new super-regulator charged with monitoring systemic risk, will be gutted by the Trump administration: (brackets and emphasis by the Wrongologist)

Because the FSOC is headed by the Treasury secretary…[a cabinet post selected]…by the White House, a Trump administration is unlikely to continue any of the council’s…priorities, including the designation of nonbanks or continued regulation of those firms already designated.

It is obvious that if this bill passes and is signed by President Trump, financial regulation will be relaxed, not by repeal, but through atrophy. Republicans want to replace any mandatory rules for regulation with discretionary ones. That way they can claim that they’re merely improving the system by putting the decisions in the hands of the experts instead of members of Congress.

A next step will be to hire regulators dedicated to turning a blind eye to what the financial industry does. The chair of FSOC is the Treasury Secretary. Trump’s candidates for Treasury Secretary include Steven Mnuchin, Trump’s national finance chair and the most likely choice for Treasury, who sits on the board of directors of CIT, a financial services company with more than $50 billion in assets. The Treasury Secretary will ensure that the rest of the FSOC board is made up of regulators and presidential appointees who share Trump’s laissez-faire philosophy.

President Obama will veto this bill if it passes the Senate before January 20th. But the Republicans plan to roll it out this week, instead of waiting for Trump to enter the Oval Office. They want to gauge just how much backbone Democrats have after their thumping in the election. More from Dayen:

This is really a moment of truth for those Democrats. If Republicans put up a big bipartisan vote in the House for this, the Senate will be more inclined to try to pass it down the road. And it will serve as a test case for Democratic resolve more generally.

Wall Street-friendly Dems have already endorsed tailoring Dodd-Frank rules to eliminate smaller regionals from the rules. This bill is a big change, and the question is whether Democrats play ball with Trump’s deregulation agenda, or will they recognize the harm it will cause?

This is an early test for those Dems whose seats are at-risk in 2018 and 2020.

Financial deregulation has rarely been a partisan political matter. Democrats and Republicans have typically worked together to roll back rules and loosen up the Wall Street casino.

HR 6392 could represent a return to those times, or it could be the moment when Democrats join together and say “no”, forcing Republicans to support the banking industry agenda on their own.

Party line resistance by Democrats could be in their longer-term best interest.

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Capitalism, It’s Not You, It’s Me

There is a meme that has gone global since the early days of the Occupy movement. Here it is as a wall graffiti from Greece that uses the same meme we first saw in NYC in 2011:

Capitalism Lotek

Just kidding capitalism, it really is you.

The artist is a Greek who styles himself as Lotek. The name Lotek is derived from the short story (and later, a film) by William Gibson called Johnny Mnemonic. The story is set in 2021, in a world ruled by corporations. An anti-authoritarian gang that are called Lo-Teks, fight the power. They are in fact not low tech at all, but are high tech hackers. Sound familiar?

Greece is surely a place at war with neoliberalism and free market capitalism. So is it also time for us to reconsider capitalism?

Consider this from Mark Blyth in Foreign Affairs:

An inherent tension exists between capitalism and democratic politics since capitalism allocates resources through markets, whereas democracy allocates power through voting.

The compromises both systems have struck with each other over recent history shapes our contemporary political and economic world. Blyth observes:

  • In the three decades that followed World War II, democracy set the rules, taming markets with the establishment of protective labor laws, restrictive financial regulations, and expanded welfare systems.
  • Starting in the 1970s, a globalized, deregulated capitalism, unconstrained by national borders, began to push back.

And today, capital markets and capitalists are setting the rules, and democratic governments follow them.

Some background: Cutting taxes in the 1980s caused government revenues to fall. Deficits widened, and interest rates rose as those deficits became harder to finance. At the same time, conservative govern­ments, especially in the UK and the US, dismantled the regulations that had reined in the excesses of the financial service industry since the 1940s.

The financial industry began to grow unchecked, and as it expanded, investors sought safe assets that were highly liquid and provided good returns: the debt of developed countries.

This allowed governments to plug their deficits and spend more, all without raising taxes.

But the shift to financing the state through debt came at a cost. Since WW II, taxes on labor and capital had provided the foundation of postwar state spending. But, as govern­ments began to rely more on debt, the tax-based states of the postwar era became the debt-based states of today.

This transformation had pro­found political consequences. The increase in government debt has allowed capitalists to override the preferences of citizens:

  • Bond-market investors can now exercise an effective veto on policies they don’t like by demanding higher interest rates when they replace old debt with new debt.
  • Investors can use courts to override the ability of states to default on their debts, as happened recently in Argentina
  • They can shut down an entire country’s payment system if that country votes against the interests of creditors, as happened in Greece in 2015.
  • Citizens United dictates who runs for office in the US, and in many cases, who wins.

Now that the financial industry has become more powerful than the people, should we blindly follow capitalism’s meme as the only way forward?

Free-market rhetoric hides the dependence of corporate profits on conditions provided for, and guaranteed by, governments. For example:

  • Our financial institutions insist that they should be free of meddlesome regulations while they depend on continuing access to cheap credit from the Federal Reserve.
  • Our pharmaceutical firms have resisted any government limits on their price-setting ability at the same time that they rely on government grants of monopolies through our patent system.

To use a sporting metaphor, it’s as if the best football team purchased not only the best coaches and facilities, but also bought the referees and the journalists as well. Those responsible for judging economic competition have lost all authority, which leaves the dream of ‘meritocracy’ or a ‘level playing field’ in tatters.

In our country, the divide between the business oligarchs, the political class and “the people” increasingly appears unbridgeable, marked by hostility and deep distrust. When people are told for a generation that government mustn’t make decisions that interfere with free markets, it is inevitable that people will lose faith in democratic governance, and in government’s capacity to help them solve their problems.

Capitalism in its current form no longer works for the people. We have seen a reaction in the start of movements by Occupy, by Bernie, and by others in Europe.

Remember that the greatest prosperity in living memory in the US came during the brief social democratic moment, in the 1950s and 1960s, when the constraints on business were the greatest.

More democracy and more economic justice are the necessary foundations for the path to a more prosperous, and sustainable economy.

A reformed capitalism must be a part of what emerges from that fight.

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Can the GOP Edge in the Primaries Carry Over?

(Note: There will not be a Sunday Cartoon post again this week. Wrongo and Ms. Right will be in Santa Barbara CA for our granddaughter’s college graduation. Blogging will resume on Tuesday, 6/14)

In 2008, the Republicans turned out a total of 20.8 million votes in 45 Primaries. In the 2016 primaries, the Republicans grew that total to 28.6 million votes.

The Democrats have 27.7 million primary votes in 2016, before the DC primary. When Clinton and Obama ran against each other in 2008, they had 37.4 million votes.

So the GOP is up 7.8 million votes or a 37.5% increase over 2008. The Democrats are down nearly 26% or, 9.7 million votes. The parties were separated by only 900,000 votes by the end of the 2016 primary season, and the GOP was on top.

The question to ask the pundits: What does the Republican increase in primary voter turnout by almost 8 million, and the Democrats’ vote shrinking by almost 10 million mean for the general election?

We could talk about the populist turn in 2016. The electorate is rebelling against the establishments of both parties. We could point to the insecurity about jobs, social security and pensions for the 98% of America who know these things are no longer certain in today’s America, and are even less certain in tomorrow’s America. These have made the Bernie promise of free education, Medicare for all, and a break-up of the banks very popular with Millennials. Trump has understood the economic fears of the white middle and lower classes, and has added fear of Muslims, fear of Mexican immigrants and a longing for a simpler world where America was unchallenged, and the 40-hour work week was nearly a right, to be the aspirational standard for tomorrow’s America.

We could talk about Hillary Clinton and the enthusiasm gap. In 2016, Hillary has garnered 15.7 million votes, and she will win the nomination. In 2008, she received 18.1 million votes, 2.4 million more than she got in 2016, and lost. This time around, she was not facing one of the best retail politicians of the last 100 years in Barack Obama, and no one thought that Bernie was real competition, until he was.

So, America is now at a point where, for the Pant Suit vs. the Pant Load, these numbers really begin to matter. Let’s remember that primary turnout doesn’t necessarily translate into a reliable indicator of the turnout in the general election.

Also, over half of the GOP turnout was for candidates other than Trump. Voter preference may change significantly for the general election.

This election will be true to previous form and will be decided in just a few states: Ohio, Florida, Michigan, North Carolina, Virginia and Pennsylvania will likely decide the outcome. Obama won all but NC in his 2012 race against Mitt Romney.

Assume that Hillary will win the majority of blacks, Hispanics, other ethnic minorities and many white women. The biggest question is: What percentage of women will vote for Hillary? If Trump peels off enough, he may be able to win in a few of those states.

So, turnout will be key. As an example, Charlie Crist would be the current governor of Florida if just 50% of the African American voters who were registered Democrats, had voted in the last gubernatorial election. In just in one (populous) Florida County.

The gap in the primary voting numbers are a good indicator that the GOP primary voters were more enthusiastic than were Democratic voters in 2016. However, the Democrats were very good at “Get out the Vote” programs in 2008 and 2012. Can Donald Trump match that in 2016?

Hillary starts with better odds of winning since the Democrats have an Electoral College advantage. Romney won 206 Electoral College votes. He lost Colorado, Florida, Ohio, Pennsylvania and Virginia each by between 150,000 and 250,000 votes. So, it’s conceivable that the enthusiasm for Trump in these states combined with less enthusiasm for Hillary could give him an Electoral College victory.

OTOH, Trump can’t change who he is. He’s not going to go toe to toe with Hillary on wonky policy details. So, he’ll continue the campaign that won him the primary in the general.

Will Pant Load fatigue set in? It hasn’t yet.

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1890s Progressivism: When the Movement Worked

Last week, Wrongo read “The Bully Pulpit: Theodore Roosevelt, William Howard Taft, and the Golden Age of Journalism” by Doris Kearns Goodwin (Simon and Schuster, 2013). The book covers the birth of the Progressive Era, a period of social activism and political reform across the US, from the 1890s to 1920.

For context about the times, does any of this sound familiar?

The gap between rich and poor has never been wider…legislative stalemate paralyzes the country…corporations resist federal regulations…spectacular mergers produce giant companies…the influence of money in politics deepens…bombs explode in crowded streets…small wars proliferate far from our shores…a dizzying array of inventions speeds the pace of daily life.

That was the political landscape in the 1890s. This was the time of the Gilded Age, a time of income and wealth inequality. From 1860 to 1900, the wealthiest 2% of American households owned more than a third of the nation’s wealth, while the top 10% owned roughly three-fourths of it. The bottom 40% had no wealth at all.

The Bully Pulpit” tries to do three things simultaneously: It is a biography of Theodore Roosevelt, and a biography of William Howard Taft; third, it introduces us to McClure’s magazine and the rise of Muckraking journalism. The muckrakers were investigative reporters who exposed corrupt politicians and business leaders at all levels. Goodwin includes mini-bios of Ida Tarbell, Lincoln Steffens, Ray Stannard Baker and William A. White, all of whom were titans of investigative journalism at the time. A key finding by Goodwin is how TR encouraged the Muckrakers. He offered them access and friendship, and received information about the problems they were investigating, a synergy that enabled both to influence policy and politics for 30 years.

Consider the times: Corporations were ascendant. Politicians were reluctant to involve the federal government too heavily in the private sector. In general, they accepted the concept of laissez-faire, opposing government interference in the economy except to maintain law and order. This attitude started to change during the depression of the 1890s when small businesses, farmers, and labor movements began asking the government to intercede on their behalf.

By the start of the 20th century, the middle class was leery of the emerging corporate giants called “Trusts”. The Trusts consolidated businesses, using horizontal (controlling competitors) or vertical integration (controlling supply and distribution), and thus, created monopolies. For example, John D. Rockefeller drove other oil companies out of business and created a giant oil company, Standard Oil.

The Progressives argued the need for government regulation of business practices to ensure competition and free enterprise. Under President Benjamin Harrison, Congress regulated railroads in 1887 (the Interstate Commerce Act), and in 1890, the Sherman Antitrust Act, which prevented large firms from controlling a single industry. But, these laws were not rigorously enforced until Teddy Roosevelt, vice president under McKinley, became president after McKinley’s assassination in 1901.

Roosevelt and William Howard Taft became close friends when both were part of the Harrison administration in 1888. Taft became a key member of President Roosevelt’s cabinet, and later his handpicked successor, in the election of 1908. While TR thought Taft a “genuine Progressive”, Taft was not the politician that TR was, and he was by temperament, more conservative. In 1910, TR broke bitterly with Taft on a series of issues and when in the 1912 nomination process, Roosevelt failed to block Taft’s re-nomination, he launched the Bull Moose Party. This ultimately led to them both losing in 1912 to Democrat Woodrow Wilson, who also ran as a Progressive.

This wave of reforms was continued by Wilson. The legacy of the Progressive Era includes the Pure Food and Drug act, the progressive income tax, direct election of senators and the women’s vote.

All of this makes “Bully Pulpit” a very long book at 928 pages. But, it is a very worthwhile read, particularly since many of the same issues we face today were in full flower back then. And it is remarkable how similar the political and ideological arguments of the time are nearly identical to the arguments today.

The book gives us some hope that, at one time, divided government could morph into a movement that won by embracing progressive values. That happened because interest groups, including farmers, small businesses and unions joined together with local governments, journalists like the Muckrakers, and sympathetic politicians of both parties to energize a movement that was directed at solving specific problems – the consequences of the Gilded Age.

Can it happen again? Can investigative journalism return, or is it dead?

Tomorrow, we will take a look at why Progressivism died and was then reborn under another Roosevelt.

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Monday Wake Up Call – March 7, 2016

Today’s wake-up call is for the Republican Party.

Beginning with Barry Goldwater in 1964, the Republican Party began its deal with the Devil by starting their catering to those on the farthest Right edge of the political spectrum, inviting people who traffic in anger, hatred, religious zealotry, and fearmongering of those not like them, inside the GOP tent.

The election of Ronald Reagan helped bring these zealots some legitimacy, not because he was one of them, but because he had courted them in his first run for the White House.

We forget that in 1976, an evangelical Christian who taught Sunday school, and who endeavored to follow Christ in his daily life ran for President and won. But, despite Jimmy Carter’s strong Christian beliefs, Evangelicals went heavily for Ronald Reagan in 1980. Because they admired his Christian faith? No, his faith seemed situational. But he projected what they perceived as strength and leadership.

Evangelicals ignored one of their own in favor of a secular Republican who talked tough and affected an air of someone who could talk tough when events called for toughness. Turns out that for Evangelicals, like many groups, are primarily concerned with political power; their need for a theologically-sound candidate takes a back seat whenever it has to.

That’s the reality today, as it was back then. Trump is barely Christian, and Cruz is solidly Christian, but the politics of the Christian Right demands fealty to a political agenda that tolerates hatred, exclusion, and intolerance. Therefore, Trump and Cruz quality.

The contrast between the Democratic and Republican parties couldn’t be more sharply defined.

Since the late 1800s, when businesses were undertaking tremendous consolidation, leading to the formation of trusts, Republicans supported business, despite the fact that business was beginning to prey on people and overshadow the government.

After the brief Republican Progressive period from 1890-1917, in which Republicans were the force behind “trust-busting”, they have advanced an increasingly exclusionary and discriminatory agenda, denying a collective responsibility to care for our fellow human beings in favor of elevating corporate interests along with their view of individual liberties above all else. Government is an instrument designed to show strength, project American power, and enforce a neo-liberal, dog-eat-dog economic worldview, one that will take the social contract back to where it was in the early 1900’s.

Democrats understood that government needs to be more than a police and fire department. One of the most important roles assumed by government was ensuring that we create a level playing field for all citizens, that corporations were not first among equals in America. They also believed that we must look after those who are down on their luck by providing a social safety net.

Government was not to be primarily an instrument for projecting power and protecting the influential, but rather one of ensuring the American social contract, while protecting our citizens from the abuses of big business.

After years of courting the Radical Right, thinking that they could be kept under control, Establishment Republicans now understand that, not only do they no longer have control, the inmates are now running the asylum – poorly. Faced with the reality that the bill for their deal with the Devil has come due, Republicans trotted out Mitt Romney to make the case against The Donald, who responded with crude personal insults and inappropriate sexual innuendo:

COW Trump Miracle Worker

Congratulations, Republicans, you have only yourselves to blame. Now, you desperately need a Wrongo Wake up Call. To help you wake up, let’s return to the “small hands” innuendo of the last GOP debate.

Here are the Talking Heads doing “Born Under Punches” live in Rome in 1980, from their great album, “Remain in Light”. This 8-minute live version is worth your time, since it includes spectacular guest guitar work by Adrian Belew, who played with Frank Zappa and King Crimson.

Some think the guitar that Belew is playing was originally jimmy Hendrix’s (the one he burned at the Monterey Pop festival). Frank Zappa repaired it, and loaned it to Adrian Belew, whose main influence was Hendrix.

The bassist in the white dress is Tina Weymouth who is (still) married to Chris Franz, the Talking Heads guitarist. Here are some sample lyrics:

Take a look at these hands
Take a look at these hands
The hand speaks, the hand of a government man
Well I’m a tumbler born under punches, I’m so thin

Hmmm. Is Trump a government man?

Those who view the Wrongologist in email can view the video here.

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We Are Victims of Political Misrule

Yesterday we said that 2016 may be the last election we ever need if political division keeps us from getting anything meaningful done for another four years. We also said that none of the current candidates from either party appear to have the ability to lead us towards being a better country.

Despite that, partisans on both sides say their worst candidate would be a fine president, and would certainly do a better job than the best candidate on the other side. Maybe we have a failure to define exactly what our next president needs to accomplish.

We talk as if a president were all-powerful, able to simply wave his/her magic wand, and all will be well. The past 16 years of presidential and congressional misrule has taught us to know better, but candidates still campaign as if we didn’t know better.

If a president can’t solve our problems, what can he/she do? If all they will do is to continue doing what hasn’t worked in the past, why do we bother to elect them, or have elections at all?

If all we can expect is to maintain a defective status quo, what’s the point?

We need America to grow up. We need a president who can enunciate a humane, adult, reasonable worldview, and vigorously promote it at home and abroad. Perhaps over time, that message will resonate with enough people, young Americans in particular, so the next generation can take the first political baby steps towards building a better world.

Either we fix our politics, or resign ourselves to the fact that our democracy is going to continue to give us substandard results.

To succeed at changing the country’s world view, the people would have to insist upon a politics that requires a humane, adult, reasonable, sane worldview from our elected representatives. At best, we would see some compromise, and take a few steps forward. At worst, idealism fails, and we continue the tyranny of a Congress that while elected, is not accountable for the success or failure of the nation.

Donald Trump has broken the GOP, possibly fatally. The party’s recent history seems to have assigned him that task, and he has discharged it well. Thanks to Trump, “lesser evilism” has lost its power to control our politics, making it possible for genuinely progressive politicians to put non-incrementalist policy back onto the mainstream agenda.

That has been Bernie Sanders’s goal. He too has discharged his task well. He, like Trump, has become the polestar for people who are outraged at the status quo, and who want to change it fundamentally for the better. But if the Democrats nominate Sanders, they risk making the same mistake the Republicans would make if they nominate Trump. That is, not recognizing that the very rhetoric that their side likes best will be seen as inherently disqualifying in the eyes of many.

It is the error of the echo chamber–believing that your side is so obviously right that all you have to do is state your beliefs with conviction and honesty and then surely win.

Unfortunately for Hillary, she seems to be on the wrong side of the zeitgeist for a second time. In 2008, she was no match for an aspirational black man who allowed progressives to project their values on him. This time, it’s an actual progressive who may become the road block to her coronation. In different times, HRC would have the perfect resume for the Oval office, and yes, she could yet win the nomination and the big job. Her biggest problem is poor vision. Here is the NYT’s Charles Blow: (emphasis by the Wrongologist)

But possibly the most damaging of Clinton’s attributes is, ironically, her practicality. As one person commented to me on social media: Clinton is running an I-Have-Half-A-Dream campaign. That simply doesn’t inspire young people brimming with the biggest of dreams. Clinton’s message says: Aim lower, think smaller, move slower. It says, I have more modest ambitions, but they are more realistic.

How long has it been since a President has campaigned on a specific platform and also urged the people to vote for his Party in Congress so that he could accomplish that platform. Reagan maybe?

No president has ever changed things alone, and none ever will. If Bernie wins, it’s because he inspires us to join a movement for change. Just like Reagan and Movement Conservatism, where Republicans built a conceptual base, a popular base, a business base, and an institutional infrastructure of think tanks. By the 2000s, movement conservatives controlled the Republican Party.

It took them 40 years, but they succeeded.

And it can happen again.

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The Last Election You’ll Ever Need

“The only rules that really matter are these: what a man can do, and what a man can’t do”Captain Jack Sparrow

Some may have seen Death Wish, starring Charles Bronson. The movie came out in 1974, a time of increasing fear of random crime, creeping distrust of life in our cities, and growing frustration with what the Right called the moral relativity of liberalism. The film resonated with the US public, and had four sequels over the next 20 years.

The context for Death Wish was New York City’s decline after the fallout from years of redlining, blockbusting, and failed urban renewal. The city’s crime stats began to rise. Son of Sam would arrive in three years, a Republican president would tell a bankrupt NYC to drop dead, and Reagan’s morning in America would usher in a decade of anti-city films bookended by Escape from New York and New Jack City.

So, the question for 2016 is: Does America have a death wish? Are we about to start another period when our cities are declining, and our fears are growing? There is plenty of evidence to support both, from urban decay in Detroit and Flint, Michigan to our fears of Muslims and immigrants, to the distressingly difficult geopolitical landscape for which we have no clear strategy.

In the case of Flint’s need to replace its water pipes, no government – local, state or federal, has any idea where the money will come to fix the problem.

And in the case of geopolitics, we chose to spend $trillions on defense and homeland security, while willingly giving up some of our Constitutional rights out of fear, but are still failing to stem the tide of persistent conflict.

And no candidate from either party is offering a coherent set of policy positions that will solve these issues. Consider that Donald Trump and Hillary Clinton, the two front-runners, offer a similar pitch: Trump’s “I know how to get things done” is the same as Hillary Clinton’s.

But what can get done?

Whenever we talk about a solving a big problem, what we say is: “We can’t do that.” But in politics-speak, “can’t,” doesn’t mean: “That’s impossible” or, “We don’t have the skills or money”. What we really mean is: “It’s too hard”.

Or the solution is outside our ideological comfort zone. Ian Welsh said in 2009:

While there are no problems that America has that America can’t fix, it also appears that there are no problems America has that America is willing to fix properly. And it doesn’t matter why.

The world won’t grade us on a curve. You need to jump the fence, and you can’t. You’re running away from a bear, and you don’t run fast enough, and you’re dead. You wanted to get into a good grad school, but you don’t have the grades or test scores.

As we enter the 2016 election process, this is where America is:

• We have been shipping our real economy overseas for 30 years
• Ordinary families have had wage stagnation for the same 30 years
• We’ve voted for lower taxes
• We’ve not paid for infrastructure reinvestment, or education, or much of our domestic needs

This is where America is, and we continue to struggle to find our way in both domestic and foreign policy, despite the growing criticality of our problems.

In 2001, we elected a president who had a conservative ideology, and under his watch, we had disastrous foreign wars and the Great Recession. So, in 2008, we elected a president who we thought had a vision for the future. Someone who spoke to our better angels, who would drag us out of a near-depression, who would focus on our domestic problems and get us out of war in the Middle East.

Like Jack Sparrow says, after 16 years of presidents with very different ideologies, neither could do most of the things they promised. And we are the worse for that.

Now it is time to elect a new savior, and no candidate looks ready for the job. But choose we must, and one of them will be the next president. If, after we make our next choice, our political divisions again prevent progress for another eight years, it may be the last presidential election we ever need.

Collapse of the state is not an event, it is a process. A process that we are in.

We are right on schedule.

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Will Hillary’s Campaign Strategy Win?

“Everybody has a plan until they get punched in the mouth.”Mike Tyson

The primary season clown show has moved on to New Hampshire. Republicans will see more mud wrestling between Cruz and Trump, while Rubio, Kasich and Christie try to elbow their way in to be one of the top two by next Wednesday.

Iowa showed that the Democrats will have a tough time choosing between the candidates, both of whom will struggle to refine the message(s) they need to take to South Carolina and beyond in order to win the nomination. Like that great philosopher Mike Tyson says, now the top two in each party need to present a plan that connects with voters nationally.

Think for a minute about the messages that Hillary and Bernie have been running with:

Bernie is saying we should have (and can get):

• A single-payer health care system
• Universal pre-K and free college tuition at our state universities
• Guaranteed sick leave and vacation for every employee
• A minimum wage of $15/hour
• The big banks broken up, and Glass-Steagall reconstituted
• Our campaign finance system is reformed
• The super-wealthy should pay for it all

Hillary is saying we can’t get all that:

• We must focus on what can be accomplished, not what Sanders is proposing
• Single-payer is a nice idea, but is too politically toxic to be viable
• She agrees with Sanders about sick and maternity leave
• College shouldn’t be free for all, some should pay, mostly because their parents can afford it
• Breaking up the big banks isn’t the best way to address financial market risk
• $15/hour is too high a minimum wage, $12/hour is realistic
• Since Republicans will control at least one house of Congress next year, they’ll never vote for what Sanders proposes

Hillary is in a difficult position. She’s telling people that they can’t have the things they want. Every parent understands this, but Clinton is also saying: “his policies can’t win”, all the while she is thinking: “I can get some of this through Congress.”

That may not be a winning message, particularly if Sanders is still running in a dead heat with Clinton in April. His charm is that he’s not willing to settle for campaigning on a platform that is calibrated to work in our gridlocked politics.

So, will Hillary change if she can’t shake Bernie? And what would her new message be?

She needs to start by finding a way to relate to an electorate that has limited interest in politicians like her who speak for the status quo.

Today’s voters say that the status quo is unacceptable. In fact, that’s the only thing everyone in America seems to agree about right now. And since 60% of the Democratic delegates actually get selected in March, Clinton needs a message better calibrated to meet today’s political realities, or she risks losing the nomination, or winning it only after a fight that weakens her party.

It is true that if elected, either Clinton or Sanders will be in virtually the same place regarding what they can actually achieve. The big difference today is in the vision they are laying out, and whether the voters will buy it. Will they buy a president who articulates unobtainable goals and blames the .01%, or do they want a president who articulates modest, but still unobtainable goals?

Would the electorate buy that her insider status would bring about some (or all) of her goals?

Candidate Clinton is running primarily on her resume. She presents us with a CV of job titles, not accomplishments, and if there is a campaign persona that she is embracing, it is the idea of being a lifelong fighter. But will that be enough? From the 2/2 NYT:

…she still faces an authenticity problem, even among Democrats. Some 47% of likely Democratic primary voters said that they felt Mrs. Clinton said what voters wanted to hear, rather than what she believed. 62% said they believed Mr. Sanders said what he thought…

Clinton’s liabilities as a campaigner could be lessened by treating the campaign more like a struggle between opposing parties instead of one between political celebrities. Overall, she performs well enough as a candidate. She debates well, she interviews well.

Her argument should be: if you want to see the incomes of the middle class grow, if you want to retain Constitutional freedoms that are under attack by a conservative Supreme Court, if you want to keep Social Security, Medicare, Medicaid and other social programs like Obamacare, if you want less foreign adventurism, then you have to vote Democratic regardless of what you think of Hillary Clinton.

It’s sort of a vision.

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