Politics – Page 43 – The Wrongologist

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.”

Monday Wake Up Call – November 23, 2015

Earlier in the month, the Wrongologist wrote a column asking: “Shouldn’t Democrats Be Doing Better?” Over the last few days, we have seen others ask the same question. Notably, Alec MacGillis asked “Who Turned My Blue State Red?” in Sunday’s NYT.

He pondered why poor areas vote for politicians who want to slash the safety net, and mentioned two major points: That the “have-littles” have no interest in helping the “have-nothings”, and that the “have-nothings” rarely vote.

MacGillis quotes State Auditor Adam Edelen, a Democrat who lost his re-election bid this year:

People on Medicaid don’t vote.

The numbers show that the bottom 20% in socioeconomic status aren’t voting for anyone, while the next quintile wages a class war aimed at their inferiors. The poorest aren’t voting to shred their own safety net, they’re not voting at all. They have been demobilized, and the middle and upper classes are taking advantage of low turnout to drive their political programs:

• Maine re-elected a guy who ran on a platform of not helping the poor
• Kentucky voted in a governor who will dismantle Obamacare
• Kansas re-elected a guy who has nearly tanked their economy, and got elected after promising to hurt them some more

Democrats were counting on Obamacare to galvanize the bottom quintile of the population in red states to vote for them by 2016, but it isn’t happening. One issue that MacGillis does not address is how the politics of resentment is fanned and fostered, mainly by right wing propaganda. Otherwise, why are people a few steps up from the bottom blaming the poor rather than blaming the rich, when it is the rich who have gamed the system, not the poor?

The answer is that they are victims of welfare queen paranoia.

Their perceptions have been manipulated over the past 30 years by a steady diet of social Darwinism, led by the GOP, the Club for Growth, Fox News, and others. But Democrats and progressives have failed to develop ANY effective counter that gives people a reason to vote, or to vote their economic interests.

And this may be a good time to point out that the arguments that helping the poor disincents them have little empirical foundation:

For as long as there have been government programs designed to help the poor, there have been critics insisting that helping the poor will keep them from working. But the evidence for this proposition has always been rather weak.

And a recent study from MIT and Harvard economists makes the case even weaker. Abhijit Banerjee, Rema Hanna, Gabriel Kreindler, and Benjamin Olken reanalyzed data from seven randomized experiments evaluating cash programs in poor countries and found “no systematic evidence that cash transfer programs discourage work.” Attacking welfare recipients as lazy is easy rhetoric, but when you actually test the proposition scientifically, it doesn’t hold up.

We know that most people form their opinions about whole groups of people (such as people living under the poverty line) from their anecdotal experience. They do not develop an understanding of the policies, or the statistics that describe the outcomes of specific policies.

Thus, well-known facts such as increasing the minimum wage doesn’t decrease jobs, and that Obamacare has not decreased jobs, are unknown to them.

There is no such thing as a well informed electorate, at least not in the US.

So, time to wake up American voters! To help you get the sleep out of your eyes, here is “The Times They are a-Changing” the great Dylan song interpreted by Flogging Molly, an American Celtic punk band from Los Angeles, led by Irish vocalist Dave King.

They add a sense of energy, hope and joy to Dylan’s old classic. Those who read the Wrongologist in email can view the video here.

Netanyahu: Gimme the Golan Heights

The carve-up of Syria has started. When Israel’s Prime Minister Netanyahu met with Barak Obama on Monday, he asked for three things:

• That the US raise its aid to Israel from $2 billion US to $5 billion annually to be used against the “new” Iranian threat
• Israel intends to formally annex the Syrian Golan Heights, and Netanyahu wants our recognition of that annexation
• That the US submit the terms of any future deal involving Syria to Israel for their approval in advance of US approval

During the meeting, Netanyahu also clarified Israel’s purported “red lines” with regards to Syria.

We won’t tolerate attacks from Syrian territory, we won’t allow Iran to open a front [against us] on the Golan Heights, and we will disrupt the transfer of deadly weaponry from Syria to Lebanon…

That explains the money part of the requests. Well, we will do #1, we won’t do #3, and that leaves #2, recognition of Israel’s annexation of the Golan.

Some history: Israel occupied Syria’s Golan Heights after the Six-Day War in 1967, and annexed the Golan in 1981. In the intervening 48 years, neither the UN, nor any country has recognized the Golan annexation. The US could not unilaterally recognize the Golan annexation without upsetting our EU allies. In addition, Russia would not recognize the annexation, and they have an air force in Syria. And Iran could make life difficult for Israel by increasing Iranian aid and weapons to Hezbollah.

Why does Israel want to complicate Obama’s task in the Middle East? Well, he asked for recognition of Israel’s annexation of the Golan Heights, just as new oil reserves were discovered there.

Wait, they found oil in the Golan? Apparently, yes. And it’s potentially billions of barrels. The tangled web of the oil business is at work here: Genie Oil & Gas, a US company, is doing the exploratory drilling in Golan through its subsidiary, Afek Israel Oil and Gas, which holds an exclusive 3 year petroleum exploration license issued by the government of Israel. Genie’s founder and CEO is Howard Jonas, who has been a big financial backer of Netanyahu’s political campaigns. And, look at the advisory board of Genie Oil & Gas:

• Michael Steinberg, Board Chair
• Rupert Murdoch
• Jacob Rothschild, the chairman of the J Rothschild group of companies
• ex-CIA director James Woolsey
• Dick Cheney
• Lawrence Summers, former president of Harvard
• Bill Richardson, former secretary of energy under Bill Clinton
• Mary Landrieu, former Louisiana Democratic Senator

With “Advisors” like these, it would be foolish to bet against the US recognizing the Israeli annexation of an oil-rich Golan Heights at some point. From Mint Press News:

Israel hopes to quintuple the size of its settlements over the next five years by adding an additional 100,000 settlers to the region.

So, new settlers and new oil.

Perhaps Bibi’s request is really part of a longer game directed at the 2016 US presidential candidates, in which he is laying out his demands: “In return for my political support” go the unspoken, but implied words of Bibi, “I would like you to agree to fill my shopping bag,” including the Golan.

It turns out that Haaretz is now reporting that Mr. Obama has rebuffed Bibi’s bid to have the US recognize Israel’s annexing Golan:

Washington rejects Prime Minister Benjamin Netanyahu’s suggestion to US President Barack Obama at the White House on Monday to discuss the possibility of US recognition of Israeli rule over the Golan Heights, a senior White House official said.

We should have predicted this move by Israel: the Golan occupied, and Syria in fragments due to uprisings and attacks by ISIS creates a vacuum for Israel to fill. But if you buy that the request was really directed at the next president and the next Congress, and not the lame duck Obama, Bibi apparently is betting that his sycophants in the Congress are going to give him what he wants in 2017.

It would be a challenge for America’s politicians to explain to voters in 2016 why we should increase funding of Israel by $3 billion, instead of helping students pay off their college loans, or instead of building better roads.

We need to make sure that this additional reach into our pockets by Israel is a national campaign issue in 2016. Until a few politicians lose an election because they are too hawkish on Israel, we will continue to lavish money on them.

And our politicians will continue to support Israel’s Middle East policies at the expense of our own.

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?

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.

Waiting for the Great Trumpkin

Today, we focus on this from the WaPo’s Marc Fisher who profiles the kind of people who support Donald Trump and finds they are mostly older white men and women:

The way Joe McCoy sees it, the last time America was great was when Ronald Reagan was president, when people played by the rules. No, it was in the ’70s, Holly Martin says, when you could depend on Americans to work hard. No, to find true American greatness, Steve Trivett contends, you need to go back to before the Vietnam War, ‘when you could still own a home and have a good job even if you didn’t have a college education.’

Fisher says this demographic resonates with the Donald’s campaign slogan, “Make America Great Again”. And even if they don’t agree on exactly why, they do accept Trump’s contention that the US has become “an economic wasteland” and that it is “committing cultural suicide.”

The premise behind “Make America Great Again” is that while the country is no longer great, it can be great again, and Trump is the can-do billionaire who can make that happen.

This can be difficult to watch, like a slowly-developing accident on the freeway. People seem so easily misled, and they say such unsophisticated things about immigration, about Putin and Syria, about our economy, about the threat from Muslims who live in America.

But do we have good Party establishment choices in the 2016 election? No, voters don’t have good, clear choices, despite the unprecedented number of candidates.

Republicans made their voters a bunch of promises over the past 10 years, some of which they had no hope of keeping, and others which they had no intention of actually delivering. It’s also clear that the Republican “Establishment” is frustrated with the Republican candidates, and their supporters who actually expected the Party to be more effective. That’s why so many Republican voters have no interest in Jeb Bush or Scott Walker, and it’s clear that the GOP Establishment misunderstands their own base.

So, Donald Trump appeals to many Republicans as someone who’s pretty effective at holding the media’s attention and driving the national conversation. Someone who looks to be a better bet to actually shake things up and make possible a few things that currently look impossible.

It might be a GOP Hail Mary pass, but what’s the alternative?

For Democrats, Hillary Clinton looks like the candidate who’s “turn” has finally come. She is a product of their “establishment” as much as Jeb Bush is of the GOP’s.

And is it really all that different that the progressive left looks to Bernie Sanders to create a “revolution” in the political climate, making a progressive America possible? Sanders may be more of a Hail Mary pass than Trump.

Since both parties suck and won’t work together, many on both sides are looking for an anti-establishment Messiah to lead them to the political Promised Land. What makes this risk seem worth it is that, while folks understand they’re inviting chaos, they feel our politics are already chaotic. So, people think “What’s the difference?”

And it’s hard to argue with them. American politics feels like a metaphor of Easter Island: Some of us spend our lives trying to get new trees to grow, while the majority are happy to keep chopping down the old ones as fast as they can.

Trump is saying if we vote for him, he’ll make it all better. And if you read Senator Sander’s stump speech, you’d know he is saying he can’t do it alone, that people have to get together and organize to effect change.

That is “a substantive difference” between these two “insurgents”.

That’s why Bernie Sanders’ use of the Democratic Socialist label is disorienting. It shakes people out of their normal process enough to wonder how he thinks he could possibly win. He can’t.

And the mainstream media and both party establishments say: “things really aren’t as bad as they’re made out to be.” They hope that in the end, most voters will agree with their sentiment, and vote for their establishment candidates.

But voters have spent decades lowering their expectations (in Wrongo’s case, except for a short-lived upswing in 2008). Screw that. People need to raise their expectations. Because lower expectations and the “what did you expect” attitude is essentially giving permission for poor results.

We need to expect MORE, demand more.

Because it’s better to have high expectations with the risk of disappointment, than it is to have low expectations that guarantee more of the same old stuff.

Monday Wake Up Call – November 2, 2015

From the WaPo:

Keith Moore, a 40-year-old military veteran recovering from post-traumatic stress disorder in Oklahoma, remembers the day last year when he sold off a chunk of his pension.

He had left the military after 21 years of service, because his disabilities — PTSD, arthritis and other injuries — made it difficult to work. But the transition to civilian life came with a different struggle: the need to provide for his family and pay the same bills with only half the paycheck.

The article says that Moore was two months behind on rent and 10 days from his next paycheck. He saw a TV ad for Future Income Payments, an Irvine, CA company that buys pensions in exchange for a lump sum of cash. The company said it had worked with military personnel and government workers. Moore called them. More from WaPo: (brackets and emphasis by the Wrongologist)

The next day, a company representative…explained that he [Moore] would receive a $5,000 cash advance for selling part of his pension. In exchange, Moore would have to pay the company $510 a month for five years, a total of $30,600.

If it were a typical loan, that would amount to $25,600 in interest — a rate of 512%.

Can you say deceptive and predatory?

We are ending year seven of our recovery from the Great Recession, but the recovery has largely benefited those at the top of the income ladder, while bottom-feeders like these pension advance companies work to profit from poverty, charging more than 500% annual interest.

This is particularly egregious when companies target income streams that are riskless since they are backed by the federal government.

But these are not treated as loans by the pension advance companies. They are treated as an installment “sale”. The pensioner sells the income stream to the pension advance firm, rather than making a loan against the future payments, which would be subject to usury laws.

Some will say that Mr. Moore entered into a dumb deal, that he is a victim of his own personal choices.

Others could say that view makes you an apologist for loan sharking. Following the argument to its logical conclusion, any fraud or con game should be legal under the premise, “the victim should have known better“.

Some in the government are looking into the grift: In a 2014 report, the GAO identified 38 companies that offered pension advances. At least 30 of them were affiliated with one another in some way. The Senate Special Committee on Aging held a hearing on the issue last month, and reported that only two states, Missouri and Vermont; have laws regulating pension advance companies. If 30 operators are really one company, why can’t states or the Feds regulate this?

So, it’s past time for state and federal regulators to wake up and look carefully at pension advance firms. To help them rub the sleep from their eyes, here is Minus the Bear, an American indie rock band from Seattle, with their tune “Knights”:

Sample Lyrics:
I owe you, don’t I?
A little light today but tomorrow
Oh, tomorrow

This usury’s so typical
A piece of you for a piece of me
It’s hard-coded
A piece of you for a piece of me

Is it really a sin if we both come out even?

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

The Wrongologist

Geopolitics, Power and Political Economy

Category: Politics