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The Wrongologist

Geopolitics, Power and Political Economy

Tuesday Wake Up Call – October 3, 2017

Re: Las Vegas: In an America of unlimited guns and unlimited ammo, we live or die at the whims of killers. That is clearly what the Founders intended when they authored the Second Amendment. And “thoughts and prayers”, or lowering the flag to half-staff, are do-nothing pap for the masses.

The Daily Escape:

Madrid, the capital of Spain – Photo by Wilhelm Lappe. The effort by the people of Catalonia to vote for independence from Spain was the largest story of the weekend, until Las Vegas happened. Barcelona, in the northeast part of Spain is home to the Catalans.

About 92% of Catalans who voted in the weekend’s referendum backed independence, on an overall turnout of just 42%. Eight percent of voters rejected independence, and the rest of the ballots were blank, or void.

The entire process of voting for independence was marred by the effort of the Spanish national police to prevent polling places from opening, or votes from being counted. That led to violence in which at least 844 people and 33 police were reported to have been hurt.

The Spanish national government of Mariano Rajoy showed bad judgment in trying to prevent a Catalonian referendum from happening. There were good examples of how to handle this: The UK allowed the Scots to have their vote, and campaigned showing why the Scots would be better off in the UK. The Scots rejected independence. Similarly, Canada permitted Quebec to vote for independence, and campaigned on the benefits of remaining with Canada. The Quebecois voted against separation.

If the Spanish had allowed an open referendum and campaigned against secession, the outcome might well have been that separation was rejected. In an open referendum, those opposed to secession would have been empowered to campaign and vote against it, not participate just by casting blank ballots. From Benjamin Studebaker:

If someone was against Catalan independence, it would be odd to participate in this referendum because the Spanish state–the entity you recognize as sovereign–declared the referendum illegal. An independence referendum that has the backing of the regional authority but not the national authority can only deliver a divisive result.

But, the Spanish government chose to disrupt the referendum with police force. The separatists (call them voters!) chose to confront the police exercising their right of self-determination. That right, codified in the UN Charter, states that a people can freely choose their sovereignty and international political status without interference.

But few nations would agree that the right of self-determination creates a right for a portion of the country to secede from an existing nation state. In the US, a Supreme Court case, Texas vs. White, (1869) held that the Constitution did not permit states to unilaterally secede from the US.

And with the Catalonia vote, Spain is now divided, and what happens next is unclear. The referendum will be followed by a declaration of independence, leaving the central government with few choices but to escalate toward repression.

Spain will be a true test, as the Catalonian movement could well become a feature of this century. The Kurds are attempting it in Iraq. We see a weakening of the nation state as an organizing principle due to the weakening of national identities, and their replacement with micro-identities.

People now have some choice regarding identity, thanks to global flows of information. For example you can identify as conservative, libertarian, Muslim, Jewish, or Jedi Knight-American. The old “brands” – English, Spanish, Italian, American, are being parsed into a subsets with which people identify, organize, and vote. This “identity politics”, organizing around the new identity, is a problem. It’s a threat to unified societies.

This is qualitatively different from simply being a hyphenated American who celebrates their roots.

It’s time to wake up: the old world order isn’t holding. People will not stay inside it voluntarily. We need to look at our system of government, and the ties that bind us. To help us wake up, here is Muse with their tune, “Uprising” from their 2009 album, “The Resistance”. The song is about a proletarian revolt against the 2008 global banking crisis:

Key Lyric:

They will not force us
They will stop degrading us
They will not control us
We will be victorious

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

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Saturday Soother – September 16, 2017

The Daily Escape:

Old Prison, Annecy, France. This 12th century prison sits in the middle of the river Thiou. Because of the canals in the town, Annecy is called the Venice of the Alps.

Yesterday, Wrongo said that we needed a special tax to be used solely to rebuild the economies and infrastructure of states hit by Irma and Harvey. It didn’t take long to hear that millionaires already pay enough taxes. In one way, that is correct. From the Atlantic:

Forty years ago, the richest 1% paid about 18% of the country’s federal income taxes. Today, they pay about 40%.

While 40% seems high, we need to look harder at the arithmetic: The number of million-dollar-earners in the US has grown rapidly since Y2K. According to the IRS, the number of households with an adjusted gross income greater than $1 million more than doubled between 2001 and 2014, the last year with complete data. And no group has grown faster than the super-rich; the number of households earning more than $10 million grew by 144%.

Between 2001 and 2014, income earned by millionaires grew twice as fast as income earned by the rest of us. In 2001, million-dollar earners and above collectively reported income of about $600 billion. In 2014, they reported $1.4 trillion, more than double the amount in just 14 years. And the top 10% of wealthiest families in this country control 76% of our country’s total wealth.

So, we shouldn’t feel guilty about taxing them for a specific need, for a time-limited period.

If you’re a millionaire, it’s not just because you worked hard. It’s because you worked hard, and you live in a country where the government provides a well-developed infrastructure, stable institutions and markets governed by a strong commercial code.

Rich people need to stop griping and pull their weight, just like the rest of America’s tax-payers.

So Wrongo says again, we all need to pay extra taxes into a special fund for redevelopment of Florida and Texas. As the libertarian Joseph Tainter asserts in his book “The Collapse of Complex Societies” (don’t read it), when a society no longer has the reserves to help offset what might otherwise be a recoverable disaster, collapse can’t be far off.

Increased revenues will absolutely increase our reserves. And they will help us recover from this current disaster.

It’s Saturday, and we need to relax. Today Dr. Wrong prescribes a double Hayes Valley Espresso (whole bean is $ 17/lb.) from Oakland, CA’s Blue Bottle Coffee. Get it now, Blue Bottle has just agreed to be acquired by Nestle.

Brew it up, put on the Bluetooth headphones, and listen to the Flute Quartet No.1 in D major by J. J. Quantz, flute maker and Baroque composer. Quantz was extremely prolific. He wrote six flute quartets that were discovered in 2001 by American flutist Mary Ann Oleskiewicz in archives of the Sing-Akademie zu Berlin. Here is Quantz’s Flute Quartet No. 1:

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

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A Different Way to See Middle Class Voters – Part II

The Daily Escape:

This is the last in a series from the NJ Grounds for Sculpture – 2017 photo by Wrongo

Today, we continue with G. Mark Towhey’s idea that our political parties no longer work well enough to be relevant to a large segment of middle class voters. He says that the parties must appeal to the voters he calls pragmatists:

The opening episode of the fourth season of Aaron Sorkin’s Emmy-winning TV series The West Wing... [places]…what typical Americans want from government…into perspective for…Toby Zeigler and Josh Lyman, both senior White House staffers in the show. They’re…in a hotel bar and strike up a conversation with a middle-aged “typical American” who’s spent the day touring the University of Notre Dame with his college-aged daughter.

The man and his wife together earn $80,000 a year and, he laments, ‘I never imagined I’d have trouble making ends meet. I spend half the day thinking about what happens if I slip and fall on my front porch. It should be hard. I like that it’s hard. Putting your daughter through college…that’s a man’s job, a man’s accomplishment. Putting your kids through college, taking care of your family… [But] it should be easier, just a little easier, because in that difference is…everything.’

That guy doesn’t want welfare reform, or tax reform. He wants government to focus some of its resources and brainpower on making his everyday life “just a little easier.” The typicals don’t want perfection, just small, concrete steps that improve their lives.

They are the pragmatists.

We shouldn’t confuse “pragmatists” with centrists who are in the space between the Left and the Right. They are not necessarily moderates. Pragmatism isn’t a moderate ideology, but a different prioritization of issues. From Towhey: (emphasis by the Wrongologist)

It’s a focus on the concrete, rather than the abstract. It targets immediate, specific problems rather than deep, systemic causes. It prefers clearly defined and implementable solutions rather than aspirational visions…what if, instead of referring to a place on a Venn diagram, the pragmatic-idealistic divide actually functions like a different political axis?

In other words, don’t appeal to them with policies, speak about solutions. Towhey thinks we should imagine the traditional Left/Right political spectrum on a horizontal line, the “x-axis,” running naturally, from left to right. Now imagine a vertical line that intersects the x-axis at its center. That’s the “y-axis.” At the top of this vertical line, we’ll put people who place a high value on ideals and ideologies that affect society in the abstract. The top end of the y-axis is the “idealist” end. At the opposite end of the y-axis are people who place a high value on practical solutions and actions that help them personally. This is the “pragmatic” end. Here is a representation of Towhey’s matrix:

Prepared by Wrongo from Towhey’s article. Position of politicians by Wrongo

Towhey thinks that the y-axis (Pragmatists to Idealists) shows how most Americans see the world: how a policy affects the world, versus how it impacts me; people who’ve succeeded in the current system, versus people who are struggling in it. Those at the pragmatic end struggle to make it under the status quo. They’re people who want small, but real improvements, a few practical solutions.

Pragmatists are too busy to worry about the future. Whether they’re on the left or right on the x-axis, they share a focus on more immediate needs. And today, voters don’t move along the x-axis as easily as they may have in the past.

If Democrats are to compete in this “pragmatic” voter segment, they need to recognize that the typicals comprise many American citizens, enough to have elected a president in 2016.

The lesson for Democrats is to support leaders who will perform the basics of government exceptionally well. Mayors are great examples of this.

On the national level, health insurance is a great example. Pragmatists want action on health insurance, not on health insurance ideology. If Trump can’t form a coalition with an ideologue GOP Congress, pragmatists would be happy if he worked with pragmatic Democrats, so long as the new health insurance law makes their lives easier. It doesn’t have to be perfect, as it has to be for idealists on the right or the left.

This is the message of pragmatism: less ideology, more action. Small steps, not grand gestures. Results, not principles. And pragmatists are up for grabs. They can, and will vote for Democrats.

They’ll follow a politician who unites them behind a few plans that people think will deliver tangible results. That is how Bernie out-polled Hillary, who had 39 positions on her campaign website.

But, if Democrats can’t make this shift in thinking and leadership, new candidates and new alliances may form, and pragmatists will vote for them.

It could lead to the end of the Democratic Party as a national political power.

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A Different Way to See Middle Class Voters – Part I of II

The Daily Escape:

Emerald Lake, Yoho National Park, British Columbia – 2017 photo by Shelley VanKempen

Yesterday, we discussed how building consensus among voters was the best way to beat the disruptive, and in many ways, destructive efforts by Donald Trump to change our democracy.

When Democrats bring up Clinton’s winning of the popular vote in 2016, they overlook the reality that Democratic congressional candidates lost in 23 districts that Clinton won, including seven in California. Imagine, those voters didn’t want Trump, but liked what their local GOP candidate for Congress stood for enough to split their vote.

Trump won the white vote by 58% to 37%, while 51% of American women also voted for him.

To beat Trump, or whoever might be next, Democrats need to move from following a few failed strategies. First, they have been trying only to win the White House, not the Congress. Being a presidential-only party is a powerful thing, until you lose the White House. Second, they need to move away from identity politics. People know the size of the pie is relatively fixed, and the effort to fix the problems of one group can easily be a zero-sum game for others.

An interesting analysis in American Affairs by G. Mark Towhey says that our traditional view of voters as positioned along a spectrum of left to right is no longer germane. He argues for a new grouping of “pragmatists”, who are everyday middle class people:

This bloc of typical citizens—overstressed, under-informed, concerned more with pragmatic quality of life issues than idealistic social goals—has become a powerful political movement…Conventional political leaders seem to completely misunderstand them…

They are not among those of us who read (or write) long-form blogs or articles. We aren’t typical Americans:

We have time to read…we can pause our breadwinning labor and child-rearing duties long enough to consider hypotheticals and to ruminate…on an idea or two. We may not recognize this as a luxury in our modern world, but we should.

Typical Americans don’t read lengthy articles. They: (brackets by the Wrongologist)

Get up far too early in the morning, after too little sleep, [and] work too hard for too long in a job that pays too little, before heading home, feeding the kids, cleaning the house, and collapsing into bed far too late. He or she has precious little time to consume news…maybe a two-minute newscast on the radio if they drive to work or a few minutes of local TV news…It is through this lens that typical Americans view the world beyond their personal experience and that of friends and family. It’s through this lens that they assess their government and judge their politicians.

Towhey says that these people elected Donald Trump.

We all know that there is a gap between the lifestyles, perspectives, and priorities of the most successful Americans and the “typical Americans.” The people who make the decisions that matter in America are, by definition, our political and business leaders — people who have been successful under the current system. They believe that the system works, because it has worked well for them.

The smart people that lead our politics believe the typicals don’t really know what’s best for them. The typicals want to end immigration, hoping it will increase wages, but we smarties know better. From Towhey:

A politician who promises to deliver the demands of an ignorant electorate is a “populist,” and that is a very bad thing. A politician who equivocates during the election, then does nothing to impede immigration, on the other hand, is a wise man skilled in the art of political campaigning and governance.

Typical Americans have always elected the smart people who call themselves Republicans or Democrats. After each election, the typicals wait for their lives to improve, but nothing changes. Most typical Americans don’t simply divide the world into Left and Right. Instead, they instinctively divide the world into things that affect them and things that don’t, things that help them, and things that won’t.

In 2016, the typicals decided that it was time to elect someone from outside the system. Maybe it won’t work out, but electing smart status quo types hadn’t worked out so well for typical Americans, so what did they have to lose?

(Tomorrow we will talk about the emerging political power group of middle class voters that Democrats need to satisfy if they want to remain relevant, the group that Towhey calls “pragmatists”.)

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Getting Past Charlottesville

The Daily Escape:

Upper Peninsula MI, 2017 – photo by Otto Heldring

There’s a depressing overtone to Charlottesville that suggests the arc of history is the energy behind the story. Is the nation’s soul about to be divided as it has been many times before? Americans get two chits: One for the ballot box, and another for the soap box. Many people feel compelled to use both. The existential question is how best to use them.

The Charlottesville incident left a woman dead, and many others badly injured from a car-ramming. It has the flavor of a “first shot” in a new civil war. And the president’s criticisms of counter-protesters in Charlottesville seem to be far outside the mainstream. Frank Bruni, NYT:

We’re stuck for now with a morally bankrupt plutocrat for president, someone so defensive and deluded that he’s urging more nuance in the appraisal of neo-Nazis.

Still, many Republicans have been reluctant to condemn Trump’s Charlottesville rhetoric. The right would do well to excise any association with the Hitlerites who chanted “blood and soil” in their torch-lit pseudo Nuremberg rally in Virginia. America remains the land of the free and the home of the brave, but Nazis? Nein, Danke.

We have two conflicts arising from Charlottesville:

  • Does every group still have the right to assemble (peacefully) and speak their minds?
  • What are we to do about the symbols from our divided past?

The 1st Amendment protects most speech, but not the sensibilities of those who are exposed to it. Some speech is guaranteed to be offensive. America has lived with neo-Nazis, the KKK, et al for Wrongo’s entire lifetime, and has survived it, no matter how odious. Even the ACLU assisted the neo-Nazis in Charlottesville.

But there are recognized limits. No one has a right to incite violence. Individuals have no right to defame someone. Some of the limits are easier to define than others: The concept of inciting a riot can lead to a subjective reading of the facts and the application of nebulous standards.

Today’s wrinkle are the armed demonstrators. They imply that a peaceful assembly could be placed at grave risk at any moment. It shouldn’t be difficult to foresee that local people will come out to confront neo-Nazis and white supremacists that are marching in their town. That creates even greater risk of physical violence, and requires that local police are well-trained and disciplined.

Second, there are Confederate statues all over America. The white supremacists who went to Charlottesville to “protect” Lee’s statue need to hear that we will not re-litigate the Civil War. The south’s and the nation’s history are what they are. The Civil War should be given due weight, learned from, pondered, and not shunted aside. Are Robert E. Lee’s existence, deeds, and historical relevance news to anyone?

A suggestion: In Bulgaria, the USSR monuments were removed and placed in a single museum park. The museum’s collection covers the period 1944 to 1989, from the introduction of communism in Bulgaria, to the end of the totalitarian regime. Herding those statues into one place makes a statement that speaks loudly about the era, and how the USSR deprived Bulgarians of their rights.

Maybe a few such statue parks could have a similar effect here.

Let’s not get sidetracked from the most important issue before us: How we remake the US economy so that it provides a decent standard of living and expanding opportunity to as many people as possible.

There are plenty of “deplorables” who would benefit from universal health care, inexpensive college tuition for their children, infrastructure that worked, and good-paying jobs. Uniting the US population around programs that achieve these goals would do much to subdue the angry ethnic divisions that these “political entrepreneurs” are trying to foment.

Moreover, this program is not of the right or the left.

It’s a path toward political stability and a better society – one that would allow people the opportunity to develop into contributing, thoughtful citizens, capable of fully participating in the Republic.

Ok, a tune to help you think about peaceful assembly and whether the statues should stay or go. Here is Depeche Mode with “Where’s The Revolution” from their 2017 album “Spirit”. Wrongo didn’t know they were still working, much less producing relevant tunes:

Takeaway Lyric:

You’ve been kept down
You’ve been pushed ’round
You’ve been lied to
You’ve been fed truths
Who’s making your decisions?
You or your religion
Your government, your countries
You patriotic junkies

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

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Silicon Valley Will Escape the Revolution

The Daily Escape:

Waterfall Jumping Competition (from 69 feet up), Bosnia, August 5th – photo by Amel Emric

Antonio Garcia Martinez:

Every time I meet someone from outside Silicon Valley – a normy – I can think of 10 companies that are working madly to put that person out of a job…

Well, that makes most of us “normies”. In context, we are the people who do not work in Silicon Valley. We are the people who use technology, rather than invent technology, and many of us ought to see technology as a threat to our jobs and our place in society.

We are not in the beautiful peoples’ club. Our names are not on the list. We’re not software engineers who work just to pay the taxes on their company stock.

And who is this Martinez guy? From Mashable:

He’d sold his online ad company to Twitter for a small fortune, and was working as a senior exec at Facebook (an experience he wrote up in his best-selling book, Chaos Monkeys). But at some point in 2015, he looked into the not-too-distant future and saw a very bleak world, one that was nothing like the polished utopia of connectivity and total information promised by his colleagues.

Martinez pointed out that there are enough guns for every man, woman and child in this country, and they’re in the hands of people who would be hurt most by automation:

You don’t realize it but we’re in a race between technology and politics, and technologists are winning…

Martinez worries about how the combination of automation and artificial intelligence will develop faster than we expect, and that the consequences are lost jobs.

Martinez’s response was to become a tech prepper, another rich guy who buys an escape pod somewhere off the grid, where he thinks he will be safe from the revolution that he helped bring about. More from Mashable: (brackets by the Wrongologist)

So, just passing [after turning] 40, Antonio decided he needed some form of getaway, a place to escape if things turn sour. He now lives most of his life on a small Island called Orcas off the coast of Washington State, on five Walt Whitman acres that are only accessible by 4×4 via a bumpy dirt path that…cuts through densely packed trees.

He’s not alone. Reid Hoffman, co-founder of LinkedIn told The New Yorker earlier this year that around half of Silicon Valley billionaires have some degree of “apocalypse insurance.” Pay-Pal co-founder and venture capitalist Peter Thiel recently bought a 477-acre escape hatch in New Zealand, and became a Kiwi. Other techies are getting together on secret Facebook groups to discuss survivalist tactics.

We’ve got to expect that with AI and automation, our economy will change dramatically. We will see both economic and social disruption until we achieve some form of new equilibrium in 30 years or so.

It will be a world where either you work for the machines, or the machines work for you.

Robert Shiller, of the famous Case-Shiller Index, wrote in the NYT about the changing meaning of the “American Dream” from the 1930s where it meant:

…ideals rather than material goods, [where]…life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement…It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable…

That dream has left the building, replaced by this:

Forbes Magazine started what it calls the “American Dream Index.” It is based on seven statistical measures of material prosperity: bankruptcies, building permits, entrepreneurship, goods-producing employment, labor participation rate, layoffs and unemployment claims. This kind of characterization is commonplace today, and very different from the original spirit of the American dream.

How will the “Normies” survive in a society that doesn’t care if you have a job? That refuses to provide a safety net precisely when it celebrates the progress of technology that costs jobs?

The Silicon Valley survivalists understand that, when this happens, people will look for scapegoats. And we just might decide that the techies are it.

Today’s music is “Guest List” by the Eels from the 1996 album “Beautiful Freak”:

 Takeaway Lyric:

Are you one of the beautiful people
Is my name on the list
Wanna be one of the beautiful people
Wanna feel like I’m missed

Are you one of the beautiful people
Am I on the wrong track
Sometimes it feels like I’m made of eggshell
And it feels like I’m gonna crack

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

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Our Democracy in its 242nd Year

The Daily Escape:

Three Sisters, Alberta Canada

… the preservation of the sacred fire of liberty, and the destiny of the Republican model of Government, are justly considered as deeply, perhaps as finally staked, on the experiment entrusted to the hands of the American people. — George Washington’s First Inaugural Address (1789).

It is worth thinking about the state of our Democracy on our 241st birthday and how the American people are handling Washington’s experiment. At the time of the country’s founding, seven of the 13 states, representing 27% of the population, could command a majority in the Senate. Today, more than half of the US population lives in just nine states, while the other half of America lives in the other 41 states. The voters in the biggest nine states have equal representation in the House, with 223 Representatives, while the other half has 212.

But in the Senate, it’s a different story. Because of the population concentration, the half of the US living in the largest nine states are represented by just 18 of 100 Senators. The other half of the country living in the other 41 states have 82 Senators, more than four times as many. Today, with the filibuster, 21 of the 50 states, representing 11% of the population, can muster the 41 votes necessary to reject a bill, or to stop the confirmation of a Supreme Court Justice.

You don’t have to be good at math to see how much less representation in Congress those living in the big states have today. The four smallest states have eight Senators combined, giving California, with two Senators, only a quarter as many as Alaska, North Dakota, Vermont and Wyoming, even though California has 14 times the combined population of these states.

Wrongo raises this as a structural example of the now near-permanent political division in America. It is difficult to see what big idea, or great emotion, can bridge that divide and bring us back to some semblance of unity.

Beyond structural divisions, there are huge divisions of policy and perception. A new Marist poll for PBS NewsHour and NPR News finds that 70% of Americans believe the country has become less civil since the Trump regime came to power, with 61% saying they have little or no trust in the White House right now.

(Marist contacted 1,205 US adults using landline and mobile phones between June 21 and June 25. There is a 2.8% margin of error).

The poll shows that Republicans in particular are very receptive to Trump’s attacks on the media, and a healthy chunk of Republicans want the media restricted. When asked if they trust the media, only 30% of US adults overall said they do trust them to at least a “good” amount. But there are stark differences along party lines:

  • 9% of Republicans say they trust the media, while 56% of Democrats and 28% of Independents say they do.
  • And on the Constitutional right to freedom of the press, four out of 10 Republicans said the nation had “gone too far in expanding the right,” while two out of 10 Independents and one out of 10 Democrats agreed with that statement.
  • Overall, a quarter of US adults said the press had too many rights.
  • 52% said the nation should preserve the right to protest and criticize the government. But 41% percent of Republicans think the right to protest should be scaled back. Only 7% of Democrats and 11% of independents said they feel the same way.

When asked about the right to vote, six out of 10 Americans overall think that our right to vote is fine the way it is. But among Republicans, 25% think the US has gone too far in expanding that right.

Some of the cross-tab results are dismal: 

  • Among people making less than $50,000 a year, only 1 in 4 trust the media at all.
  • More 18-29 year olds trust Trump (27%) than trust the media (22%).
  • Meanwhile, 40% of Trump supporters think America has gone too far in allowing people to criticize the government.

Let that sink in, and then try to think about how we ever battle back to a middle ground where America has a chance to once again row the boat in the same direction.

On to music. Here are the Grateful Dead with their take on “Smokestack Lightning”, originally recorded by Howlin’ Wolf in 1956. The Dead performed this 18+ minute version in February, 1970 at the Fillmore East:

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

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Buffett: Focus on Lower Health Care Costs, Not Corporate Taxes

The Daily Escape:

Ribbon Chapel, Onomichi Japan – photo by Koji Fujii

Andrew Ross Sorkin wrote about Warren Buffet and the Berkshire Hathaway annual meeting in Omaha. Thousands of people attend these meetings, which are known as “Woodstock for capitalists.” Sorkin reports that Buffet made this comment:

The tax system is not crippling our business around the world.

Sorkin said that Mr. Buffett, was blunt and pointed, implicitly rebuking his fellow chief executives, who have been lobbying the Trump administration and Washington lawmakers to lower corporate taxes. Buffett said that those who have been single-focused on seeking relief from their tax bills would be smart to shift their attention to health care costs, which are growing and swallowing evermore corporate profits. The Kaiser Family Foundation reports that 49% of Americans, about 156 million, are insured by their employer. More from Sorkin:

The need for corporate tax relief has become the lodestar of the corner office, with CEOs rhapsodizing  over President Trump’s plan to try to stimulate growth by cutting tax rates for businesses.

But as Mr. Buffett pointed out, these chief executives are missing the bigger issue: As a percentage of our GDP, the cost of maintaining our American health care system is rising at an alarming rate. And Corporate America pays a big (and growing) chunk of that bill.

Buffett wasn’t talking about the cost of health insurance, which is a fraction of the total cost of health care. He suggests that today’s corporate tax rates are a distraction, not a true impediment to growth:

If you go back to 1960 or thereabouts, corporate taxes were about 4% of GDP…And now, they’re about 2 % of GDP.

While tax rates have fallen as a share of gross domestic product, health care costs ballooned:

About 50 years ago, health care was 5% of GDP, and now it’s about 17%.

Buffett is a smart guy. He raises an argument for focusing on the underlying costs of our health care system, something that goes far beyond the debate around the Affordable Care Act, or what will replace it. Buffett says that our global competitiveness has fallen largely because our businesses were paying far more for health care — a tax by another name — than those in other countries.

As Buffett said: (brackets by the Wrongologist)

When American business talks about [corporate taxes] strangling our competitiveness, or that sort of thing, they’re talking about something that as a percentage of GDP has gone down…While medical costs, which are borne to a great extent by business, have swelled.

Here are the facts:

  • In 1960, corporate taxes in the US were about 4% of GDP. The percentage fell steadily, reaching a bottom in 1983 before rising slightly over the last few decades. Today, it is 1.9%.
  • In the meantime, health care costs as a percent of GDP have skyrocketed. Today our health care costs are 17.1% of GDP, up from 13.1% in 1995.
  • Germany’s cost is 11.3%, up from 9.4% during the same period. Japan’s is 10.2%, up from 6.6%. Britain’s health care costs are 9.1% of GDP, up from 6.7% percent in 1995.

That makes our health care cost disadvantage far greater than our tax differential. It harms American companies in particular, since they bear such a large share of those costs, which firms in our competitor countries do not. US Corporations spend $12,591 on average for coverage of a family of four, up 54% since 2005, according to a study by the Kaiser Family Foundation.

But Congress avoids the issue, and CEOs don’t talk about it. A final quote from Warren:

It’s very tough for political parties to attack it…it’s basically a political subject…

In fact, Buffett’s partner, Charlie Munger, is the rare Republican (Buffett is a Democrat) who has advocated for a single-payer health care system. Under his plan, the US would enact a sort of universal type of coverage for all citizens — perhaps along the lines of the Medicaid system.

Which brings Wrongo to his final point: Medicaid expansion is the one part of Obamacare that can be said unequivocally to work. It’s a single payer program funded by the Federal government. So it’s bitterly ironic that the Republican’s reaction to Obamacare is to assault and roll back an existing Federal program, from LBJ days.

Of course, kicking poor people who benefit from Medicaid will always be popular with Republicans. So, Republicans, by making Medicaid worse, will try to restore their natural order of things.

Lazy, uninformed voters = Lazy, uninformed legislators = Lazy, uninformed policy.

It’s that simple.

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Is Taxing Robots a Solution to Fewer Jobs?

The Daily Escape:

(Slot canyon with dust devil – photo by Angiolo Manetti)

Yesterday, the Dutch voted in an election pitting mainstream parties against Geert Wilders, a hard-right, anti-Islam nationalist whose popularity is seen as a threat to politics-as-usual across Europe, and possibly, as an existential threat to the EU.

Wilders, who wants to “de-Islamicize” the Netherlands and pull out of the EU, has little chance of governing, as all of the mainstream parties have already said they won’t work with him. Given Holland’s complicated form of proportional representation, up to 15 parties could win seats in parliament, and none are expected to win even 20% of the vote. OTOH, polls show that four in 10 of the Netherlands’ 13 million eligible voters were undecided a day before voting, and there is just 5 percentage points separating the top four parties, so Wilders could surprise everyone.

As Wrongo writes this, the Dutch election results are not known, but PBS NewsHour coverage on Tuesday surfaced a thought about taxing robots. PBS correspondent Malcolm Brabant was interviewing workers in Rotterdam:

Niek Stam claims to be the country’s most militant labor union organizer. He says the working class feel insecure about their prospects because of relentless automation and a constant drive to be competitive. The union is campaigning for robots to be taxed.

Brabant then interviewed a worker:

Robots do not buy cars. Neither do they shop for groceries, which leads to a fundamental question: Who’s going to buy all these products when up to 40% of present jobs vanish?

This isn’t an entirely new idea. Silvia Merler, blogging at Bruegel, says:

In a recent interview, Bill Gates discussed the option of a tax on robots. He argued that if today human workers’ income is taxed, and then a robot comes in to do the same thing, it seems logical to think that we would tax the robot at a similar level. While the form of such taxation is not entirely clear, Gates suggested that some of it could come from the profits that are generated by the labor-saving efficiency…and some could come directly in some type of a robot tax.

The main argument against taxing robots is made by corporations and some economists (Larry Summers), who argue that it impedes innovation. Stagnating productivity in rich countries, combined with falling business investment, suggests that adoption of new technology is currently too slow rather than too fast, and taxing new technology could exacerbate the slowdown.

It can be argued that robots are property, and property is already taxed by local governments via the property tax. It might be possible to create an additional value-added tax for robots, since an income tax wouldn’t work, as most robots are not capable of producing income by themselves.

Noah Smith at Bloomberg argues that the problem with Gates’ basic proposal is that it is very hard to tell the difference between new technology that complements human work, and new technology that replaces them. Shorter Noah Smith: Taxation is so hard!

Why are Western economies stagnant? Why has wage growth lagged GDP growth? Automation is certainly a key factor, but rather than point the finger at the corporations who continually benefit from government tax policies, let’s just assign blame to an object, a strawbot, if you will. That way, we won’t look too carefully at the real problem: The continuing concentration of economic and political power in the hands of fewer and fewer corporations.

Automation isn’t the issue, tax laws that allow economic treason by corporations in their home countries are the issue.

Why is nationalism on the march across the globe? Because fed-up workers see it as possibly the only answer to the neoliberal order that is destroying the middle class in Western democracies.

Let’s find a way to tax robots. Something has to offset Trump’s tax breaks for the rich.

Now, a musical moment. Did you know that “pre-St. Patrick’s Day” was a thing? Apparently, some dedicated celebrators prepare for the day itself by raising hell for up to a week beforehand. With that in mind, here is some pre-St. Pat’s Irish music, with Ed Sheeran singing “Nancy Mulligan” a love song about his grandparent’s marriage during WWII, against the wishes of her parents, and despite their Catholic/Protestant differences:

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

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First Person Report From the Women’s March

(Below is a guest post from Nicole Dodd, a recent graduate from UC Santa Barbara. She has moved to Washington DC to begin a career in government service. The photos below are ©Nicole Dodd)

“Women’s rights are human rights.” Hillary Rodham Clinton, 1995

This past Saturday, I was one of almost 500,000 women and men participating in the Women’s March on Washington. From 8 am until well after 8 pm, the streets were crowded with women wearing pink ‘pussy hats,’ carrying indignant signs, and chanting out against our newest president.

The movement was powerful, and greatly exceeded expectations: the Washington March itself had almost 2.5x the amount of people it was projected to have, and the sister marches across the States and the world had incredible turnout. After having seen so many red “Make America Great Again” caps and rioters in the streets just twenty-four hours earlier, I was encouraged to see an influx of pink hats participating in a protest that remained peaceful and could spark a global movement.

From an outside perspective, it may seem that the Women’s March had no direction and no goal. Millions of people took to the streets to protest, but for what? On the Women’s March website, it lists the ‘unifying principles’ of the march: ending violence, reproductive rights, LGBTQIA rights, worker’s rights, civil rights, disability rights, immigrant rights, and even environmental justice. From what I saw, participants in the March held signs that advocated for each of the unifying principles of the March. However, the heart of the matter is this: President Trump was elected without a majority popular vote, and while he has promised to be ‘a president for all Americans,’ his words and actions have proven that he will not.

While January 21st was an important first step in the fight against the Orange Overlord’s administration, the fight in no way stops here. As a pragmatist, I realize that many women and men will walk away after this weekend thinking that they’ve completed their democratic duty by simply showing up and chanting angrily for a few hours.

Despite this, I am extremely hopeful. Many speakers at the Washington March implored the participants to get politically active. We were told to write our representatives every single day, join and become active in the organizations that we were working to support, and finally, to run for public office. Protesters held signs echoing those same sentiments, urging us to vote and to get involved. To top it off, the Women’s March website published an article outlining what exactly we can do during Trump’s first 100 days to make sure our voices are heard in the Capitol.

In the same way that it is our democratic responsibility to vote in local, state and national elections, it is also our democratic responsibility to peacefully protest and make sure that our representatives are accurately representing our interests. It’s hard to evaluate if the Women’s March will lead to concrete actions – the commitment of the crowd could easily be attributed to mob mentality, and people lose resolve over time. Still, the Women’s March was the largest protest to ever occur over the inauguration of a US President, and that fact cannot go unnoticed. My hope is that, with clear guidance and resources from the Women’s March administrators, the majority of participants in Saturday’s movement will abandon their excuses and take it upon themselves to exercise their democratic rights and responsibilities.

I can promise you that this protester will refuse to sit by idly, and will take action.

My favorite chant from Saturday sums up the movement perfectly:  “This is what democracy looks like”. Here are a few photos from the DC March. This one shows size of the crowd:

Sign from person near the Smithsonian:

One of the main purposes of the March was to address reproductive rights:

I’m with her” sign shows marchers’ solidarity. View towards the Washington Monument:

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