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The Wrongologist

Geopolitics, Power and Political Economy

Monday Wake Up Call – April 1, 2019

The Daily Escape:

Racka Sheep, Hungary, April 2017 – photo by Laszlo Balogh.

The Trump legacy keeps on giving. Forbes reports that when Trump’s tax bill passed in late 2017, it included:

“A new tax on litigation settlements: no deduction for legal fees…..That means many plaintiffs must pay taxes even on monies their attorneys collect. Of course, the attorneys must also pay tax on the same money.”

Robert W. Wood, a Forbes contributing writer who follows taxes, cites the case of Edwin Hardeman who won $80.5 million in a suit against Monsanto’s Roundup. From Forbes:

“Hardeman was awarded a bit over $5 million in compensatory damages, and $75M in punitive damages. The combined contingent fees and costs Mr. Hardeman pays his attorneys might total as much as 50%. If so, the plaintiff would get to keep half, or $2.5 million of the $5 million compensatory award. Since it is for his…non-Hodgkin’s lymphoma, that part for physical injuries should not be taxed. Then, of the $75 million punitive award, $37.5 million goes to legal fees and costs, and $37.5 million to Hardeman. So before taxes, the plaintiff’s take home is $40 million.”

But because of Trump’s new math, Hardeman’s $75 million punitive damages award is fully taxable, with no deduction for the fees he pays to his lawyer. Between federal taxes of 37% and California taxes of about 13.3%, Hardeman could lose about 50% to the IRS and California Franchise Tax Board. He would still owe another $37.5 million to his lawyers, so his after-tax take from an $80 million verdict only $2.5 million.

A $2.5 million award isn’t chump change, but this is another effort by corporations and Republicans to discourage law suits seeking punitive damages by plaintiffs. Notably, compensatory damages for physical injuries or physical sickness are still tax-free, but not punitive damages.

Doesn’t paying taxes on money you don’t receive seem un-American? The reach of corporate interests into our laws cannot be overstated. It will take a generation to reverse all of the inroads corporate lobbyists have made into our tax laws alone.

So, wake up America! It’s time to change capitalism so that it works for the people, not just for the owners and managers of corporate America. Bill Maher had a great discussion on his show “Real Time“. He echoed FDR’s “Four Freedoms” while commenting on how countries with a higher socialism-to-capitalism mix rank as happier than the US in the recent World Happiness Report. Maher says;

“Happiness isn’t only about what you have. It’s also about what you don’t have to worry about,”

Maher recommends rebranding Capitalism Reform as “Capitalism Plus.” Because, “It’s a plus when you get sick and you can focus on getting better instead of not going broke“. Or, ending up sleeping under an overpass.

Maher ends with:

“Does pure unbridled capitalism work? I guess that depends whether you’re on the board of Boeing, or onboard a Boeing.”

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

 

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We’re Being Sold a Story

The Daily Escape:

Plague Fort (or Fort Alexander), St. Petersburg, RU. It was built between 1838 and 1845 on an artificial island in the Gulf of Finland. From 1899 to 1917, the fort housed a research lab focused on plague and other bacterial diseases. It was abandoned in 1983.

The Economist has an 8500-word interview with the documentary film maker, Adam Curtis. For 30 years, Curtis has produced documentaries on politics and society. Apparently, he has emerged as a cult-hero to the UK’s young thinkers trying to comprehend our chaotic world.

His latest film, “HyperNormalisation” (you can view the trailer here, or watch the entire 2+hour documentary here) argues that governments, financiers, and technological utopians have, since the 1970s, structured a simple “mostly fake world” for us, run by corporations, and kept stable by politicians.

Wrongo was attracted to this in part because Curtis takes the title of his documentary from work by a Russian historian, Alexei Yurchak, now a professor at Berkley. He introduced the word in his book Everything Was Forever, Until It Was No More: The Last Soviet Generation (2006). Yurchak says that in the 1980s, everyone from the top to the bottom of Soviet society knew that it wasn’t working. They knew that it was corrupt. They knew that the bosses were looting the system. They knew that the politicians had no vision. And they knew that the Party bosses knew they knew that.

Everyone knew it was fake, and they just accepted the fakeness as normal. Yurchak coined the term “HyperNormalisation” to describe that feeling. When Wrongo was in Russia in October, he heard a few Russians express this exact idea about the end stages of the Soviet Union in the 1980s.

The fall of the Soviet Union didn’t stop them from despising Gorbachev, who ended the state economy and replaced it with a less-than-functioning market economy. They longed for the simpler state of affairs, with less to think about, and less to worry about. Where everyone knew that the system didn’t work, but they all had jobs, and there was food in the markets.

2018 America is far from being the Soviet Union, but this is exactly the way the US is today. In most ways, everything the government touches, like elections, environment, tax policy, and health policy, could be substantially better for all of our citizens.

We all know everyone is unhappy, but everyone just says, “It’s the system. We can’t change it.”

A quote from Curtis:

There is a sense of everything being slightly unreal; that you fight a war that seems to cost you nothing and it has no consequences at home; that money seems to grow on trees; that goods come from China and don’t seem to cost you anything; that phones make you feel liberated, but that maybe they’re manipulating you, but you’re not quite sure.

He talks about the concept of “risk”, and how it entered our discussion, migrating from finance to politics in the 1980s. Today, everything has become about risk analysis, and how to stop bad things happening in the future: (emphasis by Wrongo)

Politics gave up saying that it could change the world for the better and became a wing of management, saying instead that it could stop bad things from happening. The problem with that is that it invites all the politicians to imagine all the bad things that could possibly happen—at which point, you get into a nightmare world where people imagine terrible things, and say that you have to build a system to stop them.

Can the people take power back from corporations and their captured politicians? Maybe, maybe not. People like stability and they fear instability. We saw that with Gorbachev in Russia in the 1980s.

But if we are to move past the collusion of corporations and politicians trying to keep us accepting things we know are unacceptable, we need to have better politicians.

The job of a master persuader is to tell a story that says, “Yes this is risky, but it’s also thrilling, and it might lead to something extraordinary”. The persuader must say, “Yes, I understand your fears but look, what’s happening isn’t right. We can do better than this”.

People are asking, “What is our future? What is this existence for?

  • If you live in West Virginia surrounded by people taking opioids, you surely want to know what all that sorrow is for
  • If you are a recently laid-off GM worker, you’re asking the same thing
  • If you’re a student with $75k in student debt, and a cog job, you’re asking the same thing
  • If you’re a plumber with no health insurance and pancreatic cancer, you’re asking the same thing
  • If you’ve worked hard to elect someone who just lost because of ballot-stuffing, you’re asking the same thing

These are the questions that our politicians should be answering.

Do you see someone who can bring people together behind a better vision?

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Houston’s Petrochemical Industry Fails to Protect City

The Daily Escape:

Ranwu Lake Campsite, Tibet photo by Arch-exist Photography. Ranwu Lake is a tourist attraction in SE Tibet, and is called the “Tibetan Switzerland”.

Life in the age of corporatism resembles life in the food chain. In a potentially disastrous outcome from the Harvey flooding, a chemical plant in Crosby, Texas belonging to French industrial giant Arkema, has had several explosions of peroxide and other volatile chemicals. From the NYT:

The company had already ordered all workers to leave the damaged plant, and Harris County ordered the evacuation of residents within a 1.5-mile radius.

These chemicals have to be refrigerated. When the plant’s warehouses lost power, they transferred the product to diesel-powered refrigerated containers. But later, the backup generators were swamped by flood waters, so cooling was lost, and the explosions began. On Tuesday, the company released a statement:

Refrigeration on some of our back-up product storage containers has been compromised due to extremely high water, which is unprecedented in the Crosby area. We are monitoring the temperature of each refrigeration container remotely….while we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real.

The rains are over, but the chemical fires linger. Richard Rowe, the CEO of Arkema’s American operations said:

The company has no way of preventing chemicals from catching fire or exploding at its heavily flooded plant…the company has no way to prevent…this worst case outcome.

The CEO says, “No way to prevent explosion“. Back in the olden days, that would be known as a “major design flaw”. Most engineers would have recommended placing the generator sets above at least the 100-year high water mark, just to prevent this kind of fun event. They would also put the diesel tanks above that water line.

Maybe next time. The Houston Chronicle had this amazing map of chemical plants in the Houston area:

In case it is hard to read the map legend, the yellow markers are for petrochemical plants that have a “medium” potential for harm based on their location within the 100-year flood plain. The red markers have a ”high” risk for harm. Houston’s ship channel and the surrounding area along the Gulf coast represent about 40% of U.S. petrochemical manufacturing. At least 25 Houston-area plants have either shut down, or experienced production issues due to Hurricane Harvey’s flooding.

Any guesses that the concentration of plants in the Houston flood zone will cause our corporate overlords to think about relocation of a few of these sites? Or, how they best secure them from the next 500-year flood, which looks like it will happen in say, the next five years? From Forbes:

Harvey was a wake-up call, reminding us that it is time to take a more serious look to ensure the safety of the petrochemical industry and the public at large, just as the nuclear power industry has done in reaction to the Fukushima disaster.

But Arkema has worked hard to change EPA rules in their favor. David Sirota reports that the new rules, which were set to go into effect this year, were halted by the Trump administration after a lobbying campaign by Crosby plant owner Arkema and its affiliated trade association, the American Chemistry Council:

Those rules — which would have taken effect on March 14 — were blocked by EPA administrator Scott Pruitt. The move was a big win for the chemical industry that has spent more than $100 million supporting federal lawmakers since 2008.

Apparently, sacrifices must be made in the name of making America great.

The closures are not just disrupting markets; they’re also causing the release of toxic pollutants that pose a threat to human health. The NYT reports that damaged refineries and oil facilities have already released more than two million pounds of hazardous substances into the air.

The sheer number of facilities around Houston that have to come back online at the same time creates another huge emissions problem. From City Lab:

The real problem is that the plants are allowed to operate so close to residential areas in the first place. Houston’s lack of zoning regulations have been front-and-center in discussions about why Harvey has been so terrible for the city, and that’s no different in the discussion about air pollution.

Not to worry, Houston, your petrochemical corporations will be fine. They have insurance. They will get to write off any damage against their profits. They will get tax incentives to rebuild, or if they choose to move, tax credits from the town down the road.

The people? Most will have no insurance to rebuild their homes or to purchase new furniture.

And the pollution impact? A cost of doing business for the petrochemical industry.

Unfortunately, for the people, pollution’s about their health. And there will be no help forthcoming for the most vulnerable Houstonians.

Have a slice of Texas-themed music: Here is Robert Earl Keen, doing “Corpus Christi Bay” from his 1993 album “A Bigger Piece of Sky”:

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New FCC Chair Guts Net Neutrality

Today we premiere a new feature, the “Daily Escape”, a photo that hopefully will take you away from all that is wrong just now. Some photos will be by Wrongo, but most will be from professionals. They will not have any particular relevance to the topic of the day. They are here to help you pause for a moment, and go to a different place.

Today’s Daily Escape: George Peabody Library, Johns Hopkins University

Now, on to what’s wrong…

The principle that all Internet content should be treated equally as it flows to consumers is called “net neutrality”. Net neutrality looks all but dead under Trump’s new head of the FCC. From the NYT:

In his first days as President Trump’s pick to lead the Federal Communications Commission, Ajit Pai has aggressively moved to roll back consumer protection regulations created during the Obama presidency.

Mr. Pai took a first swipe at net neutrality rules designed to ensure equal access to content on the internet. He stopped nine companies from providing discounted high-speed internet service to low-income individuals. He withdrew an effort to keep prison phone rates down, and he scrapped a proposal to open the cable box market to competition.

Before he became FCC Chair, Pai served as an FCC commissioner, one of the Republican minority under the Obama administration. In that role, he opposed reclassifying broadband providers as common carriers, which allows the agency to regulate them like utility companies, a necessary step if the FCC was to enforce net neutrality rules. That reclassification might be next to go.

Today consumers can pay Internet service providers for a higher-speed Internet connection, but regardless of the download speed they choose, under new Chair Pai’s plan, they might get some content faster, depending on how much their content provider has paid the service provider.

Tim Wu at the New Yorker offered some insight: (emphasis by the Wrongologist)

With broadband, there is no such thing as accelerating some traffic without degrading other traffic. We take it for granted that bloggers, start-ups, or nonprofits on an open Internet reach their audiences roughly the same way as everyone else. Now they won’t. They’ll be behind in the queue, watching as companies that can pay tolls to the cable companies’ speed ahead

The new rule gives broadband providers what they’ve wanted for about a decade: the right to speed up some traffic at the expense of others. The motivation is not complicated. The broadband carriers want to make more money for doing what they already do. Never mind that American carriers already charge some of the world’s highest prices for a service that costs less than $5/month to provide.

In the large-scale server market, Internet traffic is nearly free. In that market, a terabyte of data costs about $1/month. That’s 1000 gigabytes/month, if you are not familiar with usage of that size.  The home user pays 10x to as much as 1000x more than that per month; $100 for 100 gigabytes of traffic is not uncommon. A recent offer from AT&T for 45 M/bit internet is $30/month, which includes 1TB of data/mo. So 1000 gigabytes costs $30, or $1 per 33 gigabytes, but, if you exceed ATT’s limit, the price goes up dramatically: You would have to pay $10 per each additional 50 GB.

No volume discount for you, but Netflix will get one.

Requiring access fees for faster service will be good for Netflix, since it won’t have to worry as much about competitive traffic, particularly from small companies. The ultimate result will be to lock in the current set of incumbents who control the internet, ushering in the era of big, fat, (and possibly) inefficient monopolies.

Republicans and big corporations like to say that they are against regulation because the free market should rule. That economic efficiency brings lower prices.

It is always a lie.

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Our New Political Majority

(This is the last column for this week. We will resume on Sunday with cartoons. Everyone has reasons to be thankful, so take the time to talk about them with your loved ones, or your close friends this week.)

Last weekend, like most Americans, Wrongo spoke with friends and family about how we got to the disappointing political place where we are today.

Der Spiegel Online asked: If you think back ten years, could you have imagined in 2006 that America’s reality would be Donald Trump as president of the US? Probably not, but ten years ago:

  1. Economic growth and job growth both fell in 2006 as the residential housing boom came to an end.
  2. Wages were the smallest share of national income since the government began compiling the statistic in 1947.
  3. Consumer debt soared to new heights, while consumer debt payments rose to the highest on record.

Those were dispatches from the ongoing war that corporations and neoliberal economic elites made on our citizens. And it didn’t stop there. After 2006, we had the financial meltdown and the Great Recession. Banks had to be bailed out. Millions of people lost their jobs. Debt grew, and faith in government’s willingness and ability to improve the fortunes of their citizens evaporated.

The clear losers were workers in traditional economic sectors, particularly in manufacturing. According to a study by economists David Autor, David Dorn and Gordon Hanson, the increase in imports from China have resulted in the loss of 1.5 million manufacturing jobs since the early 1990s.

But automation had a greater impact: In total, some 6.9 million manufacturing jobs were lost in the US between the early 1990s and 2011. For those who have lost their jobs, it seems that their political representatives have forgotten them. Particularly when establishment Democrats and Republicans continue to push for more trade, by which they mean more imports from our global corporations who continue to export those jobs to lower-wage countries.

In 2016, despite substantially better economic times, many American still worried about losing their jobs and their financial security. They saw themselves as the losers in a game that only helps corporations and the elites. This domination of our politics by the economic elites has produced a defacto disenfranchisement of everyone else.

A new political map has emerged, one that doesn’t neatly fit into the Left vs. Right model of our politics. The new dividing line is between those who support, and those who oppose, America’s economic elites and their neoliberal policies. Those on both sides of the old ideologies who distrust the elites are connected by their fear of being left behind. This was clear in 2016 in those precincts where Trump outperformed Romney, and where Clinton underperformed Obama.

This is today’s landscape, but in 1998, Richard Rorty, an American philosopher who died in 2007, wrote “Achieving Our Country” which predicted our current political situation. According to the NYT, the following fragment of the book has been retweeted thousands of times since the election:

Members of labor unions, and unorganized unskilled workers, will sooner or later realize that their government is not even trying to prevent wages from sinking or to prevent jobs from being exported. Around the same time, they will realize that suburban white-collar workers — themselves desperately afraid of being downsized — are not going to let themselves be taxed to provide social benefits for anyone else.

At that point, something will crack. The nonsuburban electorate will decide that the system has failed and start looking around for a strongman to vote for — someone willing to assure them that, once he is elected, the smug bureaucrats, tricky lawyers, overpaid bond salesmen, and postmodernist professors will no longer be calling the shots.

One thing that is very likely to happen is that the gains made in the past 40 years by black and brown Americans, and by homosexuals, will be wiped out. Jocular contempt for women will come back into fashion…All the resentment which badly educated Americans feel about having their manners dictated to them by college graduates will find an outlet.

Rorty’s basic contention is that the left abandoned its core philosophy in favor of a neo-liberal worldview that promoted globalism and corporatism. Rorty said in a lecture in 1997:

This world economy will soon be owned by a cosmopolitan upper class which has no more sense of community with any workers anywhere than the great American capitalists of the year 1900.

Mr. Rorty’s most prescient words:

The cultural Left has a vision of an America in which the white patriarchs have stopped voting and have left all the voting to be done by members of previously victimized groups.

Rorty said that in 1998. And in 2016, it was Hillary Clinton’s failed election strategy.

What’s so striking about “Achieving Our Country” is Rorty’s argument that both the cultural and political left abandoned economic justice in favor of identity politics, ignoring too many economically disadvantaged Americans.

According to voter turnout statistics from the 2016 election, 58.4% of eligible voters actually voted (135.2 million). Clinton received about 63.7 million votes (27.5% of eligible voters) to Trump’s 62 million, (26.8%) while 9.5 million votes went to others.

This means that 41.6% of America voted for nobody, far outweighing the votes cast for Trump or Clinton.

That the majority of Americans did not vote is not because they don’t care. They voted no confidence in a political system that forgot about them a long time ago.

A minority elected Trump. The majority voted against our neoliberal political system.

 

(BTW, Tuesday was the 53rd anniversary of JFK’s assassination. While it remains fresh in Wrongo’s mind, it hardly registers in the minds of the press or the public. A new idea on Oswald’s motives appeared in the LA Times. Take a look.)

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100% of Jobs Created Since 2005 Were For Contractors or Temps

And that’s why so many Americans are scared. Neil Irwin in the NYT’s Upshot brought us the bad news that 9.4 million new jobs created during the period from 2005-2015 were temp jobs or contracting jobs.

What’s worse is that those jobs add up to more than 100% of the jobs created by the US economy during that period. That means there was an overall decline of about 400,000 in people working as employees for an American corporation during those 10 years.

The news is based on a study by labor economists Lawrence F. Katz of Harvard and Alan B. Krueger of Princeton that found that the percentage of workers in “alternative work arrangements” — including working for temporary help agencies, as independent contractors, for contract firms, or on-call — was 15.8% of total employment in 2015, up from 10.1% a decade earlier. More from Irwin:

By contrast, from 1995 to 2005, the proportion had edged up only slightly, to 10.1% from 9.3%. (The data are based on a person’s main job, so someone with a full-time position who does freelance work on the side would count as a conventional employee.)

This raises bigger questions about how employers managed to shift much the burden of providing our social safety net to workers, and about the economic and technological forces driving the shift.

The change has profound implications for social insurance. More so than in many advanced countries, corporations in the US carry a large share of the burden of providing their workers with health insurance and paid medical leave when employees are sick. US corporate employers pay for workers’ compensation insurance, and for unemployment insurance benefits for those who are laid off.

These are part of the government-sponsored safety net in other countries.

In addition, US employers help fund their workers’ retirement, formerly, through pensions, but now more commonly, through 401(k) plans. These are also part of the government safety net elsewhere.

While the Affordable Care Act has made it easier for independent contractors to get insurance, there’s little doubt that these workers are now carrying more of the financial burden of protecting themselves from misfortune than they would have shouldered with a more traditional company-employee relationship.

Perhaps most significant, the implicit contract between an employer and an employee is that there is a relatively high bar for firing employees. If the economy turns down or business slows, a contract worker is far more likely to be out of a job or out of the job faster, than a conventional employee.

This is a large factor in the growing job insecurity we see since the Great Recession.

Moreover, the study shows it was likely that companies caused this shift in terms of employment, not employees who were looking for more freedom and flexibility. If 2005 to 2015 had been a period when workers had a lot of power in the job market that might have been plausible, but it wasn’t. More from Irwin:

The unemployment rate was above 7% for nearly half of the period, from the end of 2008 to late 2013. Employers had the upper hand. That suggests it’s more likely that employers were driving the shift to these alternate arrangements.

So, companies took advantage of the weak job market since the Great Recession. In addition, improvements in technology have enabled the shift. New technology allows remote measurement of how successful each worker is, regardless of their location, and it allows the employer to monitor contractor progress, giving the company the power it needs to move to contracting, or to a temp workforce.

Making employees into contractors benefits only the employers, not the workers, and it may help explain the disconnect between the anger and insecurity we see on the 2016 presidential campaign trail, and the clearly positive employment and economic news we’ve seen each month for the past few years.

Both are true, and that has profound implications, both politically and economically, for the next 10 years. A big question for the next decade is whether the rise in temp employment was a one-time shift, or whether it will continue in the years ahead, even in a tightening labor market.

At risk is whether employer-provided social insurance that has been a backbone of the 20th-century American middle class economy will still be with us in the 21st century.

And if the shift to contracting continues,and we become more of a 1099 nation,  it is a certainty that we will see a growing populist, anti-corporate electorate.

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Free Trade’s Double-Edged Sword

The Bernie Sanders win in Michigan is chalked up to his attacks on trade agreements, in particular, the Trans Pacific Partnership that resonated with a broader audience than his attacks on Wall Street. Along the way, Donald Trump has been plowing the same ground, talking about how America is losing jobs to Mexico and Asia.

So the question is, are we seeing a political backlash against trade? Can Sanders or Trump gain sufficient political traction to win with this issue? And can we blame trade for losing jobs to China and elsewhere?

Jared Bernstein in Monday’s New York Times made an excellent point: (emphasis by the Wrongologist)

The economic populism of the presidential campaign has forced the recognition that expanded trade is a double-edged sword. The defense of globalization rests on viewing Americans primarily as consumers, not workers, based on the assumption that we care more about low prices than about low wages.

When you hear politicians speak about free trade, they talk about cheaper products. They sidestep the terrible impact on American jobs, they sidestep the concern that many, many jobs have been lost through free trade agreements. The free trade deals have also exacerbated the loss of union power, which means fewer (and lower paying) jobs, fewer hours, and poorer benefits, including pensions.

The trade topic is obviously a huge driver of Trump’s and Sanders’s appeal. It is a problem for Hillary, since she was for the Trans-Pacific Partnership before she was against it.

Despite being on opposite ends of the political spectrum, the two populists are using the same message: The government, both political parties, and business are working at cross-purposes with the needs of the American people. In a democracy, populism is a warning sign that government has been disconnected from its citizens. Consider that while Americans lost at least 4 million jobs, corporate profits are up, and the 1% has gotten much wealthier.

It’s true that off-shoring is good for the global economy. Chinese people working to make iPads are richer than they were, but it’s not a win-win situation. It’s more of a win-lose, where Chinese workers win relatively big, while American workers lose medium.

Another problem is that workers directly impacted by trade have little power or influence in their firms or the country as a whole. In the US, exports only make up about 13.5% of GDP. But in Sweden, Denmark or Germany, exports are north of 40% percent of GDP. And these countries, with far fewer natural resources, have robust social safety nets in addition to high wages. And as Bernstein says:

The real wage for blue-collar manufacturing workers in the United States is essentially unchanged over the past 35 years, while productivity in the sector is up more than 200%.

Why? Because governments in these other countries stress building high-skill industries that compete based on producing high value-added products, while low-skill industries that compete based on exploiting their employees are discouraged. This is called having an industrial policy, which encourages business to meet government priorities. In America, we are against having industrial policies, because it sounds like socialism.

Bernstein points out that the free trade negotiation process has been captured by investors and corporate interests:

According to the Washington Post, 85% of the members of the outside committees advising the administration on the proposed Trans-Pacific Partnership were from private businesses and trade associations (the rest were from labor unions, NGOs, academics and other levels of government).

And that’s the world we live in. Business is driving most of the decisions that our politicians make, ensuring that whatever is enacted is primarily good for business, and secondarily, if at all, for We, the People.

And in the world we live in, free trade has significantly boosted wages and quality of life for overseas workers and has helped lift millions of Chinese and other Asian citizens out of poverty, while our middle class, a prerequisite for our stable society, has been hollowed out.

Yet, America’s plutocrats and politicians push for even MORE free trade.

The current election cycle may horrify the “political establishment,” of both parties, but it was preordained by their bought-and-paid-for politics.

Americans have a real gripe. They don’t see, or care about the benefits to Chinese and other third world workers that lower or stagnant wages at home help to provide. The Bernie win in Michigan and Trump’s success in the GOP primaries show people are super pissed off.

Our political parties better start coming up with ways to mitigate the trade and wage problem before someone like DonDon actually succeeds in becoming president.

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Has The Progressive Moment Returned?

(This is the second and final column on the Progressive Movement)

Few issues in the history of 20th and 21st century America have inspired more disagreement than the value of the Progressive movement to our society. Our high school texts taught that it was a movement by the people to curb the power of the special interests in our government:

COW Bosses

The Bosses of the Senate by Joseph Keppler, 1889

The 1890s Progressive Movement was a response to dislocations in American life. There had been rapid industrialization of the economy, but there had been no corresponding changes in social and political institutions. Economic power had moved to ever larger private businesses, while social and political life remained centered primarily in local communities, even within rapidly growing cities, with great variability in quality of life.

But early Progressives believed that the problems society faced (poverty, violence, greed, racism, class warfare) could best be addressed by providing good education, better working conditions and an efficient workplace. The desire to regulate big business was mostly focused on creating a fair(er) deal for small businesses and workers. Others encouraged Americans to register to vote, fight political corruption, and let the voting public decide how issues should best be addressed (via direct election of senators, the initiative, and the referendum).

Essentially the struggle was a clash between the “public interest” and “corporate privilege.”

Daniel Rodgers’s Atlantic Crossings (1998), shows how European reforms at the time influenced American progressives, suggesting that the movement was not just an American phenomenon, but had roots in a European process of change. He describes the international roots of social reforms such as city planning, workplace regulation, rural cooperatives, municipal transportation, and public housing that traveled across the ocean to our shores.

This is something we see today. Populist movements from the left and the right are roiling Europe, just as they are in America.

In the mid-1930s, the New Deal allowed the country to return to a pent-up agenda of its Progressive past. Once again, we had an economic crisis, once again, the power of business was outsized versus the power of the worker.

Another Roosevelt reformer stepped into the role of Progressive-in-Chief. But where Teddy was a Republican, FDR was a Democrat. Regardless, change again ensued.

We hear Progressivism referred to as synonymous with the American welfare state. But, the original Progressives did not believe that a ‘welfare state’ was an end goal. In fact, the term ‘welfare state’ did not come into currency until the end of the 1940s, as a new label in the Republican Party’s attack on Social Security and other programs of the New Deal.

As we wrote in the review of One Nation Under God (2015) by Kevin Kruse, James Fifield, a minister who worked to bring Corporate America and Christians together said in 1935:

Every Christian should oppose the totalitarian trends of the New Deal…

Overall, Kruse’s book is an excellent analysis of how Christian fundamentalism and capitalism were conflated in the 1950s to erode the divide between church and state, re-casting Progressive political philosophy as both “un-American”, and “anti-Christian” at the same time.

Progressives were called Reds or socialists. It was a charge that would follow Progressives throughout the 20th Century, whenever Progressives returned to the cause of economic equality.

In American Dreamers: How the Left Changed a Nation (2012), Michael Kazin shows that the US is unique among Western nations in that we never developed a viable, left-wing political movement. Unlike Europe, a progressive party has never succeeded in establishing more than a temporary foothold in American politics, despite the hysterical rhetoric of conservatives. We have had a Congressional Progressive Caucus only since 1991. It is comprised of one Senator and 75 Congress people, all Democrats.

Yet, Progressives still have had great success in shaping American society. During presidencies from LBJ to GW Bush, there was far more radical dissent in the US than at any time in the 1950s. Millions of Americans, perhaps a majority, came to reject racial and sexual discrimination, to question the need for and morality of military intervention abroad, and to worry that industrial growth might be destroying the climate.

Since Teddy Roosevelt and the Bull Moose Party in 1912, Progressives have had little historic influence on electoral politics. In the earliest days of Bernie Sanders’s presidential campaign, it was thought that his role was not to win the election, but to slip a few liberal planks into Hillary Clinton’s candidacy. But on the campaign trail, Sanders started drawing crowds of thousands, his ratings surged, and his became a Progressive moment in electoral politics.

Today, Progressivism is a cause in search of a candidate.

Many have called our time a new Gilded Age.

If so, the question then becomes whether Progressivism can once again move back into the halls of government, and be a positive force for change.

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Workin’ in a Coal Mine

American Experience ran a documentary called “The Mine Wars” on January 26th. It told the story of West Virginia coal miners’ battle against mine owners at the start of the 20th century.

Few know that the WV mine workers struggle against the mine owners led to the largest armed insurrection after the Civil War and turned parts of West Virginia into a war zone that required federal troops to pacify.

The battle started in 1920 with a shootout in Matewan, WV. It was triggered by a plan by the United Mine Workers (UMW) to organize Mingo County, where Matewan is located, and the thuggish reaction by mine owners. There is a fine movie that documents this, “Matewan”, by John Sayles.

The town’s union-sympathizing Police Chief Sid Hatfield confronted a group of private detectives from the Baldwin-Felts company who were hired by the coal mine owners. The detectives had come to Matewan to evict the families of unionized miners. The “Battle” of Matewan left seven Baldwin-Felts men dead, along with the mayor and two townspeople.

Some background: Workers were paid based on the weight of the coal they mined. Each car brought from the mines theoretically held a specific amount of coal (2,000 pounds). However, cars were altered by owners to hold more coal than the specified amount, so miners would be paid for 2,000 pounds when they actually had brought in 2,500. In addition, workers were docked pay if rock was mixed in with the coal. Miners mostly lived in company-owned homes, and were forced to shop at company-owned stores.

The UMW started organizing and striking in WV in 1912. When the strikes began, the mine owners used hired guns to inflict plenty of violence on miners and their families.

There is a sordid history of similar efforts throughout the US. Check out the Ludlow Massacre in 1914.

But before WWI, the UMW was unsuccessful in changing working conditions or wages for miners. The US entry into WWI in 1917 sparked a boom in demand for coal, also bringing increasing wages. After the War, demand for coal fell, and so did miners’ wages.

At that time, the largest non-unionized coal region in the eastern US were WV’s Logan and Mingo counties, and the UMW made them a top priority. Mine owners in Logan bought off the Logan County Sheriff Don Chafin to keep the union out of the county. In 1921, after increasingly violent confrontations with the owners and their hired guns, miners moved to fight back.

In August, approximately 5,000 armed union men entered Logan County. Logan city was protected by a natural barrier, Blair Mountain. Chafin’s forces took positions at the top of Blair Mountain, while the miners assembled near the bottom of the mountain. There were skirmishes and deaths. On September 1, President Harding sent in federal troops to break up the battle, and the miners soon surrendered to the feds.

By 1924, UMW membership in the state had dropped by about 50% of its total in 1921.

Mine owners also engaged in a PR campaign that portrayed the UMW as “Bolsheviks”. The Red Scare in 1919-1920 was based on fears that the labor movement would lead to radical political agitation, or would spread communism and anarchism within the country. This sense of paranoia was driven in part by the mining companies.

Does any of this sound familiar? How many red scare equivalents have we had in the last 100 years?

Corporations have always been at war with workers. Here’s the real question: Is it possible for capitalism, by its very nature, NOT to incite a constant battle between the .01% and everyone else?

Probably not. Class is a feature of capitalism, so it follows that class conflict will always be part of capitalist economies. We may find ways to mitigate the effects of that conflict, but it will always be a struggle to do so.

At the same time, we see every day that the interests of private capital are not aligned with the needs of society as a whole. We re-learn these lessons because our public institutions periodically get co-opted by capital. Until private capital’s stranglehold over our political process is ended, it will always try to rig the system.

The miners’ struggle in West Virginia was not just a backwoods conflict. The WV experience has direct relevance to today’s American economy, to today’s capitalists, and to the state of labor in America today.

What happened in West Virginia is an object lesson for what all of America might look like with unfettered corporatism.

Take a look and listen to Lee Dorsey’s 1966 hit “Workin in Coal Mine” written by the late, great Alan Toussaint:

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

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“One Nation Under God” – A Review

Some readers may have noticed the “Reading List” on the blog’s right frame. Today, we take Kevin Kruse’s “One Nation Under God – How Corporate America Invented Christian America” off that list and discuss it.

The book begins with the election of Dwight Eisenhower in 1952 and describes how, through succeeding administrations, Americans came to think that we are a Christian nation instead of a nation of Christians. What started in Eisenhower’s living room ended up in corporate boardrooms, and finds a place at the heart of campaigning in today’s politics.

In 1935, James W. Fifield, a Congregationalist pastor from Los Angeles founded an organization called Spiritual Mobilization. Channeling donations from businessmen like tire magnate Harvey Firestone, Hollywood producer Cecil B. De Mille, Sun Oil’s J. Howard Pew, and the National Association of Manufacturers, Fifield built a nation-wide publishing and propaganda campaign that called ministers to action, saying:

Every Christian should oppose the totalitarian trends of the New Deal…

And to oppose:

The anti-Christian and anti-American trends toward pagan stateism in America.

This was conflated with slogans promoting: “free pulpit, free speech, free enterprise, free press, and free assembly.”

The Spiritual Mobilization campaign’s thesis was that if religiosity could be widely and officially deployed, it would be the sword that defeated both collectivist liberals and Communists who, in their view, were both working to undermine America.

Some context: The percentage of Americans who claimed membership in a church was low in the 19th century. Kruse shows that it increased from 16% in 1850 to 36% in 1900. It rose to 49% by 1940. It peaked in 1959 at 69%. Along the way, we adopted “Under God” and “In God We Trust” with little opposition from organizations like the ACLU. Much of what Kruse tells us is about familiar events:

• The addition of “Under God” to the Pledge of Allegiance in 1954
• The official adoption of “In God We Trust” on all American currency in the late 1950s
• The Supreme Court decisions that struck down state-mandated prayer and Bible reading in public schools in the early 1960s, and the huge polarization it brought among individual Christians vs. their Church leaders, mostly abetted by politicians who saw a campaign issue

Overall, the book is an excellent analysis of how Christian fundamentalism and capitalism were conflated in the 1950s to erode the divide between church and state, re-casting progressive political philosophy as both “un-American”, and “anti-Christian” at the same time. Importantly, he describes the thinking that emerged from Fifield’s movement and its subsequent embrace by Billy Graham; that our way of life and our economic system were ordained not just by God, but by the Christian God.

Graham said during the 1952 presidential campaign:

The Christian people of America will not sit idly by…They are going to vote as a bloc for the man with the strongest moral and spiritual platform, regardless of his views on other matters.

Graham meant Eisenhower. Kruse details the incestuous relationship between clergymen and politicians, with particular focus on Rev. Billy Graham’s remarkable ability to get close to, and influence, presidents.

Some have criticized the book, saying it does not prove its case about the influence of corporate America in the promotion of “One Nation Under God”. Wrongo disagrees. Most of the funding for these efforts, which began in the 1930s and continued through the Nixon administration in the 1970s were contributed by corporations and corporate executives. In fact, the book’s main premise is that corporatists are as responsible as politicians and clergy for making America a more Christian nation.

We continue to see the impact of these corporate/clergy efforts today: It bolsters the idea of American Exceptionalism, it limits the range of acceptable political debate, it fosters class warfare, and suborns churches to the cause of politics.

Today’s religious fundamentalists want to blur the lines between church and state. They seek to control American culture, to use faith in the service of ideals that leave no room for social programs, no room for diversity, no room for science, no room for ideas that contradict or challenge the myth of America as a Christian-capitalist-ordained-by-God empire.

This movement that started in the 1930s explains why many Americans favor policies that are clearly against their best interests. Not coincidentally, many of those in that category are also “religious conservatives.” A recent interview with a rural Kentuckian who voted for Republican Governor Matt Bevin who plans to roll back Medicaid expansion, despite her need for insurance, said:

My religious beliefs outweigh whether or not I have insurance…

She voted for an anti-abortion, anti-gay rights candidate, despite her personal need for insurance.

Kruse’s book explains why.

 

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