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Friday, March 6, 2009

Daily Kos: If Only We Could Be So Lucky

Rep. John Campbell (R-Calif.), who gives his departing interns copies of Ayn Rand’s novel "Atlas Shrugged," told me today that the response to President Obama’s economic policies reminded him of what happened in the 51-year-old novel.

"People are starting to feel like we’re living through the scenario that happened in 'Atlas Shrugged,'" said Campbell. "The achievers, the people who create all the things that benefit [the] rest of us, are going on strike. I’m seeing, at a small level, a kind of protest from the people who create jobs, the people who create wealth, who are pulling back from their ambitions because they see how they’ll be punished for them."

Oh, yes please. By all means, let's give that "strike" a go. I'll tell you what, "achievers" -- you keep your Collateralized Debt Obligations, and we'll keep the food. You take away your energy futures trading, and we'll keep the actual power plants. You run off to your own private island with your structured corporate insurance derivatives, and we'll keep the automobiles, and the boats, and the oil, and the coal, and the grain, and the batteries, and the electronics, and the cows, and the roads and bridges, and the drinking cups, and the indoor plumbing, and the light bulbs, and the televisions, and the art, and the music, and the trees that grow the fruit, and the lumber, and the recycling centers, and the actual pills to cure what ails you, and the fishing lines, and the books, and the buildings, and the railroads, and the little metal clips that hold the little hydraulic lines that keep that gigantic, thundering airplane you're on in the air. We'll keep the borax, iron, salt, aluminum, and steel. We'll keep the corn, the soybeans, the lettuce, and the water. We'll spot you as many U-haul boxes as you need to pack up your money and your stock certificates, and then please, by all means -- teach us a lesson.

Go live your Randian fantasies, go create that wonderful utopia in which only the most wealthy are permitted entry, and you are not burdened with the outrageous insult of having to contribute back a proportionate share of your income in order to help maintain the very fabric of the nation around you. I can see now that the thought that you might have to pay the same share of your income in taxes that your housekeeper does has drained your already pale blanched, and the thought of having to pay as much in taxes as your wretched mothers and fathers did, a few decades before you, is nothing less than an armed assault on your beachheads.

What fool would suggest we possibly return to the same tax polices that existed under that shameless wealth-stealer and Stalinist, Ronald Reagan? And what insane person would dare seek to treat achievers identically to the lower classes, the people with grubby hands and only one house?

Ah, the arrogance of the Better Class. Just who are these "achievers, the people who create all the things that benefit the rest of us?" They're not the farmers -- we must give far more deference, assign far more value to those that push money from one column to the next. They're not the factory workers, those couldn't possibly be the people who create all the things that benefit the rest of us." They are not nearly so important as the people that invent the derivatives to speculate upon the future trajectories of the numerical indexes that represent the simplified and aggregated "marketplaces" in which the company will sell the products that the workers at the machines create.

It is all so simple, really. You can see how the "achievers" are better than anyone else, and how put upon they are. We claim that the farmers of America create our food, but they are only the saps at the bottom of the chain -- food does not exist unless their is a global market to assign it value, then gather cash by making increasingly leveraged wagers on the incremental differences within submarkets of that global market. You may claim that our miners, those that willingly entomb themselves under a billion tons of rock in order to pry just a small amount of the raw materials of society out from under it, may create "things", for without them there would be precious few "things" to create -- but they are hicks, undeserving of such admiration, and certainly undeserving of official "Acheiver" tax breaks. What do they know of danger, who have not had to rush to their computer to trade a several thousand shares bought earlier in the day, so as to gain a slight monetary advantage over the hundreds of thousands of people doing the same?

So yes, please, by all means, teach us a lesson, Achiever Class, and do it quick. You take your money, and we'll take the people who know how to fix your goddamn plumbing at three in the morning. You grab your portfolio and hold it high above your heads, a symbol of your lifetime of accomplishments, and we'll take all the firefighters. I can only presume you will not need our doctors, our schoolteachers, our grocers or even our tax accountants. Ayn Rand would have wanted it that way: Ayn Rand, oracle of the prickish class, official trumpet section for anyone and everyone that thinks themselves a king.

Does it feel to anyone else that we are in a national rut? That the entire economy of the United States has been predicated, for the last decades, on the following ingenious business cycle?

  1. Someone -- probably Phil Gramm -- pushes for deregulation of a particular subset of a particular financial marketplace (see: energy markets, corporate insurance markets), or fervently insists that a newly discovered loophole in current regulations remain open.
  1. Using the new loophole or deregulatory act, the companies that requested the financial deregulation in the first place make money hand over fist by exploiting that unregulated marketplace in increasingly sketchy ways (see: Savings and Loan crises, Enron, AIG). Someone who pushed for the deregulation -- probably Phil Gramm -- happens to have a relationship to one of the companies in question, and profits handsomely.
  1. The unregulated financial sub-marketplace becomes so sketchy, so loaded with either implicit or explicit fraud, that it collapses under itself, taking the savings of millions of Americans with it (see again: Savings and Loan crises, Enron, AIG). Someone -- probably Phil Gramm -- calls on Americans to stop whining about it, it's just how the world works.
  1. The government is forced to step in and repair the damage, but is restricted by the policy prescriptions of multiple somebodies -- usually including Phil Gramm -- to re-regulating the industry in the most minimal possible way, bailing out the companies that got themselves willingly into trouble through their own sketchy or asinine behavior.
  1. A thousand other somebodies -- usually followers of Ayn Rand, the most communistic anti-communist to have ever lived, the woman who proposed that the rebellion against communism should consist of starting a commune, but being, you know, more selective about the membership -- chafes violently at the proposed fix in the process, because even in most gentle form it is far, far too harsh on those that created the problem in the first place. Rinse; repeat.

Are we becoming a nation intent on scamming itself, a nation that only values work or inventiveness when it is applied to new ways of squeezing more transactions between the same market endpoints, or milking out one more tenth of a percentage point in income by taking on thirty times that in risk?

It's not enough to produce energy anymore, or to transport it -- there's not enough profit in that. So any company worth it's salt, like Enron, knows the real money is in speculating on energy, not actually doing anything with it. Any Wall Street broker worth their salt knows that investing in a factory is an absurdist proposition, you want to invest in the companies that invest in the investors that financed the investment of that factory. What fool would want to provide actual healthcare, when all the actual cash is to be made in managing that health care by deciding what gets covered, and how much it should cost, and exactly how many files need to be moved how many times before your doctor will see even a dollar in cash from your visit six months ago, and how precisely your heath management company should invest that dollar in other marketplaces, during the ever-expanding length of time it is held between when the service is rendered and all possible paperwork has been exhausted and the dollar must, at long last, be forked over?

What would happen if America's financial sector threatened to go the same way as America's textile industry, or America's steel industry? We are seeing it now -- there is no price not worth paying, in order to prop up the Masters of the Universe. We'll do it, and we have to do it, so tied in is every part of the world economy to all of the others.

But those same financiers might -- gasp -- have to pay three more percentage points of tax, in exchange for saving them, their companies, and their entire industry, and so many may flee to Bermuda and be done with the likes of us. We might block a loophole or two, or question why some company (probably led by Phil Gramm) might keep tens of thousands of secret, offshore bank accounts in an apparent attempt to allow the wealthy to subvert the very laws that the rest of us saps must live by, each and every year, and to even bring such questions up is a declaration of class warfare.

When you have lived your life in the presumption, fervently held, that you are simply better than all those around you, and that your station in life is so far above all others that you should be honored as titan, or Achiever, or demigod, it is merely a given that the common people should not only rescue you from your own created catastrophe of errors, but they should feel damn lucky to have the privilege.

Daily Kos: If Only We Could Be So Lucky

Wednesday, March 4, 2009

Truthdig - Cartoons - The Weight of the Party

Truthdig - Cartoons - The Weight of the Party

t r u t h o u t | Obama Skews Battle Lines in "Class War"

   Republicans are criticizing his budget plan, but the proposed redistribution of wealth toward the lower and middle classes only reverses a longstanding trend, Michael Hiltzik writes.

    "Class warfare" comes in many flavors. There's the variety practiced by feudal overlords upon their serfs, and the variety waged by the Jacobins of the French Revolution against the monarchists.

    Then there's the variety that Republicans claim to find in President Obama's proposed budget -- a taking from the rich to reward the undeserving poor. The rhetoric has spread quickly, moving from the libertarian Heritage Foundation to the ranks of GOP presidential hopefuls like flames leaping from tree to tree in the Angeles National Forest.

    "Lenin and Stalin would love this stuff," says former Arkansas Gov. Mike Huckabee. "The Union of Soviet Socialist Republics may be dead, but a Union of American Socialist Republics is being born."

    Yet the true class war of recent American history is the one that has pitted the upper 1% of income earners against almost everybody else. Over the last three decades, a period that spans Republican and Democratic administrations alike, average family income has scarcely budged an inch, while the wealthy have grown measurably wealthier.

    In 1979, the top 1% of U.S. households earned eight times as much as the middle 20% and 23 times as much as the bottom fifth; by 2005, the Congressional Budget Office found, the upper crust touched 21 times as much as the middle class and 70 times as much as the bottom. Adjusting for inflation, the average American worker made 16% less in 2004 than in the 1970s, according to economist Benjamin M. Friedman.

    Will the Obama budget redress this imbalance? Let's take a measured look at what he proposes.

    The budget plan would restore the top income tax brackets to their levels before the 2001 Bush tax cuts, with the topmost rate rising to 39.6% from 35% now, hardly an excessive increase. The higher taxes kick in at $250,000 for a married couple and $200,000 for individuals.

    For those taxpayers, Obama would ratchet back itemized deductions. He also would raise more money from hedge-fund managers, shareholders and other recipients of investment income. Obama says the money would help pay for programs aimed chiefly at lower- and middle-income wage earners, including a tax credit, relief from healthcare expenses and more aid for education.

    Does this constitute redistribution of income? You bet. That's what government does. George W. Bush redistributed income too -- from the lower- and middle-income wage earners who pay the bulk of Social Security payroll taxes to the higher earners whose income tax cut was financed out of the Social Security surplus.

    Plenty of taxpayers have felt uneasy about this tendency.

    "All the tax rebates to the rich never made sense to me," says Roger A. Wells, 80, a retired computer executive in Manhattan Beach who considers himself firmly middle class and is a lifelong Republican whose GOP pedigree dates to his father's local party chairmanship in Michigan. "I fully endorse the idea that it's about time the middle class got a crack at it."

    The relevant discussion is really about how much income redistribution is proper, and how much the economy can sustain. Obama's critics contend that his budget will take so much from the people and institutions driving economic growth that it's "dangerous," to quote Rep. Eric Cantor (R-Va.).

    They suggest that wealthy investors and entrepreneurs won't work so hard to help the economy if they get to keep less of the bounty, like the striking industrialists in an Ayn Rand novel.

    Consider economist Larry Kudlow, who last week declared that "raising the marginal tax rate on successful earners, capital, dividends and all the private [investment] funds is a function of Obama's left-wing social vision."

    Kudlow, who holds forth in this vein every day on CNBC, claimed that hornbook economics teaches that "countries that spend more produce less, while nations that tax less produce more."

    But Kudlow sang a different tune last September, when he spoke up in favor of the big bank bailout. "Once every few decades or a couple of times a century," he said in an exchange with Sen. Bernie Sanders, a Vermont socialist, "even conservatives have to use government" -- prompting Sanders to congratulate him for joining the socialist ranks.

    Furthermore, the supposed link between high government spending and reduced growth is imaginary.

    "No matter how you torture the data, there is no negative relationship between a commitment to a welfare state and the rate of growth in how well off we are," Peter Lindert, an economist at UC Davis and a leading student of the subject, told me recently. "There really is no case for saying that what Obama is proposing will damage economic growth."

    To be fair, some people don't think Obama can collect all the money he needs by raising rates only on incomes over $250,000. "He's going to reach down, and people making more than $100,000 will pay more," predicts Kip Dellinger, a Westside certified public accountant. Throw in a payroll tax hike to shore up programs such as Medicare and Social Security, he said, and the combined maximum tax bite on top earners could approach 60% -- "and that would have a really negative impact on economic growth." He thinks the middle class will end up getting socked if the Obama budget becomes reality.

    Still, in both economic and social terms, the consequences of America's rising income inequality have been dire. Wages stagnated while the money that otherwise would have gone to workers went instead to shareholders and overcompensated CEOs.

    This deprived lower- and middle-income Americans of purchasing power; to maintain their standard of living they -- all right, we -- took to borrowing on our credit cards and home equity. The harvest is today's credit crisis and a dizzying falloff in consumption.

    The income inequality trend has had a socially corrosive effect. Friedman, the economist, observed in 2006 that the period from 1953 to 1973, when median family income doubled, was one of great social progress, encompassing the civil rights movement and President Johnson's Great Society program.

    Over the following decades, however, stagnating incomes for most Americans brought "a fraying of the U.S. social fabric," Friedman wrote. Public opinion turned sharply against immigration, affirmative action and welfare, with attacks on the latter program displaying "a vindictive spirit that was highly uncharacteristic of the United States in the postwar era."

    Obama's proposed budget, by reversing the transfer of wealth from lower- and middle-income Americans to the wealthy imposed by the Bush tax cuts and by the economic mantras of a generation, won't in itself restore a sustainable balance to the economy, but it will start the process.

    Better-paid workers will be better able to consume goods and services without going into debt, and the frenetic search for profits in financial engineering, rather than in productivity and innovation, will fade. And we'll know whether the talk of "class warfare" echoing so widely today represents the roar of a permanent overclass, or the death rattle of the old guard.

t r u t h o u t | Obama Skews Battle Lines in "Class War"