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Bush, Congress tell working folk to go to hell

Lou Dobbs pulls no punches in this one.

Bush, Congress tell working folk to go to hell

Thirty-seven Democrats vote for full amnesty for all illegal aliens in this country, even though nobody really knows whether the number is 11 million, 12 million or 20 million. The Senate Republican leadership demands that a "comprehensive immigration reform" plan must be passed before this Memorial Day weekend. And the president signs into law a tax cut that raises taxes on the educational funds of teenagers saving for college.

Never before in our country's history have both the president and Congress been so out of touch with most Americans. Never before have so few of our elected officials and corporate leaders been less willing to commit to the national interest. And never before has our nation's largest constituent group -- some 200 million middle-class Americans -- been without representation in our nation's capital.

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This is an outright assault in the elitist war on the middle class. And working men and women who've already borne the pain of losing good-paying manufacturing jobs and having middle-class jobs outsourced to cheap foreign labor markets are faced with the onslaught of more illegal immigration and cheap labor into the American economy. This president and Congress talk about bringing illegal aliens out of the shadows while they turn out the lights on our middle class.

Remember the old days when politicians used to at least pretend to care about the bottom 95% of Americans, while stuffing their pockets with pork barrel projects? Bush & Co. can't  be bothered anymore to put up even a minimal pretence. Such is their disdain for the bottom 95% of our country.

The Predator State: When Capitalism Goes Bad

This new Mother Jones article is a must read. I've been in business since the mid-eighties and have never seen such unethical, predatory behavior as we have been witnessing in the marketplace over the past few years. It's not small business that's to blame. It's large business. Large global players are simply not accountable to anyone. If any one state attempts to clamp down on predatory behavior, they simply move to another jurisdiction. It's all become a big shell-game for the multinationals. (Yes, I know that I'm not saying anything new here.)

Here's a key section from this article, The Predator State, written by James K. Galbraith, who one might describe as an evolutionary economist.

When capitalism goes bad:

Today, the signature of modern American capitalism is neither benign competition, nor class struggle, nor an inclusive middle-class utopia. Instead, predation has become the dominant feature—a system wherein the rich have come to feast on decaying systems built for the middle class. The predatory class is not the whole of the wealthy; it may be opposed by many others of similar wealth. But it is the defining feature, the leading force. And its agents are in full control of the government under which we live.

Our rulers deliver favors to their clients. These range from Native American casino operators, to Appalachian coal companies, to Saipan sweatshop operators, to the would-be oil field operators of Iraq. They include the misanthropes who led the campaign to abolish the estate tax; Charles Schwab, who suggested the dividend tax cut of 2003; the “Benedict Arnold” companies who move their taxable income offshore; and the financial institutions behind last year’s bankruptcy bill. Everywhere you look, public decisions yield gains to specific private entities.

For in a predatory regime, nothing is done for public reasons. Indeed, the men in charge do not recognize that “public purposes” exist. They have friends, and enemies, and as for the rest—we’re the prey. Hurricane Katrina illustrated this perfectly, as Halliburton scooped up contracts and Bush hamstrung Kathleen Blanco, the Democratic governor of Louisiana. The population of New Orleans was, at best, an afterthought; once dispersed, it was quickly forgotten.

The predator-prey model explains some things that other models cannot: in particular, cycles of prosperity and depression. Growth among the prey stimulates predation. The two populations grow together at first, but when the balance of power shifts toward the predators (through rising interest rates, utility rates, oil prices, or embezzlement), both can crash abruptly. When they do, it takes a long time for either to recover.

The predatory model can also help us understand why many rich people have come to hate the Bush administration. For predation is the enemy of honest business. In a world where the winners are all connected, it’s not only the prey who lose out. It’s everyone who hasn’t licked the appropriate boots. Predatory regimes are like protection rackets: powerful and feared, but neither loved nor respected. They do not enjoy a broad political base.

Enron, Worldcom, Anderson, Adelphia, Helliburton, wildly over-priced prescription drugs, the new Bankruptcy Act, the attack on Social Security, and the "misanthropes who led the fight to abolish the estate tax." A lot of Americans today can smell the stench of rot in the system even if they can't put a finger on the cause. Practically everyone grasps that something is wrong. Terribly wrong.

If you want to understand what's really going on remember these two rules:

1. Follow the money. (Look into who is profiting in any given situation.)

2. Only scoundrels wrap themselves up in the flag and quote from the bible as they pick your pockets.

By the way, I like the phrase, "Benedict Arnold companies". People should start using it in conversations.

Read the entire article.

The Tapeworm Economy Exposed

Ever have the uncomfortable feeling that something's wrong with the economy--terribly wrong--despite the chorus of upbeat pronouncements from Wall Street? Well, you're not alone. In reality Wall Street decoupled itself from Main Street back in the 1980s, but continues to this day to deny the fact. The good news is that every day fewer and fewer people accept this lie.

Back on April 5th, 2006, the NY Times had an article titled The Economics of Henry Ford May Be Passé by David Leonhardt. In it he rolls over the rock and sheds light on some pretty disheartening economic data.

First off, real wages for 80% of Americans have remained stagnant since the mid 1970s.

Meanwhile, the top executives who have driven most of American industry into the ground (e.g., the auto industry) or moved it to China and India have made off like bandits in terms of salaries, benefits, stock options, and golden parachutes. Back in the 1950s and 1960s the disparity between executive and worker pay wasn't anywhere near as extreme as it is today. Back then a typical executive at a large company earned 50 times what a worker did. Today that disparity is typically a multiple of 500 or 1000.

Now here's something really interesting data from Stephen Roach, the Chief Economist at Morgan Stanley in a piece called Globalization's New Underclass, from March 2006. In the article he admits that globalization is benefitting only a few at the very top. For the rest of humanity globalization is basically a euphemism for "race to the bottom."

This includes most Americans.

Let me quote him here:

Billed as the great equalizer between the rich and the poor, globalization has been anything but. An increasingly integrated global economy is facing the strains of widening income disparities - within countries and across countries. This has given rise to a new and rapidly expanding underclass that is redefining the political landscape. The growing risks of protectionism are an outgrowth of this ominous trend.

It wasn't supposed to be this way. Globalization has long been portrayed as the rising tide that lifts all boats. The surprise is in the tide - a rapid surge of IT-enabled connectivity that has pushed the global labor arbitrage quickly up the value chain. Only the elite at the upper end of the occupational hierarchy have been spared the pressures of an increasingly brutal wage compression. The rich are, indeed, getting richer but the rest of the workforce is not. This spells mounting disparities in the income distribution - for developed and developing countries, alike.

The United States and China exemplify the full range of pressures bearing down on the income distribution. With per capita income of $38,000 and $1,700, respectively, the US and China are at opposite ends of the global income spectrum. Yet both countries have extreme disparities in the internal mix of their respective income distributions. This can be seen in their so-called Gini coefficients - a statistical measure of the dispersion of income shares within a country. A Gini Index reading of "0" represents perfect equality, with each segment of the income distribution accounting for a proportionate share of total income. Conversely, a reading of "100" represents perfect inequality, with the bulk of a nation's overall personal income being concentrated at the upper end of the distribution spectrum. In other words, the higher the Gini Index, the more unequal the income distribution. The latest Gini Index readings for the US (41) and China (45) are among the highest of all the major economies in the world - pointing to a much greater incidence of inequality than in economies with more homogeneous distributions of income, such as Japan (25), Europe (32), and even India (33).

Moving along a little further, we read:

What is new is how America's income distribution has become more unequal in a period of rapidly rising productivity growth - a development that has been accompanied by an extraordinary bout of real wage stagnation over the past four years. Economics teaches us that in truly competitive labor markets such as America's, workers are paid in accordance with their marginal productivity contribution. Yet that has not been the case for quite some time in the US. Over the past sixteen quarters, productivity in the nonfarm US business sector has recorded a cumulative increase of 13.3% (or 3.3% per annum) - more than double the 5.9% rise in real compensation per hour (stagnant wages plus rising fringe benefits) over the same period.

I don't think it's a coincidence that the relationship between productivity growth and worker compensation has broken down as the forces of globalization have intensified. First in manufacturing, now in services, the global labor arbitrage has been unrelenting in pushing US pay rates down to international norms.

Yet, day after day, the media carpet bombs us with stories on how great the economy is doing.

Only in America have concentration of capital and gross disparities in income been twisted into something positive by the professional spin doctors. There are sound economic and moral reasons why both Bill Gates and Warren Buffett asked President Bush not to repeal the inheritance tax a few years ago. Without it wealth becomes even more concentrated in the hands of a few leading to a society like 19th century England where the landed gentry owned and controlled everything. The other 90% lived as serfs.

Welcome to the Tapeworm Economy

Over the weekend, I listened to a couple audio seminars by Catherine Austin Fitts on what she calls the "tapeworm economy". The tapeworm is a parasite which injects a hormone into its host which then makes the latter crave whatever the tapeworm needs in order to survive and flourish. This is how big business and big banking work as well. They are tapeworms. The interesting thing about Ms. Fitts is that she doesn't just stop at describing the problem; she provides a practical solution for killing off the tapeworm in our communities through local financial systems.

You can read her description of the tapeworm economy here.

The British have an expression, "I'm alright, Jack" which sums up those who don't care if the neighborhood, country, or world is going to hell, so long as their individual circumstances are tolerable. If you missed the implication, it's a put-down of people who care for no one but themselves.

Back in the early 199os, I was in La Paz, Bolivia on business. I had dinner one evening with one of the wealthiest businessmen in the country. He was involved heavily in supporting a micro-lending program for the poor called BancoSol. When I asked him why he was concerned about the disadvantaged, he told me it because of his two young sons, both under ten back then. He was thinking ahead, you see, and didn't want them living in a world where you had to ride around in an armored Suburban accompanied by armed guards if you had some money.

Well, judging by the Evo Morales victory in Bolivia's recent elections the disparity in wealth became intolerable for the majority in Bolivia, and they threw the tapeworm out.

Jumping back to the NY Times article, David Leonhardt concludes with:

Politically, though, I am not so sure that the current trends are sustainable.

Me neither.

Someday soon even the people in Kansas will finally wake up to what's been happening to them. It will be interesting to see what happens then.

US Headed Toward Economic Meltdown

The BBC interviews David Walker, America's Auditor-in-Chief.

The richest, most powerful nation on earth faces a fiscal "tsunami" which threatens to overwhelm Government and citizens alike.

According to Walker, we are headed for a fiscal crisis which is "only getting worse every minute of everyday."

Infortunately, polticians know that if they acknowledge these problems, they become unelectable as the public just doesn't want to know.

The video is 23 minutes in duration.

BBC interview with David Walker.

Empire of Debt Review

“A great empire is to the world of geopolitics what a great bubble is to the world of economics. It’s attractive at the outset but a catastrophe eventually. We know of no exceptions.”   

With this unforgettable quote ends a fascinating review of Empire of Debt by American Conservative magazine. It's important to emphasize that the book's two authors, William Bonner and Addison Wiggin, are "accomplished financial analysts" and "talented historical writers".

I have just ordered a copy through Amazon, which means I haven't read it yet. So I'll just share a few random highlights from the review:

Two hundred years ago, when the United States was a modest commercial republic, the president could take a walk down Pennsylvania Avenue—by himself—and talk to anyone who approached him. If he wasn’t on a walk outdoors, he was most likely at home, and you could speak to him by knocking on the door of the White House and presenting yourself.

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Today? The president moves about like Caesar Augustus, with a vast, graded court of civil and military aides, doctors, secretaries, valets, hairdressers, makeup artists, bodyguards, drivers, baggage handlers, cooks, food tasters, Praetorian guards, snipers, centurions, bulletproof limos, a portable hospital, and an armored rostrum. And that’s when he travels in the U.S.

When Bush visited Ottawa, members of Parliament were refused entry into their own legislature by the massed power of the Secret Service, in violation of Canadian law. When Bush visited London, 5,000 additional police were assigned to protect him. Parks and streets and neighborhoods were closed. Riflemen thronged the roofs. The queen was horrified by the trashed condition of the grounds and great rooms of Buckingham Palace, but that meant nothing relative to the security of the emperor.

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The paranoia of the Bush circle has infected the whole regime. The entire government—elected officials, appointed staff, permanent bureaucracy—has shifted in the last decade from pretending to be the people’s servants to admitting that they regard the people as a threat. Thus do we see the stream of legislation permitting ever more powers to spy, confiscate, and jail without trial.

Never has sociologist Franz Oppenheimer’s view of the state been more clearly on display: it is there to dominate, exploit, and protect itself against any challenges to its power. It clings to power like Gollum holding the ring. And that power is deployed not for the purpose of protecting people but for protecting the state and its interests. When Oppenheimer theorized in 1908 that this was the true nature of the state, he was shouted down and pilloried for denying the doctrine of government as a social compact. Now his claims read like a description of the day’s political news.

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Most Americans are aware that something has gone very wrong, but they are at a loss to sort of out the causes, especially the ones that are most invisible. This is where the smashing book by William Bonner and Addison Wiggin, titled Empire of Debt, performs an extraordinary service.

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The authors not only provide a frightening picture of the mess that the U.S. government has made at home and abroad, they also understand the crucial role that the monetary regime has played in this debacle. They show how the legal right to counterfeit—that’s what the Federal Reserve grants the government—has changed the structure of the government and led to the loss of liberty and the rise of an imperial power unlike any in history.

In the commercial republic of Jefferson, money was gold and silver. Government had no power to print currency. It was not even allowed to tax directly. What money it had came from tariff revenue, and pressure from exporters and importers kept it low. Even if Jefferson had wanted to establish a tyranny, there was no means to do so. If the wall of separation between money and the state was not as high as it might have been, there was still a barrier that put a curb on power-mongering.

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The impulse to empire helps make sense out of our huge deficits and debts or such costly and obvious blunders as the invasion of Iraq or the war on terror. It is as if America were committing suicide, our authors say, first by bankrupting the economy and then by creating endless enemies all over the world.

With this comes a belligerent and blind nationalism that has affected the whole culture in one degree or another. But then, in an empire, the people must become “hollow dummies,” said Orwell. They must believe they are superior to others, and have a right to tell others what to do. Americans seem to go beyond even this. They believe that other countries actually want to be invaded and occupied and shaped into mini-Americas by the United States. All we have to do is “get their dictators off their backs, and the men will start building shopping malls and the women dressing like Britney Spears.”

Did the Swiss puzzle and plot over what kind of government the Iraqis should have? Did they set out to make the rest of the world more like Switzerland and think that other peoples secretly yearned to be Swiss themselves? No, these are imperial inanities.

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But then, no one’s business is too small or too remote to be of no interest to the U.S. state. From its globe-girdling military bases and its world-circling spy satellites, the U.S. watches everything, everywhere, always. Not a sparrow falls without “triggering a monitoring device in the Pentagon.”

Yet citizens of the empire exult, just as in Rome:

The average American reacted just as the average Roman had reacted. When the purple was hoisted, he stood up and saluted. It made him feel like a big shot. If Americans were bossing people around in Asia or the Middle East, it made him feel more important. His homeland team was winning all over the world. And if it did not always seem to be on the winning side, he knew he must support his troops and stand behind their commander-in-chief. No one wants to carp and criticize when soldiers take the field. It is unpatriotic. So, keep the soldiers in the field all the time.

All italics are mine.

Get your copy of Empire of Debt today.

The McDonaldization of America continues

We truly are turning into a nation of burger flippers.

Recent statistics show that the fastest-growing jobs in the US also happen to be those with the lowest compensation. At the same time, the minimum wage is, in real dollar terms, the lowest it has been since the law establishing a federal minimum wage, the 1938 Fair Labor Standards Act, was amended in 1947.

The Bureau of Labor Statistics (BLS) last month reported that the official unemployment rate had fallen to 4.7 percent.

Buried in the rosy economic scenario portrayed by recentBLS reports is the fact that few jobs in the fastest-growing categories pay well. According to the BLS January jobs report, food-service and service-provider jobs grew a combined 69,000 in January.

The report was followed this month by the BLS annual Occupational Outlook Handbook, which projects continued rapid growth in demand for home-healthcare workers, medical assistants and personal-care aides, all service-related jobs that generally pay little more than the minimum wage.

Though service-related employment categories do include managerial and non-supervisory positions that are better compensated, the majority of such jobs pay little more -- and in some cases, such as restaurant workers, less -- than the minimum wage, which is now less than a third of the average hourly wage, according to an analysis released by the Economic Policy Institute Friday.

Of the 30 fastest-growing occupations, six do not require higher education and another eight demand just an associate’s degree.

According to the EPI, which advocates for a higher wage floor, the minimum wage has been consistently below 40 percent of the average hourly wage for 23 years and has been falling steadily since 1998, the last time it came near the 40 percent mark. Last month, the average hourly wage was $16.41, more than three times the federal minimum.

How much more of this type of  recovery can we endure before the national economy collapses?