[T]here is no pile of money anywhere in the country, no matter how large or small, and no matter how vital to the people who were depending upon it, to which the grifters in the financial-services “industry” do not feel entitled as fuel for their unquenchable greed.
To see what Mr. Pierce is reacting to specifically, see “Looting the Pension Funds” by Matt Taibbi. Please read it all, but in brief, he’s showing us that the financial sector has been looting government worker pension funds for years, because they could, and now that the pension funds are mostly gone, the public workers are being blamed for the dire circumstances of state and local governments. Taibbi:
It’s a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn’t happened overnight. This has been in the works for decades, and the fighting has been dirty all the way.
All across America, pension funds have been diverted into “investments” that somehow made no money for anyone except the power brokers on Wall Street. Or else the pension funds were used to make up the revenue shortfall created by tax cuts that benefited only the wealthy. David Sirota provides some examples:
In Rhode Island, the state government slashed guaranteed pension benefits while handing $75 million to a retired professional baseball player for his failed video game scheme.
In Kentucky, the state government slashed pension benefits while continuing to spend $1.4 billion on tax expenditures.
In Kansas, the state government slashed guaranteed pension benefits despite being lambasted by a watchdog group for its penchant for spending huge money on corporate welfare â€œmegadeals.â€
Paul Krugman today came out and called the Masters of the Universe types a “powerful group of what can only be called sociopaths.” These malefactors of great wealth not only think they are entitled to any remaining bits of wealth or privilege still available for plundering, but they want our adulation as well. When they don’t get it, they feel persecuted.
In any case, however, whatever is causing the growing concentration of income at the top, the effect of that concentration is to undermine all the values that define America. Year by year, weâ€™re diverging from our ideals. Inherited privilege is crowding out equality of opportunity; the power of money is crowding out effective democracy.
So what can be done? For the moment, the kind of transformation that took place under the New Deal â€” a transformation that created a middle-class society, not just through government programs, but by greatly increasing workersâ€™ bargaining power â€” seems politically out of reach. But that doesnâ€™t mean we should give up on smaller steps, initiatives that do at least a bit to level the playing field.
Take, for example, the proposal by Bill de Blasio, who finished in first place in Tuesdayâ€™s Democratic primary and is the probable next mayor of New York, to provide universal prekindergarten education, paid for with a small tax surcharge on those with incomes over $500,000. The usual suspects are, of course, screaming and talking about their hurt feelings; theyâ€™ve been doing a lot of that these past few years, even while making out like bandits. But surely this is exactly the sort of thing we should be doing: Taxing the ever-richer rich, at least a bit, to expand opportunity for the children of the less fortunate.
In a week when he tried to focus attention on the struggles of the middle class, President Obama said in an interview that he was worried that years of widening income inequality and the lingering effects of the financial crisis had frayed the countryâ€™s social fabric and undermined Americansâ€™ belief in opportunity.
Upward mobility, Mr. Obama said in a 40-minute interview with The New York Times, â€œwas part and parcel of who we were as Americans.â€
â€œAnd thatâ€™s whatâ€™s been eroding over the last 20, 30 years, well before the financial crisis,â€ he added.
â€œIf we donâ€™t do anything, then growth will be slower than it should be. Unemployment will not go down as fast as it should. Income inequality will continue to rise,â€ he said. â€œThatâ€™s not a future that we should accept.â€
Four out of 5 U.S. adults struggle with joblessness, near poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.
Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor and loss of good-paying manufacturing jobs as reasons for the trend.
So how does right-wing blogger Rick Moran respond to this? You will never guess. No, really. So I will tell you —
I read this AP story and could hardly believe it. Obama is still out there talking about “income inequality” when 80% of his constituents are living on the economic edge.
All together now: What do you think “income inequality” means, genius?
I swear, some of these people have had their brains sucked out and replaced by old wadded-up copies of The Internet for Dummies.
Getting back to the AP story —
Hardship is particularly on the rise among whites, based on several measures. Pessimism among that racial group about their families’ economic futures has climbed to the highest point since at least 1987….
…Sometimes termed â€œthe invisible poorâ€ by demographers, lower-income whites are generally dispersed in suburbs as well as small rural towns, where more than 60 percent of the poor are white. Concentrated in Appalachia in the East, they are also numerous in the industrial Midwest and spread across Americaâ€™s heartland, from Missouri, Arkansas and Oklahoma up through the Great Plains.
In other words — red state America.
More than 19 million whites fall below the poverty line of $23,021 for a family of four, accounting for more than 41 percent of the nationâ€™s destitute, nearly double the number of poor blacks.
Itâ€™s probably fair to say also that poor whites are overwhelmingly Republican, and in large part due to an overhang of racial resentment.
Ya think? They watch Faux News and listen to Rush, and they’re all hopped up about all the illegal immigrants and black street thugs in hoodies and women getting abortions and liberal elites trying to take away their guns. And like the lemmings they are, they continue to vote for politicians who are screwing them.
Do we need Reality for Dummies? Maybe if it were a comic book …
My god, this is a kicking of the ass. Sooner or later, they’re going to realize that you really do have to bring the A-game on this stuff to the Senior Senator, or she is going to smile her Okie smile and the hook is going to come off the jab and, as the great Jimmy Breslin once put it, you will leave the ring in a blanket. She does mean business. Someone should start to believe that
These Democrats and their intellectual allies once occupied the political fringes, pushed aside by more moderate members who supported both immediate spending cuts and long-term entitlement reforms along with higher taxes.
But aided by a pile of recent data suggesting the deficit is already shrinking significantly and current spending cuts are slowing the economy, more Democrats such as Virginia Sen. Tim Kaine and Maryland Rep. Chris Van Hollen are coming around to the point of view that fiscal austerity, in all its forms, is more the problem than the solution.
I’ve always thought of Kaine as something of a milquetoast, so good for him.
You might wonder what, exactly, is the big deal here. After all, Democrats haven’t been the ones pushing for spending cuts. Republicans have. But most of the time, Democrats have ceded the general point to Republicans that debt is a major problem, and that in some form or another, fiscal policy should focus on reducing that debt. The realization that growth is how you close the deficit and that austerity (because it saps growth) is counterproductive allows Democrats to form a counter-argument that doesn’t cede to the GOP’s premise. And that in itself is an important change in the debate.
Make no mistake that the data supports this concept.
Now, itâ€™s surely the case that the spell isnâ€™t as broken as all thatâ€“the force has been disturbed, the U-Mass team sprayed a heavy hose on the hair-on-fire austerions. But neither is Keynesianism about to break out all over.
Still, you gotta love the incredibly juicy irony of whatâ€™s going on. Nobel laureates, former Treasury officials, think tankers, yours truly and zillions of others have been trying to break through on this for years. Some bespectacled twenty-something comes along, and for a term paperâ€“a term paper!â€“tries to replicate Rogoff and Reinhartâ€™s study, he perseveres, gets some solid guidance from his profs, who happen not to genuflect at either the alter of austerity or the academic hierarchy (Iâ€™m afraid other profs might have shut the young man down)â€“and BOOM!
Somebody really needs to make a movie out of all of this someday.
I don’t think the debunking of Reinhart/Rogoff all by itself caused the partial collapse of the austerity myth. There were signs of disillusionment elsewhere, especially in Europe. The debunking may have been a tipping point, though. The myth isn’t dead, of course; it will be with us for a long time. But it’s nice to see the myth being challenged.
I disagree with White and Parti that this is going to hurt President Obama. The more Dems tell Republicans they can take their austerity and shove it, the weaker the Republican position. My sense of things is that the President is less pro-austerity than pro-get something passed, even if it isn’t what he wants.
This is an astonishing story I’ve been struggling to wrap my head around this morning as I wait for the coffee to drip.
“TED (Technology, Entertainment and Design) is a global set of conferences owned by the private non-profit Sapling Foundation, formed to disseminate ‘ideas worth spreading,’ says Wikipedia. In March, a venture capitalist from Seattle named Nick Hanauer gave a talk at TED on income inequality that clearly and succinctly destroyed all the BS talking points about the rich being “job creators.” Middle-class consumers are the real job creators, he said.
Most TED conference talks are published on the TED website for public viewing. But this one was embargoed for being too politically partisan. Over the past few hours several leftie bloggers and columnists such as Ezra Klein learned of this and gave TED a good smacking for being weenies. TED shot back that the charges against them are unfair; but they also admitted they embargoed the talk for being too politically partisan. So, yeah, they are weenies.
However, being weenies, they caved to pressure and released the talk. You must watch this:
I knew I shouldn’t read Brooks’s most recent column, because he’s talking about the economy, and Brooks is always in over his head when talking about the economy. But then he’s in over his head about just about anything else, too. I suspect he could be quite the authority on many simpler things, such as cheese graters or crew socks, but anything that involves more than a couple of moving parts tends to confuse him.
Nevertheless I waded in, to find Brooks explaining that neither conservatives nor liberals really understand what’s wrong with the economy. But he has perceived that its problems are structural, not cyclical. “Fixing these structural problems should be the order of the day, not papering over them with more debt,” he says.
So what are these structural problems?
“First, there are those surrounding globalization and technological change. Hyperefficient globalized companies need fewer workers. As a result, unemployment rises, superstar salaries surge while lower-skilled wages stagnate, the middle gets hollowed out and inequality grows.”
I hadn’t noticed a need for fewer workers in those globalized companies, just cheaper ones, such as in Mexico or China.
There’s actually a free-market solution for that, though. Once there’s no middle class to play the role of “consumer,” the globalized companies won’t have any “consumers” around to buy their products, and the whole house of cards will collapse. A correction! Or, a depression!, depending on your point of view. But let’s go on.
“The United States, once the worldâ€™s educational leader, is falling back in the pack. Unemployment is high, but companies still have trouble finding skilled workers.”
I though they didn’t need workers? But is it true companies are having trouble finding skilled workers? I have heard of some isolated incidents, but I have a hard time believing this is a major trend.
“Over the decades, companies and other entities have implanted a growing number of special-interest deals into the tax and regulatory codes, making it harder for politically unconnected, new competitors, making the economy less dynamic.”
There may be something to this, but essentially it comes down to the big companies rigging the system to eliminate competition from smaller companies. Theodore Roosevelt had a similar problem to deal with, as I recall. In his case, government was the solution.
“These and other structural problems have retarded growth and wages for decades.”
Beside shipping jobs to Asia, what’s suppressing wages are a whole mess of other things, including the decline of unions, which Brooks doesn’t mention.
“Consumers tried to compensate by borrowing more. Politicians tried to compensate by reducing the tax bill, increasing deficit spending, ensuring easy credit for homebuyers”
Yes, blame the poor homebuyers, not predatory lenders, for the financial crash.
“… and by helping workers shift out of the hypercompetitive, globalized part of the economy…”
… since their jobs were lost forever to Bangladesh …
“…and into the less productive and more sheltered parts of the economy â€” mostly into health care, government and education.”
I hadn’t noticed that government was doing all that much to train people to take jobs in health care, government, and education, and in any case government jobs have been chopped all over the place lately. And I’m not sure what he means by “sheltered.” Is Brooks hallucinating?
“But you can only mask structural problems for so long. The whole thing has gone kablooey. The current model, in which we try to compensate for structural economic weakness with tax cuts and an unsustainable welfare state, simply cannot last. The old model is broken. The jig is up.”
Granted, the tax cuts aren’t doing a hoo-haw to get the economy moving, but the “unsustainable welfare state” is mostly a figment of the Right’s imagination. America is pretty chintzy on “entitlements” compared to a lot of other countries, but if Brooks can’t appreciate the structural role played by Medicare and Social Security and other props to keep the middle class from sinking into a third-world bog, then he truly is an idiot.
“Unlike the cyclicalists, we structuralists … “
“We structuralists.” That’s so … affected.
“… do not believe that the level of government spending is the main factor in determining how fast an economy grows. If that were true, then Greece, Britain and France would have the best economies on earth. (The so-called European austerity is partly mythical.)”
Translation: Brooks can’t believe genuine austerity is failing as badly as it is obviously failing in Yurp, so he assumes the Yurpeans must be doing it wrong. But the only partly mythical thing here is Brooks’s brain.
But let’s go back to “we structuralists do not believe that the level of government spending is the main factor in determining how fast an economy grows.” I don’t think anyone believes just spending a lot of money makes the economy grow. This is a fantasy the Right has pushed for ages; that the Left believes spending lots of money in and of itself is a good thing. If that were true, then let’s role the dice and use the entire federal budget to give ourselves vacations in France. That would certainly be great for the economy … of France.
What some of us believe is that if taxpayer money is invested in things like, oh, I don’t know — education, maybe. Brooks says we need a better educated workforce. Does he think the “free market” will take care of that? On what planet?
Make college more affordable, for example. Make student loans cheaper. Throw some money into failing public schools so that the buildings aren’t falling apart, class sizes are smaller, and at least some of the books in the library were published after 1989.
Throw some money at infrastructure issues such as the energy grid, roads, and bridges; plus information technology. Business needs this stuff to thrive, you know. Plus, it makes jobs.
Let’s go with a single-payer health care system, to get health care costs off the backs of business and prevent medical bankruptcy from ruining so many lives. Plus, a healthy workforce is a more productive workforce.
Invest in scientific research. All that pure science stuff is what provides the know-how for new products of the future.
Etc. etc. There are a few more paragraphs in Brooks’s column, but I lacked the strength to go further. Brooks is a freaking idiot.
I actually do agree with him that the ultimate problems are structural and not cyclical, but as I see it, the whole consumerist-capitalist economic system is unsustainable. We’re going to have to evolve into new economic models. But that’s hard to do when people conflate economic theory with religion. So I’m not hopeful.