Tuesday, May 08, 2012 4:22:53 AM
America’s idiot rich
The 1 percent is complaining louder than ever. There can be no reasoning with people this irrational
By Alex Pareene
Monday, May 7, 2012 06:45 AM CDT
Some unknown but alarming number of ultra-rich Americans are now basically totally delusional and completely divorced from reality. This is now an inescapable fact, confirmed by multiple media accounts of billionaire thought and an entire special issue of the New York Times Magazine.
Here’s a brief list of insane things that are apparently common knowledge among the billionaire class:
- That President Obama and the Democratic Party have treated wealthy finance industry titans maliciously and unfairly.
- That the fact that they are perversely wealthy and growing richer during a period of mass unemployment and staggering debt is a sign that the economy is functioning correctly.
- That poor people, and not the finance industry, are responsible for the financial crisis and subsequent recession.
- That the ultra-wealthy are wealthy because they are smarter and work harder than everybody else, and that they are resented for their success.
- That the ultra-wealthy in general, and finance industry executives in particular, are the victims of widespread prejudice akin to that faced by ethnic minorities.
There can be no reasoning with people this irrational. Any attempt to do so will fail, as Barack Obama, whose main goal is to maintain, not upend, the system that made these people so disgustingly wealthy, is learning. It’s growing harder and harder to pretend that the fantastically wealthy have a sophisticated understanding of politics — or math, or economics, or cause-and-effect.
The Times Magazine has the story of the Obama campaign’s difficulty in matching its record 2008 contributions from the finance sector [ http://www.nytimes.com/2012/05/06/magazine/obamas-not-so-hot-date-with-wall-street.html?pagewanted=all (at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75127832 )]. It contains this now surely infamous passage, a true marvel of that classic rich guy cocktail of self-pity mixed with self-regard:
One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief.
The problem with inequality in America, you see, is apparently that it has led to rhetorical attacks on the winners of the class war. Greg Sargent wrote [ http://www.washingtonpost.com/blogs/plum-line/post/its-not-easy-being-a-wall-street-gazillionaire-these-days/2012/05/02/gIQAAWzZwT_blog.html ], in response to this story: “One wonders if there is anything Obama could say to make these people happy, short of declaring that rampant inequality is a good thing, in that it affirms the talent and industriousness of the deserving super rich.”
I’m not sure even that would help, because there is already another presidential candidate who likely believes that. In the same issue of the Times Magazine, we have the story of Edward Conard [ http://www.nytimes.com/2012/05/06/magazine/romneys-former-bain-partner-makes-a-case-for-inequality.html?pagewanted=all (second item at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75197318 )], a retired Bain Capital executive who is about to release a book (presumably against the wishes of his friend and former colleague Mitt Romney) arguing “aggressively” that massive wealth disparity is an unalloyed Good Thing. In fact, Conard thinks “the wealth concentrated at the top should be twice as large.” (Paul Krugman does not think much of his argument [ http://krugman.blogs.nytimes.com/2012/05/02/rich-guy-says-we-should-be-grateful-for-his-wealth/ ].)
Conard also detests charitable giving and has developed a statistical method for finding a spouse, because he is a sociopath. Because he is very wealthy, he is very used to his ideas being taken seriously — even economists offer him (qualified) praise. He is utterly convinced that his book will convince every serious person that wealthy finance industry titans not only deserve their wealth, but make society a better place for all. He has basically taken what is a gut feeling among his class and turned it into a philosophy and an argument [ http://blogs.reuters.com/felix-salmon/2012/05/02/how-the-1-think-about-their-wealth/ ].
Perhaps the most persuasive argument — for Republicans — for nominating Mitt Romney was that he is of this class. The fact that he is more comfortable in a boardroom than a Pizza Ranch is actually a major asset, because the Democrats had, since the Clinton years, gradually won over much of Wall Street, helping them to erode the GOP’s massive Reagan-era fundraising advantages. Romney can win that money back. Our friend Ed Conard even created a shell corporation [ http://www.theatlanticwire.com/politics/2011/08/anonymous-romney-donor-comes-forward/40923/ ] for the sole purpose of secretly donating $1 million to Romney’s super PAC. The Sunlight Foundation shows in Figure 5 here [ http://sunlightfoundation.com/blog/2012/01/26/on-fire-how-the-finance-insurance-and-real-estate-sector-drove-the-growth-of-the-political-one-percent-of-the-one-percent/ ] that the share of finance money going to Democrats skyrocketed during Clinton’s first term, and rose again in 2008. Clinton rewarded his super-rich donors with extensive deregulation — and they rewarded him by shifting the majority of their donations back to the GOP. (Finance, naturally, likes to chase winners: They give more to whichever party seems to be on the upswing, as Obama learned in 2010 and will learn again this year.)
They are one of those industries that is used to getting exactly what it always wants from Washington, because they essentially own both parties. (As opposed to say, oil and gas, ally of Republicans, or the entertainment industry, ally of Democrats.) So Dodd-Frank made them very, very mad. But not just mad: Confused, hurt, betrayed. There is a psychosocial element to the response, clearly on display in the story of the rich people who wish for a speech about how they are not evil. They are essentially spoiled children who have just been lightly reprimanded for the first time that they can remember.
Obama has not been remotely unkind to Wall Street, even as he’s grudgingly adopted a slightly more leftist tone. The grotesque nature of our campaign finance system has effectively made economic populism impossible. Even populist rhetoric not backed up by any sort of action is apparently hurtful to these masters of the universe.
But Conard is wrong. The rich are not intrinsically more virtuous or hardworking than the masses. They are also, decidedly, not any smarter. And they receive their news, and their political opinions, from the exact same organs as everyone else. They may be more likely to read the Wall Street Journal than the New York Post, but both of those Murdoch-owned newspapers carry similar lies on their editorial pages. In other words, they actually believe their bullshit. They honestly believe that mean Democrats invented “Occupy Wall Street” in order to make them scapegoats for a crisis that they feel no responsibility for. People who are in the business of extracting fees and interest from consumers, or moving rich people’s money around, unironically think of themselves as “job creators.”
The result of their last few decades of job creation has been the decoupling of productivity grown from wage growth
[ http://tpmdc.talkingpointsmemo.com/2012/05/40-years-of-workers-left-behind-chart.php?ref=fpa ] and skyrocketing compensation for CEOs and finance industry workers
CEO-to-worker compensation ratio, with options granted and options realized,1965–2011
[ http://www.epi.org/blog/ceo-pay-finance-sector-income-inequality/ ].
But appeals to logic, history and common sense will not get you far with a roomful of very rich guys who feel paranoid and victimized. The Wall Street types asked to become Obama donors wanted assurances that the president would not criticize his opponent’s finance industry record. It’s not enough that they’re ridiculously wealthy: They wish to be utterly above criticism. That’s the most important thing to remember: These people, the .01 percent, are mostly childish idiots. Idiot children have now accumulated all of the nation’s wealth and they are terrified that someone might try to take some of it away.
Copyright © 2012 Salon Media Group, Inc.
http://www.salon.com/2012/05/07/americas_idiot_rich/singleton/ [with comments]
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Sandy Weill, Builder Of Too Big To Fail, No Longer Accepts Blame For Crisis
Mark Gongloff
Chief financial writer, The Huffington Post
Posted: 05/07/2012 5:51 pm
The man who brought you Too Big To Fail has had just about enough of everybody blaming him for big banks failing.
In an interview with Fortune's Nin-Hai Tseng [ http://finance.fortune.cnn.com/2012/05/07/sandy-weill-philanthropy/ ], Sandy Weill, the former CEO of Citigroup, said his lumbering beast of a bank, and other lumbering beasts like it, aren't to blame for the crisis.
Weill was the CEO of Citigroup until late 2003, during the key "becoming a monstrous disaster waiting to happen" phase of its existence. He lobbied, tirelessly and successfully, to break down Depression-era regulations against banks becoming too big. He even has a plaque in his office that boasts "The Shatterer of Glass-Steagall," according to a New York Times report [ http://www.nytimes.com/2010/01/03/business/economy/03weill.html?pagewanted=all (first item at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45208032 )].
And after (or, really, before) those regulatory shackles were cast aside, Weill worked tirelessly and successfully to bolt as many moving parts onto Citigroup as he could. Every other bank followed suit, just to keep up. Citi was king of them all for a while, the biggest bank in the world, and Weill rode off into the sunset in 2006, when he retired as chairman, his handiwork complete.
And then the wheels started to come off. About a year and a half after his departure as chairman, Citi announced horrific losses due to its exposure to subprime mortgages, and a year after that the government pumped $45 billion into the bank to keep it from creating a black hole into which all of our money would be sucked. Citi has ever since been shedding as many of the parts Sandy Weill bolted on as it can.
So, naturally, Sandy Weill, whom Time magazine labeled one of the "25 People To Blame For the Financial Crisis [ http://www.time.com/time/specials/packages/completelist/0,29569,1877351,00.html ]," feels deep regret for all of this, no?
No! Are you kidding? Do you really think the man who loaded half his family tree onto a Citigroup jet for a Mexican vacation [ http://www.nypost.com/p/news/international/item_MfMoS4o6UiwbmMIm5kAinL ] just weeks after the bank received the second of its enormous taxpayer bailout checks still has a functioning shame gland?
In the Fortune interview, Weill said "too big to fail" is not the problem you are looking for. In fact, making banks smaller would be the real problem, come to think of it:
I think this whole concept of fixing 'too big to fail' is a problem because when you create an environment where you can't make a mistake then you're also creating an environment where nothing good is going to happen.
So true: If you don't give an alcoholic the keys to the liquor cabinet and the Ferrari, then obviously nothing bad can happen. But then nothing much fun can happen, either, can it?
In fact, Weill said, the time has come for us all to stop with the pointing of the fingers at this or that ex-CEO and just move on. After all, we were all equally to blame. Maybe, before you start pointing the finger at Sandy Weill, you should head for the mirror and point a finger there, too:
I would say there is enough blame to go around. I think that the financial industry made some mistakes that created issues, our government made mistakes that created issues, the regulators made mistakes that created issues. People made mistakes that created issues.
Lots of people were at fault. I think we want to move on. There comes a time when you stop punishing people and ask how do we build this back in a way that's going to be safer for the future? We should concentrate on the future and positive thinking.
Sandy Weill hopes you all feel adequately ashamed of yourselves.
Copyright © 2012 TheHuffingtonPost.com, Inc.
http://www.huffingtonpost.com/mark-gongloff/sandy-weill-too-big-to-fail_b_1497761.html [with comments]
===
Lehman E-Mails Show Wall Street Arrogance Led to the Fall
Illustration by Brian Walker
By William D. Cohan
May 6, 2012 5:06 PM CT
If one wants to understand the full complicity of Wall Street in the Great Recession, look no further than the voluminous package of pre-collapse Lehman Brothers documents [ http://www.jenner.com/lehman/docs/ ] that have been made available by the law firm Jenner & Block LLP, which has acted as the coroner in the Lehman post-mortem.
Most important, the cache dispels the myth that Dick Fuld, chief executive officer of Lehman Brothers Holdings Inc., and his close associates were unaware of the risks their business faced in 2007 and 2008. That would be bad enough, but the more devastating reality is that Fuld and his sycophants were warned repeatedly but were blinded by their hubris.
The records confirm, yet again, that the “forces-out-of- our-control” argument we hear from Wall Street leaders is bunk. It is the ill-advised behavior of one banker after another, day in and day out, that leads to the sort of devastating financial crisis we are only now emerging from.
For instance, at a Lehman board meeting in September 2007, according to a copy of the presentation in the data cache, Lehman executives presented a clear summary of the brewing crisis. “The initial tremors were felt at the end of 2006,” the board was told, “when the poor loan performance of sub- prime borrowers began to be a cause for concern in the marketplace. This was evidenced by a gradual spread widening in the asset backed index.” The presentation continued: “The market continued to widen as it became apparent that the performance problems in mortgage loans was not going to abate and was no longer limited to the sub-prime market but also affecting the Alt-A product.”
Dumping Assets
Then the board heard about the problems at two Bear Stearns Asset Management hedge funds that “ran out of liquidity” in June and July 2007 and were forced to shut down, leading to other hedge funds dumping assets into the market “adding additional stress to the market.” By August 2007, the commercial paper market was “facing challenging conditions, with very little liquidity” and “funding for almost any type of mortgage or ABS” -- asset-backed security -- “product dried up.” You can’t say the top Lehman management didn’t understand what was happening in the market.
So did other firms: At Goldman Sachs Group Inc. (GS), these “initial tremors” in December 2006 were sufficient to get the firm to make a huge proprietary bet -- referred internally at Goldman as the “Big Short” -- that paid off big-time in 2007 and helped to put the firm in a position to weather the financial crisis a year later.
At Lehman, though, it was business as usual. Management chose to ignore the rising concerns. By Labor Day weekend 2007, Lehman, like Bear Stearns and Citigroup, had been in talks with Citic Group, the leading Chinese investment bank, which wanted to make an investment in a Wall Street firm, a potential lifeline in a crisis. Lehman’s top executives -- Fuld and David Goldfarb, the firm’s chief financial officer -- weren’t interested, at least on the terms that Citic was proposing. If Lehman were to do a deal with Citic, Goldfarb wrote Fuld and others in an e-mail, “This will signal a major sign (which obviously isn’t true and will feed into rimors, etc) and put us in a category of those who needed an infusion to help them out of this market mess.”
Fuld responded with his usual misguided bravado: “Sounds to me like another non-starter. If it’s just about price [and] who is the right partner then tell them NFI.” Goldfarb couldn’t resist piling on. “Agreed 1000 percent,” he wrote back to Fuld. “How do you spell stupidity in Chinese!!!”
Will and Skill
Then the conversation descended into a pathetic display of macho arrogance. “What happened,” Fuld asked Goldfarb, “u didn’t like my sumdum spelling?” Responded Goldfarb, “I love it, better said then I could have. I think Mizuho is the best option for strategic partner. Any potential investor that would consider BS” -- Bear Stearns -- “in the same breath as LB should go fungoo themselves!!!” Fuld replied, “I agree we need some help -- but the Bros always wins!!” Goldfarb agreed. “Absolutely, will and skill always win, and that be us!!!!” Concluded Fuld: “Got it so do u.”
Fuld was well-paid for these insights. Between 2000 and 2007, according to various documents released as part of Fuld’s testimony before Congress, he took out of Lehman some $500 million in cash.
The Jenner & Block trove shows that instead of seeking the capital they so desperately needed, Fuld and Goldfarb believed Lehman was an impenetrable fortress. “During the last downturn” -- 2001-02 -- “the firm outperformed its competitors and established a platform for further growth,” Lehman management told the board in January 2008. “The firm pursued a counter-cyclical strategy, investing in talent while its competitors were in retrenchment mode” and then outperformed the peer group.
The clear message: Lehman would use a similar approach through the 2008 downturn. At the board meeting in January, Lehman management explained that while other Wall Street firms were raising “significant capital” in the “past three months,” for Lehman “aggressive capital raising is not necessary” because the firm “remains strongly capitalized” thanks to capital “generated by earnings.”
Knowing that Lehman would be belly up by the end of September 2008, reading these e-mails and documents is cringe- inducing. Unfortunately, given the lack of leadership we still see on much of Wall Street, they will hardly be the last of their kind.
William D. Cohan, a former investment banker and the author of the recently released "Money and Power: How Goldman Sachs Came to Rule the World [ http://www.amazon.com/Money-Power-Goldman-Sachs-World/dp/038552384X ]" and the New York Times bestsellers "House of Cards [ http://www.amazon.com/House-Cards-Hubris-Wretched-Excess/dp/0385528264 ]" and "The Last Tycoons [ http://www.amazon.com/The-Last-Tycoons-Secret-History/dp/0385514514 ]", is a Bloomberg View columnist. The opinions expressed are his own.
To contact the writer of this article: William D. Cohan at wdcohan@yahoo.com.
To contact the editor responsible for this article: Tobin Harshaw at tharshaw@bloomberg.net.
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-05-06/lehman-e-mails-show-wall-street-arrogance-led-to-the-fall.html [with comments]
===
Look Who’s Pushing Homeowners Off the Foreclosure Cliff
Illustration by Bloomberg View
By the Editors
May 6, 2012 5:01 PM CT
One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.
Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.
The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules [ http://files.consumerfinance.gov/f/201204_cfpb_factsheet_putting-service-back-in-mortgage-servicing.pdf ] to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.
All mortgages require homeowners to maintain insurance on their property. Most mortgages also allow the lender to purchase insurance for the home and “force-place” it if a policy lapses or is deemed insufficient. These standard provisions are meant to protect the lender’s collateral -- the property -- if a calamity occurs.
High-Priced Policies
Here’s how it generally works: Banks and their mortgage servicers strike arrangements -- often exclusive -- with insurance companies in which the banks agree to buy high-priced policies on behalf of homeowners whose coverage has lapsed. The bank advances the premium to the insurer, and the insurer pays the bank a commission, which is priced into the premium. (Insurers say the commissions compensate banks for expenses like “advancing premiums, billing and collections [ http://newsroom.assurant.com/lender-faq.cfm ].”) The homeowner is then billed for the premium, commissions and all.
It’s a lucrative business. Premiums on force-placed insurance exceeded $5.5 billion in 2010, according to the Center for Economic Justice [ http://financialservices.house.gov/UploadedFiles/072811birnbaum.pdf ], a group that advocates on behalf of low- income consumers. An investigation by Benjamin Lawsky, who heads New York State’s Department of Financial Services, has found nearly 15 percent of the premiums flow back to the banks.
It doesn’t end there. Lenders often get an additional cut of the profits by reinsuring the force-placed policy through the bank’s insurance subsidiary. That puts the lender in the conflicted position of requiring insurance to protect its collateral but with a financial incentive to never pay out a claim.
Both New York and California regulators have found the loss ratio on these policies -- the percentage of premiums paid on claims -- to be significantly lower than what insurers told the state they expected to pay out, suggesting that premiums are too high. For instance, most insurers estimate a loss ratio of 55 percent, meaning they’ll have to pay out about 55 cents on the dollar. But actual loss ratios have averaged about 20 percent over the last six years.
It’s worth noting that force-placed policies often provide less protection than cheaper policies available on the open market, a fact often not clearly disclosed. The policies generally protect the lender’s financial interest, not the homeowner’s. If a fire wipes out a house, most force-placed policies would pay only to repair the structure and nothing else.
Lack of Clarity
Homeowners can obviously avoid force-placed insurance by keeping their coverage current. Banks are required to remove the insurance as soon as a homeowner offers proof of other coverage. But the system, as the New York state investigation and countless lawsuits have demonstrated, is defined by a woeful lack of clarity, so much so that Fannie Mae has issued a directive [ https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2012/svc1204.pdf ] to loan servicers to lower insurance costs and speed up removal times. And it said it would no longer reimburse commissions. The recent settlement [ http://www.nationalmortgagesettlement.com/ ] with five financial firms over foreclosure abuses also requires banks to limit excessive coverage and ensure policies are purchased “for a commercially reasonable price.”
That’s not enough. Tougher standards should be applied uniformly, regardless of the loan source. Freddie Mac should follow Fannie Mae’s lead and require competitive pricing on the loans it backs. The consumer bureau should require mortgage servicers to reinstate a homeowner’s previous policy whenever possible, or to obtain competitive bids when not.
The bureau should also prevent loan servicers from accepting commissions or, at the very least, prohibit commissions from inflating the premium. It should require servicers to better communicate to borrowers that their policy has lapsed, explain clearly what force-placed insurance will cost and extend a grace period to secure new coverage. Finally, states should follow the example of California, which recently told force-placed insurers to submit lower rates that reflect actual loss ratios.
Many homeowners who experience coverage gaps have severe financial problems that lead them to stop paying their insurance bills. They are already at great risk of foreclosure. Banks and insurers shouldn’t be allowed to add to the likelihood of default by artificially inflating the cost of insurance.
To contact the Bloomberg View editorial board: view@bloomberg.net.
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-05-06/look-who-s-pushing-homeowners-off-the-foreclosure-cliff.html [with comments]
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History Repeats Itself in New Gilded Age
Ted Frier
APRIL 20, 2012 3:29PM
Just 55 well-to-do white guys wrote the US Constitution during that Philadelphia summer of 1787. And to hear the conservatives of the current Roberts Court tell it, the Founding Father's "original intent" was for small groups of wealthy white guys to rule America ever since.
As we anxiously wait to see whether a Republican-dominated Supreme Court has the audacity to strike down the signature accomplishment of the elected Democratic branches and throw 30 million recently-insured Americans back on the street in what would almost certainly be a narrow 5-4 partisan decision, it's becoming increasingly obvious that in conservative eyes not all "judicial activism" is created equal.
Actions by the Supreme Court that advance personal freedom -- such as the rights of women to control their own bodies, or the rights of non-believers not to be proselytized to in public places, or the rights of criminal defendants to justice - are denounced by conservatives as assaults against The Natural Order of Things and subversive of both democracy and majority rule itself.
However, based on the behavior of these very same conservatives, judicial "activism" doesn't refer the actions of judges at all but rather to a state of non-conformance with the way conservatives think societies ought to be organized, with most power placed in just a few hands. And this is why conservatives don't look at their judicial power grabs as "activist" at all, but rather "restorative," in the same way Bush v. Gore wasn't "activist" because it restored Republicans to the White House or Citizens United wasn't "activist" because it restored plutocratic control to the American political process.
To wage class warfare you must first believe, as only conservatives do, that America is, and should always be, divided into separate and distinct classes, each with its own responsibilities and prerogatives.
That is why, says the Alliance for Justice, the Roberts Court "consistently pursues a political agenda that favors powerful corporate interests" while conservative Justices display a "striking willingness to engage in judicial activism to fulfill their ideological goals."
As they defend their timeless and "immutable principles" -- written in the very nature of the universe -- conservatives have also shown themselves to be uncommonly adaptive and flexible when it comes to inventing arguments out of whole cloth that advance their own self-interest.
Thus, ever since John Roberts became Chief Justice in 2005, the Alliance says the Supreme Court has "demonstrated an increased readiness to do whatever it takes to twist the law" in order to achieve the conservative movement's "decades-long campaign to elevate corporate profits and private wealth over individual rights and personal freedoms."
The severely right wing worldview that underlies the decisions of the Roberts Court fits loosely within a school of judicial thought known as "The Constitution in Exile," which Jeffrey Rosen in the New York Times defines as the belief that the entire social welfare and regulatory state in force since the New Deal "is unconstitutional as well as immoral."
Because the collapse of the capital markets in 2008 and those corporate scandals like Enron have provoked an important debate about the relative merits and dangers of the free market, while making chances of the political transformation conservatives seek seem "remote," Rosen says conservatives now appear "content, even eager, to turn to the courts to win the victories that are eluding them in the political arena."
This has produced what Rosen calls the "troubling paradox" of conservatives denouncing liberals for using the courts to "thwart" the will of the people while "succumbing to precisely the same temptation" themselves.
George F. Will is a perfect exemplar of this type. You will not find a conservative more hostile to, or contemptuous of, "the right to privacy" supporting a woman's right to choose than George Will. And yet, in his column just this week Will defends the right of the rich "to be left alone" as he insists a "vast" portion of life should be "exempt from control by majorities." And when our democratic system does not "respect a capacious zone of private sovereignty," Will thinks the courts need to step in to "police that zone's borders."
Conservatives cringe whenever they hear Thomas Jefferson's words insisting that "all men are created equal," which is why conservatives have always made the distinction between the "revolutionary" Declaration and a "conservative" Constitution that brings institutional order out of revolutionary chaos.
And yet, here is the conservative George Will saying the Constitution is a "companion" of the Declaration in that the whole point of government is to "secure pre-existing rights" not to "confer" new ones -- which is all beautiful poetry intended to obscure the reactionary recipe Will is concocting for preserving rank and privilege against popular agitation and change.
All restoration fantasies have their Golden Ages, says Rosen. And for the Constitution in Exile movement, that fondly-remembered yesteryear is the dominance the Republican Party enjoyed from the Gilded Age through the Roaring Twenties when business-friendly courts "steadfastly preserved an ideal of free enterprise" by routinely striking down laws meant to protect workers from the ravages of the unregulated market.
It was here that Mitt Romney's idea of a public corporation as a "person" first took root as conservatives sought to fashion the 14th Amendment's due process protections into what economic historian Kevin Phillips called "a sword conservative judges could use to cut down state and federal legislation for 'unreasonably' interfering with property and contracts."
Indeed, says Phillips, while judicial decisions voiding laws as unconstitutional were few and far between before 1850, during the Gilded Age they became commonplace as business-controlled state courts between 1885 and 1899 struck down more than a thousand local laws meant to protect workers.
One of the most notorious judicial power grabs was 1895's Pollock v. Farmer's Loan and Trust Co. in which the US Supreme Court invalidated the federal income tax. To the man on the street, the question before the bar was whether "consumption should pay all the taxes of the federal government or whether investment and speculation should bear their fair share of public burdens," writes William Swindler in his Court and Constitution in the 20th Century.
The New York World called the Court's decision "a triumph of selfishness over patriotism and another victory for greed over need."
A former Oregon governor said the ruling signified that "our constitutional government has been supplanted by a judicial oligarchy."
The St. Louis Post-Dispatch editorialized that "the corporations and plutocrats are as securely entrenched in the Supreme Court as in the lower courts which they take such pains to control."
Speaking for the Court minority, Justice John Marshall Harlan - "the Great Dissenter," who gave us the idea of a "colorblind" Constitution in his dissent the following year in Plessy v. Ferguson - said the Court's "disregard" for a century or more of history and practice "may well excite the gravest apprehensions" for it "strikes at the very foundations of national authority, in that it denies to the general government a power which is, or may at some time in a great emergency, such as that of war, become vital to the existence and preservation of the Union."
The late 1880s were a period of social unrest and class warfare - most of it provoked by the rich whose exploitations against the poor produced that great backlash known as the Progressive Movement.
And yet in the face of these mounting tensions, Harlan said the practical and direct effect of the Court's decision to invalidate a tax that had been in force since the Civil War "is to give certain kinds of property a position of favoritism and advantage that is inconsistent with the fundamental principles of our social organization -- and to invest them with power and influence that may be perilous to that portion of the American people upon whom rests the larger part of the burdens of government and who ought not to be subjugated to the domination of aggregated wealth any more than the property of the country should be at the mercy of the lawless."
So, how could it be that after more than a century of political, economic and legal evolution we have arrived right back where we started 100 years ago, with our political and legal branches once again beholden to -- and corrupted by -- plutocratic influences?
Well, to quote a famous American philosopher: "It's the economy stupid."
The late 1800s were a time very much like our own. A massive government jobs and stimulus program -- called The Civil War -- revolutionized the American economy and transformed a provincial agrarian society into a modern industrial one stitched together with government-subsidized transportation and communications networks.
During the 1870s and 1880s, the US economy expanded faster than ever before in the country's history, where between 1865 and 1898 the output of wheat increased 256%, corn 222%, coal 800% and railroad track mileage 567%.
Corporations - which are not "people" as Mitt Romney would have us believe but creatures of law and state -- became the dominant form of business organization.
And like any period of rapid economic change, new elites emerged to replace old ones, hardening into a new American plutocracy whose concentrated wealth helped elect a nearly unbroken succession of business-friendly Republican presidents.
From Abraham Lincoln in 1861 until Howard Taft in 1912, the Republicans occupied the White House for more than half a century, interrupted only by the split terms of Bourbon Democrat Grover Cleveland, whose hard money economic policies made him a Republican In Everything But Name.
This, in turn, led to the appointment of conservative Supreme Court justices drawn mostly from the ranks of corporate and railroad legal practice, whose views on the superiority of capital over labor were reflected in the priority given by the courts of this era to capitalists, private property and freedom of contract.
Just like today.
Michael Lind, author of the new book, Land of Promise: An Economic History of the United States, argues that it often takes American politics, government and the law a generation or two to catch up with technology-induced economic change -- like the unchallenged power exercised by the Robber Barons of the Gilded Age.
Lind lists three such revolutions in recent American history: The first, based on steam, produced the railroad, steam-powered factory and telegraph. The second was built around the internal combustion engine. And the most recent is the one we are experiencing today, based on the information technology that Lind says is rapidly transforming the way we work and play.
Lind says that the changes wrought by the IT revolution in our own time are undermining the political and legal structures of the New Deal by creating a new kind of "global corporation" that draws heavily on labor and supply chains extending across many nations but regulated by none.
The misalignment between political and economic power can grow for decades, says Lind, until the abuses and exploitations the political system finds itself powerless to address explode in a cataclysm of long delayed reform, such as the Civil War and Reconstruction, the Progressive Movement and New Deal and, perhaps today, Occupy Wall Street.
Essential reforms today are being filibustered and delayed because conservatives "mindlessly cling to the half-century-old dogmas of right-wing opponents of the New Deal," says Lind.
And the reason they do, says New York Times economist Paul Krugman, is "soaring inequality."
The huge wage gaps that have opened over the past 30 years as incomes have tripled at the top while stagnating at the middle and bottom is at the root of both America's polarized politics and the country's inability to adequately respond to crisis, says Krugman.
Rising incomes at the top have created a New American Plutocracy that has warped the nation's intellectual and political life, says Krugman, as the super-rich have bought themselves a political party as insurance against the future -- like some kind of credit default swap.
As the wealthy become ever more aware of themselves as a distinctive and, in their own minds, embattled class, this disengaged plutocracy begins to exhibit all the classic defensive characteristics of a reactionary caste, whose inability to relate to those outside their charmed circle is perfectly manifested in Mitt Romney's wooden and socially inarticulate behavior around other human beings.
The widening gap between the parties, which is directly related to higher income inequality, is occurring because Republicans are moving far to the right not because Democrats are moving left. Krugman says we see this most obviously in the Republican proposals for health care reform that the President adopted as his own template for Obamacare only to see Republicans denounce their own ideas as Marxist-Leninist "Socialism!"
What all of this adds up to is that Republicans, and their appointees on the Supreme Court, are no longer engaged in the task of genuine governing but in the narrow protection of privilege at all cost.
We have no way of knowing for certain how the Roberts Court will rule on the constitutionality of Obamacare or its individual mandate.
But it's possible that the rigor mortis of class and caste thinking is so far advanced among the Court's reactionary majority that it might foolishly provoke what Justice Harlan cautioned his own colleagues against more than a century ago when he warned that by privileging power over people the Court's conservatives were inviting "a contest which in some countries has swept away, in a tempest of frenzy and passion, existing social organizations, and put in peril all that was dear to the friends of law and order."
Ted Frier is an author and former political reporter turned speechwriter who at one time served as communications director for the Massachusetts Republican Party, helping Bill Weld become the first Bay State Republican in a generation to be elected Governor. He was Chief Speechwriter for Republican Governor Paul Cellucci and Lt. Governor Jane Swift. Ted is also the author of the hardly-read 1992 history "Time for a Change: The Return of the Republican Party in Massachusetts." So, why the current hostility to the Republican Party and what passes for conservatism today? The Republican Party was once a national governing party that looked out for the interests of the nation as a whole. Now it is the wholly-owned subsidiary of self interest. Conservatism once sought national unity to promote social peace and harmony. Now conservatism has devolved into a right wing mutation that uses divide and conquer tactics to promote the solidarity of certain social sub-groups united against the larger society while preserving the privileges of a few.
© 2012 Salon Media Group, Inc.
http://open.salon.com/blog/ted_frier/2012/04/20/history_repeats_itself_in_new_gilded_age [with comments]
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Health Care Access Worsened For Americans Since 2000: Report
Americans are finding it more difficult to get health care and dental care they need because of cost and other reasons, even if they have health insurance, according to a new study.
05/07/2012
http://www.huffingtonpost.com/2012/05/07/health-care-access-urban-institute_n_1497658.html [with comments]
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Health Care Costs Have Older, Wealthier Americans 'Terrified,' Survey Shows
Health care costs are a major concern for older Americans, even those who have money in the bank, according to a new survey.
05/07/2012
http://www.huffingtonpost.com/2012/05/07/health-care-costs-older-wealthier-americans_n_1495827.html [with comments]
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To understand economic struggles, Romney says he meets with regular families - off the record
By Associated Press, Published: May 4, 2012
PITTSBURGH — Mitt Romney says he learns about what it’s like to struggle in a difficult economy by sitting down to chat with regular people. But the Republican presidential candidate doesn’t want anybody to see it — and his campaign won’t say who he meets with or when the meetings occur.
In interviews and on the campaign trail, Romney regularly says that he learns about the struggling economy by talking to people affected by it. Earlier this week, he said he meets with families “almost every day.” On Friday, Romney said the talks are “off the record” — and that he agrees to keep private the names of the people he meets with.
“Before I begin an event like this, I typically am able to sit down with a few people on an off-the-record kinda basis,” Romney said as he delivered his standard campaign speech Friday in Pittsburgh.
“I agree not to say who they are to the members of my media,” he said, before joking: “My media, I don’t have my media, I wish I had my media. To members of the media.”
That description was slightly different from one he offered on Tuesday.
“So far during my campaigns one of the highlights for me has been sitting down with three or four families almost every day without the camera there,” he said during an interview with CBS News. “Most of them are done privately — that is a wonderful way for me to understand how people are really feeling.”
Aides did not respond to repeated requests for information about the meetings and the participants, including when the meetings take place, who has participated or even which states they are from. Aides also wouldn’t say whether any meetings were held Thursday or Friday, when Romney campaigned in Virginia and Pittsburgh, respectively.
The meetings aren’t listed on Romney’s public schedule.
On Wednesday, a spokesman said Romney had no such private meetings before an appearance that day at a small business in Chantilly, Va.
“Almost every single small business.most every public event that we have, we have these middle-class families do a round-table with the governor,” Romney spokeswoman Gail Gitcho said Wednesday when asked to explain what Romney said in Tuesday’s television interview. “It’s more productive to do it without the cameras. He hears from them about the Obama economy; he hears what their concerns are in the states.”
Romney has held a few round-table events with voters while cameras were present.
He held one with veterans in South Carolina on Veterans Day last year, with housing industry businesspeople in Florida before the primary and with business owners in Nevada before the caucuses. After becoming the presumptive nominee, Romney held a round-table with Hispanic community leaders in Arizona.
He also meets regularly with the owners of the companies who host his campaign events. Almost all of Romney’s stops on the trail are in warehouses or offices of local small businesses.
But instead of keeping these stories secret, he’ll often incorporate them into his campaign speech as sad examples of a suffering economy or to highlight what America’s entrepreneurial economy can do. There’s a struggling barber, for example, who’s putting off retirement. On the other hand, there’s an immigrant who came to the U.S. and founded a company that helps with pioneering spinal surgery. Romney appeared at that company, NuVasive, in southern California in late March.
“I’m amazed by the hard work and the entrepreneurial spirit of the American people,” Romney said Friday.
Copyright 2012 The Associated Press
http://www.washingtonpost.com/national/to-understand-economic-struggles-romney-says-he-meets-with-regular-families-_-off-the-record/2012/05/04/gIQAwWZt1T_story.html [with comments]
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An Oasis, Once Gilded, Now Greened
The glass conservatory where Duke grew her beloved orchids.
May 3, 2012
HILLSBOROUGH, N.J.
TEENAGERS growing up in this part of Central New Jersey used to boast of how they had jumped the stone walls into Doris Duke’s 2,740-acre estate here. How many actually made it past her private police force and how many merely bragged about doing so are lost to the haze of memory.
But the legend speaks to the mystery of Doris Duke, “the richest girl in the world [ http://query.nytimes.com/mem/archive/pdf?res=F20613FA385B137A93C0AB178AD95F478385F9 ( http://bit.ly/K2XdNy )],” who, if the newspapers of her day were to be believed, ate her baby porridge from a 14-carat-gold cup, bathed in colored water spouting from an ancient Italian fountain in her bedroom and wore bathrobes made from the wool of a rare species of dwarf camel.
Variously a foreign correspondent, a surfing champion, a protector of Imelda Marcos, a preservationist and a philanthropist, Duke was the target of threats and the delight of gossip columnists from her birth in one of the richest families in America to her death in 1993, when the headline on her obituary in The New York Times [ http://www.nytimes.com/1993/10/29/obituaries/doris-duke-80-heiress-whose-great-wealth-couldn-t-buy-happiness-is-dead.html?pagewanted=all&src=pm ( http://nyti.ms/IYzfD0 )] memorialized her as the “Heiress Whose Great Wealth Couldn’t Buy Happiness.”
[...]
http://www.nytimes.com/2012/05/04/arts/doris-dukes-farm-hillsborough-nj-opening-to-public.html [ http://www.nytimes.com/2012/05/04/arts/doris-dukes-farm-hillsborough-nj-opening-to-public.html?pagewanted=all ]
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The Outsourced Life
By ARLIE RUSSELL HOCHSCHILD
Published: May 5, 2012
IN the sprawling outskirts of San Jose, Calif., I find myself at the apartment door of Katherine Ziegler, a psychologist and wantologist. Could it be, I wonder, that there is such a thing as a wantologist, someone we can hire to figure out what we want? Have I arrived at some final telling moment in my research on outsourcing intimate parts of our lives, or at the absurdist edge of the market frontier?
A willowy woman of 55, Ms. Ziegler beckons me in. A framed Ph.D. degree in psychology from the University of Illinois hangs on the wall, along with an intricate handmade quilt and a collage of images clipped from magazines — the back of a child’s head, a gnarled tree, a wandering cat — an odd assemblage that invites one to search for a connecting thread.
After a 20-year career as a psychologist, Ms. Ziegler expanded her practice to include executive coaching, life coaching and wantology. Originally intended to help business managers make purchasing decisions, wantology is the brainchild of Kevin Kreitman, an industrial engineer who set up a two-day class to train life coaches to apply this method to individuals in private life. Ms. Ziegler took the course and was promptly certified in the new field.
Ms. Ziegler explains that the first step in thinking about a “want,” is to ask your client, “ ‘Are you floating or navigating toward your goal?’ A lot of people float. Then you ask, ‘What do you want to feel like once you have what you want?’ ”
She described her experience with a recent client, a woman who lived in a medium-size house with a small garden but yearned for a bigger house with a bigger garden. She dreaded telling her husband, who had long toiled at renovations on their present home, and she feared telling her son, who she felt would criticize her for being too materialistic.
Ms. Ziegler took me through the conversation she had with this woman: “What do you want?”
“A bigger house.”
“How would you feel if you lived in a bigger house?”
“Peaceful.”
“What other things make you feel peaceful?”
“Walks by the ocean.” (The ocean was an hour’s drive away.)
“Do you ever take walks nearer where you live that remind you of the ocean?”“Certain ones, yes.”
“What do you like about those walks?”
“I hear the sound of water and feel surrounded by green.”
This gentle line of questions nudged the client toward a more nuanced understanding of her own desire. In the end, the woman dedicated a small room in her home to feeling peaceful. She filled it with lush ferns. The greenery encircled a bubbling slate-and-rock tabletop fountain. Sitting in her redesigned room in her medium-size house, the woman found the peace for which she’d yearned.
I was touched by the story. Maybe Ms. Ziegler’s client just needed a good friend who could listen sympathetically and help her work out her feelings. Ms. Ziegler provided a service — albeit one with a wacky name — for a fee. Still, the mere existence of a paid wantologist indicates just how far the market has penetrated our intimate lives. Can it be that we are no longer confident to identify even our most ordinary desires without a professional to guide us?
Is the wantologist the tail end of a larger story? Over the last century, the world of services has changed greatly.
A hundred — or even 40 — years ago, human eggs and sperm were not for sale, nor were wombs for rent. Online dating companies, nameologists, life coaches, party animators and paid graveside visitors did not exist.
Nor had a language developed that so seamlessly melded village and market — as in “Rent-a-Mom,” “Rent-a-Dad,” “Rent-a-Grandma,” “Rent-a-Friend” — insinuating itself, half joking, half serious, into our culture. The explosion in the number of available personal services says a great deal about changing ideas of what we can reasonably expect from whom. In the late 1940s, there were 2,500 clinical psychologists licensed in the United States. By 2010, there were 77,000 — and an additional 50,000 marriage and family therapists.
In the 1940s, there were no life coaches; in 2010, there were 30,000. The last time I Googled “dating coach,” 1,200,000 entries popped up. “Wedding planner” had over 25 million entries. The newest entry, Rent-a-Friend, has 190,000 entries.
And, in a world that undermines community, disparages government and marginalizes nonprofit organizations as ways of meeting growing needs of working families, these are likely to proliferate. As will the corresponding cultural belief in the superiority of what’s for sale.
*
WE’VE put a self-perpetuating cycle in motion. The more anxious, isolated and time-deprived we are, the more likely we are to turn to paid personal services. To finance these extra services, we work longer hours. This leaves less time to spend with family, friends and neighbors; we become less likely to call on them for help, and they on us. And, the more we rely on the market, the more hooked we become on its promises: Do you need a tidier closet? A nicer family picture album? Elderly parents who are truly well cared for? Children who have an edge in school, on tests, in college and beyond? If we can afford the services involved, many if not most of us are prone to say, sure, why not?
And the market expands to fill increasing demand. The director of research and development at the company eHarmony, for example, the champion of the marriage market, has envisioned expanding the company’s operations into later stages of adult life, and into workplace and college relations. EHarmony now operates in Canada, Brazil and Australia, as well as across Europe. The more members of diverse communities hunger for counsel, comfort, dates, support, the more outfits will spring up to extend services for those who can pay. The cycle takes another turn.
Paradoxically, the more we depend on market services — and market logic — the greater its subtle but real power to undermine our intimate life. As the ex-advertising executive and author of “In the Absence of the Sacred,” Jerry Mander, observed, “With commerce, we always get the good news first and the bad news after a while. First we hear the car goes faster than the horse. Then we hear it clogs freeways and pollutes the air.”
The bad news in this case is the capacity of the service market, with all its expertise, to sap self-confidence in our own capacities and those of friends and family. The professional nameologist finds a more auspicious name than we can recall from our family tree. The professional potty trainer does the job better than the bumbling parent or helpful grandparent. Jimmy’s Art Supply sells a better Spanish mission replica kit than your child can build for that school project from paint, glue and a Kleenex box. Our amateur versions of life seem to us all the poorer by comparison.
Consider some recent shifts in language. Care of family and friends is increasingly referred to as “lay care.” The act of meeting a romantic partner at a flesh-and-blood gathering rather than online is disparaged by some dating coaches as “dating in the wild.”
We picture competition as a matter of one business interest outdoing another. But the fiercest competition may be the quiet continuing one between market and private life. As a setter of standards of the ideal experience, it often wins, whether we buy the service or not.
The very ease with which we reach for market services may help prevent us from noticing the remarkable degree to which the market has come to dominate our very ideas about what can or should be for sale or rent, and who should be included in the dramatic cast — buyers, branders, sellers — that we imagine as part of our personal life. It may even prevent us from noticing how we devalue what we don’t or can’t buy.
As Michael J. Sandel, a Harvard professor of government, notes, a prison cell upgrade can be purchased for $82 a day in Santa Ana, Calif., and for $8 solo drivers in Minneapolis can buy access to car pool lanes on public roadways. Earlier this year, officials at Santa Monica College attempted to allow students to buy spots in oversubscribed classes [ http://www.usnews.com/education/best-colleges/articles/2012/05/01/consider-the-high-cost-of-low-tuition-at-community-colleges ] for $462 per course. The school’s trustees dropped the proposal only after large-scale protests. Even more than what we wish for, the market alters how we wish. Wallet in hand, we focus in the market on the thing we buy. In the realm of services, this is an experience — the perfect wedding, the delicious “traditional” meal, the well-raised child, even the well-gestated baby.
As we outsource more of our private lives, we find it increasingly possible to outsource emotional attachment. A busy executive, for example, focuses on efficiency; his assistant tells me, “My boss outsources patience to me.” The wealthy employer of a household manager detaches herself from the act of writing personal Christmas-present labels. A love coach encourages clients to think of dating as “work,” and to be mindful of their R.O.I. — return on investment, of emotional energy, time and money. The grieving family member hires a Tombstone Butler to beautify a loved one’s burial site.
Focusing attention on the destination, we detach ourselves from the small — potentially meaningful — aspects of experience. Confining our sense of achievement to results, to the moment of purchase, so to speak, we unwittingly lose the pleasure of accomplishment, the joy of connecting to others and possibly, in the process, our faith in ourselves.
There is much public conversation about the balance of power between the branches of government, but we badly need to confront the larger and looming imbalance between the market and everything else.
A society in which comfort, care, companionship, “perfect” birthday parties and so much else is available to those who can pay for it?
What would we say if a wantologist put us on a couch and asked, “Is this the kind of society we want?”
Arlie Russell Hochschild is a professor emerita of sociology at the University of California, Berkeley, and the author of “The Second Shift” and the forthcoming book [ http://us.macmillan.com/theoutsourcedself/ArlieHochschild ] “The Outsourced Self: Intimate Life in Market Times,” from which this essay is adapted.
© 2012 The New York Times Company
http://www.nytimes.com/2012/05/06/opinion/sunday/the-outsourced-life.html [ http://www.nytimes.com/2012/05/06/opinion/sunday/the-outsourced-life.html?pagewanted=all ] [with comments]
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The 1 percent is complaining louder than ever. There can be no reasoning with people this irrational
By Alex Pareene
Monday, May 7, 2012 06:45 AM CDT
Some unknown but alarming number of ultra-rich Americans are now basically totally delusional and completely divorced from reality. This is now an inescapable fact, confirmed by multiple media accounts of billionaire thought and an entire special issue of the New York Times Magazine.
Here’s a brief list of insane things that are apparently common knowledge among the billionaire class:
- That President Obama and the Democratic Party have treated wealthy finance industry titans maliciously and unfairly.
- That the fact that they are perversely wealthy and growing richer during a period of mass unemployment and staggering debt is a sign that the economy is functioning correctly.
- That poor people, and not the finance industry, are responsible for the financial crisis and subsequent recession.
- That the ultra-wealthy are wealthy because they are smarter and work harder than everybody else, and that they are resented for their success.
- That the ultra-wealthy in general, and finance industry executives in particular, are the victims of widespread prejudice akin to that faced by ethnic minorities.
There can be no reasoning with people this irrational. Any attempt to do so will fail, as Barack Obama, whose main goal is to maintain, not upend, the system that made these people so disgustingly wealthy, is learning. It’s growing harder and harder to pretend that the fantastically wealthy have a sophisticated understanding of politics — or math, or economics, or cause-and-effect.
The Times Magazine has the story of the Obama campaign’s difficulty in matching its record 2008 contributions from the finance sector [ http://www.nytimes.com/2012/05/06/magazine/obamas-not-so-hot-date-with-wall-street.html?pagewanted=all (at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75127832 )]. It contains this now surely infamous passage, a true marvel of that classic rich guy cocktail of self-pity mixed with self-regard:
One of the guests raised his hand; he knew how to solve the problem. The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich? Around the table, some people shook their heads in disbelief.
The problem with inequality in America, you see, is apparently that it has led to rhetorical attacks on the winners of the class war. Greg Sargent wrote [ http://www.washingtonpost.com/blogs/plum-line/post/its-not-easy-being-a-wall-street-gazillionaire-these-days/2012/05/02/gIQAAWzZwT_blog.html ], in response to this story: “One wonders if there is anything Obama could say to make these people happy, short of declaring that rampant inequality is a good thing, in that it affirms the talent and industriousness of the deserving super rich.”
I’m not sure even that would help, because there is already another presidential candidate who likely believes that. In the same issue of the Times Magazine, we have the story of Edward Conard [ http://www.nytimes.com/2012/05/06/magazine/romneys-former-bain-partner-makes-a-case-for-inequality.html?pagewanted=all (second item at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=75197318 )], a retired Bain Capital executive who is about to release a book (presumably against the wishes of his friend and former colleague Mitt Romney) arguing “aggressively” that massive wealth disparity is an unalloyed Good Thing. In fact, Conard thinks “the wealth concentrated at the top should be twice as large.” (Paul Krugman does not think much of his argument [ http://krugman.blogs.nytimes.com/2012/05/02/rich-guy-says-we-should-be-grateful-for-his-wealth/ ].)
Conard also detests charitable giving and has developed a statistical method for finding a spouse, because he is a sociopath. Because he is very wealthy, he is very used to his ideas being taken seriously — even economists offer him (qualified) praise. He is utterly convinced that his book will convince every serious person that wealthy finance industry titans not only deserve their wealth, but make society a better place for all. He has basically taken what is a gut feeling among his class and turned it into a philosophy and an argument [ http://blogs.reuters.com/felix-salmon/2012/05/02/how-the-1-think-about-their-wealth/ ].
Perhaps the most persuasive argument — for Republicans — for nominating Mitt Romney was that he is of this class. The fact that he is more comfortable in a boardroom than a Pizza Ranch is actually a major asset, because the Democrats had, since the Clinton years, gradually won over much of Wall Street, helping them to erode the GOP’s massive Reagan-era fundraising advantages. Romney can win that money back. Our friend Ed Conard even created a shell corporation [ http://www.theatlanticwire.com/politics/2011/08/anonymous-romney-donor-comes-forward/40923/ ] for the sole purpose of secretly donating $1 million to Romney’s super PAC. The Sunlight Foundation shows in Figure 5 here [ http://sunlightfoundation.com/blog/2012/01/26/on-fire-how-the-finance-insurance-and-real-estate-sector-drove-the-growth-of-the-political-one-percent-of-the-one-percent/ ] that the share of finance money going to Democrats skyrocketed during Clinton’s first term, and rose again in 2008. Clinton rewarded his super-rich donors with extensive deregulation — and they rewarded him by shifting the majority of their donations back to the GOP. (Finance, naturally, likes to chase winners: They give more to whichever party seems to be on the upswing, as Obama learned in 2010 and will learn again this year.)
They are one of those industries that is used to getting exactly what it always wants from Washington, because they essentially own both parties. (As opposed to say, oil and gas, ally of Republicans, or the entertainment industry, ally of Democrats.) So Dodd-Frank made them very, very mad. But not just mad: Confused, hurt, betrayed. There is a psychosocial element to the response, clearly on display in the story of the rich people who wish for a speech about how they are not evil. They are essentially spoiled children who have just been lightly reprimanded for the first time that they can remember.
Obama has not been remotely unkind to Wall Street, even as he’s grudgingly adopted a slightly more leftist tone. The grotesque nature of our campaign finance system has effectively made economic populism impossible. Even populist rhetoric not backed up by any sort of action is apparently hurtful to these masters of the universe.
But Conard is wrong. The rich are not intrinsically more virtuous or hardworking than the masses. They are also, decidedly, not any smarter. And they receive their news, and their political opinions, from the exact same organs as everyone else. They may be more likely to read the Wall Street Journal than the New York Post, but both of those Murdoch-owned newspapers carry similar lies on their editorial pages. In other words, they actually believe their bullshit. They honestly believe that mean Democrats invented “Occupy Wall Street” in order to make them scapegoats for a crisis that they feel no responsibility for. People who are in the business of extracting fees and interest from consumers, or moving rich people’s money around, unironically think of themselves as “job creators.”
The result of their last few decades of job creation has been the decoupling of productivity grown from wage growth
[ http://tpmdc.talkingpointsmemo.com/2012/05/40-years-of-workers-left-behind-chart.php?ref=fpa ] and skyrocketing compensation for CEOs and finance industry workers
CEO-to-worker compensation ratio, with options granted and options realized,1965–2011
[ http://www.epi.org/blog/ceo-pay-finance-sector-income-inequality/ ].
But appeals to logic, history and common sense will not get you far with a roomful of very rich guys who feel paranoid and victimized. The Wall Street types asked to become Obama donors wanted assurances that the president would not criticize his opponent’s finance industry record. It’s not enough that they’re ridiculously wealthy: They wish to be utterly above criticism. That’s the most important thing to remember: These people, the .01 percent, are mostly childish idiots. Idiot children have now accumulated all of the nation’s wealth and they are terrified that someone might try to take some of it away.
Copyright © 2012 Salon Media Group, Inc.
http://www.salon.com/2012/05/07/americas_idiot_rich/singleton/ [with comments]
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Sandy Weill, Builder Of Too Big To Fail, No Longer Accepts Blame For Crisis
Mark Gongloff
Chief financial writer, The Huffington Post
Posted: 05/07/2012 5:51 pm
The man who brought you Too Big To Fail has had just about enough of everybody blaming him for big banks failing.
In an interview with Fortune's Nin-Hai Tseng [ http://finance.fortune.cnn.com/2012/05/07/sandy-weill-philanthropy/ ], Sandy Weill, the former CEO of Citigroup, said his lumbering beast of a bank, and other lumbering beasts like it, aren't to blame for the crisis.
Weill was the CEO of Citigroup until late 2003, during the key "becoming a monstrous disaster waiting to happen" phase of its existence. He lobbied, tirelessly and successfully, to break down Depression-era regulations against banks becoming too big. He even has a plaque in his office that boasts "The Shatterer of Glass-Steagall," according to a New York Times report [ http://www.nytimes.com/2010/01/03/business/economy/03weill.html?pagewanted=all (first item at http://investorshub.advfn.com/boards/read_msg.aspx?message_id=45208032 )].
And after (or, really, before) those regulatory shackles were cast aside, Weill worked tirelessly and successfully to bolt as many moving parts onto Citigroup as he could. Every other bank followed suit, just to keep up. Citi was king of them all for a while, the biggest bank in the world, and Weill rode off into the sunset in 2006, when he retired as chairman, his handiwork complete.
And then the wheels started to come off. About a year and a half after his departure as chairman, Citi announced horrific losses due to its exposure to subprime mortgages, and a year after that the government pumped $45 billion into the bank to keep it from creating a black hole into which all of our money would be sucked. Citi has ever since been shedding as many of the parts Sandy Weill bolted on as it can.
So, naturally, Sandy Weill, whom Time magazine labeled one of the "25 People To Blame For the Financial Crisis [ http://www.time.com/time/specials/packages/completelist/0,29569,1877351,00.html ]," feels deep regret for all of this, no?
No! Are you kidding? Do you really think the man who loaded half his family tree onto a Citigroup jet for a Mexican vacation [ http://www.nypost.com/p/news/international/item_MfMoS4o6UiwbmMIm5kAinL ] just weeks after the bank received the second of its enormous taxpayer bailout checks still has a functioning shame gland?
In the Fortune interview, Weill said "too big to fail" is not the problem you are looking for. In fact, making banks smaller would be the real problem, come to think of it:
I think this whole concept of fixing 'too big to fail' is a problem because when you create an environment where you can't make a mistake then you're also creating an environment where nothing good is going to happen.
So true: If you don't give an alcoholic the keys to the liquor cabinet and the Ferrari, then obviously nothing bad can happen. But then nothing much fun can happen, either, can it?
In fact, Weill said, the time has come for us all to stop with the pointing of the fingers at this or that ex-CEO and just move on. After all, we were all equally to blame. Maybe, before you start pointing the finger at Sandy Weill, you should head for the mirror and point a finger there, too:
I would say there is enough blame to go around. I think that the financial industry made some mistakes that created issues, our government made mistakes that created issues, the regulators made mistakes that created issues. People made mistakes that created issues.
Lots of people were at fault. I think we want to move on. There comes a time when you stop punishing people and ask how do we build this back in a way that's going to be safer for the future? We should concentrate on the future and positive thinking.
Sandy Weill hopes you all feel adequately ashamed of yourselves.
Copyright © 2012 TheHuffingtonPost.com, Inc.
http://www.huffingtonpost.com/mark-gongloff/sandy-weill-too-big-to-fail_b_1497761.html [with comments]
===
Lehman E-Mails Show Wall Street Arrogance Led to the Fall
Illustration by Brian Walker
By William D. Cohan
May 6, 2012 5:06 PM CT
If one wants to understand the full complicity of Wall Street in the Great Recession, look no further than the voluminous package of pre-collapse Lehman Brothers documents [ http://www.jenner.com/lehman/docs/ ] that have been made available by the law firm Jenner & Block LLP, which has acted as the coroner in the Lehman post-mortem.
Most important, the cache dispels the myth that Dick Fuld, chief executive officer of Lehman Brothers Holdings Inc., and his close associates were unaware of the risks their business faced in 2007 and 2008. That would be bad enough, but the more devastating reality is that Fuld and his sycophants were warned repeatedly but were blinded by their hubris.
The records confirm, yet again, that the “forces-out-of- our-control” argument we hear from Wall Street leaders is bunk. It is the ill-advised behavior of one banker after another, day in and day out, that leads to the sort of devastating financial crisis we are only now emerging from.
For instance, at a Lehman board meeting in September 2007, according to a copy of the presentation in the data cache, Lehman executives presented a clear summary of the brewing crisis. “The initial tremors were felt at the end of 2006,” the board was told, “when the poor loan performance of sub- prime borrowers began to be a cause for concern in the marketplace. This was evidenced by a gradual spread widening in the asset backed index.” The presentation continued: “The market continued to widen as it became apparent that the performance problems in mortgage loans was not going to abate and was no longer limited to the sub-prime market but also affecting the Alt-A product.”
Dumping Assets
Then the board heard about the problems at two Bear Stearns Asset Management hedge funds that “ran out of liquidity” in June and July 2007 and were forced to shut down, leading to other hedge funds dumping assets into the market “adding additional stress to the market.” By August 2007, the commercial paper market was “facing challenging conditions, with very little liquidity” and “funding for almost any type of mortgage or ABS” -- asset-backed security -- “product dried up.” You can’t say the top Lehman management didn’t understand what was happening in the market.
So did other firms: At Goldman Sachs Group Inc. (GS), these “initial tremors” in December 2006 were sufficient to get the firm to make a huge proprietary bet -- referred internally at Goldman as the “Big Short” -- that paid off big-time in 2007 and helped to put the firm in a position to weather the financial crisis a year later.
At Lehman, though, it was business as usual. Management chose to ignore the rising concerns. By Labor Day weekend 2007, Lehman, like Bear Stearns and Citigroup, had been in talks with Citic Group, the leading Chinese investment bank, which wanted to make an investment in a Wall Street firm, a potential lifeline in a crisis. Lehman’s top executives -- Fuld and David Goldfarb, the firm’s chief financial officer -- weren’t interested, at least on the terms that Citic was proposing. If Lehman were to do a deal with Citic, Goldfarb wrote Fuld and others in an e-mail, “This will signal a major sign (which obviously isn’t true and will feed into rimors, etc) and put us in a category of those who needed an infusion to help them out of this market mess.”
Fuld responded with his usual misguided bravado: “Sounds to me like another non-starter. If it’s just about price [and] who is the right partner then tell them NFI.” Goldfarb couldn’t resist piling on. “Agreed 1000 percent,” he wrote back to Fuld. “How do you spell stupidity in Chinese!!!”
Will and Skill
Then the conversation descended into a pathetic display of macho arrogance. “What happened,” Fuld asked Goldfarb, “u didn’t like my sumdum spelling?” Responded Goldfarb, “I love it, better said then I could have. I think Mizuho is the best option for strategic partner. Any potential investor that would consider BS” -- Bear Stearns -- “in the same breath as LB should go fungoo themselves!!!” Fuld replied, “I agree we need some help -- but the Bros always wins!!” Goldfarb agreed. “Absolutely, will and skill always win, and that be us!!!!” Concluded Fuld: “Got it so do u.”
Fuld was well-paid for these insights. Between 2000 and 2007, according to various documents released as part of Fuld’s testimony before Congress, he took out of Lehman some $500 million in cash.
The Jenner & Block trove shows that instead of seeking the capital they so desperately needed, Fuld and Goldfarb believed Lehman was an impenetrable fortress. “During the last downturn” -- 2001-02 -- “the firm outperformed its competitors and established a platform for further growth,” Lehman management told the board in January 2008. “The firm pursued a counter-cyclical strategy, investing in talent while its competitors were in retrenchment mode” and then outperformed the peer group.
The clear message: Lehman would use a similar approach through the 2008 downturn. At the board meeting in January, Lehman management explained that while other Wall Street firms were raising “significant capital” in the “past three months,” for Lehman “aggressive capital raising is not necessary” because the firm “remains strongly capitalized” thanks to capital “generated by earnings.”
Knowing that Lehman would be belly up by the end of September 2008, reading these e-mails and documents is cringe- inducing. Unfortunately, given the lack of leadership we still see on much of Wall Street, they will hardly be the last of their kind.
William D. Cohan, a former investment banker and the author of the recently released "Money and Power: How Goldman Sachs Came to Rule the World [ http://www.amazon.com/Money-Power-Goldman-Sachs-World/dp/038552384X ]" and the New York Times bestsellers "House of Cards [ http://www.amazon.com/House-Cards-Hubris-Wretched-Excess/dp/0385528264 ]" and "The Last Tycoons [ http://www.amazon.com/The-Last-Tycoons-Secret-History/dp/0385514514 ]", is a Bloomberg View columnist. The opinions expressed are his own.
To contact the writer of this article: William D. Cohan at wdcohan@yahoo.com.
To contact the editor responsible for this article: Tobin Harshaw at tharshaw@bloomberg.net.
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-05-06/lehman-e-mails-show-wall-street-arrogance-led-to-the-fall.html [with comments]
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Look Who’s Pushing Homeowners Off the Foreclosure Cliff
Illustration by Bloomberg View
By the Editors
May 6, 2012 5:01 PM CT
One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money.
Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure.
The situation has caught the attention of state regulators and the Consumer Financial Protection Bureau, which is considering rules [ http://files.consumerfinance.gov/f/201204_cfpb_factsheet_putting-service-back-in-mortgage-servicing.pdf ] to help homeowners avoid unwarranted “force- placed insurance.” The U.S. ought to go further and limit commissions, fine any company that knowingly overcharges a homeowner and require banks to seek competitive bids for force- placed insurance policies. Because insurance is not regulated at the federal level, states also need to play a stronger role in bringing down rates.
All mortgages require homeowners to maintain insurance on their property. Most mortgages also allow the lender to purchase insurance for the home and “force-place” it if a policy lapses or is deemed insufficient. These standard provisions are meant to protect the lender’s collateral -- the property -- if a calamity occurs.
High-Priced Policies
Here’s how it generally works: Banks and their mortgage servicers strike arrangements -- often exclusive -- with insurance companies in which the banks agree to buy high-priced policies on behalf of homeowners whose coverage has lapsed. The bank advances the premium to the insurer, and the insurer pays the bank a commission, which is priced into the premium. (Insurers say the commissions compensate banks for expenses like “advancing premiums, billing and collections [ http://newsroom.assurant.com/lender-faq.cfm ].”) The homeowner is then billed for the premium, commissions and all.
It’s a lucrative business. Premiums on force-placed insurance exceeded $5.5 billion in 2010, according to the Center for Economic Justice [ http://financialservices.house.gov/UploadedFiles/072811birnbaum.pdf ], a group that advocates on behalf of low- income consumers. An investigation by Benjamin Lawsky, who heads New York State’s Department of Financial Services, has found nearly 15 percent of the premiums flow back to the banks.
It doesn’t end there. Lenders often get an additional cut of the profits by reinsuring the force-placed policy through the bank’s insurance subsidiary. That puts the lender in the conflicted position of requiring insurance to protect its collateral but with a financial incentive to never pay out a claim.
Both New York and California regulators have found the loss ratio on these policies -- the percentage of premiums paid on claims -- to be significantly lower than what insurers told the state they expected to pay out, suggesting that premiums are too high. For instance, most insurers estimate a loss ratio of 55 percent, meaning they’ll have to pay out about 55 cents on the dollar. But actual loss ratios have averaged about 20 percent over the last six years.
It’s worth noting that force-placed policies often provide less protection than cheaper policies available on the open market, a fact often not clearly disclosed. The policies generally protect the lender’s financial interest, not the homeowner’s. If a fire wipes out a house, most force-placed policies would pay only to repair the structure and nothing else.
Lack of Clarity
Homeowners can obviously avoid force-placed insurance by keeping their coverage current. Banks are required to remove the insurance as soon as a homeowner offers proof of other coverage. But the system, as the New York state investigation and countless lawsuits have demonstrated, is defined by a woeful lack of clarity, so much so that Fannie Mae has issued a directive [ https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2012/svc1204.pdf ] to loan servicers to lower insurance costs and speed up removal times. And it said it would no longer reimburse commissions. The recent settlement [ http://www.nationalmortgagesettlement.com/ ] with five financial firms over foreclosure abuses also requires banks to limit excessive coverage and ensure policies are purchased “for a commercially reasonable price.”
That’s not enough. Tougher standards should be applied uniformly, regardless of the loan source. Freddie Mac should follow Fannie Mae’s lead and require competitive pricing on the loans it backs. The consumer bureau should require mortgage servicers to reinstate a homeowner’s previous policy whenever possible, or to obtain competitive bids when not.
The bureau should also prevent loan servicers from accepting commissions or, at the very least, prohibit commissions from inflating the premium. It should require servicers to better communicate to borrowers that their policy has lapsed, explain clearly what force-placed insurance will cost and extend a grace period to secure new coverage. Finally, states should follow the example of California, which recently told force-placed insurers to submit lower rates that reflect actual loss ratios.
Many homeowners who experience coverage gaps have severe financial problems that lead them to stop paying their insurance bills. They are already at great risk of foreclosure. Banks and insurers shouldn’t be allowed to add to the likelihood of default by artificially inflating the cost of insurance.
To contact the Bloomberg View editorial board: view@bloomberg.net.
©2012 BLOOMBERG L.P.
http://www.bloomberg.com/news/2012-05-06/look-who-s-pushing-homeowners-off-the-foreclosure-cliff.html [with comments]
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History Repeats Itself in New Gilded Age
Ted Frier
APRIL 20, 2012 3:29PM
Just 55 well-to-do white guys wrote the US Constitution during that Philadelphia summer of 1787. And to hear the conservatives of the current Roberts Court tell it, the Founding Father's "original intent" was for small groups of wealthy white guys to rule America ever since.
As we anxiously wait to see whether a Republican-dominated Supreme Court has the audacity to strike down the signature accomplishment of the elected Democratic branches and throw 30 million recently-insured Americans back on the street in what would almost certainly be a narrow 5-4 partisan decision, it's becoming increasingly obvious that in conservative eyes not all "judicial activism" is created equal.
Actions by the Supreme Court that advance personal freedom -- such as the rights of women to control their own bodies, or the rights of non-believers not to be proselytized to in public places, or the rights of criminal defendants to justice - are denounced by conservatives as assaults against The Natural Order of Things and subversive of both democracy and majority rule itself.
However, based on the behavior of these very same conservatives, judicial "activism" doesn't refer the actions of judges at all but rather to a state of non-conformance with the way conservatives think societies ought to be organized, with most power placed in just a few hands. And this is why conservatives don't look at their judicial power grabs as "activist" at all, but rather "restorative," in the same way Bush v. Gore wasn't "activist" because it restored Republicans to the White House or Citizens United wasn't "activist" because it restored plutocratic control to the American political process.
To wage class warfare you must first believe, as only conservatives do, that America is, and should always be, divided into separate and distinct classes, each with its own responsibilities and prerogatives.
That is why, says the Alliance for Justice, the Roberts Court "consistently pursues a political agenda that favors powerful corporate interests" while conservative Justices display a "striking willingness to engage in judicial activism to fulfill their ideological goals."
As they defend their timeless and "immutable principles" -- written in the very nature of the universe -- conservatives have also shown themselves to be uncommonly adaptive and flexible when it comes to inventing arguments out of whole cloth that advance their own self-interest.
Thus, ever since John Roberts became Chief Justice in 2005, the Alliance says the Supreme Court has "demonstrated an increased readiness to do whatever it takes to twist the law" in order to achieve the conservative movement's "decades-long campaign to elevate corporate profits and private wealth over individual rights and personal freedoms."
The severely right wing worldview that underlies the decisions of the Roberts Court fits loosely within a school of judicial thought known as "The Constitution in Exile," which Jeffrey Rosen in the New York Times defines as the belief that the entire social welfare and regulatory state in force since the New Deal "is unconstitutional as well as immoral."
Because the collapse of the capital markets in 2008 and those corporate scandals like Enron have provoked an important debate about the relative merits and dangers of the free market, while making chances of the political transformation conservatives seek seem "remote," Rosen says conservatives now appear "content, even eager, to turn to the courts to win the victories that are eluding them in the political arena."
This has produced what Rosen calls the "troubling paradox" of conservatives denouncing liberals for using the courts to "thwart" the will of the people while "succumbing to precisely the same temptation" themselves.
George F. Will is a perfect exemplar of this type. You will not find a conservative more hostile to, or contemptuous of, "the right to privacy" supporting a woman's right to choose than George Will. And yet, in his column just this week Will defends the right of the rich "to be left alone" as he insists a "vast" portion of life should be "exempt from control by majorities." And when our democratic system does not "respect a capacious zone of private sovereignty," Will thinks the courts need to step in to "police that zone's borders."
Conservatives cringe whenever they hear Thomas Jefferson's words insisting that "all men are created equal," which is why conservatives have always made the distinction between the "revolutionary" Declaration and a "conservative" Constitution that brings institutional order out of revolutionary chaos.
And yet, here is the conservative George Will saying the Constitution is a "companion" of the Declaration in that the whole point of government is to "secure pre-existing rights" not to "confer" new ones -- which is all beautiful poetry intended to obscure the reactionary recipe Will is concocting for preserving rank and privilege against popular agitation and change.
All restoration fantasies have their Golden Ages, says Rosen. And for the Constitution in Exile movement, that fondly-remembered yesteryear is the dominance the Republican Party enjoyed from the Gilded Age through the Roaring Twenties when business-friendly courts "steadfastly preserved an ideal of free enterprise" by routinely striking down laws meant to protect workers from the ravages of the unregulated market.
It was here that Mitt Romney's idea of a public corporation as a "person" first took root as conservatives sought to fashion the 14th Amendment's due process protections into what economic historian Kevin Phillips called "a sword conservative judges could use to cut down state and federal legislation for 'unreasonably' interfering with property and contracts."
Indeed, says Phillips, while judicial decisions voiding laws as unconstitutional were few and far between before 1850, during the Gilded Age they became commonplace as business-controlled state courts between 1885 and 1899 struck down more than a thousand local laws meant to protect workers.
One of the most notorious judicial power grabs was 1895's Pollock v. Farmer's Loan and Trust Co. in which the US Supreme Court invalidated the federal income tax. To the man on the street, the question before the bar was whether "consumption should pay all the taxes of the federal government or whether investment and speculation should bear their fair share of public burdens," writes William Swindler in his Court and Constitution in the 20th Century.
The New York World called the Court's decision "a triumph of selfishness over patriotism and another victory for greed over need."
A former Oregon governor said the ruling signified that "our constitutional government has been supplanted by a judicial oligarchy."
The St. Louis Post-Dispatch editorialized that "the corporations and plutocrats are as securely entrenched in the Supreme Court as in the lower courts which they take such pains to control."
Speaking for the Court minority, Justice John Marshall Harlan - "the Great Dissenter," who gave us the idea of a "colorblind" Constitution in his dissent the following year in Plessy v. Ferguson - said the Court's "disregard" for a century or more of history and practice "may well excite the gravest apprehensions" for it "strikes at the very foundations of national authority, in that it denies to the general government a power which is, or may at some time in a great emergency, such as that of war, become vital to the existence and preservation of the Union."
The late 1880s were a period of social unrest and class warfare - most of it provoked by the rich whose exploitations against the poor produced that great backlash known as the Progressive Movement.
And yet in the face of these mounting tensions, Harlan said the practical and direct effect of the Court's decision to invalidate a tax that had been in force since the Civil War "is to give certain kinds of property a position of favoritism and advantage that is inconsistent with the fundamental principles of our social organization -- and to invest them with power and influence that may be perilous to that portion of the American people upon whom rests the larger part of the burdens of government and who ought not to be subjugated to the domination of aggregated wealth any more than the property of the country should be at the mercy of the lawless."
So, how could it be that after more than a century of political, economic and legal evolution we have arrived right back where we started 100 years ago, with our political and legal branches once again beholden to -- and corrupted by -- plutocratic influences?
Well, to quote a famous American philosopher: "It's the economy stupid."
The late 1800s were a time very much like our own. A massive government jobs and stimulus program -- called The Civil War -- revolutionized the American economy and transformed a provincial agrarian society into a modern industrial one stitched together with government-subsidized transportation and communications networks.
During the 1870s and 1880s, the US economy expanded faster than ever before in the country's history, where between 1865 and 1898 the output of wheat increased 256%, corn 222%, coal 800% and railroad track mileage 567%.
Corporations - which are not "people" as Mitt Romney would have us believe but creatures of law and state -- became the dominant form of business organization.
And like any period of rapid economic change, new elites emerged to replace old ones, hardening into a new American plutocracy whose concentrated wealth helped elect a nearly unbroken succession of business-friendly Republican presidents.
From Abraham Lincoln in 1861 until Howard Taft in 1912, the Republicans occupied the White House for more than half a century, interrupted only by the split terms of Bourbon Democrat Grover Cleveland, whose hard money economic policies made him a Republican In Everything But Name.
This, in turn, led to the appointment of conservative Supreme Court justices drawn mostly from the ranks of corporate and railroad legal practice, whose views on the superiority of capital over labor were reflected in the priority given by the courts of this era to capitalists, private property and freedom of contract.
Just like today.
Michael Lind, author of the new book, Land of Promise: An Economic History of the United States, argues that it often takes American politics, government and the law a generation or two to catch up with technology-induced economic change -- like the unchallenged power exercised by the Robber Barons of the Gilded Age.
Lind lists three such revolutions in recent American history: The first, based on steam, produced the railroad, steam-powered factory and telegraph. The second was built around the internal combustion engine. And the most recent is the one we are experiencing today, based on the information technology that Lind says is rapidly transforming the way we work and play.
Lind says that the changes wrought by the IT revolution in our own time are undermining the political and legal structures of the New Deal by creating a new kind of "global corporation" that draws heavily on labor and supply chains extending across many nations but regulated by none.
The misalignment between political and economic power can grow for decades, says Lind, until the abuses and exploitations the political system finds itself powerless to address explode in a cataclysm of long delayed reform, such as the Civil War and Reconstruction, the Progressive Movement and New Deal and, perhaps today, Occupy Wall Street.
Essential reforms today are being filibustered and delayed because conservatives "mindlessly cling to the half-century-old dogmas of right-wing opponents of the New Deal," says Lind.
And the reason they do, says New York Times economist Paul Krugman, is "soaring inequality."
The huge wage gaps that have opened over the past 30 years as incomes have tripled at the top while stagnating at the middle and bottom is at the root of both America's polarized politics and the country's inability to adequately respond to crisis, says Krugman.
Rising incomes at the top have created a New American Plutocracy that has warped the nation's intellectual and political life, says Krugman, as the super-rich have bought themselves a political party as insurance against the future -- like some kind of credit default swap.
As the wealthy become ever more aware of themselves as a distinctive and, in their own minds, embattled class, this disengaged plutocracy begins to exhibit all the classic defensive characteristics of a reactionary caste, whose inability to relate to those outside their charmed circle is perfectly manifested in Mitt Romney's wooden and socially inarticulate behavior around other human beings.
The widening gap between the parties, which is directly related to higher income inequality, is occurring because Republicans are moving far to the right not because Democrats are moving left. Krugman says we see this most obviously in the Republican proposals for health care reform that the President adopted as his own template for Obamacare only to see Republicans denounce their own ideas as Marxist-Leninist "Socialism!"
What all of this adds up to is that Republicans, and their appointees on the Supreme Court, are no longer engaged in the task of genuine governing but in the narrow protection of privilege at all cost.
We have no way of knowing for certain how the Roberts Court will rule on the constitutionality of Obamacare or its individual mandate.
But it's possible that the rigor mortis of class and caste thinking is so far advanced among the Court's reactionary majority that it might foolishly provoke what Justice Harlan cautioned his own colleagues against more than a century ago when he warned that by privileging power over people the Court's conservatives were inviting "a contest which in some countries has swept away, in a tempest of frenzy and passion, existing social organizations, and put in peril all that was dear to the friends of law and order."
Ted Frier is an author and former political reporter turned speechwriter who at one time served as communications director for the Massachusetts Republican Party, helping Bill Weld become the first Bay State Republican in a generation to be elected Governor. He was Chief Speechwriter for Republican Governor Paul Cellucci and Lt. Governor Jane Swift. Ted is also the author of the hardly-read 1992 history "Time for a Change: The Return of the Republican Party in Massachusetts." So, why the current hostility to the Republican Party and what passes for conservatism today? The Republican Party was once a national governing party that looked out for the interests of the nation as a whole. Now it is the wholly-owned subsidiary of self interest. Conservatism once sought national unity to promote social peace and harmony. Now conservatism has devolved into a right wing mutation that uses divide and conquer tactics to promote the solidarity of certain social sub-groups united against the larger society while preserving the privileges of a few.
© 2012 Salon Media Group, Inc.
http://open.salon.com/blog/ted_frier/2012/04/20/history_repeats_itself_in_new_gilded_age [with comments]
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Health Care Access Worsened For Americans Since 2000: Report
Americans are finding it more difficult to get health care and dental care they need because of cost and other reasons, even if they have health insurance, according to a new study.
05/07/2012
http://www.huffingtonpost.com/2012/05/07/health-care-access-urban-institute_n_1497658.html [with comments]
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Health Care Costs Have Older, Wealthier Americans 'Terrified,' Survey Shows
Health care costs are a major concern for older Americans, even those who have money in the bank, according to a new survey.
05/07/2012
http://www.huffingtonpost.com/2012/05/07/health-care-costs-older-wealthier-americans_n_1495827.html [with comments]
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To understand economic struggles, Romney says he meets with regular families - off the record
By Associated Press, Published: May 4, 2012
PITTSBURGH — Mitt Romney says he learns about what it’s like to struggle in a difficult economy by sitting down to chat with regular people. But the Republican presidential candidate doesn’t want anybody to see it — and his campaign won’t say who he meets with or when the meetings occur.
In interviews and on the campaign trail, Romney regularly says that he learns about the struggling economy by talking to people affected by it. Earlier this week, he said he meets with families “almost every day.” On Friday, Romney said the talks are “off the record” — and that he agrees to keep private the names of the people he meets with.
“Before I begin an event like this, I typically am able to sit down with a few people on an off-the-record kinda basis,” Romney said as he delivered his standard campaign speech Friday in Pittsburgh.
“I agree not to say who they are to the members of my media,” he said, before joking: “My media, I don’t have my media, I wish I had my media. To members of the media.”
That description was slightly different from one he offered on Tuesday.
“So far during my campaigns one of the highlights for me has been sitting down with three or four families almost every day without the camera there,” he said during an interview with CBS News. “Most of them are done privately — that is a wonderful way for me to understand how people are really feeling.”
Aides did not respond to repeated requests for information about the meetings and the participants, including when the meetings take place, who has participated or even which states they are from. Aides also wouldn’t say whether any meetings were held Thursday or Friday, when Romney campaigned in Virginia and Pittsburgh, respectively.
The meetings aren’t listed on Romney’s public schedule.
On Wednesday, a spokesman said Romney had no such private meetings before an appearance that day at a small business in Chantilly, Va.
“Almost every single small business.most every public event that we have, we have these middle-class families do a round-table with the governor,” Romney spokeswoman Gail Gitcho said Wednesday when asked to explain what Romney said in Tuesday’s television interview. “It’s more productive to do it without the cameras. He hears from them about the Obama economy; he hears what their concerns are in the states.”
Romney has held a few round-table events with voters while cameras were present.
He held one with veterans in South Carolina on Veterans Day last year, with housing industry businesspeople in Florida before the primary and with business owners in Nevada before the caucuses. After becoming the presumptive nominee, Romney held a round-table with Hispanic community leaders in Arizona.
He also meets regularly with the owners of the companies who host his campaign events. Almost all of Romney’s stops on the trail are in warehouses or offices of local small businesses.
But instead of keeping these stories secret, he’ll often incorporate them into his campaign speech as sad examples of a suffering economy or to highlight what America’s entrepreneurial economy can do. There’s a struggling barber, for example, who’s putting off retirement. On the other hand, there’s an immigrant who came to the U.S. and founded a company that helps with pioneering spinal surgery. Romney appeared at that company, NuVasive, in southern California in late March.
“I’m amazed by the hard work and the entrepreneurial spirit of the American people,” Romney said Friday.
Copyright 2012 The Associated Press
http://www.washingtonpost.com/national/to-understand-economic-struggles-romney-says-he-meets-with-regular-families-_-off-the-record/2012/05/04/gIQAwWZt1T_story.html [with comments]
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An Oasis, Once Gilded, Now Greened
The glass conservatory where Duke grew her beloved orchids.
May 3, 2012
HILLSBOROUGH, N.J.
TEENAGERS growing up in this part of Central New Jersey used to boast of how they had jumped the stone walls into Doris Duke’s 2,740-acre estate here. How many actually made it past her private police force and how many merely bragged about doing so are lost to the haze of memory.
But the legend speaks to the mystery of Doris Duke, “the richest girl in the world [ http://query.nytimes.com/mem/archive/pdf?res=F20613FA385B137A93C0AB178AD95F478385F9 ( http://bit.ly/K2XdNy )],” who, if the newspapers of her day were to be believed, ate her baby porridge from a 14-carat-gold cup, bathed in colored water spouting from an ancient Italian fountain in her bedroom and wore bathrobes made from the wool of a rare species of dwarf camel.
Variously a foreign correspondent, a surfing champion, a protector of Imelda Marcos, a preservationist and a philanthropist, Duke was the target of threats and the delight of gossip columnists from her birth in one of the richest families in America to her death in 1993, when the headline on her obituary in The New York Times [ http://www.nytimes.com/1993/10/29/obituaries/doris-duke-80-heiress-whose-great-wealth-couldn-t-buy-happiness-is-dead.html?pagewanted=all&src=pm ( http://nyti.ms/IYzfD0 )] memorialized her as the “Heiress Whose Great Wealth Couldn’t Buy Happiness.”
[...]
http://www.nytimes.com/2012/05/04/arts/doris-dukes-farm-hillsborough-nj-opening-to-public.html [ http://www.nytimes.com/2012/05/04/arts/doris-dukes-farm-hillsborough-nj-opening-to-public.html?pagewanted=all ]
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The Outsourced Life
By ARLIE RUSSELL HOCHSCHILD
Published: May 5, 2012
IN the sprawling outskirts of San Jose, Calif., I find myself at the apartment door of Katherine Ziegler, a psychologist and wantologist. Could it be, I wonder, that there is such a thing as a wantologist, someone we can hire to figure out what we want? Have I arrived at some final telling moment in my research on outsourcing intimate parts of our lives, or at the absurdist edge of the market frontier?
A willowy woman of 55, Ms. Ziegler beckons me in. A framed Ph.D. degree in psychology from the University of Illinois hangs on the wall, along with an intricate handmade quilt and a collage of images clipped from magazines — the back of a child’s head, a gnarled tree, a wandering cat — an odd assemblage that invites one to search for a connecting thread.
After a 20-year career as a psychologist, Ms. Ziegler expanded her practice to include executive coaching, life coaching and wantology. Originally intended to help business managers make purchasing decisions, wantology is the brainchild of Kevin Kreitman, an industrial engineer who set up a two-day class to train life coaches to apply this method to individuals in private life. Ms. Ziegler took the course and was promptly certified in the new field.
Ms. Ziegler explains that the first step in thinking about a “want,” is to ask your client, “ ‘Are you floating or navigating toward your goal?’ A lot of people float. Then you ask, ‘What do you want to feel like once you have what you want?’ ”
She described her experience with a recent client, a woman who lived in a medium-size house with a small garden but yearned for a bigger house with a bigger garden. She dreaded telling her husband, who had long toiled at renovations on their present home, and she feared telling her son, who she felt would criticize her for being too materialistic.
Ms. Ziegler took me through the conversation she had with this woman: “What do you want?”
“A bigger house.”
“How would you feel if you lived in a bigger house?”
“Peaceful.”
“What other things make you feel peaceful?”
“Walks by the ocean.” (The ocean was an hour’s drive away.)
“Do you ever take walks nearer where you live that remind you of the ocean?”“Certain ones, yes.”
“What do you like about those walks?”
“I hear the sound of water and feel surrounded by green.”
This gentle line of questions nudged the client toward a more nuanced understanding of her own desire. In the end, the woman dedicated a small room in her home to feeling peaceful. She filled it with lush ferns. The greenery encircled a bubbling slate-and-rock tabletop fountain. Sitting in her redesigned room in her medium-size house, the woman found the peace for which she’d yearned.
I was touched by the story. Maybe Ms. Ziegler’s client just needed a good friend who could listen sympathetically and help her work out her feelings. Ms. Ziegler provided a service — albeit one with a wacky name — for a fee. Still, the mere existence of a paid wantologist indicates just how far the market has penetrated our intimate lives. Can it be that we are no longer confident to identify even our most ordinary desires without a professional to guide us?
Is the wantologist the tail end of a larger story? Over the last century, the world of services has changed greatly.
A hundred — or even 40 — years ago, human eggs and sperm were not for sale, nor were wombs for rent. Online dating companies, nameologists, life coaches, party animators and paid graveside visitors did not exist.
Nor had a language developed that so seamlessly melded village and market — as in “Rent-a-Mom,” “Rent-a-Dad,” “Rent-a-Grandma,” “Rent-a-Friend” — insinuating itself, half joking, half serious, into our culture. The explosion in the number of available personal services says a great deal about changing ideas of what we can reasonably expect from whom. In the late 1940s, there were 2,500 clinical psychologists licensed in the United States. By 2010, there were 77,000 — and an additional 50,000 marriage and family therapists.
In the 1940s, there were no life coaches; in 2010, there were 30,000. The last time I Googled “dating coach,” 1,200,000 entries popped up. “Wedding planner” had over 25 million entries. The newest entry, Rent-a-Friend, has 190,000 entries.
And, in a world that undermines community, disparages government and marginalizes nonprofit organizations as ways of meeting growing needs of working families, these are likely to proliferate. As will the corresponding cultural belief in the superiority of what’s for sale.
*
WE’VE put a self-perpetuating cycle in motion. The more anxious, isolated and time-deprived we are, the more likely we are to turn to paid personal services. To finance these extra services, we work longer hours. This leaves less time to spend with family, friends and neighbors; we become less likely to call on them for help, and they on us. And, the more we rely on the market, the more hooked we become on its promises: Do you need a tidier closet? A nicer family picture album? Elderly parents who are truly well cared for? Children who have an edge in school, on tests, in college and beyond? If we can afford the services involved, many if not most of us are prone to say, sure, why not?
And the market expands to fill increasing demand. The director of research and development at the company eHarmony, for example, the champion of the marriage market, has envisioned expanding the company’s operations into later stages of adult life, and into workplace and college relations. EHarmony now operates in Canada, Brazil and Australia, as well as across Europe. The more members of diverse communities hunger for counsel, comfort, dates, support, the more outfits will spring up to extend services for those who can pay. The cycle takes another turn.
Paradoxically, the more we depend on market services — and market logic — the greater its subtle but real power to undermine our intimate life. As the ex-advertising executive and author of “In the Absence of the Sacred,” Jerry Mander, observed, “With commerce, we always get the good news first and the bad news after a while. First we hear the car goes faster than the horse. Then we hear it clogs freeways and pollutes the air.”
The bad news in this case is the capacity of the service market, with all its expertise, to sap self-confidence in our own capacities and those of friends and family. The professional nameologist finds a more auspicious name than we can recall from our family tree. The professional potty trainer does the job better than the bumbling parent or helpful grandparent. Jimmy’s Art Supply sells a better Spanish mission replica kit than your child can build for that school project from paint, glue and a Kleenex box. Our amateur versions of life seem to us all the poorer by comparison.
Consider some recent shifts in language. Care of family and friends is increasingly referred to as “lay care.” The act of meeting a romantic partner at a flesh-and-blood gathering rather than online is disparaged by some dating coaches as “dating in the wild.”
We picture competition as a matter of one business interest outdoing another. But the fiercest competition may be the quiet continuing one between market and private life. As a setter of standards of the ideal experience, it often wins, whether we buy the service or not.
The very ease with which we reach for market services may help prevent us from noticing the remarkable degree to which the market has come to dominate our very ideas about what can or should be for sale or rent, and who should be included in the dramatic cast — buyers, branders, sellers — that we imagine as part of our personal life. It may even prevent us from noticing how we devalue what we don’t or can’t buy.
As Michael J. Sandel, a Harvard professor of government, notes, a prison cell upgrade can be purchased for $82 a day in Santa Ana, Calif., and for $8 solo drivers in Minneapolis can buy access to car pool lanes on public roadways. Earlier this year, officials at Santa Monica College attempted to allow students to buy spots in oversubscribed classes [ http://www.usnews.com/education/best-colleges/articles/2012/05/01/consider-the-high-cost-of-low-tuition-at-community-colleges ] for $462 per course. The school’s trustees dropped the proposal only after large-scale protests. Even more than what we wish for, the market alters how we wish. Wallet in hand, we focus in the market on the thing we buy. In the realm of services, this is an experience — the perfect wedding, the delicious “traditional” meal, the well-raised child, even the well-gestated baby.
As we outsource more of our private lives, we find it increasingly possible to outsource emotional attachment. A busy executive, for example, focuses on efficiency; his assistant tells me, “My boss outsources patience to me.” The wealthy employer of a household manager detaches herself from the act of writing personal Christmas-present labels. A love coach encourages clients to think of dating as “work,” and to be mindful of their R.O.I. — return on investment, of emotional energy, time and money. The grieving family member hires a Tombstone Butler to beautify a loved one’s burial site.
Focusing attention on the destination, we detach ourselves from the small — potentially meaningful — aspects of experience. Confining our sense of achievement to results, to the moment of purchase, so to speak, we unwittingly lose the pleasure of accomplishment, the joy of connecting to others and possibly, in the process, our faith in ourselves.
There is much public conversation about the balance of power between the branches of government, but we badly need to confront the larger and looming imbalance between the market and everything else.
A society in which comfort, care, companionship, “perfect” birthday parties and so much else is available to those who can pay for it?
What would we say if a wantologist put us on a couch and asked, “Is this the kind of society we want?”
Arlie Russell Hochschild is a professor emerita of sociology at the University of California, Berkeley, and the author of “The Second Shift” and the forthcoming book [ http://us.macmillan.com/theoutsourcedself/ArlieHochschild ] “The Outsourced Self: Intimate Life in Market Times,” from which this essay is adapted.
© 2012 The New York Times Company
http://www.nytimes.com/2012/05/06/opinion/sunday/the-outsourced-life.html [ http://www.nytimes.com/2012/05/06/opinion/sunday/the-outsourced-life.html?pagewanted=all ] [with comments]
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Greensburg, KS - 5/4/07
"Eternal vigilance is the price of Liberty."
from John Philpot Curran, Speech
upon the Right of Election, 1790
F6
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