Replies to post #135513 on Tornado Alley (PROG)

[StephanieVanbryce]

........Thomasky's comments on the Stiglizt article you posted.

Sad, just sad

Reading this excellent piece by Joseph Stiglitz will not cheer you up, but I do nevertheless commend it in its entirety (it's not long). One of many highlights:

When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it's tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we're doing inequality on a world-class level. And it looks as if we'll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today's standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. "I certainly hope so," he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

Stiglitz might have added the very important point that the majority of the country's most prominent pundits who go on television and interpret all this for the American people, who soothe their audiences with assurances that all this is completely reasonable, are in the top 1%, which means households above around $380,000 per year. Many of course are far above that (Bill O'Reilly, Rush Limbaugh, etc.). High-end print journalists who aren't quite at that level are still likely in the top 2%.

Anyway, the piece makes many important points, all of which boil down to the idea that while income inequality has several initial causes, there is only one thing that sustains it: a political process that is owned lock, stock and barrel by the top 1%.

Stepping back and looking at this context, and staying aware of it, makes watching these budget cuts particularly noxious. That's not to say there isn't waste, fine. But it is to say that the US political system of today is pretty inevitably designed to help the rich and punish the poor. So it's no surprise when GOP Congressman Paul Ryan proposes, as he just has, cutting $1 trillion from Medicaid, which provides health care for poor people and the disabled (an to some extent, a greater extent than many people are aware, middle-class families, too, in the form of nursing-home cost support).

Yes, Medicaid costs are high, killing the states. The feds could actually pick them up. Ronald Reagan proposed doing this. But that would be radical today. If Americans, especially wealthy ones, were paying taxes (income and capital gains) even at the rate we were in the Reagan era, we'd have no budget problems.

http://www.guardian.co.uk/commentisfree/michaeltomasky/2011/apr/01/useconomy-congress-inequality-new-assault-on-medicaid

[fuagf]

F6 .. Gilded Age politics, called the Third Party System, featured very close contests between the Republicans and Democrats, and,
occasionally, third parties. Nearly all the eligible men were political partisans and voter turnout often exceeded 90% in some states.

The wealth of the period is highlighted by the American upper class' opulence, but also by the rise of American philanthropy (referred to by Andrew Carnegie as the "Gospel of Wealth") that used private money to endow thousands of colleges, hospitals, museums, academies, schools, opera houses, public libraries, symphony orchestras, and charities. John D. Rockefeller, for example, donated over $500 million to various charities, slightly over half his entire net worth.

The Beaux-Arts architectural idiom of the era clothed public buildings in Neo-Renaissance architecture.

The end of the Gilded Age coincided with the Panic of 1893, a deep depression, which lasted until 1897 and marked a major
political realignment in the election of 1896. This productive but divisive era was followed by the Progressive Era.

http://en.wikipedia.org/wiki/Gilded_Age

The 1% bastards are fighting back.

[F6]

Did the American Dream Emigrate to Europe?

Jane White [ http://www.huffingtonpost.com/jane-white ]
Author, "America, Welcome to the Poorhouse"
Posted: 04/ 6/11 03:21 PM ET

Mickey D's recent announcement that it's hiring 40,000 [sic - 50,000] workers [ http://www.msnbc.msn.com/id/42412605/ ] bodes ill for the future of job growth in America. According to the National Employment Law Project [ http://www.washingtonpost.com/wp-dyn/content/article/2011/03/08/AR2011030804456.html ], while 40% of the jobs lost in the recession were in high-wage industries only 14% of new jobs created were, with 49% of new jobs paying less than $15 an hour. In other words, Mickey D's job growth is very likely driven by laid-off factory workers who need to grab McMuffins on the way to their new lousy jobs at Wal-Mart that they were forced to take when their unemployment benefits ran out.

When globalization is discussed it's usually focused on the outsourcing of factory and service jobs to low-wage emerging markets such as China and India. But the bigger news that's rarely covered is that high-wage Europe is not only overtaking the U.S. as the global leader but as a leader whose corporate chieftains actually pay its rank and file decently, provide them generous benefits and tend not to "divorce them," i.e., lay them off when economic times are challenging.

Americans can smugly dismiss the European Union's role as merely the bailer-outer of dysfunctional countries, i.e., Portugal, Ireland and Greece. But the more significant news isn't just that the New York Stock Exchange has been bought by NYSE Euronext and Deutsche Borse, but that as of 2007 the value of the European stock market surpassed that of the U.S., according to the excellent book Europe's Promise: Why the European Way in the Best Hope in an Insecure Age [ http://books.google.com/books?id=36NM38haLCEC&printsec=frontcover&dq=Europe%27s+Promise:+Why+the+European+Way+in+the+Best+Hope+in+an+Insecure+Age&hl=en&src=bmrr&ei=brucTfflFoyugQe5ten8Bg&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCgQ6AEwAA#v=onepage&q&f=false ], by Steven Hill. Not surprisingly, the rising value is reflective of the fact that the European Union is now the world's wealthiest trading bloc, accounting for nearly a third of the world's economy -- almost as large as the U.S. and China combined, says Hill. From 2000 to 2005, Europe added jobs faster than the U.S., posting higher productivity gains and enjoyed a $3 billion trade surplus. Oh, and these Europeans pay high sales and income taxes. Take that, Rep. Paul Ryan!

Not only did Germany overtake the U.S. as the world's largest exporter in 2005, as pointed out in a 2006 Newsweek article [ http://findarticles.com/p/articles/mi_kmnew/is_200602/ai_n16073662/ ] entitled "Europe is a House Divided," but it did so by selling high-quality/cost goods produced by generously compensated workers -- its average hourly wage [ http://prospect.org/cs/articles?article=business_is_booming ] is $48, compared to $32 in the U.S.

A little-discussed feature of the European Union is that it's a partnership between large employers and their workers, not just between countries. Since 1994 when the EU issued a directive on works councils, defined as [ http://www.thefreedictionary.com/works+council ] "composed of both employer and employees convened to discuss matters of common interest," every multinational company with at least 1,000 workers within the EU and 150 workers in each of two or [more] member states must negotiate agreements with works councils if employees petition the employer to create one, Susan Ladka writes in a June 2005 HRMagazine article entitled "Working Together [ http://www.shrm.org/Publications/hrmagazine/EditorialContent/Pages/0605ladika.aspx ]." Works councils not only enjoy veto power over job losses but have the right to meet with management to discuss mergers and the introduction of new technologies, says Hill in Europe's Promise.

In fact, works councils existed long before the EU did. According to a 2001 article in The Economist, "Europe: You're Fired [ http://www.economist.com/node/638043 ]," Germany had them after the Weimar Republic and after 1945 required any company with more than 500 employees to have a "supervisory board, in which workers hold one third of the seats. A few decades later, other countries in Europe followed suit, including Austria, France, Belgium, the Netherlands, and Sweden. While the UK resisted the notion at first, because, as The Economist put it, the British approach is "sack 'em now and argue afterwards" -- it ultimately passed local works council legislation a few years ago to meet a 2005 EU deadline, Ladka writes. Incredibly, as far as I can tell, no discussion or debate about creating works councils has ever taken the place within "sack-'em-now" American workplaces, much less on Capitol Hill.

So our counterparts in Europe are enjoying American-style prosperity while continuing to receive European style benefits, including health care, a free or cheap college education, pensions, and generous unemployment benefits.

Our biggest French fan, Alexis de Tocqueville, once said that [ http://www.brainyquote.com/quotes/quotes/a/alexisdeto389355.html ], "The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults." Ironically enough, she need[[s] to rip some pages from the European playbook to figure out how to restore the American dream.

Copyright © 2011 TheHuffingtonPost.com, Inc.

http://www.huffingtonpost.com/jane-white/did-the-american-dream-im_b_845680.html [with comments]

[StephanieVanbryce]

The Ideological Crisis of Western Capitalism

By Joseph Stiglitz 12/07/2011

...........I realize we all ready get this, just thought I'd throw it up here as it's current from Stiglitz..

Just a few years ago, a powerful ideology – the belief in free and unfettered markets – brought the world to the brink of ruin. Even in its hey-day, from the early 1980’s until 2007, American-style deregulated capitalism brought greater material well-being only to the very richest in the richest country of the world. Indeed, over the course of this ideology’s 30-year ascendance, most Americans saw their incomes decline or stagnate year after year.

Moreover, output growth in the United States was not economically sustainable. With so much of US national income going to so few, growth could continue only through consumption financed by a mounting pile of debt.

I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government. Alas, that has not been the case. On the contrary, a resurgence of right-wing economics, driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish.

In the US, this right-wing resurgence, whose adherents evidently seek to repeal the basic laws of math and economics, is threatening to force a default on the national debt. If Congress mandates expenditures that exceed revenues, there will be a deficit, and that deficit has to be financed. Rather than carefully balancing the benefits of each government expenditure program with the costs of raising taxes to finance those benefits, the right seeks to use a sledgehammer – not allowing the national debt to increase forces expenditures to be limited to taxes.

This leaves open the question of which expenditures get priority – and if expenditures to pay interest on the national debt do not, a default is inevitable. Moreover, to cut back expenditures now, in the midst of an ongoing crisis brought on by free-market ideology, would inevitably simply prolong the downturn.

A decade ago, in the midst of an economic boom, the US faced a surplus so large that it threatened to eliminate the national debt. Unaffordable tax cuts and wars, a major recession, and soaring health-care costs – fueled in part by the commitment of George W. Bush’s administration to giving drug companies free rein in setting prices, even with government money at stake – quickly transformed a huge surplus into record peacetime deficits.

The remedies to the US deficit follow immediately from this diagnosis: put America back to work by stimulating the economy; end the mindless wars; rein in military and drug costs; and raise taxes, at least on the very rich. But the right will have none of this, and instead is pushing for even more tax cuts for corporations and the wealthy, together with expenditure cuts in investments and social protection that put the future of the US economy in peril and that shred what remains of the social contract. Meanwhile, the US financial sector has been lobbying hard to free itself of regulations, so that it can return to its previous, disastrously carefree, ways.

But matters are little better in Europe. As Greece and others face crises, the medicine du jour is simply timeworn austerity packages and privatization, which will merely leave the countries that embrace them poorer and more vulnerable. This medicine failed in East Asia, Latin America, and elsewhere, and it will fail in Europe this time around, too. Indeed, it has already failed in Ireland, Latvia, and Greece.

There is an alternative: an economic-growth strategy supported by the European Union and the International Monetary Fund. Growth would restore confidence that Greece could repay its debts, causing interest rates to fall and leaving more fiscal room for further growth-enhancing investments. Growth itself increases tax revenues and reduces the need for social expenditures, such as unemployment benefits. And the confidence that this engenders leads to still further growth.

Regrettably, the financial markets and right-wing economists have gotten the problem exactly backwards: they believe that austerity produces confidence, and that confidence will produce growth. But austerity undermines growth, worsening the government’s fiscal position, or at least yielding less improvement than austerity’s advocates promise. On both counts, confidence is undermined, and a downward spiral is set in motion.

Do we really need another costly experiment with ideas that have failed repeatedly? We shouldn’t, but increasingly it appears that we will have to endure another one nonetheless. A failure of either Europe or the US to return to robust growth would be bad for the global economy. A failure in both would be disastrous – even if the major emerging-market countries have attained self-sustaining growth. Unfortunately, unless wiser heads prevail, that is the way the world is heading.


http://www.social-europe.eu/2011/07/the-ideological-crisis-of-western-capitalism/

[StephanieVanbryce]

Joseph E. Stiglitz: The Book of Jobs

Forget monetary policy. Re-examining the cause of the Great Depression—the revolution in agriculture that threw millions out of work—the author argues that the U.S. is now facing and must manage a similar shift in the “real” economy, from industry to service, or risk a tragic replay of 80 years ago.

Joseph E. Stiglitz January 2012

It's two and 1/half in depth pages ..
http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201