What does a wave of immigrants do to an economy? It was fine for Florida in 1980

There is little to no hard data showing that immigrants hurt a local economy, but there are some cases where their benefits (or lack of harm) were clearly documented: http://www.npr.org/2015/10/01/444912593/when-cuban-migrants-flooded-miami-what-did-it-do-to-the-local-economy

In the case of the "Scarface" sudden influx of 125K Cubans to South FL in 1980 (incl. 25K former criminals according to the film), there was no economic evidence of negative impact. Many were processed and enrolled in jobs/school quickly, so their need for gov't services was minor. Also they served to "grow the pie" by creating more economic demand (125K refugees = 125K consumers), which resulted in more jobs and sales for Americans. Local wages did not fall. And eventually many of them got education and contributed intellectual capital to the US. Europe, with an aging population and plummeting birth rate, actually NEEDS a lot more productive young people who are willing to work manual/unskilled jobs.

I know 1980 was a different time, and many Cubans benefited from previously-migrated relatives and a familiar culture in FL. But clearly the US will not take in 100K people from the Mideast, and they won't be concentrated in one state. As we discussed before, many Syrian refugees are educated and may also speak English, so it's not like the typical Latin American migrant profile. Detractors will come up with all sorts of excuses to oppose refugee resettlement (cost, security, culture clash), but the bottom line is they have no evidence to back up those suspicions, and as a UN member we have an obligation to act. There will always been some criminals and deadbeats among any group of people, but refugees are no worse than a random sampling of Americans (in fact they're likely better).  

VW's diesel scandal and Shkreli's drug price-gouging

More of the same - this week was not exactly ethical capitalism's (if such a thing exists) finest hour:

VW may have to pay fines in the billions for deceiving pollution monitors and violating the Clean Air Act with their TDI "clean diesel" vehicles (stock plunged 20% in response). Apparently it's not so easy for a diesel engine to be both clean burning AND great mileage.

There is a new (and sick) trend in biopharma (link1, link2) where shell companies buy up the rights to "below market price" drugs and then jack up the prices by orders of magnitude to make a ROI. Well, at least those firms aren't deluding themselves that they're trying to help patients - they're explicit in their pure pursuit of profit, and it doesn't matter if needy patients are priced out.

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Following up on VW and drug prices:

How an academic lab at UWV (an ironically similar acronym) detected VW's diesel cheating: http://www.vox.com/2015/9/23/9383663/vw-emissions-scandal-photo. I just wonder why VW's diesel rivals didn't question how VW could get superior mileage/torque while still keeping pollution low (the diesel engine is kind of zero-sum for these performance metrics). Like wouldn't they say, "Wow, in our lab we can only get 25 mpg if we stay under the NOx limit - I wonder how VW gets 40 mpg?" (numbers are fictional) Other auto makers are professing that their vehicles don't cheat, but we'll see. Even though very few light cars in the US are diesel, we of course have plenty of semi-trucks and heavier vehicles spewing particulates and carcinogens every day (but at least in CA, these vehicles now have to adhere to tighter limits). Not sure how big the impact will be in Europe, where ~half their light cars are diesel (but they have fewer cars per capita and drive fewer miles per capita vs. the US).

This article has an interesting viewpoint on the Shkreli drug prices scandal: http://www.vox.com/policy-and-politics/2015/9/23/9383899/martin-shkreli-daraprim-price. He's been such an a-hole and unapologetic capitalist re: his company's actions that he's garnered a ton of negative publicity. That actually helps to shed light on the drug price-gouging issue that Big Pharma has been engaging in for decades (BS loopholes to extend patents, buying the rights to generics or cheaper rival drugs to keep them off the market, etc.). Hopefully the increased attention and outrage will motivate lawmakers to consider new rules for the industry, but I'm not holding my breath.

Sacre bleu! Stop checking your Blackberry at night!

http://www.npr.org/blogs/thetwo-way/2014/04/10/301418591/mon-dieu-no-more-work-email-at-home-for-some-french-workers?utm_source=facebook.com&utm_medium=social&utm_campaign=npr&utm_term=nprnews&utm_content=20140410

 

Earlier The Guardian and BBC reported that France passed a law barring tech and consulting workers from using their work devices after hours (and for them, after hours means 6PM-9AM), affecting up to 1M employees. But it turns out the law only applies to hourly contractors (~200K workers) and amends a previous law that workers must have at least 11 hrs of free time per day, which is not exactly super generous.

This story was probably a Brit attempt to mock "the lazy, hedonistic frogs", but really - is it so admirable to be plugged into work almost 24-7 at the expense of your loved ones, personal interests, and health? Even if we love our job and want to work more (or are we just addicted, pressured, or socialized to think that?), you have to stop sometime! Even too much of a "good thing" is unhealthy; what happened to balance? Some managers have to force US workers to take vacation... that is kind of pathological right?

Well, despite having a 35-hour work week, at least 6 weeks of yearly vacation, and shall we say, "different" union laws, French worker productivity is similar to that of Germans AND Americans. So they are just a lot more efficient than us? Maybe knowing that you have under 9 hours a day to get your stuff done, it is motivating and clarifying? Instead in the US, it's always "let's see how much more we can pile on." But is that stuff really value-added? I think you would agree, but I have never read a brilliant late-night email and definitely don't do my best work late when I'm tired/distracted. If the late night stuff was so important, you would have worked on it at 10AM. Unless you need to respond to a 4-alarm fire at midnight, but in that case you may be hourly with a pension.

So, F-U GM and your macho, consumerist, Europe-mocking work ethic. Let he who is without sin cast the first stone (don't make deadly ignition switches and don't beg for a gov't bailout). Sorry, but I think truly successful people would be ashamed to have a Caddy in their driveway these days. So you get the posers like that B-list blond actor you hired on the cheap. I'll take a Renault, and use the leftover cash to have a nice vacation... IN FRANCE (well, Tahiti and Martinique are still technically France right?).

Silicon Valley as a preview of America's future, for better or worse

http://www.sfgate.com/technology/businessinsider/article/FEDERAL-JUDGE-NSA-Program-Exposed-By-Snowden-5069183.php

First of all, is Snowden the runaway favorite for person of the year 2013? I can't think of anyone else who affected US society more (and likely for the better). A Federal judge ruled that the arbitrary, blanket collection of Americans' phone metadata is likely unconstitutional (unreasonable search, violation of reasonable expectations of privacy) and ineffective (no clear evidence it was critical to preventing attacks). Of course the WH and NSA disagree.

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http://www.npr.org/blogs/alltechconsidered/2013/12/16/251608120/exploring-economic-inequality-from-heart-of-the-tech-boom

NPR is starting a series on Si Valley as a microcosm for the changing US economy and society. We've addressed some of these issues before regarding wealth inequality and the Bay Area housing market. Apparently some protesters recently blocked a Google bus in SF, complaining that the private buses were using MUNI stops without paying the city any fees. It's clearly part of a bigger sentiment of resentment, and part of the general debate regarding who is taking more of their fair share from society. Should those being priced out of SF "get with the program" and develop the skills needed to be able to afford living there? Or should the tech elites come down from their privileged position in society and contribute their fair share to helping the less fortunate? Or both?

As a tech employee (peon status) and longtime CA resident, I am really torn by all of this. I don't want the Bay Area to become "Facebookville" or "Elysium" where droves of poor, bitter service workers support the aloof upper class minority. But then again, we depend on disruption, competition, and innovation to win in the market, or we will suffer the same fate as Detroit. I think we can innovate and win, but also spread the benefits around so that the entire region and populace is better off. Yes, the rich should be taxed more.

Disruption is a double-edged sword. A dedicated team works like hell to address an unmet need or overcome some entrenched inefficiency, so they and their investors can be paid handsomely for it. But the industry that they just rendered obsolete is made up of people with families that depend on them. Through no fault of their own, they were disrupted out of a paycheck. A generation ago, all signs pointed to machinist or travel agent being good, stable careers with great ROI for the required education. But innovation changed the equation faster than most could adapt.

Now car services like Uber are getting rave reviews from customers, media, and generating decent financials. But what if they render thousands of low-skilled immigrant cab drivers out of a job? What if the Google self-driving car renders the Uber drivers out of a job? In some cases it is a zero-sum game, even if the metrics suggest that society overall is "better off". Does one new billionaire created compensate for 1,000 families who just got the American Dream taken from them? Everyone seems to celebrate the "winners" without considering the collateral damage. Yes, we need innovation to succeed and even survive in the world. And those who succeed should be rewarded. But what about the everyday folks who, through no fault of their own, get suddenly shifted from middle class to destitution? Do the disruptors (and the traditional companies being replaced) have a social responsibility to help those workers transition to the new reality? Does the government? If so, then I think they should fund such programs from the disruptors' stock gains.

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Sort of related (in that it perpetuates the massive inequalities of the Bay Area) is education. M Night Shyamalan just wrote a major book on education (hopefully he doesn't write more and his natural follow-up suck strikes!), and it makes a lot of good points.

http://www.motherjones.com/kevin-drum/2013/12/m-night-shyamalan-steps-education-wars

Basically, he suggests that our education system is actually great - if you're a a white kid. Our white kids do just as well as the Nordic white kids or other European white kids. But if you're a minority (and, typically, poor), the education system sucks and really drags down our averages. There are a number of ways to address this, but:

1) They take money $$

2) And they mean de-emphasizing putting resources into already highly performing white schools

I've come increasingly to the conclusion that American politics is all about race. I'm sure many of you have seen the research that support for redistribution increases if it is perceived by the voter as going to "someone like them" - i.e. someone of the same race. 

Most people in the Bay Area don't consider themselves racist and it's probably true - in fact, the Bay Area is one of the most diverse areas of the country. But poors in the Bay Area are still "the other" - they didn't go to good schools, they struggle to get by on bad salaries, their unemployment rate is x3 higher than well-educated whites. Basically, their experience is completely alien to most of the tech gods in the Bay Area and their presence is invisible. No surprise then that the tech gods (which have actual power) use little of their capacity to help the poors.

You can imagine the national consternation and outrage by the well-educated press and electorate if the unemployment rate was 20% and transportation and housing ate up 60-70% of the budget of native-born, well educated Americans, yet this is exactly the situation facing a plurality of Bay Area residents - the poors and the immigrants. I guess it's only a crisis for those that are rich. If you're poor and face such circumstances, given the media and elite orientation, it's a statistic and at best regrettable. And the rich wonder why resentment is on the increase...

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Thx, J. I agree, but why are non-whites disproportionately poor? Mostly racism. The 1% vs. 99% has also been a pervasive, ubiquitous problem for centuries, but of course the power balance has varied due to historical conditions. As you said, now more than ever gov't is serving the interests of the 1% at the expense of the 99% - and that is a big effing problem that we have to tackle if we care about democracy. But even if we returned to the economic conditions of 1960 when wealth and political power were more evenly distributed, there is the underlying racial problem that Andrew mentioned. Say we repeal Citizens United, reformed the justice system, and made a bunch of other needed changes - it will still be harder for minorities to get ahead. Addressing one problem is not a distraction from the other. Both are critical, somewhat independent, and deserve to be called out separately. There are some solutions that can mitigate both issues (namely taxation and campaign/election reforms), so we could try to prioritize those.

According to this moron, the poor and middle class are doing better than ever, because we are enjoying a "golden age of TV!" So what if I lose my job and get evicted... I can still watch the latest episode of "Duck Dynasty" at the local library's PC lab. Forget the macro indicators, our amazing selection of digital entertainment options makes life more fun!

http://www.bloomberg.com/news/2013-12-02/who-needs-a-raise-when-you-have-tv-.html

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Oh the drama of "bus-gate": http://blogs.kqed.org/newsfix/2013/12/09/google-bus-protest-most-entertaining-moment-was-staged/

Thanks, A. Good to see M. Night making a comeback of sorts, with more social value than "The Happening". Yeah it seems the path to inequality starts from grade school, and maybe even in the womb, as lower income (often minorities) generally don't have access to comparable health, nutrition, and child care as affluent whites. This could set back their development, so that even if they were lucky enough to attend America's best schools, maybe they wouldn't be fully able to take advantage of the opportunity.

It is really sad that the inequality phenomenon has such a racial component. But if a liberal dares to make that claim, you can imagine the reaction from the right (race-baiting, it's a war on white men, etc.). Roberts said that racism is over in America after all. It is especially disappointing that minorities have fallen further behind during the Obama presidency. It's not his fault and it could have been worse under a white GOP president, but Obama's heritage almost blinds America to the fact that tens of millions of minorities are not succeeding despite his meteoric, outlier success. After all, the biggest beneficiaries of US affirmative action historically have been middle class white women. The social programs that disproportionately helped the urban poor are being dismantled in the name of "budget compromise."

On a local level, I don't think the tech giants can fully celebrate their CSM and social impact, when East Palo Alto (10 miles away from FB and GOOG HQs) is still held back by the same problems it faced a decade ago. Richmond and the Tenderloin are a stone's throw away from Twitter and Salesforce. Sure the tech companies engage in their annual "day of caring" and donate millions to worthy causes, but those good works barely tip the scales vs. all the negative externalities they unintentially impose on the less privileged. I guess rather than facing the cognitive dissonance of the injustice/inequality all around them vs. their desire to make the world a better place (ostensibly for all), tech people would rather live insular lives and stick with their own kind (luxury, exclusive housing to the luxury, exclusive bus to the luxury, exclusive office to the luxury, exclusive bar, etc.). This of course is not exclusive to tech workers, and the other Bay Area professionals (doctors, lawyers, bankers) are just as susceptible, if not more. But that is the problem when achievement and career take up so much of our attention - there isn't much room left for people, especially those who are different than us.

I am not sure if it is a generational issue either. After the Baby Boomers exit the labor force, and the younger folks take the helm of the big companies, I really hope for a sea change. Douchebags aside, I think that many Bay Area yuppies would prefer a more diverse workforce and society. CA is great because it's not a stuck up East Coast cocktail party where your alma mater and family name come first. It's boring when you only work with clones of yourself who think the same way (also it's bad for business). The Valley has been successful in recruiting and naturalizing so much foreign talent, but many of them were elites from their native lands (and they tend to self-segregate in the US too). I just don't see black and Latino native residents get recruited in sufficient numbers any time soon.

Check out this slideshow from Business Insider about racial-economic segregation in SF-Si Valley: http://www.businessinsider.com/maps-show-racial-divide-in-silicon-valley-2013-9#

This issue kind of reminds me of the military crisis. When only poor people go off to war, society doesn't really notice, so our leaders may be more likely to abuse those soldiers. But in the case of WWII and Vietnam, when even some millionaire's kids and Ivy Leaguers were getting slaughtered in the field, then that changed the equation. As you said about Bay Area housing and transport costs, the privileged won't lift a finger until they feel similar pain as the poor. A more progressive income tax that funnels money to the working poor would be a start, or maybe higher property tax on richer, less diverse neighborhoods? But of course city leaders get elected by those neighborhoods, so it's a nonstarter. In France, they have a saying, "Vive l'impot!" Or a celebration of tax. It's not a dirty word like in the US. Taxes are a mark of honor, a patriotic duty to reinvest in the nation that you love. And those taxes should go to helping strengthen society from the bottom up, not further the social advantages of the elites or become giveaways to already rich special interests.

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Part of the solutions that M. Night and other education scholars have recommended is longer school days, year round schooling, and early intervention programs like head start, universal Kindergarten, etc. Basically spending a lot of money to get poor/racial minorities with bad home environments and poor nutritional habits into a much healthier system. Of course, doing this takes a lot of money. However, school inequality is still a major issue so there are some resources that could be recaptured from rich white schools.

As you may remember from the George Packer/New Yorker article, even in the Bay Area, public schools such as Woodside and Paly have foundations that parents started to "adequately" fund their school - i.e. they have way more money than they need and marginal dollars there are not doing much good, while schools like East Paly are hurting pretty bad. And of course thanks to restrictive zoning regulations meaning no new housing ever (into which the poors/middle class might move), public schools in Woodside/Los Gatos/Atherton/Paly are only public in name only: effectively they are privatized for the rich white residents. But beyond that, it would take a massive infusion of resources into places like the LAUSD, New York Public Schools, etc. that voters haven't shown the will to spend.

I know you're fairly hopeful about the promise of the younger generation, but I'm more pessimistic. It's true that race will be less of an issue for our generation and some of the issues that the oldsters have with things like gay marriage will dissipate. However, I feel like our generation, while still well-intentioned, is even more clueless about the life and struggles of poor people than any previous generation. While J is right that the gap between the 1%ers and the rest has grown astronomically, I feel like the life experiences of the top 10% is becoming increasingly disconnected from the lives of the rest. Worldly, plugged in, well educated, financially comfortable kids on the Google buses have basically nothing at all in common with day laborers in the Mission. I don't mean that they actively seek to screw them but I think it's easy for many to not even people like that exist. The problems and life experiences of the bottom 90% have basically just don't show up on the radar of your average techie or higher.

And while the top 1% have arrogated for themselves increased power, the top 10% still can drive the political conversation in the media and online. If people don't see the problems of the rest of society or only are dimly aware of them in an abstract way, I'm not optimistic that much progress can be made.

I see where J is coming from on this - I think on matters of economic policy the 1% have the resources to really get whatever they want.

But I think one of the under-appreciated developments in American politics is that, in previous historical periods, when you had this unbalanced of an income, populists would rally the poorer classes to demand change. That's how they broke up the robber barons (see Teddy Roosevelt), and that's how the back was broken of European nobility.

What's happened this time is that many of the people that might have been expected to join this populist coalition against the rich and powerful are instead diverted by issues of "other" (i.e. race). How else do you explain the fact that West Virginia, one of the poorest states in the nation, voted overwhelmingly for Romney? Or Kentucky? They're afraid that moochers (of course, moochers from out groups; in group moochers are fine) and immigrants and gays are wrecking America.  These are precisely the people that Democrats ought to find common cause with (and previously did, against the Robber Barons and again during the Depression), yet our politics that are focused on race and religion and culture have them voting against their economic interests.

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Thanks, A. It's ludicrous that there is any opposition to these youth programs, as the research indisputably shows that the ROI is huge. So the expenditures are actually cost saving measures in the long run. There should be no conservative opposition, but of course there is. Is it just a philosophical/political impasse (block ANY new gov't programs, even helpful ones), or is it the elites lashing out because they don't want poor, colored folks to succeed and compete on a more level playing field with their privileged kids? Sure the rich would rather have tax breaks now than more education spending, but as I said these programs save $ in the long run and make a stronger society, which will reduce the rich people's future tax burden and probably result in more capital gains for them, as these kids grow up on a better trajectory and become valuable consumers/workers.

The data suggests that Millennials are more tech savvy, more socially aware, and more into volunteerism than previous generations. As you said, they are worldly, and with the internet at their fingertips, they are on average much more cognizant of global social issues than their parents and grandparents at that age. So really there is no excuse for them to turn their back on social problems, even if they can't fully "relate" to the needy. But residential and workplace segregation is a terrible problem, because if you don't see diversity and the struggles of others each day, you are less likely to do anything about them. I believe that most young adults (and most of us on this email) would vote for policies and leaders who want to make our society fairer. The problem is no one is putting such debates up for a vote (probably because most of the political system is co-opted by the elites as J said). I think the youth are in the right place morally, but they just need a spark or a dynamic figure to lead them, like a modern day "Ask not what your country can do for you..." or "We hold these truths to be self evident..." We don't have that unfortunately. All our brightest young people are going into the private sector, where they can't "do good" because they are beholden to shareholders, and fighting for their lives against cutthroat competition. Only when they're super rich and semi-retired like Gates will they hopefully give back. Look at us; we have money and are well aware of the problems out there, but we don't have the time or courage to advocate for the causes (many self-imposed or social barriers stand in our way). We will vote the "right way" if the occasion arises, and maybe even give some money, but we aren't able to put in the hours (not to mention blood, sweat, and tears) to lead the populist charge as you said. I admire the few folks who do.

But maybe all is not lost and there are some leaders with potential. Here's a Fresh Air interview about Pope Francis, and of course the main theme of his papacy so far is social justice and critique of global wealth inequality (and the institutions that perpetuate it). Europe is a powder keg of discontent regarding gov't corruption, voiding the social contract, and widespread unemployment. I will give Obama credit too that he has raised the issues of race and inequality (maybe not by choice) more than any other president since LBJ. Maybe he hasn't moved the needle on the debate in America, but he isn't letting us sweep it under the rug. So we are seeing some top-down emphasis of the race and wealth issues, but unfortunately that hasn't manifested itself into new laws and reforms (the plutocrats can control lawmaking bodies a lot more than individual executives).

Re: the US history of populism, you are right that conditions were a lot different when labor was stronger and the working white poor were a major Dem constituency. But the party made a decision in the '60s to fight one injustice at the expense of the other. They fought against racial discrimination, which lost them the Southern white vote. And in order to make up for it, they had to go more corporate and turn their back on labor too. So the Dems are more elite than ever, even if the GOP is really struggling with key demos like single women and non-whites. But I don't think that racist whites in the US hate colored folks just because they bought into the economic propaganda of the elites. They had those prejudices already, and the elites just fueled the fire with scare tactics relating to black uprising/crime and immigrants taking jobs/services. We also have to address the non-economic drivers of modern racism (I am not quite sure what they are but I could speculate). I agree that the GOP is using religion as a wedge issue to keep its base from turning populist, which is of course ironic because Christian values are clearly misaligned with the modern GOP.

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As A pointed out, "But I think one of the under-appreciated developments in American politics is that, in previous historical periods, when you had this unbalanced of an income, populists would rally the poorer classes to demand change. ", I find it interesting that at that time, communication between groups was limited by lack of technology.  Now we have instant communication with anyone in the world.  You would think that it would be easy to put all of the pieces together for the oppressed to rise up.  But, these same lines of instant communication are also used to manipulate us in ways we'd never seen before, essentially keeping us divided, blaming one another for our lot in life instead of seeing the real picture.

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http://www.insidepolitics.org/ps111/riseofinternet.html
http://gnovisjournal.org/2010/04/25/media-fragmentation-and-political-polarization-how-high-choice-media-environment-leads-great/

Thanks, L. Yeah media fragmentation in the US can be a big problem. Families don't tune into the same 3 info sources around the radio or TV set anymore. So of course FNC says that everything MSNBC says are lies, and vice versa (and CNN just talks about the Kardashians) - adding to distrust, misinformation, and most harmful... polarization. Plus we are blitzed with too much info now on our multiple devices (especially entertainment/time-wasting content), which distracts us from thinking, collaborating, and rising up together.

Twitter and Facebook helped the Arab Spring gain momentum, but sadly it can't really do the same for us (even though we invented those services). Well, when commercial crap like Bieber and Coke are the most liked/followed entities on social media, you know we have a problem. It seems US social media is (deliberately or not) functioning to prevent us from mass political debate and assembly, whereas it has the opposite effect in repressive/dysfunctional foreign countries (which is why their state security services try to block/monitor it)?

Is Black Friday even worth it to our society/economy?

http://news.yahoo.com/blogs/sideshow/-walmartfights-sparks-a-trend-on-twitter-193622540.html
http://en.wikipedia.org/wiki/Black_Friday_%28shopping%29

As we know, scheduled promotions like "Cash for Clunkers" many not generate new transactions, but merely shift them to a specific date (i.e. I would have bought a TV for Uncle Bob at some point before Xmas, but I might as well go on B.F.). Sure, while you are frantically trekking through Walmart, the mob mentality and "holiday spirit" make you less responsible with the wallet, so you might be inspired to get some other items (which is incremental revenue), but it's really hard for businesses to measure if those purchases are totally due to B.F. With the "arms race" of fierce retail competition, and marketers whipping consumers into a frenzy (and now mobile broadband and social media make it even easier to learn about "great deals"), companies have to take a loss or break even on certain products just to earn some eyeballs (they likely will have to pay more for ads due to more competition). Of course they may only have 5 super-cheap TVs per store, but clearly they are pricing competitive items lower than they'd ideally want to, and likely below what the customer's normal willingness-to-pay is (sans B.F. expectations).

That is a risk too - customers are expecting great deals, so if they are sold out by the time they get to the shelves (even for folks who waited for hours in the cold), that will cause a lot of anger, and the retailer runs the risk of creating a detractor who badmouths them on social media. And that's if they're lucky - shortages may lead to riots and deaths, as we've unfortunately seen in the past. Imagine all the man-hours of extra associates, police, and other emergency responders needed to handle the B.F. madness and possible incidents. Imagine the carbon footprint of all the traffic jams and the utilities from the extra hours that stores are open (and it's getting earlier and earlier - some stores opened at 8PM ON THANKSGIVING... by 2020 Black Friday will be on Labor Day). B.F. may not drive many purely incremental sales, but it sure as heck will create many incremental traffic accidents, injuries, etc. The employees that have to deal with the insanity may get overtime pay, but they also will experience elevated stress and possibly employer resentment, which are documented to affect workplace productivity, personal relationships, and health (not to mention all the stress and panic behind the scenes where non-store employees have to rush to meet the B.F. related logistics, marketing, product launches, and other deadlines). I am pretty sure some folks at Sony and Microsoft would have liked a few more weeks to iron out the bugs associated with their new gaming consoles, but they had to get them on the shelves in time for B.F. And as far as I know, no one is getting B.F. or Xmas bonuses anymore for their extra efforts.

On the consumer side, the post-Great-Recession US shopper spends on avg. $400 during B.F. weekend (with 200M+ unique shoppers). People may not behave very rationally during B.F. (understatement of the year), so they may make inefficient and imprudent purchasing decisions that will have negative consequences on their economic viability (and that of their dependents). There are socioeconomic costs associated with frivolous spending: credit default, back taxes, late rent payments, etc. Some opportunists make money off things like that, but there will be preventable economic losses too. Also, the more we spend on shopping, the less we have to donate to charities (or even buy more medicine and healthier food). The fatigue, emotions, and sleep deprivation associated with B.F. shopping will affect shopper health, relationships, and productivity for weeks - especially during the winter time of bad weather and virus spreads. Adding all this up, I can imagine that the social costs of B.F. could easily top $1B in the US. I am not sure how much incremental profit B.F. generates (for scale, wiki says WM gets $5B from B.F., and it is ~3% of all US retail sales), but clearly it should be discounted if we want to make a fair, holistic value calculation.

Even Cyber Monday could have social costs by reducing workplace productivity and tying up bandwidth that could make pageload/latency times worse and important/emergency messages slower.

Brazil: where are their priorities?

http://sports.yahoo.com/photos/photo-finish-relive-the-weekend-in-sports-1372640894-slideshow/confederations-cup-photo--1751219419.html

http://www.cnn.com/2013/06/20/world/americas/opinion-brazil-simoes

Two-and-a-half years have passed, and [President Rousseff] is still popular among the poorest, but the recent protests were led by a different bunch: The traditional middle class. On the streets, well-educated people, from central, urban areas, shouted that they had been sold a lie [about their lives getting better].  

Inflation is once again a major concern, violent crime is on the rise, cases of corruption fill the press, healthcare is in a precarious state, infrastructure projects have not materialized and street traffic is depressingly worse than ever.


While TV showed the inaugurations of costly, lavish football stadiums, people felt their lives were getting worse by the day. After all, the World Cup will cost the nation some $15 billion, and the promised legacy in infrastructure is still nowhere to be seen.

- CNN

So they won a soccer tournament tonight, big deal (it has no real consequence except raising their FIFA ranking from their current #22, just ahead of Mali). They did wipe out Spain, whose squad is believed to be one of the greatest in history according to some. But it's just sport - what about jobs, infrastructure, accountability, and gov. services?

The match took place in Rio as crowds tried to march on the stadium but were blocked by riot police. You've probably heard that a combined million Brazilians have been protesting their government recently - first sparked by something so mundane as a planned bus fare hike (like how the Turkey protests started over a park closure, or the Tunisia protests starting over the frustrations of one small businessman). But these "minor complaints" are part of a larger theme of 2nd world governments reaping the rewards of increasing int'l prominence, but not passing much of it down to the people.

Brazil is part of the sexy BRICS economies, and barely felt the recession. The Economist projects a healthy 3-4% real GDP growth rate through 2017. Yet public opinion of Brazil's president and legislature are much lower now vs. 2003. Wealth inequality in Brazil is one of the worst in the world (worse than the US), by Gini and other metrics. 5-6% inflation is a problem and the Real is expected to lose value against the $ each of the next 4 years. The current and former presidents come from a leftist labor party that capitalized on the support of the poor to win. But it is the middle class that is key for Brazil to become a true global power, and it is the middle class that is currently really pissed off (same with Turkey, and the US - though we are too cowardly to protest).

Occupy was a manifestation of this, but all around the world people are rising up because they are tired of putting up with gov'ts that claim things are going great and they are making your life better, yet people are hurting more and more. From Greece to China to Brazil, citizens are fed up with corrupt leaders who have their priorities all backwards, and are in office just to enrich themselves and serve the elite.

We know what the Olympics did to Greece's economy (and China violated all sorts of civil rights to make their Games happen), and now we have Brazil proud to host the 2014 World Cup and 2016 Summer Olympics. They're building fancy billion-dollar stadiums, yet basic services, rule of law, and such are terribly lacking (a successful int'l sporting event needs those things too!). There were concerns about the 2010 South Africa World Cup partly because that host was also in BRICS, and crime/poverty is endemic in parts of SA. FIFA even planned to use Brazil as a backup host if conditions in SA were too poor for the Cup. But now it seems Brazil is in worse shape. Of course a big int'l event is a way for the host to show off to the world that they have arrived. They sweep their national ills under the rug for a month while foreign revelers cheer, drink, and spend money. The Olympics didn't make China stronger (and didn't really boost their global prestige IMO), and Brazil shouldn't expect any better. Honor your commitments to your people first, then worry about stupid ballgames. Same goes for the US... but "bread and circuses" are effective distractions so the masses forget how their leaders are abusing them.

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You probably heard about the criticisms of the BRA gov't and FIFA leading up to the World Cup, but here is a humorous/pathetic summary too:

http://www.businessinsider.com/john-oliver-fifa-2014-6

Like the IOC and NCAA, FIFA is another corrupt, egotistical, short-sighted "nonprofit" sport mafia that is only interested in its finances (often at the expense of all other parties) - maybe to a more pathological level than some for-profit corporations. It's not about "the good of the game" or the players/fans. The sporting events themselves are entertaining and almost universally beloved, but the governing bodies are just immoral leeches capitalizing on our passion/addiction for the sport. Maybe because of that, at some point it has to be justified to boycott.

How technology is affecting the American Dream

We talked about most of this already but it's a good take on the issue: http://techcrunch.com/2013/06/01/after-your-job-is-gone/

Also another take on the elites vs. rest idea (even Jay-Z, Obama, and Oprah are not spared!) - the author Packer was on Real Time tonight: http://www.nytimes.com/2013/05/29/books/the-unwinding-by-george-packer.html?pagewanted=all

An aside: L is right that Maher is an idiot and a psycho when it comes to security issues and Islam-bashing. He rightly trashes the 2nd Amend. yet proudly owns guns because "the other crazies are armed". He claims to be a true Libertarian, but supports all sorts of liberty-reducing actions that ostensibly prevent terrorism. It's funny... self-respect and humility often make us better people. But self-preservation and self-love make us pricks. No one wants or needs to die, but the world doesn't need us either.

I guess America's Great Society of the '60s and '90s socialism in Europe were the exception and not the rule. As the author said, most of the modern world resembles the pre-French Revolution "nobles and serfs" model. But it's sad because our generation in the US was brought up to believe that the Great Society was our birthright and if anything, we would make it even better in our lifetimes. Of course things weren't all rosy in the past (bigotry, ignorance, Cold War, etc.), but it's amazing that America of that time period had low unemployment, low wealth inequality, ample gov't services, and low deficits.

Now the opposite is true, though our employment situation is much better than Europe's... and their society may be unraveling faster than ours.

http://www.economist.com/news/leaders/21578386-euro-zone-desperately-need-boost-no-news-bad-news-sleepwalkers

But that is a little deceiving, because while US unemployment is down to like 7.5% now (much higher for young people though), the quality and security of most American jobs are not great, the social safety net is about depleted, and many are not counted as unemployed because they have taken the disability route instead (as we've discussed), or have just become the "permanent, uncounted, unhirables".

The change coincides with the rise of Si Valley, hyper-finance, and globalization. We can't be sure what caused what, but similar things happened during the Guilded Age, fueled by the tech bubble of the time - railroad, electricity, telco, etc. that Wall St. ate up. I guess disruptive tech always creates new winners and losers, but usually doesn't rewrite the labor map. Our new tech industry seems more extreme: highly paid jobs with specialized skills that are not accessible to the mainstream, emphasis on quick ROI rather than long term sustainable growth, and "virtual" products that create a ton of wealth for some but not many new jobs (or in fact replace old jobs). That could be called "progress", but the effects appear to be socially unjust too.

 Also here is a great interview on the issue with Moyers and Richard Wolff:

http://billmoyers.com/segment/richard-wolff-on-fighting-for-economic-justice-and-fair-wages/

David Stockman on the debt, Fed, etc.

http://www.kqed.org/a/forum/R201304111000

http://www.huffingtonpost.com/2013/04/07/paul-krugman-david-stockman_n_3033003.html

I don't know much about Stockman's history, but he was Regan's budget director so that is a hit to credibility. And then when he had a "falling out" with Ronnie over tax cuts and spending, he went to Wall Street (whom he blames a lot for the Great Recession in his recent book). So that is strike two. But he did become disenchanted with Wall Street, then sobered up, and is trying to be Paul Revere about our political and economic woes.

We have heard most of his arguments before, but he approaches it as a conservative who is trying to save "real" capitalism from the forces of corruption.

Some points that I found especially interesting:

-Neither Obama or the GOP dare to challenge the military industrial complex, even with all the discussion about debt worries. Maybe the sequester was the best thing for us on the military end (but not on the public services and investments side). So many Americans are now dependent and suckling on the teat of defense (quite a mental image!), defense is "too big to fail" and they claim that any cuts will cause us to slide back into recession. And many politicians are OK with that because their re-elections hinge on defense jobs and contracts in their states. And we get basically zero ROI on most defense spending - they are just cash outlays that go poof. I guess the same can be said about food stamps, but that program is a grain of sand compared to defense. I am all for spending on infrastructure and *smart* research that will actually give us positive ROI.

-The Fed's monetary policies from Greenspan to today have been disastrous. The super-low interest rates did not ease borrowing or promote growth, but only allowed Wall Street to lever up and make more profits during bubble cycles. And for the retirees and others who "did it right" and saved responsibly all their lives - their fixed income reserves are producing nearly zero returns to live off of now.

-Stockman thinks that the Social Security Trust Fund is raided and just a confetti IOU. I have heard various assessments, so I am not sure what to believe - Is Social Security OK? One thing is clear - wealthy retirees should not be getting SS benefits, even if they paid a lot into the system for decades. It makes no sense to burden younger, productive, debt-laden working people with large payroll taxes to subsidize older, richer, secure folks who don't need more security. But you have the AARP out there, so that's that.


Clearly our financial and monetary woes are not a Democrat or Republican problem. They are an American problem (to borrow an Obam-ism). Both parties are now in love with irrational tax cuts and loopholes as the best way to bribe voters (especially rich voters). Both parties think that we need to spend as much on defense as the Pentagon asks for (like asking your kid the open ended question "What do you want for Xmas?" and being surprised when they say "Unicorn!!"), even though our military is built to fight threats that do no exist. Also, a moral hazard associated with a bloated military is the fact that we may feel more inclined to use it because we paid for it. If we had a scaled-down military on par with Scandinavia and such, then it would have been obvious that we couldn't occupy Afghanistan or Iraq. In that case, we would have devised more feasible, economical solutions to fight terrorism. And probably they would have been just as effective if not more so.

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I think Stockman is basically wrong. If you're concerned about the long-term health of the nation, what you need to be worried about is getting us out of this recession and repairing the damage done. There was a recent paper looking at the job health of the long-term unemployed, and the basic answer is that being out of work for 6+ months doesn't just mean you lose that time. It impacts you essentially for the rest of your career. There's an understandable stigma about hiring people who've been out of work for long periods, which makes it harder to get back into the workforce, when you come back it's at a lower role, etc. This is a big deal for recent college grads as well: young people who graduated in the last 3-5 years have been screwed, big-time, by our economy, and may never get back on track. This idea that reducing the deficit is "for the benefit of young people" is shenanigans.

On Social Security …

Legally, the Social Security Trust Fund is a separate organization from the federal government. It has its own dedicated revenue (payroll tax) and expenses. For a long time it ran a surplus, bringing in more revenue than it paid out. It invested that surplus prudently, in the world's safest and most liquid asset class: US Treasury Bonds. Anyone who calls a US Treasury Bond an IOU, like we're talking about a 10-year old's lemonade stand borrowing money for sugar, is deeply misinformed or trying to scam you. These are the highest-quality assets in the world.

Now, it's possible that the US government could choose to default on those bonds, causing Social Security to lose its trust fund. But a default on US Treasuries would be catastrophic. The debt ceiling threat was over a short-term, technical default, with every understanding that the debt would eventually be paid, and even that roiled financial markets. A decision to default on the US debt would, with very little hyperbole, end the world financial system. Every bank, hedge fund, money market fund, etc, would be insolvent.

Moreover, the folks who talk about Treasuries as IOUs describe this as being specific to Social Security, so now you're talking about a selective default on just the debt held by the Social Security Trust Fund. That is, the government (I think it's under Sec-Treasury, so executive branch) would have to decide to default only on debt to US seniors, while continuing to pay the Treasuries owned by China, by investment banks, etc. Can you imagine the political fallout, from deciding to stiff just seniors? That President's political party would likely become a swear word (if seniors swore).

Social Security has money to pay all projected benefits through 2037, at which point the oldest of the boomers would be 92. Beyond that, it's projected to be able to pay 80% of projected benefits through the end of the CBO's 75 year scoring window (nevermind that a 75 year economic projection is usually shenanigans - imagine someone in 1938 projecting US revenue in 2013). By law it cannot impact the US debt when it runs out of money. Now, Congress could decide to make up the shortfall out of general spending, but that's a choice they'd have to make (and political coalition they'd have to build).

Social Security is fine. If you want to talk about long-term US government debt problems, it's basically a story of rising healthcare costs.

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Yeah I find that narrative more believable and realistic than what the typical conservatives are claiming. As you said, there is no political or legal way that the US gov't could default just on Treasuries held by SS and keep its commitments to the other holders. That is good to know that SS is independent of the debt.

But I think Stockman's other point was regarding working people and the payroll tax that funds SS. It is the largest single tax item the typical young-to-mid career American has to pay, and does reduce purchasing power and ability to save/invest. Personally, I don't think that anyone with a household net worth of like >$500K (excluding primary residence and trusts) at age 65 should get any SS benefits unless they encounter severe financial distress later. They paid into the system, but now others need it more and they will probably be fine. Call it patriotic sacrifice. That way the "truly poor" seniors can get increased benefits (SS has fallen behind on COLA adjustments, and most seniors can't live "securely" on $1,100/month minus garnishing for Medicare premiums). The wealthy seniors will be OK, the poorer seniors will be more secure (lowering the burden of care on their progeny too), and the working people will have lower payroll taxes - which should stimulate growth. 

Also agreed that pretty much the entire conservative agenda isn't designed to help future generations and often screws them, so I doubt their debt ideas are so forward thinking. 

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The problem with means testing is that it doesn't really save much money, unless you set the threshold very low. SS benefits cap out pretty quick, so cutting off benefits for the top 1% only saves you 1-1.5% of the benefits.

The "is it Boomers" question is actually pretty interesting. It's always fun asking people why we're just talking about SS running out of money now, when the Baby Boom would have been obvious to anyone in a maternity ward starting about 1946 (the standard answer is "government can't get anything done"). But actually back in the 80s we solved the SS-demographic problem. Reagan convened a blue-ribbon council with a big complicated name, which most people knew as the Greenspan Commission after its head (before his Fed days). They were supposed to figure out how to make SS handle the baby boom demographic shift, they recommended a payroll tax increase, their recommendations were accepted, and the problem was solved. Say what you will about Greenspan, but the dude can do math.

So why do we have this problem? The liberal answer is that it has to do with income inequality. Through the 1970s, GDP growth was broadly shared; post-80s most of the growth happened at the top of the income spectrum. This impacts SS because it means that in Greenspan's projections, GDP growth would occur for people below the SS payroll tax cap, and get taxed. In fact, the additional income happened above the cap, so it didn't get taxed. I don't know what the conservative explanation is.

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Pardon my means testing ignorance. LOL the conservative explanation is "blame the liberals and takers". In a sense they are right, but they have the wrong takers. 

“When [Social Security] was developed, 50 percent of seniors lived in poverty. Today, poverty among seniors is too high, but that number is ten percent. Social Security has done exactly what it was designed to do!” - Bernie Sanders

If it's the case that only 10% of seniors are poor these days, then means testing should save a lot more, right?

http://thinkprogress.org/economy/2011/08/25/304387/bernie-sanders-introduces-bill-to-lift-the-payroll-tax-cap-ensuring-full-social-security-funding-for-nearly-75-years/?mobile=nc

As you said, raise or do away with the cap to get the system more in line with Greenspan's projections. In 2012, 4.2% of a worker's first $110K of wages went to FICA taxes. Let's say the avg. salary of the top 5% of workers is $250K (that may not be very accurate, but the 95th percentile of wages was $100K in 2006) and the US labor force is 150M. At a 4.2% payroll tax rate and a $110K cap, we are missing out on $44.1B per year. Total SS+Medicare revenue to the gov't was $800B in 2011. Subtracting Medicare and employer contributions, the employee portion of SS revenue is about $268B (SS is about 2/3 of the $800B, and employer-employee split is about 50/50). So lifting the wage cap would make SS employee revenue increase 16%.

The tax is very unprogressive. I would rather have employers and employees contribute only 1 or 2% of their first $40K of wages towards SS, and then the % grows above that like income taxes. 4% for $40-100K, 10% from $100-200K, 20% above that. Not that harsh IMO, but of course it is not going to happen. A worker pays AT MOST $7K to SS in a year. That is ludicrous for people making $200K+. The wage cap has gone up about 3-5% yearly (it was static during the recession), yet income for the top 1% have growth a lot more than 3-5% per annum. It doesn't make sense to economically burden the most productive members of society to subsidize the elderly who often have higher net worth. If you let the younger generations prosper, they won't need to depend on SS as much in the future. But as J said, the much bigger problem is Medicare. I also would advocate a progressive Medicare tax and much reduced benefits for seniors in higher wealth brackets (Obama is proposing this I think, but I'm sure it's meager).

http://en.wikipedia.org/wiki/Social_Security_Wage_Base
http://www.financialsense.com/contributors/michael-shedlock/top-one-percent-received-income-gains-during-recovery
http://www.heritage.org/federalbudget/federal-revenue-sources (never thought I'd reference these guys!)
http://www.ehow.com/how_4736068_calculate-payroll-taxes.html

Disability coverage masks US labor force problems

http://apps.npr.org/unfit-for-work/

Starting with the Bush I recession in 1990, the numbers of Americans on disability rolls has surged. The Great Recession has further accelerated the trend. Now disability spending > (food stamps + welfare combined), with 14M Americans participating (9% of the labor force).

Of course some people are truly disabled and need public assistance to survive, but many others suffer from the same "ailments" that working people have. I am not saying that these people are lazy "takers", and in fact there is a higher prevalence in southern Red states (and of course is correlated with education levels and local economic conditions). And that is kind of the point - due to structural changes in the US economy and labor force, tens of millions of Americans are now effectively unhirable in the 21st Century. Often they come from blue-collar non-desk jobs that are more physical, so it is likely that they have various pains and elements. So it is easy for a physician to approve many of them for disability. But the problem is that once they are approved and on the rolls, there is next to zero incentive for them to find a job and go through the effort of retraining. It's not like welfare and unemployment with a finite time span of benefits. And speaking of welfare - that is a driver too. "Reforms" under Clinton and Newt effectively shifted people on welfare to other programs such as disability, so it didn't really save the country much money or motivate the labor force. Probably America would get more bang for its buck if it invested in worker transition and retraining programs rather than just hide/relegate these people to the disability space (the US spends about $260B/year on the 2 major disability programs). I am not advocating kicking legitimate people off these programs, but I think it behooves us to at least perform a cost and impact analysis, and propose improvements/alternatives. Disability is just a band-aid to mask our larger labor and health care problems.

There is even a cottage industry now ("disability industrial complex") to advise and help people to get approved for disability - similar to the folks who help kids get into college or help immigrants get their green cards (one firm took in $70M in fees in 2012 alone). And some families may now see their kids as "cash cows" too, by enrolling them and collecting additional benefits. The number of kids on disability has grown 4X since 1990. Clearly medicine has improved since then, and doctors are better able to diagnose disabilities, but it is pretty much impossible to attribute that huge rise to actual increases in disability diagnoses and incidence.

Election comments

First of all, weed in WA and CO!!! http://www.latimes.com/news/politics/la-na-pn-marijuana-votes-20121106,0,3992024.story?track=rss

I'll just comment on the election and politics here, not necessarily on the merits of each party's philosophies and policy agendas.

I can't remember the last time I felt so proud of the American people. Personally, I think this is bigger than 2008 considering the current political environment. Voters rejected the GOP's schizophrenic candidate, as well as their policies of exclusion, obstruction, wealth/power inequality, obsolete beliefs, and scapegoating the wrong people for America's problems.

And ironically, the electoral college is now working in the Dem's favor! Romney almost won the popular vote but got wiped out in electoral votes. But now there are "structural" advantages for the Dems in terms of electoral vote distributions, similar to what the GOP enjoyed from Nixon to Bush Sr.

We worried that Cit. Utd. would change politics forever, and I do believe it had a noticeable effect. But Obama's campaign is the most sophisticated and effective grassroots, micro-donation, new media machine we've ever seen (and it's a platform that they can hopefully transfer to future candidates and continue to have an advantage vs. the GOP on). In the end, that beat out the Adelson, Koch, Trump, and Rove led money and misinformation blitz. Outside groups have to pay a higher fee for TV ads than campaigns, so $1 of money raised by Obama2012 equaled about $1.50-2.00 of Super PAC money. So once again, the GOP miscalculated. Everyone (but Nate Silver) predicted that the young people, poor, and minorities (who turned out in record numbers for Obama in 2008) are now disillusioned and unlikely to show up for Obama like that again. Well they did, and even more so for Latinos. 

But still, about as many people voted for Romney as Obama. A lot of white males, older folks, and the wealthy. Maybe the GOP will realize that America is not like "Leave it to Beaver" anymore and those groups are not enough to guarantee a win each time, but I doubt it. They chose Ryan over Rubio or a woman (and he didn't even deliver WI). Well, the Ryan pick was kind of forced by the nomination of Romney - clearly not the GOP's first choice. I guess Christie wanted to wait until Obama was termed out to give it a shot, probably a smart move. 

So did the "core strengths" of the GOP actually cause them to lose here? It gained them money but cost them votes, and fortunately votes still determine our leaders. The Tea Party, ties to big business, and pro-Israel lobby became liabilities. Most Americans do not feel directly threatened by Iran, do not believe that Israel will be attacked any time soon, and care more about domestic issues. Our foreign policy is far from comfortable, but Osama is dead, America is tired of war, and the focus on these narrow issues to placate their big donors and the hawks didn't persuade many voters who weren't already sure votes for Romney.

How about big business? A private equity mega-millionaire who outsourced jobs to China and didn't support the auto bailout may not be the most convincing messenger for the conservative solution to economic growth. Despite the latent displeasure with Obama over the economy, the "supply side" argument didn't gain traction among non-core GOP voters. And it's not really a great strategy to persuade disillusioned independents and liberals to vote for you when you accuse half the country of being lazy bozos with their hands out (the veterans, elderly, marginalized?), and when you accuse a key growth demographic (Latinos) of stealing jobs and undermining our recovery. 

And then there's the Tea Party. They energized the GOP and thumped the Dems in 2010, but became a liability now. The are too regressive, intolerant, exclusive, and hateful - just not very pleasant people you want to associate with. A lot of presidential elections is about getting casual or infrequent voters out for you. These folks have more centrist, timid views - which is of course anathema to the TP. They aren't winning friends and turning off a lot of key voters with stuff like:

http://www.nytimes.com/2012/11/07/opinion/friedman-hope-and-change-part-two.html?ref=opinion&_r=0

The progressive case against Obama

Here's some cheerful stuff leading up to Election Day that a friend found: http://www.salon.com/2012/10/27/the_progressive_case_against_obama/

I'll limit my comments to the author's criticisms of Obama's handling of the financial crisis, since we've already discussed and have general consensus on Obama's transgressions on civil rights, gov't transparency, and the war on terror. I somewhat agree with the facts that the author has presented, but I disagree that not voting for Obama in 2012 in favor of a 3rd party candidate is the best thing we can do. Because clearly the right is not defecting to support the libertarian candidate - they are holding their nose and voting Romney.

I know I've spent all year jocking Obama's record and declaring him the obvious choice vs. Romney. 2008 seems like a long time ago, but it is worth revisiting now. J has studied the financial crisis in great detail, so I'd be happy for him to chime in here if he has time. Please forgive my inaccuracies and simplifications. :)

A lot of Obama's background suggests that he's not a pure corporatist, and I believe he prioritizes social justice and middle class issues as well or better than most recent presidents. Of course he took a lot of Wall St. money in his 2008 campaign, but actually many elite donors have defected since then, because he hasn't show them enough "love". I think the system was mostly to blame. Since the S&L scandal, banks have used soft power to gain more influence in Washington. Especially after the Glass-Steagall repeal and Cit. United, it's clear that some Congressional committees, the SEC, the Fed, Treasury, and others are literally controlled by Wall St. Even if you or I were president and we were completely anti-banks, what could we do?

As the new president in 2008, Obama's priority was to prevent the nation from falling into a decade-long depression. And he did that (we think). Unfortunately the banks have rigged the game so that saving them was a prerequisite for saving the economy. And of course they are more clever than our leaders (or Washington was complicit in their plans), so they were able to dump all the debt, risk, and toxic assets on us, while the banks (some would argue) got even more freedom to grow bigger and profit from the aftermath of the financial crisis. As the author said, it basically cost them zero to borrow unlimited money. That money was supposed to be used to kick-start growth and rescue underwater mortgages, but they used it to make themselves richer and bigger instead. Probably the largest wealth transfer in human history since Midas. Unfortunately no law could have passed Congress that would have forced the banks to use the bailout funds properly, given our money-tainted legislative process. Especially since the process started before Obama's term. Paulson gave Congress that famous 2-page bill and told them to write Wall St. a blank check. Pelosi and others protested, but ultimately had to cave because no one wanted to be responsible for dithering while the economy imploded. Congress was not equipped to handle such a rapidly deteriorating blackmail situation. And most of Congress is beholden to the banks more than their constituents anyway. I guess we learned the hard way that hasty action can sometime be worse long term than inaction. I thought we learned that already from Iraq, but I guess not.

I really believe that even FDR or Lenin himself would have been powerless in the face of such a situation. The only alternative I can think of for Obama is this (and it would have been career suicide of course): he could have bypassed the banks just as single payer insurance aims to bypass private insurers. If the banks were being stubborn, selfish a-holes who only care about their own bonuses, then forget them. Have the Treasury become the emergency federal commercial bank. Why waste time with the private sector and corrupt, inept middlemen like Fannie, Freddie, and Sallie? Why does Treasury only get to collect taxes and issue notes/bonds - they should make reasonable loans too (not just to the big banks but to us). If the banks are getting 0% APR rates, then at least give the people 2% APR and FAIR re-fi and repayment terms. If the gov't was guaranteeing banks and taking on their bad bets, then they should do the same for consumers. I don't understand macro and monetary policy much, so I am sure my idea is either illegal or impossible or both. But if the credit sector is not doing its job, then why can't the gov't step in? Commercial banking is not rocket science - it should be simple and boring and easy (especially when profit, liquidity, and shareholders are out of the equation). The staff at Treasury are probably smart enough to figure out how to make direct loans to Americans, and buy up distressed homes to take them off the market and stabilize real estate. Surely the banks would have gone to war over this, so If Obama committed to this path, I think it would have been the modern equivalent of Lincoln abolishing slavery. Very controversial, very risky, maybe ahead of its time (or overdue, depending on your perspective), but courageous, necessary, and the right thing for America's soul and future.

Otherwise we'll just inevitably descend into the United Banks of America, which we kind of are now. FIRE (finance, insurance, real estate) has risen from like 2% of GDP in the '40s to over 8% now, with no sign of reversing (and it's probably bigger when you consider private equity, derivatives, and other less transparent sectors). We lost, and we missed the one chance to really fight them - the crisis.

http://www.kauffman.org/uploadedFiles/financialization_report_3-23-11.pdf

Since Wall St. has infected Washington, we probably can't even enact laws to establish an alternative public banking system (like credit unions but way bigger) to compete with them - and expose all their corruption and inefficiencies. There was so much anger against the banks back then, but Obama failed to make the bold Lincoln move (so I fault him on that), and now most of the anger is directed at him now (deserved or not). But this is what he gets when he surrounds himself with Geithner, Summers, and the other ex-banking, status quo crowd. They probably promised him that the banks learned their lesson and this would never happen again. And he believed them since he really wanted to fix health care, and accomplish what the Clintons failed to do. 

Now to the question of how to hold Obama accountable. Unfortunately we are all out of Lincolns in US politics today. Literally Obama and Clinton may be the best ones we have, apart from "nonviable" candidates like Kucinich, Sanders, and Nader. Obviously a President McCain would have done things 95% the same as Obama, or made it even worse. And now a President Romney would give the banks more leeway. So what choice do we have but to stick with Obama? I guess we can fault him for not having a crystal ball and predicting this betrayal if he caved to the banks with no strings attached. But in a crisis we act hastily, especially with so much at stake. Krugman and many other experts were warning Obama. He should have picked real reformers in his cabinet, but I chalk that up to inexperience and his conflict-averse personality. He is not a tough love leader. It was the only time to knock the banks down to size, and we still could have rescued the economy and guaranteed a better future with a more effective banking sector. But I guess Obama was worried about being labeled as a socialist and taking on the yoke of "real reform".

Why do people want to vote for Romney?

All this being said I've been curious.  What are the legitimate reasons for voting for these guys?  Clearly we are a liberal bunch, some of us more so than others.  And whenever I watch daily show I see some pretty ridiculous out takes of the GOP placing feet directly into their mouths.  Am I in so deep I can't see it?  Did I literally drink all the kool-ade?

I mean, the BEST i can offer to Mitt is that I can find a reasonable seed for his statement but that the statement itself is undeniably wrong, offensive, and stupid.  Who is voting for these guys?

 

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Let's exclude the super rich and libertarian extremists for a moment, because they constitute so few votes. Who are the Republican base? White, Christian, suburban & rural people in the Midwest and South (more men than women). Why do they not vote Democrat? Forgive my Romney-esque generalizations, but many are following the narrative carefully crafted by GOP strategists, right wing media, and others. Liberals are not real Americans. They want to take away our god, our guns, our success, and our freedoms - and let the "un-Americans" take over - illegals, gays, lazy welfare people, other minorities, etc. Before, the story was the liberals wanted to give the country to the commies, but since then we've beaten the commies, so just hate the liberals directly instead. Liberals want America to be weak and let our enemies win. They want to reverse all the things that they believe made America great. So when that's your opponent, even a douche like Romney looks like your savior. The facts don't even matter at this point.

Romney keeps asking, "Are you better off now than in 2008?" The answer should be a resounding HELL YES! We actually have an economy today. Obama doesn't deserve all the credit for averting depression (and we can blame him for many unmet expectations), but I'm just saying that question is ridiculously rhetorical. Unfortunately for many in the GOP base, they can't directly feel or perceive how good they have it now vs. how bad it could have been with a different leader (can you imagine what would have happened if Romney-Ryan were elected in 2008?). How can having it good hurt this bad? Well compare it to the 1930s. However, the GOP base can perceive that this recovery has been terribly disappointing. I don't even want to call it a recovery because only Wall St. has recovered - it's more like disaster averted, and we're in limbo on where to go next - up or down? The GOP base (and most Americans) saw their savings and home values shrivel, their employment situations become more precarious, the futures of their kids looking more dim, and the country and culture they love ostensibly deteriorating.

And all the while, this popular, cool half-black dude is running the country (into the ground apparently). Some people seem to be winning during the last 4 years, or so Fox says: corrupt Democrat politicians, gays (repeal of DADT), illegals (Dream Act), China (their GDP growth is shrinking severely BTW, but most voters can't define GDP), the Muslims (despite Al Qaeda nearly wiped out and Iranian nukes set back for years), and lazy deadbeats (Obamacare, loosening of welfare eligibility that in fact never happened). So not only is the GOP base hurting, they think the un-Americans are winning. And they can't stand that - some of that backlash, intolerance, and xenophobia fueled the Tea Party.

As we commented in a previous thread, the GOP base feel like the real Americans aren't getting what they are entitled to. They are good, Christian, patriotic, and hard-working - but why is their life so hard and their country so unimpressive? They're doing everything right, but not getting ahead and actually losing ground. Ironically, Obama has said the same thing about the plight of the US middle class and the American Dream. So both must be onto something. Many metrics show how the middle-class has really taken a beating since the 1990's. But what are the root causes of that? We've already discussed the liberal side of that question (what I would like to think of as the "likely explanation"), and I guess the conservative side is: blame Obama and his supporters.

So when someone like Romney comes along with a seemingly polished business background, conservative Christian values (apart from his time in Mass.), and talking about restoring America to greatness, American exceptionalism, never apologizing for America, cutting regulations, creating jobs, lowering taxes, kicking our enemies' asses, strengthening the military, cutting off the deadbeats and tax-and-spend liberals, protecting our freedoms, putting god everywhere, yadda yadda (totally devoid of facts and reality), well that is fairly appealing to the GOP base and some frustrated, desperate voters. Romney wasn't their first choice obviously (the long, ugly GOP nomination process is evidence), but "any Republican" is better than Obama at this point (just as any Dem was better for many fed-up voters in 2008).

Mother Jones exposes Romney at a private fundraising event

On the 1-year anniversary of OWS, here's a gem for the cause:

http://www.motherjones.com/politics/2012/09/secret-video-romney-private-fundraiser

I guess his true colors come out when he's with his fellow 1%ers. Ironically, he sounds a lot much more comfortable, presidential, and intellectual there than when we've seen him with the press or on the campaign trail pandering to the "regular folks" (where he is usually awkward and ludicrous). I guess Romney didn't become CEO without having some verbal skills with the right crowds.

Even for him, it's shocking how explicitly he dismisses the "lower 47%" who are solidly Democrat. As a presidential candidate and a possible president, "it's not his job" to care about them - half of America! Of course his assumptions about those folks are way off, which may make it easier for him and his peers to justify policies that further disadvantage them vs. the upper class.

I did find his comments about independent voters fairly interesting. He answered an audience question that he can't go after Obama personally, because the independents who voted for Obama in 2008 still like the guy (and Mitt's likeability rating is so low). They are disappointed with Obama's performance but won't reject him as a failure, because that would mean admitting to themselves that they voted poorly. They instead blame conditions during his presidency. So all Romney can do is just keep pushing big lies about the economy to those voters, and hope that they are persuaded.

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Now Romney follows up with his great grasp of foreign affairs: http://www.motherjones.com/politics/2012/09/romney-secret-video-israeli-palestinian-middle-east-peace

He's clearly less comfortable with these matters, as he reverted to his usual whiny, rambling, opaque nature. First the Palestinians have an inferior culture, and now none of them are interested in peace. I wonder if he's ever even spoken with a Palestinian.

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How much of what he said is actually wrong and how much of it is saying the right (or arguably right) thing the wrong way?

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I take issue with the substance of what he said and how he delivered it. It was an attack on nearly half the population. The ironic thing is that many of the 47% that don't pay taxes are actually Republicans (senior citizens, military, veterans, white working class, etc.). I imagine that a fair percentage of the voting class in the "red" America are in that class. But he just groups them together as "victims". It is very degrading.

I don't think most people who don't make enough money to pay federal income tax consider themselves victims or are necessarily content with their situation. I think the majority are working or even have multiple jobs to support themselves or their families and Romney's comments are a spit in the face. I would dare say an insult to their labor.

And, yes, I think the government does have an obligation to provide a minimum level of health insurance to its citizens. I also think the government has a responsibilty to provide for education and providing subsistance and to promote policies that encourage responsible job growth. The whole society benefits not just those who are helped.

In addition, his comments are misleading because practically everyone in this country pays some sort of tax even- even those making the least who can least afford to do so. Payroll taxes, social security, sales tax, state tax, gas tax, propert tax, etc.

What Romney and a segment of the Republican party don't understand is that everyone needs help at one point or anther. At some point everyone needs a break. Even the most successful entrepreneurs (like Romney or Trump for example) couldn't have done it alone. They mistakenly believe that by recognizing this obvious fact they would repudiate the theory that hard work, determination, ingenuity, and risk taking are the keys to success. No one disputes that these are the keys but these traits alone are not always enough.

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I agree with your comments and thx for writing.

For Romney, let me put it this way: what does he ever get right about socioeconomics?

Let's face it, we are ALL dependent on government to some extent, from Romney down to the homeless. Profitable companies can't exist without IP protection, transport and communication infrastructure, a central bank, etc. (unless they are criminal entities, which some are). If government somehow disappeared or became totally libertarian, can you imagine an America where everything was privately owned and unregulated? Knowing Americans, it would make Mad Max look like Utopia. 

Romney is complaining like it's somehow wrong that those who may consume more gov't services will vote Dem no matter what. Well duh, what are the GOP offering them as a better alternative? They want to cut programs and make their lives harder - why would they support that agenda? And remember Mitt when you were governor, you seemed to endorse the idea that healthcare was a right regardless of ability to pay.

It's not like Obama is complaining that all the super-rich are GOP and won't change no matter what. And Obama has given them plenty of reason to like him: the S&P500 tanked under the last GOP president, and soared under him. He hasn't cleaned up Wall St. much at all, though he probably would want to do more. But what those fools don't understand is a smartly regulated Wall St. is BETTER for business. When there is more trust and transparency, people will invest more and markets will be more efficient without costly scandals and bubbles. But despite their love for the free market, I guess they prefer to make their money through arbitrage, trickery, and other uncompetitive, opaque means.

But as L said, plenty of rich people vote Dem and plenty of poor non-taxpayers vote GOP. I think the average net worth of a GOP voter is slightly higher, but that is likely the ultra rich skewing the measurement. The 2 parties are probably more similar than they care to admit from a wealth standpoint. But who are the "freeloaders" really? Maybe during the RNC, you might have caught the Daily Show clip where they were mocking delegates from the states who had the worst "net contributions" (IRS revenues collected - federal cash inflows per capita), suggesting they should be "fired" from the Union as a private sector CEO might prescribe. Only 5 of the bottom 20 states are solidly blue. And only 3 of the top 15 "most profitable" states are solidly red (TX, AR, and NE - probably due to energy). So that suggest the Republicans are the true deadbeats, yet the GOP has amazingly been able to convince many poor to vote against their economic interests. Or maybe not, as GOP leaders seem to have no problem funneling federal dollars to their states, even through the hated Stimulus. 

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

How about ducking taxes? It's true that many poor liberals don't pay any income or property taxes, but they do contribute in sales and payroll taxes as L said. Labor and consumption are being taxed at higher rates now (which hurts the lower classes more), yet capital is being taxed much less. And maybe you heard about that big $100M whistle-blower award given to the UBS employee who ratted on Americans trying to evade taxes in SWI. The IRS recovered $5 BILLION from the scheme. I don't think it was liberals on welfare who were implicated.

I find it funny and sad - some rich really seem to HATE the poor, even though the poor have never done anything to hurt them, either directly or indirectly. I don't get it. Is it just a political tactic to get the poor conservatives to blame/hate poor liberals and the Dem Party for their troubles? And these poor-hating GOP 1%ers often wear their Christianity on their sleeves, yet that religion explicitly teaches that the rich are not going to heaven and blessed are the poor. Mitt probably only gives so much because of LDS-imposed tithes, and he gives mostly internally, to church causes. OTOH, the poor have plenty to be upset about the rich, but many of them take a much better attitude: take only what you need, live and let live. We volunteer with a group that gives assistance to needy people (with no eligibility conditions attached, unlike welfare-to-work or whatever compromise programs). After meeting at least 50 Bay Area households over 7 years, I would say that only about 5% of them fit the GOP stereotype of the lazy, entitled, "victim" moocher (and I'm not sure how they vote). Most are tremendously appreciative for the little "handouts" they get, and they are facing hardships that we can't even fathom. I know that is not scientifically valid, but I don't think it would be too tough to find some supportive national data either.

A robust middle class contributed significantly to America's rise as the biggest economy and "greatest" nation. Many other empires have had a super-wealthy upper class supported by peasant masses, but many of those nations crumbled - often due to economic causes. A confident, socially secure, prosperous, and growing middle class is what separates us from the Third World. To be a great nation, we don't need more rich people, we don't need to empower them more, but we do need more poor people able to become middle class. If Romney doesn't get that, then he doesn't deserve to lead anyone.

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If i wanted to be kind to Mitt I would say that he is approaching this the only way he knows how, from a business perspective.  Those folks reliant on govt programs and that don't pay taxes, regardless of whatever value he places on them as people, what should he be spending on them in election effort?  He wants to lower taxes and cut programs, neither one speaks to their interests.  Why bother catering to them?  No fault in that logic.  The problem is when he keeps not caring WHILE president, or devalues them because they are poor/dependent.  Things like that.

But I think i understand where he was trying to come from.  Product of his upbringing so to speak.

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Yes I guess you're right that there's no point in Romney to court poor liberals, but he doesn't have to denigrate them instead. Like Obama is clearly not trying to woo voters in TX and UT, but he's not talking crap about them with ludicrous, inaccurate generalizations either (well not in public or on hidden cam at least).

The irony is that Romney is in fact indirectly pandering to the poor, but using social issues instead. Like we discussed, red states tend to be more dependent on federal money than blue states per capita. So his agenda of cutting programs should make those people angry. But they don't because I guess they take their federal assistance for granted, and instead care more about abortion, gun rights, illegals, gay marriage, etc. Romney fires up those folks with those issues so they forget that his economic agenda will actually hurt them. It's kind of sick actually, but I guess I can't blame Romney for their lack of awareness.  

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 I should add that his nominee for VP (Paul Ryan) routinely criticizes the stimulus but fails to mention that he voted for it and happily accepted the federal funds for his state. Spending money to help the poor, the sick, the disenfranchised, and the discrimanated against is bad but if it helps those that can raise you money and help you keep political office that's okay. I'm not saying the Democrats don't do the same thing but they are not the ones saying we need to balance the budget on the backs of the poor and middle class.

The income gap in this country is growing higher and higher, especially at the top one percent. If they are reaping the rewards of this new economy, why should the poor and middle class have to make all the sacrifices. In addition, they are the ones who caused the current financial crisis for their failure (to put it kindly) to identify systemic risk in their transactions out short sighted greed. Instead of holding them responsible, we reward them and encourage their behavior in the name of free market capitalism and pursuit of the American dream. Romney can't understand this because he is the poster-boy of this flawed ideology. 

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Didn't he also call 'those Iranians' crazy people?  boy, he's a funny guy.  

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Yeah and by his definition, Israel and the US are also "crazy" then:

- Led by a religious political party (more so in Israel)
- Developed a nuclear weapons program covertly
- Engages in espionage/terrorism overseas in violation of international laws
- Launches first strikes on other nations
- Blackmails other nations with force (more so for the US)

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With this new info, one could argue that Mitt and George Romney's successes are partly due to welfare!

http://www.npr.org/blogs/itsallpolitics/2012/09/19/161409916/welfare-wasnt-always-a-dirty-word-in-the-romney-family

Why do the Romneys have the right to utilize government benefits to climb the ladder and make the American Dream a reality, and now that Mitt reached the top, he wants to cut off millions of others just as deserving as his family back then, if not more. Don't the new generations have contributions to make if given a chance? I wonder what George would have told to a politician who was campaigning to cut off his assistance back then.

I know America is different now and we have new fiscal realities. But personally if I knew these were my roots, I couldn't live with myself to adopt such an conflicting platform. Funny that Mitt tries to campaign like he knows how to make something of oneself, and that his family embodies the American Dream of moving up (not to mention all the hating he does on people who have not demonstrated such success). Maybe that is a legit case to make, but then don't leave out the inconvenient details that you were only able to achieve what you did because the US government, the nanny government, the socialist activist government, the source of all our problems, the thing Grover N and the TP want to kill... gave you a handout when you needed it most - and that was the catalyst to your better life.