Archive for the ‘Books’ Category

Afghans unaware U.S. invasion sparked by 9/11

September 15, 2014

When the United States invaded Afghanistan, I thought that at least the invasion would be an object lesson to any government who thought of harboring terrorists who attacked the United States.

But Ted Rall, a writer and cartoonist who has visited and toured Afghanistan twice without protection of the U.S. military, said no such lesson was ever learned.   In an interview with Salon about his new book, After We Kill You, We Will Welcome You Back as Honored Guests: Unembedded in Afghanistan, Rall said this:

I’ve never met a single Afghan who had any understanding of the relationship between 9/11 and the U.S. presence in Afghanistan. 

In fact, I’ve never met a single Afghan who even understood what happened on 9/11, understood the scale of it.

SONY DSCI was repeatedly having to explain it to people, having to explain these buildings and how big they were and how many people were in them and how it affected the American psyche and so on.

Whenever you asked [Afghans], regardless of their age or their politics or their tribal affiliation, they’d all say the same thing: The only reason the U.S. was in Afghanistan was because the U.S. was the dominant superpower in the world; and from their point of view, whoever is the dominant superpower in the world at any given time invades Afghanistan.

So we’re just there because we could — they all think that.

If Americans think Afghans understand that whatever suffering they’re going through is somehow tied to 9/11, no; they should be disabused of that, because Afghans just don’t think that.  That’s just universally true.

They think we’re there because we hate Islam or because we want to steal Afghanistan’s natural resources or because it’s strategically important or “I don’t know, but they’re here, and I just have to deal with them!”

… … They always call us “the foreigners,” which just refers to the inevitable foreign presence that’s always there, whether it’s Soviet advisers in the 1960s and ’70s or the Red Army in the ’80s or whatever it is.

“There’s always foreigners here. We’re a weak country. We can’t defend our borders.  The foreigners come and go; we shoot a lot of them, and then they leave.”

Black humor is absolutely a huge survival tool for people who live in stressful circumstances — and Afghans are very, very funny people.

via Ted Rall’s “uncomfortable truths” – Salon.com.

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Matt Taibbi on impunity for rich criminals

August 11, 2014

I can tell you, just from forty thousand feet, that some of the most damaging behavior on Wall Street, some of the least ethical behavior on Wall Street, wasn’t illegal.  That’s exactly why we have to change the laws.
        ==President Barack Obama, in 2011

Financial crimes are not victimless crimes.   Subprime mortgage fraud affected the financial solvency of thousands of municipalities and pension funds.   Many an American is paying higher taxes or facing retirement without a pension because of criminal activity on Wall Street.

Fraud is not necessarily something that is subtle or mysterious.   When someone misrepresents the value of what they sell, when they falsify financial documents, when they pledge the same collateral to several different lenders, you don’t need a law degree to understand that this is a crime.

Matt Taibbi

Matt Taibbi

Matt Taibbi, in his new book, The Divide, has a chapter about how all these things were done by Lehman Brothers, yet nobody in Lehman has ever been prosecuted.

Why don’t we prosecute financial crime?  Part of the reason is social.  Crooked Wall Street bankers come from the same social class as judges.

It is hard for judges to imagine people who might be their friends and neighbors as criminals, or to throw them into prison with violent common criminals.  But there are other, systemic reasons as well.

One is the doctrine of “collateral consequences,” first promulagated in a memo by Eric Holder, while a low-level Justice Department in the Clinton administration.  It is the principle that when deciding whether to prosecute corporations, you should take into consideration the side effects on innocent employees and the economy as a whole.

As an example, the accounting firm of Arthur Anderson Inc. was charged criminally by the Bush administration for helping Enron falsify its books.   Immediately afterward the company collapsed, and 28,000 jobs people, most of whom had done nothing wrong, were thrown out work.  That was sad, but the blame rests not with prosecutors, but with the dishonest Anderson management.

monopoly16The solution to such cases, it seems to Taibbi and also to me, is to prosecute individuals and not the corporation.  Justice would be served, the corporation itself would continue to exist and innocent individuals would not suffer.   Anyhow if a company really is too big to prosecute without damage to the economy as a whole, that is a reason to enforce the anti-trust laws and break it up.

Attorney-General Eric Holder and other members of the Obama administration don’t do this.  They content themselves with levying billion-dollar fines, which seem large to people like me and probably you, but are really small in relation to the overall size of the companies.  Prison is the real deterrent, and nobody in the “criminal rich class” (Theodore Roosevelt’s words) goes to prison anymore.

Another deterrent to prosecution, Taibbi says, is the fact that the largest companies have the best legal talent, and it is possible to have a good case and still lose by making some minor mistake.  The Obama administration is highly risk-averse and concentrates on cases they are sure they can win, which cases against smaller companies.  This is an explicit policy.  Taibbi quotes a Justice Department memo to this effect.

The problem is not only that rich criminals go free.  It is that honest bankers and financiers are penalized.  In a well-ordered capitalist system, the purpose of banking and finance is to turn savings into capital, to be invested in ways that contribute to the wealth and well-being of individuals and society as a whole.

Instead of rescuing banks and investment firms from the follies and crimes of their managers, the  government should indict criminals for their crimes, liquidate failed companies instead of bailing them out, and sell their assets at bargain rates to firms with honest and competent management.

§§§

But, as Taibbi wrote, the problem is not just leniency for high-level crime.  It is the contrast between the administration of justice to people at the top of society and those at the bottom.   This will be the subject of my next post.

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Above the law and below it in the USA

August 11, 2014

To no one will we sell, to no one deny or delay right or justice.
==The Magna Carta

The basic principle of a free society is the rule of law.  That is the principle that laws are the same for everybody.   Nobody, however rich or powerful, is above obedience to the law.  Nobody, however poor or humble is below protection of the law.

The.Divide.Matt.TaibbiI recently finished reading a new book, THE DIVIDE: American Injustice in the Age of the Wealth Gap by Matt Taibbi which shows how far the United States has gotten from that ideal.  There is a class of powerful rich people who can commit financial crimes with impunity, and there are classes of people—poor young black men in big cities, unauthorized immigrants, welfare recipients—for whom due process of law does not exist.

Taibbi is a smart and fearless investigator, a brilliant and readable writer and, above all, a great explainer.   His specialty has been reporting on finance for Rolling Stone magazine.  In this book he combines accounts of high-level crime and low-level injustice, and the combination will make any normal person’s blood boil.

In New York City, under the stop-and-frisk policy, police stop young black men and ask them to turn out their pockets, ostensibly in search of illegal handguns [1].  It is legal to have a small amount of marijuana in your pocket provided you aren’t trying to sell it.  But the minute you take it out of your pocket, you are in violation.  Thousands of harmless people are charged in this way every year.

Taibbi told the story of a hardworking, law-abiding black man who was arrested for “obstructing pedestrian traffic” by standing in the doorway of his own apartment building at 1 o’clock in the morning when nobody else was on the street.

It wasn’t the first time this particular person was arrested for virtually nothing.  He in fact had a hard time figuring out what to do in order not to be arrested.  But in this case, he decided to fight the case.  What’s striking is how nobody involved in the process—prosecutor, public defender, judge—could get their minds around the idea that somebody would plead “not guilty” simply because they were, in fact, not guilty.

They were all annoyed with the defendant, not with the police officer who’d made a false charge.

The attitude of judges was exactly the opposite in the case of real criminals—a cabal of financial speculators who conspired to destroy a company, by means not only of spreading false information, but harassing the company officers and clients on the telephone and even, in one case, actually committing burglary, in order to make money by short sales of the company’s stock (essentially a bet the company’s stock price would fall.)

But when the victims brought a lawsuit, the judge dismissed the case, on the grounds that it was brought in New Jersey and not in New York.

Taibbi told the story of a law-abiding young musician who stopped on the street to roll some tobacco into a cigarette, and was, without warning, assaulted by strangers in leather jackets.  He thought he was being mugged until he was handcuffed and thrown in jail with a lot of desperate characters.

He found he had been charged with a drug offense, later reduced to a tampering-with-evidence offense.  Presumably the police thought he was smoking marijuana, and were doubly suspicious because he was white in a predominantly-black neighbor.   These may have been reasonable grounds for suspicion, but the point is that they didn’t bother to stop and see if their suspicions had any basis.

In contrast, HSBC, the large international bank, ran a money-laundering operation for the Mexican drug cartels.  The bank even had special windows in some of their branches for processing of large amounts of cash.   They served the interest of some of the world’s most brutal and murderous criminals, known for dismembering victims with chain saws.   But HSBC was let off with a fine, which was less than the profit earned from criminal activities.  Unlike with the musician, nobody spent any time in jail.

 Taibbi’s book is full of stories like this, true stories that make my blood boil, stories about a justice system that is harsh and merciless to harmless poor poor people, while granting every consideration to what Theodore Roosevelt called “the criminal rich class.”

Click on TruthOut to read an excerpt from Matt Taibbi’s The Divide.

Click on Democracy Now for an interview with Matt Taibbi.

[1]  This is an aspect of gun control that liberals should think about.

Matt Taibbi’s The Divide is the newest addition to my Books I Recommend page, which is a short list of readable books that provide a good understanding of current issues.

[Added 8/28/14]

Here are some of my other posts on Matt Taibbi’s The Divide

Matt Taibbi on impunity for rich criminals

The incentives to ignore due process of law

A predatory business model based on lawbreaking

The rise and fall of the Comanche empire

August 4, 2014

I recently finished a remarkable book, Empire of the Summer Moon: Quanah Parker and the Rise and Fall of the Comanches, the Most Powerful Indian Tribe in American History, by S.C. Gwynne, a Texas newspaperman.

He told a story that is compelling in itself, and raises important questions about how we think of the American past.

empire-of-the-summer-moon200The Comanche were some of the fiercest warriors who ever lived.  Numbering only 20,000 at their peak, they dominated the southern Great Plains for 150 years or more.  They terrorized other Indian tribes, including the Apache, and they repeatedly defeated the armies of Spain, Mexico, the Texas Republic and the United States.

The Comanche were originally a obscure tribe of hunter-gatherers, pursuing the buffalo while afoot in what is now eastern Wyoming.  Their life was transformed by their encounter with wild Spanish mustangs.  Seemingly overnight, they became master horsemen.

The transformation is an example of the adaptability of human nature and a refutation of the recurring notion that the customs of different ethnic groups are genetically determined—unless you assume that the Comanche had a latent horsemanship gene all along.

A six-year-old Comanche could ride bareback.  A young warrior could slip off a galloping horse, handing on by a heel behind the horse’s body while shooting 20 arrows a minute at an enemy.  Comanche could ride hundreds of miles in a day.  No enemy, Indian or white, could match their range or, until the invention of the Colt revolver and Spencer and Sharp repeating rifle, their firepower.

The Comanches were anarchists—masters of the art of not being governed.  No Comanche ever took orders from a Comanche policeman, judge, priest or employer.   Comanche war chiefs were chosen by consensus and followed voluntarily.  No Comanche chief had the power to command another Comanche to obey.

They were savagely cruel.  They raped, tortured, mutilated and killed their enemies, both Indian and white.  While this was the practice of many North American tribes, it also was Comanche policy.  The Comanche realized that terrorism was a deterrent to the spread of white settlement.

The reason the Mexican government invited Anglo-American settlers into their territories was to serve as a buffer between the Comanches and Mexico proper.   These settlers became the Texans, who were the fiercest of the white settlers, as the Comanche were the fiercest of the Plains Indians.

The Texans also were brutal by today’s standards.  But then again, by their standards, people like me are weak and cowardly.  By the standards of today, both settlers and Indians possessed astonishing fortitude and courage.   I do not believe that I could stand up to hardship, pain and danger that they took for granted.

Humanitarianism was not a Comanche concept.  The only Spaniard who dealt successfully with them was Don Juan Bautista de Anza, governor of New Mexico, who in 1779 led an expedition into Comanche territory and wiped out a Comanche village—men, women and children—and then called a council of peace.

He offered to respect the Comanche right to their hunting grounds and to engage in trade, if they would refrain from raiding New Mexico.  This agreement was kept as long as the Comanche were a free people.  Under Spanish, Mexican and U.S. rule, New Mexico were safe from Comanche attack, and Spanish-speaking traders out of Santa Fe, known as Comancheros, were the only non-Comanche who could travel safely to Comanche lands.

It was impossible to defeat them until the invention of the Colt revolver and the Sharp and Spencer repeating rifle, which gave the Texas Rangers and the U.S. cavalry overwhelmingly superior firepower.  Even so, the Comanche held out for decades more.

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A true history of Reconstruction

July 10, 2014

I was brought up with the view that just as the Civil War was a great national tragedy, Reconstruction was a crime  – the oppression of Southern white people by ignorant black people manipulated by corrupt Northern carpetbaggers and Southern scalawags.  I was taught that the Ku Klux Klan was the national liberation movement of the Southern white people, of which the 20th century Klan was a degenerate and unworthy successor.

Eric Foner, following in the footsteps of black historian W.E.B DuBois, set the record straight in RECONSTRUCTION: America’s Unfinished Revolution 1863-1877, published in 1988.

The Reconstruction governments were the most progressive of the 19th century, establishing the foundations of public education and other public services, broadening the franchise for whites as well as blacks and setting a precedent for African Americans exercising equal rights as citizens.

Reconstruction.EricFonerFar from being ignorant and easily led, the Southern black leaders of that era were surprisingly astute and enlightened, given their restricted opportunities for education.  The failure of Reconstruction was not a failure of African American self-government, but of the failure of the federal government to stand behind equal rights for all.

Reconstruction was a complex phenomenon.  The Republican governments in the South rested on three groups – black people, including freedmen and newly-liberated slaves; Northern whites, including some do-gooders who wished to help the former slaves, but predominantly entrepreneurs in search of opportunity; and Southern whites, many of them small upcountry farmers, who had been loyal to the Union during the war and wanted a reward.

This was an unstable coalition because its members had different aims.  The Northern whites and some of the Southern whites were primarily interested in railroad-building and economic development, not in public education or sale of public lands to small farmers.

Although things played out differently in different states, the Southern Republicans were unable in the end to stand up to the South’s landowning elite with its message of white solidarity, its uninhibited use of terror and violence and its superior firepower.

The authority of the plantation owner was replaced by the authority of the state and local government, which required black people to sign labor contracts with white employers and made it a crime to quit a job or be without a contract.

The Grant administration soon lost interest in black rights.  After postwar demobilization, federal troops were needed to fight Indians and break strikes.

One interesting sidelight was information on the postwar careers of some of the figures of the Civil War era.  The great abolitionists – William Lloyd Garrison, Wendell Phillips and Charles Sumner – were soon marginalized.  Abolitionism never commanded majority support in the North to begin with, except for a brief period during the Civil War.

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A true history of the Civil War

July 10, 2014

BATTLE CRY OF FREEDOM: The Civil War Era, by James M. McPherson (1988) emphasizes a key fact about the Civil War which some historians try to ignore—that the war was started by the South and fought in defense of slavery.

This book is a history of the struggle over slavery, in its social and political as well as military aspects, from the start of the Mexican War to the end of the Civil War.

The Mexican War itself was fought partly to expand the territory open to slavery (and was opposed by many Northern abolitionists for that reason); during the next decade, Southern politicians tried to expand slave territory by purchasing Cuba and by sponsoring private military expeditions to Cuba, Nicaragua and other countries.

Battle_Cry_of_Freedom_(book)_coverThe cause of the Civil War was the growing Northern opposition to the spread of slavery and the refusal of the South to tolerate any restrictions on slavery.  Although the Southern leaders’ rationale for secession was state’s rights, this was a secondary consideration.  They did not recognize state’s rights in regard to enforcement of the Fugitive Slave Law and they endorsed the Dred Scott decision, which denied the right of a state to forbid slavery.

Some were more frank than others.  Alexander Stephens, the vice president of the Confederacy, said the U.S. Declaration of Independence was in error in saying all men are created equal.

“Our new government is founded upon exactly the opposite idea; its foundations are laid, its cornerstone rests, upon the great truth that the negro is not equal to the white man; that slavery … is his natural and normal condition,” Stephens said.  “This, our new government, is the first in the history of the world based on this great physical, philosophical and moral truth.”

The war was not initiated by the North to abolish slavery.  Abraham Lincoln’s position was that slavery was a great evil and should not be permitted to expand, but that the federal government had no Constitutional right to interfere with it where it existed.

This was not good enough for the Southern leaders, who saw in Lincoln’s platform a future threat to slavery.  Ironically, if the Southern states had not seceded, slavery would have endured for many years to come.

Subjugation of black people was a matter of principle for the Confederates.  Robert E. Lee refused to permit exchanges of prisoners of war, which would have been to his benefit militarily, because Lincoln insisted on black prisoners being included in the exchanges.

The Confederacy announced that captured black Northern soldiers would be sold into slavery; this was suspended only after Lincoln threatened to put equal numbers of white Southern troops to hard labor.

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A true history of the Jacksonian era

July 10, 2014

WHAT HATH GOD WROUGHT: The Transformation of America, 1815-1848 by David Walker Howe (2007)  is a masterly synthesis of political, economic, military, social and cultural history, throwing new light on many aspects of the so-called Jacksonian era of American history.  Howe dedicated his book to John Quincy Adams, and asserts that Adams, not Jackson, represented what was best and most important in this era.

I once thought, along with Arthur Schlesinger Jr. in The Age of Jackson and innumerable Democratic speakers at  Jefferson-Jackson Day picnics, of Andrew Jackson as a champion of working people, or at least of white working men, and of the Democratic Party of today as a continuation of the Democratic Party of that era.

        I modified that view over the years without entirely giving it up, but Howe’s book shows me how completely wrong it was, and also what a mistake it is to project the political divisions of the present onto the past.  The basic principle of Jackson’s Democratic Party was white supremacy.

White men, regardless of social status or economic class, were regarded as equally superior to blacks, Indians and Mexicans.

Jackson’s deeds as a slave owner and Indian fighter were as historically significant as his campaign against the Bank of the United States.  The Cherokee, Creek and other Indian tribes once held legal title to most of the land area of Georgia, Alabama and Mississippi and large sections of other states.

General Jackson’s defeat of the Cherokee and Creek and President Jackson’s support of Indian Removal opened up the Deep South to cotton cultivation, giving slavery a new lease on life.  Cotton quickly became the leading U.S. export crop, and the availability of cheap high-quality cotton provided the basis of the British and New England textile industries, the leading manufacturing industries of their day, so this was an important historical event.

Jackson’s vision of the United States was like Thomas Jefferson’s – a nation of independent white farmers and craftsmen, independent of governmental authority or exploitation by government-chartered banks and corporations.

His opponents, the middle-class Whigs, believed in progress through improvements in technology, infrastructure (canals and railroads), public education and humanitarian reform. Most Whigs were not abolitionists, but most abolitionists were either non-political or Whigs.

Evangelical Protestantism in this era was a strong force for progress, according to Howe.  Protestantism, progressivism and patriotism were not at odds; neither were self-improvement and social reform.  Most evangelical Protestants, in Howe’s telling, regarded them as part of the same thing.  They thought the Second Coming of Christ was coming soon, and they thought they could hasten it by becoming better people and making the world a better place.  This is very different from the defensive evangelical Protestantism of our own day.

Most of the great Unitarians and Transcendentalists also were Whigs.  Most Catholic immigrants, believing in a different theology and in conflict with native-born Protestant workers and business owners, were Democrats.

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Reflections on Piketty’s inequality argument

June 14, 2014

 

The novels of Jane Austen, Honore de Balzac or Henry James, in which civilized life was confined to a small percentage of the population and the only way most people could acquire significant wealth was to inherit it or marry it.

According to Thomas Piketty’s Capital in the Twenty-First Century, there is nothing to stop that kind of world from coming back.

1_percent_decomposed_2.png.CROP.promovar-mediumlargePiketty’s basic argument goes as follows:
•    If the rate of return on investment is a higher percentage than the rate of economic growth, which he expresses as r > g,  the owners of investment property will get an ever-larger share of national income.
•    R > g is the normal state of affairs.
•    Ownership of wealth is distributed even more unequally than income.   The higher the share of income that comes from wealth, the more unequal it will be.
•    The larger the amount of wealth you own, the faster it is likely to compound.   So not only do the rich become richer at a faster rate than ordinary people, the super-rich become richer at a faster rate than the ordinary rich.
•    At some point the process levels off, but the leveling-off point may not come until inequality reaches a point that we associate with 18th century Europe or the Third World

The economic prosperity and relative equality during 1945-1975 were made possible by the destruction of capital during the Great Depression and the two World Wars, according to Piketty.   Of course war and depression left everybody worse off, not just rich people, but when economic growth resumed, a lesser share went to the economic elite.

Piketty’s conclusions are backed up by archival research that traces income and wealth distribution in France, Britain and the USA for two centuries and many other countries for shorter periods of time.  That research shows that r > g is the typical state of affairs in most countries and most periods of history for which information is available.

One striking finding is that there is just as much inequality among the elite as there is among the public at large.  In the USA, the top 10 percent have about half the wealth, the top 1 percent have about half the wealth of the top 10 percent, and the top 0.1 percent have about half the wealth of the top 1 percent.

Another finding, based on comparisons of American university endowment funds, is that the larger the amount of wealth you have to invest, the higher your rate of return is likely to be.   This is probably because the richer you are, the better financial managers you can hire, the better able you are to diversify your investments and the better cushion you have when you make high-risk, high-return investments.

chart_2.png.CROP.promovar-mediumlargePiketty proposes to deal with inequality by means of a graduated tax on wealth to go along with graduated taxes on inheritance and income.  But there are other ways.

You could figure out ways to increase the rate of economic growth, for example.  Or you could figure out ways to achieve a wider distribution of wealth, such as through employee stock-ownership plans or worker-owned enterprises.   Or you could strengthen labor unions, increase minimum wage or take other measures to increase the incomes of the middle class, working people and the poor.

It’s important to keep in mind that Piketty only deals with one specific issue, the concentration of income and wealth in a small elite—an important issue, but not the only one.   Piketty does not tell us how to raise people out of dire poverty, nor how to achieve better productivity, or economic growth, or better education, or a cleaner environment, or any other goal.

And taking money away from the economic elite will not in and of itself make anyone any better off.   A lot of financial wealth was destroyed during the Great Depression and and a lot of tangible wealth was destroyed during World War Two, but this did help anybody at the bottom of the economic scale.  Piketty thinks that destruction of wealth cleared the way for the prosperity of the 1950s and 1960s, but I don’t think anybody who lived through the 1930s and 1940s would have said it was worth it.

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Piketty’s inequality argument in six charts

June 14, 2014

Thomas Piketty’s book, Capital in the Twenty-First Century, has stirred up a lot of controversy.  As well it should.  If he is right, there is nothing to stop a tiny elite from growing richer and richer at the expense of the rest of us.

The important thing to remember of Piketty’s argument is that it is not based on economic theory.   It is based on years of research on sources of wealth and income through history in different countries.   And, as quantitative information, it lends itself to charts.

I think Piketty’s research is important to understand for the future of our country and the world.   I’m reproducing six charts based on Piketty’s data from an article by John Cassidy in The New Yorker, which sum up Piketty’s findings well.

The first chart shows the share of American income taken by the best-paid 10 percent.

chart-01The chart shows that half of the income earned by all Americans went to the top 10 percent just prior to the stock market crash of 1929, that their income share fell to between 30 and 35 percent between 1945 and 1975 and now it is going back up again to 1920s levels.

Piketty explained this with his equation, r > g.   When the rate of return on investment is a higher percentage than the rate of economic growth, the holders of capital will get an ever-increasing share of income.   For the purposes of his book, Piketty has a special definition of capital, which is different from economists’ standard definition.  He defines capital as anything you can own that will give you an income, including agricultural land, government bonds, houses (which you can rent), common stocks or anything else.   In the Old South, prior to the Civil War, slaves were a form of capital.

Income distribution in the 20th century USA became more equal for a time partly because the Great Depression destroyed the value of so many financial assets, but mostly because of the high rate of economic growth following the Second World War.

Of late the pay of financiers and corporate executives has gone up much faster than the pay of middle-class and poor people, but, as the following chart shows, inequality in ownership of financial assets is a bigger factor in the income share of the top 1 percent than inequality in wages and salaries.

top1%sharechart-02

The next chart shows that same trend exists among the top 1 percent in all the major English-speaking countries.

chart-03

The next Cassidy chart shows the income shares of the top 1 percent in some of the developing countries.

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Amazon is bad for writers and book lovers

June 12, 2014

 Amazon’s tactics against the book publisher Hachette are not just bad for publishers.  They are bad for writers.   And, in the long run, they are bad for lovers of books.

What’s going on is part of a familiar pattern.   A powerful company uses its power to squeeze the profit margins of weaker companies.   This means the weaker companies can’t afford decent pay for the people who produce the work.   But the producers can’t get at the powerful company because it is buffered by the intermediaries.

That is how it works with fast-food franchisers such as McConald’s, their franchisees and low-wage fast-food workers.   That is how it works with electronics companies such as Apple and Sony, their sub-contractors in Asia, and the low-paid sweatshop workers.  That is how it works with Walmart, its suppliers and their low-paid employees (aside from what Walmart pays its own employees)

Hachette Amazon LogoAnd this is how, apparently, it is going to work with Amazon, book publishers and authors.

Jeff Bezos of Amazon refuses to provide good service to buyers of Hachette books unless the publisher submits to his terms for distributing their books.  In an earlier dispute with the publisher Macmillian, he simply deleted the “buy” button from all Macmillan books listed on Amazon.

One of my favorite authors, Charles Stross, who is published by Hachette, explained what is at stake.

Amazon’s strategy … is to squat on the distribution channel, artificially subsidize the price of e-books “dumping” or predatory pricing to get consumers hooked, rely on DRM on the walled garden of the Kindle store to lock consumers onto their platform, and then to use their monopsony buying power to grab the publishers’ share of the profits.  If you’re a consumer, in the short term this is good news: it means you get cheap books.

But if you’re a reader, you probably like to read new books.  By driving down the unit revenue, Amazon makes it really hard for publishers—who are a proxy for authors—to turn a profit.  Eventually they go out of business, leaving just Amazon as a monopoly distribution channel retailing the output of an atomized cloud of highly vulnerable self-employed piece-workers like myself.

At which point the screws can be tightened indefinitely.  And after a while, there will be no more Charlie Stross novels because I will be unable to earn a living and will have to go find a paying job.

via Charlie’s Diary.

There is an old tradeoff:  Speed.  Price.  Quality.  Pick any two.  The business model being pushed by Jeff Bezos would pressure publishers into signing up authors who are prolific and cheap.  That literature has a value in and of itself doesn’t enter into his thinking.  As Stross said:

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