Archive for the ‘The New Normal’ Category

Fear itself is the greatest danger

December 11, 2015

Suppose you are an ISIS terrorist determined to wreak havoc on the United States.   So you infiltrate a Syrian refugee camp hoping to be admitted to the United States.

refugeecamps1371059561224.cachedWhat would be your chances of succeeding?  Let’s do some arithmetic.  There are about 4 million refugees in camps surrounding Syria.  President Barack Obama has announced he will admit 15,000 refugees (up from his original 10,000).  So the odds of any particular person being selected for the program are about one in 27,000.

Of course you would have to come up with a convincing story about how you came to be a refugee and find a U.S. sponsor.  What are the chances of that?   Yet there are governors of American states who fear to admit even one refugee.

Then there’s Donald Trump, who wants to keep out all foreign Muslims.   How would these Muslims be identified?  Simple, Trump explained.  Airline representatives, customs officials and border guards would simply ask, “Are you Muslim?”   Evidently he doesn’t consider the possibility that a terrorist would lie.   Maybe it would be simpler just to ask incoming visitors if they’re agents of ISIS.

gallup.poll.terrorismWhy do people think so irrationally?  It is because we’re scaredFrightened people don’t think.  They only react.

The fact is that so long as the U.S. government wages war in the Greater Middle East, there is going to be blowback against Americans, and there is little we can do to prevent it.

We can choose to end these wars, which is what I advocate.  We can accept a certain amount of danger as the price of waging war for important national objectives.  Or we can do things out of fear that make us feel safer, even though they don’t.

Another stock market bubble ready to pop?

May 7, 2015

wall_street_stock_market_bubble

Why are stock prices rising while the real economy is doing so badly?

Answer: Stock buybacks.

Mike Whitney, writing for Counterpunch, explains how corporate CEOs keep their stock prices high even when their sales and profits are lagging by borrowing money and buying back stock.

CEO salaries and bonuses are typically tied to stock prices, so CEOs are rewarded for increasing their corporate debt rather than figuring out how to improve efficiency and make better products.  Whitney quoted Wall Street analysts as saying stock buybacks account for more than half the post-recession rise in the stock market.

Janet Yellen and Ben Bernanke at the Federal Reserve Board made this possible by holding down interest rates, an action that punishes risk-averse small savers who’d prefer to keep their money in insured bank accounts and pushes them into the financial markets.

That’s why the financial markets are doing so well and working Americans are doing so badly.  But this cannot go on forever, and I think the next crash will be worse than the previous one, just as the current recovery is worse than the previous one.

LINKS

The Rich Get Richer: Titanic Stock Bubble Fueled by Buyback Blitz by Mike Whitney for Counterpunch.

The Whisper of the Shutoff Valve by John Michael Greer on The Archdruid Report.

Body counts and the new normal

May 1, 2015

Physicians for Social Responsibility, in a report issued several weeks ago, estimated that more than 1 million people died in Iraq during the past 15 years as a result of U.S.-led military operations, and more than 300,000 people died in Afghanistan and Pakistan.

I’m not certain these numbers are accurate.  I do think they are as close to being accurate as is humanity possible.  I don’t find them unbelievable.  They’re partly based on verified reports, partly on statistical sampling methods most Americans find credible when applied to everyday subjects.

The worst thing to me is not the number, but the indifference of the American public.  We as a nation don’t care about bystanders, except when American citizens happen to be among those accidentally killed.

Somebody might argue that people were killed in larger numbers, and more indiscriminately, in World War Two.  But the war against the Axis powers had a definite purpose and came to a definite end.  There is no expectation of when the so-called long war on terror might be won, or exactly what winning would consist of.

We talk about the moral breakdown of society.  When I think about the moral breakdown of society, I don’t think about sex, drugs and rock-and-roll.   I think of the President of the United States drawing up a weekly list of assassination orders, as if this were the most normal thing in the world

LINKS

Why the U.S. “war on terra” is a fraud by Pepe Escobar for Asia Times.

Body Count by Physicians for Social Responsibility.  The full 80-page report.

Young children can be victims of identity theft

February 20, 2015

I’m getting on in years, and, like my friend Daniel Brandt, hadn’t realized that young children and even infants these days have Social Security numbers.

Infants are assigned Social Security numbers at birth so parents can claim them as dependents on their income tax forms.

Like Daniel, I didn’t have a Social Security number until I got a summer job as a teenager and had to pay withholding tax.

It’s an example of the new normal.  On the one hand, information kept in electronic data banks affects our whole lives.  On the other hand, that information is not secure.

LINK

Millions of Children Exposed to ID Theft Through Anthem Breach by Herb Weisbaum for NBC News.  (Hat tip to Daniel Brandt)

 

The new normal: NYPD with machine guns

February 18, 2015

Tom Englehardt raises the question: Just when did it become an accepted thing for the New York Police Department to be armed with machine guns?

blog-policetank-500x280The response to this question is a great example of the fallacy of the political moderate.

One extreme position is that the NYPD’s new Special Response Group should bring machine guns to peaceful protests in case they get out of hand.  The other extreme position is that a municipal police department doesn’t need machine guns at all.

The middle position is that police departments need machine guns, but they shouldn’t use them unless it is really, really necessary.   Which means at some point, they will be used.

The use of lethal force by police has become all too routine.  But I recognize that, in a country where the right to carry firearms in public is a constitutional right and where some criminal gangs have military-grade weapons, police need to have guns and need to know how to use them.

But machine guns?  It’s as if somebody is in fear of a revolutionary uprising.

The main thing wrong with so-called ‘P.C.’

February 9, 2015

In October 2001, shortly after America invaded Afghanistan, some of its Navy personnel were preparing missiles that were going to be fired at al-Qaeda and Taliban strongholds.  One of the Navy men … … wrote the following message on his missile: ‘Hijack this, you faggots.’

… … When they heard about what had happened, the upper echelons of the Navy were outraged. They expressed ‘official disapproval’ of the homophobic message. … … Some unofficial guidelines were issued … …

… … What these Navy people were effectively saying is that it is okay to kill people, but not to offend them. … …

This really captures the warping of morality that is inherent in political correctness, where one becomes so myopically focused on speech codes, on linguistic representation, that everything else, even matters of life and death, can become subordinate to that.

via Brendan O’Neill | spiked.

The main thing that is wrong with so-called “political correctness” is that its goals are compatible with gross inequality and injustice.

It is imaginable that a future society may have conquered racism, misogyny, homophobia, able-ism and even class-ism and still be a police state committed to endless war on behalf of a tiny financial oligarchy.

That is why elite universities that have hate speech codes and teach “oppression theory” can pay sweatshop wages to their adjunct instructors and raise tuition as high as the traffic will bear, and why Fortune 500 companies and big Wall Street banks can “honor diversity” and still work against the interests of the vast majority of the American people.

I got a taste of this when I worked for a Gannett newspaper when Allen Neuharth was CEO of Gannett Co. Inc.  Under his management, Gannett made a good-faith effort to recruit and promote women, ethnic minorities and also people from diverse backgrounds—not just members of the Ivy League elite.

I think this was good for Gannett’s newspapers because a newsroom (unlike, say, an air traffic control tower) needs to be open to diverse viewpoints and backgrounds.

But “diversity” also gave Neuharth cover for paying wages below the standard for the industry and for being extremely anti-union, far beyond what devotion to the corporate bottom line would justify.

I remember what a waste of time the newspaper’s “diversity training” sessions were.   They seemed more like an exercise in divide-and-rule than anything else.

The extreme example of the contradiction I’m talking about is the celebration of Martin Luther King Day by the staff the Guantanamo Bay base, whose inmates are denied basic human rights.

I honor the struggle for equal rights for African-Americans, for women, for gays and for all the other groups who’ve been unfairly marginalized.  I see these struggles as part of an overall struggle for equal justice for all, which also is the struggle on behalf of the majority of the population for economic justice and basic civil liberties.

Without a vision of the common good and equal rights for all, and without a realistic strategy for achieving it, the disparate groups with their separate grievances will be played off against each other, and the powers that be will win.

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A case study in ‘political correctness’

February 7, 2015
marriage

Source: XKCD (Randall Munroe)

One good example of political correctness in action is how the right to gay marriage in the United States has become an unquestioned orthodoxy.

I have no quarrel with the right gay marriage.  It makes our nation more inclusive.  It neither picks my pocket nor breaks my leg.   I’m glad that gays are no longer a persecuted minority, essentially outside the protection of the law.

I do have a problem with unquestioned orthodoxies that shut down debate.  A case in point was the firing of Brendan Eich as CEO of Mozilla Firefox last year.

Eich was a co-founder of the company and the inventor of the JavaScript programming language.  By all accounts, treated employees, including gay employees, decently.

But somebody dug up the fact that, in 2008, he had contributed $1,000 to Proposition 8, the California referendum to ban gay marriage.  A few days after being named CEO, he was ousted.

Now he’s a rich and talented person who should be able to do all right for himself, so I don’t think this is the worst thing that ever happened to anyone.   As Kathleen Geier pointed out, people in more precarious positions than Eich are fired every day for much more arbitrary reasons, including wearing a necktie the employer didn’t like.

My interest in the case is in the arguments given to justify his firing.  His views were offensive to most people in Silicon Valley.  Does that mean it would be okay for a company headquartered in, say, Utah to fire a CEO for supporting gay marriage?

Gay employees would feel uncomfortable working for a CEO who opposed their right to marry.  This is the flip side of the argument most commonly used against gay rights.

The right of openly gay people to serve in the U.S. military was opposed on the grounds that straight troops would feel uncomfortable.  And this, arguably, would be a more important consideration on the battlefield than in an office in California.

In an earlier era, this was a common argument against hiring African-Americans.   Business owners told me that they had no objection to hiring qualified black people, but their customers wouldn’t feel comfortable with it.

Brendan Eich has a right to express his opinion, but he does not have a right to be free from the consequences of expressing his opinion.   Would you apply this reasoning to, say, Hollywood screenwriters who were blacklisted during the McCarthy era?

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Cory Doctorow on public policy

February 4, 2015

If you have something you think would be good for society, you need to figure out how it will make a small group of people rich, so they will fight to keep it going.

via Cory Doctorow | The Guardian.

NYPD forms new unit for protesters, terrorists

February 1, 2015

William Bratton, New York City’s police commissioner, is creating a special  unit to deal with counter-terrorism and protests, which he evidently sees as two faces of the same coin.   It will be equipped with machine guns.

Commissioner William Bratton

William Bratton

The NYPD will launch a unit of 350 cops to handle both counter-terrorism and protests — riding vehicles equipped with machine guns and riot gear — under a re-engineering plan to be rolled out over the coming months.

The Strategic Response Group, or SRG, will be devoted to “advanced disorder control and counter-terrorism protection,” responding to the sort of demonstrations that erupted after the Eric Garner grand jury decision and also events like the recent Paris terror attacks.

“It will be equipped and trained in ways that our normal patrol officers are not,” Commissioner Bill Bratton said Thursday.

“It will be equipped with all the extra heavy protective gear, with the long rifles and the machine guns that are unfortunately sometimes necessary in these ­instances.”

via New York Post.

Bratton later issued a clarifying statement that the NYPD does not plan to use machine guns against protesters.   That leaves open the question of why a special team with machine guns would be needed in situations such as the Charlie Hebdo murders in Paris.

I can well imagine machine guns being used against a mass uprising.   Maybe I’m being paranoid, probably I am, but the powers-that-be are acting as if they expect a mass American uprising and are acting preemptively to prevent it.

There is historical precedent.  Many National Guard units and armories were created in the late 19th century order to be ready for a possible workers’ revolt, and in fact were used against strikers.

Evidently Mayor Bill de Blasio agreed to creation of the new unit.   Maybe this is a price he thinks he has to pay to stop the police rebellion against his authority.

It is ominous for democracy that the NYPD considers the peaceful, lawful protests that followed the Eric Garner attacks to be in the same category as terrorism.   It also is ominous that the NYPD’s obedience to civil authority cannot be taken for granted.   I don’t see how anything good can come of this.

LINKS

NYPD’s Bill Bratton Unveils Plans For New Anti-Terror Police Unit by CBS New York.

NYPD Hyper Militarization Escalates with Bratton’s SRG for Advanced Disorder Control by Rainbow Girl on Corrente.

NYPD: Fine, Maybe We Won’t Police Protests With Machine Guns by Ben Yakas for The Gothamist.

What happened to American business start-ups?

January 28, 2015

Screen-shot-2015-01-28-at-3.49.46-AM.

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We Americans pride ourselves on our entrepreneurial spirit, but the number of new business start-ups is going steadily down.

The U.S. business death rate exceeds the business birth rate.  According to Gallup, the United States ranks 12th in the rate of new business start-ups, behind such nations as Denmark, Finland, Hungary, Israel, Italy, New Zealand and Sweden.

Why?  I can think of several possible reasons.

  • Businesses are often started by employees of large corporations who see a market niche that their employers are unwilling to try to fill.  The increase in non-compete agreements makes it increasingly harder for employees to do this.
  • The stagnation of the U.S. economy is self-perpetuating.  Nobody will start a business unless they think people will buy its products or services.  The lack of good jobs at good wages means there is less of a demand for new products.
  • Because of the uncertain economy, individuals are less willing to risk their savings by investing in startups.
  • The lack of a good social safety net makes entrepreneurialism more risky.  In Sweden, even if your business failed, you still would not have to worry about lack of medical care or your family going hungry.

This is important.  New and small businesses are local.  They employ Americans.  They don’t usually have the option to outsource to India or China.

Big businesses are not immortal.  In the ecology of business, the dying giants are replaced, if they are replaced, by growing small businesses.   Without a stream of new businesses, the economy becomes dependent on old and declining businesses, such as General Motors and Chrysler, while have to be bailed out and propped up.

I don’t think small-business subsidies and set-asides are the key to having start-ups.  The best things for business startups are a high-wage, full-employment economy, an end to abusive non-compete agreements and a breakup of big-business monopolies.

LINKS

How Wall Street Killed Entrepreneurs by Yves Smith for naked capitalism.

American Entrepreneurship: Dead or Alive? by Jim Clifton, chairman and CEO of the Gallup.

Has American Business Lost Its Mojo? by Thomas B. Edsall for the New York Times.  [Added 4/7/20154]

Slow Business Start-ups and the Job Recovery by Liz Laderman and Sylvain Leduc for the Federal Reserve Bank of San Francisco. [Added 4/7/2015]

How Special Interests Undermine Innovation by James Bessen for Foreign Affairs.  [Added 4/7/2015]

Courtney White on the age of consequences

January 28, 2015

Progress was good for my parents. They came to a strange land as poor pioneers and prospered along with Phoenix. They lived the American Dream—not the pursuit of material manifestations of success as much as their steady improvement over time.

Courtney White

Courtney White

Their lives were better than their parents’; they had more security, more opportunity, more comfort. They didn’t do without, go hungry, or stand in unemployment lines; they were well-educated, well-fed, and well-blessed with the fruits of a robust and expanding economy.

Best of all, especially for my mother, they could travel, and they saw parts of the globe that deeply impressed them. If they had second thoughts or misgivings about progress, I never heard a word. For them, the future was always bright.

I developed a different perspective. I came of age during the heyday of progress, witnessing the good, the bad, and the ugly. Impressed at first, I have now lived long enough to see that manifest destiny was not necessarily a positive force in our history.

I will likely live long enough to see evidence that America is not exceptional after all—that despite this nation’s many admirable qualities, it is subject to the same historical forces that have worn down all great nations and empires throughout the ages.

==Courtney White, The Age of Consequences

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Courtney White of Santa Fe, New Mexico, is a former archeologist, Sierra Club activist and co-founder of the Quivera Coalition, which is dedicated to bringing together ranchers, conservationists, public land managers, scientists and others to improve land practices.

I’ve not read any of his books.  Probably I should.  Here are links to excerpts from The Age of Consequences, his latest.

The real path through history: An arrow of progress.

The Nervous Breakdown.

Manifest destiny was not necessarily a positive force in our history.

Thanks to Bill Elwell for the first link and for making me aware of Courtney White and his work.

 

Why is Dayton, Ohio, demolishing its past?

January 27, 2015

Cartoonist Ted Rall wondered why his home town of Dayton, Ohio, is demolishing buildings that are architecturally and historically valuable.  These are the buildings he remembers from his childhood that give the city its character.

He was told that the likely reason is to reduce the city’s vacancy rate, which is an important factor that out-of town banks consider when deciding whether to make loans.  The fewer the buildings, the lower the percentage of vacant buildings.

I’d guess that another reason is to lower property taxes.  Unimproved real estate (land with no buildings) has a lower assessed value than improved real estate (land with buildings).

He’s probably right to say that the Dayton city fathers should exercise some judgment and think about re-purposing its valuable old buildings instead of treating them the same way they treat rat-infested fire hazards.

The basic problem is that nowadays decisions about local communities are made by powerful people far away who don’t understand local conditions.  And there are local people who think of the powerful people far away as god-like “job creators” who must be catered to and not questioned.

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The Gutting of Dayton: Why My City Is Gone by Ted Rall for A New Domain.

Austerity: the global reach of a bad ideology

January 23, 2015

2014-12-25-racetothebottom-thumbThe Western world is in the grip of a bad idea that its governments can’t seem to shake off—although its peoples are starting to.

The idea is called “austerity.” It is the belief that public goods must be destroyed in order to increase private wealth.

Banks impose this policy on indebted nations such as Greece.  They say the governments must curtail public services, including schools and public health, while raising taxes and adopting economic policies that will result in higher prices and lower wages.

Supposedly the money saved can be used to pay off the nation’s debts.  The problem is that so-called austerity destroys the nation’s ability to generate new wealth, and so, as long as countries accept the “austerity” meme, they stay in debt indefinitely.

Nations that default on their debts, as American states frequently did in the era before the Civil War, are threatened with loss of credit.  But the fact is that the banking system literally has more money than the bankers know what to do with.  In practice, lending always starts up again after a few years.

Members of the European Union that use the Euro as their currency have a special problem.  Historically the exchange rates of currencies fell when the issuing nation had a balance of payments deficit.  This tended to bring the balance of trade into balance, because their exports became cheaper in relation to foreign currencies and their imports became more expensive.

Under austerity, nations attempt to achieve the same thing by increasing prices, lowering wages and cutting government services.  Unlike with change in the exchange rate, the burden does not fall upon the whole nation equally, but only on the less wealthy and politically powerless.

Austerity involves raising taxes, but never taxes on the wealthy.  That is because the wealthy are considered to be the “job creators” who must be catered to in order to bring about economic recovery.

The “job creator” philosophy is popular here in the USA.  The saying is, “No poor man ever gave me a job.”  The conclusion is that the key to jobs is to have more and richer rich people.

Well, we Americans have made that experiment, repeatedly, and it hasn’t worked.

If we want mass prosperity, we need to invest in the things that create wealth—education, public infrastructure and scientific research—and then see that the benefits of the new wealth are widely spread, so as to create markets for private business.

We Americans once made that experiment, too, and it did work.

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The emerging American job market

January 15, 2015

Tom the Dancing BugVia Tom the Dancing Bug

What’s the matter with us liberal Democrats?

January 14, 2015

Barack_Obama_Hope_posterWhy did President Obama never crack down on the Wall Street banks that caused the financial crisis?

Why did Eric Holder’s Justice Department never prosecute financial fraud?  Why were the failed banks bailed out rather than put into receivership and reorganized, as was done after the savings and loan crisis?  Why didn’t the President hire regulators who were willing to do their jobs?

And why don’t we liberal Democrats care?

All these things, as Thomas Frank has pointed out with his usual eloquence, were (1) fully within the President’s power, (2) good policy and (3) hugely popular.  Instead the President invests his political capital in anti-worker initiatives such as the Trans Pacific Partnership Agreement and Transatlantic Trade and Investment Partnership.

The liberal Washington press corps says it is politically impossible for President Obama to do the things that his constituents elected him to do.  Frank debunked their arguments one by one, and pointed out that, if the pundits are right, then American politics is an exercise in futility and nothing will ever change for the better.

What the President offers working people are placebos.  He has proposed giving free tuition community college students who meet certain criteria.

I think this would be nice, but community college is already reasonably affordable.  The problem of student debt originates elsewhere.  And sending more people to college does not in itself generate more well-paying jobs.  In itself, it just means higher-educated servers at Starbucks.

I criticize President Obama a lot, but I think the deeper problem is that so many liberal Democrats are willing to go along with the Washington consensus he represents.  Thankfully, this is starting to change.

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It’s not just Fox News: how liberal apologists torpedoed change, helped make the Democrats safe for Wall Street by Thomas Frank for Salon.   Well worth reading in its entirety.

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What’s the matter with us Americans?

January 14, 2015

Europeans think Americans have gone crazy.  Ann Jones, who has lived in Europe for decades, said her European friends once respected the United States, but no longer.  Here are questions she gets from her European friends.

  • Why would anybody oppose national health care?
  • How could you set up that concentration camp in Cuba and why can’t you shut it down?
  • How can  you pretend to be a Christian country and still carry out the death penalty?
  • Why can’t you Americans stop interfering with women’s health care?
  • cia-loves-u-760208Why can’t you understand science?
  • How can you still be so blind to the reality of climate change?
  • How can you speak of the rule of law when your presidents break international laws to make war whenever they want?
  • How can you hand over the power to blow up the planet to one lone, ordinary man?
  • How can you throw away the Geneva Conventions and your principles to advocate torture?
  • Why do you Americans like guns so much? Why do you kill each other at such a rate?
  • Why do you send your military all over the world to stir up trouble for the rest of us?

She added:

authoritarianism9fd18cThat last question is particularly pressing because countries historically friendly to the United States, from Australia to Finland, are struggling to keep up with an influx of refugees from America’s wars and interventions.

Throughout Western Europe and Scandinavia, right-wing parties that have scarcely or never played a role in government are now rising rapidly on a wave of opposition to long-established immigration policies.

Only last month, such a party almost toppled the sitting social democratic government of Sweden, a generous country that has absorbed more than its fair share of asylum seekers fleeing the shock waves of “the finest fighting force that the world has ever known.”

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In 2015, expect civil unrest, disaffected police

January 1, 2015

The astute John Michael Greer, whose Archdruid Report is one of my favorite blogs, predicted that the most important trends in 2015 will be the disaffection of America’s police combined with continuing civil unrest.

He said the morale of American police is at the same state as that of the American forces in Vietnam in the 1970s.  Police feel they’ve been sent into a war they can’t win, and abandoned by the civilian authority that’s nominally their superior.

I think there’s truth to that, although it’s exaggerated.  Rank-and-file police officers did not invent the “broken windows” theory of policing, which is that the way to ensure civil order is to punish every violation, no matter how minor.  Nor are they the ones who decided that the way to finance municipal government in places such as Ferguson, Missouri, is to collect traffic fines from poor people.

civil-unrest-2016Revolutions generally occur when the police and the military cease to be willing to defend existing authority against rebels.

I think there is zero chance that the military or police would go over to the side of rioting black people or even peacefully protesting black people.  Armed resistance is not a feasible option for African-Americans in the present-day USA.

Effective resistance to civil authority, as I see it, would come from armed and organized militias, such as the group that formed around rancher Cliven Bundy in his fight with the federal government over grazing fees.   They defied federal and local police with loaded weapons, and were not met with deadly force.

I believe there is a real possibility that, as the U.S. economic plight worsens, resistance to government could grow and, as military and police morale decline, resistance to government would be tolerated until it became a real threat.

If things continue as they are in the United States, I believe there is bound to be an explosion.  And, given the history of violent revolution, I do not expect anything good to come from such an explosion.

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Here is John Michael Greer in his own words:

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The dangerous new ‘precariat’ class

October 28, 2014

Millions of people in the USA and other industrial countries are living paycheck to paycheck.  There are millions more for whom being able to live paycheck to paycheck would be a considerable improvement.

The people in this second group, “the precariat,” don’t know from week to week whether they’ll be able to work or how much they’ll earn.   From the perspective of the elite, that means a “flexible” labor force, which from their perspective is a good thing.  But the flexibility is all on the part of workers, not of managers or holders of financial assets.

Prof. Guy Standing of the University of London said the precariat class is growing in all industrial countries.  This class consists of three categories of people—sons and daughters of blue collar workers who had secure jobs, migrants and minorities who live on the fringe of society, and college graduates who find themselves unable to work in their fields.

Few of them participate in politics because they’re too busy just scrambling to make a living.  They’re divided among themselves, with the children of the middle class sometimes blaming minorities and migrants for their plight.

But they’re discontented, and while their discontent mostly takes the form of violent protest, Standing thinks that, under the leadership of the educated part of the precariat, they could become a powerful force.

The militarization of the police, the spread of universal surveillance and the criminalization of dissent indicate that a lot of people in authority think the same thing.

  LINK

The Precariat: The New Dangerous Class by Guy Standing for Working Class Perspectives  (Hat tip to Bill Harvey)

 

A professor who teaches blogging

October 27, 2014

I never knew that the art of blogging was taught in college.

Bad Paper: The world of the debt collector

October 20, 2014

Jake Halpern wrote a New Yorker article, and then a book, Bad Paper (which I haven’t read), about the debt collection industry.  He was interviewed by Bloomberg’s Megan McArdle.

My mom was getting hounded by a debt collector for a bill that she did not owe.  She eventually paid it just to get him to stop harassing her.

bad.paperI started investigating and found out that much debt-collection activities were in my hometown of Buffalo, New York.  I ended up writing a profile on a Buffalo-based debt collector who bought and sold and collected on debt for pennies on the dollar; that story ran in the New Yorker.

That New Yorker story got optioned by Brad Pitt’s production company.  So I went back to Buffalo with the screenwriter.

No one wanted to talk to a journalist back when I was doing the New Yorker piece, but now that I was with Brad Pitt, everyone talked.  One night, the screenwriter and I go out to dinner with a banker and a former armed robber who had gone into business with one another.

They tell me an incredible tale.  They purchased $1.5 billion worth of bad debt for pennies on the dollar. Their aim was to make a fortune.   All goes well on this unlikely venture until some of the debt is stolen and the former armed robber must delve into an underworld where debt is bought and sold on street corners.  This quest ends in a showdown with guns in the inner city of Buffalo, New York.

The world Halpern describes is lower on the economic food chain than the one described by Matt Taibbi in The Divide, but the process is basically the same.  A lender decides it is not worth the effort to collect on certain bad debts, and sells the debt to a collection agency for pennies on the dollar.

The problem is the lack of reliable information as to what is owed and for what.  Sometimes the collectors don’t know how much is principal and how much is accrued interest.  Sometimes unscrupulous lenders will sell the same debt to several collection agencies.

Halpern said he wound up having more sympathy with debt collectors than he expected.  It is one of the few occupations open to convicted felons.  The central figure in his New Yorker article was a former cocaine dealer trying to go straight.

What does he think needs to be changed about debt collection?

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The billions nobody bothered to keep track of

October 16, 2014

Between $1.2 billion and $1.6 billion in shrink-wrapped $100 bills, earmarked for Iraq reconstruction, reportedly turned up in a bunker in Lebanon, along with $200 million in Iraqi gold.

bagdad-money-palette-300x200

“Bricks” of cash in Baghdad

Stuart Bowen, a special inspector general appointed by President Bush to keep track of waste and corruption in Iraq, reported that he has been unable to persuade anybody in either the U.S. or Iraqi governments to check it out.  The U.S. embassy in Beirut denied him permission to go to Lebanon to look for himself.

The stacks of money are part of $12 billion to $14 billion in shrink-wrapped “bricks” of currency, provided by the Federal Reserve Bank.  The money was flown to Iraq on wooden pallets, to be handed out as needed. An additional $5 billion was sent via electronic transfer.

Bowen said most of the money was probably spent for legitimate purposes, but $6.6 billion is unaccounted for.  This is a staggering amount.

Notice the $2 billion margin for error in the estimate of what was sent.  That, too, is a staggering amount.

Why the lack of interest in what become of the money?

One possible explanation is that the U.S. government and the Iraqi government have a very good idea of who got the money, and don’t want it made known to the public.

Another is that they don’t know, and don’t want the public to be reminded that they don’t know.

 LINKS

Billions set aside for post-Saddam Iraq turned up in Lebanese bunker by Rory Carroll for The Guardian.

$1.6 billion in Iraqi cash seized in Lebanon by Ahmed Hussein for Iraqi News.  A good article with an inaccurate headline. The money was never seized and nobody knows whether it is still there.

Special Report: The Pentagon’s doctored ledgers conceal epic waste by Scot J. Paltrow for Reuters.  The bigger picture is that it’s simpler for the Defense Department to order new stuff than keep track of what they’ve got.  Hat tip for this link to Peter Van Buren.  He also had a post on the Lebanon bunker, but for some reason I can’t link to the post.  I’ll add the link when and if I can.

Previous post

“The biggest theft of funds in national history”

Why Norway didn’t bid for the 2022 Olympics

October 12, 2014

Norway dropped out of the bidding to host the 2022 Winter Olympics.   It’s easy to understand why after you read this list of requirements by the International Olympic Committee, as reported in the Norwegian press.

  • They demand to meet the king prior to the opening ceremony.  Afterwards, there shall be a cocktail reception.  Drinks shall be paid for by the Royal Palace or the local organizing committee.
  • Separate lanes should be created on all roads where IOC members will travel, which are not to be used by regular people or public transportation.
  • A welcome greeting from the local Olympic boss and the hotel manager should be presented in IOC members’ rooms, along with fruit and cakes of the season.  [Seasonal fruit in Oslo in February is a challenge …]
  • The hotel bar at their hotel should extend its hours “extra late” and the minibars must stock Coke products.
  • The IOC president shall be welcomed ceremoniously on the runway when he arrives.
  • The IOC members should have separate entrances and exits to and from the airport.
  • During the opening and closing ceremonies a fully stocked bar shall be available.  During competition days, wine and beer will do at the stadium lounge.
  • IOC members shall be greeted with a smile when arriving at their hotel.
  • Meeting rooms shall be kept at exactly 20 degrees Celsius at all times.
  • The hot food offered in the lounges at venues should be replaced at regular intervals, as IOC members might “risk” having to eat several meals at the same lounge during the Olympics.

via Slate.

I’m always amazed as the sense of entitlement by members of the privileged classes, but this list is worthy of a gold medal.

Apart from the behavior of the IOC, bidding wars to host the Olympic games serve no useful purpose.

It doesn’t make sense for countries to spend hundreds of millions of dollars to build huge facilities for one-time-only events.  It would be better to have permanent Olympic sites.

The Summer Olympics should be held in Greece, in honor of the original Olympic games, and sports-minded colder countries could bid to be a permanent site for the Winter Olympics.

Hat tip to Mike the Mad Biologist.

Fed official says low unemployment is dangerous

September 29, 2014

Richard Fisher, president of the Federal Reserve Bank of Dallas, said it may be necessary to raise interest rates if the unemployment rate falls below 6.1 percent because low unemployment could lead to higher wages.

Crowded Michigan Unemployment OfficeFisher pointed out that in Texas, wages are rising faster than the rate of inflation.

To me, that is a good thing, not a bad thing.  Why interfere with the law of supply and demand?  The only reason that I can think of is that it might decrease the market value of financial assets.

I am reminded of Karl Marx’s claim that “a reserve army of the unemployed” is necessary to the functioning of capitalism.

I believe in the value of self-discipline, education and the willingness to work.  But anybody who preaches these values ought to be able to show that there is a payoff, and that the payoff is available to everyone, not just the exceptionally talented and the exceptionally lucky.

If the economic system is set up so that at least 6.1 percent of the work force is unemployed at all times, then there is no way to rise out of that 6.1 percent without knocking somebody else down into it.

LINKS

Fed’s Fisher: wages rise when joblessness falls below 6.1 percent by Reuters (via Tom the Dancing Bug).

‘Poor people don’t plan long term.  We’ll just get our hearts broken’ by Linda Tirado for The Guardian.  Somewhat long, but well worth reading.

Obama’s Long Battle to Cut Social Security Benefits by Eric Zuesse for Washington’s Blog (via Mike the Mad Biologist).  The President’s goals are not what his supporters think they are.

The war for living space

September 27, 2014

Tom the Dancing BugSource: Tom the Dancing Bug Blog.

I don’t think the discomfort of airline flight discomforts me as much as it does most people.

The night before I go on an airplane trip, I stay up as late as I can so that I doze all through my airplane flight.

I have the ability to lose myself in reading and always take an engrossing pocket-size book with me on a flight.

LINK

To recline your seat or not?  Stop arguing.  Capitalism has already won this stupid war by Oliver Burkeman for The Guardian.

Prosperity for whom?

September 25, 2014

income distribution

This chart shows that during the Obama administration, the United States has had an economic expansion in which the vast majority of the population lost income.   This is the first time this has happened in more than 50 years.

There were sharp drops in average income growth during the Reagan (1982-1990) and Bush (2001-2007) years, but this is worse.

An economic expansion is a period of continuous growth in gross domestic product for at least two fiscal quarters in a row.  Americans are producing more.  But most aren’t getting the benefit of it.

I don’t think this is so much because of anything specific that the President and Congress have done as what they have not done.

I think the economic system is now structured to redistribute income upward unless something changes, and most of the present political establishment, both Democrat and Republican, is unwilling to change.

income-growth

It is true that the top income earners lose a greater fraction of their incomes in recessions that the majority do.  But taking the ups and downs together, the economic elite are taking an ever-larger share.

§§§

Source: “The Most Remarkable Chart I’ve Seen in Some Time”: The Rich Gain More Ground in Every U.S. Expansion by Yves Smith for Naked Capitalism.

If you’re trying to reconcile the two charts, keep in mind that the top chart distinguishes between 10 and 90 percent of the population, and the bottom chart distinguishes between 1 and 99 percent of the population