On Stiglitz: Part Seven

The next chapter in Joseph Stiglitz's The Price of Inequality is titled "Justice For All? How Inequality Is Eroding The Rule Of Law?" Even though it is the shortest chapter of the ten in the text, it takes sharp aim at how our justice system has helped to further inequality in this country. The rule of law is supposed to protect the weak against the powerful yet in today's society, if someone is suing a corporation, we have all been conditioned to view that person as "gold digger" and the corporation as a "victim" (This simple fact is covered extensively in the stunning film Hot Coffee).

As Stiglitz notes,

As the old poem goes, "No man is an island." In any society what one person does may hurt, or benefit, others. Economists refer to these effects as externalities. When those who injure others don't have to bear the full consequences of their actions, they will have inadequate incentives not to injure them, and to take precautions to avoid risks of injury. 

The Right has a real cognitive dissonance problem with the sentiment above. They want to live in a society where everyone is a "rugged individualist" yet still want all the trappings of a modernism. They can't accept the fact that in any sort of society one person's actions has a direct effect on another's life. and that's with or without government interference.

Stiglitz writes that one of the big reasons why American corporations have been so successful in the last 30 years is they have been able to avoid the consequences of their actions by rigging the game in their favor. This has never been more true than in the financial sector, specifically the banks. There were no real consequences for the predatory lending and fraud committed by the banks in the run up the financial crisis of 2008. Stiglitz notes that some states like Georgia tried to enact laws that would have stopped this sort of behavior in the first place.They were repaid by Standard and Poor's threatening them to not rate any of their mortgages. This would be the same Standard and Poor's who downgraded the US credit rating. This would also be the same S & P labelled "A" what turned out to be "F" rated mortgages. So, any attempt to stop predatory lending by government entities was met with (ahem) corporate force.

Stiglitz goes on to discuss how bankruptcy law has also become massively corrupted in a similar way. He touches on the student loan problem and how banks seem intent trapping young people into impossible situations with insurmountable, lifelong debt. This helps to cement the inequality in this country.

Stigliiz then turns to the mortgage crisis that was the driving force behind the 2008 economic crisis. In a nutshell, he asserts that "rule of law" was tested in this country and the results clearly showed that there was no justice for all. In fact, there was justice for very few people in the financial sector.

The banks wanted a speedier and less costly way of transferring, so they created their own system called MERS but like so much of what the banks had done in the gold rush days, it proved to be a deficient system, without safeguards, and amounted to an end run around a legal system designed to protect debtors. 

So, the banks unilaterally decided to rewrite property law. When the crisis hit, they were supposed to be able to prove how much they actually owed. They couldn't and it was largely because there was no oversight to make sure they did. It didn't really matter to them anyway. There was so much money flying all over the place that they knew the government would have no choice but to bail them out. What were they going to do? Let the economy collapse?

Worse, Stiglitz points out that if corporations were indeed people, they should have been prosecuted for fraud as they were unable to prove that there financial records were valid. There still has not been any significant pursuit, by the government, towards foreclosure fraud. This is a complete and total failure by the US government, specifically Eric Holder. It's amusing how much people on the right bitch about him for the phantom things he's done but not the main thing that he has neglected to do. Recall that the DOJ prosecuted over one thousand cases in the S & L scandal in the early 1990s.

Stigliz notes a Wall Street Journal piece which also uncovered discrimination on the basis of income regarding the foreclosure process. On average, it took banks two years and two months to foreclose on mortgages over one million dollars, six months longer than on those under one hundred thousand dollars. Banks were bending over backwards to accommodate bigger debtors and their team of lawyers that were the best money could buy. The little guy had none of this, of course, and worse, considering just how much the law had been eroded.

We've come to a point in our society where the government does more to protect the interests of corporations and less to protect the rights of individuals. People in Congress are being paid large quantities of money to look the other way and allow the private sector, especially the financial sector, massive leeway in their business. We don't need a "bigger" government. What we need are elected officials who can quickly recognize factors such as externalities and market power in the private sector and intervene quickly to prevent another crisis such as the one we had in 2008. A good place to start is the financial sector and we have, at least, taken steps down that path with the Dodd-Frank bill.

The people who are elected to Congress have to understand that they are performing a public service. They aren't the extended legal staff of the various corporations in the United States.

Who Are The Five?

Politico has a story up about how Vice President Joe Biden is saying that there are five senators who now want to change their vote on Manchin-Toomey. He didn't name who they were and I have to admit some skepticism about this but he is right that approval ratings have dropped for the 45 senators who voted against this bill.

There must be something to the story because look who is nervous. Then again, they are always nervous so it could be nothing.

Or could it?:)

(Man, it's fun to fuck with paranoids!)

No War At All

Spend some time talking to Christian conservatives and they'll tell you the same thing all the time. They are oppressed and their rights are being infringed. They want to pray in school, damnit! And the gubmint won't let them. The only problem with this protestation is that it bears no semblance to reality.

"We've gone from virtual silence about religion in the curriculum and virtually no student religious expression in many schools," says Charles Haynes, a scholar at the First Amendment Center and head of the Religious Freedom Education Project in Washington, D.C., "to today, when social studies and other standards are fairly generous to religion, and students are expressing their faiths in many different ways in many public schools, if not most."

Yep. I see it all the time in my district and my children's school district. Kids take time out of their day to pray wherever and whenever they need to do so. Staff and administration make accommodations. And it's not just individual faith expressions that are more commonplace.

Schools are increasingly including Christianity, Buddhism, Sikhism, Islam, and, in some cases, the Bible in their curricula because of concern over Americans' religious illiteracy. (A 2007 study found that only 10 percent of American teens could name the five major religions.)

History of Religion is common class that students can take for a history credit. A few of my colleagues have taught it over the years and it has always seen high registration.

The important thing to remember there is that while schools can't foster religious beliefs, still must allow students to religiously express themselves as they see fit. In short, there is no "War on Christians." It has endlessly amused me that those who bemoan the victim card play it so much, creating a reality that simply does not exist.

Beware!

The best weapon to stop them Moose-lems? A radiation death beam.

The FBI has arrested two local men for allegedly plotting to use a radiation emitting device to silently kill their targets.According to the United States Department of Justice, 49-year-old Glendon Scott Crawford of Galway and 54-year-old Eric Feight of Hudson have been charged with conspiracy to provide material support to terrorists.

The arrests come after a 14-month long undercover investigation that was prompted when authorities received information back in April 2012 that Crawford had approached local Jewish organizations seeking out individuals who could help him build a machine that could be used against anyone he perceived as enemies of Israel. 

 The Department of Justice says Crawford, a General Electric maintenance worker, and Feight were looking to build a "mobile, remotely operated, radiation emitting device capable of killing targeted individuals silently with lethal doses of X-ray radiation." Investigators say this type of technology could have been used against people without them knowing that they had absorbed lethal doses of radiation until days later when the harmful effects from the exposure surfaced. 

The clever fiendishness of their evil plot was brilliant! If it wasn't for those damn PC, multi-culti killjoys, we would all be safer now!

Well, That's Nice

Apparently, the gun community has a difficult time keeping track of the their guns. The nation’s gun dealers lost 190,342 firearms last year, including pistols, silencers and machine guns, contributing to the flow of illegal weapons that put guns in the hands of felons, gang members and drug dealer. The fives states that are the worst offenders are Texas, Georgia, Florida, California, and North Carolina. Not surprising, really.

So, let's see if I have this correct. The gun community doesn't want any new guns laws because they are worried their rights will be infringed yet, at the same time, they are completely inept at keeping track of the weapons in their care. Responsible gun owners, my ass.

Upgrade

S&P Upgrades U.S. Credit Outlook to ‘Stable’

Now S&P projects U.S. general government deficit plus non-deficit borrowing requirements to dip to about 6% of gross domestic product in 2013, down from 7% in 2012, and to less than 4% in 2015. The ratings firm also sees net general government debt as a share of GDP staying “broadly stable” for the next few years at about 84%, allowing policymakers “some additional time to take steps to address pent-up age-related spending pressures.

All over the country conservatives are face palming...what does a feller have to do to get a failed economy so they can justify their Obamaphobia?

Oh, Really?

'Conservative Republican' at IRS defends treatment of Tea Party. 

John Shafer, who described himself as "a conservative Republican," told congressional investigators he flagged the first application for tax-exempt status from a Tea Party-aligned group that he and a lower-level agent came across in February 2010 because it was a new, high-profile issue.

Take That, Gun Grabbers!!

I didn't realize how terribly insecure the gun community was until today.

Gun owners target family event

Turning a family event into an excuse to make up for a perceived penis deficiency is beyond poor taste. This would be why the setback last April with Manchin-Toomey barely phased me. They always end up (ahem) shooting themselves in the foot.

Great. Fucking. Video.

More Parents Like This, Please

Bill and Tricia Lemmers ought to be given the Congressional Medal of Honor. Why? Because they just prevented another mass shooting.

Their son, Blaec, recently confessed to police that he was planning an Aurora style shooting after purchasing an AR-15 from Wal Mart. His parents, keenly aware that their son had been in and out of mental institutions but unable to prevent him from buying a gun, reported him to the police. They picked up Blaec and he confessed as to the reason why he bought the weapon.

We need more parents like Bill and Tricia to see the warning signs and note that their sons fit the profile of these types of spree shooters. It's been painfully obvious since Newtown that the gun community is going to be of no help whatsoever with this problem (and, by extension, the federal government) so it's up to individuals like the Lemmers.

Let's bring mental illness out of the shadows and address this issue head on. Many people in communities around the country know people like Blaec and should not make the same mistakes that were made with Adam Lanza. If you know someone that has been in and out of mental institutions and has just bought a firearm, call the police immediately.

Can't Get Enough

I've the video below a couple of times now and I still can't get enough of it. In so many ways, this sums up the Right and how completely hypocritical they are. I think it's the Obamaphobia!

Oh, Really?

If conservatives across the country haven't started shitting themselves, they should now.

Over the next several years, Battleground Texas will focus on expanding the electorate by registering more voters – and, as importantly, mobilizing those Texans who are already registered but who have not been engaged in the democratic process. And we’ll use the data-driven, people-focused approach that has helped win grassroots campaigns around the country.

By data driven, they mean the same approach the Obama campaign used led by Jim Messina. That worked pretty well, didn't it?

My message to conservatives is simple: moderate. Or you are going to cease to exist as a political party.

Amen

Here is the full statement of Nick Hanauer, venture capitalist billionaire, given on June 5th of this year before the Subcommittee on Economic Policy (Senate Committee on Banking, House, and Urban Affairs).

For 30 years, Americans on the right and left have accepted a particular explanation for the origins of prosperity in capitalist economies. It is- that rich business people like me are “Job Creators” - That if taxes go up- on us or our companies, we will create fewer jobs. And that the lower our taxes are, the more jobs we will create and the more general prosperity we’ll have. Many of you in this room are certain that these claims are true. But sometimes the ideas that we know to be true are dead wrong. 

For thousands of years people were certain, positive, that earth was at the center of the universe. It’s not, and anyone who doesn’t know that would have a very hard time doing astronomy. My argument today is this: In the same way that it’s a fact that the sun, not earth is the center of the solar system, it’s also a fact that the middle class, not rich business people like me are the center of America’s economy. I’ll argue here that prosperity in capitalist economies never trickles down from the top. Prosperity is built from the middle out. As an entrepreneur and investor, I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all would have failed and all those jobs would have evaporated. That’s why I am so sure that rich business people don’t create jobs, nor do businesses, large or small. 

What does lead to more employment is a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. That's why the real job creators in America are middle-class consumers. The more money they have, and the more they can buy, the more people like me have to hire to meet demand. So when businesspeople like me take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around. Anyone who's ever run a business knows that hiring more people is a capitalists course of last resort, something we do if and only if increasing customer demand requires it. Further, that the goal of every business- profit-, is largely a measure of our relative ability to not create jobs compared to our competitors. In this sense, calling ourselves job creators isn't just inaccurate, it's disingenuous. 

That’s why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer. Since 1980 the share of income for the richest 1% of Americans has tripled while our effective tax rates have by approximately 50%. If it were true that lower tax rates and more wealth for the wealthy would lead to more job creation, then today we would be drowning in jobs. If it was true that more profit for corporations or lower tax rates for corporations lead to more job creation, -then it could not also be true that both corporate profits and unemployment are at 50 year highs. There can never be enough super rich Americans like me to power a great economy. I earn 1000 times the median wage, but I do not buy1000 times as much stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, we go out to eat with friends and family only occasionally. I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages. This is why the fast increasing inequality in our society is killing our economy. 

When most of the money in the economy ends up in just a few hands, it strangles consumption and creates a death spiral of falling demand. Significant privileges have come to capitalists like me for being perceived as “job creators” at the center of the economic universe, and the language and metaphors we use to defend the fairness of the current social and economic arrangements is telling. For instance, it is a small step from “job creator” to “The Creator”. When someone like me calls himself a job creator, it sounds like we are describing how the economy works. What we are actually doing is making a claim on status, power and privileges. The extraordinary differential between the 15-20% tax rate on capital gains, dividends, and carried interest for capitalists, and the 39% top marginal rate on work for ordinary Americans is just one of those privileges. We’ve had it backward for the last 30 years. 

Rich businesspeople like me don’t create jobs. Rather, jobs are a consequence of an eco-systemic feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners profit- in a virtuous cycle of increasing returns that benefits everyone. I’d like to finish with a quick story. About 500 years ago, Copernicus and his pal Galileo came along and proved that the earth wasn’t the center of the solar system. A great achievement, but it didn’t go to well for them with the political leaders of the time. Remember that Galileo invented the telescope, so one could see, with ones own eyes, the fact that he was right. You may recall however, that the leaders of the time didn’t much care, because if earth wasn’t the center of the universe, then earth was diminished-and if earth was diminished, so were they. And that fact- their status and power- was the only fact they really cared about. 

So they told Galileo to stick his telescope where the sun didn’t shine –and put him in jail for the rest of his life. And by so doing, put themselves on the wrong side of history forever. 500 years later, we are arguing about what or whom is at the center of the economic universe. A few rich guys like me, or the American Middle class. But as sure as the sun is the center of our solar system, the middle class is the center of our economy. If we care about building a fast growing economy that provides opportunity for every American, then me must enact policies that build it from the middle out, not the top down. Tax the wealthy and corporations-as we once did in this country- and invest that money in the middle class-as we once did in this country. Those polices won’t just be great for the middle class, they’ll be great for the poor, for businesses large and small, and the rich. 

Since when did investing in our country's infrastructure becoming communism?

Nothing Is The Matter With Kansas After All

A Win for Science in Kansas 

So. apparently. the Kansas State Board of Education voted to adopt the Next Generation Science Standards (NGSS), a new science curriculum that treats evolution and climate change as fact and promotes hands-on learning. The board passed the new standards in an 8-2 vote, and encountered significantly less opposition to evolution and climate change principles than in the past.

Recall that the state voted to weaken evolution teaching in 1999 and 2005, although it adopted an evolution-friendly science curriculum in 2007. What does this mean?

Progress.

Good Point

Attacking Syria May be the Right Thing to Do, but There Will Be Consequences...

It's amazing what short memories people have. John McCain is calling Obama's failure to act on Syria "disgraceful." But a decade ago, John McCain and George Bush had their way: they invaded Iraq based on false claims of "yellowcake" and a pack of lies told us by an Iranian spy (Ahmad Chalabi) and an informant named "Curveball" (who the Germans knew was lying).

Now Iraq is an Iranian ally and China is getting all the Iraqi oil we "liberated" from Saddam.

Osama bin Laden ran planes into buildings on 9/11 because we had left American troops in Saudi Arabia after the Gulf War. The Tsarnaev brothers bombed the Boston Marathon because they were angry about the innocents Americans had killed in the wars in Afghanistan and Iraq. Nearly all the recent terrorist attacks (Fort Hood, Times Square, etc.) have been in retribution for the wars. And we can't forget the almost 10,000 American troops who have died, and the hundreds of thousands who have been maimed and scarred for life.

Attacking Syria will mean killing Hezbollah fighters who are coming from Lebanon to help Assad. Americans will be directly responsible for the deaths of Hezbollah fighters. Thus far Hezbollah has left Americans pretty much alone unless we've stationed troops there. Remember Saint Ronald's biggest foreign policy disaster was his response to the bombing of the marine barracks in Beirut in 1983. Almost 300 American and French troops were killed by Hezbollah. Reagan talked tough, but eventually turned tail and pulled them all out. The attack was apparently motivated by the deaths of innocent by-standers by an American missile.  Sound familiar?

If we attack Syria in any significant fashion, we will kill hundreds if not thousands of innocent Syrians, as well as Hezbollah fighters and, potentially, Iranian and Russian advisers. The survivors will be angry and will want revenge. It may take 10 years, as it did for bin Laden and the Tsarnaevs, but we know for certain that some number of these angry young men will attempt to take revenge on America for these deaths. And we know for certain that some of them will succeed.

We are, at the same time McCain is demanding we invade Syria, deciding that the illusion of safety is more important than our privacy: we think it's okay for NSA to watch every single thing we do. Yet McCain is proposing an action that will inevitably endanger a whole new generation of Americans by making a whole new generation of Middle Easterners in yet another country hate us.

If we make war on Syria, we will make more terrorists. In five or 10 years, those terrorists will eventually try blow up the Pentagon or open fire on crowds of children at Disneyworld with AK-47s they can buy without background checks at gun shows in the United States. (Which they can buy with using a cell phone or the Internet.) Dozens if not hundreds or thousands of Americans will die because of an invasion of Syria. At that point millions of oblivious Americans will wail, "Why do they hate us so much?" just like they did after 9/11.

Well, this is why: when Americans kill people, their friends and relatives want revenge. Obliviously, Americans think that those people should be thanking us for freeing them from tyrants. But they don't see Assad as a tyrant: many Syrians are tied to his regime by inescapable political, family and religious ties. They perceive his acts of cruelty against Syrian rebels as necessary to protect their safety (sound familiar?).

Helping the Syrian rebels might be the right thing to do. But directly attacking Syria with American planes, ships and troops will have consequences: not only will American troops die, but eventually terrorists seeking revenge will kill innocent Americans here at home. And will the people who take power after Assad is gone be any better than he is? Is the current prime minister of Iraq any better than Saddam? Based on the number of Iraqis still getting blown up in the streets every day, it would seem not.

So, I wonder: why is the risk of American deaths from waging war on Syria so much more preferable to the risk of American deaths by having the NSA butt out of our personal lives?