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Campaign Fundraising is Bribery

Monday, April 14th, 2014

Selling influence is what our legislators do, legally, all the time

The bribery allegations against California state Sen. Leland Yee expose the folly of the U.S. Supreme Court’s logic in its April 2 decision in McCutcheon v. FEC, which struck down restrictions on the amount of money individuals may donate to federal campaigns in an election cycle.

The only legitimate reason to set limits on funding politicians’ campaigns, according to the court’s majority opinion, authored by Chief Justice John Roberts, is explicit trades of campaign dollars for action — quid pro quo corruption. The court pointedly dismissed “the possibility that an individual who spends large sums may garner ‘influence over or access to’ elected officials” as a reason to limit campaign donations.

The way our broken political system works, though, is that the chief place to raise money for campaigns is from industries and interest groups that want something from government. Influence is purchased all the time, whether in explicit quid pro quo trades or not, and such influence peddling just as bad for democracy as bribery. The real scandal in Sacramento and Washington, D.C., is not the occasional lawbreaking; it’s what’s legal.

According to the indictment, Yee allegedly received $10,000 from a campaign contributor and then wrote a letter in support of that contributor’s software firm. In addition, Yee allegedly made this trade on tape with an undercover FBI agent. (He has also been indicted for gun trafficking, which is not relevant to this discussion.) But imagine you’re state Sen. Jane Doe and you accept a $10,000 campaign contribution at a fundraiser and then a week later that contributor says to you, “By the way, my company could really use a letter of support, if you feel like it.” You say, “I’ll see what I can do,” and then you write the letter. Your behavior would be perfectly legal.

What’s the difference? For Yee, who was allegedly indiscreet enough to make such a deal explicit and to be caught on tape by the FBI, plenty. But for the rest of us citizens who must live under the distorted decisions of politicians continually focused on raising the campaign funds they need for re-election, it is a distinction without a difference.

Reading the FBI complaint against Yee on this bribery allegation, I was struck by how his discussions with the undercover FBI agent disguised as a campaign contributor were so similar to other lawmakers’ routine campaign fundraising. The usual fundraising and lawmaking that goes on in Sacramento and Washington is legalized bribery.

It costs $1 million, on average, to win a state senate campaign. That means raising about $10,000 a week for two years. How can any candidate raise that much money?

Simple: There’s an unlimited supply of campaign funds available from the people, companies and interests that want something from government. That’s where Yee’s money — and most of the money for political campaigns — comes from.

MapLight, the nonprofit I head that studies money in politics, researched campaign contributions to Yee, going back several years. Some of the people mentioned in the indictment have given him campaign contributions. But overall, his campaign contribution pattern is similar to many other California Democratic legislators’. For example, unions are among his top contributors; he received money from Time Warner and other companies too.

It doesn’t have to be this way. In Arizona and a half-dozen other states, laws creating public funding of elections let candidates run for office and win without dependence on big campaign donors. Former Arizona Gov. Janet Napolitano was the first governor in U.S. history elected without private money. She quickly created a prescription-drug discount program for Arizona citizens and said that she couldn’t have done this if she had taken pharmaceutical firm campaign money.

The Yee affair is the third scandal to hit California’s state legislature in the past six months. These stories further erode the trust people have placed in our political institutions and the well-meaning public servants who have become tainted by these scandals. Lawmakers in Sacramento and Washington understandably don’t want the public to distrust them all equally.

But dismissing the accused as just a few bad apples hardly does justice to the situation. It’s our broken money-based political system that elects legislators who are forced to spend most of their time on transactions with special interests for campaign donations rather than on legislating for the common good. The system forces politicians to compete for money and attracts lawmakers who are good at trading money for influence. Instead of electing the best leaders, we elect the best fundraisers.

If lawmakers from Sacramento to Capitol Hill want to change the public’s perception of them, they must stand up and say, “We are going to reform the system that makes people dependent upon relentless fundraising to get elected.” Legalized bribery is bribery all the same.

– Daniel G. Newman is President and Co-Founder of MapLight, a nonpartisan nonprofit revealing money’s influence on politics.

– To the original article… ➡

Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, Culture - How not to do it, Human Rights, Politics - The Wrong Way, The Perfect Storm, Wealth Disparity | No Comments »

The Ascendancy of the Oligarchy

Monday, April 7th, 2014

(NATIONAL) — If wealth and income weren’t already so concentrated in the hands of a few, the shameful “McCutcheon” decision by the five Republican appointees to the Supreme Court wouldn’t be as dangerous.

But by taking “Citizen’s United” one step further and effectively eviscerating campaign finance laws, the Court has issued an invitation to oligarchy.

Almost limitless political donations coupled with America’s dramatically widening inequality create a vicious cycle in which the wealthy buy votes that lower their taxes, give them bailouts and subsidies, and deregulate their businesses – thereby making them even wealthier and capable of buying even more votes.

Corruption breeds more corruption.

That the richest four hundred Americans now have more wealth than the poorest 150 million Americans put together, the wealthiest 1 percent own over 35 percent of the nation’s private assets, and 95 percent of all the economic gains since the start of the recovery in 2009 have gone to the top 1 percent — all of this is cause for worry, and not just because it means the middle class lacks the purchasing power necessary to get the economy out of first gear.

It is also worrisome because such great concentrations of wealth so readily compound themselves through politics, rigging the game in their favor and against everyone else.

“McCutcheon” merely accelerates this vicious cycle.

As Thomas Piketty shows in his monumental “Capital in the Twenty-First Century,” this was the pattern in advanced economies through much of the 17th, 18th, and 19th centuries.

And it is coming to be the pattern once again.

Picketty is pessimistic that much can be done to reverse it (his sweeping economic data suggest that slow growth will almost automatically concentrate great wealth in a relatively few hands).

But he disregards the political upheavals and reforms that such wealth concentrations often inspire — such as America’s populist revolts of the 1890s followed by the progressive era, or the German socialist movement in the 1870s followed by Otto von Bismarck’s creation of the first welfare state.

In America of the late nineteenth century, the lackeys of robber barons literally deposited sacks of money on the desks of pliant legislators, prompting the great jurist Louis Brandeis to note that the nation had a choice:

“We can have a democracy or we can have great wealth in the hands of a few,” he said. “But we cannot have both.”

Soon thereafter America made the choice.

Public outrage gave birth to the nation’s first campaign finance laws, along with the first progressive income tax.

The trusts were broken up and regulations imposed to bar impure food and drugs. Several states enacted America’s first labor protections, including the 40-hour workweek.

The question is when do we reach another tipping point, and what happens then?

ROBERT B. REICH, currently Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century.

He has written thirteen books, including the best sellers “Aftershock” and “The Work of Nations.” His latest, “Beyond Outrage,” is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause. This article originally appeared at RobertReich.org

To the source… ➡

Posted in Capitalism & Corporations, Corporate takeover of Government, CrashBlogging, Human Rights, Politics - The Wrong Way, The Perfect Storm, Wealth Disparity | No Comments »

The withering away of America

Wednesday, March 26th, 2014

The other day, I read a story about a Hedge Fund buying up foreclosed homes in Atlanta, Georgia. They bought up 4000 such homes on a single day and the story said they are buying more all the time.

Their plan, according to the article, is to hang onto these homes until the price of the houses rise and then they will sell them for a nice profit. In the mean time, they will rent them.

Apparently, these folks have a lot of money so they can afford to buy these houses up at distressed prices and then be patient until the market turns.

This is one of those stories where you could say these folks are pretty smart. Or not.

On a smaller scale, many of us, if we had a few extra dollars in the bank and if we saw a reasonable house come up on a foreclosure sale, we might just jump on that opportunity. We would fix it up a bit, rent it out and wait for its property value to go up and then, at some point in the future, perhaps at retirement time, we’d sell it for a tidy profit. And it would be all to the good.

Indeed, many of you who are doing fairly well with your finances probably already own one or more extra properties as investments that you are renting out just as the hedge fund folks are.

This is the American way, is it not? We get ahead by working hard, saving our money and by investing it well.

Some of you, as you are reading this now, are waiting for the “gotcha” fish hook to emerge out of this little story of mine, aren’t you?

Well, sorry, it’s not going to happen. At least not for all of those Mom and Pop investors among you. I am decidedly on your side in all of this. The hard working and smart saving American work ethic is one I embrace.

But, if we go back to the opening of this story and think about those Hedge Fund folks buying up thousands of foreclosed homes, I’ve got some problems there.

More is not always better

This Hedge Fund is buying up thousands and thousands of homes and taking them off the real estate market.

That means less homes are available for those people that want to buy. And that also means that the prices of the homes that are available for sale will rise given the inexorable logic of supply and demand.

Buyers on the lower end of the economic scale will not be able to buy in this situation and they will be forced into renting.

All of us know that renting, while done by many, is surely not the best way to spend your money. All you get is a roof over your head and as soon as you stop paying rent, the roof goes away and you have nothing. The best thing you can do as a renter, is to save money as quickly as possible so you can buy a place of your own and start building some equity.

Stacking the deck

So, here we have a case where a very large entity, the Hedge Fund, is driving the market in a way that highly favors them and disadvantages the smaller folks.

From the Hedge Fund’s POV, as they take more houses off the real estate market and put them away into their investment portfolio, they are causing the prices on the remaining houses to rise. As the prices of the remaining houses rise, less people can afford them and more are driven into the rental market.

And look who is there waiting? Its the Hedge Fund which has lots of houses to rent. Sweet, eh? It’s not unlike driving sheep into a pen.

Its sweet on all sides for the Hedge Fund beacuse as more folks compete for the available rentals, the price of rents will rise as well.

The Hedge Fund will always do well with this strategy so long as they pick their locations well.

All they have to know to win is that in desirable areas, the population inexorably rises because people want to live there for the environment and/or the work opportunities. And in such areas, more people means more homes are needed.

The bottom line here is that the Hedge Fund is using its enormous financial clout in a way that benefits them but not necessarily the rest of us.

Now, small folks with some accumulated savings can invest it by buying one or two extra homes and renting them out as we mentioned earlier and that’s just what the Hedge Fund is doing, isn’t it? Except they are doing it on a vastly huger scale.

And it is precisely this difference between the huge Hedge Funds of the world and the small folks like us which is the point of what this article is about.

The story of bigger and bigger

A small fellow starts a Mom and Pop business in his home town and it goes well. The local people like what he’s doing and they buy what he’s got.

He’s smart. He saves his profits and he opens a second shop across town. He employees more folks in the second shop. The situation is a winner all around.

He opens more shops all up and down the area of the state he lives in. More people are employed by him. He gives money to charities and he support the local Boy Scouts and the YMCA. The story is getting better and better.

At some point, he shifts from being a family owned business to being a corporation because that structure provides better protect for his family by separating their corporate assets from their family assets. And perhaps it works better for their taxes as well.

Soon, as things continue to grow, the owner opens subsidiaries or franchises and moves into other states.

And for this business and these people, things just continue to go from strength to strength.

Now, the owner knows State Representatives and State Senators on a first-name basis. He’s invited to sit on various boards for the YMCA and the local hospital.

At some point, his privately owned corporation may go public. And, if the public offering is successful, he and his family will make a large amount of money and the corporation will get a large influx of cash to fund its further growth.

Now, as a publicly held corporation, it has a board and stock holders and it becomes responsible to more than just the former owner and his family. Now, it becomes responsible to its stockholders who expect it to make a good return on their investment in the company.

This is all the stuff of magic. The stuff that every small business owner hopes will happen to his or her business. It is, literally, the stuff of the American Dream.

Ever onward and upward

The newly minted public corporation continues its growth. And with the wisdom now of its board of directors and of its corporate officers, (either of which may or may not include the former owner) the corporation becomes a real competitor in the market segment it competes in.

Somewhere along this spectacular rise, it expands out across the nation from its original state and soon it is eying international markets and establishing overseas subsidiaries. And, if the run of success last long enough, it will become an international success. It will become a global player.

Every national and global corporation you’ve ever heard of has followed this trajectory, unless it was spun off from earlier corporations. If you trace their roots back far enough, every corporation, or its antecedents, will have begun with one person, one family or a small group’s dream that they too could build something out of their hard work and creativity. It is a hugely commendable thing to build something like this out of nothing.

But can there be too much of a good thing?

Can there be too much competitiveness? Too much success? Too much market dominance?

Yes, there can be, Dorothy. Absolutely. Just because bigger seems better here in Kansas, or anywhere else, doesn’t mean it’s always the case.

Businesses can get so big that they becomes monopolies and bullies in their markets And when their competitiveness becomes market dominance, then serious systemic problems can develop. And those problems mostly affect the small folks.

Remember the U.S. breakup Standard Oil in 1911? Or the U.S. breakup of Ma Bell in 1982?

In both of these cases, the growth of the organizations had led to so much market power that they were in the position to virtually set any price they wanted for their goods. They had grown so strong that they had very little competition left.

So, what limits run away corporate power?

What has always limited corporate power, up until recent times, has been government power.
That was what did it with Standard Oil and Ma Bell.

Now, by many people’s definition, government is suppose to exist to look out for the people’s common good. See if you recognize this quote:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed….”

The founding fathers of the United States specifically said, “That to secure these rights, Governments are instituted among men….”.

When corporations are small, they are of a net benefit to all of us because of the the products and services they create and provide for us. But, when they get too large, this net benefit can become a net liability. And, when things get too far out of whack, corporations need to be controlled and regulated by the government for the common good.

And that’s the way it has worked with our government and corporations in the past. But things are changing, Dorothy.

To show you how things are changing, let me digress and tell you a short story about the environmentalist movement in the U.S. during the 1960s.

Bear with me, please, even if you are not an environmentalist. My story is relevant to the overall point of this article which is actually about the corrosive influence of mega corporations and big money on the American Democracy.

In the 1960’s there were numerous movements afoot to get laws passed that would protect the quality of our air and our water. These proposed laws were wending their way slowly through the legislative process at the national level and the corporate world was half attending to all of this but it is probably safe to say they weren’t too deeply worried about it.

Then some things happened that changed the game. There were reports about the utterly disgraceful state of some of the east coast’s rivers. The Cuyahoga River in particular caught fire in Cleveland. And the Interior Department was proposing to flood the Grand Canyon. And then there was the infamous Santa Barbara Oil Spill that occurred in 1969.

Almost overnight the environmental movement, which had been simmering, was galvanized by these events to do something now. And the bills in the legislature involving clean air and clean water were well positioned to benefit from the public’s new found passion for environmental protection.

As a result, these bills were passed decisively in a strong and undiluted form and became the new laws of the land.

The corporate world had been caught flat-footed by these rapidly moving events. Things had moved too quickly for them and suddenly there were powerful new laws that put serious limitations on what corporations could and couldn’t do with their waste.

And they couldn’t complain too openly about all of this because, after all, the new laws had widespread public support. The corporations couldn’t be seen in that political environment as opposing laws that protected the public commons from those who would abuse the air and the water for their own profits.

And about the same time that big business was realizing their vulnerability to such laws, the environmentalists were realizing that passing good environmental laws that just applied to the U.S. wouldn’t be sufficient, if the rest of the world just continued on as before. So, most of the people who were big players in the U.S. environmental movement shifted their efforts from being U.S. centric to being globally focused.

But never again

But, the business world is anything but stupid. They had learned their lesson the hard way and they resolved to never again be caught sleeping nationally or internationally.

And, indeed, they’ve kept this promise to themselves. Since those fateful days in the 1960’s and 70’s, when the Clean Air and Clean Water acts were passed, very little else of environmental significance has been signed into law within the U.S. or internationally because of effective and well focused resistance from the world business communities.

The only notable exception to this trend would be the Montreal Accord, which was ratified in 1989. This international accord limits the production and use of Chlorofluorocarbons (CFC) which were decisively shown by scientists to be the smoking gun that was destroying the world’s Ozone Layer.

For those who might be interested in this type of history, I learned a lot of this from reading the books of James Gustave Speth, Dean of the Yale School of Forestry and Environmental Studies. Speth is, and has been, one of the foremost actors in the U.S. and International environmental movements for many decades now.

The two books of his which I’ve read are, Red Sky at Morning – America and the Crisis of the Global Environment (2004) and The Bridge at the Edge of the World – Capitalism, the Environment, and Crossing from Crisis to Sustainability (2008).

But now back to the main plot line

So, here’s how the story continues to unfold after the seminal events of the 60’s and 70’s:

The large corporations, whose bottom line’s were impacted by the new environmental laws, learned their lesson. Now they could not just dump their industrial wastes into the rivers nor put just anything they wanted to up their smokestacks. And those changes to what they could and could not do were going to cost them money and lower their profits.

Stung badly once, the corporate world began to pay attention to the environmental laws that were wending their ways through the world’s legislatures on their way to possibly becoming laws. And now, the corporate world began to put on the quiet full-court press to dilute or defeat such laws preemptively to protect their bottom lines.

These battles have mostly been fought in the smokey back rooms of the political world but sometimes they have erupted into public view.

Who doesn’t remember the Tobacco Industry executives testifying in front of Congress in 1994 on TV, no less, that smoking cigarettes was not harmful to public health?

They were prepared to, and they did, lie and say anything they could to deflect congress and the people’s will from diminishing their profits. The Tobacco Industry spent an enormous amount of money on dis-information campaigns trying to deflect the law makers. But eventually Congress, with the input of scientific data on the effects of smoking, saw through their smoke screen and national laws were passed to lessen the dangers of smoking to the American public.

But the corporations have won many of these battles as well.

For instance, have you ever wondered why we cannot read on the labels of the food we buy exactly what is in it and where it came from?

I could cite many examples where the corporate world has prevented the passage of laws to protect their own bottom line profits.

For a long time now, corporations have fought via their lobbyists in our legislatures to defeat or to water down bills that will impact their bottom line profits.

And regardless of the PR and the advertisements they put out which attempt to make them all look like our cuddly responsible corporate friends, these mega corporations and extremely high net-worth individuals, like the Koch brothers, are simply all about profits with little or no concern for the public good.

We’ve drifted from what the founding fathers envisioned

Do you remember the idea of one-man-one-vote that we all learned about in school?

We are not all equal voters. It is obvious that mega corporations or very high net worth people with big money behind them can inordinately influence which laws are passed and which are not through lobbying.

Some of you will say, “Well, it’s always been that way in politics.” And, probably, you are right.

But I’m not happy about it. Maybe I was corrupted by watching Jimmy Stewart in the 1939 movie ‘Mr. Smith Goes to Washington‘ too many times.

So, here we have the picture then of why the corporate world exerts so much of its financial muscle on lobbying in our nation’s capital. And the ugly truth is that it is to protect their own profits. And all of that power, which is being exerted to shape the nation’s laws, have little or nothing to do with the common good as the fathers of our nation intended it.

Ah, but don’t despair – it gets worse

It gets worse? Yes, it does. This battle between the various forces in our society for who gets to make the laws is an ongoing thing. And like any ongoing battle, the strategies and the rules change as new opportunities are realized.

At some point, the large corporations and the mega high net-worth individuals realized that they could better influence which laws get made and which don’t not by lobbying – but by influencing who gets elected to make the laws in the first place. Why hack at the branches if you can go for the roots, eh?

So big money has begun to pour huge sums into getting folks elected who will be sympathetic to the needs of business – rather than to the needs of the people. And lets be clear, again, about what those ‘needs’ are.

The needs of business are to have their way cleared of ‘unnecessary’ laws so they can increase their profits.

This process of gaming the system in American politics with big money has gotten quite advanced. And amazingly, most of the American public hasn’t noticed.

Big business isn’t stupid by any means. They know that they can still have their gains rolled back at the ballot box if people were to get aware of and upset about what’s going on.

So, you won’t see them promoting their side of this battle by saying things like, “The rich have every right to get richer regardless of the consequence to ordinary citizens.”

Instead, they push themes like, “We need less government regulation and interference. Such interference prevents small hard working Mom and Pop entrepreneurs all over this great country from reaching their full potential.”

They purposely, and cynically, associate themselves with the small and medium size business community and make it seem like these folks and big business have common cause.

And there’s just enough truth in what they say sometimes to make it plausible.

But the cynicism of why they are doing it is breathtaking. They don’t give a rat’s behind about the small and medium Mom and Pop folks other than to use them as a foil to distract the public’s attention from their devious gaming of the American political system.

Back near the beginning of this piece, I made a point to say that I applaud the Mom and Pop small and medium sized entrepreneurs of America. And I meant it. The are the engines of creation in this country. They make the country better.

But, the really big corporations, those whose sole motivation is to maximize their profits and minimize their costs, and the really high net worth individuals who never think they’ll have enough money, these folks are of a different breed altogether.

The signs that they are making inroads into controlling our legislative processes for their own benefit are all around us. But, these signs are largely hidden by the immense PR smoke screens they are putting up to confuse the public.

In this context, the ‘Citizens United‘ decision by the Supreme Court a few years ago to grant corporations the same rights as people was huge.

So, what is a corporation anyway?

I’ll tell you this – they are not our neighborhood fuzzy responsible community friends.

Consider that a large corporation is an entity that exists solely to maximize the investment returns of its stockholders. This is a simple cold hard fact. They have only one motivation and that is profit maximization.

They have zero motivation to consider what’s good for the nation or for the public unless the issue begins to interfere with their profits.

And, if some public concern does begin to impact their profits, they’ll make superficial changes and unleash a storm of PR designed to make us think that they are on our side and they have our best interests in mind and they are part of our community and they share our values and etc. and etc. We’ve seen it all. But few of us have recognized how deeply cynical it all is.

If this was a real person who had such a single minded focus, most of us would think they were a dangerous unfeeling psychopath walking among us.

But now, according to the Supreme Court, these entities can move among us with the same rights as sovereign citizens.

And the limits of how much they can donate to political campaigns have largely been lifted.

So, what causes do you think that these newly minted mega corporate ‘citizens’ donate money to? The only ones they care about, of course. And that’s getting folks elected who will not pass laws that will interfere with their right to maximize their profits.

Their audacity knows no limits

This corporate philosophy, of not hacking at the branches if you can go for the roots, is expanding in a frightening manner internationally now.

There’s something called the TPPA, the Trans Pacific Partnership Agreement. It has been under negotiation since 2005 and currently 11 nations from around the Pacific Rim are involved.

The stated purpose of the TPPA is:

… to enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs.

Whooo-ee. That sounds good, doesn’t it?

Folks in most of the countries involved in these negotiations have no idea these negotiations are even going on, much less the details of what’s actually being negotiated.

You see, the negotiations are being carried out in secret. In many cases, they are being kept secret from even from the legislators of the countries negotiating. Specially appointed government trade negotiators are conducting these negotiations and these folks are appointed people – not elected people.

It gets even more incredible.

In the U.S., which is the most dominate of the countries involved, the vast majority of the House and Senate membership are blocked from knowing the details of what’s being negotiated while representatives from a number of large U.S. corporations are allowed to sit in on the negotiations – as they occur.

Yes, you heard that right. Our elected representative are locked out and the mega corporations are sitting in as advisors to the negotiators.

Why the h*** would that be, you say?

Well, from the few documents that have been leaked from these secret negotiations, it turns out to be evident that only about 30% of these agreements actually have anything to do with free trade. While the majority of what’s being negotiated has to do with protecting corporate rights and profits!

I know, many of you at this point in this story think that I must have drunk the bad kool-aid on this one right?

Well, you’d be wrong. This is no straw man.

There’s ample documentation of what’s going on out there and of what’s intended to happen, if the corporations get their way.

Proof?

Here’s a statement by Ron Wyden, a U.S. Senator from Oregon expressing his deep frustration as how little, as a U.S. Senator, he’s been able to find out about what’s being negotiated.

In a floor statement to Congress Wyden said, “The majority of Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of US corporations — like Halliburton, Chevron, Comcast and the Motion Picture Association of America — are being consulted and made privy to details of the agreement.”

And here’s a recent article that appeared in the New York Times by Joseph E. Stiglitz, a U.S. Nobel Prize winning economist, about what he thinks the TPPA is really about and what’s wrong with it. I encourage you to read this.

http://opinionator.blogs.nytimes.com/2014/03/15/on-the-wrong-side-of-globalization/

This is huge, my friends. Just Google the TPPA and you will find a ton of commentary on the Internet about it. And then you might also reflect on why you never hear about this sort of thing on your evening news?

Just a bit more on the TPPA and then I’m going to wrap this up.

One of the worst aspects of what’s being proposed in the TPPA is that corporations will be able to sue sovereign nations – if those nations pass laws that diminish the profits of the corporations.

Yes, you heard that right.

Imagine that a country passes laws mandating that cigarette packs sold in that country have to have plain labeling and carry pictures of what happens to folk’s lungs when they smoke. Such a law would be passed for the good of the people, yes?

Or, perhaps they pass a law that no mining will be allowed in their national parks. Again, this is a law passed for the good of the people of that country.

But, of course, the profits of the cigarette manufacturers and those of the mining companies would be decreased.

Under trade agreement law, as it would stand post-TPPA, the corporations involved could sue the countries that passed such laws to recover their lost profits. And these law suits would be not be held in the courts of the countries involved but rather they would be decided by a three man international tribunal which would not be beholding to any country.

Hard to believe, isn’t it? And all of that is going on around you in secret. In secret even from your legislators.

When I tell folks that the large multi-national corporate world is infiltrating and taking over the sovereign functions of national governments as their latest strategy to increase their profits, some people look at me like I’m a nut case.

Make up your own mind

Pay attention to the news, now that you are aware of all of this. Keeping watching and see what you think.

Ask yourself if mega corporations, solely obsessed with profits and utterly indifferent to the welfare of the people or of the nation, should be considered to be people and allowed to walk around unchecked in polite society?

Ask yourself, if a corporation is suppose to be a person, if you’d actually associate with a real person that had such nasty and mercenary personal attributes?

Or even more to the point, given how things are going, ask yourself what you think about living in a country where the “Government of the people, by the people, for the people, shall not perish from the Earth” is, in sad fact, withering away before our very eyes and being taken over by mega corporations and the very greedy.

These are not idle questions in the world today, my friends.

-dennis

Tags:TPPA
Posted in Capitalism & Corporations, Corporate takeover of Government, Corruption, CrashBlogging, Financial melt-down, Human Rights, Personal, Politics - The Wrong Way, Social Breakdown, The Perfect Storm, Wealth Disparity | No Comments »

On the Wrong Side of Globalization

Wednesday, March 19th, 2014

By JOSEPH E. STIGLITZ in the Opinion section of the New York Times

Trade agreements are a subject that can cause the eyes to glaze over, but we should all be paying attention. Right now, there are trade proposals in the works that threaten to put most Americans on the wrong side of globalization.

The conflicting views about the agreements are actually tearing at the fabric of the Democratic Party, though you wouldn’t know it from President Obama’s rhetoric. In his State of the Union address, for example, he blandly referred to “new trade partnerships” that would “create more jobs.” Most immediately at issue is the Trans-Pacific Partnership, or TPP, which would bring together 12 countries along the Pacific Rim in what would be the largest free trade area in the world.

Negotiations for the TPP began in 2010, for the purpose, according to the United States Trade Representative, of increasing trade and investment, through lowering tariffs and other trade barriers among participating countries. But the TPP negotiations have been taking place in secret, forcing us to rely on leaked drafts to guess at the proposed provisions. At the same time, Congress introduced a bill this year that would grant the White House filibuster-proof fast-track authority, under which Congress simply approves or rejects whatever trade agreement is put before it, without revisions or amendments.

Controversy has erupted, and justifiably so. Based on the leaks — and the history of arrangements in past trade pacts — it is easy to infer the shape of the whole TPP, and it doesn’t look good. There is a real risk that it will benefit the wealthiest sliver of the American and global elite at the expense of everyone else. The fact that such a plan is under consideration at all is testament to how deeply inequality reverberates through our economic policies.

Worse, agreements like the TPP are only one aspect of a larger problem: our gross mismanagement of globalization.

Let’s tackle the history first. In general, trade deals today are markedly different from those made in the decades following World War II, when negotiations focused on lowering tariffs. As tariffs came down on all sides, trade expanded, and each country could develop the sectors in which it had strengths and as a result, standards of living would rise. Some jobs would be lost, but new jobs would be created.

Today, the purpose of trade agreements is different. Tariffs around the world are already low. The focus has shifted to “nontariff barriers,” and the most important of these — for the corporate interests pushing agreements — are regulations. Huge multinational corporations complain that inconsistent regulations make business costly. But most of the regulations, even if they are imperfect, are there for a reason: to protect workers, consumers, the economy and the environment.

What’s more, those regulations were often put in place by governments responding to the democratic demands of their citizens. Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is a race to the bottom.

– More… ➡

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The Verdict on Thatcherism Is Clear

Thursday, March 13th, 2014

Simply compare how her UK squandered its oil wealth compared to Norway

Nothing says free market capitalism like Margaret Thatcher. The Iron Lady once proclaimed, “Socialist governments traditionally do make a financial mess. They always run out of other people’s money.”

Thirty-five years after she swept to power as British prime minister, it is ironic that socialist Norway now has $830 billion in the bank and enjoys fully funded social programs that most of us can only dream of. Meanwhile the U.K. is enduring another round of wrenching austerity and owes over £1.3 trillion — about US$2.2 trillion. That massive debt grows by about $3.8 billion each week, while every seven days Norway adds another billion dollars to their bank account.

What happened? Both countries were in dire economic straights in early 1970s. Both countries came into the financial windfall of North Sea oil around the same time, exploiting the same resource — sometimes from the same drill rig. How could they have ended up in such vastly different places?

Rarely in history has there been such a clear-cut opportunity to explore the real world success or failure of competing world-views. Thatcherism has gone on to become an economic school of thought with true believers in positions of power around the world. The doctrine of cutting taxes, privatizing government assets and embracing deregulation continues apace around the globe to this day. But does it work?

First let’s agree on some fundamentals. Wealth flows from resources and oil is a particularly lucrative bounty. The 75 billion barrels of light sweet crude discovered in the North Sea was worth over $8 trillion at 2014 prices. With that much money on the table and the resource roughly evenly split between the U.K. and Norway, let’s see how socialism and Thatcherism fared in this economic cage match.

For starters, Norway isn’t precisely “socialist.” Like other Scandinavian countries, they have a mixed-market economy with relatively high levels of taxation and comprehensive social programs. The main difference was that Norwegians did not have an allergic aversion to public participation in their economy.

One of the first things the Norwegian government did was to incorporate a state owned oil company — Statoil — to ensure they had an equity stake in their own oil production and to act as a repository for oil expertise. Since Norway knew essentially nothing about the oil business, they had to learn fast and having a player on the field helped them do that.

Oil is also a good investment and the Norwegian taxpayer has enjoyed over $23 billion in Statoil dividends from their government’s stake in the company since it was founded in 1972. The equity value of those shares is worth another $64 billion.

Lady Thatcher on the other hand embraced the conservative ideal of minimizing government presence in the marketplace, virtually inventing the process of privatization. One of her first acts on election was to sell 80 million shares of British Petroleum, ending the majority stake the U.K. government had held in the company since 1913 on the advice of Winston Churchill. Thatcher sold the U.K.’s remaining 1.7 billion shares in BP immediately after the stock market crash of 1987. While this raised $20 billion at the time, adjusted for inflation, those same shares would be worth over $87 billion today.

Taxation is of course another yawning philosophical divide between Thatcherism and the Norwegian model. While Norway needed outside expertise and capital to develop offshore drilling operations, they also wanted to tax foreign companies to limits of tolerance — to “squeeze the lemon to the maximum” as one historian told me. An unspoken role of Statoil was to pass on informed intelligence from within the oil industry on costs, prices and players so the Norwegian government could better prevail at the negotiating table.

This was no garden party. With literally trillions of dollars at stake, Norway was playing to win. At one iconic meeting in 1974 the Norwegian government announced to a delegation of oil companies that they were raising the level of taxation on petroleum profits to 90 per cent from 50. After the shouting had died down, the minister expressed disappointment that some of them did not walk away from their offshore leases. “We should have taken more,” he admonished his bureaucrats in full view of the enraged oil executives.

Thatcher on the other hand seemed more enamoured with ideology than money. She told a Conservative conference in 1977, “Our aim is to make tax collecting a declining industry.” She and successive governments succeeded in that dubious goal. Even though the U.K. extracted nine per cent more oil and gas by 2011, they collected $156 billion less in petroleum taxes and royalties than the Norwegians.

– More… ➡

– Research thanks to Kierin M.

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Right to refuse access by mining companies voted down in Senate

Thursday, March 13th, 2014

– This in from Australia which appears to be the U.S.’s little brother clone in the South Pacific.

– There, the corporations, through influence on government, are slowly gaining their will in all things – just as we’ve seen for some time now in the U.S.

– dennis

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A bill to give farmers and others the right to veto entry onto their properties by mining, oil and gas companies has been voted down in the Senate.

Queensland Greens Senator Larissa Waters introduced the ‘Landholders Right to refuse (Gas and Coal) Bill 2013’, which was defeated 44 to 9.

The bill also called for the Federal Government to buy back farms that have coal seam gas and coal mines on them.

Senator Waters says moves to protect prime agricultural land in Queensland and so-called critical industry clusters in New South Wales have failed to protect farmers.

“We saw an awful lot of promises on this issue before those respective parties were elected that they would act on this issue,” she said.

“What’s been produced just under-delivers in the extreme.

“Queensland made these promises years ago, and still haven’t even delivered. It’s still in bill format.

“The New South Wales ultimate protections that were passed actually have so many holes in them it’s almost like they’re a coal seam gas well themselves.”

Senator Waters says the bill was to redress the lack of right of farmers and others.

“Currently landholders across the country, in most instances, don’t have the right to say no to mining and coal seam gas companies that want to come onto their property.

“They only have the right to negotiate the compensation amount that they get.

– More… ➡

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Robert Reich: Where is the angry middle-class revolution?

Wednesday, January 29th, 2014

Our incomes are shrinking while the 1 percent profits. Change will only happen when the middle class gets mad

by Robert Reich on Salon

People ask me all the time why we don’t have a revolution in America, or at least a major wave of reform similar to that of the Progressive Era or the New Deal or the Great Society.

Middle incomes are sinking, the ranks of the poor are swelling, almost all the economic gains are going to the top, and big money is corrupting our democracy. So why isn’t there more of a ruckus?

The answer is complex, but three reasons stand out.

First, the working class is paralyzed with fear it will lose the jobs and wages it already has.

In earlier decades, the working class fomented reform. The labor movement led the charge for a minimum wage, 40-hour workweek, unemployment insurance, and Social Security.

No longer. Working people don’t dare. The share of working-age Americans holding jobs is now lower than at any time in the last three decades and 76 percent of them are living paycheck to paycheck.

No one has any job security. The last thing they want to do is make a fuss and risk losing the little they have.

Besides, their major means of organizing and protecting themselves — labor unions — have been decimated. Four decades ago more than a third of private-sector workers were unionized. Now, fewer than 7 percent belong to a union.

Second, students don’t dare rock the boat.

In prior decades students were a major force for social change. They played an active role in the Civil Rights movement, the Free Speech movement, and against the Vietnam War.

But today’s students don’t want to make a ruckus. They’re laden with debt. Since 1999, student debt has increased more than 500 percent, yet the average starting salary for graduates has dropped 10 percent, adjusted for inflation. Student debts can’t be cancelled in bankruptcy. A default brings penalties and ruins a credit rating.

To make matters worse, the job market for new graduates remains lousy. Which is why record numbers are still living at home.

Reformers and revolutionaries don’t look forward to living with mom and dad or worrying about credit ratings and job recommendations.

Third and finally, the American public has become so cynical about government that many no longer think reform is possible.

When asked if they believe government will do the right thing most of the time, fewer than 20 percent of Americans agree. Fifty years ago, when that question was first asked on standard surveys, more than 75 percent agreed.

It’s hard to get people worked up to change society or even to change a few laws when they don’t believe government can possibly work.

You’d have to posit a giant conspiracy in order to believe all this was the doing of the forces in America most resistant to positive social change.

It’s possible. of course, that rightwing Republicans, corporate executives, and Wall Street moguls intentionally cut jobs and wages in order to cow average workers, buried students under so much debt they’d never take to the streets, and made most Americans so cynical about government they wouldn’t even try for change.

But it’s more likely they merely allowed all this to unfold, like a giant wet blanket over the outrage and indignation most Americans feel but don’t express.

Change is coming anyway. We cannot abide an ever-greater share of the nation’s income and wealth going to the top while median household incomes continue too drop, one out of five of our children living in dire poverty, and big money taking over our democracy.

At some point, working people, students, and the broad public will have had enough. They will reclaim our economy and our democracy. This has been the central lesson of American history.

Reform is less risky than revolution, but the longer we wait the more likely it will be the latter.

– to the original article: ➡

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David Simon: ‘There are now two Americas. My country is a horror show’

Sunday, December 15th, 2013

The creator of The Wire, David Simon, delivered an impromptu speech about the divide between rich and poor in America at theFestival of Dangerous Ideas in Sydney, and how capitalism has lost sight of its social compact. This is an edited extract

America is a country that is now utterly divided when it comes to its society, its economy, its politics. There are definitely two Americas. I live in one, on one block in Baltimore that is part of the viable America, the America that is connected to its own economy, where there is a plausible future for the people born into it. About 20 blocks away is another America entirely. It’s astonishing how little we have to do with each other, and yet we are living in such proximity.

There’s no barbed wire around West Baltimore or around East Baltimore, around Pimlico, the areas in my city that have been utterly divorced from the American experience that I know. But there might as well be. We’ve somehow managed to march on to two separate futures and I think you’re seeing this more and more in the west. I don’t think it’s unique to America.

I think we’ve perfected a lot of the tragedy and we’re getting there faster than a lot of other places that may be a little more reasoned, but my dangerous idea kind of involves this fellow who got left by the wayside in the 20th century and seemed to be almost the butt end of the joke of the 20th century; a fellow named Karl Marx.

I’m not a Marxist in the sense that I don’t think Marxism has a very specific clinical answer to what ails us economically. I think Marx was a much better diagnostician than he was a clinician. He was good at figuring out what was wrong or what could be wrong with capitalism if it wasn’t attended to and much less credible when it comes to how you might solve that.

You know if you’ve read Capital or if you’ve got the Cliff Notes, you know that his imaginings of how classical Marxism – of how his logic would work when applied – kind of devolve into such nonsense as the withering away of the state and platitudes like that. But he was really sharp about what goes wrong when capital wins unequivocally, when it gets everything it asks for.

That may be the ultimate tragedy of capitalism in our time, that it has achieved its dominance without regard to a social compact, without being connected to any other metric for human progress.

We understand profit. In my country we measure things by profit. We listen to the Wall Street analysts. They tell us what we’re supposed to do every quarter. The quarterly report is God. Turn to face God. Turn to face Mecca, you know. Did you make your number? Did you not make your number? Do you want your bonus? Do you not want your bonus?

And that notion that capital is the metric, that profit is the metric by which we’re going to measure the health of our society is one of the fundamental mistakes of the last 30 years. I would date it in my country to about 1980 exactly, and it has triumphed.

Capitalism stomped the hell out of Marxism by the end of the 20th century and was predominant in all respects, but the great irony of it is that the only thing that actually works is not ideological, it is impure, has elements of both arguments and never actually achieves any kind of partisan or philosophical perfection.

It’s pragmatic, it includes the best aspects of socialistic thought and of free-market capitalism and it works because we don’t let it work entirely. And that’s a hard idea to think – that there isn’t one single silver bullet that gets us out of the mess we’ve dug for ourselves. But man, we’ve dug a mess.

After the second world war, the west emerged with the American economy coming out of its wartime extravagance, emerging as the best product. It was the best product. It worked the best. It was demonstrating its might not only in terms of what it did during the war but in terms of just how facile it was in creating mass wealth.

Plus, it provided a lot more freedom and was doing the one thing that guaranteed that the 20th century was going to be – and forgive the jingoistic sound of this – the American century.

It took a working class that had no discretionary income at the beginning of the century, which was working on subsistence wages. It turned it into a consumer class that not only had money to buy all the stuff that they needed to live but enough to buy a bunch of shit that they wanted but didn’t need, and that was the engine that drove us.

It wasn’t just that we could supply stuff, or that we had the factories or know-how or capital, it was that we created our own demand and started exporting that demand throughout the west. And the standard of living made it possible to manufacture stuff at an incredible rate and sell it.

And how did we do that? We did that by not giving in to either side. That was the new deal. That was the great society. That was all of that argument about collective bargaining and union wages and it was an argument that meant neither side gets to win.

Labour doesn’t get to win all its arguments, capital doesn’t get to. But it’s in the tension, it’s in the actual fight between the two, that capitalism actually becomes functional, that it becomes something that every stratum in society has a stake in, that they all share.

The unions actually mattered. The unions were part of the equation. It didn’t matter that they won all the time, it didn’t matter that they lost all the time, it just mattered that they had to win some of the time and they had to put up a fight and they had to argue for the demand and the equation and for the idea that workers were not worth less, they were worth more.

Ultimately we abandoned that and believed in the idea of trickle-down and the idea of the market economy and the market knows best, to the point where now libertarianism in my country is actually being taken seriously as an intelligent mode of political thought. It’s astonishing to me. But it is. People are saying I don’t need anything but my own ability to earn a profit. I’m not connected to society. I don’t care how the road got built, I don’t care where the firefighter comes from, I don’t care who educates the kids other than my kids. I am me. It’s the triumph of the self. I am me, hear me roar.

That we’ve gotten to this point is astonishing to me because basically in winning its victory, in seeing that Wall come down and seeing the former Stalinist state’s journey towards our way of thinking in terms of markets or being vulnerable, you would have thought that we would have learned what works. Instead we’ve descended into what can only be described as greed. This is just greed. This is an inability to see that we’re all connected, that the idea of two Americas is implausible, or two Australias, or two Spains or two Frances.

Societies are exactly what they sound like. If everybody is invested and if everyone just believes that they have “some”, it doesn’t mean that everybody’s going to get the same amount. It doesn’t mean there aren’t going to be people who are the venture capitalists who stand to make the most. It’s not each according to their needs or anything that is purely Marxist, but it is that everybody feels as if, if the society succeeds, I succeed, I don’t get left behind. And there isn’t a society in the west now, right now, that is able to sustain that for all of its population.

And so in my country you’re seeing a horror show. You’re seeing a retrenchment in terms of family income, you’re seeing the abandonment of basic services, such as public education, functional public education. You’re seeing the underclass hunted through an alleged war on dangerous drugs that is in fact merely a war on the poor and has turned us into the most incarcerative state in the history of mankind, in terms of the sheer numbers of people we’ve put in American prisons and the percentage of Americans we put into prisons. No other country on the face of the Earth jails people at the number and rate that we are.

We have become something other than what we claim for the American dream and all because of our inability to basically share, to even contemplate a socialist impulse.

Socialism is a dirty word in my country. I have to give that disclaimer at the beginning of every speech, “Oh by the way I’m not a Marxist you know”. I lived through the 20th century. I don’t believe that a state-run economy can be as viable as market capitalism in producing mass wealth. I don’t.

I’m utterly committed to the idea that capitalism has to be the way we generate mass wealth in the coming century. That argument’s over. But the idea that it’s not going to be married to a social compact, that how you distribute the benefits of capitalism isn’t going to include everyone in the society to a reasonable extent, that’s astonishing to me.

And so capitalism is about to seize defeat from the jaws of victory all by its own hand. That’s the astonishing end of this story, unless we reverse course. Unless we take into consideration, if not the remedies of Marx then the diagnosis, because he saw what would happen if capital triumphed unequivocally, if it got everything it wanted.

And one of the things that capital would want unequivocally and for certain is the diminishment of labour. They would want labour to be diminished because labour’s a cost. And if labour is diminished, let’s translate that: in human terms, it means human beings are worth less.

From this moment forward unless we reverse course, the average human being is worth less on planet Earth. Unless we take stock of the fact that maybe socialism and the socialist impulse has to be addressed again; it has to be married as it was married in the 1930s, the 1940s and even into the 1950s, to the engine that is capitalism.

Mistaking capitalism for a blueprint as to how to build a society strikes me as a really dangerous idea in a bad way. Capitalism is a remarkable engine again for producing wealth. It’s a great tool to have in your toolbox if you’re trying to build a society and have that society advance. You wouldn’t want to go forward at this point without it. But it’s not a blueprint for how to build the just society. There are other metrics besides that quarterly profit report.

The idea that the market will solve such things as environmental concerns, as our racial divides, as our class distinctions, our problems with educating and incorporating one generation of workers into the economy after the other when that economy is changing; the idea that the market is going to heed all of the human concerns and still maximise profit is juvenile. It’s a juvenile notion and it’s still being argued in my country passionately and we’re going down the tubes. And it terrifies me because I’m astonished at how comfortable we are in absolving ourselves of what is basically a moral choice. Are we all in this together or are we all not?

If you watched the debacle that was, and is, the fight over something as basic as public health policy in my country over the last couple of years, imagine the ineffectiveness that Americans are going to offer the world when it comes to something really complicated like global warming. We can’t even get healthcare for our citizens on a basic level. And the argument comes down to: “Goddamn this socialist president. Does he think I’m going to pay to keep other people healthy? It’s socialism, motherfucker.”

What do you think group health insurance is? You know you ask these guys, “Do you have group health insurance where you …?” “Oh yeah, I get …” you know, “my law firm …” So when you get sick you’re able to afford the treatment.

The treatment comes because you have enough people in your law firm so you’re able to get health insurance enough for them to stay healthy. So the actuarial tables work and all of you, when you do get sick, are able to have the resources there to get better because you’re relying on the idea of the group. Yeah. And they nod their heads, and you go “Brother, that’s socialism. You know it is.”

And … you know when you say, OK, we’re going to do what we’re doing for your law firm but we’re going to do it for 300 million Americans and we’re going to make it affordable for everybody that way. And yes, it means that you’re going to be paying for the other guys in the society, the same way you pay for the other guys in the law firm … Their eyes glaze. You know they don’t want to hear it. It’s too much. Too much to contemplate the idea that the whole country might be actually connected.

So I’m astonished that at this late date I’m standing here and saying we might want to go back for this guy Marx that we were laughing at, if not for his prescriptions, then at least for his depiction of what is possible if you don’t mitigate the authority of capitalism, if you don’t embrace some other values for human endeavour.

And that’s what The Wire was about basically, it was about people who were worth less and who were no longer necessary, as maybe 10 or 15% of my country is no longer necessary to the operation of the economy. It was about them trying to solve, for lack of a better term, an existential crisis. In their irrelevance, their economic irrelevance, they were nonetheless still on the ground occupying this place called Baltimore and they were going to have to endure somehow.

That’s the great horror show. What are we going to do with all these people that we’ve managed to marginalise? It was kind of interesting when it was only race, when you could do this on the basis of people’s racial fears and it was just the black and brown people in American cities who had the higher rates of unemployment and the higher rates of addiction and were marginalised and had the shitty school systems and the lack of opportunity.

And kind of interesting in this last recession to see the economy shrug and start to throw white middle-class people into the same boat, so that they became vulnerable to the drug war, say from methamphetamine, or they became unable to qualify for college loans. And all of a sudden a certain faith in the economic engine and the economic authority of Wall Street and market logic started to fall away from people. And they realised it’s not just about race, it’s about something even more terrifying. It’s about class. Are you at the top of the wave or are you at the bottom?

So how does it get better? In 1932, it got better because they dealt the cards again and there was a communal logic that said nobody’s going to get left behind. We’re going to figure this out. We’re going to get the banks open. From the depths of that depression a social compact was made between worker, between labour and capital that actually allowed people to have some hope.

We’re either going to do that in some practical way when things get bad enough or we’re going to keep going the way we’re going, at which point there’s going to be enough people standing on the outside of this mess that somebody’s going to pick up a brick, because you know when people get to the end there’s always the brick. I hope we go for the first option but I’m losing faith.

The other thing that was there in 1932 that isn’t there now is that some element of the popular will could be expressed through the electoral process in my country.

The last job of capitalism – having won all the battles against labour, having acquired the ultimate authority, almost the ultimate moral authority over what’s a good idea or what’s not, or what’s valued and what’s not – the last journey for capital in my country has been to buy the electoral process, the one venue for reform that remained to Americans.

Right now capital has effectively purchased the government, and you witnessed it again with the healthcare debacle in terms of the $450m that was heaved into Congress, the most broken part of my government, in order that the popular will never actually emerged in any of that legislative process.

So I don’t know what we do if we can’t actually control the representative government that we claim will manifest the popular will. Even if we all start having the same sentiments that I’m arguing for now, I’m not sure we can effect them any more in the same way that we could at the rise of the Great Depression, so maybe it will be the brick. But I hope not.

David Simon is an American author and journalist and was the executive producer of The Wire. This is an edited extract of a talk delivered at the Festival of Dangerous Ideas in Sydney.

– To the original Article: ➡

– research thanks to Gus H.

Posted in Capitalism & Corporations, Conflict, Corporate takeover of Government, Corruption, CrashBlogging, Culture - How not to do it, Financial melt-down, Human Rights, Politics - The Wrong Way, Social Breakdown, The Perfect Storm, Wealth Disparity | No Comments »

The Ayn Rand-Worshipping Sears CEO That Blew Up His Multibillion Dollar Empire

Wednesday, December 11th, 2013

The invisible hand waves goodbye to America’s most delusional CEO.

Once upon a time, hedge fund manager Eddie Lampert was living a Wall Street fairy tale. His fairy godmother was Ayn Rand, the dashing diva of free-market ideology whose quirky economic notions would transform him into a glamorous business hero.

For a while, it seemed to work like a charm. Pundits called him the “ Steve Jobs of the investment world.” The new Warren Buffett. By 2006 he was flying high, the richest man in Connecticut, managing over $15 billion thorough his hedge fund, ESL Investments.

Stoked by his Wall Street success, Lampert plunged headlong into the retail world. Undaunted by his lack of industry experience and hailed a genius, Lampert boldly pushed to merge Kmart and Sears with a layoff and cost-cutting strategy that would, he promised, send profits into the stratosphere. Meanwhile the hotshot threw cash around like an oil sheikh, buying a $40 million pad in Florida’s Biscayne Bay, a record even for that star-studded county.

Fast-forward to 2013: The fairy tale has become a nightmare.

Lampert is now known as one of the worst CEOs in America — the man who flushed Sears down the toilet with his demented management style and harebrained approach to retail. Sears stock is tanking. His hedge fun is down 40 percent, and the business press has turned from praising Lampert’s genius towatching gleefully as his ship sinks. Investors are running from “Crazy Eddie” like the plague.

That’s what happens when Ayn Rand is the basis for your business plan.

Crazy Eddie has been one of America’s most vocal advocates of discredited free-market economics, so obsessed with Ayn Rand he could rattle off memorized passages of her novels. As Mina Kimes explained in a fascinating profile in Bloomberg Businessweek, Lampert took the myth that humans perform best when acting selfishly as gospel, pitting Sears company managers against each other in a kind of Lord of the Flies death match. This, he believed, would cause them to act rationally and boost performance.

If you think that sounds batshit crazy, congratulations. You understand more than most of America’s business school graduates.

Instead of enhancing Sears’ bottom line, the heads of various divisions began to undermine each other and fight tooth and claw for the profits of their individual fiefdoms at the expense of the overall brand. By this time Crazy Eddie was completely in thrall to his own bloated ego, and fancied he could bend underlings to his will by putting them through humiliating rituals, like annual conference calls in which unit managers were forced to bow and scrape for money and resources. But the chaos only grew.

Lampert took to hiding behind a pen name and spying on and goading employees through an internal social network. He became obsessed with technology, wasting resources on developing apps as Sears’ physical stores became dilapidated and filthy. Instead of investing in workers and developing useful products, he sold off valuable real estate, shuttered stores, and engineered stock buybacks in order to manipulate stock prices and line his own pockets.

Eddie’s crazy didn’t stop there. As a Wall Street creature fantastically out of touch with the kind of ordinary folks who shop at Sears, he inserted his love of luxury into the mix, trying to sell Rolex watches and $4,400 designer handbags through America’s iconic budget-friendly brand.

As his company was descending into Randian mayhem, Lampert continued to cheerfully inform stockholders that his revolutionary ideas would soon produce earth-shattering results. Reality: Sears has lost half its value in five years. Since 2010, Sears has closed more than half of its stores. Sears Holdings is financially distressed and Lampert’s own hedge fund has reduced its stake in the company. The Sears store in Oakland, California, open for business with boarded-up windows, has even been cited for urban blight.

– to the original story: ➡

Posted in Capitalism & Corporations, CrashBlogging, Financial melt-down, Mental Irrationality, The Perfect Storm, Water Shortages, Wealth Disparity | No Comments »

No single rain drop thinks it is responsible for the flood

Saturday, November 23rd, 2013

– That little saying is a favorite of mine.

– Here’s a story from my city, Christchurch, New Zealand, that will illustrate the problem quite well.

– If you will, please, read the story below and then at the end I will tell you how it is all going to turn out – and you will see the point of the saying that “No single raindrop thinks that it is responsible for the flood”.

– dennis

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Big shakeup coming for Chch hospitals

New Zealand’s private healthcare system is set to be shaken up by the imminent arrival of a new hospital in Christchurch.

Forte Health, the multimillion-dollar specialist, short-stay hospital owned entirely by surgeons, is two months from opening and is already causing controversy.

The newcomer’s 25 shareholders are all specialist surgeons – absorbing every urologist in Christchurch, half of the city’s orthopaedic surgeons and most of its ear, nose and throat specialists, The Press understands.

Concerns have been raised about Forte’s shareholder-surgeons having a vested interest in shepherding patients towards their hospital for personal gain and health economists have criticised Forte’s short-stay model as “cherry-picking” the private market.

Christchurch’s two existing private hospitals are feeling the squeeze from Forte and will inevitably lose millions of dollars in revenue once it opens.

St George’s and Southern Cross hospitals both have 10 operating theatres in Christchurch and Forte will be adding another four into the mix, while gunning for the biggest volume of surgery in the market.

Forte is targeting the less-complex day surgeries from four key specialties: Ear, nose and throat; urology; gynaecology; and orthopaedics.

St George’s Hospital chief executive Greg Brooks said Forte’s arrival raised some difficult questions about the future.

Brooks was already investigating other potential revenue streams to help ease the loss of day surgeries.

“The challenge from our perspective is that as surgeons they can direct patients to their hospital and so it is a real risk for us,” he said.

Auckland University health economist Professor Toni Ashton said if a patient goes to a Forte surgeon for a consultation “of course they are going to direct them into their business, they are the shareholders for goodness sake”.

This new surgeon-shareholder business model will force Christchurch’s existing private hospitals out of the competition for day surgery, Brooks said.

And, if this model gains momentum, surgeons across the country could view it as a “vehicle for income opportunities” and this could lead to an upheaval of private healthcare in New Zealand, he said.

“We are all waiting to see what will happen.”

Forte Health chairman David Barker said the hospital had grown out of the earthquake-damaged Oxford Clinic and that it would be “replacing and enhancing competition” in the private market that was lost as a result of the quake.

Forte surgeons would continue to operate in the public sector and at the city’s other two private hospitals, he said.

The shareholder-surgeons were aware of their ethical responsibilities and would only direct patients toward Forte “if their surgery is suited to that environment”, Barker said.

Ian Powell, a senior doctors’ spokesman speaking in a personal capacity, said Forte was defining a niche within the market by targeting less complex surgeries, but “if I was in St George’s chair, I would see that as cherry-picking”.

The cost of running short-stay facilities was considerably less to other hospitals and New Zealand Medical Association chairman Dr Mark Peterson said Forte’s costs must reflect “that they are a lower-risk facility”.

“If they are charging the same rates for a lower acuity facility, I might have some concerns about that,” he said.

Southern Cross Hospitals chief operating officer Tau-Loon Ho said there had been recent increases in specialist owned short-stay clinics aimed at providing less complex care, but “what is concerning is the increasingly high cost of simple procedures being undertaken by many of these facilities”.

Academic Dr Michael Gousmett, who is an expert on charitable hospitals, said Forte would also put pressure on the public sector by “spreading our surgeons too thinly on the ground”.

Yet, CDHB chief executive David Meates said the establishment of Forte Health would not have any significant impact on the public sector.

The new hospital is expected to open on January 20.

QUALITY CARE OR PRIME CUT?

It is the lull before the storm for Christchurch’s private-health sector.

Come January next year, a new multimillion-dollar, glass-encased surgical hospital in Kilmore St will open its doors and cause a huge upheaval in the region’s health arena.

Forte Health is poised to enter the private-hospital realm with a small army of 25 specialist surgeons as its shareholders.

It will be targeting the biggest volume of surgery in the market – the short-stay, less-complex procedures – from four key specialties: ear, nose and throat, urology, orthopaedics and gynaecology.

It is understood all of the city’s urologists, at least half of its orthopaedic surgeons and all but one ear, nose and throat surgeon are shareholders in the venture.

The three-storey hospital will have 14 patient beds, four operating theatres and in excess of 100 staff and clinicians.

It is the most competitive beast to enter Christchurch’s private-health sector and, with the countdown on for open day, the city’s two existing private hospitals, St George’s and Southern Cross, are starting to sweat.

The newcomer will soak up hundreds of surgeries and million of dollars of revenue from their books.

Forte is less than two months off opening and questions have started to circle on the ethics of a private hospital owned entirely by surgeons who will have a vested interest in directing patients toward their hospital for financial gain.

Health economists and experts also query the way the new enterprise appears to be “cherry-picking the private sector” by targeting the easiest operations.

“This is a significant issue for us,” St George’s Hospital chief executive Greg Brooks said.

“The challenge from our perspective is that as surgeons they can direct their patients to their hospital and so it is a real risk for us.” Brooks said.

“What we need to be able to do is counter that by being able to provide good quality facilities so that the surgeons are encouraged to deliver their care here.”

Both St George’s and Southern Cross would struggle to compete for day surgeries against Forte because “our ability to influence the patients’ choice of selection is very small because the surgeon always meets the patient”, Brooks said.

This would leave St George’s and Southern Cross with the day-surgery leftovers and the more complex patients that Forte did not have the ability to care for.

St George’s was already actively looking at “diversification of revenue streams” to mitigate the birth of Forte, he said.

“You have to accept that competition comes and you have to adapt the business the best you can.”

If Forte’s shareholder-surgeon model gained momentum “and surgeons view this as a vehicle for income opportunities for the future”, it might be replicated all over New Zealand which would have a massive impact on our country’s health sector, Brooks said.

“We are all waiting to see what will happen.”

Southern Cross Hospitals chief operating officer Tau-Loon Ho said there had been a recent increase in the number of specialist-owned, short-stay facilities that were “geared toward the lower-cost, less-complex end of the spectrum”.

The cost of running such facilities was considerably less than more comprehensive hospitals, but “what is concerning is the increasingly high cost of simple procedures being undertaken by many of these facilities”, he said.

Forte Health was born out of the closure of the Oxford Clinic after it was damaged in the earthquakes.

The private clinic was run off the shareholder-surgeon model and, when it needed to relocate, other specialists in the city saw this as an opportunity to join forces and build a multimillion-dollar “larger and more comprehensive short-stay facility”, Forte Health chairman David Barker said.

The new hospital would be “restoring some competition in the private-hospital market which was lost as a result of the earthquakes”, he said.

The hospital’s surgeon-shareholder model was not an ethical issue as surgeons were aware of their responsibilities.

Patients would be directed to the most appropriate facility for their care, Barker said.

Surgical costs were still unknown for Forte but, Barker said, “we want to be efficient in all aspects, not just clinical but also financial”.

Senior doctors’ spokesman Ian Powell said Forte was smart to focus on the less complex procedures, but this could also be deemed as “cherry-picking the market”.

Powell, who is the executive director of the Association of Salaried Medical Specialists but was speaking in a personal capacity, said the private sector entered the market only when it could see a demand and “like a corner dairy, they will only put products on shelves that they know will sell”.

If the facility was set up only for easy, low-risk procedures, its prices should reflect this, Powell said.

Other hospitals around the country were run off the shareholder-surgeon model and there were strong ethical guidelines around this, he said.

“If they are deliberately directing people to use private services because of their personal advantage than that’s a no-no and, if people behave naughty, or in a way that’s unprofessional, they can put their employment with the DHB at risk.”

Professor Tony Blakely, of Otago University’s department of public health in Wellington, said there was a best- and worst-case scenario with the arrival of Forte.

The best-case scenario was that the new venture would provide cost-effective services in the most efficient manner possible.

The worst-case scenario was that it “merely serves to boost specialist incomes, divert specialists away from public delivery of services and cream skims off easier patients”.

To the original article: ➡

= = = = = = = = = = = = = = =

– After reading the story, you can see that this is going to be good for the physicians that setup the new private hospital and it is going to be bad for the public healthcare system which is going to inherit the tougher in-patient cases while losing the more profitable out-patient cases.

– But, as an American, speaking from our history, I can tell you it will get worse than that in time.

– After these 25 doctors own this private hospital for a while and it becomes obvious that it is a successful and going concern, then either the urge to take it public will become irresistible or some existing corporation with deep pockets will simply come along and buy the entire thing.

– In either case, the owner physicians will stand to make a huge chuck of money and the organization itself will pass into the hands of a public for-profit corporation.

– Sadly, we’ve seen this cycle in the U.S.

– Originally, a few decades ago, most U.S. doctors had their own private practices. But, after a time, running their own accounting, acquiring and owning their own medical equipment (very expensive) and each having his or her own office staff and quarters became burdensome.

– So they began to band together into group clinics with shared medical equipment and receptionists. They farmed their accounting out to specialist medical accounting services and they got down to just having to have one or two nurses on-staff.

– Eventually, they were ‘noticed’ by large American corporations who realized that these clinics were absolute ‘cash cows’ and they started to buy them up. This buying up has now consolidated most previously independent medical practices in the U.S. into medical corporations.

– The doctors in the clinics were persuaded to join this consolidation by money and how easy life was going to be for them post-acquisition. No staffing worries – it would all be handled by the corporate mothership. No equipment worries. Nice offices were provided. All the insurance and other logistical nightmare would all be sorted out for them. All they had to do after the acquisitions was to come into work and be doctors and see patients. What a sweet deal.

– But, of course, the darker side was that corporation’s primary reason for existing was and is to maximize the return on their shareholder’s investments in them.

– And implementing such maximization involves a few simple ideas: minimize costs and maximize profits. All good? Then go around and repeat again.

– Hence the bean counters arrived and now every medical procedure, like an MRI or an optional lab test, had to be ‘justified’, Justified not only on the physician’s thought that it was going to be a necessary part of the diagnosis but on the basis of whether or not it was justified in terms of being cost effective. Is there a cheaper way? How many patients might be lost they don’t receive the procedure or test? How many can we lose and it still will be an acceptable rate? And etc.

– I know a physician in the U.S. who was my G.P. for two decades and who became a friend of mine as well.

– We were discussing this one day and he told me that each time he prescribes an MRI to investigate some issue or other, he has to fill out 30 minutes worth of paper work for each procedure to justify it and its the costs. And since he is booked (mandated by the corporation for efficiency reasons) to see a new patient every 20 or 30 minutes all day long, there’s rarely any time during the work day to fill these papers out. So, if he wants to order the tests, then he has to stay over at the end of the day to do the paperwork.

– He said that some days he’s just exhausted at day’s end and because of that, if a case is really marginal and the patient might be OK without the MRI, he might just skip it.

– He told me that he worries that one or two of the folks he skipped might have received a life-saving diagnosis, if they would have had their MRI. And thus they died unnecessarily. And that this played on his conscience and he felt it was a direct result of medicine in the U.S. being turned into a for-profit corporate exercise wherein decisions were being made on a cost basis rather than on a patient health basis.

– So, when I say that the new private Christchurch Hospital will be worse that most folks can imagine now, this is what I mean.

– Each doctor in the new hospital obviously sees a nice opportunity to make money by doing this. And thus begins the dance that will end badly.

– Thus I say, “No single raindrop thinks it is responsible for the flood“.

– How long will the New Zealand Public Health System be able to subsidize private hospitals like this?

– Why do I say ‘subsidize?

– Because when the new hospital grabs up all the easy out-patient work and leaves the public system with all the harder and more costly in-patient work, that is an indirect but very functional form of subsidization. The easy money goes to the private hospital and the public has to pony up for the addition cost born by the private system.

– We in the U.S. have been down that road before and New Zealanders should be warned by our example.

– dennis

Posted in Capitalism & Corporations, CrashBlogging, Financial melt-down, Human Rights, New Zealand, Social Breakdown, The Perfect Storm, Wealth Disparity | 1 Comment »

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